Looking at greenhouse gas emissions, our Martian would note that the epicentre of Canada’s fossil fuel extraction, the oil sands, are responsible for about 50 million tonnes of annual greenhouse gas emissions, or about 1/20th the 2 billion tonnes that U.S. coal-fired electricity plants belch out each year. In the newspapers, he would notice the energy conversation between business, government and civil society is near monopolized by the narrow question of pipeline or no pipeline: how much the economy needs more oil pipelines and how bad this would be for the environment. A pipeline would abet the carbon-intensive oil sands that require loads of natural gas to steam out the oil, even though tapping a tiny fraction of the 11,000 MW of hydro potential lying fallow in northern Alberta could make the in situ oil sands close to a zero-carbon operation.

At this point the Martian might be perplexed. Given that Canada has economic clean electricity assets that far exceed its fossil fuel assets, why are the Canadians selling the Americans 28 times more of their oil needs than electricity needs?

The main part of the answer is that we have a lot more pipelines than power lines, so most of our best clean electricity assets are stranded from their potential customers.

But what if we found a way to make clean and conventional fossil energy work together to the benefit of the economy and the environment?

For example, imagine if Canada’s oil sands were powered by hydro power via the High Voltage Backbone Vision for Alberta that the ATCO Group is calling for. Instead of being among the dirtiest, it would be among the cleanest forms of oil – almost green from an extraction perspective.

Imagine if we devised energy corridors co-locating pipelines and superconductor electricity power lines that can fit in the same existing right-of-way, an idea the Electric Power Research Institute has commended for investigation. We also happen to have companies with prowess in power lines and pipelines, from Enbridge and TransCanada to Brookfield, as well as large pension and insurance funds with an appetite for big infrastructure plays.

Staring us in the face is this major economic opportunity to double energy exports with an enterprising, new clean-conventional energy export strategy that would also help to halve the greenhouse gas emissions from U.S. coal plants. So what is stopping us from building these double-barrelled “superpower” energy corridors?

One barrier is that we haven’t yet addressed the engineering question of how much clean electricity we actually have nationally. And assuming an optimally designed electricity grid, what would be our electricity export potential to U.S. on a province by province dollar basis? A public “Clean Energy Superpower” map undertaken by the National Energy Board depicting Canada’s wind, solar, tidal, pumped storage and geothermal potential would help delineate where to plan national-interest electricity grid corridors and would be catalytic for private sector power producers.

We also have to overcome the idea of electricity exports being some kind of zero-sum game between provinces. The convening power and leadership from the federal government could go a long way to helping Canadian provinces see how little our current slices of the U.S. electricity market are, and the potential for an electricity export pie that is 10 times bigger than today. Instead of fighting over crumbs, a pan-Canadian grid, co-located with pipeline energy corridors, with multiple north-south chutes is a means to enhancing access to U.S. electricity markets.

An abundance of red tape and the high cost of capital are two other factors that have held up the expansion of power lines. The lemonade from the lemon of recent changes to federal environmental regulations is that there is now much less red tape in the way of building major infrastructure projects.

On the capital side, the current Prime Minister has already made a substantial contribution by providing a loan guarantee to Newfoundland’s government to support the construction of the $6.2 billion Lower Churchill hydroelectric project and underwater power cable to Nova Scotia as a gateway to U.S. markets, which will save the province $1 billion in borrowing costs. He said similar financial support will be considered for projects that meet three criteria: be of “national or regional importance, have economic and financial merit and significantly reduce greenhouse gas emissions.”

A map to inspire, a transmission runway cleared of red tape, and a little credit enhancement could help us marry up clean and conventional energy and deliver the prize of economic prosperity for generations to come. Who says oil and water can’t mix?

The post Power lines and pipelines appeared first on Corporate Knights.

It’s not what one would call healthy diversity, but there is reason to believe the demand for women directors is growing as CEOs around the world are increasingly threatened with gender quotas. While quotas are not an issue in the United States, business leaders are increasingly feeling pressure from women rights advocates, consumers and investors who seek greater board diversity.

In the recent book Leaning In, author Sheryl Sandberg draws upon her personal experience to offer reasons why even highly educated women tend to lag behind, while their male peers reach positions of economic leadership and power.

The unyielding problem, Sandberg argues, is that women hold themselves back; they are locked into social or behavioural norms, and locked out of the DNA of most businesses. Tackling these barriers requires leadership by example. As chief operating officer of Facebook, Sandberg’s views triggered a national conversation, and for many were considered quite controversial.

The irony was not lost upon the New York Times as it described Facebook’s forced appointment of Sandberg to its male-only board in June 2012. It came after women advocates used Facebook’s social media tools to stage protests at the company’s headquarters, launch a user petition, threaten to boycott the social networking site, and crash Sandberg’s Harvard Business School’s commencement speech. Investors joined the movement as well.

The Facebook firestorm follows years of engagement by institutional investors who have worked behind the scenes to get companies to make boards more diverse. Some business leaders asked for patience. They agreed that board diversity needed to be addressed, but also pointed to the limited talent pool of qualified candidates as a reason for not rushing. Others said there was a lack of empirical evidence proving the economic value of board diversity. They preferred to wait.

In so doing, many business leaders seemed oblivious to the reputational risks they were exposed to as public opinion and investors drew inferences of their positions and a growing number of studies provided empirical evidence that companies with diverse boards outperformed their peers.

With these studies in mind, CalPERS and CalSTRS, two American public pension funds, commissioned the Diverse Director DataSource (3D) initiative, which is owned and operated by GovernanceMetrics International. It is a director database designed as a clearinghouse for corporate director candidates with a more diverse range of backgrounds, perspectives, skills and experience.

In other countries where cultural norms have held women back, legislators have opted for gender quotas. In 2003, Norway led the way by instituting a 40 per cent quota for women within a two-year window. Other European countries such as Spain, France, Italy and Iceland have followed, while Britain and more recently Germany held quotas at bay, after much heated debates.

