Smartphones explode power bills!

I was intrigued yesterday morning when I heard the Virgin Radio (France) host saying that mobile owners pay €70 a month to power their smartphones, ipods, tablets and laptops. It turns out this number relates to the annual cost but the point is no less alarming. The average household spends around €1,400/year on energy of which some €900 relate to electricity. According to the French Environment and Energy Management Agency (ADEME), 14% of this electricity relates to recharging phones and other devices – a very high figure which exceeds even the share of lighting that comes to 12%.

Smartphone

The agency warns that most of this power is wasted when the phone is left to charge overnight, even when it is turned off. The residual power that is wasted when devices are plugged in represents a pure waste equivalent to two nuclear power plants operating permanently at full capacity and a cost of €2 billion.

Imagine what could be achieved if such funds were invested into speeding the transition to a clean energy future.

Some smart ideas:

  • Most phones can be charged in two hours – leaving them to charge overnight is costly and wasteful.
  • Get an external battery to provide more autonomy when needed.
  • Go for a solar or wind powered charger!
  • Charge your phone as you ride – Check out CITYCYCLE.COM at LINK for great Christmas ideas for your favorite cyclist!soporte-finn-de-bike-city-guide1

Building Retrofits for Economic Stability and Energy Security

The 25th edition of the Krynica Economic Forum (Poland), the “little Davos of CEE”, took place a few weeks ago. After the opening with the Polish, Croatian and Macedonian Presidents on building a Resilient Europe, I took part in a panel organized by “The European Alliance of Companies for Energy Efficiency in Buildings” (EuroACE) on the economics and energy security aspects of renovating European buildings. A most timely topic as most buildings are energy colanders, and hence account for 40% of energy used in the EU – where more then half the energy is imported at a cost of €400+ billion.

Adrian Joyce. Archives of the Economic Forum, Krynica, Poland.

EuroACE’s Adrian Joyce reminded us that over 75% of European buildings have a very low performance level, and are a major source of energy waste and economic instability given Europe’s reliance on foreign energy. Yamina Saheb, from the Joint Research Centre of the European Commission, pointed to the economic opportunity for growth, job creation and side benefits like better air quality, health and productivity, key elements for prosperity and wellbeing in a sector that contributes 7% of EU GDP and 12 million direct jobs, adding that an ambitious renovation programme could create another 5 million jobs by 2030.

Oyvind Aarvig, from the Norwegian Ministry of Local Government and Modernisation, stressed the need to renovate existing buildings given that 80% of the buildings in 2050 have already been built. He raised the challenge of urban sprawl and renovating is not enough; we must also increased building density intelligently to create sustainable communities where people want to live. Andre Delpont, from the Bordeaux-Euratlantique Public Planning Authority, concurred that energy efficiency coupled with densification in large-scale urban regeneration projects is key to attracting investors.

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Archives of the Economic Forum, Krynica, Poland.

The city of Krakow, one of Europe’s most polluted cities because of coal burning, is opting for large-scale energy retrofits aiming to improve efficiency by 50% and co-financing its €500 million program through European Structural Funds. For Witold Smialek, Advisor to the Mayor of Krakow, the biggest obstacle is inability of owners and tenants to contribute their small contribution to the project and that is slowing down progress but in the end, he feels this can be resolved. Over 80% of Polish buildings have more than 25 years and are in need of renovation according to Oliver Rapf, Executive Director of the BPIE, meaning that the economic and social potential in renovating the building stock in the country is enormous. He commended the ambitious works in Krakow as an exemplary project that other Polish cities should replicate.

I commented that appropriate building technologies, including insulation, windows and lighting, can significantly reduce energy requirements and thereby costs, while boosting energy security in Poland and Europe. Replacing the 6,500 windows in New York’s Empire State building with energy efficient windows was one of the key elements that helped reduce energy consumption by 43% and saved $4.4 million annually with a payback of 3 years. The potential for the renovation of buildings, both in Poland and in the world is enormous.

Energy Utility Resistance

Attila Nyikos, from the Hungarian Energy and Public Utility Regulatory Authority, warned that reduced energy consumption meant lower revenues for energy utilities, as they must amortize massive fixed costs on a lower sales volume leading to higher energy rates for consumers, adding that occupants suffer while buildings undergo renovation works. He gave examples where owners refused free renovations because they wanted to avoid the inconvenience.

