The emergence of a new business model, effect marketing, promises to blend the needs of people and planet into a new form of capitalism.

The feature-length documentary Koyaanisqatsi, released in 1983, became an iconic, cult movie that aimed to show the relationship between humans, nature and technology. The title, meaning “life out of balance” in the indigenous Hopi language of Northeastern Arizona, was also filmed without dialogue or narration and has many interpretations.

The overall effect was to raise awareness among viewers about the wider world in which we live, creating a consciousness around our shared plight on a planet that now houses over 7 billion people.

One of the seemingly out of place people in the audience was Mike Martin. Martin’s career started as a real estate investment banker at Citibank on Wall Street. “I was basically just doing deal structuring and engineering every day,” says Martin. One weekend his best friend put on a James Taylor concert for the benefit of a wildlife organization, focused on stopping the human extinction of species.

“I looked at the purity and long-term importance of that and compared it with how I was spending my days. I reflected on Koyaanisqatsi recall thinking just how out of balance I was. I left a very lucrative career to focus my business knowledge on how to convert capitalism into capitalism for good.”

Coming from an investment banking background that had rung hollow for him, Martin decided that he needed to turn on capitalism, and spent seven years working on big campaigns that rallied against it. After seven years he realized he was getting nowhere and that he was basically just creating negative energy. “ I thought there was no way to change the system, so I began working with small companies that seemed to offer an alternative. I worked with Organic Valley, CLIF Bar, Earthbound Farm and Ben & Jerry’s and helped them grow bigger.

Another seven years went by and I realized that these type of companies only accounted for 3-5 percent of GDP, too small to make the kind of difference I had imagined,” says Martin. Martin’s work eventually started getting the attention of notable industry leaders, such as Ben and Jerry, Steve Jobs, and Lisa Jackson, the head of the U.S. EPA, with other big companies also starting to take an interest in what he was doing.

He began to realize the only way to really move the needle on sustainability and impact on a large scale was by working with big, mainstream companies. Ironically, the very companies he had run from at the outset of his career. But this time, rather than continuing to contribute to the problem, he is partnering with these companies to help them drive profits through good corporate citizenry. “Effect Partners was built on the principle that sustainability is necessary for the future of our planet, as well as for business.

To be truly sustainable, businesses need to profit from sustainability or they will not do it,” asserts Martin. And while companies must be allowed to profit, so too must consumers become more aware and interested than ever before in the social changes initiated by the brands they interact with daily. The very nature of consumerism is changing and so is the process with which to engage consumers.

In the 1990s Martin helped revolutionize social change in the music industry as the Executive Director of Concerts for the Environment. He went on to build MusicMatters, a pioneer in the world of music and sustainability marketing, and now a division of his company, Effect. Martin has advised U2, The Black Eyed Peas, Dave Matthews, Jack Johnson, and dozens of other artists, on sustainability practices and green issues around concerts and tours.

In 1997, MusicMatters played a key role in launching green energy in the US with their work with Green Mountain Energy. Offering “Green Energy” options was new at the time, so they created a grassroots connection with consumers to educate them about such unheard of concepts such as: Global warming, carbon offsets, renewable energy, and biomass. A green touring and event “bible” developed by Martin, called the EnviroRider ™ has become a global industry standard for the music industry’s environmental footprint. Collaborating with major, established brands is a key strategy for Martin, who believes these companies already have the infrastructure and influence to start shifting consumer behavior.

On the Live Nation U2 360 Tour, from 2009 through 2011, Effect brought Brita water filters on tour. Brita provided hydration stations and compostable cups to keep fans hydrated without any bottled water waste. The partnership also highlighted Brita’s Filter for Good initiative, and helped educate fans on the impact they can have simply by using reusable water bottles. He has also structured some powerful and effective programs with major companies such as Green Giant, Toyota, Proctor and Gamble and Ben & Jerry’s, all designed to catch the consumers’ attention in novel ways, effect positive change, market the brands and develop an emotional connection with the consumer, resulting in improved ROI.

