We have received questions and comments on today’s topic from around the world through our blog DipNote and on Twitter, and we have selected several for this broadcast. Now let’s meet our guests. We have – we are privileged to have Kris Balderston join us for this discussion. Kris is the Special Representative for Global Partnerships here at State. And we are also pleased to have with us Kirsty Jenkinson. She is part of the ever-burgeoning world community out there, and she’s Director of the Markets and Enterprise Program of the World Resources Institute. Thank you both for taking the time to join us.
I wanted to start, Kris, with you and ask you to tell us a little bit about your office and what you do.
MR. BALDERSTON: Great. Thank you, Cheryl. Thank you for the opportunity. And Kirsty, it’s great to be with you, too. When we came into the State Department in 2009, Secretary Clinton, she wanted to do things differently. She knew that the problems around the world were – went beyond borders, were very big, affected many people, and resources publicly were going down. So she created our office, which is the Global Partnership Initiative, which is a secretarial office. And it’s centered around the notion of the power to convene, to bring people together around problems. And that’s what we’ve been doing for the last three years: finding problems that people are not necessarily addressing.
Every day in the State Department, people try to solve these problems, and they’re working. They’re doing a very good job on global health and development issues. But there were some things that were out there that were not being addressed, so we created our office and we created a platform to talk to anyone who would come solve the problem with us. I often call our office the Office of Uncommon Alliances, because we will talk to virtually anyone to try to solve these problems. It could be business. It could be the religious community. It could be other nations, NGOs, foundations.
And in the three years we’ve been in existence, we’ve created – we have over 300 partners and we’ve raised over $200 million in outside-the-State Department funding on a number of projects, which we can get into later. But it’s a very exciting initiative. I think it’s the way of the world. We’ve been working with your organization and others to try to solve a lot of these problems that are faced by the inhabitants of the world every day.
MS. BENTON: Great. That’s so interesting. I apologize; I called you Kristy, and I know you’re Kirsty. And so tell us a little bit about your organization and how you interface with Kris and other entities at State.
MS. JENKINSON: Yes, of course. So I work for the World Resources Institute, known as WRI as well, based here in Washington, despite where you may think I’ve come from. (Laughter.) And we’re really sort of an environmental and development-focused think tank, and we really look at both the research and the data and the analysis, which is very independent, very credible, that’s required to understand a lot of the challenges that Kris has referred to and that we’re talking today, whether they’re relating to all the environmental change that the world’s undergoing at the moment, and also the development challenges that we’re facing.
Now, the work that I look at particularly in the Markets and Enterprise program, as the name suggests, is focused on, well, what’s the role that business and the financial markets, given the huge power that they play today, can really be a solution for many of these challenges that we’re facing. So I lead a program that really tries to work with both businesses and entrepreneurs and small-scale investors, as well as multinational companies and institutional investors, to really think about the way that the role of business can solve a lot of the challenges that also the government are trying to tackle as well.
So our interaction here with State and with, obviously, many parts of the U.S. Government and other governments around the world is to try and bridge these gaps in the best way. We provide – what we hope – a lot of the credible, data-driven analysis and research, and we work in partnerships as well to try and solve some of the issues.
MR. BALDERSTON: And, Cheryl, I would say that I think the State Department has done a great job for over 200 years in translating between languages. That’s what we’ve been very famous with. But now we’re to the point where we have to start translating the languages of business and government and government to business and NGOs to get out there and understand each other’s vocabulary.
One of the things we’re doing next week – the State Department – is impact – a forum on the impact economy, where we’re bringing the corporate sector, investors, NGOs, social entrepreneurs, and governments together to talk to each other, really for the first time, in the State Department. And we’ve found that as we’ve talked to people prior to this meeting, there is a different vocabulary. We’re all going for the same goal, but we’re calling it different things. You could – when you talk to a businessman, you talk about the over 190 federal or State Department embassies or consulates around the world. They’re our – they’re almost our branch offices. They’re our regional offices. And they have a very good sense of what’s going on, and we should be working more in tune with each other to try to solve these problems. It is possible, and we’re going to hopefully show during this conference, which Secretary Clinton is going to keynote along with Sir Richard Branson, who has an accent similar to yours. (Laughter.)
