Ethical Markets
by Hazel Henderson
There are now cleaner, greener, more ethical, and more female sectors of
our U.S. economy—and many others around the world. These growth sectors
can employ every man and woman able to work, and are the key to a
sustainable and healthy future for humanity. These segments of the
business market are here today and have been quietly growing for over
twenty-five years, yet virtually ignored by mainstream financial media.
How could this have happened? Why did it take until 2006 for a U.S.
president to finally admit that the country is addicted to oil?
I explored these issues in Politics
of the Solar Age (1981, 1988) in the hope that the transition from
fossil-fueled industrialism to renewable energy and sustainable technologies
would begin in the 1980s…. I failed to realize, however, in my optimism, that
full systemic social change would take another generation. Nonetheless, in spite
of the blindness and incomprehension of mass media, the new “sustainability”
sectors began to emerge in many countries.
Changes toward a green economy can be
grouped into three main areas:
1. The LOHAS (lifestyles of health
and sustainability) sector: renewable energy
and resource industries (solar, wind, biomass, oceans, hydrogen, fuel cells,
etc.), those in recycling, remanufacturing, reuse, barter, and second-hand
auctions (like eBay), those in preventive, alternative healthcare, wellness,
fitness, etc., and those companies in clean food and organic agriculture (www.lohas.com).
2. Socially responsible investing:
the fastest growing segment of U.S. capital markets (representing about one in
every $11 invested in publicly listed companies) or some $2.3 trillion;
according to the Social Investment Forum (www.socialinvest.org).
3. The growing focus in management on
corporate social responsibility. Most global
companies have forsaken orthodox economic ideologies of “laissez-faire,”
unregulated markets, famously promoted by University of Chicago economists,
including Milton Friedman, that “the only business of business is to make
profits for shareholders.” This view, that relies on markets as
self-correcting, holds that government regulations are ineffective,
self-defeating, and usually unnecessary. History has already overtaken these
views.
Companies today acknowledge that
globalization of information technologies has morphed into a new Age of Truth.
No corporate activity, which may affect society and other stakeholders
(employees, suppliers, customers, host countries, and the environment), remains
unnoticed. Thousands of civic groups, like Corpwatch.org, Global Exchange, The
World Social Forum, and many focused on specific issues from GMO-foods to global
warming, monitor every corporate move. Their Internet reports and blogs can
break a precious corporate brand and stock prices in real time.
Thus, corporate CEOs today have installed
a myriad of in-house programs, often personally overseen by vice presidents of
corporate responsibility. These new activities include hewing to new standards
from ISO 14001 and EMAS to SA-8000 and many other “good citizenship”
accreditations, labels including the U.S.A.’s Green Seal, Germany’s Blue Angel,
and many others. In a 2005 poll of CEOs by the World Economic Forum and KPMG, 70
percent said that “good corporate citizenship “was vital to profitability.”
So it becomes clearer why these three
burgeoning sectors of the U.S. and global economy have been all but invisible on
mainstream financial media: a fierce paradigm war of world views is underway.
Most media outlets are owned by only a few, yet very large, conglomerates: News
Corp, Time-Warner, Disney, GE, VIACOM and others. These companies are deeply
embedded in unsustainable, wasteful, fossil-fueled and nuclear-powered sectors
of the global economy, along with global banks and firms that finance their
expansion. I described this new form of government, “mediocracy,” in Building
A Win-Win World (1996). These three emerging sectors, which we cover in the
“Ethical Markets” TV series and in the Ethical Markets book, pose a
direct challenge to the market dominance of the existing world economic players.
No wonder reporting on the explosive growth of these new sectors is sparse…
Our TV series was created to cover
these three cleaner, greener, more transparent, and ethical parts of the
economy, many of which are spearheaded and led by women. Along the way, it was
necessary to unravel much of the now clearly obsolete thinking based on
eighteenth and nineteenth century economic ideas—deep in textbooks and computer
models. The word is out that economics, never a science, has always been
politics in disguise. I have explored how the economics profession grew to
dominate public policy and trump so many other academic disciplines and values
in our daily lives.
Economics and economists view reality
through a monetary lens. Everything has its price, they believe, from rain
forests to human labor to the air we breathe. Economic textbooks, Gross National
Product (GNP), and the statistics on employment, productivity, investment, and
globalization—all follow the money. Happily, all this focus on money exposes how
money is designed, created, and manipulated. Our widespread focus on the
politics of money is at last unraveling centuries of mystification.
