Saturday, February 23, 2008

Greening Products Locally?



Poland Spring's Eco-shaped bottle made it's debut recently. I found out about it by seeing an ad on the television. There were various ecologically friendly activities portrayed in the ad, riding a bicycle as a commuter , driving a hybrid, recycling, etc. We are informed that these are "green" activities since the people partaking in the activity have flowers grow out of their heads (kind of like the Whos in Whoville). Of course, your friendly neighborhood consumer walks out of the store with the new eco-friendly Poland Spring bottle and the flower sprouts from her head as well. It uses ~30% less plastic, which must be a good thing, but what percentage is recycled? There are certainly advantages to its design, but is it enough? The negative environmental externalities are still not contained in its price.

Boston's local Fox affiliate reports on the new bottle...

On a somewhat related topic, if we think about what goes into our bodies and where it comes from, which is certainly related to bottled water, Boston area suburbanites appear to be more interested in buying locally produced food; (image from www.environment.nau.edu) This is good news. Local farms benefit as more suburbanites buy food grown close to home. What's the cost difference? Is this something limited to those in the upscale neighborhoods that can afford it (assuming that there is a higher price associated with this wholesome goodness)? Again, externalities play a role here. Imagine if the average piece of shrink-wrapped food that travels 1500 miles from source to purveyor of said goods included the true cost of fossil fuel? Locally produced good would be that much more affordable (or at least competitive) depending upon one's income level.

There IS a way to do business without compromising the world we all share. Gary Hirshberg shares his story in a new book, Stirring it Up, and talks about it briefly in a recent Newsweek article.

So much greenery to read about, though my head is filled after a five hours Econ study session; Pareto improvements, market failures, auctions, profit rate, etc...

Saturday, February 16, 2008

When Industries Quiver


What happens when an important component of an economy shivers? What happens to the people that "the economy" supports and produces when there is great uncertainty? (image from Extrel) The pharmaceutical manufacturing industry in Puerto Rico is experiencing these quivers now. Puerto Rico pursuing biologic bucks, from December 2007.

I recently attended the Interphex Trade Show (trade shows are interesting events, with people from various backgrounds and with various agendas all in one place, but this is a topic for another time) in San Juan (emitting even mo
re carbon for the trip there and back). It was an interesting few days, with some serious standing around time with coworkers and occasional bursts of enthusiasm speaking with customers, students, and other vendors. In any case, conversations more than a few times turned toward the recent announcements by some of the larger pharmaceutical manufacturers about downsizing, or reallocating resources. Depending upon what you read, the net job impact may not be large, in either the positive of the negative direction, but the perception of the people I spoke with was that things were moving in a negative direction. Perhaps they were just pessimists?

What are the risks that states and countries face when attempting to lure corporate investment? Can the good times last if the incentives given to the industries are too generous and the infrastructure needed to support them is too expensive? There are jobs created, and wealth is distributed to the local communities through the spending of the laborers, but as I am learning in the political economics portion of class at BGI, the owner
s of the means of production (managers & shareholders) are extracting the greatest amount of wealth from the system, that may or may not be reinvested locally.

There is an inherent conflict between the capitalists and the workers as illustrated in the profit rate equation (see below). Taken at face value, the capitalist is driven to reduce costs, of which wages (w) is one component.
In addition, the owners of the means of production are driven to reduce material and input costs (Pm) and the price of capital goods (Pc). If they can find a place that will accommodate their needs from a cost perspective, what's to prevent them from moving to the next state, country, or territory that offers an even lower price structure? Profit rate equation taken from Understanding Capitalism


If it is all about the numbers, where does social responsibility fit into this equation? w? Is that it?

Monday, February 11, 2008

BGI, Joseph Stiglitz, and Matthew Wright


My trip to BGI this past weekend for Winter Intensive #2 was yet another amazing experience, refreshing of my internal battery of goodwill and sustainable thinking as well as challenging me to be honest with my reason for being there. The first thing that sticks out to me from this Intensive's experience were the speakers that graced us with their presence on Thursday, Friday, and Saturday evenings. Continuing BGI's "...in Residence" program were the following:
These three people joined the BGI community for the weekend, inspiring us with their unique experiences and perspectives on social entrepreneurship, environmental stewardship, and social justice. It is almost too much to add that Friday afternoon brought Joseph Stiglitz, Nobel Laureate and author of numerous books on globalization including Making Globalization Work and Fair Trade for All (image from http://daryld.com/) into our midst and Saturday evening's guest was Congressman Jay Inslee, author of Apollo's Fire and proponent of clean energy, cap & trade system for carbon dioxide emissions, and general sustainable optimist.

What I found most interesting about these speakers, perhaps a common thread that ran from one-to-the-other, was a commitment to what they were doing. For me, this was most evident in Jensine Larsen and Peter Thom. There was a quiet strength within Jensine's soft-spoken description of the vision that took her from a shy, home-schooled mid-western girl to a world-traveling journalist doggedly pursuing her vision of bringing local women's voices to the global stage. Her work required a persistence and conviction that can only be admired and learned from.

Peter had a slightly different character and vision than Jensine, though equally driven by the desire to "right a wrong". His exposure to extreme poverty while consulting for McKinsey in South Africa, specifically the lack of access to potable water, planted the seed of a company that would become Ethos Water. The company is building a brand of bottled water (purchased by Starbuck's two years ago) dedicated to giving a portion of profits to organizations in the developing world addressing potable water needs. I appreciated his frank acknowledgment of the contradictions inherent with seeking to build a bottled water (a resource intensive process) brand that helps those in less fortunate situations.