MS. JENKINSON: Right. That’ll be fun.
MR. BALDERSTON: You can do good and you can do well.
MS. BENTON: Right.
MS. JENKINSON: Exactly right.
MS. BENTON: That’s so innovative. And this is under Secretary Clinton’s leadership. She established your office; is that correct?
MR. BALDERSTON: Exactly. Yes.
MS. BENTON: It had not existed?
MR. BALDERSTON: No. She started this.
MS. BENTON: Yeah. That’s pretty neat.
MR. BALDERSTON: It – I had worked with her in the Senate –
MS. BENTON: Right.
MS. BALDERSTON: -- and we started realizing that if you bring talented people together, they can help solve problems. We had a very simple issue in New York. Upstate farmers were not doing well financially, and we had the largest markets in the world, particularly organic markets at the time, in New York City. So without money, we simply put together the upstate farmers with the downstate markets, and we used Cornell’s Ag school to convene them and bring them together.
And when we saw the power, that power, we came here and the Secretary said, “Why aren’t we doing similar things around the world?” And we’re challenged. We need different structures. And I think that’s part of the WRI’s working on this work. We’re all – this is – we’re plowing new ground. We don’t have the answers, but it’s very exciting to try to set up these new structures which allow us to have to be very agile very quickly and flexible.
MS. BENTON: Very good. As we all know, today’s global community faces significant challenges: climate change; food insecurity; market instability; access to energy. And these are just some of the issues we’re trying to address here at the State Department. And as we all know, government cannot solve these issues on its own.
Kris, if you could start us off a little bit by talking about how businesses and government are currently working together to promote these innovative solutions. I think you touched a little bit on that. And then I’d like to see – have Kirsty jump in and talk about the work that your organization is doing in that regard.
MR. BALDERSTON: It’s very interesting. Companies have come to us. They do business well when they are in a stable society where you have not only infrastructure but you have human rights and equality in the economy. I’m often asked when I go overseas, “What would you do to change our economy?” In many cases, I often say two things: Focus and educate your young people, provide them vocational training – there’s a huge gap between jobs and skills – and expand the role of women in society, which is huge. You expand by 50 percent your talent.
There’s a project that we’re working on with Melanne Verveer, our Women’s Ambassador at the State Department, on Women, Mobile Women. And as you know, Melanne and others went to the mobile phone industry and said did you know there’s a 300 million person gap between men and women on cell phones?
MS. BENTON: Right.
MR. BALDERSTON: If you provide 300 million more cell phones, this is an economic tool now; you can literally change the economies of these countries. I heard a statistic the other day: 90 percent of the new market is going to be overseas, outside the United States, and only 1 percent of the United States businesses export. So we need to close this gap. We need to get people to think globally in the United States and around the world. It’s hard not to do business all over the world.
And the companies come to us, now that we’ve been in office for a bit and established, and the have very specific issues they’re trying to solve in their countries. And we’re able to connect them with the right – I call it the constellation of activists in countries, who come together and are problem solvers, rather than the traditional forum that we’ve relied on in the past.
MS. BENTON: Very good. So tell me, Kirsty, how do you see this whole situation with businesses working on the innovations that we need?
MS. JENKINSON: Absolutely, and Kris is absolutely right in his comments. And essentially, it comes down to we know pretty – in an unchallenged way what the problems are. We’re at a world really of 7 billion people today, just past that; we’re moving towards 9 billion in 2050. Water use, if we just take that as one example, is growing twice as fast as population growth. We’re going to have to food and fuel all these new people. We know that temperature is changing as well and having an impact. So we start from the premise that these are unrefutable challenges and shifts in the world economy that are taking place, so how can we turn them around and think about, well, where is the opportunity that these create?
