CORNucopia of Opportunity in the Heartland: Or Just More Feed for the Political Cattle?

We now live in a carbon constrained world. Fears of human induced climate change are bringing about changes in government, corporate and consumer behaviors. Investments in renewable energy are increasing, corporations are greening everything from their supply chain to their vehicle fleet, and consumers are seeking to minimize their ecologic footprint as well. Are some of our greening efforts leading to a recipe for success or failure? Is the short-term monetary gain fueling investments that will not be financially or environmentally sustainable?

In America’s heartland, growing corn for ethanol fuel feedstock is almost as good as planting a money tree right now. Driven by a carbon-constrained world and need to reduce U.S. dependence on foreign oil, are we setting ourselves up for a corn constrained world? A CNN Money.com article states the U.S. will grow more corn in 2007 than any year since World War II. The driver for this boom in corn production is ethanol fuel whose main feedstock is corn.

The story of ethanol is just beginning in the U.S. Demand for ethanol fuels are growing. President Bush has proposed that the U.S. reduce its total gasoline consumption 20% by 2020. To achieve this goal President Bush recommends displacing gasoline, in part, with ethanol. But what is the true cost and risk associated with a biofuel like ethanol?

I’m all for biofues, creating jobs and enhancing our energy security - but at what expense and future risk? For example, increased production of corn for ethanol will displace other agriculture commodities like soybeans and wheat. As a result the consumer cost of these commodities may increase. Other agriculture products including beef may be subject to price variability due to the diversion of corn to ethanol production. In addition other natural hazard and environmental variables cannot be controlled. Increased incidents of tornadoes or hurricanes for example will impact short-term agriculture production and pricing. Short and long-term weather fluctuations can impact agriculture output, length of growing seasons, and numerous production variables (like water availability, soil nutrients, PH and overall quality, and insect infestation). In fact NASA Research found that the Dust Bowl of the 1930’s was a major climatic event spawned by “cooler than normal tropical Pacific Ocean surface temperatures combining with warmer tropical Atlantic Ocean temperatures to create conditions in the atmosphere that turned America's breadbasket into a dust bowl from 1931 to 1939”. If the U.S. reduced its dependence upon foreign oil by 20% and increased dependence on heartland produced ethanol, how would we react to another decade long dust bowl in the 21st Century? Is this energy dependence and security that we are creating or shortsighted short-term economic gain with global spin?

While there may be some science and technology solutions to these issues – is this a sustainable model for energy production in the long-term? Displacement of agriculture land to produce feedstock for biofuels also raises equity and ethical questions. Should farm land be utilized for food production, helping feed those that are hungry in the U.S. and world? Are we that addicted to transportation fuels that we’re willing to get a new fix rather than address our over-consumption? Are we only masking our thirst for oil with a new buzz on heartland fuel?

There are many unanswered questions surrounding alternative transportation fuels, particularly ethanol. As this industry plays-out we will watch with a careful eye to what’s working and what is not. A larger “systems view” of global climate change, natural resources, food and energy production and equity needs to align with societies evolving greed for what’s green. If we only succumb to meeting our short-term “fix” we will misguide future generations.
Many companies have realized this and are searching for better solutions.

The path to growth of many leading executives in our AHC Group (www.ahcgroup.com) network involves a dashboard that includes so many variables it’s almost impossible to navigate where to go. However, the companies that are leading the way toward a more sustainable world have figured out that one simplified formula can lead them in the right path: population growth + rate of consumption + efficiency of our machines = pollution and climate change. So, with this formula in mind, corporations from GE, Boeing, Starbucks, Wal-Mart, Siemens, Tom’s of Maine and Dell are simplifying their dashboards, and setting a course for action while they search for new solutions to minimize their environmental impact.

The story environmental business expert Bruce Piasecki tells in his World Inc. is rich with these complexities and tangible examples of what has worked when sustainability is integrated into the core business of small and large corporations. In reading World Inc. it becomes apparent, that while we live on a finite earth – the opportunities for creating better products and a better world are infinite.


Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com

The World is Discovering the “S” Frontier

Will Pioneers of the "S" Frontier Guide the Path to a Better World?

Louis and Clark were frontiersmen of the Wild West; Jacques Cousteau was a frontiersman of the wild Blue Ocean, and Russian cosmonaut Yuri Gagarin a frontiersman of space. Each of these frontiersmen exhibited courage, curiosity and care for their adventures and discoveries. These modern day hero’s opened the world to new possibilities, expanding upon our knowledge and our vision for the future. Opening up new lands, foreign seas and the vastness of space – these frontiersmen embody the spirit of hope and possibility in humanity and within us all.

There is a new frontier that is being explored right now. Called the “S” Frontier, it is being charted by social entrepreneurs, philanthropists and government and corporate pioneers across the globe. This new frontier is a “virtual” space as much of it is about values embedded in philosophy, culture and systems thinking. This frontier is also a “physical” space as it is actionable, tangible and very material to business and society. Finally this frontier is “magical” because it instills a promise for the future and better world while bringing us breakthroughs in new science, innovation and business models.

