This photo is from our first flight from Boston to London on 1-01-10
Jill and I are currently in the airport in Bahrain waiting for the third, and final, leg of our 28 hour trip to Dhaka, Bangladesh. We left Boston on the first of January at 7:20 PM and arrived in London at 6:50 AM on the second. As you can see from the photo above, we really lucked out in terms of our seating on the first flight: we got the seats that are usually reserved for flight attendants when they take naps on long flight; as a result, we had seats that could recline all the way down (even though we were in coach) and we had as much leg room as we could possibly want! The flight went smoothly and, as I have been reading The Rise and Fall of the Third Reich–an absolutely fascinating history of Hitler’s Germany–the time passed rather quickly. Our second flight took us from London to Bahrain, where we are currently in the midst of a seven hour layover before one final flight to Dhaka.
Social Business and The Genius of Muhammad Yunus
I am currently reading a book by Dr. Muhammad Yunus titled Creating a World Without Poverty: Social Business and the Future of Capitalism, and I am left mesmerized both by the brilliance of Dr. Yunus himself and the beauty of the idea which he proposes in his book–the idea of social businesses. Let me start by providing a summary of what Yunus means by a social business. He defines it as an enterprise that has investors who recoup their initial investment but who do not receive dividends or profit from their investment. Thus instead of making their investment based on the company that is most likely to offer them the highest, most secure return, they choose based on the company that offers the greatest social or environmental benefits. Social businesses exist for the sole purpose of addressing social and environmental problems, but they are not charities. Instead, they must achieve self-sufficiency by selling low-cost products and services, or through a myriad of other methods that enable the organizations to pay back the investor’s initial investment, to achieve financial sustainability and to achieve the mission of the organization. In essence, then, what Yunus is proposing is a blending of for-profit and non-profit models, but in a way that I have not seen in the past. He suggests that social businesses will compete with traditional profit maximizing businesses (PMBs) on quality, price, availability, etc. He goes on to propose new innovations such as a stock market for social businesses where the company’s stock price reflects its ability to achieve social good, rather than it’s ability to make profit at any cost.
Perhaps if this idea were to come from anyone but a Nobel Peace prize winner and the founder of the Grameen Bank and the Grameen family of companies in Bangladesh–one of the most remarkable group of organizations ever established–it would be seen as naive. But to illustrate the power of the idea, Yunus starts his book by describing how he convinced the CEO of Dannone Group, one of the largest companies in the world, to launch a social business in Bangladesh that would focus on providing low-cost, healthful food products the poor, rural Bangladeshis. Within a year of proposing the idea, Grameen Dannone, as the new company was called, had completed an environmentally friendly yogurt factory, and were selling their nutritious yogurt through Grameen borrowers. Dannone fronted half the start-up costs and, aside from getting back its initial investment, will make no money on the deal. All profits earned by the company will be reinvested in the company to lower prices or to expand into new markets.
Microfinance, Microfinance and more Microfinance
Microfinance has completely invaded my life of late. My thesis, titled ‘Green Microfinance: A Blueprint for Advancing Environmental Sustainability and Social Equality in the United States,’ is about 80% complete, and obviously deals with the various ways in which microfinance can be used for advancing environmental aims. In addition, the non-profit that I co-founded, The Capital Good Fund, is in the middle of a pilot phase, and I have been very busy speaking to and meeting with applicants. Lastly, I have been working with my business partner, Mike, and the company we founded, The Capital Good Group, Inc. so launch an innovative financing mechanism that covers 100% of the up-front cost of doing residential energy-saving upgrades and is, in effect, a microfinance program as well. I haven’t written here in a while, and I want to provide some updates on these projects, as they are all intimately related despite the fact that one is a masters thesis, the other is a non-profit, and the last is a for-profit.
The Capital Good Fund
We have made a lot of exciting progress recently. First, we just launched our new web site, www.capitalgoodfund.org. On the site, you can learn more about microfinance, see our community partners, check out the latest updates on our program, make a tax-deductible donation, download a loan application or find out how else to get involved with us. We are really excited to have the site up, and we have already received inquiries from potential borrowers through the site!
A New Logo For Two New Endeavors!
As soon as Mike and I incorporated our environmental services company–The Capital Good Group, Inc.–on January 1st, we wanted to get to work branding ourselves as a socially minded, mission driven company dedicated to serving people and the planet. Our first step was to hire Douglas Bonneville, owner of BonFX, the company that designed and built this web site, to create a logo for both The Capital Good Group, as well as The Capital Good Fund. The idea was to develop a logo that would convey the concept of a “triple bottom line” (social, environmental and profitability); that would be applicable to environmental consulting, microfinance and any other endeavors we undertake using the ‘Capital Good’ name, brand and concept.
After several rounds with Doug, we finally settled on the above logo. Mike and I really thrilled with the way in which it conveys the concept of three without being oppressive about it, and how the shapes in the logo can be viewed as trees, or a family, or just interesting geometric shapes. Read on to see the logo for the Fund.
Winning a Grant, and Other Exciting News
Winning a $500 Grant
Two days ago, as I was sitting in my apartment and looking out the window at the snow piled on the branches and walkways of Providence, I received a call informing me that I had won a $500 grant from dosomething.org for The Capital Good Fund. Every week, Do Something selects a social entrepreneur that is under the age of 24 to win a $500 grant. I applied, along with the rest of the Capital Good Fund team, several months ago, and I had long ago forgotten about the grant. Although the money itself isn’t much–it will provide about half of a citizenship loan–it also provides our project with great exposure, gives us access to more networking, and provides us with additional, and much needed, technical assistance. Receiving the grant also gave me a boost of confidence as I enter a very busy of time during which I start a company, launch a non-profit and write my masters thesis.
