A model of good money management embraces ESG. 

By Hank Boerner

We’ve commented here on “Universal Ownership,” which like the term “SRI” can have several meanings and dimensions, depending on the speaker (and those who hear her and interpret the words). I like the concept of UO as the communities’ monies, with funds contributed into the larger pool, partially and in the main by individuals and government, and other institutions, to be managed by independent fiduciaries with very clear duties and responsibilities for the ultimate beneficiaries. Think of pension funds (corporate and public sector), mutual funds, and endowments and the concept of monies being universally-owned.

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“Tonight we move forward a new idea, that capital is used for meaning.” Naomi Smith reports from SOCAP/Europe.

Originally posted on the CSRwire website.

By Naomi Smith

“This impact investing space is kind of like the big bang,” says Brian Walsh, director of Liquidnet for Good. My first night at the SOCAP/Europe conference and Brian has summed up the 100+ page masters thesis I have just completed in these two words. As we stand together in the Beurs Van Berlage historic stock exchange in the centre of Amsterdam, surrounded by 650+ attendees from over 50 countries, I see exactly what Brian means. All around us are investors and entrepreneurs who share a common vision of a blended value approach to the way we should do business. Age old capitalist thinking in which profit maximization has stood as the cornerstone of purpose is being shaken up by this small yet rapidly growing industry of social business where financial returns are partnered with social and environmental impact.

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What would happen if Wall Street went away?

As part of the New Economy 2.0 series

By David Korten

The first reaction of most people to the call to shut down Wall Street is one of jubilant enthusiasm. The second reaction is, “But what about my 401(k) retirement account?” The same question might be raised about our credit cards, mortgages, and medical, homeowners and auto insurance.

Money may be nothing but a number, but survival in a modern society is impossible without basic financial services. There are, however, better ways to deal with our very real financial needs than those presently offered by Wall Street. Here are some examples.

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Some CEOs are bucking the Wall Street trend to move the needle on CSR.

By Ann Charles

It’s impossible to discuss the role of Corporate Social Responsibility (CSR) in today’s business without acknowledging the elephant in the room. The economic collapse that began in 2007 was largely the result of a colossal failure of leadership in both the finance industry and U.S. government. The once venerable investment banking industry has devolved into an unsupervised and unregulated market, a giant that casts its dark shadow over the entire economic system. And while most of us are still wading through the debris of the Great Recession, Congress has yet to enact any truly game changing regulation, and Wall Street compensation still incongruously exceeds the pay of today’s brain surgeons.

For a comprehensive history of how we got here, watch Inside Job, but here is the abbreviated version: The banking community created complex high risk financial instruments whose singular purpose was to drive maximum short term profits. The government did nothing to protect us, except to determine taxpayers must bailout these companies that were considered too big to fail. The credit crisis, housing market collapse, illegal foreclosures and long term unemployment ensued, while the banks continue to thrive, rewarding themselves with lavish pay and bonuses.

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Impact investing is a hot topic, but Version 2.0 would improve the odds.

By Dr. Matthew Kiernan

“Impact Investing” is generating an enormous amount of “buzz” these days – even if it is talked about much more than it is practiced. It has become particularly popular among foundations, endowments and high net worth individual investors. While the precise meaning of the term is still being defined and debated, in essence, impact investing is a style that explicitly pursues social and environmental objectives as well as purely financial ones.

In many cases investors are willing to sacrifice some of the latter to achieve the former. Typically, impact investing occurs in the emerging markets, in private transactions and at a small scale: to date the average investment has been in the USD 1 million range. Typical projects might include the purchase and distribution of cleaner-burner cooking stoves or solar-powered lamps, to rural villages in Africa, Asia or Latin America. All very good stuff, but…

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Research shows, efficiency investments pay back fast.

By Rosalinda Sanquiche

The Green Transition Scoreboard® (GTS) tracks private sector investments since 2007 in green technologies, including investments in Efficiency and Green Construction. Efficiency in use of energy and materials is basic, often simple to implement and offers the fastest, best bang for investments.

Of the $2 trillion tracked by the GTS, only $282 billion has gone to Efficiency and Green Construction, just over 14 percent, making this huge potential the most challenging to quantify. The McKinsey & Company report, Unlocking Energy Efficiency in the US Economy, estimates efficiency investments can yield $520 billion in returns in the USA alone by 2020. According to The Energy Report: 100% Renewable Energy by 2050 by WWF and ECOFYS, maximum energy efficiency will become central to all economic activity, saving nearly £4 trillion a year through reduced costs by 2050.

