For the last 25 years Hollyhock, a conference centre on Cortes’s sandy south shore, has been stirring up dissent, promoting social activism and talking cash flow through a movement called the Social Venture Institute (SVI). Founded by a trio of Greenpeace activists from the “Save the Whales” 1970s, Hollyhock began by offering weary urbanites programs in personal growth and the healing arts. In 1995, 30 entrepreneurs who had assembled to explore how business can heal the planet ended up founding what is now SVI. In the years since, Hollyhock’s lush gardens and cedar lodges have become a crucible for more than 3,000 practical altruists who believe the best way to achieve equity and social justice is to build your own change-making platforms.

Through annual events at Hollyhock and in Vancouver, Banff and San Francisco, SVI has developed robust networks of values-driven activists in sectors such as organic food, climate-change mitigation and sustainable tourism. Happy Planet – the Burnaby, B.C., producer of organic juices and smoothies now carried by most Canadian grocers – came out of the SVI community. So did Happy Planet’s co-founder, Gregor Robertson, an organic farmer who served three terms as Vancouver’s greenest mayor.

Caring communities are contagious, says SVI co-founder Joel Solomon: “SVI was a petri dish out of which a lot of good things grew.” SVI has spun off such prominent organizations as Canadian Business for Social Responsibility, which also turned 25 last year; Net Impact, a global non-profit that helps business students pursue social purpose in 435 universities; and MakeWay (formerly Tides Canada), a donor-driven foundation that changed its name last year to distance itself from the US-based Tides Foundation.

Why focus on entrepreneurs? Social ventures have the potential to become self-sustaining agents of change. Where most non-profits struggle for funding, and reform-minded governments may be blocked by stubborn lobbyists, progressive entrepreneurs fund themselves – and need no one’s permission to grow. As they build new business models in finance, food, health products, energy, workplace training and even the arts, they’re also building ecosystems of social innovation. Where 1960s activists railed against corporations, today’s social entrepreneur knows that power grows out of a solid business plan.

“Business and finance are close to neutral tools,” says Solomon. “The values and purpose we put into them is what matters.”

SVI events come with unusual ground rules. Solomon, a Vancouver impact investor who sat on Hollyhock’s board for 30 years, says SVI organizers personally select their attendees, ensuring that two-thirds come from for-profit businesses, one-third from not-for-profits. (They also throw in lawyers and accountants, because entrepreneurs can never have too many professionals on speed dial.) SVI also seeks a majority of women attendees.

“We’re trying to feminize business a bit,” says Solomon. “We want to get away from the macho ruthless business model to a more collaborative one.”

SVI sets another quota: half of attendees should be first-timers. “The do-good conspiracy,” as Solomon calls it, isn’t building a club; it’s seeding a movement. Before COVID-19 struck, SVI was planning to expand to Toronto, and maybe New York. Which is good news, because social entrepreneurship isn’t just a West Coast thing. And it’s hard, sometimes lonely work.

A 2016 survey by Mount Royal and Simon Fraser universities found social enterprises sprinkled across Canada, employing 31,000 people and generating revenues of $1.2 billion (the sector has grown significantly since then). Their average profit margin was a reasonable 4.8%. But two-thirds of the surveyed companies were more than 16 years old, so those findings don’t reflect the difficulty of launching a business or battling the status quo.

Enter SVI, whose events develop not only business savvy but resilience, empathy and connectedness. Because of COVID, SVI’s fall conference was held virtually. Gone were sunrise yoga and long walks in the rain, but the organizers orchestrated four days of highly engineered learning and mentorship for 230 attendees on Zoom. For those who couldn’t make it, here are six top takeaways from SVI 25 for anyone hoping to make change.

1. SVI 25 opened on a Tuesday evening with music and a review of the Hollyhock rules. The most important one turns out to be even more relevant in real life than at any conference: “Relationships first, business second.

2. In a session called True Confessions, Karina Birch of Rocky Mountain Soap Company spoke about growing her Canmore, Alberta, soap business into an international brand with 200 employees. Working with a chemist, she insisted that her soaps be 100% natural – using only “pronounceable” ingredients, with no chemicals or preservatives. When the chemist argued that 98% natural was good enough, Birch insisted on 100%. Even her business philosophy gets boiled into pronounceable steps: Trust your intuition. Go rogue. (“Everyone in the company has the ability to do something they don’t have approval for,” says Birch. “It doesn’t always work, but neither do the things I do.”) And finally, stay humble and keep learning. As her company grew, Birch took a course at Harvard to learn how to manage a complex organization. “I started as the soapmaker,” she says. “I had to earn the job of CEO.”

