Biodiversity/Rainforest Archives

July 23, 2009

"A Plastic Bag Is a Pain in the Butt"

[I've been delayed in posting my blogs from other sites, so i'll put up a few in a row, and they all happen to be about Wal-Mart -- lots going on with the giant retailer. This one is from Huffington Post here]

A few weeks ago in Sao Paolo, Brazil, I heard the distinct sound of "taps" being played for the simple plastic shopping bag. Wal-Mart Brazil had invited all its suppliers to come and discuss its sustainability goals -- and sign a public agreement to match them. The pact dealt with everything from saving the Amazon forest, mostly through bans on sourcing beef and soy that come from cleared lands, to reducing phosphates in detergents (see the agreements here). It was an historic meeting that covered a lot of ground (full disclosure: I was hired to speak at the event and provide context on the greening of business globally).

But aside from the much larger and thornier Amazon-related initiatives, one announcement was both fun and indicative of the green pressures coming to bear on companies and particular products. Wal-Mart Brazil is sponsoring a nationwide campaign, in conjunction with the Brazilian government, to drastically reduce plastic bag use. The minister of the environment, Carlos Minc, was on hand to co-announce the project. Wal-Mart's own internal goal is a 50% reduction by 2013 (a larger reduction than the company's global goal, which I've commented was perhaps not strong enough).

The humorous national campaign includes television ads featuring the hip "Junior" (only the coolest have one name), a leader of youth-oriented NGO AfroReggae. The slogan for the campaign, "Saco E um Saco," translates roughly into "A bag is a pain in the butt" -- or at least that's what the simultaneous translators tried to convey...they seemed at a loss on how to handle it. One Portuguese executive told me that it's closer to "A bag sucks" which plays on the double use of "saco." Either way, it's a funny, yet aggressive way to get people to stop using these things.

Brazil is hardly alone in the national effort to eliminate bags. China starting taxing all shopping bags and has cut total usage 66%.

Companies are also trying many methods to get customers on board. Charging for bags is one clear signal to consumers to use fewer. British retailer Marks & Spencer recently announced an 80% drop in use at its stores after adding a small charge (IKEA and others have witnessed 80-90% drops in usage as well after charging a nickel to any customer wanting one).

Wal-Mart Brazil has experimented with refunds instead. If you don't take the bags, you get a discount off your grocery bill (so it's revenue neutral to the company and basically charges those who DO take the bag, without raising anybody's bill).

All companies should take note of this kind of coordinated effort by governments and other companies -- imagine what happens if your product, manufacturing process, or sourcing strategy ends up on the societal bad list. I've talked about the risk to business from these kinds of market shifts on green principles before. While we might have some guesses as to what's next (did your meat come from cleared Amazon? Do you use too much water from dry regions in your production?), it's unfortunately somewhat unpredictable where the questions might come from.

Bags are not the only products facing this kind of challenge -- it's happening to bottled water as well. But nothing compares to the coordinated global attack on plastic bags. Once your product is declared a pain in the butt, where do you go from there?

July 28, 2009

Wal-Mart Asks, Where's the Beef (From)?

[Post #2 of 3 on Wal-Mart's activity in the last couple of months. This appeared at Harvard Business Online and then on BusinessWeek online]

In the last month, what event had the greatest potential for changing business as usual forever? If you said the passage of the climate change bill in the U.S. House of Representatives, it would be hard to argue with you. But I'm going to make the case for another event as the most influential (or at least a very close second): the Wal-Mart Sustainability Summit held in Sao Paolo, Brazil.

Following the model of the historic meeting Wal-Mart held for its Chinese suppliers last year, the President of Wal-Mart Brazil, Héctor Núñez, decided to hold a similar event for his suppliers. (Full disclosure: I was hired to give a keynote about the greening of business for larger context setting, but I have no consulting relationship with Wal-Mart).

Speakers at the event included the Brazilian Minister of the Environment and the director of Greenpeace Brazil, an organization that just a few weeks ago produced a damning report titled "Slaughtering the Amazon" that points the finger at the cattle industry as the primary cause of deforestation (growing soy is another leading cause). I had an interesting talk with Hector about his conversations with the aggressive NGO. He commented that "when you talk to Greenpeace, it's hard to argue with what they're saying."

But, I thought, arguing with the environmentalist perspective is exactly what business leaders normally do. But the world is changing fast. In fact, Hector's speech at the summit, with its soaring rhetoric about global environmental damage, made him sound more like a Greenpeace activist than a hard-nosed manager.

At the Summit, Wal-Mart announced significant goals and mandates to tackle some of the thorniest environmental and social problems in the world. Wal-Mart Brazil will now, in essence, ensure that its supply chain uses...

— No companies that employ slave labor; "forced" labor (read, slavery) is a rampant problem in developing countries.

— No soybeans sourced from illegally deforested areas; 20% of the world's carbon emissions (and 70% of Brazil's emissions) come from burning down trees.

No beef sourced from any newly cleared Amazonian land; globally, deforestation emits more carbon than all vehicles. Brazil and Indonesia are at the heart of this enormous challenge.

[For the rest of this column, please see BusinessWeek]

February 7, 2011

Dow Asks, What's the Business Case for Protecting Nature?

The business logic for protecting nature has always been a harder sell than making the case for other green initiatives.

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Companies are increasingly seeing the obvious benefits of slashing energy use, and beginning to include in their calculations the considerable risk reduction from managing water well or limiting the use of toxic chemicals. But there are aspects of going green that are much less directly quantifiable than kilowatts or tons of carbon -- or the avoidance of regulations or a lawsuit.

For example, how should companies handle the overuse of natural resources and the reduction in the planet's "biodiversity" (that is, the abundant variation in plant and animal life)?

