Omaha, Nebraska

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Our home to share our thoughts and host an (e)discussion about the opportunities sustainability presents and how our world will be changing as a result. From savvy strategies for clients to our fleet of Schwinn 10-speeds and everything in between; we invite you to the conversation and hope that we can explore true.green. together.


It’s time for us to stop dancing around the issue of whether or not humans are causing climate change. The overwhelming evidence unequivocally shows that climate change is real and is primarily human-caused. This is no longer up for debate. It’s time to move on to solutions and, dare I say, adaptation.

Internally we’ve been talking about when and how we discuss climate change with our clients, partners and collaborators. We have always been very careful when bringing it up because we fear doing so will immediately alienate the “disbelievers.” I think it’s time we start talking about it. First, a little background on why I’m a little fired up about it. Over the weekend I watched a film and read several articles that put me in a bit of a tizzy.

Chasing Ice
First, on Friday night a few Verdisians and I took in the film Chasing Ice. It’s a documentary following photographer James Balog’s quest to document the rapid decline in glacial ice. As he put it in the film, glacial retreat is the canary in the coal mine when it comes to climate change. The film did a wonderful job of showing the eye-opening loss of glacial ice while being absolutely beautiful thanks to Balog’s stunning photography.

Chasing Ice really reached a crescendo for me when a few of Balog’s colleagues witnessed the largest calving event ever recorded on tape. Glacial ice roughly the size of Manhattan broke away from the main Ilulissat Glacier for 75 minutes, a portion of which was shown in the film and can be viewed in the clip above. It was absolutely jaw-dropping to see. If you haven’t seen the film yet, it’s worth seeing in the theatre (now playing at Film Streams!).

National Climate Assessment & More
When I awoke Saturday morning, there were three articles on the back page of the Omaha World Herald all covering climate change; two of which summarized findings from the National Climate Assessment (NCA) draft report. The first article focused on what’s been happening in the Great Plains and highlighted the crazy weather we experienced in 2011 as a perfect case-in-point for what we should expect going forward (of particular note: $12 billion in damages due to the extreme weather).

The second article summarized national trends and specifically mentioned the NCA’s finding that ”warming of the planet is changing daily American life“. The report, which is a mere 1,100+ pages, cuts right to the chase and identifies the kinds of changes we should expect, region-by-region, and warns of the disruptions our society will likely experience as temperatures rise. While it’s not as epic as Waterworld predicts, the prognostications are a little scary.

The third article donning the back page of my Herald originally ran in the New York Times on January 10. Its focus was 2012′s worldwide weather and it noted that extreme weather is now the norm. Several extreme and highly abnormal weather events from all over the globe were cited. As was illuminated in the Times article, extreme weather is not uncommon, but the sheer number of extreme events that occurred in 2012 is what’s abnormal.

Where Do We Go From Here
Fortunately, many businesses are responding, which is becoming clearer every time a major consulting firm produces a sustainability-focused report. One indicator: more than 80% of the Global 500 responded to the Climate Disclosure Project’s 2011 request for carbon disclosure (PwC: Do Investors care about sustainability?). Additional good news is that those companies that are actually taking meaningful steps are often out-performing their competitors (MIT Sloan Management Review: Sustainability: The ‘Embracers’ Seize Advantage). 

Despite the clear evidence that 1) we are facing widespread institutional risk to all of our known systems due to climate change, and 2) implementing meaningful sustainable change is good for the bottom line, we still find that adoption of sustainable principles can still be a tough sell. Why? IBM’s recent report suggests that executive involvement and support is critical to success. We couldn’t agree more. Without the leader on board, it’s not worth doing, which is sad but true. Leaderless sustainability initiatives often struggle and face insurmountable challenges when attempting to make progress.

I think there’s more at play, though. The term climate change has become so politically polarized that some leaders will stop listening if it’s even mentioned, which means that when it comes time for them to understand the risks they face and the benefits they’re missing, they’ve already tuned out. It’s for this reason that we rarely talked about climate change in the past, choosing instead to focus on the more tangible benefits of sustainability initiatives: saving money, happier employees, healthier work environments, and more loyal customers.

It’s no longer enough. It’s time for us to start talking about the risks that organizations face as well. It’s not going to be easy, but if we’re going to do our job and do it well, they must be knowledgeable of and prepared to respond to the challenges that climate change is going to bring. These aren’t scare tactics; it’s reality. And if we aren’t prepared and helping our clients prepare, we aren’t doing our job.

Onward and upward.

 

 

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As an advocate for increasing the use of renewable energy as one action to slow climate change, I am disappointed by the news that the South Shore Heights Homeowners Association has forced one of the neighborhood residents to remove solar panels from the roof of his house.

