Search

FTSE350 companies in the UK are being pushed by Business Secretary Vince Cable and Lord Davies to increase the number of women in their boardrooms.

The pair have jointly written to the chairs of the FTSE350 stating, that with the deadline for Lord Davies' 25% target for FTSE100 companies ever nearing, they should press ahead with continued change.??

In 2011, the FTSE100 were set the ambition by Lord Davies and his Steering Group for women to account for 25% of FTSE100 boards by 2015. The latest figures for the FTSE100 show that this now stands at 20.4%, up from 12.5%   in February 2011.

The FTSE250 have also been encouraged to increase female representation and aim for 25% of women on boards.??It is estimated only a further 60 new female board appointments will need to be made to reach the target for the FTSE100.??

Vince Cable and Lord Davies have asked FTSE350 chairs to aim to appoint one additional female director in the year ahead and consider giving two female candidates from senior management the opportunity to serve as a non-executive director at another company.

Business Secretary Vince Cable commented: ??"In the past few years we've made great progress in improving boardroom diversity and the momentum has turned. But the time for talking and listening is over - we now need to start seeing businesses acting on their words."??

 

gDiapers is a heartthrob product among sustainability-minded parents. The covers are stylish, and the inserts come in both cloth and disposable, which allows for some flexibility for times when cloth isn't practical. The idea is that you can use cloth most of the time, and when you have to use disposable, the volume of the material that's getting disposed is much smaller because you're still using a reusable cover.

Unfortunately gDiapers has gotten their hand slapped by the FTC over claiming that their disposable inserts are actually compostable.

These issues are top of mind for me, as my husband and I are expecting our first child in March, and, y'know, hoping for the sweet young thing to be low-impact, environmentally speaking. We looked at gDiapers pretty closely but ultimately decided against them because, while the flexibility is cool, the inserts are more expensive than full disposable diapers, even the hippie ones. Cloth vs. Disposable is one of the first decisions any new eco-parent has to make, and the internet is chock full of resources for helping new parents sort out the environmental implications of their little darlings. But I digress...

gDiapers clearly understands that there are many expectant parents currently weighing these issues with a solemnity only expectant parents can muster. Of course they geared their marketing toward making their product seem as environmentally friendly as possible. However, it looks like they may have taken things a little bit too far...

According to the FTC complaint, the company made false or misleading representations in marketing gRefills and gWipes as biodegradable. These representations include claims that: the products are “100% biodegradable” and “certified” biodegradable; gRefills and gWipes will biodegrade when tossed in the trash; gRefills will biodegrade when flushed; and gRefills offer an environmental benefit because they can be flushed. In fact, the complaint alleges, gRefills and gWipes are not biodegradable because they do no completely break down and decompose into elements found in nature within one year after customary disposal, which is in the trash.

The complaint also alleges that the company has not obtained independent, third-party certification of biodegradability. Additionally, the complaint charges that gDiapers did not rely on adequate substantiation for its claims that gRefills and gWipes biodegrade when thrown away in the trash. The complaint also alleges that gRefills do not biodegrade when flushed, and that the company did not rely on, and could not substantiate, that gRefills offer an environmental benefit, because they can be flushed.

Yowzer.

Now, allow me to let you in on a little secret. Even at its best, most consumer-friendly, gDiapers' recommended flushing system, is... kind of complex. "Before you take the first flush, know thy toilet. Read about precautions and tips on the diaper therapy blog. Then follow the simple directions and give us a ring if you have any questions at all." Yes, it's really nice of them to offer, but you may need to call them for help with diaper disposal. There's also a three step process which includes a stick you use to poke up the solid things in the toilet.

gDiapers also advises parents that if a clog does occur, "reach into the toilet and pull out the material. You can always wash your hands." Yes, parenthood is apparently a dignity-free zone and they just want to make that perfectly clear.

But getting too close and personal with baby poop was not the center of the complaint (although it is one of mine in re: the coming attraction). The biodegradability complaint centers on whether these things break down in a landfill environment (no) and whether flushing is environmentally preferable to the landfill. No.

Is flushing environmentally friendly?

Even though it's tempting to think all the things we flush down into the toilet just go away, out of sight out of mind style, they don't actually just disappear. Fresh, clean drinkable water shows up in your toilet, and when you flush away pee, poop, toilet paper, gRefills, condoms, baby wipes or dental floss, they all end up at a sewage treatment facility, where they go through an energy intensive treatment process:

The non-biodegradable materials get caught right there at the beginning in the screens, if the treatment plant workers are lucky. (If they aren't, these items clog up the pipes and someone has to go clean them out). Yes, it's someone's job to clean that stuff out of there. Guess where it goes after it's been collected? The landfill!

In summary, when you flush something that isn't biodegradable, you are using gallons of potable water to send it hundreds of miles underground, so that it can (hopefully) be caught in a screen and some dude can fish it out for you and throw it in the garbage. Environmentally friendly indeed!

Is it safe to compost human feces at home?

I guess I do need to ask. The answer is no, that's gross. While there are special composting set-ups specifically to render humanure (heh) safe, your average home compost pile does not get hot enough to kill the pathogens and bacteria in the poop, so it's unsafe to use the resulting fertilizer for anything practical like a garden supplement.

gDiapers was called out for tiptoeing around this issue on it's website:

The complaint alleges that gDiapers misled consumers when advertising gRefills and gWipes as compostable at home. According to the complaint, the company failed to adequately disclose that consumers cannot safely home compost gRefills and gWipes soiled with solid human waste – a material limitation. Where gDiapers did disclose that limitation, in many cases the disclosure was not clear and conspicuous. For example, gDiapers made an unqualified home compostable claim on its website’s homepage, only to reveal the limitation on other site pages. Additionally, the complaint alleges that gDiapers lacked substantiation for its claim that gWipes are home compostable.