One large company, Dow, is now tackling this issue, working with the environmental NGO The Nature Conservancy to try and make the business logic clearer. This odd couple announced a collaboration last week to "work together to apply scientific knowledge and experience to examine how Dow's operations rely on and affect nature."

But we don't have to wait for their work to come to fruition to cite a number of possible compelling arguments for managing the intersection of business and natural resources well, including:

  • Human life support: Earth's natural systems provide "ecosystem services," such as purifying water, enriching soil, providing natural infrastructure that reduce floods and protect assets (think wetlands on the Gulf Coast), and providing clean air and a stable climate (here's a fun video on these services). The long-standing, best estimate on the value of ecosystem services has been $33 trillion annually, roughly the same order of magnitude as the global economy.
  • Climate and carbon market value: The world's forests and farms can sequester carbon that could be worth billions in a carbon markets (however, the prospect of a functioning carbon market in the U.S. is very low in the near-term).
  • Self-interest: Species provide us medicine and sources of food. We find species that result in blockbuster new drugs to fight heart disease or cancer, for example.
  • Business continuity: All companies depend on natural services, such as water, either directly or in their supply chains. For a business wanting to, say, expand a facility, integrating the value of this input into investment decisions will be critical.
  • Inspiration, best practices, and biomimicry: Over billions of years, Nature has found the most efficient way to do things. Think of spider silk as a model for strong, flexible fibers or a shark's ultra-efficient movement through water, which has inspired everything from Speedo's now-banned swimsuits to Airbus' more aerodynamic plane fuselages. (See 15 cool biomimicry stories.)
  • Innovation: By cataloging our dependencies on nature, we can identify opportunities for better products and services, such as Bayer's drought-resistant crops (Note: Bayer is a client of mine).
  • Risk reduction: Managing your nature-sourced supply chain well can help avoid headaches and possible litigation. Gibson Guitars found this out the hard way in 2009 when the Fish and Wildlife Service raided the company for allegedly using illegally harvested rosewood in its instruments (giving an ironic twist to the word "ax").


In the end, all of these arguments are really part of a much larger logic, which was laid out best in the 1999 groundbreaking -- and now classic -- book Natural Capitalism by Paul Hawken, Amory Lovins, and Hunter Lovins (more info on ongoing work by the Lovinses here and here). In total, it's about a systematic and realistic view of the world.

In some sense, asking "What's the business case for valuing nature?" is ridiculous. We live in an integrated network on a single planet with limited resources. Either we manage these resources well, or we don't survive. In our current mode, we're systematically knocking down pieces of our own support structure. Or in business terms, we're drawing down the assets on the balance sheet of the world. This is no smarter than taking out load-bearing walls in your home.

But regardless of the macro-logic, business does run on financial valuations. Since none of the benefits above are truly measured in our models, we need news tools to value the natural world in business. This is why I was excited to see the announcement about the work Dow's doing with The Nature Conservancy.

The novel alliance will look at Dow's business and its supply chain through a natural world lens. They will identify risks and opportunities at Dow's facilities and in its products and supply chain, and try to value them correctly. In short, the $10 million collaboration will "advance the incorporation of the value of nature into business." But perhaps more importantly, the project will be an open-source exercise, with the partners sharing all the tools and lessons learned. As Michelle Lapinski, TNC's Director, Corporate Practices, says, "We hope to demonstrate to other companies that incorporating nature's services into decisions is a responsible, smart and viable business strategy."

As part of the joint press conference and announcement, Dow's CEO Andrew Liveris put it all in context: "This collaboration is designed to help us innovate new approaches to critical world challenges while demonstrating that environmental conservation is not just good for nature -- it is good for business...companies that value and integrate biodiversity and ecosystem services into their strategic plans are best positioned for the future by operationalizing sustainability."

The Nature Conservancy's CEO Mark Tercek talked recently on his blog about the opportunity here for Dow and for nature. "Imagine the potential of a company with the size and reach of Dow making a commitment to incorporate nature into its global business strategies. What might that mean for green infrastructure? What might that mean for nature? What might that mean for a company’s bottom line? What might that mean for the health and prosperity of the communities around the world? Together, we’re going to find out." (For longer views on this partnership and perspectives from Dow's VP of Sustainability Neil Hawkins and the Conservancy's Mark Tercek and Glenn Prickett, see excellent pieces from GreenBiz's Joel Makower and TIME's Bryan Walsh.)

As usual with sustainability strategy, companies must strike a tough balance between pursuing competitive advantage and the kind of open-source partnership needed the tackle global-scale issues. But the companies that "get" how to value nature in their operations first will have the advantage, even if they then share that information. The leaders will win by integrating these new valuations effectively into their processes, products, and services. They will create an advantage through superior execution. It will be fun to watch how Dow navigates this tricky path -- while developing the tools for other businesses to follow in their footsteps.

December 22, 2011

Top 10 Green Business Stories of 2011

Yes, it's December again somehow: time to look back on what we've learned and oversimplify into a handy list. Here's my take on the 10 big stories in sustainability and green business this year:

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1. The usual sustainability drivers got stronger
Ok, this one is cheating a bit, but on a fundamental level, the top themes in green business haven't actually changed too much (see the 2010 list). So, rather than take up valuable list real estate with these perennial favorites and big-picture drivers, I'll quickly list them in one big bucket of mega-trends:

  • The rise of the consumer around the world, related to...
  • China, China, and China. From relentless demand for resources to bamboo-like 9% growth to vicious competition for the technologies and industries of the future, China will be the big story for a long time.
  • The greening of the supply chain. Big organizations keep asking more of their suppliers.
  • Increased demand for transparency and its close partners, (a) the quest to define and develop useful sustainability metrics and (b) the growing sustainability data explosion.
  • The military continues to lead the way on energy and climate.
  • The ongoing failure of policy at a global level (with the important exceptions of some successes/workarounds such as new mileage targets for cars and trucks and a carbon tax in Australia).