Over the weekend the Omaha World Herald published a story summarizing the struggle and conclusion of one South Shore Heights (SSH) resident’s attempt to have solar panels on his home. Resident Tim Adams installed the panels on his roof in 2010 and has been battling the SSH Homeowners Association (HOA) ever since. The two sides recently settled a lawsuit (prompting the OWH story) and Adams agreed to remove the panels by July 1. I want to summarize the arguments on both sides and then add my own two cents.

Tim Adams’ Argument

Mr. Adams created a website to tell his side of the story and to “educate Omaha homeowners about solar power and the lawsuit” with SSH. His primary argument is that solar panels are not prohibited by any language in the SSH covenants. Moreover, Mr. Adams argues the HOA board has for years failed to follow protocols in the covenants for approval of external improvements and has been inconsistent in approving certain improvements.

A view of the rear of Mr. Adams house in South Shore Heights.

The HOA’s Argument

In challenging Mr. Adams’ solar panels, the HOA board relied upon covenant language requiring external improvements to conform to the “look, feel and style” of the neighborhood. The board argued that allowing solar panels on Mr. Adams’ house would reduce property values and make it more difficult to sell the home, in addition to being ugly.

My Perspective

Even though the HOA was on the winning side, I think the HOA was on the wrong side.  The evidence that global warming is already happening is growing, and even though Nebraska won’t disappear due to sea level rise—unlike many island nations—Nebraskans should start preparing for more frequent and severe drought, more wildfires, and changes to wildlife and insect inhabitants as climate change impacts the midwest. (What do you think these impacts will do to our agricultural economy?) Our past burning of fossil fuels and the associated emissions are starting to catch up with us. The future costs of the impact of climate change are going to make the supposed aesthetic concerns of the SSH HOA insignificant. The SSH HOA seems out of touch with the causes and effects of climate change.*

Climate change is likely to increase the frequency and severity of drought in the midwest, meaning that reservoir lakes such as Lake Zorinsky near South Shore Heights, will eventually disappear as water supplies decrease.

Although I do not know if the SSH HOA has challenged other exterior improvements in the neighborhood, other HOAs around the country have fought with homeowners over such frivolous items as holiday decorations, yard signs, types of pets, use of clotheslines for drying clothes, and allowable flora and fauna. There have also been other HOA challenges related to more significant items like the on-site use of renewable energy for a home. As a society we need to get past the point where aesthetics and short-term economic concerns prevent one individual from making a decision to reduce his family’s contribution to climate change by investing in solar energy.

I suspect that Mr. Adams thoroughly educated his neighbors on the financial case for on-site renewable energy and the environmental benefits of preventing climate change. However, I wonder if he mentioned the more immediate impacts of pollution from OPPD’s coal- and natural gas-based electricity generation, and the immediate health benefits to everyone in the Omaha region from reducing the emissions from nearby power plants. These emissions are directly tied to respiratory irritation across the population but especially in the very young and very old, linked to asthma and bronchitis, send mercury into the atmosphere and environment, and emit gases that lead to acid rain.

Selection Bias In Action

Regardless of the SSH HOA’s right to exercise its authority pertaining to the “look, feel and style” of the neighborhood, I think that Mr. Adams was right not to back down right away. The HOA may not have fully considered the practical value—as opposed to any aesthetic value—of the panels, because it appears the board members were likely making decisions using selective bias. Selective bias is a human tendency to perceive information that reinforces preexisting beliefs while ignoring information that challenges existing beliefs. In such cases, convincing others to act on information alone is quite difficult. Instead, those individuals need to come to the conclusion on their own either through their own experience or over time. It seems the SSH HOA already has a bias against renewable energy regardless of its practical value, and did not truly consider or weigh that value against any preexisting biases.

The settlement between the parties reinforces the apparent presence of selective bias. In addition to restricting Mr. Adams from taking future legal action or filing complaints against the HOA, the settlement does not allow him to make any future public comments about the case or the HOA and its members, whether on Facebook, his website, or other media. Although I don’t agree, I can understand the settlement requiring removal of the panels and preventing future legal action, but the restraint on Mr. Adams’ speech seems only to underscore the HOA’s bias in this situation. The HOA was able to block Mr. Adams from using renewable energy on his home, but why should he also be restricted from making future comments about the case? The answer is that it reinforces the HOA’s apparent bias against on-site renewables: The HOA had an opportunity to remove a voice from the table that it didn’t agree with by imposing this bias on Mr. Adams’ would-be audience. In other words, the HOA appears to have shifted from the internal bias of “I don’t care what you have to say and I’m not listening,” to the external “Because I don’t want to hear what you have to say, I won’t allow you to say it to anyone else either.”

