BY AARON FAIRCHILD, CEO
The last two weeks has been a whirlwind of intentional conversations with like-minded, social purpose organizations. The B-Corps Champions Retreat and the following week of SOCAP17 were both intense conferences of shared themes and desired outcomes. A couple things linger in my mind from these social impact conferences:
Pioneers like Thomas Edison have been excited for decades about the use of solar power. “I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that,” Edison anticipated. Starting this Fall, the first of many Green Canopy's Net Zero Energy homes will be available on the market in Seattle - with a commitment to offering these high-performance homes at a price that is on par with code-built new construction homes.
I have often cited Daniel Goleman to explain a consumer’s desire to make an impact with his or her invested dollar. In Ecological Intelligence, Goleman explains that consumers will always buy what they perceive to be a less toxic or more environmentally friendly product given price parity with a competing product. While the consumer may not be buying the perceived “better” product to make a positive impact in the world, they are likely buying it because they view the product healthier or better for their family.
This consumer behavior pattern offers a direct analogy for financial investors. It goes without saying that investors invest capital to generate a return. If an investor can invest in an opportunity that generates a similar risk-adjusted rate of return to competing investment opportunities yet the investment will also deliver outcomes that better align with their values, then the investor will likely choose to invest their capital in such a value-aligned opportunity.
Enter Green Canopy. Our mission is transformational; our company was deliberately created with the mission to inspire resource efficiency in residential markets. We have two impact product offerings for consumers to buy.
Our primary impact product is our homes. We build homes that are more environmentally sustainable than what is required by city code and have third party audits verifying our homes meet or exceed a local or national green building standard. In other words, a Green Canopy home is healthier for the planet, consumes less energy to operate (we guarantee that), and is simply a better home than the comparable code-built home. The kicker: we price our homes for sale on par with other homes on the market. We have to price our homes competitively with other homes because if we don’t, buyers would choose to acquire the less expensive yet comparably located and sized home. So buyers of our homes acquire a Green Canopy home at a competitive price that delivers outcomes that align with their needs and values.
Our second impact product is our real estate fund offerings. We currently manage two debt funds that generate competitive returns for investors. If it were not for these funds, we would not have enough debt financing to build more environmentally sustainable homes at our current scale. Investors in these funds buy membership units that are designed to generate competitive rates of return and deliver outcomes that align with their values.
I believe the United States has entered a relatively new era where the general market is looking for values-aligned solutions. I witness this daily in both of our product offerings. However, most consumers and investors remain price sensitive and will continue to be so. This is where many people believe the government and foundations can play a role. However, I don’t believe it is incumbent on the government or others to subsidize product offerings, or for that matter the market to simply accept the market-price mismatch.
Entrepreneurs innovate. The role of being an entrepreneur is to figure out how to bring new product to market in such a way that the market is willing to pay for it. Government incentives and infrastructure are helpful catalysts and support structures for market change. But the role of efficiently bringing new product to market is ultimately the role of entre- and intra-preneurs.
Additionally, foundations, the government and other mission-driven sources of capital can aid in providing lower cost of capital to kick-start product offerings and help stimulate demand (think of the Bullitt Center or the ZHome development). However, values alignment should not be seen as an impediment to bringing socially and environmentally impactful product offerings to market—it should be used as a competitive advantage. Sound business people focused on values-based product offerings will continue to innovate within the cost/price constraints of the market and ultimately bring more and more highly sought after product to meet consumer demand. Impact alignment and the balance between supply and demand are really just a matter of time and innovation.
Contributed by: Aaron Fairchild, CEO of Green Canopy, Inc.
"The current fight over how we should pay for affordable housing, and who will fund it, is beating on the wrong drum."
Social and environmental impact investing and businesses continue to capture the interest and imagination of the Pacific Northwest, part of a broader global trend. Local early adopters affiliated with Element 8, Impact HUB Seattle, Seattle Impact, Mission Investors Exchange and other institutions and individuals have forged impact investment paths that many others now find themselves traveling. It’s exciting to see the local impact investing ecosystem and communities flourish. However, a market imbalance persists with more impact investor dollars available than the limited number of qualified investment opportunities can absorb. Fortunately we’re seeing signs that the supply of impact investment opportunities is starting to catch up with demand from impact investors.
