first encounter with a living roof

Photo: Akhila Vijayaraghavan ©

A few weeks ago, I spent a day at the California Academy of Sciences in San Francisco. With little planning, it turned out to be a pretty green day. I took the public transport and ate organic food at their cafe as well as spent a lot of time appreciating science and the natural world in general.

The academy is big on sustainability and the first impression of this is when you walk in to be greeted with a revamped building with lots of natural light and clean lines. The second is found on the back of their maps: "printed on 100% recycled post-consumer paper "and "please return after use to help the museum save resources". The many other signs include the climate change exhibit, the organic food served in their cafe, eco-friendly items in the gift shop, including organic cotton T-shirts, solar panels on the roof, water-saving toilets and their carefully chosen exhibits. Best of all was the 2.5 acre living green roof - I have previously blogged about green roofs but that was well before I saw one of this proportion. It was covered in little hills of native Californian wildflowers which are endangered, supported bees, butterflies and birds as well as a massive installation of solar panels. It was a treat for sore eyes and it made me hopeful again about the possibilities of technology. More information about the green roof can be found here.

The academy is housed in the largest LEED Platinum-rated public building and it is the greenest museum in the world. The innovative use of materials and energy efficiency have made it a model for green buildings.

The other thing that blew my mind was the planetarium. The Morrison planetarium is the biggest all-digital dome in the world with a 75-foot projection screen tilted at a 30 degree angle. The kind of imagery it produces gives you the feeling that you are flying in space especially because everything is happening above your head. To celebrate Earth Day they were show-casing 'Fragile Planet' narrated by Sigourney Weaver - truly goose-bump inducing stuff, stressing the importance of protecting the only home we know.

For anyone living in the Bay Area or visiting, the Academy is a must-see and provides an enjoyable day out for everyone in the family.

why CSR is important to SMEs

Last week I said that I will write a post about how small-enterprises can gain by employing principles of CSR and here it is. In a previous post I talked about how CSR plays an important role in current economic times and how companies that employ these principles have an edge over others.

First of all it must be stressed that CSR is not just policy, it is a principle of doing business. It is not something that is done as an add-on, it is something that is incorporated into your way of doing business. In this scenario, it offers businesses many benefits in terms of better shareholder relationships and also acts as a powerful tool for word-of-mouth advertising.

As mentioned in my last post, it offers SMEs added benefits in terms of strengthening their relationship within the community and acting as an example to make people's lives better. The most important reason why small companies should engage in CSR activities is to improve their export markets. Acting as a part of the supply chain means that export products to a big company needs to meet certain standards all along the chain. This is the single more important competitive benefit that SMEs have by incorporating CSR into their business. It is especially important for small businesses in emerging economies supplying to companies with multiple supply chains.

Secondly, mainstreaming CSR into any business is a challenge. By incorporating the principles of CSR in the early stages of growth, SMEs have another advantage over companies that have already reached a certain size. Forming principles, processes and structures becomes easier along with reporting and policy writing. Developing a culture of sustainability within the organization becomes more streamlined and employees know what it means to be sustainable.

Finally, it makes business sense. This is something that the larger companies are beginning to understand. When the small companies jump on this idea, the limits to green business has no bounds. Infact, the term might just become obsolete along with the term 'business as usual' because every business will be ethical, sustainable and profitable. This is a dream worth working towards...

changing perception of business

Growth at current rates cannot be supported on the precept of development. The definition of sustainability does not offer any explanation as to how this rate of growth can be supported because it assumes that resources are running out and that we are compromising the future generations’ ability to enjoy the current quality of life that we have. What it also fails to address is how sustainability can be a business model.

Businesses are equated with profit which is equated with growth. All growth demands destruction. The definition of sustainability in itself is anti-growth, which is why the incorporation of the concept of ‘sustainable growth’ becomes difficult. The previous generations were used to unprecedented rates of growth with little or no concern towards environmental issues.

The ominous environmental constraint that we feel now is changing the way we think about ‘business as usual’. The global impact we have on the environment is slowing making the phenomenon of globalization and by proxy its downstream implications like, off-shore manufacturing a redundant concept. The realization that there is a difference between ‘price’ and ‘cost’ is hitting all businesses hard.

We have effectively managed to push economic growth, societal well-being into a corner and using the concept of sustainability as the life-ring to ensure that business as usual can proceed. The concept of big business is on its way out. The new business model is one that consists of social entrepreneurship at its core, both in the service and manufacturing sector.

For a concept to be truly sustainable, it requires the involvement of the people in the grass-roots. Business decisions can no longer be made in the board-rooms of the world; it requires involvement from people on the ground in massive scales. This concept has long been idealised as social development. This is the concept that is going to be the future of business. Social development negates the phenomenon of the tragedy of the commons which is the root of environmental problems. If people are involved in the building of something, they will not destroy it. It encourages the exchange of technological advances and traditional knowledge. It is a concept that has a bottom-up escalation of ideas and encourages horizontal management.