These drivers underpin a number of stories from 2011, but a few new themes came out as well. Here's the rest of my top 10 stories, with callouts for companies and examples that typify the trend.

2. Malthus strikes back: Coca-Cola takes an $800 million hit on commodity costs
Coca-Cola was not alone in facing increasing costs in 2011; one of my clients, Kimberly-Clark, took an earnings hit from record pulp prices. These companies are notable victims of a new reality: resources are constrained and input prices are fundamentally rising.

For over 200 years, from Thomas Malthus to the Limits to Growth gang, many people have made the case that it won't be long before we'll run out of food, energy, materials, and on and on. It's an idea that has enthralled many, but has seemed to be wrong. But this year, something felt different as we hit 7 billion hungry, striving humans on the planet. While "running out" isn't really the right phrase, it's clear that delivering many commodities to market is getting harder and more expensive (we don't dig for oil a mile under the ocean for the heck of it). And the dangerous mix of supply crunch and rising demand is only increasing, across nearly all commodities.

In January, China "seized" its rare earth metals (meaning it wouldn't export them anymore). In June, the New York Times declared a warming world hostile to food production. The best analysis of the resource scarcity mega-trend came from asset manager Jeremy Grantham. His analysis of commodity availability on a finite planet is compelling, thorough, and absolutely fascinating. Here's the gist: after 100+ years of fundamentally declining resource prices, the data show a rising trend for nearly every input into our society. Business as usual is no more.

3. Climate Change Arrives: Texas weather triumphs over (some) ignorance
Climate change is here. The list of "once-in-a-century" storms, floods, and droughts this year is too long to list. I know, I know — no single storm or season "proves" climate change. Was a year like 2011 possible in a world without climate change? Of course. But please. Was a year like 2011 likely? Not at all. In the words of climate scientist Jim Hansen, we've loaded the dice in favor of extreme weather events.

From Thailand to Pakistan to Texas, some areas are deluged with water, while others have absolutely none. Please look at the numbers for how dry and hot Texas was this summer (I'll wait). The data speaks for itself: Texas' heat was literally off the charts this year. What was once temporary drought is looking more like permanent change. For another angle on a changing "normal," read Jeff Goodell's piece in Rolling Stone on "Climate Change and the End of Australia." Finally, if the immediacy of the "look out the window" method of gauging climate change didn't work for some, at least one major climate skeptic changed his tune based on longer-term data. Richard Muller ran the models himself and discovered that, surprise, the thousands of scientists before him had gotten it right. It's probably wishful thinking, but I believe the climate debate is actually over (and a solid majority of Americans agree).

4. High-profile "failures" shake up clean tech: Solyndra has its day in the, um, sun
What can one say about the failure of solar company Solyndra? It certainly has become a media darling for clean tech skeptics. Soon after this quasi-fiasco, a few other stories seemed to indicate that corporate America was backing off of green tech. Google stopped its high-profile pursuit of cheaper-than-fossil-fuel renewables, and California utility PG&E quietly pulled the plug on its carbon offset program. In my view, none of this is all that distressing. So one technology and company failed miserably (and perhaps the government made a bad investment choice). And some initiatives didn't work out as planned. So what. Whether it's government money, venture capital, or corporate initiatives, you gotta place lots of bets to get some winners. These were all experiments, and you always learn from what doesn't work. But the real reason I'm not too worried is that...

5. ...clean tech is rising fast: Renewable investment tops fossil fuels for first time
Markets have a remarkable way of sorting the wheat from the chaff. While the overall carbon emissions news is not good, the renewable energy market is growing very fast. The sector is larger than most people realize, with clean tech investment hovering around $200 billion globally. Total investment in new power generation is a good indication of where we're headed, and for the first time renewables beat fossil fuels globally. Right now, the U.S. and China are entering a trade battle over solar subsidies, which tells me it's a real market now. They wouldn't be arguing if the prize were not very large.

5b. Nuclear on the outs

Following the nuclear meltdown in Fukushima, Japan, the once-resurgent nuclear industry is flatlining: generation actually fell globally in 2011, with Germany alone shutting down 8 gigawatts' worth. In September, Siemens, one of the world's largest nuclear power plant suppliers, exited the business. CEO Peter Loscher declared Germany's plans to move aggressively toward renewables "the project of the century."

6. Water rising — both literally and as a serious issue for business: Honda's supply chain gets slammed, Levi's gets creative
A list of floods that devastated lives, homes, and countries this year would be tragically long. So it's no wonder that business started to wake up to the serious danger that storms and shortages present to their operations, both from direct damage to property and from massive production interruptions (i.e., "business continuity"). Think back to the January floods in Australia which covered an area larger than France and Germany combined. The extreme weather seriously disrupted coal production, one of the most important economic engines in the country. At the microeconomic level, consider what Thailand's floods have done to the market for disk drives, or to supply chains for Honda and Toyota (which are dealing with a double flood hit from the tsunami as well).

On the use side of the water issue, companies with products that depend on water in production (beverages) or in use (shampoo, apparel) are also seeing the writing on the wall and getting creative. Levi's announced a low-water jeans production method, Unilever started asking customers to shorten showers, and beverage companies are working with farmers and NGOs to drive water use down throughout the value chain (see my last blog, co-written with Andy Wales from SABMiller). In 2011, the phrase "water footprint" became a lot more common.

