Category: January 2013 – New Articles

Calvert Foundation – Celebrating the Past, Envisioning the Future

Year-end letter from Lisa Hall, CEO and President

 
Dear Friends,

In the midst of the busy holiday season and end of year activities, it is sometimes difficult to stop and reflect. As 2012 comes to a close, I hope that you and your families are able to pause and recall the moments which were most meaningful for you this year. For Calvert Foundation and the broader impact investing field, it was a year to remember. Our co-founder and co-chair of the board Wayne Silby was inducted into the Social Venture Network’s Hall of Fame as part of the organization’s 25th anniversary celebration. SVN was founded by Wayne and Josh Mailman in 1987 at a time when it was highly unorthodox to suggest that business could be used to create a values-driven, sustainable world. I was honored to be in the audience with more than 1,000 champions for social and economic justice as SVN honored Wayne, Josh and 23 other visionaries who have demonstrated over the past 25 years that business tools can contribute to positive social and environmental change.

We also saw the impact investing industry gain widespread recognition in the mainstream media and among traditional financial services firms. Calvert Foundation was thrilled to be featured on the nationally syndicated show Nightly Business Report, in a two-part segment which explored how impact investing is addressing social challenges. This year we also collaborated with industry leaders on a research effort to assess market appetite for sustainable investments. Released in June, the Gateways to Impact report revealed a $650 billion market potential for impact investing, and a growing interest by financial advisors in offering sustainable investments to their clients.

For me personally, some of the strongest memories from this year are the ones that demonstrated how we are all connected. As the nation continues to recover from the physical devastation of SuperStorm Sandy and the emotional anguish of the Newtown tragedy, we cannot escape the reality that our lives are interconnected on a global level by forces like climate change and our basic desire to protect children from harm. I feel privileged to lead an organization that is committed to addressing social issues through the power of money as a force for good—empowering investors to empower communities here in the US and around the world.

And while the holidays are a time to reflect on the past year, they’re also a time to consider what’s possible in the coming year. Looking ahead to 2013 and beyond, I am encouraged and enthusiastic about our vision for Calvert Foundation as we build on the legacy that our founders Wayne Silby, John Guffey and Terry Mollner have left in place.

In an interview earlier this year with the Green Money Journal [ www.greenmoney.com ], I spoke about my vision for impact investing for the next 20 years. I deeply believe it is possible, and that Calvert Foundation is helping to make it possible, for every investor to be an impact investor. Everyone should be able to invest according to their values, putting money to work in ways that are in harmony with what they believe, and not in opposition.

We are in the business of connecting individuals with causes they care about, and one of those causes is women’s economic empowerment. So, in 2012 we responded by creating the Women INvesting in Women INitiative (WIN-WIN), the first widely available impact investment to directly support organizations empowering women through healthcare, education and microenterprise. Launched in March 2012, WIN-WIN has already deployed nearly $10 million to support women’s economic empowerment and their financial stability. More information at- www.calvertfoundation.org/winwin

Based on the success of WIN-WIN, we are developing three new initiatives: revitalizing older American cities, connecting diaspora communities around the world with their countries of origin, and promoting environmental stewardship. Bringing these initiatives to the marketplace requires your support. Donations provide the seed funding we need to get these types of new initiatives off the ground and running.

As we lead the way in creating investment opportunities that benefit underserved communities, we hope that you will participate with us in this growing movement. Consider donating to Calvert Foundation this holiday season (or throughout the year) to help empower communities around the world.

We’re grateful for your continuing support and partnership, and wish you the happiest of holidays.

Sincerely,

Lisa Hall
President and CEO, Calvert Foundation / www.calvertfoundation.org

Note to Reader: Your donation is tax-deductible to the extent allowed by law. No goods or services will be provided in exchange for your donation.

Cultivating a Better Food System in 201

by Danielle Nierenberg and Ellen Gustafson, Food Tank: The Food Think Tank

 
As we start 2013, many people will be thinking about plans and promises to improve their diet and health. But we think a broader collection of farmers, policy-makers, and eaters need new, bigger resolutions for fixing the food system – real changes with long-term impacts in fields, boardrooms, and on plates all over the world. These are resolutions that the world can’t afford to break with nearly one billion still hungry and more than one billion suffering from the effects of being overweight and obese. We have the tools—let’s use them in 2013!

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Growing in Cities:  Food production doesn’t only happen in fields or factories. Nearly one billion people worldwide produce food in cities. In Kibera, the largest slum in Africa, farmers are growing seeds of indigenous vegetables and selling them to rural farmers. At Bell Book & Candle restaurant in New York, customers are served rosemary, cherry tomatoes, romaine, and other produce grown from the restaurant’s aeroponic rooftop garden.

Creating Better Access:  People’s Grocery in Oakland and Fresh Moves in Chicago bring mobile grocery stores to food deserts giving low-income consumers opportunities to make healthy food choices. Instead of chips and soda, they provide customers with affordable organic produce, not typically available in their communities.