Conclusion

By filing for a court injunction to force Mr. Adams to remove his panels, the SSH HOA could have set a very damaging precedent to the future use of private renewable energy generation in the Omaha area. Even though it is disappointing that the HOA ultimately achieved its objective to remove the panels, it is better that it occurred through a private settlement rather than a court decision. The next time an HOA threatens renewable energy on a private home in Omaha, I hope Omaha residents can galvanize support for city-wide changes that ensure any homeowner can take action to his or her carbon footprint by investing in private, on-site renewable energy generation. Nebraska’s net metering statutes presumes that residents have the ability take such action, and allowing distributed generation increases the security and reliability of our electricity grid by spreading out the generation and reducing the need for transmission, in addition to mitigating climate change.

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*The South Shore Heights website “about” page states that SSH is “situated within a quarter mile” of Lake Zorinsky, and features a panoramic image of the lake. The implication is that the neighborhood derives value from its proximity to a natural place, and I am sure that is true. However, there is a disconnect because Mr. Adams solar panels would reduce greenhouse gas emissions, which is an action that mitigates climate change, and thereby helps preserve natural places as we now know them. Without greater action to mitigate climate change, scientists predict more frequent and severe drought in the midwest, which has the potential to perpetually dry up reservoir lakes such as Lake Zorinsky as water resources become more scarce.

 

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Phew! The world did not end on 12/21/12 as many deduced it would based on the rollover of the Mayan calendar. That is great news. Now we only have to wait for global warming to become as alarming and “interesting” as the possible end of the world.*

As more people are concerned by global warming, more people will want to act to prevent global warming and be willing to contribute to the effort. Those contributions will have to be both action-oriented and financial, but many Americans are weary of making that financial commitment in a recession when they aren’t sure climate change is even linked to human activity.**

The United States was long the world’s largest producer of greenhouse gas emissions, but China has recently surpassed the U.S. In spite of the recession, the U.S. remains the second-largest emitter in the world (producing nearly 20% of worldwide emissions) because of the availability of energy. When I say availability, I mean that energy is both easy to use (accessible) and cheap to buy in the U.S.

Cheap?… Cheap! Cheep!

When many Americans hear politicians advocate for cheap energy, they often respond like baby chicks with an enthusiastic, supportive, and approving “Cheap? Cheep!” without much concern for where that energy comes from or the actual cost of supplying that energy. And realistically speaking, who doesn’t want energy to be as low-cost as possible? The problem is that when you only talk about energy being cheap in terms of the dollar cost to the consumer, you miss a lot of the hidden costs associated with fossil fuel energy.

But why is fossil fuel energy so cheap in the U.S. (Cheap? Cheep!)? I’m not an economic guru, but can share a couple of fundamental factors of which I am aware. One reason energy is cheap in the U.S. is that the extraction and production of fossil fuels is heavily subsidized by the federal government. In fact, the federal government subsidizes fossil fuels with about 5 times as much money as renewable energy in the form of tax breaks and direct spending. For example, from 2002 to 2008, the government provided $70 billion to fossil fuels and only $12 billion to renewable energy.

Secondarily, the presence of these subsidies on fossil fuels incentivize the effort to search for and extract fossil fuels. This increases the supply of these sources beyond what a free, unsubsidized market would support. According to the economic “laws” of supply and demand, a greater supply leads to lower relative demand and lower prices. We know the impact of large subsidies on fossil fuel extraction is real because even the relatively small production and investment tax credits from the U.S. government for wind energy have created a tremendous wind energy boom in the past five years. The policy problem with putting our chips behind fossil fuels now is 1) that fossil fuels eventually run out, and 2) while we burn fossil fuels at a rate far greater than our ecosystem can safely absorb the associated emissions (and pollution) we are changing the atmosphere and environment. These changes are starting to warm the planet and create foreseen and unforeseen consequences. There is no way to accurately predict the financial cost of these changes, but they are estimated to be very large.

Taxes, Fees, and Caps

In order to level this playing field, and provide price signals to consumers about the actual known and unknown/unquantifiable cost of burning fossil fuels and releasing greenhouse gases into the environment, experts, citizens, and Congress have explored various methods to create pricing signals.

Taxes on emissions are often generically referred to as “carbon taxes” because the element carbon is one of two elements present in carbon dioxide, the most prolific and infamous greenhouse gas. These taxes could work similarly to traditional taxes on specific items like gasoline, cigarettes, or alcohol, and would apply to fuels that produce carbon dioxide through combustion. The government would collect these taxes and in theory use them to support programs and projects that mitigate and adapt to climate change.

Other experts have advocated for carbon fees. Generally, carbon fees would be collected similarly to taxes but distributed directly back to citizens rather than being doled out by the government. The benefit of fees is that they would directly help citizens purchase energy or efficiency measures and thereby help them with the increased cost of goods and services.

