Connected Ecosystems: Climate and Agriculture

I have mixed feelings about #ClimateWeek, unfolding in NYC this week to coincide with proceedings at the United Nations General Assembly. It’s a little like the “patient safety” department in a hospital. A department? Isn’t patient safety the first responsibility of everyone?! A week? Isn’t preserving a stable climate everyone’s responsibility every day?

I get it. I work with a lot of the organizations that participate and wholeheartedly support taking advantage of UN conferences and meetings to draw attention to this global, species-level problem. 15 years ago, our film "Hope in a Changing Climate" premiered at Agriculture and Rural Development Day as part of the 2009 United Nations Framework Convention on Climate Change (COP 15).

Broadcast globally by BBC World, our award-winning documentary told the story of successful large-scale ecosystem restoration in China, Rwanda, and Ethiopia. It was the impetus for subsequent gatherings and guided discussions in more than 30 countries. The film remains one of the projects I’m most proud of leading because it took an almost impenetrably complex set of issues and made them understandable to non-specialists without oversimplifying. It showed what people around the world could do when working together. Yes, there are more than a few other ingredients in the theory of change, but figuring out how to bring people together is fundamental.

How people then exercise collective power to drive change becomes critical, especially if the goal is to alter or replace embedded systems. Early next month in Denver, as a guest of Canopy Farm Management, I’ll be with a group of investors and practitioners driving change through investments in regenerative food systems (Regenerative Food Systems Investment). Regenerative agriculture is not exactly the same as ecosystem restoration. But if we can appropriately scale regenerative agriculture now, maybe the sequel to “Hope in A Changing Climate” could be “The Promise of Regeneration?”

Watch the full-length version of "Hope in a Changing Climate"
(Courtesy of Plant for the Planet)

Newton Was More Right Than He Knew “…an object in motion remains in motion unless acted on….”

In Minneapolis for a convening to help build “an Intersectional Philanthropic Approach: Climate Change, Agriculture, and Healthy Rural Communities”, I am reflecting on a film we made in 2009. Hope in a Changing Climate premiered at Agriculture and Rural Development Day at COP 15, the goals of which are described below in the report from the International Institute for Sustainable Development.

“The key objectives of the meeting were to build consensus on ways to fully incorporate agriculture into the post-Copenhagen climate agenda and to discuss strategies and actions needed to address climate change adaptation and mitigation in the agriculture sector.”

Tom Vilsack, The U.S. Secretary of Agriculture, both then and now, addressed the group and “underscored that food security and climate change are linked and one cannot be addressed without the other.” The film went on to be broadcast globally by BBC World, received numerous awards, and was the impetus for gatherings and guided discussions in over 30 countries.

And now we are approaching COP … 29.

I thus can’t decide whether I am proud to be a part of this important meeting or dismayed that it has taken us so long to have such a joint convening of funders. Probably both. Congratulations are due to the leaders and staff of all the sponsoring organizations: Sustainable Agriculture and Food Systems Funders, Climate and Energy Funders Group, Funders for Regenerative Agriculture and the Health and Environmental Funders Network. Putting together something like this takes a ton of thinking, planning, coordination, and execution. And as has been the case with all previous SAFSF gatherings, I am sure it will be enlightening, spawn collaboration, and help move not just one but multiple needles.

But why has it taken so long to do this – to act? Surely it is not because participants don’t know one another. And while there is always some competition for members among philanthropic affinity groups, we are a generally collegial group and don’t operate in the “free” market that many would likely agree is the cause of serious environmental, climate, health, food, and agricultural challenges. And although resources are always scarce, it is also not for lack of funds.

The last 18-months has seen a host of positive announcements from USDA, ClimateWorks, Acumen and others; and the Global Alliance for the Future of Food, Rockefeller Foundation and additional organizations are pushing for deeper collaboration in advance of COP 29. Yet the question persists; why the lag from COP 15 to COP 29? I’m not sure of the answer, but I think it is important to reflect on how we arrived where we have, at the moment we have.

I propose for consideration what I think is a major obstacle that we need to overcome. Most of us are not trained as systems thinkers. Most of us don’t know the underlying principles that are used to design, understand, and fix systems. Many of us work in organizations where we encourage others, or are ourselves encouraged, to think outside the box. But very few of us have been charged with thinking about the systems that connect the boxes.

Despite our commitment to drive systems change, how many foundations have a ‘program officer for systems’? A member of SAFSF for quite a few years, I have been a regular irritant on this matter – and am excited that Clare Fox, the new head of SAFSF, spoke to the importance of systems in her opening remarks. While the language of systems change can seem opaque, it’s no more daunting to understand system dynamics and hierarchy or mental models than it is to come to terms with carbon sequestration, glyphosate, or nutritional deficiencies. It is helpful when trying to change systems to understand the differences between a fulcrum, a lever, and a leverage point. Whether our vocabulary defines our thinking or our thinking defines our vocabulary, it’s hard to change systems unless we understand them.

Let’s set some targets.

• A webinar series for foundation trustees and leaders on the fundamental of systems thinking;

• Advanced training in systems design for a staff member;

• Guest speakers at annual conferences who focus on systems design and change; or

• A digital and curated library of materials on systems thinking.

I am sure other folks will have better ideas for how to overcome this obstacle. But, please, let’s not wait for COP 40.

Watch the full-length version of "Hope in a Changing Climate"
(Courtesy of Plant for the Planet)

Brittle Systems: Staying Connected in the Post-Pandemic Era

My experience this week at Heathrow is a small but telling example of the global risk many businesses face: multiple systems failing simultaneously. Solving discrete problems is what we do every day, at home and at work. Resolving the failure of a system is much more challenging. However, coping with the failure or near failure of interwoven and codependent systems can lead to catastrophic grid lock.

Heathrow reminded me of airports I used regularly running my business in the Soviet Union – minus the stray dogs and birds inside the terminals. In both settings people were working mightily to succeed despite multiple systems failures.

A common feature of systems failure is a disconnect between people with and people needing information. Communications collapses often go unseen until they spill over either into another business function or into the public domain. The most disturbing and compelling explanation of this may be Edward Tufte’s iconic analysis of how the likelihood of “O-ring” failure was missed in a jumbled PowerPoint slide before the Columbia shuttle burned on re-entry. (PowerPoint Does Rocket Science--and Better Techniques for Technical Reports)

Although inconsequential by comparison, massive crowding, low ceilings creating a cloud of noise, and awful or completely missing signage at Heathrow meant that hundreds of people in line for dozens of flights could not hear agents shouting. They were trying, in vain, to pull people who were at risk for missing flights from lines that started well outside the terminal building. While waiting, we asked ourselves numerous times: “What did she say, was that about Dulles or Dallas?” It should have been obvious to on-site managers that shouting indecipherable instructions in an overcrowded, international airport was going to fail, especially while competing with booming public address system broadcasts of clear but useless instructions about unattended bags.

We received repeated false assurances not to worry because there was a back-up plan -- to supplement the verbal communications with written signage. “We will come around with boards.” But just like the inaudible audio, when agents did finally mingle with the crowd, they were hugging the signs rather than raising them overhead. For different reasons, in instances, people with important information could not get it to people who needed it. The information was known, the users were known; they never connected.

Working around these communications failures, based on experience (always the genesis of workarounds), we managed to get into a short line to a check-in. But when it was our turn, the agent announced that she was closed, I flashed to a surreal scene decades ago in the Soviet visa office in Washington, DC. As I would talk to a consular office behind a glass partition, sliding papers and passports through a little metal tray. If a discussion was not to the Consular officers liking, s/he cut it off. Abruptly, by pulling a curtain down over the window. Conversation done. In this instance at Heathrow, again, information black out.

Despite these obstacles, we finally did make communications work. We told an agent, she found a supervisor, the supervisor phoned the gate, reached someone, received the correction information; they had just closed the gate. By definition, workarounds always come back at some point to rejoin the system that they were avoiding. They are detours, not replacements.

