Sustainable Business – Page 3

NOAA: June, April to June, and Year-to-Date Global Temperatures are Warmest on Record

Posted on 17 July 2010 | by Jay Kimball | 2 Comments

Climate change news from the National Oceanic and Atmospheric Administration (NOAA):

15 July 2010

Last month’s combined global land and ocean surface temperature made it the warmest June on record and the warmest on record averaged for any April-June and January-June periods, according to NOAA. Worldwide average land surface temperature was the warmest on record for June and the April-June period, and the second warmest on record for the year-to-date (January-June) period, behind 2007.

The monthly analysis from NOAA’s National Climatic Data Center, which is based on records going back to 1880, is part of the suite of climate services NOAA provides government, business and community leaders so they can make informed decisions.

Scientists, researchers and leaders in government and industry use NOAA’s monthly reports to help track trends and other changes in the world’s climate. This climate service has a wide range of practical uses, from helping farmers know what and when to plant, to guiding resource managers with critical decisions about water, energy and other vital assets.

NOAA Temperature Anomalies June 2010 — (source: NOAA National Climatic Data Center)

The Guardian did a nice job of going deeper into the story. Here are highlights from their article:

The figures released last night by the National Oceanic and Atmospheric Administration (NOAA) suggest that 2010 is now on course to be the warmest year since records began in 1880.
Scientists expressed surprise that the June land surface temperature exceeded the previous record by 0.11C (0.20F). “This large difference over land contributed strongly to the overall global land and ocean temperature anomaly,” said John Leslie, a spokesman for NOAA.
Separate satellite data from the US National Snow and Ice Data Centre in Colorado shows that the extent of sea ice in the Arctic was at its lowest for any June since satellite records started in 1979.
In a further possible sign of a warming world, the Jakobshavn Isbrae glacier, one of the largest in Greenland, lost a 2.7-square mile chunk of ice and retreated one mile between 6-7 July – one of the largest single losses to a glacier ever recorded.
The glacier, a tongue of the Greenland ice sheet, has retreated six miles since 2000 and more than 27 miles since 1850. It is believed to be the single largest contributor to sea level rise in the northern hemisphere.
Greenland’s ice sheet, a vast body of ancient ice covering 1.7 million sq km, is melting today more rapidly than only a few decades ago. Since 2000, the ice sheet is calculated to have lost about 1,500 cubic kilometres of water– enough to raise global sea levels by 5mm . If the entire ice sheet melted, the world’s oceans would rise by over 23 feet.
Glaciologists expressed surprise at the speed of the break-up of the glacier: “This is unusual because it occurs on the heels of a warm winter that saw no sea ice form in the surrounding bay … it lends credence to the theory that warming of the oceans is responsible for the ice loss observed throughout Greenland and Antarctica,” said NASA scientist Thomas Wagner.

Present concentration of carbon dioxide gas in the atmosphere is 31 per cent above pre-industrial levels.

Referring to the chart below, current emissions are tracking above the most intense fossil fuel emission scenario established by the IPCC Special Report on Emissions Scenarios-SRES (2000).

Global Carbon Emissions 2010 — (source: EIA, CDIAC, Raupach et al. 2007, Proceedings of National Academy of Sciences)

Referring to the chart below, NOAA has modeled change in seasonal mean surface air temperature from the late 20th century (1971-2000 average) to the middle 21st century (2051-2060). The left panel shows changes for June July August (JJA) seasonal averages, and the right panel shows changes for December January February (DJF). The simulated surface air temperature changes are in response to increasing greenhouse gases and aerosols based on a “middle of the road” estimate of future emissions. As we can see from the chart above, we are exceeding “middle of the road” substantially.

surface air temps change 2050 — (source: NOAA - National Oceanic and Atmospheric Administration)

Red areas on the map represent a 20 degree increase from averages in the late 20th century. This has major implications for food production, water, and energy, not to mention business as usual.

For a hint of what to expect, look at the infamous 2003 heat wave that struck Europe for just 7 days:

30,000 heat-related deaths, 14,802 in Fance alone.
Extensive forest fires (10% of Portugal forests burned).
Temperatures ranged from 104 ºF to 118 ºF (40 ºC to 48 ºC).
Melting glaciers in the Alps caused avalanches and flash floods in Switzerland.
Extensive crop loss of wheat across Europe (13% to 80%).

