A Poem

The Future of Business

I see shiny buildings

they are interacting with the sun

water circulates within their walls,

purifying and being purified as it circulates.

I am in those shiny buildings

and I look back at my history.

Business was once powerful;

it wrote the rules

it competed and grew fat

it depleted our resources;

it conquered, and brought inequality.

It served itself.

But now, we have learned to really live, together.

Business is at our service

to build the technology we need.

We have a new model.

We are, each of us, both consumer and producer.

We create and we share our gifts and our products.

When we are finished using a product, the waste becomes a resource

for something new.

How did we get here?

Business had to become sustainable.

Company by company, it adapted its financial reporting to sustainability reporting.

Consumers became loyal only to brands that continued raising the bar on transparency, human rights, and better environmental practices.

Technological innovation brought us the ways to fulfill all our basic needs

and disrupted all the top-down models we were used to.

The internet of information brought us the internet of things.

It was exciting to come forward with one's own invention and to share a new product

that others would want to use.

We had an explosion of entrepreneurship.

With so many entrepreneurs, our largest businesses had to become not only leaders in sustainability,

but great places to work

for creative, entrepreneurial individuals.

So in the end we let go of our old addiction to squeezing quarterly profits

out of our people and our resources.

The businesses that held on to that old model

simply lost their best employees, their consumers, and, inevitably, their investors too.

And here we are, in our shiny, self-sustaining buildings

in sustainable cities,

feeling creative.

And we still have nature.

She has not been destroyed.

She is, in fact, happy.

June, 2015

Casino Capitalism and the Way Forward

Denmark has decided to freeze its economy for a few months, with the government subsidizing employer costs like salaries so people won’t be laid off during this crisis. And providing for the unemployed. When you have a welfare state in place, and when economics is about income and costs, keeping cash flow flowing, it seems plausible that decisive action like this could work.

But the American economic model is casino capitalism. Masters of the Universe buy and sell pieces of our economy every day, putting the financial system, originally supposed to fuel and support entrepreneurship, on a roller coaster ride we all hope will go well. Our retirement system works like this: the Department of Labor has encouraged American workers to hand over a portion of hard earned wages every month to gambling professionals. These professionals are good at their jobs, but it’s a guessing game and a roller coaster ride for everyone.

When companies get very big, and their stock is publicly traded, and their ownership is diluted among many, Short-Term-Shareholder logic takes over. Growth is king. Margins must continue widening. Revenue must increase and costs must be cut. Corporate decision-making is ruled by a nebulous greedy monster that has no face: it’s the crowd. Corporate decision-making becomes irrational, drawn to behaviour that puts profits over everything. Over human life, even. 

Imagine if instead of human shareholders we had robots programmed to seek only profits. At a time like this, companies would be programmed to keep their workers working, and at maximum productivity. If a competitor firm had its employees wiped out by a virus, so much the better. Money money money.

My cousin who is a single mother of two with rent to pay has already lost both her jobs. Do the robots at the top care?

This pandemic puts us at a crossroads. Will we jump into a competitive bloodbath feet first? Will we condemn our citizens to a looting war, to a Lord of the Flies world while the rich retreat to island paradises with heaps of cash? Or can we recognize that we are brothers and sisters, interconnected and in community? 

When Europeans came to the United States, they brought a mentality of conquest and growth, and immediately began expanding their wealth on the back of slave labor. They wiped out the philosophies of the indigenous peoples who had been in America before: philosophies not without violence, but where life is cyclical like the seasons and to be shared in community. 

Short-Term-Shareholder culture will destroy us. We should not keep going down this path. The practical question of how to switch gears so late in the game, and now as our house-of-cards economy is about to crumble, is the hardest to answer. 

But there are models and there are people with answers. The simplest, clearest existing models are in Scandinavia. I started by citing Denmark’s answer to this economic crisis, which can work for Denmark where there is a welfare system in place. 

Here is some of the way forward, in bullet points:

-introduce checks and balances to the shareholder model. The new (already existing) model is stakeholder capitalism. Corporations and societies must create value for all stakeholders: workers, the public good (first and foremost care for the environment and recognition of our proper place within nature), community, consumers, families, and so on. There are ways to do this. Multinational corporations can use the Integrated Reporting model to report on deployment of six capitals: financial capital; manufacturing capital; human capital; social and relationship capital; intellectual capital and, natural capital. And on value creation for all stakeholders.