Eaters Demanding Healthier Food: Food writer Michael Pollan advises not to eat anything that your grandparents wouldn’t recognize. Try eating more fruits, vegetables, and whole foods without preservatives and other additives.

Cooking More: Home economics classes have declined in schools in the United Kingdom and the U.S. and young people lack basic cooking skills.  Top Chefs Jamie Oliver, Alice Waters, and Bill Telepan are working with schools to teach kids how to cook healthy, nutritious foods.

Creating Conviviality: According to the Hartman Group, nearly half of all adults in the U.S. eat meals alone. Sharing a meal with family and friends can foster community and conversation. Recent studies suggest that children who eat meals with their families are typically happier and more stable than those who do not.

Focus on Vegetables: Nearly two billion people suffer from micronutrient deficiencies worldwide, leading to poor development. The World Vegetable Center, however, is helping farmers grow high-value, nutrient rich vegetables in Africa and Asia, improving health and increasing incomes.

Preventing Waste:  Roughly one-third of all food is wasted—in fields, during transport, in storage, and in homes. But there are easy, inexpensive ways to prevent waste. Initiatives like Love Food, Hate Waste offer consumers tips about portion control and recipes for leftovers, while farmers in Bolivia are using solar-powered driers to preserve foods.

Engaging Youth: Making farming both intellectually and economically stimulating will help make the food system an attractive career option for youth. Across sub-Saharan Africa, cell phones and the internet are connecting farmers to information about weather and markets; in the U.S., Food Corps is teaching students how to grow and cook food, preparing them for a lifetime of healthy eating.

Protecting Workers: Farm and food workers across the world are fighting for better pay and working conditions. In Zimbabwe, the General Agricultural and Plantation Workers Union of Zimbabwe (GAPWUZ), protects laborers from abuse. In the U.S., the Coalition of Immokalee Workers successfully persuaded Trader Joe’s and Chipotle to pay the premium of a penny-per-pound to Florida tomato pickers.

Acknowledging the Importance of Farmers: Farmers aren’t just farmers, they’re business-women and men, stewards of the land, and educators, sharing knowledge in their communities. Slow Food International works with farmers all over the world, helping recognize their importance to preserve biodiversity and culture.

Recognizing the Role of Governments:  Nations must implement policies that give everyone access to safe, affordable, healthy food. In Ghana and Brazil, government action, including national school feeding programs and increased support for sustainable agricultural production, greatly reduced the number of hungry people.

Changing the Metrics: Governments, NGOs, and funders have focused on increasing production and improving yields, rather than improving nutrition and protecting the environment. Changing the metrics, and focusing more on quality, will improve public and environmental health, and livelihoods.

Fixing the Broken Food System: Agriculture can be the solution to some of the world’s most pressing challenges—including unemployment, obesity, and climate change. These innovations simply need more research, more investment, and ultimately more funding.

Article by Danielle Nierenberg and Ellen Gustafson are the co-founders of Food Tank: The Food Think Tank [ www.FoodTank.org ]. Danielle is based in Chicago, IL and Ellen is based in San Diego, CA.

Let’s make ethical investment bigger and better in 2013

By Mark Robertson, Head of Communications, EIRIS

In the UK 2012 has been an interesting year for ethical investment. Big scandals have hit big banks, consumer protests and investor revolts on tax avoidance and executive pay made headline news and campaigns such as ‘Move Your Money’ and ‘National Ethical Investment Week’ have helped to raise the profile of ethical finance. All of this has taken place alongside a growing sense that a more long-term, responsible approach to investment is urgently needed.

Surveys undertaken by EIRIS and others continue to confirm public enthusiasm for ethical investment. In the UK EIRIS’ 2011 Ipsos MORI consumer poll found that 82% of the consumers want financial product providers to pay more attention to environmental, social and governance (ESG) risks when deciding which companies to invest in or lend money to, as part of ensuring good financial return. Whilst in France EIRIS’ 2012 Ipsos MORI poll found that over 50% of French retail investors think environmental, social and ethical criteria are important when making financial decisions.

Against this backdrop of growing interest in ethical investment, FairPension’s recent report ‘Ethically Engaged?’ which claims UK ethical funds are failing to represent the views of their customers by focusing mainly on negative screening and failing to engage with companies to improve performance sounds, at best, like a missed opportunity for the ethical investment community as a whole.

In EIRIS 2010 Ipsos MORI national opinion poll consumers felt that banks and financial institutions should prioritise current ethical concerns such as protecting human rights, tackling climate change, protecting the environment and investing in fair trade in their lending and investing activities, more so than avoiding ‘sin’ issues relating to the manufacturing of alcohol, tobacco and gambling which have traditionally been the focus of ethical investors. Survey respondents gave the following issues the highest priority: human rights (67% scoring 7 – 10), investing in fair trade (66%), protecting the environment (62%), avoiding arms manufacturers (61%) and tackling climate change (59%). A smaller proportion prioritised the avoidance of companies involved in the manufacturing of alcohol (22% scoring 7 – 10), tobacco (37%) and gambling (38%).

