Monthly Archives: March 2012

Water for All in Algeria: Interview with Jean Marc Jahn of Suez Environment

(Post written by Caroline D’Angelo, IGEL’s Graduate Intern and Editor-in-Chief for StudentReporter.org World Water Forum 2012 project, and Maria-Tzina Leria, a Penn Master of Environmental Studies student and Reporter at the WWF. It was originally posted at StudentReporter.org)

Student Reporter Maria-Tzina Leria interviewed Jean Marc Jahn, Chief Executive Officer of Société des Eaux et de l’Assainissement d’Alger (SEAAL) at the World Water Forum (you can listen to the podcast below). SEAAL is a private-public partnership between Algeria’s government and Suez Environment, the second largest private water company in the world. The partnership exists to expand water and sanitation access, as well as to build capacity at the local level through a specific program, Water International Knowledge Transfer Initiative (WIKTI), which provides videos, training and education to local operators. Suez presented this partnership and WIKTI as a ‘solutions’ in the Village of Solutions and on SolutionsforChange.org, the Forum’s online depository. Mr. Jahn brought Algerian operators with him to the World Water Forum and was clearly proud of the program. He says in the interview that in the past five years, there has been”…60,000 days of training in Algiers, and more than 50 percent of the trainers are Algerian.  In the beginning it was zero.” This shift reflects the large investment in knowledge transfer to the local community.

The partnership was born out of massive water shortages in the early 2000s that led the Algerian government to explore privatization options. Up to 40 percent of water sent through Algiers’ system was leaked and wasted.  In 2005, the Algerian government passed a new Water Code, which permitted privatization under certain conditions and also provided the government with more enforcement options for environmental violations. The Algerian government invested 14 billion dollars in water and sanitation between 2006 and 2015, and will be investing tens of millions more in the coming years.  In the interview, Mr. Jahn describes the change in access to water and sanitation over the last six years, explaining that now 100 percent of distributed water is safe to drink and is available 24 hours a day. Wastewater treatment coverage has expanded from eight to 53 percent of the population and is expected to reach 70 percent by the end of 2012, which is far better than the old system of direct dumping in the Mediterranean. Perhaps reflecting the success of the program, Algiers recently resigned the contract with Suez for another five years.

Listen to the interview and comment below.
http://w.soundcloud.com/player/?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F40330393&show_artwork=true

Eco-Services: The Holistic Valuation of Water

Heidi Travis is in the Master of Environmental Studies program at Penn. She also works as a facilities manager in the School of Medicine, where she works on energy efficiency and recycling. You can read her full bio and more of her writing here. This post was originally posted on StudentReporter.org.

One of the hotly debated topics among environmental wonks, public sector representatives and companies is the value of water. Water is a resource considered to be ‘free’ and a public right by many. Why is it that our most necessary life-sustaining resource carries so inadequate a monetary value in relation to other resources such as oil? Peter Gammeltoft of the European Commission pointed out that water pricing is just one part of the solution associated with increasing awareness about its worth.  It is important to point out that other issues exist within the framework of creating a stronger monetary value for water because assigning a price to consumption (only) still does not prevent pollution from other sources.

One way to value water is through overall ecosystem sustainability, which should be considered from a holistic perspective.  People often turn to technology in order to solve our problems. Technology’s main eco-equitable purpose should be to promote ‘more with less’. Investment in natural capital, according to the United Nations’ Josefina Maestu, provides more social and environmental long-term benefits.  Yes, human ingenuity allowed us to fashion many ‘cool’ tools to make our lives easier, more interesting, healthier, and longer lasting; but nature inherently possesses its own inexpensive or even ‘free’ technological solutions in the form of natural systems. These work well to filter water, clean air, prevent flooding, and provide many other benefits which have been termed ‘ecosystem services’ and referred to in land use solutions over the past 20 years.

