Friend or Foe?

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It’s been a while since I write a piece for Sustainability Inc., 2 months to be exact, so I thought it time for another instalment, particularly in light of the shale gas gold rush across the world and the potential effects it could have on climate change and Government climate reduction targets.

In this article I am going to look at the ramifications of the shale gas bonanza on energy generation, paying particular attention to the implications it could have on renewable energy.

The shale gas bonanza has already revolutionised the energy industry in the US, with gas prices tumbling, due to the vast reserves discovered. In Europe the same discoveries of  vast reserves of shale gas are being made, meaning potentially cheaper energy and more jobs. Also, very importantly it is viewed as a potential new industry to help the global economy kick start that much need growth.

All this adds up to an industry worth billions and highly political, as it is viewed as a way to deal with energy poverty, economic growth, both in terms on jobs and businesses and finally energy security for States for the next 30 years or so. All in shale gas is very significant and just when you thought it couldn't get anymore to complicated, what implications could it have for climate change targets and specifically the adoption of renewable energy, which is still in its infancy.

The answer to the first part of the question is significant, all fossil fuels have high carbon emissions, even though shale gas is the lowest emitter of them, and with it becoming cheaper, power stations will convert to gas from other fossil fuels. Some commentators would say this is good as it will encourage high carbon emitting power stations to emit less through conversion, and therefore slow climate change. Not so because the spin off from this is, that as energy companies make their revenues through how much power they generate, particularly in light of a recent report from The Guardian newspaper in the UK May 2012, stating that the EU was going to re- categories shale gas a green source of energy, following intense lobbying from the gas industry. Thus enabling the industry to promote itself as a cheaper form of energy than solar and wind, diverting billions of Euros for research in renewable energy towards gas.

This all make for rather stark reading, but in my view this is not the end, for two reasons. Firstly, shale gas and renewable energy can work together, with renewable energy generating the power during the day with gas taking up the peak and during the night- time shale gas can generate the energy. This theory is backed up by a report recent published by Citi Group that discusses a symbiotic relationship between shale gas and renewable energy. Where by gas is used as peaker plants and can be ramped up quickly, and reinforcing this relationship is the experience Germany’s energy sector has where this relationship can help renewables to take away energy generation from nuclear and coal, particularly as more renewable energy plants come on line.

The second reason why shale gas does not signal the end of renewable energy, is the comparative cost of renewables to shale gas is falling, and it will continue to do so as the technology becomes cheaper to produce and more efficient. Taking into account that energy plants generate revenue by how much energy they produce, this will certainly be an incentive to switch to renewables in the long- term.

Taking into account the view from Citi Group and other consulting bodies the advice they are providing is to invest in shale gas in the short-term and move to renewable energy in the medium term to long term. Now, this is good news for renewables energy moving into the future, but this does not mean that renewable energy will in the medium term become the energy producer of choice, what it mean is that it is not guaranteed. To help facilitate this Government still have a key role to play in enabling this possible future to occur and where possible to speed up the shift entirely from fossil to renewable energy as climate reduction targets still have to be met and carbon footprints reduced and in EU has to meet target of 20% of energy to come from renewable sources by 2020, currently it stands at 7%, so there is still quite a long way to go.

So the question raised is what can Governments do to maintain the move towards renewable technology or possibly speed it up to avoid the worst of climate change?

Firstly, they should not give up on climate change targets and hold onto target % of energy generated through renewable technology, otherwise conversion to shale gas will mean the meeting of this target alone, taking the pressure off States to meet their climate reduction targets.

Secondly, incentive schemes should be established for energy companies to produce energy from renewables, and in the short- term they could devise policy thought would encourage them to switch to shale gas and renewables. This would help the first step in the move towards renewable energy.

Thirdly, continuation of Feed In Tariff policies at the micro generation level, to ensure take up by households continues. Also, that policy’s are devised for commercial buildings to generate energy through micro generation, through not just energy incentives or FITs, but through business rates and taxes breaks.

Fourth, encourage or empower cities to implement more policies and initiatives at the local level with businesses and communities. Set up strategic partnerships with local authorities and energy companies, and implement incentives for business to set up in those areas threw these partnerships.

These are just some of the policy areas, which could be implemented at a national and local level, there are others, but for now I think that this is enough.

