.
T

ech for good’s moment is here. Its global scale and potential catalyzed by the pandemic. It takes 300 milliseconds for facial recognition software to do its thing.  The world’s fastest supercomputer clocks in at 148.6 petaflops (quadrillion floating operations/sec) powered by 4.3 million cores. Google and NASA reported they solved a problem with a quantum computer 200 million times faster than a regular chip-powered machine. The world’s fastest recorded internet speed blazes at 44 terabits/sec—capable of downloading 1,000 HD movies in a second.  

All of this computing power is arrayed against the COVID-19 pandemic, from helping scientists sift through millions of potential treatments and vaccines, to powering virtual work, education, and other digital connections. We are not touching on the breathtaking algorithmic capabilities of software applied in every field of human endeavor. Software is infinitely scalable and we can go on and on, but the point is this: All this immense power and computational ability can and should be applied to solve outsized societal problems and use tech for good. Tech for good is ultimately good for society and by consequence, tech itself.

Blockchain and Capital Flows: One Example

Access to money is a lynchpin for people to participate and prosper in the economy. The business of money is undergoing a sustained amount of significant innovation that has the potential to widen economic participation funnels. Creating on-ramps for our most underserved populations, which almost by extension are under or unbanked, lowers friction and enhances pathways to prosperity. This is good for business and society and technology is playing a central role in the future of finance.

The UK’s Department for International Development (DFID) found that there is a clear link between access to financial services and the ability of households to buy things, from education to fish tackle. Those investments, even small ones, lead to growth and the commensurate ability to earn higher incomes. This positive cycle could be infinitely scaled with technology. Using a tech-enabled lens—not a grant giving or a traditional economic development lens—to look at democratizing access to the formal economy is a paradigm shift.

Blockchain has the potential to disintermediate (read: lower the cost of) financial services and greatly simplify the inefficient, noise-ridden, and slow value transfer constructs that have left billions of people on the margins. Blockchain is underpinned by open and distributed databases that store transaction records efficiently, permanently, and automatically. These records are also immutable. Value is tied to an encrypted account or digital wallet, which enables low-friction, peer-to-peer transactions. These building blocks enable us to re-imagine a world in which economic participation in broadly shared and the otherwise prohibitive cost of distrust is lowered.

While the potential for fintech innovation is immense, barriers on the demand and supply side continue to persist. In the U.S. alone it is estimated that 60 million people are un- or under-banked and COVID19 has magnified this reality. Internet connectivity, a condition precedent for leveraging technology, continues to be a real barrier because in America the digital divide mirrors the economic divide. Cross border transfers, simplified data analytics, value exchange authentication, nimble asset and liability repositories, and neural networks all have great appeal individually. Collectively their potential is boundless, yet at the same time, policymakers and regulators must be vigilant to ensure that the stability of the financial system is preserved, while allowing innovation and competition to flourish.  Just as technology for good widens the economic participation funnel, technology-forward regulation can widen the base of competition and lower barriers to entry.  This combination should yield net benefits in the form of greater consumer choice and economic competitiveness.

Values Anchored Value Creation: Capitalism 2.0

We have passed a tipping point and the business community is in fact embracing sustainability, not just talking about it. As the Business Roundtable puts it, “to redefine the purpose of a corporation to promote an economy that serves all.” It will be hard to make the shift to sustainable growth on the global stage unless the investor community decides to pivot away from its focus on short-term profits.  Blackrock’s Larry Fink’s letters to CEOs talk about a transparent capitalism. He argues that squeezing financial gain out of companies on a quarterly basis at the expense of longer term and sustainable prosperity is ultimately value destroying. A long horizon lens to shared prosperity is starting to become capitalism’s mantra and the drumbeat of change, however faint, grows more persistent.

A study by the Institute for Sustainable Investing at Morgan Stanley, which looked at over 13,000 mutual funds, shines a light on the fact that sustainable investing meets, and often exceeds, the performance of comparable traditional investments. Sustainable funds had equal or higher median returns and equal or lower volatility than traditional funds for 64% of the periods examined. The long-term returns of one index scoring high ESG criteria exceeded the S&P 500 by 45 basis points. A recent update published by the bank stated that 57% of asset owners envision only allocating to fund managers that have formalized sustainability as part of their process. Furthermore, 80% of survey respondents said that positive ESG practices could lead to higher profitability. This applies to all sectors and industries, but we believe that the scalable nature of tech’s return on assets makes the potential even larger.

