Intuitively, money that is almost entirely electronic seems like it should be environmentally friendly. No paper, no rummaging the earth’s crust for metals, no armored-car deliveries, no inks or energy for printing and stamping machines… a big win, right? 

Yet most of these blockchains are also ‘mined,’ using massive numbers of specialized computers, such as field-programmable gate arrays (FPGA), and application-specific integrated circuits (ASICs). Massive computers running 24/7/365 mean massive electric bills translate to massive greenhouse gas emissions (GHGs).

Mining crypto, which is essentially an incredibly complex and decentralized accounting exercise — requires an incredible amount of energy. As The Guardian colloquially framed it in 2018, “Effectively, a bunch of computers engage in a race to burn through the most electricity possible and, every 10 minutes, one wins a prize of 12.5 bitcoin for the effort.”

The BBC reported in July that the estimated total energy consumption for Bitcoin mining alone is “around seven gigawatts of electricity, equal to 0.21% of the world’s supply. That is as much power as would be generated by seven Dungeness nuclear power plants at once.

Depending on the price of Bitcoin at the time, the value may or may not be worth the effort, hence there is now a focus on reducing electric costs. 

The majority of cryptos are mined in China, Mongolia, Russia, Canada, Iceland… Do you see a trend developing here? Sweltering places like Guatemala, Pago Pago, and Indonesia are not top destinations for mining, and that is likely because of another challenge for crypto miners: the incredible amount of heat generated by the data centers needed as mining equipment. 

Mining in the cold lands means less need to pay additional costs — in dollars and greenhouse gases (GHG) — for air conditioning. With an average temperature around the freezing point of water, mining in Irkutsk means no A/C is needed, and that plenty of heat is provided by the very equipment used to mine. And this is now proving useful, for not everyone who lives and works in the cold mines cryptocurrency, and those people need heat also. 

Enter: a number of solutions for using excess heat from mining as home or industrial heating. Take Iceland — where crypto’s demand for electric has, for the first time anywhere — now outstripped that of households. Iceland, though very cold on the surface, is a bubbling mass of magma from the mid-Atlantic ridge, and between geothermal and hydro power they are able — without the use of fossil fuels — to generate more electricity than they need. Rates are low, miners have flocked, and now they are using the excess energy and returning it in the form of heating for barns and other buildings where they can house their thermally challenged equipment. 

Some miners have since relocated from China — the largest crypto-mining hotbed in the world — to Canada, and one such is operating data centers at Canadian oil and gas field sites due to low gas prices. 

Just within the past few weeks, a Canadian oil drilling firm actually formalized an agreement with three mining outfits to use their excess natural gas byproducts for onsite electrical generation, specifically to power their crypto-mining operations.

“Especially in areas of the world lacking pipelines and other gas transportation infrastructure, vast amounts of such associated gas (byproducts) are commonly flared as waste or unusable gas.”[1]This agreement assigns the gas to “several large mobile units equipped with gas-electric generators at oil wells. The excess fuel is used to produce electricity to power the cryptocurrency mining hardware, which is typically installed in modified shipping containers that are easily transported. 

An enterprising miner in Irkutsk, Russia — with a mean temperature hovering around the freezing point — has started a company offering sealed mining units to locals to heat their homes. With the seven — count ‘em — coldest months averaging a toasty -12.8℃ (9℉), it’a a tempting deal. The valuations will change as Bitcoin rises and falls but, at the time of The Guardian’s report (August, 2019), “a single heater (made) about $55 for its owner while radiating heat for up to 10 square meters.” The customers would get paid for the crypto their box mines while they get free heat for their homes.

Doing Siberia one better, a company called Hotmine is marketing a similar program in Ukraine. A company in France, too, began such a program in 2018 — though presumably there’s less call for heaters there. All concerned seem to like the idea of taking crypto away from the big mining companies and sending it back to its decentralized roots. 

