Category: December 2014 – Special 100th Issue

Why Monsanto Will Never Rule the Food World: The Three-Prong Movement That’s Stopping the Beast in Its Tracks

By John Roulac, founder of Nutiva

 John Roulac

The issue of how we grow and process our food, while it’s always been important, is now a hot topic both at the kitchen table and on Wall Street. From the recent scandal about a chemical used in yoga mats being found in Subway bread to the rising awareness of GMOs and demands to label their presence in foods, the public is fast awakening to the need for safe, whole, natural nourishment.

In early May 2014, the stock price of Whole Foods Market (WFM) dropped about 20 percent in 24 hours, based largely on fears that Walmart and other grocery giants will overtake WFM’s share of organic food sales. The number of equity funds looking to invest in the next Annie’s or Clif Bar is astounding. Astute investors now understand that food impacts not just waistlines but bottom lines.

The elephant in the room is that agriculture, not transportation, is globally the greatest contributor to greenhouse gases—an issue that gets glossed over by Al Gore and 350.org alike. The media, whether in the recent New York Times food reportage or in the May 2014 National Geographic cover story on “The New Food Revolution,” all fail to mention the three most pressing food issues: the climate change connection; the vast subsidies to corn, soy, and wheat; and the massive increase in the use of Monsanto Roundup with its human health and ecosystem impacts.

Central to the conversation are the questions How do we grow our food in a more sustainable way? and Who decides? Should America lead the world in turning over our heritage of ancestral seeds to Monsanto or DuPont for them to patent as intellectual property? It’s becoming ever more widely known that each firm has a long history of making lethal war chemicals, creating toxic manufacturing sites that leak carcinogens into disadvantaged communities everywhere, and influencing the EPA, USDA, Congress, and the White House so that decisions made—such as the recently passed Farmer Assurance Provision (widely called by its critics the “Monsanto Protection Act”)—favor biotech.

The recent good news is that, on May 8, 2014, per a law signed by Governor Peter Shumlin, Vermont became the first U.S. state to mandate the labeling of foods made with genetically modified organisms. The Grocery Manufactures Association (GMA) has challenged the new law in court in what is expected to be an epic legal battle of the people vs. corporations. Supporting members of GMA include Starbucks, Kellogg’s, and General Mills.

 

The Three Ways That Monsanto Is Being Defeated

In spite of Monsanto’s death grip on the food system, important progress is being made in three key areas: (1) public education via the social media, leading to (2) wiser food choices and (3) more sustainable investments.

All great movements begin at a grassroots level. Think of the civil rights sea change in the 1960s: the government acted to pass the civil rights bill only after the people had reached a tipping point about racial injustice. Having started in a similar grassroots fashion, the organic food movement is now well on its way to changing the food system worldwide.

Yet Monsanto and Big Ag are much better at crafting propaganda than were the bigots of the 1960s. The three biggest lies: that GMOs will feed the world, that organic agriculture can coexist with GMOs, and that Roundup-tainted GMO foods have been proven safe.

Although tens of millions of Americans might not understand all the complexities, they have a gut sense that something is very wrong with our food system, and little faith that Monsanto should be in charge of a baby’s nourishment. They can’t help but wonder how much Monsanto herbicide content in a mother’s breast milk is safe.

Cheerios Go Non-GMO

Some of the biggest news in the food industry this year is the General Mills conversion of Cheerios to a non-GMO cereal. This cultural milestone signals not only the swelling consumer exodus from industrial GMO foods, but also the rise in the use of social media by foodies to educate the public.

The Cheerios conversion is representative of a broad and radical trend in the entire North American food industry, as exemplified by last year’s announcement from Whole Foods Market that GMO foods and supplements must be labeled by 2018—a revelation that the non-GMO movement was becoming big business.

The GMO Inside coalition (of which I’m co-founder and co-chair) had begun to target Cheerios, in part because General Mills, was a big funder of “no” on California’s Prop 37, the failed right-to-know labeling campaign. In subsequent months, GMO Inside got 50 thousand anti-GMO comments placed on the Cheerios Facebook wall.

The startling General Mills announcement was the result of the strongest adverse media coverage in the history of GMOs. And in early 2014, Post Foods announced it was rolling out a non-GMO Grape-Nuts cereal.

Tens of millions are now realizing the stakes of turning over the food supply to a cabal of war-chemical giants that also includes Bayer and Syngenta. In the wake of the Cheerio’s changeover, Kellogg’s Corn Flakes, Smuckers Jam, Land O’Lakes, and even Starbucks lattes are caught up in an epic fight for public opinion, with Monsanto and friends on one side and the real food movement on the other.

How alarmingly efficient our industrialized food system has become! Roundup is now in the rainwater that falls from the heavens, and in the blood and urine of newborn babies. Not a moment too soon, our society is waking up, smelling the Roundup, and choose life-affirming foods grown in a way that honors all the generations to come.

The hippy roots of the nascent organic food movement in the 1970s and ’80s held a vision of a revitalized food system—one that devoutly honors the health of the soil. Today’s devoted organic farmers realize that a healthy society must start with healthy soils.

Americans vote at every meal for their preferred version of a food system. Cost is an issue, largely due to the giant subsidies paid to the GMO industrial-ag corn, soy, wheat, and sugar beets used for cheap junk foods.

GMO Inside’s latest campaign targets Starbucks’ “Monsanto Latte,” due to the fact that their milk is sourced from cows fed GMOs and injected with antibiotics on factory farms. GMO Insiders are also directing their efforts against the factory-farmed “Monsanto butter” produced by Land O’Lakes and Alta Dena Dairy.

Social media has become an effective tool in the creation of a better food system.

A Monsanto Stock Plunge

An Iowa-based group, Food Democracy Now, is calling for all citizens who invest in mutual foods to close their account if their fund is invested in Monsanto.

“Already, the phone lines at Fidelity, Vanguard, and State Street have been ringing off the hook as thousands have reported calling their financial advisors and discovering that they have inadvertently owned shares of Monsanto’s stock,” comments Dave Murphy at Food Democracy Now. “Unfortunately, if you have a retirement fund, a 401K, or mutual funds you could be profiting from Monsanto’s toxic products.” The movement is aiming for an unprecedented stock plunge for Monsanto.

According to Murphy, Food Democracy Now’s prime reasons for targeting Monsanto include the following: “As the manufacturer of Agent Orange, DDT, PCPs, and dioxin, Monsanto’s toxic legacy of harm to the environment and human health is without parallel. Now Monsanto owns patents on life and is genetically engineering the food that we eat. In the past two years alone, Monsanto has helped fund massive misinformation campaigns to the tune of $70 million to defeat GMO labeling.”

Connecting Carbon, Climate Change, and Food

In our efforts to reduce carbon emissions, it’s vital that we reduce the demand for coal, oil, and fracking via wind and solar systems and plug-in hybrids. From the Tesla Company to First Solar, exciting work is being done.

What’s not well understood about climate change is how agriculture is both the number one problem and the number one solution. As we race past carbon dioxide concentrations of 380 parts per million, not only is our atmosphere being overloaded with CO2. The dirty little secret is that the oceans are becoming the carbon sink.

While people debate whether the planet is getting hotter or storms stronger due to climate change, we know for a fact that the oceans are getting very acidic. Not one scientist—not even one on the payroll of the Koch brothers—can refute the fact of the oceanic pH fall. Fast-forward another two or three decades and this will have led to a massive fish and coral reef die-off.

The solution is simple, and already at our fingertips. We need to become carbon farmers, or the customers of carbon farmers. This means ending the use of synthetic fertilizers and toxic pesticides and growing via the organic methods that build healthy soils. Mainly it means moving from CAFOs (concentrated animal feeding operations) to pasture-based systems for raising chickens, pigs, and cows. In the process, we’ll lock the massive amounts of atmospheric carbon atoms into the top six inches of our planet’s soil.

This is no pipe dream, but it will require continuance of the major shift in consumer habits that’s already gaining speed. That is, choosing grass-fed meats, with their much healthier omega-3 levels, over CAFO meats. And reducing our overall meat consumption by 50 percent or more is vital. Already many meat eaters are cutting back their total consumption by half or two-thirds and choosing to eat only pastured meats. We need to keep moving away from the carbon-centric, GMO-based industrial farming that releases vast amounts of greenhouses gases into the environment.

The United States also needs to restore the domestic farming of hemp, which locks carbon from the air into its fibrous stalks. Hemp fiber can be grown for construction (it’s more energy-efficient in walls than are wood–based walls), auto parts (it’s lighter in weight than fiberglass, and thus more fuel-efficient), and many other uses.

Another resource is Biochar, a name for charcoal when it’s used for particular purposes , especially as a soil amendmentand it also holds great promise as a new tool for carbon farmers. Biochar is being seen as a possible approach to carbon sequestration to produce negative carbon dioxide emissions.

Finally I am including this link to a recent article from Judith Schwartz on Yale’s Environment 360 website “Soil as a Carbon Storehouse: A New Weapon in the Climate Fight?” It looks at the degradation of soils from unsustainable agriculture and other development, which has released billions of tons of carbon into the atmosphere. But new research shows how effective land restoration could play a major role in sequestering CO2 and slowing climate change.

In closing, to secure and ensure a vital and livable world, we need to keep shifting from Monsanto-style industrialized farming to the wisdom and foresight of such positive approaches as Biochar. Central to the implementation of this new food system will be the crop rotation, soil-building practices, and pasture systems that are the basis of sustainable organic foods.

 

Article by John Roulac, founder of Nutiva (www.nutiva.com ) in 1999 to create a food system that nourishes people and the planet. As a vocal challenger of the industrial food system, he is a strong advocate for hemp agriculture, GMO labeling, organic farming, and healthy food for all. Through his leadership, Nutiva has been named one of Inc. Magazine’s fastest-growing food companies in America for five consecutive years. He has founded four nonprofit groups, including GMO Inside and the Nutiva Nourish Foundation, which donates 1 percent of Nutiva’s sales to support sustainable agriculture and other environmental programs. John is the author of four books, including Backyard Composting and Hemp Horizons: The Comeback of the World’s Most Promising Plant.

An Open Letter to the Financial Services Industry From a Concerned Millennial

By by Liesel Pritzker Simmons, Blue Haven Initiative

Liesel Pritzker SimmonsAs a millennial, I have recently noticed a flurry of studies, articles, and reports about my generation, authored by a diverse range of interested parties. Quite a bit of the pure sociological data suggests that the 80 million of us born between 1980 and 2000 are narcissistic, lazy, and optimistic to the point of being delusional – it’s enough to make me want to delete that selfie!

Interestingly, the selfish characteristics so rampant in the sociological studies seem to dissipate when researchers start looking at how we Millennials spend our time and money. We want our work to have meaning for ourselves and the world, and we place a higher value on consumer goods that have some sort of beneficial social or environmental impact. Climate change is not a debate for us, and we probably still nag our parents about separating the trash from the recycling. Although we are generally more conservative in our investment decisions than previous generations (can you blame us?), we are willing to take on more financial risk if it increases exposure to ESG impact. Impact Assets recently authored this excellent Issue Brief (http://bit.ly/1usAobt) outlining many of the attitudes of millennial investors.

There is little doubt in my mind that the plethora of studies on Millennials, and particularly the way they intend to invest their money, will continue to multiply, for underpinning nearly every report is one essential, ubiquitous fact: Millennials will inherit over $30 trillion from the baby boomers in North America alone. This is the largest transfer of wealth the world has seen to date, and it could present an enormous opportunity for the financial services industry. If only advisors knew what these selfish, self-less Millennials wanted to do with their assets…?

