Business Imperative: Sustainability the Key to a Secure Future

Last Friday, I attended a live webinar sponsored by the 2Degrees Network, featuring two speakers who are based in the UK. David Bent is the Head of Business Strategies at not-for-profit Forum for the Future. James Robey is the Head of Corporate Sustainability at Capgemini. Together, they discussed why business leaders must see sustainability as an opportunity to ensure a secure future, despite the recession. 

Indeed, the current recession is the result of unsustainable development in economic, material, and environmental terms. David Bent surprised me when he characterized the the current postwar trend of economic and population growth as a global overshoot.

Overshoot is a situation when a system gathers so much momentum in one direction that it temporarily exceeds certain limits, and that this eventually will be met with a corrective force or forces that drives it back into an equilibrium. Overshoot is Wyle E. Coyote breaking through a guardrail while pursuing the Roadrunner, puzzling for a moment about what just happened, gaping at the abyss below his feet, and then taking the plunge.

Bent stated his point and moved on with his presentation.

I was surprised, because this concept has been ignored by mainstream business leaders and economists. The concept of overshoot smacks hard against the prevailing philosophy that our economic growth can be sustained in perpetuity, without limit.

Overshoot implies that there are certain physical and ecological limits to civilization's growth which lie beyond our control. However, most neoclassical economists including Julian Simon have strenuously attacked any effort to make such a suggestion, relying on the faith that human ingenuity will always develop an answer and deploy it in time to save the day.

Bent's unapologetic use of the term captured my attention. By accepting the liklihood of limits to growth, one can better appeciate this definition:

Sustainability: living within our means

At the Forum for the Future, Bent and his team are trying to anticipate our future based on various assumptions. His hope is that organizational strategists in the public and private realms, regardless of ideological bias, will use these scenarios to help their organizations develop appropriate precautions and contingencies-- with little or no regulatory prompting from governments.

Some of the questions addressed by the scenarios include: 

• Will the response to overshoot be globally-coordinated or nationalistic? 
  
• Will elites around the world recognize and support global institutions? 
  
• How will the financial markets be regulated? 
  

He has developed four primary scenarios: 

1. Alpha scenario: things will go global; consistent market regulation; Finance is run as more of a business utility than a casino (my emphasis!); primary mfg of consumer goods in China: finishing, use and re-use done within local markets 
   
2. Beta (continuation of path that we are on): nationalistic responses, protectionism, barriers 
   
3. Delta1: patched-up globalization; disasters inside China; distributed (renewable) energy generation empowers the developing world 
   
4. Delta2: me and mine, individualism reigns, powered by online services: atomized social networks; collapse of trust in large orgs (private and public); regulatory nightmare 

Their advice to organizations: 

• Prepare for radical change: rehearse multiple scenarios 
  
• Don't obsess on consumer demand: expectations for corporate responsibility will rebound once the economy improves 
  
• Identify direct cost savings
  
• Use innovation to protect market share (more customer value)
  
• Motivate your people
  
• Capture long term advantage (strong balance sheet) 
  

My question: The Interface Corporation under Ray Anderson's leadership is frequently cited as a leader in transforming its business along sustainability principles. Sadly, it's financial performance has failed to convince mainstream business analysts. Any ideas why?

A: Interface's sustainability goals are radical, not incremental. They are shifting from selling goods to selling services, and this warrants them to reeducate their customers about changing their buying habits. This all takes a lot of trial-and-error, a lot of time to perfect.

My question: Organizations naturally respond to the need to "do" CSR, by expanding their bureaucracy (i.e., adding new roles to their organizations), instead of integrating new incentives and practices into existing structure. What can be done to avoid this?

A: Apply some of the lessons learned during the TQM revolution in the '70s and '80s. Many companies started by forming special quality management groups but soon found out that you cannot create quality, no matter how hard you test for it. Quality products come from quality processes, from companies that train and encourage all employees to employ quality in their work. Sustainability needs to be treated the same way.

Watching Comedy Central Makes Me Smarter, Part I

Nothing demonstrates what we stand for as a nation more than the way we treat those we captured during our ongoing struggle against Al Qaeda.

In this Daily Show interview with Cliff May, Jon Stewart jousts with him about shades of gray, drawing lines, and framing this important argument in historical context. 

If there is an equivalent form of "dittohead" for Jon Stewart fans, I am one.

Dr. Jay Hakes and the Future of Energy

Last Thursday, I attended a very informative meeting sponsored by CareerEco, featuring Dr. Jay Hakes. Hakes was an advisor to the Carter Presidency and later head of the US Energy Information Administration. Now, he heads the Jimmy Carter Presidential Library and is a Midtown resident.

In response to the Arab oil embargo of 1979, Carter introduced a visionary energy plan with a goal of supplying 20% of our domestic energy needs via renewables by 2000! By comparison, the EU currently has set the same goal for themselves by 2020. Back then, the public did not understand such a complicated plan, and its opponents derided the windfall profits tax as if that were the only important aspect of the plan.

Hakes: You can't fit an energy policy on a bumper sticker.

In the late 1970's, the US led the world in solar and wind technology, but in the early 80's the Saudis intentionally flooded the market with oil and tanked the prices in a successful attempt to damage the alternative energy industry. All Federal administrations from Reagan's on have paid lip service to renewable energy, and our technology leadership has subsequently passed to the Germans and the Japanese.

With regards to CAFE (Federally-mandated fuel efficiency standards,) American automakers are not wholly to blame for the lack of progress over the past 2 decades. They have been willing to accept tighter standards, if the Feds also raised taxes on fuel. Our politicians didn't, and they continue to resist.

