16 juni 2018

Impact Investing Mythes, Feiten Drogredenen



Mythes, Feiten & Drogredenen

Als Impact Investing zoveel voordelen heeft, positieve impact voor mens, milieu & winst oplevert, waarom doet dan niet iedereen het allang?

Het is nieuw, het is anders en behalve naar financiële opbrengst wordt ook naar impact, opbrengst voor mens en milieu gekeken en die som is nog niet altijd even makkelijk te maken. Soms kan meer geld verdiend worden door impact te negeren omdat de samenleving, mensen ver weg of het milieu de rekening betalen.

En er ontstaan verkeerde beelden en halve waarheden die als drempels gaan werken.



MYTHE 1: Economische groei voorziet -uiteindelijk- in de (basis)behoeften van iedereen. Groei, winst → banen → inkomen → basisbehoeften en door belasting (betaling) sociale voorzieningen.

FEIT: Investeringen hebben impact, positieve & negatieve.
Door falen van de markt, verschillen in ontwikkelingsfasen en plaatsen wordt het rendement: de winst, economische groei, 
positieve en negatieve impact niet gelijkmatig verdeeld.



MYTHE 2: Impact Investeren zal nooit opschalen, groot worden, omdat het alleen in private equity & door institutionele investeerders wordt gedaan.

FEIT: Impact Investeren kan in alle asset klassen: cash; spaargeld; leningen: obligaties, omzetbare -converteerbare- leningen : van lening naar aandeel of certificaat; aandelen (in fondsen), obligatiefondsen; mixfondsen : aandelen & obligaties; duurdere soms exclusieve Notes; goedkope producten als ETFs, indextrackers, roboadviseurs thema fondsen, vastgoed (fondsen); private equity : niet beursgenoteerde leningen, al of niet in fondsen; crowdfunding voor impact (liefst met AFM vergunning / toezicht) …

Drogreden: De MYTHE is ontstaan doordat Impact Investing als marketing term is bedacht door en voor grote private equity investeerders. Maar nu wordt het gewoner met beursgenoteerde beleggingsproducten & door crowdfunding.



MYTHE 3: Impact Investeren zal nooit groot worden, opschalen omdat het durfkapitaal is, Venture Capital : het investeert hoog risico start- & groei kapitaal.

FEIT: 3: Het ontwikkelen van nieuwe markten ('sterren') vraagt visie, een strategie, risicobereidheid, geduld & flexibiliteit. Daarom onderscheiden we ook impact 'opschaling' investeringen, vooral leningen, en Catalytic Impact Investing dat nieuwe markten bouwt.

Drogreden: Impact Investing is veel groter dan de hoog risico opstart, venture, investeringen. Het belegt bijvoorbeeld in vastgoed voor sociale huisvesting, geeft vooral leningen en bepaalt de te betalen rente aan de hand van risico en de beoogde impact.



MYTHE 4: Impact eerst, het belangrijker vinden dan rendement, met laag of lager dan de markt, dat wil zeggen risico, conform rendement is een dominante strategie.

FEIT: De impact belangrijker vinden dan het risico/rendement is eigenlijk gedeeltelijke filantropie. De meeste impact investeerders streven naar evenwicht in impact en -risico- gerelateerd rendement. En/of ze denken dat op de langere duur impact investeringen het beter zullen doen, bijvoorbeeld in duurzame bedrijven, hernieuwbare energie en groene technologie.

Drogreden: De term Investeren met Impact is bedacht door filantropen, goede doelen, ontwikkelingsbanken en overheden, maar dat betekent niet dat ze geld wilen verliezen, ze willen juist rendement om de impact op te schalen.