Here’s a picture of the temperature anomaly across Europe during the heat wave. (N.B. Red indicates +10 ºC, +18ºF anomaly)

2003 European heat wave — (source: NASA)

For related articles and books, see:

Climate Change May Reduce Protein in Crops

Creating Leaders Great at Performing in Uncertainty without a Clue as to Why

Posted on 14 July 2010 | by Belina | 3 Comments

There is an interesting phenomena going on in some of the major business schools in Europe. In some – you are not allowed to mention environmental factors as a major catalyst for new business models/thinking. It is “understood” that as a lecturer, you inspire the students with fresh thinking but only so far. Go further, and people just roll their eyes and pigeon-hole you as a treehugger.

Here are three quotes from top business leaders:

“The era of ‘abundance’ is over. The future will see our natural resources, from oil to food, having some level of restriction placed on them.” – Andy Bond, CEO, Asda (May 2009)

“We must rapidly wean ourselves off our dependence on coal and fossil fuels.” – Richard Branson, announcing investment of all profits from Virgin transport business, estimated at $3 billion over 10 years, to be invested in fighting global warming. (21 September 2006)

“Sustainability is here to stay or we may not be.” – Niall Fitzgerald, UK CEO, Unilever

Now, none of these guys are particularly treehuggy. And most MBAs would give their eyeteeth to fill the shoes of these guys – and yet – in many MBA programs – coverage of sustainability issues is absent, apologetic, sidelined, or sketchy.

Let’s stop tiptoeing around the obvious. Business leaders can handle the truth. Though there is uncertainty on what the impact will be, climate change is a global issue that will impact business. Period.

In 2008 the US Director of National Intelligence (DNI) presented to Congress the DNI report National Intelligence Assessment on the National Security Implications of Global Climate Change to 2030. Here are a few excerpts:

“The United States depends on a smooth-functioning international system ensuring the flow of trade and market access to critical raw materials such as oil and gas, and security for its allies and partners. Climate change and climate change policies could affect all of these—domestic stability in a number of key states, the opening of new sea lanes and access to raw materials, and the global economy more broadly—with significant geopolitical consequences.”

“In addition, anticipated impacts to the Homeland—including possible increases in the severity of storms in the Gulf, increased demand for energy resources, disruptions in US and Arctic infrastructure, and increases in immigration from resource-scarce regions of the world—are expected to be costly. Government, business, and public efforts to develop mitigation and adaptation strategies to deal with climate change — from policies to reduce greenhouse gasses to plans to reduce exposure to climate change or capitalize on potential impacts—may affect US national security interests even more than the physical impacts of climate change itself.”

“Climate change is a threat multiplier in  the world’s most unstable regions.”

“From a national security perspective, climate change has the potential to affect lives (for example, through food and water shortages, increased health problems including the spread of disease, and increased potential for conflict), property (for example through ground subsidence, flooding, coastal erosion, and extreme weather events), and other security interests.”

These leaders are talking about fundamental shifts in ‘givens’ that require action, a joined up way of behaving, new ways of thinking, and new approaches. And our top business schools should be on the leading edge.

I first got interested in business schools ignoring the big elephant in the classroom two years ago when I was delivering a course on dominant business metaphors and implementing change. I wanted to say one line – one sentence inviting students to ponder how the nature of sustainability planning would be different if organisations, in addition to approaching business as a ‘competitive sport’, also approached it as a living organism. The professor who brought me in said ‘no’ – that the MBAs would feel they were being hijacked away from the course they had paid for. There was a specific elective for sustainability – and outside of that – best not to mention those issues.

Over the past few months, I’ve been speaking with several top MBA programs in Europe. Each is saying that leaders need, more than at any other time in history, to be able to lead in the presence of ambiguity, and to be able to perform collaboratively with high levels of uncertainty. Applied Improvisation skills are rather good for that, which is why I’m there in the first place.

What I find interesting in talking with these top MBA programs is that many are not contextualising the WHY of this new emphasis. Not addressing why managers/leaders would need to be so good at ambiguity.