3. Unlearn your biases: Like many organizations, SVI is struggling to address systemic racism. In a frank session called Anti-Oppression, CEO Peter Wrinch shared Hollyhock’s diversity journey. “We were making strides, but to a limited form of inclusion,” he admitted. “We said, ‘Let’s invite more racialized people – but let’s not do anything to examine what the space feels like for those people.’” Similarly, Hollyhock had long welcomed the island’s Indigenous Klahoose community, shared job ads with them and gladly sold their art. But at heart, Wrinch said, “the relationship was all about us.” As part of what Wrinch calls “decolonizing work,” Hollyhock called on the Klahoose to actually listen to their goals. This year, a 14-day Klahoose expedition setting out to visit families in Washington State, 200 kilometres away, beached their canoes on Hollyhock’s shore. As Wrinch greeted the group, he wondered why he was welcoming Indigenous people to land on their own traditional territory: “We’re just at the beginning of our journey of unlearning.”

4. There’s no learning without reflection. An odd SVI habit is to pause a session to give the audience time to mull over what they’re learning. Compare that to most conferences, where people race from session to session and never get time to reflect. SVI makes time for thinking, because that’s the important part.

5. In a second True Confessions session, Adnan Durrani, CEO of Connecticut-based Saffron Road, spoke about the troubled launch of his Halal-certified food company. Durrani’s products debuted nationally at Whole Foods in 2010, just in time for Ramadan, the Muslim month of fasting and self-reflection. The retail chain welcomed Saffron Road with signs saying “Happy Ramadan,” but one Texas manager tore the signs down, saying Ramadan would not be celebrated in his store. Durrani’s response expertly blended composure and commercialism. Before going on CNN to discuss the incident, he negotiated to display his products on-screen – and then refused to criticize his client when the reporter asked, “Did Whole Foods do anything wrong?” Instead, Durrani focused on how new his product was, how helpful the retailer had been, and how the Texas incident was an anomaly. Whole Foods was delighted, and sales took off. Durrani urged SVI attendees to use “halal-jitsu” to turn problems into growth opportunities. “I know there’s a lot of darkness out there,” he said. “Instead of being a victim, be the driver of change.”

6. On Thursday evening, just before SVI’s virtual 25th anniversary party, attendees heard from one of the organization’s founders. Gary Hirshberg, chairman and “chief organic optimist” at Stonyfield Farm, one of the world’s leading organic yogurt producers, urged change agents to embrace the everyday challenges of business: cash flow, marketing, how to treat people, how to retain ownership. “This is where we make or break it,” he said. “The angel is in the details.”

Wearing a cap that said “Make Earth Cool Again,” Hirshberg said that for social entrepreneurs, the challenge is just beginning. “It’s no longer about slowing climate change, it’s about reversing it: taking carbon out of the air and putting it back into the soil.”

“Business,” said Hirshberg, “is the only force strong enough to move us in a different direction.”

The post The angel is in the details appeared first on Corporate Knights.

Why has business school research and teaching largely ignored co-ops? The answer to this question is part historical, part ideological.  

Historically, the contemporary business school has grown with the modern shareholder-governed business corporation. As such, business education has always been focused around educating professionals who are interested in a career in these particular organizations.

It is the large corporation in which, over the last century, management has become a profession and the MBA degree the ultimate certificate of being a member of this profession. Consequently, business education has focused on those large corporations at the neglect of other forms of business organization, such as cooperatives. That neglect, by the way, has also been palpable with regard to small-and medium-sized enterprises and not-for-profit organizations.

Beyond this historical explanation there is also an ideological reason for this bias. Certainly since the 1970s, with the rise of what today is often referred to as “neoliberal” thinking, business schools by and large have bought into a view of the firm as an organization whose only purpose is the maximization of its shareholders’ wealth.

Making investors wealthy is still the main game in town. This, of course, is fundamentally opposed to the idea of a cooperative, where the main purpose is to achieve some social goals while at the same time using collaboration as an approach to improve the lot of all people involved in the business.

Cooperatives are based on the assumption that working together as producers, employees and investors (often in the same person) will make everybody better off. Cooperatives represent a “stakeholder view” of the firm, where the purpose of the firm is not just to enrich investors or shareholders but to operate as a social venture that serves the interests and purposes of multiple communities.

On that note, then, having an issue of Corporate Knights focusing on cooperatives is a timely venture. Certainly after the financial crisis of 2008 we have seen some serious navel gazing in the business community. No less than Dominic Barton, global managing director of McKinsey, and Harvard strategy guru Michael Porter have raised their voices to actively think about a different approach to doing business. Seeing business as just extracting value for one single constituency is just not working – it’s not sustainable.

The debate on alternative forms of organizing and governing businesses is in full swing. Cooperatives are just one example. Looking at countries such as Italy, Spain or Switzerland shows that cooperatives can actually be a major player in the economy. And a profitable option, too. Migros, the Swiss cooperative retail chain, is a major multinational player in many markets. And a lot of our super-elite Italian fashion gadgets are produced by cooperatives.