MYTHE 5: Impact investeren is alleen voor miljardairs, High Net Worth Individuals, goede doelen en institutionele impact ambitieuze investeerders die grote deals doen, met hoge instapbedragen en hoge kosten. Het is niet toegankelijk & onbetaalbaar voor de rest van de wereld. (Oh ironie)

FEIT: De markt voor 'exclusief impact investeren' groeit hard. De investeringen van grote, 10miljoen US$+, investeerders groeide in 2017 naar 228miljard US$, een verdubbeling van 2016. (theGIIN) Exclusieve impact investeringen beginnen soms pas bij 100.000 Euro of US$ en wel meer en zijn op maat gemaakte beleggingsproducten. Exclusief impact investeren is de top van waaruit 'trickle down', doorsijpel economische groei ontstaat en producten wel toegankelijk en betaalbaar worden. Dat gebeurt ook al bij impact investing: stukjes Groene Obligaties, 'nominaal' 100.000 euro, zijn te koop voor > 50 euro.

Drogreden: Omdat er veel aandacht is voor exclusief impact investeren door bekende miljardairs, (hun) goede doelen en grote (investerings)banken lijkt het soms alsof impact investing alleen door zeer vermogenden wordt gedaan.



MYTHE 6: Investeren met Impact zal nooit groot worden omdat er te weinig verdiend kan worden aan arme mensen en basisbehoeften.

FEIT: Investeren met Impact is incusief²,
het kan al vanaf een paar euro, zonder kosten, bijv. als je geld leent aan de armste mensen, Base of the Pyramid en kleine ondernemers.
Economische ontwikkeling ontstaat ook onderaan, doordat mensen zich organiseren, van elkaar leren, samen werken en geld lenen. En door nieuwe online 'fintech' technologie waardoor geld lenen, sparen of beleggen goedkoop wordt en voor iedereen bereikbaar op mobiele telefoons etc.

Drogreden: Arme consumenten en kleine investeerders, en daar zijn er veel van, kunnen grote markten bouwen als ze zich organiseren. Oikocredit groeide door de honderden kleine en grote kerken die geld inlegden en hun kerkgangers. Microkredit groeit door de miljoenen mensen die goedkoop een klein bedrag lenen bij een microkredietbank tot een markt met 116miljard US$ vermogen, net als investeren in vrouwen, die zijn ook populair bij microkredietbanken omdat ze goed terug betalen en het in hun gezin investeren, huis, onderwijs, zorg etc. Community Development Finance in arme, lokale gebieden in de VS, is een markt van 122miljard US$. Inclusive finance verbreedt het aanbod.



MYTHE 7: 'minder schade doen, negatieve impact verminderen door het uitsluiten van schadelijk producten, minder investeren door ESG risico integratie is 'Doing good'.

FEIT: Investeren met Impact is meer dan het rebranden van Ethische, Duurzame, Verantwoordelijke, ESG & Thematische (bv. Water) investeringen. Het meet de impact 'opbrengsten' per Euro en maakt onder-scheid tussen BREDE (minder negatieve impact voor veel mensen) & DIEPE Impact: de positieve impact voor speciale doelgroepen, regio's, markten en de kosten/besparingen.

Drogreden: Minder negatieve impact is niet hetzelfde als positieve impact. Bijvoorbeeld minder CO² uitstoot is geen directe positieve impact, dat is hernieuwbare energie die geen CO² uitstoot EN geen andere negatieve impact heeft in het productieproces of bij kernenergie het kernafval. Kijk naar Waar: de armsten, opkomende markten, achtergebleven gebieden... Wie: mensen die minder toegang hebben tot basisbehoeften en kansen :vrouwen, jongeren & kinderen, ouderen, chronisch zieken & gehandicapten, minderheden, LGBTQ etc. Wat: toegang tot financiering, huisvesting, onderwijs, gezondheidszorg, maar ook wereldwijde thema's zoals vergrijzing, sociale bewegingen, bevolkingsgroei, klimaatverandering, de circulaire economie, duurzaam produceren en consumeren.... En altijd wat kost de impact?



