By Marie Perriard
All economic production depends on our scarce natural resources and we can apply insights from physics and ecology to help us examine our economic system.1 As resources are depleted, waste is generated, and the continuous loop regenerates itself as long as 1) throughput is within capacity of the system and 2) the scale of the economy is relative to the size of the ecosystem. This “steady-state” economy strives for balance because, otherwise, growth beyond its limits will lead to instability and destruction of the very ecosystem that supports all economic production.
As a community organizer, I am all too familiar with the free rider problem and with economically rational ways to circumvent it. Under the right conditions it’s not as daunting as it first appears.
I’ve seen two classical ways around the free rider problem. The first is democracy- everyone makes a decision to invest collectively and then contributions are mandatory (ie taxes.) The second involves punishment, in a multi-stage game free riders can be punished for their actions, creating a an incentive for everyone to chip in.
We’ve asked and attempted to answer this question may times: What’s the cost of a tree? This question inherently implies that there is a price tag on that tree, and that price is a reflection of what one party is willing to pay for the benefits of the tree, and what another party is willing to receive in exchange for giving up those benefits.
Reflections on Power Politics by Arundhati Roy and the Presidio MBA Program
As we move forward and pursue our definition of progress, we must bear with all the “complexities, contradictions and demands” (p.6) that the world bestows upon us. This is no small task. Leaving it to the experts is no longer an option – after all that’s just a “convenient way of shrugging off our own role in the circuitry” (p. 26). The author’s point about the distinction between valuing a resource and putting a market value on that resource, reinforced how difficult a task we have before us.
The world of social capital is small, but it’s hot. With rising uncertainty about both the moral and economic underpinnings of the traditional financial sector, finance for socially conscious enterprises has become a destination for those looking to put their morals behind their money and those who see good social and environmental stewardship as hallmarks of success in tomorrow’s economy.
At the Presidio School of Management we were lucky to sit down and talk with three leaders in this space: Joe Glorfield of TBL Capital, Esther Park of RSF Social Finance and Deb Parsons of Investors’ Circle. Here are some trends they identified in social venture finance:
Thank you, Richard Nixon.
I’d like to begin this post by thanking Richard Nixon for creating the historic opportunity for the US to work with China on the two most critical global issues challenging our world today: Economy and the Environment. Although current US – China relations have opportunities for improvement, Nixon laid the groundwork for political collaboration with China through his 1972 visit to Beijing.
The opportunity that the US now has to work collaboratively with China to solve the economic and environmental crises may well be our greatest hope for change. The goal of this post is to highlight where we are today with regards to high level political cooperation between China and the US on the issue of a global climate change treaty. I will also add a few comments on the role of US consumers in Chinese GHG emissions.
The current financial crisis has made me stop and think about my relationship to money and just what it provides you with. Is it an illusion that having a robust stock portfolio helps you feel secure or that when your 401k is up the future looks more rosy?
Now the illusion has been stripped away. People are waking up to the fact that, contrary to everything we have heard for many years now, money doesn’t make you happy. According to Meadows, Meadows and Randers in “Beyond the Limits”, “People don’t need enormous cars; they need respect”
I envision walking into a med-room, accessing low-toxin medications from a reusable dispenser, and carrying them in a reusable pill cup into a patient room. Our hospital policy strives to minimize pharmaceutical therapy, maximizing use of complimentary and alternative therapies such as acupuncture and guided imagery for symptomatic relief of conditions such as pain and anxiety.
Shripal, your observation that business considerations tend to delay the implementation of carbon sequestering is acute. The ecological value of an implementation now is indeed much greater than in the future, but yet the carbon pricing trend would indicate the reverse. I think this is the classical “Don’t miss it till it’s gone” syndrome.
I am worried that our reliance on finding large scale technological solutions can potentially stunt the growth of sustainable development. To me, Sustainable Development is the result of integrating Sustainability in our lives, while Sustainability is a set of actions which ensure that living and non-living systems can thrive in perpetuity.
Taking this article as an example, “Rocks Found That Could Store Greenhouse Gas“, the numbers are so abstract and large that they were mostly irrelevant. For example, the potential of rocks sequestering carbon equal to 500 years of US GHG emissions has no practical meaning. Even if the sequestration amounted to 1% of 1% of those 500 years of emissions, it is still less than the amount of annual reductions needed to get to 2050 goal.
The concepts behind stakeholder management seem to be so obvious, yet have been largely ignored for a long time by corporations that are now beginning to see the error of their ways. Taking into account all those that can impact your business as well as those your business impacts would seem to be common sense, if not for a 40-plus-year push from Milton Friedman followers which decided that economic success can only come from focusing on increasing shareholder value above all else.
The theory was that, if reaching out to communities, dealing with the media, developing stronger employee relations, and engaging competitors, special interest groups and NGOs would help increase shareholder value, then and only then would it be pursued by the company. Otherwise, if a direct line to profit could not be shown, these relationships were insignificant to the overall directive of increasing profits.
The intuitive visioning section of Beyond Leadership particularly resonated with me due to a number of contributing factors. The sense of pessimism associated with the economic collapse combined with the overwhelming amount of information we’re inundated with on the existing and pending environmental issues leads naturally to questions of self-preservation. As Bennis states the question, “what can I get?”
On Earth Day 2001, Hunter Lovins wrote the following memorial to Dana Meadows, a true hero of the planet. Dana Meadow’s writings can be found at the Sustainability Institute website.
Donella (Dana) Meadows
(March 13, 1941 – February 20, 2001)
On this Earth Day, as we gather to celebrate our love of our home, let me share with you the celebration of someone I always just thought of as a friend of mine. At this time, in gatherings all over the world, people are coming together to remember Dana Meadows.
Dana died recently, suddenly. Bacterial meningitis. She was 59 years old. To me it was a crushing loss.
I no longer remember when I first met Dana. 20 years ago, 30…. Somewhere on the road, some conference, some speaking gig. It just seemed she’d always been there, always been my friend. Hers was the quiet voice of reason, of impeccably documented science, proving that the time is very short for us to learn of the limits and to put into practice what we already know about how to live within them.
Bob Willard’s video, “The Business Case for Sustainability” explains that companies on the journey towards sustainability move through several stages before reaching a 4th stage, called the “Integrated Strategy”. At this stage, everyone in the organization is involved in eco-efficiency processes, resulting in enhanced company profits. The business case is furthered by a Graves and Waddock study, detailing that stock prices of values-led companies outperform the average by 11.6%.
The Economist on-line two weeks ago covered a story illustrating a recent example of the business case for sustainability, by describing the “Green-Engage” initiative undergoing trials by the Intercontinental Hotels Group (IHG)
I think that I’m beginning to understand why greed is good. Greed provides clarity and focus in a world of steadily increasing and seemingly endless possibilities. When the twin towers go down, gold traders keep on trading gold, and in a global market that needs gold to stabilize itself from the shock maybe that’s a good thing.
Greed is also predictable. Greedy people are easy to understand, easy to motivate and therefore easy to do business with. Traders on the Enron floor did not graduate ready to shut off California’s power, they entered an environment built for and by greedy people and they conformed because greed is also safe. In an environment where everyone else is greedy there is no (apparent) benefit to being nice. A greedy person surrounded by nice people may or may not become nice, but a nice person surrounded by greedy people will eventually be forced to become greedy.