Return on Sustainability

Kudos to my Bainbridge Graduate Institute (BGI)colleague Kevin Wilhelm, for the publication of his new book Return on Sustainability.  Kevin shows the clear business case for sustainability and dealing with the climate crisis proactively.

Kevin highlights the risks and opportunities climate change poses for business.  As I've stated in previous posts, there are opportunities for companies that 'truly' embrace sustainability and Kevin digs into the details including:  enhanced brand value; improved customer, employee and shareholder relations; and better climate performance all at the same time.

As Kevin points out, climate change touches on every aspect of a business: Energy; transportation; innovation; waste; supply chain; employee retention and morale; investor pressure; brand value; customer loyalty; market opportunities; cost savings; tax; regulatory; carbon trading; and leadership.  

Given all that, don't you think a comprehensive strategic business plan should address climate change is a serious manner?  What we learn at BGI, and what I teach my clients is how to address sustainability and climate change in a comprehensive way.  Kevin's new book helps bring that understanding to a wider audience.

Treating climate change as an ancillary issue creates mostly costs for business whereas addressing sustainability comprehensively allows a company to capture the opportunities.

Think of the technological revolution back in the 80s.  Companies that embraced technology in a strategic and comprehensive manner left their competition in the dust.  Those who were slow on the uptake were forever relegated to playing catch up.

Single-Payer Health Care

We are over a year into this crisis and we have yet to see a single reform beyond massive government spending programs designed to restart the same system that created the mess.   Isn’t that akin to using a defibrillator on a 75-year old, 1,000lb, diabetic smoker?

While I’ve been advocating the elimination of Wall Street, the implementation of a Carbon Tax with a 100% dividend and the 32-hour work week, today I’ll weigh in on health care reform.

One fundamental change I support [and we don’t hear enough about] is the Single Payer Health Care system. 

Single-payer is the system that removes private insurance companies from the picture; the government pays all the bills, but health-care delivery remains private. People still get their choice of doctors and hospitals. Single-payer reduces administrative costs and eliminates expenses for-profit insurance companies add to health-care delivery. 

How nice it would be to never have to worry about health insurance again!

This would benefit everyone, including business.  Managing health care plans is an expensive proposition for business.   Beyond the high cost of coverage are the hidden costs of shopping for insurance, evaluating options, legal and tax compliance, HR overhead, employee benefit education and communication and other administrative costs.

Despite being closed out of the debate by corporate media, single-payer is developing critical mass.  H.R. 676 "Expanded and Improved Medicare for All," has 65 co-sponsors in Congress.  I myself won’t vote for a politician who doesn’t support universal health care.  Groups like Single Payer Action (I am a paying member) are growing and taking action.

I believe all of us suffer as a result of our for-profit health care system.  We need a system where everybody is in, and nobody is out.  Single-payer is the solution.  I hope you’ll take action (contact Congress, talk to people, get educated, tell your story, etc.)  right now, to help further single-payer.

I'm opposed to the Cap-and-Trade system

I believe we need to reduce greenhouse gas emissions and we need to do it quickly.  I also believe a market solution is the best solution. While I laud the goals of carbon reduction, I believe a Cap-and-Trade (CAT) system is an unnecessarily complicated scheme only Wall Street could love (and politicians afraid of the word “tax” and US citizens to dumb to understand CAT is a tax.) 

CAT is essentially a carbon tax wrapped into a security.  Do we really trust Wall Street and the financial speculators to responsibly handle a trillion dollar market created to equitably solve a social problem?  I don’t.

Instead, I support a simpler, more transparent, and easier to understand, straight-forward Carbon Tax with 100% dividend distribution to U.S. citizens.  With a 100% dividend distribution, this tax would be revenue neutral for the government since all proceeds would be returned to the people in the form of a rebate.

The tax would be collected as the fuels enter the US market and that would be it.  The additional cost would flow through the system and affect all CO2 emitters.  This would internalize the price of polluting, making it more expensive to emit CO2. 

Since all monies collected would be refunded, those that pollute less than average would actually get a net rebate while those who pollute more than average would be the ones ultimately paying more.

The tax code is regularly and successfully used to promote or discourage certain behaviors.   I believe a simple, revenue neutral Carbon Tax is the way to reduce carbon quickly and fairly.

A Carbon Tax is supported by both Al Gore and NASA scientist and climate expert Jim Hansen.

Classes for CPAs and business advisors

During May and June I will be teaching two classes which will qualify for Continuing Professional Education (CPE) credits for CPAs:  

• Sustainability for CPAs: What it means to you, your clients and the profession
• Advising the Startup Business

Both courses will qualify for 4 hours of CPE.  The classes will be offered in Portland and Lake Oswego.  The CPE sponsor is BrownBagCPE, a local group that provides live and affordable CPE in Oregon and SW Washington.

The feedback from the Sustainability Course has been outstanding.  Please contact me if you would like more information or have an interest in having this class taught in your area.

Last week I had lunch with a salesman from XYZ Company seeking TriLibrium's business.  XYZ Company is probably ranked third in an industry dominated by two giants. 

As I was looking at his card while getting ready to send a thank you note, I was thinking about XYZ Company as a business and my thoughts were: 

1.       Why should I care about XYZ?

2.      It must be a tough and competitive market battling the two giants, especially when you compete on price.

3.      What are you doing to be sustainable?

I sent my thank you and included the following note:

“… I was thinking about XYZ and your business strategy and how a company like yours could benefit by embracing sustainability as a strategic business driver.

