Wednesday, January 27, 2010

Better Place and the Electric Vehicle

Many people are very excited about Better Place! Their business model thinks well beyond the electric vehicle by considering the infrastructure requirements, governmental partnerships, and renewable energy needed to make this work. It's a good example of thinking about the interconnected parts of a bigger picture when creating new, sustainable value.

Listen to what some investors think of Better Place

Listen CEO Shai Agassi...very inspiring

The question still remains though where all the electricity is going to come from if we placed the demand of 900,000,000 electric vehicles (amount of vehicles in the world today) on the grid. Nuclear seems to be fading as a viable option because it is deemed too expensive and unreliable...not to mention the fact that we have no idea what to do with the toxic waste it creates. Fueling the cars with renewables would be the ultimate sustainable solution but renewables struggle to make any significant dent in power contribution. A leader in renewables, Germany is at about 16-17% of power originating from renewables and Denmark just passed 20%. Now tack on demand from electric vehicles and this portion plummets. The only viable solution as of now is coal, but the emissions created from the coal plants to generate the extra power offsets the emission reductions from moving to EVs. But what about carbon capture and storage technology (CCS)? Jeff Rubin, former chief economist at CIBC World Markets, nicely warns of the shear magnitude of emissions that would need to be stored if we used coal for these vehicles. It would take roughly 6 billion tons of CO2 annually to power the 247 million American EVs, which is the equivalent of trying to capture and store 76 million military tanks somewhere in the Earth.

The CEO of Better Place claims that the power generated for these vehicles will be from renewables. I admire the fact that he's thinking about the source of electricity in his business model...but time will tell whether this is realistic.

(Rubin, 2009: Why Your World is About to Get a Whole Lot Smaller; Randomhouse, Toronto

Sunday, January 24, 2010

Wall-E: Embedded Messages of Sustainability

In 2008, Walt Disney Pictures released the movie Wall-E. For those of you who haven’t seen this movie, it’s a rather exaggerated portrayal of what our consumption habits here on Earth can do to our civilization and our environment. In the movie, centuries have passed since humans lived on Earth; their departure a result of their excess consumption and waste, which has left the planet entirely devoid of life. In a last ditch effort to clean up the waste and save humanity, humans created thousands of little robots to clean up the mess before leaving on a giant spaceship to survive. ‘Wall-E’ is the last remaining robot on Earth and, true to his programming functions, continues to take on the daunting challenge of cleaning up the waste humans have left behind. The hope was that one day life would once again be supported for humans, at which time humans could return. 700 years have passed since their departure, and the movie humorously depicts humans as morbidly obese with everything they could possibly need at their fingertips.

The combination of subtle and explicit messages conveyed in this film is quite impressive. Not only is it an educational flick on the environment for children but it carries some very powerful messages for adults as well. Here are a few:

First, explicit in the movie is the fact that humanity has grown comfortable on their movable couches on the spaceship with technology allowing them to have everything they need from food, entertainment, exercise, and sport, within the reach of a click. Consequently, the human population on this spaceship is morbidly obese to the point where they’ve lost, from an evolutionary perspective, the ability to walk. Clearly this exaggerates our rather addictive quest for convenience, making fun of a range of behaviours such as our use of remote controls, the use of drive-thrus, vehicle cup holders to eat and drive whenever possible, standing lazily on escalators rather than actually stepping up or down, using elevators rather than the stairs, among others behaviours.

Second, the robot itself (Wall-E) represents the many technological fixes we tend to presume will save humanity. I’m consistently shocked by the growing traction of ‘climate change technofixes’ that author Dianne Dumanoski and others argue represent a dangerous allure:

Giant sun reflectors to cool the earth and the use of volcanic ash to cloud the atmosphere are becoming increasingly realistic and now, more and more, spoken not as part of a joke but as possible solutions. In the movie, humanity similarly leaves the problem of waste and its seemingly irrevocable impact on life to, you guessed it, a technological solution - in this case robots cleaning up the mess while humans continue with their reckless consumption elsewhere. Today, governments around the world continue to advocate for green technological solutions, consistently ignoring the giant elephant in the room associated with behavioural change (see page 3 of the following link):

Elephant in the Room (Valente, 2008)

"We can't solve problems by using the same kind of thinking we used when we created them" (Einstein, 1905).

The day will have to come when we begin to accept that addressing these social, ecological, and economic issues is not always going to be through producing and selling more of something else.