Corporations in Germany, which has one of the worst records in Europe when it comes to diversity of leadership, are beginning to feel the pressure from politicians, investors and activists.

Deutsche Bank in particular has become a “lightning of criticism” for dragging its feet on leadership diversity, according to a recent Wall Street Journal report. Women represent just 18 per cent of senior management at the German bank, compared to a rate of 42 per cent across the company.

France, by contrast, is the largest market in Europe to have adopted gender quotas that apply to more than 2,000 companies. Boards of all companies, publicly listed or in private hands, with more than 500 employees or €50 million of revenues must have at least 40 per cent women directors.

European CEOs are not alone in feeling the pressure of quotas: Malaysia requires companies to have 30 per cent women in decision-making roles, and the province of Quebec in Canada has also adopted quotas.

While there is debate on the merit of quotas, having them on the table has led CEOs to take the issue more seriously and find ways to narrow the diversity gap.

We are reaching a time when global demand for qualified female directors is resulting in global searches for candidates. French companies, longtime laggards in geographic and gender diversity, are now leading.

American CEOs are aware that international governance trends promoting values shared by American investors and public opinion have crossed the Atlantic. It was not so long ago that the European practice of “say on pay” regarding executive compensation became the most hotly contested and widely covered business issue.

Other initiatives that widen director search, identify skill sets and promote globally diverse director networks will add to the supply pool of exceptional diverse board candidates. Business leaders will tap that pool as global demand for diversity balloons.

American CEOs should not drag their feet too much if they want to build diverse boards and senior management teams out of the best and brightest candidates. If such people are in short supply now, they’ll been in even shorter supply as this diversity trend gathers momentum.

The post Gender in the balance appeared first on Corporate Knights.

The plastic in question isn’t the familiar debris that accumulates in rail tracks, along roadways and on the sidewalk. Rather, the trains’ journeys are smoothed by super-rugged railroad ties made up of veritable mountains of plastic waste recycled from consumers’ trash.

At a quick glance, the dark plastic ties are tricky to distinguish from the heavy wooden beams they replace. Their performance is vastly different, however.

Where conventional wooden ties degrade, sometimes in just a few years, the recycled plastic composite ties do not.

In fact, the material “is basically impervious,” says Steve Silverman, president and chief executive of New Jersey-based Axion International Holdings, which supplied its Ecotrax composite ties to Miami-Dade Transit.

“It doesn’t rot. It doesn’t corrode. It doesn’t absorb water. Bugs don’t eat it,” he adds.

Silverman estimates the longevity of the plastic ties to be at least 40 years, compared with a few years for wooden ties in harsh environments. What’s more, it needs no maintenance, such as painting or re-sealing.

On a run of heavily used Long Island Rail Road commuter rails, a batch of Axion ties in service over the past eight years showed no signs of material degradation, according to a recent independent lab study.

If anything, the ties’ performance had improved slightly. As the plastic weathered, it hardened slightly, tightening its grip on the spikes, screws and hardware that attach the rails to the ties.

More than 150,000 of Axion’s ties can be found in rail beds on six continents. The company is also pushing into the construction industry, where its composite I-beams, planks and structural members are being used to rebuild bridges formerly made of wood, concrete or steel.

If Axion’s approach takes off, the environment may prove to be the biggest winner.

Using recycled composites in these heavy-duty applications has the potential to usefully absorb enormous flows of plastic waste. Today, just 8 per cent of plastic is recaptured, according to the U.S. Environmental Protection Agency. More troublesome still, a significant share of waste plastic is lost to the environment.

Because plastic waste does not degrade it does cumulative harm to the environment, whether in your backyard or floating far out in a Pacific Ocean gyre.

On land and on water, loose plastic waste often ensnares wildlife. It has also begun to penetrate natural food chains. As it breaks up into microscopic bits, plastic debris is consumed by tiny creatures, which are in turn eaten by bigger fish or birds. At each step in the food chain, traces of plastic and related additives accumulate, explains Susan Freinkel in her 2011 book, Plastic: A Toxic Love Story.

Humans are tainted by plastic, too. Blood tests reveal widespread exposure to synthetic chemicals used in plastics circulating in our bodies.

Axion’s Miami project offers a glimpse at the impact that recycled composites could have in diverting the growing tide of plastic.

So far, Miami has purchased around 2,000 composite ties, made up of roughly one million pounds of recycled plastic. By comparison, every year, the U.S. rail system replaces some 20 million ties.

As a thought experiment, if all those replacement ties were made of recycled plastics, the effort could usefully sequester some 10 billion pounds of waste, more than twice the volume of all the plastic recycled in the U.S. in 2010. Besides being stable and enormously strong, the composite ties can also be recycled at the end of their life.

For now, Axion is focusing on rail and construction markets where the relatively high upfront costs of its composites pencil out by avoiding more frequent future replacements. In the U.S. and overseas this dictates a focus on regions similar to Florida, where it’s hot, wet and salty, and insects are rife – conditions where wood products are short lived.

Longer term, Silverman sees bigger opportunities using plastic garbage to help remake America’s crumbling infrastructure. A 2011 Federal Highway Administration report estimates that more than 143,000 bridges are either structurally deficient or functionally obsolete, largely due to the sort of corrosion, wear and tear to which recycled structural composites are immune.

But first the company has to drive down the cost of its raw material. Though the world is awash in plastic, too little of it is recycled.

“If the U.S. recycled more, our prices would come down,” says Silverman.

That could be a triple win: for Axion, the country’s infrastructure and the environment.

Click here to view our complete Tech Savvy series.

The post Tech Savvy: Axion Intl. appeared first on Corporate Knights.

