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23 February 2018

Are you incentivising the right people?

I was at the North East Recycling Forum yesterday, one of the very few events I go to as a punter as it really punches above its weight when it comes to speakers and content.

I brought two big thoughts away from me, one I'll blog about on Monday as it requires some stats to make my point, but a qualitative one arose from a presentation on Deposit Return Schemes (DRSs). These are the automatic reverse vending machines which accept glass and plastic waste and pay out cash in return. I've seen this work in action a decade ago in Cologne, not only do people tend to return their bottles, but there is a whole grey economy around homeless and kids collecting litter to make a few shekels.

The problem with this is that these very materials are the ones which make cash for local authorities through existing recycling channels. So by moving to DRS, more material would get recycled, but it would shift the direct economic benefit from local authorities to private companies. The aim of yesterday's talk was to persuade the Council waste officers in the room that the economic benefits from reduced collection costs, reduced litter etc, made up from the lost income from selling materials. They didn't look terribly convinced.

This made me think more generally about the alignment of incentives, beneficiaries and decision-makers. To take an example I've come up against a few times, if you rent a building, either for living or working, then you usually pay the energy bills, but the landlord owns the heating system. Therefore there is no incentive for the landlord to install an efficient heating system as the benefit will go to you, not them.

But you can fix some of these disconnects. If you use activity based accounting, then all overheads are attributed to each activity – so, say, each production manager is responsible for the whole cost of energy, waste etc for their production line, rather than the whole lot being lumped together. You can write contracts to incentivise contractors and suppliers to solve your problems.

You really need to be conscious of this problem or it could jump up and bite your Sustainability efforts on the backside.

 

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20 March 2017

An Important Sustainability Lesson from the Netherlands

dutch cyclingOn Thursday, the eldest child and I set off on our bikes to Amsterdam – Harry had won the ferry tickets in a prize draw from a cyclocross race he'd won. We made a little video about our trip which you can watch below – and yes he really did slide into a stinking stream on the way to the ferry. He was very lucky he wasn't injured, but we both had a whiff of stagnant water about us for the rest of the trip.

As always on journeys abroad, I had my eyes peeled for different approaches to Sustainability. Eight years ago, a business/pleasure trip to Belgium had really brought home the difference between that country and the UK on renewable energy at that time. However this time the difference wasn't apparent; the number of wind turbines we saw approaching the Dutch coast was similar to the number we saw along the North East coast of England on our way back to the Tyne on Sunday morning.

The biggest difference I noticed was the cycling infrastructure. A friend of mine, on seeing our video, said we had managed to make the Tyneside cycle paths as good as the Dutch ones, but there is an extremely important difference. By chance, the old riverside railway on the north bank of the Tyne has been converted into Hadrian's Cycleway, connecting our neighbourhood with the ferry dock. If the dismantled railway route wasn't there to build the cycle path, I doubt we would have cycled at all – we'd have been dodging lorries the whole way.

In the Netherlands, there is no such lottery. Every route has a cycle route. Every roundabout had a outer cycling ring. Every junction is properly signposted.

When we hit Amsterdam, we didn't need to work out a good cycle route to get through the bustling city centre to our hotel – we just picked the roads that went where we wanted to go (although if you watch the video, Harry was a bit overwhelmed by the sheer number of Amsterdamers shooting past us on bikes and mopeds as we made our stately way along the canals).

The generic lesson from this experience is: we must make every option a Sustainable option. Customers, employees and stakeholders ideally shouldn't have to make a choice between Sustainability and non-Sustainability, and, if they do, the decision making process should be heavily tilted towards the former.

Then we get Sustainability by default.

And then we win.

 

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