MYTHE 8: Er valt niets te verdienen aan basis-behoeften zoals huisvesting, landbouw, schoon water, afvalverwerking, onderwijs & zorg, etc. want de producten zijn te goedkoop en overheden maken te veel, dure regels.

FEIT: Investeren met impact focust op basisbehoeften en de groei-potentie. Het heeft lager rendement maar ook lagere volatiliteit, koersgevoeligheid. Microkredietfondsen deden het beter tijdens de financiële crisis. Door het vrij geven, liberalisering van aanbieden van onderwijs, zorg, huisvesting, opwekken van duurzame energie etc kunnen markten groeien, betere kwaliteit bieden en lagere prijzen vragen.

Drogreden: De mythe negeert de toegevoegde waarde van specialisatie, en gevolgen en kansen van 'mega' trends zoals bevolkingsgroei, verstedelijking, technologische ontwikkeling maar ook no nonsense productie & distributie waardoor goedkoop massaal geproduceerd kan worden. En van Frugal, zuinige innovatie & exponentiële growth.



MYTHE 9: Technologische innovatie lijdt tot complexe, dure producten & diensten voor minder klanten in krimpende markten. Zoals steeds duurdere medicijnen, telefoons & laptops.

FEIT: Investeren met Impact is gericht op technologische innovatie en kapitaal- intensieve kennis. Maar jonge mensen en hoger opgeleiden willen positieve impact hebben, die laten groeien en kennis delen.

Drogreden: Door technologie ligt de wereld binnen handbereik met betaalbare toegang tot informatie, producten en diensten. Mensen vinden aan de lopende band betere, goedkopere producten en diensten uit die online kunnen worden gevonden en 'als massa product' kunnen worden aangeboden. Vernieuwende businessmodellen met impact voor People & Planet zijn doorslaggevend voor bedrijven om te kunnen groeien door betaalbaarheid en verkrijgbaarheid.



MYTHE 10: het meten van impact van investeren is te complex, vaag en normatief. Waarom is investeren in 'vrouwen' beter dan in mannen? ESG data is gemaakt voor grote investeerders, wordt alleen gedaan door multinationals, is te kwantitatief en kijkt te weinig naar kwaliteit & synergie. Het is vooral public relations & impact 'washing'.

FEIT: Wat wordt gemeten wordt gemanaged. Stel goede vragen, verzamel de juiste data, gebruik de beste algoritmes & veel gebruikte metrics om te kunnen vergelijken.

Onderzoekers kijken welke duurzame praktijken de meeste resultaten hebben voor bedrijven en hun winstgevendheid (GISR).

Speciale impact meting systemen, voor specifieke doelen en doel-groepen (DIEPE impact) worden al geïntegreerd met bijv. het veel gebruikte GRI Global Reporting Initiative data en ESG systemen.

Drogreden: Het meten van input, output, outcome, resultaat is de basis voor impactmeting. Die kijkt ook naar wat er gebeurd zou zijn als er niets was gedaan (om een probleem op te lossen). Marktonderzoeken moeten ook naar impact kijken en impact investeringen moeten ook goed, goedkoop, gezond verstand lean & mean marktonderzoek doen om efficiënt te kunnen investeren.


1 juni 2018

Impact Investing Nieuws 1 Juni 2018

Green Bonds in Europe 2017 & 1Q2018: NL op 3 Pag 1
EIB Education Water & Health Impact bond aankondiging Pag2
Gelukkig lanceert Luxemburg, kampioen Green Bonds listings met haar GreenXchange een SRI platform: Pag 3
NN IM viert het feestje mee: 3 ETFs Pag 4
LSE Global Sustainable Impact platform(s) : Green ETFs Pag5
Indexus eBook maatschappelijk beleggen Pag 5
UNPRI watchlist Pag 6

Equileap 500 miljoen US$ invested in Equileap Women index instruments Pag 6
UK Gender Pay Gap data duurzame darlings doen het goed maar verder: 8 op de 10 bedrijven betalen vrouwen minder dan mannen. Pag 7
Transparantie PR & Pledges Robeco AI Pag 7

