What a Circular Economy is, and Why You Should Care

Originally published on www.inc.com on May 28, 2015.

We are used to thinking in a linear fashion. We are born, grow old, and die, and many of us spend all our money in our lifetime. We dig resources out of the ground, fashion them into products, use them, and throw them away.

Native cultures often thought in cycles, not straight lines. They lived according to the seasons, and honored rather than pillaged the earth. The Iroquois thought about impacts on seven generations of descendants before making important decisions.

With the planet approaching a population of nine billion, many think it's time to think circular. Ellen MacArthur, a British sailor, thought hard about efficient resource management while beating a world record sailing solo around the globe, in 2005. Five years later she launched the Ellen MacArthur Foundation, which "aims to accelerate the transition to a circular economy, a systems level redesign which offers the opportunity to harness innovation and creativity to enable a regenerative economy."

What does all that mean?

It is about attention to how we design, manufacture, use and dispose of all the physical things in our world. We need to shift our mindset to thinking in cycles for both our biological things, such as coffee, and our technological things, such as cellphones.

In the case of our food and other biological material, we farm it using pesticides and without regard for soil regeneration. Much of it is wasted before arriving all the way to a consumer's mouth. And then we dispose of our organic waste without composting.

All of this can be improved through innovation. We can extract biochemical feedstock from food waste, for example, and use it as a resource. We can compost and use enzymes as a substitute for certain chemicals.

On the technology side, we dig fuel and minerals out of the ground, we ship them to a place where parts are manufactured, we ship the parts somewhere else and assemble them into products, a service provider then offers them on the market, and they are bought and used. As soon as a newer model comes out, we throw away our old one without much thought to where it's going or the waste involved.

In many cases, what we want is the service provided by a product, not necessarily the product itself. We might be happy to pay for getting from point A to point B, and not necessarily need to purchase the vehicle that gets us there. We could prefer to purchase a contract for illumination of our factory, and let the lightbulb manufacturer-turned-service-provider worry about when to change the bulbs. That kind of change would incentivize manufacturers to design products that last, and that can be repaired and repurposed.

The Ellen MacArthur Foundation hopes to inspire thinking around the redesign of these systems. We can manufacture products that last much longer, rather than focusing on the race to the next model. We can fix our toasters when they break, instead of throwing them away. If you haven't heard of it yet, check out ifixit.com, a community that stands for the "right to repair" and hopes to deconstruct every product and publish a free manual on how to fix it. The New York State legislature is considering a "Fair Repair" bill that would require manufacturers to provide owners and independent repair businesses with fair access to service information, security updates, and replacement parts.

When we really are done with a product, we can redistribute it on eBay or at Goodwill so that someone else gets a chance to use it further.

Finally, as a last resort, we can recycle the waste from the products we throw away. That sometimes requires redesigning the products so they are recyclable, and always requires collecting waste, sorting it, and having the technology to process each waste stream. In the US, Walmart and many of its biggest suppliers, including Coca-Cola and PepsiCo, were so frustrated with cities not having the funds to create recycling programs that they set up the Closed Loop Fund to help speed up the process.

Our linear way of extracting, producing and consuming energy can be replaced by circular, renewable energy, bringing all kinds of benefits. But again, the shift requires plenty of innovation and a systems level redesign.

"A circular economy is one that is restorative by design, and which aims to keep products, components and materials at their highest utility and value at all times," reads the Ellen MacArthur Foundation's website. It also means eliminating the concept of waste, with materials ultimately re-entering the economy at end of use as valuable technical or biological nutrients.

By the way, moving from a linear to a circular system provides a tremendous economic opportunity. According to research by the Ellen MacArthur Foundation and McKinsey & Company, the cost savings alone are worth billions of dollars.

There are already numerous examples of businesses globally that are taking advantage of the economic opportunities offered by transitioning to a circular economy. The next challenge is to scale up circular economy activities more broadly, and doing that will require greater awareness of the opportunities across businesses globally.

We have all the tools to shift to a circular economy. Unfortunately, we lack the awareness, and the will, to do it. Drumming that up is the challenge of our time.

10 Things You Need to Know About Water

Originally published on www.inc.com on May 21, 2015.

Increased droughts and flooding are wreaking havoc on America and the world. While scientists and concerned individuals attempt to convince Congress that global warming is real and we should do something about it, we have another urgent task: dealing with water stress. If we’re not careful, we will be savagely fighting over water in California while losing livelihoods and resources to floods in Kentucky.

Here are 10 things to keep in mind:

1. According to UN Water, 47% of the world’s population will be living in areas of high water stress in 2030, with either no water or too much. The OECD says water use has been growing at more than twice the rate of population increase, and predicts that water demand will rise by 55% globally by 2050, due to manufacturing, electricity generation, and shifting agricultural demand. This data is collected in a new report by PwC called “Collaboration: Preserving water through partnering that works.”

2. According to waterfootprint.org, to produce 1 kg of beef you need 15,415 liters of water, compared with 1,608 liters for 1 kg of bread. A report by Hank Paulson’s think tank Risky Business, “Heat in the Heartland, Climate Change and Economic Risk in the Midwest,” concludes that rising temperatures in the Midwest pose serious threats to the corn and wheat we harvest there.

3. We are used to thinking that water is free for the grabbing. But when it becomes scarce, not everyone has the right to remove it from a river, suck up groundwater, or gather rainwater that otherwise would have seeped into the ground.

4. We can handle the water challenge, but we need to collaborate. “Let’s-work-together isn’t a novel idea,” says Lauren Kelley Koopman, a director of PwC’s Sustainable Business Solutions practice. “But sometimes it’s hard to put into action in practice.” She cites the UN Water Action Hub, an online matchmaking tool developed by the UN Global Compact’s CEO Water Mandate, as one tool for different members of a watershed to share information on what works and doesn’t work for water management.

5. Business needs to take a serious risk management approach to water usage. Map it, study it, disclose it, improve on it. Above all, partner with government and the community to create long-term solutions. PwC, together with Pacific Institute, the Carbon Disclosure Project, and the World Resources Institute, developed a set of corporate water disclosure guidelines to help companies address water issues. And in its most recent report, PwC proposes a 7-step approach for companies:

• Provide water, sanitation, and hygiene services in the workplace
• Measure and monitor water management practices
• Drive operational efficiency and reduce pollution
• Identify and understand water-stressed and high-risk basins
• Integrate water management into business strategy
• Leverage improved performance throughout the value chain
• Advance sustainable water management and engage in collective action.

This last point is the key to an orderly and equitable future, where the rich are not stealing water from the mouths of the poor.

6. It seems crazy to talk about reputation when the stakes are so high, but business does face a reputational risk and opportunity. In the worst case, a company locating a new plant in an area where it is forced to take scarce water from a thirsty community may be driven out. In less extreme cases, a company will receive low marks from sustainability-minded investors and customers if it does not report and mitigate water risk.

7. Water is undervalued. It needs a higher price if we are going to take it seriously, and pricing for water must be managed locally, watershed by watershed. “The water agencies in the state of California are reporting around a 30% increase in costs of water, expected to rise,” says Clinton Moloney, managing director at PwC’s Sustainable Business Solutions practice. “I think increasing the price would be a good signal, because it communicates that this water is, in fact, valuable.” Adds Koopman, “it’s not just the price of buying the water from the municipalities. You have to think about transporting it, treating it, how they are discharging it, having water to meet energy needs.”

8. California can be a test case, a laboratory to try to identify the best policies, partnerships and technologies. Water is a huge economic issue, and is already exacerbating tensions between haves and have-nots. California’s governor and mayors are trying water rationing, grants to remove lawns and switch to “xeriscaping” with stones, water conservation programs, desalination, water recycling and farm water conservation, as well as water tunnels to improve channeling of water from northern to southern California.

9. California and other water-stressed states should look abroad for experience and solutions. In Israel, for example, crops grow in the desert and 85% of household wastewater is purified and reused for agriculture.

10. And that leads us to innovation. Technological innovation of course will be key to managing both water scarcity and flood resilience. From solar-powered desalination units to wastewater purification to infrastructure changes, California can lead. As the state manages its crisis, the world is watching for a risk to turn into an opportunity.

10 Things You Need to Know About Deforestation

Originally published on www.inc.com on May 7, 2015.

I have been, frankly, confused and ignorant on the topic of deforestation. I have heard that we need to save the Amazon rainforest, and know that forests are being wiped out for palm oil, but that's about the limit of my knowledge. So I attended a conference organized by the Innovation Forum to find out what the problem is and what can be done about it.

Here are 10 interesting points I picked up:

1. According to NASA, in 650,000 years the level of carbon dioxide in the atmosphere never rose above 300 parts per million, until 1950. Since then it has risen steadily to over 400 parts per million, and continues to rise. We need trees to consume carbon dioxide and emit oxygen, so deforestation is part of the problem, and reforestation is part of the solution. According to the United Nations, approximately 13 million hectares of forests continue to be lost each year, contributing up to 20 per cent of annual global greenhouse gas levels.

One person who has done quite a bit of research into the issue is Stephen Rumsey, Chairman of Permian Global, an investment company focused on climate mitigation through forest protection and recovery. "Emissions from human destruction of forests have been three times that of burning fossil fuels," says Rumsey. "If forests could recover a quarter of the biomass that they have lost that would reduce atmospheric CO2 from 400 parts per million to 280 parts per million." Forest recovery is the cheapest and most realistic solution to climate change, he argues.

2. Deforestation has caused at least two other major problems: it has displaced indigenous people, and it has interfered with biodiversity. It is an important social issue, as well as an environmental one.

3. The main cause of deforestation is agriculture. According to NASA, the problem is increasing due to large-scale commercial agricultural activities, including cattle ranching and soybean production in the Amazon and palm tree plantations in Indonesia. A vast quantity of smallholders around the world are also contributing to deforestation in favor of agriculture.

4. There is a debate over the definitions of deforestation, zero deforestation, and zero net deforestation. Deforestation means conversion of natural forest to agriculture or timber farming, but selective logging is important for communities and shouldn't be considered deforestation, says Tobias Webb, CEO and founder of the Innovation Forum. "While 'zero deforestation' refers to the prevention of any forest clearance, 'zero net deforestation' refers to the replacement of logged forest with an equivalent area of new forest through replanting," he writes. "However, it is difficult to ensure that the area that is replanted is equivalent to the area that is logged, and even more difficult to ensure that no environmental impacts or losses in biodiversity are incurred in the process. This makes 'zero net deforestation' a much more complex and unreliable strategy."

5. Deforestation is considered a solvable problem, and much progress has been made. There has been lots of activity by non-governmental organizations to raise awareness and stop deforestation, for example in the Amazon. There are roundtables, forums, protocols, supply chain certifications, and tools available to tackle the deforestation problem. For example, the Roundtable on Sustainable Palm Oil (RSPO), which includes plantation companies, processors and traders, consumer goods manufacturers and retailers of palm oil products, financial institutions, environmental NGOs and social NGOs, has 2,145 members, and has certified 12.27 million tonnes, or 18% of global palm oil, as sustainable. 90% of palm oil trading companies have made commitments to no deforestation (see www.mongabay.com for statistics and charts on this).

6. Some multinational corporations are taking the lead by committing to zero deforestation, and are pressuring governments for regulation and enforcement. Tobias Webb tells corporations "there's a three-stage process to get started. Step one is internal risk mapping and benchmarking that with NGOs. Step two is to deliver on transparency (using technology) and show the world the challenges, and progress as implementation begins to happen. Step three is to work with other companies to help raise the bar in the supply chain and lobby for others to do the same and governments to support. Step four will likely be to revisit and revise targets and engage in restoration, but for many that comes much later."