The market place is rapidly changing and I believe the future will NOT resemble the past. 

·         Your next generation of employees (Gen Y) care deeply about who they work for and the values of the company

·         Your customers care about this as well and will be increasingly, at least partially, basing their decisions on these factors

·         Sustainability is an excellent differentiation strategy.  Do it now and be a leader, do it later and you will inevitably play catch up forever.

·         Managing carbon emissions and the cost of polluting will be rising and is likely to be regulated.

·         “True” sustainably driven organizations have the highest relative market values

In many ways, sustainability and traditional business and management approaches are as different as night and day.  Appending the strategic plan with “green” practices is helpful, important and appreciated, but ultimately doesn’t go far enough.

I think every business has an opportunity to embrace sustainability as a strategy.  Sustainability has the ability to be a disruptive business innovation and in that environment, you are either a leader or you risk being left behind. …”

As readers and visitors to this blog, I would appreciate your thoughts and comments. 

 

Let's Talk Energy

I attended The Natural Step breakfast meeting this morning.  The topic was Peak Oil and John Kaufmann, Senior Policy Analyst with the Oregon Dept. of Energy gave an amazing presentation.

If you are not aware of Peak Oil, then I highly, highly recommend you get yourself educated about the science and the implications.  I believe we may have already peaked, or that the peak is imminent.  He said the consensus is that we reach Peak in 2-5 years if we haven’t already.  Here are some resources for more information:  www.hubbertpeak.com, www.peakoilportal.com, www.theoildrum.com.

One of the key things I’ll share is that this crisis is urgent and that we ought to be using the precious liquid gas resources we do have to bootstrap our way to the next system.  It takes lots of fossil fuel to build electric trains, retrofit and build buildings for zero energy use, and put in the grid and generators that will provide clean and renewable energy in the future.  We have really squandered the last 25-30 years and we cannot afford to squander the next.

Every type of non-renewable energy source will peak and decline this century: Petroleum, natural gas, coal, uranium.  We currently get 4 percent of our energy from renewable sources (wind, hydro, solar, geothermal, bio, etc.) and almost none of that fuels our transportation.  96% of our energy supplies will peak or be exhausted this century.  Ninety-six percent!

I’ve never really thought about how much energy we use or what life might be like without it. I recently heard a couple of examples that put our energy use in context.

How much energy does it take to run a single 100 watt light bulb?  Have you ever been on one of those bikes hooked up to a light bulb?  It takes a very physically fit person biking at nearly full speed to power a single light bulb.  Multiply that by all the lights and electrical devices in your home and you probably have the equivalent of at least 50 human slaves working for you in the form of energy.

How much energy is in a gallon of gas? Try this, fill your tank with a gallon of gas and drive until you run out.  How much energy was in that gallon?  Try pushing the car home to find out.  Similarly, fill a chainsaw with a gallon and cut wood until you run out.  Now repeat using an axe or saw.  You’ll find that a gallon of gas can do the work of more than 100 men.  I had someone tell me today that 3 tablespoons of gasoline will do the equivalent work of one person working an 8 hour day.

 

“True” Commitment

I’ve been writing about the A.T. Kearney report that discussed their findings that the market rewarded “companies who show a ‘true’ commitment to sustainability.”  What is a ‘true’ commitment to sustainability and what does that look like?

To me, using sustainability as a strategic driver means you make that focus primary.  Making money and being financially sound are also important but if they become the primary focus or raison d’etre, I believe you’ll make short-term decisions and when the two conflict, you’ll likely make the wrong choice.

Another sign of “true” commitment is leadership and a continuous drive for improvement.  I toured Rejuvination's manufacturing facility this week and learned that they sit down each year and evaluate all areas of their business to ensure they are using the current best practices.  Is there a better chemical, process or material they should be using, if so, they change.  

One thing I’m beginning to use as a criteria between a deep and real commitment to sustainability and a lesser, questionable commitment is the greenhouse gas (GHG) inventory.

No GHG inventory and no plans to do one = Questionable commitment.  Are they just greenwashing?

Taking action to minimize your waste stream is important. The largest and arguably most dangerous waste streams are your unseen and unmeasured carbon emissions. 

Dr. James Hansen, the NASA scientist and climate expert, recently wrote that “our planet really is in peril” as a result of our carbon emissions.

Will 2009 be the year you do your GHG inventory, or are you prepared to be accused of greenwashing and lose your brand and market position?

Greenwashing

Yesterday I wrote about the A.T. Kearney report that discussed their findings that the market rewarded “companies who show a ‘true’ commitment to sustainability.”  What is a ‘true’ commitment to sustainability and what does that look like?

Let me start with a true story about a ‘fake’ commitment. 

I was recently introduced to an executive for a ‘green’ online website.   I was excited to meet her based on her business card and initial ‘image’.  I visited their website before our meeting and could immediately smell a fake.

Visiting their website I could instantly tell they didn’t get it.  While it was an aesthetically pleasing site with the appearance of some good branding, it was clear they didn’t get sustainability and I predicted failure.

•  They were promoting consumerism
•  Their online articles were fluff
•  There was no information about who they were, where they were located or an easy way to contact them
•  There was nothing about their story
• Nothing about their commitments or goals to social justice or sustainability
•  There was nothing there to make me care

I met with the executive and shared my thoughts in a polite manner.  I sent her a mini report after our meeting and here is part of her email response:   

“I Know, I know, we aren't transparent and all the other stuff you mentioned...but in this economy it is all about making money.”

