SUSTAINABILITY, PART 2
SO WHAT DO WE DO
NOW?
Dr. Ron
Lembke
WHAT IS “SUSTAINABILIT Y?”
 The ability to keep doing something for the indefinite future
If it’s not profitable, it’s not sustainable
 What allows a company to survive?
 Meeting customer demands
 Developing new products
 Keeping costs low
DIFFERENT METRICS
 Dimensions of Environmental Sustainability:




Carbon: energy burned by us, by our suppliers
Water: water used
The Carbon
Paper and corrugated used
Solid waste generated
Footprint of
 Costs and Revenues:
 Lower electricity, gas and water bills
 Lower garbage hauling costs
 Better public relations
a plastic
bag is 1/1000 that
of the food in it!
 How much do customers care?
 If it makes them feel closer, there’s likely monetary value?
 How much is your competition doing?
 Watch out for GREENWASHING!!!!
 Trivial gestures: attention misdirection – ski passes, plastic bags
MORE EFFICIENT CARS
 Aka Suzuki Swift,
Cultus
 EPA 55/60 mpg
2011 EPA MILEAGE CHAMP
TOYOTA PRIUS
 MRSP $23,810
Hybrid
MPG
Gas
Fuel/yr
Fuel/mo
Fuel Price / gallon
33
454.5
$1,591
$133
$3.50
Regular Hybrid
MPG
26
33
Gas
576.9
454.5
Cost
$2,019 $1,591
$ saved
$428
% fuel reduction
21%
Base MSRP
20,580
Breakeven years
Fuel Price / gallon
27,435
16.0
$3.50
Jan 17, 2011
Oct 17, 2010
Jul 17, 2010
Apr 17, 2010
Jan 17, 2010
Oct 17, 2009
Jul 17, 2009
Apr 17, 2009
Jan 17, 2009
Oct 17, 2008
Jul 17, 2008
Apr 17, 2008
Jan 17, 2008
Oct 17, 2007
Jul 17, 2007
4
Apr 17, 2007
Jan 17, 2007
Oct 17, 2006
Jul 17, 2006
Apr 17, 2006
Jan 17, 2006
Oct 17, 2005
Jul 17, 2005
Apr 17, 2005
Jan 17, 2005
4.5
Avg US Retail Gas Price
CAMRY HYBRID
3.5
3
2.5
2
1.5
1
0.5
0
GREEN SUVS?
ISN’T THAT AN OXYMORON?
Regular Hybrid
MPG
17
21
Gas
882.4
714.3
Cost
$3,088 $2,500
$ saved
$588
% fuel reduction
19%
Base MSRP
42,580
Breakeven years
Fuel Price / gallon
54,490
20.2
$3.50
2011 MSRP Info from cars.com
Regular Hybrid
MPG
14
21
Gas
1071.4
714.3
Cost
$3,750 $2,500
$ saved
$1,250
% fuel reduction
33%
Base MSRP
32,515
Breakeven years
Fuel Price / gallon
38,340
4.7
$3.50
HOW HAVE WE FIXED
THINGS BEFORE?
IF CARS ARE THE
PROBLEM…
LET’S GO BACK TO HORSES!
 Feeding:
 1.4 tons of oats, 2.4 tons of hay per year
 5 acres per horse
 15 million acres: West Virginia
 1 ,000 lb horse:
 50 lbs/day, 10 tons/year, quart of urine
 “Crossing Sweepers”
 1898 first urban planning conference: horse manure
 1894 Times of London: 9ft deep by 1950
 Conference quit after 3 days, not 10
 Henry Ford saved us?
DDT
 DichloroDiphenylTrichloroe
thane
 Mosquitoes-malaria
 Lice-typhus
 Nobel Prize, 1948
 Rachel Carson Silent
Spring, 1962
 EDF, 1964
 Banned, 1972
 Granny’s garage, 2005
OZONE HOLE
Return to 1980 levels by 2068
Photo: NASA http://www.nasa.gov/vision/earth/lookingatearth/ozone_record.html
CFCS





