Training Green Jobs

photo from Bio Liberty LLC

Part of building a successful business is having an educated and trained workforce.  Most businesses take this into account when setting up their headquarters.  Ideally, you want to be located next to some bright minds.  It’s no coincidence that some of the best technology firms start up in Silicon Valley.  These companies are trying to attract some tech-savvy people. 

This is what we call human capital and it is essential to a successful business.  You could have the greatest business plan in the world, the financing, and the market, but if you are lacking in human capital to make your business function properly, it will flop. 

Furthermore, whole sectors of the economy cannot develop or grow without this human capital.  In recent months, probably because of President Obama’s committment to combatting climate change, we have been hearing about building a green economy, investing in alternative sources of energy, and building more energy efficient automobiles.  Sounds great.  But who will actually do the work to make this happen?  The government can talk, and outline plans, and allocate money all it wants, but if we lack trained workers to actually carry out the plan, nothing will get done.  Who will install the solar panels on everyone’s roofs?  Who will construct the millions of windmills?  Who will retrofit all of our buildings to make them more energy efficient? 

I came across an interesting article today on the BBC about Cerro Coso Community College in California, near the Mojave desert.  It’s a place where the wind blows hard, and because of that CC Community College has a program to train workers to install wind turbines.  The students pay about $1,000 for the course, and are almost guaranteed a job in the wind industry after graduation.  These are the green jobs of the future that President Obama wishes to create. 

Also, there is the East Los Angeles Skills Centre, an institution training workers who either lost their jobs or who are ex-cons and ex-gang members to install solar panels.  These jobs are highly skilled.  Workers need to know how to install the solar panels, and wire them.  Trainees will also almost certainly be hired for a job after completion of the course.  These are also the green jobs of the future. 

President Obama and Governor Schwarzenegger want to create more of these green jobs.  Obama has ensured funding through the recent stimulus plan, and Governor Schwarzenegger will use that money for his new California Green Corps, a program to train youth in these new green jobs.  The green industry is booming.  The problem is not the political will or even the funding, but the lack of human capital is preventing this industry from exploding.  There aren’t enough universities or trade schools to train workers in these fields.  These courses are fully enrolled and have a waiting list.   

A lot of Americans tend to think of manual labor as a low-end job.  This has contributed to a decline in U.S. manufacturing.  But the green industry is the next big boom in manufacturing, and thus, the next big boom in jobs.  If the U.S. doesn’t take the lead, another country will.  If the green industry takes off, it will be because there are more institutions such as the Cerro Coso Community College and the East Los Angeles Skills Centre.

Corporate Greening

In the last post I talked about the danger of biodiversity loss and I put up a video of Thomas Friedman talking about the importance of getting involved with responsible corporations to combat climate change. I’d like to expand on that a bit in this post.

According to the Pew Center on Global Climate Change, industry represents 19% of total international carbon emissions.  That is a huge chunk of the pie.  Because of the very large role corporations play in spewing greenhouse gases into the air, it is all the more important to get them to change.  While switching the lightbulbs in your house to more efficient bulbs and driving less are very important changes that all of us need to make, the significant change will happen by cleaning up industry.  The Wal-Marts, Exxon Mobiles, General Electrics, McDonalds, and Nestles of the world.  If environmentalists, consumers, and governments can partner with some of the worst polluters in a cooperative effort, real change can take place.  Many of these corporations have been responsible for polluting our air, dumping toxic waste into our rivers and streams, and destroying wildlife habitats across the world.  They have been the evil villains for years, forever attracting the public’s outrage.  Environmentalists saw industry as something that needed to be restrained, contained, and regulated.  Industry saw the environment and environmentalists as pests; obstacles in the way of making money.  The environment and industry were opposites.  Being green and being profitable were mutually exclusive.

Why the change of heart?  Money.  The environment is beginning to be seen as a way of MAKING money, not an obstacle to it.  Environmentalists are beginning to see that industry is not going away, and greening them can be positive for everyone.  What’s more, many entrepreneurs are seeing the huge business opportunity in green industry.  Solar panels, wind turbines, green efficiency, green design.  That’s the future of business.  Applying pressure to the worst violators is important, but what will really change behavior, what will really work, is the financial gain from going green.  That’s the biggest motivator for corporations.  