Benzinga Fintech innovatie robo advisor en meer Pag 8

Wakawaka Light stopt certificaten emissie op NPEX platform, misschien toch beter met obligaties begonnen maar misschien is NPEX ook te oud(erwets) Pag 9

Lendhand moves up the Impact investing Pyramid & 

Thoughtpiece & Sociale Impact 101 email cursus Pag 9

RATING INNOVATIES Morningstar
Duurzame Small cap fondsen Robeco powershares & Amundi Pag 10 

& Low carbon Fund Rating Pag 11

Eureka Thoughtpiece geaccepteerd door Duurzame Dinsdag,

de koffer met duurzame ideeen voor het kabinet Pag 12

vanMoof Citybike stapt in deeleconomie verwacht +10 +20% extra verkopen Pag 12

Compliance is een SDG16 catalyst, blockchain is instrumentele technologie

Toniic F&F HNWI Private Impact Investors 75% invested for Impact. 

Public Equity de grootste categorie met 21% impact & 5% non impact. 
Fixed Income (obligaties/leningen) 17% & 4% non impact
Cash & Equivalents 3% (CDFI & DevFI) 7% non impact Pag 14

Emissie Care Housing Charity Bond op LSE Pag 15

Woord&Daad & Incluvest investeren in vleesvervangerfabriek in India ''Int MVO''

met Schouten Europe, contract bevestiging op de handelsmissie van Rutte Pag 16
BuurtAED crowdfunding gesponsord door de Hartstichting, 

Philips Medical gesteued en bij ons door de gemeente GooiseMeren die wil leren :) Pag 16

Shell doesnt go Further 

Follow This is toch tevreden zoekt het hogerop dwz groenere pastures :) Pag 17

ABNAMRO Wat zou je doen met een miljoen (18-29jr) 

Duurzaam Investeren of Beleggen en aan een goed doel geven....Pag 19

F&F Vrouwelijke filantropen & Impact Investors in de VS ja graag & en-en Pag 20
Mercy Corps Impact Venture Team USA
First Gradually then Suddenly Pag 21

Inspirational quotes & contactgegevens Pag 22 


https://www.slideshare.net/alcanne/impact-investing-nieuws-1-juni-2018

26 mei 2018

#EUREKA: Raters will Rescue the Global Economy ENGLISH












#EUREKA: Raters will Rescue the Global Economy

I thought standardised investment instrumenten are crucial to accelerate impact investing. 'If it looks enough like an investment product, it probably is'. Because structured products turned micro finance into venture capital & private equity debt funds, 'the' critical success factor for what we now call 'inclusive finance' ...

Because thematic bonds & notes, before the domain of develop-ment banks, these days also issued by corporations, created markets with Billions of US$ for economic growth & innovation, developing countries, community finance, uridashi, development bonds, vaccine bonds, investing in women, climate bonds, green bonds, sustainability bonds, social impact bonds, health impact bonds, development impact bonds, charity bonds, micro bonds...
 
IMPACT METRICS
I thought impact metrics are the key ingredient. That insight in non financial returns of investments through broad use by mature Integrated Reporting Invest- ment Standards : IRIS, supported by theGIIN, the Global Impact Investing Network) would make the impact return on investment transparent, also by rating it with the Global Impact Investing Rating System GIIRS, also supperted by theGIIN.

That the truth of the return of investments would be clear fot the whole global economy. I developed a Buy Hold Sell Framework to distuinghuis impact effects, also of ''stranded assets'' in non sustainable markets such as Alcohol, Gambling, Tobacco, Porn, Firearms, Fossil Fuel etc. A growingd universe of harmful products & servics be it direct or indirect. See next page.