Consumer attitudes to ethical investment are clearly evolving, but it’s important to remember that issues such as gambling, pornography, tobacco production and weapons manufacture also remain priority areas of concern for many investors.  Over the last decade we have developed new criteria to cover a broad range of societal concerns such as climate change, water and resources scarcity, human rights and environmental issues. We have developed research criteria which are relevant to specific sectors or areas of the world such as obesity, indigenous rights, access to medicines or women on the board.  We have also launched engagement and voting services which enable investors to become active owners and exert a positive influence in the companies within which they invest.

A growing number of ethical funds in the UK and elsewhere are embracing this broader agenda of issues and are using our positive criteria and sustainability ratings to avoid sustainability laggards, engage to improve sustainability performance, or to invest in companies providing solutions to sustainability challenges.

But mainstreaming green and ethical investment isn’t just about ensuring a good range of green and ethical financial products are available to all consumers across all aspects of ethical finance. It’s also about ensuring that retail fund managers embed sustainable investment principles across all funds under management, not just in the green and ethical funds they offer. This might mean engaging to improve performance, or integrating ESG factors into investment decisions to reduce risk and identify investment opportunities.

Ethical opinions and priorities differ from person to person and the 90+ UK green and ethical funds currently available already offer a variety of investment options to UK investors. However, there is scope for some existing funds to broaden the scale and scope of their investment approach and also room for new funds based on more positive sustainable investment themes. Levels of transparency also need to improve – EIRIS’ www.YourEthicalMoney.org  and the European SRI Transparency Code are both designed to help with this – and there is considerable scope for funds to evolve further to reflect the concerns of investors.

Over the last 30 years, millions of investors across the world have supported ethical investment by investing in funds which have driven improvements in corporate behaviour and acted as a catalyst for change in financial institutions by championing the advantages of long-term, sustainable investment.  Looking ahead, there is scope for ethical funds to achieve much more. EIRIS will be examining some of the key issues identified in the FairPensions report and explore ways to make ethical investment bigger and better in 2013.  We invite you to join the conversation.

Article by Mark Robertson, Head of Communications, EIRIS

Mark joined EIRIS in September 2004 having previously worked as research manager for an investor relations consultancy. Prior to that he worked as sustainable development officer at the London Borough of Ealing. A graduate in Environmental Science from Greenwich University, London, Mark has responsibility for planning and delivering a varied programme of press, PR and communications activities to promote EIRIS, its research and its products and services for investors. He is responsible for key initiatives to develop the market for responsible and ethical investment including www.YourEthicalMoney.org  – the UK’s first ever one-stop-shop consumer website on ethical money. Mark is an advisory board member for National Ethical Investment Week, a campaign to promote responsible investment in the UK. He is also a qualified Associate Member of the Chartered Institute of Marketing (ACIM).

EIRIS is a global leader in the provision of environmental, social, governance (ESG) research for responsible investors. For more information go to- www.eiris.org

Source: EIRIS Blog – December 21, 2012

Number of Companies in S&P 500® and Fortune 500® Reporting on Sustainability More Than Doubles From Previous Year, According to New Analysis by Governance & Accountability Institute

 
New Research Shows S&P 500® and Fortune 500® Reporting on Sustainability More Than Doubles From Previous Year

The rise in ESG / CSR / Sustainability reporting among U.S. companies in the S&P500 Index® and the Fortune 500® resulted in a dramatic increase from 2010 to 2011, according to an analysis released today by Governance & Accountability Institute.

The New York-based G&A Institute, which is the exclusive Data Partner for the Global Reporting Initiative (GRI) in the United States, the UK and Ireland, published its analysis — “2012 Corporate / ESG / Sustainability / Responsibility Reporting – Does It Matter?”

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G&A team members for the second year have been examining corporate sustainability and responsibility reporting trends by US-domiciled companies to explore the question — does such reporting really matter? The research team began their research with these commonly-asked queries in mind:

• Regarding Financial Performance – Do companies that report perform better in the capital markets over the long term? Are there discernible share price (valuation) advantages for reporters?

• Equity Indexes – Are companies reporting on sustainability more likely to be included in such popular sustainability indexes as the DJSI and NASDAQ OMX CRD Global Sustainability Index?

• Key Corporate Reputational Lists / Awards – Are reporting companies selected more often for credible reputational lists such as Newsweek’s Green Rankings?

• Key Corporate Ratings & Rankings – Are higher ratings and rankings achieved by reporting companies by leading organizations such as Carbon Disclosure Project (CDP)?

This year G&A Institute elected to concentrate on the universe of the S&P500 companies (last year’s report focused on the Fortune 500 companies). G&A initiated the change partly in response to feedback from readers of the first report, and to better align the report with the most commonly-used benchmark, the S&P 500.

Top-Line Findings

•  An increasing number of corporate managers and boards are recognizing the many benefits that measuring, managing, and disclosing their strategies and performance on Environmental, Social and Governance (ESG) factors can have for their companies.

