Visit Our Sponsors
The searing heat of the Arizona desert is not necessarily the first thing that comes to mind when considering green issues, but it once again was the site of AMR Research's Sustainability Peer Forum Spring Executive Summit, which dovetailed our annual Supply Chain Executive Conference in Scottsdale. While the Summit was successful courtesy of the passionate discussions and topics explored throughout the sessions, it was also noteworthy in one other specific way: it was the final interaction of John Davies as the leader of the Sustainability Peer Forum.
For more than two years, John played a pivotal role leading AMR Research's sustainability initiative. We will miss his contributions and wish him well in his future endeavors. I will try to engender the same sense of enthusiasm and commitment to the vast range of themes that are now captured within the broad canvas of the Green Agenda on the contemporary business landscape.
My arrival at AMR Research during the Sustainability Peer Forum Spring Executive Summit marks a transformation and refocusing of our efforts on the development of a dedicated and already growing vendor and user advisory service in sustainability, business, and climate change. This service will complement the existing Sustainability Peer Forum and Green Alert newsletter.
I take this opportunity to reflect on some of the initial themes we will explore the next few months as we continue to dive deeper into the topic of sustainability and its impact on business.
It is an unusual time to arrive in the United States, with all the obvious signs of a massive national headache. Internally, it's a symptom of a hangover after a decade of widespread property development and mortgage excess in the sub-prime sector. But externally, its origins lie distinctly in the Middle East, brought on by the strong smell of petroleum fumes. Whether the next president is an old broom from the West or a new broom from the Midwest, he will have to find some rapid remedies for the collective cranial discomfort.
Treatment is currently a fairly weak, Federal Reserve interest-rate pain reliever, but the issues of energy are something very closely aligned to sustainability and the green agenda. An energy price hike, unparalleled since the mid-1970s oil crisis, with its inflation-corrected highs only recently surpassed, would provide a sound basis for organizations to fully embrace energy strategies that lead to greater efficiency. Most would imagine they'd enjoy the concomitant cost savings and simultaneous reductions in risk from exposure to future forms of greenhouse gas (GHG) emission-related taxation, one that will undoubtedly be introduced in some form within the timescale of the next president.
Shifting energy policies clearly require capital asset replacement and long-term planning; the regulatory aspects of securing permission for the development of a new power-generating facility alone require between 8 and 15 years. Struggles in Europe to get nuclear power stations built likewise indicate such a shift is unlikely to embed itself quickly or in a linear fashion.
Carbon prices in the European Union Emissions Trading Scheme (ETS) have recently hit their highest level in two years, on the back of relentless oil price increases. The benchmark EU ETS carbon contract for December delivery increased to 27.54 ($42.77 US), a 40% climb from the last four months alone. It has been attributed to oil price increases, which, at the time of writing, have reached a new record of $140, recently jumping by more than $11 in a single day.
The carbon price increase is attributed to European energy generators shifting the electricity generation mix back to one that's dominated by carbon-emission-intensive coal fuel sources. Somewhat ironically, these recent increases follow a drop in the ETS price on carbon, down to about 19 in February, following concerns of a global economic slowdown and the associated reduced demand for energy.
The reaction of larger GHG emitters to drive up carbon credit demand and adjust the generation mix is antithetic to the ETS and Kyoto-based aspirations of using carbon as a driver toward a more energy-efficient generation. Rising energy costs and reducing emissions levels might not go hand in hand in the expected fashion. In this regard, long-term corporate and national energy strategies will more precisely align. However, the timescale and effects of the relationship, as well as the rapidly emerging regulated and voluntary carbon markets, cast a shade of green we are only just starting to view and understand.
While all the news may not be good across the pond, the landscape for the green economy appears to be more vivid and widespread than ever in the domestic consumer market.
As a recent arrival to the United States, I am struck by the omnipresence of the green message in the marketplace. Whether scanning a newspaper or magazine, driving, channel surfing, or taking a ride on a train or subway, the green message is everywhere.
The transformation of that messaging into a tangible and profitable proposition for business does, however, remain some ways away. The most recent demonstration was a recent survey that examined green customer behaviors in the banking sector. While 43% of respondents indicated they are more likely to do business with companies that they perceive as green, 75% insisted on receiving paper statements rather than opting for a paperless alternative. A big issue? Well, big enough for the U.S. household market segment alone to account for an estimated 687,000 tons of paper.
Other recent surveys point to the less tangible benefits of corporate reputation and competitive advantage as justifications for the ever-increasing push for companies to green their scopes and products, as well as aim for long-term operational efficiency. While customers are increasingly welcoming the sign of green in the marketplace, they are still disinclined to see green in their wallets.
Another area of green disconnection catching our eye is the space between the visions and perceptions of leaders and the frequent, significantly lesser clarity of the implementer and operational entities within organizations that are expected to execute this green vision.
Some 60% of organizations report sustainability policy being generated at the C-level and primarily at the CEO level. This vision is typically communicated to the remainder of the organization through a single or small group of (often part-time) sustainability staff. Our recent survey of the oil and gas sectors' sustainability initiatives clearly identifies this chain of ownership as a major weakness. When designed in the CEO's office, the sustainability vision is often created more for external consumption using a lexicon that is simply foreign or implausible to operational staff.
The green agenda needs to clarify and codify sustainability in a manner that is useful for internal organizational consumption but which also has resonance with all stakeholders and customers. And, preferably, it should be quantifiable for performance measurement and direct internal and external comparison.
Green issues can be viewed through many lenses, these are but a few. The nature of the future carbon marketplace and its links to energy policy and energy efficiency; market place perceptions of sustainability, and internal frameworks; and lexicons and metrics in the sustainability and energy efficiency space represent a snapshot of some of our research agenda that explores the greening of all verticals. We'll be further developing this agenda in the coming months.
The green movement has shifted into a green marketplace, and business leaders agree it is here to stay. Uncertainty now lies only in predicting the timing and nature of its full development. I welcome your email@example.com.
Enjoy curated articles directly to your inbox.