For example, the average football game produces 50 to 100 tons of waste and an initiative last year with waste and food bag company Glad, saw Effect collaborate with Glad and the University of Southern California (USC) to reduce game day waste within the stadium. Glad and Effect have even developed a One Bag toolkit that provides a how-to guide on planning a waste-conscious event which can be found at gladtowasteless.com.

While Martin goes all out on creating sustainability programs for big corporations, he feels some of the meaning and context of sustainability has become a box to check for most companies. Some just ensure there’s liability insurance for the corporate officers or have a recycling program set up in their offices and think that’s enough.

“What needs to happen next,” says Martin, “is to ask what the short term AND long term Return On Investments (ROI) is on sustainability work. This is what the leading companies in the world are starting to do. In other words, how do company sustainability efforts drive profits for the company and also how do they fold into the bigger picture of the economy?”

“ExxonMobil will make $45 billion of profit in a year, yet not one penny of profit is going towards CO2 remediation. Coal energy plants give a lifetime of asthma to 30 percent of kids within a 30 mile radius of their plant, yet not one penny goes towards helping with their lifelong health costs,” says Martin.  “You have these costs that are being socialized, yet the profits are being privatized.

The whole notion is something which is a fundamental flaw of capitalism.” Martin stresses that we’ve created a capitalistic system that requires quarterly growth, yet is overlaid on a planet that has finite resources. Something has to give at some point. He’s not against capitalism and embraces it, being excited about the conscious capitalism movement and working exclusively with companies who improve the health of the people and the planet, or who are working to achieve this in their business model. Martin has unique marketing expertise from his work in the corporate world and a good grasp of marketing.

He often uncovers amazing work that’s being done by a company around sustainability, that’s not being communicated because management don’t see it for what is, or don’t want to subject themselves to criticism. Sometimes the marketing officer will suggest doing a green campaign, which is completely disconnected from what’s happening from a sustainability perspective, and it all ends up as green washing because it wasn’t thought through properly.

“When companies start realizing the power of combining their marketing departments with their corporate social responsibility departments, we’ll see the emergence of a new business relationship that has proven to drive profits: effect marketing,” says Martin.

 

In March 2012 a Goldman Sachs vice-president, Greg Smith, set the media world alight, and caused much anguish among financial institutions, when he resigned from Goldman Sachs in the most public way possible: an explosive reveal in The New York Times, which claimed the Goldman culture to be “toxic and destructive.” In this exclusive interview, Real Leaders asks him to reflect on this time and share his vision for the future of big finance.

What made you take on one of the most powerful financial institutions in the world? What did you hope to achieve?

First of all, I wasn’t trying to take on one institution – I was trying to do what I thought was the right thing. My message is not just about Goldman Sachs, which is very similar to many of the other major banks that survived the financial crisis. Some of it has to do with my generation, versus my parent’s generation. I grew up being very idealistic. Parts of big finance have become a golden goose that many know has serious ethical problems, but no one’s willing to talk about it. This became increasingly uncomfortable for me. To a large extent I drank the Kool-Aid at Goldman Sachs.

I was one of the heads of the summer intern program, used to fly to Stanford twice a year and recruit new people. I was very proud of what I would call the “old culture” of banking, that was focused on the long term, and where you aspired to develop ten year relationships with people. In the early 2000’s, the majority of regulations that kept this old banking system in place, got overturned. Derivatives got deregulated and leverage limits disappeared, which was actually a symptom of a much larger problem – that the industries with the most money effectively controlled politicians, who changed the rules in order to get more campaign contributions.

With less rules, the old world model of, “Let’s first do right by the customer and the profits will follow,” turned into, “Let’s make five times more profit today, because we’re only in this business for another five or six years.” There was an attitude of not caring what happened next.

