By: Michael Green
With global population rapidly marching towards 11 billion and with it the demand for food, health services, energy, and security, we need to reexamine the models that have gotten us to this point. Currently, our planet is on track to fly past the two degrees Celsius warming that scientist have repeatedly warned marks the safe range for humans on this planet. Beyond this point we will only see the outcome of these challenges become more severe and an increased potential of no return.
Alnoor Ladha at SVN October 2014
This past fall, I had the opportunity to meet with many brilliant business leaders at the Social Venture Networks fall conference in Greenwich Connecticut, where keynote speaker Alnoor Ladha, Executive Director of /The Rules remarked: “Global climate change is not a man made problem; it is a capital made problem.”
Over the last 40 years global wealth has become more concentrated: since 1970 the wealthiest 10% of Americans went from owning 33% of the nation’s wealth to 48.5%. During this time we saw a massive expansion in our planet’s destruction and disruption; global carbon emissions have grown by 75% since 1970, deforestation rates have climbed to a 17% in the past 50 years, and this trend has not slowed. Using the recovery from the last economic recession in 2008 as an example, the Economist wrote that 95% of the gains since the recovery have gone to the richest 1%. Clearly, the neoliberal economic growth model being promoted as a road to economic development is not distributing our gains in wealth to the majority, but to an elite minority, at the expense of the planet’s future habitability.
During this same time we have experienced continued growth in greenhouse gas emissions. Global emissions have grow by 70% since 1970, and show no signs of stopping or slowing down. The science tells us that this increase will only lead to an imbalance in not just our weather but also national and economic security. A recent study by the National Bureau of Economic Research estimates that for every 1℃ in additional warming, violent crimes such as assault, murder and rape will increase by 2.4%, while larger conflict such as riots, ethnic violence, political instability and gang activity will increase by 11.4%. Economically, 5% of the global market economy is at risk currently due to climate change. This is not accounting for damages due to increased intensity of weather events, of which 80% will be felt by poorer southern hemisphere countries. Put in plain and simple language: limitless production and consumption is not possible on a finite planet.
Workers Greyston Bakery in New York
As business owners, investors, and entrepreneurs, we must aid in the creation of a new economy. We have the chance to change this paradigm through new technologies, new business models, and new financial structures, which redevelop the role business plays in society. In this challenge we need to account for not just the natural limits of our planets but also for the injustice and inequality generated by our current economic paradigm by responding with in a collaborative spirit.
As business owners, let us look at the role of our footprint in the community and environment. We need to ask ourselves where our priorities lie. The bottom line can no longer be the sole driver of our operations. By engaging with the surrounding community, a business can generate a societal benefit, and be more than just a profit generator. Greystone Bakery is an excellent example of one such business. As New York State’s first certified B corporation, Greystone is committed to high quality products and customer service, and to employee self-sufficiency and self-betterment. Greystone’s unique hiring program gives those hard-to-employ a second chance regardless of education, work history, or social barriers. The Bakery also provides low-income housing to employees as well as work development training to help them get on their feet.
As investors we need to review the business and financial models that we promote. The demand for socially responsible investment portfolios continues to grow as billions are being divested from the fossil fuel industry. More and more individuals and institutions are searching for ways to invest into local economies, the cleantech sector and the growing demand for renewable energy. Green Century Funds, manager of the Green Century Fund, surpassed $100 million in total assets last year, with no signs off slowing down. Investors are beginning to align their financial concerns about a carbon bubble in fossil fuel reserves with their moral concerns about a warming planet, and are making the switch to investments that offer a brighter future. Whether you are a new angel investor or a seasoned venture capitalist, it is time to look for ways to promote diversity in more than just your portfolios. The environmental implications of an investment, the business model limits around growth, and ownership models are just a handful of values that shape the investments of the future. Let’s create ownership models that are more equitable and new business plans that develop communities, not just maximize returns.
A Drinkwell project site in West Bengal, India
As entrepreneurs you have the opportunity to design, build, and create a fighting chance to these challenges. Just building a cleantech innovation economy is not enough. We have to reinvent our economy from the ground up if we are to successfully address these challenges. With accelerator programs launched around the country in every major metropolitan area, social ventures have become the new norm. Business models are taking advantage of new, untapped markets and solving difficult problems around the globe and in their own communities with new, transformative business models. Drinkwell, a recent alumni of Cleantech Open Northeast, is creating sustainable water systems for communities across Asia. Not only have they invented a cutting edge technology for arsenic mitigation, their business model is providing employment for end user communities in Laos, Cambodia, and India.
Complete change will not happen overnight. It will not be built on the back of one investor or one innovative entrepreneur. It will be something that business owners, investors, political leaders, consumers and entrepreneurs must all work together towards. There is no question that we can solve these challenges if we start working together to make it happen.