To add anecdotes to data, my own motivations as a millennial investor stem from a few formative experiences that fundamentally shaped my worldview. I grew up in a very wealthy family, but one that valued hard work and giving back. I was brought up with a firm understanding that I had an obligation to help leave the world a little better than I found it – with great fortune comes great responsibility, to misquote FDR and Uncle Ben from Spiderman.  When I inherited control over my assets at age 21, I wrestled with what to do. Like many who inherit wealth they did not create, I view my role as a steward – though I may be making decisions regarding its management, this wealth is not “mine”.

Rich White Girl Goes to Africa

Confused and curious, I decided to start reading and traveling. I read Amartya Sen while volunteering in India, Jeffrey Sachs and Muhammad Yunus while working at a microfinance institution in Tanzania. It was the first time I really witnessed that level of extreme poverty, and it made me feel even more unworthy of all the wealth I was born into.

More than anything else, though, I was moved by the people I met and the complexity of their lives. Examining daily cash flows, asking women how they thought about savings or paying school fees, how they made decisions when emergencies arose – I was humbled by how complicated it all was. And markets were everywhere – even in the most impoverished places, I saw clear evidence of financial problem solving and ingenuity. I know how cliché this sounds: Rich White Girl Goes to Africa, Has Life-Changing Experience. But alas! There it is.

I returned from these experiences, energized and eager to help. So I took a portion of my assets and started a foundation, because that’s what rich people do when they are energized and eager to help. Under my mother’s leadership, the IDP (Innovation, Development, Progress) Foundation has become a leader in the low cost private school movement, focusing on expanding educational opportunities in Ghana and other parts of the world. And while I am very, very proud of the work the foundation has done, over time I found myself feeling constrained by the limits of philanthropy and aid. Many of my experiences and frustrations have been corroborated by the work of economists like Dambisa Moyo, who cites compelling data about the ineffectiveness of some aid-based development. Programs start and stop, funding agendas change, and many well-intentioned “interventions” are designed halfway around the world from the very communities they aim to help. Oftentimes, aid reduces systemic issues into technical problems that can be “solved” with two-year interventions. There didn’t seem to be much space for dignity – or the indigenous problem solving I had witnessed.

What I found to be particularly bizarre, however, was the disconnection between the talk and the action. At many philanthropy conferences, I would hear the buzzwords: We should be engaging in “strategic”, “catalytic”, “venture” philanthropy that seeks “measurable”, “scalable”, “operationally sustainable”, “market-based” solutions to the world’s problems. It seemed odd to me… If there was a growing consensus that aid should be administered like business, well, why don’t we just simply do business?? Let’s stop talking like first year MBAs and just do it.

This was the real light bulb for me. But let me be clear – I don’t think all philanthropy is bad or ineffectual. Indeed, philanthropy can take risks and prove concepts. It can fund research and pick up the pieces when disaster strikes. And philanthropy can “buy down” risk in order to attract market-rate capital to help address chronic social problems. Some very important parts of society, such as the arts, will always need at least some philanthropy to recognize meaning and value where the market does not.

What I realized, however, is that philanthropy simply isn’t enough. I needed to use all the resources I had at my disposal to help scale solutions for a broad set of stakeholders. So I set out to learn as much as I could about how to leverage business and finance as a means for social impact.

Profit with Purpose

Luckily for me, there were already many, many examples of how good business practices can generate real value for communities all over the world. People were experimenting with creative ways to share that value, through innovative ownership structures like the Employee Stock Ownership Plan (ESOP) and new corporate structures like Benefit Corporations. There were financial products that cater to these types of businesses through funds or debt facilities. I can barely keep up with all the new reports and conferences about impact investing. Even the large banking institutions seem to be in an arms race over new Social Impact Bond issuances!

As I began exploring these exciting new products and started to reinvest my portfolio in alignment with my beliefs and interest in impact, there was another experience that would fundamentally reshape my profile as an investor – the financial crisis. I was 24 in 2008, and my peers and I stood stunned as we watched markets collapse, risk assumptions crumble, and “uncorrelated” asset classes suddenly all…correlate—in the wrong direction!

This experience has had a profound effect on my generation. Some studies on millennial investors point out that we prefer to invest in physical assets over the stock market. And we are less trusting of advice from financial advisors – we will seek out many more opinions on financial decisions than previous generations did. The financial crisis occurred early enough in our lives that we haven’t really experienced anything else – this is our normal.

Some Friendly Advice for Financial Advisors

All of these experiences – as an inheritor, a philanthropist, a millennial, have deeply shaped how I think about investing and the ultimate purpose of capital. Several years ago, my husband and I formed Blue Haven Initiative, a family office managing a diversified international investment portfolio. We invest with high standards, always seeking to optimize financial return together with social and environmental performance. And though I do not deign to think I am speaking for my generation, I do believe some of these thoughts might be helpful for those who hope to advise a piece of the $30 trillion coming down the pike.

Stop talking about trade-offs.Like many in my generation, I want to do good and do well; I want profit with purpose. We don’t have to settle for one or the other. I know Milton Friedman didn’t think it was possible. Spoiler alert: Milton Friedman is not our idol.

We want to create value, real value. I want my investments to help improve livelihoods for communities. I want to help improve the land we live on. I want to help reduce waste or carbon emissions. Sustainable, long-term financial return can only be generated by improving social or environmental value, not extracting it.

We have to broaden our definition of risk. Investors like me are not satisfied with the traditional definition of risk – standard deviation and variability of returns. I think that is way too narrow. Hopefully, we will still be alive in 50 years, and that smog-filled, diabetes-riddled world we are creating sounds awfully expensive to me, regardless of how much my portfolio outperformed its benchmarks in Q3 2014. When we decide not to price in the negative impacts of our investments today, we are creating more risk (that someone will have to pay for) down the road.

And most importantly, let’s finally acknowledge that every investment we make has an impact on the world around us. Let’s make it a good one!

Article by Liesel Pritzker Simmons, Co-Founder and Principal of Blue Haven Initiative (bluehaveninitiative.com) a family office dedicated to investing for-profit and non-profit capital to solve social problems. BHI looks across asset classes and capital types to find solutions-oriented opportunities both in the US and in developing markets.

She is the Co-Founder of the IDP Foundation, Inc. (www.idpfoundation.org )a private foundation with a mission to mobilize resources and strategic support to increase educational opportunities. Established in 2008, the IDP Foundation has supported and developed a wide range of programs in the education sectors most notably the innovative IDP Rising Schools Program in Ghana, which leverages microfinance networks to empower nearly 200 low cost private schools with trainings and financial services. Pritzker Simmons is a Co-Founder of Opportunity International’s Young Ambassadors for Opportunity (YAO), a global network of young professionals who are passionate about microfinance. She serves on the boards of Waste Enterprisers, Eco-Post, and Synergos. Pritzker Simmons attended Columbia University, where she studied African History. She lives in Cambridge, MA with her husband, Ian Simmons.

Featured Articles, Past Issues

The Next 20 Years of Organics

 By Gary Hirshberg, co-founder and chairman, Stonyfield Yogurt

Gary HirshbergWhen thinking about our future, I can’t help but think of the past. I often joke that back when we started Stonyfield in 1983, you couldn’t even use the words “organic” and “industry” in the same sentence.

With just seven cows and hardly any consumers understanding “why” it made sense to eat organic, we had no supply, and no demand. Today our annual sales are over $360 million, and the rest of the organic industry has continued to grow right alongside us. In the U.S., sales of organic food and beverages have grown from $1 billion in 1990 to $35 billion in 2014. Even during the recent economic downturn the organic sector grew at a much faster pace than the conventional food sector. Organic food sales now represent about seven percent of all U.S. food sales. The organic industry grew by nine percent in 2011, adding new jobs at four times the national average. Organic is a growth engine for the economy.

What’s driving this continued growth? The simple answer is the public. Every day more people are deciding they want to take control of their health by taking control of their diet. Hardly a day goes by without another story breaking about a food supply scare. Pink slime in our burgers, antibiotics in industrial livestock production leading to antibiotic-resistant superbugs, arsenic in our chicken, salmonella on our cantaloupe – the list goes on.

For others, it can be a more personal life event, such as a pregnancy or a diagnosis of cancer or diabetes, that leads people to a new awareness of how the food they eat affects their health, or the health of their unborn children. In recent years we’ve learned that prenatal exposure to pesticides can result in lower birth weight, delayed cognitive development, ADHD diagnoses and even lower IQ. It’s been shown that we can avoid many of these risks by eliminating our exposure to pesticide residues in our diets. As columnist Nicholas Kristof reported in The New York Times two years ago, “The President’s Cancer Panel is the Mount Everest of the medical mainstream, so it is astonishing to learn that it is poised to join ranks with the organic food movement and declare: ‘chemicals threaten our bodies.’” Four out of every 10 Americans will have cancer in their lifetime, the report stated. The 2010 panel, whose members were appointed by the Bush administration, recommended limiting your exposure to chemicals by eating foods produced without pesticides as one way to lower cancer.

With cancer, diabetes, obesity and allergens on the rise, people want to know more about their food. At Stonyfield, we hear from people 24/7 asking about ingredients, where they’re from, and how they’re grown. Often they are overwhelmed with contradictory information. There is considerable confusion over the difference between organic and natural, for example – and whether there is any difference at all. Unscrupulous companies have led consumers to believe that ‘natural’ products offer all of the benefits of certified organic for a more affordable price. With the rise in public confusion comes increasing consumer distrust. In response, agribusiness launched a $30 million PR campaign to build trust through a new US Farmers and Ranchers Alliance. The Center for Food Integrity, a non-profit created by Monsanto and other agribusiness interests, is dedicated to “build consumer trust and confidence in today’s food system.”

Americans’ insistence on knowing what is in their food gave rise to Just Label It, the national campaign to label genetically engineered (GE) food. The National Organic Standards prohibit organic growers and food processors from using GE, but it is now in widespread use on non-organic farms throughout the U.S. A relatively new technology, GE has raised a host of health concerns and led to an explosion in herbicide use (herbicides made by the same companies manufacturing the GE crops designed to resist those herbicides). Despite the risks, the FDA has declared that because GMOs don’t smell, taste, or look different from their conventional counterparts, consumers don’t need to be informed about whether their food contains GE ingredients. Last October, the Just Label It campaign petitioned FDA to require mandatory labeling on GE foods, already required by more than 40 countries worldwide, including all of Europe, Japan, Brazil, Russia and China.

More than 500 diverse organizations – farming, parenting, religious, health, consumer, environmental, and business groups – joined the Just Label It (JLI) coalition as partners. Though they held different views about GE technology, they united behind the common belief that we have a right to know about our food. Consumer support for GE-foods labeling in the U.S. is nearly unanimous, according to the political opinion survey on GE food labeling conducted by The Mellman Group on behalf of JLI. Pollster Mark Mellman said that only topics like motherhood and apple pie muster over 90 percent support, but labeling GE-foods is among them. His survey found nearly all Republicans, Independents and Democrats in favor of labeling. No wonder then that JLI met with groundbreaking success. In just 180 days, it generated more than 1 million petition comments – over twice the number on any food petition in FDA history. This extraordinary win is just part of a much broader push toward transparency in the food system.

People want the truth. They want companies and other institutions to be transparent. This was clearly demonstrated through the rapid nationwide response to Pink Slime, and the surging popularity of the Occupy Movement last summer. Americans of all political persuasions voiced distrust of how government and companies are making decisions. Americans will no longer tolerate keeping the public in the dark for the benefit of just a few.

This emergent consumer movement clearly wants to know about its food. People increasingly want to buy food from sources they know. The number of farmers markets has grown from under 2,000 in 1994 to over 6,000 today. Local food sales are predicted by USDA to hit $7 billion this year. And the organic sector continues to grow.

