This year the event was held in Dubai and 84,000 people registered to attend. Critics often point to the carbon footprint of moving this many people from place to place regardless of whether they pay the extra money to “offset” the carbon footprint of the air travel.

Sultan Ahmed Al Jabber’s appointment as COP28 president was also controversial: Al Jabber is the Minister of Industry and Advanced Technology of the UAE and Chairman of the Abu Dhabi National Oil Company. Critics including Al Gore questioned whether it made sense for the meeting to be held in an oil-producing state and led by the chairman of a company that churns out more than 4 million barrels of oil per day.

This didn’t prevent the future of fossil fuels from taking centre stage as one of the main issues discussed at this year’s meeting alongside the ongoing discussions about equity and climate finance. There was also debate about the idea that funds should be provided to support countries impacted by climate change. 

Cop28 was also notable as it marked the first official stocktaking to measure the world’s progress against the agreement in Paris reached in 2015. The unsurprising outcome, which helped to focus minds and build Cop28 consensus, is that the world needs to transition to a low-carbon energy regime and the window to act is rapidly closing. 

In the end, the almost 200 countries involved committed to doing this although the final communique avoided strong language such as setting a specific timeline to phase out or end the use of coal, oil and gas. Instead, the language used was in the context of agreeing to keep the target of 1.5ºC average warming and “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, to achieve net zero by 2050 in keeping with the science”.

One way to look at COP 28 is that the event was a resounding success and marks the beginning of the end of the fossil fuel era. This was the tone of the remarks by Simon Stiell, a former tech executive before taking on his current role as executive secretary of the Convention in 2022. Al Jabber was even more triumphant as he told the assembled audience: ‘Together, we have confronted realities and set the world in the right direction. We have given it a robust action plan to keep 1.5[°C] within reach.

A contrarian view is that Al Jabber and his colleagues in other oil-producing nations have managed to postpone a clearer plan to phase out fossil fuels to protect their own interests. Greenpeace called the final agreement “disappointing” and expressed its concern that the next meeting, COP 29, is scheduled for Azerbaijan, another oil processing country.

In my view, perhaps the most significant achievement of COP 28 is that the countries of the world reiterated their commitment to the process itself. This involves increasingly ambitious nationally determined contributions or targets, as well as different groups of countries agreeing to do more than the rest, on issues ranging from banning coal to transforming their agricultural sectors.

The implication for business is that the world is clearly moving in the right direction. What this means is that the issue is not whether a specific company should transition to a low-carbon operating model but when. This makes it fundamentally a financial decision. My advice is companies should move to a low-carbon operating model sooner than later.

The even better news is that behind the scenes Global Capital has got the message and is putting its money behind industries, companies, and technologies which will be part of a carbon-neutral future. By Global Capital I mean the sovereign wealth funds and enormous pension funds which manage hundreds of billions of dollars.

The people who manage these organizations have already turned the page and are looking for innovative green energy and technology projects which will accelerate the transition away from fossil fuels. Many of them were in Dubai and are actively seeking projects and companies that will be on the right side of history. 

Cop28 just about delivered the collective willpower to keep the fight against global warming as a top priority. Sovereign wealth and pension funds and the projects they invest in are the ones tasked with actually winning it. 

The post COP 28 first appeared on Doing Business on the Earth.

What is clear is that Europe must reduce its dependence on Russian gas but should do this by doubling down on the European Green Deal and investing in energy efficiency, Solar, Wind, and maybe even nuclear energy as opposed to simply burning coal instead of gas. This path will cost more money in the short term but pay off over the medium and long term.

Despite these challenges, there is a change occurring in the business world and I am increasingly being asked to talk about sustainability to different companies and groups of people around the world. There are also a number of outstanding books on the market these days which all point to a more sustainable future.

One of them was written by Lorenzo Massa, an IESE PhD. and two co-authors and is titled “Sustainable Business Model Design” which explains in a clear and compelling way how to build companies that are sustainable from the get-go!

You can read more about the book and order it here .

Another was written by Corey Glickman and Jeff Kavanaugh who both work at Infosys. Their book is titled Practical Sustainability: Circular Commerce, Smarter Spaces and Happier Humans. I will actually have the pleasure of interviewing both Corey and Jeff in New York City on June 28th. You can find more details about the session at the IESE Alumni portal here.

Infosys actually has an amazing sustainability story to tell and Corey leads the company’s efforts in this area. If you are interested in digging into the details of how to avoid the worst impact of climate change,  I suggest you play an interactive game developed by them and published in the Financial Times. In the game you have to make policy choices during three time periods and depending on what you choose, the world will transition to a low carbon economy faster, slower, or not at all. To play the game, click here (https://ig.ft.com/climate-game/)

A third book that you might want to look at is  “Net Positive” which was written by Andrew Winston and Paul Polemans, the former Chairman of Unilever who has also been on IESE’s International Advisory Board for many years. Paul will be interviewed by our former Dean, Jordi Canals in Madrid on June 27th and in Barcelona on June 28th.

The post So much going on in sustainability! first appeared on Doing Business on the Earth.

A question I am often asked is where all of this is going and what, if any, could be the endpoint for this war.

While I have no crystal ball and Russia’s latest comments about Moldova are deeply concerning, I do believe a likely scenario is a de-facto partition of Ukraine much like that which exists in Korea and Jammu and Kashmir.

The starting point for this outcome is the redeployment of Russia’s forces and its apparent inability to defeat the Ukrainian army and force a change of government.

A second point is that the partition of Ukraine along the Dnieper river seems unlikely to me as Ukraine’s second-largest city, Kharkiv, would fall on the wrong side of the line. Taking Karkhiv would cost the Russians dearly and reports of Russian casualties are already very high with estimates ranging from 15 to 22,000 dead with perhaps another 20-40,000 wounded. Experts say that a fighting force that loses 10% of its people begins to lose its will to fight and I do not think the Russian leadership will risk a mutiny for the sake of Karkiv.

More likely, in my opinion, is Russia will keep advancing along the open plain of the Donbas until the entire region and the coast of the Sea of Azov is firmly in its hand. Reports say that the open nature of the wheat and barley fields make it possible for the Russian Artillery to clear an area before its troops carefully follow. Once these goals are achieved then I think it is possible that Russia will agree to a temporary cease-fire contingent on the successful resolution of peace talks which can continue in Turkey or perhaps move to Belarus or someplace else.

Russia will demand that its annexation of Crimea and the future of the Donbas be recognized by Ukraine and I find it unlikely that Volodymyr Zelensky and his government will ever do that. the Ukrainians will demand that Russia give up both regions as well as pay for the reconstruction of the country and I do not believe that Vladimir Putin will ever admit that the war was all for nothing. This would lead to a stalemate reminiscent of the situation after the Korean war in 1953, the first war between India and Pakistan in 1947,  and the brief war that ensued after China invaded India in 1962. All of these conflicts ended in a cease-fire that never resulted in a full diplomatic resolution. Those cease-fire lines became the de-facto borders between the countries involved.

In Korea, it is called the DMZ or Demilitarized Zone and is essentially a 2-kilometer-wide strip of territory running across the entire country roughly along the 38th parallel. I have been there and on the Southern side, they have built an observation post, snack bar, and a gift shop. You can even go down and see the one of the tunnels that the North Koreans built to go underneath the highly fortified border.

Although the DMZ has been the de-factor border between North and South Korea for 69 years, both countries still refer to themselves as Korea and do not officially recognize the division of their country. This is where Donald trump walked into North Korea to meet Kim Jong-Un in 2019.

In Jammu and Kashmir, they call similar lines that were drawn after inclconclusive wars the Line of Control. West of Kashmir, the line of control seperates the province, now Union territoy form the Pakistini state of Azad Jammu and Kashmir or simply Azad Kashmir. In the North East, another line of Control sperates the Indian state of Ladakh from Askai Chin, or the name the Chinese give the region they took form India after the invasion of 1962.

In 2019, the Indian governement led by Narendra Modi changed the special status of Jammu and Kashmir which was protected by the Indian consituion and made three UNion terrioteis called Jammu, Kashmir, and Ladakh. The thing is that India has never given up its claims of soveriegnty for either Azad Kashmir or Askai Chin even though the situation has been relatively stable for decasdes.

This, I fear is a likely end state for the war that Russia has unleashed on Ukraine. Comming back to the situation in Moldova, Russia has been helping seperatist who want to make a new country, called the Pridnestrovian Moldavian Republic or Transnistria along the left bank of Dniester river which broder Ukraine. One could imagine that Russia’s egnuune war aims is to link Transnistria to the Crimea and the DOnbas and effectively cut Ukraine off from the Back Sea.

The probelm with this idea is that the Ukranians will fight t the end to protect the sourthern part of the country and this would also involve the occupation of Odessa. Odessa is a largely srussion speaking Ukranian city but I knw first hand that the people of the region are proud to be Ukranians even if they speak Russian with their families.

The only problem with this, and other geo-strategic anaylsys done by serious professionals is that we simply do not know the state of mind of Vladmir Putin. In a recent video his governement posted of him being “briefed” by his defense Minister, the man not only did not look well, but seemed completely disconnected from reality.

We can only hope that someone in the Russian governeemnt is concerned about the deaths of thousands of Russian soldiers and the long term effects this war will have on the Russian people. While far from perfect, a cease fire and a new line of control will at least stop the slaughter of innocents and allow millions of people to go home.

The post What’s next in Ukraine? first appeared on Doing Business on the Earth.

The invasion did take many people by surprise (including me) despite the fact that the Biden administration has been working steadily over the last few months to warn its allies that Russia was planning an invasion and even took the step to go public with some of its intelligence on the upcoming invasion.

Just after Russia recognized the so-called “republics” of Donetsk and Luhansk my students asked me what would happen. In class, we have been speaking about the historic roots of the current crisis, NATO expansion, the energy dependency of Germany and other European countries on Russian gas, and other related issues. My students know that I recognize Russian concern about the Eastward expansion of the Alliance despite Western promises not to do so and thought I might have some special insight.

Of course, I was wrong.

My own conclusion is that Russia would stop with the Donbas, as the region is known, and offer the world a similar situation as it did when it annexed Crimea eight years ago. At the time I did confess that my bias was to look for reasons why a full-scale invasion was unlikely.

My thinking was that Putin would either be satisfied with the Donbas or, at worst, would draw a line north from Crimea and establish a new Republic or Russian province in Eastern Ukraine. This would give a couple of hundred kilometers of strategic depth and keep Ukrain, and whatever army it eventually had, that much further from Moscow. I could not imagine he would really send his forces against Kyiv and its 3 million people.

The fact is war is almost too horrible to contemplate and most of us will try to rationalize it away.

What’s Next?

The best clue to what Vladimir Putin thinks is to listen to what he has said recently. His most recent speech, on February 24th is clear. He feels that the United States took the wrong lesson from the collapse of the Soviet Union and has proceeded to impose its own imperialistic vision of the world based on lies, manipulation, and wars of its own which have all had a devastating impact on the countries involved.  He referred to the change of government in Ukraine in 2014 as a coup and calls its current leadership a Nazi regime. You can read it for yourself here.

While it is easy to reject Putin’s public remarks as propaganda, citing for example that Ukraine’s brave President Volodymyr Zelenskyy is Jewish, he appears to be acting on the premise that it is true.

On that basis, it seems that the war will continue until Ukraine surrenders or its army is defeated. As he promised, Joe Biden will continue to impose additional sanctions on Russia as the invasion proceeds but so far they are far from sufficient to stop the advance or cause Russia to withdraw.

Germany has also expressed its rejection of the invasion by imposing sanctions and not certifying Nordstream II, the second gas pipeline that connects it to Russia without going through Ukraine. What the west has not yet done to my knowledge is to stop the flow of gas through Nordstream I or Turkstream another pipeline that carries Russian gas to Europe through Turkey. That is the only step I can imagine will have a real impact.

How Bad Will Things Get?

The truth is I do not think anyone has a crystal ball and it is unclear will this thing will end up. What I do think makes sense is to consider a range of scenarios as to where the situation will go.

• After Ukraine, Russia moves on one of the Baltic states triggering article 4 bringing NATO into War with Russia. I consider this highly unlikely and guess that the reason Russia has invaded Ukraine today is that it is not yet a member of NATO.
• After Ukraine, the world settles into Cold War 2.0 and the next test of Western resolve comes if and when China makes a similar move on Taiwan. China’s apparent acquiescence to Russia’s move may indicate that Xi Jinping and Putin have agreed to this.
• After an initial victory and the capture of President Zelenskyy, Russia offers a peace treaty creating a new Republic in the Donbas in exchange for liberating Zelensky and allowing Ukraine to govern its own affairs without NATO membership or heavy weapons.
• The war drags on for months and the easy victory that the Russian press has foretold does not come to pass. This may force the Russians to pull back to the Donbas at least for the time being.
• A number of divisions of the Russian army stop fighting and protests across Russia create an internal struggle for power. While this is also unlikely, there are reports that Russian conscripts are being brought to the front lines and that protests are occurring in Russia

Over the last few days, I have read a number of articles, blogs, and tweets that talk about an inflection point and how nothing will be the same again.  I find much of this rhetoric a bit over the top. I lived half of my life during the cold war and understood that war could break out at any time up until the collapse of the Soviet Union in 1991. If we do end up in Cold War 2.0 we will, most likely, survive.

For the time being, all we can really do is send money, food, and moral support to the people of Ukraine.

(You can, by the way, send money to the Ukrainian Red Cross here.)

The post What price freedom? first appeared on Doing Business on the Earth.

Most of the articles I have seen show astonishing numbers such as 4 million people have quit their jobs in a given month in the United States. According to the Bureau of Labor Statistics, the actual number for April 2019 was 3,992,000 and this is certainly alarming. The thing is that this is actually only 2.8% of the 143 million people working in the United States so the first thing we need to do is to put such numbers in perspective.

Even so, if you add up April, May, and June, you get 11.5 million people leaving their jobs, and the 12 month total from November 2020 through October 2021 is over 45 million!. This data comes from a database called JOLT that the Bureau keeps up to date through a regular survey. The number that I and most reports are drawing on is called the “quit rate”. You can read more about the database here.

To get a better idea of what is actually going on, I thought it would make sense to compare the last year with another year before the pandemic to see if it’s normal for millions of people to quit their jobs. The number for the period of November 2017 through October 2018, for example, was 40 million. The difference between the last year and a few years ago is about 5 million more people have left their jobs in the last year than normally do so.

What this analysis tells me is that the great resignation does appear to be a real phenomenon although the numbers are far lower than what you might see in some of the press reports and on social media.

In looking through the different articles and reports the reasons for the mass resignation include:

• People being burned out by zoom meetings and working from home
• Others and especially front line personnel like nurses and check out people concerned about their own health
• People who feel that their wages and benefits are simply too low or limited to justify the time spent at work

At the more granular level, the quit rates in health care, retail, and foodservice are all up by a full percentage point or more compared to a couple of years ago and these are some of the lowest-paid and highest risk sectors of the economy.

In his opinion piece on the subject in the New York Times, Paul Krugman rejects the idea that the resignation has to do with emergency unemployment benefits but does lend his support to the ideas of Arindrajit Dube, from the University of Massachusetts at Amherst who thinks it is due to people realizing that they were working in low paying jobs they didn’t like any

One thing I have heard from many people from all over the world is that the pandemic has helped them remember what is most important in life such as health and family. Maybe the explanation is that 5 million people, about 3.5% of the American workforce realized in 2020 that their current work was taking them away from that without providing enough of a sense of purpose or economic compensation to make that sacrifice worthwhile.

The post The numbers on the Great Resignation first appeared on Doing Business on the Earth.

These meetings have occurred almost every year since beginning the process in Rio almost 30 years ago. The process has had its fits and starts and some would say that it reached its culmination in the 2015 meeting in Paris which produced a global agreement to limit the average rise in temperature to 2º Celsius and to try and keep it below 1.5º. We have already heated up the planet by 1ºC and urgent action is needed to avoid the worst-case scenario.

Even before the Rio conference, in 1988, The World Meteorological Association and the United Nations established the Intergovernmental Panel on Climate Change (IPCC). This is a scientific endeavour working under the United Nations to estimate the extent of the problem and to propose solutions to it. So far it has published six complete assessments of the situation. The first was in 1990 and the 6th was published just a few weeks ago.

Everyone should read the Summary for Policymakers of the latest report which you can find here. The fundamental difference between this report (AR6) and earlier reports is that the IPCC has dropped its normally cautious and careful language. Typically it would give bad news and qualify it by saying things like they had high confidence in certain findings, etc. This time, the language is clear and alarming. The first finding in the summary, for example, is:

I could go on, but my interest today is not to overstate the obvious or summarize the IPCC’s report. Instead, I want to talk about an initiative that IESE business school is involved in which so far combines professors from 8 of Europe’s leading business schools which we are calling Business Schools for Climate Leadership.

The group is the idea of the former Dean of the Saïd Business School at Oxford, Peter Tufano,  for us to work together on this critical topic. Besides IESE and Saïd, the group includes IMD, Insead, HEC Paris, The London Business School, The University of Cambridge Judge Business School, and The Instituto de Empresa in Madrid.

The long-term vision of this community is to explore opportunities to influence the leaders of organizations, by :

• Collaborating on research to identify trends and best practices
• Working across sectors and generations to accelerate the business world’s response to climate change
• Imparting a sense of urgency and awareness of the role of business in climate change mitigation and adaptation in outreach activities
• Creating an impact through joint outreach to all eight alumni communities.

The first activities that the group is doing are preparing a digital toolkit that summarizes some of the issues we think business leaders need to think about and also presenting a series of webinars to talk about the different ideas. I will, for example, participate in a webinar together with a colleague from Insead, Mark Stabile on October 13th at 18:30 Barcelona time. You can learn more about it here.

We are also hoping to share the toolkit with the world at COP 26 itself.

I have written in the past about the Paris climate deal and some of the challenges associated with it. The biggest issue is that the Nationally Determined Contributions, that is to say, the voluntary targets that each country has committed to) were not enough to solve the problem in 2015. Most observers expect that many countries will substantially increase their targets in Glasgow.

In addition to national governments, hundreds of companies, cities, and regions are also making commitments to reach zero emissions. This is often referred to as the Race to Zero and is an example of how all aspects of civil society need to come together. This is the idea behind Business Schools for Climate Leadership.

The post Business Schools for Climate Leadership first appeared on Doing Business on the Earth.

I will write a separate post about another called “Beyond Gravity” which was about a new age of space exploration.

On the first day Mike Pompeo, the former U.S. Secretary of State, gave a keynote speech which reminded me of another keynote speech at the same conference by Niall Ferguson the historian. In 2019, Ferguson surprised the conference by launching into a strongly worded condemnation of China and announcing that he believed that the U.S. and China were already engaged in Cold War 2.0.

Pompeo doubled down on this idea after bashing the Biden administration for losing Afghanistan to the Taliban. According to Pompeo, he had secured promises by the Taliban not to overtake the country after the American withdrawal. His idea was to keep the American airbase at Bagram operational and then to secure the continuation of the Afgan government by “inflicting unacceptable losses” on the Taliban if they were to break the agreement.

Even though the airbase was closed in July, my guess is that the Biden administration looked at this option and felt that killing tens of thousands of fighters and civilians from the air was not in American interests in the long run. Pompeo clearly would have argued for such a course.

Pompeo, of course, is a person of interest in Korea because of the meetings he has had with the Dictator of North Korea, Kim Jong-Un. Pompeo first went to North Korea in April 2018 when he was still head of the CIA, on a secret mission to open up a dialog between Kim and Donald Trump. That contact and subsequent meetings eventually lead to the high-profile summit meetings which failed to deliver the deal that Mr. Trump thought he could make.

About Kim, Pompeo told the audience in Seoul that he was a “young man” who could not be trusted but with whom he still thought a deal could be worked out.

What concerned me more, however, was Pompeo’s attitude about China.

For Pompeo, Covid 19 clearly originated in a lab in Wuhan and has spread around the world due to China’s actions at the beginning of the outbreak. China, in his view, has built its economy by stealing intellectual capital from the west, was a threat to regional peace and security, and must be contained. His language was reminiscent of the architects of the containment policy that characterized the first cold war with the former Soviet Union.

In another session at the same conference, Graham Allison spoke about his book Destined for War, which looks at the US-China relationship in historical terms and about which I have written before. Although he participated remotely, Prof. Allison told the conference attendees that he saw a real danger of misunderstandings and miscalculations leading to war between the two countries although he also saw two ideas that could keep the peace.  One is the presence of nuclear weapons which both sides have and could lead to total annihilation. This idea of Mutually Assured Destruction did actually keep the peace between the US and the Soviet Union and might do so in this case.

The other is the mutual need for both countries to take further action on climate change. Clearly, the Biden administration will be pushing hard in this direction.

To go back to Mike Pompeo, however, he has spoken openly about protecting U.S. energy interests and opposes the Paris Climate framework. When asked by the moderator of his speech if he was running for President of the United States, he said this was not the time for an announcement but he would be spending the next months doing his best to elect a Republican majority to the house in 2022.

While I disagree with Pompeo on most points, I must admit to being impressed by his speech. Pompeo comes across as a polished and intelligent public figure with a clear view of the issues and a commitment to defending the United States’ position in the world. He has also lost a lot of weight.

If he were to run and win in 2024, war with China will become a little more likely.