7. Value chain and transparency partnerships growing: The apparel industry bands together
One of my favorite new partnerships is the new Sustainable Apparel Coalition, an impressive mix of powerful retailers, apparel manufacturers, and NGOs. The group is leveraging extensive data from Nike and the Outdoor Industry Association on supplier sustainability performance (energy, water, toxicity, etc.) for "every manufacturer, component, and process in apparel production." The goal: to reduce negative environmental and social impacts of the $1.4 trillion market for clothes and shoes.

The larger trend here is the continued growth of "open" — open data and open innovation, including new value-chain business partnerships and cattle-call contests inviting in any and all ideas. The movement has been building for years, from P&G opening up its product development pipeline early in the 2000s to the launch of the GreenXchange for sharing green patents early in 2010. But the trend accelerated this year, with GE's expanded Ecomagination Challenge and other coalitions and open competitions.

8. Valuing and internalizing the externalities: Puma Calculates its Environmental P&L
A few very cutting edge companies are starting to ask some deeper questions about the value they create and destroy in the world. Puma, in a surprise leap to the front of the sustainability leadership pack, commissioned TruCost and PwC (full disclosure: I have a partnership with PwC) to assess the value of its total environmental impacts from operations and supply chain, including carbon pollution, water use, land use, and waste generated. The total: 145 million euros. In a similar vein, Dow Chemical launched a 5-year, $10 million partnership with The Nature Conservancy to "value nature" (so called "ecosystem services") as an input into their businesses. It's unclear what companies can do with these numbers since externalities are by their nature, well, external to the regular P&L. But it's the beginning of something very important — companies are starting to understand the real value and costs of their businesses, to themselves and to society. Watch this space.

9. The people speak: Keystone and OWS
Speaking of getting companies and governments to think longer term about value and costs to society: against all odds and expectation, the protests against the Keystone XL pipeline from Canada — led most prominently by uber-environmentalist Bill McKibben — were successful (for now). And what can one say about Occupy Wall Street? The movement is, in part, about this larger question of value and values. Do we value the right things (equity, fairness, justice) or just promote growth and profit above all? Currently, our businesses are driven entirely by quarterly profits. Pursuing the short-term payback can cause a firm to deviate wildly from actual, long-term, sustainable profitability. This disconnect was bound to stir some passions eventually. Whatever your politics, ignoring or dismissing this movement is a big mistake. The concerns underpinning the anger out there stem from concern about what's good for the long-term, and what's truly sustainable. None of these questions are going away.

10. A path to sustainable consumption begins to emerge: Patagonia asks us to buy only what we need
Perhaps the most heartening business story of the year came from perennial thought (and action) leader, Patagonia. Its Common Threads campaign/business model questions consumption at its core. The company announced that it would take back its clothing and refurbish, resell, reuse, re-whatever. The website proposes a grand bargain - we make clothes that last, and you don't buy what you don't need. A holiday ad got more specific and demanded we "Don't buy this jacket." Patagonia is testing new ground and it's not a gimmick — it's a sign of the future.

Looking Forward to 2012 and beyond: New business models coming
Patagonia has always been at the leading edge; it was one of first companies to buy organic cotton or to turn recycled plastic into fleece. Now it's showing the way to new business models. I've written about this kind of heresy before, but the few examples out there are generally B-to-B (Waste Management, Xerox). Patagonia's move is a warning shot over the bow that the consumer-facing consumption question is coming. The near future will hold more questions about how businesses can and should operate in a resource-constrained, hotter, drier (or wetter) world. And companies will increasingly question the wisdom of focusing on quarterly profits. It won't all come to fruition in 2012, but it's on its way.

As usual, I'm sure I'm missing many great stories in my list. I look forward to your suggestions. Happy holidays and Happy New Year!

(This post first appeared at Harvard Business Online.)

(Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter @GreenAdvantage)

January 9, 2014

Business Resilience Comes from Working with Nature

[Note: This post is co-authored with Michelle Lapinski, a senior advisor on valuing nature at The Nature Conservancy]

Hurricane Sandy, the superstorm that pummeled the U.S. northeast in October 2012, ranks as the second-costliest hurricane in American history, causing an estimated $68 billion in damages. One year later, the most powerful storm ever recorded to hit land devastated the Philippines.

With these once extraordinary events becoming more ordinary, it’s becoming clearer that businesses in vulnerable regions need to prepare. But how should companies go about building resilient enterprises that are ready to face extreme weather and other effects of climate change? One powerful, underleveraged option is to use nature to protect our coasts and physical assets — that is, to invest in so-called “green infrastructure” a term meant to differentiate projects from more typical “gray” or man-made infrastructure solutions (such as dams, levees, and water treatment systems) that we build to cool and purify water or defend our buildings and assets against the elements.

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Our natural world already provides immensely valuable services to make our economy and society possible. Most obviously, we get all our food, minerals, and metals from the ground, and forests provide wood and oxygen. But there are more subtle benefits: forests also clean our water and coastal wetlands and reefs provide natural defense from storms and floods. They can help us manage rainwater and wastewater. These services, which are not currently valued in the marketplace, protect both people and commercial and residential assets.

So a city or company looking to safeguard its water supply, for example, could invest in protecting or restoring lands instead of building a new water treatment plant (which is exactly what the New York City did when it bought land in the Catskill Mountains in 1997 — this initiative avoided up to $8 billion in costs for a new filtration facility and saved $200-$300 million in ongoing operation and maintenance costs).

But is this kind of green infrastructure approach generally as effective? Is it cost competitive? A recent paper by Shell, Dow, Swiss Re, Unilever and The Nature Conservancy concludes that frequently, it is.

