Search

More than half (53%) of UK households would support the construction of a wind turbine within two miles of their home, dispelling the general perception that Britain is a nation of ‘nimbys’ (‘Not In My Back Yard’).

The research into attitudes towards renewable energy by Co-operative Energy reveals widespread public support for local renewable energy projects in the wake of the Government’s decision to consult on the withdrawal of subsidies for community energy generation investment.

The poll of 2,000 UK adults, commissioned ahead of Community Energy Fortnight which starts this weekend (5 September), revealed that 78% would support local renewable energy projects, including wind turbines, that are owned and controlled locally with the profits generated benefitting the community.

Ramsay Dunning at Co-operative Energy said: “Our findings fly in the face of the general perception that Britain is a nation of ‘nimbys’ who object to wind turbines and other energy generation initiatives being located close to home.”

Support for solar is also strong. According to the poll, it’s the most popular form of electricity generation among the British public - 30% say it would be their preferred source and almost two thirds (65%) said they would support a solar farm project within two miles of their home.

Shale gas is the least preferred method of energy generation, with just 2% of public support.

Giles Bristow, director of programmes, Forum for the Future who act as Secretariat for the Community Energy Coalition, added: “This month’s Community Energy Fortnight is an opportunity to experience first-hand how communities can take control and go about owning, generating and saving energy. We would urge ministers and civil servants to take this opportunity and be inspired by the fantastic work going on across the country and reassess their current lack of support for community energy projects.”
 

Back in December 2012, we ran across a young woman named Eden Full, who won a 20 Under 20 Thiel Fellowship for a very clever device that took in dirty water at one end, used that water to power a solar tracker along the way, and then spit out clean water at the other end. That was the beginning of SunSaluter. Recently, I was contacted by Jake Schual-Berke, SunSaluter’s chief operating officer. He wanted to give us an update on the progress the company has made.

In a nutshell, here’s what he said. The design of the water clock mechanism has changed. Now, it is much more user-friendly and easier to ship. The cost of the SunSaluter has dropped by 50 percent, making it much more affordable. A prefabricated version is now available in addition to the kit. The tracking capability increases the energy output by about 30 percent when compared with a stationary solar panel. The filtration system will process 4 liters per day for each tracker.

The company now has a manufacturing team in Bangalore, India, (moved from Canada) and a distribution partner, Recapo, in Lilongwe, Malawi.

Schual-Berke told us: “The SunSaluter design has evolved to where it’s a viable product, and we’re selling it and getting it out there. We’re also emphasizing our nonprofit work more, emphasizing our capacity building and doing entrepreneurship training. Our goal is really to get local entrepreneurs to take the SunSaluter technology and run with it.”

Says 22-year-old CEO Eden Full: “Since the last piece on Triple Pundit, SunSaluter's core technology of using a water clock has not changed, but the design has been tweaked for different environments/solar panel installation sizes."

 

When we last covered SunSaluter in 2012, the organization only had a few units deployed in the field. Now, SunSaluter has units deployed in 16 countries, with partnerships with several major organizations, particularly in India and Malawi where its offices are located, Full told us. "We have more of a track record now that proves that SunSaluter's technology works, and it really makes a difference in the places that it has been deployed," she continued.

“The primary change since we last spoke has been around our approach to scaling this technology," Full said. "SunSaluter was formally registered as a 501(c)3 nonprofit organization in 2014, with our aim being to bring electricity and clean water to developing communities through a grassroots network of entrepreneurs. This means that instead of having our global organization try and start businesses in each individual country, which would be a slow and inefficient process, we focus on teaching others how to leverage our technology to create businesses.

"We teach local entrepreneurs best practices, how to become a SunSaluter manufacturer and we connect them to other organizations who can help in their location. This way, SunSaluter as a global entity is more focused on economic empowerment by advocating for increased energy and clean water. We'd love to collaborate with any organizations that have likeminded goals related to energy, water, health, social impact, international development and economic empowerment.”

SunSaluter now has 140 units out in the field in 16 countries. Its target is 1,000 by the end of this year and 10,000 by the end of 2016.

Recapo started working with SunSaluter in 2013 to develop a solution for providing power for basic household lighting and powering small electronics in Malawi, Lawrence Matengula, a spokesman for the company, told TriplePundit.