There will come a time when — just like Sutter’s Mill — the rich lodes of Bitcoin and many of the other cryptos will play out. Bitcoin is expected to dry up for good in the 2140s for example. In the meantime, it’s clear the initial mining models are unsustainable. Kudos to those innovators who have, at least, reduced the impact of this lucre on the planet. Here’s to many more.

References:
[1] https://en.wikipedia.org/wiki/Gas_flare

Every prior generation had some date, some event, some achievement that for them was a metaphor for The Future.

To those born early in the 20^th century, years of global depression along with the rise of fascism, Nazism and communism, two world wars and a cold war, lent a certain aura to the future date, 1984. Published mid-century, Orwell’s tome of the same name in some way represented what the world of The Future might be like some 35-years ahead. Yet now it’s the same number of years in the past.

Mid-20^th kids — now known as boomers — looked toward the millennium and asked, “How old will I be in the year 2000?” while counting on their fingers and saying, “Oh my gosh, really?”

The film 2001: A Space Odyssey swept this generation’s imagination and cemented the turn of the century as The Future, a place so different it seemed impossibly distant and unreachable. It featured space walks, for example, and International space stations. A disembodied computer — called only by its first name — virtually ran the homes, facilities, and space missions of the future. Ridiculous, right? Hmm. That certainly isn’t in the future anymore.

But for many — notably those in business in the latter part of last century — the lodestone year they visioned for, benchmarked for, and planned for — including sustainability — was unquestionably 2020.

As Anne Gaasbeek of PRé wrote in 2016, “In the last 10 years, every self-respecting company and government has been setting corporate social responsibility (CSR) goals for 2020. 

Global giants like Coca Cola, Procter and Gamble, and Ford all set goals for the 2020 milestone. Organizations such as The Vision2020 Initiative (a Drexel University-derived group working for women’s equality), New York City’s own Vision 2020, a 10-year waterfront initiative, and many others — schools, municipalities, NGOs — saw 2020 as the year when The Future arrived.

As Gaasbeek noted, “They are all equally ambitious…But will they actually reach them, or are these goals just too abstract and overwhelming for companies to actually take action?”

Now that 2020 has arrived we can answer that: while some of these institutions met their goals, the overwhelming majority did not. Yet that is now all in the past, and The Future — a new one — lies ahead.

So, what type of future will it be? The dreamworld of peace and plenty we all hope for? An Orwellian dystopia? Or the equivocal message of 2001, A Space Odyssey, which chronicled the genesis and long rise of human innovation and presaged the rise of AI, but made clear we must exercise caution when exploring and when creating machines that can think.[1] Will it be a future with infinite promise or one with serious consequences if things go the wrong way?

Real-life predictions of the future can also cut both ways. A 1997 piece in Wired magazine forecast a future where growth would rise dramatically and all boats would rise with it:

“We have entered a period of sustained growth that could eventually double the world’s economy every dozen years and bring increasing prosperity for — quite literally — billions of people on the planet. We are riding the early waves of a 25-year run… that will do much to solve seemingly intractable problems like poverty and to ease tensions throughout the world. And we’ll do it without blowing the lid off the environment.”

That was a bold prediction about what was then the future. But we know now that we can’t simply grow our way out of social problems; that duodecennial doubling of the world’s economy — though initially helpful — will indeed result in “blowing the lid off the environment,” and in so doing will erode the very social goods it’s designed to foster. As Valutus recently wrote[2] of the world’s increasing prosperity, the good stuff  “depends on our not continuing the bad stuff.”

But we are continuing the bad stuff, hence the environment’s lid may very well blow. If it does, prosperity’s hard-won gains will soon shrivel and fail.

Wired based their predictions on what they called two transformational ‘metatrends’ beginning in 1980 and continuing to this year: fundamental technological change; and a new ethos of openness.

But those supposed trends are not the trends current thought leaders have been following. In our original research into megatrends for 2030 – which we call 30 in ’30 – the megatrends identified did not include openness, and a strong case could be made that in many important ways openness is very much on the defensive.

And, while fundamental tech change — specifically AI, automation, and connectivity — were certainly considered, they did not top the list.

