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How the zero-waste economy benefits everyone

Published August 28, 2014
How the zero-waste economy benefits everyone

“Don’t let fashion go to waste,” says H&M, the global clothing retailer that booked $20 billion in revenues last year. So I brought a bag of old T-shirts, sweaters and khaki pants to an H&M store in Washington, D.C., which took them, no questions asked, and gave me a coupon for 15 percent off my next purchase. H&M takes back clothes in all of its 3,100 stores in 53 countries.

Next, I pulled an ancient iPod and an iPhone 4S with a cracked screen from a desk drawer. On the website of a company called Gazelle, I answered a few questions and learned that the company would pay me $37 for the pair. (Without the cracked screen, the iPhone would have been valued at $135.) I printed out a free shipping label, and they were on their way. Not to landfills, but to a new life.

Meanwhile, not far from my home, a garage owned by the Washington Metrorail system is about to undergo a makeover. Existing lighting fixtures will be replaced by LEDs that are expected to reduce energy usage by 68 percent. The LEDs will be manufactured, owned and monitored by Philips, which will take them back when they need to be repaired or replaced.

Welcome to the emerging world of the circular economy. Faced with rising prices for energy and raw materials, along with pressures from environmentalists and regulators who have passed “extended producer responsibility laws” in Europe and some U.S. states, forward-thinking companies are finding ways to take back, reuse, refurbish or recycle all kinds of things that otherwise would be thrown away. In contrast to the traditional “take-make-dispose” linear economy, which depletes resources, a circular economy is an industrial system that is restorative or regenerative by intention and design. Inspired by nature, a circular economy aspires not merely to limit waste but to eliminate the very idea of waste: Everything, at the end of its life, should be made into something else, just as in the natural world, one species’ waste is another’s food.

Refined and rebranded

This isn’t entirely new, of course. Recycling has been around for centuries — iron pots, for example, were melted down to make armaments during the American Revolution — and, when done right, it delivers significant environmental benefits by reducing demand for raw materials, energy and water. (It takes around 700 gallons of water to make a cotton T-shirt such as those I brought to H&M.) In the 1990s and 2000s, pioneering environmental thinkers such as Paul Hawken, Amory Lovins, Hunter Lovins, Janine Benyus and William McDonough laid the intellectual groundwork for the circular economy by developing such concepts as natural capitalism, biomimicry and cradle-to-cradle design. But they were slightly ahead of their time, as pioneers often are.

Now their ideas have been refined and rebranded by influential business thinkers as the circular economy — and they are getting the attention of big companies.

The timing is no accident: Prices for oil and energy have more than quintupled since 1998, metals prices have tripled and food prices have risen 75 percent, according to "Resource Revolution: How to Capture the Biggest Business Opportunity in a Century,"  a new book by Stefan Heck and Matt Rogers. “What we are seeing are two concurrent trends,” explained Heck, a former McKinsey consultant. “First, the cost of extracting resources is going up dramatically. That’s driven by the fact that we went after the cheap and easy stuff first.” (Think about the costs of drilling for oil in the Arctic or extracting it from Canada’s tar sands.) More important, Heck said, is that an estimated 2.5 billion people in China, India and other developing countries will move out of poverty and into cities by 2030. They’ll want apartments, cars, air conditioning and electronics, creating massive demand for energy and raw materials.

No wonder companies see the circular model as a business opportunity. The transition to a circular economy could generate savings of more than $1 trillion in materials alone by 2025, according to an analysis by the U.K.-based Ellen MacArthur FoundationMcKinsey & Company and the World Economic Forum, which are collaborating to promote circular thinking. The foundation’s partners include Philips, Cisco, Unilever, Renault and Kingfisher, Europe’s largest home improvement retailer, all of which are testing circular models.

“Companies are getting much more interested in how they can recover products at the end of life,” former foundation CEO Jamie Butterworth said.

Usership, not ownership

Philips has gone further than most. The company began incorporating circular-economy thinking into its activities two years ago, the company’s CEO, Frans van Houten, recently told the McKinsey Quarterly. The thinking is applied to the company’s lighting and health care businesses.

LED streetlights in Singapore and Buenos Aires, like the new fixtures in Washington, D.C., Metro garages, will be owned by Philips, saving government customers the capital outlays. The governments will pay monthly fees based on usage. In Amsterdam, an office building being designed for accounting firm Deloitte will showcase a smart lighting system equipped with sensors that will deliver information to building managers about which offices are occupied and which need to be heated and cooled. The system is owned and managed by Philips, which will upgrade the technology as needed, while Deloitte pays for lighting as a service.

“We keep the ownership of the products, and we redesign them in such a way so that they have more value at the end of life,” said Henk de Bruin, head of sustainability at Philips. “Usership rather than ownership is a trend we see emerging.”

