A Better way to Run Our Capital Markets


Paying attention to the news lately, you can’t avoid hearing about the economy and who needs to be bailed out next. What I haven’t seen, though, is a discussion that takes a step back and asks, “What would an economy look like that doesn’t need to be bailed out or ‘fixed’ every x number of years?”

This type of a discussion would ask a whole new set of questions: Why do centralized economies where communities systematically export money continue to be the de facto standard? What can we do to strengthen our local economies to provide resilience in broader economic downturns? How can businesses play a leading role in redefining our social landscape and add to economic resiliency? Would a corporate structure forced to focus on long-term sustainability be any better than one focused on short-term results? Should an investor even care about social impact?

Last year, The United Nations Global Compact highlighted a report released by Goldman Sachs that discussed Goldman’s propriety framework for evaluating the long-term sustainability of firms and made the argument for using those principles in determining valuations. Then, just the other day, I heard from a clean tech entrepreneur who is working with Goldman Sachs on financing a startup that GS is investing solely in businesses that are focused on long-term sustainability and clean technology (which is more than just renewable energy).

Similarly, over the last decade, we’ve seen tremendous interest and growth in firms such as: BALLE (Business Alliance for Local Living Economies) – who looks at ways to increase economic resiliency by catalyzing, connecting, and strengthening local investors and business networks; B-Corp – which is a business membership organization that tries to catalyze the power of private enterprise to create public benefit; and RSF Social Finance – a non-profit that makes loans to social entrepreneurs and can claim a default rate of a fraction of a per cent.

It’s clear that there is a growing ecosystem in the world of finance that rewards long-term thinking and companies that behave responsibly and act as stewards of their communities. So the next time you write to your congressional representatives about this economic crisis or the next one, be sure to give them these examples of successful organizations that are actively working to make our economies more sustainable and resilient.

3p will be covering the dozens more such examples this week at SoCap08.

Steven Tiell holds an MBA in Sustainable Management from Presidio School of Management, where he is still involved as part of the teaching team for Economics, Capital Markets, and Law. Steven is also a Managing Partner at Impact Fund Advisors, a San Francisco based strategy consulting firm that helps investors make and track socially impactful investments.

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