Third, ‘Buy-N-Large’ is the major corporation in the movie, meant to mimic, more obviously, major bulk retailers like Wal-Mart and Costco in the West yet perhaps more implicitly the dominating presence of the private sector in society. I grew up in Sudbury, Ontario and when I visit I'm always intrigued by the growing population exhibiting an obsession with Costco (and Wal-Mart for that matter), as I’m sure other cities are. In the movie, Buy-N-Large seems to be the only private sector company owning all supply chains and producing and delivering all products and services. The name of the company carries an important meaning of course. Does it imply ‘buy everything large (in bulk)’ as the trend today in society reveals? Is it also meant to imply that the act of buying will make you large (over-weight), as the movie portrays. Whatever it is, it’s shocking how much this bulk trend is escalating. When I was home for the holidays, I noticed that several houses in a particular neighborhood had the same Costco holiday wreath hanging on their house. It felt kind of surreal.

Now I don’t want to belittle Costco’s and Wal-Mart's business prowess. They’ve clearly perfected the model and have successfully captured a substantial chunk of the market. But the important connection between Costco and Wal-Mart and the movie is the unnecessary consumption of bulk products and low quality junk and the waste it creates. I recently had a good conversation with a colleague about whether it is possible for business to adhere to principles of sustainability when, inherent in their strategic trajectories, is growth that presumes a limitless environment. I recall seeing a coupon from Costco for an air compressor. Part of their business logic is to present consumers with deals for items they may or may not need, leveraging their purchasing power to offer such prices. But one doesn’t buy an air compressor because it’s on sale, one buys one because it's needed. This is not a brand of tissue or toothpaste where you’ll eventually run out of the product thus buying it in advance makes sense. Since when does an air compressor represent an impulse purchase? What’s next: “Did you find everything you were looking for today sir? Did you want to include a big screen television because it’s on sale even though you have 3 of them in your house already?”

Fourth, I’ve posted a few stories on this blog related to the role of the private sector in filling public service gaps and indeed influencing public policy (see Google on this blog). Notice that the president of the Earth is the CEO of Buy-N-Large perhaps unintentionally flagging the increasing neoliberal political power of the private sector by suggesting that the leader of the most powerful company is also ‘naturally’ the leader of the planet. With the world leader possessing mental models of profitability and growth, is there any wonder why humanity is in the predicament it is in? This message i find most alluring. On my final exam in an undergraduate course called Business and Sustainability, I had a question asking students to discuss how the movie Wall-E is related to the concepts and objectives of this course. I commend those students that noticed this particular message. When we think of the most powerful people in the world, we no longer think of prime ministers, country presidents or kings, we think of CEOs of companies like Nike, Procter and Gamble, General Electric and Nestle. Are they making decisions on behalf of this planet? Should we be concerned when they do not possess the democratic incentives to act on behalf of the public? Does this mean that we need to strip business of this power and put it in the hands of the public or does it suggest that we need to alter the incentive structure of business so that they effectively use this power for society?

I’m sure there are other interesting messages that we can take away from this movie. Please add yours.

Wednesday, January 20, 2010

Green Consumer Electronics; Green Building, and Agriculture in Detroit

A few informational linkages:

Can Farming Heal the City of Detroit? (Globe-Net, January 2010): Here’s a story that I think accurately captures the need for revolutionary thinking when addressing some of the looming and already existing social, ecological, and economic challenges of today. This article (linked below) discusses the potential for a city like Detroit, heavily impacted by the state of the auto sector and simultaneously viewed as a major contributor to global warming through its manufacturing of consumer vehicles, to revolutionize its economy through farming. Could you imagine? A city engages in a dramatic shift in identity and image from being the automotive hub of the US to the agricultural hub of the US?

Whether or not this will work is less important I think than the symbolism inherent in the very idea of cities, industries, organizations, and individuals engaging in revolutionary change.

Greenpeace ranks the consumer electronics industry on green commitments (Globe-Net, 2010): Interesting to see Greanpeace’s ranking of the consumer electronics’ commitment to green practices (see link below). Notice though that they are only using chemical substances in their ranking criteria with no mention of other dimensions such as packaging, transportation footprint, and recycling efforts. It’s unfortunate that the highest rated company – Nokia – is only at a 7.3. Lots of areas for improvement.

Top Ten Green Building Trends for 2010 (Globe-Net, January 2010): Very cool trends for those interested in the green building industry.

Tuesday, January 12, 2010

Google's Political Role in China

Google announced that it is no longer willing to censor Internet traffic in China.

I find it very interesting that US government spokespeople, including Hillary Clinton, are encouraging Google to take a stand against the Chinese government's ambitions to censor material on the net, implicitly acknowledging Google's efforts in uncovering issues in the human rights domain. The article talks about how Google uncovered potentially illegal third party access of the personal emails of human rights activists. Was it the Chinese Government? The article seems to suggest so.

Not only is Google policing Internet activity to assure human rights but they are also indirectly influencing national government policy on freedom of speech. I'm sorry, wasn't this supposed to be a public service provided and guaranteed by public bodies? Western nations, Canada included, have tried for years, with limited success, to impose human rights on other nations, including China. I definitely don't want to have a debate about whether human rights is indeed an issue in China. I'm more interested in whether Google is outperforming these traditional actors in achieving freedom of speech?