I stand by my prediction.

While a company like this may temporarily grow, it won't be sustained as savvy consumers really figure out the motivations, and how sustainable is that?  A failing company takes lots of people down with it including vendors, employees and investors.

More to come tomorrow.

Green Winners and Real Sustainability

A recent report by the consulting firm A.T. Kearney found that “companies who show a ‘true’ commitment to sustainability appear to outperform their peers in the financial markets.”

Two key takeaways for me were the advantages derived from long-term thinking and that this premium value is only created by a “true” commitment to sustainability. 

Long-term thinking was 5+ years for public companies.  I guess that is an improvement for business leaders who have been primarily focused on quarter to quarter results.  But is this really the appropriate time horizon for sustainability?  No way!

I caution people about the use of the term sustainability.  It is a goal to strive for, but I believe true sustainability needs to be determined over the course of at least a few generations, if not centuries or millennia, and it is therefore misleading to say ______ IS sustainable.

Canada and many other countries actually have standards related to environmental claims.  Here is the standard for Canada:

The concepts involved in sustainability are highly complex and still under study. At this time there are no definitive methods for measuring sustainability or confirming its accomplishment. Therefore, no claim of achieving sustainability shall be made.
CAN/CSA-ISO 14021, Clause 5.5

According to Arie de Geus in his book the The Living Company, the average lifespan of Fortune 500 companies he studied was 40-50 years.  From birth to demise, whether the end comes in the form of failure, merger, being acquired or broken into pieces, the average was under 50 years.  It is well known that start-ups have an even higher mortality rate.  One study of Japanese and European firms, regardless of size, indicated an average life of just 12.5 years.   How sustainable are those numbers?

The book went on to highlight the attributes of companies who have been around for over 300 years.  There are actually companies operating today who have been around for over 700 years! Now that is starting to look sustainable.

In studying these long-lasting companies, four common traits emerged as important factors: 

1.       They were sensitive to their environment

2.       They were cohesive, with a strong sense of identity

3.       They were tolerant

4.       They were conservative with their financing

That last one seem particularly important right now.

Tomorrow I’ll comment about the report’s findings on the commitment to “true” sustainability.

Time to ACT

Dr. James Hansen, head of the NASA Goddard Institute for Space Studies and one of the leading experts on climate change wrote a Sunday op-ed for The Observer.

The picture is not pretty - "our planet really is peril" he writes.

Are we going to heed his warning?

"Our global climate is nearing tipping points.  Changes are beginning to appear, and there is a potential for explosive changes with effects that would be irreversible - if we do not rapidly slow fossil fuel emissions over the next few decades."

"If we do not change course soon, we will hand our children a situation that is out of their control, as amplifying feedbacks drive the dynamics of the global system."

I hope you have an emotional reaction to this information.  I did.  I woke this morning thinking what more can I do?

While there are a number of individual actions I can and will take, I still believe the greatest leverage point occurs at the system/paradigm level.  We must change our economic system to a sustainable system and we need to do it fairly quickly.

Dr. Hanson calls the trains carrying coal to power plants "death trains."  "Coal-fired power plants are factories of death" he writes.  Every product you buy or sell should make you think about the embedded carbon. 

How might we get off the "death train?"

A Hopi Elder Speaks

"You have been telling the people that this is the Eleventh Hour, now you must go back and tell the people that this is the Hour.  And there are things to be considered . . .

Where are you living?
What are you doing?
 What are your relationships?
Are you in right relation?
Where is your water?
Know your garden.
It is time to speak your Truth.
Create your community.
Be good to each other.
And do not look outside yourself for the leader."

Then he clasped his hands together, smiled, and said, "This could be a good time!"

    "There is a river flowing now very fast.  It is so great and swift that there are those who will be afraid.  They will try to hold on to the shore.   They will feel they are torn apart and will suffer greatly. 

    "Know the river has its destination.  The elders say we must let go of the shore, push off into the middle of the river, keep our eyes open, and our heads above water.   And I say, see who is in there with you and celebrate.  At this time in history, we are to take nothing personally, Least of all ourselves.  For the moment that we do,  our spiritual growth and journey comes to a halt. 

    "The time for the lone wolf is over.  Gather yourselves!  Banish the word struggle from you attitude and your vocabulary.  All that we do now must be done in a sacred manner and in celebration. 

    "We are the ones we've been waiting for."

-- attributed to an unnamed Hopi elder

Hopi Nation

Oraibi, Arizona

Economic bubbles

The cornerstone of the CPA profession is independence, integrity and objectivity.  I wish I could tell you that our financial system was going to be okay and that President Obama and our elected and appointed leaders in Washington were going to save the day.  Unfortunately, I'm highly skeptical and I have obligations to my friends, clients, family and readers to share my concerns.  Your future depends on understanding these matters.

Economic bubbles exists when asset price inflation rises beyond what income can sustain.  The ride up a bubble is exhilarating as everyone thinks they've found a fountain of gold and the ride down is devastating, as the economic system collapses and the artificially inflated values people assigned to certain assets retreat to their actual value.

One of the most famous bubbles was the Dutch tulip mania that peaked in 1637.  On the run up, people actually believed a single bulb was worth more than a house.  

