How to Introduce Entrepreneurship within a Young Democracy – (a case study)

During a recent Charlie Rose interview, Christine Lagarde, the president of the IMF (International Monetary Fund), shared her views with a packed audience of international economists in Washington D.C. on how young democracies such as South Africa or Malaysia commonly have fragile dual economies operating in parallel, one run by the ‘haves’ or wealthy, while the other by the ‘have nots’ or the impoverished. The wider the gap between them the greater the chance social unrest will follow, such as what happened in Egypt with the Arab Spring in 2011 and most recently in Brazil 2013. Other areas that could potentially erupt include Ukraine, Argentina, Greece, Indonesia, Pakistan… In fact the list of countries is so long that one might wonder, what exactly could the IMF or similar international financial institutions do differently and can lessons learned from one country be leveraged elsewhere?

To further explore new insights with countries operating within dual economies, I recently led a facilitated discussion with 38 university students at the Universidad del Caribe (UNICARIBE) in Santo Domingo, Dominican Republic. This island is a foothold for over 10 million inhabitants and a micro version of a typical young democracy. My goal was to hear how young Dominicans felt about their dual economy and extract a list of recommendations to pass along to political leaders and international creditors. I also hoped their ideas might offer new insights to other country leaders.

Universidad del Caribe is not your typical university. With over 19,000 enrolled students and 330 instructors, the university covers an ambitious range of degrees and disciplines at their two building complex. Students work by day and attend classes, one to two days per week. Campus spirit is notably strong fueled by an enthusiastic faculty comprised of volunteers, many of whom hold other jobs to make ends meet.

Life for a young impoverished Dominican is a daily challenge. Most will spend their lives operating undetected by government scrutiny in an underground economy where basic financial stop gaps such as access to credit for emergencies or a reasonably priced business loan are rarely accessible. Their greatest asset is their ingenuity and vibrant personality, which shines in much of what they do. Job security does not exist. They earn what they can from odd jobs, pay no taxes, and cut corners wherever and whenever by, for example, stealing electricity off the national grid. Providing for family needs consumes their meager incomes leaving them with little to no savings. In short they have few options within their reach to improve their livelihood.

On the other side of the economic spectrum, the Dominican middle class have their own set of problems. As avid consumers they buy beyond their means and spend much of their time fighting frivolous lawsuits or fulfilling new government requirements. Aside from having to pay income taxes, they are also saddled with higher utility bills required to offset the electricity stolen by freeloaders.

Surprisingly, the number one aspiration for a young Dominican adult is not to earn a college degree or to own their own business but rather to align himself or herself with a political party early on in life. In their minds, the only way to obtain job security is by serving a well-connected political group. Competition for these positions can be fierce, not because of an over-supply of skilled workers, which are scarce to begin with, but more for the oversubscribed pool of politically connected job seekers.

Open positions require a minimum of three years working experience, which leaves first time entrants with no other alternative than to join a political party.  This type of politically-motivated workforce, one based on connections rather than qualifications, tends to create a vicious circle. On the one hand, managers and leaders, also mentors, will send the wrong message to younger Dominicans who will see little value in advancing their own education or training, since the better paying jobs can be won with less effort through political connections. On the other hand, less qualified government officials are less inclined to require professional certifications from contractors to ensure that state-of-the-art services are rendered. The end result is a less competitive workforce.

The upkeep for a politically motivated workforce can become prohibitively expensive for any government. Venezuela and Cuba are two good examples where individuals are forced into political alliances for fear of being denied even basic services. Over time the workforce becomes lazy, and their leaders complacent. To please their international creditors, government officials devalue their local currency, which only makes matters worse with higher inflation rates. Eventually, both public and private sectors become trapped by the weight of their own unwillingness to progress. Adding to the malaise are party leaders who fail to recognize the immense value their Informal Sector could otherwise render with existing resources. Instead they would rather keep a tight lid on their potentially vibrant young workforce who due to their discouragement will enter a life of crime making matters even worse for their government and the rest of society.