Next stop, customer service for rebooking and a place to stay overnight. Another system, equally brittle, equally on the edge of collapse, and also intertwined and codependent. As required by policy (a system of words), we were told that rebooking is done through a consortium of hotels that service the airlines. Booking a place myself was not an option – well, not an authorized option. She logged into the booking system. She emailed the system operators. No result from either. She emailed again.

While doing all this she was also regularly reaching behind her monitor into a tangle of cables. Since we had more than enough time together (way more!), I learned that this was to switch screens on her single monitor. Again, memories of what in Russia, in the 90’s, we called ‘sneakernet.’ Before networking software enabled multiple computers to share printers, we put together a manual mechanism. If you needed to print, you walked over to the printer and manually flipped a switch that enabled the printer to receive signals from a designated computer. In Russia. In the 1990s. And at Heathrow in 2022.

Finally, she called the consortium operator. After a brief conversation, the agent at the airline consortium for hotel booking hung-up on the airline customer service agent. A digital version of the shade being pulled down in the Visa office. Sensing that I was inside a system on the edge of collapse (as I was in the USSR when it did officially collapse), I mapped a workaround. Calling various airport hotels, I found one with an opening and booked a room. While the consortium booking system was still failing to generate the needed output (a hotel reservation), I let the agent know I had a room. Long story shortened; we then bartered my reservation for her authorization to rebook – which she shared with me by – wait for it – using my phone camera to take a picture of her computer screen.

In a sense, who cares about my experience at Heathrow? We all know airports are a mess. But the mess is much more important and bigger than my experience. Our systems today are so complex, human/machine interactions are sticky rather than smooth, and workarounds are fast becoming the norm. Fragile systems on the edge of collapse are incredibly risky. It’s unsustainable for business because, especially in tight margin sectors, you can’t keep sending flights out with seats empty because passengers could not get through the airport, then occupy a second seat on an additional flight, pay for overnight accommodations, and absorb the snow-balling transaction costs of all these adjustments – in addition to reputational costs.

Transforming systems that are fragile and critical and are regularly right on the edge of gridlock is one of the most critical and daunting challenge of the Post-Pandemic Era (PPE, again). Complex systems fail in complex ways. We cannot fine-tune or tweak our way out of this challenge. We must act.

First, systems thinking cannot remain the relatively obscure discipline that it is today. We need to pull systems training out of engineering schools and build it into our primary, secondary, and executive education institutions.

Second, companies need to come clean about the various systems used to shift costs to customers. We need to understand externalities. By way of a tiny example, the time has come to pull back the curtain on the façade of “your call is very important to us.” Companies have cut staff, reduced training, and invested in technology rather than people to reduce costs – maximizing benefits to owners and imposing costs on customers. As consumers, we have all become unwitting accomplices in shifting the cost of selling ourselves the services being offered. It’s a neat trick. But especially for companies with ethical pledges, commitments to socially responsible behavior, and a dedication to mission beyond profit the externalities charade needs to end.

Third, we need to study joints. Let it be the awareness that connection points between interlocking systems are extremely fragile. And when they fail, risks multiply. And fail they will. It is these in-between spaces, the joints that hold systems together, where failure is most likely. That is as true for O-rings on the Space Shuttle as it is for tiles in your bathroom, or the white space on organizational charts.

The handwriting is scrawled across the wall tiles. We have been warned.

A Peak Behind the Curtain

A Peak Behind the Curtain

Transitioning to an expanded role as “engine for change” in sustainability, environment, and energy funding, The Cynthia & George Mitchell Foundation invites external thought leaders to blog.

 (Full text below.)

When is it worth protecting a wetland or enacting a new safety regulation? Writ large, what is the role of government in promoting and protecting public welfare? Regardless of our political orientation in these divisive times, few would oppose basic government standards for electrical wiring in our homes or in the service of food safety, right?

But how much is enough or too much?

There is a nested suite of issues and assumptions that often go largely unexamined in the debate about the value of environmental protection and whether it supports or constrains economic growth. Let’s look at them one at a time.

On language

Since language both reflects and drives thinking, the words we use matter; they define the frameworks we apply to the world around us. And seemingly simple words such as “worth,” “value,” and “price” are often used interchangeably when they mean quite different things.

Price, an economic term, describes the numeric indicator of something for sale in the marketplace – a number that allows a buyer and seller to communicate. It is not, however, the same as value which brings into the equation ethical and moral considerations that might or might not be reflected in economic price.

And “worth” adds yet another layer of complexity. My view of what something is worth may be quite different from yours. The higher price a hotel might charge for a room with an ocean-view versus one with a view of the dumpster might be worth it for you because you are going to spend a lot of time in the room. For me (since I am only sleeping in the room), I don’t care about the view. We value the same things differently.

Core Assumptions

The current paradigm for evaluating environmental (and other) public policy proposals posits market failure as the driver for government intervention. We typically presume that the market, while imperfect, will nonetheless generally serve the public interest with modest government interventions. Over the long arc of history, however, that is very much a debatable proposition.

That the “free market” is the greatest mechanism for generating wealth and prosperity may well be true. But when we put either an equity, ecosystem, or time lens on this proposition it becomes very much a hypothesis rather than a statement of fact.

Leaving aside hard questions of morality and accountability, how well is public welfare served when 86% of all the wealth in the world is controlled by 10% of its people while the other 90% control only 14%?

How is the public welfare of future generations being served by the spread since World War II of persistent organic pollutants into every corner of the planet?

Whether long-term social welfare, globally, is best served by a loosely controlled marketplace or a more empowered government that truly creates a level-playing field for all actors in the marketplace is very much unclear.

And, at an even more fundamental level, the market/government duality obscures that prosperity and economic growth might not be the highest aspiration of a society. Entertain for just a moment the thought experiment that identifies equity or spiritual fulfillment as our highest social goal. Or, even more radically, what our world might look like if ending poverty was our core social goal around which policy, capital, and intellect were all united?

As a Practical Matter

Proponents of conventional thinking will assert that “as a practical matter” we need to price clean air, carbon emissions, fishing stocks, the value frogs contribute to ecosystem stability, and the agricultural value of pollinators like bees. While inarguably useful and important, the danger here is in how we assign value, who the “we” is that does the assigning, and whether we lose something that is invaluable in our efforts to monetize nature in order to protect her.

Before we become too attached to current practice, let’s remember that before Copernicus it was the practical consensus that the sun rotated around the earth; and it seemed crazy to consider renting your apartment to a total stranger before AirBnB’s business model. What seems impractical one day can become commonplace the next.

Our thinking is not sometimes but almost always limited by our imagination and the intellectual and operational tools we deploy are very much time-bound. Whether measuring particulate pollution, designing QA (quality assurance) protocols for process engineering, or marveling at the expanding storage capacity of a chip, today’s KPIs (key performance indicators) bear little resemblance to those of a mere decade ago.

Declarations of what we “know” should be tempered with a large dose of humility.

Benefit/Cost Analysis

One of the most powerful tools in our measurement arsenal, benefit/cost analysis, is mandated across the government; it is the means by which we assess the value of the previously discussed government intervention to address market failure. It is, thus, an immensely powerful tool. And while as a tool it may be seen as neutral, “as a practical matter” it is subject to manipulation and misuse.

What goes in the benefit and what goes in the cost column when trying to devise a policy to address climate change? Closing high emitting coal-fired power plants sounds great—unless you are a coal miner. The benefits of fracking once seemed to obviously outweigh the costs—but that was before we understood the extent of methane leakage, water contamination and possible fracking-induced earthquakes.

In addition to the accounting challenge of capturing all the costs and benefits, there is also the equity/distributional challenge when deploying this widely used tool. When we provide agricultural subsidies in the U.S. to grow corn for ethanol or high fructose corn syrup, do we need to account for what impact this will have on smallholder farmers across the globe?