Chlorofluorocarbons
Break down, release chlorine
Chlorine destroys ozone
UV rays reach Earth’s surface
CFCs banned- Montreal
Protocol, 1986
LEADED GAS
 1930s: Octane in
30s
 Add Lead: 87!
 Protected Valve
seats
 Catalytic converter
problems
 1996 banned US
 $10,000 fine
,
 Feb 2, 1962 ad in Life magazine
 Humble merged with Standard to become Exxon
SO WHO IS GOING TO DO
SOMETHING?
CAP AND TRADE VS CARBON TAX
 Cap and Trade
 Amount of carbon is fixed, costs to companies are known
 Complicated:
 Permits are issued, based on past emissions, go down each year
 If you reduce emissions and don’t need them all, sell them
 If you don’t want to reduce, buy more from somebody else
 Carbon Tax
 Price is fixed each year, amount of carbon varies
 Costs are known, it’s simpler, but it’s (gasp) a “TAX!”
 Martin Feldstein, Reagan’s chief economic advisor – 20 years
 Almost replaced Greenspan, but on board of AIG
 Monies Raised help people af fected by Climate Change
ACID RAIN
 Sulfur Dioxide SO2 and
nitrogen oxides NOx react
 1990 Clean Air Act
 US coal plants cut sulfur
emissions in half
 Permits issued, reduce or
trade
 Emissions monitored
THE PRICE OF CARBON





(and everything else)
Markets need a price signal
Right now, it’s an “Externality.”
You can’t MANAGE what you don’t _______?
And by the way, who testified before Congress in FAVOR of cap
and trade?
CAP AND TRADE IS DEAD
 American Clean Energy and Security Act
 Waxman-Markey
 Passed house 219-212 6/29/09
 Died in Senate
 Environmentalists divided:
 Too weak
 Fuel MPG targets too low
 Restricted EPA’s ability to regulate CO 2
 If the politicians won’t save us… who will?
SO WHO IS DOING
ANYTHING?
THE
SEC?
 Risks to a company must be disclosed
 Guidance about reporting Climate -change related risks
 2008 E&Y study listed climate change as #1 threat to
insurance industry
MAYBE
WAL-MART WILL?
 65% improvement fleet efficiency
2010 vs ‘05
 Power Units – idling
 Truck skirts
 2010 – 57m more cases, 49m fewer
miles
 Better load planning
 7,600 cars off the road
 World’s Largest Company
 $419b ending Jan, 2010
 Told Congress to pass Cap and Trade
 No fish left to sell? Largest organic
cotton buyer, overnight.
CERTIFICATION EFFORTS
 Seafood
 Paper
 Wood
SUSTAINABILIT Y
INDEX
 1 . 15 questions for suppliers, Oct 2009
 2. Lifecycle Analysis Database
 Sustainability Consortium, ASU, U of Arkansas
 3. Simple Tool for Customers
 Maybe rating 1-100 on




