Even a year gone since the failure of Lehman, fundamental questions remain regarding the core underlying assumptions of our financial system. Though currently derivatives trading and black boxes appear out of favour, what will replace them in terms of helpful and productive uses of capital still has yet to be determined. This question was what the Conference on Social Capital Market’s, or SoCap09 tried to give some structure to; while the trend towards sustainable investments and long-term ROI seems to have taken the place of actively managed funds seeking 20x returns.

Read more of this story »

Even a year gone since the failure of Lehman, fundamental questions remain regarding the core underlying assumptions of our financial system. Though currently derivatives trading and black boxes appear out of favour, what will replace them in terms of helpful and productive uses of capital still has yet to be determined. This question was what the Conference on Social Capital Market’s, or SoCap09 tried to give some structure to; while the trend towards sustainable investments and long-term ROI seems to have taken the place of actively managed funds seeking 20x returns.

So what does this world presently look like? For one, It is not as easy to quantify as the Deloitte’s of the world would want it to be. In fact, Christopher Park from the company referred to standard accounting metrics as “a warm blanket” when compared with the confused and nascent metrics which provide assessment in this space.  Secondly, these markets are not as tested as traditional investment options. The oldest of these players, Calvert Foundation has only been around for ten years in it’s current form. The new-kid-on-the-block-phenomenon is both Social Capital’s largest asset, since apparently Wall Street pre-2008 logic wasn’t exactly perfect, as well as being it’s biggest challenge. Though the perception of Social Capital investments as a novelty, coupled with a palpable unfamiliarity with the valuations make this space seem unlikely to attract traditional capital, maybe ‘Social Investing’ is just a new word for a very old idea.

From the start of capitalism there have been players whose goals were multiple. From the massive endowments of the Rockerfellers and Carnegies to the educational scholarships committed by what today are called ‘high net-worth individuals.’ These acts of philanthropy were the yin to the yang of free-market capitalism. The question now is whether metrics and forcastable, and market-rate ROI can be properly delivered by such investments. Fittingly, Rockerfeller Foundation and Deliotte among others are behind the current push to bring the metrics of high finance down into the social sphere. One such project, called IRIS for ‘Impact Reporting and Investing Standard’s’ goal is to set agreeable metrics so comparing between these investments will be simpler. These metrics will require reporting of data such as: job’s created, revenue, etc., and are the underlying piece to developing the GIIRS, or ‘Global Impact Investing Rating System’, which will be similar to rating agencies in other asset classes. These new elements will undoubtedly smooth the road between capital and investments, if only just through the process itself introducing these actors to one another. There will have to be strong deliberative processes since the space constitutes of everyone from hedge funds to single social entrepreneurs.

While metrics and ratings are one solution to the problem of moving capital into the social sphere, other problems remain. One refrain at the conference was that investors feel comfortable either maximizing their investment returns or giving away money to charity. Oddly enough investors who were asked to invest in these blended value products had so much difficulty bridging these two worlds that they often wanted to  offer the money as a charitable donation. Though there are some reasons for making donations above proper investments due to tax laws, by-in-large this kind of response is nonsensical. Social funds not only infuse money towards inherently sustainable models, which need seed or growth funds, but they can often provide returns on the investments which in some cases exceed market-rate.

To combat this cultural wall, members of the Social Capitorati made the case that in order to attract capital, would-be ambassadors must use only the language of traditional finance. Jed Emerson of Uruhu Capital, who has espoused such social investments for many years discussed how at his fund he only speaks in phrases like ‘risk management’ and ‘qualitative assessment’ which, while they might seem euphemistic, could succeed in bringing down the barriers present for capital infusion into the space.

What is unclear still is how these investments will fit into the traditional investment paradigm-if they eventually are seen as being reasonable options for investors. One way to frame this comes from Skoll Foundation’s Dan Chrisafulli, who said that small and medium enterprises are “durable assets which are very good as part of a blended portfolio.” This seems to be the view of many with regard to the micro-finance space already. What was said as a goal for the sector at the conference is an eventual infusion of between 5 and 15 percent of total assets under management. My question is, what are the distinct borders of the space? As companies large and small begin to analyze more of their unintended consequences, and non-profits find that relying on grants limits their growth possibilities, aren’t we all moving closer to the middle by default?

