Bruce Cahan
Ashoka Fellow since 2007   |   United States

Bruce Cahan

Urban Logic Inc, SR Bank
Despite broad recognition of the importance of sustainability, no unified measure exists to align incentives for private and public investment in long-term regional well-being. Bruce Cahan is creating…
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This description of Bruce Cahan's work was prepared when Bruce Cahan was elected to the Ashoka Fellowship in 2007.


Despite broad recognition of the importance of sustainability, no unified measure exists to align incentives for private and public investment in long-term regional well-being. Bruce Cahan is creating a bank to pioneer new ways for markets to accurately value regional sustainability through consumer and market choices.

The New Idea

Bruce founded a bank to demonstrate the financial incentives for investing in sustainability. The bank uses the concept of “sustainable resiliency” (SR), a measure that combines the many different areas of social concern ranging from global warming to air quality to disaster preparedness, together describing the latent ability of a region to cope with change. Through Bruce’s strategy, this composite measure translates into monetary terms, giving the financial services industry a practical tool for understanding how investing in sustainability and resiliency is good for business. 
Through the nonprofit Urban Logic, Bruce is bringing together the information, technology, and social actors needed to link events to their spatial location and to ensure that the data from many sources can be used in a single application. Bruce has begun working with the parties who hold the keys to this data ranging from Google Earth, online search services, or Standard & Poor’s corporate ratings. With social data aligned in this way, primarily through geospatial technology, the Sustainable Resiliency Bank, citizen groups, and markets will have a new level of transparency for understanding their own actions.  
Bruce’s SR Bank will work in consumer finance, municipal bond issuance, insurance, and other areas to demonstrate the functionality of the financial incentives promoting SR. Through this strategy, he leads by example, and in the process, develops the technical and practical tools that other financial institutions will need to do such work themselves. In the long-term, Bruce’s Bank is simply a model to show what can be done—his vision is to build the idea of Sustainable Resiliency into the everyday operations of mainstream financial institutions. 

The Problem

Investing in the sustainable resiliency of a region makes sense for a simple reason: It saves and makes money. Increased investment in SR can mean lower daily operating costs because businesses face less interruption in their continuity of operations. As importantly, SR reduces vulnerability to extreme events and even regular fluctuations in the surrounding world. For example: A business that shifts to more energy efficient practices becomes more competitive and keeps operating profits up despite energy spikes or grid failures. A government that provides flood management by restoring its wetlands rather than building concrete seawalls that will crack is more likely to survive floods, at lower long-term costs.

Many groups stand to benefit from these reduced costs—the taxpayer and citizen, the city itself, the corporation, and the larger state or federal system. Under current conditions, however, incentives are not aligned for so many regional stakeholders to take advantage of these savings. Cities, for instance, have to manage short-term budget costs while citizens consider the tax burden today rather than the future tax burden of reacting to crisis.

Financial markets, though renowned for their ability to judge risk, are only beginning to attune themselves to the many risks that regions face and the many factors that define a region’s ability to respond to or “bounce back” from those risks. Even the most forward thinking of Global Reporting Initiative (GRI) has yet to make their measures of risk region-specific or regionally transparent. As banks and investors make financing decisions, they do so without considering the activity’s impact on SR. This means that their pricing—whether for an insurance instrument or debt—does not take account for the likelihood that a region, city, or business faced with a stressor will emerge from that stressor in poorer financial standing.

Of course, some of this is due to the difficulty of judging and understanding sustainability and resiliency. Each region’s SR is unique, inherently linked to its particular location on the face of the Earth, what’s built there, who lives there, what grows there and what shifts are likely there. Regionalism is complex—many interdependencies exist. Understanding and managing the effects that a particular action—whether a process, a product, or infrastructure—has on SR requires understanding the place-based relationships. For example, how building sturdier houses that are energy efficient and reduce indoor pollution mitigates against regional disaster resiliency, energy, and public health costs.

Google Earth is a well-known example of how public information in geospatial information systems (GIS) and data tagged by street address can be put on the Web to see local information, context, and interdependencies. Interoperable Web services (like Google Earth) and community need have mobilized GIS users to link their systems’ capacities via the Web to analyze and display data resident all over the globe and relating to a particular city or city block. Governments, companies, environmental nonprofits, and many other communities of practice use GIS to maintain, manage and budget their assets, programs, and money in regional context.

