Here We Are

“We are not fully prepared for the next global pandemic,” Microsoft co-founder and philanthropist Bill Gates said in 2018. “The threat of the unknown pathogen – highly-contagious, lethal, fast-moving – is real. It could be a mutated flu strain or something else entirely.”[1]

And here we are.

Hubris

Why didn’t Gates’s prophetic warning (which he also featured in his 2015 TED talk[2]) take hold more broadly? One reason is hubris – in this case, the presumption that humans control nature and not the other way around.

But, as COVID-19 has brought into stark relief, the global economy is, undoubtedly, a subsidiary of the environment.[3] One tiny change, a wee mutation in a virus, and boom! The planetary economic system goes into shock.

Local Versus Global

This has always been true locally, to be sure. A hurricane sweeps in and devastates an island nation, batters a coastal mainland, or floods major cities, and life in that area is dramatically altered. But insurers pay out, and governments draw from disaster funds to stabilize the area, and things slowly return to normal.

Can this system hold when the disasters are prolonged and systemic, rather than brief and local? As we’re discovering, the answer is no.

Belated Awareness

A third of humanity lives along, works along, builds along, farms and fishes along the 372,000 miles (620,000 kilometers) of global coastline.[4] Both insurers and governments are beginning to question the wisdom of coastal settlement in vulnerable areas, and are looking askance at continuous rebuilding efforts. The entire system is built around insurance mitigating the consequences of disasters, but now those insurers are starting to see the entire carbon-based system as risky.

Investors and reinsurers are withdrawing support from climate-change agents such as Big Carbon. Credit agencies have begun considering climate when evaluating big corporations and cities – for example, Moody’s downgraded Cape Town’s credit rating after their water emergency and did the same to Trinity Public Utilities District in California after the wildfires of 2019.[5]

Bankrupting the Environment

The current pandemic is putting the scaffolds we have built our society around – carbon, credit, insurance, globalization, unlimited air travel and, especially, free-and-lightly-regulated markets – into stark relief. Our current approaches have bankrupted the environment, in other words, to the point where it is clearly threatening the global economic system. 

There’s some scientific sentiment that this bankruptcy – specifically, bringing animals in close contact with dense populations through habitat loss – creates the conditions for diseases crossing to humans.[6] “When we erode biodiversity, we see a proliferation of the species most likely to transmit new diseases to us,” Bard College biologist Felicia Keesing told Ensia.[7]

Climate and Pathogens

Another potential danger is that higher global temperatures may be selecting for disease agents that can survive in hotter conditions, neutralizing one of our bodies’ most effective immune responses: fever.

“As pathogens are exposed to gradually warmer temperatures in the natural world, they become better equipped to survive the high temperature inside the human body,” noted Time in February.[8] “The pathogens that survive – and reproduce – are better adapted to higher temperatures, including those in our bodies.”

Another potential impact of warming is that diseases usually confined to the tropics – malaria, dengue, Chagas disease, etc. – may become more widespread in temperate zones.[9]

In other words, a bankrupt nature doesn’t affect us through high water levels and more frequent devastating weather events alone. It can also unleash new pathogens and broaden the range and duration of both current and novel diseases.

Beyond the Immediate

Successful responses to COVID-19 are strongly making the case for community and global cooperation, with decisive action and public support helping contain the virus faster. It is a relief to see that we as a species are indeed capable of making a hard turn and changing course.

While we never wanted this, the course changes do show what is possible. In New York City, carbon monoxide was reduced by half, while NO₂ and CO₂ levels also fell dramatically.[10] China’s atmospheric carbon dropped “by around 200 million tons in February…roughly half as much CO₂ as Britain releases in a year.”[11] A bottlenose dolphin or two have been reported off Cagliari, and the Venetian canals are running clear and hosting swans, all rare sightings in the past.[12]

While these changes are beneficial, the pandemic that caused them is not. We need to find a way to recapture the declines in pollution and emissions that doesn’t depend on disease and suffering.

