You tell us: where should investors put their money to "make a difference"? In "Conscious Capitalism: Liberating the Heroic Spirit of Business," the new book by John Mackey and Raj Sisodia, co-founders to Whole Foods Markets, the mission is clear.
“We believe,” they write, “that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity. Free-enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived.”
“Conscious capitalist” companies include Southwest Airlines, Costco, Google, Patagonia, the Container Store, UPS and dozens of others. Their group has been together for years. Hopefully in the next generation, organizations like Cargill, Exxon Mobil, Massey Coal, Du Pont, J.P. Morgan and the U.S. Chamber of Commerce will join Mackey and Sisodia’s Conscious Capitalism after their consciences and bottom lines are shocked awake by public pressure following a huge catastrophe.
12 macroeconomic sectors: Make a difference, get rich, save planet
So how should you invest if you want to make a difference, make a decent return — and make sure Planet Earth is here in 2050 for your children? We want your input. Yes, you could just invest in Whole Foods and other “conscious capitalists.”
You can also take the long-term perspective, one we’ve been exploring since putting together an investment-research model based on the 12-part formula in anthropologist Jared Diamond’s book “Collapse: How Societies Choose to Fail or Succeed.” He analyzed 12 macroeconomic sectors that for centuries influenced whether and how nations and economies self-destruct or survive.
In recent years we’ve used this 12-part formula to analyze future macrotrends and individual investment opportunities that lead to survival and challenges for nations.
Diamond says that as global population increases, “more people require more food, space, water, energy, and other resources,” triggering wars, famine, pandemics and political miscalculations, threatening economic growth. So we’ll take a broader look at our future using the 12 macrotrends in our model, to see how “conscious” and conscientious these capitalists really are, with 18 examples of how they plan to protect the planet for 10 billion inhabitants in 2050.”
1. Food: Buy hot commodities, become a farmer
“If you want to become rich, become a farmer,” says Jim Rogers, co-founder with George Soros in the Quantum Fund, in “Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market.” The United Nations, IMF and World Bank estimate over a billion of the planet’s 7 billion people are poor, half are underfed, living on what amounts to $2 a day. Most are farmers, subsistence farmers.
Monsanto and other agricultural giants have a huge stake in the future of large and small farmers, in fertilizers, pesticides, irrigation systems, genetically engineered seeds. The challenge is daunting. U.S. money manager Jeremy Grantham says the planet can’t feed 3 billion more people. Others focus on commercial opportunities. So if you want to get rich in the near future, “become a farmer,” and invest in commodities.
2. Agriculture: land banking, land development
Billionaire investors and nations see value: Having farmlands in your portfolio is a solid bet on the future of both developed economies and emerging nations. Critics call it land grabbing, where rich nations buy the agricultural assets of poorer nations. But rich or poor, populations are exploding, demanding better lifestyles, and all need more food.
So today there’s a rally in productive agricultural properties, thanks to possible 25% returns. Check out the list of 416 land grabs from Grain.org with large-scale real-estate deals in 66 counties, more than 85 million acres, more coming.
3. Water: the new gold for 21st-century investors
Warren Buffett says buy what you know. Well, buy water. It’s everywhere, essential for drinking, industry, agriculture, transportation. A couple of years ago, Fortune said: “Water is the new gold in the 21st century.” Water generated over a half-trillion dollars in revenue worldwide in 2010.
As global population accelerates from 7 billion today to 10 billion by 2050, and more than a billion “lack access to clean drinking water,” it will soon “trade like oil futures. For many, water is more valuable than fuel. Consider bottled-water companies, soft drinks, purification, desalination. Buy water.
4. Forest lands: rapid conversion as world urbanizes
The demand for lumber and urban lands is exploding with population growth. China and India are planning 500 new cities. Half the world’s original rain forests and natural habitats have already been sacrificed to development, adding resource demands and pollution. A quarter more will be converted in the next 50 years.