As the Impact Transition follows the path of 'Sustainable' & 'Green Transition' a simple model emerges:
1: DeCoupling of Growth & Negative impact; → 
2: Diminish Negative Impact; → 
3: Grow Positive Impact; →
4: The corporation as provider of Societal Solution in 'New Capitalism'1.

STEP 1 : DeCoupling growing without growing 'negative impact'', the footprint, usage of resources such (fossil) energy, (sweet) water, minerals etc, creating less emission, less waste by working 'craddle to craddle' & circulair for products and services (refurbishing older models for new markets), in human resource management to prevent outflow & support recruitment, optimalize governance & compliance in 'Spirit' and intent not 'the Letter' of the Law, avoid thinking about substracting 'fines' from investments and monitor board salaries & gender pay gap & the public outcry.

STEP 1 is a smart business strategy : grow & produce more at lower costs, both internal & external, and it is the start of a new organisational culture aimed at less negative impact.

STEP 2 : Lower Negative Impact for People & Planet of core activities and the business model; map revenues of negative impact activities, divest & invest in activities & business models with less negative impact. Risk raters aim to lower exposure to financial & ESG (Environmental, Social & Governance) risks so low financial & ESG ratings are a call for action. High financial & ESG ratings give clues as do Green Revenue Indices & Sustainable Development Goals indexes. These indexes reward & encourage investing in impact theme's & sectors and circular & inclusive business models. A characteristic of these indexes is their prevalence of sustainable darlings & systemic corporations.

The (Russel) FTSE Green Revenues Index Series is designed to obtain increased exposure to companies engaged in the transition to a green economy, based on FTSE’s Green Revenues data model. The indexes are designed to capture changes in the revenue mix of companies as their business models shift to the delivery of goods, products and services that allow the world to adapt to, mitigate or remediate the impacts of climate change, resource depletion and environmental erosion. http://www.ftse.com/products/indices/green-revenues

Rater MSCI built an Sustainable Impact Themes index with 100 large & midcaps based on the social & environmental revenues contributing to the UN Global Sustainable Development Goals.
'The MSCI ACWI Sustainable Impact Index aims to identify companies that derive at least 50% of their revenues from products and services that address environmental and social challenges as defined by the themes outlined above. The index, which excludes companies that fail to meet minimum environmental, social and governance (ESG) standards, weights securities by the percentage of revenue derived from products or services that address the themes.

Based on
MSCI ESG Sustainable Impact Metrics, using index constituents and weights as of March 2016, the MSCI ACWI Sustainable Impact Index had 71% greater  exposure to estimated company revenue derived from sustainable impact solutions compared to the parent, MSCI ACWI Index'. https://www.msci.com/msci-acwi-sustainable-impact-index
 
Blackrock based its Global Impact ETF on this index: https://www.ishares.com/us/products/283378/


ESGreseacher VigeoEIRIS & Solactive, 'German Index Engineering' built a #SDG index2 for the Worldbank with 50 large caps. The Note is listed in Italië as retail investment product.



STEP 2 is smart business focused on revenues & long(er) term growth opportunities through innovating, investing & managing costs also capital costs by being extra attractive for investors. As Transparency of Societal Costs & Returns grows systemic outsourcing of costs to society will be regulated (or fined) & meet more stakeholders protests.

STEP 3 : Grow Positieve Impact for People & Planet by steering the core activities towards Basis Needs & Impact accelerators mainly #Tech: Quality & Quantity. Invest in People & Planet Friendly (new) businessmodels.

John Elkington who coined People-Planet-Profit emphasizes that New Business models, not technological innovation, are 'the' success factor for next generation corporations. Examples: companies without assets offering services such as Über & AirBNB, Alibaba, Zalando, Takeaway.com Also Facebook, Twitter & LinkedIn based on data, analysis & connectivity. Elkington's Break-through Businessmodels report has a explanatory glossary with easy to determine People & Planet Impact models: e.g. The sharing & circular economy. See his Appendix p. 7-10
Another very effective way to grow positive impact is to nurture Social Cohesion, focus on 'people affected by globalization', youth unemployment & 'underserved people' through inclusive work : equal opportunities, pay & career perspective for women, minorities, people with physical, & mental disabilities, 50+, people without on the job experience, from tuition & vocational trainingprojects, re-entering the labor market after long(er) absence, with short or 'aged' employment record, ex-Pats & Refugees, etc. In short : integration of Megatrends Ageing, Population Growth & Dynamics in Futureproof Employee, Clientele & Investor relations.