And it wasn’t illegal either, as long as they followed the letter of the law. It was a scenario of drawing a line between what’s legal and ethical, and what was being done beyond that line, that many know is unethical. It was usually justified because their bosses were doing it or they were getting paid a lot of money to do it and customers weren’t going to realize anything for a long time.

This became something I didn’t want to do anymore. Much has been made of the letter I wrote, that was published in the New York Times, but this came at the end of five months of writing my thoughts down and realizing that I could actually do something positive.  I thought that if companies were not willing to change this culture internally, maybe forcing the change would work, because frankly, the systems are far too complex for politicians or the public to fix. I came to believe that people within the finance industry could become a part of positive change.

It was almost like a calling, that it was the right thing to do. If I hadn’t done it I would have felt I’d done the wrong thing by not speaking up.

Where does your idealism come from?

I am not sure but possibly from my upbringing in South Africa. I come from a Jewish family where my mother set a good example for us growing up. I always tried to be one of the kids who spoke up when I saw something being done wrong, instead of keeping my mouth shut. My upbringing in South Africa also made us see a lot of injustice and terrible inequality which I have thought has had a strong impact on me and the way I look at the world

Can you give an example of the real world effects of casino style Wall Street speculation?

During the European sovereign debt crisis I saw the panic being used as a reason to confuse investors and drum up business. I saw the very direct and very real world effect on hundreds of thousands of citizens in Greece and all over Europe, who were protesting on the streets, while behind the scenes the major banks were helping the governments gerrymander the books and make things look rosier than they were.

This was not a game anymore and brought financial issues into the real world very clearly. Banking is a vital service in society but the industry lost sight of what banking was. Previously it was about giving loans and helping people invest, but by 2012, 75 percent of revenues were being generated in a casino-style trading environment, which did not have any societal benefits.

Is the secretive world of big finance finally opening up?

No, I don’t think so. I’ve devoted time to understanding how the process works between banks, politicians and the public and what I’ve concluded is that the opaque system as it is today has purposefully been created. At worst there are politicians and regulators taking campaign contributions to keep quiet or change the laws, and at best there is just not enough knowledge around the intricacies of finance.

It seems purposefully so, because the more murky things become, the more money banks can make, without people directly being able to accuse them of doing wrong. In 2010 President Obama passed a massive financial reform bill, yet most people don’t know that only two thirds of that bill has ever been implemented. All the major structural causes of the financial crisis, such as derivatives, proprietary trading and being too big to fail, are all still in existence.

They have not been fixed and close to $500 million of lobbying money has been spent trying to kill these bills. I have spent time trying to advise some politicians in Washington DC, as well as regulators like the Federal Reserve, the U.S. Securities and Exchange Commission and the Office of the Comptroller of the Currency. I have been trying to bring a “no spin” approach of what’s right and wrong in banking and ways in which it potentially risks bringing down the whole economy.

What opportunities have arisen as a result of your decision to expose Goldman Sachs and the world of finance?

I must stress that Goldman Sachs is just one bank among many doing very similar things. Everyone has seen the $13 billion JP Morgan settlement, the Libor fixing scandal, the FX trading scandals and countless others. People said I couldn’t say the things I said, that Wall Street wouldn’t be happy, but the truth is Wall Street is made up of both banks and investors.

Investors don’t want to have the wool pulled over their eyes or have hidden fees extracted out of their accounts. People forget that trillions of dollars of public investments are wrapped up in things like teachers pension funds, charities and endowments. These investors are a vital part of Wall Street too, and should be just as much a part of the dialogue as banks. What I’ve been trying to do, aside from helping with some of the regulations, is to help empower investors, who’ve been very receptive as they’re worried and befuddled by this opaque system.

The answers you get from investors with $100 million pension funds who still do business with these banks, is that they’re too scared to ask questions or that there’s no competition, or they have no other choices. The two classes of investor, considered the least sophisticated by large financial institutions, are public investors, such as pension funds and charities and surprisingly, ultra high net worth individuals.