Even municipal composting agencies don't generally allow human (or feline or canine) waste in their streams. It's too difficult to ensure the compost piles get hot enough.

Sadly, as the video above displays, there's no easy disposal for your baby's poop. In the settlement with the FTC, gDiapers agreed to amend its website with the following considerations:

The proposed order prohibits gDiapers from making biodegradable and compostable claims, unless the claims are true, not misleading, substantiated by competent and reliable scientific evidence, and meet specific requirements outlined in the FTC’s revised Green Guides. Additionally, any claims that a disposable diaper or wipe is compostable must clearly and prominently disclose that the product cannot be composted if soiled with human waste.

Hopefully, the final outcome will be a bit more clarity for nervous, well-meaning parents. gDiapers still has a lot going for it, even without its errant compostability and biodegradability claims.

And, in case you are curious, my husband and I decided to go with whatever "eco" brand disposables work best for our little bundle's bundles, because the long and the short of allll that hand wringing is that if you are going to use a diaper service for your cloth diapers, the environmental impact of your choice is basically a wash (pun intended.) In order for cloth to come out ahead, you have to wash (and preferably air dry) your diapers at home, and that's just not feasible for our little family with two working parents. Assuming the use of a diaper service, the choice ultimately comes down to whether you want to be landfill-friendly (cloth) or energy/water conscious (disposables) and we decided energy and water constraints were bigger concerns for us than landfill growth. Plus we're kind of lazy and disposables have better absorbency anyway. It's hard for me to pick an eco-option with a lot of performance downsides, but I do like to support eco-products, even when they aren't perfect, to prove there's a market for them. By the way, despite the brouhaha over  compostability, I still think gDiapers is a good choice for people who value the style and flexibility over price.

Readers, what do you think? Was the FTC being too hard on gDiapers or providing needed clarity for confused and worried parents? 

A major CBS 60 Minutes story on the clean tech sector has been picked apart mercilessly for playing fast and loose with the facts about public and private investment in new energy technology since it first aired on January 5. If you've been following along you may already be very familiar with most of the rebuttals, but it's still well worth reading an open letter to CBS written by venture capitalist Vinod Khosla, which he posted on the Khosla Ventures website on January 14.

Aside from rebutting the distortions, misrepresentations and errors in the 60 Minutes story point by point, Khosla's letter provides a concise rundown of the the state of clean tech investment today, and you'll be hearing a lot more about clean tech investment in the coming months.

Clean tech investment: the global picture

Clean tech investment is going to be making more news this year partly because the green investor organization Ceres just launched a major new clean energy investment campaign called the Clean Trillion Campaign, at its biannual Investor Summit on Climate Risk on January 15 at the United Nations.

Clean Trillion refers to closing the gap between where we are now and the estimated $36 trillion needed in new clean energy investment, that will enable the transition of the global economy out of fossil fuels and into a more sustainable energy platform.

The campaign was launched to marshall investor support in advance of two key United Nations milestones, the Climate Summit this September, and the Millenium Goals conference in 2015.

Vinod Khosla: just the facts

The script for the 60 minutes story, The CleanTech Crash, is available on the CBS website if you'd like to follow along with Khosla's letter.  He comes out swinging at the beginning:

The pontificators at 60 Minutes, with their agenda-driven bastardization of news reporting, failed to do the most elementary fact checking and source qualification, as was the case with your Benghazi reporting. No wonder one major media outlet wrote that you have been “widely criticized for leaving out crucial information about the state of the clean tech sector.” Is this the new CBS standard?

Having said that, Khosla proceeds to correct 60 Minutes on a wide range of details (did they get anything right?), including numerous errors in their characterization of the Department of Energy loan program.

Khosla also raises key points about the subsidies enjoyed by the domestic fossil fuel industry, which he puts at $502 billion in 2011 alone. That figure includes tax breaks and the failure to price in externalities - a timely reminder in light of last week's West Virginia chemical spill, in which a coal-washing chemical entered the entire water system over a nine-county area.

Another one of those externalities is the cost of protecting oil shipping lanes by the US Navy. Khosla totals up the figure to $7 trillion, with $80 billion spent last year in the Arabian Gulf alone.

In that regard, although Khosla does not bring up the Iraq war, you can factor that in, too. As early as 2006, then-President George Bush affirmed that oil was the motivator for launching an unprovoked attack on the country. The Iraq war-oil connection has also been voiced by other members of his administration as well as leading Republican pundits.

It's rather difficult to imagine wars being fought over wind and sunlight. As for the argument that the unpredictable global market for rare earths and precious metals plays a key role in the clean tech sector, the Obama Administration has been aggressively pursuing research initiatives to develop domestic substitutes and sources.

We really encourage you to go ahead and read Khosla's letter, but if you don't have time for the full version linked above, here's a link to the abridged version at khoslaventures.com.

[Image: CBS logo by swanksalot]

Follow me on Twitter and Google+.

In 2002 the U.S. Department of Energy launched the Solar Decathlon, an international college competition where students refine and present their best ideas in solar-powered home design. The Solar Decathlon’s interdisciplinary challenge requires students to design, build and operate a cost-effective, energy-efficient home from the drawing board up.

The Solar Decathlon challenges participating students to break new ground, figuratively and literally, on sustainable home design. Held every two years, a top contender at the 2013 Solar Decathlon was Stanford University's Start.Home, leading the pack in market appeal, affordability and engineering.

