Friday, December 14, 2007


Can Anybody Save the World?

I’ve noticed those full-page ads in The New York Times on Sundays this summer, with the big, bold headline “YOU CAN CHANGE THE WORLD.” While I have many friends who believe in that credo, I didn’t think they had the $100,000 to fork over to see their sentiment in newsprint. Actually, the ads were taken out by Starbucks. Being insanely scared of a potential coffee addiction, I’ve probably had a half-dozen cups of joe in my life so I’m no devotee of Starbucks. But I will say I’ve always admired the pluckiness of the firm, whether it’s giving generous benefits to employees or venturing into the lifestyle-and-entertainment genre. Yet this ad gave me a partial scowl. I’m starting to get a little tired of the ubiquity of social responsibility and the marketing machine that’s hitting us over the head with corporate do-goodism.

Are there no more bad guys in the business world? Yeah right, that’ll be the day.
Don’t get me wrong. I’m a karmic capitalist at heart, believing a long-term (karmic) approach to business can create positive improvements in the world. But when I recently googled “change the world,” I came across rocker Joan Jett's “Cadillac Story” at the top of the sponsored links. How can an Escalade create positive change in the world? The ad men are up to their old ways.

So we have a good problem: PC pollution (and I don’t mean the personal-computer kind). Every business out there knows it needs to be perceived as Politically Correct. Otherwise it’s at risk of becoming a stock-market dog like Wal-Mart. So Joe and Mary Customer start getting a little confused. Who should they believe? Is that Gap ad campaign featuring the RED merchandise a good thing because it suggests a small portion of proceeds goes to a worthy cause? Or is it a bad thing because it’s a crass attempt to get people to buy things they don’t need, which just adds more crap to the planet?

I don’t have the answer, but I do believe we’re likely to see a big shift in the next five years that will help Joe and Mary see beyond the PC BS.

The No. 1 change we’ll see in the socially responsible business world will be transparency. It’s already happening, as smart companies are opening their books, processes and boardrooms to activists and journalists to show that these companies aren’t just bluffing with their ad campaigns. While the stock-market world has had social indexes like Domini for years, the consuming public hasn’t had any “Good Housekeeping” seal of approval that globally says, “This company walks its talk.” A number of savvy folks are in the process of creating those seals of approval and I welcome them because it will be a nice filter for all the socially responsible advertising clutter we’re starting to see.

In sum, can you truly change the world? No, not by yourself, but that doesn’t mean you don’t try. I’m encouraged that the business world has jumped on the bandwagon en masse, but let’s see how long some of those companies stay on the bandwagon when they realize real responsibilities come with looking responsible.

Given the big shift in leadership we’re likely to see in the next 10 years with the retirement of the baby boomers, I’m optimistic that the new crop of business leaders I meet when I speak at business schools is a world away from what I experienced as an MBA student nearly a quarter-century ago. This breed doesn’t just believe we should change the world; it knows the devastating consequences of not revising our collective habits would be devastating.
Chip Conley is founder and CEO of a chain of boutique hotels and author of Peak: How Great Companies Get their Mojo from Maslow (Jossey-Bass, 2007).

Three Cheers for the fourth-sector economy

Last year, Google’s directors took a step that did not get much attention but could take our social/political/economic world to the next level of maturity. They decided that the most important thing to do with the firm’s philanthropic dollars was not to set up a charitable foundation (although they did that also), but to establish another for-profit company dedicated to the good of humanity and nature. They put a billion dollars into, the firm’s philanthropic arm, to be invested in companies that can either make or lose money as long as the common good is advanced. Any profits remain in the company to do more for the common good. is one of the projects supported by It produces plug-in electric vehicles that reduce the need for gasoline because they recharge themselves overnight through the domestic electricity grid. All Google company cars are now RechargeIT cars.
The first corporations founded in America were what I call “common good corporations.” To build a bridge, for example, a town meeting established a separate organization called a “corporation.” The minimum amount that could be loaned to it was very small, so each person in town could buy at least one “share.” The bylaws stated that decisions would be made by a majority of shareholders. In this way, the democratic process of the town meeting was sustained in the corporation. The wealthy bought more shares; the poor bought one share. The corporation was managed by a board of “trustees” responsible for managing the bridge-building corporation for “the common good.” When the tolls paid off all the loans, the corporation ceased to exist.

Today, the highest priority of corporations is the financial interests of a few; decisions are made by one vote per share, not shareholder; and these corporations stay in existence as long as they choose. This is a nearly complete reversal of the priority and structure of the original corporation, contributing no benefit to the social structure.