This is not because Wall Street perceives them as not being smart, but because they know that these CEO’s and business leaders spend 99 percent of their time focusing on running their own businesses, not watching and understanding their investments. They’ll extract as much money from a high net worth investor as possible, up to a point that the person does not get suspicious.  In my mind, that’s not banking. Banking should be about trust and fiduciary duty.

There seems to be an ongoing trend of people exposing the secretive dealings of large corporations and institutions. Julian Assange and Edward Snowden come to mind. What is causing this? 

I wouldn’t associate myself in the same category as those two individuals, more in the category of the millennial generation. Some people will say that capitalism is about doing anything as long as you don’t go to jail and if the person on the other side of the transaction is foolish enough to fall for it. It’s a case of “buyers beware,” and they should have known better. Business needs to have more idealistic leadership, where you do things right by the customer and know that profits will follow. Over the long run you will do far better.

We live in a world where its all about the short-term, maximizing your personal bonus and exiting the industry leaving whatever mess is left behind for someone else to clean up. I’m hopefully part of a movement that is steering us back towards doing the right thing with customers, having a long-term mindset and having transparent earnings that your investors can understand. Ironically, openness will actually increase stock valuations.

If investors have greater transparency into where banks’ revenues are coming from, they will value the stocks at higher levels. Leaders who have a long-term mindset and an ethical framework of capitalism realize that brand is important, customer loyalty is important, and not only important for six months or the next quarter, but for ten or even a hundred years, to guarantee the future existence of your franchise.

The Silicon Valley mentality is a good example. They make a lot of money but they create a product that actually does something, it actually adds some kind of value that changes the world in a meaningful way. The financial industry at times moves money around in ways that people don’t understand, and extract a fee to do that, until they’ve got a $10 million bonus in their pockets. Young people have realized this and become disillusioned. They want to live their lives along a moral framework.

Some people think they can change the system slowly from the inside and others, like you, decide enough is enough and accelerate the process. How do you suggest people begin this change?

Our parent’s generation was about loyalty to a company, regardless of what the company was doing. Our generation has a loyalty to values. I saw someone in the Christian Science Monitor write about this. When the money is so great and people are caught up in a system, it’s very hard for people to voluntarily change the game en masse. To find a solution you’d think we might need to elect politicians, who’ll do the right thing, but I don’t have a lot of faith in politicians because of the powerful lobbys and big money that’s around to defeat new legislation.

Change must come from people within the industry, who have a long-term mindset and who are not trying to hurt their industries, but rather make them stronger, more stable and more sustainable. I think it’s people’s moral obligation to try to change their organization for the better. Most people, behind closed doors, will admit that the ingredients of our financial crisis still exist and there are many bubbles still being inflated. Another worrying fact, that most people don’t know, is that almost 80 percent of stock traded on the NYSE is done by computer.

This doesn’t create a stable environment for the average investor. Companies are making billions of dollars profit by placing computers on a stock exchange and effectively extracting money. Computers are able to buy stocks in a split second, long before any manual purchase by an investor, and they’re effectively making an immediate profit of one cent, millions of times over. At the end of the year they have billions of dollars profit.

Why is it fair that some wealthy hedge funds can place their computers closer to the stock exchange than others, to take advantage of latency times on networks? Unfortunately, as the economy gets better, the crisis recedes into memory and the public just wants to get on with their lives. One example of changing things would be to educate retirees on how financial markets work, who could then apply pressure to fund managers who control the hundreds of billions of dollars of retirement money.

If the public doesn’t understand these things, the problems can go on forever. We’re seeing more and more black swans, hard-to-predict and rare events in history. These are only supposed to happen once every few hundred years, but are now happening once every ten years. It’s not a healthy sign. We need to make finance simple again, make it transparent, regulate derivatives, get rid of proprietary trading, makes banks smaller and educate the public. Yet, banks have a vested interested in keeping things complex.

