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12 May 2014

'Do Nothing' never looked so unappetising...

old oil pump

Industries fail. Big brands hit the rocks. Governments fall. Change is as inevitable as the sun rising in the morning.

The winners are those who can read the writing on the wall and embrace the new realities. The losers are those who sit tight and pin their faith in crossed fingers.

With climate change at the top of the agenda, resource prices remaining stubbornly at an historic high and environmental legislation tightening, sustainability pressures are building. On the other hand clean technology evolves, synergies emerge and business opportunities open up.

Change brings with it risk, yes, sure, but what people are less attuned to is the risk of 'do nothing'. A powerful 'Green Jujitsu' lever is to communicate 'business as usual' as the bigger risk - to tap into people's risk aversion to push them towards sustainability, not away from it. That takes a clever piece of reframing, but it does work when you get it right.

 

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6 January 2014

Is it time to stop banging on about climate change?

Climate ChangeThat title may be a surprising one, it even might get some people foaming at the mouth, but bear with me.

'Risk perception' is the science of how we subjectively judge risks. And we are very subjective - a few years ago I went through a moderate phobia of flying but never worried about driving when the latter is much more dangerous. There's a woman who cycles slowly around my neighbourhood wearing a helmet, fluorescent jacket and a lit cigarette firmly clamped between her lips. By any judgement her risk assessment makes no logical sense, but she'd rather take her chances with the fags.

There are all sorts of theories on what we fear and why, but basically we fear something less when it doesn't appear to impact on us directly, it is intangible, and/or its effects are delayed and/or geographically distant. A bit like climate change. Very much like climate change, in fact.

The complexity of climate change science is vast. We can't even answer a simple question like "Are these storms battering the South of England due to climate change?" without giving an lecture on statistics and weather systems. It is no wonder that so many fall for the intellectually vacant logic of Boris Johnson's "if it snows, the world can't be warming."

On the other hand, the resource crunch is right here, right now. Every time you fill up your car with fuel, pay your utility bills or go to the supermarket you get walloped right where it hurts by high commodity and energy prices. You don't have to explain any complicated science.

Now here's the clever bit.

The solutions to the two problems are broadly the same - as they are two sides to the same coin. To tackle the resource crunch, we need to accelerate the uptake of renewable energy and energy efficiency. Solutions to a shortage of other resources such as the circular economy also have a positive impact on carbon emissions. So apart from a few specialised areas, such as refrigerants, we can tackle both the same way. It's just a question of how we sell them.

What I'm basically proposing is large scale Green Jujitsu. Instead of trying to explain a complex, distant and intangible problem to people, why not sell them the same problem packaged in a different way whose solutions can make a real difference to their quality of life here and now? We don't have to 'give up' on the climate crisis, just use its sibling to get action going in the short term.

What do you think? Genius or idiocy?

 

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31 December 2013

My Prediction for 2014: The Year of the Resource Crunch

crystalballBack in 2009/10 when I was writing The Green Executive, I interviewed 18 senior sustainability practitioners to generate fresh case studies. I asked all of them what were the key drivers for sustainability in their organisation. The answers ranged from legislation to cost to customer demand - even the value of assets, but nobody mentioned resource scarcity.

This year I've interviewed 5 new, but similar practitioners for Building A Sustainable Supply Chain and my next book and all of them mentioned resource scarcity or security of supply. OK, it's hardly resounding proof, but it makes me think something is definitely up. And if you look at the MGI Commodity Price Index (below) you can see why. After falling for the duration of the 20th Century, save the odd glitch,commodity prices (energy, food, minerals, fibre) have shot up so they are more expensive than any time in the industrial era.

MGI

 

Business is all too aware of this - and not just my 5 interviewees. A recent EEF survey found 80% of senior manufacturing executives thought limited access to raw materials was already a business risk. For one in three it was their top risk.

What frightens me even more than that surge in commodity prices is that politicians and the mainstream media seem completely oblivious to this. Take energy prices - the right blame subsidies for renewables, the left cartels, but everybody ignores the fact that the cost of oil and gas is crazily high.

Why does this matter? Well, non-renewable energy will can only get more expensive as demand outstrips supply. Conversely renewables only get cheaper as technologies evolve and economies of scale come to bear. But they need subsidy, investment and political support to accelerate up to the point where they can stand on their own two feet.

I would argue that the same is true of non-energy resources. Virgin plastics will only get more expensive as oil prices rise, secondary plastics will only get cheaper as reverse logistics networks mature, sorting and recycling technologies evolve and economies of scale kick in - the circular economy. But this process needs accelerating and fast.

In other words our choice is not 'green or growth' but 'green or stagnation'.

So my optimistic prediction for 2014 is that this message will finally filter from the sustainability and business world through to the mainstream of politics and media - my pessimistic prediction is we'll hit the crunch first.

 

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3 June 2013

The Resource Crunch IS Crushing Growth

Yesterday I was perusing The ENDS Report (possibly my last edition, but that's a different matter) when I saw this from Tom Burke:

Nearly a third of profit warnings by FTSE 350 companies in 2011 were attributed to rising resource prices. An EEF survey found 80% of senior manufacturing executives thought limited access to raw materials was already a business risk. For one in three it was their top risk.

That is shocking - particularly in light of the need to rebalance the economy towards manufacturing.

oil prices
Added to this is the energy situation (data taken from the EIA). The spike in oil prices probably burst the debt bubble in 2013 and, according to the EIA, the continuing high oil prices (three times what they were 10 years ago) are crushing economic recovery. Shale gas might be giving some light relief in the USA, but is clearly having little impact on global oil prices - the two usually relate. Unconventional sources rely on high prices on conventional reserves to make them viable, so we are very unlikely to go back to the days of cheap energy.

I've said it before and I'll say it again - the choice is not "green or growth" but "green or stagnation". We must reframe every argument in this way to meet this challenge head on. Lip service and/or burying our heads in the sand will get us nowhere.

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20 February 2013

Resource Crunch or Climate Change? Which keeps you awake at night?

old oil pump
One of the most interesting debates at last week's Corporate Sustainability Mastermind Group (CoSM) was which is the most pressing industry for business - maintaining a sustainable supply of raw materials, water and energy, or climate change? I must admit it was a little naughty of me instigating it as there is no simple answer, but sometimes I like being a bit naughty.

It's a tricky one because they're quite different issues:

  • A resource crunch can happen suddenly, the climate changes gradually;
  • A resource crunch will affect a business directly, but climate change impacts will occur over a wide geography and will hit some individuals and organisations more than others;
  • A resource crunch will have much more predictable impacts, climate change depends on lots of different factors;
  • A resource crunch is arguably simpler to address through substitution, whereas climate change requires concerted effort across the globe.
  • A resource crunch is much easier to understand and communicate than climate change;
  • A resource crunch is more difficult to argue against than climate change (although some do try).

It may be, of course, that given the relative ease of getting action on a resource crunch, the crafty sustainability practitioner may want to use that to get a foot in the door of the boardroom and other citadels of power, and then expand the sustainability conversation to cover other issues. Sometimes it pays to be a little bit naughty.

 

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