Innovation Bites

Yesterday I presented to a webinar audience of many who are participating in, advising on or following the Finance Lab. The subject “Innovation and Entrepreneurship in Financial Systems”.

I had been briefed to present emerging (social) innovation practice and processes that are relevant to the challenge of systems change in finance. My co-presenter, Jason Mollring, Ventures Consultant at UnLtd, presented his insights on social entrepreneurialism and a culture for change.

Here’s the presentation. The discussion that led on from my oratory centered on behavioural economics – understanding the economic decisions of actors in a system (consumers, borrowers, investors) – as key to unlocking systemic innovation in finance. That is both about unlocking systemic innovation in the finance system itself (e.g., our relationship to debt) as well as where finance enables citizen behaviour change (e.g., local currencies to drive relocalisation of markets).

Central to my talk was the ‘latent potential of human capital’ to achieve systemic change/innovation and a shift to ‘social opportunity’ enabled by networks and collaboration.  Ray Anderson calls this accessing of human capital or talent as  “Love on the factory floor”, which is the title of point 5. in my presentation.

I was also at the RSA’s talk on the Robin Hood Tax yesterday. Jeffrey Sacks described the need for the financial industry “to pony up” and take on the global shared responsibility of poverty and the wealth gap.  Referencing Bill Gates recent work, he suggested that “It is a great time for big heroic step forward by individuals”. The premise underpinning the tax (and in my view as important as the revenues that the tax generates) is engaging global citizens in a social justice movement and paradigm shift. Again, a ‘potential of humanity to lead systems change’ approach.

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You Are Not a Great Company If You Are Profitable (alone)

I was at Edelman’s London offices last Tuesday morning (Jan 26) for the breakfast launch of their 10th annual trust and credibility survey – “Trust Barometer”. The findings against a back-drop of the past decade’s trust abuse – economic, social and environmental – by both business and government. Richard Edelman, President and CEO, opened the morning with frank words: “You are not a great company if you are profitable. It’s not enough”. Can’t argue with that; he’s bloody right. Who in their right mind would trust someone based solely on how much money they had in their bank? Actually, you would probably use that as a very last indicator, and may even be swayed otherwise if that was being used to influence your trust barometer.

(By the way, I liked the straight talking from Edelman himself on opening the morning. I also liked the sharp-witted humour coming from the panelist he then introduced. These things coupled with how apparently nice Edelman people are and their very open and buzzy office has given me a good feeling about the company. Trust indicators?)*.

The Trust Barometer report shows that this year trust and transparency are as important to corporate reputation as the quality of products and services served to us. To quote the report – “In the US and in much of Western Europe, these two attributes rank higher than product quality – and far outreach financial returns, which sits near or at the bottom of 10 criteria in all regions.”

No wonder trust is asking us to go deeper than the allure of product obsession or service quality because, if you think about it, you/we don’t build trust with friends, doctors or electricians on how well they cook, their depth or knowledge or their screwdriver collection alone. Trust experiences go deeper and wider to incorporate things like human interaction, sharing, participation, fair treatment of others, transparency, bias (or ability to be apolitical), actions, ongoing relationships, attention, peer-recommendation and history/evidence. Financials come into it this much wider mix.

As I write, I am mid watching a docudrama about Mo Mowlam, the one time Northern Ireland Secretary who eventually lost her life to a brain tumour. It was her reputation for plain speaking and her fight again cancer that led her to be perceived by many as the most popular “New Labour” politician in the UK. The country ‘trusted’ her because she was transparent and honest… Honest to a degree that was helpful to the country (not to her health, hiding the fact she was fighting a deathly cancerous tumour for 9 years).

Think about the trust values assigned to machinery like an iPod/Pad or a Toyota car. A machine or inanimate object alone doe not embody deep trust. (A well-made machine will take you to a roughly a neutral trust measure and a badly made machine will start going into trust deficit). What builds trust is the reputation behind the businesses/their brand – the producer and distributor of these machines. The trust recipe here is to do with the people (inside the business and stakeholders on the outside), processes, behaviours, legacy and leadership, of which opinions are formed through interaction, participation, action etc. etc. as I listed above.

Now is the era of organisations as animate, living systems, not inanimate, mechanical machines. We judge organisations and their reputation on the way their whole system behaves and interacts with the world and its systems.

