Building Bikes For Social Mobility

Bicycles are a manifestation of what John Dengler has been trying to do with the homeless of Tampa, Florida for years. The city suffers from the second-highest rate of homelessness after Los Angeles, mainly due to temperate winters that allow those on the streets to survive year-round.

“In our society, if people don’t have monetary value, they don’t have value,” says Dengler, who was on a mission to find gainful employment for those who sometimes found a part-time job across town, but still needed a way of getting across a city of 2,500 square miles.

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As Dengler traveled around Tampa, he began noticing something strange. Thousands of abandoned bicycles – in police impounds, chained to city buses, around colleges, condos and apartment blocks. “Literally hundreds of thousands,” he says. “You couldn’t collect them all if you tried; just another example of our wasteful society.”

Seeing homeless people the city didn’t seem to value, and bikes that no one cared for, Dengler decided to put them together to create something new – Well Built Bikes. The organization teaches people on the streets how to build and recondition bicycles to sell at a fraction of a new one. Early challenges included by-laws preventing the homeless from gathering for too long in one place, complaints from neighbors wanting to keep undesirable elements away from gentrified suburbs and frequent run-ins with the law, that once saw Dengler getting beaten up.

The barrier to entry is low: a bag of cheap hand tools and parts that are easily sourced from discarded bikes. The organization prefers to bring in bikes that need some attention as it forces people to work. A sense of belonging and purpose has rippled through the Tampa homeless community. The Earn-a-Bike program earns a destitute person a free bike after putting in 10 hours of maintenance work at a Well Built repair shop.

“One part of our mission is to get homeless people to build their own bikes to use as personal transport; it transforms lives,” says Dengler. “It’s become a game-changer for those seeking work. When you own reliable transport you suddenly have access to job opportunities across the city, no longer constrained by the distance you can walk.” One guy enjoyed his newfound freedom so much he even cycled across the state to visit his son in prison, a distance of a few hundred miles!

You’d think local bike shops would feel threatened by thousands of cheap bikes flooding the market, but Dengler notes that the cheapest bike in a commercial bike shop is still way more than their most expensive bike and doesn’t pose any threat. “We operate somewhere between a bike shop and a pawn shop,” he muses.

There’s a common attitude that views for-profit ventures differently to charities. For some reason, people feel they must stop giving when a venture turns from non-profit to profit. This misguided way of thinking must change, according to Dengler. “Putting food or money into someone’s hands is good, but how about exploring a more lasting solution. Buying a sandwich for a homeless guy is great, but he’ll be hungry again in four hours and has to wait for you to reappear. There’s an unhealthy relationship between rich and poor in the world, yet I think they actually need each other desperately. Poor people have a unique vantage point on how these systems work and rich people have stuff poor people can use. Look at Well Built Bikes – we started a business from rich people’s junk.”

The sense of pride, belonging and purpose felt by those involved in Well Built Bikes can best be illustrated by a story Dengler recently heard. A homeless guy involved in the program came across a middle-class girl on an expensive bike that had broken down. He took out his bike tools and had her back on the road in minutes. It must have been the last thing she expected and helped in some small way to bridge the divide between the haves and the have nots.

Dengler is on a mission to get these two worlds to talk. He believes this is how innovation will emerge and the healing process between disparate communities will begin. “Watching the homeless standing proudly with their bikes, saying ‘I built this, I rode here,’ is incredibly empowering. People become alive again. This potential has always been inside; they just needed someone to believe in them.” 

www.bikeshoptampa.com

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Flower Power Helps Heal The Violence in Baltimore

“I’m an urban change warrior,” says Walker Marsh of Baltimore, who uses vacant lots in the inner city to grow high-quality flowers, herbs and vegetables. The tall, soft-spoken urban farmer is sitting on the floor, gluing sunflower petals to a discarded stop sign with childlike wonder.

Baltimore is not known for its softness, and you can’t help wondering how someone such as Marsh succeeds in a city that has seen gun crime, rape, robbery and murder spike many times the national average. In 2015, the death of Freddie Gray in police custody touched off riots and a crime wave that caused the highest per capita death rate ever recorded in the city’s history.

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In tough, crime-ridden communities, you usually have two choices: become like them or submit to them. No one expects you to start growing flowers.

When Marsh couldn’t find a job, he decided to create his own. Tha Flower Factory now trains young horticulturalists who are recruited from the juvenile justice system and together they are changing East Baltimore – one flowerbed at a time. Brightly colored patches of flowers stand out starkly against the dull, faded inside walls of buildings that were demolished years ago and never rebuilt. Empty lots in cities become magnets for the homeless, drug dealers and dumping grounds for waste, but Marsh has transformed them into green lungs and living symbols of growth and renewal in places of despair. The flowers get sold to local stores, restaurants and businesses.

In poor neighborhoods, a bunch of flowers is seen as an extravagant luxury, yet Marsh has seen this narrative change and now gets enormous support from total strangers. “If people grow up in a beautiful environment, they become beautiful,” he says. He’s had tools donated and people honking their horns in support as they drive by. “Vacant lots serve as shortcuts for pedestrians, and many people stopped when they filled with flowers. I think they thought it had become private property, but now they know we want them to walk through and smell the flowers,” he laughs.