• The increase in reporting among companies in the S&P500 Index® and the Fortune 500® is dramatic from the prior year’s universe of reporters. For example in last year’s analysis by G&A, 19% of the S&P 500 reported; in this year’s analysis 53% of S&P500 companies reported. In 2011’s analysis, 20% of the Fortune 500 reported, in this year’s research effort it was determined that 57% companies reported. The majority of companies that report in the S&P 500 and the Fortune 500 use the GRI Framework.

•  Companies that report on their sustainability strategies, initiatives, programs and ESG performance appear to be more likely to be selected for key sustainability reputational lists, ranked higher by sustainability reputation raters and rankers, and, selected for inclusion on leading sustainability investment indexes (indices).

•  Companies that are measuring and managing their sustainability issues appear to perform better over the long-term in the capital markets. We agree with readers providing feedback in 2011-2012 that evaluating a larger universe of companies over a longer period of time would be more definitive in this regard. (Obviously there are many factors beyond sustainability and CSR reporting that influence capital market performance.)

G&A Institute underscored a significant takeaway from its report: Now that 53% of the S&P500 and 57% of the Fortune 500 companies are reporting on their Environmental, Social, and Governance (ESG) impacts, for the first time the non-reporters are in the minority.

G&A Institute Chairman Hank Boerner observed: “We believe this minority universe will continue to shrink as it has in the past few years as more large-cap companies embrace sustainability reporting. The benefits of sustainability reporting are becoming increasingly obvious over time and the long-term benefits of adopting sustainability strategies and reporting on performance become easier to measure and quantify.”

Louis D. Coppola, Partner and Senior Vice President at the Institute emphasized: “The lesson for corporate management and boards: If you are not reporting, your competitors and peers almost surely are. The task of “catching up” will only grow larger. And, those companies reporting for a longer period of time have a definable lead on their peers.”

Governance & Accountability Institute is the US Data Partner for the GRI, and also for the UK and the Republic of Ireland. Beginning with year 2011 reporting the Institute has been collecting, analyzing and reporting on the trends in sustainability and responsibility reporting by US companies and the US-based subsidiaries of multinationals. The Institute over the coming weeks will share selected subsets of some of this year’s research findings.

Primary researchers and authors of this year’s report were Lindsey Clark, Earth Institute of Columbia University, and David Master, Zicklin School of Business at Baruch College. Reviewers, editors and advisors were Hank Boerner, Chairman, and Louis D. Coppola, MBA, Partner.

Research partners sharing resources with the G&A Institute’s research team were: CSRHub and Bahar Gidwani (Principal), GetAYou (Investars); SAM Group (creators and managers of the DJSI); Bloomberg LLP’s (Rina Levy); CRD Analytics (principal Michael Muyot); Brandlogic and senior partner James Cerutti; and, the Global Reporting Initiative and Focal Point USA’s team leaders Mike Wallace and Marjella Alma.

Click here to access the report-

http://www.ga-institute.com/research-reports/2012-corporate-esg-sustainability-responsibility-reporting-does-it-matter.html

About G&A Institute

Governance & Accountability Institute, Inc. [ www.ga-institute.com ] offers a portfolio of resources to help detect, identify, monitor, analyze, & address critical issues related to Sustainability, Corporate Social Responsibility (CSR) and Sustainable & Responsible Investment (SRI). The Institute is an issues management, strategies, research, communication and advisory organization providing leaders in the investment, corporate, social, and public sector with services and tools related to Environmental, Social and Governance (ESG) issues. G&A Institute is the sole data partner for The Global Reporting Initiative (GRI) in the USA, UK and Ireland.

Contacts at G&A Institute

Peter M. Hamilton, Media Relations, 646.430.8230 x18

Hank Boerner, Chairman/CEO, 646.430.8230 x19

Louis Coppola, Partner & Senior Vice President, 646.430.8230 x14

Source: G&A Institute and 3BL Media http://3bl.me/4szgnv

US Sustainable and Responsible Investing (SRI) Assets Up

 
New 2012 Trends Report from the US SIF Foundation Finds Increased Investor Interest in Corporate Governance, Environmental Issues and Concerns about Sudan

The new 2012 Report on Sustainable and Responsible Investing Trends in the United States, released in November 2012 by the US SIF Foundation, finds that sustainable and responsible investing (SRI) accounts for 11.23 percent of all assets under professional management in the United States at year end 2011. According to the report, $3.74 trillion out of $33.3 trillion of investment assets is held by individuals, institutions, investment companies or money managers that practice SRI strategies.

This total, an increase of 22 percent since year end 2009, reflects growing investor interest in considering environmental, community, other societal or corporate governance (ESG) issues to refine how they make decisions as they select and manage their portfolios or raise their voices as shareholders. Additionally, the US SIF Foundation identified many investors that are beginning to develop their in-house capabilities to analyze ESG criteria; these developments speak to the potential for further growth in the US sustainable and responsible investing market.

