I can pretty much guarantee that this is, if not the most unexpected post on the Built in Chicago blog, then certainly the longest.
I am reposting here in the hopes that the topic—the business costs and opportunities of a changing climate—spark some ideas among Chicago's techs.
This is the meta pain point of our time: The climate has tipped, affecting everything from infrastructure to logistics to health to media (don't you wish you'd invested in The Weather Channel years ago?).
A warning: This is a monster post that meanders from Martian oceans to the Chicago Fire to a tale of economics and energy...
OK, here goes:
What Amy Larkin’s “Environmental Debt" has to do with a Meander through a Martian Ocean, the Great Chicago Fire, Aliens in the Muck; and Amory Lovins on Why Efficiency Rocks and Coal Has a Bleak Future
It must have been quite a sight, all those eons ago on the shore of a Martian ocean. According to scientists at Cal-Tech, much of the red planet was very likely a blue planet in the deep past, with rivers fanning out into broad Mississippi-style deltas, lazily meandering to sea. There was an atmosphere, too, "possibly even cushier than Earth's."
But something happened four billion years ago—researchers aren't exactly sure what. Solar winds, cosmic collisions and a fatal lack of magnetic poles probably had something to do with it. Whatever it was, it was powerful enough to shred Mars' delicate gaseous cocoon rich in carbon dioxide, argon, nitrogen, oxygen and carbon monoxide, leaving only tell-tale isotopes behind. Once that was gone, the ocean, or oceans, simply evaporated into space. The only surviving water literally stayed underground, filling aquifers at the poles that scientists dream of one day tapping.
Was Mars covered in a primordial soup that boiled away, dooming any and all life-forms that might have navigated its depths to a thirsty extinction? Did anything have a chance to crawl onto shore to stake a pre-cataclysmic claim? Could recently discovered, super-giant, seriously alien pandoraviruses have a Martian past? As unlikely as that sounds, these viral Godzillas are so unlike anything else on Earth—discovered slithering around in actual muck—scientists haven't entirely ruled it out.
Yet even if a few ancient microbial Martians somehow managed to find safe haven on our planet, the point is there is not much, if anything, happening in the way of life on Mars today.
No atmosphere. No water. No life.
So, is this a cautionary tale for what could happen to our tiny blue dot? Barring a truly catastrophic run of luck, no. But it shows how fragile a planet can be.
The illustration below comes courtesy of Dave Gallo, a marine biologist at Woods Hole Oceanographic Institute. On the left is the Earth, Mars-style, minus all its water. The blue sphere represents all the Earth's saltwater and the itty bitty dot is all its freshwater, including frozen glaciers and aquifers. Compared to the mass of the planet, it's not much, but it is all we have, and all we are going to get.
Although Gallo doesn't include the atmosphere in his illustration, it can also be thought of as a kind of ocean: an "aerial ocean," circulating massive amounts of water through evaporation and storms. It also provides a shield against deadly ultraviolet rays, moderates temperature and, of course, contains the oxygen we need to live. Proportionally, Earth's atmosphere is thinner than the shell of an egg.
THE NEW NORMAL / LESSONS OF 1871
It is bad enough for a planet to have the life knocked out of it for cosmic reasons, and quite another to willfully poison Eden. Yet we humans have managed to do just that, pumping out such copious quantities of carbon pollution into the air to have busted through the record for the fastest rise in atmospheric CO2 in the Earth's history ever, ever, ever. So severely has the global environment been trashed, we have triggered a mass extinction, only the sixth in the entire history of the planet. The climate has changed. The old normal has given way to a new normal, riddled with extreme weather and increasingly dire insurance industry reports.
Resilience has become the new "sustainability." The goal of maintaining environmental balance has been shifted to one of survival. Even that has been buffed into the false optimism of "bouncing back," that it is possible to put Humpty Dumpty back together again. But we have crossed a line: There is no "back," only onward.
There is an onward, though, something I am reminded of every time I see the skyline of my home city, Chicago. Every gleaming, curtain-walled, high-rise, engineering-marvelous bit of it was made possible by Mrs. O'Leary's famously klutzy cow who, according to legend, cleared the decks by kicking the bucket. Well, actually it was a lantern, which, one hot, dry October evening in 1871, sparked the Great Chicago Fire.