Even more challenging is the issue of how we account for unintended consequences and the passage of time. While economists and investors have a suite of tools for this, what is a reasonable time frame over which to calculate costs and benefits? If we are talking about the habitability of our planet, how far out should we look: a decade, a generation, one-hundred years? In agriculture, for example, what looks like a terrific plan for increasing short-term yields to feed a hungry population today may be disastrous a few decades from now—if it is predicated on mining the soil of nutrients until there are none left to mine.

Value of a human life

As noted at the outset, it is and should be a sense of public welfare that drives consideration of policy. And public welfare is about people, but what I do, singly, as an individual, may seem benign until 300 million other people do the same thing. Think littering. The public consequence of personal choice is at the center of many critical debates today: sugary beverages and public health, antibiotics and food, for example.

How we value human life is another critical element of this debate which rarely makes its way into the public discourse—because it is complex and ethically awkward. But it has implications for everything from wrongful death settlements in hospitals to the height of guard rails on public roads.

As part of cost/benefit analysis policymakers routinely assess the value of a human life and factor that in to how much we spend on safety. When a lawyer guides a client in a suit against a hospital for wrongful death, they will assess how much money a court might award the surviving family members. Analysts will look at indicators like lost earnings, the value of companionship, past and potential social contributions. And they will tell the surviving family members what they think is a reasonable “value” of the life just lost. It in no way represents the worth of the person. As a practical matter, it is nothing more than a price in the marketplace.

Risk

As with cost/benefit analysis more broadly, who bears the costs and who enjoys the benefits are central to the calculus.

The death of a patient is, for a hospital, a cost of doing business; it happens. It is handled by folks from “patient safety” who are tasked with “risk management.” For a family member, the patient and the risk are profoundly personal.

So too with climate change, sustainability, energy, water, and all environmental-related issues. Risk and the perception of risk is another critical element in this suite of issues that are submerged beneath so much of our public discussion.

Risk is the intersection of probability and consequence. Risk is where they meet. If you think you don’t make risk calculations, have you ever crossed the street against the light? You made a calculation at that practical and metaphorical intersection. Low probability and low consequence decisions are easy; not likely to happen and if it does, low consequence. No big deal. High probability and high consequence, like jumping into the ocean without knowing how to swim, also pretty easy. Bad idea.

The tougher challenges are obviously around situations where there is some probability and some consequence. And around those decisions, the underlying question of who bears the risk and who is protected from them is again central if overall public welfare is the goal.

As we continue to address the wicked complex challenges of our time, how we think about them may well determine the extent to which we can or cannot successfully address them. We are, like all civilizations before us, constrained by the tools and mindsets we have at our disposal. We are not, for example, well practiced systems thinkers; we have trouble envisioning alternative futures and pathways.

If we want different outcomes, we need to change the systems we have created. And that begins with expanding our thinking to embrace new paradigms and challenging our own most basic assumptions.

Monday Monday

Pondering the categories and labels that we come to accept as fixed and true. My daughter, intellectually inquisitive at 12, was asking, “Who decided Monday was going to be called Monday?” And as we were driving from DC to Maryland, who decided “about state borders anyway?” After groping with various fact-based answers, I paused and realized that this was more than anything a question of metaphysics rather than geographic history.

As Pope Francis completes his US visit in the city of brotherly love, I am traveling through Philadelphia en route to a meeting of the Environmental Grantmakers Association (EGA) with a copy of the Encyclical on Climate Change and Inequality. How is it that for so many years the issues of global climate stability, poverty and inequality were largely disconnected from one another? As we teach at Mundo Verde PCS, “habits of mind” are critical.

Looking over the EGA members, I think of the work I have been doing with Greyston: NYS’s first benefit corporation, supplier of brownies to Ben & Jerry’s and the pioneering social enterprise that has made open-hire a viable business practice while also providing jobs to the structurally unemployable. Is Greyston a business or a nonprofit; what is one to make of the social good movement?

The business structures we assume have been around for a very long time are, in fact, reasonably new creations. Although we have come a long way from 1602 when the Dutch East India Company was formed, and even from the passage in 1811 of the New York State statute governing corporations, clearly the overall pace of change is not slowing. And yet amidst change, inequality persists and even worsens: today the 85 richest individuals manage wealth equal to that of the poorest 3.5 billion people.

The notion of socially responsible business we can date to maybe 1953, sustainability to 1987, the triple-bottom-line to 1994, and benefit corporations to 2006. And in America, philanthropy tracks a not dissimilar course, and one closely connected to business: from Andrew Carnegie in 1905 and the Rockefeller Foundation in 1913, to the UN Global Compact in 2000 that seeks to set ground rules for responsible business behavior on the global stage.

We seem on the cusp of rewriting the fundamental rules and definitions around how we define returns on investment, what makes a business a social enterprise, and where responsibility rests in the efforts to address challenges that cut across the operational and mental boundaries we have created to help us understand a dizzyingly fast and complex world.

This Pope clearly is different, but how much of a difference do his words make? The work we need to do to reset the core frameworks and systems can seem as daunting as ever.

And, by the way, how did we select names for the days of the week?

The Sustainability Trajectory

The Sustainability Trajectory

Transitioning to expanded role as “engine for change” in sustainability, environment, and energy funding, The Cynthia & George Mitchell Foundation invites external thought leaders to blog.

In 2012, a little bakery just north of New York City became the first business licensed in New York State as a Benefit Corporation.

Thus Greyston Bakery joined companies like Patagonia, Etsy, and Ben & Jerry’s in advancing a fundamentally new model for business that focuses as much on a declared social mission as on its business purpose. The advent of benefit corporations signal the beginning of a profound structural shift in the business of doing business—the first of four disruptive shifts discussed in this essay.

Far from being set and fixed for all time, the core structure of business is fluid and evolving.

In 1811, New York State enacted the first law in the United States providing for the formation of limited liability corporations. Since then we have enjoyed incredible benefits from a period of industrial production unsurpassed in human history. And while it may be seem inconceivable that this period could be winding down, it would be equally foolish to bet that it will continue forever. With this unparalleled productivity has come consumption on a scale that cannot be sustained, in part because the wealth produced in this 200-year stretch of human history has also generated inequality on a scale that is mind-boggling. The 85 richest individuals on the planet have amassed wealth equal to that of the 3.5 billion poorest people in the world.

Baking brownies in Yonkers is not going to close that gap. But as a benefit corporation, Greyston is not just, or even primarily, in business to bake brownies. Greyston does not hire people to bake brownies so much as it makes brownies in order to hire people. Greyston’s social mission is open hiring whereby it hires people on a first-come, first-served basis without asking for references or doing any type of background check.

They are in the business of hiring the structurally unemployable (those who have been in jail, on drugs, or homeless). Other benefit corporations have declared other social missions such as conservation for Patagonia or “re-imagining commerce” for Etsy. While there are about one thousand benefit corporations today, there were no limited liability corporations in the United States until 1811 (although business trusts and partnerships existed).

Benefit corporations are of course not the only mechanism through which a business can demonstrate its commitment to socially responsibly behavior. Corporate sustainability reports and corporate foundations often expound on the “good works” being done in the communities in which they operate. But these efforts are often isolated from business operations, relatively inconsequential to the business financially, and not factors in internal business decision-making.

The benefit corporation model pulls responsibility for the social and environmental elements of the triple-bottom line out of philanthropic giving and sets it squarely in the executive suite—embedding those considerations in the core product or service of the business.

Benefit corporations thus fundamentally shift the balance of business priorities. Shareholders become just one powerful group among multiple stakeholders—practically not just rhetorically. The need to run a profitable business remains critical; no money, no mission. But the reasons for running the business are significantly expanded, as is the timeline against which success is measured.