The inner hive is in fact pulsating with tiny yellow-and-black Melipona bees. Humming squadrons quickly take formation to alight on her hand and hair. As nectar is drawn up into her chef’s syringe, then dabbled onto a spoon for strangers to taste, more Meliponas arrive and seem poised to attack the invaders. But instead, the stingerless bees merely tickle as they crawl across human arms and eyebrows, apparently foraging for some new exotic blossom to savour and pollinate. No doubt they are dismayed to taste only salty sweat, since they lose interest and quickly disappear.

By contrast, the amber gold nectar they produce glides across the palate like liquid silk. More fluid than honey made from domestic bees, it transmits a translucent sparkle and has a unique lemony finish and a tart hint of acidity to temper the natural sugar. Only a single drop is needed to trigger a delighted grin.

Nobody knows that better than Richardson Frazao, a Brazilian biologist who has become a leading scientific authority on the wild bees of the Amazon. He is also the field manager of an innovative program to protect the Meliponas and the biodiverse habitat they both depend on and sustain.

Rodrigues’s 70 wild bee boxes, built in a grove of tropical fruit and nut trees some 200 kilometres from the equatorial port of Belem, Brazil, serve as the most successful pilot project among a dozen poor, remote communities in the eastern Amazon. Each hive produces about one litre per year, which Rodrigues bottles and sells as nectar. She also uses the wax-like propolis to make distinctly scented soap, shampoo and cosmetic products.

The annual income this generates for her family is modest by Brazilian standards, and meagre by North American or European standards. But in a region ravaged by high unemployment, such self-generated income is a domestic godsend.

More strategically, Rodrigues’s income from wild nectar husbandry is higher – and more sustainable – than the only alternative: being paid low wages to slash, burn and raze tropical forests for lumber and cattle interests. To date, some 70 million hectares have already fallen in Amazonia, and her small land holding is on the northern front of approaching clear-cuts.

The bulwark against this, Frazao has calculated, will be rural communities that replicate Rodrigues’s example and discover that they can earn higher, more enduring incomes by protecting their forests rather than being temporarily hired to help destroy them.

His daring plan has the backing of the Peabiru Institute (a science-oriented foundation based in Belem), the Netherlands’ Royal Tropical Institute, Conservation International and The Nature Conservancy. All agree that Frazao’s wild bee initiative may be the most effective way to protect remaining Amazon forests, restore biodiversity and promote economic equity among some of Brazil’s poorest peoples.

That is a lot of weight to rest on the delicate wings of an insect barely bigger than a fingernail. But the saving grace is that there are billions of them, in hundreds of species, each of which has been selected through evolution to pollinate distinct trees, flowers and shrubs. That means they are the lynchpin of biodiversity.

In the densest parts of still-intact Amazonia forests, Frazao has recorded up to 79 species of Melipona bees in a single hectare. This confirms a jaw-dropping level of indigenous forest biodiversity there, but it is by no means an isolated example.

Of the 20,000 wild bee species globally, there are some 400 known species of Melipona bees in the Amazon basin, which extends into Peru, Bolivia and Ecuador. About 10 new species are discovered each year. Frazao himself may soon be credited with one if independent tests verify his discovery.

Shy with strangers, but quick to flash a genial smile – especially within tasting distance of Melipona nectar – Frazao hopes to maximize community bee projects by combining science and social engagement.

“I get lots of pleasure from identifying wild bees, and from doing pure science,” the PhD candidate says during a translated interview in his Peabiru Institute office. “But science is only part of the solution. The other part is to show communities the real value of biodiversity, and to empower them to protect it.”

To that end, since 2006, Peabiru and global foundations have helped finance more than 2,000 bee box placements with 350 families in 16 remote communities. There, typical cash incomes average less than $3 per day. The recipients include indigenous tribes, Afro-Brazilian slave descendants called Quilombolas, and the rural poor.

In each setting, Frazao looks for entrepreneurial champions, like Rodrigues, to ignite community interest with bottom-line economics. A typical bee box costs $25 to make with local labour and materials, but yields nectar worth up to $90 each production season. The bee pollination also increases the nearby yields of edible fruits and nuts, which can be harvested for subsistence food or sold for cash.

As with domestic bees, Melipona hives can be split and transplanted to new bee boxes, which in turn can be divided again. So, in the manner of bank bonds paying compound interest, Frazao and Peabiru Institute hope to soon see their original investments (jointly shared by Peabiru and community associations) accelerate in scale and value.

They have plans to enlist Brazil’s network of embassies and globally famous chefs to promote the “Amazon Amber” Melipona nectar; sell the scented soap and cosmetics under special labels; and scale up production by using solar-powered extractors where power grids don’t exist. Long-range goals include a portable, commercial-grade honey processing unit, which also refrigerates the nectar so it does not crystallize or ferment before it can reach outside markets.

However, Frazao cautions, the health of the wild bees and the forests they sustain will remain the highest priority. Their plan includes carefully confining each Melipona species to its endemic location, not mixing species in adjacent bee boxes or districts, and resolving not to torque production beyond the natural limits defined by evolution.

“As more poor communities join in wild nectar production, they will fight to protect and even begin restoring native tropical forests,” predicts Joao Meirelles, a noted Amazon scholar, author and founder of Peabiru. “The numbers are on our side. Every hectare saved can support 50 to 80 Melipona species, and up to 500 bee boxes with a foraging range of 600 hectares.”

Frazao nods, adding: “My dream is that these Amazon communities can position themselves in a market where they are paid proper value for their work and unique, high-quality product, while at the same time protecting their forest and biodiversity.”

And does the scientist who works with bees all day dream of otherworldly Melipona nectar at night? A surprised, faintly guilty grin telegraphs his answer.

The post Biodiversity in a bottle appeared first on Corporate Knights.

The obvious answer is to place a financial value on what used to be called nature, but has now been rebranded natural capital. There are some magnificent examples of how this could, in principle, spare us from perverse decisions. As The Economics of Ecosystems and Biodiversity global initiative points out, if you turn a hectare of mangrove forest into shrimp farms you’ll make $1,220 per year. Leave it standing, and the benefits are worth 10 times that amount.