The “S” Frontier has been reported by Bruce Piasecki in his book World Inc., and is being explored by some of the worlds largest corporations like HP and Boeing to smaller firms like Green Mountain Coffee Roasters and Tom’s of Maine. Colleges and Universities are scouting out the “S” Frontier with Stanford University, Columbia Business School, Duke University, Harvard Business School, and MIT offering unique management, technology and entrepreneurship programs. Financial firms from the largest banks to rating agencies and mutual funds are each building new business and creating new opportunities in this “S” Frontier. New initiatives are emerging daily tied into this “S” Frontier from environmentally conscious Manhattan bakeries to off-grid water treatment facilities in Africa. So what drives the “S” Frontier? Piasecki says it it’s the following:

1. the Swiftness of new global market information;



2. the Severity of some of the leading social problems before us like climate change and the rising price of oil;



3. the need for Social response capitalists.


The “S” frontier is the progressing fringe of business thinking that is shaping the 21st century like the way the 18th, 19th, and 20th centuries were shaped by scientists, innovators, social progressives, explorers and entrepreneurs. The swiftness, severity, and social aspects of the “S” Frontier have companies, small and large, gathering data – getting their bearings – and charting a course along this new terrain not yet fully explored. The uncharted terrain is confusing to some, and a land of opportunity to others; especially those that are defining its future. Pioneer companies, universities and financial institutions stand to gain early adopter advantages both in reputation, shareholder and stakeholder value.

The “S” Frontier is the intersection by which challenge meets opportunity in a way that is more guided toward social needs. For example, feeling the ‘severity’ of climate change, today the British government proposed a greenhouse gas law to reduce emissions 60% by 2050. If passed the British law could have sweeping implications for households, businesses, government leaders and product manufacturers. What we are seeing here is Britain’s reaction to the severity of the “S” Frontier. We believe this severity is likely to continue and more governments and businesses will continue to take actions on climate change, energy security and other resource issues from Brownfield redevelopment to water conservation and pandemic preparedness.

On a more positive side the ‘swiftness’ of the “S” Frontier is teaching us that new ocean bacteria may hold promise for reducing carbon dioxide from the atmosphere or creating new energy sources. As science and technology advance we uncover new truths about our world and environment, the “magic” associated with what we still don’t know. And, acting on the ‘social response capitalism’ dimension of the “S” Frontier firms including Arizona Public Service (APS) and GreenFuel Technologies Corp. have begun to unlock the hidden financial value in using naturally occurring algae to capture and absorb CO2 emissions while creating commercial biofuels.

The net result of all of these “S” Frontier dimensions and parallel activities is a more informed and sustainable system. By shaping their future’s in this uncharted land we call the “S” Frontier, these select “frontiersmen” will shape changes and market dynamics across the next 20-to-50 years of this new century as opposed to react to them, leading the transformation to a better world.

Mark C. Coleman
March 13, 2007

20 Billion Reasons World Inc. is Happening Now!

The world is on the verge of a new economy…one that is transparent and motivated by making money while doing what’s good for society and the environment.

On March 6th Bank of America, one of the world’s largest financial institutions, announced that they were committing $20 Billion to support growth of environmentally sustainable business enterprises and activities, especially those that address global climate change.

For corporate clients the commitment by Bank of America will provide financing for projects spanning LEED certified commercial real-estate, brownfield redevelopment, smart growth and carbon emission trading. For individual clients financing will be available for green home construction (green mortgage products) and green investments in sustainable forestry. The company has also committed to have its facilities LEED certified.

$20 billion is a lot of dough – but still relatively small in relation to other “investments” in our future like the War in Iraq. In fact the Bank of America commitment is just 20% of what the U.S. spent in Iraq in 2006, according to some projected estimates. If this sounds somewhat cynical, it’s meant to be. Imagine the progress that could be made if Bank of America had “matching funds” for their social investment from the government.

Now, of course the U.S. government funds a good share of sustainable projects, but is it enough? The U.S. Department of Energy (DOE) recently announced their $365 million investment for the development of six cellulosic ethanol plants and their FY 2008 budget request of $24.3 billion including $1.2 billion for the Office of Energy Efficiency and Renewable Energy (EERE News). Considering that Bank of America’s $20 billion commitment is 16 times greater than the annual budget request of DOE’s Office EERE, we have to consider: Is the role of business outpacing the role of government in creating a better world?

The hidden value of sustainability practices are now being unveiled to Wall Street, government and society. Investment firms and large financial institutions like Bank of America are driving this new economy based on making corporate responsibility tangible. This new economy is one that is being shaped by a myriad of past mistakes, promise for the future, and real-time transaction. The rate of speed at which this occurs is furious. And, businesses have taken on a new role in transforming this new economy by advancing social response product development and a focus on providing value to not only direct customers, but to all stakeholders. Consider some of the following trends:

Social Investing - $2.3 trillion of the investment dollars under professional management are invested in socially responsible companies that have been screened for their governance, environmental, social and corporate responsibilities efforts globally (Social Investment Forum, 2005).

