PSD Blog - World Bank Group

Comparing businesses' environmental commitments

Climate Change, an environmental interest group, released a new ranking of "green" companies. The survey purports to measure how serious companies are about climate change in comparison with their sector competitors. 

The survey, which is updated annually, uses 22 criteria to analyze whether companies measure their climate footprint; reduced their impact on global warming; supported progressive climate legislation; and publicly disclosed their climate actions clearly and comprehensively.

A (LED) light at the end of the tunnel

Close to 75 percent of Sub-Saharan Africans, about 550 million people, do not have access to electricity. Lighting Africa, a conference in Ghana that ended today, is tackling how to mobilize the private sector to supply modern off-grid lighting such as Light Emitting Diodes (LEDs) to over more 250 million people living in Sub-Saharan Africa by 2030. This is a timely effort given surging oil prices and the fact that Africa spends about $17 billion on inefficient lighting fuels such as kerosene lamps and paraffin yearly.

Earth Day celebration ideas

To celebrate Earth Day some people join protest rallies, some others disappear into the wild, but here is a list of more conventional ideas. Feel free to send your own.

• Calculate your carbon footprint (and preferably try to reduce it).
• Plant a three to offset 730kg of carbon emissions (if not one cuts it down).
• Bike to and from work.
• Recycle (even if no one is looking).
• Avoid plastic bags.

Sustainable banking awards: who's winning what?

The Financial Times and IFC announced shortlists of potential winners for the 2008 Sustainable Banking Awards. The awards recognize financial institutions that have led the way in integating their policies with social, environmental, and corporate governance objectives. Below is a sample the categories and the shortlisted candidates, the full list is available here.

Sustainable Bank of the Year

• Banco Real, Brazil
• Citi, US
• HSBC, UK
• Rabobank, Netherlands
• Standard Chartered, UK

Sustainable Deal of the Year

• BlueOrchard Finance, Switzerland/Morgan Stanley, US (microfinance loans)
• Calyon, France (solar thermal power plants)
• Citi, US (financing for rural housing)
• Glitnir Bank, Iceland (geothermal power generation)
• Merrill Lynch, US (carbon finance to reduce deforestation)

Banking at the Bottom of the Pyramid

• ASA, Bangladesh
• Banco Bradesco, Brazil
• ICICI Group, India
• Opportunity International, UK
• Wizzit, South Africa

Locally-grown food in the middle of New York City

New York Magazine asked four architects to design whatever they would like for a full city block of space with no clients to worry about. One design offered was a vertical farm, complete with water tanks and each floor would be used for the cultivation of a different crop. Amale Andraos, of Work AC, the firm responsible for the intriguing idea, said in the article that they “are interested in urban farming and the notion of trying to make our cities more sustainable by cutting the miles [food travels].”

Ok, maybe that’s taking sustainable design to an extreme; does anyone have more eco-friendly (and preferably profitable) ideas?

Richard Posner on food prices

"The demand for agricultural products has grown, though not as a result of population growth; instead as a result of increased demand for ethanol and other biofuels, and for food that requires more agricultural acreage to produce. Today, besides people and pigs eating corn, our motor vehicles "eat" corn that has been converted into ethanol."

Read the entire piece here.

Here's your diploma, now go pump some oil

In times of off-the charts oil prices and environmental concerns, it may be surprising to find out that thousands of people graduate every year to go work in the oil industry. The Wall Street Journal published an article analyzing where these graduates are coming from. During the 70s and 80s, most petroleum graduates came from Texas A&M and other top U.S. and European institutions, says the article.

The tables have turned. Today, schools in Azerbaijan, Brazil and other nations with state energy firms that manage vast hydrocarbon resources are expected to produce more than 12,000 petroleum-engineering and geoscience graduates in 2008, double the roughly 6,000 in the U.S., Canada and Europe, according to recent data from Schlumberger Ltd., the world's biggest oil-services firm by revenue.

Ethanol production and access to finance

What does the U.S. Energy Policy Act of 2005 and its mandatory doubling of renewable fuel additives by 2012 have to do with access to finance? A recent paper uses the sudden increase in demand for U.S. corn, the primary input for ethanol production, as an external shock to see how access to finance affected corn producers in the U.S. It shows that productivity increased after 2005 in corn production as opposed to soybean production and more in counties with better access to finance. Now, just imagine the effect in developing countries!

The big green monster in the closet

The word is out that Wal-Mart, the giant U.S. retailer, will hold talks with hundreds of its Chinese suppliers to discuss significant reductions of the environmental impact of its entire supply chain.