Getting to the core of energy efficient home building

Reflecting the holistic nature of sustainable design, the Stanford team comprised a broad range of disciplines, from design and architecture to computer science, product design, business and social science.

Led by Derek Ouyang, the 50-member Stanford team built the Start.Home around the idea of the Core, a modular unit designed as the nerve center of the building, around which a customized home is built. A Core includes the kitchen counter and appliances, one or two bathrooms, a laundry room and a mechanical "engine" room integrating electrical, HVAC and plumbing with automation and monitoring systems.

"It's not just about engineering the perfect home,” says Ouyang, “it's about designing a product that people love and empowering people to actually lead more sustainable lives.”

Power to the people: don't build for sustainability

Ultimately, the design philosophy behind Start.Home isn't about building for sustainability; it's about building for agency.

A home built for sustainability includes lots of good things: net-zero energy use, sustainably-sourced materials, passive heating and cooling, graywater recycling and automation system to manage energy use. That's all well and good. But at the end of the day what you've created is a couple thousand square feet of sustainable habitat. If Donald Trump lived in it, what would you have? A sustainable house with a clueless man living inside, with no notion of how his slovenly ways impact energy and resource use inside the house. A nice, energy-efficient house, but with no real impact on human behavior.

Building for agency puts the power back to the people living inside the house (we'll drop our Donald Trump analogy for now). Creating a home system that relies more on information and flexible human interaction than simple automation gives homeowners the knowledge and "nudge" they need to truly understand their energy use and therefore act on it. They then go out and impart this awareness to their friends and neighbors, spreading the idea of sustainable living through agency and active engagement, not through home automation systems running unseen in the background.

“…our philosophy,” Ouyang says, “was that in the end, it's not about smart homes; it's about smart people. And with good design we can actually empower homeowners to make the decisions instead of the house making decisions for you. This, over the lifetime of the homeowner, can actually change behavior”

Building this system of agency was a primary challenge and goal for the team.  Ouyang's team quickly discovered that using off-the-shelf components for the human/home interface wouldn’t work. Integration is a key ingredient for Start.Home, and making the process of monitoring and understanding energy use must be seamless.

“Home automation systems today are difficult for the homeowner to implement because they typically require multiple integration of multiple products from multiple companies, few of which are designed to work together effectively.”

Based on extensive research into behavioral psychology done at Stanford, much of it in the Design school, the team built human interaction into Start.Home by answering two principle questions:

1. How to we identify interaction points throughout the home at exactly the moment when an energy decision is being made?


2. Once that is done, how do we redesign these interaction points to nudge users toward more energy-efficient behavior?

As the "brains, heart and muscle" of Start.Home, the Core is the central hub for recording energy and resource consumption, presenting that information to the user and providing a human-focused interface to control anything - lights, outlets, windows, shades and ceiling fans. Using smartphones and tablets works to a degree, but integration points are much more intuitive when they are part of the physical home itself, “like light switches, sinks, or even art,” says Ouyang.

Ouyang's team designed and built what they call "Pods," built on the Raspberry Pi and Arduinos platform, to link up various off-the-shelf and custom built devices. Each Pod can control up to 14 different switchable elements, eight dimmable elements and one HVAC element. “We designed our own relay panels with custom PCBs that could turn low-voltage signals into relay commands, and could handle dimming and HVAC protocols," says Ouyang.

Using the low-voltage protocol of the Pods allowed for designing beyond physical switches. Homeowners can control elements based on programmable swipe-based gestures we already use on our tablets and smartphones. A tap could turn on a light, a swipe right could turn a dimmable fixture up, a circle motion could turn on a ceiling fan - it’s up to whatever the homeowner is comfortable with.

Instead of inadvertently leaving the lights on all evening as you rush out the door, a simple three-fingered gesture down could turn off all the lights. This is the sort of human-based interaction with automation that Ouyang and his team believes can empower people to easily adapt habits of sustainability.

Like the Core, Pods are modular, and can be distributed throughout the house in locations where they are most relevant to what is being controlled. In this way, tracing wiring back to the core is reduced. Pods are easily added if more are needed. The structure and control of the Start.Home grows and adapts to the user.

Is it art, or energy-use feedback? (or both)

To demonstrate the flexibility of data management and feedback, the team designed a piece of “kinetic art” for Start.Home. A series of fan-like leaves curl in tightly or flatten out, giving an abstract representation of electricity consumption over the past hour. Two fans, each with 12 leaves, give a 12-hour history of energy production and consumption. Changing every hour, the leaves provide real-time visualization of net-balance throughout the day. "This was a big hit with people who came to see the home," Ouyang said.

The point is to make monitoring energy use and net-balance production flexible, seamless and intuitive, keeping in mind the concept of human agency, not just sustainability. Changing human behavior was the goal. Maybe even Trump would turn off his lights if he saw exactly how it would save him money. Now that's changing human behavior!

Water

To help insure against wasting water from a forgotten or ignored open tap, the team designed a knee-activated bathroom sink. Leaning into the bar turns on the water, releasing it turns it off. We'd call it a kind of "deadman switch," but that might not be in the spirit of the idea. Still, it is a simple and elegant design that reduces water waste. Graywater from the laundry room can be used to irrigate landscaping.

The team intended on installing water flow meters, but ran out of time. Nonetheless, this is easily included in future iterations of Start.Home

Manufacturing Start.Home: Inspirations from Henry Ford

Henry Ford built the Model-T around a core engine-drivetrain serving as the foundation for various chassis options depending on user needs. Sound familiar? Ford's idea of using modular components to maximize efficiency was "our major inspiration," explains Ouyang. The hard times suffered recently by the auto industry notwithstanding, Ford's original inspiration for modularity and efficiency has allowed the industry to adapt to changing times, meeting consumer demand for cars that are more efficient and cost-effective.

