Conscious Capital

Please note: an incorrect image was used at approximately 13:52. The company providing IT support to The American Red Cross is Grainger. We regret the video error.

Better World Books Gives Old Books New Life

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Good evening, everyone and welcome to this NIGHTLY BUSINESS REPORT special edition: “Conscious Capital.” More and more businesses are
following this principle of creating companies not only to build the bottom
line, but to build a better world. Tom.

TOM HUDSON, NIGHTLY BUSINESS REPORT ANCHOR: We’ve found several young entrepreneurs, Susie, who are
doing well by doing good. This isn’t just a strategy though for start-ups.
From giant chains found on every corner to socially responsible investing
funds, tonight we profile companies embracing the dual goals of “Conscious
Capital.”

GHARIB: And we begin in northwest Indiana at a company that buys and
sells used books and donates a portion of its profits to literacy projects.
Diane Eastabrook reports.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Better World
Books is an orphanage of sorts for used books. They come into the company’s
Mishawaka, Indiana warehouse by the hundreds where they get sorted,
recycled, re-sold or donated to charity. Better World’s shelves are crammed
with some four million hard covers and paperbacks with nearly 2.5 million
unique titles.

KREECE FUCHS, VP & CO-FOUNDER, BETTER WORLD BOOKS: Right here we’re
looking at a book “Understanding Nutrition” that could have come in from
the University of Nebraska or who knows where.

EASTABROOK: And it’s right next to a book about Donald Rumsfeld.

FUCHS: Yep it’s a completely random put away.

EASTABROOK: Kreece Fuchs is one of Better World’s three co-founders.
The trio of former University of Notre Dame students hatched the idea for
the company in their dorm. They found they could make more money selling
their used text books over the Internet than back to the school bookstore.

FUCHS: Over the course of that summer after I graduated, I would get
an email saying your book sold and I would run to the post office and ship
the book and you know a few days later I sold another book.

EASTABROOK: Last year Better World made about $55 million buying and
selling new and used books. The company donated roughly $2 million to
literacy programs and to libraries which give Better World their unwanted
inventories. The public library in Evanston, Illinois has netted about
$4,600 over the past couple of years for the 20,000 books it discarded.

MARIANTHI THANOPOULOS, EVANSTON PUBLIC LIBRARY: These books will end
up in the hands of people versus landfills. So, it’s really not for the
money I would say. It’s just a couple thousand dollars a year, but it
inspires another generation of learners and readers.

EASTABROOK: Better World is also making northwest Indiana a better
place to live. The employee-owned company is providing more than 200 jobs
in an area where unemployment tops 11 percent. Shipping clerk Rick
Gonzales feels fortunate to be working.

RICK GONZALES, EMPLOYEE, BETTER WORLD BOOKS: It took me roughly a
year- and-a-half to find a job, let alone one I could rely on.

EASTABROOK: Jennifer Thompson is researching book titles until she
can find a teaching job.

JENNIFER THOMPSON, EMPLOYEE, BETTER WORLD BOOKS: I vastly prefer it
to subbing. The books don’t talk back to you as much.

EASTABROOK: Better World celebrated a milestone a few months ago.
In less than 10 years the company has donated $10 million worldwide. Not
bad for this young entrepreneur who passed up medical school to hawk books.
How many people have benefited do you think today over the last 10 years?

FUCHS: We think it’s millions of children.

EASTABROOK: Diane Eastabrook, NIGHTLY BUSINESS REPORT, Mishawaka, Indiana.

Sustainable Responsible Investing

TOM HUDSON: Social awareness is finding its way into a growing number of
investor portfolios. Sustainable, responsible investing known as SRI is an
investing style looking beyond the bottom line focusing on social,
religious or ethical guidelines. It has attracted an estimated $3 trillion
from investors. Sylvia Hall looks at how SRI works and who is doing it.

SYLVIA HALL, NIGHTLY BUSINESS REPORT CORRESPONDENT: In the world of
investing, everything has to add up. But a growing number of investors are
calculating a new bottom line into their decision making.

LISA WOLL, CEO, US SOCIAL INVESTMENT FORUM: The core principles are
you need to evaluate non-financial factors. Investing can’t just be about
what’s your return and it can’t just be about what’s your return is in the
short-term.

HALL: What started as a movement to protest human rights violations
in South Africa has grown into a $3 trillion world of pensions, mutual
funds and other investments. In SRI, investors pick companies that uphold
their values. It’s a broad field. One investor could avoid companies with
grimy environmental records, while another favors companies with
transparent corporate governance.