Stockholm-based H&M has been taking back clothes worldwide since 2013. The fast-fashion retailer contracts with a Swiss-based company called I:Co (which stands for I Collect) that collects the used clothes, sorts them by hand and either sells them for reuse in poor countries or recycles them into a variety of products, including automobile seats, insulation and stuffed toys.

The economics work well, according to H&M sustainability manager Henrik Lampa — enough revenues are generated at the end of life to pay for the collection and sorting and fund research into recycling innovation. However, “there’s a big need for technology development,” Lampa said. Chemical as opposed to mechanical recycling could enable used cotton to be turned into new clothes without degradation in quality.

“Ideally, we want to make new commercial fibers out of this,” Lampa said. “Then we will have new materials that do not have the price volatility of agricultural commodities.”

Rapid upgrade

The circular model makes particular sense for technology products that go through rapid upgrade cycles. By buying back and refurbishing mobile phones from customers who no longer want them, Sprint has saved “over a billion dollars” that it otherwise would have spent buying new devices from manufacturers such as Apple, Samsung and LG, said Darren Beck, director of environmental initiatives. About 90 percent of the phones Sprint collects are returned to the market as replacements for lost or damaged phones or as “certified pre-owned phones” sold to new customers. For its part, Verizon recently introduced a free application that gives customers an instant quote for their used device, which then can be returned for cash at a Verizon store. All told, the U.S. consumer electronics industry took back or recycled 620 million pounds of electronics in 2013, twice as many as 2010, according to the Consumer Electronics Association.

The number would be higher, Beck said, if device makers could be persuaded to design phones so that they can be disassembled or recycled more easily. Some manufacturers — HP and Herman Miller are among the leaders — have embraced the idea of designing goods with their end of life in mind by, for example, using screws instead of glue to hold things together and choosing pure materials over composites.

While market forces are the primary driver of circular practices, government regulation has played a role, too. More than two dozen U.S. states have passed laws mandating recycling of electronic waste, according to the Electronics TakeBack Coalition. States with stronger laws report that their efforts generate 5 pounds or more of recycling per person, while those with weak or no laws bring in much less, the group said.

Barbara Kyle, the coalition’s national coordinator, said that without government intervention, electronics with little or no value, such as TVs with cathode ray tubes or accessories made of cheap plastics, are unlikely to be recycled. “It’s negative cash flow to take back CRTs,” Kyle said.

In U.S. states without regulation, electronics recycling is harder than it needs to be. While Best Buy, the nation’s biggest electronics retailer, has a comprehensive take-back policy, neither Walmart nor Amazon makes it easy for consumers to return electronics they no longer want.

Intrigued

How consumers feel about all this is unclear. Young consumers appear intrigued by circular models. Millennials are buying fewer cars and driving less, and the marketplace is responding with companies such as Zipcar that facilitate car-sharing. Rent the Runway enables women to rent designer dresses and accessories, reducing the demand for new clothes.

“A lot of venture capital money is going into start-up companies that enable greater asset productivity,” said author Stefan Heck. Yet those same young consumers buy single-serve coffee machines from Keurig, Nestlé and Starbucks and fast fashion from companies such as H&M and Zara — generating more waste, not less.

So are we moving closer to the circular economy — or further away? Accurate data is hard to come by, but the U.S. Environmental Protection Agency estimates indicate that recycling rates grew rapidly from 1980 through 2000, and only gradually since then. Disposal of waste to landfill declined from 89 percent of the amount generated in 1980 to 54 percent — about 135 million tons — in 2012.

Lots of work clearly is ahead for advocates of the circular economy. But the vision they are pursuing is bold: In a truly circular economy, where waste becomes nutrients and energy is renewable, economic growth would be decoupled from environmental restraints. Companies could sell more stuff without generating pollution. Consumers could buy more stuff, without guilt. What’s not to like?

This story originally appeared at EnsiaTop image: clothes stand at a flea market by Ilya Shapovalov via Shutterstock.



Real estate pros strive to explain building energy performance

Published August 28, 2014
Real estate pros strive to explain building energy performance

Commercial buildings are some of California's largest energy- and water-guzzlers. With 58 percent of the state locked in the highest category of drought, many commercial property owners are seeing increased utility bills, and with a new building energy benchmarking and disclosure law on the books, building owners seek energy efficiency solutions as a common-sense way to ease some of the pressure. One key trade association in California, the AIR Commercial Real Estate Association, is taking the lead by educating its members on the benefits of energy efficiency.