With these facts on hand, I asked the discussion group what they thought was the root cause for their dysfunctional dual economy. Some cited a lack of women’s rights as they affect the welfare of the family unit. Others pointed to the criminal justice system for sending hardened criminals back on the streets without offering them a job or alternative form of income.  After a lively exchange, the unanimous vote for the root cause focused on the country’s weak judicial system.

According to the participants, on paper the justice system appears formidable, while in practice, it is virtually spineless. Laws are readily legislated, approved, and published to please voters; however, in the courtroom, these same laws are rarely enforced as written or at all. For the right price, a political leader or powerful investor can influence a judge’s decision to their advantage.

Despite their impoverished status, these 38 student/workers recognized the importance an independent legal system. Participants noted that whenever politicians or influencers are allowed to operate above the law, trust between the government and its people erodes. This same feeling of distrust infiltrates society and its family units creating a precariously, wider gap in their dual economy. This revelation raised an important question.

In a dual economy governed by a biased legal system, what can the government and international financial institutions such as the IMF do differently to create a brighter future for the Dominican Republic?

To counter the gap-widening effects caused by a weak judicial system, the group suggested the formation of a student entrepreneur association based out of the University del Caribe.  Members would join the Association then be matched through an interviewing process according to skills, experience, and interest to a cluster of no more than ten students each. Each cluster would be be guided and arbitrated by a university appointed mentor. At least one member of a cluster would have a specific entrepreneurial venture in mind or a launched startup in its initial stages. Members of a cluster would become the new startup’s board of advisors and help in their varying capacities to further the entrepreneur’s venture. As the venture grows, members of the board of advisors can opt to work for the new entity or start their own venture within their same cluster. The University would act as an independent arbitrator to ensure members adhere to a clear set of rules and contracts.

On an interesting side note, one individual admitted that if a cluster were to help him launch his dream construction business, he would most likely leave the cluster and not return the favor. His revealing comment confirmed the inherent distrust among his peers, which our facilitated discussion found to be primarily caused by the lack of an independent judicial system in the country. His comment re-enforces the University’s role as the cluster’s so called ‘mini judicial system’, one that is independently operated. Initially the process will most likely be an uphill battle but after a few success stories should convince others of the many benefits that can be gained from trusting each other.

Although our time ran out, other questions remained unanswered that could serve for future facilitated discussions. For example, how should the contract among members be drafted and how should the spoils and liabilities of a successful launch be structured to ensure a sustainable business? Of course, securing funding for mentors, garnering support from government officials, attracting outside investors, and designing an eco-system for future entrepreneurs are important topics too. After the discussion ended, the enthusiasm from both the students and faculty was evident by the clusters that began to form immediately among them.

As I listened to their animated voices, I could not help but think how a this two-hour discussion with a sample of prospective local entrepreneurs could potentially change the course of a nation. Hopefully, members of the IMF and other international financial institutions can learn from this case study and consider including a similar cluster program as a funding requirement for young democracies.

© 2014 Tom Kadala

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Yes, You can NASA that!

When you need an address, a definition, or information about anything on earth, friends will tell you to ‘Google that’; however, what if your smart device or robot needed to look something up, considering they too have become a part of the ‘Internet of Things’? For them, ‘Googling that’ may help narrow some choices but the binary-like answers (yes or no) that futuristic devices will need to operate may have to come from another source altogether such as a ‘collaborative search engine’, driven and inspired by a half-a-century old institution, NASA. 

What is a ‘collaborative search engine’?

In short it is a search engine that by today’s standards is incomplete; not because a database is missing or links broken beyond repair, but because its primary source of information does not yet exist and is essentially pending discovery. Let me explain.  While Google has become the central source for all known data, (good, bad, and even ugly), NASA is emerging with an alternative search engine concept altogether. Instead of ‘crawling’ throughout the web to organize existing data the way Google algorithms do, NASA is organizing groups of talented individuals all over the world through virtual ‘Challenges’ to help it address a daunting list of unsolved problems whose collective contributions may one day make space travel as much of a business reality as airlines are today. Their global efforts will soon be centralized into a massive collection of ideas that will be in one way or another associated with NASA’s existing space data.