Lastly, more capital will not mean that social entrepreneurs will have any less challenges- quite the contrary. Just as venture capital creates a few winners (in the neighborhood of ten percent of funded companies really find those 20x returns which fuel the industry), so too will social ventures find challenges along the road to high impact. Juggling multiple goals makes reaching each one infinitely more complex, and without the simplicity of singular attention on profits, running either a business or social enterprises now will  be a much more multifaceted endeavor. This hearkens true for the supply-side of capital as well. While old investments really could boil down to ROI over the short-term, liabilities are everywhere for companies making an impact ( which is inherently larger at scale). The days of only focusing on the bottom line are done. The flip side is that we are no longer living in a bifurcated world where money and meaning are painted as mutually exclusive. While definitions of value will have to become hammered out through intense deliberative processes, only two eventualities could possibly exist: either irreconcilable challenges will emerge, or reasonable fusions are going to be found.

One thing is sure, when the convener of the conference Kevin Jones called Social Markets “the intersection of money and meaning” a year ago at the first SoCap conference, a nebulous middle-path emerged which could-with enough work-make the science of economics just a little less dismal.

Image courtesy Flikr user Sociate via creative commons licensing.

—

“It’s only irrelevant in the context of one who still feels entitled to the comforts and privileges that being white in Western civilization has afforded her.”

Overall, I think the most crucial component of changing the world is not privilege: it is responsibility. As someone who was born into a world with social systems favoring her, it is my responsibility to address and counteract these effects. As someone who enjoys the benefits (but not the costs) of systems that hurt the environment for future generations, I have the responsibility to try to undo the harm done in my name or the name of the dollar I spend.

You disparage psychology, but I believe that our shared psychological needs-take Maslow’s pyramid, for example-absolutely influences the immediate decision-making process of every human being. For Americans, it means that we often don’t opt to do the most responsible thing, if it is not also the most convenient and most personally-positive thing as well. Once again, this all goes back to perspective-if a hot shower feels good to me immediately, and I will never feel the worldwide damage that such an action causes, then I can hide from such knowledge and forgive myself for a single shower. With millions of people making such inner decisions-in situations with varying stakes-well, most of us can see the problem we are facing now.

I think psychology will be key, too, in fixing this little biological oversight-we can create social systems which enforce a global responsibility in personal situations (where our limited perspectives are failing us). If we can unite on truly valuing the Earth’s biosphere, then we as people, as lawmakers, can create systems of justice-environmental justice-that as validly as possible account for additions and subtractions of valuable assets within the Earth’s limited resources. This idea may sound radical-but it is amazingly simple. Often, the average person forgets that he or she is a lawmaker-that laws are not sacred nor eternal. People make them and break them according to their needs.

Read more of this story »

Special thanks to Jeff Strasburg for helping us indulge our imaginations in this series!  I’d also like to extend my gratitude to Justin for engaging me in this form.  It has been edifying to explore concepts about sustainability.  I hope that the readers of this “debate” have enjoyed the process as well, and I know I speak for Justin when I say: we welcome all comments!  This a dialog, a free exchange of ideas, so tell us yours and help to fuel the mutual inspiration.

(Author’s Note: I include the image above not only because, figuratively speaking, the “sun is setting” on our Sustainability dialog, but also because I will be travelling westward-ho! throughout the United States until the beginning of September.  My objective is to get some relief from my high-technology-based lifestyle right now, so the vacation will heavily consist of camping in national parks.  Therefore, I will blog if I am able to during this time, but if not… be prepared for both the Sust Enable episode debuts AND a bona fide blogging bonanza upon my return in early September.)

Without further ado,

Here are my final thoughts, in conclusion.

1) If you can learn to modify your life to be as close to environmental sustainability as possible, it is necessary that you proceed to do so. The human will is one of the most powerful–and dangerous–elements on the planet.  At first glance, it might feel like “too much” to give up using a flush toilet (just for an example).  But is it really?  Think about the idea.  Get familiar with it.  Picture what it would look like to use a composting toilet in your home.  Maybe start with a little one, to be used only sometimes.  Soon, the consequences may not seem all that daunting. There is always a choice. 