Are you planning to set up a new company to achieve this or would consulting as an individual be more effective?

I am already consulting to and advising some investors on how to invest their money efficiently at lowest possible cost and without hidden fees. Another goal of mine has been to talk about and promote the Dodd-Frank Act in the U.S., which is aimed at protecting consumers and improving accountability, in particular the Volcker rule, designed to eliminate casino-style betting and speculation that played a key role in the 2007-10 financial crisis.

I’m also trying to speak to as many students as I can around the world about finance. The students expect me to tell them not to go into finance, but I actually tell them finance is great. The reason I went into finance is because I was interested in speaking to the smartest investors in the world. Young people should go into finance, but with their ideals intact. When they see things happening that are not in line with what they believe, they can make a huge difference from the bottom up, by changing the ways things are done and speaking up.

Do you think that large amounts of money can still be made in an ethical manner? Profit is usually made at the expense of others, that’s the nature of capitalism, but do you think people have to adjust their expectations?

I’m absolutely a capitalist, and every one of your readers is a capitalist, but I think we need to define what free market capitalism really is. There are a few principles you have to have in place for capitalism to work: an even playing field where everyone has an equal shot at making money, no-one taking short cuts, and no-one with inside information. Everyone needs to understand the rules and it all needs to be played out openly where everyone can see it.

In finance two thirds of money is made behind closed doors, unregulated, no one sees these things publicly. That’s not capitalism anymore; it’s a rigged system. New kids, right out of college and university, start copying what their bosses are doing and the cycle continues. This doesn’t happen over a few days, but over many years, so leaders should check their business principles daily to ensure they’re not surprised to find how far the culture has strayed in ten years time.  

Entire civilizations and cultures have eroded from bad financial judgments. Are there any lessons from history from which we can learn?

If we could go back in time to the 1990s and ask people if Arthur Andersen would still be around in the future, or ask the same about Enron, people would have bet significant money that these were real brands, pillars of business that would be around for a very long time. We forget that it can disappear in a second.  Once you’ve lost hold of your culture, your ethos and what you’re in business to do, things can unravel quickly.

Look at the big banks that are incurring billion dollar settlements, you would think the financial media would be calling for the leaders’ heads, but instead they’re praising them by saying how well they’ve survived the crisis. Because they’re making huge profits, it’s assumed they must be the best in the business.

The real test would be whether customers trust them, this is more important for forecasting long-term success, not by measuring quarterly profits. You should be asking whether you have a strong enough ethos in place, with a strong enough customer base to ensure you’ll still be doing business in 50 or 100 years time. If you only see your customers as a tool for profit you’re getting into very dangerous territory.

How do we create a world that is both economically prosperous and has conquered our numerous challenges, such as runaway consumption and resource scarcity?

The more that businesses can move into products and services that are net positive to the world, the more there will be profits to be made in these new spaces. Look at the many new and innovative environmentally impactful businesses that have emerged. Look at Tesla (founded by South African Elon Musk) – a company that makes electronic cars, or any of the many businesses that are trying to look towards an energy and environmentally sustainable future.

It shows the public is hungry to do things the right way. Show people a great product that’s good for the world and you’ll make a lot of money. Things that people recognize are essential for our collective greater good get people excited. The first movers into that space will capture huge pieces of the pie and build mindshare with consumers.

What characteristics do you consider essential in a real leader?

I was once told about a leadership idea that I found very powerful called the “authenticity test” or “onstage/offstage test”. Does the leader act the same way and treat respectfully all employees of the company, from the post officer, janitor and first year out of college, through to the CEO or chairman of the board? Is the leader the same authentic person in his or her personal life as in professional life?