“Growth for the sake of growth is the ideology of the cancer cell.” – Edward Abbey

I sat up when I saw this quote. It was refreshing to see in a lecture to potential MBAs at a leading business school in the Netherlands a few weeks ago. During my time at the school, two of the guest lecturers talked about sustainability – kind of…

The first lecturer used the Abbey quote (Abbey is a renown outspoken sustainability activist) and talked about the need to create ‘sustainable businesses’ quickly dismissed the notion of ‘sustainable’ as being linked to any ‘environmental’ issues… – it was about a business which can keep going, despite ‘adversity’. Given what scientists are saying about increasing disruptions over climate change, peak oil, peak minerals, peak water, how could adversity due to these factors not be mentioned?

The other lecturer had just hosted a biomimicry event two weeks before and deeply cared about the environment and sustainability. He works with top leaders in the best companies around the world on developing leadership skills. In his session, he talked about the profound need for leaders to be comfortable leading in the presence of ambiguity, but didn’t say why. In the break he confided that there are some groups with which you cannot talk about the environment directly. He had been gently testing the water with that day’s group and found he could mention it a bit…but only a bit. Several people were there for the express purpose of earning more money with an emphasis on value extraction, not particularly wealth creation/exchange.

Contextualising is a vital part of learning. The military does this routinely in their simulations – creating real world scenarios in the classroom. If we are facing a series of challenges (climate change, scarcity of water, oil, minerals, etc.) we must mention that as part of what leaders will face.

One initiative that gives me hope is the UN Principles for Responsible Management Education (PRME) initiative. The head of a leading MBA program in the UK turned me on to it. Finally – a global effort is being made to transform business schools and the Assocation of MBAs is part of it. In theory – that should mean that the taboo-ness of sustainability issues being explicitly mentioned, or mentioned only in specific electives – disappears.

As I continue to work with MBA programs, I will keep you posted on what I see going forward in this arena. And if you know of any best practice in this area – please post it here. Let me know!

“Unless we change direction, we are likely to end up where we are going.” – Chinese proverb

US Energy Use: The Big Picture

Posted on 13 July 2010 | by Jay Kimball | 3 Comments

This chart from Lawrence Livermore National Laboratory provides a simple clear way to understand how energy is used in the US.

I use this chart a lot in my presentations. It is a classic example of the adage “A picture is worth a thousand words.” On a single page it shows the sources for the energy we use, where it goes, how much is used and how much is wasted.

Energy use in US — Energy Use in the US (click to enlarge) (source: Lawrence Livermore National Labratory and DOE)

Some things to note:

Energy sources are on the left side – solar, nuclear, hydro, wind, geothermal, natural gas, coal, biomass, petroleum.
Energy users are broken in to four categories – residential, commercial, industrial, and transportation.
The gray boxes on the right sum up the energy that was used and the energy that was lost (rejected).
The width of the lines running from the various energy sources to their destination uses is proportional to the amount of energy used.

Zeroing In On Oil

As can be seen, the lion’s share of US energy consumption comes from fossil fuel sources (oil, coal, natural gas). Of the fossil fuels, oil is the source most in demand, the bulk of which is used by the transportation sector. And oil consumption in the transportation sector is growing fast.

US Oil Consumption By Sector — (source: DOE)

Zooming in to the transportation sector, we can see that most of that oil is used for personal vehicles (cars, light truck and SUVs).

US Oil Consumption Transportation — (source:DOE)

Any attempt to reduce our dependance on oil will require grappling with transportation in general, and personal transportation in particular.

Price of Oil and Consumer Behavior

Personal transportation is 4 to 10 times less efficient than public transportation (commuter rail, trains and buses). When oil prices rise quickly, as they did in 2008 (to over $140 per barrel), consumer behavior shifts rapidly. Automobile manufactures saw their large car sales plummet. Airlines saw their fuel costs skyrocket, and bookings plummet. Commuters embraced public transportation, with many metropolitan areas seeing 30 to 45 percent increases in use of public transportation in just one quarter.

Transportation Efficiency — (source: Lawrence Livermore National Laboratory)

That rapid behavior shift represents risk and opportunity for business and government. For more on that, check out two related posts: Sustainable Energy Security: Strategic Risks and Opportunities for Business and Walmart Partnering with Patagonia on Sustainable Business Practices.

The last century was a time of abundance in energy. There is a new economy of scarcity emerging in the 21st century. Understanding the energy trends shaping our world is essential to managing risk and innovating solutions for business, government and community.

