Natural assets (such as rivers, wetlands and forests) are neither traded nor routinely valued, yet they provide critical services like helping manage worsening floods, droughts and heat waves, as well as storing carbon to slow climate change. These services are financially valuable. For example, an Institute for Sustainable Finance report estimates that Canadian wetlands alone provide services worth approximately $225 billion annually, equivalent to around 8% of Canada’s gross domestic product.

However, over-consumption of open access, seemingly “free” services from natural assets can lead to continued and undocumented degradation of such assets, as comprehensively discussed by the Dasgupta Review in the U.K. and encapsulated in concepts like the “tragedy of the commons” and negative externalities.

Recognition of natural assets in public-sector financial statements is long overdue. A 2021 Intelligence Memo explored the urgent need to report on natural assets. That same year, senior executives and leaders from nearly 70 organizations signed a joint letter urging Canada’s Public Sector Accounting Board (PSAB) to work toward “getting nature on the balance sheet” of public sector entities. Today, the path to formally recognizing natural assets has become clearer.

This involves adopting internationally aligned standards to account explicitly for the value of natural assets. The International Public Sector Accounting Standards Board (IPSASB) has made significant progress on its multi-year natural resources project and is expected to publish a draft international standard this fall to propose criteria for recognizing “natural resource assets” in financial statements and requirements for note disclosures.

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Additionally, IPSASB has updated its international standard for the measurement of the financial value of assets, introducing “current operational value” as a method for quantifying the “service potential” of natural assets. This method can include the ecosystem services provided by natural assets.

In Canada, where 80% of the land is publicly owned, PSAB has indicated its intent to follow IPSASB’s guidance, making the adoption of a similar standard for Canada likely. This would allow the inclusion of natural assets that meet certain criteria in public-sector financial statements, rectifying their current exclusion.

Momentum is building in Canada ahead of official standards to provide the data necessary to more effectively measure the financial value of natural assets. Nationally, the Census of Environment – led by Statistics Canada – is actively compiling Canada’s natural capital accounts, with geospatial datasets already available for urban greenness and salt-marsh habitat. In 2023, specifications for natural asset inventories were published as a national standard of Canada.

At the local level, more than 150 local governments are already inventorying, assessing, valuing and managing their natural assets. Cities like Calgary and Mississauga and are making quantitative, albeit unaudited, disclosures related to natural assets in their financial statements. Yet these encouraging local-government approaches lack uniformity and encompass less than 5% of the total number of Canadian municipalities. National standards are essential to achieve consistency and broad-based adoption in the financial reporting of natural assets.

Important policy considerations will arise when (not if) Canada adopts public-sector accounting standards for natural assets that ensure transparent, consistent and routine reporting on their value.

Public sector recognition of natural assets will inevitably affect the private sector, particularly public–private interactions, such as land development, which often degrade and diminish the financial value of these assets. The valuation of natural assets may also affect how private sector entities consider managing “nature-related transition risks” – actions to protect or restore negative environmental impacts.

The work of the International Sustainability Standards Board, building on the Taskforce on Nature-Related Financial Disclosures, will be pivotal in setting sustainability standards that address nature-related risks from a financial materiality perspective. Accordingly, this work will need to consider the value of natural assets as they are formally recognized.

Also, it is essential to shape accounting policy for numerous lands with treaty rights through ongoing engagement with and learning from Indigenous Peoples.

The IPSASB is to be congratulated on its leadership in this crucial domain of valuing natural assets and ecosystem services. We eagerly await updates to Canada’s public-sector accounting standards.

Joanna Eyquem is managing director of climate-resilient infrastructure at the Intact Centre on Climate Adaptation. Peter van Dijk and James K. Stewart are senior fellows at the C.D. Howe Institute.

This piece originally appeared as a C.D. Howe Institute Intelligence Memo. It has been edited to conform with Corporate Knights style.

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Given what the pandemic has revealed about our country’s capacity to respond to external shocks, concern for Canadians’ long-term well-being should be on everyone’s mind these days. We can’t be certain what the next shock will be, but we know it is just a matter of time before one arrives. Canada badly needs to increase its resilience so our governments are not again forced to shutter businesses and print money to see us through.

A blinkered focus on kick-starting GDP growth would be far from adequate for the recovery, even if getting people back to work and regular paycheques is an obvious imperative. GDP-centric thinking has dominated the minds of governments for far too long. Policies aimed at boosting economic growth in the short-term have left the economy more fragile to external shocks than many imagined. To name one, the low-interest rate policies adopted following the dot.com bust left too many households buried in debt they could barely manage before the pandemic. Many families now face the real threat of bankruptcy. Public debt has also ballooned to dangerously high levels due to the government’s efforts to keep consumer spending alive during the pandemic. Though some argue concern about this massive new debt load should be rejected, there’s no avoiding the fact that the bill will eventually have to be paid.