Takeaways:

  • When renovating a district, densification is key to attracting investors
  • Selecting the right timing for an energy retrofit and implementing integrated solutions is crucial to improve ROI
  • Multiple benefits can be important drivers (air quality, etc.) an inspire ambitious projects
  • Mixing local and EU funds is an effective answer to lack of upfront financing
  • To release the significant potential tied up in the existing building stock in Poland (and in the EU!) t is time to act. We need to start the work now (with proper planning), without delay!

Another important consideration is the need to align the interests of all parties involved. It is obvious that energy utilities will not promote effective energy efficiency programs if their profits depend on their volume of sales. Similar dilemmas exist between owners of building and tenants – owners will invest in measures to reduce energy bills if they see a real benefit for themselves. Regulatory measures (decoupling) can overcome such problems and are increasingly being deployed in America where utilities share part of the savings they generate for their customers. This sounds like a good starting for policy makers.

Pope Francis’ Encyclical: a climate game changer?

Rarely has a papal announcement received so much interest and controversy even before its release. On June 18, the long-awaited environmental encyclical of Pope Francis – the highest form of papal teaching – will be released to the 5,000 Bishops of the Catholic Church with a message to 1.2 billion Catholics around the world.

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This promises to be of great significance for several reasons:

1) Part of a long process at the Vatican

While the environmental focus of the encyclical was inspired by the 2014 papal visit to Tacloban, a city in the Philippines devastated by the Haiyan hurricane, the interest of the Vatican for environmental matters started much earlier. In 2002 already, John Paul II released his “Declaration on Environmental Ethics”, raising concerns about the degradation of natural resources and the pollution of water, land and air. Pope Benedict in turn, credited for being the first “Green Pope”, said that: “respect for humans and for nature are one and the same”. He installed solar panels and turned the Vatican into the first carbon neutral-state. So the interest of Pope Francis results from a 15-year period of growing interest for the relationship between humanity and nature during which the message of the Vatican was developed and refined.

2) A holistic and universal message

The key points of the encyclical will extend beyond the narrowly defined “environmental sphere” to emphasize harmony with God, with nature and with other human beings. By addressing questions of poverty, inequality and hunger, in a world of plenty where one-third of the food goes to waste while 800 million people suffer from chronic hunger, Pope Francis aims to replace apathy and indifference with global solidarity. In this manner, he can reframe the climate science debate into a moral and ethical imperative that is relevant to all.

By bridging science and religion, Pope Francis can provide a universal and non-denominational message that resonates with teachings across faiths. Islam, Judaism, Hinduism and Buddhism, all agree on the moral need for humans to act as stewards and protectors of the Earth and to care for the most vulnerable.

3) Strategic timing for the message

The June 18 release will allow Pope Francis several opportunities to address key audiences including President Obama, the US Congress and the UN General Assembly during the adoption of the Sustainable Development Goals that will run until 2030 – all during the month of September, sufficiently ahead of the December Climate Summit in Paris to mobilize the public and world leaders ahead of the conference.

4) A unique personality to overcome the North-South divide

Ever since the Rio 1992 Earth Summit, there has been a divide between developed countries, largely responsible for the bulk of carbon pollution, and Global South countries, the frontline victims of climate change impacts. This is why the move by the leading economies to push the “green economy agenda” onto poor nations has been received with great suspicion by developing countries that see this as another attempt at economic imperialism at their expense. Pope Francis, who selected his name after St Francis of Assisi, a man of peace and poverty, is largely perceived as the Pope of the Global South. No one is better positioned to defend the interests of developing nations and ensuring they do not end up on the short-end of any climate agreement. Only Pope Francis has the moral authority to bridge this great divide and allow a historic reconciliation capable of aligning all interests for the benefit of humanity and future generations.

Silence of the Bees

Picture credit: http://hdw.eweb4.com

Picture credit: http://hdw.eweb4.com

By Margo and Adam Koniuszewski

Over 40% of what we find in our plates including many fruits, nuts and vegetables, results from the pollination process. These “services”, mainly by bees but also butterflies, birds, bats and flies add over $215 billion annually to the global economy – some seven times the revenues of a multinational giant like Coca-Cola. Bees, including commercially managed bees, provide the bulk of this value through pollination while the honey, propolis, royal jelly and wax they produce represents only a small fraction. But the role of bees extends well beyond the economic. Ancient civilizations recognized and celebrated bees and their role in spreading the genetic material of thousands of plants. Honey was revered across the ancient world as a regenerative and mystical substance and the food of the gods in Mayan culture. In the Garden of Eden it is said that honey dripped from trees like rainwater and as far back as 5,000 B.C., “King Menes”, founder of the First Dynasty of Egyptian Kings was called the “Beekeeper”.

