Joel Makower is a widely respected writer and consultant on issues of sustainable business, clean technology and green markets. His essays on environmental business and technology are a regular feature of Sustainability Sundays. Take it away, Joel:

I've just returned from my annual stint as a judge in the Global Social Venture Competition, a business plan competition for MBAs. It's a rite of spring that renews my spirits -- and my hopes for the next generation of business leaders.

The competition was launched in 1999 by a small group of MBA candidates at U.C. Berkeley's Haas School of Business. Today, it's run at three schools -- Berkeley, Columbia University, and the London Business School -- and is sponsored by Goldman Sachs. I've been a judge since 2001 in the Berkeley semi-finals, the winners of which advance to the finals, representing winners from all three competitions.

At last week's judging event, my fellow judges and I -- mostly venture capitalists and nonprofit leaders -- evaluated 13 business plans, culled from the 100 or so submitted to Haas. It's always a challenging process. Many are pretty good, some less so, but all embody a genuine spirit of what has variously come to be called “socially responsible business,” “conscious capitalism,” and “sustainable business,” among other monikers -- but what I call “the way businesses should operate.” That is, delivering good products and services that create jobs and make money for their investors, while providing tangible social benefits.

A few examples may help. (The business plans are proprietary, so I'll be circumspect in describing them to respect the entrepreneurs' intellectual property.) Among the entrants:

• a real estate equity fund designed to capture the higher rates of returns offered by many “high-performance” commercial buildings that boast state-of-the-art energy-efficiency, better air quality, other green attributes.
  
• a company manufacturing chopsticks from agricultural waste, such as that coming from growing sugar cane, bamboo, and cotton, and manufactured in "mini-mills" in developing countries.
  
• a manufacturer and distributor of portable audio devices using radio frequency identification (RFIDs, the same technology increasingly used by major retailers and their suppliers to track materials and products) to help the visually impaired navigate public establishments.
  
• a firm that merchandises fair-trade gifts and accessories through kiosks in natural food stores, bookstores, women’s boutiques, and other venues, growing markets for globally sourced handicrafts from developing countries around the world.
  
• a microcredit investment fund that allows high-net-worth individuals and institutional investors to participate in making small loans to microentrepreneurs in developing countries -- a financial instrument that to date has been the domain largely of multilateral and foreign-aid organizations.
  
• a market research firm targeting urban Hispanic youth, a growing but underserved market, by training and hiring Hispanic teens to conduct interviews, focus groups, and the like.

Not all of these are for-profit. For example, a plan to establish an electronic “passbook” to help doctors, educators, case workers, and other community service providers more effectively serve their clients, is envisioned as an international, member-owned organization.

Some of these companies are already in business, seeking expansion capital; others exist only on paper. One criterion for entry in the competition is that each company have at least one actively participating MBA student.

One of the truly innovative aspects of the competition is that entrants are required to submit a Social Impact Assessment, or SIA, as part of their business plans. SIAs are an emerging tool that measure an organization’s social return on investment with the aim of getting the biggest social and environmental bang for the buck. Students are required to explain and quantify the “theory of change” (the logic of what their venture’s impacts will be), the indicators used to measure and track those impacts, and how those impacts will be monetized -- that is, how to measure the public benefits in financial terms.

So, for example, a firm providing job training to inner-city youth might claim that doing so helps reduce crime, increase college attendance, and improve health care thanks to better access to employer-provided insurance. But it’s not enough just to make these claims -- students must back them up with actual dollar benefits to society, including a detailed analysis of the data used to make those calculations. It’s no mean feat, even for seasoned economists.

(A friend and colleague, Sara Olsen, one of the original student founders of the Haas competition, subsequently launched her own company, SVT Consulting, to help companies evaluate and quantify their environmental and social impacts.)

The finals, representing the best from all three schools’ competitions, will be held April 15 at Haas. I can’t reveal which plans won this round, as I’m not yet certain that the winners themselves have been notified; I’d hate for the non-winners to read it here first. No matter. Who wins isn’t nearly as important as the process itself -- a chance for business-minded students to think about their futures, and ours, by imagining ventures that address the financial, social, and environmental bottom lines. That’s a far cry from the theme of most business school courses and competitions -- which focus solely on maximizing financial return, no matter what -- and it’s a refreshing change.

As a judge, I always end up getting as much as I give: insight into the many ways business can have a salutary impact on the world, the endless creativity of tomorrow’s business leaders, and the wisdom of my fellow judges. It’s a welcome return to academia, if only for a day.