Stefan Stern, of the FT, on the Edelman panel told us that there is a strong correlation between employee happiness (treating employees well, with respect, and engaging them in the workings of the organisation) and external reputation. He suggests that ‘conversations with employees’ is your media/reputation plan. In other words, build a deep and engaging relationship with your employees and treat them well and they will become ambassadors of your business reputation, innovation and success. This that he describes is a democracy made up of living beings participating in the systems success, not a production machine focused solely on the number of units sold and net profit. I would add external stakeholders to these conversations too.

Stern then said, “Trust is a now a line of business – the top driver of corporate reputation” and that organisations should have a ‘Chief Trust Officer‘ to manage this key driver. I’m wondering what a Trust Bottom Line looks like and what the measure of value is because it’s certainly different to the mechanistic version of business practice, which measures productivity and economic bottom line only. But he’s absolutely right; if trust and transparency are a key driver of corporate and governmental success then Director Trust needs to be on the board and in at the core of the strategic plan. This is a GREAT THING. It forces the organisation to engage with and put value on many of the things it historically externalised (in a mechanistic world) – where they didn’t matter – like treatment of people or ecosystems services it depends on.

Amid a challenging context for business and social prosperity – peak oil, peak resources, runaway climate change, economic failures, and increasing social divide and population growth – the ability to engage with and tackle issues that were once externalised, openly, is demanded.  As is the ability to engage with (already) trusted stakeholders such as NGOs to co-create solutions and begin to solve issues.

Now is the era of collaboration and open innovation (read problem-solving) platforms; many of the smart leading organisations, such as Nike and Best Buy in the US, are recognising this. Mark Parker of Nike launching the Green XChange open innovation platform at Davos 2010 has said:

“We go out of our way to protect our IP, but it’s important to look at that protectionism; it may actually be preventing us from pulling our collective knowledge and power of innovation and ability to leverage the best ideas we have to achieve greatest success” .

That is a trust behaviour.

Damien Green on the panel talked about the need to be apolitical in order to build trust, which is somewhat easier to imagine in a political context versus an apolitical business. It is the social democracies, such as Sweden and Denmark that command the highest trust reputation. He talked of handing over the power to the people and ‘holding an election’ as a way to build trust. In other words, let the people decide.

Can a business be apolitical? Yes, letting the people decide is wholly possible.

Finally, Damien suggested that the more people know about your family the more people trust you. I agree. And it plays to the point of an organisation as a living system versus mechanical machine.

Dinner with the CEO and family?

*Declaration of transparency: Jules Peck, my business partner, also works with Edelman so I knew a bit more about them before the Trust breakfast.

** Declaration of inadequacy: there is a load more to right on the intersection between Trust as a business driver and addressing externalities. These are simply notes.

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2009 Reflections & 2010 Predictions

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1. 2009 Reflection – The slow death of the free-market

The global economic recession, which peaked in 2009, led many to question neo-liberal/neo-classical capitalism. Well, it’s perhaps more accurate to say that it initiated conversation that was not before very present amongst civil society, markets, the media, Royalty, and even government.

In October 2008, The Washington Post posited  “The End of American Capitalism?”. March 7th 2009, Thomas Friedman wrote in The New York Times “What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said – No more!” In Britain, Queen Elizabeth asked “Why did no one see the crisis coming?.” A group of eminent economists wrote to the Queen in response to her questions and talked of “failure of the collective imagination of many bright people” and of the “psychology of denial”.

President Sarkozy suggested that “A great revolution is waiting for us. The crisis doesn’t only make us free to imagine other models, another future, another world. It obliges us to do so.” On March 12, the Financial Times ran a front-page story with the headline “Welch Denounces Corporate Obsessions.” Jack Welch, the former head of General Electric (GE), had described the business emphasis on shareholder value as “misplaced.”

What’s become clear is that the failure of capitalism 1.0 lies in the things that the ‘free market’ leaves untouched and unaccounted for: debt, risk, wellbeing, social justice, ecosystem services, energy/food/water supply and on. How our eyes were opened to these failures mid economic crisis. And how then the world seemingly reverted back to credit comfort and high-street spend as soon as the engine of growth began to tick over again. Will it require ‘Economic Collapse #2′ before we rebuild and begin the great economic revolution that Sarkozy visions? Or, on reflection, are we somewhere mid paradigm shift, so profoundly awakened by what happened to the economy in 2008-09 and moved by an increasing ecological literacy?