During the World Water Forum session on “Valuing Water and Ecosystem Sustainability”, several case studies were discussed to show how real ecosystem development plans solve environmental problems. Examples from Kenya, Tanzania, and West Berlin were used to convey ideas on how to implement plans and to show the variety of ways services might be paid for. Sometimes, payments are made in the form of vouchers or fees. Payments may also be trade-based and not just monetary, according to Jean Gault with the United Nations Food and Agriculture Organization.  Ecosystem Services require multiple partnerships and educational outreach, as well as backing from top down and participation from the bottom up.

1. Kenya (Speaker: Josefina Maestu): Forest clearing was creating a significant runoff and land degradation problem near lake Naivasha. Through a World Wildlife Fund and Care partnership, involved parties determined that to prevent issues they needed to pay upstream farmers to transform land uses in order to maintain availability of resources for downstream use. To create this ecosystem service, they implemented better practices, found incentives for farmers through creating voucher payment systems, and thus increased productivity and crop yield as well as overall vegetation.

2. Tanzania (Speaker: Dosteus Lopa, CARE): In the Uluguru mountains of Tanzania, the Ruvu River ecosystem was being damaged because of sediment issues from slash/burn agriculture, which resulted in decreased water flow due to sediment load. The area officials working with CARE decided they needed to develop a solution to conserve soil and  “modify unsustainable land use to improve watersheds for reliable supply/flow and quality of water” according to Mr. Lopa. In order to do this, they also determined that they could improve farming practice by advising farmers to grow more valuable land efficient crops. In 2006 they created six agricultural planning scenarios including a cost benefit analysis. The result of the study found that first costs to implement better agricultural planning were high and investment was needed. They found support for the project and began educating farmers and changing practices. Results of practice changes were seen through decreases in sediment load in the river. In 2009 sediment load was 416mg/liter and in 2011 load was reduced to 274.9 mg/liter.

3. West Berlin Germany Study (Speaker: Mathieu Tolian with Veolia): This project was created to find the best use of land for combined public and agricultural use. In West Berlin, a large piece of land was being used as a catchment for untreated wastewater during the period of 1896-1993 and then for treated wastewater after 1994. It was determined that the land should be studied to create a more optimal public/private use plan.  PES studied the site to create an ecological baseline then performed a “qualitative assessment of main ecosystem services.” Scenarios were created to figure out which land use provided the best payout in relation to irrigation, financial, and social value.  They found that removing irrigation decreased potential ecological services and that by continuing irrigation it guaranteed ecological service increases. Land use considered conversion for investment in same use over a 25-year life-cycle period. Studies indicated that mixed energy crop investment was the best use in combination with shared public uses. To save investment cost and reduce land taxes, new revenue could also be added through increased public recreation and pay-per-use.

Each example conveyed required multiple partnerships, studies of best practices, education of different levels stakeholders, and investment in creating land use changes. Many private companies, NGOs, and government entities continuously work together to assess the value of ecological services in order to share examples and benefits to drive more projects. All project examples shared here were implemented through both a long-term vision and action over time. The overall concept of these projects still necessitates extensive front-end work in order to convince multiple stakeholders to implement these visionary holistic land use plans. Ecological services not only improve the environment, people’s livelihoods, and communities but also build personal connection through inspiring a wide range of people to work toward the same valuable sustainability goal.

Elizabeth Seeger: Private Equity and Sustainability

Meg Schneider is a junior at Penn majoring in Environmental Studies, with a concentration in Sustainability and Environmental Management. She is currently researching behavioral solutions to environmental problems with Professor Dana of Penn Psychology for her thesis.

Elizabeth Seeger, formerly of Environmental Defense Fund and now a Principal at KKR, gave a lecture to a packed room March 21, 2012 as she discussed the intersection of Private Equity and Sustainability. Ms. Seeger began her presentation with the much-lauded Green Portfolio Program, the first sustainability initiative of any private equity firm. She explained that KKR was uniquely able to invest in sustainability as it employs a long-term perspective, active ownership, and shared practices. The Environmental Defense Fund, along with Seeger, was brought for its environmental expertise and credentials to create a full operational approach for KKR’s portfolio of corporations.

