Time is of the Essence

My friend, Darcy Winslow, just returned from a trip to Antarctica.  Sponsored by BP Energy, she and Peter Senge took 50 young leaders to the remote continent to inspire and educate them about saving this place.  Darcy shared her slides and talked about her experience to a small group of friends last night.  The pictures and video were amazing, the message was ominous.  We are on the brink of peril.

So far, all the worst-case scenario predictions from a decade ago have been exceeded.  There is more carbon, more warming, stronger storms, greater sea-level rise, etc. than any of our early models predicted.  If the West Antarctic Ice Sheet was to break off, and there is a significant possibility of that occurring, sea-level would rise an estimated 12-21ft.  That is amazing!!! 

It is estimated that a 1 meter rise in sea-level rise would create 100 million refugees based on the fact that 20-25 percent of the global population live in coastal areas.  Can you imagine the chaos of a 12'+ rise?  The number of US residents alone living with 12’ of sea-level is staggering. 

So what do we do?

Business as usual is not acceptable.  Fundamental change is required.

The mental model most of us have is that our society is the absolute peak of human existence.  That any change means stepping off the peak and somehow represents going backwards.  This is a myth we must reject.

Rather than viewing these changes as giving something up, maybe we should view them through the lens of getting what we want.

In our current system, the primary driver seems to be making money.  We’ve developed a beautiful system for making rich people richer.  Just like in the times of the Pharaohs, those at the top of the pyramid live lavishly, those just below them live pretty well and those at the base, the largest section, suffer.

Is our purpose on this earth service to the modern day Pharaohs?

We have a human birthright to clean air, water and unpolluted bodies; To lifelong education and fulfillment, to meaningful work, to healthy food, health care, and a spiritual life.   We have EVERYTHING we need right now to do that. 

My guess is that everyone reading this right now has a higher standard of living than the wealthiest Kings and Queens from 150 years ago.  How much is enough? When do we change the goals of the system?

Spreading the Word

I spoke last week at the Western Regional Conference of the American Accounting Association. This was a group of accounting educators and researchers, most of whom hold PhDs and teach accounting to college students.  My talk was on Sustainability and the Triple-Bottom Line.

Since you are reading this blog I suspect you have an interest in sustainability.  Living in Portland and working in my regular circles, I usually assume a fairly high base level of sustainability knowledge in the people I meet.   Maybe you do as well. 

However, when I lecture or teach classes on sustainability, I’m typically shocked at how low the level of understanding is regarding the issues driving the need for change.  For example, I typically include something about peak oil as one of the phenomena driving change.  At this point, I usually ask the audience if they’ve heard of peak oil in order to gauge how to proceed with the discussion and I’m usually shocked that only 5-15 percent of the people are aware of peak oil.  No wonder change is happening so slowly.

While simply knowing this information isn’t usually enough to drive change, it is an important first step.  Accordingly, we must find ways to engage with more people, outside our normal boundaries.  I am going to schedule more classes and presentations so I can get out and engage more people.

Please contact me if you would like me to give a presentation or teach a class in your area or to your firm, or if you need help developing your own presentation so we can go out and help business leaders understand the urgent need for change.

Systems Thinking

“If a factory is torn down but the rationality which produced it is left standing, then that rationality will simply produce another factory.  If a revolution destroys a government, but the systematic patterns of thought that produced that government are left intact, then those patterns will repeat themselves. . . . There’s so much talk about the system.  And so little understanding.”

–Robert Pirsig, Zen and the Art of Motorcycle Maintenance

I am reading Thinking in Systems by the late Donella Meadows.  I highly recommend this book to change agents. 

Donella defines a system “as an interconnected set of elements that is coherently organized in a way that achieves something.”  Accordingly, a system must consist of three kinds of things: elements, interconnectedness and purpose.    

So what is our purpose as humans? What is the purpose of our economic system and our businesses? What is your purpose?  While these are existential questions, they greatly impact the world we see.

My friend, Sharif Abdullah, will sometimes ask groups to imagine a world in which children are the most valued treasure.  He invites participants to share what that world might look like – outstanding and varied educational opportunities, economic security for families, parents with time to engage, safe and healthy communities, rich age appropriate activities, time to be a kid, etc., etc, might be group responses. 

Sharif then invites people to imagine a world where our elders are the most valued treasure and the participants create a similar, albeit different list of an idyllic world.

Finally, Sharif invites people to imagine a world where making money is the most valued treasure.

As long as the dominant system goal is to make money, then all our other problems will be subjugated to this higher power.  

What if the bottom line isn’t the bottom line?

I saw Dr. David Suzuki last week and he suggested the real bottom line for a human economic system should be the ecological, social and spiritual well-being of all.  

What might our economy look like if that were in fact the goal of our system?

Successful Business Kit

We just published this book to help guide start-up businesses.  It contains useful information on:

1. The choice of legal entity
2. Registering with the tax authorities
3. Accounting and bookkeeping considerations
4. Payroll taxes and reports
5. Fiscal year-end considerations
6. Income tax considerations
7. Cash planning and forecasting
8. Credit and financing your business
9. Insurance considerations
10. Leading towards sustainability
11. Your role in the voluntary carbon market
12. LEED
13. Eco-balances
14. Selecting professional advisors

It is somewhat tailored for Oregon businesses but would be helpful for any start-up business.   