A second disruptive structural change on the sustainability horizon is a shift in the basis for executive compensation. While the data remains somewhat opaque around this issue, what is unmistakably clear is that many more Chief Executive Officers sign eloquent and heartfelt letters to introduce sustainability reports every year. But they rarely actually put their compensation on the line to achieve sustainability goals.

According to a new CERES report, a scant 3% of 613 large publicly traded American companies link executive compensation to anything more than mere regulatory compliance on sustainability related matters.

Sustainability reports have been central to disclosure and transparency; they have given investors and advocates a point of access and leverage; and they have enabled companies to benchmark against best practices. But they have not, generally, worked their way onto the C-suite decision-making dashboard. Sustainability data, painstakingly collected and analyzed, rarely forms the basis for core business decisions. That would change—and fast—if leadership compensation was as closely linked to sustainability metrics (from water and GHG emissions, to community investments and labor practices) as it is to ‘making the numbers.’

As much as we need to redefine leadership, and the compensation that goes with it, so too does the notion of “supply chain” need to be reconceived. And this too will be highly disruptive for leaders and investors who cling to an outdated and narrowly circumscribed definition of the role of business being exclusively about producing products to generate near-term profits for its owners.

Once upon a time not so very long ago, what happened inside distant plants or on fields in far away lands, managed by layers of absentee investors, employing isolated workers with limited voice and even less political clout, seemed safe to ignore. But over a ten-year period, that changed dramatically.

In 1984, chemicals leaking from a Union Carbide plant in India killed thousands, and Bhopal became a household name. Five years later the Exxon Valdez ran aground and poured crude oil into Prince William Sound, tarring Exxon with the stain of corporate irresponsibility that has been impossible to remove. And for years in the 1990s, Nike was dogged by claims, and then acknowledged, that children in impoverished nations were making its shoes.

In a little anticipated shift, global businesses were forced to expand their horizons and exercise responsibility not just inside factory walls but also up and down global supply chains. But those “chains” were, and to a great extent still are, conceived of as circumscribed bands of direct inputs that flow vertically upward into products of ever increasing value.

We are now entering an age in which that band is bulging and the myriad horizontal connections at each point along the chain have also become of concern to global manufacturers. The flow of supplies is a web, an ecosystem—not a chain. The plant that makes cotton t-shirts relies on cotton grown in fields, picked by workers, sustained by nutrients and water and moved to market in myriad ways. And while a textile manufacturer may not perceive itself as being in the water business, that mindset exposes the business and its investors to immense risk if the price for cotton skyrockets due to competing demands among farmers, bottlers, other companies and citizens for access to limited water resources.

Managing the interconnected web of resources for multiple users is going to push buyers and procurement teams and their senior leadership to develop whole new skill sets and layered systems to ensure access to resources. Brute market power and dominance may temporarily forestall the day of reckoning for some corporations that cling to the notion of limited supply chain responsibility. But those that grasp the web-like quality of modern supply will likely prove more resilient and capable in the face of future challenges.

And finally, perhaps it is not really sustainability that holds the key to future prosperity across the triple-bottom line. Despite all the reporting, the deeply dedicated sustainability teams, and the efforts to build systems and software and better metrics, perhaps at the end of the day what we really should focus on is neither financial performance, nor integrated reporting, nor even the growth of the benefit corporation. Perhaps we are heading into an era in which we will begin to package these indicators into something vastly more than the sum of the parts to assess the overall health of a corporation. Whether organizational or personal, it is health that really tells us how we are doing, what we should be doing more of or less of, and how we stack up relative to others of similar type and size.

It is not a simple metric, but corporate health or wellness may be the elephant whose individual parts we have been poking at for some time without being able to fully see it for what it truly is—the underlying measure of a company’s capacity to generate value over time.

Sustainable Living or Survival of the Fittest?

This year’s CERES conference in Boston was provocative and challenging -- as it should be in celebration of 25 years of creative, innovative, and collaborative advocacy to bring greater openness and accountability to corporate behavior. And it is behavior, of course, that needs to change; openness and accountability are only the tools of the trade in modifying corporate practices.

Paul Gilding, perhaps the speaker who made the audience most usefully uncomfortable, painted two competing visions of the future. One, the Unilever Sustainable Living Plan, champions collaboration, aggressive sustainable agriculture practices, and a fundamental reorientation toward attempting to do more with less, continuing to grow and expand but with an increasingly limited footprint. Gilding also celebrated the clarity with which ExxonMobil has now articulated a different vision of a global economy driven by aggressive use of fossil fuels, where lack of climate stability is seen as a cost of business as usual, and within which ExxonMobil’s rightly vaunted discipline in execution is seen as its competitive trump card in a go-it-alone world.

While perhaps overstated a bit, I concur with his fundamental view, having served as a consultant to both Unilever and ExxonMobil -- although the engagement with ExxonMobil was abruptly ‘paused’ due to differing visions of what constitutes responsible behavior around climate change. Unless the most esteemed international scientists have it all wrong, the two competing visions of the world are pretty stark. If we push past an overall global increase of temperature beyond 2°C, the natural ecosystems that have evolved into a relatively stable and hospitable climate for our species are going to shift dramatically. And if the work commissioned by the US Department of Defense some years ago from the Global Business Network (run by Peter Schwartz, long-time scenario planning chief at Shell) is right, then we may be looking at abrupt rather than gradual changes in the global climate.

As with much change, wealth provides insulation. Resources can be mobilized to plan, defend, and identify alternatives when threats present themselves. But walled castles, cities, communities, and nations have a way of failing over time. While perhaps splendid in their isolation during their halcyon days, they also are brittle. Sea walls may be the Maginot line of the 21st century.

But there is a point at which the dynamic of “growing concentration of wealth and increased dispersal of political power” sends tremors through both markets and governments. And this was articulated well at CERES by Mary O’Malley from Prudential, an insurance company that knows a thing or two about risk.

While no one at the CERES conference was counseling the need to abandon ship, many stressed that business as usual is no longer tenable. From Roderick Morris at Opower to Rob Olson, Chief Financial Officer at IKEA US, the resounding message was to get ready for rough sailing into a vast sea of change. And those outfitted properly for the voyage stand to reap vast rewards. As Morris rightly noted, it is an invitation to innovate when the market presents a situation where “energy and water are cheap and saving them is boring.”

From Olson at IKEA, we were reminded that preparing for this new era requires flexibility and leadership to change traditional thinking. For decades companies have forsworn adjusting hurdle rate (return on investment targets) to accommodate viable sustainability projects that will bring long term value to stockholders, but by definition take longer to mature. IKEA has wisely adjusted hurdle rates outward from 8-10 years or in some cases to as far out as 25 years for critical sustainability investments.

Twenty-five years is 100 quarterly statements and 100 calls with Wall Street analysts. Few business leaders here today will be on those calls – and we generally lack bandwidth, systems, governance, and management capacity to manage out twenty-five years. But who among our business leaders today is planning for their companies to be out of business in twenty-five years? To survive, business leaders need to stop waiting for analysts to ask questions on those quarterly calls about the painstakingly compiled sustainability reports – and instead start actively presenting sustainability as core to the long-term generation of value for investors.

Leaders hesitant to make the case for sustainability as a core business mission and companies with a culture of complacency about their market position would do well to remember the fate of iconic brands that also “missed the memo” on change: Blockbuster Video, Borders, Polaroid. Who’s next?

Dismayed by one IPCC report after another (each showing with ever increasing certainty that the global climate is become more and more unstable), reading a steady flow of nerve-racking news from Ukraine, wincing at the stories of horrific abuse in Nigeria and Sudan, and still hoping for a more robust economic recovery -- it is useful to reflect on the powerful examples where hope and hard-work have combined to overcame seemingly overwhelming odds. Mary Robinson, the former President of Ireland and no longer the youngest member of the The Elders organized by Nelson Mandela, reminded us all of how Archbishop Desmond Tutu response to a question from a journalists about how he remains an optimist in the face of crushing hardship: “I’m not an optimist. I am a prisoner of hope.”