In fact, climate change was first, and six of the other top-ten trends identified were related issues such as resource scarcity and mass migration which are, of course, increasingly climate driven.[3] This leads to a far less rosy image of what may lie ahead.

Yet we don’t actually know which vision of The Future we will see. And when is The Future anyway, now that what we used to call The Future is here? When will it be? What, exactly, represents it to us now?

One candidate is the year 2100, when the effects of climate change will be fully known. By then, humanity will either have managed to maintain some degree of the status quo or will have adjusted to radically new conditions.

Will we manage to keep any semblance of diversity? More than 15,000 scientists have agreed that a terrifying number of plant and animal species will be extinct by century’s end.

Where will we live? Sea levels are anticipated to rise between .3 — 1.2 meters depending on when greenhouse emissions peak. This potentially places more than 187 million people below the high tide line. Will we have enough food, enough water, clean air?

Now eighty years away, 2100 is certainly worthy of consideration as the year that represents The Future.

On the other hand, many give the nod to mid-century as the point towards which all their planning should lead. The World Business Council for Sustainable Development (WBCSD), for example, began setting 2050 as their target date some ten years ago. The Financial Times has been building a suite of stories on the business world of The Future, with 2050 as their destination. 

But while 2050 is legit The Future — a full generation ahead — it still doesn’t have the cachet of an epic book or science fiction film. It’s not a walk on the moon or The Jetsons and doesn’t have that sense of eagerness and suspense.

No, for that we must look to last year’s IPCC report, which for the first time gave us an actual deadline to work with, a date by which we need to get our climate act together or start building an Ark: 2030. It’s just one piddling little decade hence, yet it has the necessary mystique of dread and anticipation, fear and hope, a bright future or a bleak one. There’s nothing metaphorical about 2030, says the IPCC: thirty-and eighty-year visions are too long. it’s make-or-break right now. With so much at stake, a perilously short window focuses the mind. We know we must roll up our sleeves and instantly get to work.

Now that yesterday’s The Future is here and now, today’s The Future is coming all too soon. For better or worse, The Future comes again in 2030.

References:
[1] The murderous computer personality in 2001: A Space Odyssey who decided humans were superfluous, HAL9000 — known to the human crew merely as HAL (Heuristically Programmed ALgorithmic Computer) — was portrayed as a sentient artificial intelligence
[2] Good, Bad, Ugly and…Much Better?
[3] This was the case even though we expressly didn’t focus on sustainability-related megatrends forecasters. Only 10% of our sources were sustainability-focused

When the Beatles’ John Lennon first heard Paul McCartney’s It’s Getting Better all the Time[1], he had only one suggestion, adding, “can’t get no worse,” to the chorus. The former sentiment is, in fact, true. The latter is not: It can get worse.

Nicholas Kristof asserted, in a provocative and much-discussed piece in The New York Times, that despite appearances, many things are getting better all the time. Kristof cites statistics such as the halving of child mortality, rising levels of education and literacy, and much-reduced levels of extreme poverty. That’s all excellent news, and quite true.

Yet other things are getting worse. Sea levels are rising fast, and the ice caps of our youth are doomed. Many millions of acres of brush and woodland in Russia, Australia, Brazil, Borneo, California, and elsewhere around the world are afire — and the dry season is just beginning.

Earth Overshoot (EO) day, the date by which a given year’s total planetary-resource budget has been used, keeps arriving earlier and earlier, such as the EO date of July 29^th in 2019. The rest of the year was fueled, mined, grown, watered, and logged on this year’s credit.

Kristof himself acknowledges this, quoting Oxford economist Max Roser’s well-known koan stating that, “The world is much better. The world is awful. The world can be much better.” Given this, how do we reconcile the first two facts, these two truths moving in opposite directions?

Some critical things — like the lives of the poor — are improving, while others — such as the condition of the earth’s ecosystems — are declining dangerously. How do we make sense of this?

