Rockaway Beach Provides A Sad Example Of The Integrated Nature Of The Triple Bottom Line

Are you familiar with the Triple Bottom Line? First defined by John Elkington more than two decades ago, it refers to the principle that an organization should measure its social performance and environmental performance, and not solely its financial (or economic) performance. It is occasionally known as the Three P’s of performance, i.e. People, Planet, Profit.

But the principle can also be interpreted in a more complex manner. Each of these three performance factors impacts the others. Thus, the “bottom lines” of these factors should be reported in an integrated manner.

Last week, the City of New York sadly announced a community restriction that illustrates the integrated nature of the Triple Bottom Line. Due to the hurricanes and rising tides of climate change, severe sand erosion on the city’s southeastern peninsula has led to the closing of a prime strip of sandy beach in the Rockaways.

The decision occurred after local tourist businesses opened for the season. Residents, of course, have already begun to protest their government leaders’ decision.

In this situation, an environmental crisis has led to a social and economic catastrophe for a working neighborhood that relies on its primary community resource — i.e. its summer beach — for its survival.

The residents of the Rockaways will gladly attest to the integrative nature of the Triple Bottom Line. Hopefully, the municipal leaders of your own town will learn from the current travails of their New York City colleagues.

America Alone

You may have noticed that the nations of the world are segregated in a pair of distinct groups. One is committed to fighting climate change, and the other is not.

How many nations are in each bloc? Until last week, 196 countries had signed onto the Paris Accord. And two, the United States and Syria, had not done so.

But last week, Syria announced that it is joining the Accord. The count then shifted to 197-to-1.

So what does this mean to the United States? How worrisome is its isolation from the other nations on earth?

It may be comforting to recall that America has taken lonely diplomatic stands in the past. After the First World War, for instance, it declined to join the League of Nations even though President Woodrow Wilson won a Nobel Peace Prize for his efforts to create it. The League mediated several territorial disputes before shutting down and transferring its assets to the United Nations after the Second World War.

But is this example truly relevant to our present day circumstances? At the conclusion of the First World War, none of the European (or Asian) nations was in any position to challenge the United States. Britain, France, and the other Allies were focused on rebuilding their decimated economies. Indeed, there was no global competitor with the relative strength of modern China to challenge the American nation.

And it is perhaps more worrisome that the League did not fulfill its mission to keep the world at peace. Without the United States, it was powerless to stop the rise of fascism and the onset of the Second World War.

So as America bids farewell to Syria and assumes its lonely stance, it may be reasonable to feel a bit worried about the future. After all, even without a global rival like China, the self-imposed isolation of the United States from the global diplomatic community a century ago preceded the rise of Adolph Hitler, Joseph Stalin, Emperor Hirohito, and Benito Mussolini.

Climate Change: Tipping Points

For the past few years, environmentalists have voiced concern that we’ve passed a tipping point of climate change. Even if we achieve drastic reductions in emissions, they fear, the current levels of carbon dioxide in the atmosphere may inexorably increase its temperature by more than two degrees. And meteorologists warn us that such warming may create catastrophic damage to our global weather patterns.

But before you lose all hope for our planet, you may wish to consider a different tipping point. Namely, public awareness of the problem — and demand for solutions — may have passed the point where polluters can safely continue their behavior.

Consider, for instance, the Financial Stability Board. It’s the global consortium of central regulators and banking institutions that was formed during the global economic crisis of 2009 to establish universal financial standards. It launched the Task Force on Climate-Related Financial Disclosures eighteen months ago to address environmental concerns.

Last week, the Task Force issued its final report. It recommended that publicly traded corporations issue more detailed disclosures about their governance practices, business strategies, risk management processes, and metrics and targets involving climate change.

Let’s think about that for a moment. The banking institutions that finance our global economy are establishing a universal expectation that corporations must integrate climate change considerations into all core business activities.

Although the Task Force announcement didn’t receive a fraction of the attention that was generated by the United States’ decision to withdraw from the Paris Accord, this new expectation may explain why many leaders are now optimistic that America will still meet the Agreement’s emission reduction targets.

So if you’re feeling depressed about the possibility that the environmental impact of climate change is irreversible, please keep in mind that our society’s awareness of the problem — and our determination to address it — may be irreversible as well.

In other words, one tipping point is confronting a countervailing one. And because so many individuals around the world are racing to manage both elements, it’s possible to hope that our planet has a fighting chance of survival.

The Exxon Climate “Victory”

Ten days ago, the President of the United States decided to withdraw from the international Paris Accords. And in typical Trumpian fashion, the news overshadowed all other climate change news that occurred during that time.