7. In the US, the Clean Water Act in the 1970s started the cleanup of the logging industry and attention on sustainable forestry. More recently, public outcry over deforestation from palm oil and other farming has brought corporations to come together and commit to better resource management. In September 2014, more than 30 countries and 30 corporations signed the New York Declaration on Forests at the United Nations, calling for halving deforestation by 2020 and ending it by 2030. The declaration says: "actions to combat deforestation and speed up the restoration of degraded lands will contribute to economic growth, poverty reduction and greater food security as well as help communities adapt to climate change and secure the rights and livelihoods of indigenous peoples and local communities."

Also last September, four major palm oil companies recommitted to zero deforestation in their supply chains and joined with the Indonesian Chamber of Commerce, Kadin, to demand that the Indonesian government put an end to deforestation. And this year the UN will include a goal on forests in the new Sustainable Development Goals to be launched in September. Goal 15 reads "Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss."

8. The UN developed a framework called REDD+ (Reducing Emissions from Deforestation and Forest Degradation), including through conservation, the sustainable management of forests and the enhancement of forest carbon stocks. Tropical forest countries are being urged to present priority actions for deforestation and forest restoration. Advanced economies are being urged to include financial incentives for REDD+ in their post- 2020 climate change commitments. The World Resources Institute created "Global Forest Watch," a satellite mapping application and information center on solutions to deforestation. Greenpeace and The Forest Trust (TFT) developed the High Carbon Stock Approach Toolkit, a methodology that can distinguish viable forest areas from degraded areas that have lower carbon and biodiversity values. Other NGOs such as the Rainforest Alliance and the World Wildlife Fund offer valuable resources, and www.mongabay.com has a deforestation tracker, called the Global Forest Disturbance Alert System.

9. Governments around the world need to do more given that an estimated half of deforestation is done illegally. Smallholders and migrants, driven by poverty, are responsible for a lot deforestation; thinking about deforestation needs to take into account wider issues including poverty, growing population, and water scarcity.

10. As in the food arena, there is a debate in forestry about genetically modified organisms (GMOs). Some scientists and forestry professionals advocate for breeding trees that resist disease, for example, or offer greater productivity (faster growth of more trees in smaller areas). Hard-line activists are concerned about "gene pollution," and consider that any human engineering activity can cause unexpected outcomes, particularly with regard to biodiversity.

Let's All Get Behind Regenerative Capitalism

Originally published on www.inc.com on April 30, 2015.

Capitalism has never been static, and it continues to develop. It has evolved through the Industrial Revolution, been shaped by Hayek, Keynes and Milton Friedman, and weathered the Lehman Brothers collapse. Now the excesses of economic inequality and atmospheric carbon are provoking a backlash that could lead us into a more equitable, conscious capitalism than we have been used to.

John Fullerton, a disillusioned former Wall Street banker and founder of the Capital Institute, calls the new conscious capitalism "regenerative." He recently unveiled his Regenerative Capitalism framework at an event hosted by Yale University's Center for Business & the Environment.

"Regenerative Capitalism" is an economic system that acknowledges that the market we have now is not a beautifully self-correcting free market, but a market that is manipulated by the most powerful forces. And it is a capitalism that states that just as the goods and services we take from each other are not free, the value we extract from nature (water, land, fossil fuels and so on) comes with a cost.

Fullerton's Regenerative Capitalism, therefore, corrects injustices in the economic landscape and charges for the use of natural capital, by taking into account not just shareholders but all stakeholders, such as the community and the planet.

This is already happening incrementally. Corporations are under regulatory and reputational pressure to introduce sustainability, effectively catering to all stakeholders and moving the needle forward on environmental, social and governance issues.

I recently spotted a quote in an article that startled me: a spokeswoman for a large pharmaceutical company, asked about unjustified price increases on life-saving drugs, said the company's main duty "is to our shareholders and to maximize" product value. "Sometimes pricing comes into it, sometimes volume comes into it," she said.