Industrial Agriculture

Today, industrial agriculture focuses on the utilitarian role of bees to pollinate vast monocultures. Honeybees are shipped when and where needed. The California almond is a case in point. 800,000 acres with 90 million almond trees stretching for more then 600 kilometers provide over 80% of the global almond production. With pollen available only in February, bees would starve in this environment. They must therefore be trucked-in from across the country for the job. A major logistical effort for some 5,000 trucks to bring 1.6 million beehives. This scale of trucking bees around is not without danger – accidents are common. Just last week, North of Seattle, a truck carrying over 20 million bees for blueberry pollination overturned on the highway, spilling 458 beehives that firefighters doused with flame retardant.

It is estimated that 2.5 million hives are being trucked around this way every year to Washington for apples and cherries, Dakota for alfalfa and sunflowers, Michigan for blueberries…

Bees in crisis

But the troubles of bees extend well beyond highway crashes. In the United States, beekeepers are reporting annual bee losses of 30% and more and the number of colonies shrank from its 5.5 million hives peak in the 1950s to less then 2.5 million today. This is the result of a combination of habitat loss, inadequate diets, mite infestation and disease, loss of genetic diversity and pesticides.

In Europe, since 1994, neonicotinoid pesticides have been associated with Colony Collapse Disorder (CCD) – where the insecticide confuses bees to the point where they abandon their hive. The same has been observed across the United States since 2006. UK studies link the pesticide to an 85% decline in queen production and confirm disruptions in the ability of bees to navigate and communicate. This is why the European Commission banned them in April 2013. Given that a worldwide ban would deprive Syngenta of 6.5% of its sales (source: Schroders Research), the science behind bees and pesticides is hotly debated and another culprit is pointed, the varroa mite, a parasite that has spread from Asia to the rest of the world and for which the impact of chemical treatment is showing mixed results – it is said that chemical treatment has helped the mite become more resistant at the expense of the bees.

Biodiversity decline and habitat loss are also having their toll. While farms located near natural habitats fare better, a study found that since the 1980’s there has been a 70% decline in key wildflowers. This means a lower diversity of plants from which bees can collect pollen. The genetically modified and neonicotinoid infected corn syrup they are fed by commercial beekeepers for their subsistence diet are also not helping.

The bee crisis is causing shockwaves well beyond environmental circles. New research by Schroders Investment Bank on “Bees and the Stockmarket” warns of impacts across industries including agrochemicals, food producers, retailers, beverages and the luxury sector. Meanwhile, the Obama Administration talks of a serious threat to food security and announced a federal strategy to protect honeybees, address habitat loss and biodiversity decline. $50 million has been appropriated across various agencies for research and to restore hospitable habitats for bees and other pollinators like the Monarch butterfly.

A Global Movement to Save Bees

Public authorities, the private sector and the public at large – all have a role to play. In 2010, the city of New York overturned a ban on beekeeping that had been in place since the late 1990s and “bee mania” has been spreading since with beehives being installed on skyscraper rooftops, community gardens and school backyards. Even the most  exclusive institutions like the Waldorf Astoria Restaurant have joined this movement – its has six beehives located near Central Park and serves the most prestigious honey in town. The private sector is also on board with organizations like the Cirque du Soleil in Montreal and the LVMH Group in Paris setting up hives at their headquarters and engaging in the protection and promotion of bees. But much of the leadership comes from individuals and associations around the world that are fighting unfriendly regulations and attitudes, overturning bee bans, installing hives and creating bee-friendly gardens with native wildflowers that benefit all pollinators. It may bee that in their consciousness, people everywhere are starting to realize that by protecting bees we are also protecting ourselves.

Maybee the bee still has a chance after all…

Bee Resources:

UNEP Report on Bees

White House Factsheet on Economic cost of Bee Decline and US Federal Strategy to Protect Honey Bees 

Bees and the Stock Market: Schroders Research Paper

Bees at the United Nations in Geneva

Nature Journal Study on Bee Addiction to Harmful Pesticides

European Commission Protecting Bees

Andrew Gough Blog with fascinating facts and stories about bees

Resource for Beekeepers

Health Benefits of Honey

Queen of the Sun Award Winning Documentary Film Review by Roger Ebert

Turning Trash into Cash

When Dr. Somthai started his waste recycling business in 1974, with 1,000 Thai Baht (30 US Dollars) and an old pickup truck, no one took him seriously. He literally became the laughingstock of Phitsanulok, a city of 800,000 located 400km north of Bangkok. But look who is laughing now. Over the last four decades, Dr. Somthai built his recycling business into a global empire with over 700 branches in Thailand and around the world, including Laos, Cambodia, Malaysia, Japan and even the United States. Not only has his Wongpanit Group become a major global player, his vision and charismatic personality have made him a leading international figure in terms of environmental stewardship, as a social entrepreneur, and, as a savvy, uncompromising and innovative business leader.