The answer is, we don’t. They exist on separate tracks. The world is getting better. And also getting worse.

Kate Raworth’s conception of this dichotomy as a donut is helpful here. When both what Raworth calls the Social Foundation and the ‘Ecological Ceiling’[2] are respected, all is well, all is balanced.

Think of the inner ring of the donut as the “floor” of providing basic necessities (adequate food, water, education, health, freedom, etc.) and the outer rim as the “ceiling” of planetary boundaries (not using more fresh water than can be replenished, not pumping more carbon into the atmosphere than it can absorb without changing the climate).

This only makes sense: leaving people below the ‘floor’ consigns millions or billions of people to less than they deserve. Crashing through the ceiling consigns millions or billions of tomorrow’s citizens to less than they deserve.[3]

If the Social Foundation — or chunks thereof — shrinks into the donut hole, there is a shortfall, and people don’t have enough of their basic needs met. If, conversely, the Ecological Ceiling rises above the outer rim of the donut, we have exceeded — or ‘overshot’ in Raworth’s model — our planet’s ability to support our activity.

In fact, and to Kristof’s key point, the Social Foundation is rising in several of its most crucial metrics. Yet as we know, we have also broken through the Ecological Ceiling to the point where we are borrowing against our future on a daily basis. Which brings us to economist Roser’s third assertion: that the world could be much better.

In fact, as we can now clearly see, we must make the world much better, and fast. To do this we must find a better way, a system that encourages improvements in social and material progress for the poor without undermining the future of those very same people – and billions of others.

The improvements Kristof notes are examples of raising more people above the floor, so their basic needs are being met. This must continue, both because it is just, and because people who don’t have enough today are, understandably, less likely to focus on protecting the future. If this trend goes retrograde, it will hamper our ability to improve our environmental trajectory.

And so, as noted above, the good stuff Kristof cites actually depends on our not continuing the bad stuff. More people being literate is great — but what’s the value of that if they don’t have enough water? A cell phone is potentially a wonderful boon, but does it really help if its production and business model create conditions where its owner’s farm has become a desert?

And water issues have plenty of company as things that could derail progress. Topsoil erosion is lowering the productivity of land, even when there’s enough water. The combination of soil and water issues would be a double whammy to the billions of people[4] — such as the 70% of Africans[5] who depend on agriculture for their livelihood or to help feed themselves.

Another critical issue is that 190 million people are projected to live in coastal areas that, if current trends continue, will be below the high-tide line in 2100. Any resulting large-scale dislocation would present huge social, economic, and political challenges.

The consequences of exceeding environmental limits will damage our ability to make social progress. After all, the economy is — as has been written elsewhere — a wholly owned subsidiary of the environment.

So, what can we do? Can we find a better way?

We can indeed. The very inefficiencies in our current systems that caused this situation also suggest the way forward.

Let’s take consumption first. Most of the world’s resource consumption today isn’t directed at basic needs.  Spending fewer resources on things that aren’t necessities would leave plenty for expanded access to things that are.

That doesn’t necessarily mean having fewer niceties, just spending less of our available resources on them. This is especially true because our production and distribution systems are almost unbelievably inefficient. The food wasted by the US and Europe alone is enough to feed the entire world, for example. In addition, a lot of what comes out of factories isn’t even the product we care about, but trash, pollution, packaging, and other non-product outputs.

Our end-of-use systems are even worse, consigning billions of dollars’ worth of formerly valuable — sometimes even currently valuable — products to the trash heap.

And often there are better, less-wasteful ways to get what we want. Clean electricity is obvious, but the same story can occur with physical goods. At one time, we owned records and CDs, but streaming services offer the music without the hassle of ownership and are now predominant. Ride hailing, Airbnb, Zipcar, bikeshare, and many others have pioneered a transition from an ownership model to pay-for-service.

This can dramatically shrink environmental footprint. The transition to streaming, for example, means we have eliminated the vast majority of the manufacture, distribution, storage, and disposal of CDs. A full transition to ride-share and Zipcar could have a dramatic impact on auto manufacturing, the space allocated to driveways and garages, and a host of other positive ancillary effects.