It's not long before that kind of talk from corporations will provoke enough social media activism that it will simply stop. Companies perceived to be focusing on shareholders or executives' bonuses at the expense of consumers, local communities, forests, human rights, ecosystems, or taxpayers will be punished, directly and soundly, for their greed.

In his 120-page Regenerative Capitalism paper, Fullerton maps out the shift we need to make from today's capitalism to tomorrow's. He includes cases of holistic approaches to improve value for all stakeholders, which take into account the complexities of the systems we live in. In Chicago, for example, a new generation of tech leaders is being trained at an inner city school as part of a partnership among government, organized labor, educators, the private sector, and civil society to create an advanced manufacturing renaissance in the city.

The premise is that today's version of capitalism, by focusing only on short-term profits, has created severe problems that must be addressed. Fullerton includes a chart, borrowed from the Equality Trust of the UK, demonstrating that countries with the greatest inequality also have the worst statistics on life expectancy, math and literacy, infant mortality, homicides, imprisonment, teenage births, trust, obesity, mental illness including drug and alcohol addiction, and social mobility. Income inequality in the US used to be balanced by a healthy amount of social mobility, but in recent years has increased dramatically while social mobility declined--in fact, the US stands out on the chart as the country with the greatest income inequality and the worst problems.

These problems don't just represent a moral indictment of our society; they are financially costly. If we want to solve any of them we can't just treat the symptoms, we must attack the causes. And that can only happen by thinking holistically about entire systems.

Probably the most thorny issue in Fullerton's transition to Regenerative Capitalism is economic growth. We have all been raised to think more is better, and everything we do economically is measured in comparison with what came before. But of course we know that just as money doesn't buy happiness, GDP growth doesn't buy happiness; many other indicators of well-being exist. We are also aware of demographics the population explosion and the pressure our growth-at-any-cost focus has put on our ecosystem.

There are those calling for a return to nature, away from the technology and "progress" that have brought us where we are today. I personally am a big fan of technological innovation, but I believe we can put technology to good uses or bad. This is why we absolutely need to apply holistic, systems thinking to all our processes.

Positive innovation-led growth, for me, means bringing people in the developing world out of poverty and disease. It means poor people cooking their food with non-toxic, renewable energy and being able to sell their crops for a decent wage. It means new arrivals to America may once again dream the American dream. Like technology, GDP growth can be good and bad. For example, economic growth can help introduce efficiencies that augment environmental well-being.

But just as we need to get away from too heavy a focus on short term profits, we also need to move away from our addiction to economic growth just for the sake of itself. We should focus on community, stakeholders, the environment, and working together holistically. Together we can bring in a better, more regenerative capitalism for future generations.

How to Create a Circular Economy

Originally published on www.inc.com on April 3, 2015.

A team of Western Michigan University students has big plans to build a "local loop farm," converting more than 28 tons of food waste into 1.35 tons of fish feed, producing 19,000 heads of lettuce and 997 pounds of tilapia, and composting 100 tons of agricultural waste, all on a weekly basis. The farm will use water 90% more efficiently than other farms by using hydroponics, and will fuel its water heater with compost.

The two-acre farm, the size of a city block, will be one contribution to the creation of a "circular economy," where waste becomes fuel for the next round of production.

The circular economy concept comes easily to Max Hornick, a member of the student team which won the second annual Wege Prize, a cross-disciplinary design competition focused on solving "wicked problems." Wicked problems are defined as problems where solutions tend to create other problems--so they must be tackled by thinking about the whole system the problem is a part of.

"The circular economy, which I wouldn't call a new concept, redefines our approach to systems and helps frame the future direction of our economy," says Hornick. "This is a valuable paradigm shift. We need to think about how we promote community investment and enhance the quality of life." Hornick is an undergraduate majoring in public relations, and is employed as an aquaponics (that means fish farming and growing plants in water) intern at WMU's sustainability office, where she first heard about the Wege Prize.

If every university ran Wege Prize competitions, the millennial generation would solve all our problems practically before graduation. Max Hornick is right: we need a paradigm shift.