The post Mike Pompeo seems to be running for President first appeared on Doing Business on the Earth.

As a result of the withdrawal of the United States combat troops from Afganistan, the Taliban have managed to overrun the country. After 20 years, a reported $ 1,000,000,000 and the death of just under 6,300 American soldiers and contractors it is easy to see the effort as a total disaster.

Over the next weeks and months, there will be a number of articles, analyses, and commentary about the war, the withdrawal, and whether or not those people, and the tens of thousands of Afgan security forces and civilians died in vain. Much will also be written about Joe Biden’s decision to withdraw in the first place and if he should have waited until next winter.

The problem with most of the commentary we will read about the fall of Kabul, as with almost every topic under discussion today, is it will become politicized, partisan, and largely be written by people with little to no personal experience or expertise about the subject in question. In the case of Afghanistan, to have a considered opinion one would need first-hand experience in the country, familiarity with military operations, nation-building, and aslo the wider geopolitical challenges facing the region.

By the way, I include myself in this group as I have never been to Afganistan and spend most of my time teaching at a business school.

The good news is that there are a number of people who do have solid credentials and experience with the American engagement in Afganistan over the last 20 years. The bad news is that many of these people will disagree with each other and some will bask in their 15 minutes of fame to either explain what a disaster the Biden administration has caused or how this was the inevitable end of the story.

Merriam Webster defines epistemology as “the study or a theory of the nature and grounds of knowledge especially with reference to its limits and validity”. In plainer language, it’s about how do we know what is actually true?

What seems to be true in the case of Afganistan is that by beginning the withdrawal of U.S. forces on May 1st, the Taliban were emboldened to attack regional cities far from the capital. Faced with determined fighters and without the backup of U.S. ground forces, the Afgan army and police began to lose ground and then collapsed in the last week or so.

History can also help us understand what is going on although we need to be careful about bias and manipulation in the historical record. Without going into too much detail, England sent armies into Afghanistan three times in  1839, 1878, and 1919. During the last century, the country suffered from revolts, civil wars, and an eventual de-facto occupation by the former Soviet Union. Through all of these evolutions, I understand the country was really run at the local level by tribal chiefs and regional leaders, rather than the central government. In the modern era, no foreign power has been able to hold onto the country for very long.

This is the context in which the American-led attempt to build a modern nation with a capable army and functioning institutions needs to be looked at. In my view, this will also be the key to understand how the Taliban will manage their new responsibilities in the coming days, months, and years.

The challenge will be finding out what is really going on and deciding who to trust as the story unfolds.

The post The epistemology of the Fall of Kabul first appeared on Doing Business on the Earth.

This year has been no exception and collectively the group did an amazing job of looking at most of the most important aspects of sustainability in business today. I am incredibly proud of their collective achievement.

My own opinion is that energy and the way we harness, distribute and use it is the key to a large part of the sustainability challenge and a number of my students looked at this issue from a number of angles.

One group looked at greenhouse gas emissions and discussed their sources and the big ideas that could lower them. Another focused on renewables and their possible evolution to 2050 and 2100. A third went deeply into geothermal energy and showed how relatively simple technology could lower the energy consumption of homes and buildings in many parts of the world. A fourth looked at the role of electromobility and the potential for distributed energy storage thanks to electrifying transportation. A fifth looked at the role of forestry in managing the world’s carbon budget.

Other groups focused on the social side of sustainability with one looking at how Covid-19 has impacted the UN¡s 17 Sustainable Development Goals. A second group spoke about how businesses might choose to go beyond sustainability to becoming truly responsible to civil society as a whole.

In terms of technology, one group looked at smart cities while another looked at the application of Artificial Intelligence to sustainability in general and a third looked at advanced technology as it applied to agriculture.

The circular economy was the topic of yet another wiki as we need to do something about plastics. I also had a group work on sustainability in the wine business and another on developing tasty and sustainable alternatives to meat as the footprint of a hamburger is unbelievable high.

We also had a wiki on food waste which has been a constant over the years and another on water scarcity which was topical because of what happened in cape town last year.

Most of the wikis were fundamentally upbeat speaking about solutions to the world’s problems and how business can and must play a positive role to solve them. The last one was perhaps the most controversial and spoke about the role that lobbying plays in the debate on sustainability.

Here, I am afraid that my students were very critical of business in general. In their view, business often takes the lead in pushing back against environmental legislation and slowing down the world’s progress on addressing climate change, air and water pollution, and other problems.

To quote the CEO of one of the world’s largest plastics companies, sustainability is the biggest business opportunity of our generation. Instead of fighting against it, companies should develop solutions to problems and then lobby the governments of the world to enact legislation in the direction of what they have figured out!

This will give a lasting competitive advantage AND make the world a better place.

The post MBA students on sustainability first appeared on Doing Business on the Earth.

The purpose of the course is to equip our graduates with the understanding and the tools they need to make sense of the complex world we live in and help the companies they will join and found prosper in this environment.

The thing is that most business people (and MBA students) have a fairly good knowledge of the history and geopolitical situation of their own country or region but often have little to no idea about the rest of the world.  My hope is that these students will, for example, have a better ability to understand the recent news from Jerusalem, Gaza, and now other Israeli cities as the latest crisis unfolds. In my view, only a good grasp of history and context can give us the ability to think critically about the news that comes our way and to discern the truth when we see it.

At the end of the course, my students select specific companies that are operating in specific places and explore the link between the business strategy of the firm the geopolitical reality that it is dealing with. What I found fascinating as I read through their work are the countries and companies they chose to focus on.

There were 34 projects between the two sections of the class and the following is a high-level description of the topics and some of their conclusions.

3 groups focused on the geopolitical issues associated with the vaccines developed for SARS-CoV-2. One topic of particular interest to them was Astra Zeneca and the perception that it is primarily a UK company. The geopolitical issue was about Brexit and how the management of limited supply played out on the European continent.

China was by far the biggest area of interest with more than half of the groups looking both at western companies doing business in China and Chinese companies doing business around the world. Of particular interest was Chinese investment in specific African countries in the mining, energy, and infrastructure sectors.  This is an issue we discussed at length in class and the students seemed to be evenly split between those who thought China was behaving as a sort of neo-imperialist power and those who thought they were just doing good business and taking advantage of opportunities that Western firms were not able to see.

Beyond this issue, a few groups looked at other aspects of doing business with China. One group looked, for example at Alibaba’s apparently successful entry into the US market in the B2B space, another at the problems that the NBA has recently had with China, and a third on the challenges of news organizations like the Wall Street Journal in the country.

Two groups specifically looked at TSMC, the Taiwanese semiconductor company, and the way its future, and that of Taiwan relate to  Chinese ambitions in this critical industry.

Other groups looked at infrastructure and energy in Latin America, CNN in Venezuela perhaps the most striking topic was looking at religious tourism in Saudi Arabia and Iran in the context of the tensions between those two countries and the Shia and Sunni communities.

In addition to their detailed reports, my students also send me video blogs in which they discuss their view of the world. While many are essentially optimistic, all of them recognize the complexities and dangers that the world is confronting.

What we were able to do in the classroom is to talk openly about some of the thorniest and most controversial places in the world and to do so with respect, a willingness to hear the other side, and even compassion for people’s individual stories.

This generation gives me hope that the world will make it through the challnege¡ing times ahead.

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In a post last week I wrote about Bill Gates’ new book How to Avoid A climate Disaster. One of the criticisms of Gates’s book is his tremendous confidence in technological development. For many environmentalists, the idea that we can engineer our way out of the mess that our engineering has made is not only wrong but also might give people the idea that they do not have to change behavior in order to avoid climate change and other potential problems.

Another controversial figure who makes a similar argument is Bjorn Lomborg, the author of False Alarm, Cool It, and the Skeptical Environmentalist. Bjorn does not deny climate change but thinks we would be better off spending money on other more immediate problems facing humanity and spending heavily on energy research.

My own view is that we need to take steps to accelerate the transition to a low carbon economy and that engineering and fundamental scientific research is key to that effort. One particular promising set of technologies are sometimes referred to as Frontier Materials.

Frontier or advanced materials are defined as “Any material engineered, processed or synthesized, to provide enhancement in functionality or presents novel properties compared to conventional materials for a given application in a specific industry”.

While this definition might sound a bit esoteric, the fact is that defining the class of newly engineered materials is actually quite difficult. One of them, for example, is Graphene which was produced in 2004 by Konstantin Novoselov and Andre Geim. Graphene is essentially a two-dimensional material made of a single layer of carbon atoms arrayed in a mesh. Maxine is very strong and conducts electricity very, very well. Verge science has a 7-minute video on the stuff you can watch here.

Mxenes are another class of materials which are only a few atoms think and have additional characteristics. These and other Frontier Materials are able to do things that the normal building blocks of our world such as silicon, steel, and cement simply can not.

While the science is fascinating if a bit difficult to follow, the reason I am interested in Frontier Materials is what can be done with them particularly concerning some of the challenges facing humanity today.

In terms of the planet, these materials have the potential to revolutionize the way we store and consume energy, harness the potential of space to solve problems here on earth, and also drastically reduce the energy required to manage the enormous amounts of data we are and will produce as time goes by.

For people, these materials can make wearable electronics as well as a number of promising medical applications that can improve the quality of life for millions around the world.

Frontier Materials can also desalinate water at a fraction of the energy currently required and can also be used to build the sensors needed to efficiently manage resources in the smart cities of the future.

To explore these and other applications of Frontier Materials, the AMPT, which brings together some of the leading research institutes in the world, is organizing a conference called Matter 2021. The virtual forum will be held on April 28 and 29th.

You can learn more about the event and its agenda here.

The post Will frontier materials save the earth? first appeared on Doing Business on the Earth.

According to Forbes, in 2021, Gates was only the fourth richest person in the world as he has fallen behind Jeff Bezos, Elon Musk, and Bernard Arnault who owns LVMH, Sephora, and a number of other luxury brands.

For people, like myself, who have been following the technology and politics of climate change for many years, you will find very little in the book that you are not familiar with and you make take exception to some of the things that Mr. Gates chose to leave out or the way he does the math.

For people with little knowledge on the subject, however, I think the book is important as it lays out the situation in very simple terms and makes a compelling argument for the world to do something about the situation.

Bill Gates divides the modern world into five basic activities and goes through the impact each one has on the climate and lists some of the technologies that could potentially make a difference. The five areas are useful as an organizing principle and are :

1. How we plug in (ie. generate electricity)
2. How we make things
3. How we grow things
4. How we get around
5. How we keep cool and stay warm

Another point that Gates makes a number of times is that the mitigation of climate change is different from adaptation to it and this is a critical point. Mitigation is about sharply reducing the amount of greenhouse gasses and getting to zero, or close to it, before it’s too late.  Gates makes the point that reducing by 30% say by 2030 might be a good idea but only if it is a first step to get to zero after that. His example is that switching thermal electric plants from coal to gas only makes sense if there is a longer-term plan to close them altogether!

Adaptation is about living with slightly higher temperatures and the consequences they will bring. Gates is clear that some adaptation will be needed and I also liked the way he spelled out what some of those areas are without dwelling too much on the more cataclysmic descriptions that many authors use to lay out what might happen.

Perhaps the most controversial and useful idea in the book is Gate’s use of the idea of green premium throughout the book. Gates uses the idea to put an economic cost in 2020 dollars on doing things the way we have been doing them and switching to a more ecologically sensible approach.

According to his estimates, for example, it will cost between $ 0.013 and $ 0.017 more per Kilowatt-hour to make all of the United States’ current electrical production carbon neutral as compared today. This will be roughly a 15% cost increase and is clearly affordable at the national level although Gates acknowledges that it will adversely affect the poor.

The reason the term is controversial is that our current system places no cost on pollution, carbon emissions, and other problems with the current energy mix. It also leaves out the actual subsidies that fossil fuels enjoy such as licenses to drill on federal land, low energy taxes, and the deployment of the U.S. Military from time to time to secure access to oil and gas.

The reason that I find it useful is that it puts the numbers in perspective and allows reasonable people to consider what they want to do.

Another thing I like about the book is that while Gates discusses the importance of public policy, he also stresses his conviction that innovation and industry are the keys to solving the problem. Some readers might take exception to his using examples from his own investments when discussing promising new technologies.

His firm, Breakthrough Energy, has invested in 36 promising startups and the way I read it, he is simply talking about what he knows best rather than push one solution over another. You can see the investments here if interested.

All in all, I liked the book and I think it will help make the case that combatting climate change is not only a moral imperative but is also essentially doable and good for business and society.

f you would like to read a more critical review then I suggest reading Bill McKibben’s in the New York Times. McKibben has been writing about climate change and the need to take action since the 1980s and is as knowledgeable on the subject as anyone.

The post How to Avoid A Climate Disaster (review) first appeared on Doing Business on the Earth.

If you have been reading the posts in this space, you already now that I agree with Christiana Figueres, the Costa Rican diplomat who led the negotiations for the Paris Climate Accord signed in 2016. Either the world will shift to a low carbon economy over the next ten years and mitigate or at least slow down the onset of catastrophic climate change or it will not.

If it does, then the transition is an enormous business opportunity and the financial rewards will go to those companies that facilitate it in terms of products, services, and new business models. What we would see in this scenario is rising sales, profits, and share prices for those companies that are involved in this transition and falling results for those which represent the current energy paradigm.

The other scenario is that we waste the next ten years like we have the last twenty. In this case, the Intergovernmental Panel on Climate Change (IPCC) has determined that it is very likely that the weather will get significantly worse. This will be experienced by even stronger storms, floods and draughts, more wild fires and increasing desertification and water stress. Eventually, perhaps in the 2030s, the world will wake up to the scale of the problem and the transition will happen anyway but it will cost more money and we will live in a world where adaptation to climate change will be urgent in many parts of the world.

One implication for business if this scenario comes to play is that the market for low carbon energy will take more than ten years to really develop. Another is that it will be sufficient to achieve targets such as becoming target neutral by 2035 or 2040 as General Motors has announced earlier this year.

As I wrote in a post last week concerning electric vehicles, looking at sales and the market share of electric cars might not show the deeper transition which may be going on in the larger ecosystem of the car business or what is called the socio-techincal regime around personal transportation.

Another way would be to look at what is going on in the world of finance and specifically amongst stock market investors. In theory, the investment community is already thinking about the medium term. There are a number of examples.

The first and foremost, of course is Tesla Motors. Today Tesla is trading at just over $ 650 per share which gives it a total value on the order of $ 628.6 Billion. The company sold around 500,000 cars in 2020 and made a profit than to re-selling carbon credits to other carmakers. Now weather you consider Tesla a car company which makes makes its own batteries or a battery company that also makes cars, the value that the market gives the company is incredible.

Just to put this in perspective, General Motors share price has increased a bit since its announcement on EV’s but is currently below $60 per share. This gives the company a value of $86.2 billion or about 14% of tesla’s. Last year GM sold something like 6.8 million cars and light trucks including its two joint ventures in China.

Another leading indicator which might change is oil company stocks. An indicator is the Dow Jones Oil and gas index which fell from a high of 6,000 in 2018, collapsed to below 2,000 in  March 2020 and is currently hovering around 4.000.  Exxon Mobile, for example had sales of $181 billion in 2020 and is currently trading just below $ 60 per share. This gives it a market capitalisation of $ 239.2 Billion.

You can contrast this with Schneider Electric, a company that is deeply committed to the energy transition and was named the most sustainable company in the world by Corporate Knights, a dedicated media outlet on the link between business and sustainability. In 2020, Schneider had total sales of just under $ 30 billion or less than one sixth of Exxon Mobile’s. At over $ 120 per share, however Schneider’s   market valuation is $ 72 billion or just under one third that of Exxon Mobil.

By the way, if you are interested in learning more about the energy transition, the IESE student run Energy Club is holding its annual Energy Day later this week and features Schneider’s Chief Innovation Officer Emmanuel Lagarrigue as the key note speaker. The event is free of charge and you can register for the it here.

The post According to the stock market, the energy transition has already started first appeared on Doing Business on the Earth.

Toyota began to take sustainability seriously almost 30 years ago also offers its own goals. By 2050, Toyota will have zero emissions as will its vehicles during their entire lifecycle. You can read its 2050 challenge here. The 2030 milestones are shown below. What sets Toyota apart from some other major carmakers is that they are still pursuing hydrogen fuel cells at the same time as their battery electric and hybrid vehicles.

If you take these and similar announcements at face value, you might come to the conclusion that the auto industry has already switched to electric vehicles. According to a report published by Mckinsey, 450 electric vehicles will be launched by 2022 around the world.

The report, however, shows that EV sales are flat in China and may slow down in the U.S. as incentive schemes are dropped in the years ahead. it is still optimistic about Europe where EV’s are now outselling Diesel cars but seems to be a bit more guarded than the news media.

The Financial Times also ran a story about the rise of EVs in which they credit european country’s incentives as the reason for the increase in sales and put the VW group at the top of the chart  although the best selling model is the Renault ZOE which is now just ahead of the Tesla Model 3.

The question is what to make of this seemingly conflicting data. Is the automotive industry really about to become electric?

There is a thread in innovation theory that takes a systemic view of innovation. The basic idea is that an innovation, such as the electric car, does not happen in isolation but is part of technical-social regime in which it is embedded. For the world to eventually switch to electric vehicles, much of the current automotive world will have to also go through deep transformation.

In addition to the obvious issue of changing gasoline stations for charging ports, other issues involve complex supply chain issues involving batteries, electric motors and other components and raw materials including rare earth metals, cobalt, etc.

At another level even the car dealerships and body shops will go through a profound transformation. Volvo for example will be selling its EVs direct to the consumer and tesla has not built a traditional dealer network in Europe.

One issue is that electric cars need much less service than vehicles with internal combustion engines. As I told the service rep from my local Totyota dealer, my own car operates like my refrigerator and needs little to no service. He had called me to remind me that more than a year had passed since I last took the car into the garage.

Another issue is that when accidents do happen, the local body shops do not have the equipment required to repair plastic or carbon fiber body parts and need to replace them completely.

What the data from earlier such innovations show is that the pace will be relatively moderate until the infrastructure, supply chains and sales channels all become available. Once all of that is fully in place, then things can go very quickly!

The post Electric Cars in Europe first appeared on Doing Business on the Earth.

During the last year we have ran many webinars for our alumni and even the broader international business community. It has also been my privilege to attend other webinars on different topics during the last year. In general, they are a terrific way to communicate complex ideas to large numbers of people. If handled correctly, the moderator can bring in questions from the audience and make things relevant for as many people as possible.

The format, however, still makes it difficult to accomplish some of the most positive aspects of running  a similar session in the face to face world. One of those is the opportunity for the people attending the conference to meet each other. The other is to give them an opportunity to talk about how the topic in question affects them personally or how their own organization is approaching it.

For this reason we decided to run the pilot program last week. The content we chose was my framework on looking at environmental sustainability from a strategic viewpoint that is outlined in my book Strategy & Sustainability as well as explained in some detail on my on line course with the same name.

Using a similar technique that we at IESE Business School us in some of our Custom Programs, after introducing my framework I broke the group into smaller zoom groups in which they could discuss the framework with each other.  For this process, we had recruited nine former students to act as facilitators of the groups. These students came from all over the world and ranged from their early 30s to over 60. Some had done our full time MBA program while others were from one of our executive MBAs or our other management courses such as the Advanced Management Program.

Strategic Sustainability

If you are not familiar with the framework, I use two ideas to develop 6 possible approaches at the strategic level. One idea is what I call Environmental Sensibility, or the degree to which different stakeholders are asking an organization to pay attention to the issue. It is a combination of  pressure that comes for the regulator, shareholders, employees, customers and even civil society as a whole. The other idea is to look at a firm’s performance on the different environmental indicators starting with the idea that compliance is about doing at least what the law requires.

I do not, by the way, encourage an organization to break the law but if we are realistic, there are companies which do just that with respect to environmental regulations. I do talk at length about the other five areas which range from simple compliance or what I call Take the Low Road  to going much, much further.

Wait and See is the strategy to follow if the Board and Executive Committee do not believe there is much pressure from stakeholders yet. The point is that it may be a good idea to determine a firm’s carbon footprint and the lifecycle impact of its products and services in any case and carefully monitor the situation because it might change over time. Show and Tell is when a firm is taking action on many fronts and makes explicit reference in its communication strategy. This is different than greenwashing which is about making up a sustainability story which is not authentic or grounded in real projects, KPI’s and a commitment from Sr. Management.

Pay for Principle is the way I refer to a number of companies which have taken a leadership position on the environment as a result of the conviction of the shareholders. Such a position is not due to a calculated business case but because in the view of these people, it is the right thing to do. Think Ahead is, in my view, what we are increasingly seeing in large corporations that have announced bold initiatives for the future such as General Motors. The idea is that if the Board is convinced that sustainability will be key in 2030 or 2035, then it may make sense to begin to act now as these transformations will take time.

IESE’s Alumni Go Green

So after explaining the framework for about 20 minutes, we moved the people into small groups and then had our team of alumni volunteers draw arrows and circles on the chart above to indicate where the different alumni felt their companies were today and where they were going tomorrow.  In the first place, there were many participants who felt that their organizations were already either pursuing Pay for Principle or Think Ahead.  I found this to be very positive. What was even more exciting was that the overwhelming majority appeared to work at companies that were moving across the chart toward increased sensibility and increased performance.