Ben & Jerry’s, Patagonia, Warby Parker, Tesla Motors, REI, and Blackboard are some examples of values anchored organizations. These companies have a direct link to tangible social missions. These companies also command a price premium in their respective sectors. But, why?  

Take Ben and Jerry’s, a wholly owned subsidiary of Unilever. It is one of the most profitable socially conscious companies and also commands one of the highest prices per unit of any comparable product. The brand’s ~300% premium is values anchored value creation come to life. Is a multiple bottom-line equally (or more) profitable?  

Milton Friedman’s September 1970 New York Times article, "The Social Responsibility of Business is to increase its Profits," crystallizes a view that has been taken for granted for five decades. This is due to a very crisp profit maximization single-purpose concept. It alone, mostly due to its brutal simplicity and clarity, has shaped capitalism and its practice for the last half century. But that’s changing right in front of our eyes and tech can lead the way. Maximizing profit is the main purpose of a company but not its sole purpose, as evidenced by how often taxpayers end up shoring up the private sector as we did in 2008 and we are doing now. Simply put, more equilibrium is needed in this economic thinking and what we are witnessing in real time on the streets for America is in equal parts a call for social justice and economic access—they are both intertwined.

Squeezing financial gain out of companies on a quarterly basis at the expense of longer term and sustainable prosperity is ultimately value destroying. A long horizon lens to shared prosperity is starting to become capitalism’s mantra and the drumbeat of change, however faint, grows more persistent.

Squeezing financial gain out of companies on a quarterly basis at the expense of longer term and sustainable prosperity is ultimately value destroying. A long horizon lens to shared prosperity is starting to become capitalism’s mantra and the drumbeat of change, however faint, grows more persistent.

Tech for Good: Scalability and Efficiency Make it Possible

Tech for good is a nice catchall for the positive social impact technology can have.   Earlier ESG prototypes such as corporate social responsibility (CSR) mostly paid lip service to pet corporate causes. For the benefit of all stakeholders, standards must emerge analogous to those that power trillions of capital flows in bond markets or versioning and programming API standards. One version of broad stakeholder standards is the UN Sustainable Development Goals.  

Let’s go back to blockchain for a second. It has enormous potential in applications that run the spectrum—from medical data sharing to music royalties tracking to digital currencies and supply chain provenance among many other use cases. The World Economic Forum considers technology a pillar of the fourth industrial revolution and recognizes that the first three industrial revolutions produced a world with unequal access to the economy. To avoid this, standards of practice must emerge and the WEF’s blockchain council released the Presidio Principles to enshrine the foundational values of a distributed future. Those values include user protections and governance standards for blockchain projects that by design benefit all stakeholders.

Tech leaders must ensure all their incredible innovations are leveraged for the benefit of all. COVID-19 has made something very clear: in a world underpinned by slow-moving, largely analog economic systems—where the on-ramps to basic access have high tolls and a costly legacy technology infrastructure—tech for good could start with universal standards and a goal of universal access. Digital commons turn traditional technology development on its head and could catalyze a trusted open source movement that has the potential to begin tackling the digital divide.   From 1.7 billion unbanked people to over 1 billion with no form of identification—they represent trillions of dollars of lost economic potential, stranded assets and more importantly, forgotten people. Extending the bounds of economic participation and the pursuit of happiness should be top of mind for every policymaker globally.

This is ultimately good for tech, good for the world, and good for business.

About
Dante Alighieri Disparte
:
Dante Alighieri Disparte is the vice chairman and head of policy and communications for the Libra Association. He is the founder and chairman of Risk Cooperative and serves on the Federal Emergency Management Agency’s National Advisory Council.
About
Javier Saade
:
Javier Saade is Venture Partner at Fenway Summer and Managing Partner of Impact Master Holdings. Previously, President Obama appointed him to the U.S. Small Business Administration (SBA) as Associate Administrator, Chief of Investment & Innovation.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.

a global affairs media network

www.diplomaticourier.com

Tech for Good Is Good for Tech

July 6, 2020

Tech for good’s moment is here. Its global scale and potential catalyzed by the pandemic.