I have often found that leaders who pass this test are not only the most admired leaders up and down the chain of command, but they are often also the most successful and effective. Because they are real and show their true selves at all times. Seeing the CEO of the company devote five minutes of undivided attention to the newest member of the team seems like a simple idea, but it has a profound impact on the culture of a place and sets the right tone from the very top down.

 

Whether you like it or not, you’re affected by addiction. Do you have more than four employees, four friends or four family members? If so, the odds are that you’ll encounter this problem sometime in your life. Statistics show that one in four families are touched by addiction, meaning that most of us will need to face ongoing challenges with this growing epidemic.

A unique drug rehabilitation center in Italy is giving the world hope by showing spectacular results, by transforming lives through creating amazing art and businesses that fund much of their overhead. Drug addiction can be a lonely and desperate place for a young  person, caught in a spiral of self-loathing and rejection by society. Many degenerate into crime, either from a need to financially fuel their habit, or because bad company and drugs always seem to find each other.

This drug rehabilitation center in the Rimini province of Northern Italy is showing that traditional ideas around the treatment of addiction no longer needs to be about deprivation or punishment. San Pantrignano runs its free rehabilitation program like a business, and the human dividends are showing.

The organization welcomes young men and women with serious problems linked to drug addiction, completely free of charge. They do this without requesting any kind of contribution from their families and without any state funding.  The organization also practices no ideological or social discrimination when admitting residents, who come from around the world. Letizia Moratti, former mayor of Milan, and an Ambassador and President of San Patrignano, is extremely proud of a recent achievement: presenting their impressive statistics to the World Bank.

The figure that raised eyebrows was the 72 percent success rate of people who had fully recovered after completing the rehabilitation program. She is working on raising awareness for their work, at the world’s largest drug rehabilitation center in the world. The current success rate in the U.S. is around 30 percent, where rehabilitation is typically short and expensive.

Moratti is keen for other countries to adopt their winning formula.  “Since our inception, 25,000 people have been successfully treated,” says Moratti. “We also make a concerted effort to help our residents acquire a professional certificate or diploma, that can be used to help rebuild their lives.”

It must be working, as 96 percent have found full-time employment upon leaving San Patrignano.

Calling the residents “guests” and  teaching them commercial skills within disciplines such as food, wine, home design, publishing and event management, might also be a reason why the waiting list to join has grown. Residents arrive with a bleak future and leave with skills that make then employable. Two other branches of the project have since been established in Novafeltria and Trento, enabling more young people to be accepted.

The value of their work has culminated in the community being recognized and accredited by the United Nations with the status of “Special Advisor to the Economic and Social Council of the UN.” They also received a visit from UN Secretary General, Ban Ki-moon,and were honored to address the General Assembly of the UN in June, to mark the worldwide day against drugs. Empathy and compassion have existed around San Pantrignano from the start. In 1985 the owner of the property, Vincenzo Muccioli, renounced his ownership of the 300 hectares of land and donated it to the San Pantrignano Foundation, in which he himself had played a part in establishing.

Muccioli’s family had a history of caring for the sick and offering alternative medicine to people as part of a cooperative they’d set up on the property in 1978. Moratti’s family joined him in 1979 and they’ve grown the organization into a social enterprise that currently houses 1,300 young men and women.

Residents at San Patrignano learn how to produce goods that are sold around the world. A collaboration, earlier this year, with leading architects and designers, such as Daniel Libeskind, Chiara Ferragamo and Arnaldo Pomodoro, has culminated in an exhibition of high-end furniture and décor that made its way from New York Design Week to cities across America. Other lines of goods produced by residents of San Patrignano are impressive as well.  They’ve produced 500,000 bottles of wine and attracted Japan as a major client, currently contracted to export  100,000 bottles a year to that country.

They produce cheeses, meat, ham and salami and run two restaurants, one of which is a Pizzeria, one of the most successful Pizzeria in Italy, and currently showing good profits. A textiles division produces scarves, bed linen and leather objects such as bags and belts. To add to the diversity, they also breed dogs and care for lost and abandoned animals. Not content to just keep residents busy, Moratti continually reminds them of their overriding goal: quality. “This is how we give our residents pride and dignity – quality is essential.

