Super Typhoon Haiyan: climate disruption is not a future concern

How to comment on such a tragedy?  First and foremost, our thoughts, condolences, prayers are with the victims.

This disaster, once again (like Katrina, Sandy, the droughts, floods, and wildfires), brings stark clarity to the idea that climate change is a challenge of morality and justice.

We know the frequency and intensity of storms will continue to increase, driven by global warming and the climate change that results. And increasingly, people are starting to believe what scientists have been saying for years, now that we're seeing and experiencing the patterns first hand; prompting the question if this will be a "turning point in how the West thinks about climate change."

For years, we in the sustainability field have been saying, "there's still time to act, if we act now." And in a sense that's still true.  But in another, very real sense, it's already too late.

It's true in that the faster we reduce and eliminate our net contributions to GHGs in the atmosphere, the better chance we have of minimizing the damage.  It's too late in the sense, that we're clearly feeling the damage, in obvious and subtle ways.  We'll keep feeling these changes for decades -- even if we stopped GHG pollution on a dime today, what we've already emitted cumulatively will continue to have an impact for decades.  So we'll need to continue to adapt and prepare for changes to come.

But we can't give up on the necessary goal of eliminating net GHG emissions.  The annual international climate negotiations -- COP19 -- are happening in Warsaw Poland right now.  The lead negotiator from the Philippines, Yeb Sano, announced in a powerful video (below) that he will voluntarily fast until meaningful pledges are made.

You can take a small, simple action now to help support his effort by signing Yeb Sano's petition to Stand with the Philippines and demand significant progress in Warsaw.



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Stranded Carbon Assets

The Generation Foundation released today a new report: Stranded Carbon Assets: Why and How Carbon Risks Should Be Incorporated into Investment Analysis (pdf).

It builds on the logic that globally, we have a fairly accurate idea of the maximum amount of carbon we can add to the atmosphere and still have a 50/50 chance of avoiding temperature rises of 2 degrees Celcisus.  To stay within that budget we can't burn more than one-third of known reserves by 2050.

This means that 2/3 of known reserves -- which are baked into the valuations of fossil fuel companies -- will need to be stranded, one way or another, to even have a 50% chance of avoiding really devastating impacts of climate change.

The report lays out three ways these assets may become stranded:

1. Regulation -- there are many forms of regulation being pursued around the world limit carbon emissions, but to date most investors have focused primarily on the big, international climate agreements, which have been stalled. Sub-national and indirect regulations represent investment risks that are under-appreciated by most investors.
2. Market forces -- improvements in renewable energy and the potential for breakthrough innovation can cause shifts in capital away from fossil fuels
3. Sociopolitical pressures -- even if they don't lead to comprehensive regulation right away, sociopolitical pressures threaten carbon-intensive business's license to operate 

If the status quo is maintained, the report argues, artificially high valuations of carbon-intensive assets will continue to grow, creating a 'carbon asset bubble' that is not sustainable. 

The report suggests that investors should: 

1. Identify carbon risks across all asset classes in their portfolios
2. Engage corporate leaders on disclosing and mitigating their carbon exposure
3. Diversify their holdings into companies that will bring about a low-carbon economy
4. Divest from fossil fuel intensive holdings

Examples of growing support for regulatory action are everywhere.  The EU Emissions Trading Scheme has been established for years, California has carbon legislation on the books in AB32, as do the Northeastern states through the Regional Greenhouse Gas Initiative. China is launching regional carbon markets, and this summer President Obama laid out plans to limit emissions in the US. Last week, Oregon, Washington, California and British Columbia (which has its own carbon tax) announced plans to cooperate on developing climate protection schemes. 

While we don't know for sure how we will end up limiting carbon emissions, we do know we'll have to if we want even a 50/50 chance of avoiding unthinkable impacts, which will be costly not only in financial terms, but also with regard to loss of human life and suffering.  

The report includes an excellent analysis of how indirect impacts -- like water scarcity -- also pose risks to carbon-intensive assets. Oil and gas extraction and coal power plants rely on large amounts of water, and will will become more costly and difficult as water scarcity (exacerbated by climate change) continues to grow. 