-companies will also need to map their growth against planetary boundaries such as CO2 emissions limits, toxic chemical impacts, and ozone.

-regulate, regulate, regulate. No share buybacks. Heavy taxation on pure financial profits. No offshore wealth hoarding, risky speculation with other people’s money, senators selling out just ahead of the crash they are overseeing, etc.

-build new models for financial stability in retirement that are removed from gambling. This could include providing services to the elderly for free.

-rebalance inequality. The many side effects of inequality (for example, that the increased cost of living means smart people no longer choose to be teachers) need to be addressed, first of all by reducing inequality through tax policy, but in many specific ways as well.

-break up monopolies, oligopolies, and concentrations of power, particularly in tech.

-for the love of God, healthcare for all. 

We have to do all this, AND freeze our economy like Denmark, overnight. There is certainly no time to lose.

March 21, 2020

The View From Davos: The Global Economic System Is Transitioning to Stakeholder Capitalism

Originally published on www.inc.com on January 24, 2020.

First BlackRock, and then Goldman Sachs. Money is stepping in to drive sustainable change in places where regulation is not.

BlackRock CEO Larry Fink's annual letter to corporate CEOs was a call to action on climate change.

And this week, Goldman CEO David Solomon, speaking at the World Economic Forum in Davos, said the bank will no longer take a company public if it doesn't have a diverse board of directors.

As world leaders wrapped up a week of high-level talk at Davos, the theme was clear: Our house is (still) on fire, and we need new, more diverse leadership for a new kind of capitalism -- called stakeholder capitalism -- to fix it.

The mood in Davos: The global economic system is at a major tipping point. This was highlighted by one exchange in particular: Time magazine Person of the Year Greta Thunberg, the teenage climate activist from Sweden, responded to criticism that she should study economics by tweeting, "My gap year ends in August, but it doesn't take a college degree in economics to realise that our remaining 1.5° carbon budget and ongoing fossil fuel subsidies and investments don't add up."

The point about stakeholder capitalism is that if companies continue to put narrow, short-term profitability above all else, rather than seeing their companies as actors in a connected system of stakeholders, community, and planet, they will be responsible for the fallout caused by excess emissions, waste, and income inequality -- and their profits will likely come under threat in the process.

In the BlackRock letter, Larry Fink predicted an accelerated reallocation of capital, coming faster than we see the evidence of climate change itself. And he talked about the responsibility of CEOs in an interconnected world. "We believe that all investors, along with regulators, insurers, and the public, need a clearer picture of how companies are managing sustainability-related questions," wrote Fink in the letter. "This data should extend beyond climate to questions around how each company serves its full set of stakeholders, such as the diversity of its workforce, the sustainability of its supply chain, or how well it protects its customers' data. Each company's prospects for growth are inextricable from its ability to operate sustainably and serve its full set of stakeholders. The importance of serving stakeholders and embracing purpose is becoming increasingly central to the way that companies understand their role in society. As I have written in past letters, a company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders."

From Davos, Goldman's Solomon echoed the stakeholder message. "I'm a big believer that unless you take care of your stakeholders more broadly, in the medium and long term you won't deliver outstanding returns," Solomon told CNBC.

He then stressed the need for diversity with a strong statement, which is part of a broad movement for greater gender and racial diversity on boards of publicly traded companies. "I think from a governance perspective, diversity on boards is a very, very important issue, and we've been very, very focused on it," he said in the interview. "I look back at IPOs over the last four years, and the performance of IPOs where there's been a woman on the board in the U.S. is significantly better than the performance of IPOs where there hasn't been a woman on the board. And so starting on July 1st, in the U.S. and Europe, we're not going to take a company public unless there's at least one diverse board candidate, with a focus on women, and we're going to move toward 2021 requesting two." 

Plenty of research shows that companies with diverse boards perform better than those with traditional, non-diverse boards.

California was the first U.S. state to actually mandate that boards of publicly listed companies include women. India, Germany, Australia, Norway, Spain, France, Italy, Denmark, Finland, Iceland, the Netherlands, Belgium, and Israel had already instituted similar rules or guidelines, following heated debates on the merits of this type of affirmative action.

