Let’s start by clearly defining what is meant by a Sustainability Strategy; a strategy is a collection of thoughts and documented ideas without a clearly defined Action Plan. Action plans are where the rubber hits the road for any strategy and are often known as tactical implementation.

Over the last ten years the constant feedback we have received from many organisations is that they have a clear idea of what to do next, but lack the buy-in from senior management and/or middle management to obtain the budgets and other resources required to follow through on the strategies outlined. Often the main reason this happens is that the senior management were not involved in the strategy development phase and hence have not bought into the true value of the strategy. Another reason which we are often given is that management do not see real business value in a strategy that includes sustainability as a central core.

Too often Sustainability, as a department, is seen as an entity created for meeting a required corporate governance role and as a tick box function, and not a platform that can add real value to one’s business. This viewpoint is a far cry from the truth. Investors of all kinds look to invest in profitable, well managed companies and sustainability can (as often is) a cornerstone in the company’s overall strategy to achieve increased revenue and cost reduction.

The key to understanding sustainability’s value to your business is understanding the concept of materiality in terms of the business’ impact economically, socially and environmentally. Once you have identified what is material to your business you will be able to create a strategy and action plan that is value adding. If your strategy is too broad and not aligned with material issues, invariably you will struggle to obtain buy in confirmation from your management. So prior to creating your strategy ask yourself what is material? Then create your strategy based around these important issues. Once you have created a comprehensive strategy ensure that you also have a clearly defined action plan with timelines, budgets, resources requirements and most importantly a return on investment (ROI) calculation, that is easy to understand and track. This leads us to talk briefly about the method for creating a strategy and action plan. Terra Firma Academy has created a carefully constructed course to help learners with a methodical process aimed at developing a well thought out strategy document. This course is a must should you want to develop a strategy based on materiality and value to your business.

The most successful sustainability strategies have always been ones based on adding value to shareholders and had clear buy-in from the senior executive. Take Walmart for example. They realised that the increasing input costs into their products were a material item, pushing up prices and hurting consumer sales. Realising that they had to squeeze costs out of their supply chain, they embarked on a program to make their suppliers more efficient. By doing so they squeezed more than $2B per year out of their supply chain costs. Another example is a property company client of ours which has realised that as the economy shrinks their rental income is under more and more pressure to not increase annually or only increase at single digit rates. By producing electricity on site with a rooftop solar PV solution, they are able to divert the electricity income that their tenants were paying to the municipality to their own pockets and now have a double-digit growth income stream.

It is strongly recommended that one develop an action plan immediately after developing a strategy as the two go cohesively hand in hand. Action plans often help us to ensure that the strategy is not pie in the sky and also ensure that timelines and costs are associated with the strategy. Asking a third party that was involved in the strategy development to create an action plan is not advisable.

So what kinds of resources does your organisation require to develop an Action Plan? These vary from company to company and industry to industry and will ultimately be dictated by your strategy. We recommend that you select the most material issues to build your strategy around and then create budgets that have clear returns on investment. For example, BEE. This could be a cornerstone strategy for your company so by achieving a Level 2 BEE it then becomes an investment and you can then quantify the revenue expected as a result. Always make sure that your sustainability strategy is based on a materiality analysis and that each step you intend to take has a clearly defined ROI.

Once you know you have the team to deliver on the Strategy, you need to consider what the best framework or practice should be following in order to implement the Action Plan. There is currently no international standard that can be strictly adhered too, however it makes sense to treat the implementation like any other project and manage accordingly.

What is critical in the implementation of an action plan is that you have a person or team driving the project and that, they create and share a project plan with all of the key stakeholders and sub drivers. Having a single well thought out plan with buy in from management is the most important kick-off document and all performance needs to be tracked against this. The simpler the better. Each key area within the project needs to have its own sub plan and ultimately if you are a large organisation, it needs a driver. For example, you might have a training plan, water plan, BEE plan with sub categories, energy plan, waste plan, communication plan, accreditation plan, tools plan etc. These each need a driver with a central person co-ordinating the whole plan. No one is a fan of excessive meetings but conference calls and centralised documents are an excellent tool to ensure momentum is maintained.
When it comes to certain organisations; the scope of the Action Plan will prove too great for the organisation to tackle the challenge without expert help. There are several different approaches including; keeping the consultant who developed the Action Plan on to manage the program centrally, keeping them on to assist the person managing the central program or not using them at all. If you used a consultant to create your strategy, then we recommend that you retain them through the implementation phase to ensure there is an objective opinion, as we all know “no battle plan survives first contact with the enemy” and should you get a little off kilter the consultants can help you realign.

So, now you have a strategy, and action plan and the team (possibly including 3rd party experts) to implement. How do you tell if you successfully implemented the strategy?

