by
Adam Davis

The fundamental relationship between current income and savings seems obvious. If you have a lot of savings, then you don't need to worry as much about current income, because you can draw down your savings at a comfortable pace. In many ways, you could say that your family's "status" or "class" is a direct function of your current income (earnings) plus your ability to draw down on savings. In other words, if you're using up your savings in order to maintain your lifestyle because your current income doesn't support it, your status is in jeopardy.

Of course the words ‘status’ and ‘class’ refer to your well-being relative to others – you’re upper class only in so much as there are those lower down than you. It’s also the case that current income plus ability to draw on savings determines your well-being in a more absolute sense. It determines, you could say, the ‘degrees of freedom’ you have to experience the full range of what life has to offer in a condition of comfort and safety, as well as your ability to provide this same experience to others.

For nearly all of human history, this economic reality was determined by control of land and labor. Both status and class were determined by ownership or access to land, but more importantly to the services and products produced by productive ecosystems on land. In this sense, the word ‘land’ is actually a misnomer, because access or control of the services and products of marine and other aquatic ecosystems was at least as important.

This relationship between economy and ecology was determinative, because ‘ecology’ is the most immediate measure of the planetary ability to make productive use of current solar income. The energy from the sun is ‘organized’, you could say, through the primary productive capacity of photosynthesis, into the full variety of carbon life forms, but also into the basic physics that drives water, through evaporation and weather patterns, through the system. People experience the results of this current solar income as it manifests in ‘crops’ of all kinds, and also as ‘game’, which concentrates and stores plant energy as meat.

Other forms of short-term energy storage can also be understood as part of ‘current income’ from the sun. On a human time-scale, firewood is ‘current’ stored solar energy, and when you put your hand out to be warmed in front of a campfire, you are experiencing, quite literally, the same heat that the sun radiated onto the tree within your lifetime.

Because people are in fact mammals on a planet surface, despite all of the complex cultural forms we’ve created to disguise the similarity between ourselves and the mere ‘animals’, we will maximize survival and reproductive success as we understand them. Before agriculture and specialization of labor created the conditions for clear benefit from organized trade, a complex ‘economy’ to symbolize current solar income was not necessary. Physical control of land and water, and access to its productivity were sufficient, and all early wars were wars of conquest over land.

Serious trade and the use of money to measure value grew common as human ability to make use of current solar income improved. Innovations such as the water wheel and the sail boat harnessed the forces of water and weather and increased the amount of work a person could do in a day, as did early metallurgy powered by firewood. Early gross domestic product (GDP) can be seen as a direct measure of the relative ability of a group of people to innovate using current solar income.

The Savings Account… Coal, Natural Gas, and Oil

When we figured out how to use fossil fuels, however, it slowly dawned on us that we had discovered the savings account. Fossil fuels, specifically coal, natural gas and oil, are stored solar income. Just like the firewood contains the energy of the sun radiating onto the tree over its lifetime, these underground deposits contain the energy from the sun… but over a period of millions of years.

The Carboniferous Period occurred from about 354 to 290 million years ago during the late Paleozoic Era. The term "Carboniferous" comes from England, in reference to the rich deposits of coal that occur there, but coal from this period is found across North America, Europe and Asia. It seems that during this stage of evolution, trees began to produce lignin (the resinous material that causes newsprint to yellow, and which is separated from cellulose during the production of high quality printing and writing papers), and bacteria had not yet evolved a way to digest this new material. As a result, woody material that ended up in the lowland swamps never decomposed… and instead slowly compressed and hardened into what we now know as coal.

Because this process occurred over such a long time period, there is an enormous amount of coal in the earth. The World Energy Council estimate is that there is currently a reserve of approximately 910 billion tons of coal – of which the US has by far the largest percentage (over 27%, or some 246 billion tons). The US currently burns approximately 1.1 billion tons per year and China approximately 2.0 billion, out of a world total consumption of just over 6 billion tons (up from just over 4 billion in 1980).

