Source: Investor Leadership On Climate Change, An analysis of the investment community’s role on climate change, and snapshot of recent investor activity.
By UN Global Compact; UN Environment Programme Finance Initiative; Principles For Responsible Investment
Synopsis: Analysis of risk and opportunity regarding climate change is incomplete without considering the role of investment in the process of mitigation. Investor Leadership on Climate Change explores the relationship between climate change and investment.
Reflection:
Most of the talk surrounding anthropogenic climate change (ACC) deals with risk. If we don’t do this, this is what’s gonna happen. The flipside of that coin is opportunity, which gets talked about, but not as much. Most of that talk centers around business and employment opportunities, such as startup businesses in green energy and the jobs those businesses could create. That’s true, and it’s all well and good, but change on the scale necessary doesn’t happen without money. Lots and lots of money.
We’ve talked about investment before (Who Cares Wins) and the fundamental question of that document is also the fundamental question addressed by this one: why wouldn’t sustainable businesses be good investments? Investor Leadership On Climate Change takes it one step further, narrowing down the scope to look specifically at the relationship between investment and ACC.
And really, that relationship isn’t complicated. Accepting that Business As Usual is not sustainable and is in need of an overhaul, we’re looking at developing new technology, training and re-training staff, creating new and renovating existing infrastructure, etc. As much as we like stories of the American Dream, hauling ourselves up by our bootstraps, mom-and-pop businesses do not have the capital to undertake such an overhaul, and if they do, they likely represent portions of the business spectrum too small to mitigate climate change on the scale necessary. Big Business is Business As Usual. It was, in large part, Big Business that got us into this mess, so it’s Big Business that needs to play a leading role in getting us out. In re-reading the latter sentence, I realize it sounds vindictive, but that’s not my intent. My point is simply that these are big problems, affected by a lot of variables. Those variables can only be addressed by a sufficiently large entity, such as Big Business.
Perhaps the scariest paragraph in Investor Leadership on Climate Change is the following: “…a trajectory of very rapid growth in investment in low-carbon energy supply is required – reaching US$500 billion a year by 2020. Without this growth in investment, it is extremely unlikely that the necessary GHG stabilization levels will be achieved. We cannot afford a fall in levels of investment in this sector.” What makes this scary is politics. In the U.S, Big Business and Republican are all but synonymous. Recent polls show the majority of Republicans do not accept that climate change is being caused by human factors. If you don’t believe that Business As Usual caused these problems, where is the motivation to change it?
Dedicated to exploring issues of sustainable development, saving the world one blog post at a time.
Wednesday, March 31, 2010
Tuesday, March 30, 2010
More on Belief
*WARNING* The following link is Rated R for adult language and sexual imagery. Click at your own risk.
If You Put Your Mind To It You Can Believe Anything
OK, so I get my news in equal parts from the NY Times, The Daily Show, and The Onion. I like a balanced, unbiased perspective. Kidding aside, there is wisdom in good satire, and I consider The Onion to be some of the best satire out there. I post the above link because it illustrates what may be the most serious issue standing between us and a sustainable culture/society. There is a staggering, intimidating, often terrifying amount of data telling us that The Way Things Are is not sustainable. As I've stated before, anything not sustainable will, by definition, eventually cease to exist. Between now and then, there is our quality of life to consider.
I'm also not advocating abandonment of skepticism. Skepticism is absolutely essential. In fact, skepticism underlies the scientific method; without it, there is no scientific method. However, on that grand continuum of belief, between naivete on one end and deluded rejection of reality on the other, is healthy skepticism. It is imperative we find that line, walk it, and communicate to others how to do the same.
If You Put Your Mind To It You Can Believe Anything
OK, so I get my news in equal parts from the NY Times, The Daily Show, and The Onion. I like a balanced, unbiased perspective. Kidding aside, there is wisdom in good satire, and I consider The Onion to be some of the best satire out there. I post the above link because it illustrates what may be the most serious issue standing between us and a sustainable culture/society. There is a staggering, intimidating, often terrifying amount of data telling us that The Way Things Are is not sustainable. As I've stated before, anything not sustainable will, by definition, eventually cease to exist. Between now and then, there is our quality of life to consider.
I'm also not advocating abandonment of skepticism. Skepticism is absolutely essential. In fact, skepticism underlies the scientific method; without it, there is no scientific method. However, on that grand continuum of belief, between naivete on one end and deluded rejection of reality on the other, is healthy skepticism. It is imperative we find that line, walk it, and communicate to others how to do the same.
Monday, March 29, 2010
Life Cycle Management
Source: Life Cycle Management, A Business Guide to Sustainability
By UN Environment Programme, 2007
Reflection:
“We can't solve problems by using the same kind of thinking we used when we created them."
The above quote, by Albert Einstein, is perhaps the most succinct way of summing up the changes necessary for a movement toward sustainability, but it’s particularly appropriate for thinking about life cycle management (LCM). In a nutshell, LCM is an attempt to control as many variables as possible in the life cycle of a given product, from raw material extraction to what happens to the product when it has outlived its useful life, in order to get those variables in line with the principles of sustainability.
The above quote is apt because traditionally, a manufacturer likely would not consider controlling variables outside it’s “roof,” i.e. a bicycle hub manufacturer wouldn’t worry about where or how the aluminum they use is mined. They would be concerned with the price and quality, and the mining and smelting would be the responsibility of the miners and smelters. Using an LCM approach, that same manufacturer would consider those variables their responsibility, and would control them as much as possible, which is to say, they may not be able to dictate which mining techniques are used, but would make the producers aware they represent a market demanding a product mined as responsibly as possible, or would communicate to the smelter they desire a product containing a minimum amount of recycled materials. In this respect, LCM is yet another example of sustainability through communication, using the market as a tool and an evolutionary process. Referring to the latter, quick changes through LCM may not be possible, so we must do the best we can, continually striving for improvement.
As far as Life Cycle Management as a resource is concerned, I found it to be a complete and compelling document; yet another I’m putting in my toolbox, to be brought out when some forward-thinking company hires me to make them sustainable. I especially appreciated the mini case studies included; it’s sometimes surprising where you can find sustainable business practices.
Also of note was the “Plan-Do-Check-Act” cycle in the section on implementation. As the semester progresses, I am finding more and more similarities in plans for implementation, regardless of what is being implemented. I’m not entirely sure what to make of this, other than it seems plausible that we’re looking at some kind of convergent evolution, which is a good thing. If it is indeed convergent evolution, it means we’re working with a best practice that has been tried and tweaked to work as well as possible with what we know now about how organizations operate.
By UN Environment Programme, 2007
Reflection:
“We can't solve problems by using the same kind of thinking we used when we created them."
The above quote, by Albert Einstein, is perhaps the most succinct way of summing up the changes necessary for a movement toward sustainability, but it’s particularly appropriate for thinking about life cycle management (LCM). In a nutshell, LCM is an attempt to control as many variables as possible in the life cycle of a given product, from raw material extraction to what happens to the product when it has outlived its useful life, in order to get those variables in line with the principles of sustainability.
The above quote is apt because traditionally, a manufacturer likely would not consider controlling variables outside it’s “roof,” i.e. a bicycle hub manufacturer wouldn’t worry about where or how the aluminum they use is mined. They would be concerned with the price and quality, and the mining and smelting would be the responsibility of the miners and smelters. Using an LCM approach, that same manufacturer would consider those variables their responsibility, and would control them as much as possible, which is to say, they may not be able to dictate which mining techniques are used, but would make the producers aware they represent a market demanding a product mined as responsibly as possible, or would communicate to the smelter they desire a product containing a minimum amount of recycled materials. In this respect, LCM is yet another example of sustainability through communication, using the market as a tool and an evolutionary process. Referring to the latter, quick changes through LCM may not be possible, so we must do the best we can, continually striving for improvement.
As far as Life Cycle Management as a resource is concerned, I found it to be a complete and compelling document; yet another I’m putting in my toolbox, to be brought out when some forward-thinking company hires me to make them sustainable. I especially appreciated the mini case studies included; it’s sometimes surprising where you can find sustainable business practices.
Also of note was the “Plan-Do-Check-Act” cycle in the section on implementation. As the semester progresses, I am finding more and more similarities in plans for implementation, regardless of what is being implemented. I’m not entirely sure what to make of this, other than it seems plausible that we’re looking at some kind of convergent evolution, which is a good thing. If it is indeed convergent evolution, it means we’re working with a best practice that has been tried and tweaked to work as well as possible with what we know now about how organizations operate.
Friday, March 26, 2010
Supply Chains
Sources:
Unchaining Value, Innovative Approaches to Sustainable Supply
The Lean and Green Supply Chain
By SustainAbility, UNEP, The Global Compact and USEPA Environmental Accounting Project respectively
Reflection:
The reflection that spurred my post about synthesis (A Little Synthesis) was catalyzed by these resources. In reading these, I was continually struck by the logic represented therein, which begged the question, why isn’t this Business As Usual? I was never struck by the revolutionary way in which they proposed supply chains be managed, nor case studies in which a company’s behavior represented a level of thinking to which we’re still striving. To be perfectly blunt and honest, my reaction was, “well…duh.” I still wonder what I might be missing.
My enduring understanding of these resources is one of disappointment, not in the resources themselves, or the information they contain, but in the fact that business practices that make so much sense, that represent sound risk management, efficient use of raw materials, streamlined distribution, etc. are categorized as “sustainable business practices.” Speaking in relative terms, these resources are relevant not because the authors are so advanced, but because Business As Usual is so far behind. We will all be better off when we catch up.