Whether Google is doing this directly or indirectly, it's important to acknowledge that multinational companies are growing more powerful in influencing politics than ever before. Should we be concerned about this or is this a good thing? Is it really that bad having a very ethical company like Google taking action that influences political behaviour? I mean, look at the following quotation from the article, part of which includes a direct quote from Google:

"The company added that it was sharing the information not just because of the security and human rights implications 'but because this information goes to the heart of a much bigger global debate about freedom of speech'" (Branigan, The Guardian, Jan. 13, 2010)

Should we even bother with the philosophical debate or should we acknowledge that this influence and public role is here to stay and that we must work to understand what it means when we have for profit entities indirectly influencing public affairs? Perhaps the time where we lived in a society where roles were properly delineated (public versus private) is starting to disappear and the role of the manager has become undeniably complex has s/he works to reconcile the many competing interests that go beyond shareholder wealth.

I envy young managers of today and future managers who will have to navigate this very uncertain terrain.

Monday, January 11, 2010

Pepsi's LEED Gold Manufacturing Facility: Oxymoronic or Revolutionary?

It was announced late last year that Pepsi-Co Frito-Lay became the first food manufacturing site to be awarded LEED gold certification in the US. LEED, of course, stands for Leadership in Energy and Environmental Design and is meant to provide a green building rating system based on design criteria that have implications for energy use, waste, recycling, impact on surrounding ecosystems, among other things. Pepsi was granted this certification for their manufacturing facility in Arizona.

While this is a great accomplishment for a large MNC like Pepsi, I can't help but feel uneasy about the oxymoronic nature of this initiative. Pepsi, Coca-Cola, Kellogg, and many other processed food companies are heavily crticized for the health-damaging effects of their food products. These same companies recently backed off a "Smart Choices" program that faced substantial criticism because it used laxed criteria, developed by these companies, to certify processed foods as healthy. New York City recently launched an advertising blitz to educate citizens about the negative health effects of drinking soda - akin to drinking fat. Take a look at this:

But I guess this is okay so long as the buildings Pepsi is using to make these food/drink products are energy efficient, minimizes waste and recycles. Okay, at least they're doing something, but is anyone seeing the irony here? Is this a marketing attempt to overshadow the negative implications of a majority of their food products?

Few companies have been able to see the interconnectedness of their actions. While Pepsi may be building green buildings, their core operations, the effects of which are much more systemic in nature, typically offset these green benefits 100 fold when we consider things like the energy intensive processes associated with wet milling (the process by which natural food is turned into processed food), the overwhelming amount of nitrogen and pesticides used to supply the corn and soy used for their products that eventually make their way into water streams and are considered to be the main cause of oceanic dead zones. This is not to mention the health-related impacts of their products which, if we consider social and ecological systems to be interconnected, cannot be overlooked.

I sympathize with companies because deep down i think that many of them are trying to do the right thing. But the question is whether managers will step up to the plate and begin to examine their core operations closely; their bread and butter, and to move away from the more trivial and isolated initiatives to adopt sustainability in their business.

Can Multinational Companies Play a Diplomatic Role

In the wake of a highly criticized Copenhagen summit, there is growing uncertainty around whether major state leaders have the political will and capacity to develop planet wide agreements. Can business do any better?

The following quotation came from David Vigar, author of Tomorrow's Company's report on global warming and business. He argues that governments lack the cross-cultural expertise that big business tends to have as a result of their transnational operations.

"The input of business would be vital here. Global businesses know how to manage complex multi-billion projects on time and on schedule. They are practised at relationship building because they are at home in many cultures. They handle data and information professionally. They have made a rigorous business discipline out of risk management. And they know how to reach the public. Their capabilities, deployed within a framework for which the UN and politicians take accountability, might break the logjams."

This quotation comes at a time where a growing number of publications are emerging highlighting the political role of the corporation. From Xe's (formerly Blackwater) provision of military service in the Middle East to mining companies building schools and hospitals to large corporations influencing public policy of national governments, we're starting to see more private sector influence on public affairs for the good or for the bad.

There is no question that the Nike's of the world have influence in multiple countries, more influence than the United Nations perhaps. The point is not how much influence in any given country but the influence that spans nation boundaries - something few national governments can claim to have. There's no question that large apparel companies have influenced government policy on labour conditions either directly or indirectly.

The argument in the above quote is that business possesses the complex capabilities that may be helpful in building highly complex agreements that span national boundaries. But what would this mean? Could this influence be curtailed in a way that places business profits above social and ecological objectives? How do we build proper governance into these processes if this were to be pursued?

I invite thoughts...