Well the first thing is to ensure you have met the timelines in your action plan. The next and most important is that you see the impact on the business from a value perspective, be it return on investment, costs savings, revenue generation, brand enhancement or risk reduction. While this is fairly broad a true strategy will have specific measurement strategies build into each key action item area. For example, if you want to reduce energy consumption you will have budget for installing SMART metering equipment on the specific circuits where you intend to implement projects. This will give you a clear indication of the savings and hence help you to motivate for additional budgets. Some common things that can be measured are: how many staff went on training, successful supply chain optimisation, Energy Efficiency recorded, Water Efficiency recorded, Energy Generation (solar PV or other renewable energy projects implemented), Waste Reduction recorded, BEE status achieved or maintained, CSI project success, Reduction in Hazardous Materials to name but a few.

Finally; how do you get the buy-in you need to implement an Action Plan? Focus on value and show the ROI calculations. Then get this in front of an EXCO member that has influence and authority and make it their campaign. This will get you mindshare and budgets. Show how the competition is doing the same and having an impact.
Position sustainability as a value adding differentiator to the business. Find people within the organisation that are passionate and have influence. Show how sustainability is the fabric of your culture as a company. Please contact us to find out how we can help you with your organisations’ Sustainability Strategy.”

In the last few months South Africans have been re-introduced to the reality of fracking in the Karoo. In early September the Cabinet approved the lifting of a moratorium imposed in February last year (2011), allowing licences for the exploration of shale gas in the country to be issued under certain circumstances. Mineral Resources Susan Shabangu did however say that the government will stop the exploration of shale gas in South Africa’s Karoo region if it is found that hydraulic fracturing or “fracking” poses any risk to the water table or to the Square Kilometre Array (SKA) telescope project.

The US Energy Information Administration has estimated that South Africa’s Karoo Basin contains a technically recoverable resource of 485-trillion cubic feet of gas, enough to secure South Africa’s energy independence for many years into the future. Under the Cabinet decision, the actual fracking cannot be done now, even though exploration will involve some drilling, said Shabangu. When it comes to fracking it helps to assess the history of this type of gas drilling to date and few documentaries tell the story of fracking in America like Gaslands. This moving documentary discusses the experience of Americans with fracking over the last 10 years and clearly concludes that ground water is being heavily polluted by the core fracking fluids used. It seems clear that the discussion around fracking is far from over but when examining the reasons why the South African government is pushing to go ahead two key motivations are used, firstly that it will create a R1 trillion boom for the economy over the next 20 to 30 years and secondly that as part of this boon we will get energy security and a huge boost in job creation in these areas. Shell alone has mentioned that their fracking operations could create as many as 300,000 jobs if it’s granted a license to frack the Karoo.

Let’s examine the question of energy security and job creation. From an energy security perspective Eskom has committed to almost doubling its capacity over the next 15 years to meet growth in demand from South Africans. Most of this energy growth will take the form of coal and nuclear facilities with a limited portion going towards renewable energy. Why renewable energy is not a significant part of the future of South Africa only Eskom knows but it’s clear that we will continue to abuse our coal resources well into the future at the expense of accessing clean power options. Often the reason given is the cost of producing coal power when juxtaposed with renewables. While this is a relevant fact it does not take into account the significant impact of this option environmentally or the opportunity for huge job growth through the creation of a renewable industry in South African that could become a major export. These costs and opportunities need to be accurately quantified before a true cost computation can be made on the best energy mix going forward. Not only is a study required that reflects on the energy needs of our country, but also properly reconciles our future energy, social and economical development /diversification needs

Terra Firma Academy estimates that job growth in South Africa over the next 15 years around renewable energy and energy efficiency could be into the millions if the government put its mind and money towards cutting wasteful energy consumption through maximising efficiencies and creating an energy efficiency and renewable energy manufacturing sector. For example, rather than allowing the cheap importation of Chinese’s Solar panels the government should subsidize local glass (PG Glass/National Glass) and wafer manufacturers to build our own capacity and manufacturing industry. Government protection and capital incentive schemes is key to establishing this industry which could replace the need for fossil fuel based power and create millions of solid high skilled jobs.  It has been mentioned that coal might be replaced by cleaner gas electricity power stations in the future due to the nature of gas opportunities in Namibia, South Africa and Mozambique. This is concerning as it will function to further retard the development of a renewable energy sector within South Africa.  Considering the lessons learnt in the USA, why are we continuing to spend money on fracking which has the potential to destroy future generations water supplies when we have the solution (the sun) simply falling on us daily. In the UK the fracking debate has reached fever pitch with proponents of fracking claiming that 35,000 jobs will be created, far less than the 300,000 claimed by Shell. Opponents of fracking in the UK have claimed that many more jobs can be created within the renewable energy sector if funds for fracking are redirected.