Not So Remote

As others have noted, our response to COVID-19 makes clear that the world can work remotely more than we currently do. “In a recent webinar snap poll, 91% of attending HR leaders (all in Asia/Pacific) indicated that they have implemented ‘work from home’ arrangements since the outbreak,” notes Gartner,[13] predicting that by “2030, the demand for remote work will increase by 30%.” The virus will probably drive that number up permanently and, if so, there will likely be a significant carbon savings globally.

That said, there are three things in particular we must remember.

First, as of now, this is a temporary stay rather than a pardon. For example, there is already evidence that China’s air pollution levels are ramping back up.[14]

Second, we’ve paid a steep price for what we’ve done to make diseases like COVID-19 more likely, for our lack of adequate preparation for them, and for the illusion we could separate our economy and our ecology. We’d all be guilty of dereliction of duty if we don’t learn from the mistakes we paid so dearly to discover.

Third, humans are social creatures, and our biology does not – cannot – evolve at the same rate as our technology.[15] As a result, when the crisis has passed there will be some changes but we will mostly go back to the way we socialized before – in person. That means we need to continue rapidly decarbonizing travel, work, and the economy.

When It’s for All the Marbles

The response to this crisis makes it clear that countries, sufficiently motivated, can make powerful decisions, mobilize their forces, and unleash the full range of human knowledge and expertise to solve problems. It also shows how hollow are the bleatings of those who claim the cost of sustainability is too high. To fight this emergency, trillions of dollars are on the table – in the United States alone – for business, social, and medical assistance.

The trick that has – so far – eluded us is convincing lawmakers and citizens that the climate emergency rivals that of this pandemic. Unfortunately, they both have this in common: “if you wait until you can see the impact, it is too late to stop it.”[16]

The Highest Stakes

The COVID-19 virus has shown how high the stakes are and how we must respond. Our economies, and our ultimate welfare, are wholly owned subsidiaries of our environment. We must nurse it out of bankruptcy, for all our sakes.

REFERENCES
[1] Yahoo Finance, Bill Gates: ‘My Biggest Fears About What’s Coming Next for this World,’ Sept 2018
[2] Bill Gates: “The Next Outbreak? We’re Not Ready”
[3] This quote, often attributed to Herman Daly, has also been attributed to Gaylord Nelson
[4] NASA, Living Ocean
[5] Inside Climate News, Climate Change Becomes an Issue for Ratings Agencies, Aug 5, 2019
[6] The Guardian, Tip of the Iceberg: Is Our Destruction of Nature Responsible for COVID-19? March 18, 2020
[7] Ensia, Destroyed Habitat Creates the Perfect Conditions for Coronavirus to Emerge, March 18, 2020
[8] Time, The Wuhan Coronavirus, Climate Change, and Future Epidemics, Feb 6, 2020
[9] Scientific American, What Could Warming Mean for Pathogens Like Coronavirus? March 9, 2020
[10] BBC News, Coronavirus: Air Pollution and CO2 Fall Rapidly as Virus Spreads, March 19, 2020
[11] Autoblog.com, China’s NO2 Emissions Rising as Country Recovers from Coronavirus Lockdown, March 20, 2020
[12] Esquire Middle East, Covid-19 Upside? Dolphins Return to Italy and Clear Venice Canals as Humans Self-isolate, March 18,2020
[13] Gartner, With Coronavirus in Mind, is Your Organization Ready for Remote Work? March 3, 2020
[14] Bloomberg Green, Satellite Pollution Data Shows China is Getting Back to Work, March 2020
[15] In fact, while we need physical distancing to contain COVID-19, social closeness is important to our health, happiness, and productivity, as we discuss in a separate article
[16] Yale Environment360, Coronavirus Holds Key Lessons on How to Fight Climate Change, March 23, 2020

For years we have known that women do not rise to positions of power as often or as easily as men, and for years we’ve assumed that the ‘glass ceiling’ was entirely a function of bias on the ‘demand’ side, in interviewing. What if it’s not?