Unchaining Value, Innovative Approaches to Sustainable Supply
The Lean and Green Supply Chain
By SustainAbility, UNEP, The Global Compact and USEPA Environmental Accounting Project respectively
Reflection:
The reflection that spurred my post about synthesis (A Little Synthesis) was catalyzed by these resources. In reading these, I was continually struck by the logic represented therein, which begged the question, why isn’t this Business As Usual? I was never struck by the revolutionary way in which they proposed supply chains be managed, nor case studies in which a company’s behavior represented a level of thinking to which we’re still striving. To be perfectly blunt and honest, my reaction was, “well…duh.” I still wonder what I might be missing.
My enduring understanding of these resources is one of disappointment, not in the resources themselves, or the information they contain, but in the fact that business practices that make so much sense, that represent sound risk management, efficient use of raw materials, streamlined distribution, etc. are categorized as “sustainable business practices.” Speaking in relative terms, these resources are relevant not because the authors are so advanced, but because Business As Usual is so far behind. We will all be better off when we catch up.
Who Cares Wins
Source: Who Cares Wins: Connecting Financial Markets to a Changing World
By The Global Compact
Reflecton:
Why wouldn’t “sustainable businesses” be a good investment? After reading Who Cares Wins, this question is my enduring understanding.
The central assumption of Who Cares Wins is that the way environmental, social and corporate governance issues are managed is part of companies’ overall management quality needed to compete successfully. I challenge you, Loyal Readers, to show me that assumption is false. I’ve tried, and I cannot.
Keeping in mind that my knowledge of investing is exactly as deep and broad as my knowledge of law and socioanthropology, and also remembering that unemployed bike mechanics don’t have a lot of money to throw into the market, this is what I would look for in a business:
First, I want responsible management. I’m trusting them to use my money to make money, not lose it.
Second, and related to the first, is risk management. Risk is an unavoidable aspect of business and investment alike, and it is often indistinguishable from opportunity. This truth brought forth the cliché, you must spend money to make money.
Third, I want a company that is in touch with their market, past, present, and future. Past, because history can teach us a great deal about where we are and where we’re headed. Present, because markets are fast-paced and dynamic and you have to stay on top of them. Future should be self-explanatory.
None of this is a revelation. It’s a very simple understanding of what makes a viable corporation, and everything I’ve said applies equally to Business As Usual and sustainable business. Where does the difference lie?
My experience with investing has taught me that there exists a direct correlation between risk and rate of return. The higher the risk, the greater the rate of return, and vice versa. Accepting the notion that sustainable business is really Business As Usual with exceptional risk management on a longer-than-normal timeline, we get closer to an answer to our question. But if one must choose between safe and fast, I’d still choose safe.
By The Global Compact
Reflecton:
Why wouldn’t “sustainable businesses” be a good investment? After reading Who Cares Wins, this question is my enduring understanding.
The central assumption of Who Cares Wins is that the way environmental, social and corporate governance issues are managed is part of companies’ overall management quality needed to compete successfully. I challenge you, Loyal Readers, to show me that assumption is false. I’ve tried, and I cannot.
Keeping in mind that my knowledge of investing is exactly as deep and broad as my knowledge of law and socioanthropology, and also remembering that unemployed bike mechanics don’t have a lot of money to throw into the market, this is what I would look for in a business:
First, I want responsible management. I’m trusting them to use my money to make money, not lose it.
Second, and related to the first, is risk management. Risk is an unavoidable aspect of business and investment alike, and it is often indistinguishable from opportunity. This truth brought forth the cliché, you must spend money to make money.
Third, I want a company that is in touch with their market, past, present, and future. Past, because history can teach us a great deal about where we are and where we’re headed. Present, because markets are fast-paced and dynamic and you have to stay on top of them. Future should be self-explanatory.
None of this is a revelation. It’s a very simple understanding of what makes a viable corporation, and everything I’ve said applies equally to Business As Usual and sustainable business. Where does the difference lie?
My experience with investing has taught me that there exists a direct correlation between risk and rate of return. The higher the risk, the greater the rate of return, and vice versa. Accepting the notion that sustainable business is really Business As Usual with exceptional risk management on a longer-than-normal timeline, we get closer to an answer to our question. But if one must choose between safe and fast, I’d still choose safe.
Tuesday, March 23, 2010
Rethinking Business Regulation
Source: Rethinking Business Regulation, From Self-Regulation to Social Control
By Utting, Peter
Reflection: (My apologies for a rambling, disorganized post. In the midst of dealing with a difficult resource, my hard drive crashed, so getting back on track was a process, and I didn’t edit this one very well)
Again, this was a difficult resource for me. I have a rudimentary and incomplete understanding of corporate regulation and accountability, so considerable backtracking would need to occur in order for me to fully understand what overhauling or changing that regulation involves. I feel like I hardly have enough time for forward tracking, let alone backtracking, so I’m left with more questions than answers.
Through discussion with Smart People, several aspects of material in prior resources was reexamined, giving me a better understanding of what this resource is about. Most importantly was a key characteristic of the codes, standards, and frameworks discussed in my post of that title. All (or at least most) are voluntary, and were developed by corporations themselves. Self-awareness by/of corporations is important, but this creates a distinct conflict of interest for them. When the Founding Fathers drafted the Constitution, they recognized the difficulty in objectively regulating oneself and wrote a system of governance that featured checks and balances to keep the different branches of government honest and to prevent any one of them from acquiring too much power. It is the inability of corporations to objectively self-regulate in the best interests of everybody that creates problems. To whom are corporations responsible and accountable? If they answer only to shareholders, their priority will be maximizing profit. It seems this is the way things have been historically. An effect of this is making pollution control, emission control, efficient use of raw materials, etc. a lower priority. If it becomes more profitable to flush your garbage rather than recycling or repurposing it, we end up with sick ecosystems, the effects of which we’re now recognizing.
If, on the other hand, a corporation tries to balance profit with environmental stewardship and socially just business practices, it will not be as profitable in the short term. In Business-As-Usual, where emphasis is placed on the numbers for next quarter rather than next century, this puts that corporation at a disadvantage, making it vulnerable. It’s easy to see why, in our myopic society, the sustainable corporation is a new concept. In fact, this tension between profitability and corporate social responsibility is mentioned in Rethinking Business Regulation.
The next issue I see, related to the first, is the motivation for a corporation to voluntarily comply. In Rethinking Business Regulation, the author identifies several stages of self-regulation. It seems the corporations with which I’m familiar are in the “defensive” or “compliant” stages, in which they either deny they are part of the problem or adopt a policy but treat compliance as added cost. At that stage, there is little motivation to comply. In fact, compliance could be seen as a competitive disadvantage, and the corporation may be criticized by shareholders. As I see it, this is the role of marketing. I’ve seen examples of sustainable business practices being profitable, and those profitable companies have remained so without using their sustainable practices as a marketing tool, possibly because we’re not accustomed to sustainability (as I use the term in this blog) being a competitive advantage.
This is stupid, but in the interest of time, I’m going to wait to expand on that. What it does present is the opportunity to discuss how hardening regulation could help the corporation. Let’s start with an experiment you’ve already conducted. Walk down the cereal isle in your local grocery store. What proportion of the boxes make some statement using the label “natural”? Now, compare the ingredients of those to each other and to the cereals that are “unnatural”. Differences? It’s been a while since I’ve done this, but if memory serves, you will find unpronounceable ingredients on the boxes labeled “natural”. How can this be? The term “natural” is not regulated. There are no standards that must be met in order to put it on your packaging. As such, it is meaningless. After all, there’s no shortage of naturally occurring yet really nasty compounds.
“Organic” on the other hand is regulated, and the government has set standards that must be met in order for a product to be labeled as such. No matter the product, from soda pop to rolled oats, if it says organic, the ingredients will not have used synthetic fertilizers or pesticides. This is a good thing for consumer and grower alike, as it gives us information about our purchases and a powerful marketing tool for the grower.
This is why corporation could/will benefit from hardening this regulation. It will give them meaningful information that can be used to market their products.
The final thing I’d like to mention are the thoughts that run through my head when pondering business regulation. As I’ve mentioned in the past, my parents are republican in the traditional, small government interpretation of the word. Mom counts Ayn Rand as a formative influence and has voted Libertarian many times. Dad is a small business owner. They’ve had an undeniable influence on my political beliefs. When I read about regulation, it is them I hear, whispering about the inefficiencies of bureaucracies and the pitfalls of unintended consequences, and who can argue they’re wrong? There is a fear that regulation is a trammel, and if our business and industry are trammeled and others’ are not, we will be out-competed, and we will fail. Again, this is a logical, if not appropriate, concern, but it does not take into account the ability of our businesses, industries, and economy to adapt. Agriculture in the U.S. used to be based in large part on slave labor. That system was shown to be unsustainable and the government regulated it. Industry here and abroad used to depend on child labor. That system also was shown to be unsustainable, and it was regulated. Industry adapted. These are examples which the wisdom of time has made obviously unsustainable, but the Civil War shows it was not always so obvious, and a great many people couldn’t conceive of an economy without it. The transition to sustainable business will not be easy, smooth, or straightforward. There will be many setbacks and ample opportunity to question our motivation and efficacy, but I absolutely believe there will come a time when we look back on many of our current business practices with the same disbelief with which we view slavery and child labor.