Given the magnitude of Wal-Mart’s activities – according to the Financial Times, Wal-Mart alone is responsible for about 30 percent of foreign purchases in China and close to 10 percent of all US imports from there – this may be a more significant step toward minimizing its ecological foot print than its previous attempts.

Going green as an strategic risk

A new report by Ernst & Yong ranks a growing "greening" concern as one of the top 10 strategic risks businesses face. The top three risks are: regulatory and compliance risk, global financial shocks, and aging consumers and workforce.

The report calls this increasing concern about the enviroment "radical greening" and states that going green is expensive at first, but it could be worthwhile if consumer tastes and the regulatory enviroment start to demand it; ok, perhaps that wasn't a jaw-dropping discovery, but the entire report still makes for a good reading.

Joining the dialogue: Environmental Capital

Following up on today's theme, it's worth adding the recent addition by the Wall Street Journal - it's own blog about the business of the environment. Here's more from the editors themselves:

"[This blog] tracks how growing green concern, particularly over climate change, is roiling established industries and spurring new ones – and how that shift is affecting investors, consumers and the planet."

Putting a price on carbon: time to get hands-on

The recent spate of announcements by financial institutions looking forward to a world with a price on carbon - and their decisions to set a price for carbon in their own calculations on project viability or to adhere to generic principles on carbon which may influence the future shape of their portfolios - are the latest evidence of a world preparing itself for some kind of public policy context to emerge from international negotiations. But perhaps of equal significance is evidence that the risks and opportunities from managing exposure to carbon are seen as real and present, not potential and distant.

To dig down into performance and beyond rhetoric a number of challenges face financial institutions. A carbon price helps one understand risk in a future where carbon carries a price, but how do you decide where to invest in carbon intensive projects and where not?

Global warming gets cool in Japan

A group of business leaders including executives from global corporations like Sony, Nike, and Nokia singed the Tokyo Declaration this week. The signatories expressed concern over greenhouse gas emissions and said that such emissions need to be reduced by 50 percent by 2050. Thanks.

On that same note, a McKinsey Quarterly survey finds that 60 percent of global executives consider climate change an important issue to take into account within their companies' overall strategy.

Sustainable tourism competition open

Proponents of "geotourism" believe that it benefits local residents in many ways, including economically, since travel businesses strive to use local workforce, products, and services.

A new National Geographic competition aims to raise awareness to ways geotourism may be beneficial to the local communities. Winners will be innovators in geotourism and applications are now open through April 9.

If you are part of a committed organization or governemnt you can also sign the "Geotourism Charter" (p.s.: totally non-binding and unenforceable).

Africa: (self-powered) light at the end of the tunnel

Actor Tom Hanks is better known for his role in Forrest Gump than for his work with self-powered energy. But that might soon change, at least for some people in sub-Saharan Africa, where Hanks is funding a project that will create assorted lights and lanterns to serve an area where less than 15 percent of the population has proper lighting.

These devices work by transforming winding-up motion into electricity and in some cases one minute of winding can generate two hours of lighting. The company making the products cites several applications for its devices including enabling businesses to stay open later and increasing night-time studying hours. They can also power radios, and other devices such as the "One Laptop per Child" laptops.

Maybe with oil prices breaking $100/barrel and having much of our electricity generated from oil, these devices will become commercially viable in the west as well.

Climate policy map

Econsense created an interactive database for all-things climate. Much like our Do-Your-Own-Analysis, it allows to compare and contrast data across countries, in this case, on topics such as greenhouse gas emissions, fuel tax, emissions trading and biofuel production.

Not so green after all

Ceres, a coalition of investors, environmental groups and other public interest organizations, believes that the financial services industry – with nearly $6 trillion in market capitalization – should play a role in combating climate change.

Most recently, Ceres released a first comprehensive assessment of how the world's 40 largest banks fulfill their commitments to the reduction of greenhouse gas emissions.

The study found that, despite an overall widespread positive trend, only 12 banks made climate change a governance priority; only 6 said they were calculating carbon risk in their portfolio and "no bank has set a policy to avoid investments in carbon-intensive projects such as coal-fired power plants."

Unusual champions of global sustainability

It is often assumed that the greatest potential for improving business environmental practice in developing countries lies with foreign multinationals and not with the countries' own businesses.

These case studies reject this common assumption and point to the crucial role of developing-country firms as they serve the world's most populous and fastest growing markets

Says Simone Pulver the guest editor of "Greening Development: The Role of the Developing-Country Private Sector" published in the "Studies in Comparative International Development" [subscription required]. The recent issue is based on case studies of selected firms in China, India and Latin America.