It is indeed possible to continue the good trends while changing the bad ones. We know the world is, in some important ways, getting better. We know, too, that the world is awful. It is our task now to stop the slide and make it much better.

References:
[1] The Beatles, Sgt Pepper’s Lonely Hearts Club Band, 1967, Parlophone Records
[2] Based on the Stockholm Resilience Centre’s nine Planetary Boundaries
[3] This is not a question of those alive today versus those as-yet unborn. Though 2100 seems far away, many of today’s young people will live to see it. They are today’s citizens and tomorrow’s citizens
[4] ExpoNet Nov 2015 (adjusted to current ≈ 7.5 billion global population)
[5] World Economic Forum https://www.weforum.org/agenda/2016/05/70-of-africans-make-a-living-through-agriculture-and-technology-could-transform-their-world/

This time of year, it’s traditional to wrap things up, tie the year up in a nice, neat bow. To note what has happened in the sustainable world, with all the trimmings.

Yet, as specialists in sustainability, we must look a little askance at any kind of wrap (4.6 million pounds of wrapping paper produced annually),[1] at tying things up in a nice, neat bow (61,000 kilometers of ribbon used each year), or making notes (2.65 billion Holiday cards, “a football field 10 stories high”[2]). And, of course, we worry about putting it all under a tree (25-30 million live trees annually and 23.6 million constructed of PVC[3] in the U.S. alone[4]). 

[1] Lifehacker.com, How to Recycle all Your Holiday Garbage
[2] Stanford University, Frequently asked questions, Holiday Waste Prevention
[3] Statista, Christmas trees sold in the U.S. 2004 to 2018, 2019
[4] National Christmas Tree Association, Oct. 2019

Predictions, on the other hand, have a far lighter footprint. Last December we roundup up others’ predictions for sustainability. An upsurge in the Circular economy was in one analyst’s crystal ball, and that has certainly been coming to pass. Vegetable ‘meats’ were in another’s, forecast to trend upwards — and this surely was The Year of the Plant-Burger.

An emphasis on measurement and valuation was also seen in the offing, although, while that has indeed been underway, we feel there’s a long way yet to go — as we’ll note in our PreCap ahead.

The list rounded out anticipating a rise in Green construction starts and in corporate partnerships with green-and-CSR NGOs.

Yet this year — this critical, make-or-break year of what is, perhaps, the most critical decade in humanity’s history — we’re not just summarizing what others have projected.

We’re also casting our own (organic, farm-raised) bones, dusting off our (100%-post-consumer recycled) Tarot deck, and savoring the last drops before reading our (fair-trade) tea leaves.   

We’re just ten years out from the IPCC’s 2030 winter take-all deadline and we need to know where we stand.

So we’re devoting this Special Issue to the Ghost of Sustainability’s Past, 2019, and to the Spirit of Sustainability Yet to come. After all, as dark as that Christmas Eve night was for Scrooge, the foreshadowing of his own tombstone was a catalyst for dramatic and permanent change. Perhaps our awareness that we have a very short window to sort ourselves out will do as much for us.

2019 Recedes: ReCap

The Word Has (Finally) Gone Forth from This Time and Place: Sustainability

In the wider world, this was the year sustainability arrived in the mainstream of public consciousness. The impact of the IPCC’s report defining climate change as not only an emergency, but one requiring immediate and massive triage or else cannot be underestimated.

It may have been the ‘or else’ that galvanized the greater world community, or it may not; but it cannot be denied that we’ve never seen anything like the wave of climate meetings, climate actions, climate strikes, and climate marches we were treated to in 2019. 

The notion, too, that a 16-year-old girl, who cut school in Sweden each Friday to stand alone in front of the Parliament building with a homemade sign, has just been named Time Magazine’s Person of the Year, is more reminiscent of a Harry Potter plot than a real-life story.