Overall Summary

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Research was conducted from late April – July 2012 and discovered the following:

•  $3.31 trillion in US-domiciled assets was held by 443 institutional investors, 272 money managers and 1,000-plus community investing institutions that select or analyze their portfolios using various ESG criteria

•  $1.54 trillion in US-domiciled assets was held by more than 200 institutional investors or money managers that filed or co-filed through shareholder resolutions on ESG issues from 2010 through 2012

These two segments of assets, after eliminating for double counting for assets involved in both strategies, yields the overall total of $3.74 trillion.

Main Report Findings

The report found that the total net assets of both mutual funds and alternative investment funds that consider ESG criteria increased significantly:

• Mutual Funds:  $641 billion, a doubling from 2010.

• Alternative Investment Funds:  $132 billion, a 250 percent increase from the corresponding assets identified at year-end 2009

The report also found sizable growth in financial institutions that have a mission of serving low and middle-income communities:

• Community Development Banks:  $30.1 billion, a 74 percent increase since 2010

• Credit Unions:  $17.1 billion, a 54 percent increase from 2010

The report found that concerns about business ties to repressive or terrorist regimes, other country-specific criteria and interest in corporate governance are the top issues for sustainable and responsible institutional asset owners.

• Sudan:  $1.63 trillion, a 21 percent increase from 2010; Iran : $1.24 trillion, a 180 percent increase from 2010

• Corporate Governance:  $914 billion, a 161 percent since year-end 2009.

Additionally, the report found a significant increase of institutional investor assets involved in the following ESG criteria, since the last Trends report, published in 2010:

• Environmental issues:  $636 billion, 43 percent increase from 2010. Climate change is now considered by 23 percent of institutional asset owners incorporating ESG criteria

• Corporate Political Contributions and Lobbying (tracked for the first time by the 2012 survey): $459 billion

“The 2012 Trends report demonstrates that we are moving closer to a sustainable and equitable economy,” said Lisa Woll, CEO of US SIF. “From the growth in mutual funds that consider ESG criteria and increased investment in community development banks and credit unions to increasingly large votes on shareholder proposals and the availability of sustainable investment options across asset classes, SRI strategies are on the rise in the United States. We are pleased that this report details many important and interrelated trends that indicate that sustainable and responsible investing will continue its impressive growth and impact.”

About the Survey

The US SIF Foundation sent a confidential, personalized survey link to approximately 1,100 investment management firms and institutional asset owners identified in previous surveys as practicing SRI strategies or believed to be new entrants to SRI practice. Survey recipients were asked to detail whether they considered ESG issues in investment analysis and portfolio selection, to list the issues considered and to report the value of the US-domiciled assets affected as of December 31, 2011. They were also asked to report their total US-domiciled assets as of year-end 2011 and whether they filed shareholder resolutions or engaged in other shareholder engagement activities. The research team also collected additional data from public and third party sources.

2012 Trends Donors and Sponsors Include:

Wallace Global Fund,  Bloomberg,  TIAA-CREF,  BlackRock,  Breckinridge,  Christian Brothers Investment Services,  CRA Qualified Investment Fund,  Legg Mason,  ClearBridge Advisors and Legg Mason Investment Counsel,  Neuberger Berman,  Sentinel Investments,  Trillium Asset Management,  Walden Asset Management,  Wespath Investment Management (formerly UMC General Bd of Pension & Health Benefits).

US SIF: The Forum for Sustainable and Responsible Investment is the US membership association for professionals, firms, institutions and organizations engaged in sustainable and responsible investing. US SIF

and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. US SIF’s members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and pension funds, foundations and other asset owners.

The 2012 Report on Sustainable and Responsible Investing Trends in the United States is a publication of the US SIF Foundation, a 501c3 organization that undertakes educational, research and programmatic activities to advance the mission of US SIF.

For more information on the 2012 Report or membership go to- www.ussif.org

The Tierra Solution: An overview of the new book

by  Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist
The International Institute for Monetary Transformation (IIMT)

The Tierra Solution is not simply an idea. It presents the conceptual, institutional and strategic dimensions of a proposal for a just, sustainable, and, therefore, stable world order by simultaneously dealing with three of the world’s major challenges: the climate crisis, the economic crisis and unsustainable development in the global North and South. It proposes taking the world’s most basic global system, i.e. the international monetary system and transforming it by basing it on a carbon standard. This carbon-based international monetary system would push nations to decarbonize, i.e. base their societies on renewable energy. The higher their rate of decarbonization, the stronger their economy and their currency. Taking the Tierra Solution as a pathway to this transformed world order would result in a triple win situation by avoiding the looming climate catastrophe, by effecting a just, sustainable, and, therefore, stable international monetary system and advancing low carbon and climate-resilient development.

