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Sustainability R.O.I.

Issue 9: December 2018

Hi  *||*

Welcome to the December 2018 edition of Valutus Sustainability R.O.I., a
Roundup of things that caught our attention along with some 
Observations and 

This month’s Observations is a quick look back at some of the things we've been working on and sharing with you this year while Intelligence deals with something we call ‘submerged value,’ large chunks of ROI that are not always visible at first. Most companies miss this, both in planning and accounting.

We hope you find this valuable and if you do, please consider forwarding it to your colleagues.

Thanks for being part of making the world a better place.

Warm regards,

Daniel Aronson,
Founder, Valutus
The Value of Values        +1-212-658-0405

Want to pick and choose? Here's what's inside…



Looking back, 2018 has been a particularly high and fast roller coaster. Brexit, the established international order in duress: legal shenanigans; trade wars; genetically edited babies; a trampoline for the markets and, of course, ever more— and more massive  weather-related disasters.

The backdrop was a steady stream of bad news about sustainability alongside steady positive news on the same front. As environmentalist Paul Hawken says, "If you look at the science and you're not pessimistic, in a sense you don't understand it…But if you look at the people who are addressing the problem at hand and don't feel hopeful, then you don't have a pulse."

One cannot read the 2018 UN IPCC Climate Report without thinking, “Okay, it’s gettin’ real on climate change, people!” Yet no one could note the progress made by planetary stakeholders without feeling a tad hopeful that we might, in the end, cope with this entropic disaster. One way or the other, we’ll likely look back and say 2018 was the year Sustainability went mainstream.

In this issue we chronicle some of the macro and micro issues and steps we must take to keep that hope alive, along with a backward glance at some of those we’ve covered, as 2018 has hurtled, clattered and loop-de-looped to a close.

2018: An ROI Look Back

Quite a year, you say? Indeed. Valutus ROI kicked our first edition off in January with a story about New York City divesting its pension funds of entanglements with Big Oil. Not content with that five-billion-dollar blow, they then sued the industry for crimes against the climate.

We also chronicled the NOAA’s 2017 report suggesting strongly that the past decade, being the warmest since records began, and with 16 multi-billion-dollar weather disasters vs the usual six or so, was likely not a coincidence.

February’s issue detailed the Cape Town drought, it’s ramifications and the steps that, when we revisited a few months later, had proven effective enough to push Day Zero the day they run out of water completely back a few months or, with care, a few years. From our ‘believe-it-or-not deptartment' came a proposal to tow an iceberg yup, you heard right, an iceberg  into Cape Town harbor to alleviate the city’s water crisis.

We zipped through efforts to bring sustainability to the Olympics, blasted through Idaho’s head-in-the-sand approach to teaching climate science (by stripping any mention of it from their curriculum), and delved into a study that shows plant-based and organic foods are far more sustainable than their meat-based and ‘conventional’ counterparts.

In the Summer we hit new re-polymerizable plastics, plastic-free supermarket aisles in Europe and a fascinating tale of St. Patrick’s Cathedral among other buildings in New York City delving deep for geothermal to power their electrical needs.

Photo: Bill Cotton/Colorado State University

Rounding into fall we leaned heavy on innovation:

  • Brewing biofuel from marine yeasts who knew? and seawater

  • Sucking up atmospheric carbon and turning it into clean-burning auto fuel

  • California crushing their climate goals two years ahead of schedule

  • A new initiative by the shipping industry to dramatically reduce their large, wet climate footprint by a return to sail, better ship design and some solar thrown in

We also learned of a new urban turbine (not bad, eh?) to grab wind from city balconies and rooftops, which segued perfectly into a story on Integrated Energy and the incredible global progress being made in personal small-scale solar, wind, and more.

Finally, November brought snow but also good news for bees and the pollinated world as researchers at the University of Helsinki created a vaccine to deal with American Foulbrood (AFB). More importantly, they discovered how bees (who have no natural antibodies) transport their immune agents, allowing for more vaccines in the future.

We also brought you two stories from Scotland which, in addition to distilling the finest single malts, has become masterful at harnessing sea, wind and sky for power. Tidal turbines combine with land-based hydrogen-storage batteries for smooth delivery to the grid and a handy way to store their power surplus.

We discussed green investing strategies and good ol’ Mister Green Jeans
or at least, sustainable ways to manufacture billions of his namesakes.

That brings us to the present, December of yet another of the warmest, gaudiest climate-disaster-laden years on record. Yet it was one filled with innovation, dedicated and committed climate leaders, dire reports and, we hope, sustainability finally on the global map for good. After all, as we all know, a sustainable planet is the true ROI.