By Utting, Peter
Reflection: (My apologies for a rambling, disorganized post. In the midst of dealing with a difficult resource, my hard drive crashed, so getting back on track was a process, and I didn’t edit this one very well)
Again, this was a difficult resource for me. I have a rudimentary and incomplete understanding of corporate regulation and accountability, so considerable backtracking would need to occur in order for me to fully understand what overhauling or changing that regulation involves. I feel like I hardly have enough time for forward tracking, let alone backtracking, so I’m left with more questions than answers.
Through discussion with Smart People, several aspects of material in prior resources was reexamined, giving me a better understanding of what this resource is about. Most importantly was a key characteristic of the codes, standards, and frameworks discussed in my post of that title. All (or at least most) are voluntary, and were developed by corporations themselves. Self-awareness by/of corporations is important, but this creates a distinct conflict of interest for them. When the Founding Fathers drafted the Constitution, they recognized the difficulty in objectively regulating oneself and wrote a system of governance that featured checks and balances to keep the different branches of government honest and to prevent any one of them from acquiring too much power. It is the inability of corporations to objectively self-regulate in the best interests of everybody that creates problems. To whom are corporations responsible and accountable? If they answer only to shareholders, their priority will be maximizing profit. It seems this is the way things have been historically. An effect of this is making pollution control, emission control, efficient use of raw materials, etc. a lower priority. If it becomes more profitable to flush your garbage rather than recycling or repurposing it, we end up with sick ecosystems, the effects of which we’re now recognizing.
If, on the other hand, a corporation tries to balance profit with environmental stewardship and socially just business practices, it will not be as profitable in the short term. In Business-As-Usual, where emphasis is placed on the numbers for next quarter rather than next century, this puts that corporation at a disadvantage, making it vulnerable. It’s easy to see why, in our myopic society, the sustainable corporation is a new concept. In fact, this tension between profitability and corporate social responsibility is mentioned in Rethinking Business Regulation.
The next issue I see, related to the first, is the motivation for a corporation to voluntarily comply. In Rethinking Business Regulation, the author identifies several stages of self-regulation. It seems the corporations with which I’m familiar are in the “defensive” or “compliant” stages, in which they either deny they are part of the problem or adopt a policy but treat compliance as added cost. At that stage, there is little motivation to comply. In fact, compliance could be seen as a competitive disadvantage, and the corporation may be criticized by shareholders. As I see it, this is the role of marketing. I’ve seen examples of sustainable business practices being profitable, and those profitable companies have remained so without using their sustainable practices as a marketing tool, possibly because we’re not accustomed to sustainability (as I use the term in this blog) being a competitive advantage.
This is stupid, but in the interest of time, I’m going to wait to expand on that. What it does present is the opportunity to discuss how hardening regulation could help the corporation. Let’s start with an experiment you’ve already conducted. Walk down the cereal isle in your local grocery store. What proportion of the boxes make some statement using the label “natural”? Now, compare the ingredients of those to each other and to the cereals that are “unnatural”. Differences? It’s been a while since I’ve done this, but if memory serves, you will find unpronounceable ingredients on the boxes labeled “natural”. How can this be? The term “natural” is not regulated. There are no standards that must be met in order to put it on your packaging. As such, it is meaningless. After all, there’s no shortage of naturally occurring yet really nasty compounds.
“Organic” on the other hand is regulated, and the government has set standards that must be met in order for a product to be labeled as such. No matter the product, from soda pop to rolled oats, if it says organic, the ingredients will not have used synthetic fertilizers or pesticides. This is a good thing for consumer and grower alike, as it gives us information about our purchases and a powerful marketing tool for the grower.
This is why corporation could/will benefit from hardening this regulation. It will give them meaningful information that can be used to market their products.
The final thing I’d like to mention are the thoughts that run through my head when pondering business regulation. As I’ve mentioned in the past, my parents are republican in the traditional, small government interpretation of the word. Mom counts Ayn Rand as a formative influence and has voted Libertarian many times. Dad is a small business owner. They’ve had an undeniable influence on my political beliefs. When I read about regulation, it is them I hear, whispering about the inefficiencies of bureaucracies and the pitfalls of unintended consequences, and who can argue they’re wrong? There is a fear that regulation is a trammel, and if our business and industry are trammeled and others’ are not, we will be out-competed, and we will fail. Again, this is a logical, if not appropriate, concern, but it does not take into account the ability of our businesses, industries, and economy to adapt. Agriculture in the U.S. used to be based in large part on slave labor. That system was shown to be unsustainable and the government regulated it. Industry here and abroad used to depend on child labor. That system also was shown to be unsustainable, and it was regulated. Industry adapted. These are examples which the wisdom of time has made obviously unsustainable, but the Civil War shows it was not always so obvious, and a great many people couldn’t conceive of an economy without it. The transition to sustainable business will not be easy, smooth, or straightforward. There will be many setbacks and ample opportunity to question our motivation and efficacy, but I absolutely believe there will come a time when we look back on many of our current business practices with the same disbelief with which we view slavery and child labor.
A Little Synthesis
We are roughly halfway through this semester, and I find myself searching for some kind of unifying theme in everything we’ve read. I’m trying to go deeper than the obvious “lots of things are wrong and we ignore them at our peril.” Without question, the latter is true, but I think we’re striving for a deeper understanding. After all, we students are going to end up with more letters after our names when this is all said and done.
The problem with synthesis is, in order to form a cohesive statement about whatever, you must simplify, often to the point of losing any kind of relevance. Such is the case with the above statement. It’s a message we’ve heard many times and while accurate, doesn’t hint at the underlying complexity of the issues with which we’re faced. I’ll concede that limitation and still try for something simple and meaningful.
I was tempted by an obvious one: We (I’m still not sure how wide a net I’m casting with “we”), mostly, are not stupid, lazy, inconsiderate, or greedy, but we are shortsighted. Just like everything we depend on can be traced back to the natural world, so too can all of the issues we’re facing today be traced back to this characteristic. Myopia may not be the primary cause of every issue we tackle in this class, but it contributes to and/or exacerbates them all, from ecosystem degradation to financial fraud.
This is OK, if not true and accurate. The bigger and more important consideration is where this myopia comes from. The what matters little without understanding the why. Again, I don’t have the answer, and I suspect if it’s my intention to find it, I could spend the rest of my life doing so. Even if the above is OK, I still wasn’t satisfied.
As I’ve mentioned many times, the outdoor retail sector has some outstanding examples of companies that are doing well with sustainable business practices. The more I learned about these companies, the more I wondered what made them different, i.e. why weren’t all businesses like them? I chalked this reaction up to a lot of things, but mostly to naiveté. While not a total novice, until this degree, my business education was limited and informal. I expected this degree to give me better insight into why those companies were unusual.
This has not happened.
For me, this is a more satisfying theme tying together everything we’ve covered so far. I still cannot figure out why sustainable business and business as usual are not synonymous. It’s not that what we’re reading is obvious, although some of it is. It’s not that it’s more or less complicated. It is both. It’s not that it’s easier or more difficult. Again, it will be both. It is that it makes so much sense, on every level that matters.
The problem with synthesis is, in order to form a cohesive statement about whatever, you must simplify, often to the point of losing any kind of relevance. Such is the case with the above statement. It’s a message we’ve heard many times and while accurate, doesn’t hint at the underlying complexity of the issues with which we’re faced. I’ll concede that limitation and still try for something simple and meaningful.
I was tempted by an obvious one: We (I’m still not sure how wide a net I’m casting with “we”), mostly, are not stupid, lazy, inconsiderate, or greedy, but we are shortsighted. Just like everything we depend on can be traced back to the natural world, so too can all of the issues we’re facing today be traced back to this characteristic. Myopia may not be the primary cause of every issue we tackle in this class, but it contributes to and/or exacerbates them all, from ecosystem degradation to financial fraud.
This is OK, if not true and accurate. The bigger and more important consideration is where this myopia comes from. The what matters little without understanding the why. Again, I don’t have the answer, and I suspect if it’s my intention to find it, I could spend the rest of my life doing so. Even if the above is OK, I still wasn’t satisfied.
As I’ve mentioned many times, the outdoor retail sector has some outstanding examples of companies that are doing well with sustainable business practices. The more I learned about these companies, the more I wondered what made them different, i.e. why weren’t all businesses like them? I chalked this reaction up to a lot of things, but mostly to naiveté. While not a total novice, until this degree, my business education was limited and informal. I expected this degree to give me better insight into why those companies were unusual.
This has not happened.
For me, this is a more satisfying theme tying together everything we’ve covered so far. I still cannot figure out why sustainable business and business as usual are not synonymous. It’s not that what we’re reading is obvious, although some of it is. It’s not that it’s more or less complicated. It is both. It’s not that it’s easier or more difficult. Again, it will be both. It is that it makes so much sense, on every level that matters.
Monday, March 22, 2010
The Corporate Ecosystem Services Review
By World Resources Institute, World Business Council for Sustainable Development, Meridian Institute
“Unfortunately, companies often fail to make the connection between the health of ecosystems and the business bottom line.” (pg. iv)
Historically, we Americans have been good at recognizing and appreciating the non-business value of healthy ecosystems. We have a wonderful natural park system that includes some of the most beautiful physical beauty in the universe. Millions of people visit those places annually to stand in humble awe. Then, most of those millions get back in their automobiles, turn off the part of their brain that was awed, and drive back to the office to get back to work, never making the connection between that which awed them and that which they wanted to get away from. The Corporate Ecosystem Services Review (CESR) is an attempt to make that connection.