Start.Home is Stanford's answer to a largely stagnant home construction industry, creating a "smart, adaptable residential system that cuts up-front and use-phase energy emissions" built on an "energy-efficient framework that is modular and scalable, and does not sacrifice the freedom of the homeowner to build a custom home."

Ouyang envisions a variety of Core configurations, varying in size and equipment specification based on end-use needs and location (the prototype was based on Stanford's Palo Alto Mediterranean climate). Once fully developed, modular home Cores will be produced in an assembly line process and shipped as efficiently as possible to construction sites.

The power of BIM and visualization modeling

Integrating the basic architectural, structural and MEP (mechanical, electrical and plumbing) elements into a tightly coordinated configuration within the Core was a challenge. Without modern 3D modeling and visualiztion tools, making the Core work may have well been impossible, at least in any cost-effective manner. With BIM, clashes between studs and ducts or casework and pipes were quickly identified in the initial design phase. “We could fix mistakes in an iterative manner before actual construction,” explains Ouyang.

At every point in the design process the team employed a full suite of Autodesk BIM modeling and visualization tools,  including the Autodesk Building Design Suite, Vasari for conceptual design, Simulation CFD for fluid flow and thermal simulation, and Green Building Studio for environmental analysis.

Bringing Start.Home to market

Solar Decathlon rules required the Start.Home be built entirely on-campus, preventing a real-world simulation of the factory-build process. The “manufacturing process is still undeveloped and needs further research,” says Ouyang. Even so, the task of building the prototype Start.Home revealed several lessons for the manufacturing phase:

• Prefabrication is only beneficial if it eliminates time-intensive materials and techniques. Drywall, for instance, takes the same amount of time whether set in a factory or a construction site. There is little advantage or efficiency gain in “prefab” drywall.


• Getting the most benefit of prefabrication in home building comes from using new materials and techniques using large tools not available onsite; materials the don’t require curing or drying, stud walls pressed together by a single machine, robotic welding arms assembling Core elements.

Clearly there is still a lot work sussing out exactly how factory-floor operations and distribution will work. But the concept is viable and ready for further development. The Stanford team received support and mentorship from BluHomes, a market leader in energy efficient prefab homes.

Adaptable and cost-effective

Market appeal and cost-effectiveness are among Start.Home's strongest selling points. The adaptability of the modular design has appeal across the housing and economic spectrum

"...from high-end residential (think the kind of people who buy Teslas) all the way to disaster-relief and temporary housing," Ouyang says. "I think it just goes to show how simple yet important the idea of a Core is, and I am confident that in the future they will solve lots of problems."

Not only will Start.Home and its Core concept solve lots of future problems, but so too will  bright, inspired designers like Derek Ouyang and his Stanford colleagues. They take the lemons my generation has given them and are making lemonade - all in their smart, interactive, resource-efficient kitchens.

Where is Start.Home now?

After the Solar Decathlon competition on October of 2013, the Start.Home was reassembled on Jasper Ridge Biological Preserve near Stanford campus. It is the home of Resident Ranger Brooke Fabricant, his wife and daughter.

All image credit: Dept. of Energy Solar Decathlon, courtesy flickr

Earlier this week Google announced its latest acquisition – Nest, which designs and manufactures smart devices like thermostats and smoke alarms. The price: $3.2 billion in cash.

The acquisition itself as well as the hefty price Google will pay for Nest generated a very interesting conversation online that was focused around the reasons that motivated Google to close this deal and pay so much money for a 3-year old start-up selling thermostats and smoke detectors.

The guesses went all the way from Google’s aspirations to deepen its involvement in the Internet of Things, “a world in which everything from household gadgets to cars, clothes and pets are connected wirelessly to the web” to adding to its ranks Nest’s co-founder and CEO Tony Fadell, an Apple veteran who helped design the iPod and the iPhone and might become Google’s equivalent of Jony Ive, Apple’s Chief designer.

While it’s interesting to understand the reasons behind this deal and what it says about Google’s plans for the future, I find one part that seemed to be missing in all of this even more interesting. Yes, I’m talking about the S word.

It’s not that sustainability was totally absent – the energy savings capabilities of Nest thermostat (14-26 percent savings according to Nest) were mentioned by Larry Page, CEO of Google in the press release, as well as by Tony Fadell in a blog post he wrote, in which he looked back to the beginning of Nest:

“Starting a business focused on the lowly thermostat seemed like a crazy idea at the time, but it made all the sense in the world to us. That little device that went unnoticed and unchanged year after year on the walls of our homes was a lost opportunity to save energy and money. We knew we could do better.”

Yet, when it comes to sustainability, the story of Nest is more than just the creation of a smart tool helping families to save energy. It is first and foremost a story about the company’s ability to succeed where so many other companies have failed - making simple, beautiful, thoughtful and desirable products that among other things help people make their lifestyles more sustainable.

Now, even if we assume Larry Page appreciates this part of Nest, I truly doubt if this capability played any role in his decision to purchase the company. Somehow my gut feeling is that no matter how much sustainability is important to Page, other factors like interest in the Internet of Things, his appreciation of Tony Fadell’s work, or his priorities (design and products with daily utility) got him to give this deal a green light, not sustainability.

So I couldn’t not wonder if this is necessarily a bad thing, or maybe there’s a positive side here we should be glad about?

The reasons why it’s bad that sustainability wasn’t probably on Google’s mind in this case are quite obvious. First, it shows that even companies like Google that are interested in developing sustainability related-projects don’t view sustainability as an important factor that should be a part of every discussion about the future.