AIR, founded in 1960, is a regional commercial real estate brokers association with more than 1,700 members across southern California, and is one of the nation's largest organizations of its kind. It's recognized across the U.S. for its ever-expanding library of sample lease forms, which members use to stay updated on industry and lease language trends — several of which now include sustainability. When California's energy benchmarking law, AB 1103, went into effect in January, AIR responded by creating sample energy disclosure lease and sale addenda (PDF) and began educating its members on these new tools.

Brokers are in the thick of it

The law states that any time a non-residential building owner finances, sells or leases a whole building, the property owner is required to use Energy Star portfolio manager to benchmark the building and provide the Energy Star rating and supporting consumption information to the lender, buyer or tenant in the transaction. As brokers are central to every aspect of a commercial transaction, their participation is essential for the law to have its intended effect. AIR's lease and sale addenda effectively address these energy disclosure requirements in one document, providing real estate professionals, building owners, tenants and attorneys with a framework template for compliance with the regulation.

Brokers hold the key to increasing stakeholder awareness, potentially boosting compliance rates, benchmarking data quality and ultimately better building performance and energy management — and educating the community about new regulations and tools is essential to unlocking this potential.

"I really think communication is the key here. It's very important to educate and communicate with the broker community on the benefits of [energy benchmarking] and its long-term economic potential, especially since energy and water costs continue to climb," said Marika Erdely, founder and CEO of Green EconoME, an energy service company based in Malibu that helps building owners in California reduce their energy costs and offers free training on AB 1103 and California's energy code (Title 24), both of which went into effect this year.

Last year, Erdely collaborated with AIR and Elizabeth Watson — one of California's few LEED-accredited lawyers and a partner in the Real Estate Group at the Los Angeles-based law firm Greenberg Glusker — to host a series of AB 1103 education events in the Los Angeles basin that were free and open to AIR members. More than 200 brokers and other key stakeholders attended each event.

Through these sessions and conversations with California's commercial real estate community, AIR quickly discovered that most brokers were unaware of AB 1103 and why benchmarking was important, exposing a major information gap that potentially could lead to significant energy and water waste and higher utility bills if left open. "There are so many brokers doing business every day that call me and have no idea," said Erdely.

AIR's sessions focused on the long-term view for why benchmarking matters — explaining how it's a simple way to save clients money, create more value and attract and retain better tenants. And while there is still a strong need for more education, brokers have started to pay attention. "It seems in general the brokers are becoming much more aware of AB 1103, and my recommendation has been for them to get in touch with an energy consultant like GreenEconoMe to help them through the process," AIR Executive Director Tim Hayes said.

Jeff Gould, director of the Los Angeles Better Buildings Challenge agreed: "We are seeing an increasing interest from brokers, landlords and tenants alike on how to integrate energy and water efficiency into the conversation during a transaction — the natural intervention point for this conversation is during a sales, lease or financing event."

More than the letter of the law

Such conversations don't have to be limited to AB 1103 compliance. Benchmarking, in addition to highlighting areas of poor performance, also typically serves as the foundation for a complimentary suite of energy-saving initiatives such as green leasing. A 2012 report (PDF) commissioned by the California Public Utilities Commission found that benchmarking was highly correlated with building energy improvements and management actions and boosted customer participation in utility rebate and incentive programs.

The potential ripple effect is large, but benchmarking laws are only valuable if the market acts on the information created by compliance. For that to happen, all primary stakeholders, such as brokers, must be invested. This is where education and outreach efforts such as AIR's are key. Through its actions, AIR is providing the kind of leadership we need if these policies will fulfill their long-term goals of reducing energy waste in commercial buildings and maintaining a sustainable and high-performing building stock.

Top image by TAGSTOCK1 via Shutterstock. The Los Angeles Better Buildings Challenge contributed to this article.



How four key priorities can modernize New Jersey's grid

Published August 28, 2014
How four key priorities can modernize New Jersey's grid

The increasing frequency of extreme weather events has been an effective means of convincing the skeptical that climate change is not only real but that its effects are already being felt. One northeastern state's effort to address the effects on infrastructure of extreme weather events was announced in New Jersey recently, when the state established the nation's first Energy Resilience Bank (ERB).

Formed in response to the massive power outages caused by Superstorm Sandy in 2012, the ERB “will support the development of distributed energy resources at critical facilities throughout the state,” a press release stated. The bank's first priority will be providing distributed energy solutions to water and wastewater treatment plants.

A new report from the New England Clean Energy Council (NECEC) argues that modernization of the region's electrical grid must go beyond energy preparedness and “build a 21st century electricity system that will position the region for economic competitiveness, support the growth of our advanced energy economy, improve environmental performance and deliver real cost savings for citizens across the region.”

[Learn more about Distributed Energy Systems at VERGE SF 2014, Oct. 27-30.]

The report, entitled Leading the Next Era of Electricity Innovation, “suggests how stakeholders can create a regulatory framework that is forward-looking and provides strong incentives for utilities to continuously utilize innovative technologies, to partner with grid users and third parties to deliver improved performance, and to create a platform for an increasingly diverse and distributed electricity system,” co-author Janet Gail Besser wrote.

Currently, “The combination of new demands on utilities, substantial capital investments required to maintain current functions and meet new needs, and flagging electricity demand presents an almost untenable challenge for the region’s traditionally regulated distribution utilities,” the report states. “Regulators and utilities must evolve to adapt to this changing world.”

Compounding the challenge of modernizing the electrical grid is the fact that electricity demand in the northeastern states has been flat or even declining for several years. “However,” the report observes, “the age-old regulatory paradigm based on after the fact review of costs to provide service and allowed returns on investment still persists for electric distribution utilities across the region, which operate largely as they have for the past century.”

The report identifies four key priorities for the modernization of the region's electrical grid.

1. First, the business plans of utilities must account for the growth of distributed energy resources “to make the transition from a commodity electricity delivery business model to a business model in which the utility serves as a distributed platform system operator.”

2. The role of regulators must evolve to encourage such a transition by the region's utilities, the report continues. “A forward-looking, outcomes-based approach...would support investments in a modern grid with enhanced reliability, resiliency, and environmental performance,” it states. “It would also align incentives to fully integrate distributed energy resources.”

3. Regulators should also ensure that rates be efficient and fair, and include “market signals to network users to optimize system-wide efficiency.”

4. In order to encourage modernization, regulators should also allow “utilities to establish budgets for demonstration, testing, and integration and share accelerated learning about the performance, cost, and capabilities of these new technologies.”

The advantages to the region of a modernization campaign, the report concludes, will not only be economic. A modernized grid will also be more energy resilient and provide environmental benefits as well.

This article originally appeared at SocialFunds.com. Top image of Kearny Power Station in Jersey City by mandritoiu via Shutterstock.



Is sharing really green?

Published August 27, 2014
Is sharing really green?

This article first appeared at Ensia.

I'm a big fan of the sharing economy. On a recent trip to San Francisco, I stayed in a house I found on Airbnb and made my way around the city using uberX. I've written favorably about house sharing, car sharing, bike sharing and getting rid of stuff you no longer want via yerdle. At environmental conferences, I've listened to evangelists for the sharing economy such as Lisa Gansky,Robin Chase and Andy Ruben. Participating in the sharing economy can save money, open people up to new experiences and build a sense of community among strangers.

But I'm not convinced the sharing economy delivers the environmental benefits its proponents claim.

Because the sharing economy enables more efficient use of underutilized assets — a car that might otherwise sit in a driveway, an extra room in a home, an electric drill or even a wedding dress — conventional wisdom holds that the sharing economy is "green." With a little help from Google, it's easy to find headlines like "How Web Sharing Sites Can Save the Planet" and "The Sharing Economy for a Sustainable Future." Graham Hill, the founder of Treehugger and LifeEdited, has said the sharing economy "makes a lot of sense financially and environmentally as well." In her book, The Mesh: Why the Future of Business Is Sharing, entrepreneur and investor Lisa Gansky writes: "Using sophisticated information systems, the Mesh [her term for the sharing economy] also deploys physical assets more efficiently. That boosts the bottom line, with the added advantage of lowering pressure on natural resources." In an interview with Treehugger , Roo Rogers, co-author with Rachel Botsman of a book called What's Mine is Yours: The Rise of Collaborative Consumption , declared: "In my opinion — having been an environmentalist all my life — collaborative consumption has the potential to have the biggest environmental impact that we could ever have hoped for."

But where's the evidence? It's hard to find.

Incomplete sources

One of the few specific claims about the environmental benefits of sharing came from Jessica Scorpio, the founder of Getaround, a peer-to-peer car sharing company, who in a 2012 article for Fast Company wrote, "The potential environmental impacts are significant: When measuring carbon emissions, home sharing is 66 percent more effective than hotels whereas car sharing participants reduce their individual emissions by 40 percent."

When I emailed Scorpio for the source of her data, she referred me to a 2011 study from the University of California Transportation Center that estimated that "every car sharing vehicle removes between 9 and 13 other vehicles from the road" and found that car-sharing companies tend to own newer, more efficient vehicles than the general public. But the study didn't quantify the environmental benefits — and what if the shared cars, which are on the road all day, are driven many more miles than the owned cars they replace?

