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I was reading yet another story about the impact that venture capital companies are having on the economy of Boston. Good (scientific and technological) ideas emerge from the laboratories at MIT, Harvard and other Boston area universities. Venture capital firms swarm the best of these, offering start-up funding and a lot of advice on how to get new products to market and convince others to invest in them. The venture capital firms have learned a lot over the past few decades about picking winners and losers. They know what to look for. They measure their success in terms of the private investment capital they can attract (often by going public) and the increasing valuation of the companies they create, when they are later bought and sold. They don't actually have to make money in the short term to be considered a long-term success.
There are a lot of us around who know how to help companies, communities, organizations and agencies build social capital. That is, we know how to help companies improve corporate-stakeholder and corporate-community relations. We know how to build trust where only suspicion once reigned. If you can do this, you can multiple the return to capital realized by the venture capitalists AND produce fairer, more sustainable results. We know how to help extractive industries like mining and forestry, for instance, avoid the endless legal battles and costly delays that make it hard to get started and harder to function in a cost-effective way. They need to change the way they interact with host communities, regulators, and people likely to be affected by what they do. We can show them how to do that.
The largest hydroproject in Chile was just stopped by the courts because the companies involved did not make sufficient efforts to engage residents (including indigenous communities) in thinking about what to build, where to build and how to minimize impacts (by making smarter locational and design decisions). They never got around to talking about compensation for adverse impacts that could not be mitigated. Secret corporate decisions led to harsh public opposition. Legal and political advocates were able to delay and ultimately stop what looked to be a done deal. Huge oil and gas projects proposed in the Arctic are likely to be stalled in the same way, and appropriately so, if companies don't invest sufficient time, effort and money now in building trust, sharing decision-making responsibility, and minimizing social and environmental impacts. Oil, gas and mining interests in Africa are sitting on huge new finds, but they face long stalemates if they don't figure out how to build social capital. If local interests don't stop them, international NGO's like Greenpeace will. The old models that ignored the need to build social capital (i.e. good working relationships with those likely to be affected by what is being proposed) no longer work.
At the local level in the United States, its much the same story. Energy companies know that we need more electricity to support a growing economy; yet, efforts to initiate fracking (natural gas exploration), the siting of renewable energy facilities (like wind farms and large solar arrays) and large scale mixed use development projects in many cities are facing increasing opposition. What's sad, is that it would not be that difficult to help the companies involved generate the social capital required to permit (appropriately-sized sited) projects go forward without obstruction. Think in terms of Community Benefit Corporations. Any developer proposing to build any large project in a city or in a region would create a private corporation. This legal entity would own a portion of the assets created by the project. It would then distribute shares in that project to every resident or stakeholder. These shares would not be worth anything at the outset, but if the project goes forward with community and stakeholder support, the shares would gain in value. Thus, the developer and the community have a joint interest in finding a version of the propose project that everyone can support. Shareholders, or course, would be able to speak at annual meetings. They wouldn't have to plead for an opportunity to address the owners (to complain about unexpected social and environmental impacts), because they would be the owners. The directors of each Community Benefit Corporation would include a certain number of members identified by the investors, several selected by elected officials and some chosen by the full membership of the shareholders. (Rural Electric Cooperatives in the United States have been doing this for an awfully long time.) This is just one option for building shared commitments and restoring levels of trust.
Building social capital in something that most venture capital investors know nothing about. There are, however, organizations (mostly not-for-profits) with the knowledge and experience to provide investors with the advice and assistance they need. Increasing social capital translates into greater economic returns. It also translates into more socially and environmentally responsible development and restores trust that has been so eroded by the manipulation of public opinion by secret investors operating under made-up names implying they care about what happens to the average person. They don't. The political deadlock we are in now is caused fundamentally by a lack of trust. We can work to restore trust, increase the chances for development (of the appropriate kind) to proceed, enhance the growth of the economy and cause the benefits of new development to be shared in a fairer way. We just need to complement our fascination with venture capital (and an economy of start-ups) with a purposeful commitment to the creation of social capital. And the people with all the money need to acknowledge they need the help of advisors from the not-for-profit world who have been creating social capital for years.
There are a lot of us around who know how to help companies, communities, organizations and agencies build social capital. That is, we know how to help companies improve corporate-stakeholder and corporate-community relations. We know how to build trust where only suspicion once reigned. If you can do this, you can multiple the return to capital realized by the venture capitalists AND produce fairer, more sustainable results. We know how to help extractive industries like mining and forestry, for instance, avoid the endless legal battles and costly delays that make it hard to get started and harder to function in a cost-effective way. They need to change the way they interact with host communities, regulators, and people likely to be affected by what they do. We can show them how to do that.
The largest hydroproject in Chile was just stopped by the courts because the companies involved did not make sufficient efforts to engage residents (including indigenous communities) in thinking about what to build, where to build and how to minimize impacts (by making smarter locational and design decisions). They never got around to talking about compensation for adverse impacts that could not be mitigated. Secret corporate decisions led to harsh public opposition. Legal and political advocates were able to delay and ultimately stop what looked to be a done deal. Huge oil and gas projects proposed in the Arctic are likely to be stalled in the same way, and appropriately so, if companies don't invest sufficient time, effort and money now in building trust, sharing decision-making responsibility, and minimizing social and environmental impacts. Oil, gas and mining interests in Africa are sitting on huge new finds, but they face long stalemates if they don't figure out how to build social capital. If local interests don't stop them, international NGO's like Greenpeace will. The old models that ignored the need to build social capital (i.e. good working relationships with those likely to be affected by what is being proposed) no longer work.
At the local level in the United States, its much the same story. Energy companies know that we need more electricity to support a growing economy; yet, efforts to initiate fracking (natural gas exploration), the siting of renewable energy facilities (like wind farms and large solar arrays) and large scale mixed use development projects in many cities are facing increasing opposition. What's sad, is that it would not be that difficult to help the companies involved generate the social capital required to permit (appropriately-sized sited) projects go forward without obstruction. Think in terms of Community Benefit Corporations. Any developer proposing to build any large project in a city or in a region would create a private corporation. This legal entity would own a portion of the assets created by the project. It would then distribute shares in that project to every resident or stakeholder. These shares would not be worth anything at the outset, but if the project goes forward with community and stakeholder support, the shares would gain in value. Thus, the developer and the community have a joint interest in finding a version of the propose project that everyone can support. Shareholders, or course, would be able to speak at annual meetings. They wouldn't have to plead for an opportunity to address the owners (to complain about unexpected social and environmental impacts), because they would be the owners. The directors of each Community Benefit Corporation would include a certain number of members identified by the investors, several selected by elected officials and some chosen by the full membership of the shareholders. (Rural Electric Cooperatives in the United States have been doing this for an awfully long time.) This is just one option for building shared commitments and restoring levels of trust.
Building social capital in something that most venture capital investors know nothing about. There are, however, organizations (mostly not-for-profits) with the knowledge and experience to provide investors with the advice and assistance they need. Increasing social capital translates into greater economic returns. It also translates into more socially and environmentally responsible development and restores trust that has been so eroded by the manipulation of public opinion by secret investors operating under made-up names implying they care about what happens to the average person. They don't. The political deadlock we are in now is caused fundamentally by a lack of trust. We can work to restore trust, increase the chances for development (of the appropriate kind) to proceed, enhance the growth of the economy and cause the benefits of new development to be shared in a fairer way. We just need to complement our fascination with venture capital (and an economy of start-ups) with a purposeful commitment to the creation of social capital. And the people with all the money need to acknowledge they need the help of advisors from the not-for-profit world who have been creating social capital for years.