Yet Ms. Thunberg, Generation Z’s unlikely ambassador to the U.N. and de facto leader of the youth climate movement, was runner up for the Nobel Peace Prize, tore the world’s top politicians a new one on international television, and has earned the vilification of those who, to put it mildly, are not all-in on climate change.

Exactly how far Gen Z and their teenage clarion can push the world towards action is unclear, but a whole generation of climate first-responders who are not yet 23 years old, and many of whom are voting and marching for the first time, is a force the world has not seen the likes of recently.

Plastic: In 2019, Lots of People Started Doing Stuff About It

Plastic was another dominant 2019 theme. As we’ve been reporting, plastics have moved from the ocean ‘patches’ to global ubiquity with the advent of micro plastics, which have been found throughout our waters in unprecedented quantities; and we are now grappling with plastics so tiny they can actually become part of the fabric of our tissues.

Nano plastics, which you can read about here, and the effects of which we do not yet have data for, are everywhere and cannot be cleansed with a boom, a sweep, a net, or a sieve. As we’ve also reported however, strains of bacteria and of fungi have been discovered happily snacking on PET and other plastics, and may be viable for breaking down man-made polymers.

On the other hand, plastics hitting the world’s radar — and ours — has also produced programs like Loop®, a partnership between a recycler and several of the world’s largest consumer-product corporations. Loop was announced this year at the Davos summit to create new, closed-loop products with reusable containers, to-and-from shipping, and high hopes for a circular future.

During the year Loop added major-league retailers like Kroger, Tesco, Loblaws, to their initial roster of manufacturers such as Clorox, Proctor and Gamble, and Unilever — to name a few. Delivery giant UPS was also heavily involved.

We attended the 2019 Ocean Plastic Leadership Summit (OPLS), held in the Atlantic gyre off Bermuda (read about it here). The most important takeaway from the Summit was the willingness of wildly differing stakeholders — from major activist organizations like Greenpeaceon one end to major plastic polluters on the other — to sit down on a ship together for days collaborating away on the issue.

Renewables: The Forage for Storage

During the year we highlighted several new and promising storage systems for power generated by renewables, the lodestone of the green-energy industry. CO₂ itself is a viable medium for renewables storage, and Scotland debuted new tech making hydrogen for fuel from excess tidal energy generation.

Perhaps the most fascinating approach we reported this year is a new utility being tested in Berlin using nano-coated salt to store excess energy. But we’re especially keeping an eye on — and an upcoming issue of Sustainability R.O.I. will cover — a new liquid battery called solar thermal fuel, a fluid that can apparently store solar energy for up to ten years, make it available for use, then recharge again in the sun. Game changer? TBD but we’ll have more on it soon.

Meanwhile, Back at the Brazilian Amazon… The International Year of the Forest Fire

2019 was certainly The Year of the Forest Fire. The world is going to have to come to grips with the phenomenon of wildfires that can be seen from space. Whether man-made through climate negligence, as we’re seeing in Australia, Alberta and Alaska — and many other places not starting with ‘A’ — or man-made for-profit fires, as in Brazil.

California rounds out our ABCs, but we can skip to I and M, Indonesia and Madagascar, and let’s not forget Russia, where Greenpeace reports 12 million hectares (≈ 30 million acres) have burned since the beginning of the year. Many of these fires are raging on into 2020.

And Speaking of 2020… Here’s our PreCap

Gen Z: A Generational Tipping Point?

All current information points to a younger generation zeroed-in on climate change. While the reasons are obvious — they are about to inherit this Earth — they are an age group that traditionally has little voice or power. This particular generation of high schoolers, however, may be an exception.

We all saw student climate strikers take over the streets of virtually every major city in the democratic world in 2019. The U.S. has seen unprecedented levels of activism on gun control, also being led by teenagers. The affected — and apparently aggrieved — young people have been roused to action and they have unheard-of crowdfunding, crowd-organizing, crowd-everything tools their forebears did not.