Part of Seeger’s job involves convincing corporations how sustainability is valuable. For example, unsustainable practices can disrupt supply chains, resource availability, and overall product quality. In addition, sustainability can create a “win, win, win” scenario for society, shareholders, and stakeholders as new opportunities are taken. Ms. Seeger works to create “shortcuts” for companies to start tracking and improving company performance on eco-efficient and other metrics with its portfolio and other tools. With KKR’s unique positioning, companies can also benefit from “shared knowledge” on proven practices such as cleaner fleets, efficient routing, and green packaging as well as preferred partnerships for vendors. As a result, the Green Portfolio program has currently saved over $365,00,000 for its 16 corporations in what Seeger described as “not only low-hanging fruit, but fruit just being left on the ground”.

Another large aspect of the speech involved responsible sourcing tactics, and the two sourcing attacks faced by KKR companies in 2010. As small NGOs gain greater power to influence consumers, companies face larger risks when employing unethical sourcing for their materials and labor. Instead of ignoring the unfavorable aspects of NGOs, Seeger’s team focused on partnering with the NGO Business for Social Responsibility. She also discussed stakeholder engagement in how companies talk to their employees, consumers, and community. After a student wondered how she dealt with companies that initially resist compliance with sustainability; Seeger explained that the fine line between pushing and encouraging can be very challenging and is part of the learning process for any sustainability consultant.

Elizabeth Seeger of KKR presenting on sustainability and private equity

On the question of how companies should pursue sustainable and non-sustainable projects, Seeger stressed the importance of cost-neutrality and return on investment. In her words, “all things should be linked to business value”. She further differentiated by using the example of a carbon footprint. While a carbon footprint costs money and involves much bureaucracy, it’s unclear how it can create value for many businesses. Seeger’s presentation showed another view into how businesses can employ sustainability to create value.

Eric Lowitt: Creating Competitive Advantage via Sustainability

 Meg Schneider is a junior at Penn majoring in Environmental Studies, with a concentration in Sustainability and Environmental Management. She is currently researching behavioral solutions to environmental problems with Professor Dana of Penn Psychology for her thesis.

“Altruism is the enemy of sustainability,” was one of the opening remarks of Eric Lowitt at the Penn Institute for Environmental Studies/Initiative for Global Environmental Leadership Seminar Series March 21st.  Lowitt is a graduate of Wharton and a  sustainability consultant and author of “The Future of Value.”  Although though the term sustainability has a wide variety of meanings, from eco-efficiency to the triple bottom line, Lowitt sees sustainability most of all as a business opportunity. While altruism may be the spark that leads to sustainability initiatives for a company, he said, altruism alone cannot sustain a flame that continues investment in this area.

He began his talk with a chilling example about the deadly effects in Kenya of Kumi Kumi beer, a cheap and deadly liquor made with anti-freeze and batter acid. The beer popular with day laborers who couldn’t afford the highly taxed international beers. Diageo, the global company behind Johnnie Walker and Guinness, saw an opportunity to do good and created a new, locally sourced and distributed beer called “Senator beer”.  Senator beer was a success because it created a new revenue stream for Diageo not just because it solved a problem.

Lowitt also gave some advice to the students and industry in the audience who are hoping to become Chief Sustainability Officers: “you’re going to feel squeezed like an orange” because depending on the structure of the company, you may not have direct responsibility or ownership over anything but are supposed to change everything. In a world of many environmental opportunities, businesses need a laser-like precision on what sustainable means for them and their strategy. He also warned that, as of now, most companies have devoted little to no budget to their sustainability projects, which makes the  job that much more difficult.