This piece has tried to explain why shale gas does not signal the end of the move towards renewable energy, but could encourage it further. While I agree with the majority of the view from commentators and the report from Citi Group. I feel that it is a rather utopianistic view, which paints a very optimistic picture of the market deciding, the invisible hand if you like. Unfortunately, we also know that markets can be manipulated, sometimes for the good and sometimes for the wrong reasons. As long as policy makers do not take their eye off the ball and implement market-making policies that will continue the move and encourage a quickening towards renewables, then yes, this is a positive future where by shale gas can partner with renewable energy to enable a full switch to green energy. 

What this article does not look at are the other environmental challenges that shale gas and 'Fracking' (the extraction process used) pose. This is a discussion for another time and certainly one that cannot be dismissed lightly. My personally view on its on environmental impact is still out , I await more evidence, and then the pros and cons need to be weighed with long term strategies and needs. Basically a dispassionate debate will need to take place, where serious dialogue can be had, looking at ways to mitigate possible risk and impact.

Interesting Reading:

http://grist.org/climate-energy/citigroup-renewables-will-triumph-and-natural-gas-will-help/

http://www.guardian.co.uk/environment/2012/may/29/gas-boom-renewables-agency-warns

http://www.guardian.co.uk/environment/2012/may/29/gas-rebranded-green-energy-eu

CITI Group Report: Shale Gas a Symbiotic relationship. 

https://ir.citi.com/586mD+JRxPXd2OOZC6jt0ZhijqcxXiPTw4Ha0Q9dAjUW0gFnCIUTTA==

http://www.c40cities.org/

Sustainable Energy: Power Up!

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It has been a while since I posted a topic on Sustainability Inc. I have been busy with other projects, some interesting and others not so interesting. Anyhow, I am back now with a topic that I feel is not only an important topic in sustainability, but actually goes straight to the heart of the subject and one that I feel is the number one area for action, that topic is sustainable energy.

So what is sustainable energy? To me it is a two-prong solution and the definition that I like the most is from the British Renewable Energy and Efficiency Partnership:

“Effectively, the provision of energy such that it meets the needs of the present without compromising the ability of future generations to meet their own needs. ...Sustainable Energy has two key components: renewable energy and energy efficiency”

Current Trends in Energy Consumption

Global energy consumption is on the increase with both the developing world demanding more energy has there industrialisation gets into full swing and their populations have more money to spend on consumer goods, which more often than not require energy for them to operate. Of course they are not the only player in these game, the developed world is consuming more. According to the International Energy Association (IEA) global energy consumption between 1990 and 2008 increased by an average 10% per person and with a 27% increase in global population this equates to an eye popping 39% increase in global energy consumption over this period.  The Middle East saw the biggest increase in consumption at 170%, with China second with an increase of 146%. The USA increased consumption by 20% and the EU (27 blocks by 7%.

 The table below shows the different types of energy consumed and how they have increased in the period 1990- 2008.

Energy use (TWh)[6]
	Fossil	Nuclear	Renewable	Total
1990	83,374	6,113	13,082	102,569
2000	94,493	7,857	15,337	117,687
2008	117,076	8,283	18,492	143,851
Change 2000-2008	22,583	426	3,155	26,164

  Source: IEA/OECD

It should be noted that since this data was taken energy consumption in the developing world has decline, this is obviously due to the global economic slow down though, and china et al in the developing world have increased more. This still means that global energy consumption as a whole is still increasing.

What is revelling about the data above is firstly more energy is being consumed not only because of population growth but also due to high consumption per capita.  Lastly, the majority of the increase in capacity is in fossil fuels with coal accounting for half of the increase. While renewable energy has increased at a much slower rate, but since 2008 has picked up pace and currently accounts for 19% of energy consumed globally. But not nearly has fast as increase in fossil fuel dependence, which still dominates the global energy mix.

The effects that this has on the environment are huge and costly, and as every years passes, it becomes more expensive to cut emissions and limit global warming to 2 degrees and by 2017 the allowable CO2 emissions would already be locked in with the current energy infrastructure.

So, the question emerging from this is…. How do we (globally) cut our energy emissions while not having a dragging effect on global development, both economically and in human terms?

To me there are two parts to the answer of this question, and this is where energy sustainability comes to the fore.  A two-prong attack is required; firstly, a move away from fossil fuels towards renewable energy and secondly a greater emphasis on energy efficiency through education and improving products that consume it.