About 75% of all coal mined is used for electricity production, and is the fastest growing energy source in the world. There are endless estimates about how long world coal reserves will last, but just as one example, the 2005 British Petroleum annual report estimated that proven reserves would last 164 years. Remembering that the dawn of the coal era was around 1700, in England, this would mean that we’ll burn through the entire inheritance, the entire savings account from the 60 million year Carboniferous period, in just 470 years.

Oil and natural gas were created a little differently than coal was, but the basic idea is the same. Organic material, in this case, organisms that lived in the water and were buried under ocean or river sediments, were compressed and essentially ‘cooked’ by heat, pressure and bacteria under layers of silt. Oil formed first, but as the cooking process continued, natural gas was formed, and this material has been held under rock formations at various depths beneath the earth’s crust since then.

Like coal, oil and natural gas were formed over a long time: during both the Jurassic (180 million to 140 million years ago) and the Cretaceous (140 million to 65 million years ago) periods, or a total era of 115 million years. The world’s first oil well was drilled in Titusville, Pennsylvania in 1859, and we’ve burned about 1 trillion barrels since then… about half of the total inheritance of 115 million years.

While natural gas has been used since antiquity (like oil) when it naturally seeped out of the ground, the first use of the stuff in lighting was in Fredonia, New York, in 1821. We’ve got about 6.5 trillion cubic feet of natural gas left on the planet (estimates vary from 6.1 to 7.0). Keeping track of the exact accounting can drive you a little crazy, with all of the competing statistics and political objectives behind them. If the measures used to describe energy supplies and energy use were intended to be incomprehensible, they couldn’t have done a much better job… but it’s possible to simplify some of the terms used in order to get a better general understanding of what’s going on. First of all, the standard measure, which is a ‘barrel’ of oil.

Back when oil was first drilled in earnest, in the Pennsylvania fields, it was held in old whiskey barrels, and these came in both 40 and 42 gallon sizes. It was the Standard Oil Company (no surprise) that standardized the measure, and began shipping supplies in barrels that always contained exactly 42 gallons. These Standard Oil barrels were painted blue, which accounts for the abbreviation “bbl” which you’ll see used to this day, and which means, absurdly, “blue barrels”. Because you’ve probably never seen a barrel of oil, but you’re probably pretty familiar with gasoline and what it can do, let’s make this discussion of our inheritance even more relevant by translating oil to gasoline… Each 42 gallon barrel makes 19.5 gallons of gas.

The amount of energy in both natural gas and coal can be measured in their ‘equivalent’ barrels of oil… one barrel being equal to 6,000 cubic feet of natural gas, and 410 pounds of coal (about half that amount of lignite, which is low value, high moisture coal, but let’s not get totally lost in the details).

So: based on an average of the numbers from sources like the US Energy Information Administration, the Oil and Gas Journal, and World Oil, here’s a description of our inheritance:

Peak Oil and Climate Change: This Isn’t Funny

The irony is upon us. At a time when the continued burning of fossil fuels is adding approximately 6 billion tons of CO2 to the atmosphere each year, we are going to be in intense competition to control and use the remaining reserves. I won’t repeat all of the globally available information on CO2 emissions and climate change, but just to sketch in the essentials, or to jog your memories of seeing An Inconvenient Truth, consider the following:

Because worldwide fossil fuel use is increasing dramatically, CO2 emissions are increasing too. Greenhouse Gas (GHG) emissions were 18.3 billion tons in 1980, and today are about 27 billion tons per year, again according to the Energy Information Administration. Mid-range projections suggest that GHG emissions will increase by another 50 percent by 2025 compared to present levels – some models predict a 75% increase - with emissions in developing countries growing the fastest. For example, from the NY Times: “Already, China uses more coal than the United States, the European Union and Japan combined. And it has increased coal consumption 14% in each of the past two years in the broadest industrialization ever. Every week to 10 days, another coal fired power plant opens somewhere in China that is big enough to serve all the households in Dallas or San Diego.” In 2004, China also became the world’s second largest consumer of oil, behind the U.S., surpassing Japan.

