Call me impatient, but things don't seem to be changing fast enough in our efforts to shift the current economic system to a more restorative model. Though socially responsible investing (SRI) may be growing, SRI portfolios are only a Band-Aid for what the current business paradigm has created for our planet -- and have lost credibility due to the lowered bar under which businesses can qualify as socially responsible.
A socially responsible investor purchases stock with the hope that her investment will support something that resonates with her values; however, there is no way of knowing for certain where that money really goes. And though we may like to assume that these companies adhere to the triple bottom line philosophy (of economy, environment, and society), let's be realistic: The real bottom line is that publicly traded companies operate solely for the financial benefit of their shareholders. The environmental and social elements only come into play if they somehow enhance that financial bottom line. Environmental destruction and unacceptable social practices continue behind PR-orchestrated greenwashing campaigns.
Solutions that support the values of environmentally and socially conscientious investors are in the works. These efforts spring forth from a variety of sources: grassroots nonprofits, private businesses, individuals, and business organizations. Across the spectrum, people are increasingly aware that SRI just isn't enough.
Place-Based EconomiesOne of these solutions is place-based economics. By investing in one's community, tangible results can be felt and seen because they are directly connected to where that person lives. Place-based economics also serve as a catalyst for community self-sufficiency, rather than relying on non-local employers to provide for the needs of community members. Gandhi called this philosophy
swaraj: "a genuine attempt to regain control of the self'-- our self-respect, self-responsibility, and capacities for self-realization -- from institutions of dehumanization."
Every community faces the threat of decline in its standard of living when big business comes to town. Local enterprises that have existed in a neighborhood for years cannot compete with the big box stores that seem to proliferate like a cancer, offering one-stop shopping at discounted prices. All across America, independently owned businesses struggle to keep their doors open. Once gathering spaces where community members would catch up on gossip and discuss politics, our downtowns facilitate a sense of connection to each other and to place. Yet corporately owned chain stores, typically located on the outskirts of town, cannot be reached on foot, thus hindering encounters between community residents. Open spaces that could be used for agriculture to supply a community's food become parking lots the size of football fields. Fossil-fuel needs are increased both by the transportation necessary to bring goods into the community, and for residents to get to the outlets that sell those goods.
The Business Alliance for Local Living Economies (BALLE) aims to create a nationwide network of local economies "that support both community life and natural life, while sustaining long-term economic viability." The coalescing of businesses, nonprofit organizations, farms, and individuals that comprise these networks create a collective power that can influence public policy in favor of locally owned enterprise. These networks also allow like-minded business owners to share best practices and support each other's entrepreneurial endeavors.
Member businesses of Northwest Washington's Sustainable Connections, the most established BALLE node, use a coupon book and window decals to encourage consumers to patronize local businesses. Other BALLE projects promote "buy local" campaigns. These kinds of efforts have earned BALLE the description of an "alternative chamber of commerce."
Another BALLE network, the Mendocino Alliance for a Community-Based Economy in Mendocino County, Calif., is working to connect local farmers with area restaurants and school food programs. Its objective is keeping farmland profitable, thereby fending off threats of development.
BALLE evolved from the Social Venture Network, which works with socially responsible companies that generate at least $3 million in annual revenue and serves as a national networking community of socially responsible business leaders. In contrast, BALLE membership is open to businesses of all sizes and serves as an action-oriented organization that can champion public-policy issues on which SVN is unable to take a stand. Since many SVN members have initiated or are somehow engaged in their local BALLE networks, the power to implement social change and increase local revenue is strengthened.
Social Responsibility Indicators1% For The Planet, a new nonprofit launched by Patagonia founder Yvon Chouinard, is an opportunity for businesses to invest money where it matters. Member businesses pledge 1% of sales to grassroots nonprofits, so environmental issues unique to the communities where members do business can be resolved by local organizations, which are typically underfunded. The commitment holds member businesses to a certain integrity and accountability for their actions in a way that SRI businesses cannot.
Although 1% of sales may seem like a lot of money, Anthony Sandberg, president of the Olympic Circle Sailing Club in Berkeley, Calif., thinks it's worth it. He says that the sailing industry has been "embarrassingly slow to embrace its responsibility to care for the health of the very environment upon which it depends." But why not simply make charitable donations without an intermediary such as 1% For The Planet? Sandberg says that by joining 1% For The Planet, "OCSC can associate with other forward-looking organizations and make a clearer statement of our intent to make a difference."
An organization that has directly benefited from 1% For The Planet contributions is the Matilija Coalition in Ventura, Calif., which received donations from Patagonia and Lulu Bandha's Yoga Studio in Ojai. The coalition’s goal is to remove the obsolete Matilija dam and restore the river. With 1% funds, the coalition has been able to collect data for a federal feasibility study. The environmental benefits of this project are enormous, as numerous species will once again be able to return to their natural habitat. The economic benefits aren’t too shabby, either: An estimated $75 million will flow into the community from tourism and recreation fishing.
Community InvestmentTo those accustomed to working with socially responsible investments, the Solari model of community investment may be more comfortable than the afore-mentioned selections. Devised by investment banker Catherine Austin Fitts, a Solari is defined as an "investment databank and investment advisor for a place … that promotes literacy about 'how the money works' within its place and -- with tools such as investment clubs -- promotes higher rates of investment within its place."
In an economy ridden with corporate scandals, a Solari brings transparency to money in a given location. Neighborhood financial statements that track local public and government spending and money management can illuminate the negative return on investment within the current economy and re-engineer it, according to Fitts. In other words, a well-informed public could pressure local money managers to invest according to the best interests and values of the community.
Organizers in Middlebury, Vt., are creating a community databank of information about the local economy and the various types of capital that can form the groundwork for building a Solari unique to their community. "I have never seen a model as likely to actually fix what is wrong with the world as that of the Solari," says Jason Eaton, the project’s founder.
Laying the FoundationAlthough these visionary efforts are promising, they are still in their infancy. If socially responsible investors and individuals commit to creating a solid foundation for the economic paradigm shift, we can expedite the process of moving our economy to one that supports life, community, and integrity rather than maintain our current path of destruction, disconnection, and dishonesty. It's time.
------
Johanna Schultz is director of environmental and social policy for Thanksgiving Coffee Company. She is co-chair of Mendocino Alliance for a Community-Based Economy, and a founding member of Sustainable Mendocino.