T

ech for good’s moment is here. Its global scale and potential catalyzed by the pandemic. It takes 300 milliseconds for facial recognition software to do its thing.  The world’s fastest supercomputer clocks in at 148.6 petaflops (quadrillion floating operations/sec) powered by 4.3 million cores. Google and NASA reported they solved a problem with a quantum computer 200 million times faster than a regular chip-powered machine. The world’s fastest recorded internet speed blazes at 44 terabits/sec—capable of downloading 1,000 HD movies in a second.  

All of this computing power is arrayed against the COVID-19 pandemic, from helping scientists sift through millions of potential treatments and vaccines, to powering virtual work, education, and other digital connections. We are not touching on the breathtaking algorithmic capabilities of software applied in every field of human endeavor. Software is infinitely scalable and we can go on and on, but the point is this: All this immense power and computational ability can and should be applied to solve outsized societal problems and use tech for good. Tech for good is ultimately good for society and by consequence, tech itself.

Blockchain and Capital Flows: One Example

Access to money is a lynchpin for people to participate and prosper in the economy. The business of money is undergoing a sustained amount of significant innovation that has the potential to widen economic participation funnels. Creating on-ramps for our most underserved populations, which almost by extension are under or unbanked, lowers friction and enhances pathways to prosperity. This is good for business and society and technology is playing a central role in the future of finance.

The UK’s Department for International Development (DFID) found that there is a clear link between access to financial services and the ability of households to buy things, from education to fish tackle. Those investments, even small ones, lead to growth and the commensurate ability to earn higher incomes. This positive cycle could be infinitely scaled with technology. Using a tech-enabled lens—not a grant giving or a traditional economic development lens—to look at democratizing access to the formal economy is a paradigm shift.

Blockchain has the potential to disintermediate (read: lower the cost of) financial services and greatly simplify the inefficient, noise-ridden, and slow value transfer constructs that have left billions of people on the margins. Blockchain is underpinned by open and distributed databases that store transaction records efficiently, permanently, and automatically. These records are also immutable. Value is tied to an encrypted account or digital wallet, which enables low-friction, peer-to-peer transactions. These building blocks enable us to re-imagine a world in which economic participation in broadly shared and the otherwise prohibitive cost of distrust is lowered.

While the potential for fintech innovation is immense, barriers on the demand and supply side continue to persist. In the U.S. alone it is estimated that 60 million people are un- or under-banked and COVID19 has magnified this reality. Internet connectivity, a condition precedent for leveraging technology, continues to be a real barrier because in America the digital divide mirrors the economic divide. Cross border transfers, simplified data analytics, value exchange authentication, nimble asset and liability repositories, and neural networks all have great appeal individually. Collectively their potential is boundless, yet at the same time, policymakers and regulators must be vigilant to ensure that the stability of the financial system is preserved, while allowing innovation and competition to flourish.  Just as technology for good widens the economic participation funnel, technology-forward regulation can widen the base of competition and lower barriers to entry.  This combination should yield net benefits in the form of greater consumer choice and economic competitiveness.

Values Anchored Value Creation: Capitalism 2.0

We have passed a tipping point and the business community is in fact embracing sustainability, not just talking about it. As the Business Roundtable puts it, “to redefine the purpose of a corporation to promote an economy that serves all.” It will be hard to make the shift to sustainable growth on the global stage unless the investor community decides to pivot away from its focus on short-term profits.  Blackrock’s Larry Fink’s letters to CEOs talk about a transparent capitalism. He argues that squeezing financial gain out of companies on a quarterly basis at the expense of longer term and sustainable prosperity is ultimately value destroying. A long horizon lens to shared prosperity is starting to become capitalism’s mantra and the drumbeat of change, however faint, grows more persistent.

A study by the Institute for Sustainable Investing at Morgan Stanley, which looked at over 13,000 mutual funds, shines a light on the fact that sustainable investing meets, and often exceeds, the performance of comparable traditional investments. Sustainable funds had equal or higher median returns and equal or lower volatility than traditional funds for 64% of the periods examined. The long-term returns of one index scoring high ESG criteria exceeded the S&P 500 by 45 basis points. A recent update published by the bank stated that 57% of asset owners envision only allocating to fund managers that have formalized sustainability as part of their process. Furthermore, 80% of survey respondents said that positive ESG practices could lead to higher profitability. This applies to all sectors and industries, but we believe that the scalable nature of tech’s return on assets makes the potential even larger.