Risks over Time

Since participating recently in the UN Investor Summit on Climate Risk, and in preparing for the Sustainable Land & Water Program Expert Workshop in Amsterdam on Friday, I’ve been thinking more about risk as fundamental conceptual framework for making meaningful comparisons and connections. Risk is ineluctably comparative; some actions and decisions carry more risk than others. There is physical risk for a bobsledder, financial risk for a chief financial officer. What seems risky to me, may seem not at all so to you.

And risk speaks to how we value what we don’t know. If we knew everything – past, present and future we would have certainty, i.e. the absence of risk. While leadership and intelligence each have many definitions, both require the capacity to choose wisely in the face of uncertainty.

Equity and fairness are also embedded in and sometimes obscured by how we present risk. As an agricultural buyer I reduce the risk of supply disruption by contracting with multiple suppliers; and as a farmer I can reduce my risk of a bad harvest by diversifying my crops. But when I farm higher up on a steeper slope to expand my acreage, I may create new and unforeseen risks for the downstream fishing village that may be wiped out by the silt washing off my hillside. Risk is often location specific—my hill, your river—and also very time sensitive.

And when we draw down nature’s capital stocks today, whether of rare-earth metals or carbon absorbing forests, we shift risks out into the future. As discussed at the UN Investor Summit on Climate Risk, stranded assets thus represent an interesting test-case of how we define present versus future risks. “Known reserves” in the oil and gas sector have traditionally been valued as assets and carried on the books of global companies on the presumption that the assets will be productively used at some future moment.

But there is a wrinkle in this thinking – a serious wrinkle – as documented by the work of CERES and its insurance and business partners. The risks of actually combusting all fossil fuel reserves across the planet are so high that upon serious consideration, no one really believes we could survive if we used 100% of these reserves. So, if some number less than 100% is actually usable, then some of those reserves are ‘stranded assets’ with quite limited value if they are never going to be used. How overvalued are the oil majors: one or two or ten percent? And that makes for a very different discussion about social, business, and financial risks in the oil and gas sectors.

Looking ahead to the meetings in Amsterdam, and immersed at the moment as well in a World Bank project on agricultural risk, looking at landscape- rather than farm-level productivity may (like stranded assets) unsettle decades of thinking in agriculture. The unceasing call for yield and productivity improvements may well have taken us down a path to short-term success while pushing extraordinary risks out into the future as we have undermined the productive health of landscape ecosystems around the world.

From a landscape-level perspective, a particular farm is only as healthy and productive over time as the landscape around it that provides for, among other things, soil nutrition. While we can postpone the day of reckoning for decades, a farm in the midst of a destroyed and denuded landscape is hardly a farm at all – even if it still has some productivity left in its tired soils. It too risks becoming stranded, as the assets around it that once breathed life into it become barren and infertile.

Like life itself risks rise and fall in response to both planned events and unintended consequences. That we have the capacity to manage risks wisely and with deep respect to how risks change over time is clear. Whether we have the will to do so is the greater challenge.

2014 A Happy New Year

I am comforted by the awareness that changes we dismiss today as inconceivable are often viewed by historians as having been inevitable.

A Happy New Year might thus include news of the following momentous changes.

• Following in the reconciliation footsteps of Nelson Mandela, President Salva Kiir of South Sudan and his former Vice President Riek Machar reach an accord to prevent this newest of nations from sliding into tribal anarchy.

• Noting that even Al Queda can apologize and take responsibility for being in the wrong for allowing one of its own to attack a hospital in Sanna, Yemen, George W. Bush and Dick Cheney apologize to the American people, admitting that they were in fact grievously wrong about the existence of weapons of mass destruction in Iraq.

• In a surprise announcement in Davos, CEOs Paul Pohlman (Unilever), Lloyd Blankfein (Goldman Sachs), Larry Page (Google), Mark Parker (Nike), Sam Walsh (Rio Tinto) and Norbert Reithofer (BMW) confirm rumors that beginning in 2016 they will base executive pay, including their own, not only on financial performance but also on sustainability achievements.

• Following copy-cat revelations in China and Brazil from whistle-blowers like Edward Snowden, the permanent members of the UN Security Council announce that they have begun implementation of a global intelligence gathering consortium to combat terrorism; and in a stunning move Republican leadership in the Senate vows to push for quick passage in the U.S.

• Finding common purpose in sustaining the long-term vibrancy of American democracy, Bill Koch, Bill Gates, George Soros, and Robert Reich (Board Chair of Common Cause) call for an end to all private funding for U.S. political campaigns.

• Recognizing the immensity of the self-inflicted economic damage that ripples through the economy from hunger and poverty, Mitch McConnell, Harry Reid, John Boehner and Nancy Pelosi announce a determined bi-partisan effort to raise the minimum wage to $15/hour.

• In an equally unexpected outpouring of bipartisan concern for the future of the country, House and Senate leaders pass of a carefully constructed carbon tax that is progressive, avoids stranding assets, and creates a truly level playing field; the US Chamber of Commerce and ExxonMobil push for passage, arguing that a stable climate is essential for long-term business investment.

• In response to questions posed to President Putin at the Sochi Olympics, he admits knowing next to nothing about the other twenty thousand prisoners he released along with Mikhail Khodorkovsky and the members of Pussy Riot.

• In a continued effort to introduce competition in the energy sector, House Energy Committee Chair Fred Upton (R-MI) and his fellow Michigan Representative, Democrat, John Dingell, propose legislation to repeal the Price-Anderson act, which indemnifies the nuclear power industry for any losses exceeding $12.6 billion.

• And in a stunning announcement cheered by consumers around the world Samsung, Apple, Google and Microsoft agreed to provide their unique mobile applications and services via a common platform and with fully compatible plugs, cords, and charging devices.

Hope springs eternal. Happy New Year!

Yes… But…

Rich and deep conversations are the hallmark of CERES conferences and this year in San Francisco was no exception, as CERES looks forward to its 25th anniversary in 2014. During the conference the newly released CERES report on fracking and water stress was covered in the New York Times. And General Motors signed the Climate Change declaration.

At the conference, Bill McKibben sounded yet another eloquent call for urgent action, warning the more than 500 participants that getting this done “over time” is no longer an option. On the global freshwater crisis, Peter Gleick from the Pacific Institute similarly observed that we have already passed the point of “peak water” and that unlike peak oil there are no substitutes for water.

Dan Hesse, CEO of Sprint, noted that measured along a very much shorter time-frame he has never been asked a question about sustainability on any of his quarterly earnings calls. At the other end of the spectrum Heidi Cullen, Chief Climatologist for Climate Central, reminded everyone that when the Dutch government vowed in the mid-20th century to protect its people from massive flooding, it opted not to prepare for a one in a hundred-year storm but rather adopted an 800-year time-horizon.

Although the redwood groves in Muir Woods, a mere 16 miles north of the conference site, are heirs to the tree-like ferns that appeared on earth 300 million years ago (the fossilized remains of which are today’s fossil fuels), who among us can think out anywhere close to 800 years?

But, on the other hand, who among us wants to predict when the companies we work for, or buy products from, will cease to exist? While no executive will admit to planning for the closure of his or her businesses, lack of longer-term thinking is essentially exactly that. If we are not implementing sustainability practices now -- managing resources such as water and soil health and biodiversity and atmospheric capacity for carbon absorption -- then we are failing in our fiduciary duties to preserve and generate value for stockholders and stakeholders.

Yes, but as much as we need to deepen the capacity of our species to think long-term we need to ‘scale’ urgently not ‘over-time.’ As David Blood from Generation Investment made very clear, longer-term business thinking about sustainability also yields near-term results: risk mitigation, cost reductions from greater environmental efficiencies, employee retention, and lower cost of capital.

