Category: December 2014 – Special 100th Issue

By John Roulac, founder of Nutiva

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.

By Joe Keefe, President and CEO,
Pax World Management

Twenty 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 21^st 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

When 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.

What 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.

“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

Nelson 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.

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

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.

Photos courtesy of Philippe Cousteau