We've actually experienced two bubbles in the past ten years (dot.com and housing).  These were partially fueled by cheap credit (corporate, governmental, private).

Ludwig Von Mises (1881-1973), an influential Austrian Economist wrote:

“There is no means of avoiding the final collapse of a boom brought about by credit expansion.

The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

If this is true, current government actions to expand credit (print a $Trillion and get banks lending again) will ultimately lead to the collapse of the US currency.  A collapse occurs when people no longer have confidence in a fiat currency. Historically, thousands of currencies have collapsed.  Given time, is it possible that they all will? 

It would be unfair to freak you out without providing a solution.  The first step is to get educated and then to take action.  Two items I'm imploring you to read/watch are 

1. Chris Martenson's Crash Course.  The first sentence on the home page reads, "Ready to learn everything you need to know about the economy in the shortest amount of time?"  
2. David Korten's Agenda for a New Economy: From Phantom Wealth to Real Wealth

I'm on Chapter 17 of the 20-Chapter Crash Course, and I'm in Section 2 of Korten's book.  

Real solutions? - Perhaps

I'm an idea guy.  That is one of my core strengths so I always find myself looking around for ideas that can help solve the world's problems and create a place that works for all.

I have two things to share this morning.  First, is a link to Chris Martenson's Crash Course.  The first sentence on the home page reads, "Ready to learn everything you need to know about the economy in the shortest amount of time?"  

This is an entertaining and highly informative 20 chapter video course offered in very digestible 5-10 minute segments.  I'm on Chapter 14 so I don't know how it concludes but I recommend you check it out.  I was hooked after watching the first 10 minutes.

The second item is a link to Common Good Bank.  Their goal is to create a new type of institution for a sustainable economy and to provide the "social agenda with a bank", rather than a bank with a social agenda.  You can visit their site to get more information but on the surface it looks like a good idea and I've signed up as a supporter.

I will remind readers that where you bank matters.  Not all banks are created equal.  A scholar (forgot his name) gave a lecture while I was at BGI and asserted that the most powerful leverage point for a consumer to bring about sustainable change was the decision of where to bank.  

I can't recall the entire list but I do recall where you buy your gas was #2 (Exxon Mobile = BAD) and that where you get your food was somewhere in the top 5.

Do you still keep your money in global corporate banks?  Aren't they part of the problem?

Don't Fix Wall Street, Replace It

That is David Korten's message and you can read his short essay over at Yes! magazine.  (That's a picture of the Wall Street bull as seen from the backside in case you are wondering.)

I've also been reading Dr. Riane Eisler's (The Chalice and The Blade, The Real Wealth of Nations, et al) recommendations about investing in a new "Caring Economy."  According to her,

"we should create and subsidize more jobs in childcare, education, healthcare, eldercare, and other “caring industries” through the Job-Creation and Economic Recovery and Reconstruction Plan. This will quickly stimulate our economy, help families, radically reduce poverty and violence, reward women’s economic contributions, save billions in crime and prisons -- and is an essential investment in the “high quality human capital” needed for our post-industrial economy." 

You can read Riane's Roadmap here.

I read The Real Wealth of Nations a few summers ago and highly recommend it.  In case you aren't familiar with Dr. Eisler, here is a little bit about her background and credentials from her website.  

"Her newest book, The Real Wealth of Nations: Creating a Caring Economics – hailed by Archbishop Desmond Tutu as “a template for the better world we have been so urgently seeking,” by Peter Senge as “desperately needed,” by Gloria Steinem as “revolutionary,” and by Jane Goodall as “a call for action” – proposes a new approach to economics that gives visibility and value to the most essential human work: the work of caring for people and planet.

Dr. Eisler is the only woman among 20 great thinkers including Hegel, Adam Smith, Marx, and Toynbee selected for inclusion in Macrohistory and Macrohistorians in recognition of the lasting importance of her work as a cultural historian and evolutionary theorist. She has received many honors, including honorary Ph.D. degrees, and is included in the award-winning book Great Peacemakers, as one of 20 leaders for world peace, along with Mahatma Gandhi, Mother Teresa, and Martin Luther King."

TriLibrium and our GHG Reporting

Yesterday I mentioned that a TriLibrium stakeholder requested information about our GHG claims.  Here is our response.

TriLibrium will use the GHG Protocol developed by World Resources Institute.  We will include both direct and indirect emissions in our footprint and will report on the scope of our boundaries at that time.  We intend to include all employee travel.  We will probably exclude customer travel.  We will probably exclude embedded carbon in purchased items due to the cost/benefit of gathering that data.  We intend to offset 150 percent of our measured GHG footprint and believe this buffer is more than sufficient.

Our company began operations October 1, 2008.  Our current office uses 100% renewable electricity purchased from Pacific Power and we pay additional money with each bill for Salmon Habitat Restoration.  We recycle 100 percent of materials that can reasonably be recycled in Portland including glass, metal, cardboard, plastic, and paper.  We buy in bulk and reduce, reuse and recycle where we can.  We currently put out just one small garbage can per month of solid waste.

Since inception, we have logged all employee travel whether by car, bike, train or bus.  Based on our experience, this is likely to be 80 percent or more of our GHG footprint. 

We will include natural gas consumption in our footprint inventory and will offset that accordingly.  We have not selected our offset provider.  I have personally used The Climate Trust to offset my personal GHG footprint.