Total world energy use has just about doubled since 1980, and fossil fuel use is growing faster than non-fossil fuel use, despite the rapid increase in growth of wind and solar. Even if you assume exponential grown in wind and solar, they will contribute less than ½ of 1% of total world energy use by 2020.

The level of CO2 in the atmosphere has fluctuated over time (from about 180 to 280 parts per million over the past 400,000 years), as Al Gore showed us in what is arguably the best Power Point presentation of all time, but pre-industrial levels circa 1800 were 270 parts per million (ppm). Now that we’ve set fire to about half of the total inheritance of stored solar income, which is also, of course, stored Carbon, the CO2 levels have increased 30%, to about 370 ppm. There is not a single thoughtful person I know who believes we’ll actually stop CO2 concentrations at their current levels; even if we were to take serious policy measures here in the U.S. now, the global rate of increase in fossil fuel use would take decades to reduce.

The reality is that increasing scarcity of fossil fuels and rising demand for them will lead to severe conflict over control of the remaining inheritance and sharply increased prices. At the same time, CO2 concentrations will continue to rise past 400 ppm in the near future, and on up to 500 ppm. This convergence, of increasing scarcity of oil with increasing climate instability, is going to have implications for every sector of the economy and every region of the globe.

So: we’ve blown half of our inheritance, our spending is increasing rapidly, and we’re spending in a way that damages the basic climate system we rely on. There will be opportunities, for sure, in alternative and renewable energy of all kinds, and for the nuclear power industry, but the implications for other sectors of the economy here in the U.S. and worldwide, need examination.

Adam Davis, August 2006

The Future 500 2008 Mid-Year Report

Dear friends and colleagues,

2008 is turning out to be a terrific year for Future 500, which continues to grow as more companies, NGOs, and governmental leaders globally increasingly understand, appreciate, and seek out the value of stakeholder engagement to identify solutions to sustainability problems that advance the triple bottomline.

Funding has increased from all areas: corporate, foundation, and individuals.

New Partnerships:

We continue to maintain and grow relationships with our existing corporate partners and add new partners. Most recently, BHP Billiton joined our China Stakeholder Initiative. Once the Olympics pass, we'll launch our Global Stakeholder Initiative.

We recently formed two partnerships: one with The Climate Group and a second with Stakeware.

The Climate Group is an independent, nonprofit organisation dedicated to advancing business and government leadership on climate change. We were pleased to participate in their kick-off in New York City of their Together Campaign, which seeks to bring together brand-name companies, cities and nonprofit organizations to produce a range of products, services and tips to help businesses and consumers reduce their climate impact while saving money.

Stakeware, a member of the Salesforce App Exchange, is a software leader in measuring corporate sustainability performance and climate footprint across the supply chain, according to myriad CSR standards, and then mapping stakeholders by issues across the supply chain. We are working with Stakeware to embed our Global Citizenship and Stakeholder Mapping and Planning methodologies into their on-demand software platform for use by our corporate and NGO partners.

We're Growing:

We are pleased to welcome Matt Turner and Adam Davis to our team during the first half of the year.

Matt is our Director of Global Stakeholder Initiatives with a particular focus on climate change mitigation. He has a background in corporate responsibility, managing operational and reputational risk.

Adam is a Senior Fellow with an expertise in the financial value of environmental features on real estate and the development of ecosystem markets. Adam has worked on programs that integrate sustainability principles into business strategy since 1985, solving problems across the full range of issues involving materials, energy, toxics and land.

As in 2006 when four babies were born to three Future 500 staffers, two more have been born to two staffers in the first half of 2008.

We are pleased to add Mark Serlin to our Board. Mark is a former Greenpeace activist and is now an attorney working and living in Sacramento, California.

Lastly, we wish to thank Lance Funston for his three years of work as Marketing and Communications Manager for Future 500. Lance added a more professional approach and look to all of our marketing materials and managed relationships with our conference partners. Lance will remain as a Senior Fellow to Future 500 but wishes to focus more time on his growing business in green architecture and interior design.

In closing, it's important to stress that we value feedback from you, our stakeholders, so please contact us if you think we can help you address any challenges, concerns, and needs you might have.

Thank you for your ongoing support.

Best,

Erik Wohlgemuth
VP of Strategic Operations
Future 500

Future 500 Global

Future 500 Japan
Future 500 Japan has been active in a G8 Summit (this year being called the "Summit on Environment") preparatory committee. They have contributed a great deal to the academic discussions and are looking forward to seeing what actions will be taken as a result.

Their ongoing work on the Sustainable Agriculture Survey (SAS) has been extremely well accepted. Mayors of four cities in Southern Japan are looking to organize symposiums on SAS before the end of 2008. There are also plans to release a version of SAS for China as well.

Future 500 China
Two representatives of the Future 500 China participated in the International Conference "Millennia 2015---Woman as actors of development for the global challenges" held in Belgium on March 7 – 8, 2008. Their presentations addressed Creativity, Triple bottom line & the Future 500.

Professor Jin Zhouying, Director of Future 500 China was one of six well-known international experts involved in a sustainability research project supported by BT and Cisco. Earlier this year they released the whitepaper from their research, "A New Mindset for Corporate Sustainability".

Future 500 China was honored to welcome Mr. Frederick C. Dubee, Senior Advisor of Global Compact, Executive Office of the Secretary-General of the United Nations, as a Senior Advisor of The Future 500 (China).

Coming Events

Prosper - Green Economy Summit 2008
Santa Rosa, CA, August 6 - 8, 2008

Prosper 2008™ is an extraordinary three day summit that brings entrepreneurs and leaders committed to creating environmentally conscious businesses together with people looking for new ways to create a better lifestyle.

At Prosper 2008™ you can network with like-minded people and build relationships based on your mutual passion for social and environmental change and entrepreneurship. You will work in small groups based on your shared interests, passions, and talents. Together, you will learn how to grow your business without sacrificing the planet.

You will learn the how-to’s, the with-who’s, and determine your next steps towards prospering in a new world of social and environmental responsibility.

If you are an entrepreneur with a business (or business idea) that includes both profit and a social or environmental benefit, come to Prosper 2008™. Be part of the most important business trend of our time.

If you are someone who wants a green lifestyle, but you do not know how to make it work for your life and business, then join us for Prosper 2008™. This is a great jumping off point to expand your practical and theoretical knowledge of green business.

At Prosper 2008™ you will have the chance to be a part of a community that is creating the context for the new economy.

Speakers will include world-reknown hotelier and CEO of Joie de Vivre, Chip Conley; Senior Environmental Attorney at Pacific Gas & Electric and former Menlo Park Mayor, Gail Slocum; Future 500, President & CEO, Bill Shireman, and many others.

Business Strategies for Environmental Sustainability
Palo Alto, CA, September 14 - 20, 2008

Business Strategies for Environmental Sustainability, hosted at the Stanford Sierra Conference Center, offers executives a camp-like retreat where they can explore what it means to turn sustainable business practices into competitive advantage. The program is designed to cover a range of issues on the topic of sustainability that are central to those who are leading sustainability initiatives in their roles as leaders in business, government, public agencies, and environmental advocacy organizations.

Today, environmental sustainability has become an objective both in our public policies and our business strategies. Consequently, best practice in environmental sustainability needs to be understood by business executives, environmental activists, public administrators, and regulators alike. The goal of our program is to bring together executives from each of these worlds, to expose them to state-of-the-art knowledge on environmental sustainability in business, and to facilitate their learning from one another. The program aims to be a watershed event in each participant's career, accelerating the development of those who will shape tomorrow's sustainable business and public policies.