In the traditional model of economics, pollution and thereby destruction of these was considered a ‘negative externality’. Now we know that the true cost of doing business also factors in this externality; in fact any economic model that still regards the environment as an externality is ultimately an anti-growth model. The time now is to devise concepts that will pioneer a new business model of true sustainability where the barriers between the developing and developed world are broken down and there is exchange of ideas between both.

The world of the future will consist of increasing population putting pressure on available resources. The challenge would be to ensure employment, education, accommodation, nutrition and health care at the basic level. Increase in level of prosperity and the rise of the middle class in countries like India and China will see further increase in energy consumption patterns. In order to meet soaring demand for commodities, the new business model will first have to address the question of supply in relation to price of products. Secondly it has to address whether cheaper manufacturing is necessarily better manufacturing and whether the price of goods today is worth the cost of resources tomorrow. Finally it will have to decide the kind of services that will enhance quality of life and ensure environmental protection and disabuse. In order to rebuild the world for a better future, it is not possible to be merely idealistic but also have a business idea to offer that is employable and benefits people of various regions.

In order to rebuild the world for a better future, it is not possible to be merely idealistic but also have a business idea to offer that is employable and benefits people of various regions. It is crucially essential now, to do business for the world.

tragedy of the commons

Photo Courtesy: www.fao.org

The tragedy of the commons is a phenomenon that was first written about by Garrett Hardin in 1968. In his article published in Science he describes a dilemma in which multiple individuals acting independently and solely and rationally consulting their own self-interest will ultimately destroy a shared limited resource even when it is clear that it is not in anyone's long term interest for this to happen.

Central to Hardin's article is an example, a hypothetical and simplified situation from medieval land tenure in Europe, of herders sharing a common parcel of land (the commons), on which they are each entitled to let their cows graze. In Hardin's example, it is in each herder's interest to put the next (and succeeding) cows he acquires onto the land, even if the carrying capacity of the commons is exceeded and it is damaged for all as a result. The herder receives all of the benefits from an additional cow, while the damage to the commons is shared by the entire group. If all herders make this individually rational economic decision, the commons will be destroyed to the detriment of all.

This concept that the 'commons' is available to everyone to use and abuse without regulation is the primary stumbling block towards a sustainable future. The abuse of the commons is being seen in many environmental scenarios like destruction of land resources, deforestation, air pollution, overfishing etc. Due to the lack of ownership, there is also a lack of conscience. Increase in population only increases the pressure on the commons.

I have previously argued that the definition of sustainability itself lends itself to an anti-growth model because it assumes that we are compromising the future generations' ability to enjoy the level of comfort that we do and because our current consumption patterns means that resources will run out. It does not address the issue of employing a new business model in order to overcome the tragedy of commons.

Businesses traditionally considered pollution and other abuse to the commons as an externality - a phenomenon that occurs during the normal course of doing business. Now however, there is a stark realisation that the environment can no longer be considered an externality. In fact any business model that still operates on this precept is ultimately an anti-growth model.

Business as usual needs a total reorganization in the way it operates. The age of big businesses and the off shoots of globalization like off-shore manufacturing is part of the redundant business model which still does not negate the tragedy of commons. It only makes the problem their problem but what it fails to recognize is that ultimately it is our problem.

A model of new-age business with sustainability at its core depends on social development and a bottom-up approach to knowledge transfer and horizontal management. This is done through the involvement of the community in community projects and allocation of the commons so that it is no under common jurisdiction but individual responsibility.

The backbone of every big business should be based on social development if it is to thrive. Social development is not just a localised 'small-time' tool. It can be as big or as small as one envisions. One of the biggest dairy companies in India, Amul uses this as a philosophy. Corporate social responsibility becomes an empty sentiment if it is not fully integrated into the daily workings of the business in question.

sustainability - the flip side

The juxtaposition of sustainable development with ecology and development is a valid comparison and one that is open to debate. Development at an unprecedented rate cannot continue and the lack of proper ecosystem management is making it extremely difficult to support current rates of growth. Already the adverse effect of environmental abuse is being felt. There is a direct impact on world economy due to climate change – change in weather patterns, agricultural losses, increase in floods, tornadoes, droughts. All of these have impacts on world economy.

The definition of sustainability itself has large black-holes that need explanation. As a relatively new business model, it challenges the traditional notions of growth. Whilst a growing economy simply expands, a developing economy improves. Within the frame of the definition of sustainability there is no indication of how we can support current rates of growth "without compromising on the ability of future generations to support themselves". There is no basis on which to perform a projection analysis to figure out what resource use the future generation requires because we barely know what is acceptable today. However since there is a deceptive simplicity around the concept of sustainability, it is applied to every new business model.