It is time to move beyond the shareholder-dominated view of the firm. Business has always been about creating goods and services that address social needs – or, more simply put, stuff that real people need. Cooperatives are a unique example of how people in a specific situation come together, “cooperate” and collectively create value for all involved.

We should be thinking more creatively about this form of organizing business – and it should definitely play a larger role in the classroom.

The post Business schools and co-ops appeared first on Corporate Knights.

Fresh off of Alibaba’s record-breaking IPO-dominating headlines this week, co-founder Jack Ma was interviewed by Chelsea Clinton at the Clinton Global Initiative’s annual meeting yesterday. Ma spoke at length about his desire to put his swollen bank account to charitable use, returning repeatedly to ongoing environmental problems in China. “If we don’t give up, in 15 years China will have a change,” he said. “We will have blue air, blue skies, clean water.” Former President Bill Clinton, for his part, hailed it as a potential catalyst for increased civic engagement in China.

The freshly signed Canada-China Foreign Investment Promotion and Protection Agreement (FIPPA) remains a hot-button issue. Andrew Nikiforuk is worried that clauses in the 31-year treaty would empower it to supplant decisions made by Canadian provincial, judicial and First Nations on issues of resource development. The treaty goes into effect on October 1.

Corporate Knights contributor Stephen Lacey wrote about new California-based startup Local Motion, which is working to make fleets more efficient. The sharing platform helps companies make the most of corporate vehicle fleets, working with large companies such as Google and Verizon. On Greentech Media’s The Energy Gang podcast, Lacey went into detail on New York State’s ambitious plans to incorporate more entrepreneurship and choice into the state grid. It’s well worth a listen.

The United States government has launched its largest conservation program to date to restore the Great Lakes and clean up 10 contaminated rivers and harbors. The five lakes represent the largest group of freshwater lakes in the world, but the growing cities along their shores have chased away wildlife. Farming is also responsible for filling rivers with fertilizers result in massive algae blooms that cover parts of the Great Lakes, while mussels and other invasive species are killing native fish and other species. The Environmental Protection Agency aims to treat eight times more urban runoff and restore twice as much wetland and wildlife habitats. It will also double the area that it is attempts to control for invasive species and reduce fertilizer runoff by more than 1,400 tons by 2019.

The post September 25, 2014 appeared first on Corporate Knights.

Wine and beer are no exception. Both appeal to consumer appetites for local and authentic. In Canada, craft beer, made on a small scale and with natural local ingredients, is the fastest growing segment of the beer market and, as Canada’s relatively young wine industry extends its regional reach, a small but growing number of wineries are challenging themselves to produce organically.

Because the results taste good, it’s less a matter of twisting consumers’ arms to make responsible choices than simply giving them what they want. As Heather MacGregor, a spokeswoman for the Liquor Control Board of Ontario, put it, “We respond to what our customers like and this market just continues to grow across the board, on both imports and domestic.” She’s referring to a fourfold increase in organic beer sales and a doubling in organic wine sales in the last four years.

Organic doesn’t capture the full breadth of sustainability which, in the realm of wine and beer, also encompasses energy efficiency in production and reduction in water use, packaging and transport. And while it may feel like a contemporary sensibility, it’s nothing new.

When two Bavarian dukes decreed on April 23, 1516, that the only allowable ingredients in beer were barley, hops and water, they were not really concerned about taste. The so-called Bavarian Purity Law, which gets flaunted on beer labels to this day, was in fact designed to stop brewers from pillaging local wheat and rye crops, a practice that was leading to bread shortages and even starvation, and to reduce illness from additives (whether this was more about consumer safety or protectionism from north German beers that featured weird and wonderful psychoactive herbs remains a matter of debate).

The decree also regulated prices (no more than a penny per litre) and defined the beer-making season (April 23 to September 29) in order to cut back on fires caused by brewing and spoilage for lack of cool storage in the summer months. Although no mention is made of yeast – integral to beer – it’s clear the ingredient was understood as earlier medieval documents regulate yeast-sharing protocols between brewers and bakers.

Efficient brewing

Today, the scant resource in beer-making is water and the energetic challenges are to heat efficiently, recapture heat loss and optimize water purification and bottle-cleaning. Elmira, Ontario-based environmental consulting firm Enviro-Stewards has specialized in beer and wine production. By reducing water and gas consumption, product losses and the use of caustics, wineries and breweries increase their output and minimize their loads on local water treatment facilities. Realizing this, and that reducing industrial water consumption is cheaper than digging more wells, several Canadian municipalities and public utilities have, in the last few years, begun to co-fund environmental assessments and refits.