2010 Predictions

• Climate change, the global commons and economics understood as a connected whole. The  benefits of unending economic growth are not compensating for the vast damage risks they create – energy security, global warming, ecological destruction, poverty, debt and financial risk.

• Continued discussion on ‘beyond growth economics’, sparked by civil society and leading figures such as Sarkozy, The Archbishop of Canterbury and Joseph Stiglitz.

•The emergence of peer-to-peer/collaborative business models and mutual ownership; a ground-up and innovative response to the failures of current capitalist framework.

• A rise in media content and published thinking on new forms of property management of the commons – such as what James Quilligan, economist and administrator on international development, calls “co-governance” and “co-production”, writes On The Commons. (See #5 for more on cooperatives).

2. 2009 Reflection – Socialising climate change

COP15 gave climate change (and ecosystems) a social platform and a global conversation not present since The Inconvenient Truth. The lead up to and undertaking at COP15 in December provided the “Inconvenient Truth” for citizen engagement and corporate participation. In other words, it gave the world a 2009 pillar for which to build a conversation around climate change and ecosystem collapse. Tck Tck Tck, Avaaz.org, Hopenhagen, 350.org, The Climate Leaders Summit, Governors’ Summit, Youth Climate Leaders etc. shifted world citizens and business leaders from awareness to some level of activation and a lot divided opinion. It created conversation (17,000 people in Copenhagen and the world watching on) that was not there before. Despite the failure to arrive at a meaningful and legally binding agreement on climate change, COP15 gave citizens, brands and leaders a platform.

The need for conversation, participation and engagement on climate change, ecosystems, wellbeing and economics, between citizens, NGOs, brands, businesses, the media and political figures, continues to grow. Post-Copenhagen the question remains, what organising platform or striking leadership will continue to enable this going forward? And how do we shift conversation from a macro platform to move global stakeholders along the curve of engagement to build long-term sustained political movement and actual transition on the ground?

2010 Predictions

• Greater emphasis on citizen, business and political engagement strategies to drive change: brand, business and political platforms that enable participation, points of view, and collaboration.

• Open platforms to connect thinking, innovation, and technology that drive world change, and give identity to the collective. (See #6).

• A shift from elitist response to climate change and wellbeing, to a democratic and collective opportunity to live our lives better.

3. 2009 Reflection – Beyond CO2

Deforestation, water depletion, toil-soil degradation, peak food, and disappearing bees, gave the world some reference to a beyond CO2 discussion on climate change and towards a global commons view. The complex and overwhelming truth, ever more exposed including at Copenhagen, is that the environmental challenge of our day is not only one of mitigating levels of CO2 to reduce global warming. The challenge is to understand ‘the commons’ as a whole; that how we manage natural resources and ecosystems in one part of the world is wholly connected to all of us in other parts – and our one climate as a whole.

A visibly obvious example, global deforestation – Indonesia alone has lost 72% of its indigenous forest – has led to biodiversity destruction and the disappearance of a massive carbon sink and cloud cover generated by the forests. Forest degradation through agricultural expansion, conversion to pasture land development, destructive logging, fires etc., account for nearly 20% of global greenhouse gas emissions, more than the entire global transportation sector and second only to the energy sector. Not only have we depleted the amount of forest to absorb carbon, in destroying forests we destroy topsoil and biodiversity, which in turn further emit carbon dioxide.

Ecosystems services and tackling climate change is wholly interlinked and the world is taking note. Perhaps more opportune is to suggest that citizens and communities are better able to understand and value ecological systems – be they food, forests water, oil, or minerals – than they are able to place close at heart CO2 levels and a warming planet (invisible, abstract and distant).

2010 Predictions

• A greater understanding of our individual personal responsibility for the ecosystem – the global commons – that we all share; an understanding that the atmosphere has no propertied boundaries as our lands and seas had no legal boundaries centuries ago.

• A narrowing gap between ‘climate change mitigation’ (reducing greenhouse gases) and ‘climate change adaptation’ and ‘ecosystem services’. As the impacts of climate change and ecosystem destruction are felt, and broken market systems such as intensive farming are greater understood, we will begin to see the beyond science to the global systems issues and start to drive change at this level.

