Ready for the circular economy?

And intelligent assets? A report from the World Economic Forum says the rapid and pervasive development of digital technologies, along with an understanding of circular economy principles, will drastically change life for the average urban citizen much sooner than we think.

WEF’s report, “Intelligent Assets: Unlocking the Circular Economy Potential,” defines the circular economy as a concept in which materials and products are kept at their highest possible value at all times. It’s all about connectivity: “The exponential growth of connectivity has had a sweeping impact on our society in the last decade. It is widely understood that this increased connectivity between people, products and systems can create significant new sources of value for citizens and economies,” the report says.

“As we look to the next decade, the prevalence of connectivity, through the Internet of Things and the creation of ‘intelligent assets’ will accelerate,” so the question is, how to harness technological advances to enable smarter economic growth, resource and food security, and an improved infrastructure.

The impending digital transformation the WEF envisions has the potential to redefine the very basis of the materials-reliant industrial economy, the report’s Executive Summary continues. “Enabled by intelligent assets, a new model of development gradually gaining independence from finite resource extraction is emerging. Can pervasive connectivity become the new infrastructure enabling effective material flows, keeping products, components and materials at their highest value at all times, thus enabling the coming of age of the circular economy? Such a system would generate, on top of business advantages, multiple benefits for users and society as a whole.

“It would be a system where shared and multimodal transport help citizens to quickly and safely navigate to their destination, even during rush hour. A system where assets are able to signal the need for maintenance before breaking down, and in which local farmers can monitor and regenerate the areas of their land at risk of degradation, while at the same time providing abundant and fresh produce.”

The rapid increase in the number of intelligent assets is “reshaping” the economy. “The number of connected devices is expected to grow to 25–50 billion by 2020, from around 10 billion today. A growing body of research indicates that this Internet of Things (IoT) offers a trillion dollar opportunity, brought about by improved production and distribution processes and, perhaps more importantly, a significant shift in the way products are utilized.” The surge in intelligent assets is expected to “irreversibly transform industries and societies, and when paired with circular economy principles, this transformation has the potential to unlock tremendous value opportunities.”

This circular economy would help “decouple economic value creation from resource consumption.” It encompasses four value drivers – extending the use cycle length of an asset, increasing utilization of an asset or resource, looping or cascading an asset through additional use cycles, and regeneration of natural capital – that can be “combined with one (or several) of the three main intelligent assets value drivers – knowledge of the location, condition, and availability of an asset.”

What’s at stake “is not incremental change or a gradual digitization of the system as we know it, but a reboot: pervasive connectivity rolled out at scale has the power to redefine value generation, whilst helping emerging economies bypass heavy upfront investments and material-intensive solutions.”

For example, WEF posits an ecosystem of intelligent assets-enabled services that could jointly “open widespread access to reliable, grid-free renewable energy. Solar panels could be provided as a service to individuals and businesses without access to the capital to buy solar panels themselves, through weekly online payments.”

It’s a rethinking of value creation and logistics delivery from a straight line to a digitalized circular perspective, a brave new world of extreme connectivity.

Singularity here we come.

Image: From the WEF and the Ellen MacArthur Foundation

Pope Francis: Care for our common home (2)

Here’s the next installment of our close read of Pope Francis’ Encyclical Letter on climate change, Laudato Si’.

We left off last time at Paragraph 8.

In the Saint Francis of Assisi section, whose name Pope Francis too k as his “guide and inspiration” when he was elected Bishop of Rome:

I believe that Saint Francis is the example par excellence of care for the vulnerable and of an integral ecology lived out joyfully and authenti­cally. He is the patron saint of all who study and work in the area of ecology, and he is also much loved by non-Christians. He was particularly concerned for God’s creation and for the poor and outcast…  Francis helps us to see that an integral ecol­ogy calls for openness to categories which tran­scend the language of mathematics and biology, and take us to the heart of what it is to be hu­man. Just as happens when we fall in love with someone, whenever he would gaze at the sun, the moon or the smallest of animals, he burst into song, drawing all other creatures into his praise… If we approach nature and the environment without this openness to awe and wonder, if we no longer speak the language of fraternity and beauty in our relationship with the world, our at­titude will be that of masters, consumers, ruth­less exploiters, unable to set limits on their im­mediate needs. By contrast, if we feel intimately united with all that exists, then sobriety and care will well up spontaneously.  (Paragraphs 10 and 11)