Renewable energy is becoming more competitive, supported by government policy and market forces. In 2007, the installed price of solar was $8 / watt, compared to just $3.05 / watt in the second quarter of this year. 

Perhaps most importantly, the report stresses the potential costs of maintaining the status quo. Most businesses will suffer great losses in a future defined by climate havoc: "Inaction, therefore, is a systemic and salient risk to all investors." 

In laying out options for actions investors should take, the report makes the case for evaluating carbon risks in portfolios and engaging with corporate executives and boards (leveraging tools like the Sustainability Accounting Standards Board (SASB); the Carbon Disclosure Project (CDP); and Integrated Reporting).  It quotes Mercer's Responsible Investment group in encouraging investors to "think about diversifying across sources of risk rather than across traditional asset classes." 

And it offers a nuanced approach to divestment from a risk-mitigation perspective, as opposed to a moral perspective emphasized by activist campaigns calling for divestment, noting that it's not "all or none" when it comes to divestment. There is a "hierarchy of fossil fuel asset stranding" and investors would be wise to recognize that and abandon positions with the highest risks. 

This section ends with a paragraph focused on college and unviersity endowments, which is worth quoting extensively: 

"We fully recognise that divesting can be complicated, both ethically and logistically, for asset owners. College and university endowments, for example, must prioritise intergenerational equity to ensure future students have at least the same resources afforded to current students in order to maintain and enhance the calibre of the institution. Additionally, many of these endowments participate in comingled investment vehicles, delegating complete control of asset selection to the hired fund managers. However, the investment committees of these endowments must not dismiss divestment due to the complexity inherent in outsourcing fund management since carbon risk is significant and only growing... Furthermore, academic institutions in particular are in the unique position to heighten the level of scholarly discourse around fossil fuel risk and the transition to a low carbon economy by integrating these topics into the classroom and across campus life."

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Blog Action Day 2013 - Human Rights and Social Sustainability

Today is Blog Action Day. This year's theme is human rights.  In the context of our conversation here, human rights is essential to understanding sustainability and taking a strategic approach to creating a sustainable society.

The 4th Sustainability Principle -- that in a sustainable society, people aren't subject to conditions that systematically undermine their capacity to meet their needs -- is essentially a human rights statement.

In thinking about human needs, we use Max-Neef's concept of 10 basic human needs , that are non-hierarchical and constant across time and cultures (although the ways in which these needs are satisfied can vary widely across cultures and between different eras).

The UN's Universal Declaration of Human Rights is a profound statement stemming from the horrors of WWII.  The world saw what systematic violations of human rights could lead to... and it's not sustainable.  At some point, under such conditions of oppression and abuses of power, human societies will break down into conflict.

Below are the 10 basic human needs, with reference to corresponding articles of the UDHR.

• Subsistence                 (article 3, 25)
• Understanding            (article 26) 
• Creativity                    (article 19, 27)
• Freedom                     (article 1, 2, 3, 4, 9)
• Participation               (article 20, 21, 23, 27, 29)
• Idleness                      (article 24) 
• Protection                   (article 5, 6, 7, 12, 14, 27, 30)
• Affection                    (article 16)
• Identity                       (article 15, 23)
• Transcendence           (article 18) 

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The Secrets of Sustainable Leadership in Business

Next year ASU will be offering a new Executive Master's for Sustainability Leadership.  GreenBiz hosted a great webinar today with some of the people involved with developing it:

• George Basile, Ph.D: Senior Sustainability Scientist, Arizona State University, Global Institute of Sustainability | @ASUgreen
• Bruno Sarda: Director of Global Sustainability Operations, Dell | @bruno68
• Cindy Drucker, Executive Vice President, Global Sustainability and Social Impact, Weber Shandwick | @CindyDrucker
• Moderated by: Joel Makower, Executive Editor, GreenBiz Group | @makower

The conversation touched on many of the key attributes of leadership for sustainability -- the need for compelling vision, strategy, goals, effective communication, listening, engagement, and much more.  An archive of the webinar is available on GreenBiz; definitely worth checking out. 