All current information points to a younger generation zeroed-in on climate change. While the reasons are obvious — they are about to inherit this Earth — they are an age group that traditionally has little voice or power, and sometimes little interest. This particular generation of high schoolers, however, is an exception. 

We all saw student climate strikers take over the streets of virtually every major city in the democratic world in 2019. The U.S. has seen unprecedented levels of activism on gun control being led by teenagers. The affected — and apparently aggrieved — young people have been roused to action and they have unheard-of crowdfunding, crowd-organizing, crowd-everything tools their forebears did not. 

Amnesty International reported this month that the 18 – 25 crowd — Gen Z, Post-millennials, Digital Natives, the iGen, or what have you — list climate change as their number-one concern, based on a survey of more than 10,000 young people.

In fact, the survey showed, of the 23 top concerns facing their country or the world, the respondents listed climate change at #1 (41%), pollution at #2 (36%). Loss of natural resources was ranked #4 (23%), while access to clean water came in at #8 (19%). In other words, four of that generation’s top-ten concerns had to do with climate and the environment. 

As defined by birthdays after 1997 to somewhere in the 2,000s, Gen Z is now the largest U.S. age demographic, with more than 90-million members. Likewise around the globe, with voting ages generally between 16 and 18, this bodes well for climate legislation, activism, and focus. 

In the U.S. alone, there are 15.3 million students in grades 9 – 12, meaning 15 million young people – deeply concerned about climate change and already trained to advocacy and activism — entering the voting rolls between the 2020, 2022, and 2024 elections. 

This time next year we’ll be recapping a period of youth activism unlike any since the Vietnam-war era, yet one with far greater access to information and therefore less naïve and more forward looking. As we all know, one member of this generation just hit the cover of Time for her impact on climate change activism.

Blame!

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?

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

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.

Government Policy Post-2020 Election: It’ll Be About Climate Regardless

Whoever wins the next election, we are convinced next December’s debate will be all about government’s role in climate change. Either how we prevent the government from continuing down its dark and stormy path, or how we use government to pull the world back from same. 

Let’s say the Democrat wins. No doubt we’ll reengage with Kyoto and Paris, no doubt we’ll see a return to our accustomed air and water protections. 

But how will we deal with carbon? Will we tax it into submission? Will we embrace cap-and-trade? Will we remove subsidies, or transfer them to green initiatives, allowing the market to correct carbon? 

Or will we be forced to turn to less-direct action given the U.S. political system’s veto points?

On the other hand, should President Trump win a second term, how will the world deal with the only nation in the world to sign and then repudiate Paris, to tilt at windmills on national television, and to fill its ministries with those who represent harm to the planet? 

In terms of nuts-and-bolts regulation, the first-term damage has been consistent and systematic: 

•    Clean Fuels Grant Program: Rescinded
•    Clean Power Plan: Repealed
•    Oil and Gas Emissions Standards: Weakened
•    Waters of the U.S. Rule (WOTUS): In Rescission
•    Clean Air Act Emissions Standards: Repealed
•    Energy Conservation Standards for lamps: Repealed 
•    The Methane Rule: Stayed

And much, much more of same. There is no reason to believe this agenda won’t pick up speed in a second term. 

Most likely the rest of the world is, in some sense, waiting for the U.S. election to decide how best to proceed.

While a U.S. leader can be ignored, shunned, laughed at, and repudiated, the actions of the world’s most powerful country cannot. Should Trump be reelected, the reality of another four years of American improbity and climate recalcitrance may galvanize the rest of the world. 

They may ask, can anything be done even though the lone superpower left in the world is out to sabotage those efforts? Can voluntary action work? Can businesses provide an active counterweight? 

This time next year, one way or another, those things will be top-tier issues.

Meatless Meats: Millions Served Many More on the Grill

The rise of the non-meat patty — a rise many have been awaiting for years without result — has come to pass. The stunning growth of Impossible Foods, purveyor of the Impossible burger — available at such behemoths as Burger King, White Castle, Red Robin and Little Caesar’s — and the Beyond Burger, also rocketing up the charts in Dunkin’ and other outlets from coast-to-coast, has shocked the burger establishment. 