But just one day before the President’s announcement, ExxonMobil held its Annual Meeting of Shareholders in Dallas, Texas. Of the thirteen shareholder proposals that were submitted for consideration, the twelfth was a proposition that the firm publish an annual assessment of its ability to meet the Paris Accord’s climate change targets. Exxon management formally recommended that its shareholders vote down the proposal.

But guess what? The shareholders voted to approve it! New York State Comptroller Thomas DiNapoli, who played a key role in the battle, proclaimed that “this is an unprecedented victory for investors in the fight to ensure a smooth transition to a low carbon economy.”

Is it actually a victory, though? Feel free to skim the original proposal on pages 62 and 63 of the Meeting Materials. Then skim Exxon’s formal recommendation on pages 63 and 64. Is it clear to you what DiNapoli and his supporters actually gained from the vote?

In essence, their proposal asked the firm to publicly disclose the impact of the Paris Accords on Exxon’s portfolio of energy assets. It then provided a fair amount of descriptive detail about what they have in mind.

Then Exxon responded that it already publishes equivalent information for public use. In turn, it also provided a fair amount of descriptive detail about the content of its publications, even though it didn’t address the proposal on a point-by-point basis.

So what was the outcome of this legal process? On the one hand, the shareholders of Exxon have approved a proposal to require the firm to disclose meaningful climate change information to the public. But on the other hand, Exxon has asserted that it already does so.

Given the President’s announcement about Paris, it is certainly understandable if environmentalists believe that any victory warrants a celebration. Nevertheless, if this truly represents “an unprecedented victory … in the fight (for) a low carbon economy,” they’re in for a very long fight.

Delete The Environment

Is it possible that we’re still debating the existence of climate change? Two months ago, President Trump’s Secretary of the Environmental Protection Agency (EPA) declared that:

“… measuring with precision human activity on the climate is something very challenging to do and there’s tremendous disagreement about the degree of impact, so no, I would not agree that it’s a primary contributor to the global warming that we see.”

Secretary Scott Pruitt continued:

“We need to continue the debate and continue the review and the analysis.”

But review and analysis require data. And last week, the EPA removed significant amounts of public data and scientific information from its own web site.

Why would Secretary Pruitt remove data from public view if he believes that we need to “continue the review and the analysis” of the information? According to an EPA spokesperson, the removal was needed to “eliminate confusion by removing outdated language.” And yet the spokesperson didn’t explain why the language of the data was “outdated.”

So why should we feel concern? Given that climate changes over time, scientists must analyze data that has been collected over many years in order to evaluate the effects of various environmental factors. Thus, it is difficult to understand how a set of data can itself become “outdated.”

To be sure, this is not to say that Secretary Pruitt is wrong. In fact, it is never wrong to question established scientific findings, or to call for more review and analysis.

But such activities are simply impossible to perform when information that resides in the public realm is removed from public access. So when our government “of the people, by the people, for the people” compiles data and publishes it on a public web site, perhaps we’d be better served if it simply leaves it there.

Science: Fact vs. Inference

A set of scientific facts rockets across the internet. One highly respected news organization appears to cite it as a warning about global warming. But another appears to cite it to raise doubts about such warnings.

How can that be possible? It’s tempting to assume that one of these organizations must be engaged in the practice of “fake news.” A single set of facts cannot simultaneously support a pair of perfectly contradictory inferences, can it?

In reality, it can. And given that the phenomenon of global warming impacts the future of our planet, it might be helpful to take a moment to understand the difference between scientific fact and scientific inference.

The facts in question involve a gigantic crack in a region of the Antarctic ice shelf known as Larsen C. Environmental scientists have long warned that global warming would cause the collapse and melting of the shelf, generating massive increases in sea levels. Just yesterday, the New York Times reported that:

A rapidly advancing crack in Antarctica’s fourth-largest ice shelf has scientists concerned that it is getting close to a full break. The rift has accelerated this year in an area already vulnerable to warming temperatures. Since December, the crack has grown by the length of about five football fields each day.

But three weeks ago, National Public Radio reported that:

“A lot of things are going on deep inside the ice,” says Adrian Luckman, a glaciologist (who is) leading a project to track changes in the ice shelf. “This is probably not directly attributable to any warming in the region, although of course the warming won’t have helped … it’s probably just simply a natural event that’s just been waiting around to happen.”

Let’s think about the discrepancy in these news reports. At first glance, the Times appears to attribute the crack to global warming, and NPR appears to disagree with that attribution. But are the two organizations fully at odds with each other?

Not really. In reality, the authors are largely in agreement on the facts. Neither one concludes that the crack was directly caused by global warming. And neither one asserts that global warming had no impact whatsoever on the crack.

