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Renewal Funds: investing for change

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The 21st century will see dramatic retooling of the ways we live together on the planet. It’s time to shift capital to the regenerative economy, writes Joel Solomon.

This article was originally published in Green Money Journal.

I’m the chair of Renewal Funds. We are a social venture capital firm that invests in change by supporting businesses at the forefront of social and environmental innovation. I believe that there must be a fundamental reinvention of where and how capital is deployed. 

Renewal Funds is one among an emerging sector of new mission-driven investment models. 

We call ours ‘social venture financing’. We aim to deliver above market financial returns, as well as strong community and earth-friendly returns, by investing in Canadian and US businesses that provide meaningful and positive advances. 

Renewal Funds focuses on organic and natural foods, green consumer products, and social and environmental innovation. Our portfolio includes companies like Spud, North America’s largest Internet grocer of organic and natural foods; Aquatic Informatics, which develops water and climate data software and analytics; Alter Eco, an importer and seller of fair trade, organic and carbon neutral food products including quinoa, rice and chocolate; and Sensible Organics, USDA certified organic skin and beauty care products.

Renewal Funds’ investment criteria include annual revenues of more than $1 million, a scalable business model, and headquarters in Canada or the USA. Our initial placements range from $1-2 million.

All of our portfolio companies have a “mission first” approach to their businesses. They care about increasing shareholder wealth, and also about providing organic, greener and cleaner alternatives to conventional choices. They treat their employees well, and their products inherently increase environmental safety, broader opportunity, and economic equality. 

Our due diligence process begins with mission and culture screening. We work to assess whether the products or services offered by a company under our consideration will have a truly positive effect on the planet. We meet with the company’s management team to review their manufacturing processes, supply chains and employee management practices.

We do this in order to ensure that the company authentically stands by its stated mission commitments. Our portfolio selection ensures that we are a mutual fit with the company and that we share a similar outlook. Renewal is a founding B Corporation, also we are GIIRS-rated, and a 1% for the Planet company.

Despite the innovation of this mission-first approach, our portfolio is excelling, on track to meet or exceed our “above market” internal rate of return (IRR) target.

I first began working with Renewal Funds Co-Founder Carol Newell in the early 1990s to invest in companies with strong environmental and social strategies. People thought that we were crazy.

We were told repeatedly that our commitment to use capital for social impact would not turn a profit. But, thanks to Carol’s extraordinary vision and tenacity, we built a strong team that worked together to demonstrate that investing in companies with a mission and purpose, could prove financial viability, be generative, and be replicable. 

Through Carol’s “activist family office”, with its “whole portfolio activation to mission” philosophy, Renewal Partners successfully built an investment portfolio that included companies such as Stonyfield, Seventh Generation, Jantzi Sustainalytics, Village Real Estate, Salt Spring Coffee, Horizon Distributors, Lunapads, Sounds True, Happy Planet and more.

In 2008, Renewal Partners gave rise to Renewal Funds, designed for outside investors. We now have over $98 million in assets under management, and our most recent offering, Renewal3, is a testament to the excitement that investors have for a truly mission-first option for their money.

Our $30-$50 million goal for Renewal3 was exceeded and we closed in February 2014, at $63 million. That made us into a truly going concern.

We are right sized for the per company attention and scale of business that is our sweet spot. We are proud now to have over 125 individuals, families, foundations and SRI wealth managers as our Limited Partners.

A huge change in public consciousness has happened since the early days of Renewal Partners. This advance is in part because of a massive inter-generational shift in wealth and consciousness that is now underway. 

It will pick up more momentum, with baby boomers poised to bequest the largest transfer of capital in history, somewhere between $30 and $50 trillion over the next three decades. 

These new wealth holders face a more uncertain economic environment, species collapse, global population growth, a growing economic divide, climate change, and dramatic uncertainties.

These factors are contributing to the booming demand for investment products with a focus on longer-term societal resilience. People increasingly want “organic money,” as well as clean food, clean energy, more direct, transparent, local and authentic products and services of all kinds.

Renewal Funds’ sectors are critical for a resilient society. They possess strong growth trends. Research studies demonstrate that consumers are making healthier choices for themselves, their families and the planet, and are willing to pay a premium to align their purchases with their values.

Yet these sectors are underserved by professional investors. 90% of all venture capital investment in North America has been directed to tech, clean-tech and biotech businesses. Our unique positioning provides us with excellent access to opportunities to partner with visionary entrepreneurs and companies.

After a first round investment we reserve capital for follow-on investment to support our companies as they grow and need more capital. 

Today, I’m excited to be working towards Instinct, a new seed capital fund, with a broad mandate to make smaller investments with quicker decisions. This fund will support earlier stage companies that have powerful potential to shape the economic landscape for the future. 

A new industrial evolution is underway. Practices that once dominated the world’s economy are growing increasingly unstable – from conventional agriculture, to poverty wages for workers, to unchecked non-renewable resource extraction, to unexamined consumerism. 

A new form of capitalism is rising. Organic foods and solar panels are rapidly dropping in price. Fair trade and worker ownership are ensuring broader access to a high quality of life. Enormous growth in social entrepreneurism is underway. 

The emerging collaborative economy – as just one example – is poised to disrupt many sectors. Watch what happens to the financial industry over the next few decades, as the winds of change reach this bastion of old school thinking! 

A dramatic reorientation is taking root for wealth. We now have the opportunity to look beyond incumbent investment theories and use our money as the powerful tool that it is, to shape the type of world we want to see for future generations.

Renewal Funds, and our fast growing number of colleagues in the world of financial services with a related point of view, are truly “investing for change.”

Joel Solomon is chair of Renewal Funds (www.renewalfunds.com), Canada’s largest social venture capital firm, with $98 million assets under management. Renewal Funds invests in organic food, green products, and environmental innovations. 

Also contributing to this article is Rebecca Cuttler, an experienced administrator committed to supporting healthy local economies. Prior to joining Renewal Funds, she worked as Executive Assistant to SFU Woodward’s Cultural Programming office.

 Further reading:

20 questions with… Joel Solomon

Do you know what your money is doing while you sleep?

Wisdom, ingenuity, morals and investing

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Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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