Using standard cost-benefit analysis, the study compared some natural solutions to more traditional infrastructure investments. In all of the completed corporate projects, the green option won out toe-to-toe on capital expenditures and operational expenditures

Here’s one of the more compelling examples highlighted in the paper:

One of Shell’s joint ventures, Petroleum Development Oman LLC (PDO), uses constructed wetlands to treat produced water from oilfields. PDO’s extraction activities produce a lot of oily water as a by-product. After investigating alternative, low cost solutions to treat and dispose of the water, PDO built a natural wetland system that uses sunlight, reeds, and gravity (to flow water down in steps) in place of extensive water treatment and injection operations. The latter, gray option would have required significant electric power and produced high greenhouse gas emissions… and it would’ve cost a lot more.

On every important measure — capital expenditure, operational expenditure, and performance — the constructed wetland outperformed the traditional approach. Power consumption and CO2 emissions were reduced by 98%, which lowered operating expenses dramatically. And as a bonus, the wetland provides habitat for fish and hundreds of species of migratory birds.

In this particular case, PDO only needed the natural option, but the study concluded that hybrid solutions – combinations of green and gray infrastructure — may often provide the best mix of benefits. Together, green and gray solutions combine some of the resilience inherent in natural systems with the way an engineered solution can solve a specific challenge.

Shell isn’t the only company that discovered the savings from green infrastructure. The report includes case studies for Dow, which also utilized a constructed wetland at one of its facilities, reducing capex expense by a factor of 10. Today, Dow is exploring additional applications of green infrastructure and is engaged in a multi-year collaboration with The Nature Conservancy on valuing ecosystem services, which includes evaluating the viability of natural infrastructure at its largest production site.

Companies with common challenges can identify savvy, shared investments in green solutions for wastewater treatment, desalination, or coastal defense (using, say, wetland and reef restoration) and potentially collaborate on new green infrastructure opportunities at co-located assets.

Collectively, the companies in the report concluded that green infrastructure solutions should become a major part of the modern engineer’s standard toolkit: “Incorporating nature into man-made infrastructure can improve business resilience —and bring additional economic, environmental and socio-political benefits.” The report also provides an emerging set of performance metrics that managers can use to assess and compare green and grey infrastructure options.

As the damages from (and costs of) extreme weather and other disruptions soar, investing in resilience becomes a better deal. And nature can provide many of the solutions we need to both save money and protect our assets. So run the numbers on green infrastructure solutions. The calculations are likely to show that green options are the best investments.

(This post first appeared on the Harvard Business Review blog network.)

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February 27, 2014

It Just Got Easier for Companies to Invest in Nature

Nature is valuable. But figuring out how valuable has been challenging. By some measures, the services that nature provides business and society — clean water, food and metals, natural defense from storms and floods, and much more — are worth many trillions of dollars. But that number is not helpful to companies trying to assess how dependent they are on natural resources, or how to value them as business inputs.

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In recent years, many large companies have realized that they need to get a handle on these issues, and that doing it well creates business resilience. But figuring out what steps to take has been challenging. Into that void steps a new, very helpful tool, the Natural Capital Business Hub. The Hub is a project run by the Corporate EcoForum, The Nature Conservancy, and The Natural Capital Coalition (and built by Tata Consultancy Services). It builds off a partnership launched at the Rio+20 summit in 2012 with companies such as Alcoa, Coca-Cola, Disney, Dow, GM, Kimberly-Clark, Nike, Unilever, and Xerox. At the time, they produced a report with case studies showing how companies have managed natural capital issues. The Hub expands that effort, making much more information available and searchable.

The Hub basically does four things:

  • Provides case studies of corporate action for benchmarking and learning, which you can search by industry, region, ecosystem, or value-creation focus (cost reduction, brand building, etc.).
  • Offers perspective on how to make the business case internally by laying out how valuing natural capital helps business.
  • Gives us a framework for implementation and a thorough description of (or links to) the best tools for valuing and managing natural capital.
  • Opens up collaboration opportunities by listing programs that need more partners and builds a network of professionals (with 2Degrees Network) who are working on these issues.

The case studies are ostensibly the core of the site. Project managers, facility heads, executives who make capital decisions, sustainability managers, and many others can learn from the work that leading companies have done already. Managing natural capital is a young field, but Dow, for example, is now three years into its six-year partnership with The Nature Conservancy to “recognize, value, and incorporate the value of nature into business decisions, strategies and goals.” (The company just released the latest update on the partnership.) The Hub is a place to start your research and learn from Dow and many others.

On the site, you can find stories of completed projects or prospective collaborations that need more partners to get off the ground. In the first category, you’ll find stories like the one about Grupo Bimbo, the Mexican food company that owns Sara Lee, Hostess, and Pepperidge Farms. Bimbo needed to manage stormwater around a site in Pennsylvania. Using natural or “green” infrastructure such as rain gardens and forest buffers — versus “gray”, manmade systems like retention ponds and pipes — the company reduced ongoing operating costs and avoided the complications of burying pipes in sensitive ecosystems.

On a somewhat larger scale, consider Darden restaurants (owner of Olive Garden, Red Lobster, and many more) and its efforts to save fisheries. As companies like Unilever and McDonald’s have long recognized, ensuring healthy fish stocks isn’t a philanthropic nice-to-have, but core to business survival: no fish, no fish sticks, lobster plates, or Filet-O-Fish sandwiches. Darden is working with the National Fish & Wildlife Foundation and others to target valuable fisheries and manage them closely.

