1. Dr. Ron Lembke SUSTAINABILITY, PART 2 SO WHAT DO WE DO NOW?

2. WHAT IS “SUSTAINABILITY?”  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

3.  Dimensions of Environmental Sustainability:  Carbon: energy burned by us, by our suppliers  Water: water used  Paper and corrugated used  Solid waste generated  Costs and Revenues:  Lower electricity, gas and water bills  Lower garbage hauling costs  Better public relations  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 DIFFERENT METRICS The Carbon Footprint of a plastic bag is 1/1000 that of the food in it!

4. MORE EFFICIENT CARS

6.  Aka Suzuki Swift, Cultus  EPA 55/60 mpg

7. 2011 EPA MILEAGE CHAMP TOYOTA PRIUS  MRSP $23,810

8. CAMRY HYBRID

9. GREEN SUVS? ISN’T THAT AN OXYMORON?

10. 2011 MSRP Info from cars.com

12. HOW HAVE WE FIXED THINGS BEFORE?

13. 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?

14. DDT  DichloroDiphenylTrichloroe thane  Mosquitoes-malaria  Lice-typhus  Nobel Prize, 1948  Rachel Carson Silent Spring, 1962  EDF, 1964  Banned, 1972  Granny’s garage, 2005

15. OZONE HOLE Return to 1980 levels by 2068 Photo: NASA http://www.nasa.gov/vision/earth/lookingatearth/ozone_record.htmlhttp://www.nasa.gov/vision/earth/lookingatearth/ozone_record.html

16. CFCS  Chlorofluorocarbons  Break down, release chlorine  Chlorine destroys ozone  UV rays reach Earth’s surface  CFCs banned- Montreal Protocol, 1986

17. LEADED GAS  1930s: Octane in 30s  Add Lead: 87!  Protected Valve seats  Catalytic converter problems  1996 banned US  $10,000 fine

18. ,  Feb 2, 1962 ad in Life magazine  Humble merged with Standard to become Exxon

19. SO WHO IS GOING TO DO SOMETHING?

21.  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 affected by Climate Change CAP AND TRADE VS CARBON TAX

22. 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

23.  (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? THE PRICE OF CARBON

24.  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? CAP AND TRADE IS DEAD

25. SO WHO IS DOING ANYTHING?

26.  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 THE SEC?

27.  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. MAYBE WAL-MART WILL?

28.  Seafood  Paper  Wood CERTIFICATION EFFORTS

29.  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 SUSTAINABILITY INDEX

30.  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 SUSTAINABILITY INDEX?

31.  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? SUSTAINABILITY INITIATIVE

32.  “Carbon is a financial risk”  Single reporting entity  551 Institutional Investors  $71 Trillion in assets  Launched 2000  Largest 2,500 corporations = 20- 25% 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 MAYBE WALL STREET WILL?

33.  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 CDP SUPPLY CHAIN

34. IMPORTANCE OF CARBON IN SOURCING DECISIONS

35. CARBON FOOTPRINTS

36. 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 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 GasLifetime (years) GWP 20yrs GWP 100 yrs GWP 500 yrs Methane1272257.6 Nitrous Oxide114289298153 HFC-232701200014,80012,200 HFC-134a143,8301,430435 Sulfur hexafluoride3,20016,30022,80032,600

37.  Add up total Carbon Footprint of all activities and inputs, divide by the number of units sold CF PER UNIT ++ =

39. PATAGONIA – 15 PRODUCTS

40. CARBON FOOTPRINT AS MULTIPLE OF PRODUCT WEIGHT ProductAverage Shoes 40 Shirts29.7 Jackets/vests23 Sweaters/sweatshirts46.7 Shorts8.5 Bottoms18 Dresses46 Luggage8 Original data from Patagonia

41.  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”

42. 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.Direct GHG emissions 2.GHG from purchased electricity, heat, or steam 3.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.

43. SCOPE 1,2,3 OLD PICTURE

44.  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 GHG PROTOCOL

45. INDIRECT EMISSIONS

46. 2010 VS. 2011 2011 50% outside four walls 80%? 90%? 2010

47. REVISED PICTURE, OCT 2011 Inherent Double- Counting

48. CORPORATE PERSPECTIVE SupplierRetailer

49. LIFECYCLE ANALYSIS ProductionDistributionUsage End Of Life

50. DOUBLE BILLING MFG AND RETAILER BOTH RESPONSIBLE ProductionDistributionUsageEOL MANUFACTURER’S FOOTPRINT RETAILER’S FOOTPRINT

51. EMBODIED CARBON Supplier Retailer

52. Scope 3 supply chain reporting is growing Still lags far behind other scopes

53. Upstream 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 SCOPE 3 GUIDELINES Downstream 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

54.  Wal-Mart  Sustainability initiative  Carbon Trust  Labeled £2 billion last year  Patagonia  Footprint chronicles CARBON FOOTPRINT VISIBILITY

55. TESCO (UK) LABELED 500 ITEMS Carbon-label.co.uk Carbon Trust

57. APPLE CARBON FOOTPRINT

58.  Easier to open  Less materials  Ship in same box  Cheaper to pack  No twist-ties  No theft concerns  No display concerns FRUSTRATION-FREE PACKAGING

59. WAL-MART

60.  “These are not complicated questions, but we have never systematically asked for this kind of information before ” Mike Duke WAL-MART

61.  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 CFLS

62.  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 KID CONNECTION

63.  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) WAL-MART DAIRY

64.  Measuring and Reducing GHG CARBON TRUST

65.  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

66.  128 facings of Tide brand products  13 facings of Coldwater products = 10% of slots  NW Reno Wal-Mart, Jan. 2012 WAL-MART LAUNDRY SOAP

67. TESCO DROPPING ITS LABELS?

68.  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 stuff 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 off  Why?  Nobody cares about carbon  Why?  Because there is no price on it STATUS OF WAL-MART’S INITIATIVE

69. SO WHAT MAKES SENSE?

70. Carbon = Energy = Money WHY WORRY ABOUT CARBON?

71. http://www.mckinsey.com/Client_Service/Electric_Power_and_Natural_Gas/Latest_thin king/Unlocking_energy_efficiency_in_the_US_economy MCKINSEY STUDY

72.  Look for energy usage  What appliances use the most? TOOLS FOR FINDING CARBON?

73.  Input-Output  Total inputs and outputs of system, industry wide  Micro approach – look at each input  KWh used  Gallons of water, etc. LIFECYCLE ANALYSIS

74.  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 CF OF TOMATOES, ETC.

75.  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 COMPOSTABLES

76. KILL-A-WATT

77.  Look up impact of things COMMERCIAL COMPOSTING

79. DISCOVERING OPPORTUNITIES

80. IMPACTS ALONG VALUE CHAIN

81. LIFECYCLE ANALYSIS

82.  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 LEED: LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN

83.  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 BOOKS TO CONSIDER