Amidst Power Aplenty,
Powerless Nigerians Turn To Mini Solar Grids

Photo by Temitayo Aina on Unsplash

Nigeria has vast oil reserves. Vast natural gas and coal reserves. Vast hydropower generation capacity. So, um...why does a vast portion of the populace — some sixty percent or around 120 million people — have little or no access to grid electric power?

The New York Times sums it up this way: “Droughts have stalled hydroelectric plants. And rebel attacks on critical gas pipelines in the volatile south have crippled power plants...the Niger Delta Avengers destroyed gas pipelines to pressure the government...gas shortages, as well as grid constraints, poor maintenance and technical problems,” just for starters. And as Newsweek once wrote, “Oil spills in Nigeria are a common occurrence; it has been estimated that between 9 and 13 million barrels have been spilled since oil drilling started in 1958.”*
Wars, post-colonial ethnic struggles, coups d’etat and a western grip on oil exports rounds out the explanation.


Nigerian Tanker Truck

Into this cold and bitter stew comes a pilot project involving renewables. Specifically, tiny 300-panel solar generating stations known as mini grids. These are not only bringing affordable power to small communities but are reducing the need for the gasoline generators which they’d relied on before. With the nation's population expected to roughly double in the next 30 years, renewables are a must-have for Nigeria.

                      Gasoline generator in Nigeria. Photo Source: Wikipedia

The government intends to increase total power production by 30 thousand megawatts in the next ten years with 10,000 of that increase to come from renewables. While that power is currently more costly than the national grid, it is still cheaper than motorbiking to the nearest petrol station and buying gas for a generator.

Economies of scale and a larger customer base may bring costs down further in the near term. There are currently three such micro grids in operation with more on the table, which will allow more rural Nigerians to literally go from powerless to powerful.
*Baird J (26 July 2010). "Oil's Shame in Africa". Newsweek.

No More Mincing Words On Meat

American Bison: Photo by Richard Gatley on Unsplash

The old paradox of Unstoppable Force versus Immovable Object is playing out in real time in the forests of South America, the feedlots of the American midwest and, with ketchup, on the crockery of the world’s kitchens. The rolling inertia of climate change is in direct opposition to the stubborn and long-standing desire of humans to eat meat.

With world population expected to balloon to over nine billion souls by mid-century, this paradox must be resolved, and soon. As Tim Searchinger of World Resources Institute (WRI) told The Guardian, in order to feed all those new mouths “the world would have to convert most of its remaining forest,” to pastureland, “and agriculture alone would produce almost twice the emissions allowable from all human activities.” Wuf!

From a scientific point of view, it’s clear the world must drastically reduce its animal agriculture. Yet from a practical point of view, what to do? How do we resolve this paradox? The only way is to reason with the immovable object and convince it that moving would be in its best interests. A new UN Environment report — artlessly titled, “Tracking the world’s most urgent problem: Meat” — mirrors new WRI reporting which makes it clear that by 2050, “more than 50% more food will be needed...but greenhouse gas emissions from agriculture will have to fall by two-thirds.” There’s that nasty paradox again.

There is only one way for this to resolve if we wish to have a livable planet. For years the UN has been “recommending a global shift towards a vegan diet,” stating that such “is vital to save the world from hunger, fuel poverty and the worst impacts of climate change,” according to The Guardian. In other words, we badly need the immovable object — meat eaters — to move.

A Tale of Two Christmas Trees

The best of trees or the worst of trees? In the Christmas tree marketplace the debate over natural vs artificial continues. The carbon conversation alone is a complex one that, on the whole, favors the natural trees.

Plastic trees can be folded, stored, re-used, don’t need water and come in a full palette of colors never seen in nature. They’re also growing in popularity. The Associated Press* reports that, “Between 75 and 80 percent of Americans who have a Christmas tree now have an artificial one, and the $1 billion market for fake trees is growing at about 4 percent a year.” That comes to around ten million fake trees while an estimated 25 — 40 million real trees are harvested annually in the US alone.


Okay, but what about all those lovely natural trees cut down in their prime? No worries there, Bert Cregg, a forestry expert at Michigan State, told The New York Times.

“Don’t feel bad about cutting down a tree for the holiday. Christmas trees are crops grown on farms, like lettuce or corn.” Meanwhile, all the time they are growing, they are — like any other plant — soaking up and storing carbon and giving off oxygen, providing habitat for wildlife while helping preserve farmland and green space. And unlike the fake, they can be chipped, mulched, carved or burned for fuel.

Artificial trees frequently come from China’s Pearl River Delta and are made largely of hard-to-recycle PVC. Some studies, such as a recent life-cycle assessment, suggest the carbon footprint of an artificial tree is as high as 10 — 20 times that of a natural one. This means a consumer would need to use their plastic tree for 10 — 20 years to have a footprint low enough to justify the purchase. The American Christmas Tree Association, an artificial-tree group, says the average fake tree is used for ten years, while the National Christmas Tree Association — a natural-tree organization — says their research puts the number at 6 — 9 years.