Whether a concern or not, it seems clear that Canada’s recovery plan will lead to more public spending and even higher levels of debt (assuming there is no fall election and potential change in government). The question is what this money should be spent on. Spending only to boost short-term GDP growth would exacerbate Canada’s economic, social and environmental fragility rather than building the resilience we need. Spending to invest in Canada’s social, human, natural, produced and financial assets, on the other hand, would help create the basis for sustainable well-being. A recovery plan focused on investments in Canada’s comprehensive wealth portfolio would do just this.

A plan focused on boosting comprehensive wealth would, as the name implies, lead to a comprehensive assessment of policies. Since all assets play key roles in well-being, none can be ignored. This would be a great advantage over a GDP focus, where growing market income is all that matters, even if it comes at the expense of environmental or social well-being.

A focus on comprehensive wealth would also lead naturally to a concern for the future, since assets are by their nature long-lived. We don’t invest in assets only because they benefit us in the here and now. We invest in them because we know they will be around for a long time, well beyond our lifetimes in many cases. This leads naturally to discussions about future needs – even distant ones – and how best to meet them. Again, the contrast with GDP – where what happens in the next quarter or two is the focus of decision makers’ attention – is striking.

There are, of course, many policies the government might pursue in the interest of expanding Canada’s comprehensive wealth.

Investing heavily in human capital – the skills and knowledge of the workforce and the largest component of comprehensive wealth in all industrialized countries – during the recovery is the quintessential “no-brainer.” Hiring new teachers, building new educational facilities and upgrading old ones, and experimenting with new forms of teaching are all highly desirable from a comprehensive wealth perspective.

Also desirable would be a significant expansion of immigration to double or even triple Canada’s population in the coming years. Former prime minister Brian Mulroney, among others, has recently advocated for just this. There is no faster way to increase human capital than a well-executed immigration policy attracting the “best and brightest.” A corollary to this is reform or elimination of barriers (racial, gender and administrative) that prevent too many Canadian workers from contributing to their fullest potential. Relaxing the rules around recognition of foreign academic credentials would be a good place to start.

From a comprehensive wealth perspective, urgent action to protect Canada’s natural capital would also be a clear priority. The need to limit the greenhouse gas emissions that drive climate change would simply not be a matter for debate. A stable and predictable climate is critical to well-being, and the world has badly depleted this asset. Investing massively in renewable energy (not just solar and wind, but also geothermal and hydro) makes great sense: not only would it address the urgent need to reduce emissions, but it could also quickly boost employment.

A comprehensive wealth perspective would also call for a rethink of the way we manage the revenues from natural resource extraction, with far more of them going into the kind of wealth fund former Alberta premier Peter Lougheed imagined for his province in the 1970s, but that never came close to matching his vision.

A comprehensive wealth perspective would support diversification of Canada’s produced capital portfolio, such as buildings and machinery. Far too much of our produced assets are tied up in just two sectors: oil and gas extraction and housing. Investment in other areas has lagged. To correct this, many are calling for major investments in clean technology – such as electric vehicles and improved electricity grids – as a focus for the recovery. The pandemic has shown the danger inherent in relying on global supply chains when international shocks hit. This has led to calls for to policies to repatriate manufacturing capacity, which would rebuild produced capital stocks.

Finally, there is the question of how to invest in social capital – the value of our civic engagement and community trust. The question is difficult because social capital itself is tricky to define and study. Good progress is being made in direction, however – not least by prominent Canadian researchers such as John Helliwell at the University of British Columbia and Christopher Barrington-Leigh at McGill.

Certainly, we cannot simply ignore social capital since it is the “glue” that binds society together through trust, cooperativeness, and willingness to engage. Without strong social capital we will not only make much poorer use of the remainder of our comprehensive wealth portfolio, we will see a breakdown in our society when the next shock hits.

Building trust, particularly in institutions, is one area where efforts would be welcome. Among others, policies to increase the transparency of government decision-making are essential to building trust. So, too, are policies to combat the spread of false information through social media and other online platforms.

All of the above policies would be uncontroversial from a comprehensive wealth perspective, but they would not necessarily be so from the perspective of maximizing short-term GDP growth. Hiring more teachers is simply a cost – rather than an investment – from a GDP perspective. Further damaging the climate is fine for GDP if it means more people are buying new gasoline-powered cars and trucks. Building more oil and gas pipelines certainly boosts short-term GDP even if it decreases the diversity of our produced capital portfolio. Low interest rates encouraging households to spend are a boon to economic growth today, but they do little to increase families’ resilience against hard times if they lead to mountains of private debt.

Canada cannot afford to consider its recovery plan with GDP as its primary lens. To do so would condemn our country to more short-termism when building long-term resilience is what we need. Our recovery plan must consider the investments needed to shore up the country’s comprehensive wealth portfolio. It is time to stop sacrificing our collective future on the altar of short-term growth.

This article first appeared on Policy Options and is republished here under a Creative Commons license.