Finally, cap-and-trade is a notorious proposed solution to reduce emissions in the U.S. Cap-and-trade basically involves setting a limit on an entity’s emissions (a cap) and then allowing that entity to either use less energy (by reductions or efficiencies) or obtain emissions offsets from other entities that produce fewer emissions than their limit who sell credits for those reductions. This scheme affects the price of carbon by creating an economic market for the capacity to produce greenhouse gas emissions.

What Have We Now?

I think many Americans are opposed to all of the above options because they would inevitably increase the cost of energy, which would increase the costs of goods and services that use energy for production and transportation. However, as demonstrated by the lesson of Omaha’s $1.6 billion combined sewer project, if we aren’t willing to pay a little bit today and over time, we are going to have a very large invoice from mother nature before the end of the century, and it will probably make the cost of hurricanes Katrina and Sandy look like my allowance in first grade.

But here is the thing, your cost of energy already tracks the related emissions. The only difference between what we have now and the above options is that, in many cases, no percentage of the current cost is specifically designated as being tied to emissions. As an example, take a look at the graph below showing the average annual total greenhouse gas emissions and average annual total energy cost for 83 OPS schools over the past 24+ months. The two lines are nearly identical in shape! What does that mean? Simply put, it means that you can figure out emissions simply based on energy spending, and therefore that the cost of energy somewhat incorporates the related emissions. But we are not yet calling a component of that cost a carbon tax or fee.

Graph comparing the average total annual emissions (previous 12-month period) with the average total annual energy expenses (previous 12-month period) for 83 OPS schools.

Download a .pdf of the above graph by clicking this link: OPS Emissions v Expenses.

The pricing schemes mentioned above would simply shift the cost line up slightly while retaining the same overall shape. Yes, it would probably increase the monthly energy bill by a certain amount, but if we apply the additional marginal revenue toward energy efficiency, clean energy, and renewable energy, we will over time be investing in measures that prevent a future lump-sum bill that is likely to exceed anything we can imagine. For example, one expert has calculated that for every $1 New York City spends today to prepare for and prevent climate change it will save $4 in future repairs.

Conclusion

My personal conclusion is that there is no reason to fear a slight increase on your energy bill today (assuming the increase leads directly to climate change mitigation and adaptation) when there are clear indications that the cost of not making that investment will be, for lack of a better word, huge. Cheap energy might seem desirable, but if we aren’t careful to think about what it really means to have cheap energy we might all be shouting “Cheep? Cheap!” while civilization as we now know it risks the same fate as the infamous dodo bird.

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* Climate experts are predicting that future warming due to past emissions already has the potential to change many aspects of civilization as we now know it.

** Climate experts are certain that the current changes to earth’s climate are the result of human activity.

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I see a parallel between Omaha’s $1.66 billion combined sewer overhaul project, the decisions and behaviors that led to the sewer system problem, and climate change. Anyone else?

First, what the heck is Omaha’s sewer project for? A combined sewer provides a route for both stormwater and “sanitary” sewage (basically, anything that goes down a drain in your home, including the toilet). About 43 square miles of eastern Omaha—primarily built before 1960—is serviced by 510 miles of combined sewers.

Map showing the portion of Omaha with a combined sewer system.

With as little as 0.1″ of rainfall, the stormwater combines with the sewage and causes the untreated, raw sewage to discharge directly into both the Missouri River and Papillion Creek (which feeds into the Missouri River)—known as a Combined Sewer Overflow, or “CSO.” If you don’t want to have crap, urine, and other chemicals from homes in your waterways, then you should like the idea of fixing the combined sewers to reduce the number of annual CSO events in Omaha from 52 per year to four or less per year.

Graphic schematic of a combined sewer.

If you aren’t sure if having crap, urine, and household chemicals in your waterways is a bad thing, consider that raw sewage can be a source for disease-causing organisms (in addition to being smelly and unsightly) and chemical pollutants that cause problems for fish and other aquatic wildlife (i.e., birds, amphibians, reptiles). By the way, much of Omaha’s drinking water comes from the Missouri River, and even though it is treated first, wouldn’t you rather know it started off a little bit cleaner?)

 
Second, how did we get to the point where this sewer project needs to happen? Well, it is a combination of two things. One thing is real and the other is artificial. The artificial thing is regulation from the U.S. Environmental Protection Agency. Basically, the EPA has effectively set a limit on the number of CSO events a community’s combined sewer can cause per year. The Federal Government has found that more than 770 communities across the country have a CSO problem, so Omaha is not alone here.

Map showing locations of other communities subject to EPA's CSO regulations.

