Monthly Archives: September 2013

European Economic Growth – a manifesto

A view of innovative, pan-European economic development...The internet is now a prime driver for economic growth and is continuing to shape how enterprises reach out to partners, funders and their customer/client base. Access to it makes it the  conditioning and mediating framework for a discourse about enterprise, from the smallest community business to the very largest corporation. 

A recent 2012 study by the Boston Consulting Group – The Internet Economy in the G-20, the $4.2 Trillion Growth Opportunity declared that…

The (internet) contribution  to GDP will rise 5.7% in the EU and 5.3% in the G-20. Growth rates will be more that twice as fast – an average annual rate of 18% – in developing markets, some of which are banking on a digital future with big investment in in broadband infrastructure. Overall, the internet economy of the G-20 will nearly double between 2010 and 2016, when it will employ 32 million more people than it does today…

A BCG Report from 2012
The internet and enterprise?

Download the BCG Report in pdf format here

Enterprises – social, community or corporate in governance – ignore web connectivity at their peril. Alongside this bow wave of expansion for connected business comes a shift in perception in what it is that the governance, education, data management, capital and talent needs of our communities of interest are, in order to respond to this internet fuelled growth.

An example of this new thinking and radical approach can be found in the recently published Manifesto for Entrepreneurship and Innovation to Power Growth in the EU.

New thinking on the internet and enterprise
New thinking on the internet and enterprise

This is a collaborative concept  delivered from a number of key internet players in the current EU marketplace. The creators of web based services such as Spotify, Atomico, Seedcamp and Tech City UK amongst others. If the thought of thinking about uber-Geeks and technology puts you off, persist with this article because the thought leaders in their manifesto do have some challenging and innovative ideas that would, if achieved, condition your internet driven social business for decades to come.

Download the Start-Up Manifesto in pdf format here

Here at SEEM we are always interested in disruptive models of economic creation, good governance, enterprise support and delivery. There are two elements of the manifesto which strike a chime with us and we’ll comment on them below.

Education and Skills:

The manifesto highlights a European Commission study that found across 27 EU countries some 20% of secondary level learners had never or rarely used a computer in their studies. The EU was also critical of teacher training in the IT arena. Our manifesto authors place stress on making teachers digitally confident and with increased competence to rise to the challenge of a digital society.

Teach every child, they state, the principles, processes and the passion for entrepreneurial endeavour from the earliest age. (The web offers a range of free creative, analytical  and publishing tools in the Open Source context, that could, for example, transform educative processes around IT if fully adopted).

The final elements of the education manifesto are key to radical economic growth and could, if adopted using the social business framework, transform our sector.

Encourage university students to start a business before they graduate, as well as preparing tertiary level students for a radically different market place. For the social business sector, this chimes well with our debates at SEEM about how to foster the concept of social business creation and support as a  life aim in business schools and on IT and commerce based courses.

The authors of the manifesto argue, in a similar vein, that the very largest corporation should open up their training departments to the general public, thereby increasing the critical mass of skills in a community as a necessary condition of creating new, web driven enterprises of every governance hue.

Access to Capital:

Capital is king or queen in starting a new business whatever its philosophical approach to the community marketplace. Revision to tax breaks and increasing the ease with which companies can access finance are mainstays of this part of the manifesto.

Interestingly, the manifesto puts a focus on buying more goods and service from small business. Although not made explicit in the manifesto this is the localism and SME support arguments writ large in EU lettering. It is difficult and complex for small businesses to bid for government contracts in the UK, despite recent moves to make procurement a more open process, but encouraging local purchasing initiatives would be one way to encourage the take up of provision from smaller entities, we think.

The final innovation we recognise in the manifesto is the argument for the creation of a new business form. The E-Corp. This new cross border entity would be creatable on-line and up and running in 24 hours. (A little over optimistic we think…), but the concept holds good. Why should innovative businesses committed to social impact locally not also have the opportunity trade internationally and generate surpluses from outside their local economy to deploy in their own?

This takes the Keynesian notion of ‘leakage ‘ from an economy and reverses its polarity – their leakage can become our social value. Brilliant!

Generated by key thinkers in the EU technology sector, this manifesto none the less offers some innovative and interesting ideas about how to condition change for economic growth across the EU. Changes which are pertinent to start-ups and social innovation across the piece in the UK, whatever profile your business has. See the web site here…

The SEEM Team – thinking about social business start-ups

Ethical business with a social dimension...
Ethical business with a social dimension…
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Democratising finance – a cultural tension

Bruce Davis, Managing director of Abundance Generation, recently gave a short talk on the democratisation of finance. Davis argues that traditional sources of finance are dis-empowering, and that we should exercise our right to change and deal with alternative providers of finance that offer more  control and flexibility.

(Abundance Generation is a crowd-funding tool, which allows people to invest in UK renewable energy projects – from as little as £5, using debentures as the financial mechanism of choice to secure a long-term commitment from both the project and the investor.)

See the Davis proposition explained here…

Not all viewers will agree with his position on traditional banks, but his emphatic, if slightly downbeat message, does contain some consistent and widely felt concerns.

His principle point is that we all, highlighted in a recent Mining the SEEM article, suffer from financial cognitive dissonance. Younger people, Davis argues, now understand the power of the web to link reflection on finance and action via a web connected keyboard.

We would argue the same for the emerging Social Finance market. New modes of lending and support, available from non-traditional sources, where key information, data and contact is web based.

A key difference to those publishing and marketing in the social finance sector is that there is much screen space and column inches devoted to  the philosophy of the lender, always. The core values and social concerns of the proposition are the key message, always available before control issues are highlighted or the rate card is displayed.

Davis sees alternative finance as a cultural issue. Trust, emphatic support of social and ethical principles are always first for him. This is the default presentation mode for the social finance sector, we would argue.

Mainstream banks are now beginning to make changing accounts and money ‘mobility’ an easier option. Perhaps there is a paradigm shift in mainstream fiscal supply starting to emerge. What do you think?

The SEEM Team – thinking about ethical investment and renewable energy

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Ethical business with a social dimension…
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The social stock exchange: investment, risk and return

Investment socially focused...
Investment socially focused…

Social finance is about ethical investment, coupled to returns that maximise social equity and outcome, whilst providing returns, albeit of a softer maturation than traditional investment vehicles.

There is a new market-place for matching socially positive investors with enterprises who embrace the social return in parallel with the financial…the social stock exchange.

Below we offer some examples of a new breed, the market making, signposting organisation intent upon making social finance investment a reality,

They meld with the mainstream financial markets in a variety of ways, or run ‘independently’. Evidence of this early stage development is illustrated by, in the cases we review, that there appears to be no single cross border, cross discipline framework with regard to governance, recognised standard fees or standardised cash holdings to support investment. Some operate in developed markets, others in emerging and frontier zones.

A good, standardised assessment methodology for both social and environmental positive impact already exists, Read more about GIIRS, (pronounced ‘gears’), a Pennsylvania based not for profit organisation with a world view. Could a similar system be invested to measure social finance market makers too?

None the less, a clear emergence of a trade/invest market for the socially minded investor can only be a good thing, we would argue.

Ethex:

This not for profit company believes it should help make money do good. Based in Oxford, UK the Ethex team strive to inform and support positive investors in identifying and investing in companies with strong social outcomes as part of their delivery.

Ethex believes that all money should do good – not only financial good, but also making the world a better place. That means investments that deliver social and environmental benefits, not just financial ones. Sadly, this is not true for the majority of financial products.

Currently financed from a variety of charitable trusts, Ethex is supported by The Tudor Trust, Esmee Fairbairn Foundation, The Big Lottery Fund and others, with plans to become self sustaining as their investment portfolio grows. (Ethex are open about the charges to both investor and companies seeking investment, as well as salary levels in their organisation).

Investors can discover and create portfolio from as little as £10.  Read more about Ethex here..

Social Stock Exchange:

Based in the City of London, this company is located and mirrors quite closely a traditional financial market matrix, featuring London Stock Exchange listed companies with social drivers.

At the Social Stock Exchange we connect Social Impact Businesses with investors looking to generate social or environmental change as well as financial return from their investment.