Don’t let your true identity and dreams for what the world could be become casualties of conforming.  You only have one life, so use it, in the most effective ways visible.  If many individuals decided that, deep in their hearts, ecocide felt wrong to them, that many persons when taken together comprise a mutiny against old, obsolete customs and beliefs.  Your little action today plays a role in a social revolution, of the “green” kind.

Read more of this story »

P.R. professionals bemoan this situation.

The point is actually how difficult it has been doing PR, specifically media relations, within the green space. As I told PR Week I’ve never dealt with an industry this tough and this cut throat. Everyone is trying to talk green and it makes it very challenging.

Read more of this story »

If the thought of a cross-town commute from the Valley has stopped you from checking out a Los Angeles area Green Drinks event, April 26th is your lucky day! This Thursday marks the inaugural LA Green Drinks, Valley Edition at The Sapphire in Studio City.

For those of you unfamiliar with Green Drinks International, it’s described as an “organic, self-organized network” of people interested in environmental issues. The organization now sports groups in 26 countries, including 215 locations across the US. This newest Los Angeles location completes the monthly circuit of Green Drinks held each Thursday of the month. The other locations include Culver City (1st Thursday), Hermosa Beach (2nd Thursday), and Silverlake (3rd Thursday).

In my own experience, Green Drinks events are a great way to meet like-minded people in a relaxing, casual atmosphere. The events draw from a cross-section of the green community, including people from all areas of business and non-profits, environmentalists, and even some folks just looking for good conversation and a stiff drink.

The benefits of attending Green Drinks are as varied as the people. On April 5th at the Culver City event, I met the new owner of Whole Life Times magazine and received a free subscription, reunited with a copywriter friend, and made three new business contacts. Plus, I got to do all of this with a cocktail in my hand. What more could you ask for?

Since moving to the Bay Area, attending Green Drinks has been on the top of my to-do list. So last Wednesday, I high-tailed it over to the Triple Rock Brewery in Berkeley to see what the buzz was all about.

Once inside, I met up with Green Options’ CEO David Anderson, who introduced me to a group of solar installers from Berkeley’s own Borrego Solar. When I worked for a green architect in Berkeley last summer, I would bike past Borrego Solar every day and wistfully imagine meeting up with those inside to discuss how they were changing the world. Now here I was, standing face-to-face with these very people, chatting the green chat over a delicious pint of IPA.

Upstairs on the roofdeck, I ran into some friends from the Oakland Ecovillage, where I caught up on the latest with the solar hot tub installation (which you may remember from my first Green Options post on the February 5th launch). Through them, I met the folks from spaceshare.com (providing carpooling networks to green events and festivals), stopwaste.org (reducing the waste stream for Alameda County), and even a co-sponsor of the event from EcoHome Improvement (www.ecohomeimprovement.com).

Looking at the crowd around me, I suddenly realized I had arrived full swing into Berkeley’s green scene… and it was through Green Drinks! In a mere two-hour span of time, I was able to manifest all sorts of green connections, from old friends to new acquaintances, I even managed to line up some options for future green involvement… all for the price of one drink! If you’d like to check out the green scene your hometown or even during your next trip to Italy, please visit www.greendrinks.org.

Green Drinks is an international program for people from NGOs, academia, government and business. "These events are very simple and unstructured, but many people have found employment, made friends, developed new ideas, done deals and had moments of serendipity. It's a force for the good and we'd like to help it spread to other cities."

There are now almost 200 cities with Green Drinks programs available (and San Francisco and Seattle each have two). You can check the organization's website and see if there is one near you, or find out about starting a group in your area.

The o2 network is an "international network for sustainable design." While not as socially oriented as Green Drinks, it also seeks to bring together green designers and other green-oriented people to share ideas.

Both organizations are very loosely structured. There is no set agenda or formalized program for Green Drinks. It is a very local, ad-hoc kind of get together, so programs will vary widely, both from chapter to chapter, as well as from one meeting to another in the same chapter.

My own local Green Drinks group (which meets on the third Wednesday of the month) combines both Green Drinks and o2 meetings.