Key Takeaways

• Frameworks to understand how organizations can strike a balance between business and environmental objectives while managing complex stakeholder relationships
• Strategies to gain competitive advantage through environmentally sustainable practices, including product and process innovation and sustainable supply chain management
• Deeper awareness of best practices across industries in the area of environmentally sustainable business and leadership skills to enable action as an internal change agent

Intertek's 4th Annual Ethical Sourcing Forum
October 2, Paris, France

Interested in strengthening your ability to reach organizational supply chain goals? Mark your calendars for October 2nd to attend the 4th Annual ESF Europe.

Presenters from Marks & Spencer, The Gap Europe, LVMH, L’Oreal, Alcan, MeadWestvaco, The China Center, FLA, SNCF, WWF, FSC, CIES, Acona Ltd., CBSR, Open SRI and many more will take delegates “behind the scenes” to demonstrate effective “Models and Tools of Practice” presently used for Sustainable Purchasing, Carbon Foot Print, Remediation, Supply Chain Rating/Reporting, Capacity Development and other practices. Discover practical solutions to systemic challenges and exchange ideas to bring your demands into focus.

Ethical Corporation's 2nd Annual European Anti-Corruption Summit
October 6 - 8, 2008, The Hague

Anti-corruption enforcement around the globe is continuing to heat up. The US currently has 50 investigations under way and in Europe there are now more than a 100. This increased focus has added to the urgency for many companies to get their anti-corruption, compliance and ethics programmes working effectively.

It's no surprise considering the fact that a companies preventative measures, or lack of have a direct relation to the severity of penalty incurred.

Fines have been seen to escalate into the 10's of millions and senior executives have even faced prison sentences. But the costs don't stop there. Once a company has come under investigation they will have to launch an internal investigation of their own which in itself could cost millions. On top of this is the risk of reputational damage which can have a dramatic effect on stakeholder perceptions and cause signicant loss of business.

So if you're one of the people responsible for managing compliance, ethics and anti-corruption then don't miss this opportunity to join us at the next European Anti-corruption Summit.

The conference will cover the most up-to-date topics when it comes to corruption prevention, with case studies from many of Europe's leading company's. The event offers a practical learning environment where you will have time to share information, ask questions, discuss and network with peers.

Support The Future 500's Programs

The Future 500 has teamed with Groundspring.org to make it easy for you to support NGO involvement in our various initiatives. DONATE NOW

.

Previously Featured Articles

June 2007
How to Win the War Against Hate: We are experts on hate. We work with people who hate every day: Muslims and Christians who hate each other in the Middle East, Arabs and Africans who hate each other in Sudan, corporate executives and activists who hate each other across the developed and developing world. Our job is to decimate hate - to destroy it, and the counterproductive actions hate justifies, so that we clear a path for rational, sensible, effective behavior. Our approach is called engagement. We bring together adversarial stakeholders - partisans with a stake in one another's future - in a process that turns their attacks away from each other, and toward the systemic causes of the conflicts that divide them. The most important part of stakeholder engagement is the process of dissipating presumption, prejudice, anger and hate. Once this is done, solutions can come forward... READ FULL ARTICLE

February 2007
Multinationals and Their Stakeholders Set Plans For a More Harmonious 2008 Olympics: In August 2008, when three billion people turn to their televisions or the Internet to watch the Olympic Games in Beijing, it won't just be the athletes commanding the attention. China itself, and the many multinational corporations operating there, will also be center stage. They won't be judged for their athletic prowess, but for their performance on issues like chemical spills, child labor, democracy, and press freedom. That is why two hundred global corporate executives, Chinese government officials, influential Chinese citizens, and non-profit leaders gathered in Beijing last year, for the Future 500 International Forum, to develop a more collaborative approach to the issues they will face when the Olympics begin less than two years from now... READ FULL ARTICLE