"As an organization, Recapo understands that the communities that we serve urgently need basic lighting and a source of clean water for consumption," Matengula said. "The high cost of solar panels added to hidden costs charged by so-called 'professional installers' makes the adoption of solar energy impossible in rural Malawi."

The SunSaluter provides a way for Recapo to maximize the potential of photovoltaic panels to capture solar energy and at the same time provide a water filtration system for a household, Matengula continued.

"The SunSaluter is easy to assemble, combining simple kits shipped to Malawi with local materials that trained local teams are able to manage. We have developed a complete solar energy and water filtering system for a household in Malawi and have since introduced the product to various people and organizations in our community."

SunSaluter is currently looking for partners around the world to bring this revolutionary technology to new markets. Find out how to become a project, distribution, or manufacturing partner here.

Images courtesy of SunSaluter

By Rory Wilding

TriplePundit recently featured an excerpt from "A New Psychology for Sustainability Leadership" that discusses the psychology of sustainability from an executive perspective. But what about at the consumer level?

With some in the mainstream media predicting societal collapse by 2040, it’s clear the climate change problem is gaining mass awareness. Right now there is a golden opportunity for businesses to let people know what they could do on an individual level. Based on logic, the arguments are solid: Change our behavior today to preserve current living conditions for future generations.

So, what’s stopping us on an individual, consumer level? Well, if the study of behavioral economics has taught us anything, it is that people are far from rational. Nobel laureate and psychologist Daniel Khaneman regards climate change as the most challenging cognitive psychological phenomena possible.

Psychologists have found we have two systems we use for decision-making. System one is fast, instinctive and emotion-driven, based around mental shortcuts. These shortcuts are also often called mental biases because they allow us to act by a quick rule of thumb. System two is slower and more deliberative, involving greater mental effort.

These shortcuts are correct most of the time meaning we can survive in our environment. However occasionally we are led down the wrong path by using a system one for a system two decision.

So, how do mental biases lead us away from sustainable living?

The first obvious bias is analysis paralysis. Overanalyzing a situation means action is never taken -- paralyzing the outcome. With so many things we could do to tackle climate change, it’s hard to know what to do. Linked to analysis paralysis is ‘over choice.' Climate change touches so many aspects of daily living: transport, food, clothing, hobbies, even our choice of partner. As consumers, we are faced with ‘choice overload’ when considering a more sustainable lifestyle -- biasing us toward inaction.

The status-quo bias leads us to prefer to keep things as they are. Change is hard, and human action takes time. Why are we so resistant to change? For an informed third party, it is easy to tell someone else what they ‘should’ be doing – for someone wrapped up in their day-to-day life, just taking the time to think about switching involves mental effort or using system two. For most people, it’s easier to make a quick choice not to change.

Calculating the financial implications of change put up bigger barriers still. A classic example of this problem is illustrated by the following question:

A bat and a ball cost $110. The bat costs $100 more than the ball. How much does the ball cost?

If you answered $10 you fell victim to attribution substitution, a process by which we go off an intuitive calculation rather than taking the time to be accurate.

The answer is actually $5 because the bat costs $100 more than the ball, but the ball still costs something: $5 + $100 equals the price of the bat, or $105; $105 + $5 equals $110.

This is a simple example. Imagine you are a homeowner with kids and a job plus no experience of payback costs. It’s clear to see why, for some, sustainability is perceived as more hassle than help.

While sunk costs cannot be recovered, we still factor them into our decision-making process. For a homeowner who has ‘perfectly working’ equipment, money spent on sustainability may be looked at as a loss, with sunk costs reinforcing the status quo. Consumers may not easily understand that there could be a net positive after the up-front cost. We may also face a ‘knowledge-action gap’ as we know what we should be doing but fail to take action.

Next add in the Anchoring effect: We rely on the first piece of information presented (the anchor) when making decisions. Sustainable technologies typically cost more up-front with longer-term payback. Historically, we've had anchors set by cheaper, less efficient equipment -- making efficient technologies seem even more expensive than they really are.

Finally, hyperbolic discounting distorts the way we calculate delayed rewards. We apply a steeper discount to rewards further away in the future. This means the longer away the payback period, the less likely we are able to accurately calculate the benefit.

It is obvious that these barriers make climate change possibly the most challenging issue in consumer psychology. A respect for these cognitive barriers can lead to innovative ways of framing new products and services to help consumers understand the value of sustainability. Breaking down these barriers means those organizations that value people and planet will profit from longer-term informed thinking. In my next post, I'll look at what can be done to tackle some of the psychological barriers we have discussed.