PriceWaterhouseCoopers confirms efficiency investments’ rapid payback periods from 12-24 months – compared to renewables payback of 7-10 years. Bloomberg Businessweek reports expected revenues for energy efficiency to expand by 13% annually through 2020.

A flood of reports from 2010 and early 2011 agree efficiency is the critical measure countries can take toward energy independence, supporting business and managing climate change: “Energy Efficiency Plan 2011,” European Commission; “A New Growth Path for Europe,” German Federal Ministry for the Environment; “Sizing the Climate Economy,” HSBC; “Energy Efficiency: The Untapped Business Opportunity,” Carbon Connect; Survey on Economic Recovery and Sustainability, SustainAbility and Globescan.

GTS defines efficiency to include hybrid vehicles and other products requiring less energy to run. Green Construction is defined as built to LEED standards or incorporating multiple green building elements above that of the standard used at the time of original construction. Figures include green engineering and design services; lighting, HVAC and water heating equipment; and materials such as insulation and windows. Since public-sector information is not recorded, the GTS total includes some government buildings – appropriate, given the Low Carbon Construction Innovation and Growth Team, UK Department for Business, advises governments must take leadership to overcome the ubiquitous perception that “only regulation will create demand for energy efficient retrofit.”

Private sector investing is doing an admirable job of driving the transition, despite low government support. The GTS subtracted figures for government buildings, energy generation equipment and energy monitoring services and hardware and still found billions of dollars invested in efficiency. 

Greater efficiency leads toward greater employment. Compared to other options for improving energy performance of buildings, the European Commission found implementing low or zero energy/carbon buildings/passive house requirements gave the largest energy and carbon savings and resulted in the largest number of jobs created.

Even the US Department of Defense recognizes benefits of efficiency, establishing a Strategic Sustainability Performance Plan that incorporates improving energy efficiency, acknowledging energy independence as a security issue. Similar plans have been issued from the US White House, Department of Transportation and other government entities, all of which can follow private sector initiatives solidly leading the way.

About Rosalinda Sanquiche

Rosalinda Sanquiche, MA, is Executive Director of Ethical Markets Media and principal author of the Green Transition Scoreboard® Report. Formerly, she worked for the American Wind Energy Association in Washington, DC, and for the North Florida Land Trust. She has written on the construction industry and environment for Builder/Architect and various outlets and has served on the advisory board of the EthicMark® Award for advertising. Rosalinda currently serves as treasurer for the Northeast Florida Green Chamber and is an advisor to Collins Capital Management.

About the Green Transition

“Efficiency: Bedrock of the Green Transition” is part two of five exploring the sectors driving the Green Transition. Stay tuned for Green Transition Talkback posts on Corporate R&D, the Renewables sector and Consumer Demand, contributed by members of the Green Transition Scoreboard® research team. For part one in the series, read Hazel Henderson’s “Good News on the Green Transition.” For more information, please view the associated press release.

Talkback Readers: What investments in efficiency has your firm made or is planning to make? Share your experience on Talkback!

New reports show shifting investment greenward is prudent and do-able.

By Hazel Henderson

Ethical Markets Media (USA and Brazil) now reports over $2 trillion invested in the green private sector since 2007 in the 2011 Green Transition Scoreboard® Report. Thus, we call for pension funds to shift 10% of their assets under management (AUM) away from risky hedge funds, dark pools and commodity ETFs into cleaner, green companies. Importantly, the 2011 Report includes news of two key studies from Mercer in New York and WWF/Ecofys/OMA in Amsterdam that buttress our call.

Mercer’s report, Climate Change Scenarios – Implication for Strategic Asset Allocation, upped the ante. Backed by IFC and 14 pensions funds with AUM of some $2 trillion, the report calls for 40% of institutional funds to switch toward “climate-sensitive assets” both for hedging risk and capturing opportunities in low-carbon companies. Mercer’s Craig Metrick told us this huge research effort will be ongoing with annual updates.

Meanwhile, the WWF/Ecofys/OMA report, The Energy Report, shows how the global economy can shift to “100% Renewable Energy by 2050.” We will be further analyzing this expansive report and interviewing their researchers as to exactly how this goal can be reached.