Green Canopy is an example of an impact-investor funded company that has been fueled by local early adopters. The company operates in a commodity industry: designing and building single family homes. However, we have been fortunate to attract thoughtful, impact-motivated equity and debt investors, due in large part to our mission, vision and values focused on achieving long term positive environmental and social change while simultaneously pursuing solid financial results.
Since 2011 Green Canopy has acquired nearly 90 projects; steadily building a community of homeowners, real estate agents, employees, shareholders and fund members that share our passion to inspire resource efficiency in residential markets. Importantly, we pursue our mission while being uncompromising in achieving key sustainability metrics, paying our employees a fair wage, selling our homes at fair market prices and generating long term shareholder value. Green Canopy has an opportunity to demonstrate it is not only possible, but highly rewarding for all involved to create and operate under a business model predicated on shared, blended value creation.
Similar opportunities are emerging across a wide spectrum of investment strategies that seek to satisfy growing consumer and investment demand for highly impactful market-driven solutions. As Seattle continues to attract tens of thousands of employees each year to fill quality jobs at companies like Amazon, Nordstom and Microsoft, our entire region feels the benefits. And yet, we are all faced with the unintended consequences of the additional infrastructure needed to support increased demand for critical services, including affordable workforce housing. The current fight between the City and the Coalition for Sustainable Jobs and Housing over how we should pay for affordable housing, and who will fund it, is beating on the wrong drum. Neither side seems to be asking the right questions or putting forth a broadly acceptable or effective solution for quickly increasing the supply of affordable workforce housing.
One example of an alternative solution is Bellwether Housing’s recently launched Seattle Futures Fund. Bellwether has successfully developed and managed affordable workforce housing in Central Seattle for 35 years. However, as affordable housing has become an increasingly rare commodity in the communities Bellwether serves, the organization has had to innovate how its projects are financed; necessity = the mother of innovation. Through the Seattle Futures Fund, Bellwether believes it will more rapidly scale the number of units available to house social workers, teachers, baristas, police officers, firefighters, government workers, data center workers and others that serve our communities. A potentially wonderful, local example that attracts private capital as part of the solution to develop housing that is affordable and accessible to our urban working families.
As a community, we must collaboratively develop innovative, smart, market-driven solutions to problems that impact a wide range of constituents. Hopefully, a greater supply of viable impact investment opportunities for investors to assess, like Bellwether’s Seattle Futures Fund, will be forthcoming in the near-term. In the meantime, we would encourage investors and entrepreneurs alike to continue viewing our social and environmental problems through the lens of impact opportunity.
Contributed by Kyle Mylius, Board of Directors for Green Canopy, Inc. & Aaron Fairchild, CEO of Green Canopy, Inc.
“He heard me on Seattle’s local NPR affiliate. He saw our ad, and he was determined to work for Green Canopy, learn our business, prove himself and show what he is capable of. He got the job."
Contributed by Aaron Fairchild, CEO of Green Canopy, Inc.
Ryan Nieto came into the office looking like a modern “Urban Jesus”. The moniker stuck. Thick long brown hair, beard, tats… full on Portlandia meets Seattle. He was working as a mechanical HVAC installer, installing air-conditioning systems at QFC grocery stores. He wanted to work for us as a laborer.
He said he saw the ad on our website. It wasn’t adding up for me. He was making good money as a mechanical installer and wanted to take a cut in pay and responsibility to work for Green Canopy. “Who was this guy?” I was thinking.