There’s no doubt, of course, about the problem: a glance at the Fortune 500, for example, shows a record 33 women CEOs, a not-exactly-whopping 6.6%. Corporate boards, which have also made recent progress, are similarly gender skewed, and women account for under 21%.

But is this really all a demand-side issue, caused by biased hiring managers, or is something else at play? It’s a difficult question for, as MIT Sloan Professor Roberto Fernandez told MIT Management, “the glass ceiling, like dark matter in physics, cannot be observed. We know it’s there, but we’re not sure what’s causing it to endure.” 

Up to this point, in other words, some of the smartest and savviest companies on earth have been working on the seat-of-the-pants assumption that, if they can cure themselves of hiring bias, the problem will go away.

Consequently, companies making efforts to achieve greater gender equity have been working to recruit unbiased screeners, train and retrain their hiring staff to remove internal biases, and to build in systems that make it harder for hiring managers to screen out talented women on the basis of gender.

And they have made progress, some anyway, using this model. The 33 women CEOs noted above, and the significant increase in the overall number of talented female executives and business owners, represent improvement from just a few years ago — much of it due to existing efforts to remove bias. Yet while companies have cracked the glass ceiling, they can’t seem to shatter it.

But more rigor, and a different perspective, can help fix that.

As Professor Fernandez says, “If you ask people, ‘what is a glass ceiling?’ it’s associated with an invisible internal promotion barrier. How do we rule in or out other suspects?” Examining this issue differently yields some new answers.

In three separate research papers, Fernandez, with several different partners, analyzed candidate pools, checked those against hiring results, and came to conclusions that supply and recruiting practices have at least as much to do with the ceiling as demand-side hiring bias. Therefore, they concluded, remediation efforts on the demand side alone, while meaningful, were never going to resolve the issue.

(A bit about these terms: Demand-side refers to employer behavior, such as stereotypes and preferential treatment; supply-side is employee behavior, such as employees’ beliefs about their qualifications; and recruiting practices are programs such as the use of headhunters to find candidates.)

Fernandez and his co-authors found, for example, that on initial application for specific jobs, both internal and external candidates were sorted into queues. Some of this sorting was done by females themselves, who tended to apply for lower-level positions than then men applying over the same period – for example, “7.5 percent of the pool of candidates for salaried (exempt) jobs (were) female; the corresponding percentage for males (was) almost double that rate at 14.3 percent.”[1] 

The disparity was wider for externals, where women also applied in higher numbers: men applied for these higher-paying jobs at “over 3 times the rate for females (6.1 vs. 1.8 percent).”

Applicants were also sorted into specific queues – i.e., matched with certain jobs – by screeners, more frequently leading women to lower-level positions than men applying for similar position. So, even if you were to eliminate bias in the selection process, the pool of candidates applying for higher-level positions ends up with fewer women applicants.

In a study looking at 441 high-tech firms, Fernandez and co-author Santiago Campero found that just addressing selection bias doesn’t work, but that “accounting for screening discrimination [and] also redistributing male and female candidates across the company hierarchy ‘dramatically flattens’ the glass ceiling pattern.”[2]

Yet the broader point here is that companies have been working on the popular, reasonable, and incorrect notion that by retraining their HR departments, and rooting out gender bias on the demand side, they could solve the problem.

The fact that they have not been fully successful means wider and more rigorous perspective may be required.  As Fernandez said regarding the results of the study of high-tech firms, “Whatever else is going on, policies of outreach that allow men and women to apply in more equal proportion are going to have more bang for the buck than screening discrimination or bias reduction.”