We give them the best teachers and training to produce the best quality,” she says. The community generates Eur15 million of revenue per year, but productivity remains low, due to young people wanting to leave the organization to practice their skills in the real world. This fact does not bother Moratti much. “We run a non-stop training process, that’s why productivity is not high.

We teach people to reach their potential and the work they do here is a tool to help them regain self-esteem, responsibility and dignity,” she says. “This is not something we can put a price to.”

While San Patrignano far exceeds most rehabilitation centers, with its innovative revenue generation by residents, it’s the human capital that excites Moratti the most.

“Two hundred of our residents are currently spending time with us as an alternative to jail time,” says Moratti.

“They are offered a home, healthcare, legal assistance, and the opportunity to study, learn a job, change their lives and regain their status as full members of society.” A policy decision they have taken is not to accept money from residents, their families or the state. It even extends to former residents who have left and want to donate. “We believe in this strongly,” says Moratti. “All the boys and girls find themselves equal and don’t feel different from each another.

The rich and poor, the ones who can pay and those who can’t, are all treated equally. As a result, when they have a crisis or face difficulties they are more willing to listen and trust in the process.” The fact that San Pantrignano is free, is very important for the success of the community, yet the staff turnover rate is high, probably due to the fact that the model they’ve adopted is a long-term recovery program, and can take it’s toll on the 109 volunteer staff.

Moratti values the donors and partnerships they have in place, yet also works hard at alternative fundraising ideas. The beginning of November saw six former drug addicts representing San Patrignano in the New York Marathon. Besides the runners pursuing their dream, it was also an opportunity to create visibility for their cause and make their small village in Italy known to people in need around the world.

“We have more than 100 boys and girls that have come from more than 30 countries,” says Moratti.

“From the U.S., Canada, Russia, Brazil, Columbia and  Eastern Europe, so we are truly an international facility for anyone in need.” The rest of the world is coming to this Italian coastal town for another reason too, Moratti regularly hosts government representatives from other countries seeking to replicate the San Patrignano success at home.

An agreement with Qatar to train volunteers at their facility is underway and discussions with Indonesia have begun. To attract interest, Moratti also hosts a yearly delegation of NGO’s from around the world to receive training, which might even teach us something from their perspective. “We don’t believe we’re the only answer, we love to share our  experiences with others,” says Moratti. In addition to the commercial projects at San Patrignano, there’s also a huge hidden saving that is directly linked to keeping residents off the payroll of the state.

“Over the last 25 years we’ve prevented our residents spending a total of 4,000 years in prison. This equates to a saving of Euro 300 million, or Eur16 million per year,” says Moratti.

Last year San Patrignano saved the state Eur32 million. This makes San Patrignano a likely candidate for the new social impact bond concept. Goldman Sachs in New York recently floated a $9.6 million bond for the Adolescent Behavioral Learning Experience program, a new curriculum that seeks to bring down the number of youth offenders going back to prison.

In 2012 the New York City Department of Corrections created a sensation by asking for private, corporate investors. In a new way of thinking about financing social goods, private capital is used to finance a government-sponsored program. Based on the success of the service, the government pays a dividend based on the level of impact achieved.

“This is a new frontier in financing, because it will help the state to pay for success,” says Moratti.

A few pilot projects in Italy have seen the percentage of repeat offences committed by incarcerated youths drop from 98 percent to 19 percent. The basic principles on which San Pantrignano is founded are respect for life, oneself, others and the environment, are universally recognized by various religious faiths around the world.

Moratti believes that this universal approach, combined with strong leadership, is where many organizations and companies should be heading. “Motivation, passion and an ability to convey to others what you believe are signs of a good leader.

I don’t believe in stand-alone leaders, only collaboration,” says Moratti.