Such systems are growing transparency into practice, helping to extract local impacts and meaning from vast stores of disparate data. GIS technologies have not, however, met their full potential for helping groups manage the sustainable resiliency of their regions. In the U.S., where corporate reporting is quite strict, reporting requirements are not spatially linked. Thousands of industry certifications trumpet “organic,” “fair trade,” “no pesticides,” “Energy Star” or other sustainability attributes of their products. Yet no universal certification exists to align the data streams required to make a simple buying decision encompassing a significant range of the product’s local impacts. While enlightened investors use socially responsible investment (SRI) screens and criteria to avoid companies with unfair labor practices or poor environmental or social records, SRI ratings are general and not locally accountable. Debt markets are even further behind, as the bonds issued by companies, governments, and COs do not even consider the most basic SROI. In short, a vast array of financial and consumer services can benefit from spatially enabled decision support, management, and underwriting.

The Strategy

Bruce is launching a bank to invest in sustainable resiliency. Bruce’s SR Bank will be organized as a bank holding company offering commercial, consumer, business and municipal credit, investment services, insurance, and the technology that enables them to see and use SR. SR Bank does what Bruce’s words alone could never do: Align measures of social health and risk tolerance to generate a consumer base working to increase those very characteristics.

On the consumer finance side, the SR Bank will give reduced interest rates and larger credit limits for purchases of products that generate positive SR. Since socially responsible borrowers are often better credit risks, SR Bank’s incentives would attract, package, and securitize higher credit quality loan pools to be sold into the secondary markets. The Bank will also allow consumers to make purchasing decisions aligned to their values. Through technology and data sharing partnerships, Bruce is creating a web-enabled tool that goes beyond static product labeling initiatives such as Fair Trade to create a dynamic decision-making tool. This “Means Meter” allows consumers to use their wallets to speak to the importance of their value along the entire supply chain. Bank customers purchasing products in alignment with their own, individual values, will generate a complementary currency (akin to airline frequent flier miles) that they can choose to keep, invest in SR, or donate to any entity.

Beyond just consumers, the SR bank will offer opportunities for other actors to increase SR. Businesses, COs, and governments can borrow at cheaper interest rates and in larger amounts to finance initiatives that increase their SR and make them work more efficiently and effectively. The SR Bank’s investment banking services would support public finance officers and treasury offices in cities, counties, states, and quasi-governmental organizations that meet both SR and the traditional underwriting criteria of bond analysts. Similar services to corporate finance officers and fixed income issuers would allow companies to explain and explore how their environmental and social values frameworks help them be more competitive, create more revenue potential, and qualify for more favorable governmental regulatory, tax and land use collaboration.

Over time, the Bank will begin to offer private and institutional wealth management and investment services, including trust services and mutual funds. These funds would invest in stocks and bonds rated using SR so as to emphasize the better performance of corporate governance that considers SR. In the insurance market, the Bank will create another set of incentives for SR. Consider a city at risk of extreme events (i.e., flood, terrorism, and epidemic) and looking to assure its corporations that insurance will be available to underwrite business interruptions in that city at a reasonable cost: SR Bank’s insurance arm will partner with insurers, reinsurers and state insurance departments to craft innovative insurance policies. The policies might carry incentives for policyholders whose activities generate gains in sustainable resiliency. A city struck by an extreme event loses sales, income, property, and other tax revenues, risking default on its bonds.

Technology and information are keys to the success of both the SR Bank and to Bruce’s broader purpose. The Bank is the centerpiece of a strategy to build the capacity of society to judge and measure SR. Because access to impact data remains tenuous, Bruce is bringing relevant actors to the table to increase the availability spatially enabled accounting, environmental, and demographic data. On the business side, for example, he has proposed to spatially enable the eXtensible Business Reporting Language that companies use to comply with SEC corporate reporting standards. With this information in hand, it will be possible, for the first time, to systematically link a company’s activities to the location of those activities.