WOLL: Today, you’ve got firms like Blackrock, Goldman Sachs, Deutsche
Bank, TIACREF, big, what I call big institutional actors who have a piece
of this going on, who are trying to integrate environmental and social
issues, governance issues more broadly but have small SRI shops.

HALL: The SRI trend has also taken hold in the religious community
as a way to fund retirement benefits, missions and community outreach
without breaching commitments to good works and social justice.

FATHER SEAMUS FINN, ETHICAL INVESTING CONSULTANT: There is I think a
sense of well-being and integrity and piece of mind that people are looking
for that they do actually want to look behind the curtain to see where the
product came from and where the profit came from, because that has to do
with their own sense of well being.

HALL: Most SRI funds are set up for long-term stability and not
necessarily short-term rewards. Research often shows that socially
conscious investments over the long run perform just as well as others.
Sylvia Hall, NIGHTLY BUSINESS REPORT, Washington.

Calvert Investments a SRI Fund Company’s Success Story

SUSIE GHARIB: Calvert Investments is one of the largest SRI fund
companies. I recently spoke with its CEO Barbara Krumsiek and began by
asking her what test a company has to pass in order to qualify as a
socially responsible investment.

BARBARA KRUMSIEK, CEO, CALVERT INVESTMENTS: There are about seven
different areas that we look at – the environmental, environmental
practices of the company, diversity practices, broadly speaking workplace
practices, human rights policies at overseas operations, indigenous
peoples’ rights, governance and community activities. There’s a whole range
of analysis that together form a profile of a company from a corporate
social responsibility viewpoint.

GHARIB: Is it fair to say that if Calvert’s not investing in a
company then it is socially irresponsible?

KRUMSIEK: We don’t like to look at it that way because we think every
company has the potential to be a socially responsible company. In fact,
one of our strategies is called SAGE, sustainable achieved through greater
engagement. And in that strategy we will own almost any company but we
will dialogue, we will communicate with the company and let them know where
we think they could do better. So I think there’s hope that every company
can have a very strong environmental social governance profile.

GHARIB: So I understand that Calvert has been an advocate. It
petitions and lobbies companies, encouraging them to make positive change.
How successful have you been of that?

KRUMSIEK: I have one example and it’s Dell (NASDAQ:DELL). Going on
about seven or eight years ago we worked very closely with Dell
(NASDAQ:DELL). At that time there were no take-back programs by computer
manufacturers or distributors for used waste, the waste in the computer
area. And as you can imagine that creates environmental issues in those
countries where those waste products are disposed of. And after some
negotiation, Dell (NASDAQ:DELL) to their credit agreed to initiate the
first take back program for computer waste.

GHARIB: As you know Barbara, over the last decade, there has been
huge growth in funds specializing in socially responsible investing. Has
this made a difference in corporate behavior? In other words, are we
finding — to what extent are companies becoming, putting more emphasis on
social responsibility and corporate responsibility?

KRUMSIEK: I think there’s been a huge up tick. Ten years ago 800
companies produced sustainability reports. It’s been reported this past
year 5,500 companies have produced sustainability reports and this provides
data to investors and obviously consumers interesting in knowing how
companies operate and what kind of environmental footprint they leave and
what kind of governance and social practices they support. So I’d say
there’s been a huge up tick.

GHARIB: I’m sure you hear this comment quite a bit. A lot of
investors want to do the right thing and put their money in socially
responsible funds, but they’re afraid they’re not going to make as much a
return as they would on a mainstream fund. What do you say to them?

KRUMSIEK: What we say is that we believe our funds should achieve at
or above benchmark averages over the long run. Over shorter periods of
time there may be differences in patterns of return. For example, we tend
to overweight the technology sector relative to other sectors in our work
and that could lead to some changes in pattern. However if you look over
the last three years, the annual return to the Calvert social index is
about 20.7 percent versus 19.4 percent for the S&P 500. So we do believe a
competitive firm can be achieved through sustainable and responsible
investing.

GHARIB: Very interesting information. Barbara, thank you so much
for coming on the program.

KRUMSIEK: Thank you, Susie.


The Threadless Designs and Dollars

TOM HUDSON: From charitable investing to charitable giving, there’s a
company in Chicago turning it into an art form. Threadless sells t-shirts
designed by artists from around the world. What started as a novel idea a
decade ago has grown into a booming business. Diane Eastabrook is back to
explain how Threadless uses its e-commerce clout to help charities.

DIANE EASTABROOK: You are witnessing the marriage of art and commerce.
Inside a massive warehouse with wall to wall T-shirts, workers are
frantically filling holiday orders. Threadless is a community-based design
company on Chicago’s west side. Artists submit designs to the company’s
website and its online community votes for the best ones. Winning artists
get paid for their work, then 31-year-old co-founder Jake Nickell mass
merchandizes the designs.

JAKE NICKELL, FOUNDER, THREADLESS: We started with T-shirts and we’ve
expanded quite a bit. We do iPhone cases, water bottles, backpacks,
dresses, tons and tons of stuff and we’re exploring more and more.

EASTABROOK: Threadless estimates it has a global audience of nearly
two million people, so recently it decided to tap that community for a
greater good. The company is now partnering with charities through a new
unit called Atrium. It’s currently printing T-shirts benefiting a breast
cancer awareness group called Men for Women Now. The charity will get a
quarter of the profits made from the sales of the $20 shirts.

NICKELL: Right now, we’re printing about 850 and we always sell out
our first batch. And depending on the velocity of those sales, we chase
into it and print more. And we regularly do reprints of products that sell
well.

EASTABROOK: The idea to sell cause based T-shirts came to Nickell
after hurricane Katrina. The company designed a T-shirt to benefit
hurricane victims and ended up raising over $100,000. Since launching
Atrium 10 months ago, Threadless has raised nearly a half-million dollars
for 16 charities including the Red Cross. CEO Tom Ryan says promoting
causes was a natural for Threadless because its community of artists and
consumers tend to be young and socially conscious. But, he admits it also
made good business sense.

TOM RYAN, CEO, THREADLESS: Doing this design for causes specifically
is one great way to bring in people who are already supporters of a cause.
When they support that cause, sure, they will probably find other things on
Threadless that they are interested in, but it wasn’t the primary
motivating factor in why we started to do this.

EASTABROOK: Threadless wants to host at least one cause-related
design challenge a month next year. It thinks harnessing the passions and
pocketbooks of its own community can help make the world a better place.
Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.

American Red Cross the Beneficiary of Conscious Capital

SUSIE GHARIB: If it is going to be more than a slogan, a company’s social
responsibility campaign requires deep partnerships with people and
charities delivering services to people in need. Now one of those charities
is the American Red Cross. Darren Gersh talked with the group’s president
and CEO Gail McGovern for a glimpse at what corporate social responsibility
looks like from the other side.

DARREN GRESH, NIGHTLY BUSINESS REPORT CORRESPONDENT: When companies
come to the Red Cross to lend a helping hand, they are also trying to
burnish their brands, showing customers the company cares enough to help
out. But American Red Cross CEO Gail McGovern has found another motivation
behind these corporate campaigns.

GAIL MCGOVERN, CEO, AMERICAN RED CROSS: I also think they are doing
it because there are employees are starting to demand it. This generation
of young people were brought up on volunteerism, community outreach and
they want to do it.

GERSH: Which is a good thing, because the Red Cross needs help from
businesses large and small. So how important are these partnerships to the
Red Cross?

MCGOVERN: We rely very heavily on these kinds of partnerships. From
the very simple, Keebler gives us cookies that we use in our blood drives,
it’s between a million and $2 million gift and our blood donors love it.

GERSH: The Red Cross also looks for companies to provide an
expertise. Industrial supply giant Grainger is helping with IT, Wal-Mart
(NYSE:WMT), UPS and FedEx (NYSE:FDX) with logistics. With an army of
650,000 volunteers, the Red Cross finds it is easy to get in a CEO’s door,
but it still has to ask for help. So it’s been a tough economy lately. Are
you seeing companies being more generous or are they being more tight-
fisted?

MCGOVERN: We’re finding that our corporate donors are sticking with
us. Some are making larger donations. But we’re not seeing a pullback.
We’re also doing more outreach. We’re making more asks than we had in the
past. But I think the organization is beginning to realize that giving
somebody an opportunity to give is actually a gift in and of itself.

GERSH: You guys went through a tough time and companies were a
little reticent about doing things with you. So what do you have to do on
your side to make sure you’re responsible so that people will feel like,
OK, we can be socially responsible with you?

MCGOVERN: So when I first got to the American Red Cross, we closed
our books eight days later with a $209 million operating deficit and about
$600 million worth of loans on top of that and so we had to get financially
stable.

GERSH: That meant consolidating services provided at 650 Red Cross
chapters. It also meant getting smaller.

MCGOVERN: It was tough but at the end of the day, the reason everyone
rallied around it was because I said to the organization, how can we look a
donor in the eye and say that we have this redundancy.

GERSH: After restructuring her own organization, McGovern is now in
a better position to give other CEOs advice about social responsibility.