Fed-up consumers aren’t the only force pushing toward a more organic future. A growing number of scientific studies conclude that to feed the world sustainably and affordably will require looking to alternative systems of agriculture. The National Academy of Sciences examination of agriculture in the 21st century concluded that organic systems and diversified farming systems that mix crop and livestock production are key to a sustainable future. The U.N. Environment Program found that agro-ecological systems can double or triple yields in areas of the world that need it most, like sub-Saharan Africa. Long-term agricultural research trials at Iowa State University have shown that organic crops can produce yields competitive with yields from conventional agriculture, resulting in increased profits for organic growers.

I can happily attest that this is not just the stuff of studies; it has been our very real business experience as well. We have learned that organic was not just better for us and for our consumers – farmers of many of the ingredients we purchase have also benefited from higher yields and reduced fossil-fuel based inputs leading to higher and more stable profits. Working to build our organic future is a quadruple win – for consumers, businesses, the environment and farmers. One of the best examples is the 40,000 acres of organic sugar cane we support in Brazil. Our partners there have found the transition to organic to be both an ecological and a financial success. Their green harvesting practices save 40,000 tons of CO2 per year, and 3.5 million liters of water per hour at the processing mill. The use of organic practices has led to a 90 percent reduction in pest damage, dramatic increases in soil carbon content and an incredible increase in biodiversity. They’ve done all of this while increasing their yields by 10 percent compared to when they farmed conventionally.

As we look toward the next 20 years, we can celebrate organic’s commercial success, growing consumer interest, and proven track record of competitive yields, and work to put an end to the lag in public investment. Just a tiny fraction – less than 2 percent – of all the money the U.S. government invests in public research on agriculture is allocated toward research in organic. Imagine what we could do if we were willing to invest more heavily as a society in expanding organic research.

No one has articulated this as profoundly as HRH the Prince of Wales when he addressed the Future for Food Conference at Georgetown University where I also spoke last spring. He said the system of subsidies “has led to a situation where farmers are better off using intensive methods and where consumers who would prefer to buy sustainably produced food are unable to do so because of the price.” There are many producers and consumers who want to do the right thing but, as things stand, ‘doing the right thing’ is penalized. And so this raises an admittedly difficult question – as the time arrives when a long, hard look is needed at the way public subsidies are generally geared. Should the recalibration of that gearing be considered so that it helps healthier approaches and ‘techniques’? Could there be benefits if public finances were directed so that subsidies are linked specifically to farming practices that are more sustainable, less polluting and of wide benefit to the public interest, rather than what many environmental experts have called the curiously ‘perverse’ economic incentive system that too frequently directs food production?”

I believe that the work ahead is clear. We must create a food system that produces healthy food that is widely accessible and can be produced in a way that protects our environment and enhances consumer confidence. Organic food production will improve farm profits, reduce national health care costs and help to reduce the dependence and the economic drain of inflating fossil fuels. In short, organic food production is national security.

Fortunately, the organic model we’ve developed over the last three decades has given us a running head start; we’re well on our way to creating healthy food, healthy people, a healthy economy and a healthy planet. As I wrote in the introduction to Label It Now: What You Need to Know about Genetically Engineered Foods, “Any chance of avoiding ecological or economic bankruptcy depends on business and government leaders – and, ultimately, every person on this planet – being held accountable for activities that pollute the environment, deplete our natural resources or precipitate health problems.”

As we look back, we can see that the organic industry and movement is one of the most positive and hopeful growth engines in the U.S. economy. As we look forward, to the next 20 years and beyond, I believe that the organic business sector can show America and the world how to create an economically successful food system based on true transparency and public trust.

 

Article by Gary Hirshberg, co-founder and chairman of organic yogurt leader Stonyfield ( www.stonyfield.com ), author of “Stirring It Up: How to Make Money and Save the World and co-author of Label It Now: What You Need to Know About Genetically Engineered Foods”. Gary is a frequent speaker on topics including sustainability, climate change, the profitability of green business and organic agriculture. He also advocates for change in national food and agriculture policies, including those regarding the labeling of genetically engineered foods. Gary serves on several corporate and nonprofit boards including those of Applegate Farms, Honest Tea, Peak Organic Brewing, The Full Yield, Climate Counts, SweetGreen, RAMp Sports, Stonyfield Europe, Glenisk and the Danone Communities Fund. In 2011, President Barack Obama appointed Gary to the Advisory Committee for Trade and Policy Negotiations, and Gary became a co-chair of Agree ­– a food and agricultural policy effort launched by eight of the world’s leading foundations.

From Growth Capitalism to Sustainable Capitalism: The Next 20 Years of Sustainable Investing

By Joe Keefe, President and CEO,
Pax World Management

Joe KeefeTwenty years from now, we will have either successfully transitioned from our current economic growth paradigm to a new model of Sustainable Capitalism or we will be suffering the calamitous consequences of our failure to do so. Likewise, sustainable investing will either remain a niche strategy or it will have supplanted mainstream investing. This is the critical point we must embrace: sustainable investing can no longer simply present itself as an alternative to traditional investment approaches that ignore environmental, social and governance (ESG) imperatives; it cannot simply be for some people; it must actually triumph over and displace traditional investing.

The current model of global capitalism – call it growth capitalism – is premised upon perpetual economic growth that must ultimately invade all accessible habitat and consume all available resources.[1] Growth capitalism must eventually collapse, and is in fact collapsing, for the simple reason that a finite planet cannot sustain infinite growth. Moreover, the dislocations associated with this infinite growth paradigm and its incipient demise – climate change, rising inequality and extreme poverty, resource scarcity (including food and water shortages), habitat loss and species extinctions, ever more frequent financial crises, to name just a few – will increasingly bedevil global policy makers in the years ahead. The public sector is already experiencing a high degree of dysfunction associated with its inability to confront a defining feature of this system: the need for perpetual growth in consumption spurs a corresponding growth in public and private debt to fuel that consumption, which has roiled financial markets and sovereign finances across the globe.

Meanwhile, the environmental fallout from this infinite growth paradigm is becoming acute. All of earth’s natural systems – air, water, minerals, oil, forests and rainforests, soil, wetlands, fisheries, coral reefs, the oceans themselves – are in serious decline. Climate change is just one symptom. “The problem is the delusion that we can have infinite quantitative economic growth, that we can keep having more and more stuff, on a finite planet.”[2] The problem is an economic system that makes no distinction between capital investments that destroy the environment, or worsen public health, or exacerbate economic inequality, and those that are aligned with earth’s natural systems while promoting the general welfare. Under growth capitalism, a dollar of output is a dollar of output, regardless of its side effects; short-term profit is valued regardless of the long-term consequences or externalities.

It is therefore discouraging that, in the U.S. at least, there is no serious discussion in mainstream policy circles about alternatives to the present system. Nor do I think there will be for some time given our current political/cultural drift. Political and economic elites, and the public itself, remain committed to growth capitalism, accustomed to “having more and more stuff,” for a host of economic, social and psychological reasons. As Jeremy Grantham has written, “[t]he problems of compounding growth in the face of finite resources are not easily understood by optimistic, short-term-oriented, and relatively innumerate humans (especially the political variety).”[3] Our campaign finance system, wherein policy makers are essentially bought off by and incentivized to advance the very interests that stand to profit most from the current system, is no help. Making matters worse, large segments of the public do not even accept what science teaches us about climate change, or natural systems, or evolution, or a host of other pressing realities. The late U.S. Senator Daniel Patrick Moynihan once said that everyone is entitled to their own opinion but not their own facts. Today, it seems that a growing number of people, aided and abetted by special interests that stand to benefit from public ignorance, are increasingly opting for their own “facts.”

So, neither the public sector nor corporate and economic elites, as a result of some newfound enlightenment, seem poised to consider alternatives to the current system. To the contrary, their first impulse will be to resist any such efforts. This is the critical problem at the moment: while there is an array of powerful forces aligned against the type of sweeping, systemic change that is needed, there is no organized constituency for it. There are individuals and groups who support this or that reform, or who are focused on critical pieces of the larger puzzle (e.g., climate change, sustainable food & agriculture, gender equality, sustainable investing), but there is no movement, no political party or leader, no policy agenda to connect the dots.

That is a shame because there is a clear alternative to growth capitalism that has been articulated in recent years by a diverse body of economists, ecologists, scientists and other leading thinkers – including leaders in the sustainable investment community.[4]

Although there is as of yet no unified theory or common language, let alone any sort of organized movement to speak of, what has emerged is essentially a unified vision, and that vision might best be described as Sustainable Capitalism.[5]

Sustainable Capitalism may be thought of as a market system where the quality of output replaces the quantity of output as the measure of economic well-being. Sustainable Capitalism “explicitly integrates environmental, social and governance (ESG) factors into strategy, the measurement of outputs and the assessment of both risks and opportunities…. encourages us to generate financial returns in a long-term and responsible manner, and calls for internalizing negative externalities through appropriate pricing.”[6] Essentially, business corporations and markets alter their focus from maximizing short-term profit to maximizing long-term value, and long-term value expressly includes the societal benefits associated with or derived from economic activity. The connections between economic output and ecological/societal health are no longer obscured but are expressly linked.[7]

There is no question that growth capitalism must give way to Sustainable Capitalism. It’s as simple, and as urgent, as that. Over the next 20 years, the sustainable investing industry must play a pivotal leadership role in ushering in this historic transformation. We will need to connect the dots and catalyze the movement. Why us? For the simple reason that finance is where the battle must be joined. It is the financial system that determines how and where capital is invested, what is valued and not valued, priced and not priced. The sustainable investment community’s role is vital because the fundamental struggle is between a long-term perspective that fully integrates ESG factors into economic and investment decisions and our current paradigm which is increasingly organized around short-term trading gains as the primary driver of capital investment and economic growth regardless of consequences/externalities.

The notion that sustainable investing can simply keep to its current trajectory – a few more assets under management here, a few more successful shareholder resolutions there, a few more GRI reports issued, another UN conference, an occasional victory at the SEC – and achieve what needs to be achieved on the scale required is, frankly, untenable. We need to be more ambitious in our agenda.

We will also need to take a more critical stance, not only advocating for ESG integration but against economic and investment approaches that ignore ESG concerns. We will need to consistently critique the notion that externalities associated with economic output are somehow collateral, or that financial return is sufficient without beneficial societal returns, or that markets are inherently efficient and self-correcting. We will need to unabashedly offer sustainable investing not as an alternative approach but as a better approach – as the only sensible, responsible way to invest.

I believe the sustainable investing industry will also need to align itself with a more explicit public policy agenda – while remaining non-partisan – and work with like-minded reformers to advocate for that agenda. For example, sustainable investors should be sounding the alarm about resource scarcity and advocating for a massive public/private investment plan in clean energy, efficiency technologies and modernized infrastructure.[8] The age of resource scarcity and the need for efficiency solutions is upon us.[9] At Pax World, we offer a fund – the Global Environmental Markets Fund (formerly the Global Green Fund) – whose investment focus is precisely that. Our industry needs to fashion such investment solutions, and I believe there will be opportunities to do so collaboratively as well as competitively.

I also feel strongly that the greatest impediment to sustainable development across the globe is gender inequality. Advancing and empowering women and girls is not only a moral imperative but can unleash enormous potential that is now locked up in our patriarchal global economy. Sustainable investors need to press the case that gender equality needs to be a pillar of Sustainable Capitalism. At Pax World, we also have a fund – the Global Women’s Equality Fund – whose investment focus is exactly that.

In my view, the sustainable investing community should also be advocating for public funding of federal elections, either through a constitutional amendment or, absent an amendment, through a voluntary public funding system. The notion that we can tackle any major public policy issue, let alone undertake the epochal transition to Sustainable Capitalism, while politicians and regulators are captive to the very interests they are supposed to regulate, is beyond naïve. We will not be able to reform capitalism if we cannot reform Congress.