4. 2009 Reflection – Towards a ‘Commons’ framework

Elinor Ostrom became the first woman to win the Nobel Prize for Economics, in 2009. Interesting that she is a woman, but that’s not really the notable bit. It is her outspoken work on a radical rethink of capitalism towards the development of a commons framework that decouples resources from the short-term interests of markets, which is. Ostrom’s work emphasises how humans interact with ecosystems to maintain long-term resources yields. Her analysis on economic governance show how privatising natural resources is not the route to long-term sustainable economies. She debunks the ‘Tragedy of The Commons’, which assumes that individuals are ruthlessly selfish therefore planetary commons must be privatised to ensure individual self-interest protects it.

Her work has looked at forests, lakes and fisheries that are managed by communities, with a shared responsibility to the land – similar to a ‘trust’. And has examined the use of collective action, trust and cooperation in the management of ‘common pool resources’ (such as fish stocks). Her Noble Prize represents a renewed and very public discussion on the economic framework required to address climate change and ecosystem collapse.

2010 Predictions

• The rise of Capitalism 3.0 thinking and an “upgrading of Capitalism’s operating system”, according to Jules Peck (my business partner) and Robert Phillips of Citizen Renaissance.

• An emergence of a new economists and highly publicised new economic thinking (coupled with a philosophical debate); very public discussion around commons governance.

• The coming of age of climate policy and debate, to incorporate the global commons.

5. 2009 Reflection – The rise of collaborative consumption and cooperation

This (2009) year the U.N. General Assembly passed a resolution declaring 2012 the International Year of Cooperatives – that is, businesses that belong to their workers or the people who use them, according to Shareable.com.

A flurry of leading business and marketing authors published or soon to publish the rise of ‘collaborative’ and ‘cooperative’ consumption (the same thing), where citizen or business communities ‘group buy’, barter or rent, instead of relying on single ownerships and limited use. Include John Grant’s book “Co-opportunity” (who is my other business partner), which launches this coming January, and Rachel Botsman’s book “Collaborative Consumption”, later in 2010, amongst many others listed on Shareable’s book list for 2010.

Many have called for the ‘John Lewis’ model of employee partnerships (a mutual model) in business and the public sector, including UK’s Labour government who launched an investigation to how far it can go applying the John Lewis Partnership model to hospitals, schools and housing. Though it was the right-leaning think tank Respublica, founded and run by Philip Blond, who’s report The State of Ownership, which claims to have started the mutualism debate. Blond advocates a “new civil state would restore what the welfare state has destroyed – human association”. He suggests that the state turn itself over to citizens through a new power of association or communities.

2010 Predictions

• The rise of collaborative economics, cooperation and mutualism; new platforms or even currencies that enable communities of interest to yield business and social value.

• Decentralisation of markets and a greater connection to natural and social capital. (Deconstruction of our highly industrial food system, towards local and a relationship with food production as example).

• A greater emphasis on communities to address social, economic and environmental challenges. A connection between sustainability challenges and “Wellbeing Economics” – demonstrating that living a good life does not have to ‘cost the earth’ – indeed the opposite.

6. 2009 Reflection – ‘Open Source Planet’

The Climate Group (TGI) announced the launch of “The Planetary Skin Institute”, in Copenhagen. PSI has been established to research and develop near-to-realtime global monitoring on environmental conditions, according to TGI. It is a platform for open collaboration between public, private, academic and NGO sectors. The new institute draws on several years of R&D public/private partnership between Cisco and NASA. The Department of Energy (DOE) announced the launch of “Open Energy Info” – a platform to connect the world’s energy data. It is a linked open data platform bringing together energy information to provide improved analyse, visualisations and real-time access to data. And builds on The White House’s Open Government Initiative.

Ethical Economy and Tomorrow’s Company launched “Climate Commons” a global open platform for corporate, citizen and government climate communities to share innovation and progress. And early 2010 will see the launch of Nike and Best Buy’s “Green Xchange” – open innovation platform on sustainable materials development.

Open (innovation) platforms part build on an increasing understanding that climate change and ecosystems are a global commons issue, and part address the burgeoning need to connect global communities of interest and drive movement. Unlikely partnerships and greater collaboration between business, government, NGOs and citizens are critical to addressing systems issues. And organising platforms, like these listed, are emerging as enablers.

2010 Predictions

• Announcements of wholly unlikely partnerships between competing/non-competing businesses and brands, countries, cities, majors, government departments, citizen communities and leading figures.

• An open movement for planetary understanding, R&D, and social change.