The City of Guelph and Union Gas, for instance, helped Canadian brewer Sleemans to reduce its water and natural gas consumption by 8 per cent and 20 per cent respectively, boosting the brewery’s output and its bottom line by $330,000 a year, with an annual return on investment of over 100 per cent.

In Europe, Dutch beer giant Heineken has paired with the Austrian government in a “Green Brewery” project whose ultimate objective is carbon-neutral beer. Their pilot project at 500-year-old Göss brewery in southeastern Austria uses a combination of solar thermal systems and residual heat from a nearby sawmill for brewing. Almost all of the brewery’s waste heat is used to warm the municipal water supply and in the winter, outdoor air is used for cooling. External electricity used at the brewery, like all breweries in Austria’s Brau Union group (the country’s biggest beer conglomerate), is renewable.

Such ambitions may be more realizable and at a larger scale in a European context – where, for example, Austria is aiming for energy self-sufficiency by 2050 thanks to its extensive wind and hydropower. But Canadian breweries are making strides as well. One major shift here is towards local production.

When Steve Abrams, co-founder of Mill Street Brewery, decided to launch Ontario’s first organic beer in 2002, he had to import his organic hops from New Zealand and his organic malt from Germany, a painful contradiction for a local craft brewer. In the absence of a Canadian standard, he also had to turn to the U.S. Department of Agriculture for organic certification.

Twelve years later, Mill Street’s organic ale (one of the brewery’s more than 40 beers) accounts for 60 per cent of the company’s sales. The brewery is now one of over 30 craft breweries in Ontario and Abrams is able to source all his ingredients within the province.

Hops on the ups

The boom in craft breweries has, among other things, brought hops back to Ontario following a dry spell that Ontario Hop Growers’ Association vice-president Hugh Brown believes dates back to prohibition. Founded four years ago, his association now comprises roughly 30 commercial hops growers, up from “next to none” five years ago.

Most are producing organically and on a small scale but Brown believes that, given the high local demand, bigger commercial players are soon to enter the market. He sees Ontario’s beer industry undergoing what the province’s wine industry went through a decade ago – a move towards estate production, with ingredients being grown and processed on site, a situation where sustainable practice takes on greater immediacy.

Crannóg Ales, founded in 2000 in British Columbia’s interior, is one such on-farm brewery and the first in Canada to get organic certification. Crannóg brews 1.5 million litres annually: “minuscule” in the words of its co-founder Rebecca Kneen (craft brewery is anything below 40 million litres). For Kneen, who grew up on a farm, it “only made sense” to farm and brew on site. Crannóg grows its own organic hops, propagates its own yeasts, draws its own spring water and has its Prairie barley malted by a local maltster. All spent grains and waste water are used on the farm.

Having found no solar or wind systems practical for its scale of operation, Crannóg’s solution has been to keep its energy needs low by eliminating two of the most energy-intensive processes in beer-making: thermal pasteurization and bottling.

“Why spend so much attention on the ingredients if we’re just going to filter out the goodness and flavour?” asks Kneen. Being non-pasteurized, the beer can’t be sold through the liquor board, but Crannóg has a cult following locally and nobody complains that the beer is only available in kegs or “growlers” (which get cleaned and reused rather than recycled) or that it has to be stored cold because it’s “alive.”

Breaking tradition

Crannóg harbours no dreams of expansion beyond the B.C. border: “One important piece of sustainability is being content at a place of sufficiency,” says Kneen. “Constant growth isn’t necessarily sustainable. When things go industrial, they also become invisible.”

Bill Redelmeier, owner of Southbrook Vineyards in Niagara-on-the-Lake, Ontario, is something of a kindred spirit in the world of wine. Southbrook boasts biodynamic, organic and Leadership in Energy and Environmental Design (LEED) certifications – making it unique in Canada.

Biodynamic takes organic farming to another level. Redelmeier, a third-generation farmer, dispenses with fungicides and pesticides, raises sheep for their manure and cultivates wild yeasts and moulds “right out of the sheep’s rear end.” He considers the difference between conventional and organic farming to be one of degree, whereas biodynamic farming is more one of kind. By tolerating low levels of infection in the vineyard, the grapes cultivate thick skins rich in tannins and bio-flavonoids and by using wild yeasts, fermentation takes longer and occurs in unique succession. “It’s the difference between a note and a chord,” he says referring to the taste, adding that Ontario’s two biodynamic wineries take home more than their share of national awards every year.

Redelmeier would like to see far more organic vineyards in Ontario, but understands that risk and expense are real obstacles for most grape growers. Organic vineyards typically yield less than half that of conventional ones and they’re more vulnerable to blights and weather irregularities. When taking the leap to organic, growers often look for advance purchasing commitments from wineries to protect themselves financially.