Sustainable Energy Security: Strategic Risks and Opportunities for Business

Posted on 12 July 2010 | by Jay Kimball | 3 Comments

Lloyds of London, the insurance market, and Chatham House have published a white paper on Sustainable Energy Security that details the risks and opportunities for business.

Lloyd’s CEO, Dr. Richard Ward, doesn’t mince words in his foreword to the white paper:

This report, jointly produced by Lloyd’s 360 Risk Insight programme and Chatham House, should cause all risk managers to pause. What it outlines, in stark detail, is that we have entered a period of deep uncertainty in how we will source energy for power, heat and mobility, and how much we will have to pay for it.

Is this any different from the normal volatility of the oil or gas markets? Yes, it is. Today, a number of pressures are combining: constraints on ‘easy to access’ oil; the environmental and political urgency of reducing carbon dioxide emissions; and a sharp rise in energy demand from the Asian economies, particularly China.

All of this means that the current generation of business leaders – and their successors – are going to have to find a new energy paradigm. Expect dramatic changes:

Prices are likely to rise, with some commentators suggesting oil may reach $200 a barrel.

Regulations on carbon emissions will intensify.

Reputations will be won or lost as the public demands that businesses reduce their environmental footprint.

The growing demand for energy will require an estimated $26 trillion in investment by 2030. Energy companies will face hard choices in deciding how to deploy these funds in an uncertain market with mixed policy messages. The recent Deepwater oil spill shows all too clearly the hazards of moving into ever more unpredictable terrain to extract energy resources. And the rapid deployment of cleaner energy technologies will radically alter the risk landscape. At this precise point in time we are in a period akin to a phony war. We keep hearing of difficulties to come, but with oil, gas and coal still broadly accessible – and largely capable of being distributed where they are needed – the bad times have not yet hit. The primary purpose of this report is to remind the reader that all businesses, not just the energy sector, need to consider how they, their suppliers and their customers will be affected by energy supplies which are less reliable and more expensive.

The failure of the Copenhagen Summit has not helped to instil a sense of urgency and it has hampered the ability of businesses – particularly those in the energy sector – to plan ahead and to make critical new investments in energy infrastructure. I call on governments to identify a clear path towards sustainable energy which businesses can follow.

Independently of what happens in UN negotiating rooms, businesses can take action. We can plan our energy needs, we can make every effort to reduce consumption, and we can aim for a mix of different energy sources. The transformation of the energy environment from carbon to clean energy sources creates an extraordinary risk management challenge for businesses. Traditional models that focus on annual profits and, at best, medium term strategies may struggle. Parts of this report talk about what might happen in 2030 or even 2050 and I make no apology for this. Energy security requires a long term view and it is the companies who grasp this who will trade on into the second half of this century.

Executive Summary

Businesses which prepare for and take advantage of the new energy reality will prosper – failure to do so could be catastrophic.
Market dynamics and environmental factors mean business can no longer rely on low cost traditional energy sources.
China and growing Asian economies will play an increasingly important role in global energy security
We are heading towards a global oil supply crunch and price spike.
Energy infrastructure will become increasingly vulnerable as a result of climate change and operations in harsher environments.
Lack of global regulation on climate change is creating an environment of uncertainty for business, which is damaging investment plans.
To manage increasing energy costs and carbon exposure businesses must reduce fossil fuel consumption.
Business must address energy-related risks to supply chains and the increasing vulnerability of ‘just-in-time’ models.
Investment in renewable energy and ‘intelligent’ infrastructure is booming. This revolution presents huge opportunities for new business partnerships.

A change in the energy market balance between East and West

Advanced economies remain the biggest consumers of primary energy per person but by 2008 non-OECD countries led by China and India had outstripped them in terms of the share of world demand. This shift began in the 1990s, partly because manufacturing shifted eastwards. Meanwhile, lower population growth, de- industrialisation, greater efficiency, higher fuel prices and a concern for the environment are lowering demand for oil-based fuels and coal in the OECD.

These consumption trajectories mean there is likely to be a tipping point in 2015 when countries in Asia-Pacific need more imported oil in total than the Middle East (including Sudan) can export.

Middle East oil surplus vs Asia-Pacific deficit (Source: John Mitchell, Chatham House 2010)

The white paper goes on to detail market forces, energy trends, risk and opportunity. This is recommended reading for business and government leaders and risk managers.

