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Green Impact Bonds - developing and financing our best and brightest ideas
Proposal for  U.S. Government by  vankent

Green Impact Bonds - developing and financing our best and brightest ideas

Pitch

How could capitalism deliver a just, fair and genuinely sustainable world?

Description

Summary

This proposal suggests creating an impact assessment application (a Crowd Wisdom app) for governmental institutions.

We have dozens, if not hundreds, of great ideas how to solve every problem known to man. 

But we lack the model how we make it an economic incentive to develop, mix, combine and execute these dozens, if not hundreds of ingenious ideas we already posses.

Developing Green Impact Bonds could just be the thing we need to make ingenious ideas become a (global) reality. 

Example: say you really liked Plastic Bank 

But in order to make it have a maximum impact it would make sense to combine it with micro finance for the entrepreneurs by say Kiva loans.

And further combine these two with crowd sourcing top talent globally for the entrepreneurs by say OweYaa

And gathering a number of ingenious ideas like A Liter of Light for the entrepreneurs to utilize.

Together these would indeed have a very powerful impact!

Problem # 1

For maximum impact (also maximum investments from investors) we need to gather, develop, mix and combine the ingenious ideas we already posses. It is no point in re-inventing the wheel, firstly we should probably use and further develop the best and brightest tools & ideas we already got.

Problem # 2

At the center of Green Impact Bonds is a LOT of information analyzing. Not just to develop the Bond, but at all stages. In the Green Bond Principles from Ceres, we find a need for guidance and assurance including:

- Second party consultation

- Publicly available reviews and audits 

- Third party, independent verification/ certification

How hard is it to analyze, report, consult, review, audit, verify and certify impacts? It´s VERY hard.

Example: millions of cars stand unsold. If sufficient information was available car manufacturers would stop wasting hundred of millions of dollars. Sufficient information about the future market of transportation, car sharing, car pooling (the impact of Zipcar & Uber) is not available to car manufacturers, or anybody else. 

Category of the action

Mitigation - What U.S. Federal Agencies can do to mitigate climate change

What actions do you propose?

This proposal suggests creating an impact assessment application (a Crowd Wisdom app) for governmental institutions.

Explanation;

What would constitute as sufficient information?

Impact investing is exactly that, investing in an real world impacts. What constitutes an "Impact"?

At the center of Green Impact Bonds is the concept of having a certified, verified impact on the world. The investor buys a certain environmental impact. Only if the impact is reached, then the money is transferred. Great concept, and makes impact investing a thrilling experience with absolutely guaranteed impacts on that investment.

But besides buying something easy, mathematically measurable (and without larger impact) like buying a million solar lanterns for third world schoolchildren, how do we measure, analyze, report, consult, review, audit, verify and certify impacts?

Example: in order to make the point clear about insufficient information on impacts, lets take the biggest, hardest example with the maximum of environmental impact available; system change.

The ultimate impact and at the same time the ultimate example of information failure, is the system change thoughts and research, Green Economy by Professor Tim Jackson, System Change by Blindspot Think Tank James Greyson,  New Economics by NEF. 

Undoubtedly mixing, combining, developing and executing these ideas in to policy for governments around the world would have an astonishing impact. Forget about an ailing economy or rising inflation, unemployment and so forth, with these thoughts all our conventional politics would become more robust to answer the problems of the 21st century. But, again, who can analyze, report, consult, review, audit, verify and certify impacts for an example of these system change thoughts? Besides Tim, James and the guys at NEF? Illustrating my point, even Tim, James and the guys at NEF have trouble with each others work..

We have a catastrophic lack of information analyzing capabilities. Our civilization produces more Data then ever in the history of our species. But as our amount of Data continue to expand, our capabilities to accurately analyze it, as comprehensible information, policy, impacts, investments, remains the same or even diminishes.

If we are to make Green Impact Bonds (they already have billions in investments) more than just a dudd, a something that almost was a good thing, we need a way of generating more accurate information. 

We need; a way to analyze, report, consult, review, audit, verify and certify impacts. We need FACTS.

This need for FACTS is actually a common theme in every endeavor in our society and civilization today. Corporations strive for facts. Investors make profits with facts. Schools, universities and research and development need and provide facts. Science needs and operates with facts. All governmental institutions need facts to do their job.

The study and research for impacts, facts about impacts, analyzing, reporting, consulting, reviewing, auditing, verifying and certifying impacts touch all organizations and all individuals in our global society and civilization today. 

We are just now entering a faze in human history when we start to harness the crowds. This is called crowd sourcing. We have a few examples of crowd sourcing like MIT CoLab, but even better, or adding more attributes, more crowd sourcing platforms will become available very soon.

Actually this proposal suggests exactly such a thing; an concrete application (app) for complex information analyzing, or impacts.

Because evaluating impacts is extremely hard, but the pay-offs from doing so can impact our civilization in ways we desperately need, also making billions of dollars and save valuable resources etc. This need to accurately analyze impacts does not only touch banks, international banks, investors, governments, other governmental institutions, corporations, non-profits and NGO:s, it touches all of them. And in a very profound way. 

