Saturday, 29 March 2014

Sustainability trends in our daily lives: How we are taking on the challenge!

When it comes to environmental issues and man's impact on the planet, it feels like an overwhelming problem with no solution in sight.  But an overarching solution which will fix all these problems is not available and could be near impossible considering the high complexity of the situation we are in.  However, small incremental changes and solving local problems can have a large impact on helping to stem the ongoing damage.  I have recently read a short article on how the world is moving towards creating more awareness on environmental issues and addressing the many challenges.  Then on the news this month, Paris, France is experiencing extremely high air pollution levels.  This has prompted the police to stop all cars entering and driving around the city and monitor their carbon emissions.  All cars above a certain capacity are then stopped, drivers fined and then they have to take public transport into the city.   http://motherboard.vice.com/read/today-pariss-air-pollution-is-worse-than-beijing.  These stories are becoming more common and reaching the man in the street, which in turn raises awareness and eventual change.  I hope this will become a snow ball effect.

Other trends wordwide when it comes to waste management:
  • Climbers on Mount Everest must return to base camp with 8kg of trash under new rules aimed at removal of rubbish around the mountain. 
  • Japanese scientists have built robotic trash cans that detect rubbish discarded in the near vicinity and then prompt passers by to dispose of the litter.
  • The Waste Free Oceans project in the EU which was launched in 2011 pays fisherman to use special trawl nets to collect waste floating in the sea.  This initiative reminded me of the Ocean Cleanup Array which is not operational as yet, but once it is will be able to clean up the oceans of plastic debris in a 5 year time period.  Up until now the Pacific garbage patch has been an insurmountable and growing environmental problem.  There is also a solution to clean up our rivers which are the biggest contributors to plastic pollution in the ocean.  James Dyson, the chief engineer at Dyson Ltd proposes the concept of the MV Recyclone.  This water vehicle was featured in the Time Ideas Issue March 24 2014.  The trawling mechanism would gather all plastic waste and process before off loading to a moving vehicle on land.  Looking at the entire waste life cycle we can find solutions like these.
  • Social media has also become a value add in the fight against trash.  California based Litterati uses Instagram users to record litter in their communities, with the aim of using location and other data from the images to improve waste management.  http://instagram.com/litterati .  A brilliant local solution to get everyone in communities empowered to be part of the solution to the waste problem.
  • One of the quickest ways to change behaviour in people is to reward and create incentives.  Plastic Bank in Canada will set up a plastic recycling centre in Lima, Peru this April.  The poor in the capital will then be able to trade plastic waste for food and clothing.  This model could really work well in South Africa.  Setting up recycling centres close to townships and slums could provide much needed employment opportunities and possible bartering for basic items.  Maybe this could be an add on to the social grant system currently in practice and communities will be empowered to improve their own living standards?  A possible business opportunity someone can take and fly with......with the assistance of government and NGO's?
  • Pigs are very efficient waste processors.  Egypt recognized this when in 2009 a mass culling of pigs took place due to a swine flu scare.  Waste has since been piling up all around Cairo.  And now the resumption of feeding organic waste to the growing pig population has lead to a decrease in waste levels.  This can be rolled out globally as one way of processing organic waste and also keep meat on the menu (well pork that is) as a sustainable food source.
On the capitalism front.  I wrote an article in my blog at the beginning of this month about the move to natural capitalism.  Another way to transform the current capitalism practices from purely focussing on bottom line profits and disregarding all else is through.....DIVERSITY.  I know that I harp on about gender equality in the workplace but it has been proven to have major social and economic benefits.  The economic engagement of women in particular is a driver of economic growth.  The statement speaks for itself when you look at countries in the Middle East (Yemen, Afganistan etc), South East Asia and Northern Africa where widespread poverty and high birthrates predominate.  Companies with diverse management teams consistently outperform those with less diverse teams.  Greater diversity can power greater innovation and the questioning of conventional wisdom.  If there were more women or even more diverse management teams (instead of the reckless, high flying traders and investment bankers) in Wall Street, would we have had the global economic meltdown in 2008? And that's why especially in the banks, corporates and large multinational organizations which have large influence and impact on numerous societies, the management teams and boards need to be more diverse.  

Then lastly, the food and nutrition front.  With the ballooning population we are struggling to find sustainable methods to feed all the mouths.  Our long term health, confronting world hunger and environmental well being requires a totally new angle of approaching agriculture.  Our current farm to table cooking is not sustainable. Our current expectations for dinner is what chef and author Dan Barber refers to as the First Plate: an enormous protein centric entree with a smattering of vegetables.  Farm to table, or second plate which champions sustainably raised meat and vegetables but relies on the same architecture (think of local farms and restaurants who promote this: Spier, etc.).  Both models lead to farmers over producing soil depleting crops like tomatoes and raising animals like lambs just to sell the chops.  What Dan is advising is that our tastes will have to change....through the adoption of the concept of The Third Plate.  This turns the current status quo of assembling a dish, writing a menu and sourcing ingredients on it's head.  It encourages the following:
  • changing your tastes to the health of the environment producing them instead of convention.
  • to cook with the whole farm in mind, recognizing what we eat is part of an integrated system.
  • to promote entire classes of crops and cuts of meat that have gone unrecognised.
  • right kind of demand for what a farm can supply.
This new concept of cuisine can steer us into a pattern of eating that adds rather than subtracts, replenishes rather than drains. #TheThirdPlate

Quite a great deal to digest!  In conclusion, we are making great strides in changing our behaviours and finding solutions to everyday life problems we have created.  Sustainability is moving forward and seeping into our consciousness.




Saturday, 1 March 2014

Natural Capitalism: a viable alternative to traditional capitalism?