To increase the use of renewable energy it is important to note at this point that fossil fuel industry receives 30 more times the amount of subsidies than the renewable energy sector. In 2011 these subsidies were worth a staggering $523 billion, an increase of 30% since 2010. This puts renewable energy on the back foot from the start, and to encourage more renewable this playing field would need to be leveled. To me, the answer is to move some of the subsidies on fossil fuels and apply them to renewable energy, making them more attractive to investors. The subsidies would need to be targeted and thought through as mistakes have been made in the past. just look at the subsides that were applied to P.V. installation with feed in tariffs, they were wholly unsustainable and many countries have now cut them, but still offering a decent return on investment. Biomass is another example of this, with high subsides, and now questions over its carbon neutrality, but that is a question for another day. These subsidies if targeted correctly could  spire on more R&D making renewable energy more efficient and not so land intensive and encourage more investment in the construction of plant and farms.

The subsides in the renewable energy sector should be targeted in the start up costs, R&D and construction as it is at the beginning of renewable energy where the highest cost are, over time these cost decrease, making the renewable market a good investment opportunity. It should be noted that fossil fuel energy production gets more expensive, and energy costs increase the investment opportunities look even more attractive.

The renewable energy mix, should not only include, Hydro, Wind, Biomass, Biofuels, geothermal, Solar and Photo Voltaic, but also nuclear, which with the advancements made in safety and storage over the recent years should also play apart, as this is not as land use intensive and is a more efficient way of producing energy.

The second part to the answer is efficiency, the globe must become more energy efficient, it must educate the population in saving energy and change their behavioural patterns towards energy, for example such elementary things as turning off a lights when not in the room and only boil the amount of water required, not a full kettle. Other measures include insulating the house, and energy efficient lighting and heating systems.  This can be achieved by either explaining the monetary savings or saving of CO2. An area which is of interest to myself is micro- generation, where by the energy consumed in a building is generated by that building, through the use of wind, solar, P.V and geothermal, depending on where the building is located. The excess energy can then be sold back to the energy grid, this not only decreases energy cost, but can also generate revenue as well.

Companies can be given incentives, in the form of tax breaks to produce good, which consume less energy and as a stick consumers made aware of which products consume less, although to some degree this is already being done.

This is just a brief outline of a sustainable energy strategy and one which I think will need to adopted to ensure not only the energy needs of the future, but also to sustain the planet for future generations and provide . Government have a major role to play in this both on the national level and municipal level. National Government can implement energy policy and work with foreign government to agree on global targets, all of which takes time.

At the municipal level city government can implement programmes faster IN areas of energy efficiency and co2 reduction. This can be achieved through tax breaks and incentives and by looking at what they can do with building and infrastructure they control. Photovoltaic can be utilised to not only save money but also generate income, led lighting can be used, building can be retrofitted and CHP (combined heat and power) can be implemented. All of which are part of sustainable energy.

Some Interesting Reading: 

http://en.wikipedia.org/wiki/World_energy_consumption

http://www.iea.org/

http://climatepositivedevelopment.org/display/CMTPOS/Site+Map

http://www.c40cities.org/

http://web.undp.org/gef/

Finance: To Boldly Go Where No Financier Has Gone Before!!!

There is no one definition of what of Sustainable Finance is, but the one that resonates with me is: -

“The act of allocating capital to individuals and businesses that want to make productive use out of it. In short, finance creates social value. The practice of creating economic and social value through financial models, products and markets that are sustainable over time.”

http://responsiblebusiness.haas.berkeley.edu/programs/sustainablefinance.html

(You will note that there is no mention of environmental sustainability, it is about creating a new method of doing finance.)

I have become very interested in the concept of sustainable finance over the last year and I have decided to write about it in Sustainable Inc. I suppose there is no real surprise why this has become a area of interest, the bankers controlling liquidity and managing the financial system have so spectacularly come unstuck in the last five years, with scandal after scandal, rigging, greed and miss selling. But, before I continue I want to make a few things clear, I have a quite a few friends who have been involved in the financial industry and I am not leveraging this criticism at individuals but at the industry as a whole, its culture if you like, and the lose of its social contract. The books Boomerang and The Big Short by Michael Lewis, the American finance writer so eloquently lay this out for all too see and yes I do recommend reading them.

