Emerging markets + Environmental responsibility = Big financial rewards

Sustainability and environmental responsibility may not be viewed as a priority in developing countries focused on raising citizens out of poverty. “But the developed world does not have a monopoly on visionaries,” according to a new article in Harvard Business Review. Rather, in markets where the pressures of resource depletion are felt most keenly, corporate sustainability has become a source of innovation.

In one example, Egypt’s first organic farm lowered costs, improved yields by 30 percent, and produced higher quality raw cotton. Far from being an expensive indulgence, organic cotton offered a business model that was more sustainable not just environmentally but financially.

A review of more than 1,000 companies by Boston Consulting Group and the World Economic Forum identified more than a dozen champions whose sustainability practices were “effective, innovative, and scalable.” To make their environmental efforts pay off financially, companies followed one of these approaches:

• Taking a long view, investing in methods of sustainable operation that led to dramatically lower costs and higher yields
• A bootstrap approach starting with cost savings from small changes which funded advanced technologies that made production more efficient
• Spreading sustainability efforts to the operations of customers and suppliers

The companies highlighted in Making Sustainability Profitable demonstrate that economic development and environmental sustainability are not mutually exclusive. Instead, visionary enterprises in emerging markets are showing us that environmentally responsible approaches can lead to big financial rewards.

Government ignores concerns about Teghut mine…

Armenia Copper Programme, a division of the Vallex Group registered offshore in Liechtenstein, has begun operating a controversial mining project in the village of Teghut. Preliminary work began with the clearing of a portion of the pristine Teghut Forest to create a massive tailing dump for toxic waste left after mineral processing. The company is aggressively removing a mountain in order to reach underground deposits of copper and molybdenum.

Teghut photo by Sara Anjargolian, 2012

Armenia has made mining a key part of its economic development strategy [see page 34] despite environmental, economic, and social concerns. There are more than 400 active mines and 19 tailing dumps in Armenia, a small country the size of Maryland. Scientists have reported health risks in communities around mines scattered throughout Armenia. Human rights and environmental activists have also protested violations of property rights and the loss of rare and endangered ecosystems and biodiversity.

A coalition of 14 organizations including Armenia Tree Project and Armenian Environmental Network sent a letter to the President and Prime Minister, requesting an independent Environmental Impact Assessment for the mine.

“Cases brought in opposition to the operations in Armenian courts have been cursorily and improperly dismissed on strictly procedural bases without proper examination as to the substance of the claims. The Environmental Impact Assessment and public notice requirements are fatally flawed. The irreparable damage already done to Teghut, and the yet greater damage that will be done to the region if mining continues, demand immediate attention,” reads the letter.

The letter requests the EIA in order to comply with domestic and international laws, present an accurate analysis of the environmental impact, address the public health impacts of the Teghut mining operations, take alternative development options into consideration, and restore public faith and trust in government.

The coalition received a response from Edgar Pirumyan, Ministry of Nature Protection Chief of Staff, who said an EIA was completed within the scope of the law.

“We are disappointed with the perfunctory response through the Ministry of Nature Protection whose primary mission is the protection of Armenia’s environment,” notes ATP’s managing director Tom Garabedian. “In a recent visit to California, the Prime Minister expressed his commitment to Armenia’s environment. We hope that there is a willingness of the government to reexamine Teghut and mining in Armenia as a whole.”

The letter was co-signed by Acopian Center for the Environment, Armenian American Health Professionals Organization, Armenian American Medical Association, Armenian American Nurses Association, Armenian American Pharmacists Association, Armenian Bar Association, Armenian International Dental Association, Armenian Medical International Committee, Axis of Justice (Serj Tankian), Civic Forum, haikProject, and World Wide Fund for Nature.

Prospects for a green economy...

Orakarg (Agenda) business newspaper conducted this interview about prospects for a Green Economy in Armenia after my talk at TEDx Yerevan on Redefining our economic systems: Could a forest be worth more than a gold mine? The article was titled, Finding wealth in the soil: Green economy can replace mining.