Another positive spin-off is that sunflowers draw lead and arsenic from the soil in a process called phytoremediation. It’s not widely known that sunflowers were planted around Chernobyl to remove some of the radioactive isotopes released by the nuclear meltdown. Vacant lots in cities are notorious for being polluted with toxins from old housing stock and paint, and Tha Flower Factory is helping clean the environment and make it less toxic for inhabitants.

Taking a break from his sunflower petal design, Marsh looks up and considers what a real leader might be. “Leadership should foster a feeling of togetherness,” he frowns. “When I work with the 14-year-olds in the flower gardens, I get much better results when I approach them as a peer, not as a ‘leader.’ There’s an old African proverb, ‘I am what I am because of you,’ and that resonates deeply with me.”

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Welcome to The Tipping Point of Capitalism

At a time defined by political scandals, nuclear threats, and turbulence on Wall Street, business is society’s unlikeliest hero.

A series of watershed statements, reports, and initiatives from some of the world’s most well known capitalists is heralding a new zeitgeist, during which businesses are expected to exist to benefit society – not just shareholders.

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We call this approach social purpose: a company’s aspirational reason for being beyond profits, grounded in humanity. Social purpose is no longer nice-to-have, but must-have. It’s long-term, embedded in operations, results-driven, and people-first. That’s a historic change.

We first connected business with social impact in the 1980s, linking Rockport with walking, Reebok with human rights, and Avon with breast cancer. All during a time when business was rooted in Milton Friedman’s profit-above-all ethos.

Over time, companies shifted their approach to include corporate citizenship, sustainability, and shared value. Companies saw the benefits of operationalizing these philosophies, as societal engagement began to penetrate product sourcing, operations, employee and community welfare.

During the last decade, those at the vanguard placed purpose firmly at the center of their organizations. Yet they were in the minority.

Now, a growing chorus of voices is calling for companies to embed social purpose into their operating models. It’s not a request. It’s a demand to boost societal impact in lockstep with bottom line growth.

This is heralded by the Larry Fink letter; the Just Capital JUST 100; the Bloomberg Gender Equity Index; Millennials demanding a new way to work; E&Y’s Business Case for Purpose; the Imperative Global Purpose Index; the B Team; and others.

Capitalism is changing. Dramatically.

BlackRock: Social purpose must be sustainable

It’s the letter that shook the business world: BlackRock CEO Laurence Fink’s January 2018 memo to CEOs, not-so-subtly titled “A Sense of Purpose,” challenged companies to adopt a greater sense of responsibility or “lose their license to operate.”

Even as we may coast into a bear market, Wall Street’s extraordinary performance over the past two years offers companies a pivotal choice: “
succumb to short-term pressure to distribute earnings, or make investments in employee development, innovation, and capital expenditures necessary for long-term growth,” says Fink.

E&Y’s Business Case for Purpose report affirms Fink’s theory that companies with a clear reason for being, supported by social purpose, can accelerate bottom line growth. Fifty-eight percent of companies that prioritize purpose gained more than 10% growth in revenues over three years. In that time, purpose resulted in companies making significant changes in their approach to strategy development, business operating models, as they more deeply integrated and delivered social purpose.

Yet, E&Y found that the biggest hurdle to embedding purpose in an organization is short-term shareholder pressure, underlining Fink’s point that social purpose requires a long-term strategic and financial commitment to be sustainable in both bull and bear markets.

Just 100: Employees must come first

Another unlikely leader is heralding capitalism’s new zeitgeist.

In 2013, billionaire hedge fund manager Paul Tudor Jones II founded Just Capital, a nonprofit challenging companies to operate in a way that “reflects the true priorities of the American people.” Just Capital is in the second year of releasing its JUST 100 list, which indexes America’s 1,000 largest publicly-traded corporations based on the “issues Americans care most about.”

Both years, the American public pegged “workers” as the most important issue, topping customers, products, environment, communities, job creation, and shareholders, in descending order. Providing a living wage, healthy benefits, safe working conditions, work-life balance, and career development resources signify the most “just” companies – underscoring the call for people before profit.

We concur with the public: Employees are a company’s most significant asset.

Bloomberg Gender Equality Index: Women are the new power players

The future is female, and we’re not just talking about the Women’s March and #metoo. With women making up nearly 47 percent of the U.S. workforce, many of the world’s largest companies have realized how critical it is to have female representation on boards and in the C-suite.

Bloomberg’s newly-introduced Gender Equality Index (GEI) shines a spotlight on the top 104 global companies leading in gender equality. An evolution of the Bloomberg Financial Services Gender Equality Index (BFGEI), the GEI is industry-agnostic and measures gender equality across 53 data points including internal statistics, employee policies, community support, and gender-aware products of companies in 24 countries and regions.

Companies on the Index have 26.2 percent female representation on boards, compared to the average 12.7 percent in the ESG universe. Women in GEI-indexed companies hold 26 percent of senior leadership positions, and 19 percent of executive officer positions.

The Index serves not just as a barometer for gender equality in the workplace, but a set of rigorous standards that companies — like early adopter L’Oreal – can embed in operations.

This isn’t just a feel-good movement. For further proof, women-led Fortune 1000 companies outperform the S&P 500 with three times the returns of male-run businesses, according to a 2015 Quantopian study. Putting women in power pays.

Millennials: Business must be accountable to society

More than 75 million-strong, Millennials continue to shape consumer and societal trends in a profound way. They are consumers, professionals, community members, and activists making up two-fifths of the U.S. working population. They hold close to 20 percent of leadership positions in the U.S., and by 2020, they will make up half of the world’s total workforce.