In my organizational behavior class, we spent a lot of time on decision-making and the potential pitfalls that can lead to poor decisions. One of those is the framing trap, in which prior experience or some other stimulus prevents the decision-maker from objectively evaluating the options, leading him or her to choose poorly. The above scenario is reflective of how we frame this issue, how that inaccurate frame has lead to sick ecosystems, and is what I consider the CESR’s strength.
The framing trap we fall into is disconnecting the natural from the industrial and business related. We set aside our beautiful ecosystems and protect them, and once that line is drawn, what falls outside it is ours to exploit and what’s inside it is ours to appreciate on the weekend road trip. What we’ve failed to recognize is that those lines are arbitrary, and natural systems don’t respect them. Furthermore, once that line is drawn, what’s inside it ceases to serve a purpose other than providing us with a nice background for photo ops. This is not meant as criticism of the weekend road tripper or our national park system, but as an explanation of how a skewed frame has kept us from accurately accounting for the services healthy ecosystems provide.
So, the first step is to frame the issue in terms with which we’re comfortable and familiar (read “dollars”). Americans understand and appreciate money. Put a dollar sign on it, and we’ll pay attention to the numbers next to it. We’ll notice when the price goes down; even more when the price goes up. This, I think, is what the CESR does right. Protecting ecosystems won’t be a priority until we can show corporations that doing so makes financial sense.
Beyond this argument, that neglecting ecosystems is going to cost us more than protecting them, the CESR includes the hows of accurately accounting for those services. Despite my best efforts, I have no criticism of what they say. As with other resources we’ve looked at, I’m sure issues would arise when putting the CESR into practice, and some trial and error would be necessary to adapt it to a given organization, but that’s to be expected.
“Unfortunately, companies often fail to make the connection between the health of ecosystems and the business bottom line.” (pg. iv)
Historically, we Americans have been good at recognizing and appreciating the non-business value of healthy ecosystems. We have a wonderful natural park system that includes some of the most beautiful physical beauty in the universe. Millions of people visit those places annually to stand in humble awe. Then, most of those millions get back in their automobiles, turn off the part of their brain that was awed, and drive back to the office to get back to work, never making the connection between that which awed them and that which they wanted to get away from. The Corporate Ecosystem Services Review (CESR) is an attempt to make that connection.
In my organizational behavior class, we spent a lot of time on decision-making and the potential pitfalls that can lead to poor decisions. One of those is the framing trap, in which prior experience or some other stimulus prevents the decision-maker from objectively evaluating the options, leading him or her to choose poorly. The above scenario is reflective of how we frame this issue, how that inaccurate frame has lead to sick ecosystems, and is what I consider the CESR’s strength.
The framing trap we fall into is disconnecting the natural from the industrial and business related. We set aside our beautiful ecosystems and protect them, and once that line is drawn, what falls outside it is ours to exploit and what’s inside it is ours to appreciate on the weekend road trip. What we’ve failed to recognize is that those lines are arbitrary, and natural systems don’t respect them. Furthermore, once that line is drawn, what’s inside it ceases to serve a purpose other than providing us with a nice background for photo ops. This is not meant as criticism of the weekend road tripper or our national park system, but as an explanation of how a skewed frame has kept us from accurately accounting for the services healthy ecosystems provide.
So, the first step is to frame the issue in terms with which we’re comfortable and familiar (read “dollars”). Americans understand and appreciate money. Put a dollar sign on it, and we’ll pay attention to the numbers next to it. We’ll notice when the price goes down; even more when the price goes up. This, I think, is what the CESR does right. Protecting ecosystems won’t be a priority until we can show corporations that doing so makes financial sense.
Beyond this argument, that neglecting ecosystems is going to cost us more than protecting them, the CESR includes the hows of accurately accounting for those services. Despite my best efforts, I have no criticism of what they say. As with other resources we’ve looked at, I’m sure issues would arise when putting the CESR into practice, and some trial and error would be necessary to adapt it to a given organization, but that’s to be expected.
Wednesday, March 17, 2010
More on Stuff
A friend posted this on Facebook, where it seems all pertinent information is now found. I haven't had a chance to get too in depth, but Ms. Leonard seems to be talking about an issue at the heart of sustainability, especially for Americans. I'm trying to not feel like a hypocrite while typing on my fancy computer.
The Story of Stuff
Enjoy!
The Story of Stuff
Enjoy!
Tuesday, March 9, 2010
Corporate Responsibility, Good Governance, and Scalable Solutions
Source: Gearing Up: From Corporate Responsibility to Good Governance and Scalable Solutions
By SustainAbility Ltd. 2004
Synopsis:
Corporate responsibility (CR): A term that can embrace financial integrity, corporate ethics and dimensions of economic, social and environmental value added. In the wake of such scandals as the Enron collapse, the term has often focused back on narrower definitions of financial integrity. However, throughout Gearing Up, we use CR to refer to a business approach embodying open and transparent business practices, ethical behavior, respect for stakeholders and a commitment to add economic, social and environmental value.
Gearing Up explores the relationship between corporations, corporate responsibility and governance. Ultimately, the question it seeks to answer is, through which system(s) will change be most effective?
Reflection:
I struggled with this resource until I reached the section on scalable solutions. Until that point, my biggest question was whether or not this was a subject that needed exploration. My understanding of the relationship between business and government is that business offers a society the goods and/or services demanded/needed/wanted by that society and government does its best to keep an eye on those operations to prevent them from doing more harm than good. Admittedly simplistic, but it explains my incredulity. From an environmental and social perspective, the changes demanded by sustainable development will unquestionably benefit more people than Business As Usual, so what incentive would government have in regulating developing practices that are already ahead of the curve? For example, without a lot of effort, I can think of a dozen businesses, mostly in the outdoor retail field, that practice sustainable business. They use less energy, less water, fewer raw materials, produce fewer emissions and less pollution. Their only criticism, and this is by no means conclusive, is that, in the short term, they are less profitable than Business As Usual, as most of the efforts that result in the aforementioned cost more. So again, what incentive would government have to interfere with what is already a good system?
When I got to the section on scalability, I made the connection. The businesses I might cite are small. As far as I know, none of them are publicly owned. There are no shareholder meetings, no quarterly meetings with mandates to hit your number no matter what, etc. I doubt any of the owners/CEOs have seen Glengary Glen Ross, and if they have, I doubt they abide by Blake’s ABCs. Unfortunately, Business As Usual is where we’re at, and it’s where change needs to take place, and a lot of the men and women making their living with Business As Usual would get along just fine with Blake.
So, the implication I drew is that the role of government is to aid us in getting from Business As Usual to sustainable business. Hmmmmm… Business As Usual and government regulation mix like oil and water. Forgive me for being skeptical that government regulation of Business As Usual will lead to change on the scale needed.
There was no regulation required to get us to Business As Usual. Growth was/is the natural/logical direction for business. It is a question of motivation. Most corporations on the scale of Business As Usual are not intrinsically motivated. They exist for profit. Therefore, there are two potential paths through which change might occur. One, if sustainable business practices can be proven as profitable as or more profitable than Business As Usual, we have nothing to worry about. We’ll be working with the same motivation that got us where we are, and government will have little reason to get involved. Of course, when we’re talking about profit, we’re talking about cost, and one of the bricks in the foundation upon which Business As Usual was built is incomplete accounting of costs. Most of our products are produced overseas by inexpensive labor, under governments that may be less likely to embrace strict environmental and social standards. Those costs will catch up to us, but it seems the prevailing wisdom is to ride that wave as long as possible. So government may function to more accurately account for costs through regulations and subsidies. My worry with that is the potential for unintended consequences. I cite the subsidization of corn and our current food system.
Path two is to hope that Business As Usual starts recognizing that the current system is not sustainable and starts making changes to get in line with that standard. I guess it’s not a stretch to put that in terms of profit, but only on a timescale longer than that which most corporations pay attention to. This is the role I see for the smaller companies like those I might have cited above. If their efforts prove profitable, and can be scaled up to the level of Business As Usual (or, if that level is not sustainable, a reasonable level, whatever reasonable means), then we’ll be on the right track.
By SustainAbility Ltd. 2004
Synopsis:
Corporate responsibility (CR): A term that can embrace financial integrity, corporate ethics and dimensions of economic, social and environmental value added. In the wake of such scandals as the Enron collapse, the term has often focused back on narrower definitions of financial integrity. However, throughout Gearing Up, we use CR to refer to a business approach embodying open and transparent business practices, ethical behavior, respect for stakeholders and a commitment to add economic, social and environmental value.
Gearing Up explores the relationship between corporations, corporate responsibility and governance. Ultimately, the question it seeks to answer is, through which system(s) will change be most effective?
Reflection:
I struggled with this resource until I reached the section on scalable solutions. Until that point, my biggest question was whether or not this was a subject that needed exploration. My understanding of the relationship between business and government is that business offers a society the goods and/or services demanded/needed/wanted by that society and government does its best to keep an eye on those operations to prevent them from doing more harm than good. Admittedly simplistic, but it explains my incredulity. From an environmental and social perspective, the changes demanded by sustainable development will unquestionably benefit more people than Business As Usual, so what incentive would government have in regulating developing practices that are already ahead of the curve? For example, without a lot of effort, I can think of a dozen businesses, mostly in the outdoor retail field, that practice sustainable business. They use less energy, less water, fewer raw materials, produce fewer emissions and less pollution. Their only criticism, and this is by no means conclusive, is that, in the short term, they are less profitable than Business As Usual, as most of the efforts that result in the aforementioned cost more. So again, what incentive would government have to interfere with what is already a good system?