Պրն Սոհիգյան, ի՞նչ է կանաչ տնտեսությունը:

Կանաչ տնտեսությունը հասկացություն է, որն առաջին անգամ օգտագործվել է ՄԱԿ-ի շրջակա միջավայրի պահպանության ծրագրում՝ նկարագրելու տնտեսության այնպիսի մոդել, որը կարող է նպաստել մարդկանց բարեկեցությանը և սոցիալական հավասարությանը՝ միաժամանակ նվազեցնելով ռիսկերը շրջակա միջավայրի համար: Այս թեման քննարկումների լայն ալիք է ստեղծել համաշխարհային հարթակներում, քանի որ այսօր մենք կանգնած ենք բնական ռեսուրսների ոչնչացման եզրին: Այս թեմային է նվիրված նաև «Կայուն զարգացում» խորագրով «Ռիո 20» համաժողով:

Կանաչ տնտեսության կարևորությունն այն է, որ գոյություն ունի կապ, ասենք, անտառների և ջրային ռեսուրսների միջև, ինչի պատճառով բիզնեսը կախված է շրջակա միջավայրից: Անտառները թույլ են տալիս պաշտպանվել ջրհեղեղներից և ապահովում են հողատարածքների վերականգնումը: Հետևաբար, շրջակա միջավայրի ռազմավարությունը կարող է պաշտպանել կարևոր ջրբաժանները անտառների պահպանության միջոցով: Այսինքն՝ բնության մեջ ամեն ինչ փոխկապակցված է, ինչը կարելի է օգտագործել տնտեսական նկատառումներով:

Հայաստանի համար որքանո՞վ է կարևոր կանաչ տնտեսությունը, եթե հաշվի առնենք, որ, օրինակ, տնտեսությունը ծայրահեղորեն կախված է հանքարդյունաբերությունից:

2011թ. սեպտեմբերին երևանյան TEDx-ին իմ ելույթում ես նշեցի, որ Հայաստանի տնտեսության համար ռազմավարական նշանակություն ունեցող առնվազն երեք ոլորտներ կախված են շրջակա միջավայրից: Դա ըմպելիքների արտադրության, տուրիզմի և հիդրոէներգետիկայի ոլորտներն են, որոնցից յուրաքանչյուրը Հայաստանի տնտեսության կարևոր մասն է:

The rest of the interview is available here. Stay tuned for a follow up article on this topic in English in the coming weeks.

How Payments for Environmental Services can deliver co-benefits for business & sustainable development…

This site was created to review issues related to my career and graduate coursework, so this is a good time for a status update. In December, I completed a capstone on Payments for Environmental Services, which was the last requirement for my master’s from the Sustainability and Environmental Management Program at Harvard.

The abstract for my capstone, “How Payments for Environmental Services Can Deliver Co-Benefits for Business and Sustainable Development: A Conservation Finance Strategy to Protect Armenia’s Natural Heritage,” was recently accepted for the 17th International Sustainable Development Research Conference. The conference is hosted by the Earth Institute at Columbia University and the United Nations Division of Sustainable Development.

The peer review committee invited me to present the research in the session on “Redefining Economic Systems for Sustainable Development.” The following is a condensed version of the research abstract:

“The Caucasus region has been identified by international conservation organizations as a ‘global hotspot’ for biodiversity. Among the nations of the South Caucasus, the environment of the Republic of Armenia faces widespread degradation driven by factors including unsustainable management, lack of alternative energy supplies, and a shortage of sustainable financing for conservation. In order to address similar challenges, some countries have implemented Payment for Environmental Services (PES) programs to compensate upstream landowners or land managers for environmental conservation that benefits downstream users. This research presented three examples of PES programs. The programs in Costa Rica and in upstate New York demonstrated that PES can deliver significant levels of conservation finance and can achieve favorable sustainable development results. The ongoing example in the Danube Basin shows that PES can be implemented as a pilot program to demonstrate the applicability of the concept and transfer lessons learned to neighboring regions.”