These technologies will allow Bruce’s Bank to operate effectively, but Bruce won’t be satisfied with only a few branches. His bank demonstrates the importance of SR for banks to evaluate the viability and promise of any investment or debt transaction. He plans to spread the tools for considering these factors to banks worldwide. Bruce will co-develop and license the Bank’s technology platforms to other banks and institutions to allow them to offer financial services rated and exchanged using sustainable resiliency. In another example, the salability of its loan portfolios will let SR Bank prove that loans made to reduce exposures to externalities can still be issued at competitive rates consistent with market underwriting and pricing standards (e.g., loan to value ratios). In other words, SR Bank will not only encourage SR- enhancing transactions itself, it will show other financial institutions ways to leverage and profit from sustainability and proactively partner with them to facilitate adoption.

Bruce is currently beginning the process of raising the $30 million necessary to launch his bank while continuing the partnership building necessary to make it a success.

The Person

Bruce developed a passion for beating the odds at an early age. Diagnosed by Mayo Clinic at age eight with a genetic neuromuscular condition (Dystonia), he was told to expect to live only to thirteen-years-old. He went on to defy expectation, establishing a successful career as a finance lawyer and merchant banker.

Bruce’s foray into the spatial world happened by accident. In 1989, a steam pipe outside his building in Gramercy Park New York exploded and sprayed 220 pounds of asbestos wrapping into the air, killing three people and costing $70 million for Con Edison and its insurers to clean up. As the City investigated, Bruce and his fellow New Yorkers realized that the simple lack of communication and spatial information across city agencies and utilities played a major role in the blast occurring. The incident might have been avoided if utility crews had known that their work repressurizing the 135-year-old fragile steam pipe on a hot August day was occurring only two blocks away from an underground water leak that drained cooler water around the pipe.

Bruce delved into the issues, realizing that geospatial data and more effective ways of sharing it were lacking and yet critical for making New York City safer. He went about making that happen. Through his nonprofit, Urban Logic, Bruce and his team went about creatively problem-solving to institute the most critical changes. They used a 110-year-old franchise agreement to demonstrate that utility providers were required to share their geospatial data with City agencies, for free. Later, as a bond lawyer, Bruce masterminded a reading of municipal bond and accounting practices that would allow the Office of Management and Budget to account for the cost of spatial data as a capital cost, like other infrastructure. Bruce’s reading made GIS data investments eligible for capital budget funding (City capital budgets are normally in surplus, whereas operating budgets are cyclically in deficit). Bruce’s first insight brought $100 million of utility GIS data and system services to the City’s agencies free; Bruce’s second insight funded upwards of $20 million for the City to create its own GIS data service bureau and basemap (NYCMAP) serving all agencies. As a result, New York City left the era of data “stove-piping” across agencies and launched an integrated system to allow for broader analysis of the City’s needs and threats. The NYCMAP was delivered six months before the September 11, 2001 and proved indispensable in the City’s response and recovery from the World Trade Center attacks.

In Urban Logic’s federal technology consulting work, Bruce saw the inadequacy of government incentives for collaboration to increase regional health and sustainability. He watched state government officials spend years cobbling together intergovernmental and public-private partnerships that disintegrated as political winds shifted. Too often, the funding to encourage sensible capital investments in the future had no present day advocate, and therefore was not prioritized. During his work in post-9/11 New York with Urban Logic, Bruce began formulating the idea of sustainable resiliency. He watched Standard & Poor’s and other rating services begin to review infrastructure, emergency response and other elements of resiliency as part of New York City’s bond rating. Bruce proposed saving the city millions in debt service payment through better credit ratings so as to justify continual municipal investments in regional resiliency. Bruce realized then that the capital markets were a lever to encourage cities and regions across the U.S. to invest in their own resiliency, making municipal finance a far more compelling way to get mayors and governors to champion sustainable resiliency than waiting for the next FEMA disaster to strike their city or state.

After seventeen years of working to empower communities’ spatial knowledge and the tools to use it more effectively, Bruce has recognized that having good data wasn’t enough to assure sustainably resilient cities and regions. Data is only the tool that allows people and institutions to see and make smarter choices. To actually put the money to work on the compelling priorities proved by spatial data, a new set of financial incentives were needed. Bruce left his job and began work to create SR Bank.

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