STEP 3 is a smart business strategy focused on long(er) term growth opportunities & creating a competitive advantage with People & Planet based Businessmodels.
A new inclusive organization grows positive impact social cohesion & loyality to corporations.

STEP 4: the Corporation as Societal Solution Provider as defined by Eric Beinhocker & Nick Hanauer in their framework developing into New Capitalism Note 1, 2014. For instance the 2015 UN Sustainable Development Goals.
In STEP 4 negative impact activites have been phased out or are compensated by positive impact business models. Easy Peasy? ... actually it is

Impact metrics systems such as the Integrated Reporting Investment Standards, IRIS & the Global Impact Investing Rating System, GIIRS are useful for finetuning total (financial & impact) return transparency, but the public equity capital markets covers the investees & just 1,000 businesses have half the worlds market capital:

'Globalization has concentrated economic power within a group of large companies who are now able to change the world at a scale historically reserved for nations. Just 1,000 businesses are responsible for half of the total market value of the world’s more than 60,000 publicly traded companies. They virtually control the global economy. […] By 2010 the world’s largest 1,000 companies made US$32 trillion in revenue. They employed 67 million people directly, and had a total market cap of US$28 trillion. That’s equal to 49 percent of total world market cap.'Eccles & Serafeim for Bloomberg 2012.

The Risk Raters hold the Holy Grail.

Whether they are ESG researchers or (financial) Risk Raters, these disciplines are converging rapidly as Risk raters start ESG departments and the universe of green bond verifiers keeps growing.

When Risk Raters can build indexes of corporations with positive impact based on core business, revenues & business model, they can do the same for negative impact... risk

Examples: Morningstar's Sustainability Globes, Controversies Tool (exclusion instrument) , the new Carbon Risk Score MSCI ESG Quality Score, Yahoo Finance integrating Sustainalytics ESG scores, benchmark position & controversies, etc.

I think Risk Raters, for Environment, Social & Governance and Financial Risk will have no problem determining negative impact & postieve impact.

QUESTION: But which of their clients will want to pay for being branded 'negative impact' & 'stranded asset'?
ANSWER: a select group..

Sapere Aude : Dare to Know

Politics should know to manage & accelerate the impact transition wisely...

Quetions & Remarks: impactinvestmentnews @ yahoo.com

Please follow me on Twitter @Alcanne

YOU TUBE Vlogs & Animations

PUBLIC SPEAKING & PANELS
Marga van Miltenburg @ ZIJSPREEKT


APPENDIX: Breakthrough Business-Models John 'People Planet Profit' Elkington, report for the British
Business & Sustainable Development Commission. Sep2016. Page 32 Annexes 1 Glossary of Business Models
'There are numerous business models and many different ways to categorize them, about which we do not go into detail in this report but encourage further reading. For quick reference, we offer below a short-hand glossary of some of the business models highlighted in bold italic throughout this report.'

All aim for Profit, highlighted are People Impact & PlanetImpact by me

Add-On: The core offering is priced competitively, but extras drive the price up. Customers benefit from a variable offer they can adapt. Affiliation: Supporting others to sell products successfully and benefitting directly from successful transactions. Usually uses some kind of a pay-per-sale system. Aikido: Allows a company to offer something diametrically opposed to the image and mindset of the competition. The novelty of the offering attracts a particular type of customer. Auction: Selling a product or service to the highest bidder.
Base of the Pyramid: The product or service targets customers positioned at the base of the wealth pyramid at an affordable price point. Despite small profits with each product sold, companies benefit from the higher sales numbers. Barter: Exchanging goods or services with no transfer of money.