MCGOVERN: I would tell them make sure you support the brand and what
you stand for, make sure that you engage employees in ways that are
meaningful and be sure that whatever you’re doing you can measure the
impact of it. Whoever you’re volunteering for or whatever initiative,
you’re involved in really — you can tell the impact. That it’s measurable
and you feel good about it once it’s done.

Starbucks’ “Create Jobs for USA” Campaign

TOM HUDSON: Tonight, we’ve met small businesses doing well by doing
good. Now our focus turns to a big business that’s helping fund small
business. Starbucks (NASDAQ:SBUX) began its “Create Jobs for USA” campaign
back in November, 2011. Customers get a wristband when they donate $5 or
more to help fund small business lending. Plenty of people have been
ordering those wristbands along with their lattes and iced coffees. In the
first three months of the strategy, it has raised more than $7 million in
donations. That was added to money from other sources to wind up with $50
million in loans for small companies. Starbucks (NASDAQ:SBUX) estimated
the money was used to create or keep an estimated 2,300 U.S. jobs. We
spoke to Starbucks (NASDAQ:SBUX) CEO Howard Schultz a few weeks after the
program began. What role does a public company that essentially is in the
restaurant and services industry have raising money for business lending
when it’s traditionally been a financial services and a banking industry
role?

HOWARD SCHULTZ, CEO, STARBUCKS: I feel very strongly that Washington
has let us down. I don’t want to be a bystander and watch America drift
towards mediocrity and I want Starbucks (NASDAQ:SBUX) to be the kind of
company that perhaps can be a model for others to say we can make a
difference. And at the same time we can build shareholder values.
Starbucks (NASDAQ:SBUX) is having a record year, record revenue, record
profit. Our stock is close to the all-time high and yet we’re doing the
kind of things not only for the communities we serve but at the same time
giving health care to every single employee.

HUDSON: Some would point out that it’s that success that you are
having on the bottom line that has allowed Starbucks (NASDAQ:SBUX) to make
the contributions on the benevolent side of the social ledger.

SCHULTZ: I think the consumer wants to support those companies or
products whose businesses they trust and whose values are compatible with
their own. And at the same time, I think business has to recognize that we
are in business to make a profit and build shareholder value.

HUDSON: According to Associated Press, the corporation, Starbucks
(NASDAQ:SBUX), spent over $100,000 lobbying in the third quarter on such
things as health care, food labels and debit card fees. Is business too
influential in politics in your estimation?

SCHULTZ: We are a for-profit business. We have issues that we have
to deal with and we have to protect our interest. But I think that when I
look at the numbers that were spent in 2008, over $4 billion and then $6
billion estimated to be spent on this election cycle is something
significantly and seriously wrong with the system and I don’t want to be a
part of it and I think most Americans are disgusted by it.

HUDSON: Couldn’t you argue Howard, though, it’s a market economy
when it comes to politics?

SCHULTZ: I think it’s a market economy that needs reform. I think
it needs balance. And I think most importantly we have a crisis of
confidence in this country because we have a crisis of leadership across
the board. I want America and the people who are being left behind to have
a voice and I’m not satisfied with the direction and the leadership that we
are receiving.

HUDSON: Howard Schultz with us this evening, thank you for your
comments. He is the chief executive officer of Starbucks (NASDAQ:SBUX).

Crop to Cup Percolates Business with Farmers

SUSIE GHARIB: From philanthropy at the world’s biggest coffee house chain
to a small coffee importer, it’s cashing in on the premium coffee craze in
a unique way. Diane Eastabrook shows us how Crop to Cup is making money by
empowering coffee farmers.

EASTABROOK: There are coffee hounds and then there are coffee
connoisseurs. They flock to Ipsento on Chicago’s northwest side where
coffee is roasted on site, then served up with steamed milk or without.

JACOB ELSTER, CO-FOUNDER, CROP TO CUP: Wow, it’s big, it’s different,
it’s unique. This is an espresso.

EASTABROOK: Coffee is 30-year- old Jacob Elster’s life. He co-
founded Crop to Cup four years ago after working on social projects with
coffee farmers in Africa. The company buys coffee directly from growers in
Uganda and Burundi who practice sustainable farming. It then sells the
product directly to coffee houses like Ipsento and to consumers over its
website. Videos let consumers see who’s behind their coffee. And that
personal relationship helps the farmers command higher prices for their
crops. The concept is called traceable or relationship coffee and Elster
says it’s a win-win for everyone.

ELSTER: Not only does that allow us to get coffee profiles that are
more in tune with what the market wants, but the process is very engaging
and it highlights some of the differences of what we provide versus the
commodity coffee importer.

EASTABROOK: The United States imports over 130,000 tons of coffee a
month. It comes from roughly 60 nations and most of it is traded like any
other commodity And by the time a cup of coffee like this gets to a
consumer like me, it’s hard to say tell it came from.