When I got to the section on scalability, I made the connection. The businesses I might cite are small. As far as I know, none of them are publicly owned. There are no shareholder meetings, no quarterly meetings with mandates to hit your number no matter what, etc. I doubt any of the owners/CEOs have seen Glengary Glen Ross, and if they have, I doubt they abide by Blake’s ABCs. Unfortunately, Business As Usual is where we’re at, and it’s where change needs to take place, and a lot of the men and women making their living with Business As Usual would get along just fine with Blake.
So, the implication I drew is that the role of government is to aid us in getting from Business As Usual to sustainable business. Hmmmmm… Business As Usual and government regulation mix like oil and water. Forgive me for being skeptical that government regulation of Business As Usual will lead to change on the scale needed.
There was no regulation required to get us to Business As Usual. Growth was/is the natural/logical direction for business. It is a question of motivation. Most corporations on the scale of Business As Usual are not intrinsically motivated. They exist for profit. Therefore, there are two potential paths through which change might occur. One, if sustainable business practices can be proven as profitable as or more profitable than Business As Usual, we have nothing to worry about. We’ll be working with the same motivation that got us where we are, and government will have little reason to get involved. Of course, when we’re talking about profit, we’re talking about cost, and one of the bricks in the foundation upon which Business As Usual was built is incomplete accounting of costs. Most of our products are produced overseas by inexpensive labor, under governments that may be less likely to embrace strict environmental and social standards. Those costs will catch up to us, but it seems the prevailing wisdom is to ride that wave as long as possible. So government may function to more accurately account for costs through regulations and subsidies. My worry with that is the potential for unintended consequences. I cite the subsidization of corn and our current food system.
Path two is to hope that Business As Usual starts recognizing that the current system is not sustainable and starts making changes to get in line with that standard. I guess it’s not a stretch to put that in terms of profit, but only on a timescale longer than that which most corporations pay attention to. This is the role I see for the smaller companies like those I might have cited above. If their efforts prove profitable, and can be scaled up to the level of Business As Usual (or, if that level is not sustainable, a reasonable level, whatever reasonable means), then we’ll be on the right track.
Monday, March 8, 2010
Recycled Markets
Source: Developing Markets for Recyclable Materials: Policy and Program Options
Prepared by Mt. Auburn Associates, Inc. and Northeast-Midwest Institute for U.S. E.P.A. 1993
Synopsis: For recycling to be effective, it must provide a consistent material that can be utilized by manufacturers, and manufacturers must provide a steady market for those materials. This source explores how that market can and has broken down in the past and offers recommendations for addressing those problems.
Reflection:
Recycling must be one of the most misunderstood programs connected to conservation and sustainability efforts. Even those who are stalwart recyclers probably don’t understand what happens to their #2 plastic once they dump it into the recycling bin. What is most easily understood about recycling is putting an item into one bin rather than the garbage. It isn’t a process that encourages deep thought. This is not a good thing.
The fact is, in order to get as much from recycling as possible, it does require some deeper thinking and analysis. For example, what is the difference between a #2 and a #3 plastic? The law of averages says recyclers are not chemical engineers, so the average recycler isn’t going to know that #2 is high density polyethylene and #3 is polyvinyl chloride and that those have fundamental differences in composition, so they will need to be processed differently and must be separated at some point if a usable end product is desired. We know there is an inverse correlation between participation in recycling programs and the amount of thought and/or effort required for a given recycling program. Single sort recycling is much lauded, but it’s also much more expensive. Equating time with money, we’ve just moved the expense from the homeowner to the recycling center in order to get better participation. Furthermore, how many of us recognize that the goal of recycling isn’t just to keep waste out of a landfill, but to provide a material that can be remanufactured? We see one bin, and we see the garbage can, and we feel good putting stuff into the former. End of thought process. In a perfect world, one in which people had both the time and inclination to get into recycling, we’d have recycling bins for each kind of plastic, metal, glass color, and all the separation would take place in the home and each of those materials would enter a processing stream that is as smooth as possible. In this world, participation in such a recycling program would be low.
We need to close the loop. Regarding raw materials, we’re already beyond the carrying capacity of this planet, but somewhere we forgot that materials don’t have to be raw. In addition to maintaining this blog, the other requirement for this class is reading a book from a list of approved titles. I selected Cradle to Cradle, by McDonough and Braunart. I haven’t made enough progress therein to get any more insight from that resource other than this is exactly the subject of that book, taken to the next level. In Cradle to Cradle, the authors argue that, rather than making stuff, using stuff, producing waste, and then staring at that waste wondering what to do with it, we can begin at the other end of the process and design stuff such that we already know what can be done with it when it’s used up, closing the loop. Cradle to Cradle represents a level of thinking to which we’re still aspiring. Recycling represents a level of thinking that is going to help us bridge the gap from where we are now to that level.
As an aside, I’d also like to mention another title tangentially related to recycling and reusing, Mongo: Adventures in Trash, by Ted Botha. In that book, Botha explores the subculture of dumpster diving, exploring the people who in some way make their living off the waste of others, from so-called “freegans,” who eat nothing but the perfectly good food deemed garbage by expiration dates, to antique collectors/sellers. My enduring understanding from that book was astonishment that I lived in a society that produced so much waste there was an entire subculture that revolved around it. Again, with a slight change in thinking and some innovation, waste becomes raw material, and we transform from a disgustingly wasteful society to one rich in those raw materials.
And, after some more reflection time and a couple of proof-reads, I realized I’ve strayed a little from our point. What does recycling have to do with sustainable business practices? First, in many of our resources, we’re told it can be most effective to go for the “low-hanging fruit” first. Because recycling is relatively mainstream, it’s likely that improving the recycling efforts of an organization will be relatively easy. Second, it’s possible that such efforts in the workplace will spill over into the homes of employees. In many cases, there is a threshold of effort that needs to be overcome in order for habits to change. When an employee sees how easily many things are recycled, it might be enough to overcome that threshold. Finally, if we do approach recycling as a way of producing raw materials, it’s conceivable it could become a source of income for a business. In our old bike shop, we separated our aluminum scrap because it was one of the few scrap metals that collectors were still paying for (although that’s changed). It wasn’t much, but it paid for a few cups of coffee or a round at the bar after quitting time. That counts.
Prepared by Mt. Auburn Associates, Inc. and Northeast-Midwest Institute for U.S. E.P.A. 1993
Synopsis: For recycling to be effective, it must provide a consistent material that can be utilized by manufacturers, and manufacturers must provide a steady market for those materials. This source explores how that market can and has broken down in the past and offers recommendations for addressing those problems.
Reflection:
Recycling must be one of the most misunderstood programs connected to conservation and sustainability efforts. Even those who are stalwart recyclers probably don’t understand what happens to their #2 plastic once they dump it into the recycling bin. What is most easily understood about recycling is putting an item into one bin rather than the garbage. It isn’t a process that encourages deep thought. This is not a good thing.
The fact is, in order to get as much from recycling as possible, it does require some deeper thinking and analysis. For example, what is the difference between a #2 and a #3 plastic? The law of averages says recyclers are not chemical engineers, so the average recycler isn’t going to know that #2 is high density polyethylene and #3 is polyvinyl chloride and that those have fundamental differences in composition, so they will need to be processed differently and must be separated at some point if a usable end product is desired. We know there is an inverse correlation between participation in recycling programs and the amount of thought and/or effort required for a given recycling program. Single sort recycling is much lauded, but it’s also much more expensive. Equating time with money, we’ve just moved the expense from the homeowner to the recycling center in order to get better participation. Furthermore, how many of us recognize that the goal of recycling isn’t just to keep waste out of a landfill, but to provide a material that can be remanufactured? We see one bin, and we see the garbage can, and we feel good putting stuff into the former. End of thought process. In a perfect world, one in which people had both the time and inclination to get into recycling, we’d have recycling bins for each kind of plastic, metal, glass color, and all the separation would take place in the home and each of those materials would enter a processing stream that is as smooth as possible. In this world, participation in such a recycling program would be low.
We need to close the loop. Regarding raw materials, we’re already beyond the carrying capacity of this planet, but somewhere we forgot that materials don’t have to be raw. In addition to maintaining this blog, the other requirement for this class is reading a book from a list of approved titles. I selected Cradle to Cradle, by McDonough and Braunart. I haven’t made enough progress therein to get any more insight from that resource other than this is exactly the subject of that book, taken to the next level. In Cradle to Cradle, the authors argue that, rather than making stuff, using stuff, producing waste, and then staring at that waste wondering what to do with it, we can begin at the other end of the process and design stuff such that we already know what can be done with it when it’s used up, closing the loop. Cradle to Cradle represents a level of thinking to which we’re still aspiring. Recycling represents a level of thinking that is going to help us bridge the gap from where we are now to that level.