The he finishes his introductory matter with My appeal:

The urgent challenge to protect our com­mon home includes a concern to bring the whole human family together to seek a sustainable and integral development, for we know that things can change…Humanity still has the ability to work together in building our common home…Particu­lar appreciation is owed to those who tirelessly seek to resolve the tragic effects of environmen­tal degradation on the lives of the world’s poor­est. Young people demand change. They wonder how anyone can claim to be building a better fu­ture without thinking of the environmental crisis and the sufferings of the excluded. (Paragraph 13)

I urgently appeal, then, for a new dialogue about how we are shaping the future of our plan­et. We need a conversation which includes every­one, since the environmental challenge we are undergoing, and its human roots, concern and affect us all. The worldwide ecological move­ment has already made considerable progress and led to the establishment of numerous or­ganizations committed to raising awareness of these challenges. Regrettably, many efforts to seek concrete solutions to the environmental cri­sis have proved ineffective, not only because of powerful opposition but also because of a more general lack of interest. Obstructionist attitudes, even on the part of believers, can range from de­nial of the problem to indifference, nonchalant resignation or blind confidence in technical solu­tions. We require a new and universal solidarity. As the bishops of Southern Africa have stated: “Everyone’s talents and involvement are needed to redress the damage caused by human abuse of God’s creation”.  (Paragraph 14)

It is my hope that this Encyclical Letter, which is now added to the body of the Church’s social teaching, can help us to acknowledge the appeal, immensity and urgency of the challenge we face. I will begin by briefly reviewing several aspects of the present ecological crisis, with the aim of drawing on the results of the best scientif­ic research available today, letting them touch us deeply and provide a concrete foundation for the ethical and spiritual itinerary that follows. I will then consider some principles drawn from the Judaeo-Christian tradition which can render our commitment to the environment more coherent. I will then attempt to get to the roots of the pres­ent situation, so as to consider not only its symp­toms but also its deepest causes. This will help to provide an approach to ecology which respects our unique place as human beings in this world and our relationship to our surroundings. In light of this reflection, I will advance some broader proposals for dialogue and action which would involve each of us as individuals, and also affect international policy. Finally, convinced as I am that change is impossible without motivation and a process of education, I will offer some inspired guidelines for human development to be found in the treasure of Christian spiritual experience. (Paragraph 15)

With that introductory work done, we’ll look into Chapter One: What Is Happening To Our Common Home, next time.

Image: Laudato Si’ (cover) by Thomas Cizauskas via Flickr CC

Pope Francis: Care for our common home (1)

Admit it: how much of Pope Francis’ Encyclical Letter on climate change, Laudato Si’, have you read? I admit I have read some parts of it and have certainly read about it, but here’s a thought: let’s read it together…

It is 184 beautifully written and compelling pages. As I read it I’ll highlight some passages and post them here over the course of—well, however long it takes.

The pope gets right into on page 3:

“Saint Francis of Assisi reminds us that our common home is like a sister with whom we share our life and a beautiful mother who opens her arms to embrace us.

“This sister now cries out to us because of the harm we have inflicted on her by our irresponsible use and abuse of the goods with which God has endowed her. We have come to see ourselves as her lords and masters, entitled to plunder her at will. The violence present in our hearts, wounded by sin, is also reflected in the symptoms of sickness evident in the soil, in the water, in the air and in all forms of life. This is why the earth herself, burdened and laid waste, is among the most abandoned and maltreated of our poor; she “groans in travail” (Rom 8:22).”

Some perspective, “Nothing in this world is indifferent to us” starts on page 4.