NASA’s Space Apps Challenges
These Space Apps Challenges, as they are called, are huge. Last year’s two-day global event, for example, broke the Guinness Book of World records for the largest ever ‘Hackathon’-like gathering with over 9,000 registered participants representing 484 organizations in 83 cities across 44 countries. At this year’s event, the number of attendees worldwide jumped above 10,000 and is expected to rise further as NASA continues to tap outside its walls for novel ideas, clever approaches, and outright brilliant breakthroughs all from cadres of scattered, talented, and unlikely groups of individuals.

This year one of their city events was held at AlleyNYC near Times Square located in the heart of New York City where a packed house of eager space aficionados of all ages, all walks of life, and every professional talent imaginable converged to inspire and get inspired. In a business-like manner, NASA’s Deputy CIO and CTO, Deborah Diaz, opened the event by presenting details of the institution’s tide-changing decision to post NASA’s gargantuan vaults of space data on the web at open.nasa.gov; …where anyone with an internet connection can access its vast contents freely. Experimental data from the International Space Station (ISS), weather data on Neptune, meteorite real-time positioning, GPS-landscape image coordinates on Mars and so much more are accessible for the connecting. NASA hopes its open-data policy will inspire groups to form organically as they often do at their Hackathons and address many of the institution’s pressing current and future challenges in space. On a side note, Diaz expressed her profound views that NASA’s open-source efforts could one day change the future of global democracies from one of ‘freedom-of-choice’ to one of ‘freedom-of-thought’.

NASA’s Challenges in Space
To help participants place space challenges into perspective, American test pilot mission specialist astronaut, Doug Wheelock, who logged 178 days on the Space Shuttle shared his views about space and space travel with participants during a press conference at the event. According to Wheelock, space is a brutally hostile environment that does not compare to anything on earth. To appreciate his perspective, imagine a place where the sun rises and sets 16 times every 24 hours, and every time the sun shines, materials such as the body of the space station or an astronaut’s spacesuit is subjected to temperatures exceeding 450 degrees Fahrenheit. When the sun sets, temperatures swing the other way dropping to 300 degrees Fahrenheit below zero. Radiation levels surrounding the space station are so high that despite the station’s thick walls, some of the 70+ laptops on board used to perform experiments may inadvertently ‘fry’. In a humble manner, Wheelock told a packed audience that NASA cannot continue its mission to Mars without the discovery of new materials that can withstand wide frequent temperature swings and intense radiation exposures over long periods of time.

Medical issues in space are another of NASA’s imperatives. Wheelock described issues with atrophy in the leg muscles, blurred vision, depression, and even loss of taste, all due to exposure to zero-gravity. Taken for granted on earth, gravity gives our legs purpose, our sight a level horizon to distinguish moving objects, our potential mood swings a sense of equilibrium, and even our mouth active taste buds. Our brains are wired to calibrate our bodily functions based on gravity levels. In a zero-gravity environment, for example, our legs become, essentially useless. In a defensive move, the brain will push blood away from the legs to the brain to allow for recalibration in a gravity-changed environment. Space station astronauts have learned to counter some of these physical anomalies by exercising their legs regularly with bungee cords, for example, but look to other sources for future discoveries and ideas on preventing potential blindness and automating cures for other unexpected and yet-to-be-encountered physical and psychological disorders and ailments.

Challenges in Space Travel
Then, there was the question about space travel; a question that just about any individual young or old would want to ask an astronaut. What is it really like lifting off from earth in the Space Shuttle, living at the International Space Station for months at a time, and taking a space walk? Here Wheelock did not disappoint.