Civic action with local currencies,
barter, community credit, and the more dubious rash of digital cyber money
reveal the politics of money. Traditional economics is now widely seen as the
faulty source code deep in societies’ hard-drives, replicating unsustainability:
booms, busts, bubbles, recessions, poverty, trade wars, pollution, disruption of
communities, loss of cultural and biodiversity. Citizens all over the world are
rejecting this malfunctioning economic source code and its operating systems
such as the World Bank, the International Monetary Fund (IMF), the World Trade
Organization (WTO), and imperious central banks. It’s hard-wired program—the now
derided “Washington Consensus” recipe for hyping GNP-growth—is challenged by the
Human Development Index (HDI), Ecological Footprint Analysis, the Living Planet
Index, the Calvert-Henderson Quality of Life Indicators, the Genuine Progress
Index, and Bhutan’s Gross National Happiness, not to mention scores of local
city indices such as Jacksonville, Florida’s Quality Indicators for Progress,
pioneered by the late Marian Chambers in 1983.
As with politics, all real money is local, created by people to facilitate
exchange and transactions, which are based on trust. Events of the past twenty
years have necessarily recast the story of how this useful invention, money,
grew into abstract national fiat currencies backed only by the promises of
rulers and central bankers. We witness how information technology and
deregulation of banking and finance in the 1980s helped create today’s monstrous
global casino where $1.5 trillion worth of fiat currencies slosh around the
planet daily via mouse clicks on electronic exchanges—90 percent in purely
speculative trading….
In view of these abuses, the task before us is nothing less than to
redefine success, wealth, and progress for our massively changed circumstances
in this twenty-first century. …New broader statistics on health,
education, social capital, and ecological assets are now creating better
scorecards of wealth and progress—beyond money and GNP. Life is rich in many
dimensions and we know that money can’t buy many of the things we most
desire—such as love and happiness….
Our quality of life has much to do with the vitality of the community in
which we live. Healthy communities typically have stable families, enjoyable
neighborhoods, and businesses that revitalize the local economy. Because
economists have not measured the deeper, broader kind of efficiencies provided
by cohesive communities and the values of families and local cultures, these
local living economies have been under-valued—until they break down. Then social
services, unemployment, drug and crisis counseling, caring for homeless people
require huge taxpayer costs. Today, many of the smartest investors, asset
managers, and pension funds are joining with local leaders in re-investing in
these vital community re-development efforts as described by Michael Shuman in
The Small-Mart Revolution (2006)….
One of the most surprising aspects of the new twenty-first century
capitalism is the rise of concerned, active shareholders. They invest not only
for economic returns, but to help create a better world. They attend annual
company meetings and challenge management meetings on a host of issues that
concern them such as: fair treatment of employees, pollution, outsourcing jobs
to low-wage countries, minority rights, diversity of boards and management,
climate change, and corporate governance. The active shareholders are also
influencing investment choices of pension funds, university endowments,
foundations, and socially responsible mutual funds.
Controversial in the 1970s, shareholder activism is now popular and widely
recognized as a progressive movement in the evolution to more ethical
twenty-first century capital markets. Shareholders love the extra psychological
“bang for their bucks,” while the sheer power of the $2.3 trillion active
investors wield is leading to a new model of the corporation managed not only to
the benefit of shareholders, but all stakeholders including employees,
customers, suppliers, community, and the environment. Stakeholder capitalism is
the wave of the future—thanks to the millions of shareholder activists helping
change the game and the scorecards of social progress and human development….
At last,
mainstream venture capitalists are following the lead of the many pioneers who
have been funding companies in solar, wind, biomass, fuel cells, hydrogen, and
more efficient technologies of all kinds. Leaders from D. Wayne Silby, founder
of the Calvert Group, Robert Shaw of Arête, and Nick Parker of Cleantech
Ventures, convey their enthusiasm for continually seeding these sustainability
companies, many of which are destined to become the “IBMs” and “Microsofts” of
the twenty-first century.
Hazel Henderson is a
world renowned futurist, evolutionary economist, a worldwide syndicated
columnist, consultant on sustainable development, and author of Beyond
Globalization, and seven other books.
www.hazelhenderson.com; www.ethicalmarkets.com