Carbon Emissions
Energy use
Water conservation
Deforestation
 Scan QR codes for more info?
 Nobody wants a red score
SUSTAINABILIT Y INDEX?
 Red, Yellow and Green labels on the shelves?
 Relative to what? Industry? Other alternative products?
 Plasma TVs vs. CRTs vs. LEDs vs. OLED
 Scan barcode or QR code with smartphone?
 Set up your own criteria
 I care more about: water usage, child labor, sweatshops, chemical
usage, pesticide usage, etc., etc.
 Using ratings from Earthster?
 Whatever Walmart wants may become a global standard
SUSTAINABILIT Y
INITIATIVE
 Not developing a consumer standard
 Sustainability Measurement and Reporting Standards
 What mfg should measure, and how
 Report to common database
 Common database used for indices
 Wait, what? No Index or label?
 Kicking the can down the road?
MAYBE WALL STREET WILL?
 “Carbon is a financial risk”
 Single reporting entity
 551 Institutional Investors
 $71 Trillion in assets
 Launched 2000
 Largest 2,500 corporations = 2025% GHG
 By supply chain, not by country
 > 50% carbon emissions outside
the four walls
 Maybe 80%
 600% expected increase in carbon
consulting and software
 Dan Olson 11/3/11
CDP SUPPLY CHAIN
55 companies
“greater realization that carbon management
presents a wider cost and revenue opportunity
rather than being a pure risk mitigation activity.”
90% members committed to reductions
3.4% annual goals, up from 2.2%
 Increased insight into baseline emissions
 Growing expertise regarding reducing their emissions
 Global 3.9% per year needed for 80% by 2050
ONLY 1/3 of suppliers have targets
IMPORTANCE OF CARBON IN SOURCING
DECISIONS
CARBON FOOTPRINTS
CO 2 E
 The amount of CO 2 that would have the same global warming
potential (GWP).
 CO 2 , by definition has GWP = 1 .0
Gas
Lifetime
(years)
Methane
GWP
20yrs
GWP
100 yrs
GWP 500
yrs
12
72
25
7.6
Nitrous Oxide
114
289
298
153
HFC-23
270
12000
14,800
12,200
14
3,830
1,430
435
3,200 16,300
22,800
32,600
HFC-134a
Sulfur hexafluoride
IPCC AR4 p. 212
 SF 6 - 8,000 tons produced per year
 6,000 in electrical industry, inert gas for casting magnesium
 Inert filling for insulated glazing windows
 0.2% of GHG emissions
CF PER UNIT
+
+
=
 Add up total Carbon Footprint of all activities and inputs,
divide by the number of units sold
PATAGONIA – 15 PRODUCTS
CARBON FOOTPRINT AS MULTIPLE OF
PRODUCT WEIGHT
Product
Shoes
Shirts
Jackets/vests
Sweaters/sweatshirts
Shorts
Bottoms
Dresses
Luggage
Average
40
29.7
23
46.7
8.5
18
46
8
Original data from Patagonia
 World Resources Institute
 Gustave Speth,
 “Bridge at the End of the World”
 Natural Resources Defense Council
 World Business Council for Sustainable Development
 CEO led, 200+ companies
 Stephan Schmidheiny
 1992 Rio Earth Summit
 “The mission of the GHG Initiative is to develop
internationally accepted GHG accounting and reporting
standards and tools, and promote their adoption in order to
achieve a low emissions economy worldwide”
Direct vs. indirect GHG emissions?
 Direct: sources that are owned or controlled
 Indirect: result of activities, but at sources owned or
controlled by another entity.
Scope:
1.
2.
3.
Direct GHG emissions
GHG from purchased electricity, heat, or steam
Extraction and production of purchased materials and
fuels, transport-related activities in vehicles not owned or
controlled by the reporting entity, electricity -related
activities (e.g. T&D losses) not covered in Scope 2,
outsourced activities, waste disposal, etc.
SCOPE 1,2,3 OLD PICTURE
GHG PROTOCOL
 2,487 respondents for CDP
 85% used GHG Protocol Standard
 “Often, majority of emissions come from Scope 3
sources, which means many companies have been
missing out on significant sources of improvement.”
 Kraft Foods found 90% from value chain
 GHG Protocol Factsheet
INDIRECT EMISSIONS
2010 VS. 2011
2010
2011
50% outside four walls
80%?
90%?
REVISED PICTURE, OCT 2011
Inherent
DoubleCounting
CORPORATE PERSPECTIVE
Supplier
Retailer
LIFECYCLE ANALYSIS
Production
Distribution
Usage
End
Of
Life
DOUBLE BILLING
MFG AND RETAILER BOTH RESPONSIBLE
Production
Distribution
Usage
MANUFACTURER’S FOOTPRINT
RETAILER’S FOOTPRINT
EOL
EMBODIED CARBON
Supplier
Retailer
Scope 3 supply chain reporting is growing
Still lags far behind other scopes
SCOPE 3 GUIDELINES
Upstream
Downstream
1. Purchased Goods and
Services
2. Capital Goods
3. Fuel and Energy -Related
Activities
4. Upstream Transportation
& Distribution
5. Waste Generated in
Operations
6. Business Travel
7. Employee Commuting
8. Upstream Leased Assets
9. Downstream Transportation &
Distribution
10. Processing of Sold Products
11. Use of Sold Products
12. End-of-life treatment of Sold
Products
13. Downstream leased assets
14. Franchises
15. Investments
“Guidance for Calculating Scope 3 Emissions,” Aug. 2011
CARBON FOOTPRINT VISIBILIT Y
 Wal-Mart
 Sustainability initiative
 Carbon Trust
 Labeled £2 billion last year
 Patagonia
 Footprint chronicles
TESCO (UK) LABELED 500 ITEMS
Carbon-label.co.uk
Carbon Trust
APPLE CARBON FOOTPRINT
FRUSTRATION-FREE
PACKAGING




Easier to open
Less materials
Ship in same box
Cheaper to pack
 No twist-ties
 No theft concerns
 No display concerns
WAL-MART
WAL-MART
 “These are not complicated questions, but we have never
systematically asked for this kind of information before ”
Mike Duke
WAL-MART CFLS