But how do we scale, accelerating business change such that it is in synch with what science tells us are the outer limits of time and temperature before the fragile window closes that has allowed our species to develop over about 200,000 years – which is either a very long time for an earnings analyst or a mere blip in geologic time.

The answer often proposed, taking things to scale, may be right. But scale may not mean bigger. Scale might not mean building acres upon acres of solar panels far away from electricity users. Rather it might mean small solar clips we can attach to our cell phones. In America alone, with an estimated 328 million phones dispersed among a population of 314 million people this might not be such a small achievement. A different kind of scaling.

But could such a device be invented and marketed by a company if in its development it has the same RoI hurdle rates as all other corporate undertakings? Would investors and analysts on those quarterly earnings calls have the stomach for it? Seems like the Dutch did after the Great North Sea Flood of 1953. Was hurricane Sandy enough to galvanize Americans?

“Pandora’s Promise” – Can it Be Kept?

Robert Stone has produced a provocative and important new documentary on nuclear power that was screened this week at the Sundance Film Festival. But as important as it is, Pandora’s Promise is a film that in its current configuration undermines itself.

Stone sets out to document how the dangers of our unstable climate have pushed him and a set of people featured in the film to revisit their long-held opposition to nuclear power and instead embrace fourth generation nuclear, or Integral Fast Reactor (IFR) technology. Fourth generation nuclear may indeed offer safety improvements over current operating nuclear reactors that are fundamental game changers. But the credibility of that notion is called into question by other aspects of this movie that is at once passionate and heartfelt and very unsatisfying.

The cast of characters chronicled throughout the movie are not only never identified in terms of who they are or what they do, but also engender little empathy or interest as they tell their stories. They are clearly sincere in their various professional assertions and descriptions but they lack depth. We learn almost nothing about them as people in the course of the movie; it is almost as if they are actors playing themselves rather than real people telling real stories.

And some of the assertions and scenes strain the limits of credulity. Michael Shellenberger, never identified beyond his description of himself as an environmental activist, voices what he claims is a common view -- that he was stunned to learn that background radiation exists naturally on earth and is not purely a human creation. Really? Perhaps he will say more about this during his scheduled appearance on The Colbert Report on Monday, January 28th.

And a few scenes also look like they might have been staged. Do scientists visiting the exclusion zone around Fukishima really collect radiation data wearing radiation suits with no head covering or breathing apparatus? Are they partially suited to make the point that suits aren’t really needed at all or conversely to show brave scientists doing what it takes to get important health data? Or is it just to add dramatic tension to the film?

But more important than these small items, the movie seems to cherry-pick and even distort data to about nuclear power, past and present, to make the case for its future. I posed a few questions about this. The movie claims, correctly, that Chernobyl claimed only 28 deaths due to Acute Radiation Syndrome and drums home the authenticity of this data point with a ponderous parade of acronyms over the highlighted line from the international report coordinated by WHO ("Chernobyl’s Legacy: Health, Environmental and Socio-Economic Impacts"). But there is no mention made – other than to skewer Helen Caldicott – of equally well-documented facts such as the following from a WHO overview: Health Effects of The Chernobyl Accident.

• “A large increase in the incidence of thyroid cancer has occurred among people who were young children and adolescents at the time of the accident…. [And] 5,000 cases of thyroid cancer have now been diagnosed to date among children ….”

• “Recent investigations suggest a doubling of the incidence of leukemia among the most highly exposed Chernobyl liquidators.”

• “The Expert Group concluded that there may be up to 4,000 additional cancer deaths among the three highest exposed groups over their lifetime.”

In the same way the film passes over these facts, it presents a compelling but fatuous claim that all the waste generated by all commercial nuclear reactors from 1958 to the present day could be stored on a single football field. I asked about this after the screening and the very vague and dodgy answer only confirmed my suspicion that this benign metaphor obfuscates more than it educates. To begin with, physical size is not the right way to measure nuclear radiation. It is like a doctor talking about big and small pills rather than doses and efficacy.

But so be it, if size is to be our unit of measure. There are 72,000 tons of commercial nuclear waste in the U.S. stored either as fuel rods immersed in water or in dry cask above-ground storage at some seventy-seven sites in thirty-five states. Leaving aside the considerable scientific debate about using short-term techniques for long-term storage, there is no way reactor waste stored in this manner can fit on a football field.

So a sleight of hand is needed to justify this claim. The calculation seems to be based on the quantity of isolated hot nuclear pellets in the abstract. In reality their intense radioactive power is only contained by surrounding them with zirconium shielding and immersing them in tanks with re-circulating water and additional chemical coolants. They exist only within this waste containment system. Thus, the actual combined footprint of the four spent fuel waste pools at the Fukushima nuclear plant in Japan, for example, measured 48m x 31m. Waste from this one plant alone would thus stretch about two-thirds of the way across a football field and from one end- zone to midfield.

Joined on stage Thursday by two characters from the film – Gwyneth Cravens and Richard Rhodes -- Robert Stone seemed, to his credit, to be uncomfortable with they way both totally failed to answer my questions about thyroid cancer and the football metaphor. Gwyneth Cravens clearly did not want to answer the question of how the football calculations were arrived at and stumbled through a basic explanation of techniques for storing nuclear waste. And beyond waxing rhapsodic about the lofty intentions of the first prime minister of Belarus, Vyachaslaw Kyebich, Rhodes spoke not at all to the results of extensive international medical research on the health effects of Chernobyl – admittedly an area outside his considerable expertise on the history of nuclear weapons.

These serious flaws in Pandora’s Promise undercut its credibility. While it is true that fear of radiation and short-term cancer vastly exceeds documented deaths from commercial nuclear accidents, that fear has been fanned not just by environmentalists and the media – which the movie happily indicts – but by a culture of secrecy, dissembling and false assurances propagated for decades by the nuclear power industry.

We have been promised energy “too cheap too meter” since the dawn of the nuclear age. Perhaps fourth generation nuclear power is a key piece of the puzzle to ensuring climate stability for future generations. But before citizens or policymakers agree to let Pandora out, her promise is going to need to be documented with much greater credibility than is offered by the unidentified characters in this movie.

Regulating the Playing Field

As Hurricane Sandy shifted the national conversation in the closing days of the U.S. 2012 presidential campaign, so too has the rampage at Sandy Hook Elementary School interrupted the partisan machinations over government spending and taxation. As we look forward to 2013 and beyond we thus have a rare moment to reflect and observe that these issues share a common root: the respective roles of government and business to shape our future as people and as a national community.

In violation of the investing maxim that past results are no indication of future returns, many business leaders cling to the shibboleths of the past to secure their future. They argue vehemently against regulations, and against government spending more generally, insisting that industry can best police itself and that regulation stifles growth, innovation, and job-creation. And in the same breath these lobbyists for the past ride in elevators, work in offices, eat food, drive on roads, and use communications bandwidths regulated for the public good by none other than the government.

Businesses large and small also regularly evoke the notion of a level playing field – and insist that the only role for government in the market is to level that field. But level for one party can be decidedly sloped for another. So this is generally nothing more than a cover for seeking or maintaining competitive advantage from government support – from tax breaks in the energy sector to federal support for medical research.

From fabrics to firearms, the question of how to allocate responsibility across the value chain is central to the success both of private enterprise and governments not only in the US but also around the world. See especially “From Triangle to Tazreen: A Century of Lessons,” by Francesca Rheannon in CSRwire on the recent plant fire that killed 112 in Bangladesh, and Nicholas Kristof in The New York Times on the carnage in Connecticut (“Do We Have the Courage to Stop This?”).

Beyond these two issues, here are four more crying out for resolution – and resolution that would benefit business, people, and the national and global community.

Nanotechnology, long out of the barn, is now being chased by various regulatory agencies. Like GMOs before it, nanotechnology holds great promise but is fraught with risk, both known and unknown. Although late to the table, government can help businesses drive down that risk with a smart regulatory framework that directly addresses both short-term needs and potential long-term consequences.