Furthermore, both authors concur that the region is warming. The Times reporter states that the area is “already vulnerable to warming temperatures.” And the NPR reporter quotes a glaciologist who agrees that “of course the warming won’t have helped.”

In other words, according to both authors, the Antarctic region is heating up and the Larsen C region is cracking. Neither concludes that the heat directly caused the cracking. They agree that other factors likely contributed to the situation. And yet they also believe that warming temperatures can’t possibly be beneficial for the stability of this gigantic chunk of ice.

Are the authors inclined to draw different inferences from the twin facts of warming temperatures and cracking ice? Sure. The Times author appears to be much more inclined to interpret the set of facts as supportive of concerns about global warming.

And yet, do they disagree on the underlying set of facts itself? Not at all.

It’s certainly reasonable to feel a bit distressed when reporters at two highly respected news organizations draw radically different inferences from a common set of facts. It’s only natural to hope that a pair of rational individuals could follow a common trail and arrive at the same destination.

But at least it’s comforting that these two reporters only differ on their inferences while agreeing on their facts. As long as we keep this scientific distinction in mind, we’ll be able to maintain our faith in science itself.

Climate Change: Winning While Losing

Is it possible to win while losing?

Yes, of course it is. Think about Sylvester Stallone’s character Rocky Balboa, for instance. He actually lost the championship match in his very first film. But the loss established and enabled the character — not to mention the actor who played him, the Academic Award winning movie, and the sport of boxing itself — to repeatedly win throughout the forty year run of the Rocky franchise.

And how about this year’s Presidential primary season? Bernie Sanders may soon be ready to cede the Democratic Party nomination to Hillary Clinton, but the progressive movement that he spearheads will probably thrive for years to come. Likewise, even if Donald Trump loses the November election, many experts believe that he will permanently transform the Republican Party.

This “winning while losing” phenomenon occurs in the business world as well. Consider, for example, what happened last week to Chevron and Exxon Mobil, the two global energy giants that are headquartered in the United States. Shareholder activists at both firms lost very similar fights at their corporate annual meetings. But while losing their immediate battles, they may have managed to achieve a victory for the long term.

So what were they fighting about? According to MarketWatch, the activists wanted to require the firms to perform annual “stress tests to determine the risk that … climate change pose(s) to their business.” Just as global banks in the United States perform stress tests to address risks in the world’s economy, these individuals hoped to require global energy companies to conduct similar tests to address climate change factors.

Their proposals were voted down by shareholders, but Chevron’s proposal drew 41% support, and Exxon Mobil’s drew 38% support. Apparently, these represent the highest climate proposal voting totals in the history of the firms. In fact, according to Sustainable Brands, Chevron’s 38% support total occurred after their “investors overwhelmingly rejected the (same) proposal at last year’s meeting with a 96.8 percent “no” vote.”

An increase in support from 3.2% to approximately 41% in one year? Now that is a win, even though any vote total less than 50% is recorded in the corporate records as a loss.

Either way, there’s an important lesson to learn from these events. Whether or not you believe that climate change represents an existential threat to the global environment, the number of investors who express concerns about the topic seems to increase each year.

And let’s face it. A stress test is merely, by definition, a hypothetical exercise. So why wouldn’t any global energy company (or any other organization, for that matter) consider engaging in such an activity? If there is no harm in doing so, and if 40% of its investor base might approve of it, why not give it a try?

Climate Change: Humanity and Nature, Collaborating

If you’re worried about climate change and its devastating effects on the natural balance of the environment, you’re certainly not alone. For many years, meteorologists and other scientists have warned that the increase of carbon dioxide in the earth’s atmosphere would lead to extreme droughts, hurricanes, and other extreme weather patterns.

As the forests in the drought-stricken western United States have continued to burn, and as filthy piles of snow — leftovers from the most extreme winter in Boston’s history — have continued to melt well into the summer, these predictions have proceeded to drive concerns about the climate. But hope about the future, from both human and natural causes, has begun to emanate from California and the Pacific region.

For instance, in response to Governor Jerry Brown’s unprecedented set of mandatory water rationing orders, the citizens of the Golden State have immediately achieved incredible reductions in water usage. Urban water districts, for instance, reduced their water consumption by 27.3% in June, well above the Governor’s 25% order.

And California is also receiving help from Mother Nature. Apparently, an extremely powerful El Nino effect is expected to manifest in the Pacific Ocean this winter. Such effects typically lead to extremely rainy weather on the west coast of the United States, and to relatively mild and dry weather in Boston and other northeastern cities.