As an aside, I’d also like to mention another title tangentially related to recycling and reusing, Mongo: Adventures in Trash, by Ted Botha. In that book, Botha explores the subculture of dumpster diving, exploring the people who in some way make their living off the waste of others, from so-called “freegans,” who eat nothing but the perfectly good food deemed garbage by expiration dates, to antique collectors/sellers. My enduring understanding from that book was astonishment that I lived in a society that produced so much waste there was an entire subculture that revolved around it. Again, with a slight change in thinking and some innovation, waste becomes raw material, and we transform from a disgustingly wasteful society to one rich in those raw materials.
And, after some more reflection time and a couple of proof-reads, I realized I’ve strayed a little from our point. What does recycling have to do with sustainable business practices? First, in many of our resources, we’re told it can be most effective to go for the “low-hanging fruit” first. Because recycling is relatively mainstream, it’s likely that improving the recycling efforts of an organization will be relatively easy. Second, it’s possible that such efforts in the workplace will spill over into the homes of employees. In many cases, there is a threshold of effort that needs to be overcome in order for habits to change. When an employee sees how easily many things are recycled, it might be enough to overcome that threshold. Finally, if we do approach recycling as a way of producing raw materials, it’s conceivable it could become a source of income for a business. In our old bike shop, we separated our aluminum scrap because it was one of the few scrap metals that collectors were still paying for (although that’s changed). It wasn’t much, but it paid for a few cups of coffee or a round at the bar after quitting time. That counts.
Friday, March 5, 2010
Corporate Carbon Neutrality
Source: Getting to Zero: Defining Corporate Carbon Neutrality
By Clean Air Cool Planet and Forum for the Future, 2008
Synopsis:
Definition: True corporate carbon neutrality means there is no net increase of atmospheric greenhouse gases from the existence of the company – or from a clearly-defined part of the company that accounts for a significant portion of the company’s overall climate impact. If a company makes a claim regarding a specific product, then there should be no net increase of atmospheric greenhouse gases from the existence of that product.
This document discusses the above definition and how it can be and has been interpreted (especially the first word) in the corporate world.
Reflection:
The first, and maybe most obvious, thoughts regarding this document were: “carbon neutral” is straightforward, so why an entire document fleshing out that definition, and, is carbon neutrality really necessary? I’ll deal with these in order.
Immediately upon asking the former, I realized how naïve it is. In a world where we’ve seen the definition of “is” come under scrutiny, when the tenets of capitalism compel corporations to seek any and all advantage over their competition, it should come as no surprise that a concept as complex as carbon neutrality has been interpreted differently. There are several facets of this interpretation that are important.
The first is related to the carbon cycle itself. Economic activity produces carbon, usually as CO2 emissions. The natural world takes up that carbon, usually through photosynthesis. That means carbon neutrality could be approached from one end or the other or both. Getting to Zero does a good job of recognizing this, admitting that a corporation could get to carbon neutrality by doing nothing other than purchasing carbon offsets. As they point out, this follows the letter of the law, but not the spirit. Also, there are not enough offsets (I use that term as if I understand it, but I don’t) to cover all the world’s emissions, so on a global scale, reducing them is necessary. The analogy I drew deals with automobiles. You can reduce the amount of gas you use by driving less (reducing emissions), driving a vehicle that gets better mileage (buying carbon offsets), or both. Even if everybody in the world drove a Prius, there’s not enough gas to go around. Eventually, we’re going to need to drive less. That said, purchasing carbon offsets and hybrid vehicles will be necessary Band-Aids until deeper, longer-lasting solutions become reality, and I’m OK with that.
The second aspect of interpretation, and the one most fascinating to me, deals with the question of boundaries, i.e. what parts of your business are you going to include in your claims of neutrality? If you define a narrow boundary, it is easier to get to and claim carbon neutrality. For example, Dell computers has aspirations of carbon neutrality. If they define their boundary to include only emissions from the manufacturing process, achieving neutrality will be easier than if they choose to include emissions from the use of their product. This brings up all kinds of interesting philosophical questions, and provides an opportunity to really slide down the rabbit hole. Clearly, if Dell wants to achieve true carbon neutrality, they must assume responsibility for some of the emissions produced using their product (assuming this responsibility would also create an incentive to make more efficient machines), but the consumer and end-user must share that responsibility. We know there has to be a line drawn somewhere, but where? In a perfect world, both parties would approach the situation logically and assume responsibility for just a little bit more than needed, but that’s not going to happen, especially if carbon neutrality becomes mandatory, and ESPECIALLY not if we start quantifying carbon neutrality monetarily.
The latter brings up another interesting point. Right now, carbon neutrality is voluntary. We assume businesses recognize the marketing potential behind a claim of neutrality, and some of the more foresighted ones may recognize the possibility of a carbon market in the future, when neutrality will be synonymous with fiscal responsibility, and there are probably a few out there that are pursuing carbon neutrality because it is the “right” thing to do, but the cynic in me doesn’t see this occurring on a large scale until it is mandatory. Uh oh. I can just picture the set in my father’s jaw if I were to tell him I thought regulating carbon emissions should be mandatory for companies. That said, he’s a smart guy, and widespread regulation would undoubtedly affect our economy, but I question the notion that it would be disastrous. I’ve mentioned before our love of and talent for innovation, and figuring out how to manufacture the same widget we’ve come to know and love while reducing emissions seems like a worthy cause. Well, worthy or not, it’s got to be done. Perhaps the more important question is, if carbon neutrality is mandated, what is going to happen to the credibility of claims of neutrality? We know there are companies out there that would take shortcuts, cheat, and lie in order to avoid penalties for non-compliance. Such behavior would taint the entire process and call into question all claims of neutrality.
Conclusions? I don’t think voluntary movement toward carbon neutrality will be widespread enough. Therefore, it will need to be mandatory. Such regulation will be fought bitterly by Business As Usual. I don’t know what happens at that point, but the outcome is always the same. We can get it now, or we can get it when conditions have started affecting our quality of life.
By Clean Air Cool Planet and Forum for the Future, 2008
Synopsis:
Definition: True corporate carbon neutrality means there is no net increase of atmospheric greenhouse gases from the existence of the company – or from a clearly-defined part of the company that accounts for a significant portion of the company’s overall climate impact. If a company makes a claim regarding a specific product, then there should be no net increase of atmospheric greenhouse gases from the existence of that product.
This document discusses the above definition and how it can be and has been interpreted (especially the first word) in the corporate world.
Reflection:
The first, and maybe most obvious, thoughts regarding this document were: “carbon neutral” is straightforward, so why an entire document fleshing out that definition, and, is carbon neutrality really necessary? I’ll deal with these in order.
Immediately upon asking the former, I realized how naïve it is. In a world where we’ve seen the definition of “is” come under scrutiny, when the tenets of capitalism compel corporations to seek any and all advantage over their competition, it should come as no surprise that a concept as complex as carbon neutrality has been interpreted differently. There are several facets of this interpretation that are important.
The first is related to the carbon cycle itself. Economic activity produces carbon, usually as CO2 emissions. The natural world takes up that carbon, usually through photosynthesis. That means carbon neutrality could be approached from one end or the other or both. Getting to Zero does a good job of recognizing this, admitting that a corporation could get to carbon neutrality by doing nothing other than purchasing carbon offsets. As they point out, this follows the letter of the law, but not the spirit. Also, there are not enough offsets (I use that term as if I understand it, but I don’t) to cover all the world’s emissions, so on a global scale, reducing them is necessary. The analogy I drew deals with automobiles. You can reduce the amount of gas you use by driving less (reducing emissions), driving a vehicle that gets better mileage (buying carbon offsets), or both. Even if everybody in the world drove a Prius, there’s not enough gas to go around. Eventually, we’re going to need to drive less. That said, purchasing carbon offsets and hybrid vehicles will be necessary Band-Aids until deeper, longer-lasting solutions become reality, and I’m OK with that.
The second aspect of interpretation, and the one most fascinating to me, deals with the question of boundaries, i.e. what parts of your business are you going to include in your claims of neutrality? If you define a narrow boundary, it is easier to get to and claim carbon neutrality. For example, Dell computers has aspirations of carbon neutrality. If they define their boundary to include only emissions from the manufacturing process, achieving neutrality will be easier than if they choose to include emissions from the use of their product. This brings up all kinds of interesting philosophical questions, and provides an opportunity to really slide down the rabbit hole. Clearly, if Dell wants to achieve true carbon neutrality, they must assume responsibility for some of the emissions produced using their product (assuming this responsibility would also create an incentive to make more efficient machines), but the consumer and end-user must share that responsibility. We know there has to be a line drawn somewhere, but where? In a perfect world, both parties would approach the situation logically and assume responsibility for just a little bit more than needed, but that’s not going to happen, especially if carbon neutrality becomes mandatory, and ESPECIALLY not if we start quantifying carbon neutrality monetarily.
The latter brings up another interesting point. Right now, carbon neutrality is voluntary. We assume businesses recognize the marketing potential behind a claim of neutrality, and some of the more foresighted ones may recognize the possibility of a carbon market in the future, when neutrality will be synonymous with fiscal responsibility, and there are probably a few out there that are pursuing carbon neutrality because it is the “right” thing to do, but the cynic in me doesn’t see this occurring on a large scale until it is mandatory. Uh oh. I can just picture the set in my father’s jaw if I were to tell him I thought regulating carbon emissions should be mandatory for companies. That said, he’s a smart guy, and widespread regulation would undoubtedly affect our economy, but I question the notion that it would be disastrous. I’ve mentioned before our love of and talent for innovation, and figuring out how to manufacture the same widget we’ve come to know and love while reducing emissions seems like a worthy cause. Well, worthy or not, it’s got to be done. Perhaps the more important question is, if carbon neutrality is mandated, what is going to happen to the credibility of claims of neutrality? We know there are companies out there that would take shortcuts, cheat, and lie in order to avoid penalties for non-compliance. Such behavior would taint the entire process and call into question all claims of neutrality.