Lifetime oilman T. Boone Pickens bet his personal fortune on environmental business.  Last year, he announced his “Pickens Plan,” which consisted of converting the nation’s auto fleet to run on natural gas, as a temporary solution (natural gas is much cleaner than regular gasoline), and meanwhile, he planned on building the world’s biggest wind farm in Texas.  Far from being a treehugger, Pickens believes in the huge business opportunity in alternative energy, because of the dwindling supply of oil in the world. 

Wal-Mart realized that by going green they could make more money.  By making their trucks more efficient they could save millions in fuel costs; by using less plastic in packaging, they could save more; by using less energy to heat and cool their stores, they could save more; by selling environmentally-friendly products that their customers demand, they could sell more.  Wal-Mart now has solar panels on a few of its locations, they sell fair-trade coffee, they are buying wind energy to supply hundreds of its locations in Texas, and has donated $5.7 million to supporting green job creation in the US.  There has been no shortage of public pressure and outrage directed at Wal-Mart for all of its sins.  But if Wal-Mart can alter its carbon footprint, clean up their operations, huge progress can be made. 

Clorox has introduced its environmentally-friendly cleaning products.

General Electric has bet big on wind and solar energy. 

Even some oil companies have invested in alternative energy, seeing which way the winds of the future are blowing. 

Industries have been the biggest pollutors for years.  But shaming them out of business is not a productive way of combating climate change.  As Thomas Friedman said, finding the responsible players in the corporate world, and partnering with them to bring about change, can have a huge impact.  Industry represents 19% of total carbon emissions.  If we can clean up that 19% and make money while we are at it, the world can be a better place.

Losing Biodiversity

Photo from Conservation International

According to the Oxford Dictionary, the definition of biodiversity is, “the variety of plant and animal life in the world,” or in other words, all living things on Earth.  Plants, animals, insects, and marine life, as well as all the non-living things that are connected to them.  In terms of the level of awareness, the climate change discourse has certainly elevated in recent years.  The oceans are warming, the air is warming, ice caps are melting, some areas are getting too much rain, some areas are getting too little of it, certain cities have chronic smog problems, and so on.  One important consequence that often gets lost in all the political arguments on climate change is the devastating loss of plant and animal life across the world.  As I mentioned in my post about Conservation, deforestation is one of the biggest contributors to greenhouse gas emissions.  Deforestation accounts for 20% of carbon emissions, totalling more than all the emissions from automobiles combined.  Yet, it does not get the attention that automobiles do.  Hacking down forests as large as Greece each year doesn’t seem to enrage people as much as SUVs and Hummers.  Why? 

LAND DEFORESTED FOR ROAD CONSTRUCTION AND BURNING FOREST, MADAGASCAR

And an awful side affect of both climate change and deforestation is the loss of biodiversity across the world.  It has become popular in recent years to talk about the need to save the polar bears.  This is probably due to the fact that seeing a polar bear clinging to a shrinking strip of ice, prolonging the inevitable, is a very clear example of the direct effects of climate change.  While it is truly admirable to dedicate one’s time and efforts in raising awareness for such a cause, it has also been dismissed by those who are slow to embrace our climate problem.  “Why should I care about the polar bears?”  or, “polar bears can swim.”  Such reactions miss the point.  You may not be directly affected by the loss of polar bears, but you will most certainly begin to feel the effects of a larger loss of plants and animals across the world. 

The Earth has functioned properly for millions of years because everything has worked together in a collective system.  The way carbon dioxide is taken in by the trees, providing the oxygen we breathe.  Or, the way a specific species of plant flourishes because the insects that destroy it are kept in check by a certain bird, for example.  Or,the way bees pollinate the crops humans need for food. 

As Thomas Friedman notes in his book, Hot, Flat and Crowded, “Natural ecosystems provide a wide range of benefits and “services” to people who do not have or cannot afford a local supermarket or plumbing: They supply fresh water, they filter pollutants from streams, they provide breeding ground for fisheries, they control erosion, they buffer human communities against storms and natural disasters, they harbor insects that pollinate crops or attack crop pests, they naturally take CO2 out of the atmosphere,”(143).  Biodiversity gives us cures for diseases, food, industrial materials, and keeps the system working properly. When this system is disrupted, even if it occurs far away, the effects reverberate across the world.  Larger hurricanes, longer droughts, crop devastation because of lack of insect control, food scarcity, water scarcity.  Conservation International’s slogan is “lost there, felt here.”  Indeed it is. 