We believe that robust revenue and growth businesses with social and environmental aims at the core of their activities are best equipped to generate positive change. We call these Social Impact Businesses.

As a market maker the SSE evidences strong standards, reporting and accountability processes. They argue that there selection processes for companies is rigorous and transparent, and that there system of annual Impact Reports ensures that social mission remains a constant in the companies invested in. Mission drift can lead to a lapse of listing with SSE,

As might be expected SSE enjoys the support of the London Stock Exchange and The City of London Corporation amongst others. Read more about the Social Stock Exchange here…

Moving away from the UK into the global arena for Social Finance there a number of market making organisations in our sector who focus on Africa and Asia, not Western Europe.

Impact Exchange:

This organisation is a market gateway for Africa and Asia, an access point to social enterprises seeking social market listing/capitalisation which is managed by the Stock Exchange of Mauritius (SEM).

By taking the lead in supporting Impact Exchange, SEM is working to ensure that the capital markets actively provide the infrastructure and systems necessary to create an organized, fair and regulated market that will bring Impact Issuers and Impact Investors together from across the globe. SEM is fully supportive of the vision of “”Maurice, Ile Durable” (“Mauritius, sustainable island”)”, and supports the emergence of Mauritius as sustainable island by providing a global marketplace to support sustainable investment for social and environmental impact throughout the continent, the Asia Pacific and beyond.

Impact Exchange is an open investment market, with the Impact Partners programme operating as a pre-screened, closed investment market for enterprises already exhibiting sustainability and sophistication in delivery,

The Exchange has a non – profit arm, Shujog, which provides practical operational help for social enterprises in the market’s area of interest, as well as playing a key role in developing impact assessments to evidence the social value for both the enterprise and the socially minded investor.

Impact Exchange, supported by the SE of Mauritius appears to evidence a mature and sophisticated approach to the funding, reporting and impact assessment of social enterprise on a pan-regional basis. Read more about Impact Exchange here,,,

Further evidence that mainstream financial institutions, as well as traditional trust funds, are bending more towards social finance and impact investment opportunities is evidenced in a recent Cabinet Office report on Achieving Social Impact at Scale: co-mingling social investment funds.

New fund mixtures for a new market...
New fund mixtures for a new market…

This report from the Spring of 2013 offers the reader case studies of seven international projects which have taken a layered and differentiated approach to social investment, including in the UK some key Trust funds.

Download a pdf version of this Cabinet report here...

Foundations across the world are increasingly looking towards social investment as a tool to help them to achieve their social mission. Alongside grants, growing numbers of foundations are providing different forms of repayable finance to social enterprises and charities to enable them to tackle poverty and disadvantage, strengthen communities, create jobs and drive growth…

This co-mingling of funds, layering of risk and return at stepped levels – coupled to a new social investment and impact recognition market place – all indicate that social finance as an emerging market sector has an ever increasing means of recognising opportunities and in refracting often competing investment needs through the co-ordinating lense of social outcome.

The SEEM Team – thinking about structural change in the social finance arena

Ethical business with a social dimension...
Ethical business with a social dimension…

 

 

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Great cities in the making?

McKinsey & Co began a programme of research in 2011 entitled the Cities Special Initiative. One result of which is a report How To Make a City Great. The short video below offers the company heads a chance to explain their thinking on the project and developing cities around the globe in general.

McKinsey, despite their reputation for defense of naked capitalism and overwhelming shareholder benefit, have a strong record in fostering participatory public sector projects. This report nicely captures some of the philosophy around community and public sector engagement, as well as clearly recognising that pure economic growth in the city or city region does not always automatically deliver social justice or environmentally friendly development. It is refreshing to hear it.

We have recently published an article arguing that the social business sector, or the general economy, may be entering a new social business modality…a revolution in approach, if you will. Read more about community economics here.

It is doubly refreshing to see scions of corporate advance taking a collaborative, community engagement and environmentally concerned tack in this report. The report offers a number of key concepts that cities around the globe embrace, in order to become more economically and socially successful than their peers.

  • Achieve smart growth
  • Do more with less
  • Win support for change
Making  a great city anywhere...
Making a great city anywhere…

Achieving smart growth is based on four key principles, adopting a strategic approach to development, planning for change  with the environment a key part of that change, and delivering work that insists on opportunity for all.