Conclusions? I don’t think voluntary movement toward carbon neutrality will be widespread enough. Therefore, it will need to be mandatory. Such regulation will be fought bitterly by Business As Usual. I don’t know what happens at that point, but the outcome is always the same. We can get it now, or we can get it when conditions have started affecting our quality of life.
Tuesday, March 2, 2010
Greenhouse Gas Management
By Putt Del Pino, Levinson and Larsen; World Resources Institute; 2006
Synopsis: Accepting that anthropogenic climate change is real and is a problem that can be addressed, controlling greenhouse gas (GHG) emissions is the very first and possibly most important step in assuaging the potentially catastrophic consequences. This document lays out the process of doing that, from background on ACC to planning and developing your GHG inventory to tools for managing emissions.
Reflection:
Preface: I’ve been experiencing a great deal of cognitive dissonance re: ACC lately. That experience doesn’t really pertain to this document at the tree level, but it does on a forest level, so I’m bringing it up. Also, it’s been grinding on me and I feel like venting.
As stated in my intro, anthropogenic climate change (ACC) is a foregone conclusion for me. It is not, however, a foregone conclusion for everybody, including some of my family members. I normally don’t have the patience to discuss this issue, but for family, I’ve made an exception, and I find myself paying attention to and investigating some things I normally wouldn’t. This leaves me deeply troubled.
I’m not troubled because it’s possible we’re wrong about ACC. Could there be better news than to hear our current way of life doesn’t have the disastrous consequences some of us think it does? What troubles me is how this attacks my empirical worldview, deeply rooted in the scientific method. In my worldview, we don’t know anything until it’s experimentally verified and replicated. Well, it turns out there is scientific data out there that directly refutes many of the claims made by pro-ACC scientists. Without going to the trouble of reading all the source documents myself, it seems we (superficially?) have equally valid and totally contradictory data; data generated by the rock of my worldview, the scientific method. So we have two or more claims, all based on the scientific method, and not all of them can be right. Any way you cut it, it calls into question the scientific method. So, if the scientific method is fallible, how do I know anything? (Note: In my experience, questions of epistemology are best discussed over a pint of stout. Any takers?)
Coincidentally enough, this morning I listened to a reassuring Science Friday podcast. It seems it is possible the above cognitive dissonance is caused not by a flawed scientific method, but by a flawed system of reporting and/or dissemination of information (admittedly, dissemination of info is part of the scientific method, but not at the level talked about in this podcast). This was reassuring but in little way does it help me find cognitive consonance; as much as I wish otherwise, I don’t have the resources to study the scientific journals myself. So where am I left? I am not religious, but there is wisdom in Pascal’s Wager. We have everything to gain and little to lose if we take action to mitigate ACC. On the other hand, if we choose to not accept ACC, do nothing, and it turns out we were wrong…
On to GHG emission inventory and management. Rather than sharply criticize or glowingly praise this particular resource (it’s not a resource that lends itself to either), I’m going to attempt to inventory my personal GHG emissions in the same way a business or organization might. My reason for doing this is manifold. First, in my daydreams about corporate salvation, I’m often using tools like this. The depth of knowledge gained from reading and taking notes pales in comparison to the depth of knowledge gained by using and doing. Second, as well as I think I live my life, I am not so arrogant as to believe I couldn’t do better. Seems like inventorying my GHG emissions would be a nice step in that direction. Note: I won’t be taking this to the same level as a business would, simply because accuracy takes time I don’t have. This means many steps will be easier and some will be harder. Last, you reading about me managing my GHG emissions is more interesting than reading my notes. You’re welcome.
Step one is easy: assign resources. For a business, that would mean selecting personnel and allotting a budget; for me, it means me. Two, we begin the inventory by establishing its boundaries i.e. what are we going to include in the inventory? For a business, that would mean selecting business units, their activities, and the portion of those activities/emissions for which the business is going to consider itself responsible. For me, it’s me, doing what I do. Next, we categorize our emission-causing activities to decide which will be included in the inventory. This means looking at direct emissions, indirect emissions, and the concept of “scope,” and it’s at this point the process becomes similar for the business and me, so I’ll stop pointing out the differences unless they’re particularly important. The most important of these important differences concerns ownership of the facilities responsible for emissions, and I won’t get into this because it’s boring and I’m not sure I fully understand it.
Personally, Scope 1, direct emissions are simple because I live in a rented apartment in a building that uses centralized, hot water heat. Thus, my only Scope 1 emission is from vehicular travel. Scope 2 would include indirect emissions from the heat and electricity I purchase and consume. There are also Scope 3, indirect emissions that are complicated by leases. I can’t quite decide if the electricity and heat I’m consuming are Scope 2 or Scope 3, but it doesn’t matter as this guide requires me to include both. Last are Scope 3, indirect emissions from sources not owned or controlled by me, third-party production or manufacture of materials and resources used by me, outsourced activities, etc. This guide doesn’t require these emissions be accounted for, but since they’re a large portion of my personal emissions, I will, and you could really go deep here if you wanted. As the guide states, “Scope 3 is a very broad category of emission-causing activities that can cover just about every business or product to which your company is connected, however tangentially.” For my food and daily consumables, do I include the fuel used to transport it from field to market? I eat beef. Do I include bovine flatus? I purchase and ride bikes. Do I include emissions from their production? How about the CO2 I exhale while riding? There is an interesting distinction made in the guide. For some of these categories, whether or not you report them depends on how easily the source of emissions can be quantified and how large its proportion of overall emissions. This isn’t as simplistic as it sounds. It’s a logical assumption that the more difficult a source of emissions is to quantify, and the less obvious it is as a source, the less responsible I am for it.
OK, so in my personal inventory, I’m going to include emissions from personal vehicular transportation and the electricity and heat I purchase and use. On a theoretical level, I think it’s valuable to consider emissions from transport of goods used and waste produced, more so for a business that is consuming many times what I do personally, but these emissions are also going to be relatively less and much more difficult to quantify. I’ll continue to eat local and organic whenever possible, but I’m not going to figure out how much emissions are saved by doing so.
For vehicular travel, quantifying is as simple as looking at receipts for gas purchases for a given length of time. I don’t have my receipts, but I drive two, sometimes three days a week and I estimate I fill my tank twice a month. Ol’ Cleo (that’s my ’97 VW Golf) has, I think, a 13 gallon tank. To be conservative, I’ll estimate I use 30 gallons of gasoline a month, and since I rarely have passengers, all of that is on me. I also estimate I travel by plane once per year, and it would be a simple matter to calculate an average distance per year traveled by plane. To be accurate, I would have to know the make, model, and efficiency of the planes on which I’d traveled, but it could be done.
Heat is more difficult, as my building uses central hot water heat, but a call to the super or management company could probably get me the volume of fuel used and the building’s occupancy, so it’s simple arithmetic to figure out my portion of emissions from heat. Electricity is easy, as I live alone and get a monthly statement that records kilowatt/hours (kWh) used.
OK, we know what we’re paying attention to and how we’re going to measure it. Now we need something to which we can compare, our base year. Some of this selection will depend on availability of data. Since I’ve move around a lot and don’t keep receipts and statements, if I was serious about this, I would probably have to collect data for a year and use that as my base year. Businesses would be better about hanging on to documents, and things have gotten easier with access to online statements and such.
Now we have our data, but it’s not in units that are usable for calculating emissions. I know how much gas I use, but I don’t know how many pounds of CO2 I produced. For that conversion, we use an emission factor and we end up with the following equation: activity data * emission factor = GHG emission. Emission factors are complicated beyond the scope of this little exercise, so I’m not going to go further with them. Suffice it to say they “are published by various entities such as local, state, or national government entities and intergovernmental organizations such as the Intergovernmental Panel on Climate Change (IPCC), and are frequently updated, so it is important to use the most up-to-date and relevant” (page 38). Armed with activity data and the appropriate emission factors, you can calculate your GHG emissions. Note: there are several calculation tools based on the power of the Excel spreadsheet, and in many cases, will be faster and more convenient to use, but their use should not be mindless. Also, looking at the equations themselves can be a powerful tool in altering behavior. We can directly control only one of those variables: activity data. We can travel fewer miles. We can indirectly control the emission factor by selecting a mode of transportation that has a smaller factor. Those are the only ways to reduce emissions.
The last step is the actual management of emissions, and we start with goal setting, and those goals will depend on the base year. Since I selected what I feel is an “average” year for myself, and since my intent is to decrease my emissions, my goal will be emissions less than my base year. How much less depends on several factors. For a business, it could be dictated by legislation, feasibility, or other reasons I can’t think of right now because I’m completely hopped up on caffeine and low blood sugar. For me personally, I would follow an experimental approach. Let’s say I arbitrarily select 10% reduction. I then find out a 10% reduction is feasible or not, and I can alter future goals to be more realistic. This approach is probably not realistic for a business.
Actual reductions on a personal level are the realm of Oprah and Real Simple magazine: install compact fluorescent lightbulbs, turn down the thermostat, take alternative transportation to work one day a week, etc. There are business analogs to these, and the guide does a good job of covering them. Often this is where we hear talk of “low-hanging fruit.” Reduce emissions through the easiest paths possible to start.