Social Response Product Development – Making better products; products that have social, environmental and sustainability virtues and values embedded in them; is the current state of the competitive business world. Toyota’s hybrid vehicles, Boeing’s fuel efficient 787 Dreamliner, Sun’s UltraSPARC T1 eco-responsible microprocessors, and Suncor’s commitments to integrating renewable energy technologies into their portfolio are all examples of this strategy unfolding in the marketplace. This is not a “green” trend; it is a strategic decision to differentiate and offer better products for a better world on behalf of these giants see World Inc.

Responsible Lending - More than 45 banks and financial institutions representing more than $4 trillion in assets under management have subscribed to the Equator Principles, a set of voluntary guidelines governing environmental and social investment for international project finance. Financial institutions including Citigroup, HSBC, ING, JPMorgan Chase, Wells Fargo, Wachovia, and Royal Bank of Scotland are just a sample of the global finance leaders that have adopted the principles into their lending practices (Equator Principles).

Power of Philanthropy - The year 2006 was an incredible year for billionaires. Not only did they have a successful year of returns, they also returned billions to society. In June 2006 Warren Buffet announced that he would give away 85% of his fortune built in Berkshire Hathaway and the largest share, some $30 billion would go to the Bill & Melinda Gates Foundation (FORTUNE Magazine). The Bill & Melinda Gates Foundation has committed billions toward fighting disease globally as well as reducing poverty and hunger (Bill & Melinda Gates Foundation). And with a focus on energy and climate change, global health, poverty alleviation and mitigating religious and ethnic conflict, the Clinton Global Initiative emerged in 2006 with a $7.3 billion pledge from 215 sponsors to continue these efforts globally (Clinton Global Initiative).

This new economy is more than a trend. It is being cultivated in front of our eyes and it is being reported more frequently by mainstream press, see Business Week’s Beyond The Green Corporation article from January 29th magazine as a recent example.

Globally and regionally new economies are being formed and re-shaped by corporations designing better products, by a new era of philanthropists, and by a transformational shift in how we think about – and invest, spend, use and make – money.

What other trends on money and markets do you see shaping this new economy we call ‘social response capitalism’? Let us know at Mark@ahcgroup.com.

Mark C. Coleman

March 12, 2007

Energy is the Game Changer in the 21st Century

Will Businesses Lead Social Transformation More Swiftly and Effectively than Government?

In the future, local and regional tensions are likely to rise as solutions to energy issues and social needs continue to be caught in the sticky web of socio-political-economic context of government and business. Like the saying goes, ‘sometimes we can’t get out of the way of our own shoes’. Numerous energy interests from Washington D.C. to Wall Street impede the progress of smarter business responses to social needs, as their focus remains on looking good and making money, as opposed to doing so with the grace, force and care that is needed for addressing social interests and the near future.

As the most affluent society in the world it can be mind boggling that we still have social issues associated with energy availability, reliability and pricing. Solutions ranging from energy-efficient products, conservation education and strategies, distributed generation and smart electric grid technologies, and development of energy systems that recognize and value how we now use energy in our 21st century economy are available, but take a back seat to oil wars and the dinosaurs that feed from them.

The abundance of opportunities for energy independence in our own backyard are like the rivers of Maine and Alaska that once ran so full with salmon that you could reach out and grab them. We choose however to maintain our status quo of protectionism feeding the military industrial complex that has been created over decades of delusion to support our thirst of oil and damper our fears of the world.

This is changing, and its being led by global oil giants, real estate development firms, large industrial manufacturers and smaller local enterprises focused on searching for and delivering sustainable energy solutions. We see this in transformation underway at firms like Suncor Energy, British Land, Siemens AG, and 3 Phases Energy.

This transformation is not without debate. This past February the Venezuela-owned oil giant Citgo ran television commercials in the U.S. with some interesting news for lower-income Americans. The company, many whom believe is tied to closely to Venezuela President Hugo Chávez, has announced that it will provide a 40% discount on up to 100 million gallons of heating oil for 1.2 million Americans this winter. Citgo says its part of their “…very strong tradition of giving back to the community."

Massachusetts congressman Joseph P. Kennedy and chairman of Citizens Energy said Citgo’s assistance to the U.S. is good business and begins to address social need. A Washington Post article ran this quote from Kennedy, "It's not only morally righteous, it's good business," he said, "when you're selling the world's largest market a gigantic percentage of your overall sales in crude oil, to take a little percentage and show that . . . you have concerns about how low-income people are going to keep up with the enormous price of keeping warm."

The trend we see from Citgo is likely to continue, politically palatable or not. Truth is - the underbelly of society wants change. They want their needs answered and are seeking for equitable solutions.

We are beyond the first-half in this energy game. In fact, we were granted several over-times years ago. Suffice it to say we are still in the game but losing and out of time-outs. Smart entrepreneurs, large corporations and savvy politicians are creating new rules to a new game: the economics are there, social expectation is there, the environmental need is there…will the dinosaurs holding onto the past die off or survive this new game?


By, Mark C. Coleman
March 8, 2007