Philanthropy « Rethinking Philanthropy (Lisa Genasci)

Archives For November 30, 1999

Building Impact into Investment

Lisa Genasci — March 12, 2014 — 2 Comments

Sophisticated Investors like to think their portfolio risk has been carefully mitigated and hedged. For the average portfolio, however, standard risk calculations don’t necessarily include analysis relative to environmental and social issues an investee company potentially faces, or even resource consumption analysis, yet all can have a significant impact on returns. This is particularly true of a long-term “buy and hold” investment strategy.

By contrast, impact investors believe not only that these factors weigh on a company’s returns, but also a positive screen for companies actively managing these risks can improve a portfolio’s performance.

Speaking in Hong Kong about their own 13-year journey toward an “Impact Portfolio” were Lisa and Charly Kleissner, founders of the KL Felicitas Foundation. As part of their mission, the Kleissners have urged audiences globally to think about how we can better deploy capital to help better steward the planet’s resources. On Tuesday, they spoke at a forum organized by the RS Group, hoping to advance the discussion in Hong Kong.

Today, the Kleissner’s foundation and personal portfolios, managed by San Francisco-based Sonen Capital, are more than 93 percent allocated across four different asset classes to “Impact Investments”, which signal the intent to generate both financial return and “purposeful, measurable, positive social or environmental impact”.

According to “Evolution of an Impact Portfolio: From Implementation to Results“, a report published by Sonen in October last year, the Kleissner’s portfolios have achieved index-competitive risk-adjusted returns, illustrating that, “impact investments can compete with and, at times, outperform, traditional asset allocation strategies, while simultaneously pursuing meaningful and measurable social and environmental impact”.

Their journey toward impact has not been easy, according to the Kleissners, Silicon valley denizens who both worked under Steve Jobs at Apple, among other firms. The process began with dim looks from early investment managers who wanted to focus only on returns.

“We wanted to know about the positive upside for communities, for the environment, from our investments,” Lisa said. “We wanted to make money and have positive impact but our early investment advisors had no idea how to achieve this.”

They sought an advisor who cared about impact. “We didn’t want someone who saw this as simply a job,” Charly said. “We want to change the world not just make money and our investment advisor needed to be a partner in this.”

The results were far-reaching, meaning investment policies needed to become impact investment policies, due diligence restructured, term sheets re-written, new monitoring and exit strategies developed. Sonen Capital was founded in response to this need.

The portfolios the Kleissners ended up with are far from US-centric, with more than 50 percent of investments made globally. Among those are holdings in renewable timber, carbon offsets, water and land use that is respectful of biodiversity. In other words, the Kleissners invest in companies that reflect positive impact. They have opted not to invest in coal-fired power plants or extractive industries.

Three percent of their assets are in early stage direct investments, reflecting their silicon valley, entrepreneurial background. Indeed, the Kleissners efforts to promote the impact sector has included investments of money and their own time in social enterprise incubators. These, and others, the Kleissners like to think of as “catalytic” investments that can lead to change.

Beyond the incubator model to support social enterprise development, the Kleissners also have invested in helping to build networks of like-minded investors to share due diligence as well as in promoting intermediaries to help develop the impact sector.

“Development of these investor resources is critical,” Charly said, “We want people anywhere to be able to tap into the knowledge”, which is available on the KL Felicitas website.

Measurement, always a difficult discussion, is rigorous across the portfolios, captures trends across the sectors and then includes qualitative analysis, which involves telling the story from the numbers and more.

Charly spoke of impact investment as often an evolution of smarter philanthropy. He also spoke of the importance of collaboration between grantmaking and investment to widen impact, pointing to microfinance as an example of this and to social enterprises that can start life as a nonprofit but move into a more commercial space over time using blended capital.

Speaking in Hong Kong, the Kleissners said, was a learning for them, that having worked with an incubator in India over a number of years, the entrepreneurial context there was more familiar.

In China, where the environmental challenges are substantial and polluting companies numerous, an audience member pointed out that impact might also come from working with conventional companies to change their environmental and social practices, rather than shunning them altogether.

China Cracks the Door Open To Environmental Reform

Lisa Genasci — March 25, 2013 — 3 Comments

At a recent environmental forum in Beijing, the speakers were in full swing with relatively predictable insight into China’s environmental challenges, and more broadly, environmental challenges elsewhere.

Then came the question-and-answer period and again a couple of relatively innocuous questions before a Chinese man strode to the front of the auditorium and launched into a discussion of his own.

In angry tones and raised voice, he said the Chinese government was not doing enough to mitigate air, water and soil pollution and demanded immediate attention to related public health concerns.

No one flinched, people listened intently, respectfully, no one emerged from the shadows to haul him away. Several students in the audience also asked about lack of action on pollution and suggested that more should be done to clean the environment and protect citizen health.

I sat beside a Chinese friend who simply shrugged, saying she had seen the man speak out at two other recent environmental forums. She said that because of his stature as an energy expert, he was left unhindered to express his opinions publicly.

She pointed out that the students were also feeling free to criticize the government, whereas previously the unspoken line everyone knew not to cross was any sense of direct opposition to Beijing authorities.

My sense from the entire trip (my previous visit being only four months earlier) was that China is changing, and perhaps faster than we could have imagined.

For the first time, censors this year have allowed Chinese media to carry reports about the “cancer villages” in areas of high industrial pollution.

Environmental advocate Ma Jun told me with some amazement that he had felt free recently to criticize a recent Ministry of Environmental Protection decision not to release data about soil pollution, which it considered a “state secret”.

Ma Jun said this was irresponsible and put public health at risk, a comment that was unusually picked up by the People’s Daily and Xinhua, among other news sources that aren’t usually inclined to publish remarks critical of the government.

“Previously, these comments would have been removed by censors,” Ma Jun said. “Now these issues are allowed to be talked about, debated and discussed.”

This became particularly clear, as March brought the annual meetings of the legislative and consultative bodies of China where major policies traditionally are decided and key government officials appointed.

Concern for the environment was a constant throughout the session – and was the subject of one in ten of the 5,000 proposals submitted by delegates.

Social media was also alive with commentary on the environment throughout.

And talk about environmental protection wasn’t simply a side act to the main show. The National People’s Congress (NPC) at 2,987 members is the largest parliament in the world and gathers alongside the People’s Political Consultative Conference (CPPCC) whose members represent various groups of society. This year, the NPC confirmed the new leadership of President Xi Jinping and Premier Li Keqiang.

This once-in-a-decade leadership change emerged from November’s Communist Party congress with a strong reform mandate and promising a more sustainable China, balanced growth as well as more emphasis on environmental protection.

To be fair, this was not, however entirely a departure in direction from the previous Hu Jintao, Wen Jibao administration and it remains to be seen whether the result will be real change.

The 2011, 12th Five-Year Plan, which sets the direction for policy, of course emphasized balanced growth and set priority green industries. The mantra that emerged then was that economic growth should not come at the expense of resource depletion or pollution.

Wen Jibao, representing the departing Old Guard, opened the 12th National People’s Congress with a “Report of the Work of the Government” pointing to “steady progress in conserving energy, reducing emissions, and protecting the environment.”

But levels of anger are rising, fueled by recent truly off-the-charts air pollution in Beijing as well as the repeated and increasingly public (because of the rapid spread of news on social media platforms) water pollution incidents nationwide. Rampant corruption among local officials that has allowed harmful practices to continue unhindered has also been a target of microbloggers.

This sense of disregard for public health coupled with an increasingly affluent and vocal middle class presents a problem for the Chinese government in terms of its own legitimacy.

Recognizing this, Xi Jinping said at the March proceedings that the government should play a stronger role in pushing reform and opening up.

“The new administration wants a new start,” Ma Jun said. “They want to make clear that the current environmental challenges are not their fault.”

China delegates in pollution protest vote (abc.net.au)
China’s Poison Air Is Becoming Its Leading Export – Bloomberg (bloomberg.com)
As Pollution Worsens in China, Solutions Succumb to Infighting (wtee.wordpress.com)
China People’s Congress environment surprise (abc.net.au)
Anger Over Pollution Becomes Main Cause of China Unrest (bloomberg.com)

In air pollution, asia, China, china water, Environment, Philanthropy, pollution admcf, air pollution, china, climate, Environment, Philanthropy, soil pollution, water

Angkor Hospital for Children and the Challenge of Medical Care in Cambodia

Lisa Genasci — April 21, 2012 — 1 Comment

I recently spent a week at Angkor Hospital for Children in Siem Reap, Cambodia with Francesco Caruso, director of ADMCF’s Children at Risk program and Ryan Glasgo, our new finance director. Both are working hard to help bring the hospital to the point where it can become a fully Cambodian institution.

When the hospital was founded in 1999 by Japanese photographer Kenro Izu and then was nurtured into being in partnership with an American board as a free pediatric hospital, Cambodia was a very different place.

Now there is a growing middle class, many of whom would be fully able to pay something for medical care. AHC for now, however, is still entirely free to any Cambodian child.