Businesses of all sectors need Millennial talent, and one of the best ways to attract them is through a values-based culture that emphasizes the confluence of business and society – 76 percent of Millennials consider a company’s social commitments when deciding where to work, with 75 percent willing to take a pay cut to work for a “responsible company.”

Solving social or environmental challenges is the second most important career goal to Millennials surveyed by IBM, following the ability to make a positive impact on their organization. Achieving financial security falls second to last.

Channeling Fink, 87 percent of Millennials believe the success of a business should be measured in more than just financial terms, and that success relies on long-term sustainability rather than short-term profit maximization. Perhaps a surprising insight from a generation known for flicking from one trend to the next.

Yet there is an “impact gap” between the potential and actual impact Millennials believe companies are driving. And they want to be the ones to help close it.

Tax Cuts and Job Acts Bill: An opportunity to invest in society

U.S. corporations are facing a tremendous opportunity thanks to the Tax Cuts and Job Acts bill.

Analysts believe the majority of companies will use their tax reform benefit to increase dividends and spur buybacks, or fund acquisitions and pay down debt. Some companies are already going beyond, announcing extra year-end bonuses to employees, increases in wages, new training programs, and accelerated hiring plans. The New York Times is encouraging accountability by tracking these commitments, noting that while more than 40 S&P 500 companies have increased bonuses or wages, only 9 have publicly announced increases to their charitable giving at time of publication.

This is also a pivotal moment for businesses to increase their social impact commitments, as analysts forecast steep drops in both government and charitable funding as a result of the bill. Nonprofits are facing a reduction of $12 billion to $20 billion of charitable giving, as reported by the Tax Policy Center, and will increasingly look to the private sector to fill critical gaps.

How companies use their tax reform benefit is up to them, but given that investments in corporate responsibility can increase shareholder value by up to $1.28 billion over a 15-year period, it would be a wise use of some of those funds.

What the new zeitgeist will look like

Business and social purpose are now one and the same. This is the new way to operate, lead, innovate, hire, collaborate, and profit. It’s capitalism’s moment: the opportunity for companies to address relevant social issues and benefit their business by deepening current commitments or creating a bold new vision and the innovative strategies to match.

Paul Polman led the way with his commitment to embedding sustainable living into the core of Unilever’s business and brands, to remarkable success. In 2016, Sustainable Living products delivered 60% of Unilever’s overall growth and grew 50% faster than the rest of the business — a direct result of Polman’s long-term, steadfast commitment to the power of purpose.

Creating a business that operates for society and with society demands long-term vision and a flexible framework to support it. To do this, we believe that companies must embrace the following critical principles:

  1. Lead from the C-Suite to set the social purpose vision as organizational business strategy. This leadership is critical to embed a company’s reason for being, beyond profits, into culture and behaviors.
  2. Operationalize and embed social purpose to align with the competencies and priorities of the business and its employees. This is more scalable and sustainable as stated by Peter F. Drucker, “Every single social and global issue of our day is a business opportunity in disguise.”
  3. Put employees front, center, and first in the development and delivery of social purpose. This engenders trust and affirms authenticity internally and externally.

I’ve made the advancement of social purpose my mission for more than three decades, and have never seen such a seismic shift. The more companies serve society, the more society will respond and business can grow.

It’s a capital idea, and its time has come.

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The Man Ensuring Humanity Doesn’t Drown in its Own Garbage

Ibrahim AlHusseini is not your typical investor. A Palestinian refugee born in Jordan and raised in Saudi Arabia, he attended the University of Washington where his fascination with sustainable economics was born.

He started his first company out of his college dorm room, and soon made millions. He could have stopped there, but everything changed during a trip to the Red Sea. There, he was stunned to find the beaches and scuba destinations he loved as a child choked with plastic. The fish were gone, the coral was dying, and sewage and chemical spills had turned once-bright blue waters a sickly gray.

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AlHusseini decided that personal wealth hardly mattered if the planet was dying. So, he set out to fix our global municipal waste problem.

According to the World Bank, the world generates around 1.3 billion tons of municipal waste each year, a figure that is expected to increase to around 2.2 billion tons by 2025 and double again by 2050. Put another way, that’s around 3 pounds of waste produced per person, every single day. And what’s worrying is that our relationship to waste is wasteful itself. This is a resource that should be reused, but instead we mostly bury it in the ground or dump it in our oceans.

Ibrahim AlHusseini

AlHusseini’s company, FullCycle Energy, finances global power plants that turn that waste into clean fuel to bring affordable, sustainable power to millions in need in the developing world. FullCycle Energy uses gasification: the conversion of carbon-laden waste into “syngas” for fuel production. This technology exposes waste to extreme heat to break down and strip out dangerous, pollution-causing compounds, which can then be disposed of. Modern gasification does not produce the toxic gases generated by incineration and can be built and operate at half the cost, allowing for much faster global adoption.

Significantly, AlHusseini’s technology lowers these emissions more effectively than other renewable forms of energy production, like solar or wind, as it it does not require toxic and expensive forms or storage like batteries to function reliably. Modern gasification uses the world’s never-ending supply of municipal, agricultural and industrial waste to produce a clean, versatile and valuable synthesis gas that can be used to create liquid fuels, bio plastics, energy or many other forms of value. It’s cost-effective, and something that rapidly developing (and polluting) countries can get behind.