So far the feedback we have received from the new format has been extremely positive. Our Alumni were not only able to learn something but also had a chance to talk with others about what it meant for them and their organization. We saw people exchanging emails on the chat and with luck, they are now in contact and discussing the best ways to move forward with each other.

The post IESE’s Alumni are moving ahead on sustainability first appeared on Doing Business on the Earth.

If you managed to miss it, the Biden administration just released the executive summary of the findings of American intelligence that made the assessment that “Muhammad bin Salman approved an operation in Istanbul, Turkey to capture or kill Saudi journalist Jamal Khashoggi”. The report has been de-classified and can be found here. It is unambiguous.

At the time of the killing, Blinken’s predecessor, Mike Pompeo published an article in the Wall Street Journal which did not condone the killing but essentially gave the Prince, known as MBS, a free pass due to the strategic nature of the relationship between the United States and the Kingdom. Pompeo’s boss, Donald Trump, publically said he was not sure of MBS’ role in the killing even though he and his advisors had certainly seen the report that was just released.

At the time I wrote that the U.S. had reached a new low in its foreign policy and many people have criticized Biden and his team for not doing more. What they have done is to extend sanctions that Pompeo did put on the team that killed Khashoggi to dozens of other Saudi officials as well as create a new policy named after the Saudi dissident journalist to protect such people in the future.

Blinken made reference to these measures in a press conference last Friday and you can read it yourself here. You need to skip past his statements about Canada and Mexico and get to his answers to a question asked by NBC’s Andrea Mitchell.

Amongst other things, Blinken makes clear that the United States will use its influence to end the war in Yemen and will only sell defensive weapons to Saudi Arabia. It will not cut off relations with the Kingdom as doing that will only strengthen Iran’s position in the region and could lead to war.

What I am struggling with is that while the tone of Blinken’s message is very different than that of Pompeo, the essence is the same at least on the surface.

As Crown Prince, MBS is next in line for the Saudi throne and has taken a number of steps to modernize the country. According to Ben Hubbard who wrote a profile of MBS for  The New York Times last year “He is determined to give Saudis a shining, prosperous future, and exercises an unflinching willingness to crush his foes.”

Being so far removed from the situation, it is difficult to know what to think about the Crown Prince. His moves to open up Saudi society, achieve his vision of Saudi 2030, and build a new city on the Red Sea are all positive.

Nicholas Kristof, the journalist, was a friend of Kashoggi and point out in a column on this topic that only one of the last six Crown Princes have become King in Saudi Arabia. His view is that the Saudi’s would be better off with a different successor to the throne.

Perhaps the Biden administration is working quietly behind the scenes to have more of an impact on the Prince’s future behavior and to make sure the United States’ support of the Kingdom corresponds both to its interests as well as its values.

The post Interests and Values first appeared on Doing Business on the Earth.

To fully understand where things are going, it is essential to recall that for hundreds (if not thousands) of years, China dominated the region. 

China’s leadership position dates back to wars of conquest in Indochina and on the Korean Peninsula and the seven voyages of Admiral Zeng He at the beginning of the 14th century. Other countries would pay tribute to China and their representatives would kowtow to the emperor in a sign of submission.

This system was first upset by the fall of the Ming dynasty in the 1640s and then the invasion of China in 1839 by the British in what was the first of the so-called Opium Wars.

The Opium wars eventually led to the collapse of the Qing dynasty, the Taiping rebellion, invasion by Japan, and the Chinese Civil War. In China, the 110 years between the first invasion and the victory by the communists in 1949 are referred to as the century of humiliation.

After World War II, the United States moved into the vacuum left by the defeated Japanese empire and exhausted European powers who had established colonial governments in many of the countries that had been occupied by Japan during the war. The first test of American resolve was the Korean War fought in the early 1950s that led to the current division of the country along the 38th parallel.

The second was the war in Vietnam in which the U.S. attempted to prop up the government of South Vietnam against the communist regime in the North that was financed and supported by the Soviet Union. After the North’s victory in that war in 1975,  Vietnam emerged as the leading power in South East Asia until it was invaded by China in 1979 in order to force Vietnam to cease its involvement in the internal affairs of Cambodia.

In 1967, before Vietnam would turn into a full-blown conflict, Indonesia, Malaysia, the Philippines, Singapore, and Thailand founded the Association of Southeast Asian Nations (ASEAN) to promote regional security and trade.

After the Vietnam war, American policy in the region consisted of its unwavering support for Japan and Taiwan and the maintenance of a system of military alliances and trade agreements with other countries.

In parallel, ASEAN expanded its membership to ten countries in the region including Vietnam in 1995 and gradually moved away from its former US-centric outlook to include cooperation with Japan, South Korea, and China.

During the 1980s and 1990s, the U.S. responded to a series of specific issues and crises such as the end of Ferdinand Marcos’ regime in the Philippines and the eventual disagreement with the government of Corazon Aquino which led to the closure of the U.S. military bases in the country.

During this time, China enjoyed a period of unprecedented economic growth beginning with Deng Xiaoping and continuing to the present day. As part of its expansion, China has worked tirelessly to re-establish its traditional role at the center of Asian trade and geopolitics.

The Trans Pacific Partnership began as an agreement between four countries in 2006, In 2008, the United States expressed interest in joining and that idea was picked up by the incoming Obama administration which worked for years to expand the agreement to 11 countries and finally completed it in 2015.

In parallel with the negotiations of the TPP, the Obama administration announced that it would change the focus of the U.S. foreign policy and military deployment under the banner of what it called a pivot to Asia.

Both initiatives were designed to contain China’s expansion in the region. The TPP was essentially an offer to the countries of Southeast Asia to join the U.S., Mexico, Peru, and Chile in an enormous marketplace for goods and services. It went hand in hand with the pivot to Asia designed to contain China militarily and be prepared for Chinese aggression in the South China Sea and even a possible invasion of Taiwan.

Donald Trump made opposition to the TPP an essential part of his election campaign arguing that it was a bad deal for American workers. His administration withdrew from the TPP and raised the rhetoric with China kicking off a trade war.

China meanwhile launched a number of ideas to build its own influence in the region. The One Belt, One Road initiative was launched 2013 and has essentially financed dozens of infrastructure projects across the region to connect China and its neighbors with ports, highways, and railway lines in a modern version of the ancient silk road.

Another is an alternative trade arrangement with the countries of the region called the Regional Comprehensive Economic Partnership or RCEP. RCEP was signed in 2020 and includes the ten countries of ASEAN as well as China, Japan, South Korea, Australia and New Zealand.

An example of the success of China’s policy can be seen in the Philippines where its President Rodrigo Détente makes no secret of his preference for Chinese largess versus American condemnation for his approach to human rights and law and order.

Myanmar is, of course, part of RCEP and shares a border of over 2,000 KM with China. Although the Chinese government has denied its direct implications in the recent coup, it has used its veto in the UN Security Council to block condemnation of the situation.

How the U.S. can influence events almost 14,000 KM away would be difficult at any time. In light of the region’s history and apparent shift toward China, it will be extremely difficult.

The post Myanmar and the struggle for leadership in Southeast Asia first appeared on Doing Business on the Earth.

It seems that the record fast impeachment trial was the result of a compromise between the Senate’s Democratic and Republicans.  According to press reports, Republicans had threatened to delay the $ 1.9 Trillion stimulus package, and Joe Biden’s cabinet confirmations if things were not wrapped up quickly. Since the majority of the Republican Senators had already decided to acquit Trump the Democrats felt it was better to get the whole thing over with and move on.

The first most likely result is a relatively swift passage of the stimulus package which will include $ 1,400 checks to most American families, money for vaccine distribution, unemployment benefits, school reopenings, foreclosure protection, etc. Economist Paul Klugman has written that he feels the package is “aggressive enough” and compared it to the New Deal legislation of the 1930s. If he and the president’s advisors are right, the combination of the package, vaccination, and the onset of summer should bring the U.S. economy and Covid situation into much better shape by the Summer.

The second is the swift confirmation of the rest of Biden’s cabinet. So far he has 7 out of the 23 members of the cabinet in place including Tony Blinken (State), Janet Yellen (Treasury), Lloyd Austin (Defense), Pete Buttigieg (Transportation), Alejandro Maorkas (Homeland Security), and Dennis Mcdonough (Veterans Affairs), and Avril Haines (Intelligence).

One way to see what to expect over the next few years is to look at the people that Biden has chosen for these and the other key roles in the cabinet, understand where they come from, and look at what they have said so far. In the months leading up to the inauguration, Biden made a series of presentations featuring these men and women from his base in Deleware in which they spoke in general terms of what they intended to do with their different agencies and departments.

Overall, these people bring a wealth of government experience from the Obama and Clinton administrations as well as State and city governments. Three have been State Governors. Three others were Mayors and others have been members of Congress and held other public jobs with public records.

In terms of foreign policy, I have written about Tony Blinken and the likely geopolitical viewpoint of this administration which will stress multilateral solutions but always put the interest of U.S. workers first.

As I have also written, one of the key aspects of the next four years will be a much stronger commitment to the environment in general and de-carbonization in particular. Jennifer Graham, for example, is pending confirmation to be the new Energy Secretary and as a former Governor of Michigan, she sees the shift to electric vehicles as the best way to ensure the future of the U.S. auto industry.

The administration will, at the same time, have a strong focus on job creation and labor. The Commerce Secretary, for example, will likely be Gina Raimundo, former Governor of Rhode Island who also has experience as a venture capitalist and the nominee for Labor is Marty Walsh, the former Mayor of Boston and a lifelong union member.

What is also clear is that Alejandro Mayorkas, who came to the United States with his immigrant parents will change the tone of the country’s immigration policies and Deb Haaland, a Native American member of Congress, will take the department of the interior towards more conservation and respect for native rights.

While the Obama administration was far from perfect, it did manage to get the U.S. out of the mess of the 2009 economic crisis and bring economic indicators and employment to reasonable levels. One view is given by the New Yorker’s John Cassidy just before Trump took office.

My guess is that collectively, Biden’s cabinet will draw on that experience to pull the United States out of the current mess left by Covid-19, the resulting economic collapse, and the administrative chaos produced by Trump’s appointees.

My hope is that the results of all of this, including an economic rebound and the rebuilding of the country’s aging infrastructure, will be clearly visible by the mid-term elections of 2022 such that the Democrats maintain control of the House and Senate and therefore are able to keep up the momentum.

The post What to expect from Biden and Harris first appeared on Doing Business on the Earth.

Last week, Joe Biden and Kamala Harris went to visit the United States State Department which is just over a mile from the White House. Biden’s speech, which you can read here, appeared to have at least four different audiences.

To the men and women who represent the United States around the world, he told them that diplomacy is back at the center of the US’s foreign policy. He also said that their new boss, Secretary of State Tony Blinken had his full support and more importantly that he “had their back”. He encouraged them to bring different points of view to the process of policymaking and that dissenting views were ok.

A second audience appeared to be the governments and people of the US.’s friends around the world. Biden spoke about how the new administration would rebuild the U.S.’ alliances and earn back its former leadership position. He said he will go back to full cooperation with them and re-build its alliances since no one country can take on the global challenges alone.

With respect to Saudi Arabia, he spoke at length about ending the war in Yemen through diplomatic means and at the same time underscored his administration’s commitment to defend the Kingdom against its enemies.

A third audience was the governments of China, Russia, and other totalitarian regimes such as the junta who have taken over the government of Myanmar (Burma). In Burma, he called for an end to the military government and the release of all of the people they have detained.

Biden referred to China as “our most serious competitor” and Russia as an adversary. He specifically made mention of a warning he issued to Vladimir Putin in a recent telephone call that he would no longer “rollover” in the face of Russian cyber attacks. He also called for the immediate release of Alexei Navalny.

The administration will, however, work to achieve agreements with both countries and he spoke about the renewal of the START agreement with Russia for the next five years as an example.

The last audience that Biden spoke to was American public opinion. The main idea that both he and Tony Blinken put forward was that engagement with the rest of the world was a condition for peace and prosperity at home. In Biden’s words peace, security and human progress reflect the U.S.’ own “naked self-interest” and that every policy will be developed in the interest of the working men and women of the United States. He went on to list a number of initiatives such as a review of the country’s armed forces deployment, restoring the country’s asylum program, and pushing for fair treatment of all minorities around the world regardless of their ethnicity or sexual orientation.

Interestingly enough, Biden made no mention of Iran. According to CNN, this is because Secretary Blinken and his colleagues are currently working to develop a policy in consultation with congress and international allies before going public with it.

As it happens I am teaching a class on the links between geopolitics and business strategy this semester. My students have asked me repeatedly about what the Biden administration means for the U.S.’s relations with the world and how different it will be from the Trump administration.

After Biden’s speech, it seems clear to me that the basic geopolitical alliances and tensions will not change too much although the tone and style of foreign policy will be like night and day. Biden will be warmer with friends and allies but will, occasionally disagree with them when he feels there is an issue of values for example concerning the war in Yemen.  He will, at the same time, be much tougher with China, Russia, and other countries although that resolve will be shown in concerted action with allies or through quiet diplomacy rather than public tweets and off-the-cuff remarks.

For some governments, the change will be unwelcome and uncomfortable as it was easier to understand the Trump/Pompeo approach which was all about each nation defending its own narrow self-interest without being overly concerned about American values.

On this subject, Biden made the commitment that he and his administration will put values such as freedom, opportunity, universal rights, the rule of law, and human dignity at the center of its policy.

In my view, that is how it should be.

The post Allies, competitors & adversaries first appeared on Doing Business on the Earth.

To be honest, I did not take her that seriously as I have been watching General Motors as it has gone in and out of the EV business and figured this time it would follow the same pattern.

General Motors actually built the first zero-emission, fuel cell vehicle in 1964. It was called the Electrovan 1 and the fuel cells took up much of the interior space of the vehicle. In 1969, GM developed a lightweight hybrid prototype called the GM 512. This was 24 years before Toyota unveiled the Prius concept at the Tokyo Motor Show.

In 1996, GM developed its first battery-electric production car, the EV-1 in order to meet California’s zero-emission mandate but then scrapped the program (and the cars) after the mandate was relaxed.

In my view, the most exciting concept was the GM Autonomy and Hy-Wire prototypes which were shown at the Detroit Auto Show in 2002. They used fuel cells rather than batteries and essentially looked like a large electric skateboard upon which GM talked about putting a large number of body types.

In 2007, GM introduced its new concept the Chevy Volt, a series hybrid that went into production in 2010 and sold about 100,000 units before being replaced by a new version in 2016.

During all of this time, GM’s strategy for zero-emission vehicles was what I call one of depth. GM would take its extraordinary engineering talent, its money, and its scale and develop a solution that was better than anything else in the industry. At the same time, however, GM kept running the rest of its business as if the new entity did not exist.

Toyota, on the other hand, followed a strategy that I call breadth. Toyota developed its hybrid synergy drive for the Prius and then proceeded to offer a hybrid version on almost every other model they made.

Last week Ms. Barra announced that GM was going fully electric and would phase out internal combustion engines by 2035. At the heart of the strategy are a new battery pack and drive train package they are calling Ultium in typical GM style.

As always, GM has put its incredible resources on the problem and come up with a terrific solution for batteries, together with LG Chemical, and state of the art electric motors and power train components.

What is different this time, is it appears that the company is finally going to pursue a strategy of breadth in the deployment of this technology. Ultium will be used in luxury cars like the new Cadillac Lyriq, the  GMC Hummer EV super truck, and according to Ms. Barra in vehicles in every configuration and price point.

If you are interested in automotive technology and GM’s transformation, I recommend watching at least the beginning of the GM presentation at the 2020 Barclay’s conference which spells it all out in tremendous detail. The Ultium power train will become part of a comprehensive platform strategy that GM has also not managed to pursue up until now.

If you are really interested in automotive technology, then I suggest you look at the introduction of GM’s new electric super truck, the GMC Hummer EV.

I fully believe that GM has the talent, technology, money, and scale to accomplish the strategy that Ms. Barra has set out. Like everything in life and business, success will depend on actually getting it done.

What I find an even more interesting question is why now? GM has had most of these ideas for years. Since then it has gone through bankruptcy, Ms. Barra’s appointment, and a steady drop in U.S. volumes over time.

On top of that, GM has seen that Tesla, which makes less than 10% of the cars it does, has a market capitalization about 10 times larger.

If, however, the reason for GM’s transformation is to increase its share price, I am afraid they have misunderstood Tesla and its story.

Tesla is not a car company. Its mission is “to accelerate the world’s transition to sustainable energy.” This is the basic mistake that many people make when looking at the company. Cars are a means to an end and not the reason the company exists.

William Durant founded General Motors in 1908 to bring together a number of different companies that had begun building motor cars in the early years of the last century.

Over its history, GM grew to be the world’s largest manufacturer of cars and light trucks and is still a car company despite its pledge to stress electrification and mobility.

In my view, Tesla’s shareholders buy into the mission, not the cars. They are happy if the company’s cars sell and it makes a profit but are really betting on the transition to a low carbon economy and the idea that somehow, the combination of cars, batteries, and solar roofs will make the Tesla brand worth 10 times that of General Motors.

Last year, for example, Tesla made a profit thanks to its ability to sell credits to other car companies that fell behind on their emissions goals in a number of U.S. states. For automotive people, this is proof that Tesla is losing money on the cars it is making and is not a “real” car company.

For Tesla’s shareholders, however, selling credits, its acquisition of Solar City, and its investments in solar roofs are just more proof that its charismatic founder, Elon Musk is on the right track.

I applaud GM’s commitment to becoming carbon neutral by 2040 and I suspect it will be successful in the EV market once its new, Ultium based, models, come to market.

I’m not so sure that its share price will increase tenfold.

The post GM goes electric! first appeared on Doing Business on the Earth.

About ten days ago I and about 40 million other people watched as Joe Biden and Kamala Harris took their oaths of office and became President and Vice president of the United States. Since then I have finally begun to relax and disconnect from the 24/7 news cycle that seemed to occupy me ever since November.

I believe it will take the U.S. several years to process the impact that Donald Trump and his administration have had on the country but I at least feel I can get back to teaching my classes and focus my time on things of my own choosing.

For the first few days of the new administration, I did pay close attention to the stream of Executive Orders coming from the oval office and the status of Biden’s cabinet.

Of particular note was the order putting the U.S. back in the Paris climate accord and killing the Keystone XL pipeline. Although it took Trump 3 years to leave the Paris framework it should only take 30 days for the U.S. to get back in and I am convinced that this is a very good thing for the country and also the planet.

The Paris agreement was in fact an agreement and not a treaty because Barak Obama knew that he would never manage to get the U.S. Senate to ratify it if it was a treaty. Woodrow Wilson, for example, never managed to get Senate ratification for the treaty of Versailles. The problem with the agreement is that one president can choose to join and another to withdraw.

As I wrote in another post a few weeks ago, the U.S.’s current political balance makes it difficult for the rest of the world to really know where the country will be on any given issue in four or eight years’ time.

I think I finally managed to relax after Lloyd Austin was confirmed as Secretary of Defense and the Senate managed to work about a deal to continue the business of government and hold Trump’s second impeachment trial.

By now it seems unlikely that he will be convicted as most republican Senators have lined up behind the idea that he can not be impeached after leaving office. What seems clear to me is that some are hoping to get Trump’s support for their own presidential ambitions and others are simply afraid that Trump supporters will throw them out of office if they find him guilty of inciting the January 6th mob to insurrection.

The important thing is that the United States now has a government that appears to be well qualified and committed to doing the work of running the country. The military is in capable hands, deputies have been put in place for those positions still pending Senate confirmation, and Biden and Harris appear to have entered office with a plan and program for just about everything.

Even Dr. Fauci appears to be relieved although the fight against the virus is far from over.

This administration has plenty of challenges. They include fighting the virus and repairing the economic impact that it and the measures put in place to control it have had on so many people. They also include a number of geopolitical issues around the world as well as making good on the build back better promise.

While I do not underestimate how complex all of this will be, I do not feel I need to worry about it personally and can trust in sensible people doing the best they can with the information they have. While this seems simple, it is an enormous relief.

The post A sense of relief first appeared on Doing Business on the Earth.

• Russia

As I write this post the news from Moscow is that Alexei Navalny has been detained as he returned from Berlin. Navalny has spent the last five months in Germany after being apparently poisoned with a military-grade bioweapon. Building on its success in propping up the regime of Bashar al-Assad, Russia is engaging across the Middle East and the war in Eastern Ukraine has not been resolved although there is currently an imperfect truce in place. On its side, the United States has charged 6 Russian officers with the massive cyber attack on U.S. government computers that was discovered last month although Russia has denied its involvement. Additional sanctions against Russia seem to be a real possibility and if that were to happen, Russia would likely impose counter-sanctions disturbing trade even further.

• China

Despite a recent surge in cases, China claims it has defeated SARS-CoV-2 and is back to business a usual. It is also continuing its one belt, one road initiative, and the leadership of an alternative economic arrangement with the countries of East Asia. China also successfully sent its Chang’e-5 probe to the dark side of the moon and back, collecting rock specimens. The issues of sovereignty in the East China Sea and the South China Sea continue to fester and China has made progress on improving its relations with countries in the region such as the Philippines. China is not only a complex place to do business for western firms but will continue to support its own national champions as they expand around the world and strive for leadership positions in a number of specific industries such as telecommunications, infrastructure, and energy-

• North Korea

After the collapse of the discussions between Donald Trump and Kim Jong-un, North Korea has continued to build up its military and now has as many as 60 nuclear weapons and the world’s fourth-largest army according to the Council of Foreign Relations. South Korea is the world’s 9th largest economy and its capital, Seoul, is less than 60 KM (35 Miles) away.