For the remaining part of his speech, Lowitt focused on the hallmarks of sustainable market leadership, a topic he covers in more depth in his book, “The Future of Value: How Companies are Creating Competitive Advantage via Sustainability”. He said that investors and job-seekers should look for companies using sustainability as a corporate strategy, not altruism, and looking for new ways to improve what already works, such as Johnson Controls. Other hallmarks included stakeholder engagement and aligning employee incentives with sustainable behavior. He used the example of National Grid where 10% of every bonus for managers is based not only on typical financial budgets but also carbon budgets.

When asked by the audience about how to apply resources effectively with a multitude of opportunities, Lowitt clarified that he thinks businesses should only invest in projects should have a positive return on investment. While not every sustainable project will have as high returns as other potentials, corporations can employ resources strategically and value sustainability as a feature of a project. In all, Mr. Lowitt’s talk certainly gave new insight and understanding to sustainability in the business sector.

Lowitt left the audience with a “CLEAR” takeaway:

Craft your strategy
Leadership from CEO
Execute your plan
Analytics
and Renew sustainable efforts.

Eric Lowitt presenting sustainability as a competitive advantage

 

Green Growth is Inspiring but Not Watertight

Aishwarya Nair is a Master of Environmental Studies student at Penn, with a focus on Environmental Policy and Sustainability Management. She is currently researching solutions for sustainable electrification in rural areas in the developing world and the redesigning of the grid system. This post is re-posted from the StudentReporter.org blog from the World Water Forum 2012.

Each conference comes with its own set of catchphrases and the World Water Forum is no exception. A popular one that’s been buzzing around is “the new industrial revolution” or as it’s colloquially known, “green growth“. Coined in 2008, the definition of green growth differs depending on who’s using it. In general, green growth refers to the idea of furthering economic growth within the limits of the natural ecosystem without detracting from the possibility for future development. But even after having over 22 hours devoted to green growth development, with stakeholders present from across the spectrum, it is the silence on certain issues that could sink this new possible engine of economic growth.

Before dwelling on the negative aspects, it is important to give praise where praise is due. It has been excellent to see that the words “profit” and “business” are finally being included in discussions about sustainability albeit cautiously. While it is important to hear recommendations from international and national organisations on policy and subsidy reforms, if a forum is to be inclusive of all stakeholders, then the interests of the investor must also be acknowledged. If anything, the inclusion of these interests could help improve the lifespan and success of development initiatives. Though the high panels still remain woefully thin of private financiers, it has been encouraging to see the first steps towards restructuring finance being taken.

Another admirable aspect has been the shift in discussion towards maintenance. Simon Upton, Head of the Environment Directorate at the OECD, stressed the importance of considering maintenance costs of infrastructure into any talk about investment into infrastructure. “For every $1 invested into infrastructure,” said Mr. Upton; “we need an additional $3 to maintain it.” This, in its very essence, is sustainable development; not just the installation of a water pump in a village that will break down and thus be abandoned in a few years, but planning for its preservation over its lifespan. Recognising this need for maintenance will help go a long way to making smarter budgets that include sustainable financing for green growth projects.

The Achilles heel of the green growth strategy remains, however, that behaviour change remains very much absent from the table. The premise of most of the work done by development organisations is providing basic services to those who have little or none. However, once this target is reached, there is no evidence that shows that this new base of consumers will behave responsibly. On the contrary, with less worry about access, it is far more likely – and history has shown this to be true – that wasteful behaviour will increase.

Thus we come to the paradox of sustainable development. Addressing this vital issue is not easy either. Change is hard and changing human behaviour is even harder. For those amongst us who have attempted to be more “green” in their consumption – or just give up a bad habit – we know that it entails sacrifice and denial. And how do we ask those who have never had anything, to deny themselves when finally, they feel they have a right to enjoy life? Yet, without this denial, without thoughtful consumption, sustainability will fail. This is the next subject that must be addressed if green growth is to be the new industrial growth model. To ignore or to exclude it from the discussion spells its doom before its success.

U.S. Competitiveness Project – A Need for Systems Thinking

(Post by Andrew McKeon, Founder of BusinessClimate and writer for the BusinessClimate blog, from which this post is re-posted. See the bottom of athe post for Mr. McKeon’s bio.)