Image credit: Pixabay

Rory is the commercial director of Which LED Light, the UKs leading independent LED light comparison service. Rory has a background in Psychology and is interested in the climate change challenge from a  behaviour change perspective. Follow Rory on Twitter at @WhichLEDlight.

Hmmm, could it be the recent (and continuing) chaos on Wall Street and in world markets is in large part due to a growing realization that the end of the fossil fuels era is at hand?

There’s no simple or single explanation for what’s happening — even market bubbles will blow after a critical mass of events and actions converge and push them to the bursting point.

But something dramatic and potentially historic is happening: The Wall Street market has been mostly flat for a year, and then last week lost 18 months’ worth of gains. Can we just attribute it to a market “correction,” China’s economic struggles and gyrations, and (as usual from the right) President Obama — and then move on?

Maybe not. The point about the fossil fuel era has real and welcome resonance, especially after reading Paul Gilding’s July article in Australia’s REnewEconomy, saying: “It’s time to make the call – fossil fuels are finished. The rest is detail.”

Gilding is a former executive director of Greenpeace International and a fellow at the University of Cambridge’s Institute for Sustainability Leadership. He is the author of "The Great Disruption: Why the Climate Crisis Will Bring On the End of Shopping and the Birth of a New World" (2011).

Gilding wrote: “Unless we recognize the central proposition: that the fossil fuel age is coming to an end, and within 15 to 30 years – not 50 to 100 – we risk making serious and damaging mistakes in climate and economic policy, in investment strategy and in geopolitics and defense.”

This is the year the “dam of denial” and inertia is breaking regarding climate change, along with the need for urgent transformational economic change, he wrote. It's clear "we’ve reached a tipping point," he continued, where fossil fuels will "enter terminal decline, independently of climate policy action." But policy action is ramping up and COP21 is approaching, which may spell even worse news for fossil fuels.

The key driver of the fossil energy industry’s “terminal decline” is not what many see as their greatest threat – future climate change policy. It's the improvement in renewable energy, battery storage and electric vehicle technology, coupled with rapid gains in efficiency and drops in price, that pose the biggest threat to the fossil fuel industry, Gilding wrote. Renewables are already on the on the verge of being price competitive with fossil fuels – and already are in many situations.

Factor in electric cars, which are on the same path to the conversion of a slow-moving industry (traditional auto companies like GM) into a disruptive technology-driven one (innovators like Tesla).

There is much food for thought in Gilding’s long article,especially for fans of renewable energy and opponents of the fossil fuel industry’s power (here's that link again). Gilding concluded:

“All businesses, like humans, fight death. And fight [the fossil fuel industry] will, with all the considerable power they have. So, it will be messy and chaotic, and not consistent around the world. But in the end, the fossil fuel giants have no strategy that involves fossil fuels which makes any business or economic sense.”

Perhaps that is why financial economic markets are so roiled these days; maybe there is an important realization, and major correction, occurring.

It will take a “messy and chaotic” ride to come out on the other side.

Image credit: fossil fuel>>>on the way out by Don Hankins via Flickr CC

By Leah Thibault

There’s a popular anecdote repeated in rural Piscataquis County, Maine, where a general store owner has said, “I feel the AMC (Appalachian Mountain Club) in my cash register.”

This tangible economic impact around the region is the result of the creative, decade-long effort known as the Maine Woods Initiative, AMC’s strategy for land conservation in Maine’s 100-Mile Wilderness region that also folds in very real economic stability through job creation and traditional uses of Maine working forest.

Theirs is an innovative approach to conservation that combines outdoor recreation, resource protection, sustainable forestry and community partnerships. It seeks to address the ecological and economic needs of the Maine Woods region by supporting local forest products jobs and traditional recreation, creating new multi-day recreational experiences for visitors, and attracting new nature-based tourism. In “shallow economies,” where all of these needs are so closely interdependent, this forward-looking effort is paying off in a big way.

The AMC has been able to grow overnight lodge stays from 3,900 bed nights in 2009 to more than 7,300 by 2014, and those numbers continue to grow. Per a 2013 survey, 70 percent of visitors came from out of state. One in five stayed at other properties during their trip. One-quarter visited a historic or cultural site; 67 percent ate at a local restaurant; and 77 percent shopped at a local store.