             

The financial industry over the last thirty years has developed into an industry that controls the allocation of finance for its own gain, having quickly released that if they hold funds within financial system and trade on the various markets, such as bonds, derivatives etc. they could create wealth and profits for themselves (very simplified but you get the picture). As a business they are entitled to make profits like any other enterprise. But, it forgot its main function, the allocation of resources to enterprise to produce good and services and to supply their customers with credit and interest. The finance sector developed monopolistic traits, i.e. less banks operating, higher fees and restrictions on liquidity, yet profits went up, and industries suffering. Effectively, the financial sector become self- serving and lost the trust of the general public and its social contract. An example of this is in the UK with the establishment of the Parliamentary Commission on Banking Standards and its reported proceedings. Couple this with the increase in operational risk issues and the continuation of heavy losses and fines. Since Basel II operation risk is seen as including legal and reputational risk and all are seen as getting worse. Central bankers have become so concerned with this that a joint project has been set up by London School of Economics, UCL and Queen Marys College, to look into the causes of this, with research commencing in 2013. 

What is needed now is a more sustainable financial system, one that incorporates the Berkeley definition at the top of this piece with a cultural ethic that is not about screwing the other party to the floor or simply geared towards chasing the bottom line.  To enable this will take time, the research being carried out will help to highlight the traits within the culture that can cause it and that is when the real work will begin. Changing the culture of an organisation is one thing, look at Barclays Bank for example, with the appoint of Anthony Jenkins as CEO, who in January 2013 at a press conference in Westminster talked about a new culture of banking, more focused on the customer and the rebuilding of trust, was that recognition that something must change or load of PR, only time will tell.

What is much larger task is changing the culture of an industry and that is a whole different ball game, and really, is it possible? I think it is by having it forced and by that I don't mean legislation from on high. But through changes in the way finance in done, game changers and innovation within the finance industry space. The Internet and technology can play a major role in this, and in some sectors this is already got underway. Just look at the loans and personal investments space, with the birth of Peer 2 Peer lending, where individuals lend funds to individuals or to business in a type of reverse micro finance model. Lenders get better returns than if their funds where invested inn banks and borrowers get better rates than if they borrowed from banks, creating a win- win for all.  This is still a fledging industry, with only a few players in the market, it is starting to gather pace and over the next few years more will enter to create an efficient market. In the UK The Bank of England has recognised it as a real disruptor in the market and the UK Government has announced that in April 2014 it will become regulated industry, which will legitimise it further. Other industries which is is going through a quiet revolution is factoring, where businesses sell there accounts receivables and a lower % to improve cash- flows, this is now being carried out through the Internet on specialised sites that bring together investors and businesses indeed of liquidity. Both of these two examples have lower fees than the bank and also facilitate the transaction in quicker time.

Other disruptive technologies that will force change will be Near Field Communication (NFC) it always communication between devises and can be used for exchanging data and making payments. It is already changing the way people in remote parts of Africa pay for goods and services and is now being developed in the UK for a major mobile phone company, by the same team who put it together in Africa.

All of these, in time will have an impact on the way the financial industry functions, both in costs to investors and borrowers and to how the large banks behave towards their customers. Forcing the finance sector to be more competitive and work for the long- term gain, bringing us back to Berkeley definition of Sustainable Finance.

I like to think of these innovations in the finance space as the beginning of Sustainable Finance and incorporation of the ‘social contract’, to quote the Work of the British political philosopher Thomas Hobbs. What will come after these or how these will develop is something I hope to write about in the future on Sustainable Inc.

 Interesting Reading:

http://www.lse.ac.uk/collections/law/projects/sustainable/sustainable.htm

Michael Lewis, Boomerang, The Big Bust. Allen Lane. 2012

Michael Lewis, The Big Short: Inside the Doomsday Machine. Allen. 2011

Thomas Hobbs, Leviathan, Oxford world Classi

The Super Heroes!

 Apologies for not writing an instalment on Sustainability Inc. last week, I was tied up with working on a few other bits. Anyhow here we are this week and its time for another article. This week I want share some sustainability best practice and the top ten companies applying great sustainability strategies.

Sustainability or Corporate Social Responsibility is the buzz word in the Corporate world at the moment, as we have previously explored in Sustainability Inc, it is connected to what the customer wants and is becoming good business, not just for the PR reasons. Lets be honest it makes sense to use less resources or to recycle, it makes producing good cost less, impacting the P&L and makes the shareholders happy as it increase the value of their investment and rewards them with better dividends in the long run.

