NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The setting couldn’t have been grander for Business Call to Action’s (BCtA) sixth annual forum Thursday in New York City. The streets were buzzing with anticipation of Pope Francis’ arrival later in the day, and the 70th session of the United Nations General Assembly was set to convene only hours and blocks away with an agenda that included adoption of the much-anticipated Sustainable Development Goals (SDGs).

The focus at the forum was squarely on the SDGs and, more specifically, how to make sure the private sector is engaged in them. During a breakout session on health care, Soraya Ramoul, director of access to health for Novo Nordisk, was asked if the SDGs might bring new “actors” to the scene. She warned the audience that she was going to tell the truth, then declared that, unfortunately, “The dialogue hasn’t seemed to change much.” She said she’d like to see governments asking for partnerships instead of “enlightened businesses” always taking the lead in seeking opportunities.

Joseph Kibachio, head of the non-communicable disease department at Kenya’s Ministry of Health, was on the same truth-telling page. While the Millennium Development Goals have achieved a lot, he said, they’ve always seemed – to governments, at least – like throwing money at problems. He is hoping the SDGs will be more about partnerships and investing in people, not diseases.

NextBillion will have more to say about the BCtA forum next week. And the world will have much more to say about the SDGs – and their impetus for finding new collaborations and, ultimately, solutions – in the months and years to come.

– Kyle Poplin

The Pope Disappoints on Climate Change – But Does it Matter?

There have been 266 popes in the long history of the Catholic church, and this week Pope Francis became only the fourth to visit the United States, and the third to visit Washington, D.C. But his visit to the capital was highly anticipated for another reason: After his impassioned encyclical earlier this year, which declared climate change to be “one of the principal challenges facing humanity,” many expected him to use the first-ever Papal address to a joint session of Congress to make a bold case for action to America’s power elite.

Instead, he delivered a rather vague call for “a courageous and responsible effort to redirect our steps and to avert the most serious effects of the environmental deterioration caused by human activity,” in an address that never mentioned the words “climate change” at all. Afterward, some analysts expressed surprise at the meekness of Francis’ remarks.

Personally, I was more surprised by his assurance that he has “no doubt that … this Congress [has] an important role to play” in addressing the challenge, considering that over 56 percent of its current majority party deny or question the science behind global warming. (Indeed, the second-highest ranking Republican on the House energy committee is apparently convinced that the earth is actually cooling.) And it bears mentioning that Republicans aren’t the only ones who don’t share the pope’s sense of urgency: Francis’ own church remains reluctant to divest from the fossil fuel industry.

But after this week, it’s becoming clear that the movement to fight climate change may be better off focusing on business than on popes and politicians. On Wednesday, nine major companies ranging from Nike and Starbucks to Procter & Gamble and Walmart joined a global campaign promoting low-carbon business, announcing commitments to transition to 100 percent renewable energy. What’s more, a new report released this week found that 436 institutions and 2,040 individuals representing $2.6 trillion in assets have agreed to sell their fossil fuel investments. These numbers represent a 50-fold increase from a year ago – astonishing momentum for a divestment movement that started on New England college campuses just a few years ago. And though the actual amounts divested are far less than the $2.6 trillion headline figure, this activism has clearly gotten the fossil fuel industry’s attention.

Whether it’s due to voluntary actions or public pressure, significant change in the business community’s approach to the environment has never seemed more likely. If this transformation happens, it will be far more impactful – and inspiring – than anything the Vatican (or the Congress) has managed.

– James Militzer

A B-Corp for Car Companies? For ALL Companies?

Speaking of fossil fuels and business, this was a watershed week for Volkswagen. By that, I mean they were hit by a self-made tidal wave.

Volkswagen admitted that it used software on their “clean diesel” engines to reduce the emissions of harmful nitrogen oxides, when regulators were testing them. The deception led regulators to conclude the VW diesel engines were environmentally friendly when they were anything but. VW confirmed 11 million diesel vehicles are affected.

As Sharon Silke Carty, editor-in-chief of Yahoo Autos explained, VW got away with it not just because of an overburdened regulatory system, but also due to an automotive media that rode shotgun with the hype around clean diesels and showered the company with awards about their environmental benefits.

“As editor-in-chief of Yahoo Autos, I would love to be able to pledge that we will be smarter and will catch these things before we hand out prizes and write glowing reviews about the next hot thing,” Carty wrote. “But that would be disingenuous. We are not engineers. We can’t dismantle each vehicle we drive and strap pollution-testing equipment to reliably verify every claim a car company makes.”

It’s true. We cannot rely on the word of companies that they truly have an environmental or social mission and are carrying it out. And, in the case of car companies, we as a public certainly can’t depend on regulators to ensure for the common good.

On NextBillion, we do our best to ensure that contributors, many of whom write about their own social enterprises, are in fact pursuing the social missions they say they are. But we aren’t inside the companies, nor are we interviewing their customers and suppliers.

Maybe there’s another way – the B Corp way. Consider Kickstarter, the center of the crowdfunding universe, which this week announced it would re-incorporate as a “public benefit corporation.” As the New York Times reported this week, this newish designation doesn’t mean Kickstarter gives up its profit seeking, nor does it relinquish the ability to be purchased or sell public stock in the future.

“… as a B Corp and now a public benefit corporation, legal experts say, Kickstarter is holding itself to a particularly high standard of transparency.

“A public benefit corporation is only required to report its social and environmental performance to shareholders every two years,” said Kyle Westaway, a lawyer based in New York and managing partner of his own practice, who works with public benefit corporations. “But Kickstarter chose to go above and beyond and report to the public every year as a B Corp. This represents a real commitment to transparency.”

Companies will always try to hype products and services as more beneficial to the consumer (not to mention the environment and society) than they actually are. It’s the way of business – always has been, always will be. But consumers are growing weary of it. Today, there are about 11 million very passionate (and now, very angry) VW owners who thought they were doing their share to help the environment, who now know they were exponentially hurting it. But systems like B Labs, which certifies B Corp designation, offer at least another level of commitment by the company and accountability for the public. We need more of these third party certification systems, not just to point out the bad actors, but to help consumers make the right choices – be it Fair Trade Coffee, certified organic chicken, or apparel free of child labor. It’s in the best competitive interests of businesses to seek these special designations as well. Kickstarter founders Yancey Strickler and Perry Chen told the Times that they hope to set an example for the next generation of entrepreneurs, and one would hope, large scale companies.

“As younger companies come up and think about how they operate and how they want to be structured, maybe they won’t be so easily swept up by all the usual choices,” Mr. Chen said. “Maybe they’ll be thinking long term, thinking about how to look after the things they care about.”