As Thomas Friedman notes in this video, we are losing one species of plant or animal every 20 minutes.  He also notes the importance of cooperation with responsible corporations will go a long way to making progress.  The climate change problem will not get solved with only the non-profits of the world; businesses must be a part of the solution.  In my next post, I will investigate this topic further.

Photo from Conservation International

Business Profile: EcoTulum

Here at The Enchanting Group, our parent company, we have our own destinations for ecotourism.  Today marks the beginning of our service trips at EcoTulum, a resort in Tulum, Mexico.  There are two volunteers that are arriving at the EcoTulum resort, to embark on a week of fun and service.  It is our first volunteer trip to this resort as EcoTulum (as well as Ulaa) tries to provide service opportunities in its unique location.

EcoTulum began in 1998 as an alternative vacation destination.  They have beautiful but simple cabanas located directly on a white sandy beach, looking out over the blue Caribbean.  EcoTulum believes in a truly holistic experience; the cabins are environmentally friendly, open air cabanas.  They do not have air conditioning and electricity is turned off at 11PM.  Visitors can enjoy free yoga classes, swim in the sea, hike in the rainforest, or explore ancient Mayan archaeological sites.  The EcoTulum experience is quite different from your average Caribbean cruise.

EcoTulum is not finished though.  This year they decided to host college volunteers for a reduced price to experience a unique volunteer service trip that they will never forget.  EcoTulum’s proximity to the rainforest and Mayan ruins provides a wonderful opportunity for people to come and learn about biodiversity, ecological conservation, and Mayan culture.  Their first 2 volunteers arrive today for a week of exploration, learning, and lots of fun.  Their itinerary is as follows:

March 17: A two hour tour in the Bioregion to learn about the environment there, biodiversity, and the efforts to preserve the habitat.  The tour will be followed by snorkeling in the Cenote Dos Ojos, a naturally occurring well full of plant and animal life.  This area is of spiritual importance to the Mayan culture.
March 18 & 19: Volunteers will work with Flora, Fauna y Cultura.org, a local NGO.  They will work on several projects in the area of Playa del Carmen—Eco Park la Seiva; helping to preserve wildlife and natural habitats like the native turtles; beach cleanup programs; and learning about reforestation efforts. http://www.florafaunaycultura.org/
March 20: Visit the Mayan ruins in Tulum and learn about the history of Mayan culture. 
March 21: Free day.

EcoTulum began as an ordinary spa/resort but has decided to provide opportunities for college students to have an alternative spring break.  EcoTulum is not starting this program because it’s going to be a big moneymaker; the students pay very little to stay at the resort and participate in the activities.  The objective of hosting volunteers is also not for the work the students will provide; there is only so much you can do in a week.  Rather the focus is on educating and changing the lives of the volunteers and creating an appreciation for the environment.  If they can leave EcoTulum inspired by the natural beauty, and the biological and environmental wonders of the area, then the trip will have been a success.  Hopefully, the volunteers will take home a new perspective on the environment, weave these lessons into their daily lives, and educate others.  Maybe they will even decide to study ecology, or biology, or environmental law.  Raising environmental and ecological awareness, in the end, is the measure of success for this program. 

All inclusive vacations to Cancun may be common among college kids, but trips like that are redundant and cliche.  EcoTulum ecological service trips are really different; a once in a lifetime experience.  This is EcoTulum’s first trip, but they are ongoing, so if you are interested contact our service trip expert Sarah Maxwell.  You can read her blog here, which has a wealth of information on service trips to Tulum and Ulaa.  The EcoTulum resort is a wonderful resort that has decided to use some of its profits to fund a volunteer program, hosting students and providing a series of activities for ecological service and education.

Ecotourism

Continuing with the theme of conservation, and relating to last weeks posts about agri-tourism, today I wanted to talk about Ecotourism. With rapid deforestation, and the equally rapid loss of plant, animal, and marine life worldwide, it is more important than ever to step up preservation and conservation efforts. Some of the richest areas in biodiversity are under threat from pollution, climate change, and human interference. Trying to keep people away from these sites as much as possible may seem like the logical solution, but that will remain a losing battle. By responsibly allowing rain forests, coral reefs, mountain ranges, and tropical islands to become tourist destinations, we can not only protect these threatened habitats, but provide incentives to permanently preserve them.