Waste is Gold

IMG_0215Waste management is a growing challenge in Thailand. A problem that only becomes more daunting as population grows and becomes more affluent. When waste was only organic it was easy to manage. But today, plastics, metals and toxics accumulate in landfills, overwhelm expensive and polluting incinerators, and threaten to contaminate water resources. Dr. Somthai offers a solution that diverts waste from landfills, incinerators and the environment, creates local employment and provides valuable commodities to industry at prices that help improve their competitiveness. By turning waste into resource, he transforms a problem into an opportunity for the environment and for society.

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Gold & platinum rings from recycled electronics

“There is no waste on this planet, only misplaced resources”, he says. “When looking at landfills most people see trash. I see valuable assets waiting to be mined! Recovering metals, plastics and other assets from landfills is much more efficient then mining the Earth for ores or oil. Reusing aluminum from scrap saves 95% of the energy needed to mine aluminum in the first place. The leverage is extraordinary!”

In his flagship ISO 14001 certified (since 2001) Phitsanulok plant, Dr. Somthai employs 250 people and can process 500 tons of trash every day. He buys waste from industry, landfills and individuals through 50 collection points scattered across the city. The waste is weighed, the purchase price determined based on the going rates and the payment is made immediately in cash.

IMG_1312He even has a catalog with 220 categories of items with prices for many categories of trash to encourage recycling.

A Global Market for Commodities

IMG_1265The prices of metals, plastics and all other commodities depend on global markets that Dr. Somthai monitors continuously. He prominently displays the daily prices for key commodities at the entrance of the center.

His four decades in the trade have helped hone his instinct for where the prices are heading. Akin to a professional commodities trader in London or Geneva, he takes positions, stocking up when he expects prices to go up or liquidating his stocks when prices are heading south. The recent drop in the price of oil had a negative impact on most products. This is why diversification is so important. His ability to recycle various kinds of waste helps spread his risk across a wide range of commodities. By adjusting his purchase price when markets are down he can always offer competitive prices to his customers while maintaining sustainable margins, whatever the market conditions.

Highly Skilled Labor

This labor-intensive trade is particularly well suited for developing countries with high unemployment and low wages. In Thailand it represents a significant source of income for the poorest of the poor. It is estimated that in the urban areas of Asia and Latin America up to 2% of the population depends on waste picking for their livelihood.

08_wongpanich_front05It would be a mistake however to think that this labor force is unskilled. Waste pickers are highly competent at identifying wastes with potential for recovery. The added value comes from sorting, cleaning, processing and organizing the transport of the waste in volumes that will make them commercially attractive for the domestic or international markets.

Take plastic for example. There are hundreds of plastic types. Each category must be identified, segregated by kind and color. Any impurities must be removed before processing (sorting, cleaning and chopping into flakes) so that the end product can have value. Any label on bottles of caps of a different plastic must be removed. Plastics must also be sorted according to their density (high HD or low LD) and their color. Each worker specializes in a particular type of material. Any turnover is problematic because training takes a long time and is expensive. Clearly, this is no project for amateurs.

Product Design

IMG_1267Manufacturers of packaging also cause significant problems when they fail to properly design their products. Many fast moving consumer goods have labels that are glued – this makes them difficult (sometimes impossible) to remove. But responsible companies are taking notice. Pepsi-Cola in Thailand has partnered with Wongpanit and agreed to pay an extra Baht for each kilo of recycled plastic but also to design its bottles to make them easy to recycle. Many manufacturers, despite their eco-labels and thick CSR reports fail to do this, which hampers recycling efforts and leads to overflowing landfills and incinerators. Dr. Somthai encourages these companies to follow the lead of Pepsi-Cola and the authorities to establish standards.

A Social Enterprise that is Part of the Community

schoolbankIn addition to providing local jobs and protecting the environment, Dr. Somthai values the importance of being a constructive force in the local community. Believing that the current generation is largely lost, he concentrates his time on young people, the leaders of tomorrow. He provides training in schools and once a week buys waste from the students,  providing them with an income while teaching them the economic value that can be found in waste. Similarly, he works with local monasteries that donate waste that he processes and donates money to fund scholarships for young people to be able to attend University.