In 2014, AMC’s operations employed 45 full- and part-time employees in a mix of year-round and seasonal positions -- amounting to 26 full-time equivalent (FTE) jobs in Piscataquis County. But the economic benefits don’t end there.

As that general store quote shows, the economic benefit extends beyond the direct employment at the AMC. It ripples through to a variety of enterprises, from the provisioners of the hikers, campers, skiers and other tourists that flock to the region that you’d expect, to the less obvious but equally important businesses that support investments in local infrastructure that keep the access open.

The impact moves down the supply chain as AMC purchases about $100,000 in food annually, approximately 60 percent of which is obtained from local purveyors and the remaining 40 percent from other Maine vendors. In 2012, they paid nearly $750,000 to loggers, truckers and others involved in traditional timber harvesting on its land. These local loggers and vendors with their families, then turn around and use the funds they’ve earned for goods and services in their community.

By demonstrating that conservation can also produce local economic benefit, the AMC was able to tap a federal financing tool to help acquire its founding parcels for this initiative, the New Markets Tax Credit. The federal New Markets program was designed to increase the flow of capital to businesses within economically distressed communities by providing a modest tax incentive to private investors.

The AMC is far from alone. Other enterprises are using the credit as a way to finance growth capital that’s creating jobs throughout their supply chains, like the packaging company with new contracts to support a global wound care product manufacturer and the truckers transporting Greek yogurt from a dairy in Vermont to public schools in Connecticut.

According to a study by the New Markets Tax Credit Coalition, between 2003 and 2012 the program created some 750,000 jobs – all of which was from capital invested in communities with high poverty and unemployment rates.

However, the New Markets Tax Credit program expired at the end of 2014. The good news is that it can still be extended. The New Markets Tax Credit Extension Act of 2015 (HR 855), introduced by Reps. Pat Tiberi (R-Ohio), Richard Neal (D-Mass.), and Tom Reed (R-N.Y.), would extend the program indefinitely. Sens. Roy Blunt (R-Mis.), Chuck Schumer (D-N.Y.), Steve Daines (R-Mont.), and Ben Cardin (D-Md.) introduced S. 591, which is nearly identical to its House counterpart.

By extending the New Markets Tax Credit program, Congress can continue to deliver a financing solution that supports more than any single project, but which radiates new opportunity throughout supply chains to ultimately revitalize and diversify struggling economies.

Image credit: Flickr/Trailsource.com

Leah B. Thibault is Director of Operations at CEI Capital Management LLC.

By Mina Chang

When a natural disaster hits — regardless of where it occurs in the world — everyone scrambles to help. It’s human nature to want to assist others when they’re struggling, especially in the face of destruction and loss.

Corporations, in particular, have the infrastructure, supply chains, experience and relationships to help respond quickly. It’s great when companies contribute their assets to relief efforts, but sometimes the best intentions actually cause more problems than they solve. For example, when Hurricane Katrina hit New Orleans in 2005, we saw a candy company donate bags of Halloween candy to the affected children. Can you imagine children — who have just lost everything and, in many cases, family members — opening up skeleton-shaped candy suckers?

Before your company makes an epic mishap when sending aid, here are four ways you can do the most good for those in need while avoiding any inadvertent harm:

1. Start with selfless motives

Your primary goal should always be to help those who are suffering. It’s true that helping others makes for great marketing material, but this shouldn’t be what drives you. When you reach out to those in need, it’s important to take a step back and consider — with pure motives — what is truly good for the community you’re serving.

Think beyond “bodies,” and consider what specific skills would be helpful to the communities in need. Either as part of your intake process or during training periods, ask your team if they have an interest in serving.

Next, classify your team into categories, from general staff to those who are highly specialized (e.g., medics, logistics, officers). This allows you to quickly identify and mobilize people with the proper skill-sets when disasters hit. Just be sure to check that volunteers have the right experience, prerequisite knowledge (like language skills) and understanding of disaster relief psychology to be effective.

2. Give cash instead of in-kind donations

While donating clothing to those affected by an earthquake might sound like a great way to help, consider what hidden costs and detriments might accompany your donation.

Unsolicited, unwanted donations can clog distribution locations, end up in landfills if they’re unneeded, result in exorbitant shipping costs, and suppress an economic recovery in the disaster area by undercutting locally-produced goods.