*Conservation International Photo

As Sarah talked about in her blog on March 10, in 2008 the human race has officially become predominantly an urban people. For thousands of years the majority of people have lived in rural areas, growing food, living off the land. But no more. Megalopolises are springing up at an ever faster pace. To keep up with satisfying the needs of our mega cities, more and more of the Earth’s resources are being plundered. More and more trees are being cut down for timber; more and more forests are being cleared by property developers; more and more fish are being extracted to feed the world’s growing population. Quenching the thirst of our crowded planet comes at the expense of our most valuable habitats. Conservation International, a leading international NGO specializing in biodiversity preservation, estimates that one species goes extinct every twenty minutes.

Conservation International Photo

Ecotourism is one way to help preserve these habitats. Tourism is a massive industry will only grow in the future. The idea behind ecotourism is to encourage responsible travel, educate people on the value of our ecosystems, protect these ecosystems, and provide income for the local populations – and thereby creating incentives to preserve these ecosystems. Governments can prohibit deforestation all they want, but if the local population will earn more money by chopping down trees than they would by leaving them untouched, then laws will do nothing. Preaching about the environment to the poor who live in Brazil’s rain forest, for example, will do absolutely nothing unless they are provided with an alternative livelihood. Ecotourism can create these alternatives.

According to Conservation International, ecotourism has provided income, management, and care for more than 33,000 protected areas. They are actively creating opportunities for local populations and preserving areas across Africa, Central America, and South America. One such project is the Chalalán Ecolodge located in Bolivia’s Amazon Rain Forest. Logging and hunting was destroying parts of the rain forest there and the local populations wanted an alternative. With the help of Conservation International, they built an ecolodge, made out of local materials and owned by the local population. Tourists can visit the forest, and participate in activities like birdwatching, canoeing, hiking, swimming, and more. They receive about 1,000 tourists a year and it provides income to more than 70 local families. Logging and the destruction of the forest has not continued in this area.

In an effort to promote my latest experience in Ulaa, Chile, I wanted to talk about the Alerces. Located in the rainforests of Chile, the Alerces are trees that resemble sequoias. They are some of the tallest and oldest trees on Earth, often over 5,000 years old. Historically, in Chile these trees were chopped down and used for wood, and because the wood was of high quality, it was often used to build houses. But, the Chilean government outlawed the cutting down the Alerces. Ulaa is located near these trees and it provides a unique opportunity to visit them.  For volunteers on the farm (read the post about volunteering in Ulaa), you can visit the Alerces by horseback, upon the completion of your volunteering experience. It is a day long horseback trip, with stunning views of the forest and the mountains that you ride through. Since these trees are often 5,000 years old, it is truly a virgin forest, having never been touched by man or even forest fire.  Preserving the Alerces is historically and environmentally important.  By attracting tourists to see and learn about the Alerces, Ulaa hopes to raise awareness for this cause. 
For those who are interested in conservation and biodiversity, you can find a wealth of information at www.conservation.org. For those who wish to volunteer on an organic farm, Ulaa is the place. Not only can you volunteer on an organic farm, but you can do so in the beauty of Chilean Patagonia AND you have the opportunity to travel, by horse, to visit some of the oldest trees on Earth.

Conservation Through Private Ownership

Of all the uncertainties in the world today, climate change undoubtably represents the most daunting threat to not only peace and prosperity, but to our very existence on this planet.  There are many causes of global warming – the burning of fossil fuels from industry, power plants, and cars; agricultural waste; and deforestation. 

It’s the latter that often gets overlooked as a major contributor to climate change.  Currently, deforestation represents 20% of total greenhouse gas emissions per year.  This occurs because normally trees act like filters, sucking up carbon dioxide and spitting out oxygen (photosynthesis).  The average tree inhales 12 kilograms of carbon dioxide and exhales enough oxygen for a family of four for a year.*  The result is a cleansing of the air.  The more trees that are cut down, the less filters we have to keep the air clean.  But to make matters worse – when those trees are cut down, not only do we have less trees to clean the air, but each cut down tree releases all the carbon it ever inhaled, pushing all that contained pollution back into the air, so the negative effects are double. 