We intend to do an annual CSR report complete with a GHG inventory sometime this summer and then each subsequent summer.  We will select an offset provider at that time based on best practices.  Colleagues at the Bainbridge Graduate Institute developed COPEM (Carbon Offset Provider Evaluation Matrix) which we will use to guide our selection.

As noted above, we will not include customer travel in our GHG footprint.  We have excluded it from our inventory because it is hard for us to capture this data and believe it is primarily our customer’s responsibility and not ours.  We are aware of this issue however and provide our customers with ways to reduce their travel when engaging with us through the use of secure, electronic data sharing portals, mail, fax and other means. 

What are you doing about climate change?

Every single business needs to be taking action.  

The first step is to conduct a greenhouse gas (GHG) inventory.  Have you done that yet? 

The subsequent steps are to reduce emissions and then offset the remaining ones.  By conducting a GHG inventory, you will discover ways to make positive changes.  This is an iterative process so progress can be measured and reported.  

It is the transparency of the process and the reporting that helps provide credibility.  If you aren't transparent you will lose credibility and might be accused of greenwashing.  How sustainable is that? How long do you think that type of firm will survive in this market?

Stakeholders are far more sophisticated these days and are asking legitimate questions.  On Friday last week I sent an email announcement formally introducing TriLibrium and our website.  One of the receipients noted our GHG offsetting claims and asked the following questions:

Upon review of your website you mention that you will be "offsetting" your GHG emissions.  I have a  few questions/comments:  How are you determining your GHG Emissions?  What Scope are you defining and what are your boundaries?   As a matter of transparency, it might be advisable to define how you are calculating your GHG Emissions.  Also, it may be advisable to indicate how you are offsetting your GHG Emissions.  What company you intend on buying offsets from, etc.

I'll share my answers with you tomorrow.

What Matters

As I said in my last blog post, we measure and therefore focus on the wrong things. If you manage performance using the wrong metrics, you will get the wrong results.

I would suggest that all of our current economic indicators are highly suspect guides to a sustainable economy since the source and justification for the metrics comes from the Wall Street economy. Even the employment numbers are suspect because they lack any qualitative values.

The New Economics Foundation has created the Happy Planet Index which measures our well-being divided by our ecological footprint.  Well-being is measured as the product of Life Satisfaction x Life Expectancy.

Life expectancy is an indicator for our overall health.  By putting our ecological footprint as the denominator, we can drive the index up by improving life with a smaller footprint.

As you'll notice, this index has little to do with financial indicators and who cares - in the end we don't really care about money, just the things money provides.  And as they say, money doesn't buy happiness.

Here are some examples of nonfinancial indicators we might want to measure:

• Voter participation rates
  
• Divorce rates
• School attendance and graduation rates
• Open park space
• Community service
• Percentage of home ownership
• Percentage of locally owned businesses
• Number of clean streams and rivers
• Youth involvement
• Suicide rates
• Percentage of organic food
• Incarceration rates
• Obesity rates
• Etc., etc., etc.

These factors impact the quality of our lives.  It is time we stop worrying about the Phantom Wealth numbers generated by Wall Street and Washington, and start focusing on the numbers that help us get where we want to go.

What We Measure Matters

The most important number to the powers that be is the GDP. The GDP is how Wall Street and the government measure the health of our economy but this number is seriously flawed for two important reasons.

First, it measures negative events as positive additions to GDP - Car accidents, divorces, and oil spills all add to the GDP.

Second, it fails to include or account for positive activities if money doesn't change hands - taking your neighbor to the doctor doesn't count while hiring a stranger to drive a cab does. Which do you think makes a better society?

As an accountant, I'm keenly aware that what we measure matters. In my MBA program, I really appreciated the work of Mark Anielski, an Adjunct Professor at the Bainbridge Graduate Institute and the author of The Economics of Happiness. Mark has developed a "Genuine Wealth Indicator" that can help any community measure its wealth across a number of indicators in order to measure those things we actually want.

We need new measurement tools if we are going to achieve sustainability. It is high time we stopped using GDP as a tool to measure our economic progress.

$3 Trillion, get ready to be ripped off

I woke up to a liberal talk radio host interviewing a conservative FOX business guy and their prediction and conclusion was that next week, the government should and would set up a new federal bank, capitalized with $3 TRILLION to buy up all the bad loans in the system. What the hell?

Even before the latest crisis, it is a Wall Street myth that the old economy worked. Sure, it made some people fabulously rich and it did supply many needed goods and services, but even more glaring is the fact that it failed on so many levels (Think of unmet NEEDS and environmental and social havoc). Spending trillions of dollars to restore the economic system to its previous condition is a reckless waste of time and resources.

Have you gotten your copy of David Korten's new book Agenda for a New Economy: From Phantom Wealth to Real Wealth? Here is a link if you need one.

I'll leave you with two good links today.  First, is a real nice review of David's book so you can get a taste of what is covered.

Second is an excellent article by Prof. John McMurtry from Global Research on the current problems and the choices we face. Near the end he concludes:

The most instructive moments in America’s history have been forgotten - for example, the 1776 American Revolution itself which Benjamin Franklin said was most of all to wrest back control over the issuing of money from the private Bank of England; Abraham Lincoln’s issue of “greenbacks” to go over the head of the New York bankers’ demand of 17% compound interest to fund the war for the Union; and FDR’s historic New Deal which guaranteed minimum economic security and put people back to work in rebuilding the real economy. Yet not even the Depression has demanded the economic reset now required to resolve the coinciding energy, environmental, employment and financial crises confronting America and the world.

