Thursday, September 24, 2009

“Learn how you can save the planet”

Less than 30 days ago, William Becker, representing the Climate Action Project at the University of Colorado, published the “100-Day Action Plan to Save the Planet: a Climate Crisis Solution for the 44th President.” The plan has nine major areas for taking action against the ill-effects of climate change

1. Move rapidly away from investments that lock-in carbon emitting energy solutions
2. Rebuild government leadership in this important area
3. Mobilize the marketplace to build a new 21st century economy
4. Launch an economy-wide clean energy surge
5. Ensure that climate change is equitable and fair
6. Create an agenda for natural resource stewardship that responds to climate change
7. Help the nation adapt to the climate change already underway
8. Redefine national security to include climate and energy security
9. Integrate local, state, national and global organizations to create policies that acknowledge and advocate solutions to issues related to environmental sustainability

In light of the difficult military, economic, and social decisions President-elect Obama faces, the urgency of climate change may get mired in his decisions. For this reason, we take Becker’s document seriously; it should be read, actively critiqued, and discussed. Becker and his colleagues present compelling and practical ideas. For example, they show how we can rejuvenate Americans’ penchant for innovation through government grants and incentives. He proposes an extensive “green army” involving 1.5 million Americans in the fight against the negative impacts of climate change. Further, he advocates appointing the nation's best experts to climate-critical positions in the federal government. This action would solidify the wide acceptance of climate change science rather than bolster the politics of it.

Becker is especially cogent when explaining how we can mobilize the marketplace to build a new 21st century economy. By employing carbon taxes or cap and trade systems, we can find ways to account for the true cost to our ecosystems and can provide subsidies for renewable energy solutions.

Central to his plan is the redefining of national security to include energy and climate change. The national security argument for energy independence has been increasingly cited but remains incomplete. Typically, the argument has the effect of targeting and blaming nations rather than energy sources. For instance, the US government is exploring alternative energy sources largely to reduce ties to the Middle East instead of being motivated by environmental reasons. By redefining national security, Becker suggests shifting the focus of national security to include not only volatile foreign affairs but also domestic climate change issues.

The Plan highlights other problems and potential solutions. For instance, $78 billion is spent each year on traffic congestion. In our class’s benchmarking research of multiple cities, we found that some U.S. cities are attempting to centralize commerce centers to promote “smart growth,” which would cut emissions. However, even though emissions may be reduced, actual traffic congestion may increase. To combat this, cities are exploring various “smart solutions” for commuting (e.g. greenways, bike lanes, pedestrian lanes, and even efficient car pools). Each city has experienced the difficulty of striking the balance of centralizing commerce areas with reducing congestion. If done correctly, however, it allows people to travel easily and efficiently through town and emit fewer emissions. Overall,Becker’s ideas get us one step closer to viable solutions.
These solutions do not go uncontested, however. One proposed incentive in the Plan is for states to adopt new building codes that restrict greenhouse gas emissions in order to combat the 38.5% gas emission rate from buildings. Incentives are often effective mechanisms to create change, but Becker’s zero-tolerance emission standard is lofty. Currently, we already see voluntary adoption of private building standards (e.g. LEED), which increase energy efficiency and decrease greenhouse gas emissions. The Plan’s proposed government role to make this a national code, while feasible, is only as such if the goal of reduction in emissions is realistic. Further, perhaps the incentives should be directed more towards businesses and private individuals, since they are more flexible and will directly respond to the market.

These ideas as well as many others are available in “The 100 Day Action Plan.” We suggest you not only read this important work, but also respond to it, create dialogues around it, and send the new government your ideas on how to solve the important issues surrounding climate change. We cannot ignore this increasingly-important issue.

Ana Jerman, senior, Communications
Wesley Johnson, senior, Biology
Drew Legge, senior, Economics
Lacey Robinson, senior, Political Science
Emily Spear, senior, Senior Political Science
Dan Fogel, Executive Professor of Strategy

“The Triple Bottom Line—How Businesses are Balancing People, Planet and Profit.”

Wake Forest University Babcock Graduate School of Management Magazine.