Baby boomers grew up in a world about winning wars and conquering economic space through consumption, investment, competition, and growth at any cost. Millennials are thinking differently. They are growing up in a world they understand to be fiercely unequal, polluted, running out of resources, and with leadership that disappoints.

Here are a few things I am learning from them:

1. Think of problems as opportunities.
2. Think circular. Develop products with their end of life in mind, so they can be recycled or repurposed completely, with no residual waste. Think about how much profit or cost savings you could make out of a future second life of your product.
3. Collaborate. Build on different skill sets from different disciplines. Go out and find partners with skills you don't have.
4. Think in systems. Draw pictures on a big piece of paper with lots arrows pointing out how things affect other things.

The Wege Prize competition began in 2014 as a regional competition, went national this year, and next year plans to go international. Teams must be composed of members from different disciplines and from different colleges (though the colleges can be part of the same university, as in the case of the Western Michigan University team this year). The competition is organized by the Kendall College of Art and Design of Ferris State University for the Wege Foundation and is, in fact, a design competition. That's because the solutions needed today are nothing short of whole systems' design solutions.

No mention of the circular economy would be complete without a nod to Ellen MacArthur, the British woman who sailed solo around the world (setting a world record), thought a lot about the efficient use of resources while on her voyage, and now dedicates herself to the Ellen MacArthur Foundation working in education, business innovation and analysis to accelerate the transition to a circular economy.

According to the Foundation: "A circular economy is one that is restorative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles. "

Could anything be more important than this?

4 Reasons to Accelerate the Race for Gender Equality

Originally published on www.inc.com on March 12, 2015.

The UN has set an expiration date: by 2030 inequality between men and women must be a thing of the past.

At the rate we are going, if nothing is done to accelerate the move towards gender equality, we won't have "Planet 50-50 until 2095, according to UN Women.

Women just won the right to vote in Saudi Arabia, but still aren't allowed to drive. In Pakistan there are 2.1 million child brides and only 31% of girls are enrolled in high school. Women are trafficked as sex slaves and gang raped. One in three women worldwide is sexually assaulted in her lifetime.

And in business we still have a glass ceiling: women are not reaching leadership positions, or equal pay.

Some European countries, starting with Norway and Spain, have set minimum quotas for gender balance in boards of directors of publicly traded companies. Equality at the highest level should help fix the problem elsewhere.

In the US we shy away from an affirmative action approach because that would clash with our free market philosophy where hard-working individuals pull themselves up by their bootstraps, competing on equal footing.

The thing is, we don't have equal footing. Why, in the US, do we have so many smart female students, yet fewer than one in five engineering students are women? The recent "Run like a girl" ad by Always captured part of the problem: only the youngest girls, even here in the US, feel equal to boys. As we grow up, our confidence falters and we slip into centuries-old roles.

Here are a few reasons we should reverse this trend:

1. Diversity produces better thinking. "Studies have shown that more diverse and inclusive teams consistently produce more accurate and successful solutions to complex situations and are less likely to make significant mistakes than homogenous teams," reports noceilings.org. Noceilings.org is a project by the Clinton Foundation and the Bill and Melinda Gates Foundation which aims to collect all the data it can on gender gap issues.

2. It's the economy, stupid: why in the world would any economy decide to underuse half its talent? If we want a wealth-producing economy, we should naturally fill every position with the brightest and best. Of course, we also want to ensure that children grow up with effective parenting, so we should enable that by making paternity and maternity leave the norm. The US is one of only nine countries worldwide that doesn't offer paid maternity leave.

3. Human rights: Hillary Clinton famously said "Human rights are women's rights; women's rights are human rights." Across the world, there are too many human rights violations and we must stand up against them. As businesses, we can use our power to work for human rights.

4. Peace: Economic development leads to a more peaceful society. In the developing world it is often women entrepreneurs who are able to raise their families out of poverty. Again, business has the power and the resources to help this process by encouraging sustainable development and women's entrepreneurship.