5. Energy: Oil, coal, natural gas, fossil fuels at the peak
OK, so you’re not a cash-rich nation or super-rich billionaire. Check out mutual funds like Vanguard and Pimco — they manage hundreds of billions in oil and natural-gas equities, bonds and commodity funds. Pimco’s Bill Gross predicts a “significant break” in the world’s “growth pattern” and is betting we’re past the “peak oil” tipping point.
His New Normal strategy accounts for a decline in consumer shopping as economies grow slower and “corporate profits will be static.” But with population exploding, every investor’s portfolio needs energy stocks and funds.
6. Alternative energies: biofuels, wind, nuclear at 20%
In “The Quest,” Daniel Yergin, one of the world’s most respected energy experts, says alternative energies will remain a niche market for decades, while fossil fuels will be 80% of the total in 2050. And the journal Foreign Policy confirms Yergin’s forecast in “The 7 Myths About Alternative Energy.”
Biofuels, solar, wind and nuclear many not be the “major ticket.” But with the global economies in excess of $80 trillion annually and with America spending over a trillion dollars annually on total energy usage, 20% on alternatives may grow even faster as fossil-fuel production costs increase.
7. Solar Power: space rockets and robots mining asteroids
We know sunlight is not unlimited, that we could reach max use by mid-century. But enlightened minds are already investing heavily in innovative alternatives, such as fuel cells and batteries.
And when the Mars Rover project shut down, Silicon Valley investors essentially privatized the Mars engineering team tasked to build new rockets and robots to explore and mine 10,000 asteroids for energy resources potentially worth trillions.
8. Ozone-layer protection: geoengineering climate change
Yes, human activities, autos and manufacturing plants produce carbon dioxide and other gases that escape into the atmosphere and destroy the protective ozone or absorb and reduce solar energy. Innovative geoengineering plans are under development to explore the use of space rockets to block harmful rays, reduce global warming and climate change.
9. Chemicals, minerals, mining: economic growth and public health
Diamond says human solutions have unintended consequences. For example, mining generates economic growth and also dumps toxins into the air, soil, rivers, lakes and oceans that break down too slowly or not at all — from insecticides, pesticides, herbicides, detergents, plastics. Balance is essential between economic growth and public health, with solutions more in the realm of politics, lobbying, government regulations at odds with business plans.
10. Species diversity: Variety isn’t always the ‘spice of life’
Diamond explores the consequences of transferring native species to new lands, causing the unpredictable “preying on, parasitizing, infecting or outcompeting” of native animals and plants that lack evolutionary resistance, and infect native species with new diseases.
“A significant fraction of wild species, populations and genetic diversity has been lost, and at present rates a large percent of the rest will disappear in half a century.” The solution requires innovations and trade restrictions unavailable to most investors.
11. Population: a world out of-control, 10 billion by 2050
A special issue of Scientific American calls population “the most overlooked and essential strategy for achieving long-term balance with the environment.” By 2050 world population will grow from 7 billion to 10 billion, with 1.4 billion each in China and India.
Yes, experts challenge the projections, but even Bill Gates’s 8.3 billion projection may be too much to handle. Earth Institute director Jeffrey Sachs says even 5 billion is unsustainable. Meanwhile, Gates is working on population-control initiatives in vaccines, family planning.
12. Population lifestyles: American Dream goes global, demanding more
Worldwide, most people now have their own version of the American Dream. In fact, we are all capitalists: the rich, middle class and even the poor. Witness microloans in India and luxury-car sales in China.
The problem, says Diamond, is that if all nations consumed resources at the same rate as America — 32 times more resources — and dump 32 times more waste, we’d need six Earths to survive, which will eventually force even hard-right capitalists like the Koch brothers to embrace environmentalism.
Saving the planet takes political will, leaders and long-term thinking
Bottom line: The world needs new leaders fast, says Diamond. Leaders with “the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions.”
Comments: What would you do? Where to invest? Focusing on what sectors? Specific assets and investments? What kind of long-range policies are essential to be a conscious capitalist and conscientious citizen committed to protecting the planet for generations into the 22nd century.