AlHusseini sees the global waste problem as the symptom of a large problem. “Capitalism as we know it must evolve in order for us to progress as a society,” he explains. “Today’s capitalism has pulled billions of people out of poverty and disease and continues to play a positive role in the human story. Still, there have a multitude of massive unintended consequences that we haven’t even begun to measure or understand.”

“As a collective society, we used to think that our oceans were big enough to dilute the pollution produced by industry, or that our oxygen supply was infinite enough that we could withstand air pollution forever,” he continues. “But now we know.”

So, what do we do about it? Government action hasn’t been sufficient, and philanthropy will only make a small dent. For the solution, AlHusseini looks to impact investing: investing in new ventures that solve the planet’s most pressing social and environmental problems, and that also return a profit.

AlHusseini is hopeful. The world’s largest financial institutions including Goldman Sachs have launched impact-investment funds. Stocks of socially conscious companies like Tesla, Patagonia and Ben and Jerry’s are soaring. Established organizations such as the World Economic Forum, G8, and Aspen Institute all exploring ways to get involved. Social entrepreneurism is on the rise. And individuals with modest incomes are getting involved too, wanting to both make money and grow a venture that makes the world a better place.

“Impact investing is a core part of ‘Capitalism 2.0’,” believes AlHusseini. “As more people – not just the Bill Gates of the world – get involved, impact investments will increasingly be a tool to create a better world that benefits the economy, society and the planet. This is only the beginning.”

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Desert Event Discusses Global Abundance and Sustainability

Real Leaders recently attended the annual GreenBiz ’18 event in Phoenix, Arizona – for the group’s yearly temperature-taking of trends, challenges and solutions around sustainable business.

It’s been 25 years since the founders of this Oakland, CA-based media group, Joel Makower and Pete May, began feeding us intelligent, focused content on the convergence of business, technology and sustainability. Since 1991, the pair have chronicled thought leadership and shared insights on how environmental responsibility can combine with profitable business practices. In so doing, they’ve amassed a substantial following of sustainability professionals.

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The 25-strong team focuses on energy, cities and buildings, transportation, supply chains and the circular economy and has contributed to driving the sustainability agenda deep into the business practice of the world’s largest corporations.
The GreenBiz Group has shown us how to “operationalize sustainability” through its website, events, peer-to-peer network and research arm and the annual flagship event in February (they have others) provided the perfect backdrop to engage more than 1,100 loyal followers throughout a four-day journey.

The event kicked-off with a high-level review of their annual research survey “The State of Green Business”, compiled in conjunction with Trucost, the sustainability research arm of S&P Global. The report, in short, assesses how, and by how much, companies are integrating sustainability into their business strategies and operations. The report served as a springboard for healthy debate in the plenary discussions.

Some of the highlights included Bill McDonough, Chief Executive of McDonough Innovation delivering a thought-provoking speech on “The Creation of The Perception of Scarcity Where Nothing Exists,” where he presented findings on the size of the current financial markets related to global GDP and the potential of the circular economy.

In a “fireside chat” with Makower, Erin Roberts, the Head of Capital Strategies at JP Morgan Chase & Co, walked us through the opportunities for climate-smart investments in emerging markets to 2030. She explained how the role of institutional investors, banks and governments may need to change to capitalize on these opportunities.

Lise Kingo, CEO & Executive Director of the UN Global Compact, walked us through The Sustainable Development Goals (SDGs) – precisely what they believe is needed to mobilize action and deliver on a global scale.

The importance of fiduciary responsibility in changing corporate attitudes towards environmental and social issues formed part of a panel discussion entitled, “The Role of Company Boards in Driving Sustainability.” Rose McKinney-James, Managing Principal of McKinney-James & Associates, Darla Stuckey, Executive Director of the Society for Corporate Governance and Katherine Smith, Executive Director of Boston College for Corporate Citizenship, all eloquently laid out how executive leadership and board oversight could contribute to this vital issue.

These four sessions, in particular, resonated for me, mainly because they each outlined the need for the finance sector – in the broadest sense – to step-up its game and adopt a leadership stance in driving sustainable development.
This “call to action” continued in many of the event’s break-out sessions. There were presentations, discussions and workshops on “ESG Reporting” (Environmental, social and corporate governance) – a component of the sustainable development mix that I believe to be critical.

All the topics, issues and sessions that GreenBiz Group amplify are important. They are all interlinked and interdependent. Sustainable development will only be attained via a systemic approach yet without “finance” and the ability to converge financial and non-financial reporting to reflect materiality better, we will struggle to see the change we need to see. CEOs, CFOs and their respective sustainability teams all need to speak (and report) in the same language.
This sentiment is somewhat reflected in a recent report by KPMG, one of the Big4 accounting and advisory firms, in which they state that many corporates are lagging behind in aligning their internal processes to the SDGs.

But, where there are laggards, there are leaders too. Some of the corporations that attended and demonstrated their leadership in this space were BASF, Novozymes, Johnson & Johnson, Steelcase, Iron Mountain, Intel, NRG Energy, VF Corporation, Unilever, Ford Motor Co., General Motors, Campbell Soup Company, Microsoft and The Dow Chemical Company.

These organizations have, to varying degrees, mapped their day-to-day processes against the SDGs to help them better understand the material aspects of their business processes, which ones need attention, and which practices they should change, shift or abandon.

