Sustainability Planning

Thinking Clearly in a Climate of Fear

November 14, 2008

US National Whitewater Center

Tom Lannin, PhD

Sustainability and Planning Carbon Footprint Analysis Risk Disclosure Due Diligence Process Strategy Execution

Topics

Sustainabilityand Planning

Panic in the (Wall) Streets

Panic or Reality?

“The world is at severe risk of a global systemic financial meltdown and a severe global depression.”

-- Nouriel Roubini

The Three Aspects of Sustainability

• Environmental

• Social• Economic

Sustainability Drivers

• Regulatory Compliance• Energy Efficiency• Innovation• Consumer Image

We need a rational, balanced, triple bottom line approach that considers the major drivers.

What We Must Do

We must dedicate our intellectual and financial capital toward creating far more sustainable cultures and societies, especially our own.

What We Must Do

To become more sustainable, we must design, plan, and build systems with both the human network and natural system in mind.

What We Must Do

The Real (and Big) Problem

“Climate change is the most severe problem we are facing today.”

-- Sir David King

Nature-Network Interaction

1. Fragmentation

2. Depletion

3. Pollution

4. Erosion

5. Extinction

As we create great wealth, we must deal with the problems we create.

Carbon Footprint Analysis

Beyond Compliance

We must do more than just comply. We must analyze carbon data in order to design a truly sustainable future.

What the Data Tells Us about the Carbon Problemcarbon in

millions of tons yearly

Carbon Emissions

New software enables us to measure our carbon footprint and make smart decisions about sustainable design and development.

How to Measure Our Carbon Footprint

Carbon Footprint Analysis

Organizations must first• Establish context for analysis

• Determine the source and drivers

• Avoid simple spreadsheets• Use data to decide, not just report

Carbon Footprint Analysis

Organizations must then• Forecast• Create a scenario• Be transparent about the data• Use clear methods and processes

• Report honestly and be fully compliant

Formula for Calculating GHG

Emissions

SAS for Sustainability Management

Good data in = good data out

SAS for Sustainability Management

Largest CO2 Footprints by City

CO2 Emissions by City: Pounds per Employee Annually

City and Employee Data

Facility Performance Data

Risk Disclosure

Cap-and-trade systems create a financial incentive for emission reductions.

Risk DisclosureCap and Trade Basics

Risk DisclosureCap and Trade Basics

An environmental regulator establishes a “cap” that limits emissions from a designated group of polluters.

The emissions allowed under the new cap are divided up into individual permits that represent the right to emit that amount.

Risk DisclosureCap and Trade Basics

Because the emissions cap restricts the amount of pollution allowed, permits that give a company the right to pollute take on financial value.

Risk DisclosureCap and Trade Basics

Companies can now buy and sell permits in order to continue operating in the most profitable way possible.

Risk DisclosureCap and Trade Basics

Risk Disclosure

Environmental Application

• Capacity usage is a risk factor

• Capacity usage is linked to goods and services that have some CO2 emissions

• The environment generates value-at-risk numbers (VaR) in terms of dollars and CO2 production

Risk Disclosure CO2 Exchange

European Climate Exchange (ECX) manages the marketing and product development for ECX Carbon Financial Instruments (ECX CFIs).

Chicago Climate Exchange (CCX) is the world’s first--and North America’s only-- voluntary, legally binding integrated trading system to reduce emissions of all six major greenhouse gases.

Risk Disclosure CO2 Exchange

Due Diligence

• Corporate Social Responsibility (CSR) agenda

• Environmental, social, and ethical equity are now on par with economic equity

• Companies not practicing sustainability due diligence are at risk

Due Diligence

Businesses who don’t perform due diligence with the triple bottom line in mind miss out on the potential benefits.

For example, a business could miss out on a premium that could be attached to the business’ sale price based on the value of its sustainability initiatives.

Due Diligence

The Value” of Due Diligence

• Environmental waste clean-up and “greenwashing” have a price

• A company’s corporate responsibility record has value and can be considered a bona fide asset

• This asset should be factored into deal price negotiations

Strategy Execution

Solid Strategy Requires…

• Sustainability vision (triple bottom line)

• Sustainable risk and performance management

• Sustainable process management

• Customer satisfaction

Sustainability Vision

Sustainability Process Management

Sustainable Risk and Performance Management

Customer Satisfaction

Strategy ExecutionHow They Work Together

A Call for Reason

Like a well-run bank, society cannot liquidate its natural resources (assets) to meet the demands of those operating strictly on faith, fear, and speculation.

Time for Sustainable Change

We must replace a “greed is good” mentality with a “green is good” ethic throughout our culture, and especially in business.

Reduce, reuse, recycle is the new business mantra. And the triple bottom line is replacing purely economic metrics. -- William McDonough

Questions?

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