I believe could supply a visible return on the moral values of the corporate world, and help define what I call a mature fourth sector in society. Currently, the three main sectors are government, for-profit companies and non-profit organizations. The fourth sector consists of businesses that have social agendas. A mature fourth sector would be one in which the highest priority is the common good without limits on how to express it. Mature fourth-sector firms would impose reasonable limits on equity returns, with all excess profits permanently set aside and managed for the common good.

Financial planners tell their clients the goal should be an 8 to 11 percent return on their investments. Companies could cap their returns at 12 percent. One of the initial priorities could be to put any excess capital into common-good investment funds that buy successful companies and convert them into common-good corporations. These firms could establish joint ventures, eventually making it possible to buy multinational corporations. Once one multinational in a market sector is bought by a common-good fund, it will be in the financial interests of shareholders in the remaining firms to sell quickly to the common-good funds, since the last companies in the market sector to sell would receive less for their shares. In this way, all multinationals could eventually become common-good corporations.

Will this be one of the peaceful paths to a global moral order that builds on individual freedom and a free market economy? I hope so. Every time I see companies like come into existence, I am going to step outside my front door and give out a big cheer. I invite you to join me. I look forward to the day when people often hear their neighbours stepping out their front doors and cheering, like I am sure those early American townspeople did when they finished their bridges.
Terry Mollner is president of the Trusteeship Institute in Shutesbury, Massachusetts, a founder of the Calvert Social Investment Fund and a member of the board of Ben & Jerry’s

Democratic Capitalism

Last year, when Muhammad Yunus won the Nobel Peace Prize, millions of people around the world learned of the miracles that banks serving the poor could deliver. It was a well-deserved honour for Yunus, and a great reminder of what microloans and other slight tweaks to “business as usual” can mean to hundreds of thousands of disenfranchised people. Yunus’ Grameen Bank is a marvelous example of the potential of community lending, the third leg of the stool for socially responsible investing. (The others are setting standards for what shares we will buy and entering into dialogue with companies we own.) For large populations around the globe, “the triumph of capitalism” has meant no improvement to personal well-being. Even in wealthy nations, large pockets of poverty are scattered throughout crowded and crumbling inner cities and hard-hit agricultural areas. Around the globe, many people are able and willing to work, but have little opportunity.

Access to capital is an essential component of building healthy communities. But capital is not always available to the poor. Banks are driven by the desire to be ever more profitable. Since a $600 loan and a $6 million loan take about as much effort from the bank, and have a vastly different impact on the bottom line, the bank opts for eliminating smaller customers.
In addition, poor people seeking a loan often appear suspicious or quirky to bankers. For example, let’s look at the case of a mobile-home park where an old couple running the operation wants to retire by selling the land. Between them, the owners of these mobile homes may have enough income to buy the land with a loan to be paid back over a reasonable period of time. But banks don’t lend to new co-operative ventures. They lend to a person or a corporation with good credit. Since no single person living in the mobile-home park can guarantee the payments, there can be no loan.

Community-oriented financial institutions have come about as an answer to this problem. Such institutions may be a bank (or a bank branch) dedicated to making loans that boost the community and alleviate poverty. It may be a credit union, created perhaps by a church or community group, that loans money only to its own members and only for the purpose of building healthier neighbourhoods. It may even be a non-profit group, set up to borrow from caring people and lend to those in need.

Support for these kinds of community-development financial institutions is one of the ways sustainable or socially responsible investing can be approached. At Domini Social Investments, we have a fund that purchases bonds, backing up community institutions that make microcredit loans globally; we purchase insured deposits that support poor populations; we even use activist tools to help the community-development world.

Community-development loans have an important place in socially responsible investment portfolios, allowing investors to participate directly in relieving poverty and—unlike philanthropy—enabling them to keep their money even after using it this way. Most important, such loans offer evidence that finance can be used to alleviate poverty and create universal human dignity. Nowhere is the connection stronger than it is when investors support these grassroots lending organizations, be they microcredit institutions like Grameen Bank in Bangladesh or community-building groups like Latino Community Credit Union or the Self Help Credit Union, both in North Carolina.
Amy Domini is the founder and CEO of Domini Social Investments, and author of several books on ethical investing.


Ron Robins said...

Some good posts here. As someone who has been following the green and socially responsible investing movement for decades, you and your readers might find my site -- which covers all the latest global green and socially responsible investing news, useful. It's at

The site also offers free e-newsletter.

Best wishes, Ron Robins

buddhaspeaksbiz said...

Ron, Thank you for your comments. If you would like me to make mention of you in my next newsletter perhaps you can send me a one paragraph of who and what you are all about....just a paragraph please. Happy to support an ethically based Canadian.