But the obvious answer isn’t necessarily the right answer. The issue which determines whether or not the living planet is protected is not a number with a dollar sign attached. It’s political will. That’s another way of saying that it’s about power.

Look at the European carbon market. Through the EU Emissions Trading System, it was supposed to have harnessed the magic of the markets to do what politics had failed to do: drastically reduce the consumption of fossil fuels. At the time of writing, the price of carbon is under €3 per tonne, a record low. For all the good that does, it might as well be zero.

Why is it so low? Because carbon-intensive industries lobbied politicians to raise the supply of permits until the mechanism became useless. The market has not solved the problem of power: It has simply given it another name. Whether governments attempt to address climate change the old way (through regulation) or through pricing makes not a jot of difference if they won’t stand up to industrial lobbyists.

In some respects the Emissions Trading System has made the problem worse, for it allows politicians and businesses to wash their hands of responsibility for climate change, arguing that the market will sort it all out. There is not a new airport or coal mine or power station being built in the European Union which has not cited the trading scheme as justification. This useless system has empowered polluting projects which might not otherwise have been approved.

Even if we didn’t have a number to slap on them, we’ve known for centuries that mangrove swamps are of great value for coastal protection and as breeding grounds for fish. But this has not stopped people from bullying and bribing politicians to let them turn these forests into shrimp farms. If a hectare of shrimp farms makes $1,200 for a rich and well-connected man, it can count for far more than the $12,000 per hectare of intact mangrove forest is worth to downtrodden coastal people. Knowing the price does not change this relationship. Again, it’s about power.

Natural capital accounting can exacerbate the underlying problem. By pricing and commodifying the natural world and then taking the obvious next step – establishing a market in “ecosystem services” – accounting has the unintended consequence of turning the biosphere into a subsidiary of the economy. Forests, fish stocks, biodiversity and hydrological cycles become owned, in effect, by the very interests – corporations, landlords, banks – whose excessive power is most threatening to them. In some cases, the costing of nature looks like a prelude to privatization.

Already the traders and speculators are moving in. In the U.K., our Ecosystem Markets Task Force talks of “harnessing City financial expertise to assess the ways that these blended revenue streams and securitizations enhance the return on investment of an environmental bond.” Nature is becoming the plaything of the financial markets. We know how well that tends to work out.

While natural capital accounting empowers the money men, it disempowers the rest of us. That’s one of the reasons why governments like it. Who needs all that messy democratic decision-making, those endless debates about intrinsic value and beauty and wonder, if you’ve already determined that the meaning of life is, say, 42? And who can gainsay the decision to pulp a forest or blast a coral reef, if the value of the destruction turns out to be worth several times 42? Once we have ceded nature to cost-benefit analysis, we can’t complain if we don’t like the results.

After more than a quarter of a century of environmental campaigning I’ve come to see that the only thing that really works is public mobilization: the electorate putting so much pressure on governments that they are obliged to take a stand against powerful interests. It doesn’t matter what weapons governments use to confront these interests: What counts is their willingness to use them. A system which undermines public involvement, boosts the power of the financial markets and reduces love and passion and delight to a column of figures is unlikely to enhance the protection of the natural world.

The post The downside of valuing nature appeared first on Corporate Knights.

Currently, the vast majority of North American cities are failing on environmental performance. Across the continent we see vast sprawling suburbs that lock in automobile dependency and thus fossil fuel consumption with its climate change and smog emissions.

The health and environmental impacts that result from sprawl are well known. Obesity and high blood pressure, for example, are correlated with sprawl. On average, people in sprawling areas are six pounds heavier. Sprawl is also responsible for the loss of Class 1 farmland. Less discussed but equally alarming are the economic and productivity effects of sprawl. The traffic congestion resulting from sprawl inflates shipping costs and reduces overall economic productivity.

At the same time, local economies are held back by a lack of vigorous and vibrant core business areas. Such areas provide greater choice for workers and firms, raising employment and productivity. Urban density fosters innovation-boosting knowledge spillovers, and allows businesses and households to reap savings from greater sharing of servicing costs. Yet for every such area enjoying these “economies of agglomeration,” there are dozens of hollowed-out “donut” cities with stagnant economies based on suburban discount retail.

Finally, city governments are taking on major financial liabilities with every new subdivision approval. Infrastructure is built out to service new sprawling areas, often using grants from higher orders of government. The financial burden of maintaining and eventually rehabilitating that infrastructure, however, will fall to cities. Those costs will be enormous, and many cities will prove incapable of meeting them.

Not surprisingly, given the costs of sprawl, cities are increasingly establishing goals of reducing further sprawl and building denser urban areas. This can be accomplished with well-designed public policy.

The key to choosing the right policy instruments is to focus on the causes. Suburban sprawl is taking place because prices encourage it. Businesses are setting up outside of cities because the costs are cheaper than in urban areas. Homebuyers continue to “drive until they qualify.”

Yes, zoning regulations and municipal development plans allow for sprawling subdivisions to be built. But they don’t create demand for sprawl. Prices do that.

Of course, prices are not the simple result of producer supply and consumer demand, as markets don’t exist in a vacuum. In the real world, prices and markets are strongly influenced by government policies, taxes and subsidies. The market for new suburban development is no different. It enjoys significant subsidies, while residents and businesses in established areas pick up the bills.

Impact fees (sometimes termed development charges) are intended to recover some of the municipal costs of new developments. However, they are often levied at a flat rate that fails to reflect the higher capital cost of distant subdivisions, let alone their future costs of infrastructure maintenance or renewal. Similarly, water and wastewater utility fees are often set at a flat rate, despite significantly higher pumping costs to and from far-flung suburbs. Public spending on free-to-use roads provides a subsidy to motoring that makes sprawl possible. The failure to charge for using the atmosphere as an emissions dump also artificially reduces the costs of automobile use.

