Published on September 5, 2012
By Kent Hoover, Washington Bureau Chief | The Business Journals
Bonny Moellenbrock, executive director of Investors Circle, talks about how her firm’s investment strategy, while Frank Knapp, president of the South Carolina Small Business Chamber of Commerce listens.
The 47th floor of the Hearst Tower in Charlotte seemed like an odd place to talk about how businesses can benefit society and the environment while at the same time pursuing profits.
But that’s where the American Sustainable Business Council made its stand during the Democratic National Convention. The law firm K&L Gates, which has 41 offices around the world, hosted ASBC in its penthouse offices. The firm has worked with the council before, and many of its clients are trying to build sustainable businesses, so it made sense for ASBC to hold its “Summit for a Sustainable Economy” there. Plus it’s a heck of a view.
The summit kicked off with a session on how capital can be used in a responsible way, to help socially responsible businesses or empower low-income entrepreneurs. Most banks are primarily concerned with their borrowers’ profits, not their impact on society. That’s why “we have to go outside the box,” said Frank Knapp, president of the South Carolina Small Business Chamber of Commerce, who moderated the session.
So ASBC went outside the box with this panel.
First there was Roger Smith, president of American Income Life, an insurance company that markets its policies to working-class and middle-class Americans and has a unionized work force. Smith thinks unions are good for business, since unionized workers make more money and thus have more money to spend. He’s so pro-union that he doesn’t see any conflict between his goals of expanding union membership while also encouraging the growth of small businesses in the U.S.
The last thing most small business owners want is to deal with a union, but Smith doesn’t mind having one at his business.
“It just keeps me in check,” he said.
Then there was Bonny Moellenbrock, executive director of Investors’ Circle, a Durham, N.C. firm that has helped angel investors and financial institutions invest more than $155 million in 250 socially responsible early-stage companies. She’s particularly excited about the potential for crowdfunding, which will allow companies to raise small amounts of money from lots of investors through web-based intermediaries.
“We’re extremely excited,” she said, because crowdfunding will allow ordinary Americans to make equity investments in businesses they know and believe in.
The Securities and Exchange Commission, however, is moving slowly on the regulations governing crowdfunding, which Congress legalized for equity investments in April.
“It’s going a little slow — we’re a little concerned about that,” Moellenbrock said.
Also on the panel was Brian Schneiderman of Self-Help Credit Union, a North Carolina-based community development financial institution that focuses on lending and real estate development in low-income communities, as well as serving minorities and women. The goal is “creating access to economic opportunity,” but the credit union makes sure it makes enough money to be sustainable itself, Schneiderman said. The default rate on its loans is less than 1 percent, he noted.
The credit union also tries to encourage innovative approaches to solving environmental problems and other public priorities. For example, if it invests in a biomass project, and that company proves its model is economically feasible, banks will see that success and start providing more capital to that industry, he said.
Finally, there was Shivani Siroya, CEO and founder of InVenture, a business that’s established an alternative credit score for people who wouldn’t be fairly judged by conventional credit scores. For example, immigrants may not have a Social Security number and cash-based businesses may not have a credit history. But their landlords and customers can vouch for them, and those references are incorporated in what Siroya calls a “more inclusive” credit score.
Three large banks in India are using inVenture credit scores; so are two community development financial institutions in the U.S.
For ASBC, innovations in socially responsible capital are just the start.
“The key to our economic future lies in policies that encourage and enable businesses to innovate to be sustainable, not just financially, but socially and environmentally as well,” said ASBC Director of Policy Richard Eidlin.