Funny that Kris mentioned about mobile phones. I was just reading the latest statistics on that. There’s now 5.9 billion people around the world have a mobile phone. And that’s opened up tremendous new markets overseas for companies and cell phone operators, but it’s opening up huge new markets for farmers on the ground, for businesses on the ground who are able to use phones and create efficiencies in a way that they’ve never been able to. And it’s just when I came across that statistic, I was like, my goodness, this is –we have these challenges that we have to face, we have unbelievable technological change as well that’s helping us get there.
So to sort of bring it down, I guess, specifically in the role of what we looked at and with businesses is it’s, well, how can we really try and bridge the gap where they’re able to use the innovation – which I think we recognize the private sector is one of its core strengths – how can it allow its innovation powers to be unleashed around the world and how can it be then most quickly scaled, create new markets and scaled markets, because again, that’s what’s businesses do best. We think that there needs to probably be some kind of standards by which business has to be accountable to in the way in which they operate, but ultimately, if given the right tweaks and the right incentives and the right sort of levelization, we can actually start to see that they will be able to scale these markets and they will be able to innovate, which is where I think we can see the most exciting developments.
MS. BENTON: That’s interesting, because that was going to be my very next thought and my question: What’s in it for businesses? Aren’t they in the business of doing business, not necessarily doing development or doing aid? So the traditional partner is not the traditional partner in this instance, I would assume.
MR. BALDERSTON: That’s right. And what’s in it for business, they want a stable market. We had a company right before the Arab Spring come to us, an American company, and say – tell us they were very nervous about unemployed youth and they wanted to employ unemployed youth. They came to us and said we’re ready to put money into an English-speaking program so we can train people to work in our company. And two weeks later, we see what happens.
We see other examples where companies want to expand into the market. Sun Microsystems had a statistic in The New York Times about a year ago. Mr. Khosla, who created it, told me, or told The New York Times, that they make more money in their base of the pyramid projects now than they make with Sun Microsystems. So companies are seeing the advantage of expanding their markets and doing well and doing good.
Walmart is a great example. They’ve – in Brazil, in their stores, they pick four or five products a year where they try to become more sustainable – taking band-aids, and instead of having it in a big box, putting it into almost like a gum dispenser, a sleeve; taking detergent, instead of providing a large jar or a large plastic bottle, they concentrate it. So these are things that are very helpful. The other thing Walmart, by the way, does in their Sao Paolo stores, they’ll provide low-cost or free health care, health assistance. And I often say they’re not providing – they’re not doing surgery on aisle twelve – (laughter) –
MS. BENTON: They’re not doing brain surgery. Right.
MR. BALDERSTON: -- but they’re providing this service which – why? They’re doing good but they’re doing well. Five times more people come into the store because of it and buy other things. So there are very good synergies between government and business.
And just quickly, government is very important in validation, finding these problems, making the rules in which to – so that people can engage fairly. So it’s very important to have a government role. We want to use the best of the government and we want to use the best of the private sector and the NGO and the foundation community.
MS. JENKINSON: Yeah, just sort of build on that one, to answer to your questioning, exactly right. Ultimately, still in today’s system and economic models, the role of business is to be profitable.
MS. BENTON: Right.
MS. JENKINSON: And there are challenges along the way that we’re not seeing the scale-up maybe to the degree that we all need it to, which is why discussions like this are so important and why collaborations are so important. Because ultimately, although there’s been a lot of debate about how should the financial markets function, should people be rewarded for just creating profit, is the short-term nature the right way to go, should there be loan-to-time horizons for investors? A lot of debate, as you will have read, going on about that.
So to sort of recognize that we do still have this gap that exists. Sometimes if I look at – we work a lot with the investment community as well, trying to think about, well, where can you get the flow of capital that’s required to support these kind of innovations, to support these changes in the way in which business is operating as well? We’re not quite there yet, because there is this gap. And it’s quite understandable. Often the risks involved in business like this are higher.