Currently, the main area in the sustainable arena that is growing is the big-ticket item, renewable energy. This takes time and investment, as has been seen with Google with their $1 billion investment in solar and wind projects. In the United States it has been the big thing that both private and public sectors are spearing heading the move in this direction. This list of large Corporations currently engaged is hopefully a sign of things to come in the future, with other companies and countries. 

Private and Public Sector Corporations

1.     Intel.  Intel has been the EPA’s top-rated Green Power Partner since 2008, and it's tried pretty much everything. The company got 88% of its power from renewables in 2011. They also purchased enough renewable energy certificates (REC’s) to finance green energy for over 134,000 homes.

2.     Whole Foods, of course. This is the company that started recycling its used canola oil for electricity in 2012.  This plus on-site solar generation and REC purchases, the company produces 107% of the energy it needs from renewables.

3.     The District of Columbia. Through RECs, the nation’s capital went 100% green in 2012.

4.     Staples, 90% of the company’s emissions come from the supply chain so to off set this they purchase REC’s and 20% of the energy comes from solar.

5.     The New Belgium Brewing Company. The Colorado brewery has been purchasing its energy from a wind farm since 1999. Now, they have developed a water treatment plant that cleans all the wastewater used in beer production and have solar panels on the roof for energy generation and use the methane produced to generate electricity.

6.     Pearson, Inc. The educational supplier and owner of Penguin publishing have been carbon-neutral since 2009. They purchase REC’s not only for the US plant but also for ones in South America and India. They have invested in solar at their New Jersey plant, which will save over 4,000 tonnes of carbon over the next 25 years.

7.     Wal-Mart purchased nearly twice as much solar energy than its runner-up, Costco in 2012, although due to size of the company this is only 4% of its total energy consumption. But hey it's a move in the right direction.

8.     Hilton International. The hotel chain is 94% powered by renewable energy; this is through purchase of REC’s and is an increase of 239% from 2010. They also implemented a consumption tracking system across building in 91 countries and this has dropped waste levels by 23%.

9.     Kohl’s. The Wisconsin-based department store chain uses 100% renewable energy, through a combination of RECs and self-generation.

10. Chicago Public Schools. The US’s third-largest school district gets 20% of its energy from renewable energy. They also run a schools energy saving programme, where by any school that saves 5% energy receive cash awards. Overall this saved the public purse $500k.

Taken from:

http://www.good.is/posts/ten-reasons-to-believe-in-a-green-bottom-line

Next week, I am going to start looking at Sustainable Finance, after the bad press the finance sector has been attracting and the serious loss of the industries social contract and quite frankly its moral compass, can it recover? Is there a form of finance, which can be sustainable and still create liquidity needed for business and the global economy? This is something that I am becoming very interested in, and will start to look at next week.

Interesting Reading

http://www.good.is/posts/ten-reasons-to-believe-in-a-green-bottom-line

http://www.reputationinstitute.com/thought-leadership/csr-reptrak-100

http://www.global100.org/annual-lists/2013-global-100-list.html

The Battle for Sustainability

Well, here we are again, another week and another instalment from Sustainability Inc. But first an interesting bit of news; Google spends $200m on another wind farm, now that is another step in the right direction. Despite, I am sure some people thinking this is just a cynical PR stunt. Particularly in light of the bad press Google have received about not paying their fair share of tax and Green Peace’s report on energy use by their servers being the same as San Diego’s, when operating at full strength.  But so what, this is another step in the right direction and sets a good example for big business and consumers. If you want to operate a large energy consuming business, then build a sustainable way of generating that energy. While at the same time developing more energy efficient ways of producing your goods and services.

Here is a link to the full article http://money.cnn.com/2013/01/09/technology/google-wind-farm/index.html

Now back to the usual, if you remember last week we looked at the importance of politics and policy in the sustainability arena. This week it is the turn of economics. There is of importance of in sustainability and that is as one of the three pillars of the triple bottom line that make up a sustainable business. But, in this article I intend to get under the skin of why it is important, looking at how sustainability and economics are at logger heads with each other and why an understanding of the progress being made in the economics/sustainability will aid a sustainability professional in their role.

Firstly, a basic definition of economics courtesy of Investepedia: -

‘A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics, which concentrates on the behaviour of the aggregate economy; and microeconomics, which focuses on individual consumers.’