For example, BASF, led by Charlene Wall-Warren, Director of Sustainability, has over the past 18 months mapped eight aspects of materiality across all 17 SDGs to help them better understand where an impact can be made. Claus Stig Pedersen, Head of Corporate Sustainability at Novozymes, has developed tools to assess solutions and connect them to the SDGs. By doing so, they have created 15 “impact categories” in their business.

Mapping programs such as these aim to deliver short-term results and long-term profitability – socially, environmentally and financially. They contribute towards the Sustainable Development Goals too.

At Real Leaders, we are advocates for the Global Goals and strive to highlight inspiring examples of leaders who are doing well by doing good while delivering shared value to all stakeholders.

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7 Sustainable Investment Tips

Socially responsible investing is a global phenomenon. It relates to any investment strategy which considers both financial return and social good to bring about change. We asked seven experts what makes an investment sustainable and how money can be a force for good.

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1. Brigitte Baumann, Go Beyond Early Stage Investing.

I consider an investment sustainable if the products and services it provides, and the way it builds itself, balance the “3Ps”: Planet, people and profit. Despite what some may think, profit can coexist well with social and environmental impact. In my investing business, I evaluate social impact companies in the same way I evaluate all other companies: To be sustainable they must have sources of revenue to grow and sustain their mission. The difference being, of course, that social impact companies must also deliver positive social change in addition to the financial return it provides to investors.

Investments from business angels such as myself can turn money into a force for social good. One of the big reasons I’m a business angel is because I can contribute to economic growth and towards a better world. I do this by choosing to invest in entrepreneurs who address critical global challenges while considering the needs of people, the effects on the planet and how they will create a profit in everything they do.

Angel Investing is the combination of art, science and psychology. Go with your instinct.

One of my investments, Barefoot Power, that produces small solar lighting systems for developing countries, is an example of something that allows me to align my money with my values. I would encourage investors to build a diversified portfolio and ensure they also add value to the entrepreneurs they fund by going beyond the money. Keep some money aside to continue supporting entrepreneurs who are doing well – financially and creating positive change in the world.

Approach investing with the realization that there will always be changes in markets and societies that affect a sound investment: world events, politics, high or low valuations and the time to exit. Also, value systems will always change, as we’re currently seeing with the rise of the shared economy and advances in technology. Artificial intelligence is an example of something currently influencing how we invest.

www.go-beyond.biz

 

2. Ron Cordes, Cordes Foundation.

An intentional focus on measuring the environmental, social and governance metrics of an investment qualifies it to be called a sustainable investment. Of course, all the other traditional financial metrics are important too. Social impact investment can realize profits in the same way that traditional investments do – investing in a great entrepreneur with a promising business model, or a great team of fund managers with a strong pipeline and investment process. I first ask: “Is this an encouraging ‘investment,’” then dig deeper into the measurement of “social impact.” If impact doesn’t exist, I look at how we might add it.

If we don’t pay enough attention to the investment part, we could end up making a disguised charitable grant from our investment portfolio. When we created the Cordes Foundation in 2006, one of our missions was to prove that capital can deploy in multiple ways to serve a mission – in our case global poverty and the economic empowerment of women. We believe that the 100% impact portfolio we’ve built and managed is a great example of how capital can be a social force for good.

Be fearful when others are greedy, and greedy when others are fearful. – Warren Buffett

In the social impact space, great intentions and a virtuous model to create social impact are not substitutes for a well-constructed business model – you don’t get a “pass” on all the challenges of the capital markets just because you’ve incorporated a social purpose with an investment. We’re entering a period where governments, in the U.S. and abroad, are likely to be investing less in addressing social and environmental issues. It’s imperative for impact investors to “step up” and accelerate the flow of capital into investments that will help solve the looming global challenges we are all sure to face.

www.cordesfoundation.org

 

3. Tim Freundlich, Impact Assets.

At best, sustainable investments are a holistic set of commitments that run from a supply chain, to value chain, to product or service, with deep commitments to employees, investors, and customers around creating value for society and the environment. Other than the ‘old fashioned way’ of creating profit, impact ventures have added additional layers of opportunity. Increased customer loyalty can be monetized, and risks can be reduced by applying good sustainability practices. Greater long-term profitability is possible because of the resilience these types of investments bring.

When you buy breakfast, be aware of who is a chicken and who is a pig. Chickens have given eggs. Pigs have given bacon from their hides. There’s a difference. Be aware of ‘skin in the game’ when assessing an entrepreneur and the investor ecosystem.

  When I aligned all my investment assets with my values, I created a two-fold “good.” One was at a portfolio level, by actively getting behind ventures that matter, building companies that enabled the flow of capital towards this good. Secondly, I created physical spaces in which social entrepreneurs and investors could excel and connect, such as at Impact Hubs and the SOCAP Conference. On a personal and family level, I started a conversation about how to be in sync with the world and what kind of world we wanted to leave to our children. Nothing trumps tenacity and quality entrepreneurs. Not the intention of how much impact you’d like to create, not a business idea, not even a ton of capital.

Execution, creative course-correction, and staying power are what makes the difference between success and failure. My personal mantra is increasingly that I should be “all in” for impact. This sentiment isn’t a tentative commitment. The context and times we live in drive this. The clock is ticking on climate and injustice. The value of time and the urgency of positive impact demands a departure from the cautious – to a stance of immediacy.

www.impactassets.org

 

4. Shazi Visram, Happy Family.

Sustainable investment should be a business model that creates efficiencies, rather than being a drain on natural resources. It must avoid creating challenges for the future, and rather help solve problems. Impact investments must be evaluated with the same competitive metrics of a typical business yet must also deliver a Social Return on Investment (SROI) – something harder to create.

