A Very Special “Innovator-in-Residence:” Stuart Hart

This post was written by Esteban Echeverria ’19

It is May 8 — the last day of classes, and just like every three weeks or so, we have a speaker come to our class and talk to us for the whole morning. This time it is the one and only Professor Stuart Hart, and by now we should know him and his teachings pretty well.

Professor Stu Hart

For the ones who do not know, Dr. Hart is the backbone of The Sustainable Innovation MBA program. His research, in conjunction with other experts in the field, such as C.K. Prahalad, and Dean Sanjay Sharma, provide much of the material we study in our classes.

As we know Dr. Hart quite well by now, he decided to base his lecture on where we are now as a society, and where we are headed in the future, as well as some of his current research. After some 500 years of history, he explained the many phases of the most important economic systems the world has been going through— feudalism, mercantilism, industrial capitalism, institutional capitalism, financial capitalism. He finally mentioned the next phase that we are transitioning to— what he called the new sustainable capitalism. Each of phases have been going through a cycle of power and economic distribution that repeats itself, were we keep making the same mistakes, falling on the same bumps, and ending up in the same place, which is not exactly a good one.

We are now in a moment in history haunted by a severe climate crisis, as well as a social one, where inequality is hitting major milestones that are getting close to the point of no return. It is a point where the Milton Freedman’s “increase of shareholder value” corporate objectives, as well as the concept of tying the payment of chief executives and senior leaders to performance, are to be reviewed and thought over. 

It not only has led to multinational corporations practicing stock buyback and cut R&D spending as well as operational spending including employee pay, among other strategies to raise the prices of their own stocks, but also focus on quarterly earnings reports and quick fixes to their unsustainable models. The pressure of investors, analysts, and high frequency traders has let these companies forget about the long-term strategies required to sustain their operations, as well as promote the wellbeing of their stakeholders. Shareholder primacy, as noted in the past, is not a legal obligation, but the system as of now is fixed for this purpose. 

One of the objectives of The Sustainable Innovation MBA program is to create the new generation of businessmen and businesswomen determined to go about their decision making process taking not only financial, but also environmental and social aspects into account. As a student of this program, and part of this community, I would also like to act as a sustainability enabler, by attempting to contribute to corporate transformation from the inside out. Many of these public multinational corporations need to recognize their identity, strengths, and reason of existence, and use it as a tool to transform and modernize their operations and value propositions to ones that contribute to the wellbeing of the environment and society. By doing so, they secure their long term operations for the future.

Now that we have finished the lecture portion of this program, I am a step closer to become part of The Sustainable Innovation MBA alumni community, the one that is building the business leaders that the world needs. I recommend this experience to anyone that is trying to make an impact, and be part of the transformation we are going through.

“Hunter is disruptive…”

This post was written by Henry Vogt ’19

“Hunter is disruptive” is the phrase we first saw as we walked into our second guest lecturer of the semester.

Earlier this Fall we had the pleasure of hosting guest speaker Hunter Lovins. Suffice it to say, she knocked our socks off. I had heard Hunter’s name before, but wasn’t very familiar with her work or legacy. It became apparent right away that we were in for a unique and inspiring experience.

Hunter’s body of work in sustainability and climate justice is prolific: from starting numerous influential non-profits, creating successful sustainable MBA programs from scratch, authoring best selling books, founding impact investing firms, and consulting with some of the largest corporations in the world including Unilever and Walmart, Hunter’s influence is extensive. This is augmented by her down-to-earth, Colorado ranch-style demeanor. She tells it like it is, passionately, in an inspirational way. She’s the type of person that understands that solving world problems is best facilitated over a whiskey, face-to-face. Hunter also owns a beautiful ranch in Colorado, where she easily could spend all of her time but instead chooses to be on the move, committed to her mission.

I asked Hunter how she envisions American capitalism evolving and whether she believes it has the capacity to solve the massive challenges facing our planet under current frameworks. She answered by giving a prediction from economist Tony Sebens: “Within 10 years, economics will dictate that the world will be 100 percent renewable. For this to happen, the world’s economy will be disrupted. This will be the ‘Mother of all disruptions.’ In other words, to save the climate we have to crash the global economy.”