In a candid and unreserved manner, Wheelock described the distinct noises he would hear while walking underneath the space shuttle prior to a launch. He spoke of the heaving and creaking of the massive rocket’s cylindrical shapes, which were brim-filled with liquid hydrogen. He also pointed to the constant clicking sound of the many valves used to control fuel flow. The area was in his own words, ‘its own climate’, with chunks of ice falling and water dripping off the sides surrounded by clouds of hydrogen escaping violently with high pitched hissing sounds. He gazed up at the rocket’s main nozzle knowing that at liftoff its center would reach 6,000 degrees or two-thirds of the temperature of the surface of the sun. Since no metal can withstand such high heat levels, NASA engineers designed a thickness sufficient to prevent the metal from melting completely before its final phase release. With sincere earnest, Wheelock turned to the audience once more and informed them that future space travel requires stronger and lighter materials that have yet to be discovered.

After liftoff a rocket will roll to one side to counter air dynamic forces caused by the shuttle’s stubby wings and to face its antennas toward earth. From the ground the roll looks smooth and orderly but inside, Wheelock admits, ‘it’s another world’. Once airborne the rocket rattles ‘like mad’. The G-forces he experienced are so great that reaching a switch on the controls overhead requires an immense physical effort. The vibrations and gyrations of this metallic beast forging its way against the will of nature causes the vessel to ‘rock all over’. At the earth’s orbital surface, the vessel switches to a liquid fuel and upon entering space reverts to Newtons second law of motion, a state when an object in motion will stay in motion. With a deep sigh of relief, the astronauts are finally cleared for space travel. Their vessel floats gingerly onward into the silence of space.

Inside the International Space Station, a new normal for life on board evolves quickly. Food is tasteless. The air in the station smells like the venting area of a power supply unit. The temperature is a comfortable 70 degrees and the prevailing noise of vents cooling laptops and other electronics hums at a familiar 60 MHz frequency level. The sleeping quarters are slightly quieter, while the exercise room tends to capture the smell of human sweat. Missing in the minds of the astronauts is the familiar earth scents of dirt and grass.

On the few occasions Wheelock ventured on space walks, he liked referring to the space drama film, Gravity  to illustrate his experiences. ‘It’s pretty accurate’, he said. Similar to one of the film’s most suspenseful scenes, Wheelock briefly described his own feelings when he had to release his safety cord attached to the station to complete an improvised maneuver.  For a brief moment as he pressed the button on a joy stick controlling the jet packs on his 300 pound suit (last designed in 1970), Wheelock recalls rotating around to a magnificent view of the earth with the space station out of sight. Images of 2001: A Space Odyssey flashed in my mind as he described his brief encounter of being ‘very alone in space’. With no GPS available to remotely control his automatic safe return to the station, Wheelock turned to the audience and again pointed at more areas where NASA needs help with new ideas and discoveries.

Historically NASA has always fed the industry pipeline for technological advancements. The incredible feats of lifting rockets, placing satellites into orbit, and landing humans on the moon have pushed the envelope on technological breakthroughs. The many derivative applications have created new industries, exciting careers, and a notable increase in global economic standards of living.

In an effort to address a proposed landing on Mars in the next 30 years, NASA is once again taking the lead on reinventing the future of data search engines to be developed by unlikely groups of global talent, fueled by NASA data, and created for machines to interact with other machines. Do not be surprised when, in the not-so-distant future, your friendly robot pauses during one of your voice commands to say, “Yes. I can NASA that?”

© 2014 Tom Kadala

Data Mining Lessons for Obama

Earlier this month an ex-CIA employee and whistleblower, Edward Snowden, exposed the federal government’s 6-year old, clandestine initiative, referred to internally as PRISM, a covert data-gathering program that began in 2007 as a corollary to the Patriot Act of 2001. This White House-directed, domestic-espionage project has been collecting phone logs of millions of U.S. citizens from major telecommunication giants (e.g., Verizon, AT&T, and Sprint) and emails from nine prominent Internet companies (e.g., Google, Yahoo, Apple, Microsoft) in a concerted effort to thwart future terrorist attacks.  