A Global Perspective

11Delegations from around the world constantly visit Wongpanit. On the morning of our Swiss delegation visit there was also group from Japan, where Wangpanit already has two franchises. They wanted to meet the visionary man who started this business two decades before the first Rio conference, at a time when few people took environmental matters seriously. But today still, many believe that environmental stewardship is expensive and uncompetitive. Dr. Somthai has been disproving this myth for the last 40 years. Showing that the linear consumption model of extract-consume-dispose is outdated and that more circular models of consumption are needed. By turning waste into gold, Dr. Somthai provides the economic and social rationale for the creation of  zero-waste economy. A message that has come of age.

The Geneva delegation for the Swiss visit to Wongpanit was organized by the Honorary Consul to Thailand, Mr. Armand Jost, founder and president of S3Bi, a Geneva-based enterprise focused on assisting professionals in their career transition and its directors, Mark Giannelli, who is writing a thesis on “Waste Management in Developing Countries” at the Universities of St-Gall and Business School Lausanne (BSL). His Excellency, Ambassador Chalermpol Thanchitt from the Royal Thai Embassy in Bern (Switzerland) accompanied the delegation, as well as Dr. Gilles Bernard, Founder and CEO of Charity Consulting in Jumpol, Thailand, who is planning to develop such a project to create employment in the North of the country. My heartfelt thanks to Armand Jost and S3Bi for making my participation possible  and to our hosts, Dr. Somthai Wongcharoen, Wimonrat Santadvatana and the entire team at Wongpanit for welcoming us so generously. 

 

Is a Fireplace Ban Justified?

Reagan_and_Gorbachev_hold_discussions

Will the fireside chat become a relic of history? Gorbachev-Reagan 1985 Fireside Talks in Geneva

While pollution alerts are sounding again in various French cities (Rennes, Nantes, Strasbourg, etc.), Environment Minister, Ségolène Royal, cancelled a controversial full ban on all fireplaces (even the most modern ones) that was expected in Paris and 435 municipalities on January 1, 2015. Following discussions with forest and wood industry professionals, the minister felt that the analysis supporting the ban was flawed, that the  law would be ineffective and that other measures should be explored.

Studies showed that fireplaces generate 25% of the fine particle pollution in the region, at par with the transportation sector. These figures are disputed by the wood industry which claims that fireplaces cause only 5% of the fine particles while 40% come from transport. But while lobbies debate, pollution limits are breached in Paris, across France and elsewhere. 7.4 million French homes use wood as their main source of heating, up from 5.9 million in 1999. In Haute Savoie (French Alps), where the prevalence of wood burning is high, pollution is a serious problem. Similarly, in Canada, the city of Montreal estimates that its 85,000+ fireplaces generate close to 50% of the fine particle pollution in the city – far more then industry or transport. Faced with these problems, authorities in Montreal and France continue to warn about the dangers of pollution peaks, promote public transport, reduce speed limits, suggest to lower heating and ask not to use the …fireplace.

Impacts on Health

Most people underestimate the impact of smoke pollution. But coming from a fireplace, a campfire or a wood-stove, smoke contains high levels of contaminants including small particles (that enter deep into lungs), carbon monoxide (CO), and other irritants with significant health consequences in neighborhoods where wood burning is popular but also indoors. Environment Canada warns about indoor pollution from fine particles that make their way throughout the house and remain long after the fire stops. The World Health Organization (WHO) considers that fireplace smoke causes cancer, headaches, eye irritation, respiratory disease and heart conditions. Particularly at risk are children, older people and anyone suffering from asthma and allergies.

camp-fireStudies have shown that even campfires cause pollution that can quickly exceed norms and be a multiple of those found in urban areas, even in zones with intensive industrial activity.

In Montreal, fireplace pollution contributes to the premature deaths of 1,500 people. In Paris, studies suggest it reduces the average life expectancy by 6 months in the region.

A Major Global Problem

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Picture: Global Alliance for Clean Cookstoves

The WHO estimates that 3 billion people cook and heat their homes through open fires and simple stoves burning wood, animal dung, crop waste, and coal. More than 4 million die every year due to the indoor air pollution that can be 100 times higher then acceptable levels for small particles. More then 50% of the fatalities are children under 5 because of pneumonia caused by the high levels of soot inhaled at home.

In poor countries people suffer from indoor smoke exposure because they lack better alternatives. It is odd that in the developed world, people who can afford better technology continue to use antiquated heating methods and expose themselves and others because of ignorance. Studies show that many people find the smell of burning wood pleasant and are not aware of its dangers. Surely, the authorities bear some responsibility for this.