Withdrawing the claws from data: a new year's proposal for the private and development sectors

Now, here's a mash-up that got me really excited. Mapecos provides information on the environmental performance of more than 20,000 industrial facilities across the US. Interestingly, government data on toxic pollution for each facility are displayed side by side with the data provided by the facilities' managers themselves.

PR vs. reality, the malignant might say. The site, however, is designed to move beyond finger-pointing "to provide an even handed view of industrial environmental performance": a "natural experiment" with increasing access to information, as one of its founders put it.

Creating incentives to publish "hidden data" and combining data sets from different sources - it is this type of "natural experiments" that the development (and private) sector needs more of to increase transparency and citizens' empowerment.

Locomotion for $2500

Though above $2000, at $2,500 the Tata Group found a way to build the cheapest car in the world.

Tomorrow, India's biggest company will show what taking out one windshield wiper, radio, moving the engine to the back, and putting in a cheaper, hollowed out steering-wheel shaft can do to a price of an automobile.

Its impact on the environment? It is predicted to be either very positive or negative.

Update: Tata Nano a.k.a the "people's car" is out now.

Going green for the holidays

Feeling guilty at the excesses of yet another office party or Secret Santa exchange? Envirowise in the UK has come up with a company guide to a green Christmas. Most suggestions are pretty undemanding, but hopefully the impact adds up given the sharp spike in waste generated by the typical holiday season.

In reinforcing the call for climate-friendly celebrations, Lloyds of London notes that over 8 million Christmas trees are bought in the UK alone, generating an estimated 160,000 tonnes of additional rubbish. This is apparently equivalent to the weight of 21 Eiffel Towers.

There are also business opportunities around environmental concerns. In the retail sector, firms are seeing the growing trend for green giving. Deloitte's holiday survey finds that 18% of consumers will buy more eco-friendly gifts and many are willing to pay more for them.

On the receiving end, 58% of Americans want to get a green gift this year according to the 2007 Cone Holiday Environmental Survey. So don't be surprised to find your stocking stuffed with products proudly proclaiming their green credentials from organic to carbon-neutral to biodegradable. If you don't like what you find, perhaps you need have no guilt over recycling gifts.  You would simply be doing your part for the environment.

A roadmap for international financial institutions

International financial institutions too need a clear climate change roadmap. While the Bali negotiations continue into the night, it is not too early to think about what the G8 when it meets in Japan in seven months should ask these institutions:

1. Leverage commitments from donors with private financial flows to a leverage number of their choice.
2. Come up with tools for developing countries and the firms that drive their economies to understand their adaptation risk and engineer financial products with the private sector to insure against and offset those risks.
3. Never use public aid funds to undermine the development of a market where a market may flourish and never act to become the market, but rather facilitate their creation.
4. Target subsidy to speed up the adoption of new clean technologies based on a carbon price.
5. Ask each institution to report its baseline for GHG emissions from its portfolio in FY09 with a goal to reduce over that baseline over time with criteria for exceptions based on meeting the energy access needs of the poorest countries.
6. Climate proof long range development programs.
7. Work with developing countries to create the investment climate necessary to support clean technology adoption, promote distributed, local renewable energy solutions, and water pricing policies.
8. Campaign against trade barriers that act against the interests of the climate change agenda.

A low hanging fruit?

According to IETA, carbon capture and storage – CCS for the connoisseurs - is a low-hanging fruit which could potentially be one of the main solutions to climate change. Friends of CCS met today to exchange their latest news. The European Commission is only days away from presenting to the Parliament and the Council new legislative amendments to allow for the transport and storage of carbon.

Rio Tinto and BP have together created Hydrogen Energy, a company investing in hydrogen fuelled power stations. This is how it works: coal is burned, the CO2 is extracted and stored, which leaves hydrogen as a fuel. CCS should really fall under the Clean Development Mechanism, argued Eskom, the South-African power utility.

So how low is this fruit exactly? Enel, Italy's largest power company, warned that the technology for power plants is not yet ready. And because the process of capture and storage is in itself high energy, it requires very efficient power plants. Rio Tinto confessed that none of Hydrogen Energy's plants are yet in operation. One plant requires a capital investment of about $2 billion, and finding adequate reservoirs is extremely difficult and costly. Furthermore, some plants are faced with objections from a public which has not yet bought into the idea. ECN, the Dutch energy research center, called "emotional" those reactions against CCS.

Flashbacks at Bali

Walking into the Bali Convention Center, you know that you have become a fixture in the world of international sustainable development when the UN security guard welcomes you with a broad smile and a "how have you been." You swore as a younger woman and an activist you would never become one of those grey haired incrementalists around the negotiating halls.

