In researching our soon-to-be-released Field Guide study of the Manufacturing Renaissance Council we discovered an illuminating 2011 Brookings Institution white paper, “The Federal Role in Supporting Urban Manufacturing,” co-authored by Joan Byron and Nisha Mistry. The paper focuses exclusively on the emergence of Small Urban Manufacturers (SUMs) as a trend that is transforming the American manufacturing landscape. SUMs are defined as urban manufacturers employing less than 100 people. The authors offer specific suggestions on how federal policy, which has largely failed to serve the needs of these entities, can be retuned to support them.
Capital Institute spoke recently with Steve Waygood, Head of Sustainability Research at Aviva Investors, to learn more about the advocacy work the company— with $433 billion in assets under management—has undertaken to advance the cause of more transparent reporting and management of sustainability risk. We also talked with Waygood about how Aviva Investors has embedded sustainability practices into its own operations, his broad concerns about the flawed methodologies that are currently used to value corporate assets and profitability, and the role both policymakers and the private sector need to play in addressing those flaws.
A recent New York Times article on program-related investing highlighted the $10 million equity stake the Bill & Melinda Gates Foundation took in Liquidia Technologies. Some in the foundation world are concerned that the investment blurred the line between profit-making and charity. We and our Braintrust advisor Stephen Viederman say foundations should blur those lines—as long as they deploy their endowment assets when they do so. We would argue that foundations should use all of the tools available to them to meet their mission and purpose: grants, program-related investments and, most powerfully, their endowment assets.
An Innovative Funder of Sustainable Companies Seeks to Establish its Own Sustainable Business Model
Some people talk about impact investment. Some people dabble with their own surplus funds. Some commit. Sky Lance and Tom Balderston have selflessly committed not just funds, but their full-time professional efforts to lead this important, catalytic initiative that leverages the deal flow and community of Investors' Circle in the impact investment space. I recall encouraging Sky to make the commitment at a conference in Sundance (after dropping and breaking a wine glass almost on Robert Redford's foot—no joke). I told him how important would be the contribution he could make by investing his experience and leadership in this idea. My hope is that all the institutions now growing excited about the potential of impact investment will consider supporting, and investing in, as I do, the Patient Capital Collaborative. Few initiatives have the potential to move the field forward professionally and collectively as does the PCC under Sky and Tom's leadership.—John Fullerton, founding PCC Limited Partner
Capital Institute is proud to report that Peter Kinder, co-founder of KLD Research & Analytics and Capital Institute board member, is this year's winner of the Joan Bavaria Impact Award. He was honored along with William Foote, founder and CEO of Root Capital, as this year’s winners of the fourth annual Joan Bavaria Awards for Building Sustainability into the Capital Markets at the opening reception of the Ceres annual conference, held in May in Oakland, CA.
The Bavaria Awards are given annually to two leaders working to move the capital markets toward a system that balances economic prosperity with social and environmental concerns. Separate awards are given for recent innovation and long-term impact. Bavaria, a pioneer of social investing, founded Ceres and Trillium Asset Management before her death in 2008.
Kinder received the Bavaria Impact Award. In 1988, Kinder co-founded KLD Research & Analytics, the world’s first for-profit investment research firm dedicated to the evaluation of corporate environmental, social and governance (ESG) performance and practices. KLD established the intellectual framework and metrics eventually used throughout the world to measure sustainability performance for publicly-traded companies.
August 2012 Update—Since we published our profile of Mark Pinsky and the Opportunity Finance Network, Pinsky has continued on at the organization's helm, deepening OFN’s commitment to supporting a stronger CDFI industry. OFN recently kicked off the “Create Jobs USA” program in partnership with Starbucks Coffee. Since its inception the Create Jobs USA fund has provided approximately $80 million to the nations’ CDFIs. The fund is managed by OFN and is comprised of donations made by Starbucks and CitiGroup. The OFN has also launched a Financing Healthy Foods project that focuses on educating CDFIs on how to finance and establish access to healthy, fresh foods in low-income communities. OFN has also started the Green Finance Program, which prioritizes financing energy efficiency renovations or retrofits projects. OFN has also begun offering CDFIs education on capacity-building including technical training, such as education on LEEDS certification standards and peer learning opportunities. A number of member CDFIs now specialize in green investment, and OFN hopes that these organizations will begin to provide insight and support to other network members who wish to develop expertise in financing in this sector.