The current state of U.S. competitiveness is in a sense not the problem.  It is a symptom of a larger systemic problem.  Management is learning that the threats to U.S. competitiveness are multi-faceted, interrelated, and long term and how the strategies to address them must be multidimensional, holistic, and sustained.  As they press business leaders to stop actions that simply benefit their own firms while collectively weakening America’s business environment, Porter and Rivkin are describing the real problem.  Fixing U.S. competitiveness will require a broader systems perspective – much broader and more holistic than American management has practiced in the last 40 years.

For decades U.S. management has had very little appreciation for seeing businesses from a systems perspective.  Hugely popular management approaches like MBO (management by objective) created “the whole is equal to the sum of the parts” and “manage what you measure and measure what you manage” mind-sets.  Consequently there was little attention paid to the interconnections and interdependencies within a business operation or between businesses – these weren’t seen as important in building great enterprises or fostering strong economies.  Harvard’s U.S. Competitiveness Project needs to change that thinking and hopefully will.

Yet, if we are to really address U.S. competitiveness we must stop looking at issues, businesses and markets as isolated, and instead understand that the future of U.S. competitiveness lies in how well we address the systems issues facing the global economy and the planet over the next 20-40 years.

The risks are clear.  Huge increases in global demand for raw materials, industrial and agricultural commodities, energy and water, will put greater claims on resources, stress supply chains, apply enormous pressure to profit margins and deepen the planet’s most serious environmental challenges.  Yet, these same risks point to tremendous opportunities.  An estimated three billion new additions to the world’s middle-class before mid-century will improve more people’s lives than ever in history and triple the size of the global economy.  For companies to turn these risks into opportunities they must take advantage of growth while mitigating resource disruptions and global environmental degradation.  Clearly, business as usual will not get the job done.  The fate of U.S. competiveness in the years and decades ahead will be determined by how effectively we mitigate the most urgent risks and develop the greatest opportunities that will drive the global economy and the planet.  Sustainability must be the organizing principle of U.S. competitiveness if we are to lead in the 21st century.

Many ask about the meaning of the term sustainability.  Here sustainability refers to a process and a way of thinking which begins with an appreciation for businesses as systems, embedded in larger systems such as markets, and all part of even larger systems of economies.  Ultimately, the earth itself is a system made up of highly interconnected and interdependent groupings of natural and man-made systems, one of the most powerful being the global economy.  In a well organized system, every subsystem supports and aligns with the aim, operations and workings of the overall system.  Lack of alignment leads to sub-optimization, decay and the potential destruction of the system.  Simply put, sustainability is about getting the alignment right between how the global economy works and how the planet works.  To the extent business operations support that alignment, business is sustainable and will prosper; to the extent business operations are out of alignment, business is unsustainable and will deteriorate. The key to U.S. competiveness lies in how well we plan and organize for that alignment.

Next month in New York City there will be a major gathering of C-level business leaders, entrepreneurs, NGO activists, and at least two former Heads-of-State (Costa Rica’s Jose Maria Figueres and U.S. President Bill Clinton) to discuss U.S. competitiveness in the context of the risks and opportunities of the 21st century.  The event – The Sustainable Operations Summit – is not unique – it takes place the very same week as Fortune Brainstorm Green, a CEO-level event in San Diego focused on the newest ideas shaping the future of business.  Both events and others like them signal an important trend in the business community – putting sustainability at the center of the discussion around risk, opportunity and U.S. competitiveness in the coming years.

