Jane Nelson, who wears many hats (IBLF, Kennedy School, Brookings), spoke yesterday at a meeting of the Global Poverty Roundtable at the GlobalWorks Foundation here in Washington. Jane offered a wide-ranging, yet concise summary of all of the ways business can engage in development. Jane said [and, Jane, I beg your forgiveness in advance for this shallow and truncated version of your presentation] that the activities fall in three general categories: core business activities, competence-led philanthropy, and influence on the enabling environment for business.

On Core Business: Two broad areas: First, practice responsible business (human rights, environment, labor, compliance, accountability, etc); second, increase economic opportunities -- innovate for new markets. How? By leveraging global value chains, increasing local content purchases, creating business linkages, creative financing mechanisms which draw on core businesss knowledge and skills, and perhaps most promisingly, through more and more effective collective business initiatives -- industry-wide efforts that both set standards and create healthy and friendly competition to succeed within these new standards.

On Competence-led Philanthropy: Jane's basic observation is that even though business philanthropy is a tiny part of post-tax income, it mounts up and quickly exceeds the resources of even the multi-lateral development agencies. (Specifically, she surveyed the philanthropic budgets of 50 Fortune 500 companies and found them equal, in sum, to the total budget of UNDP). Just re-balancing where money goes, and increasing attention to funding opportunities in emerging markets (that is, giving more money where goods are created and where goods are actually sold) will have big impacts. Flagship programs are good tools to unite a highly-dispersed MNC's efforts, create real brand value, and allow for more effective philanthropy. Mobilizing volunteers -- from one's own employees to affinity groups external to the company (e.g., diaspora communities, organizing remittances for development goals) -- can be effective. For the record, the term "competence-driven philanthropy" is something that I've only heard from Jane. Is it a new term?

On Business' Role in Public Policy: While businesses are acutely aware of crossing a line -- from "statesmanship" on policy to parochial lobbying, there are good examples of how to do it, such as the Extractive Industries Transparency Initiative. Weak governments and institutions present particular challenges (a point later amplified by others - notably Bruce McNamer of Technoserve and Fred Tipson of Microsoft -- who pointed out the severe "macro" problems that dwarf the "micro" efforts of any one company). Business can be helpful in giving support to governments in achieving the already agreed-to goals for development funding, e.g., the G8's Point 7 commitment for ODA.

Lots of food for thought here. Thanks to the Global Poverty Roundtable to hosting, and to Jane for her excellent remarks.

This Investor Feature is based on a recent interview with Yeung Hau Man, founder of Envirovision. Hau Man is dedicating his career to creating sound, standardized sustainability reporting at a time when such reporting is frequently ambiguous, unreliable, and extremely easy to manipulate for the purposes of company "greenwashing." Click the "Read More" link to see the full profile.

"We don't find companies, says Yeung Hau Man of the environmental monitoring and due diligence firm he helped to create, "We find people." Through eighteen years of experience in the intersection between environmental issues and business concerns, Hau Man has learned that the long-term sustainability and market viability of any company is not so much about the business itself as the people behind it. He realized this as a manager of green fund LESS Limited, where he saw company after company that had poor sustainability standards due to a lack of commitment at the management level. He took this experience to heart when the LESS Limited team charged him with creating a monitoring and due diligence vehicle that would generate a deal flow of truly sustainable companies. This project came to fruition as Envirovision, a consulting firm dedicated to providing a quality portfolio of sustainable companies to ‘green' funds and angel investors.

I really like Tom Friedman - I have since high school, when a summer program I attended assigned his book, The Lexus and the Olive Tree. I've also seen him sitting in DC cafes, running to catch cabs, and even met him in person at WRI's 25th Anniversary Dinner. Nice guy. Smart, too.

Despite all this goodwill, I usually find at least one thing in his columns or his books that irks me. Maybe he's exaggerating, or hasn't gotten it quite right, or his sources are a little off. The point is, I usually take issue with him, just a little bit.

Not today. Today, Tom Friedman, you have written the mistake-free column. In today's New York Times (subscription required), Friedman writes about mesofinance, the missing middle of investment that comprises the gap between microfinance and formal finance. He notes that there's a huge opportunity to support bottom-up development in Africa by providing patient capital: longer-term, lower-interest loans and investments (versus venture capital). In his words:

Africa needs many things, but most of all it needs capitalists who can start and run legal companies. More Bill Gateses, fewer foundations. People grow out of poverty when they create small businesses that employ their neighbors. Nothing else lasts.

Whenever you read about capital flowing into Africa, though, it tends to be from big lenders like the World Bank, which have very strict criteria and work on big projects, or from microfinanciers, giving out $50 to a woman to buy a sewing machine. Microfinance has a role, but many people don’t want the pressure of being an entrepreneur. They want the stability and prosperity of a job created by capitalist risk takers and innovators. See India.

In some ways what Africa needs most today is more "patient" capital to spur its would-be capitalists. Patient capital has all the discipline of venture capital — demanding a return, and therefore rigor in how it is deployed — but expecting a return that is more in the 5 to 10 percent range, rather than the 35 percent that venture capitalists look for, and with a longer payback period.

Yes! We have talked about this before. Acumen Fund, Aavishkaar, Good Capital - it's out there. And it's growing. Next month's Emerging Markets Private Equity Association annual conference is taking registrations and filling rapidly. The capital markets see this as an opportunity, an obligation to generate shareholder value where none is being generated now. And to maximize shareholder value - guess what - you need to make solid BOP investments. Ones with real social and environmental impact, because that's what's profitable.

(This post continues past the break; click "Read More" to continue)