Weekly Roundup: UK Launches New Social Impact Bond, Keystone XL, and Climate Change and Conflict
Didn’t have time to read the news this week? Every week, we report on the conversations surrounding the big issues in the world of social entrepreneurship and change.
UK Turns To Private Sector For Public Aid
As part of the response to the London riots, the UK government requested last Thursday that private investors put their money in Social Impact Bonds (SIBs), a financial device that funnels investor funds into social programs rather than corporations. Investors choose social programs that address social issues like poverty, healthcare and recidivism like they would choose a stock. If a particular program succeeds, its investor receives a profit.
This time around, they’ve designed an SIB for 120,000 troubled families, like many of those involved in the riots. They’ll launch in four test boroughs– Westminster and Hammersmith, Birmingham, Leicestershire and Fulham–with programs that aim to do things like keep kids in school, increase parent-child time and reduce teen pregnancies.
As expected, there are some skeptics. The details of the metrics are an old debate in impact investing. Tessa Jowell, the Labour party’s shadow Cabinet Office minister, hopped on this train, though she agrees with the idea’s foundation, and commenters on the Telegraph UK’s Spectator Blog echoed her sentiments. “How will results be objectively measured ? How will we know that the ‘intervention’ is in fact responsible for the claimed “savings” in individual cases?”
Peter Holbrooke, CEO of Social Enterprise UK, also welcomed the bonds with trepidation. “It is early days, and we need to see a stronger evidence base built,” he said. “It will be vital that the four local authorities work closely with social enterprises and charities to develop realistic targets so that the success of the projects can be measured, otherwise there’s a danger that damage could be done to their progress.”
Still, many are optimistic about SIB’s potential effects on UK society. Nick Hurd, civil society minister, told the Financial Times that they could be “a serious resource to tackle social problems in new and innovative ways.” In Forbes India, Shreedhar Kanetkar expanded on Hurd’s statement, noting that governments often “find it harder to fund prevention than cure.”
“Enthusiasm must be tempered with caution, for pilot projects are hard to assess and harder to scale up,” he said, echoing Holbrooke’s sentiments. “Nevertheless, innovations like social impact bonds deserve attention.”
Keystone XL, And Its Protest, Rolls On
On Friday, the State Department released a report giving the A-OK for TransCanada’s Keystone XL pipeline, a $7 billion proposed project that would carry oil from Canada, through the Midwest and to the Gulf of Mexico. The report claims that, as long as TransCanada follows the rules, the pipeline will have little environmental impact. The report also barred alternative routes–a request from many Midwest representatives–because the cost increase would not make it an economical decision.
In response, protests at the White House have escalated. So far, over 700 people have been arrested, including, this week, actress Daryl Hannah, Catholic priests and NASA scientist James Hansen, who calls the pipeline “game over” for climate change. YES! Magazine’s Madeline Ostrander embedded herself with the protesters this week, noting that most of them are former Obama supporters, and several people, like the Executive Director of the Sierra Club Michael Brune, believe that should Obama choose to build, it could have detrimental effects on his re-election campaign.
Echoing the protesters’ concerns, The New York Times’ Mark Bittman lambasted the pipeline’s construction. “With little or no public input, policies that benefit corporations regardless of the consequences continue to be enacted,” he wrote, and continued to provide a counter-argument for supporters’ every claim, questioning whether or not Obama was “a truly environmentally friendly president.”
TIME’s Bryan Walsh, in one of the best level-headed reactions I could find, questioned whether the Keystone XL decision would really affect Obama’s campaign. He points out that environmentalists have overlooked some of Obama’s “very real achievements,” and asserts that they “cannot possibly be serious” about sitting out the 2012 elections.
“With the exception of Jon Huntsman—who has about the same chance as you or I of becoming President—every Republican presidential candidate has expressed serious doubts about climate change, at the very least, and has threatened to eviscerate or even eliminate the Environmental Protection Agency.”
Meanwhile, in light of the State Department report, some have begun to take a pragmatic approach to the pipeline. Editors of the Houston Chronicle, who did have “earlier questions” about the pipeline,” called it “economic folly” to turn down a project that would produce so many jobs. Of course, anti-oil activist group Oil Change International did release a report Wednesday claiming that the refineries at the end of the pipeline actually plan to export Keystone products. That evidence has neither been confirmed, nor denied, and pipeline supporters are calling its bluff.
But still others point to the fact that, at the moment, a viable, efficient alternative to oil does not exist. “It’s always seemed to me that we should be focusing on reducing our demand and directly developing competitive alternatives, rather than trying to shut down new supply,” wrote Walsh.
Business columnist Loren Steffy agreed, arguing that by approving the pipeline–which would drastically reduce US dependence on foreign oil–Obama would make the most practical decision possible for the moment. “Or to put it in more placard-friendly terms,” he said, “oil sands today, more reliable and efficient wind tomorrow.”