Because Nassim Taleb made it clear with his Black Swan, George Soros with his Reflexivity investment strategies, Warren Buffet with his remark on: "The Internet does not change the way we chew gum". Our ability to accurately lay a course of information is absolutely minimum. For obtaining accurate information no venue should be blocked, all options should remain open. 

This is a very perplexing conundrum which perhaps begins to open up when we examine the governmental institutions of the Pentagon, NASA, CIA, and NSA. As described before it is in the heart of every organization to provide as accurate information as possible, provide facts. If it is not the Pentagon job to provide facts, what then?

So, whose job is it to analyze who is right? Does the Congress analyze what information the Pentagon, NASA, CIA and NSA produce, or is the job of the White House?

The amounts of data have become too large for anyone, one person, to digest, we have entered an epoch where only crowds (of experts, this point is very important to remember, we need crowds of experts) can accomplish accurate analyzes. 

If the White House and the President wants FACTS and want the governmental institutions to have an ability to provide these facts, then the only logical outcome is that the President lays down an Executive Order to all governmental institutions to co-operate in impact assessment. 

Exactly how does thousands of experts co-operate?

How will governmental institutions make impact assessment? The single most difficult information analyzing known to man? Wouldn´t that result in thousands upon thousands of added man hours?

Example of The Wisdom of Crowds:

Crowds can "guess" their way in to right answers. This is very interesting, for any one person to "guess" at something would be biased and inaccurate, but when crowds do it, it becomes incredibly accurate. Please read

Exactly how can this Wisdom of the Crowds be accessed in an easy and straightforward manner, with fast application providing numerical mathematical outcomes?

This question is a multi-billion dollar question for companies, organizations and, well, everybody. 

Crowd Wisdom app concept answer:

Step 1.

Create a question/ topic or theme; "How will Zipcar and Uber impact the economy and urban planning by year 2020?"

Fill in these boxes with visual representation that open up in to an side window explanation, suggestions like "less parking space required in city centers"

Drag & Drop Grid Arrangement

Remember we humans have a knack of analyzing visual information. We can compare and categorize visual signals containing HUGE amounts of information in a matter of seconds.

Step 2.

The grid is ALWAYS scrambled when experts get it in their smartphone. (Otherwise it would be biased etc.) The expert users arrange the grid so that the most likely suggestion is on the top left corner and the least most likely suggestion is on the lower right corner.

The grid automatically counts the importance of that information as No 1, No 2, No 3 etc.

By doing this with a number of experts, we get the number of beans in a jar effect, we get unbiased Wisdom of the Crowds.

Step 3.

Add your own suggestion. The expert user adds an suggestion that is missing.

Repeat stages 1 - 2

Step 4.

Ask the same question in a different manner "Why will zipcar and uber affect urban planning by the year 2020"

Repeat stages 1 - 3

Step 5.

Repeat stages 1 - 4 with; "How" , "When" , "Who will invest?" , "In what way?" , "What is missing?" , "What can be added?" "Which are the most important key factors?"

Conclusion:

Within moments, just a matter of seconds really, a number (it could be thousands) of experts have processed the information at hand, making the hardest of all information analyzing problems; impact assessment, utilizing Wisdom of the Crowds, creating their own content that they themselves have also analyzed and peer reviewed, objectively and neutrally without bias. And all that data can be mathematically expressed (impact probability etc. etc. etc.)

Green Impact Bonds and Social Impact Bonds are powerful tools, they make a plan, gather financing and get things done. To properly measure, analyze, report, consult, review, audit, verify and certify these impacts is not the responsibility of a single organization, a single institution, a single consultancy firm, the responsibility belongs to all of them.

Lets go back to the hardest of information processing examples; System Change. If we can tackle System Change, we just know we can tackle just about anything. We do not own a handbook on creating System Changes, so, if a Green Impact Bond was made of a extremely potent but largely unknown variable; System Change. How would or should the analyzing, reporting, consulting, reviewing, auditing, verifying and certifying of this Bond happen?

The first step is the creation of, or the suggestion of, a Green Impact Bond; System Change. This provides a finite question. A limited answer can be given on impact of such a Bond. Then research does not have to be infinite on everything, but finite on something.

The second step would be for the governmental organizations to co-operate in creating a interdisciplinary intergovernmental Bond management team. This way management and leadership is provided. 

The third step would be for Crowd Sourcing specific answers to the specific questions using the suggested app. This would undoubtedly mean that Tim Jackson, James Greyson and the guys from NEF would be asked to present the opening factors, videos, slideshows etc. to start the conversation.

With the suggested app, within seconds thousands upon thousands of experts using their smart phones have categorized, analyzed and suggested improvements on the suggested impact bond.

The fourth step would be for the interdisciplinary intergovernmental Bond management team to provide the report to the Bank on verified impact assessment.

Why plan an app for governmental institutions?

Besides already having the CIO (Central Information Officer) required, these governmental institutions are mandated for specific purposes, that is why they get the budget and tax dollars. The Impact Bonds are not imaginary tools, they are planned and made for a specific purpose to CHANGE our world we live in. I think that puts them smack right in the middle of the original mandate these governmental institutions possess.