The real thing that has created the need for this work is the storm water management paradigm in Omaha. A 0.1″ rainfall event may not seem like much, but consider what happens to that water. All the water from a rooftop is concentrated into a gutter, which then combines the flow with other gutters and the flow from impervious surfaces like asphalt, concrete, and packed dirt and takes that to the storm drain, which in a combined sewer system overloads the “sanitary” sewer leading to CSO events where all that waste and chemicals goes directly into our waterways. Over watering and over-fertilizing your lawn can contribute to harmful runoff as well. If, over time, Omaha and its residents had been investing in more diverse and dynamic storm water management in the form of storm water retention ponds, rain gardens, bioswales, porous pavements, green roofs, and rainwater capture systems like rain barrels, it is possible the combined system would have created fewer CSO events, maybe even few enough to avoid EPA’s regulations.

 
Now, in order to fix the problem of CSO events in Omaha, we need to collectively spend $1.66 billion dollars within 15 years rather than investing a little bit over the past 150 years to prevent overburdening our combined system today. And finally, ladies and gentlemen, is the three-step analogy to climate change!
 

  1. In the combined sewer system, the problem input is too much combined storm water and sewage. In climate change, the problem input is greenhouse gases.
  2. In the combined sewer system, the sewer has only so much capacity for sewage and rainwater before it overflows and causes a CSO event. In climate change, our atmosphere and planet has only so much capacity to deal with greenhouse gases while maintaining the equilibrium with which every living human and current ecosystem on earth is familiar.
  3. In the combined sewer system, the undesirable outcome is a CSO event, directly caused by the system inputs overwhelming the system’s capacity. In climate change, the undesirable events are many: rising sea levels, rising temperatures, and stronger weather events, all of which are the result of the system input overwhelming the system’s safe capacity.

Why is this analogy even worth writing about other than connecting seemingly unconnected ideas? I see a clear lesson here. In the case of the sewer system, the cost to fix the problem (mitigation) rises over time until—when there is no choice but to adapt—it is extremely, painfully costly and no one wants to pay for it all at once. Climate change is the same way. Experts estimate that every year that passes in which we do not apply serious climate change mitigation measures, the cost of adapting to it later increases by $500 billion. Yes. $500 billion every year we delay.

 
We missed the chance to use smart, diverse, storm water management solutions in eastern Omaha so as to avoid the lump-sum cost of fixing the combined sewer all at once now. But the good news is that we can still avoid the huge price tag of adapting to climate change in the future by investing our financial, social, and political resources in serious mitigation today.

Whether you understand that climate change is caused by human activity or you choose to believe something else, you can’t refute the evidence that our planet is getting warmer. And if you agree that our planet is getting warmer (regardless of the reason), you should agree that the smartest financial move, the fiscally responsible and conservative move, is to spend our resources now to avoid having to lay out unforeseen amounts of money at some critical point in the future.

The math of climate change is very simple. The consequences of climate change are very serious. Now that we have the cost and headache examples of what happens when a combined sewer runs amok, and can see how climate change is like sewer crap, it should be clear to see how bold action today to reduce greenhouse gas emissions can save even more money and bigger headaches down the road.

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I went to hear Bill McKibben speak Saturday night at the Joslyn Art Museum.  McKibben is an author and the founder of an organization called 350.org.  They are working to bring the world’s carbon levels down to the safe level of 350 parts per million (ppm), a measure currently at 391 ppm.

As an accountant in my previous life (or career), I really liked and appreciated the lecture’s title – “Do the Math.” My colleague, Daniel, wrote about McKibben’s related article in Rolling Stone this summer.

 

So here’s the math – in only 3 numbers:

2 Degrees Celsius – Why is this number important?  Leaders from countries around the world have been working for years and years to address climate change.  This issue is so difficult because countries like ours (the developed world) have emitted so much carbon dioxide already, yet there are many countries around the world that are still developing.  Developing countries want our way of life and thus believe that it’s fair that they develop as we did (often requiring significant emissions).  A 2 degrees Celsius rise in the world’s temperature was the only hard number “the world” has agreed on thus far, in Copenhagen in 2009.  Here’s an excerpt from their statement:

“We agree that deep cuts in global emissions are required according to science, and as documented by the IPCC Fourth Assessment Report with a view to reduce global emissions so as to hold the increase in global temperature below 2 degrees Celsius, and take action to meet this objective consistent with science and on the basis of equity.” 

Nearly all heads of states from Albania to Zambia, including the U.S., Russia, India and China signed this Copenhagen Accord.  Science tells us that this is a good target. Unfortunately, the International Energy Agency (IEA) currently projects a long-term global temperature rise of 3.6 Celsius in its central projection scenario.

565 Gigatons – Scientists tell us this is the amount of carbon that can be added to the atmosphere before it is expected the earth will warm another degree Celsius; thereby getting us to the 2 degrees mentioned above.  The earth has warmed around one degree Celsius already compared to pre-industrial time, and if the extreme drought in Nebraska and throughout the country this year doesn’t give us a good example of what’s to come, one can look eastward.  Hurricane Sandy’s force and damage was a result – in part – because of climate change.  The destruction to New York, a city I called home for more than a decade, was unprecedented.  When I talked to my friends out there, they said this storm was different than any they have experienced before. The devastation was much worse and much farther reaching than anything in the past. My sister is on the ground cleaning up the mess, and she says that in places, it is like nothing she has ever seen before.