7. 2009 Reflection – From ‘technofix’ to ‘behaviour change’ (as well)

Climate change demands radical innovation and change. So far, the emphasis on change has focused on technofixes and scientific target setting. Increasingly, the role of social innovation and behaviour change will offer faster, cheaper and potentially bigger change. And, like the need for a social platform, ‘behaviour change’ gives citizens a mechanism to participate in the agenda in their everyday lives; simple mechanisms that drive new ways of doing things or influence our choices in ways that make sense for us.

Here’s an example of some behaviour change work much cited in 2009: When a meat-based entrée is being served, and people are offered a vegetarian alternative, about 5 to 10% will request it. But what if the choices were reversed? Organizers of the 2009 Behavior, Energy and Climate Change Conference, which began today in Washington, tried an experiment: They made a vegetarian lunch the default option, and gave meat eaters the choice of opting out. Some 80% went for the veggies, not because there were lots of vegetarians in the crowd of about 700 people but because the choice was framed differently. We know that because, at a prior BECC conference, when meat was the default option, attendees chose the meat by an 83% to 17% margin.

As the marketing and communications industry searches for a powerful role amid the climate change agenda as well as weave its way out of the dilemma of consumerism, the place for ‘behaviour change’ work is becoming apparent. Brands, business and governments interventions as well as business model innovation are required to influence new social and consumption behaviours and beliefs. This is a creative challenge that will call on cross-discipline thinking, social media wizardry and social science leadership.

2010 Predictions and challenges

• ‘Behaviour change’ topic widely discussed amid the political targets and scientific analysis.

• Social innovation and climate change challenges seen as one.

• Wholly new business models and service systems, which change the way we do things, in place of marketing communications.

• Brands who engage consumers to make informed choices and make change a benefit versus a sacrifice.

8.

2009 Final Reflection – A no-pain-no-gain vintage year.

2010 Final Prediction – From pain, to building on the gain. And feeling pain again… and learning again.

Happy New Year. And New Decade.

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Planet Green Interview: Meet Tamara Giltsoff of Abundancy Partners

Published on Planet Green

Tamara Giltsoff is a highly respected sustainability strategist who has worked for brilliantly innovative companies such as live|work in London and OzoLabs in New York. Now Tamara has teamed up with two other pioneering sustainability thinkers John Grant and Jules Peck to form Abundancy Partners, a consultancy that aims to “radically innovate and evolve our communities, businesses and other institutions… to deliver a more prosperous and sustainable way of life for all.” Tamara Giltsoff will be a familiar name to many readers of Planet Green’s sister site TreeHugger, as she has, in the past, been a regular contributor to the site. Tamara’s writing focuses on the importance of product service systems and design systems thinking to address the critical environmental issues we all face. Tamara also contributes to PSFK. Let’s find out how Tamara became a Change Maker.

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Climate Week Versus Fashion Week

Originally published on PSFK

September 13th marked the beginning of “Mercedes Benz Week” in New York; September 20th marks the end of Fashion Week and the start of New York Climate Week – “Climate Week NYC” – an event organized by a partnership that includes The Climate Group, the UN, the UN Foundation, the City of New York, the Government of Denmark, Tck Tck Tck Campaign, and The Carbon Disclosure Project. As part of the week, world leaders will gather today in the largest-ever gathering of heads of State and government on climate change.

“No issue better demonstrates the need for global solidarity,” UN Secretary General Ban Ki Moon emphasized. “No challenge so powerfully compels us to widen our horizons.” These are momentous times in the city; also such strikingly contradictory times.

These two events make for beautifully rich illustrations of the complexities and challenges of global climate negotiations and the task ahead to redefine economies in (what we now are beginning to except is) a finite world. They also make for an illustration of life’s polarity: half escaping ourselves in creative expression, consumption and performance, and half living the hard environmental, social and political realities of globalization.

‘Fashion’ is at the heart of our consumer-driven and status obsessed society; it’s also a symbol of the externalization of the true costs of consumption. “I Shop Therefore I Am’, said Barbra Kruger, but so overwhelmed by the status and meaning of consumption we’ve become it’s now clear we lost our connection to the planetary resources and human capital required to make all the stuff we want. It’s hard to rewind on this. ‘Climate’, on the other hand, is at the heart of a longer term look at the planet and economic system and how and if it will be at all possible to carry on with the rate of fashion cycles and material consumption as we know it, into this century. The climate debate puts a value on carbon and natural resource use, and impact on society and economy, and asks us to rethink industries with this value in mind. Paul Dickenson, the CEO of The Carbon Disclosure Project (CDP), at their launch event this Monday morning told his audience of Fortune 500 companies who disclosed their carbon that there is one word for the opportunity for growth opportunity in carbon economy: “dematerialisation” – creating value through non-material services that reduce resource use.