Less human water use and extreme rain events are exactly what California needs to deal with the cumulative effects of its devastating five year drought. And mild and dry winter weather is precisely what Boston needs to recover from its Arctic-like winter of 2014-15.

Of course, this is most certainly not the time to grow complacent about climate change. Most scientists are deeply worried about its long term impact on our natural environment.

Nevertheless, this may well be the time to feel a little better about our ability to manage the impact of climate change. For at the moment, in California and the Pacific region, it does appear that humanity and nature are collaborating to moderate the recent extremes in our climate.

The California Water Crisis

As another absurdly frigid Winter melts into Spring in the northeastern United States, our meteorologists are not simply content to relax and enjoy the warmer weather. Instead, they are busily trying to understand why this particular season encompassed the coldest month in recorded history.

Why did this happen? Well, according to weather scientists, the polar jet stream developed a “kink” that drove the arctic air down over the eastern United States. To the south and west of the jet stream, however, the winter brought unprecedented heat and drought. That’s why California Governor Jerry Brown ordered a mandatory 25% reduction in water use for most residents and businesses within the Golden State.

If you check the “small print” of the Governor’s mandatory order, though, you’ll notice that one particular industry has been fully excused from implementing any conservation burden. Apparently, agricultural organizations need not reduce their water consumption habits at all.

This exemption is particularly meaningful because a whopping 80% of all water consumed in California is used by farms. In other words, Governor Brown is forcing a significant majority of all California consumers to adopt conservation measures, while not asking for any modifications from the farms that consume most of the state’s water.

Why won’t the Governor ask farmers to conserve any water? Last week, on national television, he defended his decision to exempt California’s farms, noting that they are “providing most of the fruits and vegetables of America … (and that) workers who are (at the) very low end of the economic scale here are out of work. There are people in agriculture areas that are really suffering.”

In other words, it appears that Governor Brown is exempting the agricultural industry from mandatory water conservation measures in order to protect it from economic distress. But such a policy may be shortchanging the ability of the industry to modify its own practices and emerge in a strengthened state.

For a relevant comparative example, let’s take a moment and consider the automobile industry. The federal government has repeatedly mandated improvements in CAFE fuel economy levels, despite periodic protests by the manufacturers that the requirements are not practical. And then, inevitably, what happens to the industry?

The auto manufacturers always manage to find innovative technologies that meet the new requirements. And by doing so, they become more competitive against their foreign rivals.

Might a similar process generate a similar outcome for California’s agricultural industry? Indeed, might mandatory agricultural water conservation measures compel farmers to find creative approaches for becoming more efficient with water?

It’s hard to understand why Governor Brown is so hesitant to give this approach a try. After all, if California based companies like Tesla and Google can invent cars that run on electricity and that don’t even require human drivers, why can’t technology firms in the Golden State develop agricultural methods that simply require a little less water?

Sustainability Catastrophes

Last week, a pair of independent scientific research studies came to an identical conclusion: calamitous climate change is inevitable. Indeed, it’s not just likely … it’s inevitable.

Apparently, the scientists assert, the ice sheet covering a broad region of Antarctica is now so unstable that it will inevitably collapse and melt away. And the resulting rise in ocean and sea levels will flood the world’s great waterfront cities.

So why weren’t the studies regarded as “calls to action” by our societies? Why did a controversy over a race horse’s nasal strip attract more attention than this inevitable calamity of environmental sustainability?

To answer this question, it may be helpful to consider the time horizon of the ice melt. Both research studies conclude that the primary effects will not be felt until the next century.

The detrimental effect of lengthy time horizons on human perception, of course, is not resticted to the issue of climate change A French academic named Thomas Picketty recently wrote a book named “Capital in the 21st Century” that focuses on the struggles of middle class families.

The book is now an international bestseller. But why aren’t policy makers debating his primary recommendation of a global wealth tax?

Once again, the time horizon of the scientific analysis may provide an explanation. Picketty reviews centuries of economic performance; he concludes that the emergence of an enterprising middle class during the twentieth century did not represent an inevitable trend in global capitalist history.

Ultimately, he warns, virtually all of the wealth (i.e. “capital”) in our society could be acquired by a very small number of property and business owners. In other words, human society could revert to the economic structure of medieval times, when most individuals spent their lives scrounging for survival.

Of course, you may not necessarily agree with Picketty’s gloomy suggestion of a social sustainability catastrophe. And although it is difficult to argue with the science that underlies the climate studies, you may be optimistic about mankind’s ability to adapt to the evolving environment.

But if you spend any time at all thinking about these concerns, you may be expending more of an effort to consider these calamities than our own government leaders.

To what extent should elected leaders modify contemporary economic, social, and environmental policies to address foreseeable catastrophic events that will not occur for decades?