The announcement by Solomon places the emphasis on value creation from diversity. When more women and minorities sit on boards, companies are more likely to evaluate stakeholder viewpoints and integrate a more purposeful approach into corporate strategy.

The message from Davos is clear: Listen to your stakeholders, and act with environmental and social purpose.

Airbnb's New Approach: Turning Stakeholder Value Into Shareholder Value​

Originally published on www.inc.com on January 21, 2020.

As Airbnb prepares for an IPO this year, instead of doubling down on messaging about maximizing shareholder returns, the company took a hint from the Business Roundtable and announced a new approach focused on value creation for all its stakeholders. Last August, the Business Roundtable updated its statement on the purpose of corporations, saying that rather than focusing exclusively on profits for shareholders, businesses should create value for all stakeholders, including employees, customers, suppliers, and local communities. BlackRock CEO Larry Fink echoed the sentiment in his recent CEO letter, calling for businesses to do their part on environmental and social sustainability issues such as climate change.

Airbnb spelled out in an announcement on its website the five stakeholders it considers important, the priorities and principles it will focus on for each, and the metrics it will use to measure success and value creation. "Serving all stakeholders is the best way to build a highly valuable business," the statement said, "and it's the right thing to do for society."

The company listed its main stakeholders as guests, hosts, communities, shareholders, and employees. As an example, for communities Airbnb said it wanted to focus on sustainability around travel. "We are measuring the carbon footprint of both Airbnb's corporate operations and the carbon footprint of travel facilitated by the Airbnb platform," the statement said. "Measuring our impact informs our efforts to reduce our carbon footprint and set a new standard for sustainable travel."

The company said it would put two of its key executives in charge of the project, and acknowledged that its new strategy is about "problems and opportunities that will take multiple teams working over multiple years to solve." The statement said it expected the strategy would invite criticism.

The implication, especially with the announcement coming in the run-up to an IPO, is that Airbnb bets creating value for all stakeholders will actually translate into creating more value for shareholders than if the strategy were to focus narrowly on shareholders alone.

Those familiar with risk management would likely make the same bet: A stakeholder approach attempts to address major risks that can upend a business and detract from its bottom line. Getting ahead of those risks means being serious about engaging with stakeholder expectations.

Airbnb's main operational risk is the safety of guests, and the company put that front and center in its stakeholder strategy. Its metrics for the "guest" stakeholder category are: number of personal safety incidents, percentage of stays where both hosts and guests have a verified identity, and percentage of listings that are verified (the goal is 100 percent by December 15, 2020).

Transparency in disclosure, particularly in reporting risks, progress, and failures, is essential to shareholder value. This is why in today's complex world, greater focus on each stakeholder and each area of risk and opportunity, and the kind of transparency that builds trust, are parts of the shareholder equation.

Airbnb is certainly exposed to reputational risk. As it disrupts traditional travel and tourism markets, it has been criticized for driving housing costs up, upending the hotel business, and putting unprotected travelers (and hosts) at risk. Local and national governments have stepped in and in many cases regulated or outlawed Airbnb-type rentals. And landlords often ban Airbnb sublets. A clear focus on stakeholders is also a step in the direction of managing reputational risks more proactively.

Airbnb notes that its announcement is only a step. "We are early in our work. And we are far from being a perfect company, which is why we want to share what we're doing," the statement said. Outlining its stakeholder map and issues, setting goals, and admitting there will be bumps in the road is realistic and also strategic. Airbnb is taking a step toward illustrating what the Business Roundtable is now defining as the purpose of a corporation. It is starting to clarify what that means, and setting out to prove that the stakeholder/shareholder conversation isn't "either/or" but "yes, and."

How to Respond to Larry Fink's Call to Action

Originally published on www.inc.com on January 15, 2020.

The sense of urgency is rising like a hot thermometer.

In BlackRock Chairman and CEO Larry Fink's latest annual letter to CEOs, he sounds the climate change alarm in a way that should make everyone in business and finance sit up and pay attention.

And for the first time ever, the World Economic Forum's annual Global Risks Report shows all five of the most likely global risks according to survey respondents to be climate-related.