Agenda for a New Economy

Let us be honest.   We don’t need to fix the old economy – We need to create a new economy.

David Korten’s new book, Agenda for a New Economy: From Phantom Wealth to Real Wealth, has been in bookstores less than 10 days and I implore you to get this book and read it immediately.  We have a unique opportunity to change this system and create a sustainable, life-affirming economy.  We must rid ourselves of the Wall Street menace. 

Last night I attended the first of a 4-session workshop to explore David’s new book.  There were at least 30 people in attendance which seems huge given the fact the book was launched January 23^rd, 2009!

We started by watching David give a presentation at Trinity Wall Street, a church in the heart of America’s financial district on the 23rd, which coincided with the launch of his book.  If you do nothing else this week, watch this presentation.  You can fast forward to 6:15 to see the introduction of the presentation, followed by a short video bio.  He concludes at 59:30.  There is a Q&A that follows.

I’ll be writing more about this in the future but let us take this opportunity to get to the root cause of our problem.  It is time to treat the system, not the symptoms.  The system solution is to fix the system so the problems go away.  Isn’t that what we learned in business school?

What about a 32-hour, 4 day work week?

There is a simple, comprehensive system solution you won’t hear about. (I wonder why that is? Could it be that the powers that be are heavily invested and benefit immensely from THIS system?)

This one simple action would:

• Increases the number of jobs. 
• Provide more time off for this overworked, over stressed nation.
• Provide more family time for parents and children.
• Decrease overall commuting which both reduces our dependence on foreign oil and greenhouse gas emissions. 
• Should decrease rampant consumerism as overall incomes decrease.

The late Donella Meadows wrote a famous paper about Leverage Points and places to intervene in a system. Changing the rules of the system is a fairly significant leverage point. This is one rule change that would benefit working class Americans.

Truth and honesty

We are all part of a system that is devouring the world. We know this to be true yet we deny it.

I saw an interesting quote the other day regarding truth:

There is the truth of authority and there is the authority of truth.

Which one do we believe when they conflict? Unfortunately, I think most of us follow the truth of authority.

While we know continued economic growth is a problem and that our consumer based take-make-waste culture cannot be sustained (authority of truth), we all listen to authorities (Governments, President Obama, mainstream economists, bankers, media moguls, corporations, etc.) who tell us otherwise and offer us more of the same solutions. Do we really believe we can grow our way to peace, prosperity and sustainability?

Morpheus, in the movie The Matrix, offers Neo a choice between a red pill and a blue pill. The red pill will allow Neo to see the truth while the blue pill will allow him to continue his life in ignorant bliss (Ignorant of his own slavery). When given the choice, do you live on in ignorance (and potential bliss) or do you lead what Aristotle called 'the examined life'...

If we keep doing what we are doing inside the same system, we will continue to get the same results. This is the truth. Are we being honest with ourselves?

It is easy being Green

My neighborhood Trader Joe's provides every customer who brings in a reusable bag with an entry ticket to a weekly drawing for $25 gift certificates. A few weeks back they counted up the number of entry tickets and it totaled 14,634 in one week!!! That is amazing.

I've been reusing and refusing bags for over 30 years now and I estimate my own savings would be enough to fill a small swimming pool with bags. Just think how much unnecessary packaging could be saved if we all just brought our own bags?

Without knowing the cost of bags I would still estimate Trader Joe's saves at least $1,000 per week when you add in the full cost of ordering, storing and handling new bags compared to when customers bring their own.

My coop makes a contribution to community groups and lets customers vote by placing a bean in a bucket. Both approaches appeal to me a lot better than the old standby of giving the consumer $.05/bag off their total.

It aint easy being Green

I'm trying to locate 9" x 12" and/or 10" x 13" envelopes. I would like to find the highest post-consumer recycled content as possible. I searched and searched and after an hour of searching the best thing I could find were 40% PCW in a natural brown. Where is the market for recycled office supplies and why aren't there more?

My effort to find security envelopes with any recycled content came up empty. Please let me know if you have a source for such items.

It shouldn't be this hard being green. Where are the entrepreneurs to supply this market? Where are the responsible manufacturers? I realize this market is driven by economies of scale which makes it difficult for recycled products to compete with virgin when so many people purchase strictly on price.

Form 1099-Misc due February 2

This is a reminder that 1099s, with a few exceptions, need to be mailed by Monday, February 2nd. Fines for late filing start at $15 per return (if filed within 30 days of the due date) and go up to $50 per return if filed after August 1 or not at all.

Businesses (and non-profits) need to send them to any individual or partnership if you paid them more than $600 during 2008. Professional fees to attorneys, doctors and other professionals are included. Payments to corporations are included only if they are for medical, legal or fishing activities.

You also need to send one if you paid someone more than $10 in royalties.

You can read the more detailed general instructions here or the more abbreviated 1099-Misc instruction here.

Finally, you should have a policy to require your non-corporate vendors to complete a Form W-9 prior to disbursing any payments to them. This will insure you have the required information you need at year end to properly prepare your 1099s. Don't wait until January to start gathering this data.

Dr. King and servant leadership

I attended the 24th annual "Keep Alive The Dream" tribute to Dr. King today hosted by the World Arts Foundation. This is the first time I've attended after listening to the simulcast on KBOO for years. What an inspiring event.