To request a copy, give us a call at the TriLibrium office.

Small Business Incentives in the Recovery Act

The $787 billion American Recovery and Reinvestment Act of 2009 provides nearly $300 billion in tax relief.  As a stimulus package, over $280 billion in tax relief is targeted for 2009 and 2010.  Keeping with the Obama administration view that small business is the principal engine for job growth, the act has some nice benefits for small to medium size businesses.  Please note that this is a high-level overview and you should probably see a CPA or qualified tax accountant for more information about your specific situation.

CAPITAL  EXPENDITURES

One benefit for small business is the ability to immediately expense major capital purchases through the use of Code Sec. 179 and bonus depreciation (Code Sec. 168(k)).  Code Sec. 179 is limited to small business as it begins to phase out when a company spends more than $800,000 on eligible purchases.

First-year expensing was once limited to $25,000 per year and then increased to $100,000.  In 2008, the limit was increased to $250,000, and the act extended this limit through 2009.    Businesses that qualify should take advantage of this opportunity because the limit reverts to around $125,000 in 2010 with a $500,000 phase-out and could go even lower in 2011.

NOL CARRYBACKS

The act allows corporations, partnerships and sole proprietors to carryback 2008 losses for five years rather than the two years allowed in the previous law.  NOLs can provide an immediate and significant cash infusion for a cash-starved business running at a current loss if they had income in any of the previous five years.

I was consulting with a business last week who was struggling with cash flow in this current economic environment and was able to identify over $40,000 of cash sitting in his 2008 loss.  His current CPA firm had been sitting on their S-Corp return for over 6 weeks (crappy service but that is a blog entry for another day).  I recommended he light a fire under them or bring it to TriLibrium to tap into this tax refund ASAP.

The five year carryback only applies to companies with average sales of less than  $15 million over a three year period.  It should also be noted that if a business has already filed their 2008 return and elected to forgo the carryback, there is a provision in the act that allows taxpayers to revoke that election by making a new election before April 18, 2009.

QUALIFIED SMALL BUSINESS STOCK

Owners of qualified small-business stock could previously exclude 50 percent of the realized gain on the stock if the stock was acquired when issued and held for five years.  The act increased the exclusion to 75 percent of the gain, for stock issued after February 17, 2009 through the end of 2010. 

I should also point out that start-ups should consider the benefits of Code Sec. 1244.  I see far too many lay people choose the LLC model without understanding the options and benefits of other forms of business.

S CORPS

I don’t want to go into all the details but will say that the act has some special rules that would apply to C corporations that converted to an S corporation in 2001 or 2002 and are facing downsizing and need to unload assets.

ESTIMATED TAXES

The safe harbor for estimated taxes was reduced from 100 percent to 90 percent of prior year’s tax, or 90 percent of the current year’s tax.  This safe harbor is limited to taxpayers with less than $500,000 of adjusted gross income, where more than 50 percent of income is derived from a business with an average of less than 500 employees in 2008.  This benefit applies only to 2009 but should lower estimated tax payments for many people.

Twin Crisis – One solution

In 1999 I marched at the WTO in Seattle with my then 5-year old daughter.  I’m proud that I took to the streets to protest the corporate agenda.  It was obvious to me back then that our world was headed in the wrong direction.  My chief concerns at the time were the large and growing environmental problems as well as corporate power.  Both problems have only worsened over the ensuing 10 years.

Right now, tens of thousands of protestors are again taking to the streets, this time in London at the G20 summit.  The twin crisis of climate change and global recession are at the heart of the matter.  Nothing less than the future of the planet may be at stake.  Are the world leaders listening to the people or the corporations?

The beauty of these twin problems is that it is possible to solve both of them simultaneously.  We can solve the recession and address climate change with a Green New Deal.  This is the beauty of sustainable business and a sustainable economy.   If we do this right, we fix both problems at the same time.  If we do it wrong, fixing one exasperates the other.  Given the corporate agenda, I fear that we’ll work to jump start the old economy - carbon emissions be damned.

Here is the problem – Climate change won’t wait and doesn’t give a damn about the global economy.

Just a month ago, the world's climate scientists met in Copenhagen and concluded that “the worst-case IPCC scenario projections are being realized.  … including global mean surface temperatures, sea-level rise, ocean and ice sheet dynamics, ocean acidification, and extreme climatic events.”

Steven Chu, the Nobel Prize-winning scientist who has been appointed Energy Secretary by Barack Obama, says: "I don't think the American public has gripped in its gut what will happen. We're looking at a scenario where there's no more agriculture in California. I don't actually see how they can keep their cities going either."  

If you think we have economic problems now, I think we’ll look back to now as great times if the people of LA, San Diego and SF are forced to leave their cities and places like Florida and NYC slip under the sea due to rising oceans.

A Green New Deal has the potential to put people back to work, solve our looming energy problems, clean up the environment, address climate change and refuel Main Street.   Time is running out.  We need to act now and we need bold progressive leadership.