For instance, after the 2004 South Asian tsunami, many well-intentioned people turned to their closets for donations. But clothing donations weren’t needed after the disaster; piles of old shoes, worn dresses and Halloween costumes ended up by the roadside. Domestic animals began trying to eat the clothes and became sick from ingesting the nonedible materials. Many Indonesians found it degrading to be shipped Western hand-me-downs.

When in doubt, consult a nongovernmental organization (NGO) giving aid on the ground about a potential donation. Chances are, they’ll tell you that monetary donations will do the most good.

3. Consider local cultures

In-kind donations also risk violating cultural taboos. Speaking from experience (I’ve seen cans of Spam delivered to mostly Muslim populations in refugee camps), I can tell you the most well-intentioned item donations can do more harm than good.

Again, consult a knowledgeable NGO or a local consulate about the cultural nuances of the populations in need. Specialized news media can also give great overviews of the situation, and NGOs providing aid on the ground are unparalleled resources if you have any doubts about the cultural significance of a particular item you’re considering donating.

Likewise, if you’re considering sending volunteers to a crisis zone, ensure that they’re well-versed in the local culture. Acts you might consider incredibly common may create big waves in another culture. For instance, donning your favorite shorts and a tank top to brave the Middle Eastern heat could upset many locals. You don’t want to be perceived as openly flouting local laws or cultural norms in front of victims.

4. Think about the cycle of aid

Always think about the big picture when you’re considering making a donation. For example, donating powdered baby formula might seem like a great candidate for in-kind donations at first. However, when mixed with contaminated water, it can kill a baby via diarrhea within 48 hours. Additionally, its use means a mother’s natural milk supply dries up. When she runs out of formula or can’t afford it, she’s forced to try to feed her baby rice or corn, which is not digestible.

Rather than hosting an office-wide canned food or clothing drive, it’s often much more effective for companies to raise money for proven NGOs and agencies that have a presence in the disaster zone. That way, these on-the-ground groups can make regional purchases without the hassle of international shipment or transportation costs, while also creating local jobs and supporting the local economy’s recovery.

It’s human nature to want to help, but don’t be afraid to call on an expert to help determine how best to leverage your assets for disaster assistance. Above all, keep the people you’re trying to help — not the benefits for your brand’s image — top of mind.

Image credit: Flickr/U.K. Department for International Development

Mina Chang is CEO and president of Linking the World, an international humanitarian aid organization with a focus on children, global awareness, and breaking the cycle of poverty around the world. Linking the World has been saving lives and transforming communities since 1997 through its unique emphasis on partnerships to kindle hope.

Sweden’s Iggesund Paperboard is drawing its clients attention to its responsible forestry practice with a new venture called Adopt a Tree.

The Swedish paper and card giant has been handing out gift cards which, when activated, results in Iggesund planting 10 new trees. A forest area ready for replanting in Nianfors in the Swedish province of Hälsingland has been reserved and has space for enough tree seedlings for up to 3,000 customers.

 “We want to make it clear to all our customers that the price of Invercote or Incada includes replanting which will give us at least as much new forest as the amount we harvested,” said Annica Bresky, ceo, Iggesund Paperboard. “We’d like people to know that our paperboard material is one of only a few packaging materials that actually gives something back to nature.”

Iggesund is part of the Holmen Group, which is on the United Nations list of the world’s 100 most sustainable companies.

The group produces more than 30m tree seedlings annually as a key part of its replanting strategy. Swedish law states that anyone who harvests forests is also responsible for replanting them. In practice this means that at least three seedlings must be planted for each tree that is felled.
 

Why is CSR sometimes considered a dirty word in business circles? I’ve mentioned in this column before the sniffy attitude I’ve received at mainstream business events when I’ve mentioned the acronym.

So I was intrigued by respected business magazine Fortune’s first ‘Change the World’ list.

It’s found 51 companies that have made a sizable impact on major global social or environmental problems as part of their competitive strategy. However it goes to great lengths to insist that the list is not meant to be a ranking of the overall “goodness” of companies or of their “social responsibility.”

“Big corporations are complex operations that affect the world in myriad ways. The goal here is simply to shine a spotlight on instances where companies are doing good as part of their profit-making strategy, and to shed new light on the power of capitalism to improve the human condition,” it maintains.

To assemble the list, the editors of Fortune and FSG, a non-profit social-impact consulting firm, contacted various business, academic, and non-profit experts around the world, asking for their recommendations.