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But since images of wildfires ravaging the Amazon rainforest captured global hearts and minds, efforts to reforest the planet have taken centre stage. Swedish climate activist Greta Thunberg began urging political leaders in Canada and around the globe to look to tree planting as part of a Natural Climate Solutions campaign to tackle global heating. Adding fuel to the tree-planting fire, a Swiss study published in the journal Science made waves when it concluded that planting 1.2 trillion trees worldwide could absorb and store an astonishing 205 gigatonnes – effectively removing two-thirds of all human-made carbon from the atmosphere, once those trees fully mature.

Keeping a trillion young trees alive all the way to maturity in the face of climate-change-aggravated droughts, wildfires and pests, as well as human pressures, will be an enormous challenge. As well, the Guardian’s George Monbiot (a founder of the Natural Climate Solutions campaign) recently cautioned that “in many places rewilding, or natural regeneration – allowing trees to seed and spread themselves – is much faster and more effective, and tends to produce far richer habitats.”

Regardless, the wave of mass tree-planting pledges has begun. Here’s a sampling of the latest initiatives:

• Ireland plans to plant 22 million trees every year for the next 20 years, totalling 440 million trees.

• New Zealand aims to plant a billion trees by 2028.

• A record-breaking 350 million trees were reportedly planted on a single day in July in Ethiopia, as part of a push to plant four billion trees there by October.

• Pakistan has committed to planting 10 billion trees over the next five to eight years.

• More than 20 African countries are in the midst of planting a Great Green Wall, with plans to reforest 247 million acres of degraded land.

• In Canada, the federal Liberal Party promised, if re-elected, to use revenues from the Trans Mountain Pipeline to pay for two billion trees to be planted.

Not that tree planting should negate efforts to decarbonize the economy, but as Swiss researcher Jean-François Bastin says, “Governments must now factor [tree restoration] into their national strategies.”

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In many ways, this swath of the Northern Great Plains looks strikingly similar to when Lewis and Clark first ventured across it more than 200 years ago. There’s no denying that the place has changed – departed are the bison herds that once numbered in the millions, and gone are the grizzlies and wolves that trailed them across the miles. But vestiges of humans are few and far between, and much of the flora and fauna remains as it always was. Because of this, the region has become the focus of a unique, ambitious and controversial conservation project.

“We’re essentially attempting to preserve the Great Plains ecosystem,” says Hilary Parker, spokesperson for the American Prairie Reserve (APR). “And in order to preserve grasslands on an ecosystem scale, you need between 3.2 and 3.5 million acres.” Put into perspective, that’s roughly the size of the state of Connecticut, or 50 per cent larger than Yellowstone National Park.

In the 1990s, the international conservation community realized that grasslands had largely been overlooked when it came to ecosystem-level protection. So overlooked, in fact, that there were only four major grasslands left in the world still intact enough to be viable candidates for large-scale conservation: a portion of both the Mongolian and Kazakh steppes, a slice of Patagonia and the North American Great Plains.

In 1999, the Nature Conservancy zeroed in on North America, and in particular this quiet, wild corner of Montana, and issued a report highlighting the area as a viable option for restoration. It had a lot going for it: Although the area had been homesteaded and grazed, more than 90 per cent of the acreage had never been tilled for crops, which meant it still boasted intact, native prairie. Additionally, the area included the Charles M. Russell National Wildlife Refuge, a 1.1-million-acre tract of preserved land. At the time there was talk of creating the Upper Missouri River Breaks National Monument (ultimately created in 2001), which protected another 375,000 adjacent acres. And around these two tracts lay a vast smattering of public lands, held and managed for multiple use by state and federal governments.

It seemed that if one could purchase 500,000 acres of private land in and amongst these private holdings, one just might be able to stitch together a 3.5-million-acre patchwork of prairie. And if that were possible, wouldn’t it also be possible to then open those lands to the public, and manage them for wildlife, recreation and ecosystem health? Conservation professionals began tossing around the idea of an “American Prairie Reserve.” It could be an ambitious new kind of park, managed collaboratively by state, federal and private stakeholders, where the people of the world could come to camp, fish, hunt, bike, horseback ride and immerse themselves in the beauty of the prairie.

In short order the World Wildlife Fund stepped in to get the ball rolling, as did the North Plains Conservation Network. In 2001, the American Prairie Foundation was formed as a nonprofit, with an eye toward acquiring land and guiding restoration projects. Within months it began purchasing private property in the region and leasing grazing lands on adjacent Bureau of Land Management (BLM) allotments.

In 2005, APR released 16 genetically pure American bison on its newly owned land, a homecoming that was a century in the making. The herd now numbers around 800, but the ultimate goal is far higher. “We’d like to get that herd to 10,000,” says Parker, “to offer the world a gold-standard preservation of that genome.”

With more than $90 million committed to the project (largely from private donors, including an impressive array of well-known philanthropic families) and more than 350,000 acres owned or leased, the vision of a preserved, intact wide-open prairie landscape now looks a lot more like a reality than a dream.

The only problem is, that landscape wasn’t empty when the APR herd got there.