The city was not only rebuilt, but re-imagined in ways so profound, it changed cities all over the world. New ways of building were invented. Architects flocked to Chicago for the chance to try out new ideas. The critical mass of talent was astonishing, inspiring and challenging one another to often literally new heights.
So deeply ingrained is the story of innovation made possible by the Fire that 141 years later, Chicago's premier tech hub was named 1871.
Our planet's new normal is full of Chicago Fire-style devastation, from entire towns scoured off the map by tornadoes, to ever-hotter wildfires that singe cities and suburbs that have sprawled into what was once wilderness. Heat waves shred infrastructure. Hurricanes and "superstorms" pummel coastal cities—already treading water from rising seas. Rivers burst levies. Droughts shrivel crops. Blizzards paralyze whole regions. The line between natural and human-enhanced disasters has blurred.
There is also Chicago Fire-style opportunity in the rubble, a chance to start fresh, to re-imagine cities, buildings, power grids, water supplies, transportation networks, farms, manufacturing—everything about the way we live.
ENVIRONMENTAL DEBT
"Nothing except for nature can transform the world as swiftly as can business—for better and worse. Indeed, the two concurrent crises in the news virtually every day are global financial turmoil and escalating environmental uncertainty. All business, all economies, all living and man-made systems depend on nature. Growing an economy that destabilizes nature is just plain foolhardy..."
— Amy Larkin, author, Environmental Debt
Amy Larkin, former director of GreenpeaceSolutions, is not the first to link economic and environmental health, but provides a clear-headed, sensible framework for how business can spearhead a path to low-carbon prosperity. Our planet's future, it turns out, depends on accountants—which, as the daughter of a CPA, makes me rather proud.
In her new book, Environmental Debt: The Hidden Costs of the Changing Global Economy, Larkin lays out a framework—"Nature Means Business"—designed to level the regulatory playing field, reward long view decision-making and provide catalyzing governmental support.
Key to it all is including externalities—the costs businesses traditionally haven't paid for, such as carbon pollution—in the bottom line. This speaks to our innate sense of fairness: Whoever makes a mess really ought to take responsibility.
Instead, those costs have been paid by everyone else in all kinds of ways, from scarce tax dollars that have been diverted to fight climate-fueled wildfires and make repairs to crumbling infrastructure, to higher grocery bills, water shortages and political unrest.
She cites a Harvard Institute for Global Health study from 2011, for example, that tallied the unreported life cycle costs of coal to be a minimum of $350 billion, and as high $500 billion—a half trillion dollars—annually, just in the U.S.
"These hundreds of billions of dollars represent actual bills paid by unwitting families, fisheries, businesses, schools, municipal water systems and health-care providers as well as the victims of asthma, black lung and other medical problems. So, despite conventional wisdom, coal is not a cheap energy. Its price is cheap only because it is subsidized by its own victims."
For the big picture, Larkin turns to a report by financial consultancy KPMG, which "calculated that if corporations actually paid for the services provided them by nature, it would eat 41 cents from every dollar of revenue." That's the environmental debt.
Yet as the climate tips, the costs of this conveniently obscured windfall have hit businesses hard, too, and right where it hurts the most: the bottom line.
The floods in Thailand in 2011 were made exponentially worse by decades of commercial logging during the 20th century. Despite a ban in 1989, the damage was so severe that a generation later, it was still a factor. Thai factories were shut down for months, stranding hundreds of thousands of workers and impacting supply chains that stretched around the globe. Toyota's car output alone was down 3.4% from the previous year.
According to a recent study by APQC, a nonprofit specializing in business benchmarking (cited in an HBR post on why companies are regularly blindsided by risk), "three quarters of the 195 large companies surveyed...got hit by an unexpected major supply chain disruption in the last 24 months."
In a world saddled with an unstable climate, competitive advantage can mean simply being able to get your goods to market.
LEVERAGE
Larkin, whose charge at Greenpeace was to support large corporations transitioning to cleaner, greener technologies, is in a unique position to point out barriers and highlight successes.