What’s interesting about the Darden case study, and the Hub in general, is that this project is just getting started — essentially, it’s an open call for collaboration. The Hub is innovative and helpful because of the partnership tools. Natural capital issues are not easy and cross many lines – every company, city, and home in a region, for example, depends on water and flood protection. No organization or region can act alone, and it shouldn’t. By listing the major collaborations that are actively searching for new partners, the Hub has done a great service.

(This post first appeared on the Harvard Business Review blog network.)

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July 8, 2015

The Best Quotes (and Key Themes) from the Pope's Environmental Manifesto (Part I)

I doubt you missed last month’s release of Pope Francis’ powerful “encyclical” on the environment. It’s sure to be considered a very important document in the history of sustainability – perhaps a turning point in the debate on climate change.

I highly recommend reading the whole thing. But it is a 180-page pdf (albeit with smallish pages and large font), and contains nearly 40,000 words (part of the reason this blog is a few weeks late). My goal here was to pull some critical and fascinating quotes, perhaps cutting the reading by 80 to 90% for you. But first, a few key takeaways and what I see as his big themes.

My takeaways

The Pope is trying to appeal to everyone. I can’t say I read a lot of papal proclamations, so maybe this isn’t unusual, but the language here is extremely accessible and fairly secular (or at least Judeo-Christian). Here’s a word cloud of the top 50 words in the document. Yes, “God” appears frequently (with a third of the mentions tucked into the final chapter), but “human” is the top word. Other biggies include world, all, life, nature, environment, and social. And Jesus doesn’t make the top 50.

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The essay is not remotely only about climate. Leading up to the release, much of the news coverage talked about an upcoming “climate declaration.” Yes, this is a core part of the discussion, but the Pope is clearly concerned with environmental conditions overall, including biodiversity and the sanctity of life in all its forms. And, importantly, he spends a great deal of time discussing the poor and issues of inequity.

It’s a sustainability manifesto, but without using the word. Ok, he says “sustainable” a handful of times, but only uses “sustainability” once, and that’s in quoting someone else. There’s a fascinating mix of modern views on our mega-challenges, with a serious theme of systems thinking (again without calling it that), and a bit of a dated view on the consumption side (everyone can just change their habits in the everyday choices).

In total, the big themes of the encyclical come out very clearly. Here are some of the largest of the Pope’s views with a bit of my perspective on how it comes across.

The Pope’s messages

Climate change science and impacts are clear. The Pope obviously believes that we know more than enough about the science (climate change is happening and humans are responsible) to act, and he calls out people for their denial (see section 59 below). This will be one of the most lasting impacts of his call to action – putting to rest the idea that there’s any real uncertainty on the major aspects of climate change. We may move quicker past debating the existence of the problem (at least in the U.S.) and start talking about solutions. Some pundits (and presidential candidates) have suggested the Pope should not wade into scientific debates, but that’s ridiculous given (a) his role, for 1 billion Catholics, as a spirit guide on how people should lead their lives and (b) the fact that the man holds a graduate degree in Chemistry.

We have serious equity problems. In keeping with the Pope’s core mission in his tenure thus far, he focuses like a laser on the challenges of the poor, and makes it clear that the environmental and social challenges are deeply intertwined. We must deal with them all as a system.

A modern technological society has some important drawbacks. Some critics have decried the encyclical as being anti-progress and technology. I have some quibbles in some places (such as his dislike for cities and contention that they are resource hogs), but overall the Pope does not really call for an end to progress. He’s asking us to reimagine of what we mean by progress, and suggests we take into account the health of the planet and of all its inhabitants in our investment and consumption decisions. This is another way of saying we need to value more than just short-term profit maximization.

The root of most of these environmental and social challenges is consumption, greed, and desire for stuff. Again, people may be uncomfortable with what sounds like an anti-progress, anti-modernity message, but it’s more balanced than that. And most of the language around this theme (mostly in the last chapter) fits the self-help, Oprah-like messages of simplicity, enjoying what you have and finding joy in the people and experiences in your life, living in the now, and so on. It’s clearly a message for those who have the basics (and then some) in life already, and it doesn’t sound radical.

We’re all connected (including nature and animals), which has profound implications for how we live our lives and build our economy and society. At core, this essay is about the interconnection between our big environmental and social issues, as well as their deep connection to our economy and ability to thrive. It’s about the systems thinking we need in our lives and policies. It’s really about the common good, which the Pope notably extends to “future generations.” He uses this interconnectedness theme to criticize modern economics and its element of selfishness, so this not-so-subtle call for “distributive justice” may make many readers uncomfortable. He’s launching a frontal attack on the powerful trend, especially in the U.S., of an “every man for himself” or “pull yourself up by your bootstraps” view of the world.

Saving the environment is good economics, but it’s about morals. The Pope tackles the contentious religious issue of humanity’s “dominion” over nature head on and makes it very clear that it’s core to spirituality and Catholicism to care for the environment. But for me, the bottom line of the essay is a quote that’s almost a throwaway line buried deep in the 5th chapter (of 6). Talking about the potential expense of bringing the clean economy to fruition, particularly in the developing world, the Pope throws this out there (in section 172):

“The costs of this would be low, compared to the risks of climate change. In any event, these are primarily ethical decisions, rooted in solidarity between all peoples.”

In other words, yes, we can do this all economically and it makes sense in terms of both risk reduction and prosperity. But in the end, we need to act because it’s the right thing to do for the common good.

In general, I found the Pope’s essay to be profound and on target. I don’t agree with every statement, and I certainly believe we need the scale of modernity and business to tackle our challenges, but I’m not going to have the audacity to pick apart the Pope’s essay line by line. Overall, this manifesto syncs well with my thinking in The Big Pivot. The topline logic is clear: we have some mega challenges – such as climate change, resource constraints, and inequity – and we need new thinking and life/business models to tackle them (such as circular, inclusive economies). So I for one – an American raised (mildly) Jewish – am thrilled to see this important, historic addition to the sustainability quest.