Credit: Dave IngramOne thing's for certain: In the U.S., neither the growth of car-sharing companies like Zipcar, Uber, Lyft and Getaround, nor the increased fuel efficiency of the U.S. automotive fleet, nor the uptake in biofuels mandated by the U.S. government, reduced gasoline consumption or greenhouse gas emissions in absolute terms last year. In 2013, the nation's demand for gasoline rose for the first time since 2007, ticking up to 8.8 million barrels per day, according to the Energy Information Administration (and GHGs rise in lockstep with the number of gallons of gasoline that are burned). It's impossible to know why motorists are using more gasoline because so many factors come into play -— economic growth, longer commutes to new jobs, a rebound in the housing market or a proposition known as Jevon's Paradox that says increased efficiency may lead to more, not less, resource consumption, which itself is much debated. Of course, gasoline consumption is just one way to measure the environmental impact of car sharing, which could lead to other benefits — fewer cars should need to be produced and the demand for parking should ease in urban areas.

The point is, the economy is such a ridiculously complex system that calculating the impact of any specific intervention is difficult (economists still disagree on what ended the Great Depression), and people need to think about all the possible outcomes of these things.

Behavioral questions

Let's look at another example: Monkey Parking and ParkModo — mobile applications designed to connect drivers in search of public parking (and willing to pay) to those who occupy a space and are willing to give it up. It's sharing, right? Well, aside from the question of whether public spaces can be shared for profit (San Francisco says they can't ), these apps encourage people to drive around cities, nab parking spots, vacate and sell them, and then drive around some more, and repeat. This is likely not "green" behavior.

Or consider Airbnb, perhaps the hottest sharing company. Its growth could well mean that fewer hotels get built, saving concrete, steel, construction waste and carbon emissions. But even as Airbnb boasts that July 5, 2014, was its biggest night ever, with 330,000 people booking rooms on its platform, hotel occupancy rates this year are the highest since the boom year of 2000 — so plenty of new hotels are being built. And what if Airbnb — because it's generally cheaper than hotels — enables people to travel more, rather than stay at home? Or, what if travelers treat themselves to a steak dinner, with its attendant climate impacts, with the money they save on lodging?

Sharing's still a good thing

This isn't to say that we shouldn't embrace sharing. We should. It's hard to see a downside to bike sharing or peer-to-peer connections that enable people to give away possessions they no longer need. This is especially true in crowded urban areas. As Gansky told me by email, "More access and less singular ownership reduces pressure on cities — less cars, less space dedicated to parking, fewer empty storefronts, rooftops, parking lots and commercial spaces … and less stress for individual families as the perceived need to own it all diminishes."

Maybe the evidence for the sharing economy's green claims will come in time — Gansky rightly pointed out, "while the movement is progressing, we're still in early days." But until it does, it's best to beware of green claims about sharing — or, for that matter, anything else — until all the evidence is in.

Top image of Lyft car by Alfredo Mendez via Flickr.



Chris Potter

Institute for Market Transformation
Chris Potter is the Senior Communications Associate for the Institute for Market Transformation (IMT), a Washington, DC-based nonprofit that promotes energy efficiency, green building and environmental protection in the United States and abroad.

How to growth-hack a sustainable future

By Stephanie Draper
Published August 27, 2014
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Tags: Big Data, Consumer Trends
How to growth-hack a sustainable future

Most technologies that might disrupt our business future are neutral in terms of sustainability — or at least start that way. It is not until they are applied that they become supporters, or detractors, of a sustainable future.

At Forum for the Future, we want to see more of the latest and best thinking applied to sustainability challenges. Leading companies are making commitments to that effect. DuPont's sustainability aims, for example, focus on using science to address three global challenges: feeding the world; building a secure energy future; and protecting ecosystems.

But just as exciting is the potential for new technologies, particularly digital ones, to be more systematically applied for the good. Take "growth hacking," an approach used by Facebook and others to boost user numbers. It combines data analytics with behavioral psychology and uses those lenses to design and test user experiences. It hails from marketing, but uses the rise in really detailed user information to track how people respond to certain things and what makes them share, then uses that information to take recruitment to the next level.

Growth hacking was coined at the launch of Hotmail, when organizers sent emails saying "PS: I love you. Get your free email at Hotmail" — a simple initiative that resulted in 12 million users within 18 months. This was basically viral marketing, but now growth hacking is applied in more sophisticated ways. Dropbox has multiple teams focused on data science, analytics and monetization, but sees the key lever for growth as promoting sharing and studies ways to do that.

This may all be repackaging of traditional product and marketing (and this sort of tracking is not to everyone's tastes), but it has been shown to be really effective at creating scale in the digital space. At the moment, that scale is often focused on sharing streams of consciousness (or in the case of my friends, photos of glorious holiday destinations that are painful for me to see when I am stuck at my desk). But imagine what it could do for sustainability where scale is sorely needed. How could it be applied to behavior change on energy, to support for action on climate change, to buying more sustainable products?