Technology can Help

The heating performance and pollution levels are directly linked to the type of heating device, open fireplaces being the worst performing and the latest EPA certified pellet stoves are the best. According to experts, EPA certified fireplaces can reduce small particles pollution by 94% (versus old models that generate 70 grams per hour) through higher temperatures that improve combustion which dramatically reduces residual fumes and pollution. Agreeing with industry, Ségolène Royal confirms that technology can make major difference and should be deployed. She she prefers incentives to bans, like the €1,000 the Haute-Savoie region gives for the replacement of an open fireplace or wood-stove.

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People enjoy fireplaces – there is something primal and comforting about them – the sound of the wood crackling, the light dancing around the room. It is also comforting to know that if a storm or other event that takes out the lights and the central heating, we still have a way to cook, give some light, and can heat our homes. And wood, if managed properly, is a renewable resource. But the price to be paid for an open fireplace or for antiquated wood-stoves is too high. The best of both worlds is to use fireplace stoves, that use technology that helps eliminate particulates, improves heating performance while still providing the pleasure and security of the old fashioned fireplace.

Recommendations:

– New EPA certified stoves are 90%+ cleaner and much more efficient in terms of heating.

– An open fireplace offers a very poor heating performance but generates massive indoor and outdoor pollution. It is costly, wasteful and should be phased out.

– Never burn trash, plastic, paint, or wood that was painted/treated because this releases dioxins and other toxics.

– Ideally use hardwood that is properly dry. Avoid wet and soft woods. Not only are they more polluting but they also provide significantly less heat.

– Keep the installation clean and in good working condition. Regularly sweep the chimney.

– To cities and authorities: awareness raising campaigns are needed. Financial incentives can play an important role but regulation, controls and sanctions will eventually be needed. Helping households better insulate their homes will also go a long way.

– Addressing indoor air pollution from ancient cooking and heating practices (in developing countries and elsewhere) is complex problem but solutions are available. The technology exists and can be affordable if proper financing mechanisms are implemented. Here is an example from The Gold Standard Foundation.

Related links:

Campfire Pollution

Quebec Brochure on Wood Heating

WHO Household air pollution and health

Accountants, the Unexpected Heroes of Sustainability

John D. Rockefeller

John D. Rockefeller

Few are aware that business tycoon and philanthropist John D. Rockefeller, who became the richest person in recent history, started his career at 16 as an accountant. His diligence, uncommon ability to “see everything and forget nothing” and exceptional understanding of business financials allowed him to build his oil empire by making every major decision on the basis of precise to-the-penny financial calculations. “I charted my course by figures, nothing but figures” said John D. His success underscores the importance of accurate and reliable financial information for business leaders to make the right decisions.

Accounting Records, the Military and Sustainability  

Recognizing the importance of relevant and reliable financial information, former Undersecretary of Defense Sherri Goodman said that “You can’t manage what You don’t measure” and called for better monitoring of energy use and full tracking of the Department of Defense (DoD) carbon footprint with the aim to get the US military off oil by 2040. But where did this determination to move away from oil come from?

afghan convoy deloitteAn important element is the realization of the growing number of casualties in convoy operations that deliver fuel and water to the battlefield. The other  is economic and has to do with the way fuel costs were accounted for. Historically, fuel purchases were recorded at their purchase price, say 2 to 3 US$/gallon or 0.50 to 0.80 US$/liter. More recently however, the military started looking at the “fully burdened cost of fuel” – that includes the cost of buying, moving and protecting fuel until it is ready to be used in the battlefield. In remote areas these can be hundreds of times higher than the  purchase price. Figures of US$600/gallon (US$158/liter) and more have been reported.

With delivered fuel costs representing up to 36% of the total operations budget in Afghanistan, one can understand that energy efficiency has become a top priority for the military. A priority that lowers risk while generating dramatic cost savings. In one example, $95 million was invested in Iraq to insulate tents and temporary infrastructure reducing the need for cooling during daytime and heating at night. This measure saved US$1 billion in 2010 alone and removed the need for 11,000 fuel trucks. For more see Energy Security, America’s Best Defense.

The Need for Business Leadership

Yvo de Boer and Adam Koniuszewski

Yvo de Boer & Adam Koniuszewski

Business has a key role to play when it comes to sustainability. Of the largest 150 economic entities in the world, more then 59% are not countries but corporations and our most pressing sustainability challenges are largely caused by the way businesses operate and the impact of the products they sell. But today only business has the capacity and the ability to provide solutions to these problems. According to former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) and KPMG Special Global Advisor on Climate Change and Sustainability Yvo de Boer, “The bulk of the solutions to environmental degradation and climate change must come from the private sector”.