The fashion industry and climate change (or ‘environment’) are inextricably linked, but also wholly at odds with each other; they are such a symbol of the human challenges ahead in this transition. Fashion is the fuel that feeds consumerism; consumerism, in its current guise, is the fuel that feeds climate change. It’s incredible to think of these two global events in New York in September literally happening back to back.

The fashion industry, and prevailing ‘consumer spend’, is often used as a measure of the sort activity that defines whether or not our economy is flourishing. Fashion is global, uber glamorous, highly creative and drives wealth – both in the necessity it creates to earn more and more to be able to buy more and more each season, and in driving sales of all sorts of goods (ie, not just clothes). Fashion is the genius at engaging stakeholders (or followers) and getting people to wear all sorts of extraordinary things at a cost to them. Fashion makes a good buck and like many industries it uses a healthy chunk of planetary resources and human capital to keep the spending wheel moving.

The ‘climate industry’ poses a vast geopolitical challenge; for some it is a major threat to the free market and ruling corporations because it presents a ‘limit to growth’, and for others it is a (creative) human challenge, the innovation opportunity of the 21st century and potential for new forms of wealth creation and real prosperity. It is not that glamorous (yet) though it is becoming popularized (see Hugh Jackman participate in the opening ceremony of Climate Week ). Compared to fashion industry it is disastrous at creating following, meaning and a vision for people to follow. It is (obviously) global but still largely the domain of the ‘climating classes’ – senior business leaders, policy makers, NGOs, some investors, and grass-roots entrepreneurs. Hence the girls who Top Shop or cover major fashion pages in Conde Nast publications that have mass followings I’m guessing probably won’t stick around for Climate Week. The ‘climate industry’ is growing in importance, meaning and advocacy, but does not have the power and influence on people that fashion does to create movements, community, creativity and ingenuity. Richard Edelman, CEO Edelman, at the very same event as Paul Dickenson describe the ‘lack of face’ or global symbol for climate change and “losing the communication battle” around global negotiations. Why is a look at these two ‘industries’ and their respective ‘New York Week’s’ in anyway meaningful? I think because the two are inextricably linked, the two are somewhat dependent on each other and both can also learn from each other: Climate Week Versus Fashion Week-2

Climate-Week-Versus-Fashion-Week-2

As Fashion Week transitions to Climate Week in New York this week I will echo the sentiment of James Cameron rounding up the CDP launch event and start of Climate Week this Monday, suggesting that markets (business) and policy makers need to go boldly and confidently forward with global discussions and agreements (COP15), whilst accepting the seriousness of the science and knowing that these negotiations are also inadequate. What he’s suggesting is a level of collaboration and innovation from industries that gets us to these agreements and then beyond the inadequate targets, into wholly new markets. This may require the sort of movement building and market influence that industries like fashion are so good at; and it will require the industries themselves to reinvent. More on Climate Week as the week progresses…

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Alternative Currencies (WSJ piece)

Alternative Currencies as published in the Wall Street Journal (featuring myself!).

The founder of a social network of globetrotting adventure-travelers called Hub Culture is an evangelist, of sorts, for peer-to-peer currencies. “You’re going to see inexorably, the movement towards peer to peer finance,” Stan Stalnaker says. “People will trade individually and independently among each other, all around the world. It’s going to happen, there’s no denying it,” he insists.

Actually they edited a whole load of stuff I said on film to them about new forms of value and value exchange. I am less interested in the currency itself but the sorts of transactions and motivations for peer-to-peer trading. Peer to peer transactions, whatever they may be, democratizes and decentralizes the institutional models that we are used to. It allows for much greater control and decision-making around trading, because the traders (peers) can steer the value. So with a peer-to-peer bank, the stakeholders (the peer network), can decide where money is lent and invested, versus the bank doing this.

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Mitigating Climate Change, But What About Adapting to It?

Originally published on PSFK

There’s been plenty coverage on the rise and detail of the American Energy and Security Act of 2009 (ACES and also called the US climate and energy bill), passed by the United States House of Representatives on June 26 and now facing the Senate with daunting prospects, with the objective of mitigating climate change and reducing our dependency on oil. But thus far very little coverage on the significance of climate impacts and the change and planning required for businesses, administrations and institutions – ‘climate adaptation’.

