Making our Future

Rod Oram’s presentation to 350.org.nz’s Auckland house-warming

November 28th, 2012

Kiwiki on Facebook / Twitter @RodOramNZ

oram@clear.net.nz / +64 21 444 839

Sustainability and the rise of civil society

Then…. …Now

•! 2007-09 •! Sudden liquidity crisis •! Big, quick fix

•! Pump in lots of money •! Lots of political will •! Lots of public support •! Worked fast •! Markets re-assured •! Moved on to current phase

•! 2009-20?? •! Long-running structural crisis •! Big, slow fix

•! Restructure economies •! Lack of political will •! Lack of public support •! Will work slowly •! Markets fearful •! Very, very stuck

World Economic Forum: Global risks •  To ensure human needs are met,

we need radical new technologies

•  We need to develop and deploy them on a scale and at a speed like never before

•  …and with much greater complexity and risk

•  …and with a need for public understanding and support

•  …and ways to respond far better when things go wrong

•  This is a fundamental shift in risk and risk management

WEF: Risk map

WEF: seeds of dystopia •  …e.g. is The Occupy Movement an anomaly? •  Or a harbinger of social unrest? •  ...the latter, it concluded

Over the limit

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Rio 1992 – main outcomes •  Governments agreed on 27 sustainability principles

•  Breakthrough…bringing sharp focus to humankind’s unsustainable course

•  These have helped shape some government policies… •  …and personal and community responses, and corporate strategies •  Led to the UN’s framework convention on climate change… •  …and progress in other areas such as biodiversity and Law of the

Sea

•  But in the 20 years since: •  Very hard to keep up momentum, shift behaviour, implement big

changes •  Natural resource use has increased by 40% in past 20 years, UN

says •  We are changing climate, ecosystems far faster than we ever

imagined •  Injustices are accelerating •  Our lack of sustainability is now utterly critical

Rio 2012 – Two views •  “The fact that we have a consensus outcome document at all,

and the 283 statements within it, is truly testament to the abilities and goodwill of everyone who attended.” •  Environment Minister Amy Adams, Aug 6, 2102

•  At the Environmental Defence Society conference “Growing Green” •  What the text actually contained: •  The 283 paragraphs cruelly exposed governments’ lack of ambition &

commitment •  99 times – “we support” •  50 times – “we encourage” •  5 times - “we will” •  3 times – “we must”

•  “The longest suicide note in history” •  Kumi Naidoo, Greenpeace International’s executive director

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The rise of civil society… •  …birth of a new democracy:

•  People-led •  Not politician-led

•  Locally-driven •  Not centrally controlled

•  Interactive

•  Not authoritarian

•  Creative •  Not restrictive

•  Networked •  Not hierarchical

•  Learning •  Not stagnating

…rise of civil society •  At Rio:

•  More than 700 formal commitments by organizations and companies were registered

•  They pledged more than US$500bn to sustainable development actions, many were addressed specifically to fighting climate change.

•  Examples •  The 1,800 largest companies listed on the London Stock Exchange

committed to disclose their greenhouse gas emissions •  Mayors from 58 megacities, meeting as part of the C40 Cities

Climate Leadership Group, agreed to actions which could reduce greenhouse gas emissions by over a billion tons by 2030

Voluntary action •  US Natural Resource

Defense Council’s Cloud of Commitments

•  http://www.cloudofcommitments.org

Business action •  World Business Council for Sustainable Development…member commitments

•  http://www.wbcsd.org/rio-20/membercommitments.aspx

Natural Capital •  Many global corporates committed to it at the UN’s 2012 sustainability

summit in Rio •  www.naturalcapitalproject.org

Sustainability - Local governments lead

The future of public participation

People, planet •  Vision 2050 •  A very challenging roadmap

for corporate development by World Business Council for Sustainable Development

•  …NZ version just released

Finite resources

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How Green Will Save Us: September, 2009 edition: There is no alternative to sustainable development.