The above argument is made in the 348 page book entitled The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation details of which are presented in this issue’s banner sponsored by Cosimo Books. Its subtitle shows the main emphasis of The Tierra Solution: it wants foremost to deal with the urgency of the climate crisis and the inability of government, business and civil society to effectively deal with it. The latest conference of the UNFCCC at Doha which concluded on December 7 showed that its outcome that does not match that urgency of the climate crisis.The Tierra Solution presents a pathway out of the climate crisis that is definitely outside the box and not at the outside of the inside of that famous box. It is a transformational, not reformist pathway. In other words, the transformed international monetary system upon which it is based goes beyond the IMF monetary reforms, which are changes at the periphery of an unjust and unstable system. While a return to the gold standard in its various forms is being advocated by a significant number of observers, basing the international monetary system on a carbon standard in order to deal with the climate crisis is “innovative” according to Canadian businessman Maurice Strong of Earth Summit fame.

The structure of The Tierra Solution book was determined by the supreme challenge of making a strong case for an out-of-the box proposal that many considered “too grand”.  Therefore, six of its ten chapters were used to prepare the ground before the actual proposal was presented. Thus, the book is divided in two parts: Background and Future.

The chapter descriptions in the book’s Introduction provide a good overview of its contents and structure. In some of those descriptions I have added some remarks in italics that reflect an updating since its publication in June 2012. Cf. http://cosimoblog.blogspot.com/2012_06_01_archive.html

Chapter 1 describes the climate issue and the need for climate justice in order to make real progress. It also discusses the challenge of an equitable carbon budget, which will be a major negotiation issue both at the Durban conference in 2011 and the following UNFCCC conferences. During the Doha conference of 2012 the US Delegation seems to sign on to the two notions of climate justice and the need for an equitable carbon budget.

Chapter 2 discusses the various carbon-reduction methods and the selection of one that seems to fit best with a carbon-based international monetary system. The emphasis is placed on the criteria for the selection of the most appropriate method for the Tierra Solution: a method that is global, fast, formidable, and fair. Thus, the Fee & Dividend method is chosen above the cap-and-trade approach. Basing itself on James Hansen’s recommendation of the need to return to 350 ppm and using the Fee & Dividend approach the 350.org movement under the leadership of Bill McKibben is making great strides in its “Do the Math” campaign for divestments out of fossil fuel companies. The business section of New York Times on December 5 covered it in a lengthy article entitled “The Divestment Brigade”. Bill McKibben’s opinion on The Tierra Solution is worth noting. “The further into global warming area we go, the more physics and politics narrows our possible paths of action. Here’s is a very cogent and well-argued account of one of the remaining possibilities.”

Chapter 3 considers the recent history of the international monetary system in terms of the major monetary events and trends of the last seventy years and ends with an analysis of the Great Recession of 2007-2009.

Chapter 4 covers the present monetary structure and the workings of “the Questionable Quad” (i.e., the International Monetary Fund, the World Bank, the World Trade Organization, and the Bank of International Settlements) and points to the various monetary unions that can be building blocks of the global monetary union of the TFD system. Given that the introduction of a monetary standard removes the necessity of a global reserve system, an extensive discussion is presented about reserve currencies. The chapter concludes with the identification of eight serious shortcomings of the present international monetary system.

Two other important discussions have to take place before the proposed transformation of the international monetary system can be presented: therefore, Chapter 5 discusses the role of government in monetary and financial affairs because (at least in the U.S.), this issue divides the two main political parties, to the detriment of the common good in the U.S. and even the world. Thus, the argument will be made that banks should not engage in money creation and control; that the emergence of more public banks is a beneficial development; and that the U.S. Fed should be democratically controlled.

Chapter 6 presents the need for value-based planning, particularly the need for the value of monetary justice as the guiding principle in global governance system discussions and negotiations. This argument is made after having presented the contextual sustainability framework with the sustainability model of economics.

PART II presents the architecture of the TFD (Tierra Fee & Dividend) system, together with a discussion of its strategy and its prospects, keeping in mind John Maynard Keynes’ acute observation about the introduction of new ideas when he said: “The difficulty lies, not in the new ideas, but in escaping from the old ones.”

Chapter 7 begins by outlining the monetary architecture of the TFD system, including a brief discussion of the nature of money, followed by a description of the TFD’s six monetary components. Its carbon-based monetary standard, with its unit of account—the Tierra—is described first, because it forms the heart of the new monetary paradigm. The significance of the carbon-based monetary standard is shown in the discussion of fixed (but flexible) exchange rates that would replace the volatile rates with their financial imbalances. It also is considered in the discussion of the balance of payments mechanism that now includes carbon accounts (together with traditional financial accounts). The administration of these four monetary components—the carbon-based monetary standard, carbon based currencies, exchange rates, and the modified balance of payments mechanism—is the responsibility of the Global Central Bank’s Governing Council, which is made up of representatives of regional monetary unions. Conflicts in this monetary system are settled in a Tierra Monetary Court.

Chapter 8 clarifies the significance of the TFD system as a whole by considering its presumed impacts on the monetary, climate, financial, economic, commercial, and global governance systems. This chapter focuses on several issues in each system, showing how the TFD would resolve them or reduce their adverse impacts. Here, the potential of this new global governance system is shown in its capacity to provide the world with ample credit and liquidity, without causing sovereign debt and inflation. Thus, the challenge becomes to have the Great Monetary Transition take place. This transition would move from a costly global reserve system (based on the U.S. dollar and other reserve currencies) to a reformist system of SDRs (Special Drawing Rights) and finally to the transformational TFD global governance system.