I attended because my friend Sharif Abdullah was getting a Lifetime Achievement Award for his work on peace and dialog. Sharif is an inspiration to me because of his commitment to creating a world that works for all. I too am committed to that goal.

This is a historic day. Barrack Obama and Dr. King both highlighted the importance of service to others if we are going to be great.

Dr. King said "Every man must decide whether he will walk in the light of creative altruism or the darkness of destructive selfishness. This is the judgment. Life's most persistent and urgent question is, What are you doing for others?"

So what are you doing for others?

Transparency and tough decisions

The Bainbridge Graduate Institute recently found it had to cut $1 million from its budget due to declining foundation support in these tough economic times. Rather than approach this problem from a top-down secretive approach, the leadership chose another path. You can hear the short news report here.

What isn't mentioned in the story is how they shared the problem with our entire community (students, faculty, staff, donors, vendors and more). This open process brought forth a ton of great ideas and allowed us to change the budget almost overnight.

Because it was transparent, the buy in and acceptance was unbelievable. We all were saddened by the decisions to cut staff but the open process made it palatable. A closed and secretive process would have created nothing but dissent, distrust and disharmony. Instead we are moving forward leaner and using our creativity to adjust to a new reality.

Perhaps the biggest problem was that the process generated so many good ideas that one could almost become paralyzed with too many options. This was not the case however as we sorted the ideas into a variety of pools opting for the low hanging fruit first before working our way up the tree.

Data security over the internet

Our firm just set up a 128-bit SSL encrypted extranet to store and transmit data. We have a personal and legal commitment to ensure that our clients' data is secure and protected.

I'm sharing this with you because it was just this past summer that I learned that sensitive information in emails, and even attachments to emails, can be stolen as the email passes through the internet. As I understand it, programmers in foreign countries write programs that search email for this data and can extract it when found.

Accordingly, you should never, never include your social security number, bank account info, credit card numbers, passwords, etc. in the body of an email or in an attachment, unless that data is encrypted. When we exchange this type of data with our clients, like a PDF of their tax return, we send them a encrypted link so they can upload and/or download securely.

US tax system not perceived as fair according to report

Yesterday I provided some information from The Tax Institute at H&R Block’s annual survey of taxpayers. The study found that most Americans weren’t very knowledgeable about the tax laws that impact their pocketbook and should inform their financial decisions.

What I didn’t report, and what I found more interesting, was the finding that a whopping 92 percent of those taxpayers surveyed could not describe the U.S. tax system as "very fair." While “very fair” may be a high threshold, it shows me there is a lot of room for improvement since the best tax systems are perceived as fair.

To me, the fairest system is a progressive system with increasing marginal tax rates. Increasing marginal tax rates means that tax rates increase as income increases, but only at the margin. For example, if marginal rates increased every $50,000, then the first $50,000 everyone earns would be taxed the same regardless of total income, while those who made between $50,001 and $100,000 would pay slightly more on that income than on their first $50,000. In this example, the marginal rate would go up until it reaches the maximum rate.

The theory behind this is based on the utility of money. The less money you earn, the more valuable and vital each dollar is to you, while the more you earn decreases the utility of the subsequent dollar. A $1,000 to me and a $1,000 to Bill Gates are two very different amounts.

I’ll continue with this discussion the next time I blog.

Would you pass the tax quiz?

An annual survey conducted by The Tax Institute at H&R Block finds a majority of taxpayers can’t answer even the most basic tax questions correctly according to their press release. Accordingly to Amy McAnarney, Executive Director of the institute, “Americans are failing Taxes 101.” The annual survey asks 1,000 people tax related questions.

Some of the findings:

70 percent said they were not aware of recent legislative changes that could affect their return despite the fact that changes could affect parents, first-time home buyers, long-time homeowners, military personnel, retirees, taxpayers impacted by Alternative Minimum Tax and more.

Nearly 60 percent didn’t know whether a deduction or tax credit trimmed more off the bottom line. (The correct answer is a tax credit.)

78 percent didn’t know what tax bracket they were in. (Knowing your marginal tax rate, including state and local taxes, can be very important when making financial decisions).

You can click through to their press release if you want more of their findings.

I think my key take away is that most Americans need help. Yes, you can do it yourself but are you really prepared to sort through and understand all the complexities?

It is my belief that having a CPA prepare your taxes and assist you with planning is a bit like using a slugger in baseball - They may not get a hit every time but occasionally, they hit it out of the park and that's why you pay them.

TriLibrium website is up

We've been super busy here at TriLibrium and I've had a hard time finding time to blog. I'm sure I'm not the first to find out how challenging it is to sit down and write something interesting and useful on a regular basis.

You may be interested to know that my firm's website (www.TriLibrium.com) is up and running. I invite you to visit and give me feedback.

Also, please let me know if you'd like to see me write about something specific and I'll attempt to address it.

Happy New Years!

We've had an intense winter over the past few weeks here in the Pacific Northwest and I apologize for not writing more often. However, one of my New Year's resolution is to blog more.

Here is to wishing you much success and happiness in 2009.

How do you source your copy paper?

Yesterday I had to print some handouts for the course I taught on Sustainability for CPAs. Our office is primarily paperless so buying copy paper isn't something we do very often but I purchased three reams for us to have on hand.

And here is the cool part. The paper we purchased was FSC-certified made from 100% post-consumer waste. It was manufactured using Green-e 100% Certified Renewable Energy (from biomass), and processed chlorine free. This paper is made without cutting down any trees or creating any additional green house gases.