McKibben said that it will take ONLY 15 years for the world to emit 565 Gigatons at our current projected pace.

But McKibben saved the worst number for last.

2,795 gigatons – This is the estimated emissions that will result from the use of the fossil fuel that companies currently have in their reserves.  From my accounting days, McKibben said all the right things on how they computed reserves – looking at SEC filings, etc.  Reserves are difficult to calculate because you never know exactly what’s in the ground until you take it out, but SEC filings are going to be the best source for estimates, because the company’s auditors will have vetted them to some extent. The International Energy Agency adds credence to this number in its most recent World Energy Outlook 2012.

 

So let’s do the MATH.

If 565 gigatons gets us to an increase of 2 degrees Celsius, the fossil fuel companies have 5 TIMES that amount in reserves.  The business plan and goal of these companies is to sell all of their reserves to generate profits. The emissions from extracting, producing and using all of these fossil fuel reserves will mean chaos for our planet. The climate change the earth will experience from our collective human action is the most significant issue our generation and possibly humankind has ever faced.

But it wasn’t the math that really got me, even though I am still an accountant at heart, it was the picture of children standing in their flooded street in Haiti – holding signs that said:

 

YOUR ACTIONS

AFFECT ME

 

This picture and many others McKibben showed the crowd of at least six hundred on the Saturday night of the BIG TEN Championship football game, demonstrated that people around the world understand climate change, and that many Nebraskans care.  But can they do something about?

The other point that struck me as critical to appreciate is that the United States is where many of the large fossil fuel companies are headquartered or have significant operations and significant investors.  Exxon Mobil is currently the world’s largest company, headquartered in Texas. As a side note, its largest shareholder is Vanguard, a mutual fund many Americans invest in personally or through their retirement accounts. Royal Dutch Shell is the fourth largest company, BP is 11th, and Chevron is 12th, headquartered in California. Not only are the people of the U.S. emitting more greenhouse gasses per person than any other large country in the world, our citizens work at and control many of the largest suppliers of the fossil fuel reserves to be burned.

 

So what action is 350.org calling for?

Simple. Taking our money, and any money we can influence, out of the equity shares of the top 200 fossil fuel companies. The 350.org campaign is working to have students affect their university endowment investments, church-goers to get their places of worship to divest, and anyone who has a pension to get their future financial security disconnected from these fossil fuel companies.  It is perfect.

These companies are driven by share price; it’s something that their Board of Directors and their leadership cares very much about. It is how the worth of their company is valued. Creating a sustained and ongoing sell off of these companies will force the share price down… and possibly, hopefully, cause these companies to become energy companies, rather than fossil fuel companies.

I worked in the financial services industry in New York for more than a decade, and this action, if taken by a collectively large group, could be what needs to happen to redirect our climate future. We need to harness the sun, wind and geothermal power to change our direction, but talking alone with these fossil fuel companies has not convinced them that this direction is imperative. Taking our money out of these entities that are suppliers of the problem needs to happen to motivate their leaders. It is time to move the money.

 

So what would I tell a client?

Divestment of investments in the fossil fuel industry is just like any other strategy to be considered when trying to make one’s institution more sustainable. Verdis works with clients that are committing to becoming sustainable for different reasons and at different paces.  I would tell a client interested in the financial benefits of energy efficiency to consider moving money from fossil fuel investments to a green revolving fund (GRFs). GRFs are internal investment mechanisms to fund energy efficiency projects, and they use energy savings resulting from such projects to replenish the fund. Established GRFs reported a median annual return of 28%, compared to Exxon Mobil’s annual growth rate during the last decade of only 10.4%.

Even if a GRF is not a good alternative, there are many other non fossil fuel investments with excellent returns: Investments without a core business plan that is working against the efforts of all of the other sustainable strategies being implemented at one’s institution.  After all, changing an investment portfolio’s guidelines, in theory, is as simple as changing the list of allowable investments.  The impact could be substantial, and if it is, an institution won’t want to be left holding the stock of a company with a falling price.

 

Why I will act

Droughts, floods and storms are affecting so many people around the world already. Nebraska is even starting to see how droughts and floods will impact our businesses and lives. Droughts are destroying our crops here and around the world. We know rising sea levels are forcing people to relocate. And so many of the people directly affected don’t emit any carbon in their daily lives.  Many of these individuals around the world could work their entire lives and never be able to afford a plane ticket to see our developed world, let alone live it.