Ben & Jerry’s, Patagonia, Warby Parker, Tesla Motors, REI, and Blackboard are some examples of values anchored organizations. These companies have a direct link to tangible social missions. These companies also command a price premium in their respective sectors. But, why?  

Take Ben and Jerry’s, a wholly owned subsidiary of Unilever. It is one of the most profitable socially conscious companies and also commands one of the highest prices per unit of any comparable product. The brand’s ~300% premium is values anchored value creation come to life. Is a multiple bottom-line equally (or more) profitable?  

Milton Friedman’s September 1970 New York Times article, "The Social Responsibility of Business is to increase its Profits," crystallizes a view that has been taken for granted for five decades. This is due to a very crisp profit maximization single-purpose concept. It alone, mostly due to its brutal simplicity and clarity, has shaped capitalism and its practice for the last half century. But that’s changing right in front of our eyes and tech can lead the way. Maximizing profit is the main purpose of a company but not its sole purpose, as evidenced by how often taxpayers end up shoring up the private sector as we did in 2008 and we are doing now. Simply put, more equilibrium is needed in this economic thinking and what we are witnessing in real time on the streets for America is in equal parts a call for social justice and economic access—they are both intertwined.

Squeezing financial gain out of companies on a quarterly basis at the expense of longer term and sustainable prosperity is ultimately value destroying. A long horizon lens to shared prosperity is starting to become capitalism’s mantra and the drumbeat of change, however faint, grows more persistent.

Squeezing financial gain out of companies on a quarterly basis at the expense of longer term and sustainable prosperity is ultimately value destroying. A long horizon lens to shared prosperity is starting to become capitalism’s mantra and the drumbeat of change, however faint, grows more persistent.

Tech for Good: Scalability and Efficiency Make it Possible

Tech for good is a nice catchall for the positive social impact technology can have.   Earlier ESG prototypes such as corporate social responsibility (CSR) mostly paid lip service to pet corporate causes. For the benefit of all stakeholders, standards must emerge analogous to those that power trillions of capital flows in bond markets or versioning and programming API standards. One version of broad stakeholder standards is the UN Sustainable Development Goals.  

Let’s go back to blockchain for a second. It has enormous potential in applications that run the spectrum—from medical data sharing to music royalties tracking to digital currencies and supply chain provenance among many other use cases. The World Economic Forum considers technology a pillar of the fourth industrial revolution and recognizes that the first three industrial revolutions produced a world with unequal access to the economy. To avoid this, standards of practice must emerge and the WEF’s blockchain council released the Presidio Principles to enshrine the foundational values of a distributed future. Those values include user protections and governance standards for blockchain projects that by design benefit all stakeholders.

Tech leaders must ensure all their incredible innovations are leveraged for the benefit of all. COVID-19 has made something very clear: in a world underpinned by slow-moving, largely analog economic systems—where the on-ramps to basic access have high tolls and a costly legacy technology infrastructure—tech for good could start with universal standards and a goal of universal access. Digital commons turn traditional technology development on its head and could catalyze a trusted open source movement that has the potential to begin tackling the digital divide.   From 1.7 billion unbanked people to over 1 billion with no form of identification—they represent trillions of dollars of lost economic potential, stranded assets and more importantly, forgotten people. Extending the bounds of economic participation and the pursuit of happiness should be top of mind for every policymaker globally.

This is ultimately good for tech, good for the world, and good for business.

About
Dante Alighieri Disparte
:
Dante Alighieri Disparte is the vice chairman and head of policy and communications for the Libra Association. He is the founder and chairman of Risk Cooperative and serves on the Federal Emergency Management Agency’s National Advisory Council.
About
Javier Saade
:
Javier Saade is Venture Partner at Fenway Summer and Managing Partner of Impact Master Holdings. Previously, President Obama appointed him to the U.S. Small Business Administration (SBA) as Associate Administrator, Chief of Investment & Innovation.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.