Saving the World by Making Capitalism Work for Everyone

By Jeffrey Hollender

Innovative models shared at Europe's first SOCAP conference.

Innovation. Passion. Possibility. Potential. Just four words that come to mind when I think back on the first-ever SOCAP/Europe conference (an organization dedicated to the flow of capital towards social good), which took place on May 30-June 1 in Beurs van Berlage, an extraordinary building that was Amsterdam's original stock exchange.

What transpired over the course of three days was an exploration into the wondrous realm of people fearlessly fighting back against a world gone wrong. People excited by their ideas and, yet, uncertain as to how those ideas would manifest themselves in the real world. With seven hundred people from more than 50 countries touching every corner of the globe present, the energy and excitement was palpable.

This much is clear, there are both astonishing successes and troubling failures. Hundreds of stories yet to be told. The newness of social capital and impact investing make it both fragile and tentative. This is a movement in search of metrics, scale, new partnerships and a clearer vision of what the world may look like as success finds its way. It's a movement that has already touched the lives of millions of people worldwide; a movement committed to using capital to achieve well-being, sustainability and justice as primary objectives; and a movement dedicated to generosity of spirit, rather than greed and self-enrichment.

It's an incredibly exciting vision for the future. A few experiences stood out.

A Model for the Future of Finance
An hour outside of Amsterdam in the town of Zeist is the Triodos Group, a multi-faceted financial institution offering asset management and micro-finance investing at banks in numerous European countries. In Zeist, Triodos is both geographically and philosophically connected to Rudolf Steiner, the educator, thinker and creator of biodynamic farming. (Anthroposophy, the movement that represents Steiner's thinking, has always been foundational to Triodos).

Triodos's total assets grew by £1.1 billion in 2009 (an increase of 30 percent) to £4.9 billion - faring dramatically better than its peers globally (particularly those in the US and Europe) during the financial crisis of 2008-2009.

Peter Blom, long-time leader of Triodos, shared his vision for the next financial infrastructure: one that will survive future financial collapse. The design is simple: invest in the basic building blocks of life: organic, fair trade food; alternative energy; non-speculative housing; and micro-enterprise. Since 1996, Triodos has focused all of its international activities on microfinance to best leverage the bank's core competence. The businesses Triodos invests in must be sustainable and resilient in a manner that considers the entire system and the supply chain upon which a company depends. Today, Triodos offers four microfinance funds that finance 82 microfinance institutions working in 40 countries in Latin America, Africa, Asia, and Eastern Europe.

Tridos is modeling that holistic approach itself: it is run in a highly cooperative and democratic fashion that limits the ownership power of all investors to no more than 1,000 votes - whether they own 100, or a million shares of stock. That strategy will be increasingly necessary as we face the increasing disruption that global climate change, social upheaval and financial instability engender.

A Model of Large-Scale Environmental Change
John Liu, producer of the film, "Hope in a Changing World," shared a story of renewal and regeneration on an unprecedented scale. China's Loess Plateau was once the cradle of Chinese civilization. Over thousands of years of farming, much of the once fertile soil has been leached to the point of infertility. Massive dust storms pick up the loose soil and carry it as far as Tokyo and Taipei. During sunset, fumes from factories block out the sun well before it can be observed sinking below the horizon.

Paul Mozur of the New York Times wrote: "[In] 2005, the Chinese government, in cooperation with the World Bank, completed the world's largest watershed restoration on the upper banks of the Yellow River. Woefully under-publicized, the $500 million enterprise transformed an area of 35,000 square kilometers on the Loess Plateau - roughly the area of Belgium - from dusty wasteland to a verdant agricultural center. The result of careful terracing, replanting of native vegetation and restrictions on grazing, the rejuvenated land now supports a thriving local agricultural economy. Even better, the new vegetation reduces flooding and dust storms by anchoring the region's soil and is becoming a large carbon sink."

This massive design project, completed by a Chinese government desperately concerned about food security for its huge population, is an unreported story in a world in which we celebrate community gardens and farmers markets. Liu documents the evolution of a miracle that reminds us of our planet's ingenuity in surviving the toll it takes from us – and a reminder that it will survive with, or without us.

The Reality Beyond Models
Despite hope and boundless energy, there is cause for deep concern.

The view from the other side of the Atlantic is more certain in its sense of impending crisis: economic instability in Greece, Portugal, and Ireland, and the early stages of a reactionary movement built upon the fear of losing the socially-progressive dream that made Northern Europe a model for inspiration, is merely the tip of the iceberg.

In America, our broken economic model - neither a free nor stable market - is comprised of winner-take-all rules and regulations, now bred into every nook and cranny of the "legal" way in which we do business. We are now typified by our gigantic corporations who pay no taxes, and our hedge fund managers who make trillions of dollars a year, paying less taxes than their secretaries. Sadly, we've convinced much of the world to follow in our footsteps.

A woman at the very peak of global power and influence (whose name I'm not at liberty to share) described in great detail how she is held hostage by a regulatory system that insists she consistently act in ways that put our global economic system at risk by placing short-term financial gain ahead of long-term results and responsibility.

An economic system that externalizes social and environmental costs encourages business to do the wrong thing. In a world measured only by quarterly profits, lives and livelihoods matter less that generating an extra penny of earnings.

My colleagues and I see the ever-rising levels of inequality and inequity in America (a society that has a greater concentration of wealth than Egypt or Tunisia,) as a volatile and dangerous catalyst for social instability, bringing new levels of chaos into the global economy. The possibility of the Arab Spring reaching across the sea and touching the developed world is a scenario that must be considered as we develop strategies for a new future that will arise more quickly than most have imagined. This is a future that will erupt from unexpected ruins.

The Important Questions
The question that arises out of these two days is one I have never before asked. But it's a question that more than one person in Amsterdam described quite articulately as a personal outlook on life: how do we lay the foundation upon which we will rebuild after the storm passes? What can we do now to ensure that next time around we won't repeat our mistakes? The question shifts our framework from, "how to save the world, stop global warming, prevent the massive loss of biodiversity or move billions out of abject poverty."

It inspired me to ask some more questions, which I now pose to you: what if we begin today to build and shore up the remains of our local economies? Transition to locally grown food and alternative energy that flows not through a global network but an endless series of local overlapping interconnected systems? What if we rediscover where we live and why we live there? Rebuild our communities and stop bowling alone. What does a model that builds the new while the old dies a violent death look like? How can these two ships pass in the night with out ripping each other apart?

About Jeffrey Hollender

Jeffrey Hollender is co-founder and former CEO of Seventh Generation. He is the author of the bestseller, How to Make the World a Better Place, a Beginner’s Guide, as well as five additional books, including The Responsibility Revolution and Planet Home. He is a board member of Greenpeace US and Verite and also co-founder of the American Sustainable Business Council. Visit his blog to learn more. He can also be found on Twitter (@jeffhollender) and on Facebook.

Web Links
SOCAP/Europe - http://socialcapitalmarkets.net/
Triodos - http://www.triodos.com/en/about-triodos-bank/
New York Times article (Mozur, 2005) - http://www.nytimes.com/2009/12/10/opinion/10iht-edmozur.html

This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.