“It does appear that as their bison population expands, they’ll continue to phase out livestock, and those grazing leases for cattle will ultimately shift over to bison,” says Jay Bodner, the natural resources director of the Montana Stockgrowers Association (MSA) and also a born-and-raised Montana rancher. MSA is the voice of ranching interests in the state and has been a vocal opponent of some of APR’s plans and tactics – and especially the notion that the landscape will be better off without cattle.

“The fact of the matter is that much of this ground is in such fantastic shape already because of the ranchers that are out on the landscape today,” Bodner says. “It’s a point of pride. We have about 4,000 grazing leases on BLM land in the state of Montana, and we’re meeting rangeland health standards on over 90 per cent of those.”

APR hopes to run bison on its grazing allotments with very minimal management, a stark contrast to the regimented approach area ranchers have historically taken on grazing land.  Although Montana requires that private bison herds be managed as livestock, APR’s goal is to allow its herds to behave as much like wildlife as possible. This raises questions for some area stockgrowers. Vicki Olson’s family has been ranching in the area for 100 years, and she’s concerned about APR’s hands-off practices. “Near and dear to our heart is land management, and we think this is a major step backward. We think in the end it’ll hurt the rangeland.”

Locals are keeping a wary eye on real estate prices as well. As APR purchases rangeland from willing buyers, there is concern that the price per acre will soon outpace what working ranchers can afford.  Olson worries not only about the future of the landscape, but also of a way of life. “Ranchers here want to buy land and expand so they can bring their children back,” she says. “I’ve heard people from elsewhere saying, ‘Oh, you’re all old, I bet you can’t wait to get the heck out of here.’ Well, I don’t want to! You’ll find people here with a love of the land that’s unsurpassed anywhere.”

APR is adamant that its goal is to create a reserve that makes room for everyone on the landscape – including ranchers. “We’re in no way anti-cow,” says Parker. “Right now, the public lands are fragmented under multi-use philosophy for ranching. Hey, there’s nothing in the world wrong with that. But, if we want to save our grasslands, we want to be able to restore all of the wildlife that used to be there, and that included pronghorn, prairie dogs, big horn sheep, elk, swift fox, black bear, coyote, wolf, grizzly.”

Ultimately, the long-range vision of APR is to build a fully functioning, intact prairie ecosystem that supports the flora and fauna that flourished here thousands of years ago. Parker posits that APR’s end goal isn’t simply a question of getting what it wants, but of making sure that the place itself is healthy and thriving. “The scale of this project absolutely requires collaboration in order to succeed. It’s not about APR succeeding, it’s about the ecosystem succeeding – and you don’t build an ecosystem, you support it.”

Olson tries to be optimistic, although she can’t help but feel that of everything living on the landscape, the ranchers may be the most endangered species of all: “They say we have to find common ground, but if their plan is to succeed, that means I have to leave. I don’t see much common ground there.”

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Five environmental groups and one farmer’s union are working together to dissuade Health Canada from approving a new systemic pesticide that could prove harmful to bees, birds, small mammals and other organisms. The pesticide, called flupyradifurone, attacks the nervous systems of insects and has the potential to contaminate pollen, fruits and seeds of plants. Bees and other pollinators, for one, are already having a hard time coping with the effects of neonicotinoids, which is widely believed to be a major cause of mass bee die-offs. “Scientists have called for a global phase-out of neonics. The last thing we need is another systemic pesticide contaminating the environment,” said Karen Eatwell, a spokesperson for the National Farmers Union. Health Canada has initiated a public comment period on its proposed approval of the new pesticide, says the group, which includes the Sierra Club Canada Foundation and the David Suzuki Foundation. Comments are being received up to November 3.

32 countries at “extreme” risk of conflict

An analysis of 198 countries has identified 32 nations that are most likely to experience conflict and civil unrest as a result of climate change. Bangladesh was found to be the most at-risk country in the world, followed by Sierra Leone, South Sudan, Nigeria and Chad, as well as island nations the Philippines and Haiti. Perhaps even more alarming is that growth economies like Cambodia, India and Pakistan are also on the “extreme risk” list, raising an important question about how much climate change could destabilize our increasingly globalized economy. Maplecroft, the analytics company that produced the report, said that one unifying characteristic of all these economies is their heavy dependence on agriculture for job creation and growth. “Changing weather patterns are already impacting food production, poverty, migration and social stability – factors that significantly increase the risk of conflicts and instability in fragile and emerging states alike.”

85,000 buildings in NYC flood zones: Report

You can bet insurance companies are taking note of this one. A policy brief released this week from the Office of the New York City Comptroller has determined that 84,596 buildings and 400,000 residents in NYC now lie within the so-called 100-year flood plain thanks to the rising effects climate change. The building count more than triples the previous estimate from 2010 and represents property value of nearly $130 billion, according to the analysis. The new estimate came about because of the $14 billion in devastation caused two years ago by Hurricane Sandy. “With such immense value arrayed along the city’s coast, we must act now to make the necessary investments to protect our homes, our businesses and our neighborhoods from the future effects of climate change and the potentially destructive force of another hurricane,” the brief states. “While the costs of resiliency projects are high, investing in the city’s future will pay enormous dividends, both to our waterfront communities and our broader economy.” The brief follows a report from the Union of Concerned Scientists that urges eastern and Gulf coast communities to prepare for chronic flooding over the next 15 and 30 years. To assist with adaptation, New Jersey just launched its Energy Resilience Bank, also in response to Hurricane Sandy. The bank will spend $200 million (U.S.) toward development of distributed energy resources at critical facilities so they can stay operational during outages caused by extreme weather. As Corporate Knights’ Ashley Renders reported today, Canada isn’t immune to the expected rise in flooding events. Unfortunately, it is the only country in the G8 without overland flood insurance.