• Middle East

One apparently positive development is the mutual recognition between Israel, the UAE, Bahrain, and Morroco that was done with help from the Trump administration. On a regional level,  the war in Yemen is far from resolved, and Iraq, Syria, and Lebanon all suffer from deep divisions, armed regional groups, and are far from stable. Many analysts see a complex struggle for leadership in the region going on between Iran, Saudi Arabia, and Turkey. The region offers incredible opportunities but the risks also need to be evaluated.

• Venezuela

The Maduro regime has brought poverty, murder, and mayhem to Venezuela despite the efforts of Juan Guaido and his colleague Leopold Lopez, who finally managed to make it to safety in Madrid. The continuing collapse of the country is not only a catastrophe for its people but has also swamped its neighbors with refugees and other problems. Most of the international companies which had been active in Venezuela have left the country over the years. Nevertheless, it offers a cautionary tale about what can happen when a country’s politics spin out of control.

On a personal note, I look forward to the Biden – Harris administration and have great confidence that the incoming Secretary of State, Anthony Blinken, will be able to mobilize American diplomacy to help improve the global situation. Nevertheless, these, and other issues around the world obey their own logic and will take many years to sort themselves out. as I have written on many occasions, the international business community needs to be fully aware of these issues and how they may impact the business landscape.

The post Geo-political issues to watch in 2021 first appeared on Doing Business on the Earth.

It appears that as the Capitol Police became overwhelmed by the mob, they took the decision to re-deploy and protect the members of Congress rather than risk further violence. Eventually, they were re-inforced by the DC police, the buildings were cleared and Congress went back to the process of certifying the results of last November’s election.

A woman was shot and killed, one of the capital police offers was killed and 3 others died of medical emergencies as a result of the riot that was inspired, instigated, and egged on by Donald Trump.

What struck me most was the reaction of shock and surprise by Republican members of Congress who have supported Trump these past four years and have given credibility to his far fetched claims of massive election fraud. These same men and women had looked the other way as Donald Trump misused the power of his office, coddled up to dictators, and pitted Americans against each other. They had an opportunity to impeach Trump one year ago and did not take it. They had the opportunity to speak out against his lies and conspiracy theories in November but either stayed silent or respected his right to challenge the outcome of the election in the courts.

All of this time they either acted out of their own self-interest, fear of Trump and the mob he has created, or some twisted sense of their own unique role to play.

There was a moment during the election when some guys in pick up trucks tried to run the Biden-Harris campaign bus off the road in Texas. Trump’s response was to retweet a video of the event and wrote: “I Love Texas”. Far from condemning the attack, other Republican politicians were either silent or actually supported it.

In her last comments as a Senator,  Kelly Loeffler appeared deeply shaken by the attack on the capital and chose not to join other Senators in rejecting the results from some states. Ms. Loeffler, however, tried to tap into the same angst in the electorate in her native Georgia in her Senate runoff against the Reverand Raphael Warnock which she lost by 75,000 votes.

Yesterday it seemed she and a number of her colleagues finally understood the forces they have unleashed.

Globalization, digitalization, and the transition to a knowledge economy have not benefitted Americans equally. The frustration that the world is too complex, too scary, and way too digital fueled Trump’s rise but is not his doing.

Joe Biden’s vision of building back better and using the transition to a low carbon economy as a massive jobs program may help to heal the wounds of the last four years.

The problem is that there are a number of Republican politicians who seem intent on carrying on Trump’s legacy. Senators Ted Cruz (Texas) and Josh Hawley (Missouri) knew that their challenges to the election results would not change the outcome of the procedural process that confirmed Biden’s victory yesterday. By supporting Trump now, they hope to get his supporters to support them in the next presidential election cycle.

These men will continue to appeal to the worst aspects of the American psyche. The problem with playing to the mob is that can be fickle and unpredictable.

The post For they have sown the wind, and they shall reap the whirlwind first appeared on Doing Business on the Earth.

One of those impacts is the immediate political future of Donald Trump. Although he and his allies continue to try and question the integrity of the American election, without any apparent evidence, The United States Congress will certify that election this week, and Joe Biden will be sworn in as the country’s 46th president. If it was not for Trump’s gross mishandling of the pandemic and its associated economic cost, Biden may not have been able to beat him.

Another impact is the strengthening of the Chinese Communist Party in China and around the world. Although China’s initial handling of the pandemic was widely criticized, life in China today is back to normal according to the New York Times and other media reports. An article in the Lancet credits China’s pandemic response, the collaboration of the Chinese population, and its extremely intrusive tracking system as being key aspects to its successful fight against the virus.

China’s success is seen in stark contrast to the failure to control the situation in the United States. The noise about the last election and the back and forth swings of American policy, discussed in a post a few weeks ago, adds to the idea that maybe the Chinese model of government is better than the American. This impact will play itself out over the next years in countries all around the world. Freedom and democracy are clearly important but safety and prosperity are also key to human happiness. The Chinese answer is that you have to choose one or the other.

A third impact is that carbon emissions actually went down 7% according to Carbon Brief, a UK-based website. in 2020 thanks to the lockdowns and other measures taken to control the spread of the Virus. The world had not seen any drop since the 2009 economic crisis. The biggest drops were in the US, EU, and India which saw emissions drop by 12, 11, and 9 % respectively.

China, the world’s largest emitter of Co2 also saw a drop but only just under 2% because it managed to confine most of the shock to Wubei Province and get its economy back up and running quickly in the second quarter.

The question going forward is will the world look at the improvement in emissions as well as air and water quality and decide to continue on that path or will it snap back to business as usual as things get under control. As discussed in this space, the Biden administration is committed to rejoining the Paris climate agreement and the world will meet once again in Glasgow next November to go further in its commitments.

The last ripple I want to call out today is the tremendous advance in digitalization that has occurred over these past months. Most analysts agree that increased digitalization is here to stay. In terms of jobs, I discussed one way of looking at that impact in a post last week.

Although these trends and issues were with us before the pandemic, its impact will be remembered long after its gone.

The post Covid-19’s impacts on the future first appeared on Doing Business on the Earth.

This experience gave me access to a wide range of thought leaders, academics, and business people as they managed the global pandemic which would go on to infect more than 80 million cases and kill around 1.8 million people so far.

In addition to the toll on human health and life, the pandemic and the measures taken by governments all over the world created the worst economic crisis since the great depression which began in 1929

According to the U.S. Department of Labor, the pandemic caused about 22 million people to lose their jobs in March and April. The International Labor Organization estimated that the worldwide impact was on the order of 145 million jobs in the same period.

Although the situation is far from resolved, I do feel that we can begin to see some of the key aspects of what many call the new normal and there are some signs that better testing, the natural evolution of the virus and the development of a number of vaccines and treatment options are all pointing towards an end to the emergency situation.

One of the most pressing questions is if and when these jobs will come back. Part of the answer can be found in an analysis done by two world bank researchers Besart Avdiu and Gauruv Nayyar.

Adviu and Nayyar used U.S. data to look at the degree to which different jobs could be done at home or not and also how much of the job was normally done face-to-face. Their results are shown below.

What I found most compelling was the idea that face-to-face and working from home do not necessarily go hand in hand.  It is, for example, difficult to work in manufacturing from home but there is little need for face to face interaction. Retail jobs, on the other hand, is both face-to-face and require being in the store.

In thinking about which jobs will come back and how soon, this framework can be helpful.

In the first place, those jobs that can be done from home will probably continue to be done online perhaps with people coming into an office once in a while. For those positions which have traditionally had a face-to-face component, such as teaching, my guess is that they will never go completely back to the way things were but will move in that direction as the virus is brought under full control and people become more certain of their personal safety.

Second, I would suspèct that the jobs which can not be done at home and do not require much face-to-face interaction will come back quickly although perhaps the protocols put in place during 2020 will remain for some time.

In the third place, my guess is those jobs that do require our presence and are also face-to-face will survive only if they are in critically important sectors such as health care or very special cases such as the arts, entertainment, and sports. Others will be automated or transformed over time.

The post Jobs in a post-virus world first appeared on Doing Business on the Earth.

While I try to keep up with the first story and can not seem to get away from the second, what gave me the most hope about the future was Joe Biden’s announcement of the men and women he will nominate to serve in his administration involved in the issues of the environment and climate change.

Biden had already named John Kerry as special presidential envoy on climate change a few weeks ago. What became clear in the announcement on Saturday is that Kerry’s role will be to represent the United States at COP 26 in Glasgow and in other international forums while others will focus on the U.S.

Perhaps the most emotional announcement was congresswoman Deb Haaland as Secretary of the Interior with responsibility for all federal land and the country’s relationship with Native Americans. Rep. Halland is the first Native American to hold a cabinet-level position and her speech on Saturday was charged with emotion and history.

Biden and Harris presented Rep. Haaland’s selection along with their pick for Energy Secretary, the Director of the EPA,  and an additional three appointments to Senior roles involved in climate change.

Although it is not completely clear how all of these people will work together, what is compelling is their experience and commitment.

Michel Regan, the new head of the EPA, for example, worked in the agency for almost ten years and has been the head of environmental protection in North Carolina. Biden announced a role for the former head of the EPA under the Obama-Biden administration, Gina Mccarthy, who I understand will act on the national stage in a similar way to John Kerry internationally.

This focus on environmental protection is a complete reversal of the men who Donald Trump picked to run the EPA, Scott Pruitt, and Andrew Wheeler.

A former governor of Michigan, Jennifer Greenholm is the nominee for Energy Secretary. Her focus will be decarbonization, electrification, and energy efficiency. Her conviction, which I share, is that the transition to a low carbon economy is the biggest business opportunity ever seen and will provide millions of high-quality jobs.

I am encouraged that these people show the conviction and the experience to begin the work laid out in the Biden-Harris climate plan.

The challenge is that to achieve its lofty aims such as climate justice, clean air and water for all, and a carbon-neutral electricity system by 2035, the country will need more than the four years of the new administration.

For mainstream America to buy into this idea, the jobs that Biden and his colleagues spoke about on Saturday will have to have begun to materialize well before the next election cycle.

Pete Buttigieg, the nominee for Transportation Secretary also has a role to play in finally finding the money to start rebuilding the country0s aging infrastructure and to “Build Back Better” as the Biden people say.

Biden’s cabinet will be considered historic because of its diversity and the humble backgrounds of many of its members. Biden’s presidency, however, will only be historic if they collectively make enough progress to convince a majority of American voters that the transition to a cleaner, fairer, and low carbon future is in everyone’s best interest.

As Donald Trump continues to demonstrate, there is a segment of the population that is ready to believe him and others like him who disregard climate change and want to roll back environmental protection. The excuse for doing that is to say that there is a trade-off between the economy and jobs on one side and the environment on the other.

Like myself, Biden’s new team is convinced this is a false choice and that a greener and more prosperous United States is possible. The key however is that will need to find some quick wins to ensure that the Democrats do well in the congressional elections of 2022 and that whoever is the party’s nominee in 2024 becomes the next President.

Only then will the country have 8 or even 12 years to really move things in the right direction.

Kamala Harris closed the announcements on Saturday by quoting Laudato Si, Pope Francis’ encyclical on the environment. He wrote “Humanity still has the ability to work together in building our common home”

If she becomes President after Biden then I think there may be a chance to get things well underway!

The post “Building our common home” first appeared on Doing Business on the Earth.

In my view, Joe Biden’s administration will make the world safer and greener. He and Vice President-elect Kamala Harris are honest public servants who will put their country first and lead with honesty and integrity. Perhaps they can, as Biden has vowed to do, heal the country.

While this is good news for the United States and the planet, these last four years will not be forgotten by the rest of the world. What the world has learned is that it can not rely on the United States to remain steady beyond its own election cycle.

One example is the Paris accord on climate change which John Kerry and his team at the State Department invested countless hours in negotiating in the months leading up to it. In fact, it was the 2014 agreement between the U.S. and China on emissions that, to some degree, paved the way for the brilliant effort by French diplomats and Christiana Figueras to broker the agreement. Trump, of course, chose to leave the agreement and Biden will bring the U.S. back in. The good news is that because of the pandemic, the U.S. is actually on track to meet the targets it currently has as part of the framework but it is reasonable to wonder if future American governments will honor whatever targets John Kerry articulates next November at COP 26 in Glasgow.

Another example is the United States’ engagement with the rest of the world. Biden’s pick for Secretary of State and others on his team for national security all hail back to the Obama-Biden administration and are committed to multilateral solutions to the biggest problems facing the world. They will likely re-join the Joint Comprehensive Plan of Action to limit Iran’s nuclear program, go back to isolating North Korea, and join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Asia-Pacific which is what the TPP became after Trump pulled the U.S. out just after taking office.

These are only examples of the 180-degree turn that the next administration will take as it comes into office. Others include the relationship with Russia, Turkey, postwar Syria, and Iraq, the Kurdish enclaves, Saudia Arabia, and many other issues and conflicts.

Just to be clear, I support all of these changes and will be very happy to see the portraits of Joe Biden and Tony Blinken at the U.S. Consulate here in Barcelona.

The problem is that we can not foresee the future and it is unclear who will win the 2024 elections in the U.S. to say nothing of the next 20-40 years. Donald Trump is, for example, reportedly considering running again in 2024. Regardless of whether Trump runs or not, there is a very real possibility that a future Republican President, in 2024, 2028, or at some time in the future will change the direction that Biden’s administration will set.

This was not always the case. From the end of World War II to the late 1970’s, a series of American governments, both Republican and Democratic, did manage a relatively stable American foreign policy. It was only when Jimmy Carter began to change course on some issues such as American support for dictatorial regimes in Latin America that this divergence began. Ronald Reagan then made important changes to Carter’s policies and bit by bit the agenda of Republican and Democratic presidents diverged on the nature of the United States’ role in the world.

Perhaps this is simply a by-product of free and fair elections.

For me, the challenge is to educate the American electorate so that it can understand the complexities of the world. Only then could we hope for some new consensus to emerge on the country’s role in the world and only then could we become a faithful and steady force in world affairs.

The post A Fickle Friend first appeared on Doing Business on the Earth.

This year the event was still based in the Portuguese capital but for obvious reasons was virtual. It was also amazing! The organizers issued more than 100,000 tickets to the event and had people from 168 countries attending. To get an idea of the size and scale of the things, you can see their numbers here.

What really struck me was how they managed to do something in the virtual space that was not only interesting and entertaining from an intellectual point of view but actively encouraged the kind of interaction and networking which characterizes the face-to-face version. One thing I found remarkable was that the entire event was designed to be attended on a phone and a computer at the same time!

I spent most of my time watching the third of five channels, the one focused on Society as that was where conversations about sustainability, politics, and the future of media were taking place.

The key point on the environment was made for me by Emmanuel de La Garrigue from Schneider Electric who made the point that the future of energy was all about electrification, digitalization, and decentralization. I also found Frans Timmermans, a Dutch politician and Vice President of the European Union who is responsible for the European green deal very positive. He said that “the future of Europe is green” and spoke about his first priority which is to renovate Europe’s buildings to make them more sustainable.

Probably the most striking comments on politics that I saw were made by Anthony Scaramucci, who served 10 days as Communications Director for Donald Trump in July 2017 before being publically fired. Scaramucci then became a sharp critic of the President.

During the panel at Web Summit, Scramucci said that the real issue which pre-occupies Donald Trump is being prosecuted after he leaves the White House in either Federal or New York court. For Scaramucci, Trump knows he is going to jail and will continue to fight to stay in the White House until he receives a promise that this will not happen.

He also predicted that Trumpism is dead on January 21st, 2021.

On the issue of the media, fake news, and the role of social networks, Web Summit devoted a number of panels and speakers. For me, the most compelling of them was Ann Curry, who had been a foreign correspondent for NBC news for many years. Ms. Curry spoke about the critical importance of integrity in the news media and how she felt that many journalists have compromised their integrity in favor of the profit motive of their employers. For Curry, the key role of journalism is not to maximize audience, circulation, or clicks, but to tell people the truth even when they do not want to hear it!

I was less impressed by Nick Clegg, the former head of the Liberal Democrats in the U.K. and who now works for Facebook as Vice-President for Global Affairs and Communications. While Clegg recognized the importance of privacy and spoke openly about some of the challenges facing platforms like Facebook, he said he had not watched the Netflix documentary “The Social Dilemma”.

On a different panel, Brittany Kaiser, who was personally involved in the Cambridge Analytica scandal and published the memoir Targeted, called for federal regulation of the social media platforms.

My last comment about Web Summit is that just like the edition I went to in Lisbon two years ago, the event leaves me quite optimistic. The event is full of young, and in some cases, not so young entrepreneurs looking for support to launch companies that they feel will really make a difference in people’s lives. Their enthusiasm is infectious and makes me feel that we just might be able to tackle some of the problems facing the world.

The post Web Summit shows its adaptability first appeared on Doing Business on the Earth.

Basically, if a majority of the President’s cabinet and the Vice President says he is “unable” then the Vice President takes over.

By releasing a 46-minute speech on Facebook which falsely claims he won the election, not conceding the loss and spending much of the last few weeks playing golf rather than trying to help the United States in these difficult times, Donald Trump has demonstrated that he is unable to do the job he was elected for. The mainstream media, such as the Associated Press, has pointed out that Trump’s speech is full of lies and misleading data. Like other news outlets, the New York Times has reported that the legal challenges Trump has instigated have mainly been thrown out of court.

I urge anyone who has the patience to watch the full 46 minutes of Trump’s ravings as it shows the depth of his conviction that he really won the election, the lengths to which he is willing to go to confuse the issue or both.

His last card appears to be to hope for the U.S. Supreme Court to require a massive effort to verify the signatures of absentee ballots. As I wrote a few weeks ago, if these cases get that far, and I do not think they will, it will be a chance for the 9 justices on the court to show their quality.

One way to stop this madness would be for Vice President Pence and 8 members of the cabinet to invoke article 4. That would trigger Trump’s removal from office and then he would have to insist that he is, in fact, abe to continue his duties.

If I understand the process, and I am not a constitutional law expert, the ensuing mess would have to be sorted out by a two-thirds vote of the congress within 21 days.

This is, in my view, the last opportunity for whatever remains of the Republican party to stand up to Trump and the people who are colluding with him. According to the Daily Beast, a news website, the Vice President is very uncomfortable with the behavior of President Trump and is concerned that his own reputation will be tarnished by the end of the Trump administration.

Such a move would expose a sharp divide in the party and could, in the long run, allow it to emerge as a serious political alternative.

Even if the required two-thirds majority was not found, this process could take us up to the first or second week of January and it will at least minimize the damage that Trump and his cronies will do.

It will also allow solid and formerly respectable people such as Christopher Miller (defense), Eugene Scalia (labor), Ben Carson (housing and urban development), and others an opportunity to go down in history as doing the right thing at the end.

Readers of Doing Business on the Earth may remember that I made a very similar argument in favor of Republican Senators joining the Democrats to impeach Trump when they had the chance.

This they did not do and I suspect that the Vice President and the cabinet will also not heed this advice. What I do expect from Mike Pence is to attend Joe Biden’s inauguration on January 20th as suggested by an opinion piece in U.S.A Today.

The post Mike Pence and the 25th Amendment first appeared on Doing Business on the Earth.

One appointment which does not require confirmation is John Kerry’s new role as Presidential Climate Envoy for the United States. In that role, he will have a seat on the National Security Council and participate in Ministerial level meetings around the world such as COP 26 in Glasgow in November and the Pre-COP meeting scheduled for Milan. He will, in essence, represent President Biden and the United States on this issue.

During the campaign, Joe Biden shared his plan which is to sharply reduce the carbon footprint of the US, move towards the elimination of fossil fuels, and re-establish American leadership in renewable energy and climate change.

When making the announcement of Kerry as the leader of his administration’s effort on the issue, he said that ” I don’t for a minute underestimate the difficulties of meeting my bold commitments to fighting climate change. But at the same time, no one should underestimate for a minute my determination to do just that.”

When he was Secretary of State in the first Obama administration, Senator Kerry actually signed the Paris accord on behalf of the country in 2015 and brings tremendous gravitas to the new role. Kerry has also been a colleague of Joe Biden since he joined the U.S. Senate in 1984 and can, with full credibility, speak for the President on the world stage.

What I found particularly significant was Biden made public Kerry’s appointment as the last announcement of his national security team. What this indicates, is that the Biden Harris administration will treat mitigating climate change as a security issue in line with the assessment that this issue has geopolitical and existential importance.

In his remarks, Senator Kerry echoed the remarks of the nominee for Secretary of State, Tony Blinken that the most complex problems of the world need countries to come together to solve them. In terms of climate change, Kerry pointed out that climate change was one such problem and that the United States only accounted for 13% of global emissions.

He also made the point, that I discussed in a post a few weeks ago that the current targets that countries have set as part of the climate framework were not enough to solve the problem. In speaking about COP 26 which will be in Glasgow in November, he indicated that the United States will embrace tougher goals and urge other countries around the world to do the same. Speaking about this global effort, Kerry said “all nations must raise ambition together, or we will all

fail together. And failure is not an option.”