Finally, asset management firms like my own will need to find ways to craft new, more persuasive messages, launch new products, form new partnerships, and fashion new distribution strategies and alliances that are focused on lifting the industry as a whole, because a rising tide will lift all boats. Pax World has taken a step in this direction in launching our ESG Managers Portfolios, where many ESG managers and strategies are now available under one roof in one set of asset allocation funds. There is more to be done – together, as an industry.

The times call for leadership. The transition to Sustainable Capitalism is necessary and urgent, as is the triumph of sustainable investing over investment approaches that effectively prolong and exacerbate the current crisis. Twenty years from now, our industry will be judged by whether we have met this burden of leadership. Our impact either will be dramatic or inconsequential. We either will succeed or we will fail. We should resolve to succeed, and to work collaboratively toward that end.

 

Article by Joe Keefe, President & CEO of Pax World Management, headquartered in Portsmouth, NH. Pax World manages approximately $2.5 billion in assets, including mutual funds, asset allocation funds and ETFs, all of which follow a sustainable investing approach. Prior to joining Pax World, Joe was President of NewCircle Communications (2000-2005), served as Senior Adviser for Strategic Social Policy at Calvert Group (2003 – 2005), and was Executive Vice President and General Counsel of Citizens Advisers (1997-2000). A former member of the board of US SIF (2000 – 2005), Joe was named by Ethisphere Magazine as one of the “100 Most Influential People in Business Ethics” for 2007, 2008 and 2011, and in 2012 was recognized by Women’s eNews a one of “21 Leaders for the 21st Century, where he was the sole male honoree. 

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Article Footnotes:

[1] See, William E. Rees, “Toward a Sustainable World Economy,” Paper delivered at Institute for New Economic Thinking Annual Conference, Bretton Woods, NH, April 2011, p. 4.

[2] Paul Gilding, The Great Disruption, Bloomsbury Press, 2011, p. 186.

[3] Jeremy Grantham, “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever,” April 2011 GMO Quarterly Letter.

[4] I am thinking of such writers and thinkers as Wendell Berry, Lester Brown, Paul Gilding, Herman Daly, Thomas Friedman, Paul Hawken, Richard Heinberg, Mark Hertsgaard, Amory Lovins, Hunter Lovins, Bill McKibben, Donella Meadows, Jorgen Randers & Dennis Meadows, James Gustave Speth and, of course, E.F. Schumacher. Contributions from the sustainable investing community include Steven Lydenberg’s Corporations and The Public Interest, Robert Monks’s The New Global Investors, Marjorie Kelly’s The Divine Right of Capital, and The New Capitalists by Stephen Davis, Jon Lukomnik & David Pitt-Watson. See also the work of The Capital Institute, www.capitalinstitute.org

[5] Credit Al Gore, David Blood, Peter Wright and the folks at Generation Investment Management for putting a stake in the ground and endeavoring to define and popularize this concept.

[6] “Sustainable Capitalism,” Generation Investment Management LLP, 2012, p. 2.

[7] This notion of Sustainable Capitalism is not unlike the concept of “shared value” as advanced by Michael E. Porter and Mark E. Kramer. See, “Creating Shared Value,” Harvard Business Review, Jan-Feb 2011.

[8] Daniel Alpert, Robert Hockett & Nouriel Roubini, “The Way Forward: Moving From the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness,” © 2011, New America Foundation.

[9] See Jeremy Grantham, “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever,” supra; See also, “Resource Scarcity and The Efficiency Revolution,” Impax Asset Management, www.impaxam.com

The GreenMoney Interview: Muhammad Yunus

Grameen Bank founder interviewed by Holly Mosher,
producer of the films Bonsai and Pay2Play

 

Muhammad YunusWhen award-winning filmmaker Holly Mosher read about 2006 Nobel Peace Prize winner Muhammad Yunus and the story of Grameen Bank’s microcredit for women in Bangladesh, she was fascinated. Why had an economist and a bank won the prize for peace and not the prize for economics? And how had one man gone from loaning $27 to 42 people, to helping one out of every 1,000 people on earth? With these questions in mind, she embarked on a film about his work.

However, when she realized in Bangladesh that Yunus was also operating over a dozen other companies, all aimed at ending poverty, she knew she had a completely different film on her hands.

Mosher’s emotionally compelling documentary, Bonsai People – The Vision of Muhammad Yunus, highlights Dr. Yunus’ philosophies and the affect of his work on the people of rural Bangladesh. It is the first comprehensive film looking at his whole body of work.

Bonsai People can now be seen at select screenings and will be available on DVD soon. For more information and to watch a trailer from the film go to www.bonsaimovie.com

Like Dr. Yunus, Mosher has received international recognition for her work on behalf of positive change. When we asked her to consider interviewing her friend and film subject Muhammad Yunus for GreenMoney Journal, she readily agreed.

We hope you enjoy this insightful conversation. This is the full expanded version of the interview – available only here on greenmoney.com

HOLLY:  People are mostly aware of your work with microcredit. However, you are currently running dozens of companies. What made you decide to start so many companies?

YUNUS: Whenever I have come across a problem, I would ask myself if I could start a business to try and solve that problem. And that is what I have been doing for the past 35 years.

 

HOLLY:  In order to run all these companies, you must have a very good management model. Can you share your management style?

YUNUS: My goal has been to create an environment where people are empowered to try things. Things are tried; if they work, then we continue; if they do not work then we try something else. The other thing that has been emphasized is to not lose focus of what we are trying to do. We are here to serve the poor and we should not forget this fact.

 

HOLLY:  Do you have “go-to” questions that you always ask yourself in order to push the envelope of feasibility? For example, Ashir, from your partnership with GramWeb.net, told me that you loved their healthcare kiosk, but you pushed him to make it both mobile and a tenth of the price.

YUNUS: Yes, of course. First of all, the question of need arises. Do the poor actually need this service or product? Will it make their lives better by providing them with this new thing? If not, then there is no need for it. Then it has to be affordable enough for the poor; otherwise the poor will not be able to access it. The other thing I have always asked is how to take the product or service to the doors of the poor, hence the emphasis on mobility. The people we serve are constantly trying to earn enough for daily survival, so they cannot afford the extra time to go and get the product or services that they need; so rather than them coming to us, I have always said that we should go to them.

 

HOLLY:  Several of your businesses are actually owned by the poor people they are helping. Is there a best way to include them in management and turn the company over to them?

YUNUS: When I started Grameen Bank, I insisted that this new bank should be a different kind of a bank. This bank would not only exist to serve the poor, but that it should also be owned by the poor. And that is what happened. Today the borrowers of Grameen Bank effectively own 97 percent of the bank. They sit on the Board of Directors helping to create the policies. This is the best way; by taking the responsibility and, most crucially, the opportunity, they proved to everyone that they are very capable of owning and running Grameen Bank.

 

HOLLY:  With Grameen Fisheries, you took a failing business that was supposed to help the poor and made it profitable. Can you share how you turned that around, especially when you had no experience with the fishery business?

YUNUS: This happened because the local communities were involved in the projects. Whenever these projects made profits, they were shared with the local communities. Not only that, we also hired people from the local communities to work on these projects. So we involved them very closely, and they became interested in insuring that these projects were successful.

 

HOLLY:  Why do you feel it’s so important to create and run self-sustaining models?

YUNUS: If you are dependent on donations to run your activities, there are two consequences. First, you have to spend a lot of your time raising funds to finance your activities. And second, you are at the mercy of the priorities of your donors. So if your donors change their focus, then you, too, have to change your focus or you risk losing your funding. If you are self-sustaining, you don’t have to spend any time on fund raising, nor do you have to worry about what your donors are thinking. You can go on with your activities so long as there is a need for it. This is why I place so much emphasis on sustainability and efficiency.

 

HOLLY:  Within your companies, how many years does it take to have a social business turn a profit?

YUNUS: Making a profit is not the goal of these companies. The goal of all of these companies is to serve a specific need of the poor. We do not measure the performance of the companies on how much profit they make, but rather how well they have been able to serve their target markets. But many of our social businesses are now making profit, which helps to expand their operations, which is an exciting development for us.

 

HOLLY:  What additional challenges do entrepreneurs face when trying to create a social business instead of a for-profit business?

YUNUS: A challenge that anyone will face in creating a social business is trying to explain why they are doing it. Our economic theories have constantly stressed that humans are self-centered beings who go about serving their own self-interest. We have been taught this as a fact for hundreds of years. Now we have an alternative, a selfless business where operators do not profit for themselves but benefit others. This can come as a shock to people. Explaining this is a challenge. Another challenge is to ensure funding to start up social businesses. How are people to access investments for their social businesses? Where will the money come from? We are working on finding solutions to this. One solution can be the Social Business Funds, acting as incubators for potential social business start-ups.

 

HOLLY:  Is a social business more challenging to start and operate than a for-profit business?

YUNUS: No, I do not think that starting a social business is any more challenging than running a for-profit business. Running any business requires effective business skills, all of which are applicable. The difference being that a social business is a business geared towards solving social problems – a business that benefits society, as opposed to a for-profit business that benefits the owners.

 

HOLLY:  With all your partnerships, can you share the lessons on creating a successful partnership?

YUNUS: Effective communication is the key to a successful partnership. In any partnership, the different parties have their own wants and goals. The main thing is to create bridges to arrive at a common goal. And communicating effectively is the way to achieve this. It is useful to seek partners who have the same or similar goals as you. And it also helps to find partners who have special skills, abilities or technologies that are required to do the things that you are trying to do.

 

HOLLY:  A lot of your partnerships are with large corporations.  Are you choosing to work with large corporations over small start-ups for a reason?  Is it easier for them to turn a part of their work to a social business compared to a start up?

YUNUS: What we are doing by working with large corporations is creating examples of what social businesses can look like. We are bringing companies who would have never thought of investing in Bangladesh and we are together setting up completely new social businesses here. We hope these examples encourage people to think of setting up social businesses of their own. The real power of social business lies with everyday people, who will become the real driving force behind social business. They know what problems exist in their communities better than everyone else. Then they use their creativity and ingenuity to design a social business to solve those problems. The real potential of social business is to unleash peoples’ latent creativity and ingenuity.

 

HOLLY:   From all your experience with starting social businesses, what words of wisdom would you give to people who are trying to start one on their own?

YUNUS: I advise anyone interested in social business to start with a piece of paper. Make a list of all the problems in your community and find the ones that are most pressing. Try to find a business solution to help solve that problem. Think of all the things that you will need to make that social business a success and implement those things. The main thing is to simply begin, and you may be surprised at the results!

 

HOLLY:  Can you tell how you have turned Grameen Kalyan (Healthcare) into a nearly profitable model and provide insurance to a family of 7 for $1 a month?

YUNUS: With Grameen Bank, the aim was to provide access to finance for the poor. However, I soon learned that it is not just financing that the poor need, but also a host of other services that were not being provided to them at a reasonable rate. So Grameen Kalyan was started. Currently it provides access to healthcare to people in rural Bangladesh through 54 health clinics. In the beginning Grameen Kalyan depended on outside funding to support its activities. The advantage that Grameen Kalyan has is that it does not need to make a profit, but it just needs to cover its costs. And it is well on its way to achieving that.

 

HOLLY:  You have scaled up several of your companies successfully. Is there any special advice to scaling up?

YUNUS: Starting small is the key. By starting small, you allow the company or business time to prove itself and its model. Once the company has proved its model to be effective and sustainable, we then scale up that business model. This is what we have done time and again.

 

HOLLY:  How long do you spend in research and development before really running with the business model?