June 2008 by Daniel S. Fogel

With media reporting daily on how climate change, poverty, immigration, and globalization are impacting people’s lives, corporations are being confronted with an uncomfortable reality: Become part of the problem or become part of the solution. Therefore, many businesses are stepping up to the plate and exploring ways to merge profitability with social responsibility and environmental sustainability. In other words, they’re focusing on the triple bottom line.

The phrase “triple bottom line” emphasizes balance between improving people’s lives, protecting the planet, and generating a profit. It encourages corporations to make social and environmental issues part of their overall business objectives and to address a wider set of challenges beyond the confines of a specific business or industry. The assumption is that if corporations do not confront global issues, such as poverty, environmental degradation, and the interconnectedness of the world, they are likely to see a decrease in well-being throughout the world and, ultimately, in their own profits.

Sustainability—the view that our actions must leave in place a world that is at least as prosperous and environmentally sound as the one we entered—is the guiding principle of the triple bottom line mentality. But what must a company adhering to the triple bottom line do to produce a more sustainable world? What impact does a company make by using triple bottom line practices, and why is this important?

First, the company is forced to analyze how its products, services, businesses, and processes can be improved to increase the sustainability of the corporation and the world. This analysis may result in a new focus on maximizing shareholder wealth while being sensitive to a world whose resources are finite and can only be generated using renewable resources. Other times, choices within the supply chain are reevaluated with increased sensitivity to human rights for suppliers, as in Nike’s case, and to the carbon footprint created by production and distribution.

Ironically, some observers view a focus on the triple bottom line as one that produces the most value-maximizing business outcomes, because adhering to natural processes creates more valuable long-term results. There are even some companies, such as carpet manufacturers Interface and Tandus, that have restructured their entire business models with an emphasis on environmental sustainability. Now, Interface “leases” carpet to its customers so that it can take responsibility for installation and carpet recycling.

Second, the triple bottom line uncovers new business opportunities at the bottom of the pyramid. Microfinance—the practice of providing small loans to people who have limited or no access to capital and who use social networks as collateral—has generated positive results in emerging markets, like India, because of its social and economic impact. This concept, pioneered by Nobel Prize winner Muhammad Yunus, is developed from a view that we can create business solutions for difficult social problems—in this case, extreme poverty.

Third, the triple bottom line forces companies to consider the economic value of the environment. Instead of viewing the environment as a free good, it is viewed as providing a service to corporations. Some economists estimate the value of services provided by the environment at a minimum of three times the world economy. For example, if these services were being taken into account, gas would be $8 per gallon. The triple bottom line concept urges companies to find ways not only to preserve and protect these valuable services, but also to increase the viability of the environment.

Fourth and finally, profitable alternatives to philanthropy emerge as companies examine the triple bottom line. Imboiente, a consulting and landscaping firm based in Portugal’s Algarve region, repairs landscapes damaged by roads, dams, and civil engineering projects. The company also works with foresters and other landowners to reverse the effects of poor agricultural practices. Imboiente’s success is attributed to a surprising combination of philanthropy and sound business practice that serves to improve the environment.

In addition to giving existing companies something new to consider, the triple bottom line has been a catalyst for the development of new markets. Consider the Chicago Climate Exchange, the world’s first registry and trading system for reducing greenhouse gas emissions. The idea is to commoditize gas emissions, and by trading that commodity, one brings into play the advantages of capital markets. Why are people trading credits related to gas emissions? Because traders see the underlying asset value of the commodity. Many people believe that this rules-based market is one way to reduce pollution, which they view as a chief contributor to global warming.

Triple bottom line thinking also is influencing architecture and cityscapes. Environmental ratingsystems, such as the one by the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED), are becoming part of mainstream building codes. My recent research on environmental guidelines within organizations shows that every major metropolitan area has created a sustainable-design office or unit to shape the design of buildings and communities. The New Urbanism movement in community development has created “integrated design” to represent this triple focus, which has been prevalent in Europe and parts of Asia for decades.

In order to assure that the triple bottom line concept isn’t merely a fad and becomes part of every business culture, it must be instilled in the future generation of business leaders. Wake Forest is one of six U.S. founding members and one of 53 international partners of the Globally Responsible Leadership Initiative, an organization of corporations, business schools, and leadership centers that developed its educational principles based on the triple bottom line.