As it turns out Ryan is a veteran of the Marine Corps in Iraq. He is an avid bouldered/climber and outdoor enthusiast. He has the millennial mindset that the Green Canopy culture warmly embraces. And most importantly he leads with his heart and his mind. Which is another way of saying he follows his heart as his mind works the calculations. Love that. He came in bold into the office, eyes on fire and twitching, a vestige of hard times spent in a war zone. He heard me on Seattle’s local NPR affiliate. He saw our ad, and he was determined to work for Green Canopy, learn our business, prove himself and show what he is capable of. He got the job.
Green Canopy is the only for-profit homebuilder (that we are aware of) in all of America that was intentionally and deliberately started to combat and lessen the negative impacts of climate change and resource scarcity via in-city homebuilding.
We are run by a group of commited contractors, bankers, designers and most importantly, business people who are breaking the typical homebuilder mold and working hard to build an inspirational brand that helps to leave the world better off. We are funded by a similar minded base of over 40 shareholders and counting… We are lucky to have shareholders that are dedicated to investing their money where their values are for the sake of future generations. We are propelled by the Real Estate Agent community that understands their roll in residential real estate can be used to create transformational change for the better by promoting Green Canopy’s mission and vision of the future.
“We are banking on the success of Portland to fuel expansion outside the Pacific Northwest region and into other markets across the country."With Green Canopy all started up and on solid footing in Seattle, it is time to take the most important step in our company’s short existence: expand and prove that our model can organically grow like a bamboo shoot into new markets. We are so excited to take this critical next step and expand to Portland! Portland is more important to the future success of Green Canopy than anything we are currently working on. We are banking on the success of Portland to fuel expansion outside the Pacific Northwest region and into other markets across the country.
And we are lucky.
As a city, Portland shares what is at the heart of Green Canopy. Green Canopy, like Portland, is brimming with purpose-seeking, millennial minds. As the show Portlandia famously put it, “Portland is the place where young people go to retire.” …Retire from the top down, do-as-your-told, speak-when-spoken-to, non-purposeful J. O. B. economy, to engage in the purpose driven economy where merit prevails over tenure, mentoring over micro-managing, and critical consumption over wanton consumption. Thank God that a city so dedicated to getting the new economy right, with local brands long dedicated to local, conscious, and sustainable living such as Powels Books, Ecotrust, Clean Energy Works, and so many more, represents the future success for Green Canopy.
Over the course of the last three years, Ryan has taken 10 old, run-down, drafty homes and miraculously transformed these into resource efficient, certified green, and the highest in quality rebuilt homes to inspire generations of future residents. Working out of the Ecotrust building in the Pearl, Ryan will be responsible for applying his hard earned homebuilding magic to manage the inspirational transformation of old homes to new, and building brand new homes designed to inspire and create awareness of the benefits of resource efficiency.
Ryan is Green Canopy is Ryan. We share the same mission, vision and values and are hopeful that these will resonate in Portland. So nearly three years on, Urban Jesus, is heading to the City of Bridges. Don’t expect him to walk across the Columbia and Willamette Rivers to get there, or go into business transforming water to wine… his assignment is much more terrestrial and perhaps mundane in nature. We don’t have a divine goal of saving humanity, but we are humbly trying to make the world a little better place through our work. Here we come…
Post contributed by Aaron Fairchild:
The same day that I received an email from a friend saying that he thought G2B Ventures just might be too early in the space and ahead of the market, I read an article in the Harvard Business Review about how, “smart companies now treat sustainability as innovation’s new frontier." There were a few articles in the September 2009 issue relating to green and sustainability. The lead article says that companies won’t grow unless they throw themselves entirely at green initiatives. I am in the thick of establishing the Efficient Real Estate Investment Fund, so naturally I tend to side with HBR over my thoughtful friend. Frankly, it is just amazing to observe how far we have come in the green and sustainability business world. We couldn’t have done what we are attempting to do in green real estate 5 years ago, but today it just makes sense.
When Harvard is saying the business world MUST go green to grow, you've got to think G2B is in the right space and at the right time, not just because we are doing good for the environment and society, but because we can make money at the same time.
The Green Canopy blog is written by our CEO and Culture Curator, Aaron Fairchild, as well as our staff and a few very special guests.