Climate depression… It’s real

If all of this news about flooding and conflict is getting you down, you’re not alone. Madeleine Thomas at Grist.org wrote an insightful piece this week pointing to the struggle some climate scientists, environmentalists, and other “frontliners” are having with anxiety and depression as a result of climate research. “From depression to substance abuse to suicide and post-traumatic stress disorder, growing bodies of research in the relatively new field of psychology of global warming suggest that climate change will take a pretty heavy toll on the human psyche as storms become more destructive and droughts more prolonged,” wrote Thomas. “For your everyday environmentalist, the emotional stress suffered by a rapidly changing Earth can result in some pretty substantial anxieties.” Corporate Knights had a story on this important but underreported issue in our Summer 2014 magazine. Two years earlier, we ran a feature looking at the impacts of climate change on the mental health of employees working at companies perceived to be contributing to or solving the problem.

Tall travellers of the world unite!

The problem tall people have sitting in airplane seats isn’t really comparable to climate change, but it can cause considerable stress and discomfort – particularly for long flights, and when the person sitting in front insists on permanently reclining their own seat. As The Economist’s business travel blog wrote this week, “Spending three hours wedged into a seat that cannot physically accommodate your legs may not technically qualify as medieval torture, but it’s a close call.” The blog points to the fact that many airlines now accommodate extra-large – that is, heavier – passengers by finding them a complimentary second seat that allows them to spread out. So, it asks, why not adopt the same policy, official or otherwise, for tall people? It’s a reasonable suggestion, and such a call for civility would only be fair. After all, tall travellers have a proud history of helping their shorter peers get their luggage into and out of overhead compartments. But as one of Corporate Knights’ Twitter followers replied, “KLM would go out of business” with such a policy. True, those Dutch folks are pretty tall. But we love them just the same.

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Rob Ford was the antithesis of an environmentalist. He never spoke of climate change or carbon emissions. The words “green energy” and “energy efficiency” weren’t in his vocabulary. When he talked about boosting public transit, it was in the context of improving life for people who drive. Indeed, he was determined to end what he called the “war on cars.”

I remember moderating a mayoral debate on the theme of “green government” during the 2010 campaign. Other than when he was slamming green energy for being too expensive – eliciting boos from the audience – Ford had this unique ability to not answer any of the questions directly or on theme. It was like we had four candidates seriously debating green issues and then, in the corner, was Rob Ford talking to himself about tax cuts and gravy trains.

Once Ford was elected, it was must have been a culture shock to bureaucrats who worked under previous environmentalist mayor David Miller, now chief executive of WWF Canada. Under Miller, Toronto became known internationally for its environmental leadership. Under Ford, Toronto became known internationally as the city with that crack-smoking, homophobic mayor that makes racial slurs.

A New Chapter

Now that John Tory is Toronto’s new mayor, what can we expect from him on the climate and environment file over the next four years?

For one, the words “environment” and “climate change” are again being spoken with what appears genuine concern and conviction. During his campaign, Tory talked about making Toronto a more sustainable community by boosting the city’s tree canopy by 3.8 million trees over the next 10 years. (Not to compare or anything, but motorcycle maker Harley-Davidson just revealed it aims to plant 50 million trees by 2025). Tory also wants to expand and improve maintenance of city parks, increase the number of green spaces, and revive the city’s 44,000-acre system of ravines – what he has referred to as hidden “crown jewels.” All welcome initiatives.

On energy, he has committed to creating a sustainable energy advisory board made up of local green energy, cleantech and sustainability leaders (Hey John, pick me, pick me!). The idea here is to get top advice on how to unlock energy efficiencies and where to embrace renewables as part of a plan to mitigate the city’s climate impacts. Toward that end, according to Tory’s environment policy, he would “work with other levels of government, partners and other jurisdictions on tackling climate change and its effects.”

One idea he has already put forth, long advocated by environmentalists, is the use of underutilized city assets and rights of way as locations for district thermal energy systems – e.g. geothermal, solar thermal or co-generation (biomass, natural gas). These systems could provide shared heating to buildings that are clustered closely together, and when developed across the city they would represent what Tory calls a “smart energy network.” It’s a more efficient way to supply heating, as countries such as Denmark have learned, and it has worked well in nearby communities such as Markham.