Download the report in pdf format here

Cities do more with less when they manage project expenses with real vigour and rigour. When partnerships are fully explored with realistic outcomes and humanity in their engagements. They make accountability for the project investment paramount and finally, embrace new technology in data, communication, marketing and collaboration.

Cities, the report argues, do best in winning support for change when they build projects and sub-projects around a personal vision, affording charismatic ambassadors for the work to lead from the front. Building teams that are committed and skilled in their areas of expertise, whilst still making all accountable are key drivers to success. And finally, although we have heard this many times in the past in a variety of settings – strive to forge stakeholder consensus, listening, reflecting and empathetically working together to achieve city wide advance.

The report offers some great examples of how fresh thinking can triumph. The city of Toledo, whilst only ranking 182nd in a Forbes list of Best Places for Business in the US, still managed to attract $6 million of Chinese industrial manufacturing investment recently, by sending their committed and persistent city mayor to China three times.

Conversely, the Chinese city of Chengdu, regardless of the rigidity and conservatism of regional government in the country, has a dynamic mayor who has changed the department of Migrant Control, a large issue for Chinese cities, into a department of Migrant Integration – with a clear mandate to increase uptake of education, health resources and community resources – adding to the expanding city’s human capital and enterprise creation.

These issues of quality of life for residents and for economic growth really matter. Urbanisation is not diminishing, it is increasing. By 2030, 5 billion people, 60% of the world’s population will live in cities. 1 billion live in slums, so that not only is affordable housing a key priority, but economic growth – ethical, environmentally careful and socially inclusive – are also compound elements of a great city.

We think the ‘talking heads’ at McKinsey are, in the short film above, describing a city based on the principles of social business. They are just not saying so. The global examples offered in the report text are wholly contingent with the idea of enterprise creation, albeit with social equity and quality of life as an admixture of success.

Also interestingly, if we take the key thematic lines of the report about doing more with less, accountability and good, practical team work across development agendas, we think there is a template for rural communities emerging, who could use these key philosophies to enhance non-urban employment, communications and technological access too.

Which community would not want that, urban or ex-urban?

The SEEM Team – thinking about good ideas

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Ethical business with a social dimension…
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Fiscal drag – explanations

Fiscal drag  - a definition
No holding back the social economy

As we leave the summer holidays behind in 2013 we will be adding a new occasional feature to Mining the SEEM. Explanations.

Part of our social finance mission at SEEM is not only to make finance more accessible to communities and social business, but also to help that constituency understand and be more usefully equipped to negotiate their way through  their financial development,

Explanations will be our way of developing that understanding. Taking a key concept, phrase or idea in economics, banking or social finance and offering up a classic definition for it.

Part of the problem with technical definitions is that technicians and technocrats also use even more technical language to define their concepts – perhaps obfuscating the idea even further.

If key concepts are used in the definition we will also add some supplementary explanation in plain English to frame the definition we have created. You can see an example of this occasional journal entry below – Fiscal Drag.

(If you come across a classic piece of finance speak or strangulated phrases in banking drop our editor a line and we’ll tease out a clearer view and publish the definition for you.

Contact us at editor (at) miningtheseem.org.uk   )

Fiscal Drag – a definition

The restraining effect upon the growth of demand and output that results from increases in the effective rates of taxation under inflation. This happens where progressive tax rates and increased wages and salaries bring people into higher tax brackets, even though real income may be falling…

Supplementary definitions:

Inflation: The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. (See more about inflation on investopedia.com here. )

Progressive tax: The term is frequently applied in reference to personal income taxes, where people with more income pay a higher percentage of that income in tax than do those with less income. (Read more about progressive tax concepts on Wikipedia here.)

Real income: Income, as of a person, group, or country, that has been adjusted for changes in the prices of goods and services. Real income measures purchasing power in the current year after an adjustment for changes in prices since a selected base year. ( Read more about real income calculation on the pages of the Free Financial Dictionary here. )

The SEEM Team – working with interesting ideas

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Ethical business with a social dimension…
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