Second, if Nest’s ability to superbly connect the dots bet between innovation, technology, design and sustainability don’t play a role in acquisition and valuation decisions, it sends a troubling signal to other companies that work on mastering these capabilities about what they are actually worth. After  all, if what Google is really interested in is deepening its exploration into the Internet of Things, Tony Fadell or innovative design it would probably have the same interest in Nest and offer the same valuation whether Nest’s innovation advances sustainability or not.

This is by the way in contrast to other M&A deals like the acquisition of Timberland by VF where, as Mark Newton, VP Corporate Responsibility at Timberland noted the company’s CSR expertise was taken into account in VF’s considerations of the acquisition.

Still, when you take a minute to think about it, you might get to the conclusion that after all this is not that bad. In a way this deal can be also reframed as the evolution of sustainability that many have been waiting for, where sustainability doesn’t have to be evaluated separately but is naturally embedded in the value proposition.

To understand what this means exactly let’s go back to the starting point of Nest - Tony Fadell felt all the options for a thermostat for his new house sucked - they were expensive, not smart, ugly, and basically “crap” he explained. So he thought to himself: “There’s got to be a greater way.” These thoughts eventually translated into the concept of a thermostat that is smart (the world’s first learning thermostat), thrifty and “so delightful that saving energy is as much fun as shuffling an iTunes playlist.” In other words, it was a thermostat for the iPhone generation as Fadell described it.

So what we got here is a new way to look at an old equation. Instead of saying sustainable business is smart business we should say smart business is sustainable business. In other words – sustainability is not an add-on any more that you either add or not, but a natural part of every smart solution. So just like you don’t need to say a thermostat for the iPhone generation is slick and well-designed, but take it as a given, you don’t have to say it’s more sustainable – you know it is.

This is of course not always the case but hopefully this is the case here and with every other smart solution to come. Somehow I have a feeling it will be easier to get people excited about a smart future that is also sustainable than on a sustainable future that is also smart.

Image credit: Nest

Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.

By Herman Daly

In a recent speech to the International Monetary Fund economist Larry Summers argued that since near zero interest rates have not stimulated GDP growth sufficiently to reach full employment, we probably need a negative interest rate. By this he means a negative monetary rate set by the Fed to equal the “natural” rate, which he believes is now negative. The natural rate, as Summers uses the term, means the rate that would equalize planned saving with planned investment, and thereby, as Keynes taught us, result in full employment. With near zero monetary rates, current inflation already pushes us to a negative real rate of interest, but that is still insufficiently negative, in Summers’ view, to equalize planned investment with planned saving and thereby stimulate GDP growth sufficient for full employment. A negative interest rate is a stunning proposal, and it takes some effort to work out its implications.

Suppose for a moment that GDP growth, economic growth as we gratuitously call it, entails uneconomic growth by a more comprehensive measure of costs and benefits — that GDP growth has now begun to increase counted plus uncounted costs by more than counted plus uncounted benefits, making us inclusively and collectively poorer, not richer. If that is the case, and there are good reasons to believe that it is, would it not then be reasonable to expect, along with Summers, that the natural rate of interest is negative, and that maybe the monetary rate should be too? This is hard to imagine, but it means that savers would have to pay investors (and banks) to use the funds that they have saved, rather than investors and banks paying savers for the use of their money. To keep the GDP growing sufficiently to avoid unemployment we would need a growing monetary circular flow, which would require more investment, which, in turn, would only be forthcoming if the monetary interest rate were negative (i.e., if you lost less by investing your money than by holding it). A negative interest rate “makes sense” if the goal is to keep on increasing GDP even after it has begun to make us poorer at the margin — that is after growth has already pushed us beyond the optimal scale of the macro-economy relative to the containing ecosphere, and thereby become uneconomic.

A negative monetary interest rate means that citizens will spend rather than save, so savings will not be available to finance the investments that produce the GDP growth needed for full employment. The new money for investment comes from the Fed. Quantitative easing (money printing) is the source of the new money. The faith is that an ever-expanding monetary circulation will pull the real economy along behind it, providing growth in real income and jobs as previously idle resources are employed. But the resulting GDP growth is now uneconomic because in the full world the “idle” resources are not really idle — they are providing vital ecosystem services. Redeploying these resources to GDP growth has environmental and social opportunity costs that are greater than production benefits. Although hyper-Keynesian macroeconomists do not believe this, the micro actors in the real economy experience the constraints of the full world, and consequently find it difficult to follow the unlimited growth recipe.

Summers (along with other mainstream growth economists), does not accept the concept of optimal scale of the macro-economy, nor the possibility of uneconomic growth in the sense that growth in resource throughput could reduce net wealth and wellbeing. Nevertheless, it is at least consistent with his view that the natural rate of interest is negative.

A positive interest rate restricts the total volume of investment but allocates it to the most productive projects. A negative interest rate increases volume, but allows investment in practically anything, increasing the probability that growth will be uneconomic. Shall we become hyper-Keynesians and push GDP growth to maintain full employment, even after growth has become uneconomic? Or shall we back off from growth and seek full employment by job sharing, distributive equity, and reallocation toward leisure and public goods?

Why would we allow growth to carry the macro-economy beyond the optimal scale? Because growth in GDP is considered the summum bonum, and it is heresy not to advocate increasing it. If increasing GDP makes us worse off we will not admit it, but will adapt to the experience of increased scarcity by pushing GDP growth further. Non-growth is viewed as “stagnation,” not as a sensible steady state adaptation to objective limits. Stimulating GDP growth by increasing consumption and investment, while cutting savings, is the only way that hyper-Keynesians can think of to serve the worthy goal of full employment. There really are other ways, and people really do need to save for security and old age, as well as for maintenance and replacement of the existing capital stock. Yet the Fed is being advised to penalize saving with a negative interest rate. The focus is on what the growth model requires, not on what people need.