Such policies include the use of external headhunters, who change the dynamics significantly. A study of a UK executive search firm’s activities found that candidate pools include more women when headhunters are involved and also that “women are also much more likely to be considered or hired by a company using an executive search firm…than by a company filling a position on its own with either an external or internal candidate.”[3]

Combining this with changing how applicants are sorted into queues for different jobs can be powerful. In fact, when looking into a call center, Fernandez and co-author Marie Louise Mors found that, “once allocated to queues the wage differences between male and female candidates are nil. Consequently, the roots of gender wage inequality in this setting lie in the initial sorting of candidates to labor queues.”[4]

Given how many difficult, hard-to-fix issues fall under the rubrics of sustainability and CSR, solutions that take a new approach — and create new progress — are worthy of recognition.[5] 

References
[1] Fernandez, R., Mors, M.L., Science Direct, Social Science Research 37 (2008) 1061–1080Competing for jobs: Labor queues and gender sorting in the hiring process
[2] MIT Management, August 2017.
[3] Ibid
[4] Fernandez, R., Mors, M.L., Science Direct, Social Science Research 37 (2008) 1061–1080 Competing for jobs: Labor queues and gender sorting in the hiring process
[5] This isn’t to downplay promotion and recognition issues, which matter as well. For example, the youngest-ever economics Nobel Laureate is Professor Duflo, at 46. She’s also the first-ever female MIT graduate to be awarded a Nobel – while 35 male MIT graduates have Nobel hardware. -ed. 

‘Close’ is, famously, only good in horseshoes. Trite, perhaps, but pithy. It has the benefit of age and the perfect touch of scorn.

It is also quite wrong.

Okay, full disclosure, I’ve never even gotten close in horseshoes. But I’ve done enough valuation to know that hitting close to the mark on the right target – to paraphrase the late mathematician John Tukey – is better than a bullseye on the wrong one. More precisely he said, “It’s better to solve the right problem approximately than to solve the wrong problem exactly.”

On my first trip to Thailand, I had to get to a meeting in Bangkok with no knowledge of the city or its streets.

Now these days there are many ways to find an address, even in a foreign land. Still, it’s always wise to be prepared, so before I left the hotel I printed the directions – what passes for the ‘old fashioned’ method in these days of electrons – and tucked them in my pocket.

Then, throwing my cautious approach to the warm Thai winds, I put the street name and number of my destination in the ride-share app – the thoroughly modern and incredibly precise way to get a ride to exactly where you want to go.

Naturally, I wound up on the other side of Bangkok, miles from my appointed spot. I had been taken, very precisely and exactly, to the right street name and number, but in the wrong place.

I learned then that Bangkok isn’t organized like Milwaukee or New York and, not knowing what I didn’t know, I had asked the wrong question and gotten a very correct but useless answer.

In Thailand – or in Bangkok at least – it seems there are many streets that share the same name, in different districts in various parts of the city. I had entered the wrong one in the ride-share app and that was that.

To get back, I remembered my printed instructions and simply handed them to the driver. They are far more general – they don’t account for shortcuts, police actions, accidents on the road, traffic, or any of the other up-to-the-minute perks we now take for granted.

But they did give the driver an idea which section of the city we were going to and which of the several roads with that name was the one in question. Eventually, quite late, I arrived near my meeting – not as precisely or with as much specificity… but I made it!

I had the power to call up the global coordinates, to call the restaurant and have them warp me in, even to simply give the driver my printed directions which would have gotten me close enough and, just as importantly, not have taken me almost to the Cambodian border. With electronics in my pocket that could tuck the Library at Alexandria into a tiny corner of a silicon chip, I still got the wrong answer.

A similar thing happened in Tokyo, where the street numbers can be based on the order in which the buildings are built rather than simply numbered in physical sequence. This time, however, when my driver got us close, he stopped the car and said, “I’m not sure exactly where this building number is but it’s close. Why don’t you walk up the street and ask the locals?”

To bring this around to business, it happens all the time when I’m in a meeting with top executives at a big corporation and they’re scrutinizing my numbers. I’m showing them that an awesome sustainability project they’ve been contemplating would bring in far more value than they had thought – in some cases wildly more.

There’s a pause and then someone says, well, look, I don’t know if that’s the right number?

And I’ll say, okay, got it. But this is an important source of submerged value and it really matters. If we don’t include it we are, in essence, giving it a value of zero. Better to have an approximate number for something that matters than to have it appear worthless.

So the wrong question in this scenario is not is this number exactly correct? The right question is, does the thing in question really matter? One way I like to frame this is: it’s not about the number, it’s about the decision.