Community Development Finance Leader Clifford Rosenthal Says CDFIs No Longer in Defensive Posture But Face Longer Term Pressures
July 2012 Update—Since we originally posted our interview with Clifford Rosenthal, the long-time President and CEO of the National Federation of Community Development Credit Unions, the CDFI industry has continued to face considerable challenges. However, it has also moved towards resolving many of its long-standing problems in the past 2 years.
When we spoke with him last, Rosenthal named the need for greater transparency, integration, and standardization as the three primary issues that the industry needed to address. The evolution of the industry rating system CARS™ , originally an extension of the Opportunity Finance Network, reflects progress made in the areas of transparency and standardization. CARS™ has been re-released as an independent entity and relaunched with a larger offering of analytic tools. These new products afford clients a more holistic view of a specific CDFI’s organization, function and proficiency. Many CDFIs have used their first-round CARS™ ratings to re-position their organization, and receive higher ratings in second-round ratings. The CDFI industry has become more standardized as organizations try to reach better CARS™ ratings levels. Issues of efficiency and integration are still being addressed, although integration is taking place within the industry with the establishment of centralized back office services for smaller CDFIs.
A space in the capital markets where the world of investing for profit and the world of investing for desired social and environmental outcomes meet and merge is attracting a growing and diverse group of investors. They are funding sustainable specialty coffee farms in Tanzania, affordable housing projects in New York City, and post-consumer recycled paper manufacturers in San Francisco.
“To repair the fabric of cities, towns and communities while preserving the land around them” is the stated mission of Jonathan Rose Companies. It may sound like an unusually lofty, exceedingly idealistic goal for a real estate company. But Jonathan Rose Companies is more than about developing real estate.
Founded in 1989 by a third-generation developer who sought to mix his passion for real estate with his passion for making a difference in urban communities, every project of Jonathan Rose Companies is guided by five principles: First, to increase the diversity of the places where people live and work--mixing public spaces with residences, workplaces, marketplaces, and education and spiritual centers. Second, to build with environmental sensitivity using a combination of high-tech modeling techniques and practical, often low-tech solutions. Third, to support the integration of work life and personal life--as expressed by “livelihood.” Fourth, to be mindful of the linkages between projects, users and their surroundings. And fifth, to consider that change is a given for real property as it is for all things, and thus to recognize that development projects must be conceived to adapt to often unanticipated future needs.
July 2, 2012 update—TIAA-CREF’s Global Social and Community Investments Group was created in 2006, after a survey TIAA-CREF conducted of its clients indicated that the core values that guided their investment-decision-making turned out to be human rights, community investment, and environmental sustainability.
Since we posted the profile of TIAA-CREF’s Global Social and Community Investment Group in June 2010, Amy Muska O’Brien has assumed the role of managing director. Former Director Cherie Santos-Wuest is now Principal Investment Officer Principal Investment Officer for Real Estate for the Connecticut Retirement, Pension and Trust Funds.
The Global Social and Community Group’s Green Building Technology Investment Portfolio, operated in partnership with Good Energies Venture Capital, has been involved in several projects since its formation, including the Meldahl Hydroelectric project in Ohio as well as an investment in energy saving cooling systems. It has also entered into two joint ventures with Jonathan Rose Companies that were completed in late 2011. Both have been widely lauded as successes in retrofit and revitalization practices.—Evan Lozier. Evan is Capital Institute's Summer 2012 intern.