Joseph Stiglitz was quite a speaker, and regaled us with stories of economic policy and international advisory adventures. While I tried not to think too deeply about his comments regarding the United State's economic prospects, I thought his main points were of interest (none of this seems earth-shattering);

  1. Subprime mortgages (yep, everyone's talking about this, and have been for a while): The resets of these mortgages to payments that buyers cannot bear is painful, and the pain has not fully been experienced. The bad debt expenses some of the banks have taken are a big problem.
  2. Subprime mortgages were wrapped into other financial instruments and sold (with very little transparency) to other institutions. Therefore the people that wanted to loan paid off did not own them; there is no incentive for those who originated the loan to make sure they were manageable since they were going to sell them anyway. In fact, it created a built-in incentive to deceive the the mortgage buyer about the mortgage's liquidity. International groups that said they understood the risks associated with these mortgage-backed securities did not understand the risks, therefore they were grossly underestimated. The fallout; banks no longer trust each other and intra-bank lending has dried up.
  3. Macroeconomic issues. The household savings rate has been near zero over the past few years. People took billions of dollars in equity out of their homes, in some cases to support a lifestyle their shrinking median income could not sustain. With home prices now stagnating or dropping (depending on the geography), consumers are less confident and the ~70% of the economy that depends upon consumer spending is feeling it.
Moving right along, Congressman Inslee regaled us with his vision of a clean energy future. I found it interesting to hear him talk, as I have not had many opportunities to experience political leaders speak very often. I found the rhetoric fairly "easy", considering the audience. One of my classmates asked the question I was thinking about, what do you say to your compatriots in the House that come from coal states? The CO2 cap-and-trade system he supports for a region with little coal-fired generation is an easy sell. What about selling it nationally?

In summary, the weekend (I did not even mention our classes) was chock full of incredible learning and inspiration. Care to join us?

Thursday, February 07, 2008

Passing Away


I recently learned that Sheldon Brown, a person whom may certainly be considered one of the gurus of the bicycle business, passed away on Monday. I am not one for long-winded commentary on what one person has done and how they contributed so positively to the lives of millions, etc. What I can say is that when I learned of his passing I felt incredibly sad, a sorrow that I had difficulty identifying. I knew him through our time working together at Harris Cyclery in W. Newton, Massachusetts, a funky little family owned shop with a booming internet business thanks to Sheldon's internet savvy (he recognized the power of the 'net to distribute specialized information to people all over the world early in the web's existence).

I thought more about where my sadness came from and stumbled upon stored thoughts about pursuing passion. It dawned on me, Sheldon Brown epitomized the ideal of following one's passion. The dogged commitment to what his life would be was something I have not experienced very often. The loss of someone like Sheldon, someone who demonstrated what it was to create meaning for themselves is truly a loss. He was passionate about cycling (as I knew him) and had a creative and somewhat truculent personality that sometimes disguised a desire to help. Though I never saw them, I also believe he was quite passionate about the Christmas Revels. People all over the world interested in all things related to bicycle mechanics drew upon his comprehensive bicycle website, sheldonbrown.com. Who will carry on his legacy in the bicycle industry?

The passing of a friend, acquaintance, or loved one has hit me much harder over the past few years. I am not quite sure why this has happened. There are a few theories I have, one of which is a general fatalism that has been building within me as I learn more about the challenges facing our world involving poverty, human rights, and climate change. Another is the fact that I am approaching the age that my father passed away at prematurely; 40. I've developed a healthy dislike of medical establishments; they make me anxious and nervous...inexplicably so. What's going on?

How does this relate to what I'd like to accomplish in my life? Is the sense of passing time, time that cannot be recaptured, becoming more important? How does the passing of someone I know through one facet of my life bring these emotions out?

What does this have to do with sustainability? Depending upon how you look at it, everything.

Wednesday, February 06, 2008

Enabling Sustainable Business


So, what are the technologies and systems that will enable the sustainable enterprise? I had never really given this much thought, other than a cursory mental glance when I thought about building a tool in excel to more easily track carbon emission for myself and the client I am working with at BGI. (image from Sustainable Software)

After a meeting today with a friend of mine, someone with many years of experience in the "sustainability" space, I started thinking about what it really means to attempt to maintain a sustainability initiative. It's about data; identifying, tracking, gathering, reporting, maintaining, coordinating, storing; mounds and mounds of electrons in some metal box that may or may not be physically located on your company site. There's CO2 (and other GHG's) to track, social metrics (community, employees, families, etc.), "CSR" (whatever that means), industrial ecological metrics, etc., etc. Oh, and different departments would like to see different data in different forms, thank you very much. The design guys won't care all that much about the depreciation of the new solar array, of course, they might care about the energy spend given that it could effect profit sharing payouts. In any case:
  • Where does it all go?
  • Who maintains it?
  • Who's responsible for it?
  • What data do you really need?
Makes me wonder...what are the enabling systems to support sustainable businesses? What if a billion dollar energy intensive company spread over thirteen countries in 10 time zones with 20 languages and just as many conflicting systems wants to conduct a CO2 footprint? Does the data reside on 13 different EH&S vice presidential laptops? Does the data make sense? Is it verifiable? Could it be used to assess the risk the company faces under potential CO2 emissions regulations as they go to their bank for a capital improvement project?

Makes one wonder, who can help manage all this data?