Nor is it universally agreed that organic is better. J-L Groux, winemaker at Stratus Vineyards, just down the road from Southbrook in Niagara-on-the-Lake, argues that organic doesn’t always correlate with quality or sustainability. Originally from the French Loire with wine-making experience on both continents, Groux talks about the downsides of organic production. Grapes need to be sprayed more often, he says, and that requires more fuel. There’s also the need to occasionally pick grapes prematurely to avoid disease, and in the past, organic sprays such as copper and sulphur have taken a toll on soils.

While not organic, Stratus believes deeply in sustainability, which Groux calls “the overall picture.” The winery, built in 2005, was the first building in Canada and the first winery in the world to get LEED certification – a distinction that applies to both its construction and ongoing operation. Groux talks about a “gentle on the earth” approach – which, along with no use of herbicides, includes largely natural pesticides, compost fertilizers, electro-magnetic sprayers rather than irrigation, bio-fuelled tractors and labour-intensive production that uses gravity rather than pumps. Because the parcels adjacent to Stratus are less than 30 feet away and farmed conventionally, the vineyard is not eligible for organic certification. But even if it were, Groux wouldn’t subject his wines to that corset. For him, the young, experimental culture of winemaking in Canada is what makes it more exciting than in the tradition-bound old world.

Taste trumps

For many winemakers like Groux, the term “sustainable” implies virtues rather than restrictions. California’s Sonoma County is embracing it whole hog, aiming to become America’s first 100 per cent sustainable wine region by 2019. Wine has a long tradition in Sonoma, its vineyards dating back to the 1820s and many still in family hands; it’s also big business, accounting for 60 per cent of the county’s GDP and one in three jobs.

According to Karissa Kruse, president of the Sonoma County Winegrowers, the body behind the sustainability initiative, it seems a logical step to make sure winemaking is sustainable. “The marketplace is going this way,” says Kruse. And she’s right. In its 2014 Culinary Forecast, the U.S. National Restaurant Association cited sustainability as the top trend in food and beverage for the coming decade.

While the initiative is completely voluntary, Kruse says that all of Sonoma’s 1,800 grape growers and almost half its 450 winemakers have opted in. And it’s not just a marketing ploy – the region’s susceptibility to drought makes optimal canopy management, drip irrigation and frost protection vital to survival.

Sustainable breweries and wineries, while growing, still represent a small slice of the total market, a position that seems to foster a healthy mix of solidarity and fierce competition. To expand their market share, they have to work together; to distinguish themselves within the small pack, they have to be creative. This leads to wonderful spinoffs – like the glass jewelry made from Stratus’ bottle shards or the blankets woven from Southbrook’s sheep clip – and community collaborations like Mill Street’s partnership with Earth Day Canada, or eastern Ontario craft brewer Beau’s hiring of homeless youth to drive its delivery vans.

But ultimately, it’s taste buds that drive the market. As Mill Street’s Abrams says, “Our research shows that flavour is the single biggest factor for consumers. The fact that it’s organic is nice but for the vast majority it’s not the number one reason to buy.

The post Organic beer is greener beer appeared first on Corporate Knights.

Sir Partha Dasgupta, the esteemed University of Cambridge economics professor, has been charged with showing the world’s second-most populous country how to do it. For two years now, Dasgupta has been leading an expert committee made up of economists who together are developing a “green national accounting” roadmap for India. A draft of the committee’s report was to be presented this month at an international conference.

India’s goal by 2015 is to begin reporting GDP “after taking into account environmental costs,” said India’s environment minister, Jairam Ramesh, when the expert committee was announced in 2011.

CK asked Dasgupta whether the plan calls for a full integration of natural capital into GDP. “Yes and no,” said Dasgupta, who was co-author of the well-received Inclusive Wealth Report 2012. “Changes to the system of national accounts will inevitably take place step by step, over several years. For the moment, the idea will be simply to deduct depreciation, where possible, from GDP in order to arrive at an idea of net domestic product.”

Dasgupta called “green GDP” a misnomer. “Eventually one hopes national accountants will move to estimating the wealth of nations, which are estimates of (natural capital) stocks. For the moment, net domestic product, which represents flow (of wealth), will have to suffice.”

When measured by purchasing power parity, India is the fourth-largest economy in the world after the United States, China and Japan, and is likely to move into third place around 2015. With an average growth rate of 8.2 per cent between 2007 and 2012, you’d think there was no reason for Indians to complain. But distribution of income has been inequitable and the environment has borne the brunt of this rapid growth, raising concerns domestically about the sustainability of India’s development path.

For an Indian born before the 1960s, the term “green revolution” meant relief from drought and hunger as high-yielding agrarian technology transformed food production and availability in India. This is no longer the case. The new generation of Indians would associate green revolution with the battle to preserve India’s natural capital, such as the 69.2 million hectares of forests that represent 21 per cent of the country’s land area. The stock and flow of such a resource changes over time, but the country now has some tools – under the umbrella of Natural Resource Accounting (NRA) – which we can use to assign an economic value to changes in natural capital.

NRA in India had an early but slow start. The first official effort was a pilot study commissioned by the India government’s Central Statistical Office in 1999 for the small state of Goa in western India. Eight studies followed in different states to cover land, forests, air, water and mineral resources. A technical advisory committee is now trying to collate the information generated by these studies to develop a sector-wise framework to account for the environment.

Independently, the Green Indian States Trust launched the Green Accounting for Indian States & Union Territories Project (GAISP). It sought to set up top-down economic models for annual estimates of adjusted gross state domestic product (GSDP) for all Indian states. Researchers there have estimated green national income at the state level by adjusting the traditional national income measures for changes in natural capital – namely, forest resources, agriculture and grazing lands, cattle, mineral deposits and surface freshwater.

A comparison of green income with the traditional measure of state income suggests that green income was below the unadjusted income in four of the six adjustments. The only case where green income exceeds traditional state income is in the case of human capital. This is not good news where sustainability of natural capital is concerned.

Some insight can be provided by the World Bank, which took snapshots of India’s natural capital in 1995, 2000 and 2005. Over this period, per-capita natural capital in India declined to $2,700 from $3,400 (at 2005 prices). This is a concerning trend from a resource conservation point of view, but the consolation is that comprehensive wealth – the sum of natural, physical and human capital – grew in this period because of gains in human capital.

But that won’t last in the long term, which is why Dasgupta’s work is being closely watched. It will give the Indian government a better sense of the impact high GDP growth is having on ecology and biodiversity, and what trade-offs can be made to achieve a sustainable balance. As environment minister, Ramesh has contended in the past that if natural capital impacts were accounted for, India’s economic growth would be 6 per cent – not the 9 per cent reflected by GDP.

If all goes as planned, India should have an integrated system of accounts by 2015 – a tabulation of both physical changes as well as economic estimates of the flows, and eventually stocks, of natural capital. India will then join a select group of countries that would use the common framework developed by the UN Statistical Commission, called the System of Environmental-Economic Accounts (SEEA of 2012), to provide periodic national income accounts that take the environment into consideration.

The post GDP hides India’s big picture appeared first on Corporate Knights.

The NCD was borne from the fact that, unlike climate change, natural capital is largely unaccounted for by banks, investors or insurance firms in their products and services. Nature underpins global wealth creation. The renewable flow of goods and services provided by the earth’s ecosystems buttress our economy and yield benefits for business. But this stock of ecosystems – also known as “natural capital” – is largely invisible in financial decision-making. As a result, natural capital does not appear on the balance sheets of businesses and is largely unaccounted for in financial products.

Take, for instance, an investor in London, Shanghai or New York who finances a palm-oil development scheme in Indonesia or Africa, resulting in clearance of a large area of natural tropical rainforest. The dependency on and impacts of this investment on climate, food, energy, water and livelihood security are unlikely to be included in the cost of capital or debt, credit ratings on fixed income products, investment analysis or insurance premiums. Most finance institutions still do not believe that natural capital is material to their bottom line. In addition, for many types of financial products there are (at present) no metrics available to incorporate it into credit risk.

The aim of the NCD is to mainstream the systematic integration of natural capital considerations in loans, fixed income, equities and insurance products, as well as work towards embedding natural capital in corporate accounting and reporting frameworks.

The UN Environment Programme Finance Initiative (UNEP FI) and Global Canopy Programme (GCP), who jointly manage the NCD, will soon launch the NCD Roadmap and Business Plan to kickstart Phase II of the project. The project is seeking US$2 million over a three year period from the private sector, governments and foundations for full implementation.

What are our objectives in the next three years? First of all, we aim for the NCD to be an operational initiative that develops practical tools, frameworks and metrics that finance institutions can use to integrate natural capital – alongside other material ESG factors – into their own organisations.

The Environmental Risk Integration in Sovereign Credit analysis (E-RISC) project that UNEP FI and Global Footprint Network initiated in association with fifteen banks, investors and information providers is a good example of natural capital applied to a specific asset class: sovereign fixed income. It showed, for the first time, that natural resource and environmental risks are financially material to sovereign credit risk analysis. This topic was also the focus of the Corporate Knights ‘Global 100 – Executive Roundtable Dinner’ in Davos earlier this year. The NCD implementation phase aims to start similar types of projects focused on developing metrics for other asset classes such as corporate fixed income, various insurance lines and private equity, among others.

The second objective of the NCD is to increase the number of endorsements by financial institutions to build an even greater commitment in the sector towards taking action based upon the material importance of this topic.

Four working groups have been formed to design methodologies to implement the four core commitments of the NCD that endorsing CEOs sign up to. These are:

• Understanding: Build an understanding of the dependencies and impacts of natural capital within a financial institution’s operations, risk profile, etc.;
• Embedding: Integrate natural capital considerations into financial products and services – including loans, investments and insurance policies;
• Accounting: Work towards building a global consensus for the integration of Natural Capital into private sector accounting and decision-making; and
• Disclosing/reporting: Work towards a global consensus around the development of integrated reporting, which, includes natural capital.

A number of challenges still remain. Given that a considerable part of economic growth is likely to come from emerging markets, it will be especially important to convince finance institutions based in emerging markets to sign up to the NCD. Second, it is crucial to show how systematically embedding natural capital factors into financial products can go hand in hand with having successful business models. Even though there is an obvious need to better account for the value of ecosystems in our global economy, the current economic climate makes this particularly challenging. For many banks, the foremost focus is on shoring up their balance sheets, which makes it difficult to point them to the medium- and long-term horizon where environmental constraints will affect their bottom lines. The early response from endorsing financial institutions has been encouraging, but greater institutional support will be needed for this to become mainstream.

The post Mainstreaming natural capital appeared first on Corporate Knights.

This was Steve Croth’s answer when asked what percentage of a company’s profits should go to corporate social responsibility (CSR).

Croth is General Manager of Better the World, an organization that develops CSR initiatives to engage stakeholders and one of several social enterprises to attend the 2011 In Good Company conference in Toronto.

Exploding into the mainstream as a business imperative in the early-2000s, CSR initiatives that translate into positive results on the ground and financially are still sought by many companies. The conference, put on by Orenda Connections, allowed practitioners from civil society and the private sector to share knowledge and experience on how to get the most – both socially and economically – from their community investment initiatives.

With stakeholders no longer satisfied with one-off charitable events, there seems to be a palpable shift among practitioners towards CSR projects that achieve economic and social returns while conveying genuineness. When initiatives match these criteria, the results are optimal for the company and the community. Such was the case with Edelman, a leading public relations firm, and The Little Give initiative, where Toronto staff helped two local non-profits (KUPE Arts Society and Sketch) over a 48-hour period in 2010.

Sketch provides creative services to 15 to 29 year olds who self-identify as living in poverty. The organization’s work has enabled participants to address personal issues and, in one case, even helped a local woman launch a hemp clothing business in Toronto’s Kensington Market.

“Most people do art in their ‘leisure time.’ If you’re street involved, that kind of leisure is hard to come by. Most of your time and energy is aimed towards food and finding a place to live,” according to Dale Roy, Sketch’s Marketing and Communications Associate.

Edelman helped Sketch by developing a new website and teaching its community how to use the site’s administrative functions to manage its business activities and communications.

Lisa Kimmel, General Manager at Edelman’s Toronto office, said that in an employee satisfaction survey after the campaign, 82 per cent of staff were interested in working for companies who support causes that are important to them.

This suggests that companies can retain talent by participating in initiatives that contribute to the community in a concrete fashion. The finding provides added motivation for companies to engage in CSR initiatives that are genuine and achieve lasting impacts on the ground.

In communicating their success stories, practitioners used business metrics and terminology.

Other firms focus resources towards addressing social or environmental issues over an ongoing period of time. Canadian Tire Jumpstart Charities President Dan Thompson emphasized the importance for companies to establish a “social territory” in the CSR space and to be “laser-focused” on it. Jumpstart provides organized and recreational sports opportunities to disadvantaged youth in Canada. He added how such a focus can create brand as well as shareholder value for organizations.

There is evidence of Jumpstart’s brand awareness helping Canadian Tire’s bottom line. “Our cause proposition is getting so strong that when consumers see a hangtag and that a percentage of proceeds is going to the charity, they buy more,” says Thompson.

He pointed out a case where a bicycle with a Jumpstart hangtag sold 38 per cent more than the previous year when it didn’t have any charity association. “Consumers won’t pay any more, but all things being equal they will buy your product. So, you will sell more volume,” Thompson added.

Fifth Town Artisan Cheese Co., a goat, sheep and cow milk dairy in Ontario’s Prince Edward County, stood out at the event as a social enterprise that is trying to lead by example in its mission and operations. It has the twin goals of demonstrating an example of sustainable prosperity through small-scale farming and employing people from all walks of life.

Its General Manager, Petra Cooper, wants to change the way Canadians think about food, framing it as a “cultural product.” She points out how Canada has historically not thought of itself as having a food culture and the potential for its promotion to attract tourism and foster a sense of heritage. “I think Canada loses an opportunity to market itself as a food destination by not cultivating those small enterprises,”she said.