At the same time, the hospital in 2012 has a talented and dedicated medical and administrative staff that is fully capable of taking the hospital forward.

There is now an almost entirely Cambodian staff of 149 nurses and 46 doctors, including AHC’s executive director. Only two doctors and two nurses are foreign.

Last year, the hospital treated more than 150,000 children for illnesses ranging from acute diarrhea to tuberculosis. The Outpatient Department sees between 400 and 600 patients daily, while the Inpatient unit of 40 beds is almost always full.

An emergency room has eight beds, four of these in a separate isolation ward. There are plans to build a separate neonatal ward since on any day 10 of the patients are babies and many have suffered birth trauma or are premature.

Surgeries in the one operating theatre range from hernias to heart repair.

A pediatric Satellite clinic that is part of the government hospital in Sotnikum, 35 kilometers from Siem Reap, last year treated 12,300 Children. The Satellite staff works closely with the government hospital to build the quality of care offered there, with a focus on assisting the lab, X-ray unit and pharmacy, which the clinic shares. The clinic also has installed an emergency button in the delivery room to summon a Satellite doctor to assist any baby in distress.

AHC also has become northern Cambodia’s premier pediatric teaching facility. The Medical Education program includes a three-year residency program for every doctor who joins and then on-going internal education and fellowships abroad. ME also offers internships and trainings for medical staff from other hospitals.

“What we are developing is to be shared,” the hospital’s executive director, Dr. Bill Housworth emphasized, explaining the hospital’s full engagement via the AHC External Program with both the Ministry of Health in Phnom Penh and directly with many of Cambodia’s government hospitals.

The AHC Capacity Building program works with rural Health Care Centres and communities to provide education on nutrition, hygiene, sanitation and relevant disease – some of the main challenges for the AHC patient population.

The hospital, Satellite, Medical Education and CB programs together cost US$4.5 million last year. This amount is covered almost exclusively by donor funding and is a challenge for the hospital to raise each year.

Consequently, AHC is of necessity looking at revenue-generating programs and already for a fee provides hospital services to the children of some local NGO workers and airport staff in Siem Reap.

Although public hospitals are not free in Cambodia, about 30 percent of the rural population has what is known as a Health Equity Card, which establishes that they are poor and reimburses some of the medical costs and travel expenses to get to the hospital. But even then, it is not uncommon for doctors and hospital administrators to ask patients for payment ahead of treatment.

Private clinics are expensive and don’t necessarily provide a better quality of care, underlining the importance of a hospital like Angkor for the population that just cannot pay medical costs.

Research shows that the most common reason for impoverishment in Cambodia remains emergency healthcare costs, which force families to enter an often unending spiral of debt. For families who have a child with a chronic disease, healthcare costs can be devastating.

In Cambodia, an average of one in 20 children die before their fifth birthday, compared to a rate of one in 120 found in developed nations, according to UNICEF. And four children out of five live in rural areas, where the mortality rate is much higher at 64 deaths per 1,000 live birth.

Government census data shows that in 2010, 40 percent of children under five were too short for their age, stunted by malnutrition. Roughly 30 percent of Cambodians live on less than $1.25 per day, which the World Bank has established as the poverty threshold.

Indeed, Siem Reap province, better known abroad for its 11^th century temple complexes and lavish hotels replete with Western tourists, has the third-highest poverty rate among the Cambodian provinces at 52 percent.

For a province of 1 million people, the total health budget of Siem Reap this year is about $2.8 million, according to provincial health officials, and almost two-thirds of that represents support from large foreign government donors. None of that makes its way to AHC.

Clearly, part of the problem with provincial hospitals is that the government can afford to pay only low salaries to its health workers. Thus doctors, who might earn as little as $100 a month, often supplement their incomes with private clinics that take precedence over any hospital care.

Still, Cambodia is making headway in medical care on offer, in part with the support of AHC.

Part of the problem is the legacy of destruction leftover from the 1975-1979 Khmer Rouge rule, when medical professionals and other educated people were singled out for slaughter. In all, an estimated 1.7 million people were killed or died from forced labor, starvation or disease over the period.

When they marched into Phnom Penh and other cities, the Khmer Rouge emptied the hospitals, eliminated the doctors and then left the care of sick and injured to untrained young soldiers who favored traditional Cambodian remedies over Western medicine. By the time the Vietnamese ejected the Khmer Rouge from power, there were only an estimated 40 doctors left in the country.

Decades of war and isolation followed, leaving the medical infrastructure in shambles. In the 1990s, NGOs simply took over the health care system without trying to build anything indigenous, and change only began in earnest with the end of the Cambodian Civil War in 1998.

Angkor Hospital is working hard to be part of the solution.

In children at risk, health, Philanthropy admcf, children at risk, community development aid, Philanthropy

Redefining Fiduciary Responsibility

Lisa Genasci — December 29, 2011 — Leave a comment

I’ve been thinking recently about Fiduciary responsibility and what that has come to mean over the past two decades of rapid growth.

I’ve been thinking about how and why the interpretation that has crept into investment culture over that period – simply to maximize rates of return – has slowed an appreciation of investment that doesn’t cause social or environmental harm.

It goes without saying that this has also slowed investment that promotes social good as well as generating returns.

I’ve also been thinking that by itself this narrow interpretation ignores both business risk and opportunity – neither of which should be ignored considering the dictionary definition of fiduciary duty: to act prudently.

Writing in a Capital Institute blog, Stephen Viederman, former president of the US-based Jessie Smith Noyes Foundation, argues that foundations should align program work with investment strategy – something that is all too rare.

“Foundation fiduciaries have an obligation to seek ‘good’ and ‘competitive’ returns, not necessarily to maximize them,” he says.

Part of the problem has been the accompanying “myth of financial underperformance from ‘social investing,’ a myth that still lies at the heart of the problem for finance committees who conveniently forget that two-thirds of traditional active managers underperform their benchmarks every year,” Viederman says.

“Yet the profit-maximizing argument–that you will underperform if you do sustainable investing–comes up time and time again in conversations and is never examined by the people who are making it.”

Indeed, most investors are not considering the business risk associated with investing, for example, in a power company, a textile operation or mining business in a region that is water scarce.

Most ignore the reputational risks associated with investing in factories or plants that are polluting, overly consumptive of resources, or engaged in bad labor practices.

“All investments are about the future, but most investment decisions are made on retrospective data, which as fund offerings make clear, are not predictors of future earnings,” says Viederman.

“We need to ask about … ‘predictable surprises,’ which include climate change, the BP Gulf disaster and the financial bubble among others. …Any institutional investor who ignores them is in breach of their fiduciary duty. To be prudent, as in the prudent person, is in its original meaning, to be farseeing.”

The ADM Capital Foundation launched a web portal, China Water Risk, in October to provide investors and companies with information about water scarcity and pollution in China.

Part of the thesis behind the initiative is that better investment decisions produce better returns in the long run and these usually come with more information – and not the information investors traditionally have sought.

But, certainly, few could disagree that the regulatory environment is changing to reflect resource consumption and that water pricing in the near future will reflect scarcity.

Few could disagree that NGOs are increasingly sophisticated in exposing pollution incidents (see my blog posts on IPE’s Ma Jun and Apple, on Greenpeace’s Dirty Laundry and other reports) and that local protests in China are growing around pollution incidents.

Workers are no longer content to suffer exposure to hazardous chemicals silently, or work extraordinarily long hours without proper compensation.

All are, potentially, a drag on profits. Would it not then make sense for fiduciary duty to include analysis of such risk?

Fully Risk-Adjusted Returns (FRR), as they might be called, should certainly not be lower as a result, indeed given the current and future challenges the world faces, they could even be enhanced by additional information.

For those who missed this, one company that is looking to consider the impact of production is PUMA, which earlier this year announced the results of an unprecedented environmental profit and loss screening.

This was a big step toward assigning economic value to resources consumed and to emissions. The value assigned was also a step toward determining the true cost of production of PUMA apparel and shoes.

Results from PUMA's Environmental Profit and Loss Analysis

The analysis showed that raw material production accounted for the highest relative impact of Greenhouse Gas Emissions and water consumption within PUMA’s operations and supply chain.

According to PUMA’s report, the direct ecological impact of company operations translated to the equivalent of 7.2 million euros of the overall impact valuation. An additional 87.2 million euros was distributed along the four-tier supply chain.

Thus, the overall environmental impact of GHG and water consumption amounted to 94.4 million euros. That compares to a third-quarter net profit of 82 million euros.

“By putting a monetary value on the environmental impacts, PUMA is preparing for potential future legislation such as disclosure requirements,” the company said.

“By identifying the most significant environmental impacts, PUMA will develop solutions to address these issues, consequently minimizing both business risks and environmental effects.”

Finally, a new and important report from IESE Business school, “In Search of Gama, an Unconventional Perspective on Impact Investing,” steps into the discussion with questions such as:

By focusing exclusively on the creation of financial wealth for individuals are financial markets destroying value for society?
Is social responsibility a component of investment that is necessarily detrimental to financial return?
Should changes be made in the taxation and supervision of financial transactions to account for financial markets’ responsibility to society?