Working with the Consumer Goods Forum (CGF), which represents 400 top global brands and retailers, she helped craft an agreement for a sector-wide shift to an environmentally friendlier refrigerant, which will trim two percent of greenhouse gas emissions from the global total over the next four decades.
That may sound incremental, but it is, in fact, monumental. This is just one technology, but adopted en masse by large companies whose business practices have enormous influence. The scale guarantees significant impact and lowered costs for installation, making it easier for smaller businesses to make the change, too. Collective corporate clout for good.
Much of Larkin's book is devoted to case studies of companies trying to forge a new paradigm for business, designed to reduce environmental debt while growing profits. For example, multinational consumer goods giant Unilever has done away with quarterly reports, finding they hobble long term planning. It has also publicly committed to cutting its businesses' environmental impact by 2020, while doubling sales.
Unilever is leading by example, showing other companies how such a bold goal might be achieved. Although Unilever's efforts alone won't fix the climate, the comfort of business as usual is no longer an option. We are in an era of the unusual. Nothing is as it was.
For its part, shoe company, Puma, produced its first Environmental Profit and Loss statement in 2010. It was an ambitious, if imperfect, effort and very sobering. If environmental costs had been taken into account, net earning would have dropped by three quarters. Rather than shove the news under the rug and sprint back to business as usual, Puma has used it as inspiration for improved practices throughout its business. Shoe boxes, for example, were redesigned as trendy bags made from recycled plastic, "saving 1 million liters of water and 8,500 tons of paper" in production inputs, along with savings in shipping costs. Small steps, but in the right direction.
Like the new normal of extreme weather, new style accounting can come as a shock. But, like the Chicago Fire, it also clears the way to develop a better foundation, full of innovation, unimaginable potential and better information for investors.
Really, who would invest in coal if the bill for externalities—the environmental debt—actually had to be paid by the companies?
EFFICIENCY & THE BOTTOM LINE
Even without the burden of environmental debt, coal has become a tough sell.
"Coal has lost 19% of its market share in just two years," says Amory Lovins, chief scientist at the Rocky Mountain Institute (RMI), "displaced not only by gas, but also by renewables and by efficiency."
While evidence of gains in renewable is easy to see—just look at all those new solar installations and wind farms!—efficiency seems less tangible. We are all too aware of the bills we have to pay, but who keeps records of bills that don't have to be paid? Yet those no-need-to-pay bills can really pile up.
Since the 1970s, notes Lovins:
"We've cut our energy use by more than half by dollar of GDP (gross domestic product). That's not bad. I would wish that we had done even better, but we now see how to triple efficiency all over again. And it's now cheaper than it was.
Saving electricity now costs only 1/3 what it was in the early '80s because the technologies have improved faster than we've installed them...
We would be using over twice as much energy we actually use today in the US if we were still as inefficient as we were in the mid '70s. I think that's considerable progress, but we now can do a whole lot better.
I think the difference now is that as we get, not just better technologies and designs, but better financing, marketing and delivery channels, we have the proven ability at historically reasonable rates to fix up our buildings and our factories faster than they grow.
So we are starting to see electricity demand stagnate or falling, even as our economy grows. And, indeed, as a major engine of economic growth because it frees up so much capital..."
With a new accounting framework designed to reflect both economic and environmental costs, efficiency is a big win: a competitive advantage that drops straight to the bottom line.
Clearly, though, the books have been cooked for the last few hundreds years, along with our planet. Who knows? Perhaps that's what happened on Mars, too, so long ago.
Nature's accounting, it turns out, is the only one that really matters.
— J. A. Ginsburg / @TrackerNews
(orignially published on TrackerNews: Dot to Dot)
RELATED
• Amy Larkin Says Business, Environment Crisis Connected / Bloomberg (Audio)
• Let's Talk About Environmental Debt / Amy Larkin / Huffington Post
• Dave Gallo at TEDxSMU
[video:http://www.youtube.com/watch?v=MJ2rJq2rjcs]
• Amory Lovins of Rocky Mountain Institute talks climate and sustainability / WBEZ (NPR)
• Reinventing Fire: Bold Business Solutions for the New Energy Era / RMI
• President Obama Speaks on Climate Change
[video:http://www.youtube.com/watch?v=cMT87OP21mo]