Approach it in the same way as if you’d decided to set higher standards for yourself every day; improving and evolving. Pure-hearted, wealthy individuals, who are deployed to better our world through philanthropy to invest in businesses, will drive progress for social good. Invest with your mind and gut. If it’s too good to be true, it usually is.

If it’s not lucrative enough to meet criteria you need for your portfolio, don’t use your investment allocations as charity. Investors should focus on authenticity in the businesses they support. This will drive a higher success rate with millennials who demand transparency and purity of purpose.

www.happyfamilybrands.com

 

5. Kristen Bauer & Stephanie Cohn-Rupp, Threshold Group.

An investment can only be “sustainable” if it has positive social, environmental or governance outcomes beyond a financial return. Typically, impact investments share two characteristics: intentionality and measurable performance.

Seeking profit through social impact investment is the same as in traditional investing, with the difference being that due diligence extends beyond traditional investment characteristics and is profoundly influenced by the unique values of
the investor.

Money can be a force for good in many ways. The best example I can currently give is the way investors have reacted to the approval of the controversial Dakota Access Pipeline. Concerns around negative environmental impact have caused many socially responsible asset owners to act. They have divested and withdrawn their money from the financial institutions that support the pipeline.

Spend less than you earn. Recognize the power of saving and compounding interest. Utilize retirement plans for a tax advantage and look to use a myriad of assets (time, treasure, talent, action) to make this world a better place.

Financial success looks different to different people and depends on individual financial goals and personal values. The best advice I can give is to be very thorough in your choice of financial advisor – it can be life-changing if you get it right.

We’re expecting an increased volatility in the financial markets for the latter part of this year, yet values systems are changing too– for the better. The 2017 Annual Impact Investor Report produced by the Global Impact Investing Network states that capital invested in social impact will increase by 17% this year. We see this as a great reflection of investor values.

www.thresholdgroup.com

 

6. Fran Seegull, U.S. Impact Investing Alliance.

A sustainable investment should consider measurable social and environmental impact as well as financial returns. The impact can come in a variety of forms – quality jobs, housing, clean energy, and water or boards and management with diversity. An excellent example of a private company creating impact is Revolution Foods that serves more than one million affordable, healthy school lunches every week in public, charter and private schools.

This example shows how capital can be a force for good, but the long-term financial imperative to invest is growing too. With a global population of 9 billion people forecast for 2050, increased effects of climate change and dwindling natural resources, we should see stakeholder value increasingly driving shareholder value – not detracting from it. Grants and government aid alone are insufficient to meet these challenges.

Women and millennials stand to benefit from a $40 Trillion transfer of wealth in coming decades.

We need to harness the power of the capital markets and investment portfolios. Fortunately, the growing impact investment movement, with investments of more than US$8 trillion in the U.S., may be a solution. Impact investing now makes up US$1 of every US$5 investment dollars.

Women and Millennials stand to benefit from a $40 trillion transfer of wealth in coming decades, and 3/4 of them say they will invest in things that align with their values. The truth is that all investments have positive and negative impacts and it can be difficult to identify and account for them.

@franseegull

 

7. Roger Ying, Pandai.

To make an investment sustainable we look at the core business model behind it: revenue, costs and the cost of capital. We ask if it can turn a profit and continue over a period, keeping all stakeholders in the investment happy. Social impact investments tend to lead to the ‘forgotten’ markets. In China, for example, this might be the rural farmers, which usually means a highly underserved, inefficient market with weak competition. In these type of markets, there is decent profit to be found, although it’s mostly about controlling the risk.

Look at your risk tolerance, relative to the reward.Understand where you are and what type of investment risk you’re prepared to take at specific stages of your life.

As an example, we may finance organic farmers in Yunnan province with a US$15,000 loan, which in one year can return a US$15,000 net profit. Compare this to the US$3,500 a year they make from low-level jobs, and it’s evident that this formula creates poverty alleviation. The investment also helps provide high-end, organic pork that fetches a premium in cities. The biggest investment tip I can give is that you should understand the asset you’re investing in from the ground up; understand the fundamentals of the asset.

This year is a fascinating one. There are many political changes and geographic uncertainties. Value systems are changing, and we should be asking ourselves about the intrinsic value of money in our bank accounts – affected by central bankers inflating the world economy. Look for assets that create real value or have intrinsic value over a length of time.

www.pandai.cn

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China’s Control of Cobalt May Leave Tech Investors Feeling Blue

Charles Marlow, the fictitious steamer captain from Joseph Conrad’s late 19th century novella Heart of Darkness was drawn to the vast “blank places” on the map that surrounded the Congo River. Today, the Democratic Republic of Congo (DRC) is no longer a blank place on the map, but it’s still a land gripped by instability. 

It is also where China has a choke hold on the world’s supply of cobalt. That poses a real risk for tech companies that rely on cobalt for lithium-based ion batteries. 

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Under the right circumstances, the combination of democracy and capitalism can lift humanity to a better version of itself. Those circumstances have never been present in the DRC. Since King Leopold II arrived from Belgium in the late 1800s, being born in the Congo has offered few blessings. In 2016, the United Nations ranked the DRC 177 out of 188 in their far reaching Human Development Index. 