Clearly, business as usual is no longer smart business and change is imminent. Considering the impact of investments and reconsidering how we make investment decisions will be the way forward.

Let’s start by redefining fiduciary responsibility, considering Fully Risked Returns. Clearly, returns may actually be enhanced either when viewed through the lens of an appropriate risk framework/weighting or in reality as a result of a superior business environment.

Gaining Traction in the Race to Protect Sharks

Lisa Genasci — December 11, 2011 — Leave a comment

I’m still surprised when other conservation funders or even NGOs ask us why we work to protect sharks, indicating that this is a “single-species” issue among a platform of ADMCF initiatives that generally is much broader in tone.

I’m surprised when we have to point out that there are at least 440 species of sharks and that as apex predators they are critical to the health of our oceans. This is in no way a single-species issue and ultimately is integrally connected to the health of our commercial fisheries.

The initiatives against consumption of shark fin soup we support have much more to do with protecting our oceans, which are in significant decline. At least a third of shark species are threatened with extinction and some species have dropped in numbers by as much as 90 percent in recent years.

Sharks cannot easily recover from overfishing because they reproduce slowly, taking years to mature and producing few offspring. If we continue to fish shark at current rates, they simply won’t be part of our ocean life in the not too distant future, with potentially disastrous consequences for us all.

For 400 million years sharks (despite their negative image largely, thanks to Jaws) have helped to maintain and regulate the balance of our marine ecosystems. We don’t know exactly what our oceans would look like without sharks but we do know there would be significantly less biodiversity. Studies have shown that regions where there are more apex predators have more biodiversity, while areas without them show clear absences.

Still, every year perhaps as many as 73 millions sharks are caught – tens of millions of these for their fins alone. Although many sharks are landed and brought to shore with their fins attached, in order to save space on fishing boats, in many instances sharks are finned at sea and the body is discarded into the oceans, meaning the sharks drown. Any food value in the large body is wasted.

And Based on FAO statistics, global shark catches are likely to be underestimated by an astonishing three to four-fold.

Hong Kong plays an important role, with 50 percent of the shark fin trade passing through the city – much of it re-exported legally or illegally to China and the rest consumed locally, mostly at wedding or corporate banquets in soup.

Shark finning is an issue that ADMCF has been working with local conservation groups to highlight and advocate against in Hong Kong. Over the past five years we have supported research, appeals to the hospitality industry and rest of the corporate sector to stop serving and consuming shark fin soup.

With local organizations we have worked to build awareness among the general public about the biodiversity consequences of decimating our shark populations. Legislators have been approached to push the Hong Kong government to consider at least ceasing the consumption of shark fin soup at government banquets – something that in reality should be easy since the dish is expensive!

Ultimately, of course, we would all like the Hong Kong government to follow the world trend and consider a ban on the shark fin trade in Hong Kong.

Earlier this year, Bloom released important research on local attitudes to shark consumption that was publicized widely in local Chinese and international media. This research fundamentally changed the debate– from shark fin as an untouchable cultural issue to a global concern characterised by changing local attitudes.

And in an encouraging recent decision, the Hong Kong & Shanghai Hotels announced a ban on shark fin at all outlets including its Peninsula hotels as of Jan. 1. This was a major shift and key step in engaging Hong Kong’s leading hotels on a collective ban. Conservation International and Bloom Hong Kong are organizing a meeting of top Hong Kong hotel executives in January 2012 to discuss what initial steps they might take toward removing shark fin from restaurant menus.

Meanwhile, WWF and the HK Shark Foundation have managed to sign up more than 110 companies and industry groups in Hong Kong to a pledge not to serve shark fin soup or consume other shark products in the course of official business. Many others have privately committed to follow the ban but have asked not to named publicly.

Indeed, the number of shark conservation organisations in Hong Kong pressuring the government, the corporate community and the trade is at an all-time high. Social and mainstream media shows that public sentiment is shifting and the momentum against consumption of shark fin is continuing to build both here and abroad.

Increasingly people do understand the importance of sharks to our marine ecosystems. There is little doubt in most minds that protecting sharks is not a single-species issues.

China Water Risk: Why we Should Care

Lisa Genasci — October 9, 2011 — Leave a comment

Concern is growing globally about water resources and the potential for conflict in regions where they are scarce. But are investors and businesses in Asia adequately factoring water into risk assessments?

A recent Neilson study showed that worry about water shortages has overtaken global warming as the top issue, with 75 percent of respondents identifying this as something they worry most about. That represents an increase of 13 percent over the previous year.

And the concern is not without basis. Worldwide, almost 1 billion people lack access to safe drinking water while 70 percent of industrial waste in developing nations is dumped untreated into waterways, further limiting what is often already stretched supply.

Yet investors and leaders of industry may not be paying attention, considering water challenges simply an environmental problem rather than a fundamental business risk.

In China, the water landscape is particularly stark. We hear much about that country’s economic growth averaging 10 percent over the past 20 years, the massive and wholesale transformation of the economy at rapid pace, but not so much about the horrendous cost to the environment that already weighs heavily on GDP .

We hear much less about the dead and dying rivers, the over-pumped aquifers, the creeping desertification in previously agricultural areas, the thinned soil from over-use of pesticides, the power plants without adequate water to function, the massive and growing health care costs from poisonings and escalating cancer rates.

We hear very little about the growing numbers of protests nationwide linked to pollution incidents.

The government is clearly concerned. The official response in China has been a tightening regulatory environment, and a move toward real pricing of the precious resource, or the investment opportunities that an inevitable clean up will bring.

The recently approved, 12th five-year plan for the first time features climate change and energy, sets lower growth targets for the country and favors investment in industries that promote pollution clean up and cleaner processes generally.

Clearly, there are thus significant ramifications across a broad range of industries in China but are investors prepared? Are they staying ahead of the water risk curve, engaging in the due diligence and mitigation efforts needed to survive the inevitable and seismic shifts around water?

China Water Risk (CWR) is ADMCF’s redesigned follow-on from Asia Water Project, the pilot initiative launched 18 months ago to inform investors and companies of both risk and opportunities around water crisis in China.

This initiative, which launches later this month at www.chinawaterrisk.org, is designed to influence capital allocation to industries in China located in water-appropriate regions, with solid mitigation strategies built around water.

A brief portrait of water in China tells the back story.

Per capita global water resources are 6,280 cubic meters on average but people in China have less than 1/3 of that amount at 1.816 cubic meters.

So, the country with 20 percent of the world’s population has access to only 7 percent of global water resources, while an estimated 300 million people in the country are without access to safe drinking water.

And this is not just a problem for rural areas in China. In 2007, research showed that 60% of China’s cities faced water scarcity and 110 cities faced serious water shortages.

Despite already limited access to water in china, horrendous levels of pollutants are allowed to spill untreated into waterways and seep into aquifers from agriculture and industry in China.

Last year, the Ministry of Environmental Protection said serious pollution violations numbered on average 10 every month.

In all, an estimated 90 percent of urban groundwater is contaminated with pollutants and the quality of 40 percent of that is getting worse, according to China’s Ministry of Environmental Protection.

Pollution of groundwater follows from the low urban sewage treatment rate, which was only 73 percent in 2009, according to a recent article in China Business Times. Hundreds of new sewage treatment plants have been built nationwide in recent years and sit idle because of the high cost of operating them.

The Beijing-based Institute for Public & Environmental Affairs in its water pollution map (an inspiration for China Water Risk and a CWR partner) lists hundreds of violations by sewage plants.

According to the Ministry of Environmental Protection, 77 percent of 26 key lakes and reservoirs, 43 percent of 7 major river basins are considered unfit for human contact. Meanwhile, 19 percent of monitored rivers and basins, 35 percent of lakes are reservoirs are believed unfit even for agricultural or industrial use.

The World Bank has warned of “catastrophic “ consequences for future generations if the government does not act to solve quickly the acute water shortage and pollution problems. The report urged new pricing, management and regulatory strategies.

In China, agriculture has been by far the largest consumer of water at 62 percent, and the largest polluter, with pesticides and fertilizers responsible for about half of contamination of waterways.

With water scarcity becoming more evident, waterways increasingly unfit for irrigation coupled with the fact that China holds only 7 percent of the world’s arable land, food security has by all accounts become of national concern.

Part of the problem around agriculture and food security in China has been that regions south of the Yangtze account for 33 percent of the country’s total farmland and 83 percent of the country’s water resources. North of the Yangtze, however, lies 67 percent of national farmland but only 17 percent of water resources

Exacerbating the problem, the country is the globally the largest consumer of pesticides and this has contributed heavily not only to aquifer and waterway pollution but to depletion of farmlands.

Meanwhile, as environmental and labor regulations tightened in the West pushing up prices at home, Foreign Direct Investment has flooded into China, fueling the factories, building the industry that is now feeding, clothing and housing the world.