In summary it’s clear that many companies are lining up to feed at the fracking trough. What is urgently required is an assessment of the costs and benefits of fracking VS the costs and benefits of a new, clean renewable energy sector inclusive of manufacturing. I would bet that if this was done independently that the one factor that would stand out above all else is that job creation by going the sustainable renewable energy route would far exceed jobs created through fracking. Let’s think long term, sustainable solutions rather than medium term fossil fuel solutions. If we do this we cannot in good conscience continue to support the growth of harmful shale gas exploration.

better-world

It is 2013 and many people still wonder whether or not human induced climate change will happen or is real. Even as the list of devastating first ever climate change events continues to grow annually the naysayers continue their oil infused lobbying. For over 3 decades there has been much international debate across the board. Still today, there are certainties and uncertainties. Even amongst the circles of well educated professionals doubt or lack of knowledge is apparent and well documented. If there is even a remote chance that the naysayers are wrong and Climate Change is real then the impact on all of our lives will be enormous and the impact on the lives of our children many times worse.  But let us assume, we really do not know.  The question that remains is, whether it would make sense to take action and mitigate climate change anyhow. Should we, given the uncertain circumstances, implement changes and manage our resources or should we just go forth with a business as usual attitude? What are the pros and cons of adapting to climate change that might or might not happen? What are the risks?

Let’s first understand what it means to take corporate action against climate change: It is developing an environmental strategy and policy for the company and includes the following possible components

  1. An integrated reporting strategy
  2. Carbon foot-printing: is a great way to start as it’s a tool to use to understand non-financial data
  3. Water management to achieve efficiencies and save costs
  4. Energy management to achieve efficiencies and save costs
  5. Waste management to reduce waste to landfill and save costs
  6. Contaminants elimination to prevent harm to the environment and have a safe working environment for employees
  7. Renewable energy as a way to reduce costs and secure energy supply
  8. Supply Chain greening aimed at reducing costs and ensuring your supply chain joins the green journey
  9. Green education for key staff to build awareness
  10. Training in efficiency for all employees to build skills
  11. New service and product development aimed at addressing the growing environmental goods and services market

The uncertainty whether or not climate change will actually happen, might prevent many executives from taking the above action. But this is a point where every citizen, human or corporate, has to make a decision.

There is an interesting video on youtube with the somewhat exaggerated title of “The Most Terrifying Video You’ll Ever See” by wonderingmind42 (Greg Craven). Personally, I would not call it terrifying, but rather rational or quite logical.  In his video, he talks about the decision making principle for us as a global race. He does not prescribe what we should think about climate change but rather prompts us to find out how we think about climate change.  I would like to pick up on his idea and elaborate on his philosophy in regard to corporate responsibility and awareness towards our environment.

Creg Craven introduces the 4 different options. Our future will roughly fall into one of these 4 scenarios:

  1. Climate changes does not happen – yet we have prepared for it.
  2. Climate changes does not happen – and we have not prepared for it
  3. Climate change does happen – and we have prepared for it.
  4. Climate change does happen – but we have not prepared for it.

Putting these into a table of scenarios, it would look like this:

cc-table-1

I am suggesting that companies who have not arrived at a decision yet, and are unsure what to do, should try the above exercise. Management should fill thoughts and considerations relevant to one’s business and the environment one depends on into these white boxes. As an example I have filled the table demonstrating potential outcomes:

cc-table-2

Now that we created a bigger picture, we can see many possible effects and consequences. It is time to choose. Since there is uncertainty around climate change, we cannot pick from the rows as to whether or not climate change will actually happen, we can only select which column is the best for us.  Which column has the most positive aspects? Should we take action? Or should we continue business as usual?

What do you think? Which column would you choose?

I can see a column that has a lot more ticks than the other:  It is the one averting the most risks by taking action.  Not only will this decision support us should climate change happen, but it might also avert climate change from happening in the first place. I feel we can safely come to the conclusion, that the question around climate change is irrelevant. The question around environmental policy and strategy gets a much clearer answer. It is just like the decision to buckle up when driving a car…

On top of this the decision is further strengthened by the fact that an environmental strategy will increase shareholder value through cost reduction and opportunity identification.   In reality all companies are in business to make money and we often meet with CEOs that tell us that they need to reduce costs or increase revenue and that their CSI (Corporate Social Investment) budget is for social not environmental initiatives. This is a great discussion as Terra Firma Solutions has many case studies where we can show CEO’s the Rands and cents behind employing an environmental strategy. It’s the empirical facts behind this strategy that often convince CEO’s to deploy an Environmental Strategy. The facts are clear, an environmental strategy is a key tool in any companies cost reduction, revenue identification and differentiation strategy. There are few places that a company can invest its money that will give shareholders a better return than an area like energy efficiency or supply chain greening. Seems like a no brainer to me!