Fracking, hydraulic fracturing of the earth’s deep rock formations, holds out the potential to drive down American energy costs and thus boost production and on-shore manufacturing while creating jobs and billions of dollars of revenue for private companies as well as debt-ridden governments. But the risks associated with the vast quantities of water used to crack the rock, the chemicals used in the fracking, and the global consequences of an energy independent America are poorly understood. While state governments are awakening to this opportunity/challenge, the federal government needs to engage and drive a robust discussion about what level means in the field of fracking.

The search for climate stability, of course, continues to cry out for U.S. and global leadership. As politicians dither, the ice caps melt opening new shipping routes across the Arctic, storms increase in intensity, coral reefs bleach, dustbowl conditions return to the U.S. Midwest, sea-levels inch upwards, scientific panels affirm and re-affirm that the changes are real and man-made, and yet many business leaders continue to act as if this greatest risk to their ongoing operations can be handled by committees and pronouncements. (More soon in another dispatch on the “up the middle, up the middle, up the middle” approach to climate stability.) But there are some companies (see the signatories to the Prince of Wales’ Climate Communiqués) looking forward and as leaders they also are calling on governments to step in and … level yet another playing field.

And last, it is time to again eliminate hunger in America. More than 50,000,000 people in this nation of plenty do not know from where they will get their next meal; fully 49,000,000 receive government assistance through the prodigiously named Supplemental Nutrition Assistance Program (SNAP). While this national outrage persists, elected officials in Washington vote against the hungry and even now have begun to seek to balance the budget on the backs of these least fortunate Americans. See the Food Policy Action report card to see who voted how on key food legislation in the 112th Congress.

Hungry Americans, many of whom vote and have real reason to vote, are not even on the traditional playing field and thus have no interest in whether or not it is level. But for some of those who tend the fields on which we play, the pure pursuit of self-interest seems to be all that matters. While enlightened self-interest can be a huge and beneficial incentive, self-interest as the singular guiding principle makes for a dog-eat-dog world. It also makes predicting the future much easier; as Garrett Hardin explained in 1968, it leads with grinding certainty to the destruction of the global commons upon which we all depend.

We have some important choices to make in 2013.

Cities of the Future

The mega-cities of the nearest future are either hubs of innovation and creativity, as outlined by Richard Florida at the Aspen Ideas Festival), or overrun slums without electricity, transit access to center city, running water and the most basic urban services.

Or maybe they are both? 

Check out the forthcoming The Misfit Economy: Innovation on the Fringe by Alexa Clay and Kyra Maya Phillips (www.misfiteconomy.com)

Capetown photo by Kyra Maya Phillips, co-author with Alexa Clay of the forthcoming
The Misfit Economy: Innovation on the Fringe

Florida has a fascinating project that seeks to assess economic development not through conventional surveys and data collection that lead to traditional computations of GDP, but rather through satellite imagery and calculations of energy use as derived from light emissions seen from space at night.

While intriguing, Florida acknowledges key shortcomings in his innovative approach. I asked him about these yesterday.

Time and Money

I have spent a significant portion of my career managing research projects, publishing materials, devising marketing and communications strategies and consulting to bring needed information and perspectives to corporate and nonprofit decision-makers. So I would never argue against communications and education as indispensable tools in the battle to address pressing global challenges.

But as I articulated the dilemma at the session "Population Challenge" led by Dennis Dimick and Helen Gayle at the 2012 Aspen Ideas Festival, I don’t think the fundamental obstacle to devising solutions to climate change, for example, is a lack of knowledge. We don’t know everything; but we know enough to act. Rather, the core obstacle is our inability to effectively debate and make policy decisions around money.

Unlike the search for the cure for cancer, we actually know what is needed to slow the inexorable path toward climatic catastrophe. We need to reduce emissions of greenhouse gases. And that will result in a profound shift in our energy and economic world.

While there is money to be made in new energy sectors, so too are there vast trillions to be lost in embedded infrastructure and traditional business models if we mismanage the transition.

The other fundamental impediment to embarking aggressively on this transition is that we don’t have the mental perspective or institutional tools to readily grasp the time scale of what is involved in this effort. Even as we search for new technology for carbon sequestration, we are releasing greenhouse gases in mere years and decades that have been naturally sequestered over hundreds of millions of years through photosynthesis. How do we get our heads around a time scale that spans not just a human life, not even just the existence of our species for 250,000 years but the creating of fossil fuels over hundreds of millions of years?

Rational Middle and Social Ballast

As an approach to resolving some of the world’s most intractable problems, embracing the “Rational Middle” sounds like a terrific concept. Who could object to bringing together people of diverse views on energy and climate policy to discuss reasonable solutions in a respectful manner?

This was the touchstone notion at one of the opening plenary sessions at the 2012 Aspen Ideas Festival: “U.S. Energy Future: 'Rational Middle' Will Find Solutions." (The Gregory Kallenberg-directed and Shell Oil Company-sponsored film debuted at the Ideas Festival and is linked below.) But as the distinguished panelists made clear over and over again, we are at a pivotal moment, an historic turning point, a critical stage in managing the energy and climate future or our species. The magnitude of the challenge suddenly seemed far beyond what one might reasonably expect some “rational middle” to resolve.

Confusing the stabilizing middle with the wisdom of balance and harmony was creating an intellectually muddled discussion. The “rational middle” more often than not acts like social ballast, preventing too much rocking of the ship of state. When that ship is sailing well in open ocean, to a clear and worthy destination, then ballast is critical. When we are headed toward an iceberg (released from a glacier melting at unprecedented rates), then ballast will limit our ability to move with needed agility and speed.

As I wondered aloud (see video below), during the Q & A session, when has real innovation ever emerged from the middle rather than from the edge? In another age, “the rational middle” was utterly convinced that the sun rotated around the earth. In another age, it was held as an incontrovertible truth that the earth was flat. In our age “the rational middle” was quite content to deprive millions of Americans of fundamental civil rights simply because they did not have white skin. It seems highly unlikely that Galileo, Copernicus or Martin Luther King, Jr. would ever have been within what we might consider “the rational middle."

We can embrace the rational middle or we can innovate new approaches and solutions. I doubt we can have both.

(For more information on the film series, see the links below and visit www.rationalmiddle.com)

For video of the entire panel discussion and Q & A session,
visit the 2012 Aspen Ideas Festival channel on FORA.tv.
(The exchange above appears at 1:22:10-1:22:49 and 1:26:00-1:27:22.)

The Photosynthesis Economy

Jeremy Rifkin stole the show at this week’s CERES 2012 Conference,” Igniting Innovation, Scaling Sustainability” Amidst a line-up that included EPA Administrator, Lisa Jackson, Jack Ehnes, CEO of the California State Teachers Retirement System (managing $145 billion) and Carl Pope, sage of the environmental community and long-time head of the Sierra Club, Rifkin’s closing presentation was superior not for lack of competitors but rather for its range and scope. One could feel a ripple spread out across the 600-plus gathering of business and environmental leaders in Boston as we absorbed his opening assertion; the largest economy on earth is photosynthesis. In a TED-worthy presentation (and no slides) he then ran through a catalogue of facts and examples – from peak oil and species extinction rates, to economic cycles and renewable energy opportunities. (For more on Jeremy Rifkin's presentations, see his TED talk on "empathic civilization" and his collections on Vimeo and YouTube)

Asserting that the Fall 2008 financial collapse was in fact an after-shock to the real economic earthquake that occurred July 2008 when oil reached $147 per barrel and the global economy began its downward spiral. Given the near ubiquitous presence of petroleum derived products in everything from fertilizer to pharmaceutical products, he makes a strong case that we have now entered a period where 5-6 year cycles of growth and retreat will repeatedly be triggered by oil prices surging into the range of $130-$140 per barrel. Despite the severe and systemic crisis he sees and a palpable sense of urgency – 40 years by his estimate before the window of opportunity closes – Rifkin also outlined six pillars (and more on each of these in future blogs) for an economic and environmental renaissance that are startlingly ambitious and quite logical.