Last year, FDI was estimated at $105.7 billion, surging 17.4 percent over the previous year. This is also helping build a huge middle class and affluent consumer market in China that is expected to almost triple to 400 million by 2020.

According to a September HSBC report, already next year China will replace Japan as the world’s largest consumer of luxury items – something unthinkable just a decade ago.

A joint report published in 2007 by the World Bank and the Chinese government estimated the combined health and non-health cost of outdoor air and water pollution at approximately $100 billion a year, or about 5.8% of China’s GDP.

Water pollution, meanwhile, worsens China’s severe water scarcity problems, with the overall cost of water shortages estimated at 1% of GDP.

The weight on economic growth is certainly of concern to Beijing, but equally concerning is the growing discontent in China related to pollution incidents and scarcity. In 2005, the last year for which government figures have been released, there were an estimated 50,000 protests nationwide related to pollution incidents.

This comes in response to significant growth of so-called cancer villages, or clusters of cancers invariably located near heavily polluting factories, fast-growing rates of urban cancers and outbreaks of illness or poisonings related to drinking polluted water.

Many of these protests have been centered around specific polluters and in several instances have forced factories or power plants to close. This then involves not just reputational risk but threatens serious economic losses for polluters.

There are also additional considerations around political risk. Concern is that as climate change potentially exacerbates the country’s water shortages, the government sees the need to exert further control over domestic water resources with far-reaching consequences.

Of the 261 International rivers globally, 15 originate in China, including the Mekong, Ganges, Brahmaputra and Indus rivers. These international rivers span 16 nations and China has no formal agreements or treaties regarding the use of these rivers with any of its neighbors.

What is patently clear, is that no investor or business leader can step into China without carefully considering the water challenges facing each industry and then positioning to mitigate risk. At the same time, don’t investors and business leaders want to position themselves to take advantage of potentially huge opportunity?

Education for India’s Lowest Caste: The Musahar

Lisa Genasci — April 3, 2011 — 3 Comments

ADMCF recently spent time in Patna, in India’s Bihar state where we were looking at how we might work effectively with the Musahar community, which ranks at the bottom of the dalit or untouchable caste.

We found that there is apparently relatively little concrete information about or assistance given to the Musahar, whose name translates quite literally as the “rat-eaters.” Estimates of their numbers in Bihar and other states range from 2 million to as high as 5 million.

The Musahar fall so far down the well of the Indian caste system that by all accounts its people live in modern India much as they did 2,000 years ago. In an initiative that was perhaps telling about the regard in which the community is held, in 2008 the Indian government acted to help the Musahar by allowing the commercialization of rat meat.

A brief portrait of their situation gleaned from what is available online and through conversations in Bihar: In the villages around Patna in Bihar state, India, child marriage at 13 or 14 is still common, although illegal in India.

In the rural areas, Musahar are primarily bonded agricultural labourers, but often go without work for as much as eight months in a year. Children work alongside their parents in the fields or as rag pickers, earning as little as 25 to 30 rupees daily.

The Musahar literacy rate is 3 percent, but falls below 1 percent for the women. Yet it is cast discrimination rather than parents that keep Musahari children away from schools. That said, the schools to which they have access apparently offer so little in the way of education that perception among the community is that schooling doesn’t offer them anything. And it is certainly true that even if they do manage an education certificate, discrimination means few manage to find jobs anyway.

By some estimates, as many as 85 percent of some villages of Musahars suffer from malnutrition and with access to health centres scant, diseases such as malaria and kala-azar, the most severe form of Leishmaniasis, are prevalent.

Besides eating rats, the Musahars are known for producing a good and cheap alcohol so not surprisingly alcoholism is rampant among the community, particularly the men.

Government development programs provide very little support to the Musahars. They are not recipients of housing schemes because generally they do not possess title deeds for their land. They are also the lowest number of recipients of loans from revolving funds within government schemes. Thus the social support system bypasses them, as do private donations since so little is known about them.

The Dalit community in Bihar as a whole suffers frequent and often unpunished human rights violations. In the ten years before 2003, for example, 4243 cases of Dalit atrocities were registered in police stations, including 694 cases of murder, 1049 of rape, 1658 of severe injury and 842 cases of insult and abuse.

Into this picture walked Sudha Varghese 26 years ago, a nun who wanted to give voice to India’s dalits. The Musahars were the least advantaged of the dalits she could find and she moved into their community to truly understand their needs and way of thinking.

her organization, Nari Gunjan, was born to give voice to the Musahar women in particular. The organization now runs 72 primary education centres and a residential hostel/school for girls. Nari Gunjan promotes social, political, and economic empowerment for the women and girls. Beyond education, some of the centers provide vocational training and assist with micro-credit for Musahar women.

A decade ago, recognizing the need also to represent Musahar women in the courts, Sudha sent herself to law school and returned armed with a new skill set she has used to pursue the prosecution of ten rape cases that without her would have gone unpunished. In each case, she lead a column of Musahar women to the police stations to persuade officers to make the right arrest and in each case she has succeeded in putting the perpetrators behind bars, she says.

Known as the “bicycle nun” Sudha visits the various communities on her bicycle, and her fragile appearance belies a ferocious determination to provide Musahar children with education, self-esteem and purpose, its women with hope. For her courage, India’s national government recently awarded Sister Sudha the country’s highest civilian award, the Padmashri.

During a visit, the difference between children who attend her education centers and those who don’t was immediately apparent. Still, like any organization working in difficult circumstances that has been around for some time, achieving a constant flow of funding, even at the modest scale Nari Gunjan requires, is extremely hard. Some of the education centers have gone unfunded for 10 months although the teachers continue to work and the children appear.

In asia, children at risk, cultural preservation, health, impact investment, Microlending, Philanthropy, pollution, social enterprise admcf, children at risk, community development aid, cultural preservation, Philanthropy, social enterprise, social impact

Fighting for Education on the Thai-Burmese Border

Lisa Genasci — February 17, 2011 — Leave a comment

: Naw Paw Ray

An estimated 50,000 children of refugees from Burma live in the Mae Sot area of Thailand, 80 percent with no access to schools. Among them are children from the Mon, Karen and Shan minority groups fleeing decades of political, economic and military oppression at home.

These migrant populations along the Burmese border are largely forgotten, subject to harassment and have little access to support or education.

Estimates are that with a near absence of economic, educational, health and job options at home, about 2 million Burmese have migrated to Thailand since 1988.

Of these, 150,000 are living in refugee camps, 500,000 are legal migrants and the rest live illegally in Thailand.

Although the camps and borders are officially closed, an estimated 1,000 people cross into Thailand daily and this was evident on a recent visit to Mae Sot, with fighting raging just across the border.

Life for migrant Burmese in Thailand, however, is not much better than at home. In a report released last year, Human Rights Watch described “an atmosphere circumscribed by fear, violence, abuse, corruption and intimidation for illegal Burmese in Thailand.”

The illegal migrants are kept to just a few low-skill job opportunities. Most work as day labourers with no rights, no protection. They are commonly exploited and abused by employers, police, immigration and others with little recourse, according to HRW.

Schooling options for their children are also limited. Places for them in local Thai schools are almost non-existent, although there are some limited Burmese “education centres” as the Thai government prefers to call them.

In the Mae Sot area, Ashoka fellow Naw Paw Ray has worked hard to get Burmese children into some sort of schooling over the past 11 years. Of the 50,000 locally, she estimates 12,500 attend the 60 education centres, as they are called by the Thai government, gathered under her Burmese Migrant Workers Educational Centre network.

BWMEC works to make sure the curriculum and facilities of the education centres under her umbrella are adequate for learning, providing training, funding, administrative support and school buildings or dormitories where necessary.

A migrant herself, Paw Ray’s story is fairly typical of the migrant Burmese community. She left Burma in 1986 when her village was destroyed by soldiers and entered a refugee camp in Mae Sot when they were set up by the United Nations a year later.

In Burma, Paw Ray was a teacher but in Mae Sot she worked in a gas station until she said she could no longer stand to see the discrimination. “I could teach and I wanted to teach. I wanted to do something to help my people,” she said, setting up a first school with just 25 Karen and Burmese students.

Chosen as an Ashoka fellow in 2007, Paw Ray said that in her work she hoped to address the vast educational gap between Thai children and the children of Burmese migrant workers.

Naw Paw’s schools hopefully give migrant children options – preparing them for a prospective return to Burma or integration into Thai society and culture – critical to establishing a pluralistic and tolerant Thai society. The idea is to pave the way for migrant schools, students, and teachers to gain public support and official accreditation in Thailand.

No other organisation in Thailand fields such an array of minority schools or is doing so much to build a long-term solution to the growing number of uneducated migrant children coming to or born in Thailand each year.

Yet like many good organizations, Paw Ray struggles to find adequate funding to support this forgotten community.

And the problem remains, children attending the Burmese elementary schools have only limited access to Thai secondary schools for reasons related to cost, discrimination and availability. That limits future job opportunities and integration.