Shale Gas Exploration: The Coming Storm

Posted on 06 July 2010 | by Jay Kimball | 20 Comments

When you see three mainstream media (Vanity Fair, HBO, and Bloomberg) covering the esoteric practice of hydraulic-fracturing (also know as “fracking”), pay attention. Vanity Fair’s report, A Colossal Fracking Mess; HBO’s report, Gasland; and Bloomberg’s report, Shale Game, all detail the nasty practice of fracking – a process used to release natural gas and oil from the earth.

How nasty is fracking? Watch this amazing video of a homeowner demonstrating one of the toxic side effects of Fracking taking place on land near this man’s home.

This video was posted a year ago, and has had about 130,000 views. Though it took a year for the story to hit the mainstream media – the cats out of the bag.

Burning water is just one of the side effects of fracking. Tests of fracking runoff show presence of benzene, ethylbenzene, toluene, boric acid, monoethanolamine, xylene, diesel-range organics, methanol, formaldehyde, hydrochloric acid, ammonium bisulfite, 2-butoxyethanol, and 5-chloro-2-methyl-4-isothiazotin-3-one. (Recently, in congressional testimony, drilling companies have confirmed the presence of many of these chemicals.) In the Vanity Fair article, Theo Colborn, a noted expert on water issues and endocrine disruptors, said that at least half of the chemicals known to be present in Fracking fluid are toxic; many of them are carcinogens, neurotoxins, endocrine disruptors, and mutagens.

HBO’s Gasland is a detailed journey around America, visiting the various communities where shale gas exploration is having an impact on health and wellbeing of the community. Special attention is given to the Marcellus Shale, which poses high risk to ground water for residents of Pennsylvania and New York. All three reports detail this.

Each well needs 82 tons of assorted chemicals to get it producing. New York has banned shale gas drilling statewide until it adopts new rules. “We firmly believe, based on the best available science and current industry and technological practices, that drilling cannot be permitted in the city’s watershed,” Mayor Michael Bloomberg said in an April.

While the Vanity Fair and Bloomberg reports provide for gripping reading, Gasland’s use of video and narrative delivers a powerful compelling punch. After watching, I was thinking how grateful I was to not live in any of the numerous communities exposed to the toxic side effects of shale gas exploration.

Dimock Township in Pennsylvania is one of the towns that features in all three reports. The Bloomberg report says:

Victoria Switzer, who moved to Dimock Township, Pennsylvania, to build a $350,000 dream home with her husband, Jimmy, in 2004, had no idea how shale gas would consume her village of 1,400.

She says she found so much methane in her well that her water bubbled like Alka-Seltzer. Neighbor Norma Fiorentino says methane in her well blew an 8-inch-thick (20-centimeter-thick) concrete slab off the top. The $180 bonus Cabot paid to drill on Switzer’s 7.2 acres (2.9 hectares) and the $900 in royalties she gets each month don’t compensate, she says.

To paraphrase Ronald Reagan, “The 10 most terrifying words in the English language are ‘I’m from the oil company an I’m here to help.’”

Transitioning from Fossil Fuels to Renewable Clean Energy

Gas/Oil production is peaking. The easy oil and gas has been consumed. What remains will increasingly be harder to get to and more complicated to extract. Witness the BP Deepwater Horizon debacle in the Gulf. The business of oil/gas extraction will get increasingly messy and rife with political and legal risk.

In 1950 we could produce 100 barrels of oil using the energy of 1 barrel of oil. So the Energy Returned on Energy Invested (ERoEI) was about 100:1. Today that ratio has fallen below 10:1. Similar low ERoEI can be found for other fossil fuels. The chart below shows the ERoEI for various forms of energy. The highest ROI is in wind and solar. This is where we are seeing double-digit growth.

The oil/gas industry has 100 years of inertia propelling it forward. The golden days of fossil fuels are behind us. The industry is a dinosaur now – kept alive by our addiction to fossil fuels. Renewable energy is our future. The faster we can make the transition, the less damage will be done as the beast staggers to its rotten end.

Bryan Walsh, one of my favorite environmental reporters, just published this evenhanded video that looks at some specific examples of toxic fracking related events in Pennsylvania, the heart of east coast gas extraction. The devastating impact on homeowners and communities is tragic.