Now this is especially critical when dealing with values-based value. Values – such as trust, leaving things better than we found them, helping others, etc. – are intangibles and often seem impossible to place a specific value upon.

It is possible though, and my forthcoming book The Value of Values is based on two key premises: first, that the impact of integrating values into the cellular structure of a business can be measured, and second, that the positive value created by doing so can be very, very large.

Let’s imagine the approximate value we get is substantially in the black. We don’t know to the decimal what the value will be but that is surely enough to work with.

Or let’s say we’re performing valuation on the impact of an outreach program, a charitable giving regime, or support for a health initiative in Africa, and we find significant value. Not exact value, but significant. That again makes the decision an easy one.

On the other hand, if a company asks how much will it cost us? that is an answer likely to have an exact answer, but it’s the wrong question, if there is significantly more value in going forward.

So I learned long ago to hedge my directional bets when travelling in Asia. But I also learned that getting close is not only valuable in horseshoes.

In the movie Back to the Future, a lightning bolt strikes a clocktower, generating enough energy to power a trip forward in time – with the assistance of the ‘flux-capacitor’ of course.

It did not occur to the movie’s ‘Doc’ Brown, however, to bypass the lightning in favor of the rain falling around it, as his source of energy. Yet that is just what is being proposed by several teams of scientists working independently to create electricity from rain.

As unlikely as it sounds, a single 100-microliter droplet, falling from only 15cm, “can light up 100 small LED light bulbs,” with over 140V generated, according to Professor Wang Zhong Lin, Chief Scientist at the Beijing Institute of Nanoenergy and Nanosystems, who is leading a Chinese and American team in this effort.

Still, a hundred small LEDs? That’s barely a Christmas tree…what’s the big deal?

It is estimated that a gallon of water contains more than 75,000 drops[1] while an inch of rain on an average residential roof[2] renders 1,743 gallons.[3] Suddenly, a little rain on a single roof could light 130,725,000 LEDs. That is a lot of Christmas trees.

In all, about 26,000 cubic miles of rain falls on land each year.[4] Imagine the power available during the annual 6-month monsoon in Cambodia, for example, or India, on any rooftop where the conductive material is placed.

One advantage of power from rain is the utterly renewable resource involved. The water cycle, as it’s called, is continuous, and the water does not need to be converted to hydrogen or steam in order to be used: the principle involved is strictly mechanical via gravity. Another benefit, of course, is energy production during a rainstorm when solar energy isn’t currently collected.

One group has taken the sun-rain power paradox to the next level by adding mechanical energy from rain to their photovoltaic cells, thus gaining continuous power even when the sun is obscured by rainclouds or during rain events at night. These hybrids are known as ‘all-weather solar panels’ using “triboelectric nanogenerators” to reap the power from rain. The idea is to allow continuous power in areas where it rains a great deal. As Euro Scientist reported in 2018, researchers at Soochow University created a panel where the solar and mechanical generation shares the same electrode, allowing a thinner, more efficient design.

Another team, in Grenoble, France, detailed their conversion process in Phys.org to the effect that, “when a raindrop impacts a surface, it produces a perfectly inelastic shock… To capture the raindrops’ mechanical energy, the scientists used a PVDF (polyvinylidene fluoride) polymer, a piezoelectric material that converts mechanical energy into electrical energy.” The impact of the raindrop on the “25-micrometer-thick PVDF” starts the polymer vibrating while “electrodes embedded in the PVDF” carry the electrical charges generated by the vibrations.

Scientists leading this research have suggested this could be applied to electronics as well as umbrellas, protective raingear, even the hulls of ships. Any surface which is bombarded by water’s mechanical energy could power this type of system.

So, to our surprise, here we have yet another plentiful, renewable energy source that – once the materials are refined and scaled – could provide power anywhere water is impacting a surface.

It may not be the ‘flux-capacitor’ but it is, nonetheless, a significant step forward. Though this new technology still needs between three and five years before it could be implemented in solar panels, according to IGS.com, with a little luck we won’t have to go far ‘Back to the Future’ to put it to use.