If this is, in fact, the case, then the next decade will be tumultuous to say the least. This led our class session to focus on the question of what’s next and how do we collectively begin to prepare for this disruption. While this notion and idea can admittedly be not very uplifting, it was encouraging to hear suggestions from many of my classmates on how we may leverage our global economy and invest in Base of the Pyramid projects to find solutions and begin to strategize on how we may “soften the landing” from major global disruption.

Overall, having Hunter present to us was inspiring and eye-opening. While there are massive challenges ahead, having individuals like Hunter who are disruptive, driven, and committed to finding solutions to these challenges provides hope for the future.

How Business Can Support Refugees

This post was written by Ryan Forman ’19

All around the world, refugees are being demonized for various political reasons. There is overwhelming academic and professional research into how much value refugees are to society. Therefore, civil society cannot help them adjust to their new country alone, but business plays a role in supporting them as well. There are multiple ways in which business can help the current refugee situation, but this article is going to focus on two key methods.

The first way that business can help refugees is by investing in refugee-owned/founded businesses. Research shows that refugees are more likely to hire fellow refugees. Because of this investment, businesses can support more than just one refugee; they can help many others get hired as well. One example of an impact investment organization that specializes in investing in refugee-founded businesses is the Refugee Investment Network (RIN). The RIN works to help move private capital to investment in financing of companies that benefit both refugees and their host communities.

An additional way that business can help refugees is by advocating for them in the workforce. Advocating for refugees could be businesses partnering with both governmental and non-governmental organizations that will help individuals get the skills that they need to be more competitive in their local job market. Ernst & Young (EY) in Germany have gone above and beyond in how to support refugees. EY Germany states, “Through EY Cares, the team got funding for a language-learning app, developed by an employee of EY Germany. The team has also supported Kiron, a social start-up providing higher education to refugees, and it has launched a pilot internship program for 10 refugees across EY Germany.” There aren’t many examples of this in the United States, but there is a similar situation here in Burlington at Rhino Foods. Advocating for refugees could be looking at leveraging their past skills to hire them for similar roles in a business that they did in their former country. According to Rhino Foods, “The cultural diversity at Rhino exposes us to each other’s favorite foods, traditions, and life experiences.” Currently, refugees make up 37% of Rhino Food’s workforce.

In our Entrepreneurship class, my group has proposed creating an incubator that would help address both of these methods to help refugees. We think that an incubator, that supports both investment in refugee-owned businesses and partnerships to help refugees get the skills they need to become competitive in their local markets, is a needed organization. I would certainly like to see more organizations place such an emphasis on, as RIN has described, “the greatest social challenge of our time.” Refugees are a boon to the local economy, and it is time for business to empower them.

Photo by Perry Grone on Unsplash

Students Advocate for Global Aid Policy for CARE International

A group of students* from The Sustainable Innovation MBA Class of 2018 travelled to Washington, D.C. in May to advocate on Capitol Hill on behalf of CARE International. The CARE National Conference, now in its 16th year convening, brings together citizen advocates, corporate responsibility professionals, philanthropists, humanitarians, and international development experts for advocacy training and congressional meetings on Capitol Hill.

Over the course of three days, the students participated in numerous educational sessions, learning about CARE’s impact and outlining the policy and political goals for the year. This year’s theme, “Your Voice, A World of Change” lifts up and celebrates the advocates whose voices help CARE continue to be the leader in creating positive change for women and girls on the global stage. The conference kicked off with prominent figures and speakers in the foreign aid space including Sally Yates, former Acting Attorney General; Helene D. Gayle; Senator Amy Klobuchar (D-MN), and multiple CARE and CARE Action! Voices.

Designed for new CARE advocates, the conference hosts a comprehensive introduction to successful advocacy: Advocacy 101, Congress 101, and CARE: Our Story. New advocates leave sessions with enhanced legislative understanding and overviews of this year’s top priorities for CARE.

Prepared with discussion points for the advocacy day on Capitol Hill, The Sustainable Innovation MBA students set out to meet with the offices of Vermont’s Congressional delegation: Representative Peter Welch, Senator Bernie Sanders and Senator Patrick Leahy. In the meetings with the Congressional offices, the students advocated for co-sponsorship of the International Violence Against Women’s Act, a bipartisan bill to ensure that gender-based violence is a top U.S. foreign policy priority. This issue is an important priority because an estimated one in three women will face physical, mental or sexual abuse in their lifetimes. Violence against women has an immeasurable impact on women and girls, their families and their communities. IVAWA elevates the importance of these issues and places them at the center of U.S. foreign diplomacy.