Cobalt has been as much a curse as boon for the DRC. When state-run mining collapsed in the war-torn country, unregulated “artisanal” mines filled the void. These mines are often dug by hand in terrible conditions, far too often by children. By UNICEF’s estimates, 40,000 children work the cobalt supply chain. Amnesty International now considers cobalt a “conflict mineral” and title of the organization’s 92-page report on the mines evokes King Leopold’s ghost: “We die for this”.  Sadly, these are the “good jobs” in the DRC.

Although the Dodd-Frank Act does not yet list cobalt as a conflict mineral, U.S companies recognize the moral hazard. Earlier this year, Apple stopped sourcing hand-mined cobalt from the DRC and Tesla pledged to source its cobalt from North America. Unfortunately, finding a conflict-free supply is next to impossible. Cobalt sourced from artisanal mines is too easily mixed with large scale operations. The bigger problem for tech investors, however, may be Silicon Valley securing any supply at all.   

Last year China made the biggest private investment in the DRC’s history, when China Molybdenum announced it was buying U.S.-based Freeport McMoRan’s stake in the Tenke copper mine for $2.65 billion. Why is copper significant? Cobalt is produced primarily as a bi-product of nickel and copper mining, and the Tenke mine contains one of the world’s largest known deposits of copper and cobalt. In one stroke, China gained control of over 60% of the world’s cobalt supply.

This could be a problem for tech companies. Lithium-ion batteries already require 40% of the world’s cobalt.  For example, cobalt comprises around 15% of the Tesla/Panasonic electric vehicle (EV) battery. That means Tesla would require more than 6% of the current worldwide supply to both meet its pledge to source North American cobalt and meet its 2018 production targets. According to the United States Geological Survey, North America wouldn’t even produce enough for the Model 3 alone.

Keep in mind, Tesla is just one player in the growing demand for EV batteries. Morgan Stanley estimates EVs will represent 15% of the global car market by 2025. Much of that is driven by China which already represents 50% of the global market. By most estimates, China is growing at 200% per year (three to four times faster than the US and Europe). As is the case with most mass markets, China matters. 

For now, history is repeating itself in resource rich central Africa.The world is closing in like it once did on its elephant herds and rubber. For the people of the DRC, let’s hope this time, the results are different. And for investors, risk isn’t a blank place on the map. You just need to know where to look.

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Hunger Uptick in Africa Can be Reversed

FAO Director-General José Graziano da Silva has expressed optimism that the recent uptick in global hunger levels will be reversed and that Zero Hunger remains attainable – but added that doing so will depend on boosting the resilience of communities in Africa, where current hunger trends are particularly worrying.

The most recent UN global report on world hunger found that, after decades of decline, the number of hungry people on the planet went back up in 2016, largely due to conflict, climate-related shocks and economic slowdowns.

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Trends in Africa helped drive that increase. Some 23 percent of people in sub-Saharan Africa suffered from chronic hunger in 2016, while in East Africa, 34 percent of people did, according to the report.

“Even in some countries that have been successful at reducing food insecurity faced a setback, especially due to prolonged drought caused by the impacts of El Niño,” Graziano da Silva noted today in a speech at an event on Zero Hunger held during the FAO Regional Conference for Africa (19-23 February, Khartoum).

However, the FAO Director-General also expressed optimism that an already-emerging and energetic response by the international community to recent negative hunger trends will help turn the tide.

“I firmly believe that 2016 was a point outside the curve, and not a reversal tendency,” he argued.

Causes For Optimism

One reason for optimism is that political will to redouble anti-hunger efforts is running higher than ever, Graziano da Silva said, as evidenced by the issue’s high prominence during the recent African Union Summit attended by the continent’s top leaders as well as UN Secretary-General AntĂłnio Gutteres – FAO today launched “Achieving Zero Hunger in Africa by 2025. Taking stock of progress”, which contains the proceedings of the African Union High-Level Meeting on the topic.

Two other factors provide additional cause for optimism, according to the FAO Director-General.

For one, the Green Climate Fund has become operationally and is now channelling funding to developing countries to help them respond to climate change, including its impacts on food insecurity. Additionally, there are strong signs that the world economy is recovering, which will create favorable conditions for development.

“Zero Hunger is attainable. It depends on us,” the FAO Director-General exhorted his listeners.

“It is time to redouble our efforts, and push for political commitment and timely, concrete actions such as never seen before,” he said.

In her statement to the FAO Regional Conference, African Union Commissioner of Rural Economy and Agriculture, Josefa Sacko, said that on the Commitment of Ending Hunger by 2025, “we are lagging behind and there is still a lot of work to be done going forward on ending hunger by 2025,” however also noting there was cause for optimism.

“We have the opportunity to pick out some key lessons, exchange views on what might impede our progress in achieving food and nutrition security and continue to strengthen coordination and partnerships among us,” Sacko said. She mentioned the Africa Solidarity Trust Fund as a way to help move things forward.

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Facebook Makes it Easier to Help During a Crisis

Starting today, organizations and businesses can post in Facebook’s Community Help, so that they can provide critical information and services for people to get the help they need in a crisis.

This announcement comes hot on the heels of Facebook’s decision in January to tackle fake news and promote articles and sources that are “trustworthy, informative and local.” According to CEO Mark Zuckerberg, “There’s too much sensationalism, misinformation and polarization in the world today.” While many media outlets, publications and brands are struggling to understand how the new Facebook rules will affect the visibility of their content on the world’s largest social media network, it’s clear that Zuckerberg is not just censoring – he’s also proactively adding new features to boost this new direction.