A negative interest rate seems also to be the latest advice from Paul Krugman, who praises Summers’ insights. It is understandable from their viewpoint because in their vision the economy is not a subsystem, or if it is, it is infinitesimal relative to the total system. The economy can expand forever, either into the void or into a near infinite environment. It does not grow into a finite ecosphere, and therefore has no optimal scale relative to any constraining and sustaining environment. Its aggregate growth incurs no opportunity cost and can never be uneconomic. Unfortunately, this tacit assumption of the growth model is seriously wrong.

Welcome to the full-world economy. In the old empty-world economy, assumed in the macro models of Summers and Krugman, growth always remains economic, so they advocate printing more and more dollars to expand the economy to take over ever more of the “unemployed” sources and sinks of the ecosystem. If a temporary liquidity trap or zero lower bound on interest rates keeps the new money from being spent, then low or even negative monetary interest rates will open the spending spigot. The empty world assumption guarantees that the newly expanded production will always be worth more than the natural wealth it displaces. But what may well have been true in yesterday’s empty world is no longer true in today’s full world.

This is an upsetting prospect for growth economists — growth is required for full employment, but growth now makes us collectively poorer. Without growth we would have to cure poverty by redistributing wealth and stabilizing population, two political anathemas, and could only finance investment by reducing present consumption, a third anathema. There remains the microeconomic policy of reallocating the same GDP to a more efficient mix of products by internalizing external costs (getting prices right). While this certainly should be done, it is not macroeconomic growth as pursued by the Fed.

These painful choices could be avoided if only we were richer. So let’s just focus on getting richer. How? By growing the aggregate GDP, of course! What? You repeat that GDP growth is now uneconomic? That cannot possibly be right, they say. OK, that is an empirical question. Let’s separate costs from benefits in the existing GDP accounts, and develop more inclusive measures of each, and then see which grows more as GDP grows. This has been done (ISEW, GPI, Ecological Footprint), and results support the uneconomic growth view. If growth economists think these studies were done badly they should do them better rather than ignore the issue.

The leftover Keynesians are correct in pointing out that there is unemployed labor and capital. But natural resources are fully employed, indeed overexploited, and the limiting factor in the full world is natural resources, not labor or capital as used to be the case in the empty world. Some growth economists think that the world is still empty. Others think there is no limiting factor — that capital is a good substitute for natural resources. This is wrong, as Nicholas Georgescu-Roegen has shown long ago. Capital funds and natural resource flows are complements, not substitutes, and the one in short supply is limiting. Increasing a non-limiting factor doesn’t help. Growth economists should know this.

Although the growthists think quantitative easing will stimulate demand they are disappointed, even in terms of their own model, because the banks, who are supposed to lend the new money, encounter a “lack of bankable projects,” to use World Bank terminology. This of course should be expected in the new era of uneconomic growth. The new money, rather than calling forth new wealth by employing all these hypothetical idle resources from the empty world era, simply bids up existing asset prices in the full world. Most asset prices are not counted in the consumer price index, (not to mention exclusion of food and energy) so economists unconvincingly claim that quantitative easing has not been inflationary, and therefore they can keep doing it. And even if it causes some inflation, that would help make the interest rate negative.

Aside from needed electronic transaction balances, people would not keep money in the bank if the interest rate were negative. To make them do so, the alternative of cash would basically have to be eliminated, and all money would be electronic bank deposits. This intensifies central bank control, and the specter of “bail-ins” (confiscations of deposits) as occurred in Cyprus. Even as distrust of money increases, people will not immediately revert to barter, in spite of negative interest rates. Barter is so inconvenient that money remains more efficient even if it loses value at a rapid rate, as we have seen in several hyperinflations. But transactions balances will be minimized, and speculative and store-of value-balances will be diverted to real estate, gold, works of art, tulip bulbs, Bitcoins, and beanie babies, creating speculative bubbles. But not to worry, say Summers and Krugman, bubbles are a necessary, if regrettable, means to boost spending and growth in the era of newly recognized negative natural interest rates — and still unrecognized uneconomic growth.

A bright silver lining to this cloud of confusion is that the recognition of a negative natural interest rate may be the prelude to recognition of the underlying uneconomic growth as its cause. For sure this has not yet happened because so far the negative natural interest rate is seen as a reason to push growth with a negative monetary interest rate, rather than as a signal that growth has become a losing game. But such a realization is a reasonable hope. Perhaps a step in this direction is Summers’ suggestion that the old Alvin Hansen thesis of secular stagnation might deserve a new look.

The logic that suggests negative interest also suggests negative wages as a further means of increasing investment by lowering costs. To maintain full employment via GDP growth, not only must the interest rate now be negative, but wages should become negative as well. No one yet advocates negative wages because subsistence provides an inconvenient lower positive bound below which workers die. On this “other side of the looking glass” the logic of uneconomic growth pushes us in the direction of a negative “natural” wage, just as with a negative “natural” rate of interest. So we artificially lower the wage costs to “job creators” by subsidizing below-subsistence wages with food stamps, housing subsidies, and unpaid internships. Negative interest rates also subsidize investment in job-replacing capital equipment, further lowering wages. Negative interest rates, and below-subsistence wages, further subsidize the uneconomic growth that gave rise to them in the first place.