Also of particular interest is his plan to appoint an “environment advocate” for the city. This person’s job will be making sure environment policies are consistently applied – and coordinated – across all municipal departments, agencies, boards and commissions. The advocate will also have the task of developing a comprehensive climate adaptation plan for the city and its infrastructure, and a “realistic” and “achievable” plan to reduce greenhouse-gas emissions from municipal assets, improve waste diversion, and lower the amount of toxins released within city boundaries.

Best of all, progress on all of this is supposed to be documented in a “Sustainable City Report” to be released annually. Tory has promised to present this report himself to city stakeholders. It will be important to hold him to it.

Transit Challenges

It is on transit, however, that Tory has attracted the most attention – partly because there’s a big question mark over how he expects to pay for his plan, named SmartTrack. It targets the creation of a new 53-kilometre, 22-station aboveground subway service, one that would basically piggyback an existing regional rail corridor that is already targeted for electrification. He ambitiously claims he can get this ready within seven years, and that it would make it easier for people living in the suburbs – e.g. Markham, Scarborough, and northwest Etobicoke – to ditch their cars in favour of public transit.

Environmentalists like portions of Tory’s plan, but say it doesn’t go far enough. They preferred candidate Olivia Chow’s plan to significantly expand bus service, which would increase transit options to more areas and do it faster and at less cost. An open question is whether Chow’s approach would have reduced or led to more emissions compared to Tory’s plan, given that most Toronto buses run on diesel fuel.

Tory was also criticized by what some described as an unambitious plan to boost cycling infrastructure in the city. He called for more separated on-road bike lanes, more spaces to park bicycles, and more money for maintenance of existing lanes, but he didn’t provide a sense of how much he would expand the network.

Chow, on the other hand, pledged to create more than 200 kilometres of new bicycle lanes, which would roughly triple existing on-road lane infrastructure. True, Tory didn’t put a number on kilometres, but his openness to cycling as part of a strategy to reduce congestion and emissions is still a good sign. He can be pushed on this.

As a city cyclist, my own thought is that downtown Toronto is a chaotic, terrifying place to ride a bicycle. More separated bike lanes would help, but the real problem is rampant, uncoordinated condominium and road construction that gives little, if any, consideration to the impact on cyclists and their safety.

Creating a Smart City

Throughout his campaign, Tory spoke frequently about building intelligence into the way the city operates. He’s a big fan of intelligent building management systems, smart traffic management, and other technologies that collect and make sense of data that can reduce congestion, lower building energy costs and make the city, its residents and its businesses operate more efficiently. “Toronto should be at the forefront of the implementation of these technologies,” stated Tory’s economic plan, in which he outlined his intention to use the “market pull” of the city to turn Toronto into a global research and development hub for “smart city technology.”

One problem, in Tory’s opinion, is that the city hasn’t been taking advantage of the massive amounts of data it currently collects, most of which isn’t available to the public. He has cited that New York City releases 10 times more open data sets to the public compared to Toronto. “We should work to double the available data each year for the next 10 years until we are truly a global leader,” according to his economic plan.

The saying “you can’t improve what you don’t measure” is probably etched in Tory’s mind after his years as president and chief executive of Rogers Cable, where keeping the cable firm’s high-speed Internet service competitive with offerings from Bell Canada meant constant number crunching and analysis in search of efficiencies and a market edge. It’s why Tory plans to push for real-time energy monitoring for all municipal buildings, where he says he will find $22 million in annual savings by his fourth year in office. On top of that, “we will see additional new opportunities for energy retrofits, based on solid, real and measurable data.”

Unfortunately, Tory doesn’t appear ready to support a call for mandatory energy benchmarking of private commercial buildings, despite movement in this direction from city council staff and recommendations from the Toronto Atmospheric Fund. Tory feels private building owners and operators will do this voluntarily if the municipality itself shows leadership on its own buildings. This is highly doubtful. There’s a reason why cities such as New York, Chicago, Seattle, San Francisco and Washington, D.C. all require commercial buildings over a certain size to report their annual energy use, and that’s because most of them – especially the laggards – won’t do it voluntarily.

We’ve had voluntary reporting for a few years in Toronto and it can only go so far. For energy benchmarking to be truly effective as a way to find efficiencies, we need all commercial and public buildings of a certain size playing by the same rules. Here’s hoping Tory has a change of heart on this issue, and supports doing in Toronto what world-class cities south of the border are already doing, with great success.

Will He Deliver?

I know Tory reasonably well. As a technology and telecom reporter at the Toronto Star when Tory was CEO of Rogers Cable, I had many opportunities to chat with him. We kept in touch when he was leader of Ontario’s PC Party and later when he was talk show host for Toronto radio station CFRB 1010. He invited me on his show a few times to talk about energy and technology issues.

From these interactions, I can comfortably say one thing: Tory is not a No Man like Ford. He’s a consensus builder. He has opinions on various energy and environmental matters, but he isn’t dogmatic about it. He doesn’t like to throw money into a burning house. At the same time, he seems to keep an open mind, and is willing to change his position when he hears a sound argument for doing so. He’s a fiscal conservative, but he’s thoughtful enough about matters that he knows that solving social and environmental problems can’t always been done using Bay St. metrics. Sometimes situations call for patient capital. Sometimes payback can take several years. Tory appreciates this – it’s even an approach his former boss Ted Rogers took when building, at huge expense, the country’s first national mobile phone network.