MS. BENTON: Right.
MS. JENKINSON: The payback period for an investment is longer. The scale is still relatively small. They’re less liquid. These are all sort of preconditions that are required for sort of a massive scale-up of the kind of, I think, the development that we’d like to see.
But what we’re kind of understanding through discussions like this is that you can start to bridge that gap by governments and business sort of like speaking more and trying to narrow it. What I’m seeing that’s also very interesting is on the investment side you’re seeing quite a shift in the way that large institutional investors are really thinking about these issues. Now there’s an initiative called the Principles for Responsible Investment, which comes out of the United Nations, which is now representing 1,000 asset owners, that’s fund managers and pension funds around the world. They have about $30 trillion in assets under management. They’ve now committed to taking environmental, social, and governance issues into account when they invest. Now, it’s still early days, but that’s a big shift from where we were 10 years ago that there’s now $30 trillion of assets starting to ask these questions about how they put their money.
And in addition to that, we’ve got – also seeing reports from other organizations. JP Morgan has been leading the way in this in terms of thinking what’s the possible size of the impact investing market, and ranges range from 500 billion to sort of a trillion assets under management here again. So if you start to see investors think differently about these issues and the way they invest, that’s obviously going to spur companies to run their businesses differently because the know that they are ultimately accountable to their shareholders.
So again, it comes back to all these different parties starting to realize that okay, there’s still a gap we need to solve, but we’re going to have to sort of start getting onto it, because otherwise we’re going too many people living on too few resources.
MS. BENTON: Exactly.
MR. BALDERSTON: And as a matter of fact, we’re going – we will be making an announcement on the UN Principles next week at our conference, which is very exciting, but also highlighting it. And also, we’ve had a couple of the rating agencies call, hearing about it and wanting to come to learn more.
But I think, Kirsty, it’s – you’re the embodiment here in our studio of what we want. I mean, you’re translating between business. You have a background in finance and other economic matters, and you’re able to translate. And I think it’s really interesting when you look at the trends of young people going to business schools now. The numbers differ, but there are some numbers that say 35 percent of them are looking into the social entrepreneurship field, so they’re thinking differently.
We often think of government as bureaucratic, but what I’ve found in my travels is that the businesses will admit that they can be pretty bureaucratic too. And one of the challenges is that we need one of the players in this to start looking cross-sectorally. We – a lot of companies will not talk within their sector because they’re competing, but they can come up with solutions if they start looking across the sector to try to solve problems, which is a very interesting new way to do it. And I think government can provide a platform and venue, particularly U.S. embassies, to bring these cross-sectoral interests together to try to solve these common problems.
MS. BENTON: It’s interesting; we’ve been kind of talking around the subject, but what is an impact economy? Because I know there was a forum last June at the White House and you centered around that, that concept. So what is it and how does the Global Partnership Institute and your organization help in facilitating investments, in partnerships that promote an impact economy?
MR. BALDERSTON: We’ve been going down – there’s been an evolution, I think, in this field, and there are a lot of catchphrases. And we’ve seen companies go from pure philanthropy to corporate social responsibility to impact investing.
MS. JENKINSON: Yes.
MR. BALDERSTON: And they’ve all been good and they’re all very – they all have their place. But what we’re trying to encourage with the impact economy is for companies and governments to recognize – and NGOs and foundations – that you can also do well and do good; you can use your core business, you can take your core competency, as Walmart example, and Pepsi and Coke will both tell you they’re looking at the water issue harder than anyone else because they depend on it.
You’re looking at a number of companies that are working in our Partners for a New Beginning projects in the Middle East. Muhtar Kent, the CEO of Coca-Cola, will say: I have 6,000 jobs that I’m trying to fill that are going unfilled because I need to keep my Coca-Cola drinks cooled in refrigerators across the North Africa, the Maghreb. So there are opportunities. These are opportunities we want people to start seeing. And I think our conference is going to be an effort to try to create and reinvent these tools. We can’t wait any longer for annual applications and rigid structures. I mean, there are many policies that the government has to look at closely to help encourage enable this.