Larry Fink publishes a letter every year addressed to the CEOs of the companies BlackRock invests in. For several years he has used the letter to step up a call for companies to create value for all stakeholders, to embed a greater sense of purpose within their companies, and to focus more on environmental, social and governance risk.

This year the letter reads as if he had seen a ghost.

"Every government, company, and shareholder must confront climate change," he writes.

Fink points to the kinds of disruptive questions climate change is raising, and the growing chorus of investors around the world asking them. "Will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds?" he writes. "What will happen to the 30-year mortgage - a key building block of finance - if lenders can't estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas? What happens to inflation, and in turn interest rates, if the cost of food climbs from drought and flooding? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts?"

Because of these questions, Fink predicts an accelerated reallocation of capital, coming faster than we see the evidence of climate change itself.

One day after Larry Fink's letter was circulated, the World Economic Forum presented its annual Global Risks Report ahead of its 2020 Davos summit, and climate risks took center stage.

In a ranking of the most impactful and the most likely risks over the next ten years, the top risks listed by likelihood are: extreme weather, climate action failure, natural disasters, biodiversity loss, and human-made environmental disasters. Listed by impact, the top five are: climate action failure, weapons of mass destruction (remember that?), biodiversity loss (this means food shortages), extreme weather, and water crises.

WEF notes that these risks are interconnected, and that the urgency is rising. In his preface to the 2020 report, WEF President Borge Brende writes: "On the environment, we note with grave concern the consequences of continued environmental degradation, including the record pace of species decline. Respondents to our Global Risks Perception Survey are also sounding the alarm, ranking climate change and related environmental issues as the top five risks in terms of likelihood - the first time in the survey's history that one category has occupied all five of the top spots."

The report points to turbulence as the "new normal" and raises concerns that multilateral institutions may not be equipped to address the geopolitical, environmental, economic and social risks on the horizon. Social upheaval and "fraying fundamentals" are seen as grave global problems. And the report emphasizes economic costs of climate change. It quantifies the economic stress and damage from natural disasters in hundreds of billions of dollars every year, and emphasizes that humanity has little more than a decade to reverse global warming trends, as indicated by scientists. Dystopic scenarios around cyber security are also identified in the report.

For business leaders, the Larry Fink letter and the WEF report are strong reminders of the importance of strategic and structured risk management. Companies need to have governance and corporate culture in place able to identify and prevent risk. They need to increasingly layer risks related to environmental, ethical and human aspects onto the usual financial and operational risk mitigation processes. These new ESG (environmental, social and governance) risks need to be assessed and prioritized, and appropriate responses needed to be readied and implemented. And these new risks and responses need to be communicated and reported on to stakeholders, including shareholders. 

COSO, a committee set up by five major accounting and auditing associations to provide guidance on enterprise risk management (ERM), teamed up with the World Business Council for Sustainable Development and produced a framework for using an ERM approach to manage ESG risks. The framework helps businesses understand how to create a risk-sensitive culture, strategize and prioritize around risk, and take action to bolster resilience.

Some of the actions COSO advises are mapping the company's mandatory or voluntary ESG requirements, embedding ESG-related skills in hiring practices, conducting an ESG SOT analysis, understanding metrics for expressing risk, identifying external changes that may affect business objectives, and reporting relevant risk information internally for decision-making.

At a time of increasing intensity, complexity and pace of work, getting a handle on the vast panorama of interconnected risks that looms for an organization, and making plans around how to position the company to weather them, is more important than ever.

All this may sound complicated. In his letter, Larry Fink directs CEOs to two frameworks for reporting: SASB and TCFD. SASB is the Sustainability Accounting Standards Board, which has created guidance for reporting on material ESG risk by sector. TCFD is the Task Force of Climate-related Financial Disclosures. These offer guidance on reporting for large, listed companies. But smaller companies should be aware of these tools and the direction they are taking financial reporting, and as a consequence, the entire financial system.

Be aware, be agile, and use available tools to navigate the new world this new decade brings. As Larry Fink writes, "we are on the edge of a fundamental reshaping of finance....In the near future - and sooner than most anticipate - there will be a significant reallocation of capital." Be ready.

How Time Magazine's Choice of Person of the Year Will Impact Your Business

Originally published on www.inc.com on December 12, 2019.