This, in my view, is encouraging.

As one Toronto environmentalist told me, “Overall, this is a very solid opportunity that we should all jump on.”

We’ll learn more over the coming weeks and months. Exactly who he selects as his “environment advocate” will offer key insights, as well as who makes up his sustainable energy advisory board. Tory’s first-annual “Sustainable City Report” will tell us if he’s serious or not, as will his demonstrated willingness to push Toronto Hydro into moving more aggressively on conservation and district energy.

This editor will be watching closely.

The post Did Toronto just elect a green mayor? appeared first on Corporate Knights.

The Internet Corporation for Assigned Names and Numbers (ICANN), the agency that regulates all Internet addresses, announced Tuesday that Vancouver-based social venture Big Room can have exclusive control and operation of a new Internet registry for the dot-eco top-level domain.

It means domain names like cars.eco and construction.eco – even corporateknights.eco – could soon be the home for new environmentally focused websites, and groups such as Greenpeace and 350.org could be part of the network approved to sell them.

It’s a landmark achievement for the little Canadian company, which was co-founded in 2007 by Jacob Malthouse, Trevor Bowden and Anastasia O’Rourke, who met while working together at the United Nations Environment Programme in Geneva.

Competition for the dot-eco extension has been intense. At one point a California-based company called Dot Eco LLC, backed by former U.S. vice-president Al Gore, was lobbying aggressively to be selected as operator of a dot-eco registry.

Not that Big Room was going to be intimidated. To be favoured by ICANN, applicants had to demonstrate a high level of community support for their bids. Big Room’s founders not only worked full time over the years building widespread support within the global environmental community, they also structured the for-profit company as a community-based social venture that has since been certified as a B Corporation.

“It’s operated more like a public-private partnership, so the community will be written into the contracts of ICANN,” explained Malthouse in an interview. “We’re a company, yes, but the community is in charge.”

That community is essentially a coalition of more than 50 environmental organizations from around the world, including WWF, Greenpeace, the Natural Resources Defense Council, the Carbon Disclosure Project, the David Suzuki Foundation, and Conservation International.

“It’s a huge coalition, one of the largest the environmental community has ever put together, and they all wrote in to support our application,” Malthouse added.

Green Cross International, a group founded by former Soviet Union president Mikhail Gorbachev, also threw its support behind Big Room. Eventually, Gore saw the writing on the wall and backed off, Malthouse speculated. “Once his team saw there was another application that was community-based and had the support of WWF and Greenpeace, I think he thought our approach was a better way to go.”

The former U.S. vice-president wasn’t the only one with a change of heart. Climate activist group 350.org, founded by U.S. environmental journalist Bill McKibben, initially supported the U.S.-centric Dot Eco bid but decided later to switch its allegiance to the broader-based Big Room.

In the end, Big Room had three competitors going after dot-eco – Planet Dot Eco LLC, which had some environmental backers, and two domain industry companies that just saw dot-eco as an opportunity to print money. Had Big Room failed to convince ICANN of its higher purpose, the process would have defaulted into an auction that would result in dot-eco going to the highest bidder.

That the Vancouver venture was successful has created excitement within the environmental community. “The potential for the global environment movement to collaborate like never before has been unleashed,” WWF International’s Richard McLellan said in a statement after learning of Big Room’s winning bid.

The Hard Work Begins

Winning control of dot-eco wasn’t easy, or cheap. The application fee alone was about $200,000, and additional funding was required for administrative and legal work, not to mention the time and effort that went into building a global coalition. Some social investors stepped up, providing the funding that Big Room needed.

But now, in many ways, the real work begins. “The community has a tonne of work to do to figure out how to do this right,” Malthouse said. “The important thing now is not to rush it, but to make sure the community has a model we’re all happy with.”

And when can organizations and individuals start registering for their dot-eco addresses? “I would hesitate to put a timeline on it, but sometime next year for sure. We have our work cut out for us to make sure this happens,” he added.

Good governance will be key. The coalition of environmental groups that backed Big Room calls itself the Dot Eco Community Organization (DECO), which has developed a set of by-laws aimed at unifying members around a common set of goals.

A community council of DECO members makes recommendations to its board, which works with Big Room to make sure the policies that result are put into practice. The International Institute for Sustainable Development, headquartered in Winnipeg, provides secretariat services for the coalition.

Big Room and the dot-eco council, co-chaired by WWF’s McLellan, have some difficult questions to answer before they launch the registry. If the dot-eco domain is to only be used for the greater good, how will that “good” be defined? Who can and can’t register a dot-eco extension?

Under what conditions, if any, can oil.eco or coal.eco be registered? Nuclear.eco and naturalgas.eco could be even more controversial. How will the community decide if a company, such as ExxonMobil or TransCanada, can register the dot-eco extension to their own brand names? Will so-called greenwashing be forbidden, and if so, how will this be monitored and enforced?