In this context, well-designed policy focuses squarely on prices. The aim is to eliminate the subsidies and turn the prices around until they pull in the direction of a city’s urban density goals. Prices are powerful influences on decisions; with the right pricing, developers will fall over each other to build dense, livable communities, and home buyers will flock to them.

There are a number of ways that municipal and other governments can reduce the subsidies to sprawl. Impact fees and utility fees can be adjusted to reflect the higher costs of infrastructure needed for low-density fringe developments, or to encourage developments that reduce automobile trips – as Portland, Oregon, has done.

Property tax rates can be adjusted to reduce the costs of infill housing and industrial and commercial redevelopment. Spending on new roads can be reduced, with emphasis turning to repair and maintenance of existing roads. Fuel taxes in North America – currently a fraction of those in the rest of the developed world – can be raised to more competitive levels. Annual road user fees can be established; Austin, Texas, for example, provides an exemption for people who don’t drive.

The new revenues generated from using such pricing instruments can bolster municipal fiscal health. They can be used to provide improved transit services as well as social programs to support lower income people. At the same time, the greater density they bring about will help firms take advantage of economies of agglomeration – the knowledge spillovers that boost economic growth.

With well-designed pricing policies, cities can secure and improve existing levels of environmental, fiscal and economic performance while also generating a social return. Will it be easy? Nothing worth striving for has ever been easy. But the rewards are large and well worth the effort. Getting the prices right will unleash a wave of creativity that puts those rewards within reach.

The post Donut filling appeared first on Corporate Knights.

Road congestion is a chronic problem in big cities, getting worse, and already resulting in billions of dollars in lost productivity annually. The Texas A&M Transportation Institute estimated in 2009 it was costing the U.S. economy $87.2 billion a year, resulting in 2.8 billion gallons of fuel being unnecessarily burned.

At the same time, many municipalities are cash-strapped and looking for ways to fund road repairs and new transit infrastructure. Combine that with urban smog problems, not to mention the need to tackle greenhouse gas emissions, and the argument for taking action is difficult to deny. Offering a way to charge drivers based on the distance they drive, where they drive and the time they drive seemed for Grush like something cities didn’t just need, but should desperately want.

There was just one problem: Drivers are generally suspicious of such advanced road tolling schemes, particularly if it’s imposed. It’s a tax grab, they say with justification, because for the most part talk of road tolling in the U.S. has been about alternative ways of raising revenue, not helping the environment. Drivers also argue that it’s just another way for Big Brother to track citizens, and many object to what’s considered an added limit on free movement.

Fact is, said Grush, people like their privacy and freedom, and don’t like having to pony up for something they feel they already pay for. “If you want them to move off of that spot, they will resist,” he said. Few politicians are willing to pick that fight. Instead, they go back to talking about raising gas taxes. Still controversial, yes, but politically safer.

Having spent $9 million on marketing, going to conferences, doing demonstration projects, and trying to educate government officials and transportation economists, it finally sunk in for the wide-eyed folks at Skymeter. “We were dreamers,” conceded Grush, who was forced to throw in the towel last fall. The company, insolvent after spending years pursuing the dream, was shuttered and all assets were put on sale.

Few deny road-tolling works. One need only point to Stockholm, which in 2006 placed tolls at all access points into the city as part of an ambitious congestion-pricing system. Jonas Eliasson, director of the Centre for Transport Studies at Sweden’s Royal Institute of Technology, said during a presentation at a TEDx event last September that traffic volume during rush hour fell 20 per cent as soon as the charge, set at just €1 to €2, went into effect. “It’s now six and a half years ago since the congestion charge was introduced in Stockholm and we essentially have the same low traffic flows,” said Eliasson, adding that 70 per cent of Stockholm residents were against the toll when it was introduced. Today, 70 per cent want to keep it.

IBM, which was the main technology provider behind the Stockholm system – and similar systems in Singapore, London and Brisbane – believes it’s only a matter of time before GPS-based vehicle metering gains traction. This suggests that Skymeter may have simply been ahead of its time.

Eric-Mark Huitema, who leads IBM’s smarter transportation business in Europe, said a six-month trial in Eindhoven, Netherlands, two years ago showed that GPS-based road pricing not only met technical expectations, it was successful in getting 70 per cent of participants to avoid rush-hour driving. NXP Semiconductors, the telematics technology provider that partnered on the trial with IBM, said the project “vastly exceeded” expectations. “There is a direct relationship between the number of cars on the road and the price of the road,” Huitema said. IBM estimated that the system would reduce CO2 emissions from road transportation by at least 10 per cent if rolled out across the Netherlands.

The advantage of using GPS, versus a system of camera- and sensor-equipped gantries as in Stockholm, is that it doesn’t have to be confined to a particular area. Instead of charging a flat fee in exchange for access to a defined zone, drivers can be charged by the number of kilometres driven. More than that, it can be a variable charge based on the vehicle’s emissions profile, the time of day, specific locations and pollution levels. The flexibility means GPS-enhanced road tolling can be a municipal, regional, countrywide or even transnational system.

Germany has been charging trucks this way since 2005, the first in the world to do so using satellite tracking. More than 720,000 trucks, most originating from other European countries, are now equipped with onboard units used to charge the vehicles 18 to 36 cents per kilometre, depending on truck classification. The effect was almost immediate: The number of inefficient “dirty” trucks entering Germany has plummeted.

The network, operated by the company Toll Collect, stretches more than 13,000 kilometres and has generated about €30 billion so far for the German government. A different version of the system, called Toll2go, was launched in fall 2011 to cover trucks travelling through both Germany and Austria. “You’re seeing movement of this now to other countries,” said Huitema, adding that the next milestone is to apply the technology to personal vehicles. “But it starts with trucks.”