As I have written many times over the years, the transition to a low carbon economy represents an enormous business opportunity. Based on the announcement last week, it appears that the next American administration is determined to seize that opportunity and lead this effort.

The phrase, “failure is not an option” was immortalized by Actor Ed Harris playing the role of flight director Gene Kranz in the 2003 film about the Apollo 13 mission. The issue at the time was saving the three astronauts whose spacecraft had experienced a catastrophic failure on the way to the moon.

For John Kerry, it is about saving the planet.

The post Failure Is Not An Option first appeared on Doing Business on the Earth.

The report, A Regulatory Green Light, was written last January by Graham Steele who is the Director of the Corporations and Society Initiative at Stanford Graduate School of Business.

The essence of Steele’s argument is that not only does climate change itself pose a systemic financial risk but that the inevitable transition to a low carbon economy will lead to a collapse in fossil fuel assets and the value of the companies that hold them. He points to different studies that show the exposure of large banks, insurance companies, and asset management firms such as Black Rock holding enormous amounts of loans, bonds, and stock in firms that will lose their value as the world moves away from coal and oil.

One of the studies he cites, for example, was made by the Insititute for Energy Economics and Financial Analysis, which promotes renewable energy investments. It says that Block Rock has lost $ 90 billion of its investors capital due to such investments and that its actual holdings do not much the green rhetoric for which its CEO Larry Fink is well known.

Drawing on the financial crisis of 2008/9, Steele argues that the popping of the carbon bubble, as he calls it can spread similar havoc in the financial system since many of the players hold the same fossil fuel assets (Asset liquidation channel) and have holdings and investments in each other (Counterparty transmission channel).

Steele’s proposal is to use the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010 to oblige financial institutions to mitigate the risks of holding these assets and even to decrease their exposure. The key to being able to use Dodd-Frank for this purpose would be for the Financial Stability Oversight Council (FSOC) to determine that climate change and the transition represent a systemic risk and therefore should be regulated.

In his paper, Steele goes through a number of potential arguments against this course of action. One of them is that some might say that the financial industry can manage its own climate risk. On this topic, Steele cites a number of sources that confirm that “financial institutions do not effectively self-regulate, particularly as it relates to catastrophic risks”.

This idea echoes the work of Columbia University’s, Graciela Chichilnisky, who argues that business leaders, in general, do not measure catastrophic risks very well. In her work, she argues that climate change requires a different lens to understand its economic impact.

From a financial point of view, the problem is that the net present value of any negative financial result will be zero if it is far enough in the future or a relatively low probability is placed on it.

In the conclusion to his paper, Steele argues that “macroprudential regulation mitigates the moral hazard problem posed by the industries and financiers driving climate change.116 Under the status quo, the worst polluters are being treated as if they are “too big to fail.””

Whether a Biden-Harris administration makes progress on this issue will depend on who is asked to serve as the U.S. Treasury Secretary and if they are confirmed by the Senate. One candidate who would certainly take such steps but is unlikely to be picked is Senator Elizabeth Warren. The problem is that if Senator Warren would join the cabinet, The Republican Governor of Massachusetts would most likely appoint another republican to fill her seat until her term expires in 2025.

Part of the reason there is so much attention (and money) going into the two Senate runoffs in Georgia is that all cabinet appointees must be approved by the Senate. If Republicans win one of these seats, that will give the party control of the Senate and an effective veto on President-Elect Biden’s cabinet and restrict his administration’s ability to take the kind of steps argued for by Graham Steele.

The post Preventing a carbon bubble? first appeared on Doing Business on the Earth.

As of today, 188 of the197 parties to the convention have ratified it and submitted their first Nationally Determined Contributions (NDC’s) to reducing greenhouse gasses. The Marshall Islands and Suriname have actually gone ahead and submitted their second set of commitments as called for by the agreement.  All NDC’s are public and can be found here.

The United States, for example, committed itself to CO2 reduction targets for 2020 and 2025 in its first NDC submitted before the election of Donald Trump in 2016.

Surprisingly, after four years of the Trump administration’s systematic efforts to reverse the progress that the U.S. had made on the issue, the Energy Information Agency is projecting that the U.S. will emit an equivalent of 4.62 billion metric tons of carbon in 2020. This is 37% below the peak in emissions of 7,39 metric tons in 2005 and far faster than the commitments made as part of the Paris framework shown below.

Of course, the reduction comes mainly from decreased economic activity as a result of SARS-CoV-2 and the measures put in place in many states to try and control the epidemic. Assuming things get back to some idea of normal in the next year or two, the challenge will be to meet the 2025 targets or even go below them.

The bad news is that, according to the Climate Tracker,  even if the US does manage to maintain these reduced levels of Co2 and the rest of the world meets its own voluntary commitments, it will not be enough to halt climate change. The climate tracker is a consortium of research institutes and private companies that compares the current set of voluntary targets with the latest figures from the Intergovernmental Panel on Climate Change (IPCC).

Their “thermometer”, shows a 50% chance that the current set of targets will still cause a 2.7ºC warming (1.4 ºC more than today) by 2100 if the targets are not updated and made more ambitious.

Donald Trump’s rationale for leaving the agreement was about relinquishing American sovereignty to the United Nations and the agencies being set up to monitor the agreement.  What he seemed not to understand, or chose not to understand, is that the NDCs are voluntary targets and the entire Paris mechanism is about getting the world to cooperate rather than to dictate policies.

The essential idea is that countries will gradually make successively more ambitious targets as technology improves and time goes by. Transparency and sharing of technology, best practices, and investment funds will gradually shift the world onto a different trajectory and close the gap.

The Paris agreement was an important milestone in a series of meetings that have been held since 1992. These meetings are officially the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). Paris was COP 21 as it was the 21st such meeting in the 23 years since the agreement.

The next one, COP 26 will be held one year from now in Glasgow and will focus on encouraging all countries to agree on a goal to get to net zero in terms of carbon emissions at some point in the future and to agree to further voluntary targets by 2030.

The first point of Joe Biden’s climate plan is quoted below and is fully consistent with the goals of COP 26 and the consensus of the international community.

1. Ensure the U.S. achieves a 100% clean energy economy and reaches net-zero emissions no later than 2050. On day one, Biden will sign a series of new executive orders with unprecedented reach that go well beyond the Obama-Biden Administration platform and put us on the right track. And, he will demand that Congress enacts legislation in the first year of his presidency that: 1) establishes an enforcement mechanism that includes milestone targets no later than the end of his first term in 2025, 2) makes a historic investment in clean energy and climate research and innovation, 3) incentivizes the rapid deployment of clean energy innovations across the economy, especially in communities most impacted by climate change.

As I have written many times over the four years I have been writing Doing Business on The Earth, de-carbonization represents an enormous business opportunity. The combination of co-ordinated American action with China’s own steps to de-couple its economic development with its carbon footprint will push enormous investments into energy research, making our buildings and factories more energy efficient and transforming the energy mix itself.

The post Mind the gap! first appeared on Doing Business on the Earth.

Although it appears that Donald Trump has not accepted the result of the election and is still ranting about an unproven conspiracy against him, the United States is moving on. On Saturday evening, Biden and Harris declared victory in Wilmington Delaware, thanked their supporters and the thousands of people who worked through the week to count the ballots, and promised to serve all of the American people regardless of who, they voted for.

You can see the excitement, joy, and pride in Harris’ face as she makes her remarks. She spoke about how the American people had made a choice of hope, unity, decency, science, and truth. She also stressed the historic nature of her election as the first woman who is also African American and the daughter of immigrants to the Vice Presidency. She urged girls around the country to “dream big” and to “see what can be, unburdened by what has been”.

Joe Biden actually trotted up to the podium to give his speech and echoed many of the themes he has been talking about during the campaign. At one point in the speech, he paraphrased Ecclesiastes 3:2. He said “The Bible tells us, “to everything there is a season: a time to build, a time to reap, and a time to sow and a time to heal.”. He then said, “This is the time to heal in America”.

In my view, his reference went beyond Sars-CoV-2 that is continuing to spread across the United States. Biden was also referring to the stark divisions in the country which Donald Trump did not create but has systematically exploited for his own political gain.

For Biden, we stand at “an inflection point” and have the opportunity to choose between the “better angels of our nature” or “our darkest impulses”. He offers more than a different political party or program than Donald Trump. Even more than a different style of leadership or world view. Biden is a different type of man.

Biden is a man with deep religious faith and the political conviction that politics is about listening to the other side and finding common ground. If the Republican party maintains control of the Senate as it is likely to do in Georgia next January, he will have to find that common ground.

In terms of the major themes of environmental sustainability, Biden will certainly bring the United States back into the Paris climate agreement. His version of the New Green Deal calls for rebuilding American infrastructure, retrofitting its buildings, and putting the country on track to eliminate fossil fuels by 2050. He will also appoint new leadership at the Environmental Protection Agency and work to re-establish its former capabilities.

As regards geopolitics, I posted a few weeks ago why I thought that Biden and Harris will make the world a safer place. He said last night that he would not use the example of (America’s) power, but the power of (its) example in world affairs.

I have family in New York who saw first hand the spontaneous celebrations that sprung up there and across the United States when the election was called on Saturday. It reminded me of the scene in the Return of the Jedi after the emperor is overthrown with scenes of celebration across the galaxy! Biden said he was “suprised and humbled” by the outbreak of joy all across the country.

I and many others feel like a great weight has been lifted off of our hearts. We can again be proud to say we are from the United States of America and look to the future with hope.

Joe Biden decided to run for President to restore the soul of the United States. His victory in the election is the first step in that process.

The post A Time To Heal first appeared on Doing Business on the Earth.

The story is kinder to Faramir in the book than in the movie but in both cases, he does the right thing and lets them go.

Last night (Nov. 5th), Donald Trump said he had won the election and would litigate the result if Biden prevails in the final count. Trump said he would not be surprised if the case or cases “ended up in the highest court in the land” meaning the Supreme Court where the Republican Senate had just approved his nominee, Judge Amy Coney Barrett, to the court in record time.

In Tolkien’s words, this is a chance for the members of the court to “show their quality”.

Much of the discussion of Judge Barrett’s confirmation revolved around her views on Roe Vs. Wade, the landmark ruling making abortion legal in the United States. The Trump administration first nominated Ms. Barret, a law professor, to the United States Court of Appeals in South Bend Indiana in 2017. I understand that her candidacy to the Supreme Court has been supported by Vice President Mike Pence and other evangelical Christians who support President Trump in part for his campaign promise to reverse Roe v.s. Wade.

If Trump is right and this election ends up in the court, then we will see where she and her fellow justices stand on a completely different subject. My guess is that Trump believes he can count on the full support of Judge Barret and the other two justices he has nominated, Bret Kavanaugh and Neil M. Gorsuch. While I am not a legal scholar, I do not think such an interpretation is necessarily correct.

Justice Kavanaugh has made a reference about absentee ballots potentially flipping the result of election day which may indicate that he has sympathy for Trump’s arguments but I am not so sure of Justice Barret and Justice Gorsuch. My guess is they will focus more on their reading of the law and the constitution than some idea of loyalty to President Trump.

Looking at the other members of the court, I find it unlikely that Justice Kagan, Justice Sotomayor, and Justice Breyer would support Trump unless there were clear violations of the U.S  constitution. Kagan and Sotomayor were nominated by Barak Obama and Justice Breyer by Bill Clinton.

The last three members of the court, Justice Thomas, Justice Alito, and Chief Justice Roberts were nominated by Republican Presidents but not by Donald Trump. Justices Alito and Robert were nominated by Geoge W. Busch and Justice Thomas by George H. Busch. My guess is that these justices will be more concerned about the rule of law and their own legacy than helping Donald Trump subvert the American election.

In summary, I do not think Trump will find a majority of support in the court even after Justice Barrett’s confirmation.

During his remarks, all of the major television networks except for Fox News cut off the President’s speech and took the time to tell viewers that what he had said was not true and they had not found any evidence of his charges of fraud and conspiracy.

After 17 minutes, Trump left the stage while the handful of reporters who had attended the session shouted questions. As an aide closed the door CNN’s Jim Acosta asked “Mr. President, are you being a sore loser?”

As I write this blog in Barcelona, new count totals from Georgia and Pennsylvania put Biden ahead in those states. If these leads hold then Joe Biden will have won the election and will be the 46th President of the United States next January 20th, regardless of what Donald Trump has to say.

The post A chance to show their quality first appeared on Doing Business on the Earth.

The course is relatively short but I try to give the students a sense of the historical forces which have led the world to its present state, discuss some of the key geopolitical issues facing the world and show them how a wide variety of the world’s challenges are connected to each other. All of this was done with the backdrop of SARS-CoV-2, the economic impact that the virus and the measures put in place to control it have had, and of course, the American election.

As part of their coursework, each student was required to record a 2-3 minute video blog explaining whether they were optimistic or pessimistic about the future of the world. This weekend I divided my time between reading the latest polls from Florida, Texas, and Pennsylvania and watching the student’s video blogs since my grades are due next week!

In the first place, about 25% of the students described themselves as pessimistic. These students cited problems such as the ongoing pandemic, tensions between the U.S. and China, other global hot spots, fake news, privacy and big tech, and the looming climate crisis as reasons for their pessimism. A few spoke about people being essentially selfish and that human nature itself was holding us back. What truly moved me, however,  was that almost 75% of the students, like the woman below said they were optimistic about the future of the world.  (One out of 80 would not say if he was optimistic or pessimistic).

These students discussed the same problems as their pessimistic classmates but framed them as challenges rather than problems. While different students cited different reasons for their optimism, the following are some of the ideas that they most commonly expressed.

In the first place, many students cited the historic increase in wealth that the world has experienced over the last fifty years and how that wealth has resulted in less poverty, lower infant mortality, longer lives, and more materials wealth for most people on the planet. The impact of the pandemic was not overlooked but instead placed in the context of years and years of progress.

Secondly, many students thought that technology, in its broadest sense, had the potential to overcome some of the most pressing problems facing humanity. These students typically recognized the dangers of information systems technology in terms of privacy and jobs but thought that in the end, digitalization would combine with other technologies to cure disease and find a way to power a low carbon economy bringing prosperity to all.

In terms of geopolitical tensions, the students spoke about political leaders having had learned the lessons of the last century and some cited statistics showing how war itself was going out of fashion in historical terms. on the specific issue of the U.S. and China’s stormy relationship, the optimists felt that a hot war was not really possible and even a cold war would have limits due to the interdependence of the world’s two largest economies.

A fourth point that many students insisted upon was that people had a natural tendency to innovate, adapt, and overcome the challenges that are put in their way. This line of thinking was partially inspired by Lenni Montiel, an executive of the United Nations Development Program who I invited as a guest speaker and was able to zoom in from New York. Speaking about the current Pandemic, Montiel thought that although the world had lost as much as 10 years of its progress on development, humanity had made it through worse crises in its history and would survive this one.

A fifth point was that several students felt that their generation had the preparation, awareness, and attitude required to really make a difference.

A final point that I thought was truly inspiring was that many students acknowledged the challenges facing the world but then went on to say that they chose to be optimistic in any case because they felt that only a positive attitude would bring about positive change. These students cited movements calling for more political rights and environmental protection as signs that we are on the right track. One said, “We have to remain optimistic!”.

As long as our young people believe in the future as strongly as my students do, I believe it will be bright.

The post “We Have to Remain Optimistic!” first appeared on Doing Business on the Earth.

Although I probably should write about the upcoming presidential election in the U.S., I am sure that at this point I will not convince anyone to change their mind about Donald Trump or Joe Biden and besides that, it seems like 60 million Americans have already voted including me!

What I found much more interesting than the Donald Trump Show was watching the video blogs that my Global Executive MBA students sent me explaining their views on sustainability.

I teach my course, Strategy & Sustainability, in the final week of the program which is 16 months long and takes the students to 6 cities on three continents. Although IESE Business School makes an enormous effort to stress the ethical responsibility of business in every lecture and case study, we have sustainability in the final week to make sure that the message strikes home.

The course is relatively short as compared to the full-time MBA course but covers much of the same territory with cases on the oil business, the consumer products sector and a concept called the Blue Economy which is the title of a book published by Gunter Pauli. We also had Jamie de Jeraize, the President of LG Iberia who spent an hour with the class to explain the movement they have launched called Smart Green.

I ask the students to record a 2-3 minute video blog sharing their views on the topic as I find video is a great way to get students to tell you what they really think.

This year my students really impressed me with their creativity, conviction, and practical ideas about how to make the world more sustainable at the levels of government, business, and in their personal lives.

Several students from the fashion industry spoke about how their business needed to change in a fundamental way since about half of the new clothes manufactured every year end up in landfills.

Students in financial services spoke about the relatively low footprint that the industry produced but the enormous responsibility it had in terms of the investments it supports.

Others, including a student in the fishery business in Latin America, spoke about the opportunity of using a true and deep commitment to sustainability to differentiate their products and services. Interestingly enough, this argument was also made by students in real estate development from several places around the world.

Students from developing countries spoke clearly about the challenge of increasing prosperity in their countries in a sustainable way. One of these students felt the key lay in education while another was deeply concerned that the wealthy, developed world might use a sustainability argument as a way to keep poor countries poor. perhaps the freshest insight came from a woman in an advanced economy who struggled with her own values and how to balance the economic development of billions of people around the world with the need to avoid catastrophic global warming.

At the personal level my students told me how they were changing their consumption patterns, the things they purchased, and even the food they ate to live a more sustainable life.

Several spoke about the positive effects that efforts to control the spread of SARS-CoV-2 have had on the natural world. Their point was that perhaps we do not need to stress economic growth quite so much and look for a more nuanced view as to what progress means.

Our students in this program are typically in their late 30s and early 40s and come from all over the world. They have an average of 15 years of experience and are truly seasoned executives.

Their collective commitment to building a more sustainable future shows me that we really are at a tipping point concerning sustainability in terms of the global business community.

Assuming that the American people elect Joe Biden perhaps he can provide true leadership for the U.S. and the world at the governmental level.

His program calls for the gradual phase-out of fossil fuels by 2050 and to re-establish the U.S. as the leader in the transition to a low carbon economy.

The post Global Executive MBAs and Sustainability first appeared on Doing Business on the Earth.

During the first presidential debate in 1960, Senator John F. Kennedy explained his view that the struggle between the United States and other liberal democracies against communist Russia and China could only be won through economic prosperity in the West and the example that the US. and its allies would set for the world.

For much of the next 40 years Kennedy would be proven correct due to the prosperity of the West and what came to be called the Washington Consensus dominated the world spreading free-market capitalism and some form of elected government to many countries.

Along the way, the Soviet Union collapsed under its own mismanagement and inability to provide such prosperity to the citizens of Russia and the Eastern block.

As the USSR faded, China began what would be its economic, political, and geopolitical revival under the leadership of Deng Xiaoping. Deng’s legacy would be pursued by a series of Chinese leaders including its present Premier Xi Jinping.

After the financial crisis of 2009, the endless war in Afghanistan, and the disastrous situation in post-war Iraq, however, the idea that the United States was the model for the rest of the world has become an open question. Restored, to some degree, under the leadership of Barak Obama, Donald Trump has eroded the image of the United States in the rest of the world by turning his back on traditional and new American allies, coddling dictators such as the North Korean Kim Jon Un and Russian President Vladimir Putin, and allowing hundreds of thousands of Americans to die from SARS-CoV-2.

As the world enters the 2020s, the Chinese example seems to offer a counterpoint to the United States for countries across Asia and Africa. China’s One Belt, One Road initiative offers investment capital for infrastructure projects and Chinese companies offer their equipment and services backed by low-interest loans from the Chinese Development Bank and other institutions. China has controlled the virus and its economy is back on track.

The other beacon of liberal democracy, The European Union is deeply struggling with its own issues, the virus, and the exit of the United Kingdom from the Union.

At the same time, there are a number of critical situations around the world including:

• Tensions in the South China Sea and the East China Sea
• Ongoing tensions between North Korea and the United States
• The conflict between India and Pakistan and India and China
• Ongoing war in Afghanistan
• The conflict between Iran and Saudi Arabia and the United States
• The conflict between Armenia and Azerbaijan
• Political instability in Iraq, Egypt, and Lebanon
• The Israeli – Palestinian conflict
• Civil War in Libya
• Civil war in Syria
• Tensions between Turkey and Rojava, the Kurdish state in Northern Syria
• Civil war in South Sudan
• War int he Eastern Ukraine
• Armed groups such as Boko Harum in Nigeria and Al-Shahab in Somalia
• Violence in the DRC
• Institutional conflict in Venezuela
• Criminal violence in Mexico

As if all of this was not enough, the world faces the very real threat of climate change which requires concerted action by all of the countries involved and the United States and China in particular.

The historian Niall Ferguson says that we are already in the middle of cold war 2.0 between the U.S. and China and the former Dean of the Harvard Kennedy School, Graham Allison,  published a book recently asking if the U.S. and China were destined for war?

The next few years will be critically important on a number of issues and the role of the United States, and whoever turns out to be its president from 2021 – 2025 will certainly be decisive.

Four more years of Donald Trump will further erode the United States’ standing in the world as he continues to pursue his zero-sum version of realpolitik. A Biden presidency, on the other hand, would stress multilateral solutions to the world’s problems and bring the U.S. closer to its traditional allies in Europe, Asia, The Middle East, and Africa.