Sell 100 MILLION CFLS in a year!
Save customers $3b in electricity
20 millions metric tons of CO2
Save $40 over life of bulb
WAL-MART KID
CONNECTION




Reduced packaging
497 fewer containers per year
$2.4m shipping costs
Straight to bottom line
 4,000 trees saved
 1,000,000 barrels of oil
 $60m sales needed for that much profit
 Why didn’t we do this sooner?
 $2.4 million straight to the bottom line
WAL-MART DAIRY
 Don’t make the farmers to bad guy
 Look at whole supply chain
 Grow the crops to feed the cows
 Methane from the cows and their manure
 On-site power generation
 Transport milk to process
 Process milk into sour cream
 Haul sour cream to Distribution Centers (DCs)
CARBON TRUST
 Measuring and Reducing GHG
WAL-MART
 10% of impact is from stores, trucks, etc.
 90% of its impact is from the Supply Chain
 Fortune 1= 900 lb gorilla
 Take the water out of Tide
 ¼ the packaging, shipping cost, shelf space
 95 million lbs plastic resin saved
 400 m gallons of water
 125 m lbs cardboard
 500,000 gallons of diesel = 11m lbs CO2
WAL-MART LAUNDRY SOAP
 128 facings of Tide brand products
 13 facings of Coldwater products = 10% of slots
 NW Reno Wal-Mart, Jan. 2012
TESCO DROPPING ITS LABELS?
STATUS OF WAL-MART’S INITIATIVE
 2005 – 8% of shoppers left, unfavorable views went from 38%
down to 20% in 2012.
 Require top 200 Chinese suppliers to cut electricity by 20%
 It’s still sold 35% more stuf f in the US from 2005 to 2011 .
 Index will NOT account for durability
 Carbon footprint per year, assuming it lasts 3 vs 5 years?
 Index a Long way of f
 Why?
 Nobody cares about carbon
 Why?
 Because there is no price on it
SO WHAT MAKES
SENSE?
WHY WORRY ABOUT CARBON?
Carbon = Energy = Money
MCKINSEY STUDY
http://www.mckinsey.com/Client_Service/Electric_Power_and_Natural_Gas/Latest_thin
king/Unlocking_energy_efficiency_in_the_US_economy
TOOLS FOR FINDING CARBON?
 Look for energy usage
 What appliances use the most?
LIFECYCLE ANALYSIS
 Input-Output
 Total inputs and outputs of system, industry wide
 Micro approach – look at each input
 KWh used
 Gallons of water, etc.
CF OF TOMATOES, ETC.
 1kg of Tomatoes
 0.4 kg organic loose tomatoes, grown locally in July
 9.1 kg (20 lbs) average
 50 kg (1110 lbs) organic, “on the vine” cherry tomatoes, grown in
Ohio, in March
 Flights, bread, wine – Ca vs. France
 Bags vs food?
 Attention Misdirection




Carbon Footprint of a plastic bag?
Recyclable ski passes
Recycled paper
Feels like something is being done
COMPOSTABLES
 Great Basin Brewing Company




Compostable napkins, straws, silverware, boxes, etc.
Slightly higher cost
Vendors not even aware of their own products
Project lead by UNR MBA graduate
 Waste hauled by Castaway Trash Hauling
 Commercial composting
 Landfills emit methane, a bad GHG, and usually don’t capture it
 Composting emits less methane 30-70% less
KILL-A-WATT
COMMERCIAL
COMPOSTING
 Look up impact of things
DISCOVERING OPPORTUNITIES
IMPACTS ALONG VALUE CHAIN
LIFECYCLE ANALYSIS
LEED: LEADERSHIP IN ENERGY AND
ENVIRONMENTAL DESIGN
 US Green Building Council
 Points system
 Start with an architect that specializes in LEED
 True believers who really know how to find cost-effective methods
BOOKS TO CONSIDER
 Ecological Intelligence: The Hidden Impacts of What We Buy,
Daniel Goleman
 Force of Nature: The Unlikely Story of Wal -Mart’s Green
Revolution, Edward Humes
 How Bad Are Bananas? The Carbon Impact of Almost
Everything, Mike Berners-Lee
 Hot Flat and Crowded: Why We Need a Green Revolution – And
How it Can Renew America, Thomas L. Friedman