The second request made to the Vermont delegation was to support the International Affairs Budget FY 2019 and request a funding increase that returns to the Obama-era funding levels. Proposed budget cuts by the Trump administration would slash funding for critical foreign assistance programs and jeopardize millions of lives around the globe.

Vermonters are lucky to live in a state where all members of the delegation are receptive and engaged in policy to sustain funding for international aid and development. Over the course of the CARE National Conference the students gained great insight into the top priorities for foreign aid policy and how to engage with political leadership to influence change.

*Andria Denome, Camille Fordy, Madeline Brumberg, Julia Lyon, and Kaitlin Sampson

Lessons and Insights from the Climate Cap Summit

This post was written by Shari Siegel ’18

Four members of The Sustainable Innovation MBA Class of 2018 — Ian Dechow, Andria Denome, Kaitlin Sampson and Shari Siegel — recently headed south to attend the inaugural Climate Cap Summit at Duke University. The Summit was a chance for our travelers to listen to and exchange views with professional investors, bankers, scientists, financial strategists and advisors, corporate executives, academics and MBA students from other schools on a variety of business, finance, political, and social issues related to climate change and other sustainability challenges.

The program opened with a keynote presentation by Scott Jacobs, co-founder of Generate Capital, and a conversation between Jacobs and Greg Dalton from Climate One.  Jacobs posited that the challenge of “clean tech” is not so much about invention as it is about infrastructure: energy, land, water, food and clean air are critical and are made available through infrastructure, which requires substantial capital up-front. Thus, while there are hundreds of infrastructure projects that it might be in economic actors’ rational self-interest to pursue, it is often difficult to get these projects funded.

For the owners/developers of the technology, the “Silicon Valley” funding model (a small investment in a small, early stage company with the potential for rapid growth at exponential returns) does not fit: these companies have proven (potentially improved) technology that requires substantial investment that will yield long-term steady, but not exponential returns. For the potential clean tech customers, investing in a large capital project with substantial up-front costs that turn what was an operating expense into a capital expenditure is a difficult decision to make, especially in the current capital markets environment where there is so much focus on short-term results rather than long-term sustainability.

The solution proposed by Jacobs and his co-founder at Generate, Jigar Shah, is to provide “infrastructure as a service” using project finance structures under which independent developers build and operate infrastructure owned by a special purpose company financed by Generate. It is, in many ways, a macro version of successful strategies studied by students in The Sustainable Innovation MBA in connection with bringing solar power, mobile phone service, and other technology to the base of the pyramid.

The opening discussion was followed by a discussion between Truman Semans, founder and chief executive officer of Element Strategies and Matt Arnold, global head of Sustainable Finance at JPMorgan Chase regarding environmental, social and governance (“ESG”) investing, the UN Sustainable Development Goals (“SDGs”) and risk management.

Attracting private investment in projects related to the SDGs requires reducing risk for the providers of capital. Among the strategies to further risk reduction is better (more transparent and standardized) disclosure relating to ESG matters.  The speakers noted the ESG disclosure scores promulgated by Bloomberg.  Another risk-reduction strategy is the one put forward in the Blended Finance, Better World discussion paper released for discussion by the World Economic Forum in 2017.[1]  It proposes using multilateral development banks to provide public money which can attract investment of private capital into major infrastructure projects in the developing world to meet the SDGs. Estimates are that investment of approximately US$6 trillion is needed annually to meet the SDGs.

Later panels returned to the subject of assessing ESG factors as part of fundamental long-term risk management.  While in the early days of ESG investing, such a strategy was thought to reflect a willingness to eschew higher returns in exchange for desired impacts, it is becoming increasingly clear that investors ignore environmental, social and governance aspects of a company’s operations at their peril and incorporating ESG factors into an investment strategy likely leads to better long-term performance.  As Ron Temple, head of US Equities and co-head of Multi-Asset Investing at Lazard Asset Management, said, it is “simply irresponsible” not to look at ESG factors in evaluating risk.