References
[1]Convert-to.com
[2]U.S. Geological Survey, based on 40’x70’ roof dimensions
[3]U.S. Geological Survey
[4] Wikipedia.org: Precipitation

The Science Based Targets initiative, created by some of the most potent and committed NGOs in the world along with the United Nations Global Compact, can be an incredibly powerful force for carbon reduction once enough companies sign on.

In his excellent blog for The Conference Board, Dr. Uwe G. Schulte laid out the simple steps for setting Science Based Carbon Targets (SBTs).

• First, the company must complete a commitment letter
• Next, it must develop a target
• Third, that target must be submitted for validation
• Finally, once accepted, the target must be announced

Items 1 and 4 are not exactly challenging. Write a letter, submit it and publicize your commitment. Yawn. Any large corporation can do that without breaking a sweat. Item 3 is also something companies are good at: a goal is laid out and they set the machinery in motion to achieve it.

No, it is the second step that many companies find so vexing, so irritating, so downright bothersome that they throw up their hands and say, “What a pain in the neck. Forget this.”

But is that the wise choice? Dr. Schulte lays out the pros and cons approximately this way:

Pros:  The targets will be independently approved; they will have a positive effect on stakeholders, NGOs and investors; 
and they will make it much easier to have the internal discussion about the right targets.

Cons:  The target-setting method is complex and companies have had numerous problems identifying the correct data; 
and the process requires considerable time and resources.

But what if the hard part were removed? What if setting a target were actually easy, could be done, say, in a few hours rather than weeks or months…would that change the equation here? In the words of Rowan and Martin, you bet your sweet bippy it would!

Our Science Based Target Setting & Tracking Tool – it’s a mouthful, but a tasty one! – was designed for exactly this purpose. Because the ‘hard part’ should be achieving the targets, not setting them. The Valutus tool saves you time and money, and, most importantly, makes it far more likely your organization will be willing to set SBTs. Here’s a brief video that takes you through the tool’s various capabilities.

Here are some other things it does – instantly and comprehensively – that streamline and enrich your goal-setting process.

• The tool enables you to visualize both individual and cumulative effects of carbon reduction initiatives, graphically displaying the “wedges” created. This makes it easy for everyone to see and understand how your plans compare to what is actually required

• It also makes building support for the targets much easier, by displaying both the current and the required emissions trajectories graphically, and enabling instant modifications and visualizations 
  
• It’s completely interactive and lends itself to the what if? questions, such as, What if we used intensity targets instead of absolutes? Or, What would happen if we started in 2022 instead of 2020? How about if we wanted to set a 2030 goal, or a 2025 one?

Answering these questions usually consumes a great deal of valuable time, but with the Valutus tool, you have the answers the moment you ask them.

Tracking and updating is also greatly simplified. Once your targets are set, you then have to track progress and actual emissions. It takes time, year after year, to manually enter the actuals, recalculate – by hand – both your current trajectory and the one required to meet the goal, and to create fresh visuals to illustrate your progress. With the Valutus tool, however, none of that is necessary. Simply enter one number each year and the rest happens automatically – and instantly.

We believe companies can best serve the world, and their own long-term interests, by committing to deep carbon reductions, and the SBTs are tailor-made for this purpose. Overcoming some of the barriers – notably time and money – that have, to this point, prevented many from participating, will help this far-reaching, strategic, and critical activity.

Yet over the years, when working hard to drill down on sustainability, we’d reach into the toolbox…but the right tools weren’t there.

Again and again, companies thumped up against barriers, and the lack of proper tools reduced their ability to move critical sustainability projects forward or even to engage at all. Watching as we all reinvented the wheel on every project was painful.

Fortunately the sustainability space has matured and has begun to address this issue. However, there are still many fewer arrows in sustainability’s quiver than needed. Accordingly, over four years ago, Valutus set out to create tools that were scalable and could be applied to almost any company’s sustainability work, to help them drill powerfully through those barriers.

Here, in brief, are four of the most common issues and the tools we’ve developed to resolve them.