This is starting to happen. Avaaz and 38 Degrees use basic referral and sharing techniques to drive campaigns on anything from bees to Syria. At Forum, we have a "Lab" aimed at creating more of such experiments. The Internet of Things Academy was born out of the Lab and focuses on sharing hardware and software tools that people can use to improve things for people and planet. Buggy Air is an example of this, where parents are shown simple ways to create sensors that go on their child's buggy and then share the results; this creates awareness of air pollution and through sharing can stimulate people to do something about it.

But these still feel like isolated examples. Too much innovation is still taking us on an unsustainable course. Those of us interested in a greener future need to take the latest and best thinking — from companies' R&D to the latest digital toolkits — and use it shamelessly to drive us in a better direction.

Top image of data by kentoh via Shutterstock.

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New Global Opportunity Network seeks to transform 5 major risks

By Bjørn Haugland and Erik Rasmussen
Published August 27, 2014
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Tags: Climate, Health Care, More... Climate, Health Care, Human Rights, Innovation, Water
New Global Opportunity Network seeks to transform 5 major risks

How can we use the pressure from global risks such as extreme weather or water scarcity to create new sustainable business opportunities?

If you have not already asked yourself that question this morning, take five minutes to think about it right now. It might be the best thing you can do for your company.

In today's strategizing and business developing, we are very good at spotting risks associated with the sustainability challenges facing us. Markets will change, access to critical resources might dry up, and politics and regulation remain unpredictable. This gives many of us daily worries and makes planning for our businesses' future hard.

Nobel Prize-winning economist Daniel Kahneman is well known for his work showing how we give more attention to avoiding losses than to creating new gains. This is especially true when we are faced with complex risks that we cannot fully comprehend. This is basic human psychology, and we bring it with us to our companies' office space.

Unfortunately, this also means that we are not nearly as good at seeing the opportunities for creating sustainable businesses as we are at spotting the risks. Our inherent loss-aversion clouds our outlook and carries the risk of stifling our potential to act and invest in a sustainable future. A sad loss for innovation and society at large.

Question is: How do we change this? How do we adopt a lens for the strategic outlook of our companies that enables us to see the opportunities and take the leaps needed to seize on them?

Greek-style innovation

The answer to these questions has been refined for centuries. Tools and mechanisms have been developed to handle the risk of losses and overcome barriers for action. Mutual insurance is a good example. Distributing the individual's risk over a larger group of people makes it less threatening to invest or engage globally.

Ancient Greek merchants already had this system in place. They dared to face the risks of losing cargo because they knew the other merchants would share their potential loss. The old Greeks dared to take action, because they as a collective entity had a bigger incentive to seek the chance, ship off their goods and reach for the benefit (in this case, a profit). By sharing the risk, they were able to see that the opportunity of trade was more compelling than the alternative of backing down in fear of taking a loss.

Credit: Rafael Croonen via ShutterstockCompanies and societies today must start doing exactly that. Right now, we dig deep into the risks of water scarcity and global warming. We do, however, talk very little about what societal gains we could achieve from creating, for instance, a no-carbon energy system. Just as the invention of mutual insurance set the Greek merchants free to see the benefits of trade, we need a new tool to help us focus on the benefits of a transition to a more sustainable society, to enable us to act on the sustainability challenges ahead. That work begins now.

From five risks to 15 opportunities

Launching in Johannesburg today — and coming to San Francisco on Thursday — is the new initiative Global Opportunity Network, which begins where traditional risk reports stop. Initiated by DNV GL and Monday Morning Global Institute, the work aims to demonstrate how to turn five global risks into 15 sustainable opportunities for societies and companies across sectors.

Over the next two weeks, academics, innovators, business leaders, public officials and youth organization representatives will convene at workshops in San Francisco, Sao Paulo, London, Johannesburg, Oslo, Abu Dhabi, Mumbai and Shanghai to identify tangible opportunities related to five risks threatening our communities: extreme weather, continued lock-in to fossil fuels, urban breakdown, lack of fresh water and continued rise in non-communicable diseases.

Each risk puts a lot of pressure on our existing way of living. Extreme weather is by far the most costly type of natural disaster, and flooding is a rapidly growing source of both human and economic losses. Non-communicable diseases have become the No. 1 killer in the world, putting healthcare systems on the brink of collapse. And decreasing supplies combined with increasing competition for water reserves soon can result in water resources not meeting demands.

Later this fall, a group of experts will review the identified opportunities and distill them into 15 tangible opportunities. These will then be tested in a global survey with about 5,000 private sector decision makers and influencers to determine how compelling the opportunities are when seen as investment areas.