Time Magazine doesn't choose its "Person of the Year" lightly. The process begins every Fall with nominations, followed by teams of researchers helping to select the finalists. The winner can be a public figure, such as Mahatma Gandhi, a group, such as the Ebola fighters of 2014, or an inanimate object, such as the computer. But it always captures what is most significant in the moment.

What Time's editors realized this year, with their selection of 16-year-old Swedish climate activist Greta Thunberg, was not just that Thunberg was a popular figure garnering attention from millions of people around the world and mobilizing youth to strike for action on climate change. They realized that her success meant that change is happening.

Time's profile on Thunberg notes: "She has succeeded in creating a global attitudinal shift, transforming millions of vague, middle-of-the-night anxieties into a worldwide movement calling for urgent change. She has offered a moral clarion call to those who are willing to act, and hurled shame on those who are not. She has persuaded leaders, from mayors to Presidents, to make commitments where they had previously fumbled: after she spoke to Parliament and demonstrated with the British environmental group Extinction Rebellion, the U.K. passed a law requiring that the country eliminate its carbon footprint." 

Time notes that 60 countries in the past year have said that they will eliminate carbon emissions by 2050, and that as this year comes to an end the momentum for  implementing clean energy policy has increased dramatically. In the US, California and other states are heavily focused on emissions and on other aspects of environmental policy, as are many cities. A backlash against political correctness, including high-profile complaints about water-saving toilets and energy-saving lightbulbs, rings hollow in the face of tangible effects of climate change like fire and flooding.

Here are three ways the Greta phenomenon will impact your business:

1. Be prepared to decarbonize.

If so many cities, states and countries are committing to reduce greenhouse gas emissions, businesses will eventually be required to do their part. This will include reducing the carbon footprint of your products during their lifecycle, reviewing the sources of energy you use to run your offices and servers, and cutting back on your transportation emissions. It might very well mean factoring in a price on carbon. While you're at it, you will probably have to step up other sustainability programs like waste management and elimination of single-use plastics.

2. Expect pressure from customers.

Whether your clients are other businesses or end consumers, they are likely to examine your sustainability record with a fine-tooth comb. It may sound counter-intuitive, but some young consumers will want to know what your company is doing to reduce consumption, given that the consumer culture itself is being perceived as a villain. Be prepared to be held to a much higher environmental standard.

3. Expect employees to rise up in protest.

Greta has become a symbol of empowerment. Employees have demanded big-name companies such as Amazon and Google act on climate, and yours will too. The workplace (or school or college campus) is the most immediate sphere of influence a young person can have.

Whatever you do, it won't be enough. Many companies started decades ago on the path to sustainability with a mandate to do less harm. Soon that became an opportunity to do more good. Now, the stakes are much higher. Your company will be expected to commit to zero carbon emissions. It will be expected to pay a carbon tax. You will be expected to take a stand publicly on environmental and social issues; your employees will demand that. And over time, you will be expected to turn your company into a regenerative business, with only positive impacts.

Where should you start? Take a look at the environmental and human rights impacts you have now, both your own and those of your suppliers. Figure out how to map and measure these impacts. Once you have a sense of your footprint, you can get creative. Your strategic planning and investment strategy should be looking at market factors anyway, and these will need to include the Greta phenomenon. The cover of Time has spoken.

How to Get to a Zero Carbon Future

Originally published on www.inc.com on December 3, 2019.

A sobering new climate calculator makes it clear that in order to keep the earth from overheating this century, there aren't any quick and easy solutions. Instead, humanity will need everything in our toolbox and then some. Scientists have affirmed that the consequences of a global temperature rise of more than 1.5 degrees Celsius over the pre-industrial levels of the late 19th century would be dire, and now it is up to policy makers and industry to come up with solutions.

MIT Sloan, Ventana Systems, and Climate Interactive developed the En-Roads Climate Solutions Simulator, which allows you to input hypothetical policy actions and see their effects. For example, what would happen if governments heavily incentivized electrification of transportation? You can adjust the incentives using a sliding scale, and see what changes in the current global energy mix, how that affects greenhouse gas emissions, and what temperature increase that translates into for the year 2100.