The past few years has seen a great outcry against the outcomes of traditional capitalism.  The widening income disparity of the rich and poor (Gini coefficient) has lead to many movements including Occupy Wall Street and even Pope Francis's official statement on global capitalism in promoting exclusion and inequality.  Beyond the impact on society, traditional capitalism has had disastrous effects on the environment and the earth's natural resources.  We have lived with traditional capitalism for centuries (since the 1700's) with a few other economic movements making a mark such as socialism, Marxism and Communism.  These economic ideologies with the exception of capitalism has ended mass hunger and destitution in many countries but is however not sustainable as can be seen in the old USSR, parts of Eastern Europe, Asia and South America to name just a few and still leads to exploitation of natural resources.

With this in mind, what new economic theory can be implemented which benefits the environment and society?  There was recently a very valid and thought provoking article on the RMI website: Fixing the Broken Compass: Finding our way to natural capitalism.  How to incorporate the protection of natural resources into current capitalism thinking is not working, therefore a total overhaul of the system is required. Starting with the basic fundamental concept of the economy: supply and demand meaning that what is scarce carries much more value.  Thus, people are no longer scarce but nature is....a major shift from nature being abundant and people scarce.

With this mind a logical response would be to build pricing signals into the market to reflect the shifts of scarcity.  Amory Lovins who co-authored the article on the concept of 'Natural Capitalism' in the Harvard Business Review, included a road map for solving environmental problems while also generating profit for businesses.

1. Carbon pricing and Cap & Trade


This is the easy and fast way to mobilize the market to take up the climate change challenge.  A big driver is the Carbon Disclosure Project which partners with market forces to motivate companies to disclose the impact they have on the environment and to take action to reduce this impact.  The amount of data the CDP has is staggering and they use this information to give insights to business strategy, investment and policy decisions.  Lately, more and more organizations are placing an internal price on carbon to guide decisions on future investments on assets.  Allocating financial value to carbon emissions is gaining momentum and will become the norm fairly soon.

2. Mitigating risk

Acknowledging the investment risks in established and emergent energy assets is an incentive to shift the focus from traditional to natural capitalism.  Thus an investment in clean energy projects instead of a coal fired power station is more stable in terms of returns and not prone to volatility in fuel prices.  In 30 years a coal fired power station will be facing policy changes and punitive carbon pricing which makes it a very unattractive asset in a portfolio.  And where will Medupi and Kusile be in the next 30 years?  And of course the implementation of a carbon budget designed to restrict global warming to the 2 degress Celsius band, which means that up to 2 thirds of the existing fossil fuel reserves on the planet must remain untouched.  This means a massive balance sheet risk to the biggest economies and corporations in the world today.

3. Market disruption and revolution

As with any market revolution, natural capitalism will require a retooling of the economy. New technologies will break through; new businesses will prosper; new skills will be in demand; new rules will emerge; and new fortunes will be made. At the same time, however, there will be losers: certain established technologies will be rendered obsolete; some established businesses will struggle; skills from a previous industrial age may become redundant; and a certain proportion of economic value will inevitably be eroded, even as new sustainable economies emerge to fill the gap.

Successfully honouring natural capital means we will need to stop falling back to the known and the proven. This will mean unwinding the supportive policies and presumptions that have made the current carbon extraction industries and businesses some of the most financially- productive in the world. We will also need to be prepared to write-off established assets that no longer produce true value because of their environmental impact. We will have to accept that formerly great icons of success, titans of an earlier age, may tumble. Ask those who ran mainframe computer companies or former telecoms monopolists about the cost of disruption and paradigm shift.

In 2009, Royal Dutch Shell executives Gert Jan Kramer and Martin Haigh argued that new forms of energy take a very long time to become material sources of global power supply. But there are signs that this reality is changing, too. The logic of the past, where growing energy supply generally required massive capital projects with correspondingly long lead times, is being overturned.  This is also true in the information technology software industry.  Watch out the big players like SAP and Oracle....less upfront expenditure and faster implementation times are becoming the norm.

Solar panels on the roof of a family home require a much simpler capital sign-off process than coal-fired power stations or fracking wells; they are modular, and are installed “as needed” in a few weeks. More dramatically, returns on investment in energy-efficiency projects often filter through within months, rather than decades, and these projects are gaining traction everywhere from China’s commercial sector to European and U.S. real estate markets. A single LED lamp is not a revolution – but large-scale roll-out of LED lamps is.

4. The Way Forward

The concept of natural capitalism is now centre stage at the GreenBiz forum recently hosted in the US and has become the top priority of sustainability executives.  Current business models rely heavily on the availability of natural resources which are fast becoming exhausted.  Mining, energy and forestry industries are most at risk.  So our unit trusts and retirement annuities offered as products from investment and insurance houses are more and more including 'green' industries in their portfolios as the ROI carries less risk.  The firm Trucost measures the costs of lost ecosystems, air and water pollution and ill health due to the business models of current companies.  50% of companies profits would go to these costs if enforced.

It makes more and more sense to include the conservation of the planet into business models but to convince an asset manager to invest in natural capital is currently a great challenge.  You need to show them that this is not philanthropy but a viable business model.  There is definitely already an industrial upheaval happening due to the high risk of high carbon business and customers increasingly embracing a future of more environmentally and socially responsible ventures.  A framework is already emerging and sustainability executives need to follow an initiative spearheaded by the Natural Capital Coalition, which is developing guidelines it hopes will guide businesses in natural capital valuation exercises. A draft of these protocols should be available by March 2014, and the coalition is using a consultative approach with industry.


The first sector-specific guides related to these protocols will be focused on food and apparel companies, and much of the methodology should be officially available by the end of 2015.  Something South African sustainability consulting companies need to keep an eye on and consider incorporating in their toolsets for current and prospective clients.