November 2006
Turning Conflict Into Cooperation: Ten years ago, top executives at three Mitsubishi companies were suddenly faced with a protracted consumer boycott campaign waged by activist NGO Rainforest Action Network (RAN), which sought to tarnish the company's brand to force it to change its business practices. Instead of fighting RAN, the companies did exactly the opposite of what its lawyers, public relations experts, and crisis professionals advised: They sat down and engaged the group's leaders in dialogue.... READ FULL ARTICLE

February 2006
Toward A Framework for Supply Chain Leadership: This document represents a first step toward a potential framework for supply chain leadership. It is based on interviews of companies conducted before the Working Group (October 2005), literature searches and reviews of thirteen companies and ten independent supply chain initiatives, and discussions among executives during the Working Group. It is a project of the Working Group on Global Corporate Citizenship and Risk Assessment, and is prepared by The Future 500 and The Conference Board.

This document is meant to start a discussion on supply chain leadership – not finish it. The definitions, approaches, interpretations, and assertions are preliminary, intended to help drive thought and consideration. Feedback is invited.

Through this process, a management framework for supply chain leadership is emerging, elements of which will continue to be added, shaped, and improved... READ FULL ARTICLE

October 2005
PET Peeve: In the face of continued declines in plastic recycling rates, a handful of PET industry advocates have hit upon a new strategy: prevent new more sustainable alternatives from entering the market. Their approach is just plain wrong. Better alternatives are the key to the success of plastic recycling, and may represent the future of the companies now devoted to PET. PET exploded onto the marketplace, and quickly captured share once held by more easily recyclable packages, like aluminum and glass. PET now dominates the soft drink market, especially bottled waters and noncarbonated drinks. But the promise of PET recycling has not been filled, and never will... READ FULL ARTICLE.

July 2005
Avoiding Survey Fatigue: It is an old truism that wise investing depends on good information. While there are well-developed, government-regulated mechanisms for collecting and disseminating accurate and relevant financial information from publicly traded companies, the means for gathering and distributing non-financial information are relatively early in their development. But the demand for non-financial reporting is growing as even mainstream asset managers and institutional investors increasingly appreciate the importance of issues like greenhouse gas emissions and other environmental and social liability potential. Many companies have responded by... READ FULL ARTICLE.

March 2005
The Stakeholder Imperative, Part 2: In this article, we outline a three-phase stakeholder engagement process. These phases (and the steps or tasks that comprise each phase) build a sequence of activities that can create the foundation for an effective stakeholder engagement process, guide the business strategic planning agenda, and increase a company’s ability to be robustly competitive in a changing business environment... READ FULL ARTICLE

October 2004
The Stakeholder Imperative, Part 1: Today’s companies serve not just shareholders but an increasing array of ‘stakeholders’ including employees, customers, community groups, governmental regulators and environmental advocacy groups...What are the features of this new environment for business? READ FULL ARTICLE

July 2004
Jumpstarting California's Hydrogen Economy: Governor Schwarzenegger’s recent announcement to commit 0 million to create a California hydrogen highway by 2010 positions the State as leading this technological transformation in the U.S. But several states – Ohio, Michigan, New York, Texas -- are competing for this title... READ FULL ARTICLE

April 2004
Dogged By Dozens of CSR Standards: The surge of standards for Corporate Social Responsibility (CSR) and Socially Responsible Investing (SRI) is creating tremendous challenges and opportunities for leadership companies... READ FULL ARTICLE

To receive a special trial subscription offer to Ethical Corporation magazine for Future 500 members only, visit http://www.ethicalcorp.com/subscribe and enter "ECT05" as your promotional code to get your free subscription. You don't have to provide any credit card details, and you can cancel your trial subscription at any time. If you have any questions please do get in touch by emailing the subscription department at subscriptions@ethicalcorp.com.

Please feel free to forward this message to interested colleagues.