And forward looking businesses, including some of the world’s largest corporations like IBM, Dupont, Walmart and world leading carpet-tile manufacturer Interface, have profitably embarked on the path towards sustainability. Interface Founder Ray Anderson said that: “The business case for sustainability is crystal clear and we are pressing ahead with our sustainability initiatives as fast and as far as we can because it has proved to be so good for business”. From the beginning of their sustainability journey, greenhouse gas emissions per unit of production are down 71% (since 1996) and profits are up. In Ray Anderson’s words:

–       “Costs are down, not up, dispelling that myth

–        Products are the best they have ever been because sustainable design has opened up a wellspring of innovation

–       People are galvanized around a shared higher purpose

–       And the goodwill of the marketplace is just amazing!”

Check out as Ray Anderson shares his passion for sustainability with George Stroumboulopoulos:

The Interface journey began by attacking waste and diverting the savings to invest in reducing carbon intensity while developing innovative business processes and products. Proper accounting records and monitoring played a central role. Accountant Buddy Hay led this part by implementing the EcoMetricsTM measurement system to track all the materials and energy inputs and all outgoing products, waste and pollution. He says that: “When implementing sustainability programs, you have to measure, understand and articulate the drivers of success. This requires the same rigor and thinking used in financial accounting but applied to natural resources and environmental impact”. Improved tracking allowed Interface to reduce waste to landfills per unit of production by 95% since 1996, and to avoid millions of dollars in costs. This helped fund additional sustainability efforts while rewarding shareholders with a 444% share price increase (5 year period ending Dec 31, 2013).

The Prince of Wales and Accounting for Sustainability 

HRH-A4SConcerned that our current measures of profit and GDP are providing the wrong signals to leaders in business and government, His Royal Highness The Prince of Wales has embarked on a global project with the accounting profession to help embed sustainability into the DNA of business organizations. Through his Accounting for Sustainability (A4S) Project, The Prince of Wales aims to demonstrate the business case for organizations to embed sustainability into their operations, develop the tools and build the capacity for action and create an enabling environment for change. The objective is “To help ensure that we are not battling to meet 21st century challenges with, at best, 20th century decision-making and reporting systems.” And by working with the A4S Accounting Bodies Network representing two million accountants around the world, The Prince’s Accounting for Sustainability Project is helping the profession to overcome the false choice between business success, environmental sustainability and the development of human happiness and wellbeing.

A4S Executive Chairman, Jessica Fries, knows the importance of involving Chief Financial Officers in the process of building sustainable business models: “The A4S CFO Leadership Network is the first grouping of its kind to bring together leading CFOs to explore their role in developing practical approaches to integrate environmental and social issues into financial decision making. There is a growing commercial imperative for businesses to take these factors into account if they are to future-proof their organisations; and there is now clear evidence that companies which address environmental and social issues in a strategic manner can deliver improved commercial returns.”

Another area of focus is how to account for natural and social capital. One organization that has really helped to highlight the importance of better accounting for natural capital is PUMA, the global sport-lifestyle company. Jochen Zeitz, the company’s then CEO, conceived the development of PUMA’s Environmental Profit and Loss account: “We understand the importance of healthy ecosystems to the future of our business. We have embarked on a journey to develop an enterprise and supply chain wide view of our environmental impacts in monetary terms, so that we could take these impacts into account strategically and embed them in our business decision making processes.” 

Valuing Natural Capital in the Montreal Region

David Suzuki and Adam Koniuszewski

David Suzuki and Adam Koniuszewski

Few realize that some of the greatest biodiversity hotspots in the Province of Quebec, are located in the Greater Montreal Region and are at risk from urban sprawl. The David Suzuki Foundation issued a report that valued the ecosystems services of a greenbelt that would protect 19% of the greater Montreal territory to be worth $4.3 billion per year! This work  helped convince the Communauté métropolitaine de Montréal to create this greenbelt as part of its new urban plan and the Government of Québec to invest $150 million for its protection.

“With the robust analysis and quantification that the accounting profession can provide, we can better understand the value of natural capital and the importance of preserving and enhancing ecosystems and natural habitats for the greater benefit of our communities” said Quebec Chief Scientist, Rémi Quirion.