The leftover Keynesians tell us, reasonably enough, that paying people to dig holes in the ground and then fill them up, is better than leaving them unemployed with no income. But paying people to deplete and pollute the Creation on which our lives and welfare ultimately depend, in order to expand the macro-economy beyond its optimal or even sustainable scale, is surely worse than just giving them a minimum income, and some leisure time, in exchange for doing no harm.

An artificial monetary rate of interest forced down by quantitative easing to equal a negative natural rate of interest resulting from uneconomic growth is not a solution. It is just baling wire and duct tape. But it is all that even our best and brightest economists can come up with as long as they are imprisoned in the empty world growth model. The way out of this trap is to recognize that the growth era is over, and that instead of forcing growth into uneconomic territory we must seek to maintain a steady-state economy at something approximating the optimal scale. Since we have overshot the optimal scale of the macro-economy, this will require a period of retrenchment to a reduced level, accompanied by much more equal sharing, frugality, and efficiency. Sharing means putting limits on the range of inequality that we permit; it has huge moral and social benefits, even if politically difficult. Frugality means using less resource throughput; it results in less depletion and pollution and more recycling and efficiency. Efficiency means squeezing more life-support and want-satisfaction from a given throughput by technological advance and by improvement in our ethical priorities. Economists need to replace the Keynesian-neoclassical growth synthesis with a new version of the classical stationary state.

[Image credit: Stitch, Flickr]

A version of this piece originally appeared on The Daly News

Herman Edward Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States. Daly was Senior Economist in the Environment Department of the World Bank, where he helped to develop policy guidelines related to sustainable development. He is closely associated with theories of a Steady state economy.

 

By Michael Green

There’s a well-worn cliché that businesses oppose all government regulation. But what happens when companies look to the government for fair rules that promote safer products? As some recent cases demonstrate, too often our government lags behind these responsible companies, leaving both business and consumers at risk from market scams and unsafe products.

Take the case of the organic food sector – an industry that actually requested government regulation. For decades the organic industry was a self-regulating community made up of state and regional certifiers, farmers, and processors. You may not be surprised to learn that the country’s largest organic certifier, California Certified Organic Farmers, celebrated its 40th anniversary in 2013 – but you probably did not know that Maine launched its organic program two years before California. Organic certifiers from coast to coast had different standards for “organic” products for nearly three decades, until the industry came together and urged the government to help develop a unified national organic standard.

The organic sector recognized that a federal standard with independent, government oversight would help insure fair competition and promote markets for their products. According to the USDA, the organic standard has been wildly successful in promoting organic sales: since it was finalized in 2001, the U.S. market for organic food has outpaced supplies, with sales of organics tripling by 2008.

Unfortunately, the organic standard has not been strongly regulated in some non-food sectors. For example, today there are dozens of cosmetics and personal care products labeled “organic,” yet USDA has balked at enforcing standards for these products. This has left responsible companies who make premium-priced organic cosmetics at an unfair disadvantage, since competing purveyors can simply print phony “organic” labels for their cheaper products that actually contain few or no organic ingredients.

In California, the only state with a federally recognized organic code, recent lawsuits exposed this hoax and ended false claims by more than forty companies, including major brands like Kiss My Face and Boots (a brand now co-owned by Walgreens). Under legal settlements, some companies, like the company that makes “Organix” brand hair care products, are now required to use a different name – but only in California. Ultimately, a class-action case forced this company to make its name-change nationwide, but some other companies continue to use their phony organic labels outside of California.

There’s obviously no reason why a consumer –- or an honest organic business -- in Ohio should have less protection from organic scams than those in California. But despite urging from businesses, consumers, and organic advocates, USDA continues to allow unregulated sales of these phony “organic” cosmetics.

Another example of outdated government rules is from the furniture industry. In the 1970s, California adopted a flammability standard called TB 117, promoting the use of flame retardant chemicals –including substances linked to cancer, infertility, and other serious illnesses -- in virtually all furniture. At the time, this rule was advanced as the best way to protect families from furniture fires.

But as a 2012 exposé by the Chicago Tribune discovered, promoting the use of flame retardant chemicals in furniture was a ploy by the tobacco and chemical industries to fend off regulators who were calling on the tobacco industry to make fire-safe cigarettes. The scheme saved tobacco companies from being forced to change their products, and insured a steady market for the chemical companies’ toxic products. Given the enormous size of the California market, the flame retardant makers knew that most furniture companies would comply with the state standard by using chemical flame retardants in all products nationwide, rather than make a separate product line just for California.

For years, health advocates worked to expose the threats to children and families from flame retardants in furniture and urged California lawmakers to update this standard. Major businesses also supported change, since their customers were demanding safer products made without flame retardants.

Finally, on January 1, 2014, a new California flammability standard that provides for improved fire safety without the use of harmful chemicals went into effect. In October, with the new rules coming, the HBO documentary Toxic Hot Seat featured our organization and noted our experience in working with businesses that are interested in making safer products. The day after the movie aired, we were contacted by the founder of a national brand ergonomic furniture company who wants to work on making their products meet the new standard without harmful chemicals.

Others have also noted that many furniture makers are eager for the overdue standard: Russ Heimerich of the California Department of Consumer Affairs told the Los Angeles Times, “We anticipate seeing a huge number of pieces of furniture meeting the new standards in the first six months [of 2014]. There's consumer demand for furniture that doesn't have chemicals in it, and the manufacturers know that.”

While we welcome this happy ending, it should not take more than forty years to correct “safety” standards that both businesses and consumers know are actually making us sicker. With stronger partnerships between responsible businesses and health advocates, government can create rules that work better for all of us. Let’s undo the myth of anti-regulatory businesses, and collaborate for common-sense regulations that serve both our health and the bottom line.

Michael Green is Executive Director of the Center for Environmental Health.