YUNUS: This really depends on the sector involved. For example, with Grameen Bank, I experimented with it for a number of years before finally getting the laws passed to start the bank formally. During that time, you get the feeling whether something will be successful or not. In other cases, with Grameen Danone for example, it was quick.

 

HOLLY:   Now that you are working with Grameen America, are there any challenges in particular to doing business in the US compared with Bangladesh?  Any lessons learned for America in general?

YUNUS: While working with Grameen America, we have realized that the American banking system has left behind so many Americans. The citizens are deprived of access to financing and the whole host of benefits that come along with being able to have access to credit on a timely basis. We have had to learn what the particular needs to our borrowers in America are. For example, we have had to learn what size the loans to our American borrowers should be, what should be the interest rates and what should be the repayment schedules, etc. The one great lesson learned from Grameen America is that even in the industrially developed world, there is a class of people that the traditional banking system has left behind. So from this we can extrapolate that microfinance can have a place even in the richest countries in the world.

 

HOLLY:   What do you see as the difference between a social business and a social enterprise?

YUNUS: The definition of a social enterprise is very broad. A social enterprise can be any initiative to help people. The initiative can be economic, non-economic, for-profit or not for-profit. The distribution of free medicine to the poor can be a form of social enterprise. On the other hand, a social business is a very particular type of a business. It is a business with a social goal, and not a monetary goal. You can say that a social business is a subset of social enterprise.

 

Interviewer’s Note:

I would like to close with a note about past events. In November of 2010 a Norwegian documentary came out called, Caught in Micro-Debt, which looked at cases of microcredit gone wrong. After the film aired, the Prime Minister of Bangladesh publicly stated that Dr. Yunus was “sucking the blood of the poor.”

Since then, a government probe showed that the Grameen Bank actually has the lowest interest rate of any Bangladeshi microcredit program. However this finding did not deter the Bangladeshi Bank from forcing Yunus to retire for being too old.  There is a bank ordinance that says that all bank workers should retire at the age of 60. He is currently in his 70s.

Although the future of Grameen Bank and Grameen Companies is uncertain, Yunus continues to run over 30 companies and partnerships – all aimed at serving the poor.

Yunus is one of seven people in history to receive the Nobel Peace Prize, the Presidential Medal of Freedom, and the Congressional Gold Medal.

2014 Outlook for Socially Responsible Investing

by Amy Domini
Founder and CEO of Domini Social Investments

Amy DominiWhat lies ahead for responsible investors during 2014? Certainly new products, particularly those that are cleaner or more local, certainly a more predictable stock market, and probably enhanced interest in the value added by utilizing social and environmental considerations when choosing investments. These trends are already evident. Each is good news for the ethical investor.

New Products

When Corporations Rule the World, Second Edition by David C. Korten was published in 1995, it was rightly viewed as a challenge to buy local, take personal responsibility for sustainability and to invest at least part of your assets into smaller local businesses. The call was powerful and spoke to something in the psyche. It put into words the unease so many had been feeling and gave a blueprint for action.

Since that time the Slow Money movement has put a voice to one aspect of the sustainability effort. It asks us to invest one percent of our assets into businesses that are small and geographically close to us, businesses that enhance life as a core mission. The first beneficiary seems to be the sustainable agriculture field, with dozens of options springing up. In my home region of New England we see the gamut from a small organic pickling company to an integrated farm-to-table network.

Sustainable agriculture has re-introduced an old concept to many. Rather than investing in exchange for ownership in a company, many investors are investing in exchange for a part of the revenues that the business generates. This has the dual benefit of leaving ownership with the entrepreneur and giving the investor a potential for superior returns. It is a common form of reward in starting a restaurant or making a film, but relatively new in its current use as part of the sustainability trend.

The desire for more direct and useful products has, in recent years, led institutional and ultra-wealthy investors to purchase venture capital funds that promise to seek out and invest in segments of the sustainability market, like clean land or hydro-culture, solar power or bottom-of-the–pyramid wealth creation. But these investment vehicles demand long-term commitments with no liquidity. That isn’t for everyone.

Domini Social Investments has, therefore, launched Nia Global Solutions, an equity portfolio that seeks to bring these concepts into the public market. In seeking the very most impactful companies, meeting the very toughest sustainability questions, we started with our own basic universe of 2,800 companies. Only three worked for Nia. We now have a pool of about 43 to work with in managing the portfolio.

This is likely to be a big new effort in the socially responsible investing world. Bringing the concepts of high impact investing into the public equity setting is filled with challenges, but the industry has long heard the call from investors for something cleaner and more consistent with personal values than what they’ve seen to date.

I’d be remiss to leave this point without addressing fossil fuel free investing. It is real and it is going to become an industry standard. The challenges of investing without fossil fuels have been well stated, but they lack moral validity. As a first step in this direction, Domini launched Nia. I do not know when and how step two will take place, but I do know that it must.

A More Predicable Stock Market

The years between 2000 and 2012 were difficult ones for investors and posed special challenges for the responsible investor. We suffered through two market collapses of roughly 50 percent. The period has been marked by the distortions that war creates and by the distortions that an under-regulated investment community creates. For much of the period the forces of extreme voices dominated public discourse, whether in their calls on our government to wage war, or in their hatred of government actions (oxymoronic as that statement is).

During the first half of that period the investor ran from oil stocks to weapons stocks to gambling stocks to gold stocks and then began the cycle all over. None of these ‘hot’ industries were appealing to responsible investors and markets that witness narrow industry movements without broad market trends joining are hard markets to do well in. For many in the industry, these were the most challenging years we have ever faced.

During the second half we witnessed the complete collapse of the housing market and all the financial structures that depend on housing. We also saw spectacular malfunctions in securities trading, with flash crashes and London Whales, Bernard Madoff and AIG’s failure. The Federal Reserve, left alone to protect our economy once Congress was blocked by the Republican Party’s do-nothing stance, used the only tools they had. They reduced short rates to zero or less after inflation and when that wasn’t enough, they entered the public markets and bought long bonds, pushing long rates down as well. These were unprecedented actions and Wall Street by and large did not know how to cope with them. The result was an approach many called, “risk-on, risk-off.” The right way to invest was to go all in or all out, even if you did that daily. It created volatility and uncertainty.

This past year saw a return to relative normalcy. Companies announced good news and their stock prices rose. When the news was poor, the stocks sold off. The chase after the story of the moment and the take-a-risk/don’t-take-a-risk market behavior has faded. This allows old-fashioned fundamental research to lead to more solid results. And nothing is so fundamental to understanding a company as the sort of knowledge we gain by doing a social and environmental audit.

An underlying threat to the market stability remains. The political environment is very uncomfortable. Non-action has become a tactic used daily, and it is used to make the administration look bad, rather than to hold the status quo. It is a testament to the strength of our recovery that in spite of the inaction we have seen GDP growth. When you consider that Standard & Poor’s estimated that the government shutdown alone cost $24 billion dollars, you get a sense of the horrific economic impact of the Republican Party’s efforts. There will be elections this fall that will stir up markets.

Growing Understanding of the Value of ESG research

We are at the tipping point here. Environmental, social and governance evaluations are baked into most research platforms today and some street research. Do you have an account at Fidelity? Click through the research on your portfolio and you’ll see what I mean. Do you rely on Factiva, FactSet or Bloomberg? They all provide this. Even street research occasionally references it in the U.S. and always bakes it into their European reports. This was the core goal of introducing ethics into investment decision making, to influence Wall Street to be a force for good, and we’re seeing it unfold.

We are just moving from the point of this research being available due to client demand to seeing it used by conventional analysts. Wellington Management Company recently published a short article on their work with a Wall Street broker that provides ESG research and found, as each study has, value added. Like many such pieces, it was quick to disavow that this was socially responsible investing, but the subtleties are lost on me. As the recognition of value grows, the feedback to corporations will as well.

In fact we know that corporations have been receiving the feedback. We know because they publish Corporate Responsibility Reports. Corporate Register reports that 7,000 or so companies (private as well as public) report on some aspect and that about 80 percent of these report on a spectrum of issues. As a founder of a company that scoured corporate reports for any indication of interest, this both astounds and delights me. It validates the effort.

The growth of understanding that there is value added to research by knowing the full spectrum of corporate impacts on people and the planet in turn assists those of us who are professionals in the field of socially responsible investing. We will begin to feel the wind at our backs for a change. Many of us have grown weary of the question, “how do you compare to regular managers?” As ESG research gains acceptance, so do we.

2014 – A Good Year

2014 is unlikely to see the spectacular equity returns that we enjoyed in 2013, but it will be a year in which we can manage assets in a logical manner. We will begin to see the development of real products for the public’s new interest in the ideas of Slow Money, Sustainable Agriculture, Fossil Fuel Free investing and High Impact. And these products will themselves spur new interest in our field. 2014 will see the continuance of mainstreaming, particularly in the acceptance of ESG research as an important tool in understanding the company whose stock we are buying.

Although we have some cross currents to navigate, the general thrust of these three points I have been making is toward a good environment for the field. We do not know what the Federal Reserve’s gradual reduction of their actions will be, but they do seem to be moving slowly. This in turn has reduced our concern that growth in emerging markets will be impaired, which would be a negative for our economy. Yes, there are risks. But I argue that this is the beginning of an exciting decade.

During 2013 we saw the start of drivers for truly robust growth begin to emerge. We saw the emergence of Tesla, a major new disrupter in the automobile field, with a battery solution that will drive other industries. We saw the cost of solar equipment plummet and the efficiency soar, and with it, companies that install solar on hospitals or industrial settings. And we saw shifts in disease treatment moving us more to personalized medicine, privacy options, and increased tools in the fight against cancer. This is in a way an even better set of circumstances than the computer revolution brought us. It is a broader base and brings in both low and highly skilled workers. And we saw the emergence of KickStarter and other such group funding opportunities, which support local economies and the emergence of new entrepreneurs.

2014 will see these trends continue, and these are trends that speak directly to the socially responsible investor. Within this context will come the new products, the calmer markets and the growth of acknowledgement that ESG research adds value. This is the environment we have long been waiting for. I look forward to seeing the year unfold.

 

Article by Amy Domini, who is a partner in the Sustainability Group in Boston where she manages roughly $1 billion in liquid assets for high net worth families. Additionally she is the founder and CEO of Domini Social Investments (www.domini.com ), a New York City based mutual fund family. She is widely recognized as the leading voice for socially responsible investing. In 2005 she was named to the Time magazine 100 list of the world’s most influential people, and in 2009 Time listed her as one of 25 “Responsibility Pioneers”.  In 2005, President Clinton honored her at the inaugural meeting of the Clinton Global Initiative.

Ms. Domini co-authored the groundbreaking book, Ethical Investing in 1984.  Since then she has authored or co-authored several books.  Her articles have been widely published and she is a regular contributor to The Intelligent Optimist magazine.

Ms. Domini serves or has served on several boards.  She is a member of the Boston Security Analysts Society and holds the Chartered Financial Analyst designation.

Ms. Domini holds a B.A. in international and comparative studies from Boston University.  She is the recipient of two honorary degrees: a Doctor of Business Administration, from Northeastern University College of Law and a Doctor of Humane Letters by the Berkeley Divinity School at Yale.

In Mandela’s Footsteps: The Long Walk Continues

By Donna Katzin, Executive Director

In Mandela’s Footsteps: The Long Walk Continues“Eliminating poverty is not a gesture of charity. It is an act of justice… Like slavery and apartheid, poverty is not natural. People have created and tolerated poverty. And it is people who will overcome it.”
– Nelson Rolihlhla Mandela

 

On July 18, 2013 Nelson Mandela’s 95th birthday, children with crayons in Kazakhstan draw his face on the sidewalk. At the United Nations, fifteen year-old Malala Yousafzai from Pakistan, who has been shot in the head by the Taliban, says Mandela has influenced her and she forgives her shooters. On December 5, 2013 the world mourns and harvests lessons from this monumental man who has taught us so much, and left so much more to do.

Nelson Mandela’s Legacy

On a personal level, Nelson Mandela exemplified the heights of human potential. Today we harvest his humility, courage, selfless dedication to justice, his understanding of what is historically necessary — and his capacity to reconcile without bitterness, learn from others and build community. These things challenge us and point us to what is possible.

At the same time, his life and the global groundswell he helped to catalyze and lead underscore larger lessons about changing history. In the investment community, they enlighten our work to build a more equitable, sustainable and peaceful world. Among many other things, Mandela and the anti-apartheid movement taught us the following:

1 – In this global economy, transformation requires organizing beyond borders. South Africa’s struggle to end apartheid wove the work of activists, stakeholders, and “ordinary” people around the world to do extraordinary things. They ranged from the United Nations with its arms embargo and oil embargo campaigners in Norway, sports-boycotters in New Zealand, to communities, congregations, campuses, companies, cities and states that mobilized their resources to exclude South Africa from the family of nations.

2 – Sustained catalytic campaigns require more than one lever for change. They are rooted in collaboration by stakeholders coordinating a spectrum of strategies. For socially responsible investors, effective tools have included dialogues, divestment, boycotts, sanctions, codes of conduct and, ultimately, reinvestment. Since apartheid’s demise, investors and activists alike have applied these strategies to campaigns ranging from climate change to financial inclusion to waging peace in the Middle East.

In South Africa’s case, these strategies were not hatched in a vacuum, but developed in concert and solidarity with activists on the ground – mineworkers and autoworkers, and protesters in Sharpeville, students in Soweto, and the wide web of social justice movements – throughout South Africa and in exile.

3 – Historic change does not flow from one man. Mandela maintained to the end, whether prisoner or president, that he was a “humble servant” of the African National Congress. The wisdom and strength he gleaned from other ANC members – and from their many partners – informed his leadership and enhanced his effectiveness. Mandela was a great man, but knew better than to espouse the “great man” theory of change.

4 – Transformation often takes more than one lifetime. In the U.S. we should appreciate this fact – as we confront entrenched racism more than 150 years after our country’s Emancipation Proclamation. South Africa, which celebrated the ANC’s 100th anniversary last year, and this year the 20th anniversary of democracy, still has a long way to go to translate its hard-won political rights into an equitable economy for all of its citizens. The country’s transfer of political power in 1994 did not transform an economic system that continues to concentrate wealth, maintain exploitative relationships and generate poverty.

The Unfinished Agenda

Mandela appreciated that his long and continuing walk to freedom began before and would extend well beyond his lifetime – not only because of the viciousness of colonial and apartheid rule, but also because of the deeply entrenched attitudes and economic system that required change. While the new order, rooted in economic and social human rights, is hardwired into the country’s 1996 constitution, it will take at least another generation for it to become a reality for the majority of South Africans.

There is no denying that South Africa has accomplished Herculean achievements since it abolished apartheid and established a political democracy in 1994. A recent study released by Goldman Sachs reports that between 1996 and 2011, functional illiteracy dropped from 34 percent to 19 percent; access to sanitation increased from 50.3 percent to 62 percent of the population, and access to electricity rose from 58 percent to 85 percent. Between 2002 and 2012, the portion of the population that experiences hunger dropped from one in four to one in 10; those with access to tap water and/or plumbing grew from 56 percent to 91 percent of the population, and the share of learners receiving free elementary school education mushroomed from 1 percent to 57 percent. The democratically elected government has provided more than 3 million units of low-cost housing.

Contributing to South Africa’s success have been the increase in its gross domestic product per capita, which rose from $4,300 in 1995 to $6,000 in 2012, and its tax base, which grew from 1.7 million payers contributing $114 billion to state revenues in 1994 to 13.7 million contributing $814 billion in 2012.

But apartheid’s legacy will take many years more to reverse – particularly given setbacks in some of South Africa’s key markets (notably Europe and the U.S.) The country’s booming population has grown from 40 million in 1994 to nearly 52 million today. While the number of employed people has risen between 1996 and 2011 from 9 million to 13.2 million, the ranks of its unemployed have officially increased from 4.7 million to 5.6 million. When we count “discouraged” workers who have given up looking for jobs, the unemployment rate swells to an estimated 40 percent – higher still for low-income youth of color. As township dwellers move into new homes, rural residents in search of jobs and housing often take over the shacks they vacate – replenishing the list of people waiting for government housing and subsidies. In many parts of the country – like many other parts of the world, the income gap between haves and have-nots is actually widening. Today – 20 years after the abolition of apartheid, 87 percent of white South Africans may be classified as middle or upper class. Eighty-five percent of Africans remain poor.

Laying Foundations for the Next Generation

In Mandela’s Footsteps: The Long Walk ContinuesNelson Mandela understood that an equitable economy was not a foregone conclusion, and that it would take many more years to achieve. Acknowledging this reality, a number of non-profits have sprung up to help continue the work. In 1994, one of them, Shared Interest, launched a New York-based socially responsible investment fund, which Mandela recognized. A decade ago he told us, “Your contribution toward making available credit, creating jobs, encouraging small business and providing affordable homes and viable communities for economically disenfranchised South Africans [is] as necessary now as it was in 1994…We look forward to continuing that work which is based on a shared interest.”

Since then, Shared Interest has provided a vehicle for individuals and institutions to turn from disinvestment to reinvestment in South Africa’s economically excluded communities of color. Some would call this community investing, others “impact” investing. With our South African partner organization, Thembani, we guarantee South African financial institutions’ loans to small business owners and farmers, cooperatives, microfinance and affordable housing organizations they would otherwise consider “unbankable.” The goal is for the new borrowers to “graduate” from guarantees, and for commercial lenders to discover this market – and make it a platform for their ordinary business.

Our results have been significant. Not one of our investors has lost a penny of interest or principal. With the capital they lend to us for three to five years, we have guaranteed South African financial institutions’ loans benefiting more than 2.2 million low-income black South Africans.

These are couples like the Mkhungus in KwaZulu-Natal, who purchased a run-down poultry farm from a retiring white family, and have increased their production from 28,000 to more than 900,000 eggs a month. They are young workers at small businesses like One Vision, which makes vegetable chips in the Western Cape in a community where 1,000 jobs were destroyed when another plant closed. They are young women like 28-year old Rofihwa Tsialatshitsa in northern Limpopo, who have more than doubled the hectares of tomatoes they produce for a local company, and are determined to demonstrate that women can succeed as commercial farmers.

But as we celebrate Shared Interest’s 20th anniversary – and that of post-apartheid South Africa – we recognize how far we have to go on the path Mandela and South Africa’s liberation movements created. We also appreciate the continuing relevance of many lessons from the first two decades of South African democracy. These are cornerstones for Shared Interest’s Next Generation Campaign to lay financial foundations for the future, and to educate investors that at least another generation of work will be needed to make a just economy a reality for all South Africans.

A South African street vendor said it best: “Political freedom without economic freedom is not freedom.” The model of peaceful transition, forgiveness and multiracial collaboration runs the risk of unraveling unless it is shrinks the gap between haves and have-nots. We call this the economics of reconciliation.

For our partners, and us this means:

1 – We must build broader alliances and coalitions to challenge financial institutions whose practices and systems keep people poor and powerless, and to encourage emerging initiatives for inclusive finance. This is difficult now, in the wake of the world financial crisis that pressed institutions in South Africa (and elsewhere) to focus more on building reserves and protecting depositors’ assets than on providing credit and services to people at the bottom of the pyramid.

2 – Building effective local institutions, enterprises and a more just economy call for stronger international partnerships – and all of our support within and beyond South Africa. In South Africa, some of the new “born free” generation that grew up after apartheid are less versed than their parents in lessons and tools for transformation. Young people around the world may labor under the illusion that South Africa’s transformation is an issue of the past, not a challenge for the future.

3 – Finally, we recognize that transformation is likely to take longer than our lifetimes. Mandela clearly told us: “It is time for the next generations to continue our struggle against social injustice and for the rights of humanity. It is in your hands.”

 

Article by Donna Katzin, PhD., the founding Executive Director of Shared Interest (www.sharedinterest.org ). From 1986 until July of 1994, she served as Director of South Africa and International Justice Programs for the Interfaith Center on Corporate Responsibility. In that capacity she worked with religious bodies, institutional investors and community organizations to exert economic pressure to end apartheid, promote responsible reinvestment after apartheid, and to advance social criteria for domestic and international lending. She holds a master’s degree in Community Organization and Planning, and a doctorate in Human Services Education and Development. She is a board member of the Thembani International Guarantee Fund, Housing for HIV, and the Jewish Funds for Justice.

The GreenMoney Interview: Philippe Cousteau

Explorer, social entrepreneur and environmental advocate
interviewed by Cliff Feigenbaum, founder of GreenMoney Journal

The GreenMoney Interview: Philippe Cousteau

One of the more enjoyable tasks at GreenMoney is interviewing true leaders in our world.

This interview features Philippe Cousteau, the son of Jan and Philippe Cousteau Sr. and grandson of Captain Jacques-Yves Cousteau. As a member of this legendary family, Philippe is continuing the work of his father through EarthEcho International (www.earthecho.org ), the non-profit organization he founded with his sister and mother and which he serves as President. His goal is to engage and empower people to take action for a brighter future. His tools are simple—education, balanced advocacy, and commitment to action.

In this, his first GreenMoney interview, he has much to share. He begins with the new venture that brings together business and the environment, and closes with a look at the next 20 years.

 

GMJ:  It is great to hear that you and AdvisorShares are launching the Global Echo ETF this year. Tell us more about it.

PHILIPPE:  The Global Echo ETF (GIVE) is the culmination of three years of work where I have tried to find a way to leverage financial markets and Wall Street to do ‘good’. It all started during a casual conversation I had with a friend of mine in New York. I was lamenting the state of the economy and how difficult it is to raise money for important causes. He said to me, “have you ever thought about getting involved in financial markets?” I confessed that I hadn’t thought about it and we moved on to other subjects. But the idea stuck with me and I began asking questions and learning, and realized that there just might be an opportunity. After more than a year of networking and learning about different types of funds, I happened to meet the guys at AdvisorShares. I had decided against hedge funds, or private equity funds or venture funds even though some folks had offered to help me start some simply because I wanted to create something that everyone could participate in, not just wealthy accredited investors.  That is when I learned about Exchange Traded Funds (ETF’s). Originally the AdvisorShares team was doing a favor for a mutual friend by telling me about ETF’s as part of my personal research to learn about markets, but it quickly became apparent that we shared a common vision for finding a way to change the world. From the beginning, I wanted to find a way to support sustainable investing but also generate new philanthropic dollars immediately and over the course of a few months the structure of GIVE took shape to do just that.

 

GMJ:  Tell us about the partnership with AdvisorShares. Why them and why an ETF and not a mutual fund? 

PHILIPPE:  What I really liked about AdvisorShares was that their business model always anticipated some sort of sustainable venture. When we met and learned of our mutual goals it was a match made in heaven. I also liked the fact that they were a young organization, ready to innovative and shake things up. ETF’s appealed to me because they are simple, transparent and easy for anyone to invest in. My life is dedicated to helping people find hope and understand their potential to change the world. From classroom education, to television, to books, live events, and even designing educational and sustainable buildings, I have always looked for ways to help people take action. Now I am turning my attention to financial markets. If you can buy a stock on the NYSE you can buy GIVE. From high net worth individuals to kids who want to start investing with the $100 birthday money from their grandparents, they can invest in the market and change the world.

 

GMJ:  What is the focus of your Global Echo Foundation and how will the new ETF help the foundation further its mission(s)?

PHILIPPE:  The Global Echo Foundation is being founded in tandem with the Global Echo ETF. Its goal is to provide funding solutions to many of the challenges facing the world community, from social issues impacting women and children to environmental conservation, as well as to support social entrepreneurship, like micro-credit programs.

 

GMJ:  So, this venture represents a dual mandate in both public and private markets. How will the public product be managed and who will make the investment decisions? Who is this investment product suitable for?

PHILIPPE:  Correct, the Global Echo ETF (GIVE) will fund the Global Echo Foundation by contributing 40 basis points of its management fee. AdvisorShares and the four sub-advisors hired to deploy their particular expertise in Sustainable Investment will manage the public product. First Affirmative Financial Network (FAFN) will serve as the allocation manager, deciding when allocations to each manager should be added or subtracted. Each sub-advisor manages very large sums of money for institutional and retail clients and has done so for many years with great success. We have two global equity managers; Reynders McVeigh focuses on publicly traded companies that have sustainable corporate mandates and Baldwin Brothers invests in its High Water Global strategy, with its global sustainability themes based on work by Paul Hawken (clean energy, new technology, etc). Additionally, fixed income manager Community Capital will invest in sustainable fixed income opportunities and FAFN the alternative manager that will employ a long/short strategy that invests in ESG, SRI and sustainability themed ETFs and will short out market beta with inverse or short ETFs. As mentioned previously, this product is designed for any investor who wants to make a difference in the world!

 

GMJ:  What have you seen over the years that has challenged the capital raising environment for not-for-profits and why have you embraced financial markets for this new endeavor? 

PHILIPPE:  As we struggle with a depressed global economy, philanthropic dollars have dried up.  Even though the non-profit industry employs more people than the financial services and car industries combined, we never got a bailout. The old model of raising money is insufficient to drive the kind of dollars we need to solve our greatest challenges so we need to find new and innovative models

 

GMJ:  We’ve heard so much about Business and Environment as an either/or. How do you see Business and the Environment working together for a sustainable, even restorative, future? 

PHILIPPE:  It is true that this absurd notion still plagues the world but I believe that is changing. We are not just investing in green energy and technology. There are a lot of companies out there with responsible environmental, social, and governance (ESG) policies and yet they are large successful companies and great investments. A sustainable company manages risk well because public and governments around the world are becoming more aware and responsible, and they expect corporations to do the same. A good ESG policy is just good business. It leads to higher employee retention, less risk of legal action, cheaper mitigation costs, and better marketing opportunities. Often, initiatives like energy efficiency, water efficiency, etc., lead to lower operating costs and fatter bottom lines. They just make good sense.

 

GMJ:  You are on the front lines in the environment, specifically in our oceans. What are you seeing out there? How can we better protect the oceans?

PHILIPPE:  It’s simple; the oceans are the life support system of our planet. They provide most of our oxygen and a huge percentage of our protein, and they regulate our climate. Without healthy oceans, humans will be unable to thrive on this planet. My father and grandfather had a simple dream “That every child born has the right to breath fresh air, drink clean water and walk on green grass under a blue sky.” I share that dream and know that if we don’t ensure that healthy oceans exist, that dream won’t happen. The world’s population is 7 billion this year, with an estimated 2 billion more people coming to this planet in the next 40 years. If we are going to feed, clothe and power these people we have to find a better way. There just isn’t enough stuff to maintain the status quo, – not enough food, water, or raw materials. For example, food production will have to rise by seventy percent by 2050 to keep pace with population growth. Old solutions like adding fertilizer are less effective; there are no new water sources and people are eating more meat while wasting more food. Unless these problems are solved we will add 2 billion more people to the current 1 billion that go to sleep every night hungry. Businesses who solve those problems will own the markets of the future.

 

GMJ:  With the Cousteau family legacy of raising awareness and protection of the Natural World, what do you see as the steps we need to take in the next 20 years to ensure a healthy global ecosystem? 

PHILIPPE:  The fundamental challenge today is population; most of the coming two billion people will be born into poverty near the regions of the world that will be most affected by climate change; we cannot have environmental sustainability unless we have human sustainability. That is why the Global Echo Foundation is focused on three critical solutions.

The First is Investing in Social Entrepreneurship with a focus on micro-credit, essentially the old adage of teaching a human to fish, not just giving them a fish. We believe in the desire of people to build a better life for their families and we want to build on the success of that movement to help them do so. Second, we are Investing in Environmental Education; we cannot have a sustainable world without generations of youth who understand their responsibility and power to change the world.

The Third is Investing in Women. My grandfather always told me that the key to sustainability is investing in women. We know that women invest their money in educating themselves, their children and feeding and supporting their families. It’s about empowering women with respect and choice. Those are the key solutions, in my opinion, to the problems facing this world. These are the solutions that investing in GIVE will support. It is a simple way for people to invest in the market and change the world at no cost to themselves because the fund’s money comes out of management fees that they would pay anyway. For responsible investors, it is the closest thing to having your cake and eating it too.

The GreenMoney Interview: Philippe Cousteau

Photos courtesy of Philippe Cousteau

Good Greed

By Ray C. Anderson, founder of Interface, Inc. (1934-2011)

Since you’re reading the GreenMoney Journal it’s likely that you’ve already made the mental shift to sustainability, and if that’s the case, welcome! I believe that shift happens one mind at a time, one company, one technology, one university curriculum, one industry, one community at a time. Furthermore, I have never met a “former environmentalist.” It’s true! Once you understand the truth and complexity of our environmental challenges, you are forever changed. My story demonstrates that. And fortunately for us and for our planet, that collective mental shift seems to be happening quickly, particularly in the important field of green building.

I well remember the first time I spoke before the United States Green Building Council (USGBC), back in 1995 in Big Sky, Montana. I counted heads in the audience; there were just 135 people in that room. When I shared the opening plenary at the USGBC meeting in Atlanta with Paul Hawken and Janine Benyus ten years later, there were 12,000 people there! Two years after that, in Chicago, over 22,000 registered and an estimated 40,000 showed up. In business, that is a growth curve to die for. Today, USGBC’s Leadership in Energy and Environmental Design (LEED) rating system is emerging as the global model for green building standards. It’s truly an idea whose time has come, on a global scale.

My 54 year-long working life has been spent in industry. I founded my company Interface, Inc., from absolute scratch, from just an idea 37 years ago – an idea that felt so right, so smart – to produce modular carpet in America for the emerging “Office of the Future.” Today we are a billion dollar global producer of InterfaceFLOR modular carpets and of broadloom carpets, (under the “Bentley Prince Street” brand), primarily for business and institutional interiors, as well as carpet tiles for the home, marketed under the FLOR® brand. We operate production facilities on four continents, with sales in 110 countries, and make about one-third of all the carpet tiles used on the Earth.

So I’m an industrialist, – some might even say a “radical industrialist,” a handle which gave rise to the title of the book I wrote that was published in 2009, “Confessions of a Radical Industrialist.”

You may know the story: I was convicted and transformed in 1994 by Paul Hawken’s book “The Ecology of Commerce” and his thesis that the largest, most pervasive, most powerful, influential and wealthy institution on Earth must lead humankind out of the environmental mess we are making. That institution is business and industry, which also is the biggest culprit in creating the mess—the precipitous decline of the biosphere. That is my institution, and carpets, generally, are petro-intensive for material and energy, contribute to global warming, and use a lot of water in their production.

Sixteen years ago, I said to a tiny, newly formed, environmental task force of Interface people, “If Hawken is right, and business and industry must lead, who will lead business and industry? Unless somebody leads, nobody will. Why not us?” So, for 16 years we at Interface have been climbing Mount Sustainability, – that point at the top symbolizing our goal: zero footprint. We call it “Mission Zero.”

We are well on our way to meeting that 2020 goal … I’ll give you a progress report before I’m done here.

Reading Hawken’s book nearly 16 years ago, I asked myself then, and I ask you now, how could a living planet – the rarest and most precious thing in the entire universe – lose its biosphere, its livability? We take it completely for granted and don’t want to believe for a second that we, i.e., our descendents, could possibly lose it.

Though clearly there’s a broad awakening under way, there’s no denying that there is also a fair amount of resistance to change. Why? Well, I think there’s more than just inertia or perverse incentives at work. Our culture is very much in the grip of some old, flawed views that stand in direct and violent contrast to sustainability, – flawed views that are reflected in, and fueled by, consumerism, our insatiable infatuation with stuff.

There is the flawed view that treats the earth as though it were an infinite source of raw materials to feed our industrial system, stock our shelves, fill our houses, crowd our garages, and spill out into rented storage units, or into landfills, waterways, oceans, and the air.

There is the flawed view that adopts the annual (or quarterly) timeframe to measure the worth of an idea. There is the flawed view that forgets to ask one simple question when assessing the environmental costs of a business decision: What if everyone did it?

  • What if everyone discharged untreated wastewater into the local river?
  • What if everyone sent hazardous waste to be buried in the local landfill?
  • What if everyone left their office lights burning, or truck engines running, or thermostats set too high or too low?
  • What if everyone did it?

There is the flawed view that assumes this world is ours to conquer and rule; that we can take whatever we want from it without regard for all the other species that depend on – and compromise – nature itself, the same natural world that we depend on and are a part of, too. There is the flawed view that when accumulating all that stuff gets us into trouble, technology will see us through, even though the extractive, abusive attributes of technology – especially when coupled with numbers-driven, unemotional, results-oriented, left brain intelligence – got us into the fix to begin with.

And there is the flawed view that relies on the invisible hand of the market to be an honest broker, even though we know the market can be very dishonest. Does the price of a pack of cigarettes reflect its true cost? Not even close! How about the price tag on a lead-tainted toy from China? A box of contaminated infant formula? I don’t think so. And the price of a barrel of oil? Last time I looked, the oil companies weren’t deploying armies or naval forces to the Middle East to protect the oil fields and tankers. You and I are doing that with our taxes. Our sons and our daughters are doing it with their lives. The oil companies aren’t paying the medical bills for all those folks breathing smog, either. Nor are they building the seawalls our coastal cities will need to keep the warming, rising ocean from drowning them. Let all those be somebody else’s problem. Let our grandchildren foot that bill.

Add up all the costs the oil companies are happy to have someone else pay on their behalf, and the price of a barrel of oil – even by today’s measure – is too low by $150, and maybe $200. It is infinitely too low if you’ve lost a son, a daughter, a husband, or a wife to war.

Here’s the thing: While a few of us might enjoy the fruits of what we think is a free market, we all suffer the consequences of a rigged one, a market that is very good at setting prices, but has no concept at all of costs.

A market that’s rigged to get someone else to pay the bills whenever and wherever a gullible or unwary public allows it to happen. A system of economics that idealizes the so-called Basic Economic Problem as the driver of all economic progress. The “problem”? The gap between what we have and what we want; not need, want.

So how should we look at the world, and ourselves, from the point of view of sustainability? How do we reshape the linear take-make-waste conveyor belt we’re stuck on and bend it into a closed loop circle? I believe there is a way that unleashes a force even greater than our passion for wants, powerful enough to overcome just about any inertia. What is that force?

That force is something we used to be pretty good at—good old capitalist, enlightened self-interest. It’s irresistible magnetic force that in a free society draws innovation and capital straight to opportunity, what we might call “good greed.”

And I think it’s exactly the force that will compel business and industry to charge right to the top of Mount Sustainability.

I know we’re not going to get this job done in just a few years. I know that bringing our companies, our universities, our governments, our families, and ourselves into balance with the earth’s natural systems is a huge challenge. But the payoff is nothing short of survival—while earning a solid, honest, ethical profit. It is one of the key things we hope to accomplish at Interface: to prove this new and better business model works, to demonstrate by our own example that reaching for sustainability can lead to bigger and more legitimate profits; and by doing so, to attract other companies around the world to the model.

One result: an ever greener built environment.

The good news is that we can do it one small, smart step at a time, each one paying its own way and laying the groundwork for the next. Each step will make us a little less unsustainable, and simultaneously more profitable.

In that kickoff speech years ago, borrowing from Hawken, I said that every company has to face three ecological challenges honestly and head-on:

  1. What we take from the earth.
  2. What we make, and what collateral damage we do in the making of it (pollution of all kinds).
  3. What we waste along the way (in all forms), from the wellhead to the landfill.

At Interface, we began scaling what we call Mount Sustainability on seven fronts: waste, emissions, energy, material flows, transportation, culture, and the redesign of commerce. We’ve made significant progress in 16 years–progress that can be replicated by, I daresay, any industrial company on earth. Here’s our report card:

Today, we’re about 60 percent toward our “Mission Zero” goal—zero environmental footprint by 2020. Importantly, using a mix of alternative, renewable sources of energy, and other process efficiencies, we’ve cut greenhouse-gas emissions by 44 percent, leading to a 94 percent net reduction when factoring in offsets such as the use of landfill gas for process energy. We have pioneered new industrial processes that allow us to recycle both the nylon face fiber and the vinyl backing of reclaimed carpet—ours and that of other manufacturers as well. Water usage is down 83 percent.

As for costs, they’re actually down, not up. A zero-tolerance waste initiative has paid the way. Sixteen years later, we’ve reduced or avoided waste to the tune of $433 million, more than footing the bill for all the costs associated with greening our company.

We’re doing it because it is smart, and because it is right. And when we succeed, we’ll never again need another drop of oil for our petro-intensive industrial processes; and…

We’ll be doing very well by doing good.

That epitomizes my vision for Interface, and I know – just the way I knew carpet tiles were so right and so smart – that if we can get there, you can get there, too. Now, then, what if everybody did that?

 

Article by Ray C. Anderson, chairman and founder of Interface, Inc., and author of Confessions of a Radical Industrialist. For more information on the company go tohttp://www.interfaceglobal.com

Note to Reader: Sadly, Mr. Anderson passed away on August 8, 2011.

This Article was originally published in the GreenMoney Journal (Summer 2010 issue)

Megan Epler Wood - Cambodia

The Future of Ecotourism

By Megan Epler Wood, Epler Wood International

>> Back to January 2020

(Reader Favorite from Summer 2012)

Twenty years ago travelers were just beginning to think about the environmental impacts of their tours. Ecotourism became a catch-all term in the 1990s for making travel environmentally beneficial, and it was frequently cited as the fastest growing phenomenon in travel. Journalists tended to run with any reasonable stats they were given on this growing market, but the fact was that truly responsible travelers were a rare breed. It has taken 20 years to take this phenomenon mainstream!

Ecotourism was defined by The International Ecotourism Society (TIES) in 1990 as responsible travel to natural areas that conserves the environment and sustains the well-being of local people. As the founder of TIES, I found this basic definition a vital tool to manage perceptions of what tourism’s impacts are, how we might manage it differently in the future, and how to ask the industry to put a higher value on conserving the landscapes, wildlife, parks, people, monuments, and cultures that make their businesses possible.

Once I saw travel not as just a personal experience, but a way to touch the global community and help promote positive measures for conservation and sustainability, it became impossible to look back. Ecotourism influences a broad global dialog on the sustainability of travel which even led to a United Nations ecotourism summit in 2002. But for me the growth of the tourism economy has been the most important fact to help the global community understand its potential for good and the need to arrest the bad. This huge industry now generates over 10 percent of the world’s gross domestic product. And for 83 percent of countries in the world, tourism is one of the top five sources of foreign exchange.

Travelers are branching out around the planet, and the Internet makes it possible to book in any country, at any time. Volume continues to go up worldwide, and developing countries are seeing enormous growth. Tourists now spend over $200 billion annually in emerging market nations. No other sector spreads wealth and jobs across poor countries like tourism does, but no other sector grows with so few controls.

Vulnerabilities to the economy of tourism are always there. Security risks can cause drastic downturns, armed conflicts destroy tourism markets, and rising oil prices hit fast and hard. All of these factors will affect ecotourism in the next 20 years. I just returned from Egypt, and due to the current news cycle featuring some political unrest, tourist volume is down over 50 percent. This drastic reduction in sales is painful; huge investments are lost, and local businesses lay off workers. The harsh reality of a market-based product cannot be softened. No matter how one wants to present tourism as a positive force for sustainability, it is still a global market that cannot be controlled.

The profile of the ecotourist is changing rapidly. It was once assumed that the ecotraveler was a foreign visitor to exotic locales, dressed in khaki and ready to view wildlife by day and sit by campfires at night. Now, the ecotraveler has many profiles. Throughout the world, ecotravelers often visit rural and exotic locales in their own countries. Brazilians from Sao Paulo are a major market for parks in the beautiful mountains of Minas Gerais. Travelers from Dhaka in Bangladesh are the major market for the parks and reserves on the Bay of Bengal. Indian and Chinese travelers are a growing force in their domestic destinations. Ecotravel is no longer a reflection of a colonial past, it is a highly globalized market. It is dependent on neither backpackers nor luxury safari enthusiasts, but is a full spectrum of nationalities and demographics representing all ages and incomes.

El Rosario Mariposa Monarca - Epler Wood Int - GreenMoney Journal
El Rosario Mariposa Monarca, courtesy of Epler Wood International

In the last 20 years, sustainability and the environmental management of tourism have become a greater focus of the largest tourism corporations on earth. Systems to manage hotel waste, water, air quality, and energy conservation are standard procedure now among most major hotel brands. Travelers may see only that they are being asked not to waste their sheets and towels, but behind hotel walls, efficient systems for lighting, heating and air conditioning, and water conservation measures are being installed across the globe.

Ecolodges, once a rare phenomenon, have become a strong market trend worldwide. Frequently designed by inspired architects; ecolodges set the standard for environmentally sustainable lodging, using renewable energy, reducing waste, composting, growing their own organic gardens, and avoiding the destruction of native vegetation. Dozens of independent lodges now operate in the globe’s beauty spots, from Caiman Ecological Refuge in the Pantanal of Brazil to the Kosrae Village Ecolodge and Dive Resort in Micronesia. Tourism and travel awards are frequently given to chains of ecologically managed hotels that take their cues from the ecolodge movement, such as Six Senses, which operates in Thailand, Vietnam, the Maldives and Jordan. This company builds lodges using local sustainable sources wherever possible and serves organic food, helping travelers to appreciate the “slow life.”

There have been many global gains for ecotourism, but when it comes to aviation, we are talking about one of the most carbon intensive industries in the world, not an ecological strong point of this industry. The global aviation industry presently accounts for three percent of carbon emissions worldwide and is rising fast. With all known measures, including improved efficiency, emissions will nevertheless be up 175 percent in the next 20 years, particularly because of ever increasing numbers of long haul flights. At present, the EU is mandating carbon trading for aviation, but the global airline industry is fighting this tooth and nail. It seems few are worrying about the environmental threats of global aviation, so initiatives to manage the carbon impacts of air travel are difficult to advance.

Making ecotourism a genuine tool for conservation of the world’s ecosystems is a battle which never flags, but also never receives the needed unconditional support. For example, travelers without question are ready to pay for entrances to parks, and foreign visitors are frequently prepared to pay more than they do. Yet parks and protected areas around the world have been extremely slow in adopting measures to be certain tourists pay what is really required. How many times do travelers enter parks around the world without knowing how to pay? Ecotourism in the next 20 years must be a primary source of revenue for parks, and ecotravelers will be ready to pay.

Sri Lanka ecolodge site, courtesy of Epler Wood International

Historic monuments also suffer greatly from a lack of wise management. In the Valley of the Kings in Egypt I was lucky to visit when few other travelers were present, but I was told that there are no limits on the numbers of visitors entering the ancient tombs, which are among the greatest monuments of human civilization. When I questioned whether there might not be a system to implement limits in the future, I was told I was dreaming. If Egypt or Cambodia or any other nation with major monuments cannot control visitor volume, the future of ecotourism is compromised. Traveler overload will damage these sites and they may eventually have to be closed. However, managers of Macchu Picchu in Peru have come to terms with this problem and set out a permit system to control the number of trekkers on the Inca Trail. Through this type of volume management, we can hope that ecotourism will be a positive for the world’s important monuments.

Travel suppliers are increasingly diverse. Small communities across the globe have sought to join the travel economy. We now call this community-based tourism. But often local communities do not offer the quality that travelers can embrace, and as a result do not find ready buyers. Helping these businesses has become an agenda for the ecotourism world, and investments in local community-based providers can help local people to maintain cultural roots and protect their environments.

In my current work, as the head of the Planeterra Foundation (http://www.planeterra.org ) we are investing in local community providers throughout Latin America. We are presently helping Mayan women in a small village on Lake Atitlan in Guatemala to build improved home-based accommodations. As travelers visit the community’s art and handicraft workshops, medicinal herb gardens, and tree-planting ceremonies, tourism is making a positive contribution to the community and creating a living example of the benefits ecotourism can generate. Planeterra can ensure these small businesses get a real market, as we are the foundation for G Adventures, the largest adventure travel company in the world. Wherever Planeterra invests, we work with G Adventures to be sure their passengers enjoy these wonderful authentic experiences that genuinely benefit local people.

Ecotourism has built an influential market base which draws customers committed to a green economy. Its market potential is not limited, but the resources upon which it depends are. One of the biggest issues with providing ecologically sound tourism will be the management of landscapes and regions where tourism has taken off. Authorities rarely have the knowledge to implement smart growth strategies, and the landscape quickly becomes overcrowded with hotels, restaurants and services for travelers. As tourism fans across the land, local services are frequently not provided to local workers who live without basic sewage treatment, fresh water, health services or adequate education for their children. It is difficult to advocate a more ecological future for tourism if basic sanitation and human needs are not met.

The Planeterra Foundation has developed a system for governments to track the impacts of tourism and make better decisions on the investment required to manage tourism. This system, already tested on Ambergris Caye in Belize, is being implemented further by the Belize Tourism Board and plans are now being made to work with other governments to help local authorities develop destination management systems needed to arrest unplanned growth.

What the ecotourism experience will be like in 20 years depends on the commitment of governments to create well-planned destinations. Without local planning, ecotourism could easily be just another problem on the landscape. Local people are increasingly recognizing that they need to protect their resources. What local people do to preserve their destinations must be a high priority for the future of ecotourism.

In Egypt I traveled to the Western Sahara. After one night in the large oasis of Bahariya, four hours west of Cairo, we had a soak in the crystal oasis waters and afterwards ate lunch in a simple building, decorated with local handicrafts and rugs, served by local guides. This was one of those authentic meeting grounds, where locals and tourists enjoy the same laid back experience of being away, sharing each other’s cultures, eating local foods, enjoying interesting indigenous handicrafts and honoring the beautiful place they are visiting without artifice. I found myself loving the Sahara desert, its timeless beauty, and the fun-loving nature of our local guides. I relaxed, got into the groove, and thought to myself, this is the future of ecotourism!

 

Article by Megan Epler Wood, who founded The International Ecotourism Society (TIES) in 1990, the oldest and largest non-profit organization in the world dedicated to making ecotourism a tool for sustainable tourism development worldwide. Since 2003, Megan’s firm Epler Wood International  has devoted itself to aiding some of the poorest countries in the world with sustainable tourism development. Megan is presently the Co-Executive Director of the Planeterra Foundation where she is leading a global effort to scale up the community and environmental benefits from sustainable tourism. 

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