The simulation tool, with the underlying assumptions built into it by its developers, makes it possible to look at global energy and transportation systems holistically and see how one policy change might set off a series of consequences. For example, the tool assumes that incentivizing nuclear energy might change the mix of renewable energy, but not necessarily convert significantly more energy away from fossil fuels. Among other uses, the simulator can be played as a game.

For business leaders, it makes sense to be ready for the major policy changes that might be on the horizon, whether at the local, state, federal or global level. There are discussions in Congress around legislating a carbon price or tax, and some states participate in carbon credit trading programs. There is already a surprising amount of global dialogue and alignment, around things like shifting cars from combustion engines to hybrid and electric, and energy efficiency for new buildings. For a business, it will be increasingly important to look at energy sources and emissions, including in the supply chain, and plan for more stringent regulations or pressure from customers or investors to go clean. Although the US is in the process of withdrawing from the Paris Agreement on climate change, the rest of the world is negotiating how to structure the global governance called for under that agreement, during climate talks currently taking place in Madrid. The outcome of those talks will likely shape the direction of policy in the US as well.

The MIT group isn't alone in trying to project effects of policy changes on carbon in the atmosphere, and the resulting global temperatures.

Citigroup's Global Perspectives & Solutions research arm also recently published a 165-page volume looking at the path to net zero carbon, humanity's "moonshot for the 21st century." This report, titled "Energy Darwinism III - The Electrifying Path to Net Zero Carbon" traces how much more carbon can be put into the atmosphere, maps out emissions, and suggests a path forward to a zero carbon future. The report highlights key areas to focus on, by fuel, by activity, and by country, and urges electrification of industry and transportation on a grand scale.

And the Center for American Progress, a progressive Washington think tank, put together a "100 Percent Clean Future" analysis looking at how we get to that target by 2050. The authors note that this is the new goal post, if we want to be on track for 1.5 degrees by 2100.

That may sound radical, but already in 2018 the European Union announced a goal to reach net-zero emissions by 2050. The EU is currently figuring out how to dramatically reduce its emissions by 2030, since its current goal of reducing emissions by 40% in 2030 over 1990 levels isn't thought to be ambitious enough.

It's not new to try to map out the best path to carbon neutrality in order to save ourselves from the kinds of disasters scientists are predicting will occur under a business-as-usual scenario. These include sea level rise, ocean acidification, extreme weather events, loss of biodiversity, food shortages, and more climate refugees.

Scientists and others have been sounding the alarm for decades. In recent years, research has focused on detailed impact analysis and concrete solutions. The "Risky Business" project led by Republican former Treasury Secretary Henry Paulson, with current Democratic presidential candidates Michael Bloomberg and Tom Steyer, published its research in 2016. The research said it was economically and technically achievable to reduce climate risk by building a clean energy economy through electrification, renewable energy generation, and energy efficiency. Private sector investments of $320 billion a year would be needed through 2050, it said, but they would create over a million new jobs.

The MIT simulator is perhaps the most eye-opening tool to come along so far. At Bloomberg's recent Sustainable Business Summit in New York, MIT Sloan Professor John Sterman led attendees through a simulation exercise. As volunteers chose policy solutions to try, the audience could see the impact on global temperature, versus the impact of a business-as-usual scenario. Pretty soon it became clear what the big takeaway was: as Sterman pointed out, there are no silver bullets. It is still possible for us to limit the global temperature rise to 1.5 degrees Celsius and limit the damage to civilization as we know it. But it will take, well, everything we've got.

Google Wants to Help You Use AI for Social Good

Originally published on www.inc.com on November 27, 2019.

Google is launching a new Startups Accelerator focused on the United Nations Sustainable Development Goals, which include eliminating poverty, delivering quality education, and improving healthcare around the world. The announcement reads: "Geared toward social impact startups working to create a healthier and more sustainable future, the accelerator provides access to training, products and technical support. Startup founders will work with Google engineers and receive mentoring from over 20 teams at Google, as well as outside experts and local mentors."

The project is part of Google's strategy to help drive sustainable solutions for humanity using technology, particularly artificial intelligence. Google is fraught with controversy on many fronts, including demands from employees for more action on climate. And there are fears surrounding AI, for example that an application could bring unintended consequences. But Google, and others, offer a growing collection of tools and opportunities social entrepreneurs might want to think about (carefully) taking advantage of.