Our research shows that sustainability is a mother lode of organisational and

technological innovations that yield both bottom-line and top-line returns… …In fact, because those are the goals of corporate innovation, we find that smart companies now treat sustainability as innovation’s new frontier.

Innovation

Cradle to Cradle •  One product gives rise to the next

•  …waste, by-products and recycling of one, become materials for the next •  …emulating nature’s cycles

Re-conceiving…footprints •  Positive footprints •  …the insight of Michael Braungart •  www.braungart.com

•  If we change our technology so our resource use benefits the ecosystem

•  Then the more we consume… …the richer the environment

•  Waste = food

•  Four positive footprints: •  Fabric of Airbus aircraft seats becomes compost for growing food •  Formway’s bio-plastic chair •  Carbon positive farming •  Ants vs. Humans

•  Positive role in ecosystem vs.negative…how do we make it positive?

Ray Anderson

•  Founded Interface in 1973 •  …15 years later world’s largest maker of carpet tiles

•  His “mid-course correction” came in 1994, when he was 60 •  2020 goal: take nothing from the earth that could not be rapidly replenished,

produce no greenhouse-gas emissions, and no waste

•  By 2007 Interface was about halfway up “Mount Sustainability” •  Greenhouse-gas emissions by absolute tonnage were down 92% •  Water usage down 75% •  74,000 tonnes of used carpet recovered from landfills •  Savings of $400m each year from no scrap and no off-quality tiles more than

paid for the R&D and process changes •  As much as 25% of the company's new material from “post-consumer recycling” •  Sales had risen by two-thirds and profits had doubled

•  Ray Anderson’s Economist obituary www.economist.com/node/21528583

Re-conceiving…biomimicry •  Imitating nature •  …the technology discipline

pioneered by Janine Benyus •  www.biomimicry.net

•  Fans, propellers like nautilus shells •  Wire ropes as strong as spider webs… •  …made in cold biochemical processes

Revolution •  Radical new technologies are

inverting old dynamics…e.g. •  Additive manufacturing

overturns mass production •  New materials overturn

commodity constraints •  Iterative design overturns

linear product development

Leader of the revolution •  The Centre for Bits and Atoms at the Massachusetts Institute of Technology

•  Led by Prof. Neil Gershenfeld, www.cba.mit.edu

•  The first Fab Lab…machines making machines •  Science & technology road map to micron-Lego assembly…

…dis-assembly of products

•  Prof Neil Gershenfeld, MIT…TED talk http://bit.ly/MI7Eur

…when information meets atoms

Integrated Reporting •  The next big initiative by

corporates and accounting bodies

•  Seeking to make financial, environmental and social measures…

•  …much easier, more accessible and more useful to corporates, investors and the public

•  www.theiirc.org

The next 10 years •  Finance and capital conditions

•  Finance more expensive and less available •  Market and regulatory constraints

•  Less benign economic conditions

•  Higher economic volatility; Increased risk

•  Low carbon-economy •  New disciplines & technology •  Far greater resource efficiency •  Technology change accelerating

•  Public losing trust in business •  Scepticism over Anglo-Saxon model •  More government intervention

•  Social and demographic change •  New responses to retirement, pensions •  New business & government solutions •  E.g. more flexible working practices

“The Shape of Business” Confederation of British Industry

www.cbi.org.uk

…but we suffer from slowth •  We’re still recovering slowly …

…helped by rebuild of Christchurch

•  Growth in year to June 2012 was 2.0%... ..could peak at 3% next year …dominated by Christchurch

•  But will then sink back to its

long-run slow growth average of around 2%

•  Why can’t we grow faster,

longer by earning a bigger living in the world economy?