Fossil fuels – RIP.

Walmart Partnering with Patagonia on Sustainable Business Practices

Posted on 01 July 2010 | by Jay Kimball | 2 Comments

A recent article in Forbes describes how Patagonia, one of the early thought-leaders on sustainable business practices, and Walmart, are partnering to help Walmart move up the sustainable business learning curve fast. The article emphasizes the need for not just being sustainable inside the business, but up the supply chain as well.

Highlights of the Forbes article:

Patagonia is working with Walmart to develop a sustainability index for its products
This initiative is being driven by Walmart CEO, Lee Scott, working with Patagonia’s CEO, Yvon Chouinard.
Walmart CEO Lee Scott first articulated a sustainable vision for Walmart in 2005 saying Walmart “must operate in a world that is healthy.“
Walmart is assessing things like how much water is consumed in the manufacturing process of a product, whether pesticides are used, impact on climate change, energy efficiency, etc.
Walmart wants to place a scorecard on its store goods that rate products on eco-friendliness and social impact.
Walmart is evaluating its suppliers and will give preference to those who best comply.
Patagonia has helped others, including Nike, Gap, REI, and North Face.
Nike has gone on to form GreenXchange, a consortium of ten companies (among them, Yahoo) that will trade eco-friendly intellectual property.

Most businesses I talk with want to do the right thing in terms of caring for the planet, but it rarely shows up in their mission statements or operational imperatives. However, if you ask any business person if their business depends on a healthy customer and a healthy supply chain, the answer is an obvious “Yes!”

Sustainable Business Interdependence

When I talk with business about strategies and tactics for sustainable business, we invariably come to this picture:

If a business confines their view of global issues to within their own business, they might think that climate change, water scarcity or high energy costs don’t impact them. They might say “Well, we don’t use much water, so that’s not an issue for us.” But if the view becomes more expansive to include the supply chain and the customer, they find increased risk to “business as usual.” Everyone interdepends on everyone else. Just as the proverbial rising tide lifts all boats, if the tide falls for one, it falls for all.

For example:

Water tables are falling rapidly in China. If a production plant in China, making product for Walmart, depends on water for the production, and the price of water suddenly rises, or access is limited by government edict, that impacts Walmart cost of goods and product flow.
If Walmart customers can’t afford to buy as much because they are spending too much on energy bills and gas expenses because the price of oil is at $120 a barrel, Walmart top line revenue growth declines.

Even if a business isn’t selling directly to “the consumer,” there is risk. If a company has businesses as a customer segment, they must understand how those businesses will be impacted. For example, if Walmart customers choose to spend less money at Walmart because of rising energy prices or fear of losing a job, Walmart will place less orders with their vendors and vendor order volume will fall. So consumer wellbeing matters to vendors all the way up the supply chain.

Walmart is the biggest retailer in the world. They are taking the long view and understand the interdependence of their success with the health of their supply chain and customer base.

Regarding sustainable practices, as a business expands its field of view to include supply chain and customer, there are three key things to examine:

Mitigation – Understanding what impact global issues will have on the business and creating adaptive strategies and tactics to prepare. Shareholder value is protected.
Innovation – As a business understands the global trends and challenges, they can innovate solutions that will have real value for their business, supply chain and customers, and beyond the, open new markets and opportunities. Shareholder value is increased.
Advocacy – Are the steering directions a business gives to representative associations, lobbying firms, chambers of commerce and state and federal representatives in alignment with new found adaptive strategies and tactics?

Thinking like Walmart – What can a business do to ensure a healthy world?

Perhaps we should call it the The New Trickle Around Economy!

More on this in a future post. For now, here are some photos I took while visiting Walmart headquarters, in Bentonville, AK, for a book I am writing on sustainable business strategies. These pictures were taken while touring one of Walmart’s flagship stores in Fayetteville, AR.

Walmart store green steps program, sign at check out — Walmart store Green Steps program, sign at check out, in Fayetteville, AK

Walmart store green steps program, rain water harvesting catchment tanks at back of store

Walmart store green steps program, rain water harvesting description

Walmart store green steps program, wetlands for catching run-off, and purifying it naturally.

Walmart store green steps program, streamlined truck to reduce fuel consumption

Category: Sustainable Business