This is a huge global, moral issue. And because we are here, in the U.S., we can do something about it. So many, so far away, with scare resources, will feel the affects of our actions or inaction.  Our time is now.

We should care and we should act – for those who cannot act themselves. For those who are the future. For our children and our grandchildren. For those little children in Haiti. I will act for my daughter, who was born the very day this photo was taken in Haiti. There is no debate about the science. The debate is over.  It is time to change the course of our planet before it is too late.

 

 

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The Business Ethics Alliance hosted another discussion in its Mind Candy series on Tuesday. The topic: business and politics and how they mix. As a member of the Business Ethics Alliance Board of Trustees, I was really happy that such a potentially toxic topic was being explored. It’s not only timely, it’s one that can be tough to talk about without hurting feelings. The polarization that exists today, especially at the federal level, clearly trickles down into many political conversations. Oh, how I pine for a good, healthy conversation, which occurred on Tuesday.

Personally, I’m politically engaged and my views have strengthened over the last few years; the latter largely a function of digging deeper into the issues and actually talking with our elected officials. I love talking politics and am working with a few teams of people on select local issues. Team Verdis has infrequent informal political discussions, but we’ve never really explored the ins and outs of one another’s views in a meaningful way. I think we largely agree on most issues, but not all. And only on one occasion have we put the Verdis name out there in support of a cause.

Tuesday’s Business Ethics Alliance discussion provided a great opportunity for the panel and the audience to explore two central topics: 1) to what extent it’s appropriate for businesses to allow (or encourage) political discussions to occur in the workforce, and 2) whether it’s appropriate for businesses to publicly advocate for candidates or policies. The former was deeply explored; we only skimmed the surface of the latter.

A couple of key takeaways and learnings for how businesses should handle internal conversations:

  • Do what’s best for your business and its culture. In some cases, political discussions can build stronger teams, inspire people to work harder, and actually produce more effective employees. In others it’s totally toxic and causes nothing but problems. There’s not a single right way that everyone should handle it.
  • Leaders must be careful not to push their views on employees, either purposefully or unintentionally. Doing so can alienate those that disagree, especially if  you’re not creating a culture that fosters and allows these conversations to occur productively. It’s a delicate balance, and I was impressed with how Rex Fisher handles it at HDR.
  • Generally speaking, society is not very good about handling conflict, and political discussions are no different. Don’t expect everything to be peachy.
  • For employees, some of the best advice I heard was to give them the latitude to have discussions and share their views while making it clear that there are consequences if they cross the line. Most adults have a good sense for where that line is and when they’ve crossed it. Or at least I hope they do.
  • No electioneering. Right on, Hal Daub.

While I found myself nodding my head to much of what everyone was saying, there are a few questions that popped into my head that remained unanswered. In pretty much every case, these questions arose because we didn’t get to explore whether businesses should take political positions and be politically active. I really wish we could have talked about it further. It’s where everything gets pretty dicey, in my opinion. I can handle how we navigate political discussions at work, but I could really have used some insight from the panelists or other attendees on whether or not we should be putting the Verdis name on anything.

Just to offer an example, Verdis formally supported the Equal Employment Ordinance that passed City Council in March 2012. We felt that discriminating against someone just because they are GLBT is wrong. By adding our name to the list of supporters, which was 100+ organizations long and included a few local large corporations, we took a risk. A business owner that disagrees with our views may have looked at that and decided not to call us. Or they may not return a call when I’m hoping to make a pitch. Was it in our best interest as a business to formally support the EEO? In our minds, the answer was yes because we viewed it as a simple issue of fairness.

This leads me to what I think was an unspoken and incorrect assumption from the morning: I think everyone in the audience was operating under the premise that the primary motivation for a business and its leadership is to increase profits. A motivation that likely drives what positions a business will hold when it pertains to regulations that could potentially hinder their ability to be more profitable (e.g., banking regulations. And a motivation that would prevent said business from taking a position on a social issue that they might believe in but doesn’t necessarily directly impact their business (e.g., gay rights).

I don’t think that’s unilaterally true anymore. There are so many business leaders on both sides of the aisle that are willing to sacrifice a little from the bottom line in order to build a better community. This wasn’t discussed, but it could have made for an interesting dialogue.

Social entrepreneurs are often creating businesses out of a desire to solve a social problem, not because they see a chance to build their own wealth. In some cases, the two go hand-in-hand, which is beautiful. I think Verdis falls into this category primarily because our motivation from day one was to have a big impact on protecting the planet. Fortunately for us there’s a very strong business case for sustainability, and when we talk to potential clients, we focus on the business case, not on specific environmental issues like climate change.