But note, rather than cite specific pages after this, I’ll use paragraph numbers and delete the footnote cites.

3. More than fifty years ago, with the world teetering on the brink of nuclear crisis, Pope Saint John XXIII wrote an Encyclical which not only rejected war but offered a proposal for peace. He addressed his message Pacem in Terris to the entire “Catholic world” and indeed “to all men and women of good will”. Now, faced as we are with global environmental deterioration, I wish to address every person living on this planet. In my Apostolic Exhortation Evangelii Gaudium, I wrote to all the members of the Church with the aim of encouraging ongoing missionary renewal. In this Encyclical, I would like to enter into dialogue with all people about our common home.

4. In 1971, eight years after Pacem in Terris, Blessed Pope Paul VI referred to the ecological concern as “a tragic consequence” of unchecked human activity: “Due to an ill-considered exploitation of nature, humanity runs the risk of destroying it and becoming in turn a victim of this degradation”…

5. Saint John Paul II became increasingly concerned about this issue. In his first Encyclical he warned that human beings frequently seem “to see no other meaning in their natural environment than what serves for immediate use and consumption”. Subsequently, he would call for a global ecological conversion. At the same time, he noted that little effort had been made to “safeguard the moral conditions for an authentic human ecology”.6 The destruction of the human environment is extremely serious, not only because God has entrusted the world to us men and women, but because human life is itself a gift which must be defended from various forms of debasement. Every effort to protect and improve our world entails profound changes in “lifestyles, models of production and consumption, and the established structures of power which today govern societies”. Authentic human development has a moral character. It presumes full respect for the human person, but it must also be concerned for the world around us and “take into account the nature of each being and of its mutual connection in an ordered system”. Accordingly, our human ability to transform reality must proceed in line with God’s original gift of all that is.

Pope Francis notes that his predecessor, Benedict XVI, also proposed “eliminating the structural causes of the dysfunctions of the world economy and correcting models of growth which have proved incapable of ensuring respect for the environment”. He observed that the world cannot be analyzed by isolating only one of its aspects, since “the book of nature is one and indivisible”, and includes the environment, life, sexuality, the family, social relations, and so forth. It follows that “the deterioration of nature is closely connected to the culture which shapes human coexistence”.

“Pope Benedict asked us to recognize that the natural environment has been gravely damaged by our irresponsible behaviour. The social environment has also suffered damage.” Both are ultimately “due to the same evil: the notion that there are no indisputable truths to guide our lives, and hence human freedom is limitless.”

This is valuable background, I think, because it shows that Pope Francis is not alone in his thinking on climate change and society – the popes are “united by the same concern.” And the statements of the popes echo the reflections of numerous scientists, philosophers, theologians and civic groups, all of which have enriched the Church’s thinking on these questions. Outside the Catholic Church, other Churches and Christian communities – and other religions as well – have expressed deep concern and offered valuable reflections on issues which all of us find disturbing.” (Paragraph 7) He cites the compelling statements of Ecumenical Patriarch Bartholomew I of Constantinople in the ways we have harmed the planet: “For human beings… to destroy the biological diversity of God’s creation; for human beings to degrade the integrity of the earth by causing changes in its climate, by stripping the earth of its natural forests or destroying its wetlands; for human beings to contaminate the earth’s waters, its land, its air, and its life – these are sins”. (Paragraph 8).

Riveting stuff whether you believe in God or not, but especially if you believe in God.

This where we’ll stop for now.

Image: Laudato Si’ (cover) by Thomas Cizauskas via Flickr CC

Mondelez moves to third-party sustainability evaluation

Mondelez International, the multinational snack foods giant, is developing an outcome-based sustainability framework that will use an external party to measure the impact of its $200 million Coffee Made Happy program.

Mondelez, the world’s second largest coffee company, says the arrangement with the independent third-party organization, the Committee on Sustainability Assessment (COSA), will “provide unprecedented transparency on large scale” along the coffee supply chain.