Behavior Change: Stimulating customers to embrace new behaviors, such as reducing consumption or modifying daily habits. Building a Marketplace: Reinforcing the marketplace through the use of social programs, local market adaptation, and other services such as financing mechanisms or technical assistance. Buy One, Give One: Using a portion of the profits from the sale of a product or service towards donating a similar product/service to those in need.

Cash Machine: Customer pays upfront for the products sold before the company has to cover any associated expenses.

Circular Supplies: Using renewable, bio-based or fully recyclable materials to replace single-lifecycle inputs.
Closed-Loop Production: Virtuously recycling the material used to create a product back into the production system. Collection Service: Providing a service to collect old or used products from customers in a convenient manner. Consumer Lock-In: A value proposition that entices customers to continue using a specific product or service regularly.
Cooperative Ownership: Where companies are owned by members.


Cross-Selling Services or products from outside the business are added to the offerings.
Crowdfunding: Enabling entrepreneurs to tap into the resources of a wider network of people to raise money. Crowdsourcing: Solutions to tasks or problems are generated via an anonymous crowd, with contributors receiving some incentives.
Customer: Loyalty: Customers are retained by providing value over and above the actual product or service itself.

the-Materialization: Reduction in the amount of materials used in the production of products.
Differential Pricing: Charging more to those able to afford, and subsidizing those who cannot.
Digitization Turning: existing products or services into digital versions of themselves, offering advantages such as more rapid distribution. Direct Selling Where products are available directly from the manufacturer or service provider. Savings from cutting out the middleman are passed on to the customer. E-Commerce: Traditional products or services are delivered through online channels only. Experience Selling: Value of a product or service is increased by an additional customer experience.
Flat Rate: A single fixed fee is charged for a product or service, regardless of actual usage.

Fractional Ownership Sharing of a certain asset class among a group of owners.
Franchising: Independent franchisees bear the risk of local operations whilst being licensed to use the franchisor’s brand name, products and corporate identity.
Freemium Allowing users to access a proprietary product or service for free, but charging a premium to access advanced functionalities.

From Push to Pull Decentralization, adding flexibility to a company’s processes in order to be more customerfocused. Guaranteed Availability Makes the customer’s needs central to decisions within the enterprise and the shaping of the value proposition. Hidden Revenue Main source of revenue comes from a third party who cross-finances any free or low-priced offering that attracts users. Advertising is a common application.

Inclusive Sourcing: Shifting the focus of sourcing from volume and price, to supporting the farmer or producer.
Increased Functionality/Services: Uncovering multiple, alternative, uses for an existing product, resulting in fewer products required. Industrial Symbiosis: Sharing of services, utility, and by-product resources among industries to improve resource efficiency. Ingredient Branding: Inclusion of a branded ingredient to a product and stressing the added value or positive association.
Innovative Product Financing: Leasing or renting products to customers. Integrator Company: has command of the majority of steps in the value-adding process, including all resources and capabilities in terms of value creation. Layer Player: A specialized company limited to providing one value-adding step to different value chains, thus benefiting from economies of scale, more efficient production and specialized expertise.
Lean Production: The elimination of waste within a manufacturing system, or the creation of more value for customers with fewer resources. Leverage Customer: Data Creating new value by collecting customer data and preparing it in beneficial ways. Licensing: Developing intellectual property that can be licensed to other manufacturers, transforming intangible assets into money.
Local Loop: Co-locating of production processes in countries or regions where the businesses’ main markets are. Localization: Favoring local and/ or community-based production and consumption. The bulk of revenue is generated through a “long tail” of niche products, which individually, demand neither high volumes nor a high margin.
Make More of It: Where know-how and other assets in a company are offered to other companies, creating additional revenue using slack resources.