1. Acceleration in the production and use of distributed energy;

2. Retrofitting of existing building stock to turn buildings into mini power plants;

3. Utilization of hydrogen for batteries to store energy;

4. Expansion of the smart grid as a transmission mechanism for energy; and

5. Introduction of electric vehicle fleets replacing the internal combustion engine.

And Rifkin’s sixth pillar, a change in consciousness, is based on a provocative and compelling link he draws between how societies are organized and how the human brain evolves. In brief, he postulates that with each fundamental shift – from foragers to hunters and gathers, from rural agricultural societies to urban cultures – so too does the human brain evolve to account for closer, tighter, and more complex social interactions. And empathy, he asserts, not aggression or greed or competition, is at the core of evolving human consciousness. (For more on this see Rifkin’s fascinating tome, The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World)

The need for a change in consciousness ran like an invisible thread through much of the conference in calls for more robust theories of change, the use of new tools such as the CERES AquaGauge and WRI’s Aquaduct, and Carl Pope’s quip to a smaller group that “natural gas is a potentially useful fuel afflicted with an abysmal industry.” And in many side discussions I exhorted people to marry facts with compelling narratives, to reframe the climate debate as a positive need for “climate stability,” and to refocus our thinking, planning and processes to embrace timetables that run well past the typical quarterly myopia that afflicts American industry.

As Pope, Jackson, Rifkin and many others observed there is increasingly no difference between environmental protection and economic prosperity. Future economic success, in Rifkin’s terms the “third industrial revolution,” (which interestingly is also the title of this week’s Special Report in The Economist), will be an environmental and energy revolution as well. Climate change is thus rightly seen not as an environmental challenge but rather as an economic issue – rife with risk and opportunity.

Mining the Planet

I’ve had occasion to have some in-depth conversation with Achim Steiner, head of the United Nations Environment Programme. In the following clip below we discuss the unique role of humans play in both degrading and repairing the natural environment. And as part of that we review the conundrum of humans both as a species within that natural environment, and as the only species that can act on that environment in potentially catastrophic ways.

As I suggest to him, we are at a unique moment of species responsibility as we have a triad of technical capacity unknown to earlier generations:

• geographic information systems that let us see and analyze data in place;

• knowledge management tools and techniques that enable us to handle massive quantities of data; and

• a deepening understanding of resource and environmental economics that help us see market failure and the richer value of fully functioning ecosystems.

As Achim explains, we can and must do so much better than “simply mining the planet.”

(For more video of Jonathan Halperin presenting and interviewing on the theme of ecosystem restoration, see Hope in a Changing Climate.)

The Sustainability Principle

In my closing remarks at the Sustainable Food Laboratory Summit I explained that I did not think sustainability was a goal, a metric, or even an approach to doing business. Rather, it is a principle. And it has at its core a fundamental rethinking of space and time.

Intergenerational equity – using resources today such that we don’t impair the rights of future generations to also meet their needs – is deeply in conflict with what we have come to see as the normal behavior of short-term profit maximizing corporations. That conflict is real and should not be smoothed-over or avoided.

However, for companies seeking to generate long-term value for investors, employees and the communities in which they operate sustainability is absolutely essential to success. It is in recognition of this, as I have noted elsewhere, that Unilever recently announced it was no longer issuing the seemingly sacrosanct quarterly financial report.

Over the longer term, it also becomes essential for business to manage, protect, and restore critical assets without which business will most assuredly collapse. Ecosystem assets are vital to long-term profitability.

And we now possess the tools needed to exercise this responsibility in ways that were unimaginable a few short years ago. First, the fields of resource and environmental economics have come into mainstream thinking. We understand that there is a price associated with using the carbon sequestration capabilities of the natural world. We recognize that it makes sense to pay more for the room with the ocean view than for the one overlooking the dumpster.

Second, knowledge management tools enable us to collect, analyze, understand, and share vast amounts of information about what is happening in our world – from the depths of the ocean, to ice caps, to soil moisture.

And third, we can now place this knowledge in concrete physical space, using geographic information systems.

With vast knowledge comes commensurate responsibility. As Prince Charles states at the opening of Harmony, "I don’t want my grandchildren, or yours, to come along and say to me ‘Why the Hell didn’t you do something about this?  You knew what the problem was.”

(Visit TheHarmonyMovie.comfor more information on the film -- and view the Harmony Movie Trailer from Balcony Films -- courtesy of Vimeo)

GreenSpace Knowledge Center Goes to Nationals Ballpark

While I was out-West last week at the Sustainable Food Laboratory Summit and Aspen Ideas Festival back East in Washington, DC, a project I have been supporting for some years marked an important milestone. GreenSpace marked the opening of its new headquarters and turnkey knowledge center at Nationals Ballpark.

More than an office, more than a conference facility, more than a learning center, and more than a product demonstration venue, GreenSpace is a microcosm of the kind of community it supports throughout the national capital region. Designed without walls but with sustainable materials throughout, the space is designed, by Gensler, to be reused and redesigned without waste. It takes LEED one step further and redefines the notion of modular office space to encompass a truly mixed-use operation that is connected to and a driving force within the community.

GreenSpace founder and director, Patty Rose, embodies a new style of leadership where breaking down barriers replaces protecting ideas; where building win-win collaborations trumps competition; and were process mimics content. As the press release explains:

“Our green learning and resource center at the Nationals Park will be the place to go to build the skills, knowledge and capacity of professionals, policymakers and the public to create and retrofit ground breaking green buildings, sites and communities across the region."

For more on how GreenSpace has been driving change, in a town often criticized for being at the heart of the problem rather than the solution, see www.greenspacencr.org and its statement of goals Growing Green Communities Together (pdf).

Among the policy and sustainability leaders celebrating the launch of GreenSpace’s new facility at Nationals Ballpark last week were:

Eric Grant Vice President, Corporate Relations Washington Gas

David Robertson Executive Director MWCOG, Metropolitan Washington

Harriet Tregoning Director DC Office of Planning

Christopher Tulou Director DDOE, District Department of the Environment

Time and Language

As children, many of us were encouraged to persevere and be somehow comforted by the strange adage that “sticks and stones may break my bones but names will never harm me.” Not exactly. Language does matter.

Power generated from the sun streaming down on the earth today is what we have come to call solar power. But what we forget at our peril is the fossil part of fossil fuels. Oil, gas and coal are also forms of solar power; the sun just created them a very long time ago.

When I mentioned this last week at the Aspen Ideas Festival to Marvin Odum, President of Shell Oil, he seemed bemused.

• Coal was formed some 300 – 400 million years ago as giant ferns and other plants died and were buried and then baked in swamps.

• Also fossilized remains from hundreds of millions of years ago--likely of plankton, diatoms and other microscopic sea organisms--oil too begins with the capacity of these organisms to convert solar rays into energy.

• And according to the Natural Gas Supply Association, “natural gas is a fossil fuel. Like oil and coal, this means that it is, essentially, the remains of plants and animals and microorganisms that lived millions and millions of years ago.”

As we go about the business of quickly releasing the carbon dioxide and methane that mother nature took hundreds of millions of years to carefully sequester, we would do well to remember that time, like geology, is a very powerful force. How we come to understand time and its many meanings has huge impact on how we see the world and the challenges we face. (And more on that in upcoming dispatches.)

For example, the Co-Founder of Wired Magazine, Kevin Kelly, recast the seeming universality and permanence of today’s social media technologies at a fascinating session with Sherry Turkle (Director of the MIT Initiative on Technology and Self) last week at the Aspen Ideas Festival. His calm observation that the web is about 8,000 days old reframed the entire discussion.

What seems fixed today, is sure to change tomorrow. Unless of course we are talking about rocks or the deep underlying natural processes that support life on planet earth.