The idea of sustainable development is based on two assumptions. The first is that we are running out of resources and the second is that economic growth is the cause of this depletion. However, resources are becoming less, not more, scarce. Agricultural yields for all the major crops like rice, corn, and wheat have been on the increase. Increased exploration of oil, coal and natural has been revealing that known reserves are expanding. This same phenomenon has been seen with metals like aluminum, zinc, iron, and copper where reserves have increased. Improved technology has ensured that more-conservative production techniques are encouraged and this in turn has ensured the exploration and new discoveries of underground reserves. Life expectancy, housing, nutrition and education levels are improving world over. In short, the prosperity we enjoy today is leaving future generations better off, not worse off.

If the definition of sustainable development incorporates the maximization of human welfare, then this is only possible if the legal system ensures property rights in order to ensure market operability. The definition of sustainability should incorporate the idea of right to development. The right to development and by proxy the right to environment can only be guaranteed when the tragedy of the commons is abolished. Since growth and increasing wealth leads to improved environmental quality by raising demands for it, economic growth cannot be the antithesis of sustainable development but the essence of it.

Political and economic systems based on property rights is the only base to sustainable development. Government regulation to stop growth is the antithesis of any development and will see a decline in environmental quality. Scarcity of resources is the excuse given for lack of institutions that ensure human freedom.

The biggest problem is that there is no common consensus that world governments and organizations can reach in order to resolve these issues. Additionally, any measure we have in place in terms of treaties etc are not mandatory not legally-binding. Unless there is some measure that legally enforces sustainable development, the change is going to be slow to come. At this point, 'slow' cannot be afforded.

sustainability and the 'bottom line'

The Brundtland report defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. 20th century economics has seen an emphasis on economic growth i.e., increases in GDP and consumption levels, which has brought us to the present situation. The concept of sustainability ushers the 21st century in a more development-orientated model i.e., keeping consumption constant over an infinite amount of time through improving the quality and efficiency of the production process across the world.

All industry ultimately depends on natural resources for their operational needs. The growth model may have improved living standards for few but at rates exceeding those of natural resource regeneration. Climate change is an effect of this model and could cost the world 1-2% of its economic output per annum; it may not seem to be a significant portion of GDP except that, most industrial economies grow at a rate of 2.5% per annum. Hence, given that this estimate is even approximately correct, climate change comes close to stopping economic activity.

The ‘bottom line’ for any company is to maintain market share, responsibility to its stakeholders and to make a profit. In terms of climate change, companies have a responsibility to be aware of public opinions in order to maintain or improve upon their market share. To ignore environmental issues or not pick up on public sympathies, companies can lose customer trust and this affects the bottom line. They may have to run a costly advertising campaign to restore consumer confidence and avoid losing market share which may have knock-on effects on share prices. A good example of this would be the Brent-Spar oil rig fiasco which cost Shell between Β£60M and Β£100M, when loss of sales were considered.

Environmental issues can work for the company to regain market-share, re-launch itself in a new sector like carbon-reducing goods and opportunities for expansion into sustainable development. An example of this would be Scottish Power which was a traditional company generating energy from coal and hydro-power. However in 2006 they were granted permission to build Europe's largest on-shore wind farm. The 322 MW/140 turbine site will cost an estimated B£300m. This is already showing an increase in their share prices and the company is slowing regaining its flagging market-share.

As with any newly developing economic sector, careful investment, studying market trends, etc., is needed. Energy is one of the biggest commodities in the world today and sustainable forms of energy have huge economic pay-offs. Suzlon is the world's largest, fully-integrated wind power company. In terms of market share, the company is the largest wind turbine manufacturer in Asia. As a relatively new company, it has proved that careful prediction of future trends and investments can reap rich rewards within the sustainable energy sector.

The main challenges associated with sustainable development are the fundamental reforms needed to make this a wide-spread method of production. From factory equipment upgrades to a radical change of global production standards, the 21st century faces heavy costs and adaptation time lags to forge sustainable economies. Globalization, indeed, in itself proposes the birth of eco-trade. It is perhaps one of the earlier manifestations of this change.

Another challenge is the persistent uncertainty surrounding global ecosystems. These are complex and interactive to a degree that we are only just starting to understand. Environmental economics, at its present embryonic stage, has only glimpsed at the causal chains that brings environmental effect about. Investing in research and development for betterment of the technologies available should be of prime importance for big companies and developed governments world wide. Careful investment in existing technologies and promotion of existing sustainable technologies should be encouraged as well.

Finally, conceptual changes in biological and economic evaluation standards for environmental effects have to be incurred. Unless we find new methods of measuring pollution, we cannot impose equivalent controlling measures. Since aspects of pollution show huge variability in its types and forms, in varying densities between different places even within the same country, an overall expansion of current data-gathering models is needed. This can be achieved by honing environmental sciences to produce a larger and more holistic view of the global ecosystem, while integrating the economic science in the appraisal of such complex dynamics.