History shows that PRISM has prevented numerous incidences, including a foiled backpack bombing plot in New York in 2009. Despite its undisputed success record, PRISM has ignited a national debate on whether the administration has gone too far seeking tighter security at the expense of civil liberties. In a statement to the American people, President Obama argues that his actions are justified.

 “You can’t have 100-percent security and also then have 100-percent privacy and zero inconvenience,” he famously stated. “We’re going to have to make some choices as a society.”

Not surprising, many Americans disagree with Obama’s position and have taken action. Among them is Sen. Rand Paul (R-Ky), who will soon introduce a class action suit of which he hopes to obtain more than 10 million signatures. Those in favor of Obama’s PRISM believe that the price to pay for security is small in comparison. Just how damaging can a diverted phone log be to anyone, or a random email read, for that matter, if terrorist attacks can be prevented? However, when the process requires canvassing mountains of data that could randomly incriminate anyone, the fundamental basis for the U.S. judicial system where defendants are considered innocent until proven guilty, is truly at risk.

‘Con’ concerns do not stop there. Dissenters argue that PRISM has set a precedent for further erosion of individual freedom. Without a counter mechanism in place, future leaders will more than likely continue to up the ante on domestic surveillance until an unimaginable, automated version of a Russian-style KGB informant process becomes undetectable and virtually unstoppable. If you are skeptical, consider what happened with consumer debt after Reagan’s supply-side economics took hold: Every American consumer was doused with credit cards. The combination of economic bubbles that followed eroded the effectiveness of our elected leaders in Washington who today are trusted by less than 20 percent of the population.

If eliminating PRISM is not an option, then what mechanisms can be put into place, early on, to prevent domestic surveillance from reducing our individual freedom… and what solutions have worked in the past, and with whom?

Data Mining vs Mining Precious Metals
Lessons can be learned from another type of mining activity that is very similar to mining data, namely, mining for precious metals in some of the most remote areas on the planet. Surprisingly, the operational principles of the two efforts are nearly identical. In both cases expensive machinery and sophisticated software are used to sieve through enormous amounts of data/ore. Both identify specific assets (i.e., key leads/gold nuggets) that in aggregate could create exceptional value, a value so great that individuals, corporations, or governments would break laws or silence whistleblowers to secure its use or acquisition. Finally, both processes are confronted with a conflicting tradeoff that involves the invasion of privacy of a constituency of voters.

Just as Americans feel an attack on their personal freedom from PRISM’s data mining activities, local communities in Peru, Congo, Guatemala, South Africa to name of few, experience a similar personal upheaval when global mining companies (i.e. Barrick Gold, Rio Tinto and many, many more) set up operations without the communities’ consultation or consent. Environmental disasters, such as toxic chemicals found in the water supply or increasing numbers of birth deaths or defects, have exposed rogue mining operations and over time have forced the hand of powerful politicians and legislatures to comply with legal mechanisms that protect the rights of affected community members.

Recent examples include Peru’s mining town of Bagua where 34 people were killed in 2008 in a staged military attack against peaceful indigenous demonstrators. In the Congo, where many rare-earth minerals are used to make mobile phones and appliances, increasing local uprisings have forced mining operations valued at $1 billion to close.  These uprising are clear evidence of a failed system or policy. They offer a lesson and illustration of a similar dark future for Obama’s PRISM project, if left uncontested.

The striking resemblance between data mining and traditional mining suggests that some of the best practices used to resolve conflicts in the mining industry could also be applied to the PRISM project to safeguard it from escalating and potentially causing a ‘trust rift’ between the US government and the American people.

American Society/Council of the Americas
At a recent gathering of the American Society/Council of the Americas (AS/COA) in New York City, a distinguished expert-panel with deep field experiences working on some of the toughest mining-related conflicts in the world offered their insights, best practices and ongoing recommendations to a packed audience of interested parties of non-profits, NGOs, and private investors. (AS/COAs recent issue of, Americas Quarterly, covers additional details.)