Lessons in Disaster Relief And Prevention, via @HurricaneIrene
The East Coast’s biggest news this week: Hurricane Irene. It hit North Carolina on Saturday and the Northeast later that day and on Sunday. The worst-hit areas were upstate New York and Vermont, where flooding completely blocked off roads to thirteen towns. Hundreds of thousands of people in the tri-state area lost power, while floods devastated upstate New York and Vermont. One business school prof told the New York Times that the storm could cost the nation an estimated six billion dollars.
The way people used social media during Irene had some interesting lessons in disaster relief communications. The American Red Cross’ social media team dedicated a chunk of time to studying social activity during Irene, and found that most people used the utility for information on how to prepare, or find help if they needed it. And they reached out to Red Cross directly – a pattern the organization has seen over the last few years they’ve used online disaster relief communication.
The biggest Red Cross takeaway: verification is key. Online, not all information is correct, largely because people tend to gather solo and create their own Facebook pages to convey information. The Red Cross recommends recruiting volunteers to monitor these crowd-generated groups — and this time, the Red Cross even reached out to Twitter to get verification badges for their volunteers, a process you can check out in a video on their blog.
Treehugger used the opportunity to tout the benefits of telecommuting, an option that kept the economy buoyant despite the fact that Irene shut down a lot of transportation options. And Triple Pundit pointed out some options that could have mitigated the effects of Hurricane Irene before the storm even made landfall, like Smart Grids, electric systems that give real-time updates on stability, breakdowns and extra energy that could be re-routed. The system can also draw from multiple energy sources. “Green buildings with solar panels can not only receive energy from the grid but easily return excess energy (e.g. on a weekend when no one is working in the building) back to the smart grid,” they said.
The article gives a nice synopsis of how Smart Grids would have played out during Hurricane Irene, and also has an interactive map of Smart Grid projects around the country.
New Study Links Climate Change And Conflict
And on a similar note, researchers at Columbia University’s Earth Observatory published a study this week showing that the risk of civil conflict doubles in areas affected by El Niño. It’s the first study to scientifically link climate change and human violence, and suggests part of the reason is that El Niño’s extreme weather patterns–floods and droughts that occur every two to seven years–can wreak havoc on food production and local economies. The Columbia study looked at data from 1950 to 2004 and concluded that El Niño may have had a role in twenty-one percent of all civil conflict in the tropics during those years.
Commentators natural conclusion? Violence will only increase in years to come.
However, some critics claim that commentators may have drawn conclusions too quickly. In Foreign Policy, Charles Kenny, a senior fellow at the Center for Global Development, pointed out that despite claims that ongoing climate change would lead to increased violence, the study didn’t actually didn’t provide such evidence. He provides a delightful history of studies, starting in the 15th century, that link climate with violence, concluding that “The nature of the relationship between the weather and violence in the past remains open to question.” If anything, he argues, it’s the result of a complex web of factors.
And in a provocative essay on CSRWire, blogger Francesca Rheannon agreed that there’s an impending convergence between climate change, conflict and poverty that, unless developed countries change their economic policies, won’t just be restricted to the tropics. She pulls heavily from the book Tropic of Chaos: Climate Change and the New Geography of Violence by journalist Christian Parenti, and points out that the West — US included — is often a major factor in violence in developing states, starting from their colonial regimes.
But while Parenti focused on “failing states,” Rheannon warns that poor economic policies that amplify the effects of natural disasters may also exist in the US. “With its climate denying creationists underwritten by climate denying fossil fuel corporations, its dwindling middle class and bloated military, the moribund capitalist society of the U.S., is fast proving its own inability to grapple with the monster bearing down on us with the speed and force of a hurricane.”
Random Weekend Reads
- A new study links compassion to mental and physical health. Plus one for social entrepreneurs.
- Google, IDEO and Pixar have a few lessons for our schools. For anyone, really.
- A great interview in Fast Company with Acumen Fund’s Sasha Dichter.
- Tim Ferriss pops up in the New Yorker, and he still wants you to have a four-hour work week. And a four-hour body. A fifteen-minute sex-life. We promise it’s a good read on time management.
- Katharine Danton, director of research and policy at the UK’s UnLtd wrote an essay in The Guardian about the importance of social entrepreneurs helping riot-hit communities in London, both in the aftermath and in more longterm ways.
Several good business advice pieces….
- The Guardian on hiring and retaining talent.
- Fast Company on humanizing your brand and increasing your success.
- “Secrets and seduction in seed investment,” via The Guardian. The title was so good, we couldn’t change it.
And an application…
For the youngsters, Georgetown’s Global Competitiveness Leadership Program has opened applications. Deadline is October 7th.