Top
Thursday
Aug182016

It's summertime, so what are we reading?

In addition to the books that we enjoy over August, we like to use this time to catch up on the thoughts, research and analysis found in some of our favorite sources. We have handy links to many of them here.

The newest addition to the list is Devex Impact. Devex Impact is a global initiative by Devex and USAID in partnership with top international organizations and private industry. Devex is a media platform for the global development community, connecting and informing 700,000+ people.

-- Clara Shen

Friday
Aug122016

Measuring the risk of slavery in today's economy

A new report from the risk management firm Verisk Maplecroft issues a stark warning to businesses -- and consumers -- across the globe: slavery is rife in nearly 60% of countries around the world.

This report garnered substantial media attention this week for its assertion that nearly 46 million people worldwide are living as slaves, and that this problem is not limited countries with underdeveloped markets and struggling legal systems.

Further, while precise estimates of the number of slaves differ, there is broad agreement that there are more slaves today than any time in human history. In fact, according to a 2012 article in the Atlantic, over the entire 350 years of the African slave trade, a total of 13.5 million were taken from Africa to be slaves; that's less than one-third of the current number.

While the report notes that most multinational companies have robust systems in place to guard against slavery among their top suppliers, there is more risk further down the value chain. Some other key findings include:

  • With the exception of the US and EU, the world’s top 12 garment exporters, including China (ranked 23rd highest risk), India (15th) and Pakistan (9th) are rated ‘high’ or ‘extreme risk’
  • Over 80% of sub-Saharan African countries feature in the two highest risk categories, including Kenya and Nigeria, two of the region’s three largest economies 

Groups that we are particularly interested in, such as small farm operations, are not immune -- cocoa producers are also considered to have a heightened risk, for instance. An economic system built on mutually beneficial relationships has no place for slavery, so this is a risk that should be closely watched.

 

Image source: Verisk Maplesoft

-- Jay Jakub

Monday
Aug082016

Investing: You can profit by "doing good"

There is a deeply ingrained notion among individual investors that you can't make as much return on capital if your investment decisions are based on sustainability or social benefit metrics. This conventional wisdom persists, despite the fact that a majority of investors say they would prefer to invest in sustainable or socially responsible companies.

So, I was interested in the November 2015 presentation by an investment professional who challenged these assumptions. Audrey Choi is CEO of Morgan Stanley's Institute for Sustainable Investing. She is also Managing Director and Head of Morgan Stanley's Global Sustainable Finance Group. In these roles, she oversees the firm's efforts to support resilient communities and promote economic opportunity and global sustainability through the capital markets.

As part of her role at Morgan Stanley, she commissioned a poll of a thousand individual investors. She found that overwhelmingly, people wanted to add sustainability and social responsibility to their investing formula. Yet, 54 percent of the people still said if they put their money in those kinds of stocks, they thought that they would make less money.

But when Morgan Stanley looked at the hard numbers, they found the long-term performance of more sustainable businesses outperformed conventional equities by a nearly 2-1 margin.

Now, let's be clear, they didn't make that outperformance by giving away money to seem like a nice corporate citizen. They did it by focusing on the things that matter to their business."

Some good food for thought for investors, and the businesses that are seeking them.

Video Source: TED Conferences

-- Bruno Roche

Friday
Jul292016

When the sharing economy starts to take

The sharing economy has swept the world, disrupting a number of industries, particularly the hospitality industry. From the onset, there was a significant push from consumers for this new business model, which launched as a model for the little guy, and companies within disrupted industries continue to face pressure from this new era of individuals and groups making money from underused assets, as PwC describes it.

Tom Slee, a well-known critic of the sharing economy model, however, suggests in this Harvard Business Review article that sharing economy leader Airbnb is “facing an existential expansion problem.” A model that started out as one that allowed individuals to rent out living spaces for extra income and to spur local economic growth has reached a tipping point, becoming a mass vehicle for tourism. But it is also beginning to erode the atmosphere and livability of the same locations it attempts to build up, claims Slee.   

The number of Airbnb listings in Paris has skyrocketed in recent years, starting at just 20,000 two years ago and now up over 40,000, with Airbnb listings representing approximately 11.9% of hotel supply. In London and New York, Airbnb listings represent roughly 10% and 17% of hotel supply, respectively. In Lisbon, where toursim is on the rise, there is concern that this shift from residential to financial investments and short rentals is having a negative impact on the historical centers of the city.

The issue Slee has with Airbnb is that it positions itself as a service where individuals rent out their living spaces from all areas of a region (not just the downtown core or tourist hotspots) allowing economic opportunities for smaller areas where, prior to the sharing economy boom, this was a challenge. Through his independent review, however, Slee has determined that many Airbnb renters rent more than one residence, placing them in the commercial category. He also found that much of the rental uptake is taking place within central districts.

City officials and residents around the world are starting to pushback against Airbnb, which is where Slee derives his remark that the company is facing an existential expansion problem. What started out as a business model that supported new financial opportunities for local residents has reached a turning point, creating animosity among the basic foundation of Airbnb’s business model; that is, the local residents. 

We welcome your thoughts. Has the sharing economy reached a point where it’s no longer achieving what it set out to do?

-- Yassine el Ouarzazi

Tuesday
Jul192016

Social innovation – making the world a better place, or is it?

In this day and age countless companies across the globe claim to innovate and strive to "make the world a better place." Are they, though, anywhere near achieving their public-spirited and ambitious goals?

A recent New York Times article explored this burgeoning concept of social innovation and found that many of today’s companies are solving all the wrong problems. The article makes light of a few innovative companies and their claim of bettering the world, including a service that virtually packs your suitcase for you, a mail delivery service that delivers a new toothbrush head to your door every three months and a smart zipper that alerts you when your zipper is down, to name a few. In the grand scheme of things, the companies that claim to be bettering our daily life are really only targeting a minute portion of the world’s population and failing to address the problems that really exist and need attention.  

Clay Tarver, the writer and producer of the HBO comedy Silicon Valley, which chronicles the launch path of an innovative startup that “wants to make the world a better place,” recently wrote in a New Yorker article: “I’ve been told that, at some of the big companies, the PR departments have ordered their employees to stop saying ‘We’re making the world a better place,’ specifically because we have made fun of that phrase so mercilessly.”

And Tarver has a point. Many startups claim to make the world a better place but fail to understand what it is they’re attempting to better and just what it means to truly innovate. According to Jessica Helfand, author of Design: The Invention of Desire, today’s companies, when innovating, are focusing less on truly creating, but more on “undoing the work of others.”

She argues that today’s pursuit of innovation has lost its way and that it’s missing a few key ingredients–empathy, humility, compassion and conscience. Helfand warns that the current state of social innovation is failing, with these companies claiming that their entire point of existence is social welfare, but in reality they’re devoting their time to problems that don’t really exist.

-- Zack Petersen