The remainder of what will be a very long blog (with 1 or 2 more to come over the next few days) will be mainly quotes. I’ve tried to put them into big themes (many of which the Pope established in the structure of the piece), and provided some thoughts in a few places. Each excerpt includes the paragraph number the encyclical uses (from 1 to 246). Enjoy.

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THE POPE ON CLIMATE, OUR BIGGEST ENVIRONMENTAL CHALLENGES, AND A CRITIQUE OF MODERNITY

A. CLIMATE SCIENCE, IMPACTS, AND DENIAL

23. A very solid scientific consensus indicates that we are presently witnessing a disturbing warming of the climatic system. In recent decades this warming has been accompanied by a constant rise in the sea level and, it would appear, by an increase of extreme weather events, even if a scientifically determinable cause cannot be assigned to each particular phenomenon… a number of scientific studies indicate that most global warming in recent decades is due to the great concentration of greenhouse gases…released mainly as a result of human activity.

25. Climate change is a global problem with grave implications: environmental, social, economic, political and for the distribution of goods. It represents one of the principal challenges facing humanity in our day. Its worst impact will probably be felt by developing countries in coming decades.

59. ...we are tempted to think that what is happening is not entirely clear. Superficially, apart from a few obvious signs of pollution and deterioration, things do not look that serious, and the planet could continue as it is for some time. Such evasiveness serves as a licence to carrying on with our present lifestyles and models of production and consumption. This is the way human beings contrive to feed their self-destructive vices: trying not to see them, trying not to acknowledge them, delaying the important decisions and pretending that nothing will happen.

161. Doomsday predictions can no longer be met with irony or disdain. We may well be leaving to coming generations debris, desolation and filth. The pace of consumption, waste and environmental change has so stretched the planet’s capacity that our contemporary lifestyle, unsustainable as it is, can only precipitate catastrophes, such as those which even now periodically occur in different areas of the world.

163. …the profoundly human causes of environmental degradation.

But…

188. …the Church does not presume to settle scientific questions or to replace politics. But I am concerned to encourage an honest and open debate so that particular interests or ideologies will not prejudice the common good.

199. It cannot be maintained that empirical science provides a complete explanation of life, the interplay of all creatures and the whole of reality.

200. Any technical solution which science claims to offer will be powerless to solve the serious problems of our world if humanity loses its compass, if we lose sight of the great motivations which make it possible for us to live in harmony, to make sacrifices and to treat others well.

B. BEYOND CLIMATE

Nature and human impacts

1. …our common home is like a sister with whom we share our life and a beautiful mother.

2. …the harm we have inflicted on her by our irresponsible use and abuse of the goods with which God has endowed her…the earth herself, burdened and laid waste, is among the most abandoned and maltreated of our poor.

5. Saint John Paul II…warned that human beings frequently seem “to see no other meaning in their natural environment than what serves for immediate use and consumption”.

21. The earth, our home, is beginning to look more and more like an immense pile of filth.

Natural resources, waste

27. Other indicators of the present situation have to do with the depletion of natural resources. We all know that it is not possible to sustain the present level of consumption in developed countries and wealthier sectors of society, where the habit of wasting and discarding has reached unprecedented levels. The exploitation of the planet has already exceeded acceptable limits and we still have not solved the problem of poverty.

106. …easy to accept the idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts in technology. It is based on the lie that there is an infinite supply of the earth’s goods, and this leads to the planet being squeezed dry beyond every limit.

50. …we know that approximately a third of all food produced is discarded, and “whenever food is thrown out it is as if it were stolen from the table of the poor”.

Water

28. Fresh drinking water is an issue of primary importance

30. access to safe drinkable water is a basic and universal human right, since it is essential to human survival and, as such, is a condition for the exercise of other human rights [italics in original]

185. …we know that water is a scarce and indispensable resource and a fundamental right which conditions the exercise of other human rights. This indisputable fact overrides any other assessment of environmental impact on a region.

Biodiversity and inherent value of nature

AW comment: This strikes me as a kind of 50-plus-year bookend to Silent Spring. The Pope could drive a jump in consciousness on these issues like the historic book in 1962.

32-3. The loss of forests and woodlands entails the loss of species which may constitute extremely important resources in the future, not only for food but also for curing disease and other uses… It is not enough, however, to think of different species merely as potential “resources” to be exploited, while overlooking the fact that they have value in themselves…The great majority become extinct for reasons related to human activity…We have no such right.

34. …many birds and insects which disappear due to synthetic agrotoxins are helpful for agriculture: their disappearance will have to be compensated for by yet other techniques which may well prove harmful.

39. The replacement of virgin forest with plantations of trees, usually monocultures, is rarely adequately analyzed. Yet this can seriously compromise a biodiversity…

Oceans and coral reefs

40. Oceans not only contain the bulk of our planet’s water supply, but also most of the immense variety of living creatures…

41. Many of the world’s coral reefs are already barren or in a state of constant decline.

174. The growing problem of marine waste and the protection of the open seas represent particular challenges. What is needed, in effect, is an agreement on systems of governance for the whole range of so-called “global commons”.

C. MODERN TECHNOLOGICAL SOCIETY

Short-Termism

32. The earth’s resources are also being plundered because of short-sighted approaches to the economy, commerce and production.

36. Caring for ecosystems demands far-sightedness, since no one looking for quick and easy profit is truly interested in their preservation

178. A politics concerned with immediate results, supported by consumerist sectors of the population, is driven to produce short-term growth.