Sustainability reporting and the risk of Greenwashing 

Despite the growing interest in CSR and sustainability reporting, the surge in revenues for accounting firms is not without risks. Professor of Social and Environmental Accounting at ESSEC Business School in Paris, Dr. Charles Cho, has published numerous studies on these topics. His particular field of interest is accounting and the public interest. Dr. Cho warns that “The recent proliferation of the ‘sustainability’ buzz, particularly within the business community, should certainly not become an avenue for opportunistic strategies and behaviors. We really need to pay close attention to what makes it substantive versus what is likely to become a mere symbolic representation—unfortunately, the latter happens more often than the former. A typical example is the production of stand-alone sustainability or CSR reports—recent mounting evidence has been provided that most of the information contained in these reports is generally biased, selective, trivial and sometimes misleading. Nevertheless, they provide a ‘legitimate’ shield, or a veil, on what is really happening inside organizations. Therefore, such reports should at least be monitored by a set of enforceable regulations, but it is far from being the case.

As for the role of the accounting profession—I remain skeptical on certain aspects such as the Big 4 public accounting firms seeking the next sustainability or CSR report assurance/audit engagement (this type of service is exponentially growing and one does not have to be Nobel Prize winner to understand that this is another great, highly profitable consulting opportunity for the Big 4). However, I am now more convinced that there are potential avenues for accountants, especially management accountants, to make a meaningful contribution to the sustainability agenda, notably by utilizing their technical skills to measure and report on real social and environmental impacts of organizations.”

Concordia University Professor, Dr Michel Magnan, FCPA, FCA, agrees that significant aspects of corporate sustainability reporting are symbolic rather than substantive. But in his view: “There has been progress in the quality of such disclosure over the years among European and North American firms. My research with colleague Denis Cormier shows that such reporting is relevant for market stakeholders (investors, analysts) when a firm exhibits good environmental performance (as measured by objective metrics) but comparability across firms and reliability of disclosed information are still major issues. One has to keep in mind that even for financial reporting, with strict regulatory enforcement and formal standard setting, there are still discussions as to comparability, relevance and reliability!

 Another major issue is the scope of sustainability reporting: i.e., when do we stop? For instance, when looking at greenhouse gas emissions for a dairy confectionary company such as Nestlé or Danone, how far do we go to capture the emissions underlying the production process? Do we include the methane emitted by the cows that produce the milk, or even the process by which they get fed (which is often highly mechanized and polluting as well)? In my view, this is the next stumbling block for sustainability reporting to take off.”

“With the evolution towards a `materiality-focused` sustainability reporting, not only are we currently auditing (internally and externally) to provide accurate and reliable information, but our sustainability practices are also allowing organizations to better understand the material issues that relate to the overall strategy of the organization. With early stage moves towards Integrated Reporting, we anticipate an increase in the need for these services that are currently being provided across Quebec, Canada and internationally.” 
– Luc Villeneuve, FCPA, FCA, President, Deloitte Quebec.

Accountants and Sustainability 

More then a century has passed since John D. Rockefeller retired from running his oil empire but the importance of robust and relevant accounting and financial information is more important then ever. The new global context, the state of the environment and the accelerating depletion of natural resources, present immense and unprecedented challenges and opportunities. Our ability to create economic systems that promote and reward businesses for restoring and enhancing natural environments, for conserving resources and for eliminating pollution and waste will help define our future prosperity. The accounting profession, the preferred provider of unbiased, relevant and reliable information, is ideally positioned to speed up this transition.

In this regard, Mr. Daniel McMahon, FCPA, FCA, President and Chief Executive Officer of the Ordre des CPA du Québec, mentions the strategic direction for 2013-2015 adopted by the Board of Directors : “ The Order aims to be recognized for the key role it plays in Quebec’s economic and social development and intends to highlight the role CPAs play in sustainable development. “

Other links of interest: CPA Quebec, Global Reporting Initiative (GRI), Center for Social and Environmental Research (CSEAR), Sustainability Accounting Standards Board (SASB), AICPA & Sustainability


About the Author: Adam Koniuszewski, CPA, CA, CFA is a Commerce Graduate from Concordia University in Montreal. He started his career with Big 4 Accounting-firm Deloitte & Touche in Montreal and London (UK) before continuing his international career with a global corporation (North America, Europe, North Africa) where he gained experience in strategy and business development, planning and risk management, corporate and government affairs. Adam has now joined the world of civil society where he works in the field of sustainability. He is a public speaker at international forums on global sustainability challenges and their business and financial aspects. Adam is also involved in several social and charitable initiatives.