Read more: http://www.investopedia.com/terms/e/economics.asp#ixzz2Itd3lWAf

And now a definition of Sustainability: -

‘Sustainable development is development that meets the needs of the present without compromising the needs of future generations to meet their own needs’. (Brundtland, 1987)

Economics looks at the way scares resources are turned into goods that are consumed by the market, it does not look at how these stocks, either natural or human can be replenished which would support the consumption for future generations. Also, by economic definition it is only when something becomes scares that it becomes valuable. Meaning that sustainability works against economics, because it looks to make resources renewable.

The fundamentals of economics have not been rethought since the time of Adam Smith and ‘The Invisible Hand’ some 200 years ago, taking regulations, human culture, interaction and quality of life as given. Economic theory needs to be updated to take into account these new factors and this is where ‘sustainable economics’ comes in. 

Sustainable Economics is trying to be more inclusive, by including these factors, human, social, quality of life, see diagram above. Through doing this it also provides a good framework, which can be used to help business to become more sustainable, by meeting Government regulation, and abiding by new initiatives, improving the lives of its workers, which can boost productivity and create saving for the business. The framework can also be used as a tool to assess both sustainable socio- economic impacts the company would have on a State if it chooses to invest there. Which can give business leverage in securing favourable terms to invest in one state over another. Thus freeing up funds to be used to for investing in sustainable technology and practices at that plant, site etc.

Interesting Reading:

The Big Idea: The Sustainable Economy, (2011)

http://hbr.org/2011/10/the-sustainable-economy/ar/1

Harvard Business Review

Toward an Economics of Sustainability, (1997)

http://web.missouri.edu/ikerdj/papers/econ-sus.htm

World Watch Institute

http://www.worldwatch.org

The Institute of New Economic Thinking

http://ineteconomics.org

Politics of Sustainability!

Last week in Sustainability Inc., we listed the skills sets and areas of knowledge needed for sustainability professional, with a brief explanation of why the skills sets were important. This week I am going to start looking into the areas of knowledge and why they are important. The first to be unpacked will be politics and policy, which in my view are very important areas for sustainability professionals to have an understanding of. In this blog I will attempt to explain not only why it has become important, but I will also highlight some relevant areas of policy.

But first a quote that saliently illustrates the political link between Corporations, Society and Government: -  

“The important thing for business and society at large to understand is the limit to voluntary action, which is the point where government need to intervene. If we are to live within the earth’s capacity and share its resources equitably, economies must be transformed. That cannot be done by business alone”  (Cowe R and Porritt J, 2002)

Since this was written the politics have sharpened, with the global economy boom and spectacular crash in 2008, which has created mistrust with the financial sector and big business. Companies have also started to move into markets in the developing world, to create new revenue streams and increase their profits, which brings with it a new political dimension. The growing global populations and the industrialisation of developing countries is adding to pressures on natural resources which is increasing the cost to consumers, as the search for new reserves goes to new parts of the globe, creating more political tension and corporate disasters. Lastly, and by no means least is the increase in natural disasters and extreme weather incidences, which fuels the environment and climate change debate.

The effect this is having on society is dramatic, people are more aware of the environmental impact they are having on the world and want to do something about it, they are concerned about human rights and how people are treated across the globe.  It has created much cynicism about the corporate world and in the information age it is possible to find information on a company’s environmental record and working practices and if these are deemed unacceptable a company’s reputation can be damaged through the use of social media. The knock on effect has been that consumers want to buy products from companies that operate in a responsible way and shun those that do not.

This has lead to business and politics becoming ever more interconnected and because society is more engaged, so have politician. Which in turn brings new white papers, policy ideas and ultimately Government to intervene and facilitate the necessary shifts in behaviour to start answering the big questions around use of natural resources, the environment, energy generation and ethics.

Governments and International organisations have set to work creating a raft of policies and codes of practice for companies to follow. So of which are actions such as health and safety and others being the disclosure of information, creating a carrot and stick.  

Policy makes are aware of the power the consumer has over companies now, so they rely on public opinion as a stick and an increase in revenue as the carrot. An example of this type of policy is in the UK, where a new regulation came in in 2012 to help with carbon emission targets as set out in the Kyoto Protocol. Companies must publish their carbon emissions on an annual basis, not reduce them. Politicians are then able to say that they are not overly legislating business, with the aim being that companies reduce their carbon footprints voluntarily. The last, two voluntary codes of practice I shall highlight is the UN’s Global Compact, (2000) and Guiding Principles on Business and Human Rights (2011); these are voluntary guidelines for companies to follow with some of the largest Corporations already registered.