Let's not wait for 2095, or even 2030. Let's get to work now.

How Women Are Making Wall Street a Better Place

Originally published on www.inc.com on January 22, 2015.

After Lehman Brothers went down, comments circulated on social media that if it had been a partnership of Lehman Sisters maybe greed wouldn't have gotten the better of it.

It isn't healthy to stereotype, and it may or may not be a useful exercise to study how many women have risen in investment banking and whether or not they do things differently from men. Certainly, whatever the investment style, in a competition for profitability one has to achieve results or else lose clients. But sustainable investing is proving that profits can come with a caring touch, and many women, and men, are excelling at it.

Here's one story of two women and their own quiet revolution.

Lily Engelhardt began a career in investing in 1981 and soon hired another Lily, LiliAnn Stafford. The two lived through the many waves of consolidation in New York investment banking: in 1986 they went to work for Shearson, which became Smith Barney, which became Morgan Stanley. Today they are wealth managers calling themselves "the Lily Group," under the Morgan Stanley umbrella.

Because an early client was the pension fund of a labor union, the Lilies were tasked with some investment screening. The union asked them to avoid investing in companies known for union busting, to refrain from directly or indirectly investing in South Africa during Apartheid, and not to buy bonds funding a nuclear power plant. A few years later, they were adding companies supportive of gay rights to their clients' portfolios. "Our socially responsible investing began with the practice of screening for companies people didn't want to work with," says Engelhardt. It has evolved with the market, and today includes proactive impact investing, and shareholder activism through proxy voting to influence corporate practices.

In 1992 the Lilies began investing in a green fund, in response to client demand, and soon after they helped convert a Morgan Stanley value fund into a socially responsible fund. At this stage, still working with unions, they noticed that a large group of women was behind a garment industry pension fund interested in socially responsible investing. When they held a workshop to educate workers, mostly women, "we were stunned by how little they knew," recounts Stafford. "They didn't know what questions to ask. They needed to be empowered."

This drove the Lilies to reach out to women as clients. "Even today, when a brother and sister come in asking us to manage, the sister will tend to defer to the brother," says Engelhardt.

Indeed, a recent study by the Spectrem Group showed that although the number of wealthy women in the US is growing at a much faster rate than that of men, more wealthy women consider themselves "only fairly knowledgeable with a great deal to learn."

So with women clients the Lilies make an extra effort to educate and empower. The Lily Group web page promises women a holistic, sisterly approach with plenty of personal attention. "Your money is probably just as intimate as your marriage," says Stafford. "It's a very guarded topic. And women have always taken care of women."

The Lilies take calls at night from clients who have waited to tuck in the kids, and offer crayons in the office. They enjoy hearing women outline their dreams and goals and chat about the obstacles in their way.

Over the years, women have been warmed by the Lilies' welcoming approach, and also drawn to their emphasis on sustainable investing. "We've found in general women are more attuned to gun control--they'll say no defense, no gambling, no alcohol in my portfolio," says Engelhardt. "They care about domestic partnerships, they care about women in the workplace, they care about privacy issues, social justice; child labor is huge. Another thing that concerns women is animal testing in the cosmetic industry. And cleaner energy is a big focus, especially now that the Rockefeller Foundation is divesting from fossil fuels."

The Spectrem study confirms women's inclination towards sustainability: 86% of high income women consider the reputation of companies they are investing in, and 46% specifically consider the social responsibility of companies. These numbers are much higher than those for other affluent investors.

The Lilies won't turn away clients not interested in socially responsible investing, but they'll offer them lots of options. And there are many options available today that are socially responsible and profitable at the same time. Indeed, there are studies to show that companies with more female directors outperform companies without women on their boards, and that companies highly ranked for sustainability perform better than general stock indexes.

The Lilies are not alone on Wall Street, or elsewhere in the financial industry, though we don't hear much about these quiet changemakers. There are both a growing number of women in finance, and more investment managers who are socially responsible, women and men alike. Maybe it's time to look to their kind to take the lead.