For a business, the final step will likely be reporting all of the above, especially if its goals were set because of regulatory legislation, but also because stakeholders should be interested in efforts like this. My reporting consists of making my friends feel bad by broadcasting at the slightest provocation that I ride my bike to work. I’m a hit at parties.
Synopsis: Accepting that anthropogenic climate change is real and is a problem that can be addressed, controlling greenhouse gas (GHG) emissions is the very first and possibly most important step in assuaging the potentially catastrophic consequences. This document lays out the process of doing that, from background on ACC to planning and developing your GHG inventory to tools for managing emissions.
Reflection:
Preface: I’ve been experiencing a great deal of cognitive dissonance re: ACC lately. That experience doesn’t really pertain to this document at the tree level, but it does on a forest level, so I’m bringing it up. Also, it’s been grinding on me and I feel like venting.
As stated in my intro, anthropogenic climate change (ACC) is a foregone conclusion for me. It is not, however, a foregone conclusion for everybody, including some of my family members. I normally don’t have the patience to discuss this issue, but for family, I’ve made an exception, and I find myself paying attention to and investigating some things I normally wouldn’t. This leaves me deeply troubled.
I’m not troubled because it’s possible we’re wrong about ACC. Could there be better news than to hear our current way of life doesn’t have the disastrous consequences some of us think it does? What troubles me is how this attacks my empirical worldview, deeply rooted in the scientific method. In my worldview, we don’t know anything until it’s experimentally verified and replicated. Well, it turns out there is scientific data out there that directly refutes many of the claims made by pro-ACC scientists. Without going to the trouble of reading all the source documents myself, it seems we (superficially?) have equally valid and totally contradictory data; data generated by the rock of my worldview, the scientific method. So we have two or more claims, all based on the scientific method, and not all of them can be right. Any way you cut it, it calls into question the scientific method. So, if the scientific method is fallible, how do I know anything? (Note: In my experience, questions of epistemology are best discussed over a pint of stout. Any takers?)
Coincidentally enough, this morning I listened to a reassuring Science Friday podcast. It seems it is possible the above cognitive dissonance is caused not by a flawed scientific method, but by a flawed system of reporting and/or dissemination of information (admittedly, dissemination of info is part of the scientific method, but not at the level talked about in this podcast). This was reassuring but in little way does it help me find cognitive consonance; as much as I wish otherwise, I don’t have the resources to study the scientific journals myself. So where am I left? I am not religious, but there is wisdom in Pascal’s Wager. We have everything to gain and little to lose if we take action to mitigate ACC. On the other hand, if we choose to not accept ACC, do nothing, and it turns out we were wrong…
On to GHG emission inventory and management. Rather than sharply criticize or glowingly praise this particular resource (it’s not a resource that lends itself to either), I’m going to attempt to inventory my personal GHG emissions in the same way a business or organization might. My reason for doing this is manifold. First, in my daydreams about corporate salvation, I’m often using tools like this. The depth of knowledge gained from reading and taking notes pales in comparison to the depth of knowledge gained by using and doing. Second, as well as I think I live my life, I am not so arrogant as to believe I couldn’t do better. Seems like inventorying my GHG emissions would be a nice step in that direction. Note: I won’t be taking this to the same level as a business would, simply because accuracy takes time I don’t have. This means many steps will be easier and some will be harder. Last, you reading about me managing my GHG emissions is more interesting than reading my notes. You’re welcome.
Step one is easy: assign resources. For a business, that would mean selecting personnel and allotting a budget; for me, it means me. Two, we begin the inventory by establishing its boundaries i.e. what are we going to include in the inventory? For a business, that would mean selecting business units, their activities, and the portion of those activities/emissions for which the business is going to consider itself responsible. For me, it’s me, doing what I do. Next, we categorize our emission-causing activities to decide which will be included in the inventory. This means looking at direct emissions, indirect emissions, and the concept of “scope,” and it’s at this point the process becomes similar for the business and me, so I’ll stop pointing out the differences unless they’re particularly important. The most important of these important differences concerns ownership of the facilities responsible for emissions, and I won’t get into this because it’s boring and I’m not sure I fully understand it.
Personally, Scope 1, direct emissions are simple because I live in a rented apartment in a building that uses centralized, hot water heat. Thus, my only Scope 1 emission is from vehicular travel. Scope 2 would include indirect emissions from the heat and electricity I purchase and consume. There are also Scope 3, indirect emissions that are complicated by leases. I can’t quite decide if the electricity and heat I’m consuming are Scope 2 or Scope 3, but it doesn’t matter as this guide requires me to include both. Last are Scope 3, indirect emissions from sources not owned or controlled by me, third-party production or manufacture of materials and resources used by me, outsourced activities, etc. This guide doesn’t require these emissions be accounted for, but since they’re a large portion of my personal emissions, I will, and you could really go deep here if you wanted. As the guide states, “Scope 3 is a very broad category of emission-causing activities that can cover just about every business or product to which your company is connected, however tangentially.” For my food and daily consumables, do I include the fuel used to transport it from field to market? I eat beef. Do I include bovine flatus? I purchase and ride bikes. Do I include emissions from their production? How about the CO2 I exhale while riding? There is an interesting distinction made in the guide. For some of these categories, whether or not you report them depends on how easily the source of emissions can be quantified and how large its proportion of overall emissions. This isn’t as simplistic as it sounds. It’s a logical assumption that the more difficult a source of emissions is to quantify, and the less obvious it is as a source, the less responsible I am for it.
OK, so in my personal inventory, I’m going to include emissions from personal vehicular transportation and the electricity and heat I purchase and use. On a theoretical level, I think it’s valuable to consider emissions from transport of goods used and waste produced, more so for a business that is consuming many times what I do personally, but these emissions are also going to be relatively less and much more difficult to quantify. I’ll continue to eat local and organic whenever possible, but I’m not going to figure out how much emissions are saved by doing so.
For vehicular travel, quantifying is as simple as looking at receipts for gas purchases for a given length of time. I don’t have my receipts, but I drive two, sometimes three days a week and I estimate I fill my tank twice a month. Ol’ Cleo (that’s my ’97 VW Golf) has, I think, a 13 gallon tank. To be conservative, I’ll estimate I use 30 gallons of gasoline a month, and since I rarely have passengers, all of that is on me. I also estimate I travel by plane once per year, and it would be a simple matter to calculate an average distance per year traveled by plane. To be accurate, I would have to know the make, model, and efficiency of the planes on which I’d traveled, but it could be done.
Heat is more difficult, as my building uses central hot water heat, but a call to the super or management company could probably get me the volume of fuel used and the building’s occupancy, so it’s simple arithmetic to figure out my portion of emissions from heat. Electricity is easy, as I live alone and get a monthly statement that records kilowatt/hours (kWh) used.
OK, we know what we’re paying attention to and how we’re going to measure it. Now we need something to which we can compare, our base year. Some of this selection will depend on availability of data. Since I’ve move around a lot and don’t keep receipts and statements, if I was serious about this, I would probably have to collect data for a year and use that as my base year. Businesses would be better about hanging on to documents, and things have gotten easier with access to online statements and such.
Now we have our data, but it’s not in units that are usable for calculating emissions. I know how much gas I use, but I don’t know how many pounds of CO2 I produced. For that conversion, we use an emission factor and we end up with the following equation: activity data * emission factor = GHG emission. Emission factors are complicated beyond the scope of this little exercise, so I’m not going to go further with them. Suffice it to say they “are published by various entities such as local, state, or national government entities and intergovernmental organizations such as the Intergovernmental Panel on Climate Change (IPCC), and are frequently updated, so it is important to use the most up-to-date and relevant” (page 38). Armed with activity data and the appropriate emission factors, you can calculate your GHG emissions. Note: there are several calculation tools based on the power of the Excel spreadsheet, and in many cases, will be faster and more convenient to use, but their use should not be mindless. Also, looking at the equations themselves can be a powerful tool in altering behavior. We can directly control only one of those variables: activity data. We can travel fewer miles. We can indirectly control the emission factor by selecting a mode of transportation that has a smaller factor. Those are the only ways to reduce emissions.
The last step is the actual management of emissions, and we start with goal setting, and those goals will depend on the base year. Since I selected what I feel is an “average” year for myself, and since my intent is to decrease my emissions, my goal will be emissions less than my base year. How much less depends on several factors. For a business, it could be dictated by legislation, feasibility, or other reasons I can’t think of right now because I’m completely hopped up on caffeine and low blood sugar. For me personally, I would follow an experimental approach. Let’s say I arbitrarily select 10% reduction. I then find out a 10% reduction is feasible or not, and I can alter future goals to be more realistic. This approach is probably not realistic for a business.
Actual reductions on a personal level are the realm of Oprah and Real Simple magazine: install compact fluorescent lightbulbs, turn down the thermostat, take alternative transportation to work one day a week, etc. There are business analogs to these, and the guide does a good job of covering them. Often this is where we hear talk of “low-hanging fruit.” Reduce emissions through the easiest paths possible to start.
For a business, the final step will likely be reporting all of the above, especially if its goals were set because of regulatory legislation, but also because stakeholders should be interested in efforts like this. My reporting consists of making my friends feel bad by broadcasting at the slightest provocation that I ride my bike to work. I’m a hit at parties.