“Based on these results, this paper argues that PES may be an effective conservation finance strategy to apply in the Republic of Armenia. This is especially compelling since there are several sectors that have been identified as strategically important for the country’s economic development that rely heavily on environmental services as a core part of their business. These include hydropower, the beverage industry, and the tourist industry. This paper has shown that these sectors have a direct interest in environmental conservation and that investing in natural capital would ensure their long-term viability and profitability. In addition to addressing business risk in these strategic industries in a proactive manner that lowers costs, a PES program can deliver sustainable development co-benefits and enhance a Corporate Social Responsibility program.”

This research was motivated by the work of a number of organizations including the following, each of which provided support or resources cited in this study:

• Armenia Tree Project
• Caucasus Nature Fund
• Conservation Finance Forum
• The Economics of Ecosystems and Biodiversity
• The Katoomba Group
• World Resources Institute
• WWF Caucasus Programme

One of the next steps is to advance the business case for a PES program using WRI’s Corporate Ecosystem Services Review. This tool enables corporate managers to develop proactive strategies to manage business risks and opportunities arising from environmental impacts and dependence on environmental services. I hope readers will stay tuned as this research advances to the next stage toward implementation.

Sustainable development and Armenia’s environment…

“The moral argument is that we have a duty to preserve irreplaceable gifts of creation, whereas we have no comparable duty toward transient commercial goods. The economic argument is that any society that depletes its natural capital is bound to become impoverished over time.”

I used this Peter Barnes quote from Capitalism 3.0: A Guide to Reclaiming the Commons to open an article about sustainable development for the special year-end magazine issue of the Armenian Weekly. The commentary gives an overview of environmental challenges in the Republic of Armenia caused primarily by the unsustainable exploitation of natural resources.

The copper smelter in Alaverdi poses a great risk to public health in Armenia (Photograph by Hawk Khatcherian)

A widely accepted definition of sustainable development is reviewed, along with an emphasis on the economic value of environmental services provided by forests. The following are some of the key conclusions: The protection of agricultural lands from loss of topsoil caused by deforestation and erosion must be prevented, especially given Armenia’s finite resources and geographic isolation.

Strategic decisions and actions taken today can prevent potential resource conflicts both within Armenia and with Armenia’s neighbors. And finally, sustainability must be an integral part of any national development strategy, and by definition it must address economic, environmental, and social factors.

In response to the urgency of the situation, there are signs of progress. I cite ATP's backyard nursery micro-enterprise program, which was selected as a National Winner of the Energy Globe Award for Sustainability at the European Parliament in Brussels, and the United Nations Global Compact which been operating in Armenia since 2006 and has enlisted more than 30 business and organizations committed to aligning their operations with universally accepted principles in the areas of environmental protection and social issues.

Carbon offsets emerging as important tool to mitigate climate change…

Carbon offsets have emerged in recent years an important means of mitigating the effects of climate change. While there have been problems identified with offsets--from technical scientific issues to a lack of quality standards--the voluntary market has grown 240 percent since 2006 to US $331 million in 2007, and the compliance market has grown to US $66 billion.

Size of the Voluntary and Regulated Carbon Markets (2006-2007)

Source: Katherine Hamilton, Milo Sjardin, Thomas Marcello, and Gordon Xu, Forging a Frontier: State of the Voluntary Carbon Markets 2008, Ecosystem Marketplace and New Carbon Finance

I wrote a study on this rapidly emerging field for an environmental management course on climate change taught this summer by William Moomaw and Timothy Weiskel at Harvard University. The following is a summary of the key points that address some of the controversy and benefits of carbon offsets:

• Mechanisms to fund emission reductions in other countries are enabling developing countries to transition to a low carbon economy
  
• Voluntary offsets create an opportunity to sequester carbon emissions that are unavoidable
  
• Voluntary offsets are driving project innovation and quality standards which are expected to have an influence on changes in the compliance market
• Voluntary offsets are sometimes being purchased in the compliance market to exceed reductions required by law
• The lack of US participation in Kyoto has stimulated the emergence of voluntary actions on the part of US cities and states to legislate emission reductions
• A forestry offset may bring a company into compliance until a more cost effective emission reduction technology advances
• Forestry projects contribute to a “triple bottom line” by creating environmental, economic, and social benefits in addition to climate mitigation