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This past year people came to Facebook around some of the worst crises across the world to let their friends and family know they’re safe, learn and share more about what’s happening and help communities recover. In particular, many used Community Help to ask for and give help in times of crisis — everything from providing shelter, to rescuing people from flood waters and gathering and distributing clothing, food and water.


How to create a Community Help post

  1. Go to Crisis Response on Facebook
  2. Select the Crisis page you’re interested in, then click the “Community” tab to go to Community Help
  3. Find Help or Give Help by creating a post and commenting on other people’s posts. You can also message people directly from within their posts.

Since launching this feature a year ago, people have posted over 750,000 comments and messages in Community Help for more than 500 different crises. During Hurricane Harvey in the US in August last year, brothers Austin and Nathan grabbed their boat after seeing Community Help posts from people who were trapped and rescued 20 people from the rising waters. 

After the attack in Barcelona in August, Javier took to Community Help to seek psychological support for his friend who witnessed the attack. Lina, a psychotherapist, responded and the next day she met up with Javier’s friend in-person.

People from more than 450 different cities across India took to Community Help to offer help to those affected by the flooding in Mumbai in August last year and after the earthquake in Central Mexico in September, volunteers arrived within an hour to help prepare food for victims.

On average, for every post requesting help, there are five posts offering help. 

But people helping people is only part of the solution. Organizations and businesses also play an integral role in responding to crises and helping communities rebuild. Organizations and businesses can now get involved by posting in Community Help, opening up new possibilities for getting help to those in crisis.

Facebook is beginning to roll out the feature to Pages for organizations and businesses like Direct Relief, Lyft, Chase, Feeding America, International Medical Corps, The California Department of Forestry and Fire and Save the Children and will make the feature available to more in the coming weeks.

Allowing organizations and businesses to post in Community Help will give them new ways to reach communities impacted by crises and provide resources to help them recover. For example, they might post about helping people find everything from free transportation to supplies and connecting volunteers with organizations that need help.

“Facebook’s priority is to build tools that help keep people safe and, when crisis does strike, make it easier for them to get the help they need to recover and rebuild,” said Aften Meltzer of Facebook.

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Sustainability Programs Don’t Always Lead to Sustainable Business

Can I do this forever? That’s the key question to answer if you want to figure out if something is sustainable.

Plastic, for example, has been part of our daily lives for the past fifty years or so. Used in everything from food containers and toys to bottles and bags, one of its main qualities – its durability and the fact it takes millions of years to decompose – has become its biggest drawback. And simply, it’s unsustainable for us to continue consuming such vast quantities.

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The key idea of sustainability is that we must act responsibly so that resources on this planet will be able to support the many generations to come. Companies, of all shapes and sizes, have announced ambitious goals from sustainable sourcing and reducing waste to so-called “decoupling” in which the production grows without corresponding increases in environmental pressure.

But how are we getting things wrong? From my experience, it’s far easier to measure both the financial and social benefits if companies have direct control over how solutions are implemented, such as reducing water or inputs in production processes. Sustainability programs, which invariably have complex systems and multiple actors, tend to flounder when there’s a lack of direct control or direct relationships in the supply chain.

Take the garment industry in Asia, for example – a major employer with a vital role to play in alleviating poverty. Typically, brands in developing countries outsource the manufacturing to suppliers many thousands of miles from their headquarters. The brand is several steps from the process and may be unaware that child labour is being used, or that workers are inadequately trained on barely livable wages in unsafe factories.

One response has been to hire certifiers to inspect for child labour or unsafe conditions and provide grants to NGOs. But is there a sustainable “livelihood” solution for these children and workers or just risk mitigation for the brand? What happens when the grant to the NGO dries up? Is there a viable platform for continuing to deliver a service such as a skills or education program?

Bangladesh, for instance, ranks below nearly every neigboring country on literacy, education and skills. More than eight out of ten laborers is either illiterate or has no formal schooling. An incredible 60% of pupils fail to complete primary school and just 5% have received some sort of training. It’s holding Bangladeshis back from securing quality jobs.

To do better, governments and businesses need to take a longer term view. Investing in developing the technical skills of workers is a sustainable approach.

One such program is Sudokkho, which focuses on private sector training for the poor, particularly women. Trainees contribute hard-earned money to the cost, which alongside the garment industry’s financial support, makes the training sector less reliant on subsidies.

Within two years of the program beginning, more than 10,000 people were placed into semi-skilled or skilled jobs. Almost half (4,825) – mostly women – were sewing machine operators. The increased skills resulted in an additional ÂŁ4.26 million of net income for those who had undergone training. Ultimately, the five year program aims to help improve the skills of 100,000 people by 2020.

The benefits are not only increased productivity but an improvement in the quality of products. Companies stand to benefit financially from a more efficient and competitive process – the time it takes to get a t-shirt, for example, from the factory to the shop floor is less. Better skills also means higher pay and improved conditions for workers.

The key to success is that all of the actors in this system, including major global retailers, move from a short term transactional relationship based on price, to a longer term relationship where they all have an incentive to invest in the transformation of the supply chain. Over time, skills development pays for itself, like any good investment.

Now that’s sustainable. And yes, we can do it forever.

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