When you think of the worst polluters in the world, you usually think of the top two: 1) China, 2) USA.  But, who comes in at number 3?  You would probably think of a big industrialized country, maybe in Western Europe somewhere.  But no, the third largest source of greenhouse gases comes from Indonesia, because of the rapid deforestation occurring there.  Indonesia has some of the richest tropical forests in the world, and they are being demolished, year after year, releasing massive amounts of carbon into the atmosphere.  Brazil is the fourth largest source of greenhouse gas emissions, also mostly because of the large scale deforestation.  Each year, rainforests about the size of Greece are chopped down.** 

People often talk about the devastating environmental effects of emissions from automobiles, and justifiably so.  But, conservation of the world’s plant and marine life are as important, if not more important.  To some, protecting tropical rainforests often conjures up images of hippies chaining themselves to trees to stop big logging companies from hacking down large forests.  It might seem like an uphill battle and while admirable, that might not be the long term solution to preventing large swathes of forest from permanently disappearing.  What we need is government action, and preferrably international regulations on deforestation.  But, that’s always put off ’til next year, if at all.  So in the absence of government action, what do we get?  Quite a innovative idea to conservation – private ownership.

Douglas Tompkins has a mixed track record in Chile and Argentina.  He originally was the founder of North Face, the outdoor clothing company, and the ESPIRIT clothing company with his wife Susie.  He sold his c0ntrol of ESPIRIT and began focusing on conservation.  He began buying up large territories of natural forests to protect them from development.  He bought forests in Chile and Argentina, mostly in the Patagonia region of southern Chile.  With his foundation, The Conservation Land Trust, he buys forest and then returns the land to the state of Chile, ensuring they are irreversably preserved as national parks.  He works with his current wife (former CEO of Patagonia Company) and her foundation, Conservacion Patagonica.  They are responsible for the preservation of  over 2,000,000 acres of forest.  He has been met with both praise and opposition.  Some Chilean nationalists fear a foreigner owning such large amounts of land; some developers wish to acquire the land for economic gain.  But Tompkins has slowly gained the trust of many people. 

Chile has very rich forests and much of it is untouched.  However, much of it is also unprotected.  Through private ownership, Tompkins has prevented the invasion into such pristine forests, and uniquely turned over ownership to the government of Chile with the condition that they are preserved as national parks. 

Deforestation remains one of the major causes of climate change.  But when government fails to act, or is unwilling to do so, the future of such forests may rest with the boldness of people like Tompkins. 

 

Picture from Executive Style

*Fact from ESA (European Space Agency)

**Fact from ESA (European Space Agency)

Business Profile: Ulaa

In the past it seems as if the world’s greatest cities were the ultimate vacation destinations. New York, London, Paris, Rome. While these will surely continue to be huge draws for travellers, it seems the focus has shifted a bit. Urban populations continue to rise, and with that, nature becomes increasingly foreign and unfamiliar to so many people. Spending a week without blackberries, cell phones, and the Internet is difficult to come by (let alone without electricity!). So many people are so far removed from nature (including myself). Removing oneself from the daily stresses of life, “unplugging” from the modern world, has become a popular theme for vacationing. If you’re a businessman living in New York, why go to London for vacation, just another loud and crowded city? If you have grown up in Boston, a vacation in L.A. probably wouldn’t be that exciting.

I spent this past week at an organic farm and resort called Ulaa. This blog is part of The Enchanting Group, which owns Ulaa. It’s located in Chilean side of the Chile-Argentina border, in Patagonia. They have cabins, an organic farm, and it’s situated in the mountains overlooking a crystal-clear lake. Tourists can come and stay in their rustic cabins and enjoy the natural beauty at this remote location. They can participate in various sporting activities, such as kayaking, hiking, rock climbing, fishing, or just plain relaxing by the lake. And you can eat home-cooked meals with ingredients grown here on the farm.

And we ate well. We helped out around the farm and made homemade jams with the blackberries we picked; we made salads with fresh tomatoes and cucumbers; and we cooked some flavorful soups with potatoes, lentils, pumpkin, and garlic. We even went fishing from a canoe, and caught a trout, which we baked for dinner. Ulaa is a wonderful place.

But it takes a lot of work to maintain the property and Ulaa needs help developing the organic farm. I asked the caretaker of Ulaa, Martin, what was the single most important thing he needed to help expand and he said it was people to work the farm. There are apples and plums that fall to the ground without people to pick them up; blackberries remain on the trees because there’s no one to pick them; and it wouldn’t make sense to invest in more crops until they can get more help.

So, The Enchanting Group, could remain content with keeping Ulaa as a wonderful place where tourists can come and enjoy the nature and the local attractions. But they have decided to create a second arm of Ulaa. In order to further develop the organic farm, Ulaa would like to welcome volunteers to stay in their cabins for free, and in exchange, commit to working on the farm. Organic farms like Ulaa have been growing in number and popularity.