The dichotomy of a company committed to converting the hard-core meat eater, in an outlet like Burger King, which has reaped the financial rewards of deforestation and factory meat farming, is not lost on either party. Yet the symbiosis is working. Burger King had its largest growth spurt in decades in 2018. 

Here, too, is an example of values in action. Four years ago, Impossible Foods had an offer on the table — from Google — of between $200 and $300 million for the company: they turned it down. In 2017 Business Insider quoted Impossible Foods CEO and founder, Pat Brown, to the effect that, “The company is defined by a mission that — no matter how much someone who wants to acquire the company may say they believe in it — no one believes in it with the commitment that we do, and we’re not going to put it at risk.”

The trend would indicate they made the correct decision. Given the growth curve, we anticipate others will be entering the market with similar products this year looking for big-time partnerships. it’s time for imitators to enter the market through their own outlets. The Big Prize, of course, would be McDonald’s, which has dipped its toes in the vegan-patty market with a test-offering in Scandinavia and, this year, a pilot of a McDonald’s proprietary Beyond Burger in Ontario, Canada.

Given an exponential growth pattern between 2016 and the present, we see no reason why we won’t be talking about meatless offerings again at the end 2020. Look for the continued strong growth of meatless in next year’s December recap.

Measure Everything: Total Impact is Coming

There has been a trend towards measuring stuff for some time, and some of us have had the bug for longer than others. Valutus, of course, has had a thing about measurement for years, but we are noticing one particular strain of the disease that is just getting underway and which, we predict, will be a hot topic come next December: Total Impact, also known as Full Impact. 

Traditionally, a company’s impact centered around its revenues: how many customers they served or people they employed, how much value in assets did they control? How large was their market share or — the frequent refrain — how much did they increase shareholder value this quarter? Monetary results are meaningful, no doubt, but what about the wider footprint? 

As we wrote earlier this year, “A company’s true impact is much deeper than its carbon emissions, its water use, its payroll, or its taxes paid. In fact, a huge chunk of a company’s impact is submerged, not visible on the surface at all. Generally, it stays that way until the right questions are asked.”

Consider the 3+ billion iPhones out there in the world. We’ve reported in this space the advent of inexpensive power and gas metering in rural Africa, all done by cell phone, and the submerged social effects once women and children don’t need to forage, then burn, charcoal toxic to them and to the environment. They can then attend school or do other useful work. These impacts are not measured on the traditional balance sheet.

On the other side, what of their manufacture? Their use? Their disposal, given the complexity and breadth of materials and batteries within each device?

How about the power they take to operate, or the social environment created by their manufacturing facilities in Taiwan and China? Is there a value to the example they set for other companies?

Elephants knock down trees on their way through the brush, bears and big cats shred bark to sharpen their claws, while beavers, of course, change the landscape itself with their architectural efforts.

Elephants don’t mean to create firebreaks or habitat for the dung beetle, and beavers don’t plan to reduce downstream flow, nor do big cats mean to expose insects for hungry birds. Yet those submerged effects happen just the same.

Likewise, business often churns up the landscape on its way to making things and generating profits, with consequences rippling out far and wide across their customer base, their value chain, employee ecosystem, and planet. It’s important to know what those effects are, how large the impact is, and who is affected.

Consider the fur industry’s impact on those same trees and rivers when it harvested beavers almost to extinction. Such impacts — both the pro and the con — can and should be measured to see the clearest possible footprint of a company across all activities.

There is still a need for a unified standard in TI reporting, however the basic framework — looking at Social, Economic, and Environmental impacts — is fairly consistant.

Valutus has a particular take on how to ferret out the total impact using something we call Impacts Science. Impact Science leans heavily on raising submerged impacts to the surface while also valuing catalytic impact. (For more on this, see our series on Total Impact: Part I, Part II and Part III.)

This may just be the year we end by noting that big companies began working on TI reporting.