• Knowing where to focus for the most useful impact
  
  Materiality was created with this in mind. Yet as we noted a few months back, materiality — as practiced — is broken. (See article here.) We have overhauled it and now offer 4D Materiality, a tool that helps create a truly powerful, more in-depth, and far-reaching materiality assessment — and does it faster. Once that is done we complete the strategy with our Catalytic Strategy Process— something we call Who / What / Wall / Way. (See what we did there? Catchy, right?)

• Lack of time, budget, and capacity for all available sustainability initiatives
  
  There’s never enough of these for everything sustainability practitioners want to do but our sheaf of tools for setting and tracking targets, quantifying value — valuation tools for customer behavior, for talent and for risk — along with our Materiality Squared tool, are designed to make important tasks faster and easier. And by faster we mean a couple of weeks instead of several months 
  
  
• Lack of leadership support
  
  Buy-in from the rest of the business is critical: for securing funding, assistance, data, etc. Companies often don’t see the value sustainability creates and therefore don’t support it strongly. Our valuation tools and consulting are designed to show sustainability’s true value including ‘submerged value’ — secondary and tertiary value usually unseen before the fact but averaging around 80% of sustainability’s true business value. Our Submerged Value Tool (read about it here) is designed to raise this value to the surface and, when the true value of this initiative is understood, funding and buy-in may follow
  
  
• Insufficient metrics for proving impact, thereby preventing companies from improving it
  
  It is a truism that, ‘if you can’t measure it, you can’t manage it.’ Conversely, if you can measure it…
  But measuring is often easier said than done. How do you connect metrics to strategy? How do you design a full metrics system? And how do you integrate information from different sources and different definitions? Our Metrics Tool Kit and Metrics Development Process are designed to help with these challenges

And all of our target tools — for carbon, for waste, and for water — can take just a few days to calculate your target rather than the standard of several months.

Just as no self-respecting mechanic would work without the right tools, there is now a wide array of such to choose from for sustainability. A box full of shiny new tools can help you build strong, integrated, and impactful sustainability programs.

In a world where many live in scarcity, one commodity is always in full supply. And, while there’s always plenty of blame to go around, we expect environmental blame to be in overdrive before 2020’s in the books.

The effects of climate change are becoming too frequent, too severe, too onerous a financial burden to many large and powerful institutions, for denial to be maintained. 

The next ‘thousand-year-flood’ doesn’t care if it carries off the home of a climate denier or an environmentalist, and when the truth finally becomes personal, anticipate deniers howling for relief along with everyone else — and looking for someone to blame. 

They may not find such a receptive audience, however. As Fortune succinctly framed it, “for the insurance industry, global warming has advanced from a future ecological challenge to a present financial shock.”

Reinsurance company Munich Re called 2017-18 the worst two-year period for natural catastrophes on record, with insured losses of $225bn.[1]

The largest reinsurer in the world, Swiss Re, has taken in twice as much in premiums for disasters at it has paid out in claims over the past twenty years. Not bad, not bad at all. However, “for the past two years, Swiss Re has had to pay out vastly more for large natural catastrophes, those over $20 million apiece, than its models anticipated for an average year’s loss. In 2017, Swiss Re expected to incur $1.18 billion in large “nat-cat” losses, based on actuarial averages, but racked up a bill of $3.65 billion.” In 2019 hurricanes once again blew their projections out of the water – rain and floodwater in this case.[2]

So insurers at least, have no doubts whatsoever about climate change. Their prime question is, how do we protect ourselves? They are, after all, masters of managing financial risk. So, what are their plans?

For one, as Fortune notes, some are pulling back from insuring carbon-dependent industries such as coal. In our last issue we noted that there were two tipping points: one for climate change, the other for the movement working to preserve our world as it was. We did not, however, consider adding ‘lack of insurance for carbon polluters’ to the scales. Hmmm.

