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.

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)

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.