Mondelez coffee brands include Jacobs, Carte Noire, Kenco and Tassimo. COSA will evaluate the “real impact experienced by farmers on the ground” of the Coffee Made Happy program. Program objectives aim to measure how Coffee Made Happy is achieving its objectives to improve farmers’ business and agricultural skills, increase farm yields and “engage young people and women in coffee farming so as to empower one million coffee entrepreneurs by 2020.”

Assessing climate change risk

Except for a small but mostly insane group of climate change deniers, it’s generally acknowledged that the globe’s climate is at risk—therefore how companies assess the financial impact of climate change in their risk portfolios should be an important consideration, both for their operating models and bottom lines. Seems logical, right?

Maybe not so logical it seems. Ceres, a nonprofit advocacy group that focuses on corporate sustainability, contends that not many companies believe climate change will have a material impact on their business. “Roughly half of the 3,000 biggest publicly traded companies in the U.S. say mum’s the word, reporting zilch in their annual filings to U.S. regulators,” it says.

Sex, drugs and GDP

The continuing discussion about what Gross Domestic Product (GDP) should include in order to more accurately reflect the scope and health of the economy has entered a new and intriguing dimension.

From across the Atlantic comes this question: Why not include prostitution and drugs in GDP calculations, as Italy and the United Kingdom have done? After all, those are economic activities, right?

The U.K.’s Office of National Statistics announced that paying for drugs and sex adds about £10 billion ($16.7 billion) a year to the economy. So, the British government is now including prostitution and narcotics sales in its official GDP statistics.

While illegal activities are a small part of the U.K. economy—only 0.7 percent—according to the government’s estimates, the reason for the inclusion is to harmonize economic reporting across the European Union.

Less is more, more or less: Matt Ridley’s strange alchemy

Matt Ridley, the UK author, journalist and member of the House of Lords, recently asserted in a Wall Street Journal article that the “world’s resources aren’t running out.” Well maybe, sorta. If you are into the mental gymnastics of conservative doublethink.

I could not let his piece pass without providing, shall we say, a different and more intellectually honest (I hope) viewpoint.

He asks: “How many times have you heard that we humans are ‘using up’ the world’s resources, ‘running out’ of oil, ‘reaching the limits’ of the atmosphere’s capacity to cope with pollution or ‘approaching the carrying capacity’ of the land’s ability to support a greater population? The assumption behind all such statements is that there is a fixed amount of stuff—metals, oil, clean air, land—and that we risk exhausting it through our consumption.”

Employees can’t afford to eat? Happy New Year!

Welcome to the New Year, same as the old year—in much of corporate America and the Republican Party.

A recent HBR Blog item by Peter Cappelli notes it was not all that long ago that companies worried about whether their employee practices were fair. “One of the functions of human resource departments was to advocate for the interests of employees.”

That was a long time ago in galaxy gar, far away. Shareholder activism as well as court cases sympathetic to shareholder interests have meant that the vast majority of companies pay more attention to maximizing stock prices, often at the expense of their employees.

Infographic: Do Hybrids Make Sense and Cents?

As this infographic courtesy of AutoPawn indicates, maybe you can’t have everything—at least not yet.

Created by AutoPawn

Celebrate World Water Day: Reduce Water Use

Guest post by Danielle Nierenberg, co-founder of Food Tank: The Food Think Tank

The United States is one of the world’s biggest users of water: many Americans use as much water as about 900 Kenyans. Water resources in the U.S. are shrinking. In the last five years, water shortages have occurred in almost every part of the country, including the worst drought in at least 25 years that hit 80 percent of the country’s farmland in 2012. Even worse, the damaged land won’t fully recover this year and at least 36 states are expecting local, regional, or statewide water shortages, even without the impact of drought.

The Natural Resources Defense Council expects water scarcity to affect the American South, West, and Midwest the most. Fourteen states in these regions already have “extreme” or “high” risk of water scarcity. Arizona, Florida, Idaho, Nevada, and Texas face the most danger because they are expected to see some of the largest population increases by 2030.