With the work of the Global Opportunity Network, we aim to enable us all to look at the pressure these global risks impose with a specific set of lenses: The kind that magnifies what new demands, behavior patterns and market disruptions these risks create, and convert this knowledge into sustainable opportunities — for societies and for business. If we succeed, the work will demonstrate that the greatest risk we run is not seeing the opportunities at hand.

Top image of sun emerging from behind clouds by Ioana Davies (Drutu) via Shutterstock.

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These chemical initiatives deserve your support

By Richard Eidlin
Published August 27, 2014
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Tags: Chemicals, Green Chemistry & Toxics, More... Chemicals, Green Chemistry & Toxics, Policy, Pollution Prevention
These chemical initiatives deserve your support

Laws, oversight and guidelines are essential to the success of sustainability initiatives, and responsible business owners can make a big difference by fighting for policies that protect our health and environment. Here are two pro-sustainable business policy items the American Sustainable Business Council is working on in conjunction with many other organizations — and information on how you can join the cause.

1. Support meaningful chemical reform

Efforts to update the nation's chemicals law with meaningful reforms achieved a small victory last month when the industry-written Chemicals in Commerce Act died in committee. Several smaller chemical reform bills are expected to be introduced later this year, but unfortunately, comprehensive legislation remains stalled.

ASBC's campaign Companies for Safer Chemicals is advocating on Capitol Hill to make the business case for modernizing the nation's chemical laws.

But it is an uphill struggle. Just getting substances labeled as harmful is difficult. Consider the case of styrene, which the National Research Council recently upheld as a likely carcinogen by the National Toxicology Program. The NTP had previously ruled styrene was a likely carcinogen, but had faced stiff industry resistance. A styrene trade association had asked a judge to block the inclusion of this finding, but its arguments were rejected in court last year.

Styrene is used extensively as a component in polystyrene, often used in food service containers and building insulation, among others.

What's at stake?

This example of how difficult effective chemical regulation can be should serve as a wake-up call. Eliminating the worst chemicals from commerce will require forward-thinking businesses to get involved. Incumbent industries have the resources to make this a lengthy fight. Elevating the business voices that support cleaner and safer products will be essential to recast the debate.

Lax chemical regulation puts public health at risk, which in turn can drive up health care costs — already a major burden for businesses — and hamper worker productivity. At the same time, concerns about the safety of commonly used products adversely can affect consumer confidence and drive demand down further.

The Toxic Substances Control Act has not been updated since its passage in 1976. The lack of effective, up-to-date chemicals regulation poses risks to the economy as a whole and to individual companies. Companies that produce chemicals, as well as those that use chemicals as inputs to production, suffer high financial risk because of litigable health hazards, such as fiberglass and asbestos, that can surface years later and bring companies down.

On the other hand, companies that have the know-how to produce better, safer alternatives to conventional chemicals have difficulty building a market because the hazards of existing chemicals are not measured and disclosed.

What can you do?

That doesn't mean it can't be done. ASBC has published business case studies from companies, including Kaiser Permanente and Seventh Generation, that have had success with safer chemicals.

Businesses can support the effort in a number of ways, from signing a petition for safer chemicals to joining the coalition to advocate for updated chemicals regulations.

Credit: Dan DeChiaro via Flickr

2. Fight back against "super pollutants"

Earlier this year, Sens. Chris Murphy (D-Conn.) and Susan Collins (R-Maine) announced they would introduce legislation to reduce emissions of short-lived climate pollutants, or SLCPs. These materials, also known as "super pollutants," include soot from diesel engines and cookstoves; refrigerants used in many household appliances; and methane, a far more potent greenhouse gas than carbon dioxide. Overall, they are responsible for about 40 percent of climate change.

A similar piece of legislation was introduced in the House last year. The Murphy-Collins bill would build on that in a number of ways, including calling for international efforts to reduce black carbon, a major element of soot.

What's at stake?

According to Murphy, reducing SLCPs in the atmosphere could lead to a 25 percent reduction in sea level rise and a nearly 50 percent cut in the rate of rising temperatures, all while preventing as many as 2 million premature deaths annually.

What can you do?

Contact your senators and ask them to co-sponsor the bipartisan Murphy-Collins Super Pollutants Act of 2014.

Tweet in support of the bill using the hashtag #ActOnClimate.

Top image of test tubes by Raymond Bryson via Flickr.

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Can investment districts bring more clean energy to minorities?

By Kat Friedrich
Published August 27, 2014
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Tags: Finance, Social Responsibility
Can investment districts bring more clean energy to minorities?

The nonprofit Center for Social Inclusion has developed an innovative policy paper called "Energy Investment Districts" that could attract clean energy financing and distributed generation to minority and low-income communities.