Elizabeth Lewis of Terra Alpha Investments, Mark McDivitt of State Street Corporation and Kate Gordon of the Paulson Institute agreed, particularly when talking about climate change. According to the 2017 Global Risks Report published by the World Economic Forum, extreme weather events and natural disasters are two of the top 5 global risks in terms of likelihood to occur and impact; water crises and failure of climate-change mitigation and adaptation are also in the top 5 global risks in terms of impact.[2]  The key to talking about business and climate change is to understand the pricing of climate change risk.

Fundamental risk and opportunity presented by ESG factors, especially those relating to climate destabilization, was hammered home again in a later presentation by Tiiram Sunderland of Bain & Co, who noted that climate change represents the biggest issue affecting business today.  He also noted that unless sustainability is embedded in the core of a business school’s curriculum, the school is failing its students. 

This last point was, of course, happily endorsed by The Sustainable Innovation MBA students.

[1]           See https://www.weforum.org/reports/blended-finance-toolkit.

[2]           See http://reports.weforum.org/global-risks-2017/

Wellington Management Talks About Investing in a Better Future

This post was written by Shari Siegel ’18

According to the Global Impact Investing Network (the “GIIN”), the financial markets will have to provide several trillion dollars annually if the U.N. Sustainable Development Goals (“SDGs”) are to be met by 2030.[1]  Thus far, impact investing has been mainly the realm of a small group of institutional and wealthy individual investors, but that situation is now poised for change.  The GIIN’s new framework is calling for impact investing to be “made more accessible by developing new products suited to the needs and preferences of the full spectrum of investors (from retail to institutional) and to accommodate the capital needs of various types of investees.”[2]

The Sustainable Innovation MBA Class of 2018 started Module 4 of its program with a visit from Meredith Joly, Christopher Kaufman, and Quyen Tran from Wellington Management arranged by Professor Charles Schnitzlein.  The Wellington trio came to discuss how the privately held Boston-based investment manager is making impact investing a viable option for a larger pool of investors.

First, A Little Vocabulary.  “Impact investing” differs from “ESG investing.”  ESG investing is a strategy in which investments, usually equity in publicly traded companies, are chosen because the issuers have environmental, social or governance practices that align with the investor’s values; the companies in question may or may not offer products or services that are intended to address social or environmental problems.  (For example, an ice cream manufacturer that is well known for its advocacy of better environmental practices and equality issues may be an ESG investment, but wouldn’t be an impact investment.)  Impact investing is a strategy in which the investor chooses investments with a view to addressing specific social and environmental issues.  The core businesses of the companies that the impact investor invests in are specifically aimed at solving one or more social or environmental problem.  (For example, a healthcare technology company that enables people in remote locations to have “virtual” doctor visits so that they can obtain otherwise unavailable or cost-prohibitive care could be an impact investment.)  The social and environmental issues impact investing usually attempts to address are subsets of the SDGs, including addressing adequate housing, access to education, healthcare, climate, water resources, etc.

Traditionally, impact investing has largely been done through large private investments in private companies.  Such investments would normally be limited to institutional investors or Very or Ultra High Net Worth individual investors (i.e., investors with more than $5 million to invest).  The Wellington team came to talk about how impact investing can be done through selecting publicly traded stocks, bonds and mutual funds, which are much more liquid and have much smaller minimum investment requirements than private equity, thus making such strategies more widely accessible.

The SDGs establish a common language for NGOs (non-governmental organizations), foundations, governments and private investors as they each work in their own ways to solve the world’s most pressing problems.  Supported by its large, centralized research team, Wellington has identified hundreds of publicly traded securities that provide capital for companies and projects whose core businesses and missions address SDGs in one of three impact themes: life essentials (housing, clean water/sanitation, sustainable agriculture/nutrition, and health), human empowerment (education and job training, digital divide and financial inclusion) and environment (alternative energy, resource efficiency and resource stewardship).  As the manager of its own equity and bond funds and subadvisor for third party funds, Wellington monitors and measures not only the financial performance of the securities in its portfolios but also the social and environmental impact the companies and projects are having to ensure that investor goals are being achieved.  This is an example of one more way business is being used as a force for good.