The promotional video for the new master's program is also great for learning more:

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New Video Contrasts Obama's Climate Speech and Coal Policies

Greenpeace just released a new video aimed at keeping President Obama honest on the contents of his recent powerful speech on climate change, pointing out continued policies that give away coal from public lands for cheap export to China:




Read more in this Huffington Post article by Brendan DeMelle of DeSmogBlog.

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College Endowments, Divestment, ESG Investing, and Corporate Sustainability

I recently published the following piece for Second Nature's @edu column on GreenBiz.com.  Read the full article here.

Will campus activism reach the C-suite?

Something's brewing on college campuses that soon may affect corporate sustainability professionals in all industries.

During the past year, a groundswell of action demanding that college and university endowments sell their holdings in fossil fuel companies has brought environment, social and governance (ESG) issues to the fore. Driven in large part by 350.org, the fossil fuel divestment movement has sprung up on more than 300 hundred campuses and is spreading to cities, faith organizations and beyond.

The latest news: Sterling College -- a small, private liberal arts college in Vermont -- has completed its divestment from the fossil fuel industry. While Sterling is small, with only about 100 students and an endowment of approximately $1 million, it provides more evidence that divestment is possible and relatively straightforward.

Do your homework

Common initial comcerns about divestment include that it is costly, complicated and requires investors to sacrifice returns. To divest, Sterling College chose a fossil-free option that Trillium Asset Management has offered clients for over a decade. “Those who say divestment is not possible haven’t done their homework,” said Matt Patsky, CEO of Trillium.

Trillium’s fossil free option replaces screened companies with similar investment characteristics (e.g. similar beta and return on equity). The result is a fossil-free option that doesn’t sacrifice returns. Recent reports from Impax Asset Management (PDF), MSCI (PDF) and Aperio Group (PDF) support the claim that removing fossil fuel investments from portfolios has a negligible impact.

Sterling is one of just six colleges to commit to divestment to date, along with Hampshire, Unity, Green Mountain, San Francisco State and College of the Atlantic. But many others are considering it.

Divestment highlights the moral hazard of our fossil fuel based economy for institutions that understand the devastating implications of climate change, yet support fossil fuel production as shareholders. This is a particularly difficult challenge for college and university endowments, designed to benefit institutions and students over the long term, in perpetuity. How is it justifiable to risk the fundamental resilience of our society from climate change impacts in the name of potentially higher financial returns? (Particularly when the data suggest those higher returns are negligible, if they exist at all.)

A moral paradox

Divestment proponents recognize that fossil fuel companies are unlikely to stop mining and drilling because some investors sold their shares -- others will buy them. But the movement highlights this moral paradox. And even if no other schools divest, it has sparked conversations on campuses across the country about a range of other ESG investment strategies.

And this could have dramatic implications across all industries -- not just fossil fuel companies. Every company currently has some responsibility, in one way or another, for greenhouse gas emissions and a wide range of other sustainability challenges such as water use, toxic chemicals, and labor and human rights issues. But those that are proactively implementing strategies that help move society towards sustainability can avoid risks and seize opportunities for innovation, attracting top talent and enhancing shareholder value...

Read the rest at GreenBiz.com's @edu blog.

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Culture Shift: Why culture trumps technology in moving markets

This great video of Rebecca Henderson's talk at VERGE is worth the 10 minutes.  She lays out four elements of a needed cultural shift:

1. Adopt an entrepreneurial mindset
2. Develop compassion for the core (e.g. the mainstream, the status-quo, those who don't see the need for change)
3. Become rational about emotions
4. Develop a systems mindset

Henderson explains each of these concisely in her talk below, and stresses, that like the "fifth discipline" the need for a systems mindset is the most important. 

Moving groups, organizations, and societies as a whole towards sustainability requires great collaboration and profound shifts in worldviews, values, and mental models (e.g. habits of thought, assumptions and blind spots).  I believe we have everything we need in terms of resources, tools, technology to create a sustainable society (though continuing to work and improve on those fronts is important, beneficial, and can potentially make the shift easier) -- and that we still have lots to do in bringing about the culture shift. 

That calls on us all to be open and provide leadership at all levels. Those acts of leadership often involve simply being strong enough to let go of assumptions and preconceived notions; to rethink success, and reevaluate what our fundamental needs are, and how we can most effectively go about meeting them. 

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