At The Sustainable Operations Summit I will be moderating a panel that was originally entitled “Environmental Strategy and Business Strategy.”  I spoke with the conference organizer about changing the name – replacing “and” with “as” – and he agreed.  The “Environmental Strategy as Business Strategy” panel will discuss how new business strategies for American competitiveness in the 21st century must not make environmental strategy vestigial, or incorporate it because it is noble or even socially responsible.  Instead environmental strategy must be seen as the key to global competiveness. Understanding natural systems is much more than simply tell us what we’re doing wrong to the planet – it can provide unique insights into how to build resilient businesses systems.  As detailed in the book Profit Beyond Measure by H. Thomas Johnson and Andres Bröms, natural system characteristics such as self-organization, interdependence and diversity have been used to build some of the most efficient and robust manufacturing systems of the 20th century.  In the 21st century only by understanding these principles will companies be able to address the daunting challenges and unprecedented opportunities that are unfolding.

One of the panelists on “Environmental Strategy as Business Strategy” will be Col. Mark Mykleby (U.S.M.C. Ret.).  After serving in combat in Iraq and developing strategy for U.S. Special Ops Command, Colonel Mykleby served as special assistant to the chairman of the Joint Chiefs of Staff, where he developed a new National Strategic Narrative for the United States in the 21st Century.  The U.S. has been without a national strategy since the end of the Cold War when the strategy of “containment” of global communism became obsolete.  Col. Mykleby’s narrative replaces “containment” with “sustainment”, making sustainability a core principle for America’s next 50 years.  The narrative is not just about green energy and resource efficiency, although these are important components.  It is about something larger – a view of America’s challenges and opportunities from a systems perspective.  There are powerful and influential people both inside and outside Washington who are quietly working to see this strategy transformed into policy in the next administration, which would go far to mainstream the idea that U.S. competitiveness in this century as a matter of national policy must and will be driven by sustainability and systems thinking.

Andrew McKeon is founder of BusinessClimate, a provider of consulting services that help clients increase their global competitiveness and profitability through sustainable business strategies, and the host of the annual conference on sustainability and global competitiveness.  Clients include PwC, Bank of America Merrill Lynch, Intel, and Johnson Controls.  Andrew holds an MS in Mechanical Engineering and an MBA, both from Columbia University.  His writings have appeared in such publications as Greenbiz, Reuters and strategy+business magazine.  He has been invited to speak at NASA, the United Nations, the Deming Biennial, PICMET, and the Agrion Energy Conference.  He is an advisor to the UN-GAID and is a member of the Board of Directors of TransitCenter. Andrew maintains a blog at www.businessclimate2012.blogspot.com.

Penn Students Reporting Live from the World Water Forum

Eleven University of Pennsylvania Master of Environmental Studies students and one University of Richmond Law student are reporting live from the sixth World Water Forum in Marseille, France with the Oikos/Penn Student Reporter program.  IGEL’s own Caroline D’Angelo is serving as Editor and coordinator of the group. The World Water Forum is the largest gathering of water professionals and ministers in the world; it meets every three years in different locations. Previous years have seen up to 25,000 attendees. Attendees and speakers include representatives from non-governmental organizations, government officials, small non-profits, businesses and academia. The students will be live blogging the conference and interviewing leading officials – check out studentreporter.org, follow them on Twitter @oikosreporter and like them on Facebook – Student Reporter. Add your thoughts to the discussion by commenting, tweeting or leaving a post on FB!

If you are at the WWF, let us know – we can set up an interview! 

Business Sustainability Leadership: a New Wharton Executive Education Program

ImageOne of the initiatives that IGEL has been building is an Executive Education program in sustainability.  Thanks to the generous support of SAP, this program, Business Sustainability Leadership, launches in June. We are excited to harness the cutting-edge teaching of Wharton’s premier Aresty Institute of Executive Education to help solve issues in business and the environment. Sustainability requires interdisciplinary and cross-functional thinking, strategic planning and leadership – all of which are components of leading Executive Education programs here at Wharton.  Business Sustainability Leadership is June 12-14, 2012 in Wharton’s San Francisco Campus.  Registration is open now – join peers and mentors in sharing best practices and learning new skills and strategy from leading Wharton professors.  Follow the link below to find out more about the program and to register.

http://executiveeducation.wharton.upenn.edu/open-enrollment/leadership-development-programs/business-sustainability-leadership.cfm