In the Fall of 2018, Google launched an AI Impact Challenge, awarding the 20 winning applicants with funds, coaching and inclusion in a prior accelerator program. The idea was to help social entrepreneurs (and others with similar goals) find ways to use AI to make progress on the Sustainable Development Goals. Google then put together a report, "Accelerating Social Good with Artificial Intelligence," based on the information gleaned from evaluating applicants. The report offers valuable insights and lessons the company learned during the process.  

Google has also done research on using AI as a tool to accelerate the transition from a linear economy (where we take resources from the environment, make them into products, and then throw those products away into landfill) to a circular economy (where we reuse, repurpose, and recycle products, designing them to last longer, incorporate renewable materials and be recyclable, where possible). Google and the Ellen MacArthur Foundation recently published a report, "Artificial Intelligence and The Circular Economy," highlighting the potential of AI to accelerate a circular economy transition, with a deep dive into two sectors: food and consumer electronics. Separately, Google Cloud and SAP recently hosted a contest for social entrepreneurs on circular economy solutions.

The two reports illustrate ways in which artificial intelligence can be deployed for social good. For example, a company in the Netherlands called Skilllab B.V. is using AI to help recommend career paths to refugees, and US-based Nexleaf Analytics is working on helping ensure vaccinations are delivered safely to the children who need them. Another company, Rainforest Connection, uses AI to dissect sound patterns to identify illegal logging. The circular economy report cites four companies working with AI algorithms to create plant-based foods that replace meat, fish, dairy and egg products. 

Here are some tips and tools for business leaders looking into AI for social good.

1. First of all, AI may not be the answer to every problem. According to Google, the first step is to evaluate whether there are more effective, cheaper ways to achieve desired outcomes, and whether data is readily available. Machine learning won't be helpful without good data. "For AI to prove solutions... it not only requires the four steps of data collection, data engineering, algorithm development, and algorithm refinement, it also requires a clear understanding of the actual problem and what we specifically need AI to solve," the circular economy report reads. "Put simply, if humans cannot establish the relevant inputs and outputs clearly, a machine cannot solve a problem." 

2. AI can be useful in certain cases, for example to predict future events, to personalize a user experience, to categorize, and to detect infrequent events that change over time. For more information on when to use AI, see Google's People + AI Guidebook, one of many tools Google offers online.

3. OpenAI is another resource with helpful tools set up by a team of people in San Francisco, unrelated to Google. OpenAI's mission, according to its website, "is to ensure that artificial general intelligence benefits all of humanity." That's important as developers try to ensure that AI solutions are ethical and avoid dangerous consequences. OpenAI offers learnings, case studies and research. Take a look.

4. Independently of its accelerator programs, Google offers the opportunity to learn from its machine learning experts. In its AI Education web pages, Google offers courses, content, and the AI for Social Good Guide. Be ready to spend hours here. For basic training, start with Google's "Teachable Machine" tool that's accessible to everyone.

5. AI is becoming more accessible. TensorFlow is an open source software platform that makes machine learning and deep learning tools available to everyone. And on GitHub, you can collaborate on projects with other developers.

6. AI can help with product design for a circular economy, identifying materials that work well and rapidly testing products. Google's report cites the Accelerated Metallurgy project, run by the European Space Agency together with a group of leading manufacturers, universities, and designers. "AI technology was used to create a rapid and systematic way to produce and test new metal alloys," says the report. "Not only did it produce completely new materials, it also discovered them faster than ever before."

7. In the transition to a circular economy, there are cases where products might be sold as a service instead of by the unit. For example, a lightbulb producer could provide a certain amount and type of lighting, rather than selling lightbulbs. In a case such as this, AI can be used to help manage the demand for lighting and predict maintenance needs. The circular economy report cites the company Stuffstr, which buys used products from consumers and sells them second hand. "Stuffstr is using AI to support price setting, forecast demand, and to create trading platforms for secondary resources, components and products," says the report. "An AI algorithm helps Stuffstr to set competitive prices for the seller, while offering Stuffstr a good margin on the second hand market." This is an example of AI helping to change business models in order to transition to a circular economy.