Fascinating times. The house passed the most important energy and environment bill in the nation’s history. I would urge all readers to reference and follow the World Resources Institute’s coverage on the bill, as it is quite simply the simplest and smartest coverage I’ve seen alongside Worldchanging.com that does the best global contextualization of climate issues. I’ve read a lot on the bill recently, including the many thousands of words of the very thing, because I am working a project looking at the intersection between climate policy development and market opportunity. The assumption often is that climate legislation will hit harder than it actually stimulates, but wise businesses will plan for new futures and generate value from change.

The lion-share of focus on the Act and in the media is reducing man-made impact on climate change; reducing emissions by capping heavy emitters. That is ‘mitigating’ climate change. And on stimulating clean energy R&D and innovation, supported somewhat by the Recovery Act.

But with all the debate about the details of the cap and trade program and the 16 States opposing the bill (the “Gang of 16”) – those dependent on the heavy carbon emitting industries – other key details in the legislation and, importantly, other key components of a low-carbon economy and the climate change context have become somewhat lost in translation. For instance, climate adaptation: understanding the patterns of climate change impacts and risks and planning to ‘adapt’ to these, is lost. Given the ambitious task of reducing CO2 to slow global warming by 2050 and pretty much a global acceptance, coupled with actual evidence, that climate change is now happening, ‘adaptation’ asks how can we plan for an ever-warming planet and the impact on infrastructure, markets and the health of society. And what needs to change? It’s a question of transformation, innovation and making informed decisions to avoid impacts, deal with them and create value from change.

What does climate adaptation have anything to do with me if I am not a scientist you may ask? And why is there less focus on adapting to climate change versus mitigating it?

Adaptation is not really talked about within markets and is only just beginning to be considered and invested in by governments. For instance, the UK government, a leader on climate change policy and market stimulation, has only just this last month commissioned a large National climate risk assessment and adaptation planning initiative. It represents the world’s first countrywide climate adaptation study. Amazing, really, given the projections and that other drivers such as web 3.0, or swine flu, or the fluctuating price of oil, make it into the board room.

I’m not discounting the whole section in the climate and energy bill, ACES, (titled “Adapting to Climate Change”) that covers scope for a national change research, health and protection and natural resource impact program and a national climate change adaptation strategy. Nor the pockets of scientific research on climate impacts that are emerging from research centres such as the Pew Centre for Climate Change and the United States Global Research program.

However, adapting to climate change is an area wholly inadequately understood by markets or society. Many businesses have taken steps to reduce GHG emissions voluntarily and many are planning for the impact of legislation and the pressure to disclose from stakeholders. Fewer businesses are incorporating climate risks and the opportunities associated with the physical effects of climate change in their business planning, according to the Pew Centre’s report.

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Institute of Effectiveness

Truly a brilliant concept: an Institute of Effectiveness.

In 2005, recognizing the urgency of finding strategic, practical and operational solutions to state failure world-wide, the ISE team moved their attention from a specific country context- Afghanistan- to state-effectiveness more broadly, and mobilized a group of leading experts and practitioners in the subject to work towards consolidation and refinement of an integrated approach to state-building.

Their work has been very much ‘fragile-state’ buliding, (described as “failed states”), working in countries such as China, India, and Russia where Ghani worked with the World Bank, or in more recent state building analysis in Lebanon, Sudan, and Nepal.

ISE’s model proposes that states must perform ten critical functions in the modern world, in order to serve their citizens and fulfill their international obligations. Interestingly, though, there doesn’t seem to be much emphasis in this circle of 10 on engaging citizens as part of ‘state’ innovation and intervention.

In a free and civil society at least, citizens are the key stakeholders in the process of transformation and ongoing state prosperity. I don’t think this is a top-down kind of organisation at all, but maybe missed a trick describing the critical component of citizen engagement.

For instance, when improving transport in remote parts of rural England, although a state-funded initiative, it was critical for us (myself working as a lead consultant at live|work) to use the stakeholders within the community to resolve the issues. We moved up to the area for a period and based our office in a local community centre. We were improving ‘state’ services, yes, but working with ALL stakeholders of ‘effectiveness’ including citizens. It was the only way to embed effectiveness in a service system that for a long time had been very ineffective. Obesity, another example, is a state issue, a citizen issue, a market issue and a cultural issue. All connected. We can only address this problem through wholly connecting to all the stakeholders. Same goes for climate change or environmental overshoot; for unemployment or for failed agriculture. No state-level intervention alone could solve those issues. How does this sort of approach work in Afghanistan?