JFK Forum defines new trends in social innovation…

Kennedy School Reynolds Fellow Illac Diaz created innovative programs in the Philippines to address unemployment and poverty (Photo source: http://illacdiaz.multiply.com/)

I was fortunate to attend the JFK Forum at the Harvard Kennedy School this week on trends in social entrepreneurship. This phrase has entered our lexicon along with sustainability as something that everyone wants to be associated with right now, and the ideas are sound and inspiring. A more down to earth way to describe the concept may be social innovation, but the term is not what is important since these are people doing important work to create large-scale change in society.

The panel was titled after the new book The Power of Unreasonable People: How Social Entrepreneurs Are Changing the World, and it featured theorists and leaders from the field. This book was considered so influential, in fact, that it was given to attendees of the World Economic Forum in Davos this year.

The speakers were Leslie Crutchfield, managing director of the Ashoka Global Academy for Social Entrepreneurship and coauthor of Forces for Good: The Six Practices of High-Impact Nonprofits, Pamela Hartigan, managing director of the Schwab Foundation for Social Entrepreneurship and coauthor of The Power of Unreasonable People, Stacey Childress, senior researcher at Harvard Business School, Vanessa Kirsch, founder of New Profit, Inc., and Christopher Gergen, founding partner of New Mountain Ventures and coauthor of Life Entrepreneurs. Rebecca Onie and Illac Diaz are young leaders in this field who also participated.

Here are some of the important points I took from the presenters:

Stacey Childress: social entrepreneurs seek opportunities to address the root causes of problems, rather than the effects of a problem, and they affiliate with larger movements to change the rules of the game. Rebecca Onie: social entrepreneurs leverage the assets of existing systems to create change, and are often able to find simple, elegant solutions to seemingly intractable problems.

Leslie Crutchfield: social entrepreneurs build movements and find points of leverage in all sectors including other non-profits. She also recalled that the founder of Ashoka said rather than teaching a village how to fish, you need to revolutionize the entire fishing industry! Vanessa Kirsch: resources made available by government can be important for success, and too often organizations become focused on sustaining themselves rather than finding ways to create change.

In a highlight of the evening, Reynolds Fellow Illac Diaz described how he was able to address unemployment and poverty in the Philippines through listening and learning from beneficiaries of a Habitat for Humanity program to implement simple and practical solutions that were traditionally overlooked. He emphasized that business plan competitions can connect innovative ideas that often exist locally with necessary sources of capital investment.

In response to the anticipated crisis in non-profit leadership, Christopher Gergen concluded that rather than going out to start new organizations, there is a need to catalyze existing non-profits with these ideas so they can have more of an impact.

Clark University advances environmental sustainability…

The cover article of the Fall 2007 issue of the Clark University magazine notes that the university and its faculty, students, and alumni have long been at the forefront in examining the drivers of environmental sustainability.

A Clark University Environmental Sustainability task force is examining environmental issues on campus to help Clark move into the next decade with a greener profile. Task force initiatives include an annual report card on environmental sustainability and urging the university to join the American College and University Presidents Climate Commitment.

Other initiatives include Campus Sustainability Day and a student campaign to invest in wind power to offset the amount of “dirty” electricity they use, writes Tammy Griffin-Kumpey in “The Sustainable University.” A Clark Energy Awareness Program was founded to educate the campus about energy conservation and begin a dialogue about energy conservation. In addition, the Lasry Center for Bioscience received a Gold Leadership in Energy and Design certification and the new student residence Blackstone Hall is in the process of LEED certification.

The article interviews several faculty members working in the field of environmental sustainability, including Jennie Stephens (see photo by Rob Carlin) who teaches a course that challenges students to think about sustainability in the context of the university as an agent of change. Campus greening is a hot topic, she says, and there’s a push for campus communities to demonstrate good sustainability practices and integrate them into the curriculum and across disciplines, and also to reach out to facilitate societal change.