Mass Customization: Customizing products through mass production using modular production systems that enable efficient individualization.
Microfinance: Providing low-income, financially excluded, customers with small loans, and at times access to other financial services. Micro-Franchise: Traditional franchising with a focus on creating economic opportunities for the poor to become micro-entrepreneurs.
Modularity: Designing a product based on smaller component parts that can be independently created, purchased, used and replaced.

Multi-Sided Platform: Creating value by enabling direct interactions between two (or more) groups, typically through an intermediary platform. Success is dependent on attracting more users to all sides.
No Frills: Focusing on the necessary minimum to deliver the core value proposition, where cost savings are shared with the customer. Open Business: Where collaboration with partners in the ecosystem becomes a central source of value creation. Open Source: Where the source code of a product is made freely accessible for anyone.
Orchestrator: Where a company focuses on core competencies within the value chain, outsourcing and coordinating other segments.

Pay for Success: Performance-based contracting, typically between providers of social services and governments.
Pay Per Use: Actual usage of a service or product is metered, and customers pay for what is effectively consumed.
Pay What You Want: The buyer pays any desired amount for a given commodity, sometimes even zero. Seller benefits from a larger number of customers. Personalization: Personalization of products through the use of data.

Peer to Peer: Based on cooperation among individuals in a group or community connected via a meeting point, usually an online platform. Physical to Virtual: Replacing brick and mortar infrastructure with virtual services. Produce on Demand: Producing a product only when a customer order is made. Product as a Service: Customers pay for the functionality of a product, without the responsibility of repairing, replacing or disposing it. Razor and Blade: Basic product is cheap or given away for free, while the consumables are expensive and sold at high margins.

Rematerialization: Sourcing materials from recovered waste to create entirely new products.
Rent Instead of Buy: Customers rent the product, reducing the capital typically needed to access it.
Repurposing Excess: Capacity Excess capacity is mobilized in new ways, or with new customers.
Revenue Sharing: Sharing revenues with ones stakeholders. Reverse Engineering: Obtaining a competitor’s products, taking it apart and using the information obtained to produce a similar or compatible product. Products are offered at a lower price because of no investment in research or development is required.

Reverse Innovation: Simple, inexpensive products that have been developed within and for emerging markets. Self-Service Part: of the value creation of the service or product is transferred to the customer in exchange for a lower price. Shop in Shop: Instead of opening new branches, a company finds a partner whose branches can profit from integrating its offerings. Solution Provider: Offering comprehensive coverage of products and services in a particular domain, consolidated at one point of contact.

Stewardship Model: Where products and/or services are delivered via means that take into account biodiversity protection, ethical trade, consumer care, etc. Subscription Model Customers pay a recurring fee to gain ongoing access Sufficiency Model: Where customers are encouraged to consume less – e.g. extending the product life, encourage product take-back, product exchange, premium branding, etc. Supermarket: A company sells a large variety of readily available products and accessories under one roof. Customers are attracted to the wide variety, while economies of scale yield advantages for the company.

Trash to Cash: Used products are collected and either sold or transformed into new products. Resource costs for the company are practically eliminated. Ultimate Luxury: Where a company distinguishes its products or services by offering high standards of quality or exclusivity. User Design: Where a company supports customers to apply their creativity and preferences through services such as an online shop, or design software – resulting in the customer being also the manufacturer. White Label: A White Label producer allows other companies to distribute its goods under their own brand name.


1https://democracyjournal.org/magazine/31/capitalism-redefined/ What prosperity is, where growth comes from, why markets work, and how we resolve the tension between a prosperous world and a moral one. Nick Hanauer & Eric Beinhocker (Winter 2014, No. 31) McKinsey Quarterly: https://www.mckinsey.com/featured-insights/long-term-capitalism/redefining-capitalism Despite its ability to generate prosperity, capitalism is under attack. By shaking up our long-held assumptions about how and why the system works, we can improve it.