Commercial trucks are an easier sell. But at the consumer level, concerns over Big Brother, even in socialist Europe, remain a sticking point. The IBM Netherlands trial was supposed to lead to a nationwide tolling system for trucks and passenger vehicles starting in 2012. “But the program was suspended before it was implemented because of privacy concerns,” according to a December report on mileage-based vehicle fees from the U.S. Government Accountability Office (GAO), which was looking at ways to replace or supplement federal Highway Trust Fund revenues.

No major U.S. city has yet implemented a simple gantry system, let alone one that uses satellite tracking and charges based on mileage. Michael Bloomberg, mayor of New York City, proposed a Stockholm-style system in 2008 and it died a quick death. One can imagine the uproar of forcing car owners to install a device with the potential to track their every movement. “The perception that these technologies will be used to track privately owned vehicles and infringe upon individual privacy currently appears to be an insurmountable challenge,” according to the GAO report.

The systems can be designed to minimize the threat, perceived or real, to personal privacy. Programs can be run by an independent third party – we trust banks and credit-card companies, after all – and the information collected doesn’t have to track exactly where people go, just how far they’ve driven and what general class of road they have travelled on.

But even that is unlikely to earn the public’s trust if GPS-based road tolling programs are introduced as mandatory. That’s why most experts say the programs need to be voluntary from the start. As Facebook has shown, people have no problem opening up their lives when the decision is theirs alone. “The government would give you a choice,” explained Huitema. “You either pay a fixed tax, which is high, or a variable tax that requires installation of a small box in your car.” The idea is to set the variable rates such that drivers, if they altered their driving patterns, would voluntarily sign up in an effort to save money.

Bern Grush agrees the voluntary approach is the only way to go, but with one caveat: The offer must come from the private sector, not the government, and it needs to deliver what individual consumers value, not what citizens are expected to accept for the common good.

“You have to make it so people want to enroll in a program,” said Grush, who despite the failures of Skymeter is giving it another shot. Late last year he transferred the defunct company’s intellectual property to a new venture called Applied Telemetrics. “We do the same things with the technology, but our market emphasis has changed. We’re far more interested in insurance and premium parking applications, and not so much focusing on tolling.”

The emphasis on parking makes sense, given the frustration of trying to park in a downtown core – and the congestion that results. It’s not uncommon for drivers to circle a block several times, or “cruise,” as they look for cheap or free street parking. Donald Shoup, urban planning professor at University of California, Los Angeles, spent a year studying one Los Angeles neighbourhood and calculated that drivers cruising for on-street parking clocked 950,000 additional vehicle miles. Imagine what the figure is when applied to every neighbourhood in every major city on the globe.

Grush wants to ease that driver frustration (and city congestion) by offering a service called Park Wallet, a personal account pre-loaded with money or credit card information that would be linked to a network of registered parking lots in a city. “As you’re driving and come close to your destination you hit a button on your smart phone to indicate you’re looking for parking,” explained Grush, who owns a patent for GPS-based parking. “Up will come a list of available spots and prices. You choose one and park in it.”

The prices for spots would change throughout the day, based on demand and time of day, with an eye to maximizing revenues for lot owners. The city itself could join the network, making it possible to generate more income from street parking. Even homeowners could register a driveway left empty during the day. The end effect would be a dramatic reduction in cruising, which is directly related to congestion and emissions.

Users of the service, meanwhile, would benefit from the convenience of always finding a spot, never having to search for spare change, and not having to rush out early from an important meeting to put quarters in the street meter and avoid getting a ticket. That alone might be enough to motivate drivers to voluntarily put a tracking device in their car. But for Grush, it’s just the start – Park Wallet is only one of many “apps” that the device could enable, including insurance plans that charge for when, where and how far a person drives.

Pay-per-mile insurance is readily available in Europe, but has been slow to get going in North America. Quebec-based insurance provider Industrial Alliance offers a version of it, but geared to new drivers looking for savings. The company’s product, called Mobiliz, tracks kilometres driven and driving behaviour such as speed, abrupt braking and aggressive acceleration. “Just having the device in the cars changes behaviour,” said Michel Laurin, president and chief executive of Industrial Alliance Auto and Home Insurance. “Customers tells us they save on their insurance premium but also on gas.” California startup MetroMile offers pay-per-mile insurance for “low-mileage” drivers in Oregon, but different state insurance regulations have made it challenging to enter new jurisdictions.

But the potential is there, and if one box can provide what people want, that paves the way for the introduction of congestion tolling, said Grush. It begins to reframe people’s thinking about vehicle metering and larger societal benefits. “Once these meters are, say, in 52 per cent of vehicles, then the government can more easily step in and say, let’s start congestion charging. But first you have to create value for people.”

As Eliasson from Sweden’s technology institute concluded in his TEDx presentation: “If you do it right, people will actually embrace the change. And if you do it right, people will actually even like it.”

The post Pay as you drive appeared first on Corporate Knights.

Yet for all the kudos showered on Puma, few – if any – other global companies have so far followed its lead.

Jochen Zeitz, a director of PPR, Puma’s parent, asserted in an interview with Corporate Knights that “I only get positive remarks…. It’s been overwhelmingly positive.” Zeitz was a driving force behind the environmental profit and loss account – known as EP&L – during 18 years as Puma’s CEO.

But Richard Tipper, chief executive of Ecometrica, a London-based consultancy, noted that many chief financial officers would “hold up their hands in horror” at the thought of an accounting system that adds a sizable liability to their balance sheets. It’s a view that would undoubtedly be shared by their boards of directors, Tipper added.

Such hesitancy raises questions about the quest for a wider natural capital accounting system. Is Puma’s EP&L merely ahead of its time, raising the prospect that others will sooner or later catch up? Or are Zeitz and his colleagues idealists out of touch with the rest of the business world?