The TFD’s two-pronged strategy and its prospects constitute the two final chapters.

Chapter 9 describes the top-down strategy, where the U.N. General Assembly would pass a resolution to establish the U.N. Commission of Experts on Monetary Transformation, Climate Change and Sustainable Development. Its mandate is to develop recommendations for a U.N. Framework Convention on Monetary Transformation, the Climate Crisis, and Sustainable Development, together with a Monetary Agenda for Climate and Development Action. It also describes a bottom-up strategy, consisting of national TFD Working Groups that are to be part of the Global Network for Monetary Transformation (GNMT). The Network and its working groups would engage in research, education, and action. Their educational activities would consist of stimulating national debates about the connections of climate change, development and a carbon-based international monetary system. These debates would have as a practical outcome the willingness of their government leaders to sponsor the above U.N. General Assembly Resolution and/or engage in serious consideration of the TFD as a post-Kyoto or post-Rio 2012 global governance candidate.

Chapter 10 describes the prospects for the Tierra system.  It describes the rationale for the TFD, objections to the TFD, and responses to those objections. It also discusses three promising trends: monetary developments in 2011; the growing assertiveness of BRICS and developing countries; and the increased effectiveness of civil society in global affairs.

An unsolicited review of the book on Amazon at- http://amzn.to/TNVUcg  sums up the essence of The Tierra Solution’s bold vision and the need for an active dialogue on integrated global governance. “This book, if anything, is thought-provoking. I sincerely believe that while the adoption of a policy such as the Tierra Solution may seem like the stuff of pipe dreams, this does not change the fact that we need to start talking about these things and opening our minds to the idea that big changes need to be made. This is a great book for both policymakers and regular citizens to read, because the time is ripe for an active dialogue that leads to actual changes. Who knows, in the future, an “impossible” solution such as this may be made possible by virtue of sheer necessity and urgency.”

Article by Frans C. Verhagen, M.Div., M.I.A., Ph.D., author and sustainability sociologist

Email:  gaia1@rcn.com

The Making of a Fair Trade and Organic Fashion Brand

By Scott Leonard, CEO and Co-founder of Indigenous Designs

Over 18 years ago, while traveling in the high Andes of Ecuador, I developed a great interest in the hand knitted garments crafted by local Indigenous artisans. In particular, I noticed that the women who produced these wonderful garments were not necessarily being honored for their masterful weaving and knitting skills. They clearly weren’t being paid the wages that they could have been, or they didn’t have the knowledge for how to apply their skills to the marketplace.

Indigenous co-founders, Matt Reynolds, Joe Flood and I all had similar goals of wanting to make a difference in the world surrounding social justice and helping women in economically marginalized communities. We saw that bringing in fair wages and technical assistance, and marrying premium, environmentally friendly fibers with more sophisticated fashion designs was a way to make a difference. We realized that Ecuador provided the opportunity we were looking for to launch a never before social economic production model. As young social entrepreneurs in the early 90’s, we were proud to be fair trade and organic pioneers, and we were inspired to start Indigenous Designs and to overcome the many challenges that lay ahead in building a true Eco Friendly Fashion line. See the complete line at- www.indigenous.com/shop/womens

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In the beginning, there were two major problems that confronted us: quality control and financing. How do you build and elevate a cottage industry’s quality control when you’re dealing with 1,500 artisans and they’re in pockets of three to 30? How do you aggregate their work and have continuity and consistency that produces a truly premium product? We encountered a large number of quality-control glitches, from fibers to knitting, to consistency of sizing and fit, to timing of delivery. Systems integration was also a significant issue for us. We were dealing with a unique production model – one that is diversified and spread out in desolate hard to reach locations. It was clear we had to create a new systems model, and this took a lot of time and collaboration and money.

With the help of social investment leaders like Josh Mailman we began to look for a consistent way to finance the fair trade and organic supply chain we had pioneered. Around 2001 our management team began working with The Barred Rock Fund and Rudolf Steiner Foundation (RSF) http://rsfsocialfinance.org  on financial modeling and purchase order financing.  

In 2005 we engaged with Willy Foote and his amazing Root Capital team  www.rootcapital.org/about-us  to pilot them into the handicraft and textile sector. Root Capital is a nonprofit social investment fund that grows rural prosperity in poor, environmentally vulnerable places in Africa and Latin America by lending capital, delivering financial training, and strengthening market connections for small and growing agricultural businesses. There was abundant synergy as the RC social investment fund cared immensely about our Indigenous mission to create jobs that honored both people and the planet. Root Capital was a crucial element in helping us to financially scale our fair trade artisan supply chain in the base of the pyramid (BOP). Root Capital continues to lend capital, while delivering financial literacy, within our supply chain partners, today.