Emphasizing sustainability pushes corporate activity to balance financial outcomes with social and environmental impacts. Only then do we achieve true accountability.

Dan Fogel is Associate Dean for Working Professional
Programs and Executive Professor of
Strategy at the Babcock School, and is based at
Babcock’s Charlotte campus.

Making decision to take right path

Winston-Salem Journal guest column.
September 16, 2008 by Daniel S. Fogel and Peter F. Marsh.

The doubtful among us might call it catching the "green wave" and responding to the natural inclination to "do the right thing," and therefore perhaps not a serious leadership topic. We have a different view about "Go Green Winston-Salem," a climate-protection week series of events promoting environmentally sustainable practices in Winston-Salem.

The Winston-Salem we live in today, like many communities throughout the developed world, enjoyed tremendous growth and prosperity during the industrial era of the late 19th and 20th centuries. But now the employment base from these industries faces serious decline from, among other things, global competition.

Perhaps it is comforting that we are not alone in that economic transition. The message of this week's events reaches beyond global competition. It is fundamentally about the fact that we are highly interconnected to many systems (economic, social and environmental) that must be in balance and be regenerative to be sustainable.

Our viewpoint comes from our work with municipalities, businesses, nonprofit organizations and universities seeking to adopt sustainability principles as part of their core strategy. Recent local examples include our research that supported the Piedmont Triad Research Park's decision to adopt sustainable guidelines for the development and operation of the park. Another is our consultation with the Family Services organization in its decision to build the first newly constructed green building in Winston-Salem under the U.S. Green Building Council's LEED rating system.

With media reporting daily on how climate change, greenhouse-gas emissions, dwindling fossil-fuel sources coupled with escalating prices, a world food crisis and globalization impact people's lives, communities and organizations are being confronted with an uncomfortable reality: Become part of the problem or become part of the solution.

Our research shows that more than 12 percent of the Top 200 Public and Private Companies in North Carolina are beginning to take action on sustainable practices. So how do you get started down the path of sustainability at the individual, organizational and community levels?
It begins with the decision to act -- to act in a way that equally values social capital, environmental capital and economic advancement in a balanced system. Many municipalities and businesses are stepping up to the plate and exploring ways to merge increased capacity (growth and profits) with social responsibility and environmental sustainability.

That leads to the need for education, research and analysis to begin to frame up the short-, mid-, and long-term opportunities that apply to each specific culture, organization or community. It also leads to a new mindset based in systems thinking, what Paul Hawken, one of the most respected authors in the field, has defined as the "Ecology of Commerce."

An effective organization that looks at its strategy through a sustainability lens starts with self assessments. These assessments include a review of products, services, processes and business models and how they could be improved using a sustainability lens. Greenhouse-gas emissions, energy audits, value-chain assessments, competitor analyses and matching processes against standard processes such as ISO 14000 are all methods used by best-in-class firms.

The leadership of this community has begun to answer the question of how to get started. Mayor Allen Joines signed the U.S. Conference of Mayors' Climate Protection Agreement last year, and the city has just completed its first greenhouse-gas emissions profile, with a goal of reducing carbon emissions in the city by 7 percent from 1990 levels. "That may not sound like much," Joines said, "but to meet this mark by our goal of 2012, the entire community must be involved and committed."

As an outcome, the analysis frequently results in a new way to focus on maximizing results for stakeholders (employees, customers, citizens, stockholders). At the highest level, a new strategy emerges that involves a new set of opportunities and market innovations. Actions that do not add value to an organization and its owners should not be priorities. Sustainability is not only good for the survival of our planet -- it is also a key means to increased profitability.
Winston-Salem's stated goals will lead to an exploration of its connection to larger systems of community and the environment. With our support and energy as citizens, that path will eventually lead to an understanding of sustainability as a core strategy for the entire community.

■ Daniel S. Fogel is an associate dean at the Babcock Graduate School of Management at Wake Forest University and chairman and founder of EcoLens Group. Peter F. Marsh is the president and co-founder of EcoLens Group and vice president of Workplace Strategies Inc.