So Paw Ray’s challenge remains: what is the best way to provide education to a migrant population that may or may not return home ?

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Willie Smits and Sugar Palm

Lisa Genasci — January 30, 2011 — 9 Comments

Recently we were in Northern Sulawesi visiting Willie Smits, an evangelist for sugar palm. I had seen his Ted talk and met him in Hong Kong on a previous visit and we wanted to see his work for ourselves.

We were keen to understand more about both sugar palm as a source of livelihoods for local populations and also his program of ecological restoration built around the trees, which are native to Sulawesi.

ADM Capital Foundation has been working with the Nantu conservation effort, also in Northern Sulawesi, and are looking at ways to help Nantu generate alternative local livelihoods. Clearly we can’t talk about forest conservation without working on the development/education piece for communities, as I have discussed in previous blogs.

Smits, a biologist/forester, has lived in Indonesia for three decades and is married to an Indonesian tribal princess who is also a local politician. Having worked previously for years for the ministry of forestry in Jakarta he has a good understanding of both Indonesia and its political/corruption challenges.

Over the past decade writing about, researching and working with sugar palm, Willie has built a unique store of data on everything about the tropical plant, as well as on deforestation, its causes and consequences.

He spends much of his time working through how to restore land for people and forest-dwelling animals alike, create livelihoods for local populations so they no longer must poach, log or otherwise log to support their families.

Understandably, Indonesia’s Forestry Ministry is focused not so much on conservation in Indonesia, but on how to support development that will sustain a rapidly growing population currently at around 230 million. This was made patently clear in a recent conversation with Jakarta MOF officials.

Understanding this, Willie Smits instead of talking about saving Orangutans from palm oil plantations, talks about community livelihoods, about Samboja Lestari, which is the restoration initiative discussed in his TED talk, about his sugar palm cooperative of 6,285 shareholders in Northern Sulawesi.

Although he now is not directly involved with Samboja, which is administered by the organization he founded but no longer leads, Borneo Orangutan Survival Foundation, Willie is still a board member of BOS. The principles around which Samboja was built stand regardless of its management: diversified secondary forest that includes sugar palm and at each layer provides income for communities as well as habitat for animals.

Secondary forest that produces income of course also takes the pressure off native forests.

To achieve this, Willie has developed a franchise process and system to sign up local holders of degraded land, provide the palms and training at a cost of approximately US$1000 per hectare.

The idea is that each cluster of about 150 farmers form a “Village Hub” or a cooperative that acts to build the social fabric, as a bank and to consolidate the product. The mini sugar processing plant, the core of the village hub, which is primarily solar driven, concentrates the raw sugar juice from about 20% to above 60% where it is nonreactive and easier to transport.

Each farmer has an account with the hub and this is credited with each container of juice brought in. They can then use the credit to buy goods and services in the village. This removes the use of actual money and the potential for corruption or theft.

The concentrate is delivered to a regional hub that processes the concentrate to various products, including raw sugar, rum, bio ethanol, among many others. Village Hubs are estimated to cost around 350,000 Euros.

Now to the numbers:

Willie claims to be able to plant 70 producing sugar palms per hectare in among other vegetation, with each tree producing 13 liters of sugar syrup, equivalent to 3 kilos of sugar per day. That’s roughly 36.5 tons of sugar or 19 tons of ethanol per hectare per year – according to Willie the equivalent of 82 barrels of oil per hectare per year.

Sugar palm, he says, requires little water, no chemical fertilizers or pesticides (they have their own built-in defenses), creates local jobs for tappers (trees must be tapped twice a day and this keep local people occupied and away from natural forest). They also enhance food security since sugar palms produce sago, sugar (better for you apparently than cane sugar) and fruit.

Sugar palm, Willie emphasizes, is not a crop but a forest and there are already an estimated 10 million existing sugar palms, many of these in Indonesia. Furthermore, there are tens of millions of hectares of grassland or wasteland that could be restored to include sugar palm that would provide local livelihoods, sequester carbon, while producing fuel and food. He is looking at where else in the world sugar palm might be used to generate income.

Some interesting concepts and hard to verify since most of the work around sugar palm has been done by Willie himself.

Certainly, we would be keen to be pointed in the direction of other numbers/thinking connected to community livelihoods and sugar palm.

HK Campaign Against Shark-Fin Soup Gathers Strength

Lisa Genasci — January 23, 2011 — 6 Comments

The campaign against shark-fin soup is building in Hong Kong and perhaps this is a good moment to summarize some of the actions and challenges around educating consumers about this unsustainable dish.

Recently, Legislative Council member, Hon. Audrey Eu, requested the moribund Hong Kong government to clarify its position on serving shark-fin soup at official banquets and to release information about how often the dish was included at state functions.

She also asked the government whether or not it was educating the public about the ecological damage caused by excessive consumption of high-value shark fins, which are often hacked off the still-alive marine animals. The shark body is then discarded in a practice widely condemned for its wastage and banned in U.S. and other waters.

The predictable response from Secretary for the Environment, Edward Yau at a Legco meeting on January 12 was that because of budgetary constraints not much shark-fin soup was served at official functions but that detailed information on this was impossible to gather. “We do not think it is appropriate to lay down guidelines to regulate the kind of food to be consumed in official banquets and meals,” Yau said.

Further, Yau hid behind the traditional government line, which is that HK follows CITES, which allows the trade in all 468 shark species (Yau says there are 320), except the three listed in the CITES appendices, Great White, Basking and Whale Sharks. “At present the laws of Hong Kong regulate the trade in shark species in accordance with the CITES requirements,” he said.

CITES is the Convention on International Trade in Endangered species of Wild Fauna and Flora.

The Hong Kong government showed once again that officials are more concerned with keeping an industry or trade body happy, in this case the Marine Products Association, than in any action against ecological damage or move toward encouraging sustainable fisheries.

Echoing this sentiment, in a recent letter to the SCMP, Robert Jenkins, identified as president of Species Management Specialists and apparently also a consultant to the Hong Kong Marine Products Association, wrote “There are no valid reasons for Hong Kong’s Department of Agriculture, Fisheries and Conservation to condemn traditional Chinese cuisine simply to satisfy the views of persons and organisations ideologically opposed to human use of marine species for food.”

As justification for this he points again to CITES, which has 180 sovereign states as members and “for 25 years has been the premier international legal instrument identifying wild animals and plant species endangered by trade.” Even for the three listed shark species, Jenkins points out, CITES requires trade to be regulated, not stopped.

The reality is, however, that CITES is primarily a trade rather than a conservation body and as such is inherently political, motivated by issues beyond protection of species. CITES last year at its Doha meeting failed to include a severely threatened shark species, the Scalloped Hammerhead, among its appendices because member states with specific interests were unable to reach agreement. Even critically endangered Blue Fin Tuna is not listed by CITES.

Yet the International Union for the Conservation of Nature Red List of Threatened Species, has classified 143 shark species as either critically endangered, endangered, vulnerable, or near threatened with the risk of extinction. That amounts to 30 percent of all shark species and many of the shark fins that we find in Hong Kong markets actually belong to these.

Still, action against the consumption of shark-fin soup is growing in Asia. Illustrating the reputational risk to companies ignoring the issue, shark conservation organizations were again successful in pressuring a Hong Kong bank to withdraw a shark fin soup promotion. Last summer, following similar pressure, Citibank Hong Kong withdrew a shark-fin soup promotion and asked its employees to avoid the delicacy during work events.

Working together, several marine conservation groups recently launched a campaign against Dah Sing Bank for announcing it would offer a shark-fin soup banquet for 12 to new borrowers.

After a few days of intense adverse publicity, the bank withdrew the offer. Hopefully, other financial institutions locally will also recognize the reputational risk around promoting or even serving shark fin soup at banquets.

Just to recap the importance, shark populations worldwide are facing massive decline. Scientists estimate that the fins of tens millions of sharks are traded globally. This is devastating to sharks, which are slow-growing, long-lived, late to reach sexual maturity and produce few young.

In other words, the human appetite for shark fin and other shark products simply cannot be sustained. The consumption of shark-fin soup is a major factor in declining shark populations, with potentially disastrous impacts on the entire marine ecosystem.

Although shark fins are widely regarded as tasteless, shark fin soup is considered a delicacy mainly because of the high price of the fins. People eat or serve it mostly as a measure of status and a bowl can cost as much as US$400 a bowl.

Shark fins fetch a high price , while shark meat does not. Fins sold in Hong Kong range from about 90 euros to 300 euros per kilogram while shark meat in European markets fetch 1 euro to 7 euros per kilo, according to a Jan 22 letter to the editor in the South China Morning Post written by Claire Garner, director of the Hong Kong Shark Foundation (www.hksharkfoundation.org).

That means the wasteful practice of shark finning – the cutting off a live shark’s fins and then throwing the body back to the sea – is highly lucrative.