And I also think leadership is important. I think President Obama doing the conference at the White House and Secretary Clinton doing this, and we’re looking at a whole-of-government approach. The Commerce Department’s, Under Secretary Sanchez, is looking at doing impact investing trade missions. So we’re trying to use all of these resources to come together, be creative, and try to solve these problems.
MS. BENTON: I wanted to get a couple questions in. We’ve gotten a Twitter question from Susannah, who writes: Where are the most innovative public-private partnerships happening, and what impact are they delivering? She goes on to ask further: What can we learn from them?
So that’s a two-part question to you, Kirsty.
MS. JENKINSON: Sure. Yeah, well, maybe I’ll kick off. I mean, it’s a great question because it sort of says, well, the proof is in the pudding. So I mean, the proof –
MS. BENTON: Yes. Right.
MS. JENKINSON: And I guess I’ll answer it by pulling on an example that we’re working on in WRI at the moment, which I think is a really interesting one. It’s to do with palm oil plantations in Indonesia. And for those who – I didn’t know – palm oil is used in food, it’s probably in my lipstick, it’s in body lotions, everything. It’s in lots of different areas, and it’s a really valuable sort of input to a lot of products. But at the same time, Indonesia is one of the major growers of palm oil, and palm oil needs, obviously, land to be grown, and it’s led to an awful lot of deforestation.
So that has a negative environmental impact, land impacts, and also with an emissions impact. So some of the work that we’re doing very nicely with public and private sector out in Indonesia is trying to make this a win-win situation, which might sound harder than it is. But really, when you start to look at the land use in Indonesia, there’s an awful lot that’s already been degraded, which means that it’s available for plantation; it doesn’t involve chopping down new forests, but it’s sitting there.
So there’s been an agreement from the Indonesian Government and a bunch of also business leaders that, actually, a lot of the drivers for the new growth of palm oil economy is going to be building it on degraded land. Now, this sounds – it’s much more complicated than I am saying it, but it really is that real sort of good example, I think, of where the business wants to continue to grow, so you need to continue to have the product, but at the same time, you want the policy makers and also sort of like the environmental sort of impacts as well need to be managed.
So there we’ve managed to see projects that are now going on where more and more palm oil is being grown on these degraded lands in Indonesia. And in order to – sort of what we learned from that, it’s about you have to start and enter into some of these partnerships on the mutual – you have to work out what you both want from it. So what’s the driver behind each party? What’s the government and the policy maker’s driver? What’s the business driver?
And once we put those on the table and lay them out, then you can have a discussion about, well, how can you meet in the middle and find a way that meets both ends? It probably needs a little compromise on both sides, but ultimately you’re all aware of what the drivers are.
And then you also need to decide, well, what’s kind of the impact that you want to have. So here it is continued economic growth but done in a way which is through responsible use of land and also emissions reduction. So we then can all agree on the impacts that want to be achieved.
The final, I guess, lesson learned is you need to then agree a methodology to track that impact and to be able to report and hold one’s progress against it. And that’s where a lot of the challenges come in, but that’s – at least we’re starting around those roots. So I hope that gives our Twitterer – (laughter) – a good example.
MS. BENTON: Well, you’re getting a paradigm to work with.
MS. JENKINSON: Yes, sort of that one can work with and what needs to be – you need to look out for.
MR. BALDERSTON: Cheryl, if I may –
MS. BENTON: No, no, go ahead.
MR. BALDERSTON: I never – I don’t want to miss an opportunity to plug our Global Alliance for Clean Cookstoves.
MS. BENTON: Exactly. Yes, I’m so glad.
MR. BALDERSTON: Which is, I think, the partnership that we’ve worked on that’s – I always say it’s the furthest down the conveyor belt of our little partnership factory.