Zeitz explained the rationale behind the new accounting system when he introduced it in 2010:

“I wanted to know how much we would need to pay for the services nature provides so that Puma can produce, market and distribute footwear, apparel and accessories made of leather, cotton, rubber or plastic for the long run. I also wanted to know how much compensation we would have to provide if nature was asking to be paid for the impact done through Puma’s manufacturing process and operations.”

The EP&L puts a monetary value on Puma’s greenhouse gas emissions, water use, land use, air pollution and waste. It includes the impact of Puma suppliers around the world. The first EP&L estimated a total cost of €145 million in 2010. An updated version is due to be published later this year.

PPR’s other luxury and sport brands, such as Gucci, Stella McCartney, Bottega Veneta and Alexander McQueen, are also now working on EP&Ls. They plan to publish them in 2016. (The EP&L has no bearing, at least for the time being, on the companies’ traditional financial statements.)

Puma has also set a number of targets to shrink its footprint on the environment, including a 25 per cent cut in carbon emissions, waste and water usage; sourcing all paper and packaging supplies from sustainably managed forests, with a minimum 50 per cent recycled content; and phasing out the use of hazardous chemicals by 2020. It has also committed to more sustainable and humane sourcing of leather supplies.

Mark Anielski, an Alberta-based consultant who specializes in “well-being” economics, noted that a handful of companies – notably Interface, a Georgia-based maker of commercial carpet tiles – have been even more aggressive than Puma in actually shrinking their ecological footprint.

Interface founder Ray Anderson – often described as “America’s greenest CEO” – adopted a “Mission Zero” policy, committing the company to eliminate any negative impact on the environment by 2020. Shortly before his death in August 2011, Anderson estimated that the company was more than halfway towards that goal.

But Interface and Puma are exceptions.

Zeitz acknowledged other companies’ fear of negative publicity if they disclose the full cost of their environmental impact. Nonetheless, he asserted, some are working quietly behind the scenes to develop environmental accounting systems.

He said more details will emerge with the official launch in a few months of The B Team, an initiative spearheaded by Zeitz and Sir Richard Branson, the flamboyant founder of the U.K.-based Virgin Group. The B Team aims, according to its website, “to make business work better … by shifting the focus from just financial gains towards environmental and social gains as well.”

One of its self-described “Grand Challenges” is to create “a global standard to help businesses account for the environmental impacts of their operations.”

Puma itself recently won support from a panel of 22 outside experts commissioned by the company to review the EP&L. In a report published in December, the group described the initiative as “an innovative and pioneering corporate approach to transparency.”

Despite some shortcomings, such as the system’s complexity, the panel said that Puma’s methodology “clearly applied credible valuation approaches.”

It also cited numerous benefits of an EP&L, and not only for Puma. For example, “by providing greater transparency on the impact of business on society, the EP&L can provide companies with leverage in public policy discussions which can ultimately help shape better-enabled and more sustainable business operating environments in the future.”

As Anielski sees it, business will come under growing pressure to adopt not only EP&Ls but also broader measurements of well-being.

“We’re seeing a whole generation that are now accustomed to seeing sustainability reports, and expecting these kinds of accountability,” he said. “Young people want authenticity.”

Zeitz acknowledged that the approach will be more challenging for small or mid-sized companies because of the amount and detail of data that needs collecting. “You may say that’s too much of an effort and the costs are too high.”

Still, he’s confident that momentum will build as big companies adopt an EP&L system, after which the approach will be simplified and standardized so it can be more easily adopted by small businesses.

“I’m convinced that eventually this will happen,” said Zeitz. “Whether it will be called an EP&L or something else, it doesn’t really matter. It’s the principle of accounting for natural capital and environmental impact which is important.”

Despite his reservations about the EP&L methodology, Tipper said he appreciates Puma’s effort. “This is a good initial start, and I would welcome it if other companies did it.”

The post Puma takes a giant leap appeared first on Corporate Knights.

Take the saga of global food giant Nestle. Three years ago, Greenpeace launched a major campaign against the company – taking to the streets, and to Facebook and YouTube, to accuse it of chopping down forests in pursuit of cheap palm oil.

The company initially went on the attack, blaming its suppliers and what it called a political decision to use palm oil as biofuel. But less than two months after the campaign began, Nestle capitulated – promising to demand that its suppliers move towards using palm oil that is 100 per cent certified as sustainably produced, a goal it expects to achieve this year, and to report on its progress.

Strictly speaking, the Nestle campaign had nothing to do with accounting. But it was all about the company’s financial well-being. The certified palm oil the company is now buying is a bit more expensive. But for a consumer company like Nestle, the potential costs of sustained consumer outrage far outweigh the savings from buying the cheaper, uncertified ingredient.

Over the past few decades, environmental NGOs like Greenpeace, the Carbon Disclosure Project (CDP) and many others have developed sophisticated techniques for hitting companies where it hurts – in their sales, or their stock price, or both. As a result, the accounting industry and companies themselves are beginning to look seriously at how to track and account for the natural capital on which their businesses depend. The movement is in its early stages; though there is a lot of action, there’s even more bewilderment and absolutely no consensus.

But there’s been a big shift, says Stephanie Hime, lead specialist in natural capital at KPMG. “I’ve been in this field a long time,” she says. “And when I used to say what I did, people would go ‘well, OK,’ and that was the end of the conversation. Now they actively try to find me to talk about it.”

The shift can also be seen in a slew of reports, guidelines and voluntary standards for natural capital reporting and accounting from such varied organizations as the World Business Council for Sustainable Development, the CDP’s Water Disclosure Project and the International Finance Corporation. A few governments have even gotten into the act: Denmark requires large companies to report on their responsibility to society, and France requires listed companies to report on a long list of environmental impacts.

But so far, there’s absolutely no agreement on even the broadest outline of what natural capital accounting might look like in practice. And while some companies are doing a stellar job of tracking the issue, most are lagging. A recent study by the Association of Chartered Certified Accountants (ACCA), Fauna & Flora International and KPMG (of which Hime was an author) found that, although 50 per cent of company earnings (roughly 11 per cent of global GDP) could be at risk from environmental externalities, less than half the association’s members were reporting on the issue.