“Just like the Ministry of Heritage and Culture has grant programs for filmmakers to explore topics that don’t get funded from the commercial public, the same could be said of food and ways to encourage chefs and growers and reintroducing heritage wheats and beans that are Canadian,” said Cooper.

“Small-scale dairy is important to provide consumers with choice. It’s an important segment to revive like vegetable organics has done for vegetables,” said Cooper. Foregoing a status quo operation today might mean smaller cash flows for a social enterprise now, but might lead to creating a more vibrant sector in the long-term.

While commitment from organizations is important for making the most impact on the ground, buy-in from CEOs and CFOs is crucial for their success.

A community investment project backed by a corporation can have less risk associated with it, as the company can absorb the loss, if unsuccessful. A social enterprise takes on greater risk as it is addressing a fundamental problem and enables its operators to advocate for a solution. In Fifth Town’s case, this not only means producing cheese but also creating public awareness of the poor quality of industrial food and instilling a cultural pride in Canadian food.

That said, CSR practitioners are disadvantaged in having to satisfy internal and external stakeholders by achieving economic and social returns on the initiatives they manage. When compared to measuring and achieving economic returns, obtaining results on social returns is significantly less clear-cut.

While to traditionally-minded managers it might seem that a corporation is straying from its core competencies by focusing on a social issue, the truth is, it’s an opportunity to gain new expertise and build a brand by achieving real impacts on the ground.

For more information on organizations mentioned in the above article, please visit:

Jumpstart Charities: https://www.canadiantire.ca/jumpstart/

Fifth Town Cheese Co.: https://www.fifthtown.ca/

KUPE Arts Society https://kupearts.org/

Sketch: https://sketch.ca/

Edelman “The Little Give initiative”: https://thelittlegive.ca/2011/

Better the World: https://www.bettertheworld.com/

The post Money where it matters appeared first on Corporate Knights.

It all boils down to one challenge: how do we prosper without any increase in our gross domestic product (GDP)? What might seem like a purely academic concern to the uninitiated—or borderline heresy to traditional economists—is the single most important question we ought to be asking, according to economist Tim Jackson in his new book, Prosperity Without Growth.

Avoiding runaway climate change means reducing the carbon intensity of every dollar 130 times, says Jackson.

This cannot be done without forgoing economic growth, he says – a difficult task, given that GDP growth has been the single most important policy goal for a century.

Thanks to his book’s critique of the “iron cage of consumerism,” many label Jackson’s work as anti-capitalistic. But, he argues, capitalism can exist without growth—just not capitalism as we know it.

CK: Why do you dismiss as “delusional” the Stern Report’s conclusion that spending three per cent of our GDP on abating climate change is sufficient?

JACKSON: The main inspiration for this book was this seductive idea that clean, clever, and efficient technologies are all we need. But real progress has been hampered by perverse incentives towards efficiency that encourage the development of new technologies, wasting more resources in the process.

CK: Do we just need to reconfigure our thinking?

JACKSON: That is the thrust of the argument. Environmental economics tried to account for the failings of the model with slight adjustments, such as carbon taxes. But what we really need is to change the internal dynamics of our current economic model, because it pushes us towards expansion or collapse—not stability.

CK: What critiques of your work bother you the most?

JACKSON: One is simply ignoring my idea. Another is claiming that profit-driven economics are in accord with the natural motivations of people who are inherently selfish. We have institutionalized this narrow vision of humanity into an economic system that calls on us to be myopic, individualistic novelty-seekers in order to drive material output.

CK: What is your reaction when people accuse you of being anti-progress?

JACKSON: I characterise my position as “trans-modern”: many of the ways that society was traditionally organized were valuable, such as locally-organized economies and strong communities. Those have been swept away by a vision of modernity that functions merely to fuel consumerism. We need to retrieve those ideas and use them as the building blocks for a new definition of shared prosperity.

I have derision for those who would throw traditions away to maintain a derelict system. That is a very destructive way to treat human history and how we understand progress.

CK: The book was written when the economic crisis was just kicking off. What do you have to say about recent events?

JACKSON: In the aftermath of the crashes in 2008 there were a number of attempts at reform that turned into false starts. That was very disappointing. The British elections did not feature any questioning of the model whatsoever in a country where the national debt grew at a million pounds every eleven minutes while the recession loomed in 2008.

It is understandable, looking at the horrible situation in Greece, that people are nervous to talk about changes to the model, but my point is that Greece is a casualty of the model.

CK: Do you have hope for the future?

JACKSON: Absolutely. I have faith in humanity’s inordinate ability to adapt to difficult circumstances. And I think it’s a responsibility to have hope. Hope is a psychological strategy for achievement.

The post A new kind of prosperity appeared first on Corporate Knights.