Sustainability Planning
Thinking Clearly in a Climate of Fear
November 14, 2008
US National Whitewater Center
Tom Lannin, PhD
Sustainability and Planning Carbon Footprint Analysis Risk Disclosure Due Diligence Process Strategy Execution
Topics
Sustainabilityand Planning
Panic or Reality?
“The world is at severe risk of a global systemic financial meltdown and a severe global depression.”
-- Nouriel Roubini
The Three Aspects of Sustainability
• Environmental
• Social• Economic
Sustainability Drivers
• Regulatory Compliance• Energy Efficiency• Innovation• Consumer Image
We need a rational, balanced, triple bottom line approach that considers the major drivers.
What We Must Do
We must dedicate our intellectual and financial capital toward creating far more sustainable cultures and societies, especially our own.
What We Must Do
To become more sustainable, we must design, plan, and build systems with both the human network and natural system in mind.
What We Must Do
The Real (and Big) Problem
“Climate change is the most severe problem we are facing today.”
-- Sir David King
Nature-Network Interaction
1. Fragmentation
2. Depletion
3. Pollution
4. Erosion
5. Extinction
As we create great wealth, we must deal with the problems we create.
Carbon Footprint Analysis
Beyond Compliance
We must do more than just comply. We must analyze carbon data in order to design a truly sustainable future.
What the Data Tells Us about the Carbon Problemcarbon in
millions of tons yearly
Carbon Emissions
New software enables us to measure our carbon footprint and make smart decisions about sustainable design and development.
How to Measure Our Carbon Footprint
Carbon Footprint Analysis
Organizations must first• Establish context for analysis
• Determine the source and drivers
• Avoid simple spreadsheets• Use data to decide, not just report
Carbon Footprint Analysis
Organizations must then• Forecast• Create a scenario• Be transparent about the data• Use clear methods and processes
• Report honestly and be fully compliant
Formula for Calculating GHG
Emissions
SAS for Sustainability Management
Good data in = good data out
SAS for Sustainability Management
Largest CO2 Footprints by City
CO2 Emissions by City: Pounds per Employee Annually
City and Employee Data
Facility Performance Data
Risk Disclosure
Cap-and-trade systems create a financial incentive for emission reductions.
Risk DisclosureCap and Trade Basics
Risk DisclosureCap and Trade Basics
An environmental regulator establishes a “cap” that limits emissions from a designated group of polluters.
The emissions allowed under the new cap are divided up into individual permits that represent the right to emit that amount.
Risk DisclosureCap and Trade Basics
Because the emissions cap restricts the amount of pollution allowed, permits that give a company the right to pollute take on financial value.
Risk DisclosureCap and Trade Basics
Companies can now buy and sell permits in order to continue operating in the most profitable way possible.
Risk DisclosureCap and Trade Basics
Risk Disclosure
Environmental Application
• Capacity usage is a risk factor
• Capacity usage is linked to goods and services that have some CO2 emissions
• The environment generates value-at-risk numbers (VaR) in terms of dollars and CO2 production
Risk Disclosure CO2 Exchange
European Climate Exchange (ECX) manages the marketing and product development for ECX Carbon Financial Instruments (ECX CFIs).
Chicago Climate Exchange (CCX) is the world’s first--and North America’s only-- voluntary, legally binding integrated trading system to reduce emissions of all six major greenhouse gases.
Risk Disclosure CO2 Exchange
Due Diligence
• Corporate Social Responsibility (CSR) agenda
• Environmental, social, and ethical equity are now on par with economic equity
• Companies not practicing sustainability due diligence are at risk
Due Diligence
Businesses who don’t perform due diligence with the triple bottom line in mind miss out on the potential benefits.
For example, a business could miss out on a premium that could be attached to the business’ sale price based on the value of its sustainability initiatives.
Due Diligence
The Value” of Due Diligence
• Environmental waste clean-up and “greenwashing” have a price
• A company’s corporate responsibility record has value and can be considered a bona fide asset
• This asset should be factored into deal price negotiations
Strategy Execution
Solid Strategy Requires…
• Sustainability vision (triple bottom line)
• Sustainable risk and performance management
• Sustainable process management
• Customer satisfaction
Sustainability Vision
Sustainability Process Management
Sustainable Risk and Performance Management
Customer Satisfaction
Strategy ExecutionHow They Work Together
A Call for Reason
Like a well-run bank, society cannot liquidate its natural resources (assets) to meet the demands of those operating strictly on faith, fear, and speculation.
Time for Sustainable Change
We must replace a “greed is good” mentality with a “green is good” ethic throughout our culture, and especially in business.
Reduce, reuse, recycle is the new business mantra. And the triple bottom line is replacing purely economic metrics. -- William McDonough
Questions?
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