The post Biden and Harris will make the world safer first appeared on Doing Business on the Earth.

I actually tried to watch the first debate between Donald Trump and Joe Biden but only lasted 15 minutes before turning it off. Neither Trump nor Biden followed the rules they had agreed to and the moderator, Fox News’ Chris Wallace, lost control of the event in the first few moments. At one point he had to remind the President that he “was the moderator” and Trump said he felt like he was debating Wallace instead of Biden. Trump probably thought he was going to get a free ride from Wallace since he is an anchor st Fox News but his questions seemed fair and pointed. Trump, as always was himself and painted his alternative reality view of how everything he has done has been right and if not, it is someone else’s fault. Biden, on the other hand, repeatedly called Trump a liar and seemed at a loss for how to deal with him or even control his own temper at the insults, jabs, and interruptions.

Biden was much better at the Town Hall style meeting he held with ABC, the television network,  last week. That event was broadcast from Philidelphia’s Constitution Center and moderator by George Stephanopoulos who is a co-host of Good Morning America and also has a weekly political commentary talk show. Stephanopoulos worked on President Bill Clinton’s election campaign and was on Clinton’s staff during his first term. The show was put together since Trump pulled out of the second scheduled debate when the organizers, a non-partisan group that manages the debates decided to make it virtual because Trump and members of his team had tested positive for SARS-Cov-2.

One point that came out was that the words and deeds of a President matter. Biden was sharply critical of Trump for not setting an example to the nation on how to respond to the virus, for example, by wearing a mask.

Not to be outdone, Trump went on a similar program on NBC, a rival network and they actually aired at the same time. NBC aired the event at the Pérez Art Museum in Miami with the image of the Mcarthur Causeway in the background. His moderator was Savannah Guthrie, the host of the Today show on NBC. I also watched the first 20 minutes of this broadcast and was surprised that Ms. Guthrie spent that time asking Trump a number of hard questions about his administration’s response to the virus, his attitude to white supremacists and Q Anon, and his use of Twitter. The President was visibly angry at her questioning as the idea was to get questions from voters but the good news is that he finally unequivocally denounced white supremacists.

Perhaps the most interesting comment was when she challenged the President about retweeting a story about Obama and Biden having a Navy Seal Team Killed to cover up the fact that Bin Laden was still alive. Trump defended himself saying it was only a retweet and he would let people think for themselves. Guthrie’s answer was “I don’t get that. You’re the president. You’re not, like, someone’s crazy uncle who can just retweet whatever.”

For me, this comment, and Biden’s condemnation of Trump’s behavior is a key aspect of the difference between these two people and what this election is all about.  For Trump, the presidency is a prize that he won which allows him to do as he likes. For Biden and Harris, public service is a privilege and a responsibility.

This campaign and these last few weeks also show how much has changed in the media landscape in which the election is being played out. The fact that rival networks give air time to rival candidates at the same time seems to indicate that the whole thing is a tv show…a reality show like The Apprentice. The very dubious role of Social Media – and Trump’s reliance on it to reach his electoral base is again a sign of our times. In case there was any doubt, the news over the next few days was not about anything the candidates said but that Joe Biden’s show had more viewers than Trump’s!

60 years ago there was another presidential election in the United States. This was between the Vice President, Republican Richard Nixon, and the Democratic candidate, Massachusetts Senator John (Jack) Kennedy. They held the first such debates in history and it is instructive to watch a few minutes of the first one just to remember what politics is supposed to be about. If you watch this debate you will see that the candidates differ in their interpretations of the facts but not on the facts themselves.

They disagree over policy but do not disrespect each other. In Nixon’s words, his disagreements with Kennedy were not about the goals for the country but about the means to reach those goals. One could tell in the debate that these two men have little personal empathy for each other but the debate itself is about policy, not personality.

Going back to Joe Biden in the first debate, it seems he was genuinely surprised by Trump’s behavior. I, unfortunately, was not. For the sake of the United States, and to some degree the rest of the world, I hope that the polls are correct and we will see the end of this administration in just a few short months.

The post 15 days left first appeared on Doing Business on the Earth.

Pence portrayed President Donald Trump as misquoted, hard-working, and successful. While I disagree with his assessment and would take issue with the lies and mistruths he made, I have to give him credit for presenting the administration’s record in the best possible light.

In my view, Senator Harris also came across as a credible, sensible, and at the same time passionate defender of the country’s diversity and its basic values. It seemed to me she was using the occasion to present herself to a wider section of the American electorate than has seen her before.

While the format did not allow extensive discussion of any of the different topics that the moderator, Susan Page, brought up, one area which underlies the differences between the Republicans and the Democrats in this election is the issue of the environment and climate change. Mike Pence said he was “proud of (his administrations) record on the environment and conservation” and pointed to the Great American Outdoors Act as proof of Trump’s commitment.

The act, which was introduced by Colorado’s Junior Senator, Republican Cory Gardner and will provide needed funding for the United States system of national parks. It received widespread support from both parties and particularly in the Western part of the country where many of the parks are located. Kamala Harris was actually one of 59 co-sponsors of the law which President Trump signed on August 6th.

According to Linda Bilmes, a Sr. Lecturer at Harvard’s Kennedy School who is an expert on funding the national parks, the bill is the “biggest land conservation legislation in a generation”.  She also said “It is ironic that President Donald Trump will get to have his signature on a historic milestone that has eluded conservationists for decades. The Trump administration has undermined public land protection more than any in my lifetime. It slashed Bear Ears National Monument in Utah by 85 percent, reduced Grand Staircase Escalante by 50 percent, removed protection for millions of acres of sage-grouse habitat in Western states, opened the Arctic National Wildlife Refuge and most of the U.S. coastline to oil and gas drilling, reduced protections for wetlands, and weakened the Endangered Species Act. Earlier this year, Trump proposed cutting discretionary spending on the Land and Water Conservation Fund by 97 percent.

Pence said several times that the Trump administration would “continue to listen to science” even while he also called into question the connection between greenhouse gasses and climate change. This, of course, is the same administration that put Scott Pruit in charge of the Environmental Protection Agency and has systematically tried to remove the protections that have given the United States the clean air and water that Pence boasted about.

For her part, Senator Harris agreed that climate change is an existential threat, referred to wildfires and extreme storms, and committed a Biden administration to re-joining the Paris agreement.

Both candidates made reference to the Green New Deal and the Biden/Harris version which you can see on their website here. Pence attacked the plan and Senator Harris for supporting it and being a co-sponsor to the original Green New Deal back in March 2019. As far as I can see, the Biden/Harris version includes the most critical environmental aspects of the overall idea but does not include some of the more progressive (or leftist) aspects of the original proposal.

The key difference in my view is that Trump and Pence see natural gas and hydraulic fracking as the answer to the climate issue since gas does have lower emissions than coal and heavy fuel oil. (On fracking, both candidates said they were in favor of the technology but neither one talked about the most important thing which is to provide adequate oversight on the industry to ensure that fracking is done with proper casing, protection against methane leakage, and water treatment.)

Biden and Harris, on the other hand, have a goal of getting the U.S. back to the forefront of environmental technology and achieving a zero-emissions power base by 2035. In this view, which I share, natural gas is the bridge to a clean and renewable energy future.

Since the first Trump/Biden debate was so dysfunctional, and there may not be another one, I suggest watching the full 90 minutes of the Pence/Harris debate if you have not done so already.

In my view, the contrast is clear on a large number of issues including that of the environment and climate change.

The post A sharp contrast first appeared on Doing Business on the Earth.

I wanted to write about the continued spread of SARS-CoV-2, the recognition of Israel by the United Arab Emirates, the fires in Washington and California, and everything else that has been going in the world.

My problem has been my inability to watch the Donald Trump Show despite my conviction that what happens in the next American election will have far-reaching consequences for many of the issues and challenges the country and the world are facing.

The Donald show includes the Republican National Convention, the constant barrage of lies and half-truths coming from the White House, the so-called debate last week, and the overwhelming hypocrisy of the Republican establishment as they rush to replace Ruth Bader Ginsburg with Amy Coney Barret.

The last issue is not about Judge Barret’s qualifications or her political and religious views but is about being consistent with what these same people said four years ago when they refused to let Barak Obama’s pick even come up for a vote with the argument that an election was only 9 months away!

Now the show has moved to a critical stage as Donald finds himself in the hospital with the virus he said was not a big deal. His wife and a number of his aides are also infected as it seems no one would wear a mask in the President’s presence!

Given the state of play, my suggestion to the Republican party would be for Trump to withdraw from the race due to his illness and thus save him from losing. They could run Mike Pense in his place and be really honest, delay the vote on Judge Barret until after the election. Pence will mobilize the Christian right and do so without them having to hold their nose when thinking about Trump’s sexual conduct. If elected he would be totally within his right to nominate Judge Barret and begin to unwind the legality of abortion in the United States.

If the Republicans were to do such a thing, then the best play for the Democrats would be for Biden to also withdraw in favor of Kamala Harris. Harris is younger, more vibrant than Joe, and would clearly signal that the Democrats are for inclusion, fairness, and the rule of law.

My understanding is that there are a number of sharp disagreement across the United States about many things. Donald Trump and his team have used these disagreements to further polarize the country and pit different groups against one another.

Joe Biden is the Democratic nominee precisely because he rises above many of these issues and appeals to those ideas and ideals that bring Americans together, rather than driving them further apart.

In my view, both Kamala Harris and Mike Pence are honest people who would also try to bring people together although they come from very different places. A debate between them could potentially be about ideas, values, and policies and help the American people decide what kind of country they want to strive for rather than being mired in the muck of Trumps’ reality TV show.

The post Mike Pence V.S. Kamala Harris first appeared on Doing Business on the Earth.

What I come away with after watching a number of high profile speakers is a Democratic Party that is more united than at any time in memory. The party is United by its candidates, Joe Biden, by their conviction that the United States can overcome the virus and its other challenges and their deep disdain for Donald Trump and what has become of the Republican Party.

Speaker after speaker made the point that the virus has had a much worse impact in the United States and it did not have to be this way. New York’s Governor Andrew Cuomo spoke about how New Yorkers came together and managed to defeat the virus but that the learnings from that fight were not rolled out across the nation. Cuomo made the point that a virus attacks and an organism particularly when it is weak. For him, a competent government the immune system that protects the body politic and he, like many others, puts the blame for the scale of the US situation on Trump and his administration.

Expanding on this theme, Barak Obama and others spoke about the work of government and how Trump has not stepped up to do it. Referring to Joe Biden, Bill Clinton said that he would “Go to work and deal with the facts”.

At IESE Business School we stress the idea of leadership as service to others and this was another theme that the Democrats hit on over and over again. Kamala Harris spoke about her own personal story and what drew her to public service in the first place. She quoted her own mother who said that “service to others gives life meaning & purpose”.

Perhaps the most blasting condemnation of Donald Trump came from Barak Obama who said that Trump never understood the responsibility that came with the office he holds and was incapable of stepping up to it.

The other main theme that comes from watching the speeches is that this election is a battle for the soul of the United States and will resonate for years and even generations to come. For the Democrats, the country is at an inflection point and will either come together and deal with its challenges or continue on the current path set by Donald Trump and what is left of the Republican party.

In my view, Joe Biden said it best at the end of his remarks. Speaking with passion, conviction, and confidence Biden said that “Love is more powerful than hate, hope is more powerful than fear, and light is more powerful than darkness.

I write this post 74 days before the presidential election and am encouraged by the unity and strength of the message given by the Democrats. While a Biden-Harris administration will certainly be more progressive on a number of issues including dealing with climate change, the most important aspect is not the policies it will pursue but the values it will hold dear.

In his remarks, Bernie Sanders went through a list of specific proposals that Biden has endorsed but also spoke about Biden’s commitment to justice, love, and compassion. Kamala Harris spoke about his resilience, empathy, decency, and belief that everybody counts.

My hope is that these messages not only get the people who normally agree with the Democrats out to vote in November but also get through to people who voted Republican in 2016.

The post Love, Hope, and Light first appeared on Doing Business on the Earth.

This quote is taken from the latest report of a group that was put together by the Center for Climate Security which is part of the Council on Strategic Risks. The council is a Washington based think tank that is reportedly bi-partisan and has an array of retired Generals, Admirals, and Air Force officers on its advisory council. They set up a working group called The National Security, Military, Intelligence Panel on Climate Change which published the report in February 2020 just as the magnitude of SAR-CoV-2 began to sink in.

You can download the full report here but I did want to give some of the highlights from the executive summary. Essentially, the message is that climate change is directly linked to geo-political instability meaning the more things change, the more unstable the world will be from a political and military viewpoint. Even at low levels of warming, the report cites a number of risks over the next three decades.

Depending on which part of the planet you look at, Climate change will increase famine and water shortages which in turn will drive people off the land and into cities and neighboring countries. Some countries will see their institutions be put under tremendous stress or even collapse and this in turn will create more fragile states on the one hand and the emergence of authoritarian regimes on the other. All of this could lead to regional wars and even tension and conflict between the great powers themselves.

You can see a summary of the findings for the mild, near term scenario below:

The authors of the report used a five-point scale to measure the risks going from Low to Medium to High, Very High, and Catastrophic. What is striking is that the lowest levels of risk were found to be in Europe and North America but even there it was rated between Medium and High. Above 2.4º C the risk is high, very high, or catastrophic everywhere.

“Higher levels of warming will pose catastrophic, and likely irreversible, global security risks over the course of the 21st century.”

The good news is that the international financial community, many large international businesses, and much of the world’s political leadership recognizes this threat and is committed to taking action. The United nations 17 Sustainable Development Goals are a good example of the kind of actions that will make the world more resilient in the face of climate change the therefore will mitigate some of these security risks.

The bad news is that the Republican Party int the United States has allowed Donald Trump and his friends in the coal business to undermine the efforts of the Obama and Clinton Administrations to make progress on the issue of both Climate Change even if a number of State and local governments are proceeding ahead despite the administration’s wrongheadedness.

The response of Trump and his supporters is to say that groups like the Council on Strategic Risks are part of the “deep state” and somehow against the country’s interests.

In a brilliant opinion piece last week, Illinois Senator Tammy Duckworth defended her patriotism against Tucker Carlson, a journalist who has a show on the Fox network. Senator Duckworth defines herself as Asian American and lost both her legs when the military helicopter she was piloting hit by a rocket-propelled grenade in Iraq. According to Public Citizen, an advocacy group that is no friend to President Trump, Fox consistently puts out news programs which question climate science and denies that the crisis is real. Its analysis of Fox’s coverage in the first half of 2019, singles out Mr. Carlson’s show as airing 41 segments denying climate change or about 7 per month.

The United States spends on the order of $ 700 billion each year on its military forces which involves approximately 1.3 million men and women. These people routinely risk their lives for their country and regardless of one’s political views, it seems that real patriots would recognize the links between geopolitical risk and climate change and try to avoid sending troops into harms way as a result of inaction and misdirection on the climate emergency.

The post Climate Change & Global Security first appeared on Doing Business on the Earth.

I will explain why I support the selection of Senator Harris after first discussing some of the other candidates that appear to be on the list.

Traditionally, a Vice president is chosen to balance a ticket geographically and to ensure a win in key swing states. This was the logic of Hillary Clinton’s picking Virginia Senator Tim Kaine as her running mate. Kane did deliver Virginia but failed to convince the nation that Donald Trump was unfit for office. Using this logic, Biden should pick someone from a swing state such as Georgia and there are people who feel he should either pick Stacey Abrams or Keisha Lance Bottoms. Ms. Abrams narrowly lost the race for Governor of Georgia in 2018 and would probably have won if the election was fair, and Ms. Lance Bottoms is the Mayor of Atlanta.

Both would increase the likelihood of winning in Georgia and getting the African American vote to the polls across the country. Both are accomplished politicians and I could imagine will be effective Vice Presidents. My concern is if they have the experience and personality needed to become president if anything happens to Joe!

Another line of thinking has the democratic party divided between progressives who supported Bernie Sanders and Elizabeth Warren on one side and moderates who supported people like Senator Klobuchar, Pete Buttigieg, and Joe Biden on the other. This line of thinking would indicate that Senator Warren is the perfect match as it would unite the party and encourage progressives and younger voters to come out to vote. While I am an enormous fan of Senator Warren, my concern is that the right-wing of the Republican party and the President will paint her as a socialist radical and do their best to scare both moderate Democrats and reasonable Republicans that if she were to become President, the country would face economic destruction. Massachusetts will support Biden in any case.

A third line of thinking is that Biden already has the support of African Americans and that the progressives will come out to stop Trump in any case. This thinking then looks at securing the increasingly important Latino vote. According to Politico, the two leading candidates from this list are New Mexico’s governor, Michelle Lujan Grisham, and  Nevada Sen. Catherine Cortez Masto. Both New Mexico and Nevada ended up supporting Ms. Clinton and it is unlikely they would flip to Trump in 2020. In any case Ms. Masto has said she needed to focus on issues in Nevada.

The reason I like Kamala Harris is the same reason Bill Clinton chose Al Gore as his running mate back in 1992. On the surface, Gore seemed a poor pick as his electoral base was similar to Governor Clinton’s and he came from Tennessee which is not so far from Arkansas. When asked why he chose him, Clinton gave the best possible answer which was “I think he would make a great President if something happens to me”. Biden will not need her to deliver California’s 55 electoral votes and will need to make sure he does something to mollify the progressive wing of the party but I still think she is the right choice.

At this moment in time, the United States desperately needs a president who embodies what Dean Williams calls Real Leadership. Someone who puts the country’s interest before their own reaches out to all Americans regardless of race, wealth, gender, or sexual orientation and helps to heal the wounds left by Donald Trump. At the same time, the country needs someone who can help Americans wrap their heads around a number of very difficult issues which include the need for a  better health care system, criminal justice reform, and an accelerated path to a low carbon economy. To know more about where she stands on most issues, her campaign website is still online and you can find it here.

Although her presidential campaign did not get very far in the polls, Senator Harris developed her position on these and a number of other issues and seems to have the temperament and experience to lead the country if called upon to do so.

Assuming Joe Biden’s health does allow him to complete his term, his Vice Presidential pick will be well placed for running for President in 2024 and Senator Harris is someone who could truly bring the country together to face its many challenges in the years ahead. The one area she will need to develop will be in the foreign policy space but she would have four years to get ready for that.

In its own list of who is in the running for the VP slot, the New York Times put Senator Harris at the top of the list but also included Susan Rice, the former ambassador to the United Nations and head of the National Security Council in the Obama administration. She would, of course, bring a wealth of foreign policy expertise to the job but will have to demonstrate her capabilities on domestic policy.

The post Pick Kamala! first appeared on Doing Business on the Earth.

A few days ago, for example, an academic for whom I have enormous respect, insisted that there had never been a second wave of any airborne virus including the Spanish Flu and there was no chance that SARS-CoV-2 would come back in the fall. While I hope he is right, History.com does state that there was a second wave in the Fall of 1918, but who knows. I have not, for example, been able to trace the data that was used to draw the chart on the right and it is sensible to question the data quality from 100 years ago in any case. On a different, but related subject, I know many people who insist that vaccines essentially do little or nothing for the public good and have unacceptable levels of side effects, but again, I have not done the research myself.

The thing is that I am not an epidemiologist. I, for example, did my Ph.D. on automotive innovations such as seat belts and airbags and then tried to extrapolate that data to the subject of hybrid and electric cars.Even in those spheres of knowledge where I have spent considerable amounts of time such as environmental sustainability or geopolitics,  there are people who know more than I do and have a deeper understanding of some of the facts.

In the end, when I speak to people who are passionate about a number of specific issues and hold beliefs that are very different from my own, I find it increasingly difficult to reach any kind of common ground.

In trying to make sense of this whole thing my gut reaction is to blame Donald Trump who, according to the Washington Post, has lied or made distorted or misleading statements or tweets an average of 15 times per day since he has been in office. The problem is, first, that my friends and family who support the President would say that the Post is biased against him, and second, Trump is more likely a symbol of the problem than its cause.

Al Gore is best known for losing to George W. Bush in a highly contested election in 2000 and publicizing the climate crisis with his book and movie “An inconvenient truth”. He is less well known for his 2006 book, An Assault on Reason, which I have mentioned several times in this space over the years and touches at the heart of this problem.

Gore’s book recalls a time when there was a broad consensus in the U.S. Senate and other public forums of what was and was not true even while there were policy disagreements about what to do next. These days it seems that people from all parts of the political and ideological spectrum first disagree with what to do and then look for data to back up their ideas. This is the wrong way around.

One of the programs I enjoy most in my work teaching strategy at IESE Business School is the European Broadcasting Union’s Executive Program we do together with the Anderson School of Business at UCLA. The Program is targeted at Sr. Executives in European public service media companies and over the years we have had over 100 such people from almost every country in Europe. In most European countries these entities are fiercely independent and widely trusted. Part of their challenge is to protect that reputation and develop their business models to do so in the most cost-effective and digital way.

Most of us will never spend the 100’s of hours needed to sift through conflicting viewpoints on complex matters and find The Truth.  Instead, we will turn to a source of news and analysis that we feel we can Trust. It might be the Guardian, The New York Times, or the Wall Street Journal or a number of other credible media outlets. My purpose is not to suggest one or the other but to recommend those outlets which, like many of Europe’s public service media companies, adhere to the highest journalistic standards, check their facts, and only grant expert status to scientists and public policy experts who deserve it.