Anyway, my approach is an aside slightly because I truly believe in challenging state effectiveness and engaging PEOPLE in the process. ISE’s focus is really on leadership, accountability and higher education; transforming truly crippled nation’s, so maybe slightly different to where I’m going?

I believe each nation (“failing” or “operating”) should have its own Institute of Effectiveness. It should be non-governmental, independent, for profit (or better, a social enterprise); it should have a board of ‘citizens’, business leaders, scientific leaders, entrepreneurs as well as policy makers. In fact, forget a board, all these stakeholders should be running the institution. Stakeholders would revolve on a yearly basis. And it should work to challenge the system that is government, at local, regional or national levels as well as the market.

What would be the return? How would it sustain itself? I’d suggest a percentage of government expenditure/funds, from any budget holder (fed department or state budgets), and a combination of commission/royalty from any new service developed in partnership with the market to address and support ‘civic’ or ‘state’ needs. In fact, you could also put in place an effectiveness ‘bonus’ or commission on state funded work. There’s many ways to shape an organisation that’s sole purpose and performance indicator  is effectiveness.

I’ve taken this concept wider than the mission of ISE I think. I’m just so inspired to see intervention on state effectiveness. And I believe ISE and Clare Lockhart are getting the attention they desire.

On Charlie Rose.

Guardian interview.

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John Larsen – CLARITY and the Clean Energy Act

John Larsen provides the simplest evaluation of the Clean Energy and Security Act (climate and energy bill), I’ve found to date. I like his breakdown of areas causing concern:

  • Role of USDA: The bill gives authority to the U.S. Department of Agriculture for the administration of domestic GHG emissions offsets generated by farms and forests in the U.S. While USDA has an important role to play supporting carbon sequestration, it has less expertise on regulating pollutants which is the province of the U.S. Environmental Protection Agency (EPA). The respective roles of the two agencies in ensuring robust carbon accounting for offsets under a U.S. cap and trade program remains to be satisfactorily resolved.
  • Trade Provisions: The final version of the bill introduced controversial new trade provisions which would enable the United States, from 2020, to use aggressive, unilateral border measures to impose duties on certain energy intensive foreign goods. President Obama publicly expressed concern about the provision which he described as “protectionism.”
  • Allowance Allocations: These remain an area of contention. Some constituencies – including various environmental groups – argue that industry received too much assistance. Others – including carbon intensive industrial corporations – argue that more assistance is needed to cushion the transition to cleaner technology. Some in the international community believe too few allowances are dedicated to assisting developing countries as they adapt to climate change impacts and adopt clean energy technologies.
  • Biomass Emissions: There are concerns that the bill’s provisions accounting for emissions from biomass may potentially include fuels that yield a net increase in GHG emissions.

I get to interview John Larsen, for Sustainable Life Media, so I am thinking up some questions. Thoughts welcome.

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US Product Carbon Disclosure

My prediction is that 2010 will be the Year of (eco/resource/carbon/social impact) Labeling. Already Sustainable Brands International (SBi) is dedicating a whole event to the discussion, in November this year. And I found this in the bill, as well.

SEC. 274. PRODUCT CARBON DISCLOSURE PROGRAM.

(a) EPA Study- The Administrator shall conduct a study to determine the feasibility of establishing a national program for measuring, reporting, publicly disclosing, and labeling products or materials sold in the United States for their carbon content, and shall, not later than 18 months after the date of enactment of this Act, transmit a report to Congress which shall include the following:
(b) Development of National Carbon Disclosure Program- Upon conclusion of the study, and not more than 36 months after the date of enactment of this Act, the Administrator shall establish a national product carbon disclosure program, participation in which shall be voluntary, and which may involve a product carbon label with broad applicability to the wholesale and consumer markets to enable and encourage knowledge about carbon content by producers and consumers and to inform efforts to reduce energy consumption (carbon dioxide equivalent emissions) nationwide. In developing such a program, the Administrator shall–

That is Scope 3 disclosure  – upstream and downstream – emissions from products if ever I saw it. And that sure is a lot of data to measure, collect and manage.

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