3 top Federal policy priorities should be:

• continued focus on energy conservation and efficiency
  
• Enact a tough National Renewable (electricity) Portfolio Standard
  
• We need to place a tax on carbon. A direct tax is preferable to a cap and trade system, for many of the same reasons that Thomas Friedman recently described in his NY Times op-ed

As for stimulating our domestic renewable energy industry, it's politically expedient to offer tax incentives. It's always easier to cut taxes than it is to raise them, but they rarely achieve their lofty aims. Due to the temporary nature of these credits and rebates, businesses won't take risks that depend on them.

In addition to these carrots, we have to also implement some sticks--mainly in the form of a carbon tax. Unlike tax incentives, new taxes are usually permanent. Thus, businesses can count on taxes when they make long-term plans and investments; they cannot with the more ephermal tax incentives.

We will have to accept more nuclear power plants to satisfy our needs. It's good that the GA PSC granted permission to pre-charge ratepayers for the construction of Plant Vogle2; it provides a true-cost signal to the regional electricity market and will make renewables more attractive.

My question to Hakes about educating govt officials (e.g., PSC members), business leaders and everyday citizens is most important. Unfortunately, there are few easy answers.

He does not subscribe to Peak Oil theory; we have ample access to unconventional sources such as tar sands--for a price; the PO'ers are advocating for the right policies for the wrong reasons; he respects Matt Simmons but respectfully disagrees.

We need installers of wind and solar systems who have brand name cachet.

All-in-all, Hakes represents an expert, moderate voice in the debate about our energy future. I bought a copy of his book and will comment here further once I finish it.

Got Trash? You Bet!

On Saturday, we drove from Atlanta to Athens for the annual Twilight Criterium bicycle race, via GA Route 316. 316 is a four-lane, 45-mile trek through a sunburned exurban landscape of office parks, pastures and big-box retail. What makes 316 such a painful experience is the combination of difficult driving conditions (traffic congestion, numerous traffic lights, high speeds, aggressive drivers) and the utter lack of beauty.

The 316 corridor is land that human civilization has conceded to its most selfish tendencies (and fullsized pickup trucks): a paved asylum. Take, for example, this roadside gem which comes replete with a tip to Ol' Glory.

Little did we know, that on this very day a University of Georgia professor of Marketing would murder three people outside of an Athens theater in broad daylight. Might a little beauty, an expression of love in public spaces and community, have tempered the professor's lunacy enough to avert this tragedy?

I am someone who believes in a higher power and seeks to find that power in any situation, no matter how hopeless it may seem on the surface. In this case, I had to raise my gaze up to the clouds, for the landscape offered nothing.

Rest & Repair Day, Dreaming of Trials

Following a good, hard weekend of riding, I took today off (well, except to ride to Little 5 Points to run some errands.) I replaced some drivetrail components on my mountain bike, and it now runs swe-e-e-t.

Urban trials riding, at its best, melds grace and strength into an art-form, especially when accompanied by a great soundtrack, like in this video.

Emerging Smart Grid Technologies

Last Wednesday, I attended a live webinar sponsored by the 2Degrees Network. It was moderated by Peter Fox-Penner,  a Principal and Chairman Emeritus at The Brattle Group. The panelists were each expert in their respective fields and contributed to the topic:

• Jesse Berst, Managing Director of GlobalSmartEnergy
  
• Karl Stahlkopf, Senior Vice President of Energy Solutions and Chief Technology Officer of HECO 
  
• Peter L. Corsell, Chief Executive Officer of GridPoint 
  
• Ahmad Faruqui, Principal with The Brattle Group
  

Overall, the uptake of SG technology will continue at the present, steady pace for some months and maybe years. The panelists generally agreed that SmartGrid pilots, while so far demonstrating promise, need to exhibit more scalability, especially in moving from 100+ residences to 1,000,000+ residences.

The power industry is undergoing a transformation that resembles telecomm's transformation from an industry providing commodity services (a dial tone, 120VAC at the receptacle) to value-based services.  The dialtone is not the product, it's the experience of using the end-user service.

Just by providing real-time feedback to consumers household demand can be lowered 6-10%. GridPoint calls it "a virtual power plant." However, providing an easy-to use web-based information display is not easy.

The meter is a "false water's edge" as customers gain usage control behind the meter. While significant effort currently is focused on smart meters and their integration, this will shift more to "behind the meter" applications for the consumer.

The financial justification of SmartGrid projects remains a challenge and should ease, once the hard benefits are better understood and quantified. Increased customer self services and remote provisioning, for instance, will reduce the number of incoming service calls and "truck rolls."

Legislators and public service commisioners need to be educated about the regulatory opportunities and challenges, e.g. demand-based pricing, opt-out rights for consumers.

There will be a clash over in-home control amongst local utilities, Microsoft, Google, others.

PHEVs (electric plug-in cars) have the potential to double the efficiency of the SmartGrid and represent a "killer app." They are the ideal nighttime load for utilties. GP is working with GM on smart charging solutions for the Chevy Volt; leverage on-board diagnostics and telematics. Automakers will sell their PHEVs "grid-aware", with options for the car buyer to enroll in the utility's smart charging program.

The Codger Returns

This feels new yet vaguely familiar, as I maintained a personal web site from 1999-2004 which included a daily journal. Sorry, kiddo, it was before they ever had these there bloggy-things.

Now the Old Codger is back in business...so long as I can keep track of my glasses. My aim remains the same: to capture in words and pictures my daily life's more meaningful, humorous, or otherwise worthwhile moments. 

I hope this contributes to a greater sense of mutual understanding and community which is, after all, our only hope.

About this blog's name: Marquee Moon is the name of a favorite song from the influential 1970s New York guitar rock band Television. I like it, because it embodies many memorable nights for me spent prowling lower Manhattan in search of the best scene.

Sometimes I found it, but that's for another day...

Your attention to my blog gives me great pleasure, as do your comments.