These were then evaluated against four criteria: the degree of business innovation involved, the measurable impact at scale on an important social challenge, the contribution of the shared-value activities to the company’s profitability and competitive advantage, and the significance of the shared value effort to the overall business.

The top 10 companies proved to be Vodafone, Google, Toyota, Walmart, Enel, GSK, Jain Irrigation Systems, Cisco, Novartis and Facebook.

The supporting case studies – such as Vodafone’s work with Safaricom (a mobile money platform) and GSK’s development over 30 years of a malaria vaccine, are all showing how these companies are “doing well by doing good”, says Fortune.

How does that not classify as CSR? I thought the whole selling point of being a responsible business was that not only was a company doing good but it was also impacting positively on the bottom line. CSR and profit are not mutually exclusive. Neither are dirty words. In my book, they are what make a company ultimately sustainable.

So perhaps it’s time to ditch the acronym CSR if mainstream business views it in such a negative ‘tick box’ light? When a magazine of Fortune’s standing seems to be at great pains to distance its ‘Change the World’ list from ‘social responsibility’, surely the writing’s on the wall?

And if business can misinterpret what CSR stands (or doesn’t stand) for, what chance has the general public of understanding and appreciating responsible business practice? How can businesses spread their responsible message without fear of misinterpretation? Just recently a friend of mine described himself as a responsible drinker because he always made sure to recycle the can or bottle afterwards…

Answers on a postcard/email please.

[email protected] 

It’s 8am on a damp Monday morning and I’m locked in a tough negotiation. I’m trying to persuade my five-year-old daughter to put on her clothes so that we can head off to school. We still need to fit in tooth brushing and hair brushing before we have to leave the house, but so far my reasoned arguments are carrying no sway.

Whether we realise it or not, we all spend a huge amount of our time trying to influence others. Whether it’s persuading your toddler to at least try his broccoli, your neighbour to turn down the music, or your CEO to approve funding for your next project, we are all influencers.

An essential skill
Being able to influence others is a key life skill and it has particular relevance within organisations where traditional linear lines of management have been replaced with flat, matrix style structures.

The positional power of the command and control system will only get you so far when working in this type of organisation, whereas learning how to use your personal power to cross functions, cultures and national boarders is always far more effective.

Changing mindsets
That few CEOs, certainly of large, listed companies, would argue against the case for CRS is testament to how successful the profession has been in influencing leaders over the last 20 years. But there is still much to be done to ensure that rhetoric equals reality.

The role of the CRS professional is still to help propel organisations forward towards more sustainable and responsible business practices, making the ability to influence and persuade as important as ever. Having secured the support of senior leaders, the next big challenge is to change the mindsets of those mid-level managers who, under pressure to deliver against their own targets, are usually the most challenging to engage with the CRS agenda.

Here, our ability as practitioner to influence and move others will need to be grounded firmly in our understanding of the business and its objectives and built on strong internal networks that themselves are built on mutual trust and shared purpose.

Are good influencers born or made?
Speaking to our members at the ICRS, it’s clear that of our five competencies, influencing and persuading is the one people find the most challenging. Our webinars on the topic have proved to be our most popular and the topic is a perennial favourite at any gathering of CR professionals.

There was a time when it was thought that being able to move others was an inherent talent – like charisma, you either had it or you didn’t. But this simply isn’t true. As countless studies have shown, the ability to influence others is a skill that can be learned and refined just like any other. All any of us needs is the right insight, support and the opportunity to practice – a fact I remind myself of as I finally usher my daughter out of the front door.

Claudine Blamey is chair of the Institute of Corporate Responsibility and Sustainability (ICRS) and head of sustainability and stewardship at The Crown Estate 

The global economy depends on the preservation of natural resources. Yet the majority of businesses have not traditionally placed a high enough financial value on natural capital - the products and services they derive from nature. As the pressures of resource scarcity, raw material price volatility, pollution and climate change intensify, how can companies reduce their environmental impact and make informed business decisions? Alastair MacGregor, COO of Trucost and Claire Forsyth, director of business development, cr360, discuss

The global economy depends on the preservation of natural resources. Yet the majority of businesses have not traditionally placed a high enough financial value on natural capital - the products and services they derive from nature. The environmental and social impacts of business on natural capital could cost the economy as much as $7.3tn per year, calculates Trucost. As the pressures of resource scarcity, raw material price volatility, pollution and climate change intensify, progressive companies are beginning to consider nature more seriously.