At Ulaa, and other organic farms listed on the World Wide Organization of Organic Farms (WWOOF), people have the opportunity to stay at organic farms. There are many people out there who will love to visit such an untouched area in Patagonia. They can do so, and also get the opportunity to learn about sustainable agriculture, organic food, and a relaxing, slow lifestyle. If they have the motivation to work hard on the farm, they can do all this without charge.

It’s a win-win situation. Ulaa can get working hands to help expand their organic farm, and travellers looking to get away can take advantage of this opportunity and relax in solitude without the price of a week in Paris.

“Growing” Tourism

Tourism has long been a great field to start a profitable business. Penthouse suites in the world’s greatest cities, gigantic hotels erected on pristine beaches, and luxury liners dropping anchor all over the world. The money is often good, really good. And each new resort is meant to outdo the last – in size, luxury, and of course, price. The height of lavishness one year, may be outdated the next. The Atlantis Hotel in the Bahamas, and Dubai’s over-the-top ridiculous Al-Arab hotel, the only 7-star hotel in the world (though it is a self-awarded rating). The tourism industry exploded in the second half of the twentieth century, but the 21st Century of over consumption has shown that bigger does not necessarily mean better.

One growing sector in the tourism industry is agritourism. The main idea behind agritourism is people going to stay on farms for a holiday vacation. They visit for rest, relaxation, and the chance to learn about plants, animals, growing food, and the day-to-day life of a farmer. In a world where most people are far removed from the natural world, where everything we could possibly want is shrink-wrapped, packaged, and shipped to us, agritourism is all about getting back to nature. With ever-progressing technology and modernity comes a cushy urban or suburban lifestyle, the peace and quiet of a farm becomes a novelty.

While already commonplace among the farms of Italy, agritourism has gained popularity worldwide as of late. Increased environmental and health concerns, as well as the explosion of the organic food industry, are major reasons to the growing interest in farming. With that, comes tourism. There is a big range in the prices and the quality of accommodation, but the idea is that you pay the farmer to stay and enjoy the property, the food, and any other local attractions. Often times you can help work on the farm and receive a free or low-cost stay.

World Wide Opportunities on Organic Farms (WWOOF) is an excellent organization that provides a directory of organic farms that allows you to come and visit. You can work on the farms during the days, and in return you do not have to pay for your accommodation. Depending on the farm, you may be able to eat for free as well. Providing accommodation for tourists is usually not too expensive, and the extra help on the farm helps the farmer harvest more crops, earn more money, and subsequently, grow and expand.

Most farms are strictly organic and try to minimize their environmental impact. Tourists are able to learn about sustainable farming, the lives of farmers, and the perks of eating organic and local food. Of course these farms are not the multi-million dollar resorts like the Atlantis, but they are proving to be a breath of fresh air on the tourist industry.

If you haven’t read Barbara Kingsolver’s Animal, Vegetable, Miracle, pick up a copy and check out why growing your own food is not a backwards lifestyle, but how it can be a healthy, sustainable, and fun way to live.

Agritourism may not be an exploding industry, but it is steadily growing. By forgoing the 5-star hotel in the Carribean and opting for a local farm in your state, you can support a number of good things: your local economy, sustainable farming, healthy food, and of course, you can have a wonderful vacation. If you don’t feel like staying close to home, WWOOF lists farms from all over the world, so your options are endless.

Fighting For the Middle Ground

Investing responsibly can help promote the growth of socially responsible businesses and your money can go to work for you, for a good cause.  Your money will help provide the financing for social entrepreneurs to grow and expand their missions.  While there are tons of people out there who take environmental, social, educational, and civil rights factors into consideration when investing their money, for the vast majority of investors these ideas would never cross their minds.  So, until the New York Stock Exchange (NYSE) and NASDAQ are replaced by social stock exchanges (SSE) like the one in Sao Paolo (not likely anytime soon), when it comes to financing, social entrepreneurs are stuck fighting for the middle ground.  They are too business-oriented for charitable donations, and too charitable for normal investors.