And guess what? The manufacturer is Gray's Harbor Paper manufactured right here in the northwest (Hoquiam, WA). This is a locally owned company that closes the recycling loop by taking our local paper waste and turning it back into paper. I think everyone in the northwest should be buying their paper. Here is a great story about the company and their impact on the community.

Too much of the paper we recycle in the northwest is shipped across the ocean to China where it recycled using dirty coal-fired plants like the one pictured above then shipped back to us at enormous environmental costs. Harbor 100 should be the paper of choice for any northwest firm interested in sustainable economies.

More Than Money

I was at BGI this weekend where I help teach accounting and finance. Mark Albion, the former Harvard Business School professor, best selling author, and founder of Net Impact was there. I had met Mark before and found his book True to Yourself — Leading a Values-Based Business, and personal life story, inspiring as I ventured out into the real world with my MBA.

Mark's new book is called More Than Money: Questions Every MBA Needs to Answer and he was again talking about the importance of a creating a life of meaning. As an MBA, I have a lucky lottery ticket and the question is, what should I do with my lucky ticket? The cultural expectation is to cash it in for money and status, but is that really fulfilling? To me the answer is no.

Mark told the story of how he used his MBA skills to help a small scale fisherman. You can see that story here in a 3-minute video I hope will prompt some discussion and thought about sustainability, business and life.

Bullish on Sustainable Business

Our accounting firm is in the process of adding staff which means we are growing. As a new firm, it would be hard to get any smaller but still, I remain bullish on the market sectors and business organizations committed to sustainability.

Why in the face of continued negative economic forecasts am I hopeful? Because I know that humans have and will always have an economy and that the green economy is the economy of the future and will continue to grow accordingly.

While the old economy is changing, the leading green edge is vibrant. For example, here is a recent report showing LEED building starts are up five fold. Here is another story about a research report showing that 2009 will be a good year for green IT. I also suspect part of Barack Obama's economic plan will include a huge capital infusion towards building the green economy of tomorrow.

I meet every day with business owners and entrepreneurs. All of them are concerned about the economy while simultaneously excited about the future. Our job, as business leaders, is to remain hopeful and to build the types of triple-bottom line organizations we will need in the emerging economy.

Sustainable Networking

I have been a member of a couple networking groups and have visited numerous different ones over the years. These networking groups can be an important marketing and sales element of a business plan for small to medium size organizations. These groups usually allow just one representative from each industry who then provide leads to each other.

One problem with most of these groups is the dearth of like-minded green businesses, since this is not a criterion for membership. Fortunately, that is starting to change and I’m hoping this post will encourage others to start green business networks in their communities.

First, a little background. I helped start a “green” networking group here in Portland back in 2002. I was selling B2B in the progressive community and saw a real need for values based businesses to connect efficiently and economically. Informally, with folks from the ReDirect Guide and others, we started our own green networking group to make it easier for like minded folks to connect.

Our group was informal, with minimal dues (we asked everyone to throw in a few bucks each meeting) and met every other week at a locally-owned progressive restaurant. Everyone present got a chance to give a 30-60 second introduction and promo for their business before we’d feature a 10-minute in depth talk by one of our members. This group successfully served its function of helping all of us obtain more business.

That group has since dissolved but I recently joined a similar group here in Portland called Bridges, a green business networking group. Bridges is a bit more formal and structured but the key here is that the group uses sustainability as the primary screening tool for every member. Besides myself, Bridges has a green financial planner, physician, acupuncturist, builder, insurance broker, mortgage broker, real estate agent, graphic designer, marketing consultant, life coach, computer tech, geologist, and a real estate appraiser. This group is vibrant and growing.

It is really easy to start a networking group and I would encourage green business leaders to get one started in their area. Feel free to contact me if you need any help and/or post ideas and suggestions here to help others get started.

Business networking groups are a great way to learn, share and grow as a community. There should be green business networking groups across the country.

Health, Happiness and Sustainable Business

BGI Founder and President Emeritus Gifford Pinchot will be giving an address at the Green Festival in San Francisco next week entitled "Health, Happiness and Sustainable Business: The Happo/Dammo Ratio." I bring this up because Gifford's Happo/Dammo ratio is onto an important aspect of sustainability. Here is what Gif has to say:

The purpose of the economy is to support our health, well being and happiness. Unless we find ways to produce substantially more happiness with far less stuff and damage, our civilization is doomed. But this is a happy task, a joint project of sustainability experts, entrepreneurs, consumers, citizens, corporate innovators, academics, legislators and policy wonks. Given that most happiness comes from relationships and most of our consumption uses stuff symbolically rather than for its intrinsic value, it won’t be hard to make 1,000 fold improvements in the ratio of happiness to stuff. These innovations will often be very popular, cost-effective and profitable. In this direction lies hope and true prosperity.

Our current economy is driven by a take, make, waste consumption cycle and as long as we stay in this paradigm the future looks bleak. However, as Gifford correctly points out, we have an incredible opportunity to expand our economy by figuring out how to increase happiness while decreasing stuff. We have an unlimited and endless supply to provide comfort, joy, laughs, smiles and support. These have no environmental or social costs.

The cycle of giving support/getting support/giving support is an endless human cycle that has been around as long as humans have walked the earth. It was the basis for tribal economies. Maybe we can learn something valuable from an economic system that has been around for 100,000 years.