NEIL BALKCOM, QUALITY CONTROL, CROP TO CUP: With this coffee, we’re
getting just tons of chocolate.

EASTABROOK: Neil Balkcom is sort of a coffee sommelier. He sniffs
and slurps the coffee Crop to Cup buys, looking for unsavory beans. If he
finds any he’ll trace them back to the growers and help them identify
potential problems. In one case the beans weren’t to blame, but a washing
station was.

BALKCOM: There was a piece of machinery there that needed to be
calibrated and it wasn’t being calibrated. Therefore it was letting through
certain defects.

EASTABROOK: Elster says that kind of information is critical to
farmers. To him Crop to Cup is as much about empowering rural Africa as it
about selling coffee.

ELSTER: Working with and living with the communities I worked with in
Uganda, I came to realize that they really wanted jobs and good jobs as a
first starter. And with that came a lot of pride, a lot of dignity and a
lot of ability for them to take care of themselves.

EASTABROOK: Recently Crop to Cup brought that philosophy home to
Chicago. It’s paying developmentally disabled adults at the Misericordia
home to package coffee. Assistant Executive Director Lois Gates says the
jobs have made a big difference in the lives of the workers.

LOIS GATES, ASST. EXEC. DIR., MISERICORDIA HOME: They like to have a
reason to get up in the morning. They like to accomplish and they like to
be proud of what they do.

EASTABROOK: This year Crop to Cup will turn a profit for the first
time. Elster admits that’s a big accomplishment for him and the company.
But an even bigger goal is becoming a model for other businesses at home
and abroad.

ELSTER: I’ll consider Crop to Cup successful if we can get people to
copy us, if we can help grow the market for traceable coffees, if we can
really reintroduce a new way of dealing with the people who provide all of
our commodities.

EASTABROOK: Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.

HUDSON: When it comes to giving, two of the world’s richest men have
championed a plan to get their rich friends to donate money to charity.
It’s called “the giving pledge.” Now it was started by Bill and Melinda
Gates six years ago. It’s supported by their good friend Warren Buffett.
He’s a billionaire of course. The pledge challenges the wealthiest people
on the planet to pledge at least half of their wealth to charity. So far
Buffett and the Gates’ have convinced a number of the world’s richest
people, 69 of them, to sign the pledge, promising billions of dollars to
charity in the years ahead. This list includes people like Microsoft
(NASDAQ:MSFT) co-founder Paul Allen, New York City Mayor Michael Bloomberg
and the founder and CEO of Facebook, Mark Zuckerberg.

“The Girl Effect” Offers a Lasting Return on Investment

SUSIE GHARIB: And finally, tonight’s “Money File” has a unique investment
with a conscious capital twist. Here’s Manisha Thakor, co-author of “On My
Own Two Feet — A Modern Girl’s Guide to Personal Finance.”

MANISHA THAKOR, CFA & CO-AUTHOR, “ON MY OWN TWO FEET”: Are you
frustrated by stock market volatility and paltry rates of return on cash
equivalents? Do you want your hard earned dollars to make a bigger impact
on the world at large? If you are looking to generate a lasting return on
investment, I’d like to suggest invest in the education of a girl.
According to the non-profit “The Girl Effect,” a unique collaboration
between the Nike (NYSE:NKE) Foundation, Novo Foundation, and others, when a
girl in the developing world receives seven or more years of education, she
marries four years later and has 2.2 fewer children.

When women and girls earn income, they reinvest 90 percent of it into
their families, as compared to only 30 to 40 percent for men. Per the
coalition for adolescent girls, investing in girls starts a virtuous cycle
that reduces poverty, AIDS, hunger and perhaps even war. Yet of the world’s
130 million out-of-school youth, 70 percent are girls.

Organizations such as The Girl Effect and Kiva are seeking to change
history by giving girls in developing countries access to education or
loans to start small businesses. Studies show that when you improve a
girl’s life, you improve the health, hygiene and overall lives of her
brothers, sisters, parents, and beyond. Now that sounds like a great return
on investment to me. I’m Manisha Thakor.

HUDSON: For more information on this NBR special edition “Conscious
Capital” and of course, our daily market coverage, head over to our
website. You’ll find us at nbr.com. That’s it for this special edition of
NIGHTLY BUSINESS REPORT. Thanks for watching. I’m Tom Hudson. Have a great
night, you, too, Susie.

GHARIB: Same to you Tom. I’m Susie Gharib. We hope to see all of
you again tomorrow night.

Copyright 2012 NBR Worldwide, Inc.


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