The topic sustainable development has been theorised and kicked around more often than most in the last 10 years. If one researches sustainable development and tries to find a conclusive definition one ventures into a quagmire of differing definitions. Two popular definitions include:

WWF’s definition: “Improvement of the quality of human life within the carrying capacity of ecosystems”

Brundtland Commission: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”

What we are seeing more and more is that current definitions of sustainable development no longer include the concept of “growth”. The aim is that the scale of the economy must be kept within the capacity of the overall system on which it depends. An economy that is able to sustain GDP growth without having a negative impact on environmental conditions, is said to be decoupled.

Different sustainable development theories abound and include complex names like Systems Theory, Deep Ecology, Eco-Feminism, Social Ecology, Bioregionalism, Ecological Modernisation, Gaia Theory and Traditional Ecological Knowledge. Believe me there are others that do not have the level of acceptance that these do but all do have their value and appeal.

Many of us today realise that the way we are living is not sustainable and that as our human population reaches 10 billion, the world as we know it will change for the worse. One only needs to watch the latest Judge DRED movie to get a glimpse of what our world might look like in the not so distant future. The question that hangs in the air like a weightless elephant is how do we change our world and achieve growth that is truly sustainable?

Having evaluated most of the theories I think there is only one real tangible solution that will allow decoupling. DECENTRALISATION of all services. Let’s take for examples electricity in South Africa. We first use fossil fuel to dig out coal which is then washed and transported with more fossil fuel to power stations which then burn this fuel to create electricity which is then sent many kilometres to the End Users! This is a crazy process that uses masses of fossil fuel and water and results in significant loses of electricity as it is transported down the electricity lines. The solution in a decentralised model is to generate electricity where it is needed most and to use natural resources to do this. For example, the generation of electricity should not be the responsibility of Eskom. Rather electricity should be generated in the communities or areas where it is needed. Technology like solar, wind, waste to energy, geothermal and tidal energy should be common. Can you imagine the jobs this type of decentralised, renewable energy grid would create? Regulations would be put in place allowing adjacent communities to sell power to one another which would allow one community that has wind energy to sell to another that has solar or geothermal energy.

In the same way water supply should be decentralised reducing the need for electrical pumps that today are used to pump water from a central station to users. Benefits would include reduction in the loss of water through poor infrastructure and leaks. One would rely on ones community to create jobs that would ensure water is not wasted and that all available water is captured, be that water from rain, boreholes or solar desalination (as on the West Coast). Communities that have more water than others might be able to trade water for electricity or food.

This brings me to the next pillar of decentralisation which is decentralisation of food supplies. Of late we have seen that the large supermarket chains have moved towards centralisation of all of their food distribution to cut costs and further enhance their profits. We have long in this country been at the mercy of large scale food retailers who have destroyed the butcher, baker and candle stick maker by undercutting them on price and availability. As these smaller food retailers have died off so the supermarkets have increased their prices to the point where we are captive to our food suppliers. We need to break these chains and decentralise food supply. Every community needs to start growing its own food and we need to become scholars of agriculture. For instance, in my own community we have large recreational parks that could double as the communities’ bread basket. In the more urban environments roofs and walls can be utilised as green spaces to generate food. Every weekend you and your neighbours could then go to a central place and buy or barter for your food. What a wonderful community generating activity. One fantastic offshoot from this strategy would be the end of plastic packaging as people could come along with a basket, fill it up and take it home without the need for any packaging.

While decentralisation impacts all service supply positively I will only focus on electricity, water, food and waste. This brings me to my last topic for this article and that is waste. A wise man once told me “show me your waste and I will show you something you have paid for but see no value in”. Organic waste is the lifeblood of compost which is the basis of a healthy garden. All organic waste would be brought to the food gardens and used to generate food. All non-organic waste that is not recyclable would be used to generate electricity with a central biogas digester creating methane which would then be fed into a biogas generator which would create electricity. All non-organic waste that is recyclable would be categorised, used for building material or other community needs and any leftovers would then be sold to your neighbouring communities.

Each of these decentralised systems would create hundreds of thousands of jobs country wide and help alleviate poverty in many communities. This is a brave new world that is going to need visionaries and leaders but it’s also going to need rules, regulations and incentives to make getting started easier.

It really is time for the government to step in and up! We want a decentralised sustainable services network and we need to start changing now as this change will take time and planning. Bring on the legislation and incentives that can kick start true sustainable development through decentralisation!