Both studies call for accelerating upfront capital investment so as to scale the green technologies already competing price-wise with fossil fuels and nukes: energy efficiency, wind and solar PV. This is also why we at Ethical Markets Media track these private sector investments and benchmark $1 trillion per year through 2020 to bring them to scale. While capital cost may be higher for some technologies, the fuel is abundant and free. All these studies point out the absurdities of 90% subsidies still given to fossil fuel and nuclear energy, decades after their maturity, while renewables and efficiency receive less than 5%.

Globally, two additional studies now indicate the green transition has reached a tipping point. The Threshold 21 World modeling in “Towards a Green Economy” finds investing $1.3 trillion annually (some 2% of global GDP) over 10 key sectors can kick-start the green transition, reduce poverty and limit wasted resources. The UN Environment Program and World Meteorological Organization issued a summary “Integrated Assessment of Black Carbon and Tropospheric Ozone,” reconfirming what I and many others have stated: the obsessive focus on carbon dioxide (CO²) and its pricing has always been too narrow, and should include soot, VOCs, methane, mercury and other chemicals from fossil fuels harmful to humans and the environment. I have studied atmospheric chemistry since founding Citizens for Clean Air in 1964 and remember the helicopter ride we arranged for Senator Robert F. Kennedy to show him all the sources of air pollution around New York City and how the costs were “externalized” from company balance sheets and national accounts (GDP). Kennedy went on to become our champion and made his famous speech in 1968 at the University of Kansas! 

All these systemic reports finally may shift governments, pension funds and companies toward greener policies worldwide.

About Hazel Henderson

Hazel Henderson, D.Sc.Hon., FRSA, founder of Ethical Markets Media, is a futurist and author of award-winning Ethical Markets: Growing the Green Economy. Her editorials are syndicated worldwide by InterPress Service. She leads the Transforming Finance initiative, created the Green Transition Scoreboard® and developed with Calvert Group the systems alternative to GNP, the Calvert-Henderson Quality of Life Indicators. In 2010 she was honored as one of the “Top 100 Thought Leaders in Trustworthy Business Behavior 2010” by Trust Across America.

About the Green Transition

“Good News on the Global Green Transition” is part one of five exploring the sectors driving the Green Transition. Stay tuned for Green Transition Talkback posts on Efficiency and Green Construction, Corporate R&D, the Renewables sector and Consumer Demand, contributed by members of the Green Transition Scoreboard® research team. For more information, please view the associated press release.

Talkback Readers: Are we at a tipping point for a Green Transition? What will it take to shift investment? Share your thoughts on Talkback!

Defining the green economy means defining prosperity.

By Philip Monaghan

According to media reports and unofficial briefings the UN has finally given up on a credible, binding global climate deal on carbon reductions ever happening. Commentators are saying the North and South will never be able to agree on common ground, politicians do not have the appetite to think long-term anyway, and to make matters worse, the world recession has given professional sceptics everywhere a wonderful excuse not to take a difficult decision anyhow.

It would appear all hope is not lost however. The UN is already making manoeuvres with its ‘Plan B’ – the green economy.

A round of applause please for those UN folk; they do not give up on a good idea easily. The thinking here is that by focusing on close-to-home, populist issues – like growth, jobs and skills arising from building a new generation of electric vehicles – politicians and the general public will warm (no pun intended) to the idea of taking climate action. In short, economic development is a good news story, asking voters to pay more for the gasoline in their cars is a bad news story. One only needs to look at the interest China’s new 5-year plan aroused recently to see this in action because of its focus on low or zero carbon industries.

So is this a viable alternative or a regressive step by the UN?

The answer is ‘yes.’ Not wishing to confuse you, what I mean by this is if we get the working definition right, it could be a game changer. If we fail to put in place the appropriate governance arrangements, however, it could make matters much worse.

Starting with a clear, agreed, commonly used definition may seem an academic point. Yet it is crucial to it working at all. Yes, it must be about uncoupling growth in wealth from growth in emissions. But more than this, it needs to be about shared prosperity; if there are to be winners and losers as a result of the transition, then it should not be the poor or global South that fails to benefit. There is work already afoot from various organisations like the World Future Council and collaborators to come up with useful ideas on such a definition, but hopefully this is the beginning of the conversation not the end, as we need the discussion to be led from or with Southern partners.

Turning now to governance, it is vital appropriate local and national governance arrangements by the OECD and others are put in place to hold any firms or governments accountable for the plethora of new public-private partnerships being established to develop major urban infrastructure (rapid transport, smart grids) or special trading zones (wind or solar industrial parks) to ensure there is no cynical stripping of community assets or green patents. Especially so as public spending shortfalls owing to the global recession may weaken the negotiating power of our world city mayors and leaders.