MS. BENTON: It’s your baby.
MR. BALDERSTON: It’s our baby.
MS. JENKINSON: Teenager. (Laughter.)
MR. BALDERSTON: Exactly. A teenager going into early adulthood. But this is a problem that we filled a gap. A lot of people weren’t looking at it. It was first or second on a lot of people’s list – or second or third on a lot of people’s lists, but not first. And this is a problem that kills 3 million women and children a year, breathing in the fumes of cookstoves. Half the world cooks on open fires; 20 percent of the black carbon in the world; deforestation; violence against women. Women in the Congo are raped one a minute because they’re going out looking for fuel for their families to cook for their families.
So we brought together at the Clinton Global Initiative a new initiative with the UN Foundation where we’re looking for a market-driven approach. And we found companies – Dow-Corning came in and provided funding, Shell Oil, Morgan Stanley, who looks at carbon credits – providing their expertise to come together. We have 30 countries – 35 countries now onboard with more coming every day. And we have Julia Roberts as our ambassador on clean cookstoves, and Jose Andres is our culinary cook, starting Cooks for Cookstoves.
So it’s very important to be able to tell these stories and to get it out into the – communications is very important to get it out into the public sector and tell people that this is a problem that exists. This problem kills three times more people than malaria and tuberculosis. People didn’t know it. And we have programs –
MS. BENTON: And there’s no vaccine.
MR. BALDERSTON: There’s no vaccine. And those numbers, we’ve addressed them. They’re at least coming down. Very serious, but coming down. But with cookstoves, as we – as the population grows, it keeps going up. So we have to address it, and we have a public-private partnership that’s doing it. And it’s really allowed us to go into other areas because people have seen the success of this.
MS. BENTON: It’s just such good work. It’s good work. We’ve been chatting away here, and guess what. Our time is up now. And I want to know if you’ll come back again and if you’ll come back again, because the work you’re doing is fascinating and it’s impactful, shall we say.
So this closes this session of Conversations With America. And I’d like to ask Kris if you will just share your final thoughts, and Kirsty, would you do that, too? And then we’ll close out and thank America for being with us.
MR. BALDERSTON: My final thought is that I think people look at a project like this and they say, “Well, the Secretary of State has a lot of power, a lot of power to convene.” But I would tell people all over the world and anyone watching, we all have the power to convene, to bring people together on problems, to listen, to be empathetic, and to try to walk a mile in another person’s shoes, and sincerely look to solve problems.
Anyone at the State Department can bring people together, or anyone in businesses. But I often call it, as I said earlier, Office of Uncommon Alliances – bring people together. A lot of people have solutions; they just have to be asked.
MS. BENTON: That’s right. Good deal. Kirsty.
MS. JENKINSON: And I guess I’d just sort of end it again on a positive note, of I think a lot of discussion about the challenges that we’re facing were that focused on the risk. It’s focused on the downside. It’s focused on what do we need to sacrifice, what do we need to give up, what do we need to feel bad about. And I think we need to turn the agenda on its head and say, actually, what we’re looking at here is a world that is growing; we know that there are going to be increasing demands and pressures on our resources available to us. But time and time again, the human race has shown that through smart collaboration, as Kris has talked about, and through the great inputs of science and technology, we can come together and we can solve them. So we must see this as an opportunity. From my perspective, it’s an opportunity for business, so let’s turn the agenda around from risk and sort of like the depressing side, and let’s think about where are the new business opportunities and where are the markets of tomorrow.
MS. BENTON: That’s fascinating. You just have to meet people where they are and work on the solutions from there.
So I’d like to thank our special guests, Special Representative Kris Balderston and Kirsty Jenkinson, for sharing your work and your knowledge with us. And I’d like to thank each of you for joining us today. We hope that Conversations With America will continue to inform citizens about the Administration’s efforts to address the challenges of the 21st Century. We look forward to engaging with you again soon. Thank you.