And then you look around and you see your old friends, all with traces of grey at the temples, reporting, representing UN agencies, working the trade agenda, running think tanks, hanging out on the west coast of the US with other ageing activists and having fun being still irreverent, or slightly proud that Michael Crichton may have based his caricature of the evilly powerful NGO on you.

Looking around you see a remarkable repository of knowledge, not just of the substance of the negotiations, but of the social anthropology of summitry. Of the personal that makes up the political and the history of institutions, a history that often impedes collaboration and undermines trust.

A public/private partnership to the moon

The technologies are available, the savings obvious, yet consumers are slow in adopting energy efficient products. Speaking at the Bali Global Business day on the margins of the UN Climate Change conference, a Philips official wondered why two thirds of the world still uses old lighting technologies when switching to existing modern technology would represent a 40% saving in total lighting energy consumption.

The private sector is asking for a public/private partnership where governments implement stronger energy efficiency standards, including labeling, adopt greener public procurement requirements, and grant financial incentives.

In developing countries, investors' appetite for clean technology investment is also growing but private companies are facing additional obstacles: the risk perception, the lack of market research, the need to adapt technologies to the requirements of these markets. Again, a public/private partnership makes sense.

GEF and IFC launched today the Earth Fund which aims to give those businesses keen to invest in environmental technologies in developing countries that extra support they need to take the leap. The most exciting feature of the fund: a prize! The very same company that stimulated with a prize the launch of the first private rocketship in outer space, will manage the Earth Fund's prizes for innovative environmental technology.

Development in 3D

What do a community project in the Philippines and the U.S. Air Force have in common? An appreciation for the power of 3D modeling to visualize and manage information.

The project from the Philippines is based on Participatory 3D Modelling "aimed at facilitating grassroots participation in problem analysis and decision-making." One has to wonder whether providing communities with a chance to see the impact of future projects on their land would engage them.

And this is what the U.S. Air Force is up to, according to The Economist:

Last year Waterstone, a consultancy, assembled the geodata for 13 American air-force bases and wrapped them up in a modified version of NASA's World Wind geobrowser.

Money on trees

The host sets the tone: last year's climate change talks, held in Nairobi, revolved around adaptation. This year, with Indonesia hosting the UN climate change conference, the prevalent issue is deforestation.

The malaise here in Indonesia is clear. Rising commodity prices and a boom in biofuels have led to uncontrolled deforestation. To improve its image and to offset the conference, Indonesia has just been on a planting spree with 79 million new trees in the ground. The word is that the conference, as a result, is "carbon positive." The question is: what measures, if any, will flip the current incentive scheme and will make it financially more interesting to keep the forests standing.

In a new report CIFOR suggests payments to land users for environmental services. The report, however, does not mention how high those payments should be to represent a real alternative, nor where those payments would come from, nor where local people previously employed on these lands would find a new job.

A little while ago, when offered to be paid as custodians of the country's landscapes, French farmers vehemently declined the idea. A real job and their dignity, that's what they wanted.

Straight from the Climate Change Conference in Bali

Our own code-breakers in Bali, Lucie Giraud and Rachel Kyte, kindly agreed to keep us abreast of the developments on the ground throughout the second half of the United Nations Climate Change Conference.

In the meantime see the World Bank's official conference site and the list of delegates.

We'll keep the track of their dispatches below.  Comments are encouraged.

• Lucie - Money on trees
• Lucie - A public/private partnership to the moon
• Rachel - Flashbacks at Bali
• Rachel - Disciplined financial mechanisms
• Lucie - A low hanging fruit?
• Rachel - A roadmap for international financial institutions

Business counting on Bali agreement

The ongoing UN Climate Change Conference is being closely monitored not just by environmental groups, governments and the media, but by those in boardrooms around the world.

Climate change has been focusing the mind of business as never before, as highlighted at the recent Business Forum at the Bank. Now the past week has seen the unusual sight of big name multinationals actively calling for more regulation. The Bali communiqué signed by 150 business heads, including from the US and China, calls for a legally binding UN framework to tackle climate change.

A new survey by law firm Clifford Chance finds that 4 out of 5 firms worldwide want more regulation. As reported in the Washington Post, James Smith, chairman of Shell UK, spoke for the UK and EU Corporate Leaders Group on Climate Change in arguing that enforceable standards will give business the confidence to make long-term investments in lower-carbon technologies. Big business believes it cannot afford to ignore climate change. Michael Porter and Forest Reinhardt, writing in a special report on the topic for Harvard Business Review agree that climate impacts on companies' operations are

now so tangible and certain that the issue is best addressed with the tools of the strategist, not the philanthropist.