The Earth Summit 2012 – the Rio+20 anniversary – is a legitimate and timely forum to begin to craft a better understanding of both these issues, given it will bring together best minds from local government, industry and NGO. But only if the two issues are seen to work in tandem will they become critical to climate resilience. Let the big debate begin.

About Philip Monaghan

Philip Monaghan is author of the acclaimed new book Sustainability in Austerity, which has been praised by respected commentators from the UN, Harvard, WWF and Accenture.

He is a strategist and change manager in the fields of economic development and environmental sustainability.

Talkback Readers: What suggestions would you bring to the table at the Earth Summit 2012 for a successful transition to the green economy? Tell us on Talkback!

SRI by any other name continues to help the sustainability movement grow.

By Joe Sibilia

For many years language used to describe the movement towards a more economically just and environmentally sustainable society included many terms. One of the most popular terms has been ‘socially responsible investing’ (SRI). Today, there’s movement away from this term and towards a new incarnation of the same idea – ‘impact investing.’

It seems the philanthropic industry (at least in the U.S.) is moving closer towards measuring the impact of investments, as opposed to citing a specific (social) initiative, and calling for a public/private partnership that includes philanthropy, creating what some others call the ‘fourth sector.’ It’s a vibrant effort. 

The Rockefeller Foundation in participation with the Initiative for Responsible Investment (IRI) at Harvard University and InSight at Pacific Community Ventures recently published a report, Impact Investing: A Framework for Policy Design and Analysis, that argues ‘investments that effectively deliver social benefit invoke a strong case for government support.’ The language used in the report moves the conversation closer to impact as opposed to social, as the term of choice. This report comes on the heels of the seminal report from the IRI titled: From Transparency to Performance – Industry-Based Sustainability Reporting on Key Issues. From Transparency to Performance argues government mandates to broaden disclosure be not meant purely as a measure, but as a way to get a more generally acceptable set of reporting requirements to compare and contrast peers.

SRI grows up to become impact investing, and impact investing is attracting the attention of public policy initiatives. Sometimes a shift in language is the impetus to advance ideas.

Government, business and philanthropy sectors cannot individually solve the plethora of problems facing developing countries and the planet as a whole. The recent financial crises in Greece and the U.S. (and elsewhere) demonstrate the need for greater transparency, especially in financial instruments. Hiding under the cover of homeownership as a right and ample credit as a privilege, financiers took advantage of a gullible public. If we begin to measure our investments in relation to its impact on solving social and environmental problems, we begin to look at the process through a new lens.

Consider the connection between the recent financial crisis, where investors were asked to ‘bet’ on the rising value of a financial instrument (credit default swap) without any knowledge of its underlying value and an impact investing instrument where its intrinsic value is connected to solving a social and/or environmental problem while being financially rewarding. Everyone wins in the latter, while the former benefits the first few financiers and leaves the underlying problems to the government and general public.

As the evolution away from single bottom line capitalism matures toward a more comprehensive view of how we organize society, it seems intuitive that measuring impact will bring us closer to our goal.

About Joe Sibilia

As a visionary of the socially responsible business movement, Joe Sibilia is founder and CEO of Meadowbrook Lane Capital (MBLC), described by the Wall Street Journal as a “socially responsible investment bank” specializing in turning values into valuation.

He is also the CEO of CSRwire, the social responsibility newswire service that distributes and archives corporate social responsibility/sustainability news to journalists, analysts, investors, activists, academics, public relations and investor relations professionals worldwide.

Joe also founded the Gasoline Alley Foundation, a 501(c) 3 corporation that has incubated forty-three small businesses since 1985 and teaches inner city and/or underprivileged persons to be successful entrepreneurs using socially responsible/sustainable business practices while revitalizing inner city neighborhoods.

Through MLBC, Joe has worked with a number of Socially Responsible Companies and has been widely recognized for his work in attempting to take Ben & Jerry’s Homemade Ice Cream private, while creating a private stock exchange for CSR companies.  MBLC successfully preserved many of the founders’ social initiatives, and advancing the connection between good corporate citizenship and increased share value.

His long range plan for CSRwire is to establish a “platform for innovative revenue sharing applications advancing the ‘Movement’ towards a more economically just and environmentally sustainable society and away from single bottom line capitalism.”

Talkback Readers: What measurable results have you seen from SRI and fourth sector initiatives? Share on Talkback!