WWF and other conservation organizations in Hong Kong such as Bloom Association, the Hong Kong Shark Foundation, Green Sense, Greenpeace, Shark Savers and others are working in their own way to draw attention to the need to protect sharks.

WWF has managed to persuade many corporations in Hong Kong such as HSBC, the Hong Kong and China Gas Company, Hang Seng Bank, Swire Properties, University of Hong Kong, Canon Hong Kong to adopt a no-shark-fin dining policy ( http://bit.ly/dtkHA1 ). Hong Kong Observatory, and 180 primary and secondary schools also have made a similar pledge.

So what can the average person do to promote awareness around the damage shark finning causes our marine ecology? Beyond not consuming shark fin soup yourself, please do ask your companies and trading partners about their own policies.

It is urgent we act against waste and move consumption toward sustainable fisheries before it’s too late!

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Impact Investing as an Asset Class

Lisa Genasci — December 5, 2010 — 1 Comment

The world’s problems are too vast for philanthropy or governments alone to solve. The US$300 billion spent by U.S. philanthropists last year is just not enough to make a significant dent, while foreign aid represents less than 1 percent of global gross domestic product.

The reality is that only by harnessing the markets, large-scale private and institutional capital, will we even begin to meet the challenges posed by massive population growth, meet our many needs, address issues around water scarcity, our depleted resources as well as our polluted air and water.

Philanthropy can help spur innovation, it can be used as risk capital, to develop models for social benefit that can then be scaled. Governments can help take that innovation to scale but they can’t do it all. Only markets have the potential to bring about real change at the scale and speed we need that to happen.

In other words, we urgently need to take social investments out of the realm of just doing good and plant them firmly in business models in order to make our world fit for our children and grandchildren.

But how does that happen?

A new report released last week by J.P. Morgan and the Rockefeller Foundation in partnership with the Global Impact Investing Network (GIIN) attempts to advance this discussion.

The report argues that impact investments are emerging as an alternative asset class, thus allowing the sector to be considered alongside any other as part of an investment portfolio. Impact investments in this instance are defined as investments intended to create positive impact beyond, although not to the exclusion of, a financial return.

“With increasing numbers of investors rejecting the notion that they face a binary choice between investing for maximum risk-adjusted returns or donating for social purpose, the impact investment market is now at a significant turning point as it enters the mainstream, ” the report states.

It addresses questions such as what defines and differentiates impact investments, who is involved in the market and how they allocate capital. Also considered is what makes impact investment an emerging asset class, how much return investors are expecting and receiving, how large is the potential opportunity for investment in this market and what does risk management and social monitoring involve?

The report analyzes five sectors that serve bottom-of-the-pyramid populations (the global population earning less than US$3,000 annually): Urban affordable housing, rural access to clean water, maternal health, primary education, and microfinance.

For just these segments of the impact investing universe, the report identifies a potential profit opportunity of between $183 and $667 billion as well as investment opportunity between $400 billion and $1 trillion over the next decade.

Many impact investments will take the form of private equity or debt investments, the report says, while other instruments can include guarantees or deposits. Publicly listed impact investments do exist, although as a small proportion of transactions.

B-Lab differentiates Impact Investing and Socially Responsible Investing, which has been around for some time, defining SRI (estimated at $2.7 trillion in 2007) as primarily negative screening, or investment in screened public equity funds that avoid so-called ‘sin stocks’ or seek to influence corporate behavior.

The core of the II asset class is that the model of the business (which could be a fund management firm or a company) into which the investment is made should be designed with the intent to achieve positive social or environmental impact, and this should be explicitly specified in company documents.

There are a handful of investment funds established to finance businesses that address social problems, especially in the developing world. Examples of funds working in these space include Acumen Fund, Root Capital, E+Co and IGNIA, among others.

A significant challenge identified in making impact investments is sourcing transactions. Many impact investment recipients are small companies and the majority of deal sizes analyzed from our investor survey are less than US$1m.

Particularly for investors based in different regions, the costs of due diligence on these investments can often challenge the economics of making such small investments.

Another, of course, would be setting the reporting standards needed to establish just what constitutes a social or environmental return on an investment. This is something on which GIIN and B-Lab are working hard.

It’s great to see a mainstream financial institution dipping into this discussion.

Last week, I participated in a panel discussion at INSEAD, Singapore on impact investing and many of the points above were discussed at length. In particular, we spoke of the challenges of II in a developing world context where this is urgently needed.

Philanthropy and Climate Change

Lisa Genasci — November 16, 2010 — 3 Comments

We recently hosted a forum with the Asia Foundation on Philanthropy and Climate change. We hoped to encourage Asian funders to draw the lines between climate change (something that seems often hard for the individual to grasp) and the more tangible and immediate air pollution, forestry degradation, water scarcity etc.

We also hoped to then get them to think beyond the environment to a wider philanthropic portfolio and to consider the impact of climate change on livelihoods, health, education – even how funders in the arts might get involved to build awareness around the need to act.

Why? We feel that given the enormity of the problem, it’s often hard for the individual funder, the family office foundation, to see how they might act in any way that is impactful.

But what we found was remarkable energy in the room. Rather than despair, we felt that participants left informed and energized by our panelists and keynote speaker, Stephen Heintz of Rockefeller Brothers Fund, which has an excellent environment and health, southern China program, managed by Shenyu Belsky.

Dr. James Hansen, one of the world’s leading climate scientists and head of the New York’s NASA Goddard Institute for Space Studies, provided an overview of climate science – setting the scene for discussion. Dr. Hansen, an advocate for a carbon tax, spoke of our inertia in the face of an emergency, the possible extermination of species, receding glaciers, bleaching of coral reefs, acidification of the ocean, basically that we are a planet out of balance.

Heintz also spoke about urgency, describing climate change as a “planetary threat that knows no bounds.” He emphasized the particular threat in Asia – that of 16 countries facing extreme risk, five are in in this region and they are among the most impacted, low-lying Bangladesh for example.

In all, he said, global warming could cost southeast Asia 6-7 percent of GDP. Clearly, Asia is squarely at the intersection of climate and development and he emphasized the need for new ideas and new ways of thinking, something that accurately reflects current realities and anticipates new needs.

It is easy, Heintz pointed out, to be discouraged by the science, yet philanthropy, government, civil society and the private sector all have roles to play. In reality , it is imperative that we act because, inevitably, climate change will impact every other issue that we are working on.

Global grant-making, Heintz said, has increased dramatically over the past decade yet environmental issues are way behind, receiving only 5 percent of funding. Resources targeting climate change specifically, of course, are far less.

The philanthropy sector, Heintz said, can play a crucial catalytic role, take risk, experiment, support advocacy to change public policy and trigger larger systemic change. Important will be innovative public-private partnerships, helping to develop emerging models of low-carbon prosperity. His was an excellent speech.

Our three panelists, Runa Kahn of Bangladesh’s Friendship, Dorjee Sun of Carbon Conservation and John Liu, an environmental filmmaker and journalist based in Beijing, spoke of the practicalities of working effectively within this context – and they also were inspiring.

Runa spoke about making life possible for the 4 million people living in impossible circumstances in Bangladesh’s northern chars, John Liu on a massive ecological restoration project in China and showed the results, Dorjee on carbon, community and market solutions for saving forests.

The entire session was expertly moderated by the Asia Business Council’s Mark Clifford who managed to draw together the discussion, keeping an often amorphous and difficult topic moving toward practical solutions and away from fear.

The forum was a private side event to the C40 Climate change conference early this month organized by the Civic Exchange and supported by the Hong Kong government and Jockey Club Charities Trust.

It would be great to hear about other experiences linking climate change with a wider philanthropic portfolio, about nudging funders into action in this arena.

Our Consumption Driving Climate Change

Lisa Genasci — September 2, 2010 — 1 Comment

Mountains of waste

We hear about climate change all the time now, we know it’s bad, we understand much of the science behind the phenomenon. But what can we do? No really, what CAN we do? How does this broad concept connect with our daily lives?

We turn off and unplug appliances, we try to take public transport where possible, we use fewer resources, turn down the air conditioning in summer and heat in winter, we buy less bottled water.

But often we don’t stop to think about the rest of our lives. We still want to eat strawberries in winter, meat flown in from the U.S. We (or our children) still buy clothes where often quantity and price reigns over quality.

We look for lower prices (because we’re hooked on cheaper is better) and then don’t have to think so hard about whether or not that particular cheap item that clearly is not taking into account the environmental or social cost of production is actually needed.

We change our cars regularly, buy the latest Apple gadget (must have the ipad, the latest computer to stay in touch) and think nothing of chucking an iphone, ipod that has lasted only a year.

What happened to the time in the not so distant past when we romanced a dress for a long time and just one purchase was ok, when we could buy fresh local produce and meat in season, when one car lasted a decade or more, when we didn’t need gadget upon gadget to be happy?

So back to climate change: All of that consumption, flying goods around, needs energy. Production and energy (produced largely by coal in China) at least at the moment lead to air pollution and climate change. Sometimes we forget the connections.