“There’s a whole discussion that needs to take place about what it means to be qualified as dot-eco,” said Malthouse. “We have to make sure we give the right access to the names, and eliminate squatting.”

On the other hand, the Big Room-operated registry has an opportunity to get quite creative with how dot-eco name extensions are sold. Typically, a registry approves registrars to sell the extensions. Malthouse said one option being considered is to allow established, trusted organizations like Greenpeace to become registrars – basically domain-name resellers – under an arrangement in which Greenpeace gets a percentage of the proceeds that it can put toward its own environmental initiatives and campaigns.

The rules for such an arrangement would have to be carefully crafted, but the benefits it could bring to the environmental community are potentially huge.

Dot-Eco Has Competition

An online environmental war of sorts is likely to take place over the next few years as dot-eco battles to be seen as more credible and popular than its rival dot-green domain, control of which was won by auction back in March by Afilias, the world’s second-largest domain registry.

Malthouse and others in the environmental community worry that dot-green domains will be sold to anyone willing to pay, and that this will result in a corporate rush to lock up dot-green extensions as part of industry greenwashing efforts. Websites such as coal.green and oilsands.green could soon be promoted on highway billboards, bus shelters, print advertisements and TV commercials.

Over time, this might not be a bad thing – as word spreads about the watered-down nature of dot-green domains, it could make dot-eco names that much more legitimate and respected in the eyes of consumers.

Dot-organic is another “green” domain that became available earlier this year, but it is more narrowly focused than dot-eco. While not community-governed like dot-eco, the dot-organic registry does require that any company applying for a dot-organic domain have products carrying a certified organic seal and be third-party qualified.

Other than the Canadian Internet Registration Authority (CIRA), which is the rule-setter and registry for dot-ca name extensions, Big Room is the only other Canadian organization that has exclusive registry status for a top-level domain.

Over the past few years, ICANN has considered nearly 2,000 applications for more than 1,000 top-level name extensions, ranging from dot-blog to dot-wine. Of those, 17 applicants – including Big Room – asked for a “community evaluation” as a way to lock up a domain extension before it goes to auction. A community evaluation is based on a 16-point scoring system. A score of 14 is required to pass.

Of those, only dot-eco, dot-radio, dot-hotel and dot-Osaka met or exceeded the 14-point threshold. One that surprisingly didn’t win approval was a group seeking to control dot-gay. As the U.K.-based news site The Register put it, “The application was, the evaluators complained, simply not gay enough.”

The post Canadian group wins dot-eco rights 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.

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.

The upshot is that outsourcing is not what it seems, and we lack the information to have a proper debate about it.

I was in Beijing in late January and the environmental catastrophe there was plain to see: No visible sky, deadly pervasive smog, pollutant indices off the charts, people going about their business wearing masks and the local media up in arms. At the time, 103 neighbourhood factories faced mandatory shutdowns to combat severe health hazards.

This is the forgotten impact of outsourcing jobs to China.

It has become conventional wisdom that jobs outsourced to emerging markets such as India, Mexico, the Philippines and China are a terrible thing for the economies “losing” these jobs. Politicians and pundits in the U.S., U.K., Canada and elsewhere score points with the public by accusing their rivals of outsourcing jobs overseas. Outsourcers are demonized in news stories and their headlines.

It is true that when a job moves from, say, the U.S. to China so that goods and services can eventually be exported back to the U.S., it results in a manufacturing job loss for America and a manufacturing job gain for China. But this is a simplistic way of looking at the benefits and losses from such an exchange.

For instance, it doesn’t take into account the amount of water or energy consumption that is shifted to China from the U.S. It also doesn’t account for the resulting pollution, which Chinese citizens are increasingly aware of and, in some cases, protesting loudly. Tied to this is the rising health-care costs shifted from the U.S. to China because of pollution-related illnesses.

In other words, while the U.S. may have “lost” a job and India or China may have “gained” one, the picture is incomplete unless natural capital is fully factored into the calculation. Done correctly, that math presents a completely different picture: The economy that “lost” jobs through outsourcing would also be seen to have shifted massive health-care liabilities to the country that gained jobs, while banking large savings from reduced water and energy use.

Looked at from this perspective, outsourcing contributes to the impairment on the economies gaining jobs and to a benefit for those losing jobs. Potentially, savings achieved by losing an energy- or water-intensive job could outweigh the economic contribution of the lost job. Those savings could then be reinvested in higher value-added employment opportunities with much enhanced natural capital footprints – clean energy production is one example.

On the other hand, under current accounting rules the Chinese company benefiting from the outsourced American job may be profitable on paper, even if it is polluting the air, water, ecosystems and forests, as well as affecting the health and safety of thousands, even millions of people.

Current accounting standards, in other words, are ignoring natural capital. In doing so, they are masking a complete picture of corporate profitability, and as a result are misleading shareholders, investors and the markets, not to mention perpetuating a debate about outsourcing based on myths and incomplete information.

The post Doing the math on outsourcing appeared first on Corporate Knights.