You won’t find the term ‘climate change’ in any of our marketing materials for a very specific reason: it’s a polarizing, politically-charged issue. Indirectly we know that if we are able to help an organization take great green leaps, they’re going to minimize their environmental footprint while making more money. That’s what motivates us. So when it comes to deciding whether or not we get publicly in front of a proposed law aimed at reducing greenhouse gas emissions, we tend to be quiet because we feel like we can do more good by helping businesses make change at their own pace. It’s a bit of a struggle, for me in particular, but for now it’s the right balance. We’ll see where we are in five years.

Onward and upward.

 

 

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For anyone who thinks we are going to see gasoline prices approach $2.00 per gallon ever again, you might want to grab a Snickers® because it is going to be a while, if it happens at all. The last time we saw such low prices was at the start of the current recession. We are still in recovery mode and yet the price of gasoline is again hovering around $3.50 per gallon.

Energy prices tend to fluctuate, kind of like stock prices or the daily weather in the midwest. In the midst of those fluctuations, it is sometimes difficult to discern an overall trend. Sure, gasoline prices are constantly in the news, but it is human nature to best remember only the recent past and to think about the immediate future.

The Nebraska Energy Office tracks daily, monthly, and yearly prices for many energy-related commodities. Verdis spends more time with this data than the average citizen because we often work on energy plans for our clients such as Sarpy County and the City of Papillion, and transportation infrastructure and urban design impacts how much people drive and how much gasoline they must purchase.

Download (.pdf): Omaha Gasoline Price Graph

When looking at regular unleaded gasoline prices in Omaha over the past 13 years, it is very easy to see an upward trend. In fact, the rate of increase in the consumer price index (also known as inflation) from 2000 to 2010 was 26% while the rate of increase of price of gasoline in Omaha was 89%. As supplies become more uncertain and demand for gasoline rises in countries like China, India, and Brazil, you can bet that the price of gasoline will keep climbing amidst all of the fluctuations.

Just for comparison, take a look at regular unleaded prices across the U.S. since 1976 (source: Energy Information Administration):

 

Download (.pdf): US Gasoline Price Graph

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“Global Warming’s Terrifying New Math” will make you think twice about ignoring the earth’s temperature and CO2 emissions. It’s an article I invite everyone who will be alive tomorrow to read.

Illustration by Edel Rodriguez

Bill McKibben just wrote “Global Warming’s Terrifying New Math” with math that will make you think twice about ignoring the world’s temperature and CO2 emissions. It’s an article I invite everyone who will be alive tomorrow to read.

Never mind the scary picture above used in Rolling Stones for this article, it’s a bit dramatic, even though this is some serious stuff to think about. I find it important to not let doom and gloom overshadow hope, but it is important to be aware of challenges facing us.

3 numbers summarizing this challenge from the article:

  • Celsius – What the world (2009 G8 Summit, the Major Economies Forum, and the Copenhagen Conference) has agreed is the limit of warming we want to (can?) live with. Where we are now: .8° Celsius
  • 565 Gigatons – Our Carbon Budget over the next 40 years. 565 Gigatons is the amount of CO2 that humans can pump into the atmosphere by midcentury and still have some reasonable hope of staying below two degrees.
  • 2,795 Gigatons  – The known amount of CO2 potential in the ground–5 times larger than our Carbon Budget. Fossil fuel companies are planning on burning all 2,765 Gigatons with business as usual, in fact making investments based on the potential return of $20 Trillion, despite what it will do to our ability to live on this planet.

What implications do these numbers have for you–in your life, in your work, at home, and in your community?

For me, I see a hotter future, though I’m not sure how it will get hotter than today’s projected high of 104°F, and more extreme weather events. What will we need to do in our community to adapt to this? What will it look like to live in a hotter future with more extreme weather events? What is the economic, social, and environmental impact of extreme weather events (think floods of 2011 and the drought of 2012)?

With as difficult as it is to predict the future, I do know two things, one is that we need to rise to face this challenge head on and stop pretending it will go away on its own, and two, doing so will take an investment today for our future. It will cost us more right now, but for good cause, it is insuring against the risks of doing nothing. Investments, by their very nature take time, energy, and resources today, to make for a better tomorrow.

The fee and dividend plan referenced by Bill McKibben is a system that minimizes the hardship on everyone, while increasing efficiencies and decreasing reliance on fossil fuels so we can stay within our carbon budget.

This will take political will, a decision we as a country have to make for our future. This makes it absolutely necessary to invest in energy and resource efficiency; imperative that we generate our energy with clean, renewable sources. This isn’t hard stuff, even now, organizations are making changes every day to become more efficient and to generate renewable energy. All it takes is a decision, a conscious choice, to make this investment now.

After thinking about the implications that this new earth has in my life, I’d to keep our planet similar to the Holocene, the 11,000-year period of climatic stability, that we will be leaving if we continue on our current path. I’m willing to invest now in my future. Are you?

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