As a lead-up to Abu Dhabi Sustainability Week, Jan. 18-25, Masdar sponsored a blogging contest called “Engage: Cities and Sustainable Development.” The following post was a runner-up.

By Antony Kisilo

A sustainable city is organized so as to enable all its citizens to meet their own needs and to enhance their well-being without damaging the natural world or endangering the living conditions of other people, now or in the future.

​Smart technologies have actually been used in the past and have proven to be successful at improving civic sustainability, but in many thriving cities, their underbellies - the transport, sanitation, energy and building technology - are filled with rot and decay.

To look one hundred years into the future, we really need to look back one hundred years to learn from our predecessors. The reality is that there is nothing new under the sun. For example, our forefathers in my country Kenya utilized rammed earth, sun-dried mud and twigs for construction that had near zero embodied energy, used pit latrines as a waste management technology that recycled nutrients back to the soil, captured water from fresh springs, and swam in warm, clean and unpolluted lakes. People worked and lived with natural materials within their environment and gave back to the environment. Now that's smart.

What amazes me is that all over the world, we have evidence of ancient cities fighting drought with passive filtration and boxes within cities that partially purified the rain water runoff towards the city dams. These somehow mundane solutions are looked down upon as irrelevant as the issues being faced in our cities include more toxic levels of impurities. But who says we cannot improve their passive systems as opposed to centralized power-hungry water treatment systems that end up creating more dependencies and require need of more natural resource?

Why is it so hard to get back to our roots and redesign around principles that have worked for centuries as opposed to experimenting with the lives of our future generations? Now, I have to admit that cities' populations have expanded exponentially since the second World War and shall continue to do so for the foreseeable future. However, a smarter population empowered at the individual level can actually solve local city problems through local interventions. Human destiny will be played out, and the future of the biosphere will be determined, at the local level.

A smart city needs a smart population. As an architect, I was trained to understand the area of the usable space we are carving in our environment, but I have found it myopic to view the world through this lens as there is much more to living than the thousands of square feet we develop. Cities have a life of their own and keep growing and changing in reaction to the basic needs of individuals in transport,  sanitation, water and housing.

Amazing satellite cities have been planned and built to be sustainable and smart, and we can thank the design of ancient cities and natural resources for the sustainability of these cities. Thanks to cities like Masdar, we can almost walk back in time to a desert village, with all the passive systems in place that are sustainable, but in this century.

Image credit: Flickr/Smart Cities

Antony Kisilo is an architect based in Kenya.

Cadbury owner Mondelez International has achieved Roundtable for Sustainable Palm Oil (RSPO) coverage for 100% of the palm oil it bought in 2013 – two years ahead of schedule.

"Achieving 100% RSPO is an important milestone toward our long-term commitment to only buy palm oil that's produced on legally held land, doesn't lead to deforestation or loss of peat land, respects human rights, including land rights, and doesn't use forced or child labour," said Dave Brown, vp of Global Commodities and Strategic Sourcing. "We recognize the need to go further, so we've also challenged our palm oil suppliers to provide transparency on the levels of traceability in their palm oil supply chains. Knowing the sources of palm oil supplies is an essential first step to enable scrutiny and promote improvements in practice on the ground."

In the first months of this year, Mondelez International is to review results from suppliers and to publish an action plan to give priority to supplies that meet its sustainability principles, and eliminate supplies that do not by 2020.

The £6.92m Guinness Alternative Energy C fund continued its top ranking amongst UK Registered funds over the past year to 30 November 2013 with a cumulative +92.68% performance. This nevertheless contrasted with the fund’s weak past three- and five-year performances at -8.87%/137th rank and -2.82%/124th rank, respectively.
Sarasin Sustainable Equity USA P US$ fund matched its runners up spot for the previous period to 31 October 2013 with +43.68% this time versus +39.84%/17th rank over three years. The £65.35m Premier Ethical A Inc. fund came fifth top with a +35.40% performance over the past twelve months, +62.15%/3rd rank for the past three years and a robust +118.22%/12th rank over past five. SUNARES bottom ranked in the sector with a woeful -39.08% return over the last 12 months (-57.99% over past three years).

Among US Mutual funds, Firsthand Alternative Energy fund outpaced the pack again over the past one year with a +111.40% performance, followed by the $27.87m Guinness Atkinson Alternative Energy fund with an improving +85.56% (though negative over three and five years) and the $294.93m Eventide Gilead N fund in third with +52.35% versus a stellar +229.09%/1st rank return over five years. The sector’s bottom five funds were bunched tightly: GuideStone Funds Extended-Dur Bond GS2 fund at -5.51% to GuideStone Funds Inflation Protected Bond GS4 at -7.84% on a past one-year view. For the past three years this sector posted the best peer group cumulative return at +39.49%.

LSF Asian Solar & Wind A1 fund took the yellow jersey in the European Funds sector over the past year on an improving +196.78% performance, but compared less favourably to its -17.00%/990th rank over a past three-year horizon. MAP Clean Technology Fund I came in the runner’s up spot over the past year on an improving +146.13% display, followed by Guinness Alternative Energy A fund with +89.08% (-6.96%/973rd rank over the past three years). SUNARES bottom ranked here with a past one-year performance of -40.53% and -57.75% for the past three years.

The UK Individual Pensions sector displayed the best peer group average over a one-year period with +27.37%. Top ranked fund for this sector over the past 12 months was FL/Premier Ethical EP Pension fund with a +35.60% performance over the past year and +63.41%/8th rank over past three, followed in second place by Skandia/Premier Ethical Plan fund at +35.40% on one year versus its +57.99%/17th rank over three years.