Progressive financial partners like Root Capital and RSF were vitally important during our first decade of growth. Conventional banking was just not going to work for us back then – our balance sheet lacked luster and leverage, making access to capital a difficult hurdle. These two financial institutions, along with Josh Mailman, provided us with working capital, purchase order financing, helped us to formalize our financial strategies, and even assisted us in attracting other socially minded investors. They also provided pioneer and supportive spirit in trying to push the social and environmental return aspect into financials and into evaluating the success of a business. As financial partners they encouraged us to report and track our social returns on investment (SROI), and the SROI section of our business plan during our Series A ended up being the aspect that some of our investors were most impressed with.

In 2010, RSF provided Indigenous with a PRI Fund loan to assist in creating standards and procedures for the Fair Trade apparel pilot program and to develop the new Indigenous Fair Trace Tool™. The Fair Trace Tool uses mobile-enabled web technology, allowing shoppers to scan a hang tag QR code to find out where the garment originated, who made it, how the fibers were raised, and learn about the social impact on the communities. We believe that this tool is a way to measure SROI to all our stakeholders. The Fair Trace Tool is one more way that Indigenous is raising consumer awareness of the vital importance of fair trade and organic fashion to artisans in the developing world, and to the environment. The Fair Trace Tool made its debut in the fall of 2012, with Indigenous hoping to share the traceability platform tool openly with other socially conscious brands. Indigenous continues to stand as a catalyst of supply chain integrity, and we believe that collaboration surrounding transparency innovation is a cornerstone to that commitment. The Fair Trace Tool™ offers a brand video, artisan profiles, an origins map and social impact data, including results of artisan workforce surveys. See the video here- www.youtube.com/watch?v=aKFs28bZUgQ

Today, Indigenous is a successful and profitable company that produces a full line of premium Organic Clothing sold online at-  www.indigenous.com/shop/womens  and at 500 independent stores across the country. Fair Trade + Organic are what we stand for and it is what drives our company’s deep social responsibility initiatives. We are keen on sharing and collaborating with other brands. A significant part of Indigenous production includes clothing for major brands and private labels that hang in stores such as Bloomingdales, Neiman Marcus, and Nordstrom.

Eileen Fisher is one of our major private label brands. Amy Hall, Director of Social Consciousness for Eileen Fisher, and I first met at a Social Venture network (SVN) conference. After the event, Amy shared an Indigenous Designs sweater and catalogue with Eileen Fisher’s sweater design team, and by the end of the year, a partnership had been struck to provide the brand with truly sustainable, organic and Fair Trade Fashion. Eileen Fisher has been a mentor to Indigenous by helping us achieve new levels of rigorous quality standards. Amy believes that the company has benefited just as much from our partnership. Indigenous Designs was Eileen Fisher’s first foray into the artisanal product world, With Indigenous, the company learned what reasonable expectations were for the production timeline of an artisanal fair trade supply chain. We collaborate to use our respective strengths in the fashion industry to promote this Indigenous Designs fair trade and organic model and set the pace for other brands.

 

There are more and more sustainable choices to most consumer product sectors. We believe that people can change the world by how they choose to spend their money. When a customer chooses Indigenous and other conscious brands, they are using their dollars to vote for a just, equitable world.  Along with being a producer of Fair Trade Clothing for premium retailers, we can proudly say that all Indigenous garments are made from organically grown fibers. To ensure environmental sustainability, we use organic certified cotton, GOTS processing, and Oekotex 100 approved dyes.

 

Making the right sustainable supply chain choices in this world is not the easiest road traveled. As consumers and business leaders alike we need to step up and rise to the challenge ahead. We are determined to change industry to demonstrate that you can do the right thing and be profitable in business. Indigenous will continue to lead as a sustainable fashion pioneer, producing premium fashion that is worth buying, worth wearing and worth talking about.

 

 

Article by Scott Leonard is CEO and Co-founder of Indigenous Designs Corporation, a leading apparel brand and producer of hand-crafted natural fiber clothing. Scott is responsible for directing the Indigenous Brand identity and Indigenous private label production model. Founded in 1994, Indigenous Designs develops and markets premium quality apparel to high-end fashion retailers around the world. Indigenous apparel is designed in-house and produced to specification by artisan cooperatives located primarily in South America, Guatemala and India.

In 2009, the company was selected by Apparel Magazine as a “Top Innovator,” in the fashion industry. The company has received the national Socially Responsible Business award from Co-op America. Scott and Indigenous Designs continue to be heavily involved in promoting sustainability in collaboration with Organic Exchange, the OTA, SVN, BALLE (Business Alliance for Local Living Economies), and B-Corp.

Scott is an ardent advocate about the positive power of business for the benefit of people and the planet. He has been a pioneer in the areas of fair trade apparel, organics, social justice and the sustainability movement. Scott has served two terms on the Steering Committee for the Organic Fiber Council, where he collaborated with the USDA to help set the standards for organic cotton. Scott has also worked with Root Capital to establish a breakthrough financial model for funding the fair trade artisan apparel sector in South America. In 2005, Scott founded the Green Steps program to raise business awareness of sustainability issues.

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