            And this is the subject of today’s post.  Because of the awkward limbo social entrepreneurs often reside in, they have to piece together a mixture of financing that can be confusing, stressful, and time consuming.  Since social businesses fall in the middle ground, their sources of financing don’t fall into neat categories like “philanthropic donations,” or “government funding,” or “private investors,”  but rather, a hodgepodge of all of these.  This raises many difficulties as often times the CEO of a social business is forever chasing the next source of financing, which distracts from the mission.  Instead of managing the day to day duties, he or she is on the phone with philanthropic organizations, organizing fundraisers, or lobbying Congress for this years tax incentive – which may decide whether or not they can continue operating.  Nevertheless, this is the reality of businesses with social missions.  Unless they are selling products or providing paid services that finance their social causes, social entrepreneurs will have to deal with these hurdles.

            I will focus on the various different sources of financing, one by one, in future posts.  But here is a quick run down of the patchwork of financing options for social businesses. 

• Personal Funding – since social entrepreneurs believe in their mission, many invest their own savings in starting up.
• Government Grants – because of the social benefits of ceretain social businesses, government grants are potential sources of financing.
• Angel Investors – often times a very wealthy individual believes in a certain cause, and donates large amounts of money.
• Philanthropic Organizations – they may be reluctant to donate to for-profits, but a big source of financing for non-profits and some semi-profits.
• Venture Capitalists – they probably won’t invest in either non-profits or semi-profits, but venture capitalists are a huge source of financing for for-profits.  The most obvious example is the abundance of venture capital money in the renewable energy sector.
• Going Public – Once a social business gets big enough, it can list on a stock exchange and rapidly raise capital from individual investors.  But, this also brings risks, such as losing sight of the mission.

Since their is often a gray area of where a social business operates, many social businesses tap into two, or three, or many of these sources.  Having multiple sources of financing may allow for flexibility, but it also brings difficulty and uncertainty. 

Investing Responsibly

I want to expand on one subject I mentioned in my previous post about the Social Stock Exchange (SSE).  Although Social Stock Exchanges are in their experimentation phases and the money represented in the Sao Paolo Stock Exchange is only a drop in the bucket, the larger point is the philosophy that the SSE represents.  And that is investing responsibly. 

The idea behind the Social Stock Exchange is to bridge the gap between traditional business and the tackling of the world’s problems.  Businesses exist to make money.  Companies go public and list on the world’s stock exchanges in order to raise capital, which allows them to grow, expand, develop new technology, and invest.  If their efforts happen to have a positive effect on society, all the better.  But, that’s not why they are in the game; that’s not their responsibility.  Solving social ills and caring for the underprivileged is the responsibility of governments, charities, non-profits, and social workers.  Of course, there is plenty of overlap, but generally speaking, social work and business are two very different entities.  They have different missions, different philosophies, different structures, different resources, different markets, and of course, different sources of financing.  To be sure, many large corporations have a Corporate Social Responsibility Department (CSR) that involves the company in various charitable events and community efforts, but by and large, these activities are minor and these departments often exist for good PR. 

As long as social responsibility and business remain separated, social entrepreneurs will continue to fight un uphill battle to get their missions off the ground.  But, if we can begin to see social responsibility and business as inevitably intertwined, social entrepreneurship will take off.  If the average investor considers ethics with the same weight he or she considers profits, then the field of social entrepreneurship will explode.  With the laundry-list of world-ending problems staring us down (climate change, disease, poverty, overpopulation, food scarcity), many people are calling for action.  Government regulation is needed.  But we can’t regulate ourselves out of these problems.  So regulation is needed to create the proper environment for businesses to begin attacking these impossible problems.  For example, the right combination of tax incentives, tax burdens, and carbon regulation will force businesses to “go green”. 

Which brings me to my point.  Investing responsibly can change the world.  By investing in companies whose products and services benefit society, you are supporting progress.  By not investing in companies that degrade the environment, use harmful chemicals in our food supply, and exacerbate poverty, you are punishing bad behavior.  Everyday you make choices with your money.  Your money is your vote. 

There are now tons of mutual funds out there that only invest their money in ethical businesses.  Here’s a great example of ethical investing.   Tridos is the leading ethical bank in Europe.  Here is there mission statement: “Triodos Bank finances companies, institutions and projects that add cultural value and benefit people and the environment, with the support of depositors and investors who want to encourage corporate social responsibility and a sustainable society.”  Triodos invests in renewable energy, organic food, fair trade, clean technologies, culture, and health.  Their investments have produced huge social returns and have rewarded businesses that contribute to society. 

While a Social Stock Exchange may not exist in your country, you can still put your money to work for good causes.  Invest responsibly.