New ethanol - nothing corny about it

A solution to the food vs. fuel feud may be finally on the horizon. It comes from a close cousin of traditional ethanol - cellulosic ethanol. Unlike corn ethanol, it is uses feedstock that doesn't have alternative uses such as wheat straw, corn stover, grass, and wood chips. It's also cheap and abundant.

And though earlier this year many feared that cellulosic ethanol won't be able to commercially compete with corn ethanol, more and more companies are already sprouting up.

Waste: don't just take it away

Born out of a failed methane experiment comes a water-treatment system that uses 90 percent less energy than conventional sewage system and cost 50 percent less to operate. Dean Cameron – the creator of the Biolytix Water – harnessed worms, beetles and billions of microscopic organisms to turn human waste into water suitable for irrigation.

The low cost (a small version for four people could cost $175) and its minimal energy use hold a promise for 2.5 billion people around the world who can't afford proper sanitation. So far there are 3000 biotanks installed in homes and businesses across the Pacific.

Carbon CARMA - who's been good or bad

So there are 10 billion tons of carbon dioxide emitted into the atmosphere every year. But who's exactly producing it and in what quantities?

Carbon Monitoring for Action Database (CARMA) - a new online-database containing information from 4,000 utilities and 50,000 plants – has the answers by country, city, company or a single plant.

One person's trash is other person's fuel

"Everybody is dealing with a byproduct they don't want" says Arnold Klann, the CEO of BlueFire, a California company which uses acid to convert organic material into fuel.

His firm is one of many in a race to perfect the technology to transform not only traditional biomass, but even old tires or human waste, into fuel.

Jeffrey Sachs wants another Green Revolution

This past year, food prices have […] skyrocketed, causing hardships among the poor and large shifts in income between countries and between rural and urban areas.

The most basic reason for the rise in natural resource prices is strong growth, especially in China and India, which is hitting against the physical limits of land, timber, oil and gas reserves, and water supplies.

There is an urgent imperative to raise food productivity in poor countries, especially in Africa, which needs its own "Green Revolution" to double or tipple its food production in the coming few years. Otherwise, the world's extreme poor will be hardest hit by the combination of rising world food prices and long-term climate change.

From the Daily Star [subscription required].

MDGs: a new picture

With the countdown half-way through, the data on the Millennium Development Goals are finally available via interactive maps. The timeline feature (step 3 on the map) tracks progress on any of the eight goals, throughout 189 countries.

Rice à la Kyoto

Agriculture contributes nearly a quarter of global greenhouse-gas emissions. Eric Rey, president and CEO of Arcadia Biosciences, proposes to turn genetically engineered rice into carbon credits:

The seed, still in development, will cut their need for nitrogen fertilizer, which is among their biggest costs -- and a huge source of greenhouse gases. He then aims to sell the resulting carbon credits on a growing global exchange

The market for carbon credits is estimated at $30 billion but despite the size of the market, some foreign giants, like Monsanto, were frustrated with their experiences and subsequently pulled out of China. Mr. Rey's idea will take at least five year to be implemented, but he remains hopeful:

Rather than charging farmers a premium for genetically modified seeds -- the traditional business model -- farmers would pay for the price of regular seed, plus about half of the carbon credits generated by their reduced fertilizer use.

Waste included for better cell phone service

As more and more people in developing world depend on cell phones for their business, can microbial fuel-cell chargers, which derive electricity from plant waste, bridge the infrastructure gap? Yes, according to students at MIT.

Climate change - not necessarily bad news for business

Beyond best practice examples - Alexis Sampson & Michael Jarvis report from today's conference:

How does climate change impact corporate strategy? This crucial question was discussed by business leaders at the World Bank's International Business Forum this morning. "Climate change is a risk for business…but it is also a business opportunity," noted Suellen Lazarus of ABN AMRO Bank. Energetic audience members wanted to hear more than just best practice examples, explaining that many examples are not applicable in many developing countries, and demanding more affordable eco-friendly products to be brought to these markets.

Potent ferment

Today, 3,500 biogas plants generate just under one percent of the energy used in Germany and more are under way. These cone-shaped buildings work much like bovine stomachs. They turn organic material into methane. But unlike cows, they burn gas to produce electricity, which can be sold to the grid.

There's more. Growing one hectare of crops optimized for use in biogas production facilities can create enough energy to run a car for over 40,000 miles compared to 12,000 miles on biodiesel.