In particular, companies are using natural capital valuation as a tool to reduce their impact on the environment and inform mainstream business decisions that save money, reduce risk, drive positive change and pave the way for more innovative, robust business models. By monetising their environmental impacts, sustainability leaders are bringing natural capital to the attention of senior executives in the universal language of business.

Here, we consider how to apply natural capital valuation in practical terms - both within business operations and across supply chains - and explore how data management can help to put natural capital at the heart of core business practices.

Looking through the financial lens
Making meaningful comparisons between fundamental impacts such as carbon emissions, water consumption and air pollution is challenging. Each impact is measured differently , making comparisons problematic. By attaching a financial value to the respective impacts, it becomes easier to gain an overall perspective.

For example, an environmental profit and loss account (EP&L), a monetary valuation of a company’s environmental impacts (from raw material to product disposal), is designed to mirror financial accounts. It acts as a strategic overview, enabling companies to determine how much their business costs the environment, and compare this with revenue and profit. For example, PUMA’s first EP&L identified that its business operations cost the environment €8m, and its supply chain cost the environment €137m (94% of its total impact). While this did not affect the company’s net earnings, it helped the brand to collaborate with partners throughout the supply chain to reduce its environmental footprint.

Once an organisation has a clear view of the risks its environmental impacts pose to its business, there are multiple ways of applying those findings.

1.Putting a ‘real time’ price on water and carbon
Many companies apply a ‘shadow price’ internally. This is a real-time estimate of the financial value of natural capital impacts that can then be factored into operational costs. It gives businesses an idea of the ‘true cost’ of their impacts and provides an incentive to act.
Some 150 businesses including Microsoft and Dow are using a shadow price for carbon, according to the CDP.

By factoring in an ‘internal’ price for carbon on impacts from electricity use to air travel, Microsoft has embedded the cost of carbon into its financial systems. In this way, it can also judge the relative potential of emissions reduction projects. Its shadow price is reinforced by an internal carbon fee incurred by the business divisions responsible for generating emissions associated with specific impacts.
By adding a shadow price to water consumption, companies can close the gap between the true economic value of water and the price they are paying for it.

Assessing water scarcity in specific locations, the amount of water used by individual facilities and the value of the water to the business and community can help to inform thinking on how water constraints may affect business growth and whether to expand in water-scarce regions. Tools like Ecolab’s Water Risk Monetizer are providing the practical support companies need to achieve this.

2.Managing supply chain impacts
Companies can use natural capital valuation to assess the environmental impacts of their supply chains with greater accuracy. This can amount to 80% of the impacts for the food and beverage sector, according to Trucost. Identifying hotspots helps businesses manage risks more effectively, make cost savings and reduce impacts.

Best practice suggests that companies should conduct a risk assessment to identify which environmental impacts are most material to their business. Comparing these risks in financial terms enables a clearer understanding. A company can then take steps towards building a more resilient supply chain. This could mean requesting detailed environmental data from suppliers or providing training to high risk suppliers.

Similarly, companies could build natural capital questions into supplier audits, informing purchasing decisions and improving supplier sustainability. General Mills set a goal to sustainably source 100% of its ten key ingredients by 2020 after assessing its supply chain hotspots.

3. Designing products with natural capital in mind
Integrating natural capital considerations into product development can help companies to make progress in cutting their impacts. Some businesses are building on their lifecycle analysis data by converting impacts into monetary values, making LCA findings more accessible to senior executives. Interface is pioneering this way of enhancing LCA data.

In addition to comparing different impacts, companies can also consider individual impacts in relation to resource availability . Water, for example, is more valuable in arid regions compared to water-rich regions.

4. Measuring natural capital risks on an ongoing basis
Integrating natural capital valuation into core business practices is fundamental to managing environmental risks on an ongoing basis. In future, advanced data management tools, will enable businesses to see the costs associated with their environmental impacts at the touch of a button. In this way, decision-makers can view the monetary value of environmental impacts alongside business performance, and analyse the impact of natural capital risks on profitability.

Whereas an EP&L provides a snapshot in time, data management software helps companies toanalyse their natural capital impacts on a regular basis – in a consistent and verifiable way. They can then begin the fundamental transition from monitoring negative impacts to driving progress towards a more sustainable future.