There are also policies in the development stage in renewable energy field, which when implemented could offer could encourage business down a more renewable path through the use of incentives and grants and more aggressive fines if targets are not met.

This is a brief outline of the politic to sustainability and a description of the types of policies and codes of practices, which are currently being drafted. The amount of legislation that will follow on sustainability will only increase. It will be up to the Sustainability Professional to not only interpret these rather opaque documents for the company they serve, but then be able to implement an action plan to ensure the company is compliant. With a view to saving the business revenue, ensuring all potential grants and incentives are gained and working within the supply chain to ensure reduction in energy.

I hope that this goes some way to explain the complexities of sustainability and why it is important for the professional to have a grasp of politics and policy if they are going to add value to a business.  

Some interesting areas of policy for Sustainability:

UN Global Compaq: -             

http://www.unglobalcompact.org/

Guiding Principles on Business and Human Rights: -      

http://www.business-humanrights.org

IFC Sustainability Framework: -

http://www1.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/IFC+Sustainability/Sustainability+Framework/Sustainability+Framework+-+2012/

The Voluntary Principles on Security and Human Rights: -

http://www.ipieca.org/publication/voluntary-principles-security-and-human-rights-implementation-guidance-tools

Skill Sets and Knowledge

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Happy New Year and welcome to the first post from Sustainability Inc. for 2013.

In my last post at the end of 2012, I started to talk about the different skills and areas of knowledge that a practitioner working in Sustainability, or as I like to call it sustainable business, would need. I have listed the disciplines here, as a reminder and for reference purposes: -

Skills required:

1. Project Management:

2. Communications

3. Strategic Management
4. Risk Management

Areas of Knowledge:

1.    Politics/ Policy: Frameworks/ Environment/ Human Rights/ Communications

2.   Economics: - more specifically macro- economics

3.   Operations Management

4.   Finance: - Corporate Finance/ Strategic finance,

5.    Technology: - Non technical understanding/ Strategic Management

6.   Innovation: - Consulting methods

In this blog I shall briefly outline why the three skills are important for a Sustainability Professional and then over the next few post I shall take topics from the ‘Areas of Knowledge’ and explain why they are important for someone working in Sustainability and how

Skills

The three skills are not the only ones required, but they are in my view to of the most important to enable someone to function correctly in a sustainability role.

1.    Project Management is very important because a Sustainability Professional would have to be able to roam across all departments of a company putting together projects and successfully managing them to conclusion. 

2.   Communication is important, the Sustainability agenda and the subsequent recommendations it generates are new concepts for businesses, which have to be explained clearly to all stakeholders of a company. For a sustainable project to be implemented successfully it is important that stakeholders have a clear understanding of the proposals in the project for a number of reasons: -

·      Stakeholders would be able to make recommendations to improve the proposals.

·      Good communication increases the chances that the project will be talked about across the company, creating better buy in and increasing its chances of success.

·      Good communication is also more likely to influence stakeholders to adopt the proposals and see the project implemented. Especially the Executive Management Group who need to understand how the project will enhance the strategic direction of the company, improve productivity and increase sales and importantly approving the project.

·      Communicating the sustainability message to the company’s customers and the press is important. As consumers over the last 15 years have become more selective about which companies they purchase from. There is evidence that companies that engage in sustainable practices have seen an increase in their profits and they are less likely to receive negative press.

·      Communication is also an important aspect of project management, areas such as, influencing and communicating the successes of a project. This is not an area I intend to cover in any depth, as it is part of the discipline of project management. 

3.   Strategic Management is an important skill required because Sustainability is a strategy that must be implemented into a company from the Board to all areas of the business. Firstly, the strategy has to be developed, ensuring it meets the required goals of the organization, both internally and externally and then it must be implemented across the business. 

This is a brief explanation as to why these skills are important for a Sustainability Professional. There are others skills, which are needed, but they are also required in any roles, as such I shall not dive into them.

Over the next few post I shall take topics from the ‘Areas of Knowledge’ and explain why they are relevant for someone working in Sustainability