In Hong Kong this week Clean Air Network has been good to remind us with its tongue-in-cheek Fresh Air video what we face if we don’t change our bad habits: http://www.youtube.com/watch?v=lmH3xCpOSW8

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China’s Environmental Nightmare

Lisa Genasci — June 29, 2010 — Leave a comment

In Hong Kong we rightly complain about the state of the air we are forced to breathe and the government’s apparent lack of interest in addressing the pollution challenges – despite HK$ half-trillion in fiscal reserves this year.

The moribund HK government seems incapable of taking action to protect its citizen’s health despite having the financial resources to do so. Clean Air Network is working hard and successfully to educate the public and stir the government to act, providing the tools and support to do so – hand-holding of sorts.

But perhaps part of the challenge is that in Beijing, from where I am working for three weeks, Hong Kong’s pollution pales by comparison – not that this city should set any standard!

Here, my eyes are a constant rimmed-red, a smog headache challenges concentration and my sinuses are in revolt. Here, the clouds are but a memory and weather is either cold or hot but never sunny, it seems, but there is only a steady grey. The near distance fades into a smog that anywhere else would be unbelievable.

This is the price of China’s progress, and, to be fair, of pulling an estimated 600 million people out of poverty over the past two decades by fulfilling our Western need to consume ever-more products. According to the ADB, over the past 20 years, China’s poverty rate fell from 85% to 15.9% – a huge challenge for any government and unmatched anywhere, anytime.

Still, what we hear more about in the West is the fantastic progress machine that is China, the well-oiled production centre for the world’s consumers.

The flip side of that for China’s citizens is the polluted rivers, the smog-filled air, the cancer villages in evidence countrywide, the drained aquifers, the contaminated land. All of these will be the Beijing government’s newest challenges if it is to keep its population healthy and maintain social stability, which is the utmost goal.

Highly polluted areas near factories have shown increasing cases of cancer. Southern China is replete with communities that recycle electronic waste and here people are exposed to toxic heavy metals such as cadmium and mercury. The country’s myriad chemical factories produce carcinogens that enter the water and soil, also contaminating food grown on the land.

According to a recent Guardian article, in 2007, cancer was responsible for one in five deaths, and Chinese farmers are more likely to die of liver and stomach cancer than the world average.

Water supplies are polluted and aquifers significantly drained, something leading environmental activist Ma Jun warned about ten year’s ago in his book, China’s Water Crisis, which considered the local equivalent of Rachel Carson’s Silent Spring.

The Qinghai-Tibet plateau area suffers from environmental degradation that is threatening three major rivers: the Yangtze, Yellow and Mekong. Melting permafrost and glaciers in the surrounding mountains are also eroding the grasslands and wetlands, causing the ground to lose its capacity to absorb water, according to AFP.

Xin Yuanhong, a government scientist quoted by the news agency says that at the current rate, 30 percent of the region’s glaciers could disappear within 10 years.

Climate change is also affecting the 580 million people living in these river basins. This crisis also affects food security; drought and drying up water sources are severely lowering crop yields in the area.

By all accounts, the government increasingly understands the severity of the challenge. Careful Chinese environmentalists are being allowed to speak out. Indeed, many seem to be encouraged by the government to highlight bad practice by companies breaking local laws by emitting pollutants into the water, air and ground. Information disclosure has taken leaps forward in recent months.

Ma Jun and his Institute of Public and Environmental Affairs over the past several years have divulged information in online databases of air and water violations by factories throughout China. He has created a groundbreaking “blacklist” of polluters. At last count, IPE databases listed more than 60,000 air and water violations.

To be removed from the list, companies must take corrective action and accept IPE-supervised environmental audits of their Chinese factories. Ma is also a champion of increasing access to environmental information, which he believes will bring public pressure on companies to operate more responsibly.

In Yunan Province, Yu Xiaogang, another courageous environmentalist I met with recently, is also using information disclosure, to gain bank data. He and his group, Green Watershed, along with a network of nine other NGOs, are compiling information on loans granted to development projects that are damaging to local populations.

The group recently published the environmental record of 14 Chinese banks, looking at their policies, regulations, investments and loan portfolios, noting which were connected with environmentally damaging projects.

Yu is also working with communities to help them open channels with local financial institutions to discuss social and environmental impact ahead of any loan being granted to a large development initiative.

That Beijing seems to be backing the sort of discussion underway in China is certainly encouraging. It seems Hong Kong should be setting standards in the environmental arena not lagging behind its severely challenged neighbour.

Preserving Bangladesh’s Wooden Boat Culture

Lisa Genasci — April 10, 2010 — 3 Comments

French sailor Yves Marre first viewed Bangladesh’s myriad waterways from a plane and the adventurer decided the intriguing country below would be the location for his next exploration.

Yves perhaps would not have guessed that his adventure would consume him or that 25 years later he would be still living in Dhaka, married to a Bangladeshi Runa Khan and desperately struggling against time and lack of resources to document the country’s dying wooden boat building tradition.

What in 1994 then began as a development project involving transporting a 38-meter river barge from France to Bangladesh for use as a hospital boat in the remote northern chars, gave birth to Friendship, an excellent social enterprise I wrote about in my previous blog post. What I didn’t talk about was Friendship’s commitment to Bangladesh’s fascinating boat culture.

Last month, Friendship opened an exhibition of Bangladesh’s remarkable wooden boats at Dhaka’s National Museum as part of its cultural preservation programme. It is extraordinary that in a country so dependent on waterways, considered the world’s most susceptible to climate change, where boats are integral to trade and transport, that the art of boat building is dying quickly and with little fanfare.

Bangladesh has one of the oldest traditions in terms of naval carpentry, and it also has the largest fleets in the world. Here you will find the largest variety of boats

anywhere in the world, Marre says. It is all this that is being lost without adequate documentation or preservation of the country’s naval history, he says.

For many centuries, wooden boats with large earth-colored sails have plied Bangladesh’s hundreds of rivers and tributaries and they have become interwoven with the country’s culture. Yet over the past few decades, these beautiful vessels, many unique to particular regions of Bangladesh, have slowly been replaced by diesel-powered steel vessels, which are less expensive and more practical in terms of maintenance and navigation.

Yves and Runa have taken it upon themselves to draw attention to the disappearance and at the same time document and preserve the techniques and knowledge.

At his boatyard in Dhaka, Yves has built the more than 50 models on display at the museum in Dhaka of traditional Bangladeshi vessels. Building these, have been master craftsmen using only traditional techniques that are often unique to the country.

Here, Yves also has built or restored several full-size wooden boats, among them a beautiful 30-meter Malar vessel, one of the country’s largest hulls and now used to carry tourists along Bangladesh’s waterways. Some profits from the Friendship tourism company, Contic, built around the wooden boats, goes to support the social enterprise’s work.

Looking forward, Runa and Yves hope to establish a living museum that would preserve all types of traditional Bangladeshi boats in Dhaka and allow people to experience the craftsmanship involved. To achieve this, they are searching for funding. Any suggestions of similar efforts elsewhere or possible sources of funding?

In cultural preservation, Philanthropy, social enterprise admcf, cultural preservation, Philanthropy, social enterprise

Supporting Life in Bangladesh’s Chars: When microfinance doesn’t work

Lisa Genasci — April 5, 2010 — 1 Comment

: Friendship’s Runa Khan

: Boat is the only form of transport in the chars

I recently spent some days in Bangladesh with Friendship and the excellent social enterprise’s executive director, Runa Khan. Friendship works with tens of thousands of the world’s most-vulnerable people who live in the northern Chars, remote and shifting sandbar islands that flood in winter and suffer drought in the summer.

Located about seven hours from Dhaka, these must be some of the most inhospitable habitats anywhere and consequently life expectancy for the forgotten people is only late 40s. In the rains, the islands shrink to slips of land with a few banana trees, with inhabitants and their livestock often forced to rooftops to survive the floods. In the heat of summer, the walks to the villages are often as long as three kilometers from the river through unforgiving sand.

An estimated 4 million nomadic people inhabit the 200 islands woven through the Brahmaputra river where land flattens toward the Bay of Bengal. The sand dwellers migrate from one island to another as much as 50 times in a lifetime, carrying with them their tin houses in the floods.

Climate change is clearly felt in Bangladesh’s distant northern and equally distant southern regions, where Friendship is almost alone among NGOs in working. Government reach here is also limited, Khan says. The people used to at least have certainty about the weather patterns but now the rains and droughts are harder to predict and more extreme, she says.

Friendship started its work more than ten years ago providing health care to the communities on a specially outfitted hospital barge, brought from France by Khan’s now husband, French sailor Yves Marre. Now two hospital ships and an ambulance boat ply the Brahmauptra spending a month or two in each location, offering primary care at about US 10 cents for men, 5-7 cents for women and children as well as affordable basic surgery to the region’s weather-beaten inhabitants.