The post Who do you trust ? first appeared on Doing Business on the Earth.

The town I live in outside of Barcelona has now entered into phase 2 of Spain’s plan to bring people and the economy back after the emergency lockdown that was imposed last March 14th. Restaurants and coffee shops are open with limited capacity and life seem to be getting back to normal.

According to the official data, the number of new daily cases is now down in the low hundreds, and health services can now begin to use testing, contact tracing and other measures to control SARS-CoV-2 without doing further harm to the economy. The challenge for Spain will be to open the hotels, beaches, and borders and transmit enough confidence that the tourist season is not a total write off.

From a business perspective, there are three separate ideas that, in my view,  every business leader needs to put into practice.

The first is to develop contingency plans for exactly when restrictions will be lifted and what kind of operational results will be possible in the next 3-6 months. In the hotel business, for example, what will be the expected occupation levels in July, August, and Septemeber? Similar calculations should be made in virtually every business and my advice is to have several such contingencies in place. Will people flock to car dealers, appliance stores, and finally, make purchases that they have put off for the last few months or will caution rule the day. Nobody really knows and the best way forward is to manage the uncertainty.

There may, for example, be a second wave of viral infections sometime in the fall and it makes sense to have plans in place for such an eventuality with a pre-established crisis management committee on standby if it does.

The second idea is to look at the operational solutions and patches that have been put into place during the emergency and think though to what degree such changes are potentially beneficial for the organization and its people. Most companies have, for example, found that people can be productive when working from home and that many activities could be done virtually rather than face to face. mangers should, therefore, try to think through if some of those changes should be made permanent or maybe something in between set up. A concrete idea that one executive told me is that we’re looking at only requiring people to be in the office two days per week.

The third idea that I think business leaders should start working on is looking beyond the crisis and thinking though alternative scenarios for what the world will look like and what the “new normal” will be. Questions I have been talking about with business leaders and colleagues about have to do with issues like the medium-term impact on world trade, consumer behavior, the retail sector, and our overall attitude towards environmental sustainability and climate change.

Will the crisis accelerate the trends concerning automation, digitalization, and the future of work? Will people have had such a positive experience shopping online that they stop going to malls and shopping centers? None of these questions are clear at this moment and these have huge implications for the medium and long term future of many companies.

What I believe to be the most important part of these last two reflections is that they are related. Some of the behaviors and workarounds that we have all figured out will be highly relevant only in certain scenarios of the new normal. My last piece of advice is to, therefore, think through not only which behaviors ought to be re-enforced as we all come out of this thing but also to think about who applicable they may be in the medium term.

The post Scenarios for a new normal first appeared on Doing Business on the Earth.

Another has been to force many people to spend more time with family than they may have been doing on a regular basis. Depending on people’s income, housing, and the structure of their families, this has been relatively easy for some and very difficult for many.

A friend told me today that during the lockdown, his family sat down for dinner every night and this has been a real blessing. In a similar way, many people have gone without a number of things that were part of our normal routine before the emergency.

In Engineering Happiness, Manuel Baucells and Rakesh Sarin, professors at the University of Virginia and Southern California, make the case that there is enough research and data available to actual quantify happiness and work out the fundamental laws that make people happy.

The basic idea is to isolate what the authors call happydons or units of happiness and then to sum up over an hour or month or even a lifetime the number of positive and negative happydons we receive. Someone with an overall positive score will be happy and a negative score will be frustrated, depressed, or sad.

While this sounds overly simple, the book is based on the leading psychological research and seems to apply to all types of people from all kinds of cultures and backgrounds. Baucells and Sarin postulate their six laws of happiness as follows.

The first and most important is that our happiness derived from an experience or an object we acquire is equal to the reality of that experience minus the expectations we had for it. If our hopes are too high we are disappointed no matter how objectively good is the experience.

The second idea or law is that of changing expectations and this has two parts. The first part is that for parts of our lives, expectations increase as things improve for us so that the more we get, the more we want creating an endless race between reality and expectations.

Baucells and Sarin actually distinguish between things that always give us the same pleasure, that they call basic goods, as opposed to others which follow this pattern that they call adaptive goods. In their model the words goods and experiences are interchangeable with the idea that we pay for goods with money and experience with our time.

Basic goods include eating good food, spending time with our partner and family, and perhaps listening to great music as these activities will almost always make us equally happy. Adaptive goods include bigger houses, more luxurious cars, or cell phones with more features.

In the second place our expectations are often driven by comparing ourselves and our experience to that of other people. We may like our new car but still, feel it is not as nice as our neighbor’s new BMW. Baucells and Sarin also have a name for things which make us happy because of such compares and they call conspicuous goods.

Baucells and Sarin also say it is important to compare yourself with the right group of people as humans will always make such comparisons.

I know, for example, many people who feel they are underpaid but make much more money than their parents ever dreamed of. The thing is that they compare themselves to their neighbors or peers rather than where they came from. People from wealthy families sometimes have the opposite problem as they compare themselves with their family rather than their peers.

The third law of happiness is that humans have a harder time with loss than with gain so that the happiness curve is a bit lopsided such that we lose more happydons if we lose something than we would get if we received the same thing.

The fourth and fifth laws have to do with diminishing sensitivity and satiation or just being full. All of this affects how we perceive reality and clearly the more we get something the less it might impress us. Even a basic good like our favorite meal may not make us happy if we have just finished lunch.

The final law of happiness is that we tend to impose a short term viewpoint on what makes us happy giving more importance to the emotions of the moment than what will really impact us over time.

While there is much more to the model of happiness, such as the difference between peak periods of joy or pain and the way our memory processes such data, the reason for exploring the model is to encourage you to take careful stock of what really makes you happy in life as the conversation turns to the more practical side of career management which is making enough money to fulfill your dreams and ambitions while still finding time for friends and family.

As we come out of the emergency and get back to our “normal” life, I suggest it is a good time to reflect on what really makes us happy. Should we continue to go for an evening walk as we have done since first being allowed a few weeks ago? Should we work from home a few days a week since we now know we can?

Can we live fulfilled happy lives which are different than the one we were living just a few months ago? They say we should never let a good crisis go to waste and maybe this one can lead to happier lives, at least for some of us.

The post The pursuit of happiness first appeared on Doing Business on the Earth.

One of the things that Senator Kaine said that struck me is that in normal times, competence does not win elections. His understanding is that telling voters that one candidate is simply more competent than another is boring and will not get people to the polls. The last presidential election in the U.S. bears this out as both he and MS. Clinton made the case again and again that Donald Trump was unfit for office but they lost anyway.

The question is if the outbreak of SARS-CoV-2 and its tragic consequences will highlight the importance of competence and shift the election in favor of Joe Biden and the lady he picks as his running mate. Despite the alternative narrative offered by Mr. Trump and others in his administration, the mismanagement of the current crisis is as unprecedented in recent history as the pandemic itself is. According to Juliette Kayyem, who was Assistant Secretary for Intergovernmental Affairs in the Department of Homeland Security under Barak Obama and now teaches at the Harvard Kennedy School, this thing will go on for many months as a result of this administration’s incompetence.

In his remarks last week, Senator Kaine compared the situation in the U.S. with that of South Korea, and that same comparison has been in the media including The Guardian.

As I write this blog post on Sunday, May 10th, the United States is reporting almost 1.3 million confirmed cases and 79,000 deaths due to the outbreak. How much of all of this could have been prevented by mobilizing the nation and having a coordinated and rational response to the crisis? This we will never know but today is Mother’s day in the United States and it is heartbreaking to think of how many thousands of people are mourning their mothers as a result of the gross failure of leadership of this President of the United States.

I agreed with impeaching Trump for his misuse of power in the situation concerning Ukraine a few months ago but his behavior during the crisis has been much, much worse.  I can only hope the American electorate will throw him out of office in November. After that, let the court of history judge him guilty for the magnitude of this calamity for:

• Cutting the pandemic response unit from the National Security Council
• Failing to recognize the gravity of the situation
• Emptying government of people skilled in crisis response
• Ignoring the advice of the most credible scientists and public health officials
• Mis-directing federal agencies concerning the importance of testing in the first weeks of the crisis
• Sending conflicting messages to the nation’s Governors essentially putting all responsibility on them while at the same time encouraging people who are protesting shutdowns and other measures which they have put in place to slow the virus’ spread
• Giving conflicting, inaccurate, and dangerous messages to the general public both on his twitter feed as well as the briefings he was conducting
• Putting his own insatiable ego and political paranoia ahead of the pubic interest

After the storm of criticisms received after one of his “briefings” shown above, President Trump stopped giving such briefings because they “were not worth his time”.

I had actually refrained from writing a post on this topic due to the degree to which this man, and the hateful politics he practices, upset me, and make it hard to stay optimistic and positive. What finally motivated me to write it was Sen. Kaine’s integrity and passion.

When Trump was first elected, I remember speaking to a very Sr. Executive at an event who assured me to not worry too much because “the republic has survived worse”. His words calmed me at that time and I come back to them now. yes, we have survived worse than this and I can only hope it get people to see how critically important competence really is when electing people to important office.

The post Can Competence Win Elections? first appeared on Doing Business on the Earth.

The post Losing a job first appeared on Doing Business on the Earth.

In essence, Professor Zuboff identifies Google, Facebook, and many other companies in what many call the “technology” space as a new kind of capitalist entity much like the Ford Motor Company and others were in the last century. What she attempts to do in the books 525 pages is to describe this new approach and to reflect upon its philosophical and scientific underpinnings and even speculate on the broader implications it has for society.

The focus of Zuboff’s formidable intellect is the data mining capabilities these firms have developed and their ability to not only predict human behaviour at scale but also to modify what people do and even what they think. She gives a framework in which to understand how phenomena like fake news have become such a problem and also to understand the importance of the General Data Protection Regulation that has been deployed here in Europe.

The most important take away I have had from reading the book is the realization that I had got things backward. In my head, google, Facebook and a large number of smaller companies had developed a bunch of really cool applications and devices that appealed to people and made our complicated lives both easier and more connected. Amazon’s home assistant, Alexa, comes to mind. They then found that by analyzing our use of these products, they could, to a limited degree, predict our behavior and sell that insight for cash to fund even more cool stuff.

What professor Zuboff demonstrates, in tremendous detail, is that the whole story is, in fact, the other way around. For her, the imperative of these companies is to capture what she calls the behavioral surplus that using these products create. The surplus is the goal and the products, from a thermostat to a smart vacuum cleaner or talking doll, are just means to an end. In her description consumers have become unwitting dupes in an attempt to learn more about us to influence our collective and individual behavior.

Professor Zuboff also poses even more disturbing questions about the end result of all of this innovation and what it means for civil society in general and individual freedom in particular. Some might find her vision of the future apocalyptic or exaggerated but I urge you to read it for yourself and make up your own mind.

What most disturbs me is the link between the dystopian future that Zuboff articulates and the increased digitalization that we are experiencing due to the spread of SARS-Cov-2.

The post What price progress? first appeared on Doing Business on the Earth.

In the first place, the United States has not assumed this role in this crisis. President Trump’s, America First focus and the policies his administration has pursued essentially preclude a more collectivist stance and the administration’s gross mishandling of the crisis in the U.S. has left it without anything to say to any other country. The mishandling of the situation on the USS Theodore Roosevelt and its Captian, Bret Crozier, is symptomatic of this administration’s focus on politics, rather than health and safety.

Secondly, Europe has also failed to respond with any kind of collective response to the situation. Essentially, the virus has shown very clearly that the European project is subordinate to national concerns. When things get serious, the nation-state takes over, closes its borders and does what it thinks it needs to do to keep people safe and the economy more or less intact.

In some ways, China may have actually emerged from the crisis with a more positive story than it had before it although its situation is actually quite nuanced. Clearly, the Chinese government could have done more to stem the outbreak at its source and is, to some degree, responsible for the tremendous loss of life and economic damage. China has shown, however, that its totalitarian and centralized political system is capable of dealing with threats of this order of magnitude once it started to bring all of its resources to bear. It is also reportedly providing international assistance for example to Italy.

As I write this blog we have double the confirmed cases in Italy and Spain than China had and cases are still rising exponentially in the United States. New York City, for example, is in much worse shape than Wuhan where the whole thing started.

As the crisis unfolded there was some speculation in the western press that the crisis could call into question the leadership of the Chinese Communist Party but that was clearly premature. What is unclear at this time is the economic impact that the crisis will have on China due to the temporary shut down in Hubei and also the drop in demand for Chinese made goods across a number of product categories. Longer-term, the outbreak has demonstrated the vulnerabilities of global supply chains and I know that many large companies are re-thinking some of their sourcing decisions to improve their strategic resilience.

In a thoughtful article in the Financial Times a few weeks ago, Yuval Noah Harari, the author of Sapiens and Homo Deus, wrote about how the world may react in one of two ways as a result of the outbreak. One path will take us down the road to more nationalistic concerns, tighter surveillance of the populations and a smaller, poorer world in exchange for a false sense of safety. The other is that the crisis will show how urgently we need to cooperate with each other to deal with this and other critical issues facing the world.

While so far the indications may lead us to think that we will head down Harari’s darker road, I am still optimistic. What I see is the resilience of civil society in the West and the generosity of people who are helping each other in these difficult times.

I also think that this crisis will show how important it is to have people with real integrity in public office and hope that voters around the world will throw their support to candidates who are competent, understand the complex issues that we face, and steady in times of trouble.

The post Virus Geopolitics first appeared on Doing Business on the Earth.

I will not belabor the point by contrasting the leadership style of the 33rd and 45th U.S. President. I believe history will judge Donald Trump and his incompetent administration responsible for many of the thousands of deaths and much of the economic hardship that  SARS-CoV-2 has brought to the United States due to his gross mismanagement of the crisis.

Instead, I want to focus on a virtual breakfast workshop that IESE’s Dean Franz Heukamp and I ran for 13 of CEOs of large Spanish companies last week on the current situation. We brought the CEOs together to give them a summary of what different IESE professors have been saying about the managerial implications of the emergency and to encourage them to share their thoughts and ideas with each other.

You can find the Webinars we have been offering on the IESE Web Site as well as IESE’s Linked In page. IESE took the decision early on to disseminate the webinars openly in order to do what we can to help our alumni and other managers cope with the situation.

Like Harry Truman, the CEOs felt their responsibility deeply and understood that they had to make decisions with material impact on people’s safety and their economic future. I took seven key ideas from the conversation and share them below, again in the hope that others can learn from them.

1. The key issue for the CEOs was the safety of their employees, customers, and other stakeholders. Many had taken the difficult decision to close facilities even before the government had imposed the State of Alarm here in Spain. Others had to manage people’s safety while keeping their operations running.
2. Several of the CEOs faced the challenge of having part of their business fully stopped while having to run another part beyond their normal capacity due to the specific sectors they were involved with such as medical equipment and pharmaceuticals. Their challenge was to manage simultaneously in different realities.
3. All of the CEOs stressed the importance of constant and multifaceted communication with all of the different types of people they were involved with. In some cases, this had to with having difficult conversations with the Unions and government agencies in Spain and around the world as many of the CEOs run multinational companies.
4. The CEOs also stressed the importance of change management in these times as many standard practices had to be abandoned overnight and new ones created and deployed on the fly.
5. A common theme was how they and their people were able to push digitalization beyond what was thought to be possible in just a few short weeks.
6. One of the CEOs confessed how impressed he had been by the talent that the crisis had brought out in his own organization. A common theme was how a crisis brings out the best in some people.
7. The last point, which was debated at some length, was how the crisis obliges a leader to think across several dimensions of time and to use scenarios to imagine what the future may bring.

One CEO summed this up as Now, Tomorrow, and The Day After Tomorrow. Now is about all the measures that have to be taken to ensure safety, liquidity, and in some cases being able to maintain or even exceed production. Tomorrow has to do with making sure that the company will be able to bounce back as soon as the immediate danger passes and the restrictions are lifted. The Day After Tomorrow is about already re-thinking the business’s operating model as a result of changes we may see in society in the aftermath of SARS-CoV-2.

The discussion on this last point had to do with whether there was enough time in the day to actually think about tomorrow, let alone the day after. What the CEOs did find time for last Friday was to have a cup of coffee and listen to each other in a demonstration of their own humility and sense of responsibility.

This is what the Kennedy School’s Dean Williams calls Real Leadership.

The post Real Leadership in Turbulent Times first appeared on Doing Business on the Earth.

Over the weekend IESE held two sessions for students who have been admitted to the MBA next year. My colleague, Núria Mas, was the guest speaker for the first one and I gave the second one. Both of us gave the talks remotely from our respective home offices.

Professor Mas, who is the Chair of IESE’s Economics Department and also a specialist on health care, made the point that the challenge for public policy is to manage the tradeoff between flattening the curve of viral infections, in order to avoid overstressing the health care system and minimizing the medium and long term economic impact.

I made more or less the same point on a more micro basis summarizing what I and my colleagues have been saying which is that during the crisis, management needs to find a balance between keeping people safe, which is the first priority, and making sure that the organization can survive the current emergency.

At the end of my talk to our new students, who I expect to meet face to face in September, I stressed how blessed I felt in the current situation. Although many people are gravely ill and thousands have died as a result of SARS-CoV-2,  I can only feel fortunate that the virus has spared the people closest to me at least so far.

I am also deeply grateful to the women and men who are working around the clock in Spain’s emergency services and health care system to manage the situation and save as many lives as they can. Every evening at 8 P.M. our entire neighborhood, and much of the country, step out onto the balcony to give these people applause which they duly deserve.

In addition to health care workers, critical parts of the economy such as grocery stores, delivery people, supply chains and other services are still functioning making life during the emergency possible. All of this renews my faith in the resilience of our modern society at least in the West.

Finally, I am grateful that my friends and family have enough money, food and wifi connectivity so that we can not only get through these weeks but continue to make a positive contribution and get things done.

Every day I remind myself of how privileged my family is.  The harsh truth is that most people in the world will not have this experience if and when the virus gets to them. During the session on Saturday, a student from Zimbabwe called attention to the fragility of large parts of civil society in Africa and how many people make their living day to day in crowded markets. A shut down for those societies may not be possible and their health care infrastructure is much less robust than it is here in Spain. An article in the New York Times paints a grim picture in India as a  result of a sudden lockdown imposed by Narendra Modi.

Even here in the West, there are many, many people who are suffering during the emergency without all of the benefits some of us enjoy.

As the lockdown we are experiencing in Spain spreads out to other parts of the world, I encourage those of you who can, to think about the projects and work that you may have been putting off for lack of time. The reading and the writing that you should have been doing. The web site you always wanted to build.

As an example of what can be done, my colleague Sandra Sieber has used the experience she gained moving IESE online over the last few weeks to launch a web site to help school teachers also go online. The site is still only in Spanish but if interested, you can visit it here.

Thankfully, the number of new cases in Spain has dropped for the last few days so we may be on the downward slope of the curve. We can only hope that the State of Alarm is lifted in the next few weeks and the country will come back to some semblance of normality.

In the meantime, I have webinars to prepare and classes to teach. For that, I am also grateful.

The post Blessed and busy in lockdown first appeared on Doing Business on the Earth.

Beyond the medical emergency, governments around the world have taken extraordinary measures to slow down the spread of the virus and to flatten the spread of transmission in order to avoid overwhelming the health care system and causing even more loss of life. Those measures, such as the declaration of the State of Alarm here in Spain, are causing in turn economic and social impacts which may prove to be equally or even more devastating as time goes by.

While all of this is going on, there is another emerging story about the impact that this forced hiatus is having on the natural world. A few weeks ago, NASA published satellite images of the concentration of nitrous oxide over China showing how the combination of the Chinese New Year Holiday and the emergency measures taken in Hubei province had a positive impact on this kind of air pollution. Another report, by Carbon Brief, found that the quarantine period temporarily cut China’s CO2 emissions by 25 % and projected that the global impact could be significant this year.

I do not, of course, suggest that any environmental benefit due to the outbreak can make up for the loss of human life and economic hardship that has and will occur. Instead, what I do find significant is the speed at which curbing pollution can have on air quality and the world’s carbon footprint.

I trust that a combination of reasonable public policy, the good sense of the world’s citizens and the heroic efforts of health care workers will get us through the current crisis. While the economic impact will probably be felt for some time, that too will pass.

The deeper question is what will the world learn from this crisis?

One thing will be to actually develop a permanent and effective infrastructure to deal with the next outbreak of the kind recommended by Bill Gates in his prescient Ted Talk from 2015.

The other could be to finally get serious about ushering in a transition to a new energy mix taking advantage of the dramatic fall in the cost of wind and solar power at scale. The chart below was developed by Lazard last year shows how competitive these technologies have become competitive with coal and gas over the last few years.

In 2012, the British comedian and author Ben Elton published a novel called This Other Eden which deals with the environment and what would happen to the planet if we stopped polluting it. Once all of this is over I hope the world can look at the positive environmental impact it has had and accelerate the transformation of the energy sector.

The post After SARS-CoV-2, an environmental transition? first appeared on Doing Business on the Earth.