If asked, how the government can be a more effective middle man, or minimize the cost of the governmental institutions on society, provide more of an impact on society, provide more accurate information, this is pretty much the answer.

But certainly, corporate America says "Thank You!"

Besides, when this suggested app is up and running, it will with all likely hood be incorporated to all business web pages, sooner or later. It can be clearly seen that with such an app, the customers (who are the experts in that service or product) provide comprehensible research and development for the products, services and the business structure. A business that has better customer satisfaction wins, and ones who don´t, well, go bankrupt.

Who will take these actions?

Who wants to create an Crowd Wisdom app that makes advanced customer feedback a corporate reality which no business can live without?

Don´t actually know that one yet.

Well, hopefully at least somebody gets interested in the only conceptual way of turning the Wisdom of the Crowds in to a reality for all society.

But why incorporate this app with Impact Bonds? With Social Impact Bonds, designed to impact society where the government either fails or does not have the budget or expertise to do that, the government providing sufficient information probably is a clear cut deal. The government must make calculations of savings and expenses.

Social Impact Bonds can be designed for targeting governmental expenses in unemployment, healthcare, education, prison etc.

But what about Green Impact Bonds? 

To prevent unnecessary investment risk, fraud and providing clear cut parameters for success or failure, be it a Social Impact Bond or a Green Impact Bonds the government needs to provide banks, investors and the general public with sufficient information.

Because all the governmental institutions already have CIO (Chief Intelligence Officers) this should be easy. A Presidential Executive Order to all governmental agencies, organizations and institutions to provide each Bond with co-operation in form of assigning personnel to a interdisciplinary intergovernmental Bond management team just organizes that which is already available.  

And the app makes the Wisdom of the Crowds accessible and easy. You could call it Gamification of Wisdom.

Where will these actions be taken?

Where will the app be created? 

Don´t know that one either, sorry.

Just here to present an concept of an app that all businesses would pay anything to have, and the only possible way of providing society with faster, easier, better quality information then the method of, hmm.. there just isn´t that many methods around, for providing society with quality information other than, well, science.

How much will emissions be reduced or sequestered vs. business as usual levels?

The biggest risk we have is not the lack of ideas. We have dozens or even hundreds of absolutely ingenious ideas. The biggest risk our society is facing is a information processing problem. How to asses information, impacts, investment risks. And what constitutes a success and what is a failure?

Need a clear cut example?

Is Solar Roadways Cool?

Or would Ocean Turbines be better?

How could we get the clean trillion Ceres talks about, what should we gather, mix, develop and combine to get the Trillion in investments?

Well ask a thousand experts, first engineers, then finance, then marketers and finally entrepreneurs, by a Crowd Wisdom app described in this proposal. They´ll tell you. 

With sufficient information we can actually build our society to meet our biggest challenges. 

Without sufficient information it is hard to imagine our civilization can stand up to the challenges that has been set up for us.

What are other key benefits?

The quintessential moral obligation of our species is to steward our responsibilities and provide better information, than was given to us, to the generations that follow us.

What are the proposal’s costs?

How much does a fully developed Crowd Wisdom app cost?

Sorry, never done one before, just describing the concept of how it works, why and what can be done with such an app.

Just guessing here, but if documented properly, what it does, when, why and how, most expert code makers should be able to provide one fairly quickly. We are not talking about rocket science, it´s just a Drag & Drop Grid with input possibilities. 

Time line

Social Impact Bonds and Green Impact Bonds will be multi billion dollar industry in 2014, this requires the government to react anyhow. 

Other then that? Don´t know, sorry.

Related proposals

It´s been quite some time since something of this magnitude was done to restructure the government in to a more efficient one. Obamacare is not something that touches every governmental agency. I think John F. Kennedy and John Kenneth Galbraith where there when something of this magnitude was last attempted. The razor blades of Reaganism can hardly count.

And for the concept of an Crowd Wisdom app, the closest thing would be a web developer trying to make a gamification of customer feedback, but sorry, haven´t heard of any such apps, at least yet. 

 

References

Bonds:

All about Green Bonds and Climate Bonds http://thesustainabilitycooperative.net/2014/01/22/all-about-green-bonds-climate-bonds/?utm_source=hootsuite&utm_campaign=hootsuite

The World Bank; Growing a Bond Market to finance a cleaner resilient world http://www.worldbank.org/en/news/feature/2014/03/04/growing-green-bonds-market-climate-resilience

Green bonds are set to play a vital role in funding environmentally friendly projects in the fight against climate change. Christopher Flensborg, head of sustainable products at SEB, the Swedish bank, discusses their future with Chris Flood of FTfm   http://video.ft.com/3290261583001/Eco-investments-with-impact/Markets

Seeking big impact: Zurich puts $1 billion in ‘green bonds’  http://www.socialenterprisebuzz.com/2013/11/18/seeking-big-impact-zurich-puts-1-billion-in-green-bonds

Apps:

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Proposal Summary
Green Impact Bonds - developing and financing our best and brightest ideas
By:  vankent
Contest: U.S. Government
What new actions or policies can the U.S. government agencies implement to mitigate climate change?