Photo by Denise Johnson on Unsplash

In 2016 The Huffington Post did a complex analysis that also saw real trees come out on top for a variety of reasons, carbon high among them. So, what to do?

The last word goes to forestry expert Cregg who asks, “Are you interested in supporting the local economy and keeping plastic out of landfills?” he said. “Those would be the questions I would focus on.”
*Via, Texas


2018: The year in Observations and Intelligence

We’ve learned a few tricks in 2018, seen some new things, garnered a few lessons. Some of what we’ve passed along in these pages stands out and as the year has progressed has become even more compelling. Here’s a small compendium of our Observations and Intelligence from 2018.  

  • Early in the year we noted that many leaders in sustainability are acting aggressively: working toward net positive, becoming catalysts for others. We noted that such leaders are reaping enormous ROI from their efforts. Others, meanwhile, were left behind to sweep up the orts and leavings rather than charging forward, leading and gleaning the rewards 

  • In October we revisited that theme of catalytic leadership and noted that the catalyst role doesn’t come at the expense of corporate performance. Currently, companies comprising more that 8% of global market cap have signed on to the Science Based Targets Initiative, with 130 new companies joining this year alone, almost 40% more than the year before. Powerhouses such as Biogen continue to be carbon neutral or, like Novartis* and Ryanair, have committed to going plastic neutral in the next five-to-ten years.

  • With this in mind, we discussed ‘speed, scale, and coordination’ as part of scaling sustainability. ‘Big challenges need powerful tools,’ we noted in October, and we’ve taken our own advice on this one: Scaling through tools, software, and catalytic action is a major part of Valutus’s own strategy — and 2018 saw clients using our tools for setting targets for carbon, water, and waste, as well as for materiality analyses

  • In the summer, we took on a new way to think about, and measure, plastic neutrality. Sure, recycling is great, but there is a real difference between the impact of plastic headed for a landfill in New Jersey and the really pesky stuff that is river-and-ocean bound — and that needs to be measured**

  • Last month we noted that even in 2018, corporate sustainability professionals are rarely on the masthead or the ‘About Us’ section of their company’s website. This is symptomatic of Chief Sustainability Officers and their brethren being seen as on the periphery of the company’s beating heart. What we call the Grass Ceiling*** is real and is holding sustainability back

  • Finally, we’ve taken on materiality analysis: sliced-and-diced it, discussed its many weaknesses and failings as-is. Yet we’ve also given it a makeover and, in October’s issue, gave chapter and verse on the tools needed to make it truly worthwhile. You know, like it should be.

This month, the final of this year, we bring you another powerhouse in something we call Submerged Value. This may blow your mind but, after long study and experience, we’ve found that an average of 80% of sustainability’s value — real, coin-of-the-realm, bankable value — is not understood or measured. It is submerged.

More importantly, it is not planned for, not baked into sustainability decisions and corporate reports. See this month’s Intelligence section below for details.

So it’s been an eventful year and we’ve worked hard to bring you what we’re learning and are working on. Thanks for being part of it and see you next year!

*      Disclosure: Valutus has worked with both Biogen and Novartis
**    Valutus is working with Plastic Bank on this initiative
***  This is our term for the challenge sustainability professionals face making it to the highest ranks of company leadership


Up Periscope On Submerged Value

We all constantly strive to make sound sustainable business decisions with solid ROI. Yet what if we’re not seeing most of sustainability’s true business value? What if the ROI is often vastly greater than we think, but is ‘submerged’, flowing just under the surface of our sustainable actions where we can’t quite grasp or quantify it?

It’s an important question because, in our work, Valutus has found that submerged value — hidden secondary and tertiary savings from sustainable practice — represents around eighty percent (!) of sustainability’s business value. Think of that! Eighty percent of the actual value of a sustainable decision may not be known, or recognized — all that ROI hidden from view.

Here’s an example from a discussion with a European client who wanted to reduce waste at the company’s manufacturing and distribution sites. The problem? Their analysis showed the cost of reducing waste would be higher than the savings, and this foiled the project’s funding.

Yet their analysis included reductions in only one cost: hauling. This isn’t unusual — though some analyses also include lower costs from reduced purchases of raw material because less of what do buy is wasted. Yet there are many, many more savings that are submerged, that go uncounted.

With less raw material, for example, the company no longer has to pay for placing the order or processing the invoice; for unloading at port, dock and warehouse; for receiving, warehousing, temperature control, rotation, potential losses and much, much more.

These are all clear, concrete costs — and only about half of the submerged real costs of waste — and yet they are missed, obvious only in hindsight. They are submerged. In a future issue, we’ll go into submerged value in more depth, including how to surface it, so it's no longer missed.

Thanks for reading. And have a great holiday season and New Year’s!

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