[1]           Global Impact Investing Network, Roadmap for the Future of Impact Investing: Reshaping Financial Markets (March 2018) at 9.

[2]           Id. at 49.

Third Base of the Pyramid Global Network Summit, April 18-20, New Delhi, India

Editor’s Note: Professor Stuart Hart, director of external relations and practicums for The Sustainable Innovation MBA, is — in addition to being recognized as a global authority on business strategy and its implications for addressing poverty, founder of the Enterprise for a Sustainable World, which hosts the Base of the Pyramid Global Network Summit.

In 2015, The University of Vermont (UVM)’s Grossman School of Business hosted the 2nd BoP Global Network Summit: “Sustainable Entrepreneurship From The Bottom Up”. We brought together corporate innovators, academics, entrepreneurs, community leaders, students, and BoP Global Lab leaders from more than 16 countries – all on campus at UVM.

This year, Professor Stuart Hart and friends are organizing the Third BoP Global Network Summit April 18 – 20, 2018 at the India Habitat Centre in New Delhi, India.

The 2018 Summit will include a field visit to initiatives to experience first-hand some of the leading-edge Base of the Pyramid (BoP) business initiatives in India. The field visit will serve to stimulate discussion and action during the Summit itself.

Companies and ventures cannot succeed at the BoP in isolation. It is in the strength of a strong and mutually aligned network and partner ecosystem including academia, government, development agencies, local entrepreneurs, and NGOs, that business will find the keys to success.

The 2018 BoP Global Network Summit will be focused around three such emerging strategies to more effectively reach and serve the Base of the Pyramid.

The three strategies are:

1) Beyond Environmental Degradation: Toward BoP Circular Economy Strategies

Most BoP ventures and initiatives have focused on the social aspects of sustainability while ignoring or deemphasizing the environment. Looking forward, disruptive new “leapfrog” BoP strategies may hold the key to pioneering a truly sustainable, circular economy.

2) Beyond Pipelines: Toward BoP Platform Engagement Strategies

Most BoP ventures and initiatives have focused on building single­ purpose supply chains and distribution models (pipelines), often with disappointing financial results. Looking forward, platform-based approaches, both cloud enabled and otherwise, may hold a key to building wider and a deeper value.

3) Beyond Selling to The Poor: Toward BoP Market Engagement Strategies

Most BoP ventures and initiatives have focused on developing low cost, “affordable” products and services, only to have them languish. Looking forward developing diverse and creative strategies for engagement and co creation may hold a key to successfully reaching and serving the BoP.

All three strategies hinge on creative ways to build more effective ecosystems and networks.

The objectives of the Summit are to explore the frontiers of these emerging strategies through plenary sessions featuring state-of-the art practice, followed by working sessions to build and accelerate momentum toward making them a reality.

Keynote speakers include Jonathon Porritt – the co-founder of Forum for the Future and Suresh Prabhu, Minister of Commerce and Industry, India, and many more.

See the full speaker line-up here. Sign up here.

Professor Hart’s video here.

Tech Start-Up Helps Farmers Grow More, Waste Less

This article was written by Margaret Arzon ’17 and originally appeared at PYXERAGlobal.org. Margaret is currently a Business Strategy Consultant.

Accessing Information through Mobile Technology Gives Smallholder Farmers Much-Needed Support

Walking through the streets of India, it’s hard not to notice the plethora of fresh fruits and vegetables that line the sidewalks, pretty much everywhere you go. Just a short 30-minute drive out of the city center lands you in acres of cultivated fields where many of these crops originate.

Roughly 50 percent of India’s workforce is devoted to agriculture. This demographic is common in many other emerging and frontier countries where a dominant proportion of the population relies on farming for its livelihood. Smallholder farmer is a title given to people who own less than five acres of arable land. The vast majority of smallholder farmers live in a cyclical pattern of poverty as they struggle to access markets and sell their products at the best price. Lack of market access means that farmers often lose money, even in a high growth season, and a perfectly good harvest goes to waste. With such a fragmented system in rural areas, it is extremely challenging for farmers to generate a profit to support themselves and their families.