One of the big obstacles is the short-term nature of corporate accounting. Natural capital risks are long term, Hime points out, whereas most companies look out no farther than the next five to 10 years. In addition, while carbon is carbon wherever it is, environments are as different as the companies that use them, making it hard to come up with standardized requirements. Then there’s the whole question of materiality. Companies are required to report on risks only if investors need the information to make informed decisions about the company. But materiality has traditionally been gauged exclusively in financial terms.

That can make it hard to bring natural capital into the mix, says Rachel Jackson, head of sustainability at ACCA and another report author, because natural capital issues that are environmentally significant may not be financially significant. An obvious and oft-suggested solution is to put a financial value on the natural capital a company uses, either voluntarily, as Puma has done (see page 46), or through taxation or regulation. If, for instance, developers had to include natural capital in the cost of a project, says John Talberth, a senior economist at the World Resources Institute, “you would see a lot more compact cities.”

But putting a price on natural capital is not only tricky; it could backfire. The whole point of putting a value on natural capital is to persuade companies to use it carefully. “But what happens,” Jackson asks, “if you come up with a value that a lot of big companies consider to be quite cheap?” Look at carbon: Most experts say it will take a price of at least €20 a tonne to force real changes, but in May it was trading in the European Union at less than €3 a tonne.

It’s complications like this that lead many activists to try to force natural capital into companies’ financial considerations not through accounting, but, as Greenpeace did with Nestle, through pressure from consumers and investors. “We think reporting comes before accounting,” says Nigel Topping, chief innovation officer at CDP. And reporting is growing; in 2011, for the first time, more than half the companies in the S&P 500 issued sustainability reports.

As disclosure increases, Topping argues, investors will use that information to assess companies’ assets, liabilities and risk. Their conclusions will quickly – and possibly painfully – show up in companies’ stock prices. But to be really effective, that disclosure needs to include risks that not even all environmentalists have thought about. One biggie that the London-based Carbon Tracker Initiative is looking at: If and when governments really crack down on carbon, the oil and coal companies will be stuck with a whole lot of underground assets that they can no longer sell, driving their valuations into the basement.

“Other mechanisms will kick in long before accounting,” Topping predicts. “The market will take care of that, but the market needs to know who is exposed to risk and how they’re managing it.”

The post Awakening the bean counters appeared first on Corporate Knights.

But not all density is created equal, and there is such thing as too much density. That’s where many academic planning journals and right-wing think tanks start to cross the line. Many complain of too many restrictions that are keeping high-rise condos and business towers from blooming like weeds in a vegetable garden.

A series of recently published books have also perpetuated this view, some taking it to the extreme. Take the following excerpt:

“The environmental challenge we face, at the current stage of our assault on the world’s non-renewable resources, is not how to make our teeming cities more like the pristine countryside. The true challenge is how to make other settled places more like Manhattan.”

That’s the pitch from The New Yorker writer David Owen, with his book Green Metropolis: Why Living Smaller, Living Closer, and Driving Less are the Keys to Sustainability. He noted that New Yorkers use less energy per capita than anybody else in the U.S., so therefore we should all live like New Yorkers. After all, they all live in apartments with shared walls and mostly walk and take transit, saving a huge amount of energy compared to car-driving suburbanites. Forget light bulbs and insulation, Owen argues, what matters is density. It’s a line of reasoning picked up by every real estate developer building leaky glass condos.

For economist Edward Glaeser, nothing is sacred. He’s the writer of Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. If he had his way, he would demolish New York’s Greenwich Village and build 40-storey towers everywhere to increase density and the supply of housing. He is an economist, not a sentimentalist, and notes there is a price paid whenever we stand in the way of development: “Preservation isn’t always wrong – there is much worth saving in our cities – but it always comes at a cost.”

Alex Steffen, in his book Carbon Zero: Imagining Cities That Can Save the Planet, makes a strong case that the only way we are going to dig ourselves out of the mess we are in is to live in sustainable cities.

“Americans, Canadians and Australians, in particular, sail now on a collision course with planetary realities. Our sprawling suburbs and low-density cities depend on abundant resources, cheap oil, and low costs for pollution, none of which the future holds.”

But he, too, claims that to keep cities affordable, “we need policies that result in thousands, sometimes even tens of thousands, of homes built each year. This is basic economics.” He also objects to NIMBYs who are trying to save their neighbourhoods as standing in the way of saving the world.

The problem with all of these free marketeers is that at some point it becomes counterproductive – densities can get too high. Upgrading transit to service Manhattan densities is extraordinarily expensive; the new 2nd Avenue subway is costing $1.7 billion per kilometre, where a dedicated streetcar line like that on Toronto’s St. Clair Avenue cost $37 million per kilometre, one-46th the cost.

Ken Greenberg tells of another way, where one doesn’t have to throw legendary urbanist Jane Jacobs under the bus. In Walking Home: The Life and Lessons of a City Builder, he describes the virtues of a greener, denser, but still Jacobsean place where there is “a strong, deep culture of the city with a widely shared web of relationships, a deep bench of committed city champions and a long collective memory.”

What might life in our cities look like if we aggressively filled in the obsolescent rail yards and port lands, cleaned and remediated their polluted soils and built denser, more walkable neighbourhoods? Our living spaces might be smaller, but that would be compensated by a greater variety of public spaces, amenities and necessities close to hand, so we will likely spend less time in our own private spaces anyway.

Density is important and necessary to make a city work. But it can be too tall, too dense, too spiky. Too much of it can kill a neighbourhood or a city. As that great urban theorist Yogi Berra said, when describing a St. Louis restaurant he once frequented, “Nobody goes there anymore. It’s too crowded.”

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