Incorporating The Capital Good Group, Inc
In other exciting news, Mike and I finally incorporated our environmental consulting company last Friday. The Capital Good Group, Inc., will officially be a corporation in the state of Rhode Island as of January 1, 2009. The reason why we finally decided to incorporate is that it’s becoming increasingly clear that a lot of people are getting into the game, and we don’t want to be left behind. Specifically, we found out that the people in Berkeley, California, who came up with the bond model–wherein the up-front cost of doing efficiency or renewable energy upgrades is covered by a low-interest loan from the City, and the loan is paid back in the form of a property tax add-on equal to or less than the savings from the installation–started their own company. The company, Renewable Funding, LLC, helps municipalities implement the bond model. Well, I saw an article saying that the model, if implemented nationwide, has the potential to be worth $240 billion, and at the moment there is only one company doing it. Hence the urgency to get it on the game.
A Financing Mechanism Powerful Enough to Catalyze the Green Economy
I wrote this article for the Huffington Post. It can be seen in its original context here.
Despite the recent (and undoubtedly temporary) drop in energy prices, the fact remains that because of the economic downturn and an aging housing stock, many families will struggle to heat their homes this winter. At the same time, the need to create jobs, stimulate the economy, create sound investment opportunities and drastically reduce greenhouse gas emissions has never been greater. There is no silver bullet for solving all these challenges, but an innovative financing mechanism for renewable energy and energy efficiency could go a long way toward putting the country on the right track. Here’s how it works.
Homeowners Need Efficiency Upgrades–But Can’t Afford Them
Imagine you are a low-income homeowner in Providence, Rhode Island. Chances are your home is 100 years old: the walls are barely insulated, the windows single-paned, and the boiler a relic of the 1950s. In the winter your heating bills are such that you can hardly afford to run the heat, often leaving your family shivering. And even though a $10,000 investment would dramatically lower those heating costs and pay for itself within 5 years, you can hardly pay for the mortgage–let alone $10,000 in efficiency upgrades.
Too Big To Fail, Too Powerful to Regulate
The Big Three Dama
I’ve been watching the Big Three bailout drama with increasing dismay. First, the executives from GM, Ford and Chrysler flew in private jets to Washington for a hearing, and then proceeded to beg for $25 billion–without offering a plan as to how the money would help them get out of their present mess. Congress told them to come back with a plan, and suggested that next time they find a more plebeian mode of transportation. So back the executives came this week, humbly carpooling in the poorly made cars their companies produce, with more detailed plans for restructuring. The CEOs magnanimously offered to work for $1 a year if they received the bailout money (nevermind that the bulk of their salary comes from stock options and bonuses, not salary). They presented a plan for laying off workers, closing plants, focusing on core brands, and lowering health care and other costs. Congress wasn’t exactly impressed, and polls show Americans are not in favor of yet another bailout for yet another mismanaged corporation.
But here’s the problem: the Big Three are just too big to fail. They directly employ roughly 100,000 people in the United States, but their suppliers across the country employ hundreds of thousands more, and the ripple effect would send our already reeling economy into a tailspin. It now looks like the auto companies will get their money, albeit only half of what they were originally seeking. The same “too big to fail” logic was used to justify the bailout of AIG and several other financial institutions. And, like it or not, in a “centralized” economy, the logic is quite sound. What concerns me is that “too big to fail” usually means “too powerful to regulate.”
A Conglomerate for Good
Conglomerates Abound
There is no shortage of conglomerates whose purpose is to maximize profit, at any cost, provided that no laws are broken (of course, we all know that laws are stretched and often broken). In fact, publicly traded companies have a fiduciary duty to their shareholders to maximize profit; that is, they are required by law to do so. What this means is that a company cannot focus on social or environmental goals unless working towards those goals somehow helps the bottom line. As a result, the traditional approach taken by corporations with respect to social and environmental goals has been to 1)influence laws to their benefit, 2)avoid litigation, and 3)lower operating costs (e.g., by installing CFL light bulbs, cutting wages or benefits, or reducing packaging waste).
A consequence of this paradigm is that, at least in America, public policy is too often shaped by what benefits corporations rather than individuals; getting corporations to follow the law is time-consuming and expensive, since large companies have a fleet of high-powered attorneys at their beck and call; and only limited inroads have been made on fair trade, environmental sustainability, and other important issues.
I Am Now A LEED Accredited Professional!
Passing the LEED Exam
Last Thursday I took–and passed!–the LEED accreditation exam. LEED stands for Leadership in Energy and Environmental Design, and it is a performance-based rating system for green buildings established by the U.S Green Building Council. It has come to be accepted as the benchmark for green building, and covers all aspects of a building, from materials, to energy, water and building operation. Becoming a LEED accredited professional (LEED AP) allows you to be a consultant on a LEED project, and it is also something you can put after your name to improve your credibility.
How LEED works
I studied for about a month to pass the exam, which consists of 80 questions covering all aspects of the rating system. The way LEED works is that the points are broken down into 5 topic areas: Sustainable Sites; Energy & Atmosphere; Water Efficiency; Materials and Resources; and Indoor Air Quality. A final category rewards efforts that don’t fall under the other topic areas. Within each category, points are awarded for achieving environmental performance. For instance, 1-10 points can be earned in the Energy & Atmosphere, depending on the energy-efficiency of the building. Each category has pre-requisites that must be earned, and depending on how many points the project is awarded a building can be rated anywhere from LEED certified to LEED platinum. (Learn more about how LEED works here)