8. AI can also help build infrastructure for the circular economy. For example, AI is being deployed for visual recognition to create separate recycling streams. The report cites the company ZenRobotics, which uses cameras and sensors "whose imagery input allows AI to control intelligent waste sorting robots. These robots can reach an accuracy level of 98% in sorting myriad material streams, from plastic packaging to construction waste," according to the circular economy report.

9. There's more. Look through Google's toolbox for useful ideas. One tool identifies the potential to put solar panels on your rooftop. If you input your address, it will tell you instantly how much you could save on your energy bill. Other tools provide water and power plant maps and databases which could be useful for companies looking to relocate. Another tool helps you decarbonize your electricity. And Google has developed "Global Forest Watch" and "Global Fishing Watch," satellite technology tools that can help companies avoid risk in the supply chain. 

10. You can direct your employees to a Google tool called "Your Plan, Your Planet." This gives tips for individuals to help save water, consume less stuff, waste less food and save energy. Kate Brandt, head of sustainability at Google, hopes to expand Google's offerings to specifically support entrepreneurs. "Small business is a personal interest of mine," she says. She's working on it.

11. Look for a Google.org impact challenge in your state. Google.org is the philanthropy foundation of the company, and it offers an array of challenges to help social entrepreneurs make their communities a better place. Look here for funding and other support for your local impact project. 

Google is ready to support your social enterprise with all its technological might. But it isn't waiting around for you. X, the company's "moonshot factory," might get there first, as it seeks to invent new technologies for the world's toughest problems. Stay tuned.

The Toilet Challenge Is an Example of 21st-Century Entrepreneurship

Originally published on www.inc.com on October 17, 2019.

The Bill and Melinda Gates Foundation has been focusing on toilets for some time. The foundation believes toilets are a key to health and economic growth across the developing world. As Bill Gates said recently in a speech, "More than half the world's population doesn't have the safe sanitation they need to lead healthy and productive lives." In addition to spreading disease, he added, "Unsafe sanitation also puts a huge economic burden on countries that can least afford it. Globally, it costs an estimated $223 billion a year in the form of higher health costs and lost productivity and wages."

Back in 2012 the foundation announced four winners of a "Reinvent the Toilet Challenge," and went on to launch a second round of grants to university research departments. By 2018 new generation toilets were being rolled out across India, and last November Bill Gates opened a "Reinvented Toilet Expo" in Beijing, holding a jar of human feces as he explained the reasons toilets are fundamental for human health.

Some of the technologies? A solar-powered toilet generating hydrogen and electricity, a toilet producing biological charcoal, minerals, and clean water, and a waterless toilet with nano membranes and combustion to turn solid waste to ash, powered by the movement of closing the toilet lid. The "Tiger Toilets" popular in India take advantage of a worm that thrives on human feces and digests it into valuable garden compost.

And now researchers at Georgia Tech, with engineers from Switzerland's Helbling Technik, are working on a "Generation 2 Reinvented Toilet" challenge. This team is looking to espresso machines for inspiration, because they think there are pressure, liquid and heat lessons that could be applicable to toilets.

The challenge is to move away from the need for water and electricity inputs, find ways to turn waste into useful material, and make toilets that can be produced, installed and managed very cheaply.

And as the initial research phase continues to result in workable prototypes, the toilet business can be expected not only to save billions of people from disease and put them on the path to longer and more productive lives, it can also be a powerful engine for economic growth: billions of cheap toilets could be sold in new markets for significant profit. Bill Gates estimates that by 2030, toilets will be a $6 billion a year global business opportunity.

Our climate is changing rapidly. A quarter of the world's population is at risk of drought; the threat of Amazon deforestation has never been so critical; and Ebola is making a comeback. This is a time when it makes more sense for entrepreneurs to think about global needs and their solutions, rather than the next gadget wealthy Westerners might like to add to their already overflowing collection of comforts. In the 21st century, it's clear that we need to reduce, not increase, Western consumption if we want to respect planetary limitations. At the same time, there is a huge growth market in elevating the living standards of underserved people.

The toilet example paints this picture well.

It's a way of putting technology to use for a better world, and we should refocus all our R&D in this way. Don't we want to use technology to help feed a growing global population, in the face of potential food scarcity due to weather events? Don't we want to use it to bring electricity to those in the dark? And don't we want to envision a world where people find ways to make life more meaningful and abundant?

Let's start with toilets.