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.
2017 Was the Most Expensive Year Ever for U.S. Natural Disaster Damage
Devastating natural disasters dominated last year’s headlines and made many wonder how the affected areas could ever recover. According to data from the U.S. National Oceanic and Atmospheric Administration (NOAA), the storms and other weather events that caused the destruction were extremely costly.
Specifically, the natural disasters recorded last year caused so much damage that the associated losses made 2017 the most expensive year on record in the 38-year history of keeping such data. The following are several reasons that 2017 made headlines for this notorious distinction.
Over a Dozen Events With Losses Totalling More Than $1 Billion Each
The NOAA reports that in total, the recorded losses equaled $306 billion, which is $90 billion more than the amount associated with 2005, the previous record holder. One of the primary reasons the dollar amount climbed so high last year is that 16 individual events cost more than $1 billion each.
Global Warming Contributed to Hurricane Harvey
Hurricane Harvey, one of two Category-4 hurricanes that made landfall in 2017, was a particularly expensive natural disaster. Nearly 800,000 people needed assistance after the storm. Hurricane Harvey alone cost $125 billion, with some estimates even higher than that. So far, the only hurricane more expensive than Harvey was Katrina.
Before Hurricane Harvey hit, scientists speculated climate change could make it worse. They discussed how rising ocean temperatures make hurricanes more intense, and warmer atmospheres have higher amounts of water vapor, causing larger rainfall totals.
Since then, a new study published in “Environmental Research Letters” confirmed climate change was indeed a factor that gave Hurricane Harvey more power. It found environmental conditions associated with global warming made the storm more severe and increase the likelihood of similar events.
That same study also compared today’s storms with ones from 1900. It found that compared to those earlier weather phenomena, Hurricane Harvey’s rainfall was 15 percent more intense and three times as likely to happen now versus in 1900.
Warming oceans are one of the contributing factors. Specifically, the ocean’s surface temperature associated with the region where Hurricane Harvey quickly transformed from a tropical storm into a Category 4 hurricane has become about 1 degree Fahrenheit warmer over the past few decades.
Michael Mann, a climatologist from Penn State University, believes that due to a relationship known as the Clausius-Clapeyron equation, there was about 3-5 percent more moisture in the air, which caused more rain. To complicate matters even more, global warming made sea levels rise by more than 6 inches in the Houston area over the past few decades. Mann also believes global warming caused the stationery summer weather patterns that made Hurricane Harvey stop moving and saturate the area with rain. Mann clarifies although global warming didn’t cause Hurricane Harvey as a whole, it exacerbated several factors of the storm.
Also, statistics collected by the Environmental Protection Agency (EPA) from 1901-2015 found the precipitation levels in the contiguous 48 states had gone up by 0.17 inches per decade. The EPA notes the increase is expected because rainfall totals tend to go up as the Earth’s surface temperatures rise and additional evaporation occurs.
The EPA’s measurements about surface temperature indicate for the same timespan mentioned above for precipitation, the temperatures have gotten 0.14 Fahrenheit hotter per decade. Also, although the global surface temperature went up by 0.15 Fahrenheit during the same period, the temperature rise has been faster in the United States compared to the rest of the world since the 1970s.
Severe Storms Cause a Loss of Productivity
Many people don’t immediately think of one important factor when discussing the aftermath of natural disasters: the adverse impact on productivity. Businesses and members of the workforce in Houston, Miami and other cities hit by Hurricanes Harvey and Irma suffered losses that may total between $150-200 billion when both damage and sacrificed productivity are accounted for, according to estimates from Moody’s Analytics.
Some workers who decide to leave their homes before storms arrive delay returning after the immediate danger has passed. As a result of their absences, a labor-force shortage may occur. News sources posted stories highlighting that the Houston area might not have enough construction workers to handle necessary rebuilding efforts after Hurricane Harvey.
It’s not hard to imagine the impact heavy storms could have on business operations. However, companies that offer goods to help people prepare for hurricanes and similar disasters often find the market wants what they provide. While watching the paths of current storms, people tend to recall storms that took place years ago and see them as reminders to get prepared for what could happen.
Longer and More Disastrous Wildfires Require More Resources to Fight
The wildfires that ripped through millions of acres in the western region of the United States this year also made substantial contributions to the 2017 disaster-related expenses. The U.S. Forest Service, which is within the U.S. Department of Agriculture, reported 2017 as its costliest year ever and saw total expenditures exceeding $2 billion.
The agency anticipates the costs will grow, especially when they take past data into account. In 1995, the U.S. Forest Service spent 16 percent of its annual budget for wildfire-fighting costs, but in 2015, the amount ballooned to 52 percent. The sheer number of wildfires last year didn’t help matters either. Between January 1 and November 24 last year, 54,858 fires broke out.
2017: Among the Three Hottest Years Recorded
People cause the majority of wildfires, but climate change acts as another notable contributor. In addition to affecting hurricane intensity, rising temperatures help fires spread and make them harder to extinguish.
Data collected by the National Interagency Fire Center and published by the EPA highlighted a correlation between the largest wildfires and the warmest years on record. The extent of damage caused by wildfires has gotten worse since the 1980s, but became particularly severe starting in 2000 during a period characterized by some of the warmest years the U.S. ever recorded.
Things haven’t changed for the better, either. In mid-December of 2017, the World Meteorological Organization released a statement announcing the year would likely end as one of the three warmest years ever recorded. A notable finding since the group looks at global land and ocean temperature, not just statistics associated with the United States.
Not all the most financially impactful weather events in 2017 were hurricanes and wildfires. Some of the other issues that cost over $1 billion included a hailstorm in Colorado, tornados in several regions of the U.S. and substantial flooding throughout Missouri and Arkansas.
Although numerous factors gave these natural disasters momentum, scientists know climate change was a defining force — a reality that should worry just about everyone.
How to be More eco-Responsible in 2018
Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.
Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:
1. Energy – produce it, save it
If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.
It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.
While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.
Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!
2. Don’t be just another tourist
Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.
3. Let your beauty be also eco-friendly
We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t mean that some of the product’s ingredients haven’t been tested on some poor animal.
To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.
It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.
4. Know thy recycling
People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.
People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.
5. Fashion can be both eco-friendly and cool
Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.
All in all
The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.
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