One reason such companies are easing back from insuring Big Carbon? As Fortune continues, 

“In January, the CRO Forum, a Netherlands-based organization of chief risk officers of big insurers, warned of new sorts of climate-related claims that may confront insurers. Among them: hefty bills from corporations they insure against lawsuits. At this point, legal action charging that big carbon emitters contributed to climate change or failed to react sufficiently to it is just beginning to emerge. But, as the insurance group noted ominously, the science of pinning climate blame on corporate polluters “is developing fast.” (Emphasis ours. -Ed.)

The oil industry, for example, whose documents prove they knew decades ago the effects their products were having on climate, may be in for a beating. We believe it will be in motion by late 2020. 

We also anticipate that politicians and individuals alike who denied climate science right up until it smacked them in the head, will zero in on Big Carbon polluters. Rending of garments and anguished cries of, “They knew but they didn’t tell us!” might be heard in committee hearings and courtrooms everywhere. 

The courts, too, will be busy assigning blame in their black-and-white fashion, and their decisions could have consequences far beyond any one decision. As we’ve seen above, insurers and investors are mighty touchy about backing or underwriting industries taking a pasting in the courts.

For those considering the current state of the U.S. judiciary, we suggest that such decisions are just as likely to happen outside the U.S. – and even from other jurisdictions, they can still affect multinational companies, including those based in the U.S.

References
[1]Financial Times, Sept 9, 2019, Why Climate Change is the New 911 for Insurance Companies
[2]Fortune, Oct 24, 2019

It’s 10am, you and I are at the office in Milwaukee, when we’re suddenly called to an urgent client meeting… in Gary, Indiana at two. Rats! We had lunch plans at that cool taco stand.

Gary is 120 miles away and , if we leave at eleven, we can cruise the scenic route at 40 mph with plenty of cushion. Unwisely, I stop to check with Bill about those reports and, poof! There goes fifty minutes.

Now it’s noon and we must average 60 mph to make it on time. You’re checking your watch but relax. If traffic’s okay, we’ll get there fine.

Except I left my bag and phone upstairs. Now it’s 12:30 but don’t worry, we can still make it at 80 mph, a dime over the limit. And that’s when the CEO buttonholes me at the elevator.

Now it’s one o’clock and you’re banging the elevator buttons. My new hybrid would have to average 120 mph just to give us a fighting chance. Not going to happen… it’s not a hybrid Ferrari!

The moral of this fable: if you wait longer, you will have to go faster and may run into the organizational equivalent of getting pulled over for speeding. There will be less leeway for problems or roadblocks, no flexibility, more resources needed, and less time to pivot. And that brings us to Science Based Targets (SBTs).

As we wrote in January, more and more companies have committed to a science-based target (SBT) – 805 as of this writing – and that’s a good thing. However, as we also noted, that means hundreds of thousands of companies in the U.S. alone have not yet done so.

Moreover, of those forward-looking companies, only 332 have actually set a target and had it approved. We’re not sure what the other 473 are waiting for, but we do know there’s a cost for such dragging of feet and that, the longer they wait, the higher that cost will be.

In fact, we’ve developed a tool specifically to help companies select science-based targets, and to plan for their achievement. Our Science Based Target Tool calculates, among other things, the percentage of annual reduction – of water, carbon, energy, etc. – that will be needed based on the timeline set for completion.

Let’s say your company decides to reduce carbon emissions by 50% beginning this year, with a plan to achieve it by 2030 – the outside limit for holding the line on climate according to the IPCC.

Great! Good call, and if you indeed start right away, you’ll have a full decade to reach your target and your Required Annual Reduction (RAR) will be a manageable 6.7% each year for the next ten years.

But wait a year to get going and that number goes up to 7.4%

Say you are overtaken by events and the carbon can is kicked two years down the road to 2022, what then? Turns out your required RAR has risen almost a full point and is now 8.3%.

Yet a third year of foot-dragging raises it to 9.4% and a full four years on it’s become a huge challenge, with a necessary reduction to reach your target of 10.9% annually.

As for the client meeting? Never got there. We were pulled over for speeding a mile out of Pleasant Prairie.

But hey, there’s a taco place just outside Waukegan and by now, some enchiladas and a Margarita would go down nicely!