Our economy is constrained •  Despite slow growth, the economy is

constrained by e.g. •  Skills and capital shortages •  Weak business investment •  Limited government investment

•  As a result “potential GDP” (the rate at which the economy can grow without causing inflation) is low

•  Solution: business strategies and investment that build capacity, value, wages…

•  …to grow the economy and living standards faster

Businesses are under-investing •  Recession and slow growth have been

very tough on businesses… •  …and continue to be so •  Many are hard-pressed •  Business investment remains

very low

•  But big behaviour changes… •  …e.g. retaining more staff than they did

in previous recessions because of skill shortages in the economy

•  Companies need a lot of help to raise their skills, improve their operations, increase their resilience

We’re growing our exports slowly •  Government programmes and investments are not shifting the needle… •  …e.g. composition, volume and rate of growth of exports are unchanged

Current account •  …so our current account deficit deteriorates further

What we owe the world •  …likewise our net international liabilities keep getting bigger…. •  …2011 an aberration driven by inflow of earthquake reinsurance payouts •  We are one of the most indebted of developed countries •  We need to earn a bigger living in the world economy… •  …Treasury forecasts no change in our performance

Wall •! We’re very efficient at producing low value goods and services •! But…we’ve hit the wall, economically, socially and environmentally

Government Strategy Mk III •  “Business Growth

Agenda” •  6 ingredients of

business growth

Some simple maths •  We need to double the size of the economy in 15 years in real terms •  To maintain its role, the primary sector needs to double too •  Government wants primary sector to treble…grow, say, 12%-15% a year

•  The primary sector can: •  Grow volume a bit…but real physical constraints in New Zealand •  Grow productivity a bit…but historic rate of NZ agricultural productivity

increases about 2% a year •  Benefit a bit from higher world prices…but commodity prices moderated

overseas competition and politics •  Earn a bit of a premium for NZ quality and brand…but it would need to

break free from retailers’ stranglehold •  Stave off overseas competition a bit…but the competition gets ever

better on cost, volume and quality

•  Government’s primary sector strategy: incremental growth of current model •  …but the primary sector’s current commodity model fails on simple maths

Seismic shifts…our new playing field •  Rebalancing

•  From extreme deficit and surplus nations to balanced economies •  NZ: we have to borrow, spend less; invest, earn more

•  Geo-political: from developed to developing countries •  We need to deepen our relationships in Asia and South America

•  Demand: from consumer goods to capital goods •  But capital goods are not our strength…

•  …’tho we can contribute R&D & IP to eg agriculture & clean tech •  Tougher old consumer markets a big challenge •  Reaching new markets will be hard

•  Customer service: from accepting to demanding •  Finding new ways to find, listen and engage with them •  Eg social networking and other world-changing ways

…our new playing field •  Relationships: from transactions to partnerships

•  …particularly highly strategic ones

•  Innovation: from incremental to radical •  To meet new needs…in new ways •  Open innovation and other forms of collaboration •  New opportunities for NZ companies to partner with global ones

•  Sustainability: from fringe to mainstream •  Measuring and managing environmental flows through our businesses •  Push down the road to true sustainability

•  Management: from tactical to strategic •  Need to collect, interpret and act on real-time data •  Everything we do today is a piece of our big picture

NZ Vision 2050 •  …by a group of young leaders…

•  …under the NZ Business Council for Sustainable Development…

•  …which morphed into Business NZ’s Sustainable Business Council

•  Download at: •  http://bit.ly/PxiG1B

•  NZ site coming soon at: •  http://

www.vision2050nz.co.nz

•  Vision 2050 Global report at: •  http://bit.ly/Ox0HsK

The green imperative…NZ’s opportunities •  Authoritative analysis from Pure Advantage •  …business research group led by Tindall,

Fyfe, Morrison, Ross, Mills and other NZ business leaders

•  Building business buy-in on seven initiatives in existing sectors: •  Housing •  Geothermal •  Biofuels •  Waste to energy •  Smart grid •  Agriculture •  Biodiversity

•  Available at www.pureadvantage.org

LanzaTech…clean tech leader •! Commercialisation agreement with:

•! Chinese Academy of Sciences •! Baosteel; next pilot plant in China

•! Makes biofuel from industrial waste gases •! Turns greenhouse gas liability into profit •! World pioneer of the science

•! Auckland-based; NZ Steel pilot plant

•! Big venture capital backing •! US$100m of capital so far •! NZ: Stephen Tindall •! US: Vinod Khosla •! Chinese and Malaysian investors too