To qualify as a best practice, the panel highlighted a simple yet fundamental metric that involves a transparent two-way conversation between the mining company’s project (consultation) and the local communities concerns(consent). Social unrest is almost inevitable when the conversation becomes opaque and one-way or as referred to by the industry, “consultation without consent”. Fortunately, legislative progress continues in countries like Peru where mining laws have been passed that require both consultation and consent, for example, in cases where a community is forced to move.

One of the expert panelists, Rachel Davis, the managing director at ShiftProject.org, highlighted the imperative need to include consent mechanisms. To this end she outlined three key challenges that mining companies must address properly to ensure an open-dialogue with an impacted, local community.

  1. Offer a venue for consultation but be prepared to spend at least one month of face time to earn the people’s trust.  “Trust,” she emphasized, “is the imperative currency for collaboration.”
  2. Train staff members within the mining company to develop a genuinely concerned attitude along with the skills to handle awkward conversations or even hostile responses.
  3. Ensure available access within the company to handle grievances and capacity-building, coordination efforts within a cross-functional, corporate structure.

Emily Greenspan, the Senior Policy Advisor at Oxfam America, tweaked Davis’ three points by adding one more important stipulation. She recommended that mining companies evaluate how decisions are made at local levels.

“Taking the time to understand the culture, temperament, timing requirements, and so much more are crucial from the out start,” Greenspan explained. 

Her comments reminded me of President Obama’s lunch engagements with members of Congress earlier this year. They were, in my opinion, too little, too late to have the desired effect. Had Obama requested these luncheons at the beginning of his first term, perhaps the paralyzing partisan gridlock that we have today would have found common ground. The lesson learned is the vital importance of getting to know your audience from the beginning; otherwise the cost of catching up becomes prohibitive and meaningless.

With the looming ‘black cloud’ surrounding the PRISM Project, Obama would do well to learn from his prior experiences and heed the advice from field experts, many of whom are already within his administration and working on  global mining issues for precious metals. Why not tap on their wealth of experience to help clean up the PRISM project mess?

As history has shown in the mining industry, time may be running out for Obama. A failed policy of this magnitude could turn into an irreversible tide of social unrest.

© 2013 Tom Kadala

Will Sustainability become the Feared Equalizer?

Why is the price of oil still hovering around $100 per barrel, if global demand has fallen and the supply of alternative energy sources, including shale and renewables, are increasing? Could it be that commodity traders are reacting to a new series of less visible market forces? 

We know that whenever Iran talks up their nuclear energy aspirations or Israel fires missiles into Syria, oil prices tend to rise or as of late, not drop by much. There is also US Congress’ lack of a comprehensive long term energy policy that has kept a tight rein on infrastructure investments such as charging stations for electric vehicles. However, as I discovered recently, there is yet another force at play, one that is far more complex than society is prepared to confront today and which will surely cause the price of oil and similar fossil fuels to double, if not triple in price, in the coming decades. This invisible force is referred to as sustainability.

What exactly is sustainability? In simple terms, sustainability is about replacing a resource so it can be used again and again. Terms like ‘recycling’ trash or producing ‘renewable energy’ are commonly associated with the practice of sustainability or the act of sustaining an activity in perpetuity with minimal environmental damage. Perhaps the best example of sustainability are e-books because they never wear out from one user to another and can be reproduced millions of times from one stored copy. Nevertheless, sustainability is more than just a repeatable process. It is also a culture, an attitude, a way of thinking that inspires inherent behavioral changes on socially-acceptable consumption practices.

MIT’s Sustainability Summit
At MIT’s Sustainability Summit last month, I came away with a deeper appreciation for what sustainability can mean to different people, especially how it can motivate them to change their habits and the habits of others, and yet, I could not help feel discouraged by the global indifference and the immense size of the problem. What set me over the edge was a powerful video called, ‘The Art & Science of Chasing Ice’ produced by James Balog on how our north and south polar ice caps are melting away from the amount of black soot dispersed into the atmosphere from our factories and automobiles. If this visual does not do if for you then perhaps a TED video by Charles Moore on the Great Pacific Garbage Patch may bring it home. The visuals are truly stunning, rude awakenings of what a planet with 7 billion individuals are capable of doing wrong.

With the UN’s projected 9.1 billion people by 2050, one can be absolutely certain that issues of sustainability will be front and center in the daily livelihood of every individual and entity. Why? …for the simple reason that our planet resources are limited and our current lifestyles and diverse cultures have yet to align and adapt to a sustainably-friendly behavior.

After attending the MIT Summit, I concluded that the efforts to align sustainable priorities are not only a discombobulated entanglement of disparate, self-appointed initiatives but also an odd assortment of potentially conflicting outcomes. To get an idea,  take a look at two opposing car ownership attitudes by city dwellers.  While the new normal has shifted favorably to shared auto usage among urbanites in developed countries (i.e. US – zipcar.com), in emerging countries (i.e. Brazil, China), new consumers expect to own their own car as soon as they move into a city!

Walmart vs WholeFoods
Another similar example of conflicting outcomes was visible at The Atlantic Magazine press conference in Washington DC on December 4, 2012. A forum of experts showcased the sustainability policies of two retail food companies, Walmart and WholeFoods.  While both companies work closely with their suppliers to recycle waste and introduce biodegradable packaging, Walmart’s Beth Keck, Senior Director of Sustainability, explained that Walmart provides their tight-fisted consumers with environmentally friendly products and chooses not to educate them on how they should change their consumption attitudes toward a more wholesome sustainable lifestyle.

In curious contrast, WholeFoods’ counterpart, Kathy Loftus, Global Leader, Sustainable Engineering & Energy Management, stated that with one-tenth the number of retail outlets as Walmart, WholeFoods is deeply committed to educating its employees and the communities they serve. The company teaches sustainability as a shared problem that begins with each and every consumer. WholeFoods believes that the improved knowledge on how one’s food is handled and prepared can help consumers make better choices and therefore lead healthier lives that will result in fewer medical issues. The money saved from fewer doctor’s visits and drugs, for instance, could justify WholeFood’s higher prices, …which explains in part why Walmart with its cadre of low-priced, branded, processed food suppliers has avoided engaging directly with their consumers.

Will the term ‘sustainability’ just become another commonly used marketing term such as ‘green’, ‘organic’, and ‘hormone-free’ that companies can push at will to meet their own corporate business agendas?  …maybe not this time.

A Key Driver – Shareholders
Fortunately the investment community is making meaningful strides with shareholders and CEOs. According to Sustainalytics, a Boston-based firm, companies are eager to disclose their annual ESG scores (Environmental Social and Governance), a metric used to measure best practices.  A total of 3,600 corporations globally have signed on since 1992, but as Annie White, their Research Products Manager noted, they have only scratched the surface with over 40,000 public companies still remaining.

Driving the increasing interest for ESG scores are concerned shareholders who fear that unmanaged risks or ‘blind spots’ could unexpectedly pull a global company down to its knees as has happened with BP’s Gulf oil spill of 2006, Foxconn’s child labor practice that affected Apple earlier this year and the five garment factories for European and American branded clothing that collapsed in Bangladesh this month. With good reason, shareholders are concerned that similar disasters will become more commonplace and that reactionary foreign government retaliation could put them out of business.

According to Katie Grace, a Program Manager involved with the ‘Initiative for Responsible Investing’ at the Harvard Kennedy School, local governments do not have to wait for a catastrophe to legislate changes but rather can take a proactive role by setting project specific policies. Regionally, for example, they can rezone areas to attract private sector investments. They can also set standards such as LEED, which is used for certifying eco-buildings. For social projects, governments can issue ‘green bonds’ or payment guarantees for investment funds (i.e. Social Impact Bonds).  Some mayors like Philadelphia’s Michael Nutter have adopted these proactive recommendations with their sustainability efforts and are starting to see positive results.

The City of Philadelphia
Katherine Gajewski, Philadelphia’s Sustainability Director, a new position also held at over 115 municipalities across the US, spoke of her challenges working within an entrenched bureaucracy of over 22,000 public employees, most of whom are reluctant to change. Her reprieve has been her frequent conference calls with her 115 peers who openly share their best and worst practices. Their collective list of ideas has grown as the group continues to innovate together, while making most of their ideas up as they go along.

Some interesting cases that have already crossed Gajewski’s desk might surprise you. For example, an Enterprise Car Rental operation in an industrial section of Philadelphia was paying $400 per month for their water bill but was costing the City millions of dollars to purify their share of dirty runoff from their car lots. Eventually, the situation was rectified but not until Gajewski ran the numbers to show the disproportionality between what Enterprise was paying for their office water usage and the cost to clean up its runoff.

Just how many other industrial installations are out there in a typical city like Philadelphia where a company unwittingly gets away with paying a small fee to use a common service but whose operations account for a substantial cost of clean up? …probably a lot!

Gajewski’s job as a Sustainability Director requires more people skills than know-how. She must craft alignments of interest among internal groups to achieve meaningful consensus. Perhaps most important, her role as director and facilitator is to refrain from becoming too preachy and be willing to dole out credit to each participant. Easier said than done, Gajewksi knows that sustainability is a shared task that succeeds when everyone is on board.

As more Sustainability Directors like Gajewski identify similar imbalances in their respective cities, the idea of charging the same consumer for both usage and their share of the cost of cleanup will become more widely accepted. …and herein lies the reason why fossil fuel prices will continue to rise for years to come.

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Below is a summary of Best Practices that were shared during MIT’s Sustainability Summit.

Best Practices

  1. At a university-run, trash audit, MIT students sieved through a months worth of the university’s garbage to discover that of the 2.5 tons of trash collected, 500 pounds was food waste while the remaining 90% could be recycled! The visual impact of over $11.4 billion of trash that could be recycled in the US alone inspired one student to launch a 30-day waste challenge on https://www.facebook.com/30DayWasteChallenge where Facebook friends could commit to ‘be inconvenienced by their trash’ by carrying the trash they personally generate throughout their day for a 30-day period.
  2. Offering consumers a list of prices for the same product but packaged with different levels of biodegradable materials would help bring to light the importance of recycling.
  3. Wirelessly integrating a soda vending machine with a recycle bin located nearby could encourage consumers to recycle their containers.  Consumers would pay, say two dollars and fifty cents, for a soda and receive a one-dollar refund on their university credit card once the soda can was disposed of in the appropriate recycle bin within the allotted time.
  4. ‘Rewire’ individuals at opportune times so their behavioral changes continue well after a recycling program or contest. For example, students can be impacted for behavioral change during a time of transition such as the beginning of a semester.  Recycling contest rules would be established at the start of the semester and monitored throughout the year.
  5. The crop of graduating students who enter the workforce concerned about sustainability issues will inspire a new set of hiring qualifications. Already companies like WholeFoods have changed their hiring criteria to reflect their corporate goals for sustainability.
  6. Teaching children in lower school to become advocates for a sustainable future is the most effective use of funds for behavioral change. Not only will these youngsters represent the future of our planet but their unbound audacity to correct adults who forget to recycle would deliver a priceless message with an impactful and lasting effect.
  7. A practical solution launched this year in California involves a utility tax on a consumer’s bill that is merely collected by the utility company and paid directly into a Global Educational Fund for educational initiatives. The tax removes the utility’s burden of financing similar programs for its sector and uses the utilities billing capacity as a pass-through.
  8. WholeFoods spends time in Washington DC convincing lawmakers that refrigeration codes need upgrading.  Currently stores are allowed to have open refrigeration, which according to a WholeFoods spokesperson, Kathy Loftus, spends considerably more energy than if the same refrigerator had a door.  Another sustainable tip from WholeFoods is the wider use of ships to transport goods rather than trucks. According to Loftus, ships have a lesser impact on the environment than trucks.

© 2013 Tom Kadala