Ethnic minorities will be a majority of the United States population before 2050. This paper offers clean energy financing professionals an opportunity to think creatively about ways to reach these markets.

"We're trying to change the conversation and the narrative around renewable energy generation and really focus it in on the fact that communities of color can be in this new energy economy," said Anthony Giancatarino, coordinator of research and advocacy at the CSI. "They have the assets and the tools to do so. They just need the resources. Upfront costs are a huge barrier to participation."

District structure

The policy paper advises states or municipalities to create Energy Investment Districts. These districts would consist of Energy Investment Trusts working in partnership with community-run councils. The trusts could be run by community development financial institutions (CDFIs), nonprofits, government agencies or multiple organizations.

States that have home rule laws can create organizations of this kind at the municipal or local level. States that do not have home rule laws would need to initiate this process at the state level.

The trusts would seek opportunities to funnel capital into local distributed renewable energy and energy efficiency projects. To do so, they could consider a wide variety of capital sources such as federal organizations, infrastructure bonds, workforce funding, revolving loan funds, foundations, property-assessed clean energy programs, linked deposit programs, pooled investments in LLCs, crowdfunding programs and direct public offerings.

The paper does not explore the need to build partnerships with financing organizations. However, without access to financing expertise, EIDs would be unlikely to succeed in locating and leveraging resources for their communities.

"It's going to require a bit of outreach and networking," Giancatarino said.

Pilot programs and preexisting models

Parts of this concept already have been tested. Ohio, Arkansas and Connecticut already have created energy improvement districts that operate similarly to EIDs but do not focus on minority and low-income communities. They also do not include community councils that review the programs' performance data and authorize projects.

The CSI developed this concept after an extensive review of existing programs. Some program models that influenced the paper were those created by Delaware's Sustainable Energy Utility, DC Sustainable Energy Utility, Clean Energy Finance and Investment Authority, Massachusetts Clean Energy Center, Co-op Power, Boston Impact Initiative and CDFIs.

"It would be great if we could pilot this idea to see how it plays out," Giancatarino said. "We have a lot of sticks in the fire. We're involved in talking with communities about what's involved in building renewable energy locally in an equitable way."

It's possible that the first EID may be created in California. Giancatarino said the CSI is having conversations with an organization there that may pilot this concept.

Community-oriented approaches

The CSI's work is grounded in a community-oriented viewpoint. The policy paper proposes a structure for the EIDs that is based upon this perspective.

"People need agency and people need the ability to participate in the decision-making process at the local and state levels," Giancatarino said.

The trusts each would have a board of directors. The CSI recommends that these boards include both community representatives and local citizens with technical expertise.

The policy paper recommends regular engagement with citizens via community councils. These councils also would review performance data to ensure that projects are on track to accomplish their goals.

Involving community councils in authorizing energy-related projects and reviewing their performance data may seem unusual to some stakeholders. This is not an entirely new concept, however. It is aligned with ideas promoted by the Institute for Local Self-Reliance, an organization that advised the development of this policy paper.

"We think community-scale energy is a really viable wave of the future," Giancatarino said.

Participation obstacles

Giancatarino said there is a misalignment between the types of energy efficiency measures and programs that exist today and the obstacles faced by many minority and low-income community residents.

"A lot of our policies are really steeped in property ownership," Giancatarino said.

While around 25 percent of white United States citizens are not homeowners, Giancatarino said, this number doubles to nearly 50 percent for blacks and Latinos.

Many energy efficiency and renewable energy programs focus on homeowners rather than renters, although this has changed somewhat with the arrival of community solar gardens.

"There's a lot of challenges for communities that do own their homes," Giancatarino said. "There's also structural housing issues as well — from lead to leaky roofs."

EIDs would have to develop plans to address these structural issues along with energy efficiency and renewable energy. If they provide funding for energy measures alone, they may not succeed.

Environmental hazards

According to Giancatarino, the CSI is taking a climate resilience perspective in advocating for prioritizing distributed generation in communities that are at high risk for climate impacts and coal pollution. However, the policy paper does not specify how communities might be designated as high-priority and does not propose coordination between EIDs.

"Communities that have been burdened … through coal pollution, are on the forefront of climate change and need to be resilient need to be the top priority," Giancatarino said. "If we can target the hardest-hit and fix that problem, that's going to open up options for all to engage."

Top image by kmlmtz66 via Shutterstock. This article first appeared at Clean Energy Finance Forum.

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Kat Friedrich

Editor
Clean Energy Finance Forum
Kat Friedrich is a journalist living in Massachusetts and working with clients in many states. She uses her engineering knowledge, journalism training and programming experience to create content related to clean energy, green construction and higher education.
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