Archives For social enterprise

Building Impact into Investment

Lisa Genasci —  March 12, 2014 — 2 Comments

Lisa and Charly Kleissner

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.

In asia, China, Environment, Hong Kong, impact investment, Philanthropy, pollution, social enterprise , , , , , , , , , ,
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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.

In air pollution, asia, carbon, china water, Environment, health, Hong Kong, impact investment, Microlending, Philanthropy, pollution, social enterprise, water , , , , , , , , , , , , , , , ,
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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 , , , , , ,
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Fighting for Education on the Thai-Burmese Border

Lisa Genasci —  February 17, 2011 — Leave a comment

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 ?

In asia, children at risk, cultural preservation, Philanthropy, social enterprise , , , , , ,
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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.

In asia, carbon, Environment, Food, forests, impact investment, indonesia conservation, Microlending, Philanthropy, redd, social enterprise , , , , , , , , , , ,
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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.

In air pollution, asia, carbon, china water, Environment, forests, impact investment, Microlending, Philanthropy, pollution, social enterprise, water , , , , , , , , , , ,
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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.

In asia, carbon, china water, Environment, Food, health , , , , , , , , , , , ,
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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 , , ,
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Supporting Life in Bangladesh’s Chars: When microfinance doesn’t work

Lisa Genasci —  April 5, 2010 — 1 Comment

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 , , , ,
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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 , , , , ,
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