181. Results take time and demand immediate outlays which may not produce tangible effects within any one government’s term…politicians will inevitably clash with the mindset of short-term gain and results which dominates present-day economics and politics.


Consumer/Throwaway culture and self-centered culture

22. These problems are closely linked to a throwaway culture which affects the excluded just as it quickly reduces things to rubbish.

55. People may well have a growing ecological sensitivity but it has not succeeded in changing their harmful habits of consumption which, rather than decreasing, appear to be growing all the more.

90. We fail to see that some are mired in desperate and degrading poverty, with no way out, while others have not the faintest idea of what to do with their possessions, vainly showing off their supposed superiority and leaving behind them so much waste which, if it were the case everywhere, would destroy the planet.

162. Men and women of our postmodern world run the risk of rampant individualism, and many problems of society are connected with today’s self-centred culture of instant gratification

230. In the end, a world of exacerbated consumption is at the same time a world which mistreats life in all its forms.

Progress, Power, and Ethics – The Good and Bad

AW Comment: I have some disagreement here. The Pope celebrates progress, but mostly worries about it’s impacts, which is fair. But saying that science/tech progress is not progress of humanity (113), or completely irresponsible (165), is not quite accurate. We have brought billions of people out of poverty with modern life. Yes, our mode of living and doing business must change, but we have seen immense improvement in quality of life.

102. We are the beneficiaries of two centuries of enormous waves of change: steam engines, railways, the telegraph, electricity, automobiles, aeroplanes, chemical industries, modern medicine, information technology and, more recently, the digital revolution, robotics, biotechnologies and nanotechnologies. It is right to rejoice in these advances and to be excited by the immense possibilities which they continue to open up before us, for “science and technology are wonderful products of a God-given human creativity.”

103-4. Technoscience, when well directed, can produce important means of improving the quality of human life… Yet it must also be recognized that nuclear energy, biotechnology, information technology, knowledge of our DNA, and many other abilities which we have acquired, have given us tremendous power. More precisely, they have given those with the knowledge, and especially the economic resources to use them, an impressive dominance over the whole of humanity and the entire world… In whose hands does all this power lie, or will it eventually end up? It is extremely risky for a small part of humanity to have it.

105. …as if reality, goodness and truth automatically flow from technological and economic power as such. The fact is that “contemporary man has not been trained to use power well”,[84] because our immense technological development has not been accompanied by a development in human responsibility, values and conscience…we cannot claim to have…clear-minded self-restraint.

106. We have to accept that technological products are not neutral…Decisions which may seem purely instrumental are in reality decisions about the kind of society we want to build.

109. The economy accepts every advance in technology with a view to profit, without concern for its potentially negative impact on human beings. Finance overwhelms the real economy. The lessons of the global financial crisis have not been assimilated, and we are learning all too slowly the lessons of environmental deterioration.

113. …scientific and technological progress cannot be equated with the progress of humanity and history

114. Nobody is suggesting a return to the Stone Age, but we do need to slow down and look at reality in a different way…

136. …technology severed from ethics will not easily be able to limit its own power.

165. …the post-industrial period may well be remembered as one of the most irresponsible in history, nonetheless there is reason to hope that humanity at the dawn of the twenty-first century will be remembered for having generously shouldered its grave responsibilities.

Value of people and work in modern society
128. …the orientation of the economy has favoured a kind of technological progress in which the costs of production are reduced by laying off workers and replacing them with machines…to stop investing in people, in order to gain greater short-term financial gain, is bad business for society.

129. Business is a noble vocation, directed to producing wealth and improving our world. It can be a fruitful source of prosperity for the areas in which it operates, especially if it sees the creation of jobs as an essential part of its service to the common good.

159. The notion of the common good also extends to future generations. The global economic crises have made painfully obvious the detrimental effects of disregarding our common destiny, which cannot exclude those who come after us. We can no longer speak of sustainable development apart from intergenerational solidarity…[which is] not optional, but rather a basic question of justice, since the world we have received also belongs to those who will follow us…“The environment is part of a logic of receptivity. It is on loan to each generation, which must then hand it on to the next”. An integral ecology is marked by this broader vision. [italics added]

Scale of modern society (population, cities, agriculture, etc.)

AW comment: This is an area where I mainly disagree. The Pope is not a fan of cities and sees them as a cause of our environmental challenges. But cities usually are, and certainly can be, very efficient on a per person basis. We share infrastructure – in many cities people don’t need cars at all, for example. And it’s not clear that small-scale food production alone will be enough. We can do sustainable agriculture at scale, and given the Pope’s commitment to avoid population control of any kind, we’ll need to.

44. the disproportionate and unruly growth of many cities, which have become unhealthy to live in, not only because of pollution caused by toxic emissions but also as a result of urban chaos, poor transportation, and visual pollution and noise. Many cities are huge, inefficient structures, excessively wasteful of energy and water.

149. In the unstable neighbourhoods of mega-cities, the daily experience of overcrowding and social anonymity can create a sense of uprootedness which spawns antisocial behaviour and violence.

129. …there is a great variety of small-scale food production systems which feed the greater part of the world’s peoples, using a modest amount of land and producing less waste, be it in small agricultural parcels…civil authorities have the right and duty to adopt clear and firm measures in support of small producers and differentiated production.

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Tomorrow I'll post excerpts about the moral argument, the connection of environmentalism to Christianity, the Pope on the common good and inequity, and the solutions he suggests.

(Andrew's new book, The Big Pivot, was named a Best Business Book of the Year by Strategy+Business Magazine! Get your copy here. See also Andrew's TED talk on The Big Pivot. Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter @AndrewWinston)