Lack of market access means that farmers often lose money, even in a high growth season, and a perfectly good harvest goes to waste. With such a fragmented system in rural areas, it is extremely challenging for farmers to generate a profit to support themselves and their families.

Smallholder farmers are not insignificant. Collectively, they represent 500 million farms around the world and employ approximately 2 billion people. They are responsible for about 80 percent of the food consumed in Asia and Sub-Saharan Africa. As the global population size charges toward an estimated 9 billion by 2050, the demand on smallholder farmers to increase crop yield will only continue to rise, along with the critical need to mitigate post-harvest losses. Analysts predict that food access will need to increase by 70 percent to feed 2 billion additional people on the planet, and production in developing countries would need to almost double. Food security is a global issue, and one that requires partnerships across all sectors to solve.

Continue reading “Tech Start-Up Helps Farmers Grow More, Waste Less”

Innovator in Residence: Marilia Bezerra Offers Nine Lessons and One Question

This post was written by Sarah Healey ’18.

Marilia Bezerra spoke recently to The Sustainable Innovation MBA cohort as the third Innovator in Residence for the year. She is the Managing Partner at CARE Enterprises, CARE’s social enterprise venture that links producers in the world’s poorest communities with the formal markets necessary for those producers to sell their products and services. It focuses on business ventures with the potential for exponential growth and to become game-changers in the fight against poverty.

Marilia’s life has led her on a career path full of sharp turns and road blocks that created her story.

In telling her story she offered nine lessons and pieces of advice to
aspiring entrepreneurs:

Nine Lessions…

  1. Figure out how to become the connective tissue for the problems we need to solve. A fundamental ingredient for all of us stepping into the world is to figure out how to connect people to each other to solve problems.
  2. Telling your story can be limiting.
  3. Be keenly aware of your privilege –- Bezerra talked about how she won the privilege lottery. She grew up during a relatively stable time in Brazil and was raised in a middle-class family that afforded her opportunities in life, but gave her a sense of value of the most basic things.
  4. If you are going to say something, know what it means. When using metrics, many of the numbers mean nothing. For example, the calculation of how many lives a program touched. What Bezerra learned was to ask yourself what it means three time when stating metrics and figures. If at any point you cannot answer, then the metric likely does not have meaning.
  5. Sometimes you will need to take sharp turns to figure out what you are doing, and you need to just go for it! Life takes weird turns, close your eyes and say, ‘Mom & Dad, I got this.’
  6. Fundraising is like running a marathon — it is going to be uncomfortable, but you just keep running through it until it gets better.
  7. How you feel now is not going to last — Bezerra talked about the importance of needing to detach yourself from your story for a point in time. This powerful mechanism allows you to step outside and detach from life to get past the disruption.
  8. Take time off & really take it! –- it is tempting to think about what is next, but Bezerra talked about the importance of taking a real break when you are burnt out.
  9. After doing cool things, the expectation of what is next can be limiting. When you are taking a break and looking for the next steps, people will ask what is next, but do not let that limit your story.

…And One Question

Bezerra finished with a question for aspiring entrepreneurs: How are you going to get really good at working at the edge of chaos?

Innovator in Residence: Laura Asiala

This post was written by Keil Corey, Sustainable Innovation MBA ’18

Recently Laura Asiala, Senior Fellow at PYXERA Global and a Sustainable Innovation MBA Advisory Board member, joined this year’s cohort for an in-class discussion on the role that business can play in addressing some of the world’s most intractable challenges.

Before joining the PYXERA team, Asiala had been the Director of Corporate Citizenship at Dow Corning Company. Over three decades in the corporate sector taught her that environmental and social sustainability are not hindrances to business; rather, they can ensure long-term success and profitability. She carries that vision forward in her current role at PYXERA, where she works to leverage the strengths of corporations, governments, social sector organizations, educational institutions, and individuals to solve complex problems in inclusive and sustainable ways.

Of particular interest to Asiala is how corporations can and must play a role in achieving the United Nation’s Sustainable Development Goals (SDGs), also known as the Global Goals. Adopted in 2015, the Global Goals identify specific targets and timelines that aim to end poverty, protect the planet, and ensure prosperity for all. At PYXERA, she is working on aligning multi-sector stakeholders toward those ends.

Continue reading “Innovator in Residence: Laura Asiala”