Stephens researches carbon capture and storage technologies that remove carbon dioxide from coal-fired power plants before it’s emitted into the atmosphere, and she notes that climate change is an urgent sustainability issue. The concentration of carbon dioxide in the atmosphere is increasing as a direct result of human burning of fossil fuels and deforestation, which in turn leads to increasing global average temperatures, rising sea levels, and more frequent extreme weather events, writes Griffin-Kumpey.

Another profile features geographer B.L. Turner II, who teaches “The Earth Transformed by Human Action,” which considers the increasing capacity of humankind to manipulate the structure and function of the Earth’s system. Turner has been involved with a project in Yucatán, examining this coupled system in a tropical forest and how it relates to deforestation. “When the use and cover of some segment of the Earth is changing, it has social and environmental implications,” explains Turner.

Management professor Joe Sarkis says businesses face pressure to be environmentally responsible from government, competitors, consumers, and employees. There are a lot of reasons why businesses would want to be greener, but there debates as to whether or not good environmental responsibility relates to good financial performance. “Companies that are spending a lot to be environmentally sound may not realize the returns for many years, but part of that return is that they exist many years down the line. Companies that look for the easy buck in the short term might lose out in the end,” he says.

Finally, the cover article includes sidebar stories about Clark alumni who are working in the field of environmental sustainability. Colleen Mullaney profiles my work with Armenia Tree Project, Angela Mwandia’s work with the Africa Stockpiles Program of the World Wildlife Fund, which cleans up obsolete pesticides, and Sharon Rowe’s innovative company EcoBags.

Bioneers by the Bay: Connecting for Change

Bioneers by the Bay: Connecting for Change--an annual gathering of environmental, industry and social justice innovators who have demonstrated visionary and practical models for restoring the Earth and its inhabitants--will be held at UMass Dartmouth on October 19-21, 2007. The conference will bring together a diverse audience of students, faculty, entrepreneurs, scientists, and everyday people. The conference will feature world-renowned innovators such as:

* Bill McKibbin--organizer of Step It Up 2007! A National Day of Climate Action and author of The End of Nature

* Dr. Joia Mukherjee--a long-time health care access and human rights advocate in the U.S. and developing countries, co-founder of the HIV Equity Initiative, which served as a model for the Millennium Development Goals

* Robert F. Kennedy Jr.--senior attorney for the Natural Resources Defense Council

* Diane Wilson--co-founder of Code Pink and recipient of Mother Jones's Hell Raiser of the Month and Louis Gibbs' Environmental Lifetime Award

* Van Jones--founder of the Ella Baker Center for Human Rights in Oakland, now working to wed the social justice and ecology movements by promoting the slogan "Green-collar Jobs, Not Jails"

* John Perkins--author of Confessions of an Economic Hit Man

* Simran Sethi--presenter for TreeHugger News and award-winning journalist

* Naomi Wolf--literary star of the third wave of the feminist movement

* Will Allen--organic farming visionary, activist and entrepreneur, author of War on Bugs

In addition to morning speakers and afternoon workshops, there will be evening film showings, an open mic showcasing youth participants and featured artists, wild-edibles walks, veggie-oil bus demonstrations. To register, visit www.connectingforchange.org.

Forbes says going green can be profitable...

Forbes.com has posted a series of articles titled Going Green. In his introduction to the special report, editor Dan Bigman asks what’s a fad and what’s real and concludes “We find it isn't easy being green--but it is possible. And, yes, potentially profitable.”

Some of the lead articles are about BP’s investments in genetics research for new biofuels and mining technologies, how Starbucks hopes to trim its carbon emissions footprint, and which US states are most likely to host the next generation of nuclear reactors.

An amazing photo gallery of green roofs...

Above: The Toyota Roof Garden (Photo: Business Week, Japan)

TreeHugger posted an amazing photo gallery of green roofs all over the world from the Green Roofs For Healthy Australian Cities web site: "TreeHugger loves green roofs--they can be beautiful architectural elements or 'a rooftop food production system that meshes the technologies of aquaponics, vermiculture, rooftop water harvesting, and solar-powered air moisture harvesting.'"