I just returned from two back-to-back trips that did nothing except convince me of two things: One, the tipping point for sustainable organizational transformation is near; two, there is still so much to do to convince organizations to change.
My first stop was at Rotman School of Management at the University of Toronto, one of the top 10 business schools in North America. The Michael Lee-Chin Family Institute of Corporate Citizenship (ICC) sponsored the address, part of the Sustainability Experts Speaker Series @ Rotman. The room was filled with graduate students, industry professionals and government employees all seeking to learn more about the importance of sustainability in the world, and the role that business and government can play in a real and tangible solution.
The eagerness in the audience to listen and engage was incredible. The questions afterward rewarded me with some challenging dialog. Many of the questions still swirled around the issue of the business case for change and getting their companies to act. Another issue was having enough corporate foresight or incentive to truly drive companies to change their strategies and respond to critical sustainability challenges.
One item raised was the political hot potato in North America: the oil pipeline to deliver some of the massive reserve in Canadian Oil Sands. The arguments against its construction have been due to two possible consequences: the impact of fracking on fresh water supplies and the environmental impact on refining the oil. The attendees were concerned that the prevalence of the boon of new oil would fail to encourage companies to reduce the use of oil and gas when there was such a massive reserve that could last, as one attendee put it, “200 years into the future.” No doubt that many companies were reconsidering their own strategic change in light of the new source of oil.
I don’t doubt for a minute that this kind of thinking still exists in the minds of many CEOs. I sometimes wonder if there are some organizational leaders who live in caves…and usually answer with “Don’t confuse me with the facts; it’s my opinion that counts!” (Sorry, there is just a little frustration in me at times.)
The key phrase about the 200-year supply of oil is that AT TODAY’S DEMAND, there is a 200-year supply. The last of the “easy access” oil is gone. The oil sands are hard to reach and harder to bring to the surface. According to the recent New Lens Scenarios published by Royal Dutch Shell, we may very well be in the retirement age of carbon fuels. The study predicts that as early as 2070, transportation will be fueled by hydrogen-based fuels and solar power. In fact, many think that internal combustion engines running on carbon-based fuels will not be manufactured after 2070 due to the lack of easily available carbon-based fuels and the significant impact of burning carbon-based fuels on the environment. Granted, the scenario is a possible outcome in the future but it is clearly backed by trend data.
There are two direct consequences of using carbon-based fuels for transportation and energy: the impact of carbon emissions on the atmosphere and the water-energy nexus. In the case of carbon emissions, the regulated and voluntary reduction is not aggressive enough to stem the negative impact on climate, food supplies from the seas, and sea levels. The fact is, unless change occurs, we will be in a crisis by 2060 when the planet reaches 9.5 billion mouths to feed, bodies to clothe, and provide with smart phones, cars, homes, and most of all, jobs. The focus of the World Economic Forum in January focused on this critical consequence of carbon emissions. In fact the vast majority had come to agree on and address the issue of climate change and its relationship to carbon emissions. So it seems that the CEOs at the WEF were not living in caves.
The second consequence of using carbon-based fuels is what the UN calls the water-energy nexus, and why they declared Saturday, March 21 as World Water Day. The one fact that we all understand is the lack of available fresh water in the world today. Nearly 800 million people are without clean drinking water, and it is a contributor to worldwide poverty.
Another reason for World Water Day is crisis in the water-energy nexus. More simply put, the access to fresh water is energy intensive and the production of energy from carbon-based fuels and nuclear power is water intensive. With electrification at the core of economic growth of developing nations (e.g., nearly 400 million people in India are without energy today; China plans to build cities to move 275 million people from rural areas to cities by 2020), the rapid deployment of power plants using all forms of carbon-based fuels only increases the use of water. It is a tense tug of war—not between energy and some other industry, but rather the energy industry and society.
The reality is there is plenty of information to support a business case for sustainable organizational change…that is, if you believe the facts and understand that human expansion is critically dependent on clean water and energy from renewable resources (or you could grab your club, go back into a cave and count the days until you go out of business).
Stay tuned for Part 2…