NZ Agricultural Greenhouse Gas Research Centre •  Global Research Alliance on Agricultural Greenhouse Gases •  Proposed by NZ government at Copenhagen in 2009…to:

•  Reduce emissions; increase food production •  Help developing countries to join global climate change frameworks

•  Alliance now has 36 countries + 3 observers including the EU •  = 70% of global agricultural GHGs; agriculture = 15% of total GHGs

•  Three main workgroups: •  Livestock, led by NZ and Netherlands, 483 projects identified to-date •  Croplands, led by US, 429 projects to-date •  Paddy Rice, led by Japan, 60 projects to-date •  Secretariat: NZ

•  NZ Agricultural Greenhouse Gas Research Centre: $48.5m over 10 years •  Four main workstreams: Mitigate methane; mitigate nitrous oxide;

increase soil carbon; deliver farming solutions

Our opportunity •  1 litre of milk = 940 gm of CO2 equivalent

16,000,000,000 litres = 15,040,000,000 kg of CO2 eq

•  15.04m tonnes of CO2 eq per year is not a waste product, a liability

Closing the nutrient cycle… is a brilliant business opportunity…

healthier cows and soil… = more food

Community •  Issues are increasingly global….solutions are increasingly local

•  Solutions require very strong, learning communities •  Some attributes:

•  Common sense •  Common purpose •  Common wealth

•  Places where individuals are valued, helped, encouraged

•  …in return, they participate, change

•  Challenges: •  Help communities articulate, visualise, realise their dreams •  Create local solutions to global issues •  Build support for bigger shifts •  Push governments to do more, better, faster •  Energise support for very big global shifts…fast

Voluntary action e.g. Hikurangi Foundation •  “NZ’s incubator for low carbon social innovation” e.g. community wind farms

•  …& Rod’s Rio blog www.hikurangi.org.nz/2012/06/19/rod-orams-blog-from-rio-20/

Paradox

Abundance Scarcity

Poverty

Cows Scientists

Poverty

Tourists Engagement

Poverty

Sustainability

Weak Strong

Re-invention

Scarcity Abundance

Wealth

Lacto-pharmaceuticals Milk powder

Wealth

Travellers Tourists

Wealth

Sustainability

Strong Weak

Learning to thrive on complexity •  Our world is getting extraordinarily complex •  We need to teach ourselves and our children how to deal with complexity…

•  …how to thrive on it

•  We can be good at this…as a small nation we have to be:

•  We’re skilled generalists •  We’re multi-taskers with knowledge & experience across a range of

functions •  Creative, fast-moving, self-starting, team-working

•  Not expert specialists •  Narrow skills; working in silos; hard to co-ordinate •  Typical of large companies overseas

•  Impact in business •  On our companies:

•  Makes them quick, innovative, lateral thinkers •  On multinationals:

•  NZ subsidiaries pioneer new skills, products to take globally

…but we’re dumbing down •  …in lots of ways

•  For example…

•  …rather than learning to deal better and more efficiently with complex economic and ecosystem issues, the government is stripping out essential tools from the Local Government Act, the RMA and the EEZ Act (regulating economic activity in our oceans)

•  This simplification will impoverish us…economically, environmentally, socially and culturally

Poverty

Simplicity Complexity

Poverty

LGA, RMA, EEZ Society

Wealth

Complexity Simplicity

Wealth

Society.....................LGA, RMA, EEZ

Our future…and the ultimate complexity

•  NZ Land: 270,000 sq km •  Australia’s 28x NZ

•  NZ Oceans: 5.8m sq km •  5th largest in the world •  Australia’s 1.4x NZ’s

•  Huge responsibility: •  …to nurture •  …to use responsibly •  …to sustain us •  …we get $184bn of ecosystem

services for free

•  We need new values, systems, learning, collaboration: •  …to be sustainable •  …to offer hope to the world

“You’ll have no future…

…if you don’t make one for yourself”

…Johnny Rotten:

“You’ll have no future…

…if you don’t make one for yourself”

…Johnny Rotten: