Entries by Bob Willard

CO2 – Why 450 ppm is Dangerous and 350 ppm is Safe

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dangers of elevated CO2

In my October 29, 2013, blog, Stranded Assets or Stranded Humanity. Choose One, I reviewed the math that supports leaving 80% of known fossil fuel reserves in the ground. That would allow us to limit the concentration of CO2 in the atmosphere to 450 ppm (parts per million) and have a 50:50 chance of limiting global warming to 2°C. Now scientists are telling us that this is a very dangerous and irresponsible strategy.

In September 2013, the Intergovernmental Panel on Climate Change (IPCC), the international body for assessing the science related to climate change, released its fifth assessment report. Authored by 250 climate scientists from 39 countries, it states: “It is extremely likely that human influence has been the dominant cause of observed warming since the mid-20th century.”The IPCC report goes on to describe the cumulative effect of our carbon dioxide (CO2) emissions. Read More

A 12-Step Program for Our Fossil Fuel Dependency

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click image to enlarge

click image to enlarge

PwC released its Low Carbon Economy Index 2013 last week. It confirms that we will reach the tipping point for climate destabilization by 2034 unless we end our fossil fuel addiction. And, in an interview with Alternet last month, Rob Hopkins, founder of the Transition Network, said: “It feels like the world has gone from ‘there’s no problem’ to saying ‘it’s too late,’ without the bit in the middle: ‘maybe we can actually do something.’” This blog is about the bit the middle. It lays out a 12-step program that will transition us to a clean energy economy if we are serious and smart about how we stage the steps during the transition.

These findings reinforce the stark choice that I laid out in my last blog: Stranded Assets or Stranded Humanity – Choose One. But if we choose not to bring fossil fuel reserves to market, what is our plan to wean ourselves off our addiction to oil and gas while protecting our quality of life?

Here are the 12 steps.
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Stranded Assets or Stranded Humanity – Choose one

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Bob Willard - Sustainability Expert

In Canada, we are witnessing a false debate: which is safer; shipping diluted bitumen (dilbit) by pipeline or by train? Pipeline proponents point to recent train derailment disasters as evidence that the pipelines are safer. Rail proponents point to recent pipeline spills as evidence that trains are safer. We’re overlooking a third, alternative: don’t ship dilbit at all. Leave the bitumen in the oil sands. Write them off as stranded assets.

In fact, the stranded asset alternative is our only sane choice. As shown in this figure, Bill McGibbon and his Do the Math folks help us understand why. Climate scientists and world leaders agree on at least one thing: we cannot allow the average global temperature to increase above 2°C. Even at that temperature, we only have a 50:50 chance of avoiding runaway climate destabilization. Read More

7 Reasons That it’s Time for a Gold-Standard Benchmark

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performance benchmark

In my last blog, I outlined five benefits of a gold-standard ESG benchmark for sustainable companies. Ten years ago, it would have been too soon to develop this benchmark. Ten years from now, it may be too late. Here are at least 7 reasons that now is the right time to create a gold-standard benchmark for ESG performance.

1. Leading companies are ready

The business community has already started to set gold-standard ESG performance benchmark-like goals for their environmental initiatives. Wal-Mart, GM, Ford, Toyota, Unilever, PepsiCo, P&G, Kraft, DuPont, Kimberley Clark, and others have embarked on zero-waste initiatives. California has regulations that require all new commercial buildings to be zero-net-energy (ZNE) by 2030. Interface is using its “Mission Zero” to climb “Mount Sustainability” by 2020. These leading companies know that attaining these stretch goals will make them stronger, more resilient, and more successful. Aggressive “zero” or “100%” goals for KPIs in the gold-standard benchmark will not shock them. They already agree with them.
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5 Benefits of a Gold-standard ESG Benchmark

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click image to enlarge

click image to enlarge

In my last blog, I positioned a benchmark that would be used by raters and rankers of companies’ sustainability progress, and by companies themselves. Rather than assessing a company’s environmental, social, and governance (ESG) performance against its past performance, its ESG goals, or against other companies, we would assess how much closer it is to being a truly sustainable business, as defined by a fourth gold-standard ESG benchmark.

Let’s suppose we could define a small set of science-based key performance indicators (KPIs) for that ESG benchmark. Would that be a good thing or a bad thing? Here are five benefits of having a gold-standard benchmark for a truly sustainable business.

1. It addresses the confusion factor

One lament in the business community about sustainability is that it is difficult to understand. It is too complex and has too much confusing terminology. A gold-standard ESG performance benchmark outlines clear, measurable sustainability criteria. It promotes sustainability literacy, since its criteria are expressed in relevant, measurable, science-based terms. The benchmark blows the fog away from the finish line in a race to the top.
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The Fourth ESG Benchmark

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ESG Benchmarks

When organizations assess how well a company is doing on its sustainability efforts, they need something to compare it to: they need a benchmark. Today, raters and rankers of companies’ sustainability progress use three benchmarks to assess company performance on environmental, social, and governance (ESG) factors. These benchmarks are also used by companies themselves in their sustainability reports.

1. ESG performance in a baseline year
The company compares its performance today on an environmental or social issue to its performance on that issue in a previous year. Progress is expressed as a percent improvement, or is plotted against several previous years to show a trend line.

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It’s Time We Measured What Matters

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Integrated reporting encourages companies to track the value they are adding to, or subtracting from, six capitals:

  • financial,
  • manufactured,
  • intellectual,
  • natural,
  • human, and
  • social.

That’s an excellent idea, but we are challenged with how to assess natural, social, and human capital. As we get serious about ensuring conditions for a flourishing human society on this planet, those capitals are the ones that matter most.

My plenary talk at Sustainable Brands ’13 in San Diego earlier this month was entitled, “Enabling the Renaissance: The Perfect Storm in True Cost Accounting.” Using the metaphor of the Iceberg of Company Value, I explained why we need to get better at measuring and tracking the intangible reputational value of companies, since it represents about 80% company market capitalization. It’s too big to ignore, especially as we migrate to Capitalism 2.0. Measuring how the company is protecting and enhancing human, social, and natural capitals will help us better assess its “non-financials.”
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Capitalism 2.0

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Capitalism

The game of business as we have played it for the last 150 years cannot continue. We are primed for Capitalism 2.0. The current rules of the game reward companies that privatize benefits and gains, socialize harm and losses, and under-price risk.

As Peter Bakker, president of the World Business Council on Sustainable Development, said in a speech at The Prince's Accounting for Sustainability Forum in December 2012, “Business as usual is not an option for a future-proofed economy in which nine billion people live well within the limits of the planet by mid-century.”
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Five ESG Standards Will Awaken Capital Markets

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harmony on the planet

Last week’s blog outlines my four strategies to help capital markets embed environmental, social, and governance (ESG) strategies into the mindset of executives. I briefly referenced five concurrent ESG standards initiatives that are in play in capital markets to make this happen. They will lead to an ESG mindset in lenders and investors. Following the axiom that “what interests capital markets fascinates executives,” this will precipitate an ESG mindset in company executives.

The five ESG standards efforts are shown in the adjacent figure, beside their corresponding element of the capital market information ecosystem. I describe three of them in my April 15 article for Network for Business Sustainability (NBS) entitled “2015 Will Bring ‘Sweeping Changes’ to Capital Markets.”  They are:

  • A New Ratings Standard: The Global Initiative for Sustainability Ratings (GISR)
  • A New Voluntary Reporting Framework: The International Integrated Reporting Council (IIRC)
  • New Regulatory Reporting Guidance: The Sustainability Accounting Standards Board (SASB)

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Four Strategies to Use Capital Markets as a Force for Good

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accelerating corporate sustainability adoption practices

We need sustainable businesses if we are to have a sustainable world. That means we need strategies to use capital markets as a force for good and we must embed environmental, social, and governance (ESG) thinking in executive’s mindsets. For the last 12 years, my strategy has been to appeal to executive’s profit motive.

I thought if I could help them see how more profitable they could be if they embraced sustainability strategies, they would stampede to make the necessary transformation. That’s what my four books, two DVDs, worksheets, dashboard, and hundreds of talks have been all about.

How’s it going so far? Okay, but way too slow. We need to add a push strategy to our pull strategy. We need to wake executives up with the down-side risk of not doing more, to compliment the up-side opportunity of higher revenue, lower expenses, and higher employee productivity and retention. The business case simulator helps companies quantify 14 risks to profit from inaction, but I should have highlighted the mother of all risks: more difficult access to capital when lenders and investors prioritize ESG factors in their company assessments.

Capital markets are gate-keepers to corporate interest in ESG. Here are four strategies to make them a force for transformational change.

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