From medical care, Friendship has extended into education, (both for children and adults), livelihood and vocational support, working closely with communities to help them meet all their needs. With a staff of around 350, a complex schedule of foreign doctors and other medical professionals who fly in for specialized care, Friendship works with an estimated 40-50,000 people previously served mostly by microfinance providers, who often prayed on the extreme poverty.

Khan points out that although microfinance can work for people with at least some education and means of support, it is often not appropriate for the poorest, who will use any available funds simply to buy food for their families. Many lenders, she says, show up on the islands with offers of cash, promising interest rates of only 10 percent annually. Without knowledge of basic arithmetic, the people take the money, spend it and then must meet the payments that often add up to rates closer to 50 percent, she says. And these are some of the better microcredit institutions. Money lenders charge as much as 120 percent.

“When we first start working with a char one of the first things we must do is unwind the microfinance loans,” Khan says. “People at that level of poverty need grants and other forms of support not loans.”

Khan says that the char people more than anything need, “hope for tomorrow” and Friendship offers education where there were no schools, healthcare where there were no doctors, livelihoods where people had none, community organization where people were disperse and disaster preparedness where there wasn’t any. A focus is on discussion, trading information, and building savings to prepare for years where the floods or droughts are life-threatening or force a relocation.

Friendship is also working to create a harmonious environment in the stark landscapes, building appropriate and local farming techniques for sand, bringing in solar where they can – with an emphasis on keeping people in their places of birth. Without Friendship, many people from these regions have swelled the slums of Dhaka in search of work.

Schools can be disassembled in three hours and moved to higher ground, girls are taught weaving and dying – skills that help them contribute to the family income and avoid an early marriage (12-14 was the norm before Friendship arrived). Community health workers are trained and sent to the villages, where they teach local people about nutrition, sanitation, about warning signs in a pregnancy and basic child health techniques. They also can dispense basic medicines.

“We listen to the communities, hear their needs and respond in ways that are appropriate,” says Khan of Friendship, which is surely one of the more innovative organizations I have seen.

In asia, children at risk, Environment, Philanthropy, Uncategorized, water admcf. asia, children at risk, community development aid, Philanthropy, social enterprise

Measuring Social Impact in Philanthropy

Lisa Genasci — March 7, 2010 — 2 Comments

Choosing how to give philanthropic dollars is usually a personal, often private, and hopefully rewarding enterprise many people like to keep close to home.

Those who spend much of their lives juggling returns on their financial investments and building wealth, often prefer to let other factors determine how to give to charity; emotion, for example, and perhaps friendship since frequently giving is something done in the comfort of circles or with friends.

The ever-bigger M'Lop Tapang centre for street children in Sihanoukville, Cambodia

But what is the significance of the donor community? Giving USA reports that every year, 40 million individual donors in the U.S. contribute $250 billion which represents more than 75% of total giving. That is a significant wad of cash that could be put to good use cleaning our environment and making our world a better place for marginalized communities. And that’s just in the U.S.

Obviously, there is no right approach to philanthropy and no absolute way to judge how effective a donation has been, despite that over the past two decades a whole industry has grown up around measuring social impact. But I think that once again we know more about what we don’t know rather than what we do.

Why do we need to think about how we give anyway? Isn’t that the point of giving – not to expect any return? I would say yes, true on one level, but not really. Why? Much has been written recently about the pitfalls of aid more generally. Two of the more vocal critics are New York University’s Bill Easterly and Dambisa Moyo whose book Dead Aid caused wide controversy.

The trouble is, without a concerted strategy or effective tools to guide us, many individual donors, grant-making bodies and foundations alike fall into the trap of providing aid that in the longer-term CAN be more damaging than helpful, despite our best intentions.

Because of issues around governance, particularly in a region like Asia where corruption is rampant, donors bypass governments, choosing instead to invest in a network of NGOs, which keeps these same NGOs flush with cash and lots of people employed.

If the NGO isn’t particularly thoughtful and doesn’t engage local government, this giving strategy also deprives the state of any stake in change and almost relieves them from the responsibility of improving the lives of marginalized citizens without a voice.

Another issue is that donors frequently prefer to contribute to contained NGO projects rather than to strengthening the organization simply because programmatic support fits with a particular donor funding agenda.

Although building new programs or expanding existing ones is important in terms of an NGO widening its impact, these often come at the expense of organizational support. It’s hard to see how an NGO can create a program, monitor it and measure its impact without sufficient organizational resources to do so.

Occasionally, or more than occasionally, an NGO has bent its needs to receive the targeted funding so there is little incentive or lack of adequate skills to really build.

And often that programmatic support is short term, given in periods of two to three years, after which the project is expected to be magically self-sustaining. Usually that is unrealistic and once funds are gone so is the program, leading to a real waste of resources.

So how do we make sure, as donors, that we are working as effectively as we can be with our own resources and not operating counterproductively, particularly in the developing world where issues are deep and broad?

This brings us right back to much talked about measuring impact. An excellent Wall Street Journal Article on Friday, Measuring the Bang of Every Donated Buck by Alice Hohler is a good discussion of the issues around this topic. http://bit.ly/d3Afil.

She points out that while many companies and NGOs have developed formulas for measuring the effectiveness of a donation, there still is no real magic box. She points to the tricky question of the unique qualities of nonprofits that are each fulfilling a social need in their own way.

There is little standardization in this field and little reason why one set of measures would fit all. Naturally, each organization then requires its own evaluation to assess its effectiveness and that is prohibitively expensive. It certainly isn’t scalable, which is another obsession among the donor community.

At the same time, any analysis of impact on the part of an NGO is only as good as the information gathered and few organizations have the resources, skill set or manpower to gather relevant data and then assess the real benefit.

An organization that works to get children back into school will have a much easier time determining impact than for example a conservation group that works with communities to educate them about biodiversity and the value of preserving their forests.

But even in the first instance, we see there are many, many ways to count!

And then, how to compare organizations working in different spaces to determine which would use additional resources more effectively, providing the greatest benefit to a particular community?

We find that the best way around this question is to work in a holistic way with organizations, to help them set their own measurements with their particular children, to constantly work with them on developing initiatives and monitoring their effectiveness.

In that way, we can help them refine impact, reach more children or work more effectively in a particular conservation space. We shy away from the obvious numbers that are so often meaningless, preferring instead to let the work tell the story.

Any thoughts on interesting innovation in impact measurement seen working well?

In asia, children at risk, Environment, Philanthropy admcf, asia, phil, Philanthropy, social enterprise, social impact

A Beginning…..

Lisa Genasci — January 10, 2010 — 1 Comment

It seems a moment, one of those zeitgeist moments when people start to question the status quo, they look around for what is wrong, what might work better and they seek change. What better time to start blogging about a field that desperately needs innovation, needs one of those zeitgeist moments, needs transformation: philanthropy.

Still, in this blog, just because I believe we are in a moment of transformation, I decided against using the tag philanthropy, but instead to focus on social business, which seems more fluid. I thought also that it would be worthwhile to start with a recurring and vital topic, why so little risk tolerance in the social sector at a moment when need is so great?

I recently completed an excellent week-long social entrepreneurship course at Insead in Singapore. The participants were fantastically interesting, the discussion great and the professors, from Insead’s Singapore and Fontainebleu campuses, top notch. The theme of risk aversion emerged as the bottleneck for all of us. We all identified a lack of patient risk capital in the social business sector.

Today, I found an excellent blog entry and discussion on the topic here: http://socialentrepreneurship.change.org/blog/view/ philanthropic_capital_needs_to_take_more_risks. Nathaniel Whittemore also asks the question why the risk aversion?

I believe that in recent years many have fallen into the trap of trying to over-assess our impact, which of course can be measured in so many ways. Many organizations feel compelled to bend programs to meet targets rather than respond to real need in new ways. As Whittemore points out, perhaps the overriding form of measurement is overhead costs, which may or may not mean anything depending on how a non-profit organization addresses a particular social problem. Inevitably, some forms of interaction with a community will be more costly than others – particularly those that involve needed and lengthy due diligence, consultation or interaction with the people the organization is hoping to serve. Presumably its exactly this constituency that can best inform or generate innovation?

The other factor limiting risk tolerance in the sector might be the potential reputational risk involved with funding a start-up initiative. This certainly springs from the real concern that a foundation must be careful with donor funds since presumably those have been hard-earned and shouldn’t be “wasted.” Part of the problem, here, though is the emphasis on maintaining the donor stream and the belief that publicized errors might scare away future support. The easy route then is to fund the tried and tested, the organizations that everyone knows – safety in numbers. If something goes wrong, it goes wrong for everyone “invested.” No one’s reputation is really at stake.

I am constantly surprised by the lack of risk and innovation in the wide field of philanthropy and indeed in the act of giving itself for most people. Even entrepreneurs or those who in their for-profit lives spend real time thinking about securing a financial return, often do not consider this when investing philanthropically. They prefer to give safely regardless of how those funds are used or to what end.

In Philanthropy Hong Kong, innovation, Philanthropy, social entrepreneurship

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