Last week I was in New York and spent some time thinking through the issue of how to react to Covid-19. If you have the time and interest, you can watch the 50 min. Webinar my colleague Kip Meyer and I put together for a collection of Alumni and corporate clients of IESE Business School. The webinar is on Vimeo and you need to follow the link here and then type in the password Welcome. What we are trying to do is to give people practical advice on how best to respond to the situation which, I believe, has the potential to become a full blown economic crisis if people in leadership positions overreact.

On the issue of economic impact, we polled the participants in the webinar and found that 61 % of those who responded felt that Covid-19 had already caused moderate or severe impact on their business. Another 34% had perceived weak signals that the situation may have a negative impact.

Patrick Lagadec is one of the foremost authorities on crisis management. I used his model for the talk last week and will summarize the key ideas we discussed below.

In the first place, Lagadec distinguishes between an accident and a crisis. The main point is that typically people know what to do in the case of an accident but essentially operate without a road map in a crisis. Perhaps the biggest challenge is figuring out what to do without clear and reliable information and also communicating clearly to employees, customers, partners and other stakeholders as the situation unfolds. Lagadec offers five steps in managing a crisis:

Anticipating: While it is too late for anticipating Covid-19, the fact is that epidemiologists and the World Health Organization have been predicting that something like this outbreak would occur for some time. In a crisis, it is advisable to form a crisis management group including people from different parts of the organization and it is desirable that they meet and work with each other prior to the actual crisis, perhaps developing scenarios or running war game simulations. Trust is key in a fast paced, uncertain environment and very difficult to achieve on the go.

Detecting: A major crisis might require management to pay heed to relatively weak or conflicting signals and break with long established paradigms about what kind of information is considered valid. Lagadec points out that information flow actually slows down or even stops in a crisis and that leadership is needed to create a culture which will listen to signals from unconventional sources.

One of the participants in the webinar last week explained how he had a team of data scientists drill into his firm’s supply chain and look all the way down the chain to evaluate the exposure they were facing and to seek out alternatives.

Reacting: When dealing with a crisis, an organization can be shut down by anxiety, the temptation to “wait and see” or fall into denial.  Again, strong leadership is required to act, even before everything is clear, but to avoid over reaction and to keep everyone within and even outside of the organization on the same page. Reacting is where many firms are today with respect to the current situation.

For most business leaders, the first thing has been to consider how to keep people safe including employees, customers and civil society as a whole. Each organization needs to figure out for itself what this means. Does it mean providing hand sanitizer, suspending non-essential travel or going even further? Does “safety first” mean sending everyone home? The problem is that if every organization sends everybody home to keep them safe, we will cause an unprecedented social and financial crisis that will be far worse than Covid-19. If you think about business as a positive force in society, then I do not think this option is available . For me, the key issue is how to react in a balanced way which will keep people safe but not add to unwarranted fear and panic. 

The evening before the Webinar I went to Madison Square Garden to watch the New York Knicks play the Utah Jazz and was encouraged by the normalcy of the event even though the Knicks lost.

An example of this kind of thinking is to relax a company’s sick leave policy and allow people who do not feel well to stay home with minimal hassle and full pay. In many parts of the world, front line people such as attendants and cashiers make little money and have restrictive or no sick leave. What you do not want to do is have people feel they need to come to work even if they are running a fever and coughing!

Another is to provide such people with additional protection form the public and to hygienically clean spaces with greater frequency like they are doing in New York’s busses and subway cars.

Inventing: The next stage is figure out a way forward which responds to the new situation but allows the organization to continue to fulfill its mission to society and its shareholders. What Lagadec calls “collective creativity” is needed to deal with contradicting demands and to break through deadlock, obstructions, and cynicism. For this to happen it may be necessary to create a “fundamental rupture” with the management systems normally in place and constantly assess what is happening on the ground.

For this reason while the crisis group should have people from different parts of the organization, the heads of the different units may not be the best choice. For a crisis, you need people who are able to see systemic relationships, react to weak signals from unconventional sources of data and be able to think quickly. The  team needs to think in terms of contingencies and may need to embrace solutions which are thought to be impossible.

Many organizations are, for example, looking at accelerating their plans for digitalization and looking at doing some of what they do in a virtual environment. Schools are, in particular, looking at doing more virtual sessions and classes. CEIBS in Shanghai has, for example, moved all of its programs on line. The critical issue is to stay true to an organization’s mission and values.

Mobilizing: As specific lines of action emerge, the last step is to get the entire organization on board.

Communications are, of course, key throughout the entire process but need to map onto each stage. There is no point in explaining the way ahead if it is not yet clear what the situation is! Better to first explain that things are serious and ask for information. Then, start to announce measures as they come up and finally begin the process of charting the way ahead.

All of this will require leadership and it is often these kind of situations that really show what kind of leaders people are. Balancing the need to keep people safe with acting responsibly and keeping the business running is not easy but that is the task of a true leader!

There will be another webinar on this topic Monday evening at 18:30 Barcelona time and I understand it will be broadcast live on IESE’s linked page which you can find here.

The post Covid – 19: What should a leader do ? first appeared on Doing Business on the Earth.

On Friday, February 28th, I flew from Barcelona to New York on a 767-300 operated by Delta airlines and the plane had a total of 20 passengers instead of the 261  that it can carry. Up until now I have only seen reports about flights to and from China and the fate of Cathay Pacific but suspect this thing will hurt air travel in general based on my experience. My guess is that Delta and other airlines will start canceling flights because they can not make any money at 8% occupancy.

The second thing is that a friend was supposed to meet me for lunch today in the city and decided to stay home in rural Massachusetts as he is concerned that the virus is now spreading quietly through the United States. At first I thought he was overreacting but both he and his wife are over 70 and prime targets for Covid-19.

The third thing is that I had come to New York for a Custom Program for a large, international company. While I was flying the company decided to impose a global travel ban and our program has been postponed until after the crisis, whenever that will be. Interestingly enough, this program was scheduled for Shanghai a few weeks ago but was moved to New York as a precautionary measure.

The fourth, and most surprising thing is that my cousin has actually postponed his son’s birthday party because he and his family just came back from Italy! They had not been to the North but feel it is more prudent to stay out of circulation until a full two weeks goes by.

These simple stories are illustrative of what appears to be going on around the world as the implications of the virus begin to sink in. Experts are warning of a repeat of the Spanish Flu pandemic of 1918/19 and while I am still convinced that such fears are overblown, individuals and companies are reacting with caution, a sense of responsibility in the face of uncertainty.

This will lead them to travel less or not at all, stay home rather than go out in general delay or postpone purchases and plans until things become clearer.

In a very clear, if somewhat alarmist, podcast on the daily, New York Times reporter Donald G. McNeil Jr, said that disease control experts were trying out essentially all of the anti-viral formulas that the world has to see if any of them happen to be effective against Covid-19. He also said that assuming they were not, a new cure or vaccine would be at lest a year away.

In these crazy times, it seems to me that we all need to take sensible precautions, such as washing our hands after going out in public, but that there is little reason to stop all activity unless you happen to be, like my friend in the country, particularly susceptible to this virus which can lead to a particularly violent form of pneumonia.

The post Covid-19 goes beyond China first appeared on Doing Business on the Earth.

At a deeper level, when any of us choose to live in any city or region we are also making a statement about our assumptions concerning its environmental and geo-political future whether we do so implicitly or explicitly. My suggestion is for each of us to highlight what our assumptions are and make sure we and our family are comfortable with them.

Perhaps the first issue which one should think about is the likely economic future of a given place given its role in the regional and global economy and to what degree it is considered a hub of innovation. Most economists agree that regardless of what happens with Covid-19, the next twenty years will see the continuing rise of China and other Asian countries as a percentage of the overall global economy and the mega cities of Asia will clearly be sources of economic growth.

Other places will continue to be the focus for innovation and growth in specific activities. Sillicon Valley and San Francisco will continue to lead in computer technology and applications, Boston and San Diego for advanced medical technology, etc. In 2008, Ricard Florida published Whose Your City? in which he estimates that there are around 50 of these innovation hubs around the world and he included Barcelona on his list. 

Living in such places offers significant advantages in terms of job prospects and income potential and part of the challenge is to figure out which of those cities and technologies will be important over time. Florida points out, for example, that in 1990 Detroit was far ahead of Seattle but that twenty five years later the fortunes of the two cities changed in line with the fates of the large American automotive companies on the one hand and Microsoft and other software companies, that have located nearby, on the other.

A second issue to think about has to do with the overall quality of life including the prevalence of crime, traffic patters, the quality of schools, arts and cultural activities, etc. and these aspects also change over time. Probably the best thing to do is to look for the trend line or tendency. If in, a given location, the schools have bee getting better over the last five to ten years then it is likely that they will continue to do so. New York City’s crime rate, for example, peaked in 1990 and then started a 30 year decline making the city one of the safest of the largest cities in the United States today.

The third issue is a places’s natural environment including the weather, the presence of green spaces, the condition of air and water and access to high quality food. Shanghai, for example, is a fast growing, exciting place to live and work and will clearly be one of the most dynamic cities for many years to come. There are, on the other hand, serious concerns about the city’s air quality, water purity and food safety. The outbreak of Covid-19 in China raised further doubts about Shanghai even though Wuhan is hundreds of miles up river.

On the other side of the scale is Bolder Colorado which is relatively small, has excellent air quality, and is surrounded by a green belt of public land that never be developed. From Boulder it is is a short drive to the majestic rocky mountains and if you are moved by the mountains, there may be no better place which is still only an hour from a major airport and a major city.

Part of this topic is the exposure that different places have to climate change. On this, I would stress not only long term questions about temperature and desertification, which can be significant over the next 20-30 years, but much more immediate concerns such as hurricanes and typhoons and the storm surges that come with them.

A fourth issue to think about is the geo-political stability of a place, especially if you are looking at countries which have or will be undergoing profound political change or are in some of the key hot spots around the world. Should the upcoming presidential election in the United States, for example, affect someone’s thinking about re-locating there?

The place we live will be more important than the business we are in or the role we play in that business when thinking beyond our professional aspirations and include all of the other aspects of our life such as family, friends and the way we choose to spend out time when we are not working.

In my experience, many people, particularly MBA graduates, do not give  enough thought to where they are going when thinking about the next step in their professional life.

The post The Future of a place first appeared on Doing Business on the Earth.

Reading the newspaper these days can create anxiety. At the time of this writing the world is closely following the outbreak of Covid-19, a deadly Coronavirus which has paralyzed Hubei province in China and whose economic effects are spreading across the world.

All of this is going on at a time when the United States and China are locked in a trade war which Harvard’s Neil Ferguson called Cold War 2.0. There are ongoing wars in Syria, Yemen and the Eastern Ukraine, Brexit threatens the stability of Europe, and a number of conflicts are simmering in Africa, and Asia.

Besides the drama of the Trump presidency in the United States, populist political leaders have ridden a wave of discontent around the world that appears to be fueled by rising income inequality that in turn is be caused by the digital revolution and automation.

What makes all of this even more alarming is that the world is quickly heading for the no return point in terms of climate change. On top of this there is a serious problem concerning air and water pollution in many parts of the world and in particular in the mega cities of Asia and Africa.

In this context I find that the executives, middle managers and MBA students that I interact with are increasingly concerned with their career prospects in the medium term.  I also meet many people who are currently looking for work and even more who would like to but are afraid of giving up the job they have even if it is not fully satisfying in terms of the money they make or the kind of work they are doing.

What I find surprising, and a bit alarming, however, is that most of the people separate their concerns about the changing world from their discussions about career management and their future prospects as if the two issues had nothing to do with one another.

In more conceptual terms people look at the problem of what to do with their professional life in static rather than dynamic terms. My conviction is that each of us has the ability and the responsibility to think through how we feel the major trends affecting the world will play out when making choices about where to work, what to do and where to live.

For this effort I recommend that individuals develop scenarios for how they think these trends will end up and then use those scenarios as an input to the question of how to manage their career going forward.

Will China recover from Covid-19 as soon as the weather gets warmer and the virus begins to die out? This is clearly what everyone is hoping for but it is not a foregone conclusion. Last week, the New York Times ran a segment on its pod cast, The Daily, describing the situation in Wuhan which is enough to make anyone stop and take stock of the blessings we enjoy in our day to day life.

What is even more striking is the anger the virus has sparked in China and the question poised by correspondent Amy Qin about what it means for the future of the Chinese government and the Communist Party.

You can listen to the pod cast here.

While I have no crystal ball and do not know how this whole thing will end up, what is clear is that the Chinese economy will take an important hit as a result of Covid-19 and that will have a wider impact around the world. It has already resulted in the cancelling of the the Mobile World Congress here in Barcelona as well as a number of other events, trips and programs.

My advice for people who do extensive business with China is to think through the implications of the unfolding story and where it might end up. My suggestion is not to succumb to fear and panic but to start thinking about what things might mean for the industry in which you work, the company you work for, and especially your own family and well being.

The post Career planning for a turbulent world first appeared on Doing Business on the Earth.

One point is that good strategy and systems thinking is more important than ever at this time. Strategy needs to go far beyond having clear targets and linear models of cause and effect and endeavor to understand the relationships between disparate trends and areas of expertise. Most business leaders in telecoms and tech, for example, are not experts in virology or communicable diseases but they will feel the effects of the virus when they come to Barcelona and can not meet with the people from those firms which have chosen not to come. What I see much too often are strategic plans that essentially assume that things will be fine in the general environment without any serious discussion about what might go wrong or scenario analysis.

A second idea is to be sure that the global matrix organization works well enough to move information across the organization at a speed and accuracy level sufficient to detect and react to crisis when they do occur. Do local people have sufficient authority to make difficult or expensive decisions in the interest of the safety of employees and their families? Can they do the right thing in the interest of civil society? Does management have well established protocols in place for crisis management?

A third point is to make sure the company has some built in layers of resilience so that it can weather storms when they do occur. The situation in Wuhan and China is already affecting the global supply chains of a number of companies. In my experience very few large firms today hold sufficient safety stock or have alternative sources of supply in case of disruption. This time it is due to a virus but there can also be natural disasters, labor conflicts or even military conflict between nations that can cause things to go very, very wrong.

The thing is that building resilience into the system can require significant investment in fixed costs, variable costs or both and therefore companies also need to make sure that they have adequately prepared the people who sit on their boards to think about the larger system. Only proper governance can ensure that a company is strong enough to withstand significant shocks to it and the sytem around it and also to know what to do when things do go awry.

As I wrote in a post about Hurricane Michael last year, most of the houses on Mexico Beach, Florida were destroyed but not the Sand Palace, a house who’se owner took extra care in selecting the construction materials and designing his home.

Like the owner of this house, the Board of Directors needs to take responsibility for making sure that management designs companies with sufficient strength and resilience to withstand all kinds of events and problems even is they are presumed to have a low likelihood of occuring in the short term.

The post What to learn from the virus….so far first appeared on Doing Business on the Earth.

The first thing to understand is how large Wuhan and the surrounding Hubei province actually are. Wuhan itself has a population of 11 million people. It is strategically located on one of China’s two great rivers, the Yangstze, 500 miles upriver from Shanghai and the same distance downriver from Chongqing, which has 30 million people in its sprawling metropolitan area.

To give a sense of the size of the city’s industrial base, Dong Feng, Honda, Renault,  PSA and others built almost two million cars there in 2018 and it is also a center for China’s growing electric vehicle sector. Many of the car factories happened to be closed for vacations when the outbreak hit but they will need to come back on line soon in order to avoid serious disruptions. You can read a profile of Wuhan published by the New York times here.

The second critical aspect is that the outbreak occurred just at the start of China’s spring travel season that happens a few weeks before the lunar new year (Jan 25th). Each year, Chinese people take literally billions of  trips during the period to either go home to visit family or go away on vacation. China isolated the virus, called 2019-nCoV, on January 7th and then went on to seal off much of Hubei province on January 23rd affecting tens of millions of people in Wuhan and Hubei province.

To put the crisis in perspective, imagine that Chicago and most of Illinois was under lock down during the Thanksgiving holiday and then multiply everything by 5!

As I write this post, airlines all over the world are suspending flights to China, businesses are cancelling or postponing plans and CNN is reporting that the virus may have a very negative impact on the Chinese economy which it called “very fragile”. The IMF had raised its 2020 growth projection for China to 6% after the signing of the phase I trade pact with the United States but the outbreak and the steps taken to contain it will certainly take a toll.

A further slowdown in China will ripple across the world’s economy and it has already hit global stock markets. How much and how far is anybody’s guess but the important thing is to realize how interconnected the world has become.

The Chinese authorities are building hospitals at record speed and say they have deployed military medical staff to Hubei. For an update from China itself, I recommend looking at the country’s official news agency here. Not everyone, of course, believe the Chinese news outlets. One of my students from Taiwan, for example, is understandably skeptical. For a critical view of the information, President Xi and China’s handling of the situation you can look at an article in The National Review by an analyst with the American Enterprise Institute.

What I see is most public health officials and corporate leaders taking a cautious approach and concentrating on keeping their own people and the general public safe. The problem will be if these kind of measures provoke fear, panic and even a xenophobic reaction towards ethnic Chinese – regardless of where they have been.

What I do not see, at least so far, is the virus provoking a major change in China’s trajectory or the leadership of President Xi and the Communist Party.

The post Everything is connected first appeared on Doing Business on the Earth.

What struck me most about this year’s event were two speeches given at the meeting. Both were given by western men in their early seventies and both were up-beat and optimistic.  Besides that, the two speeches and the men who gave them appeared as if they were discussing different planets.

The first speech, shown below, was given by the Prince Charles. In the introduction to the speech, the founder of the World Economic Forum, Klaus Schwab, spoke about a tipping point on the issue of sustainability and Charles agreed. He has been speaking about environmental sustainability for 50 years and finally sees movement from the financial markets as well as a range of solutions which are ready for scaling. Charles gave a ten point program for making 2020 the year that real progress begins and also launched an initiative called Sustainable Markets that will hold about 20 round table discussions over the next year in a wide variety of industries and activities.

The other speech was given by Donald Trump who is still, at the time I write this blog, President of the United States. Trump’s speech was full of how his policies had miraculously restored the spirit and economy of the United States. Brazenly, he placed workers well being at the heart of the speech and his administration and reeled off a number of statistics which are reported to be incomplete, misleading and false. Trump has an almost unique ability to say the opposite of what he is doing and get some people to believe it.

In direct opposition to the consensus on sustainability and the need for urgent action, Trump disparaged the “prophets of doom”  and used the occasion to offer to sell U.S. gas and oil to the world. On the environment he spoke about how clean the air and water in the U.S. was while also boasting about his administration’s success in removing many of the regulations which has achieved that. Although I will not embed the video, you can read the full text here.

I think it is also significant that environment came to the top of the issues discussed in the Global Risk Report, which the World Economic Forum publishes with Marsh & McLennan and the Zurich Insurance Group. This is the 15th year that the report has been published and highlights five issues as the ones that both will have the greatest impact and are most likely. You can download the full report here and see in the chart that the issues are man made environmental disasters;  natural disasters and extreme weather, made worse by climate change; biodiversity loss; and a failure to act on the climate by world’s the political leadership.

Prince Charles made the point that industry and finance are in a position to lead the way to a sustainable future and they will drag government along with them when they do. I think he is correct in that and also in the tremendous economic benefit if industry really places sustainability at the heart of its agenda.

The post Two realities at Davos first appeared on Doing Business on the Earth.

One of those moves was to assassinate an Iranian General, Qasem Soleimani, while he was in Iraq. Regardless of Soleimani’s policies or the activities of the Quds force he commanded, the killing was clearly a violation of international law and went against years of American policy and restraint. Iran’s initial response was to launch a series of missiles against american bases inside Iraq and fortunately no one was killed int he attack allowing the situation to cool off a bit although Iran’s Defense Minister,  Amir Hatami, said the missile attack was “just a slap” according to the Times of Israel.

The other thing Trump did was to sign the first part of an accord with China on the trade conflict that he provoked two years ago. President Trump has argued that the partial agreement is the best deal ever as it commits China from buying more from the U.S. but its has been heavily criticized by media outlets across the political spectrum. The Wall Street Journal for example, said that it was unlikely that China could actually buy the stipulated quantities of agriculture products, energy and equipment and the New York Times thought the deal would actually drive the two economies farther apart.

The bigger question is how will the relationship between the United States and China evolve over the next few years. Back in September I shared a post outlining the views of Niall Ferguson, a respected historian, that the two countries are already engaged in what he calls cold war 2.0.

Another historian, the former dean of Harvard Kennedy’s School, Graham Allison, coined the phrase The Thucydides Trap to describe the situation when a rising power threatens the dominant power in world affairs. Allison’s interest is in understanding the dynamics in the relationship between China and the U.S. and drew a parallel with the wars between Athens and Sparta which occurred between the years 431 and 404 BC documented by the Athenian Thucydides. 

His research looked at 16 cases in history where a rising power makes such a challenge and explores the degree to which war in inevitable when it does. His team found that war did result in 12 of the cases but that 4 of them ended in accommodation. In the case of the United States and the Soviet Union the accommodation took the shape of the cold war and in Europe it became the European Union.

Allison’s sobering conclusion is that while war is not inevitable, accommodation is extremely difficult and that a series of events may lead the two sides into a devastating war that neither wants that will damage both societies and perhaps the world as a whole. Managing this relationship is one of the critical tasks facing the american government in the years and decades ahead and will require skilled leadership based on deep analysis.

The problem is that Donald Trump is not thinking deeply about the implications of his actions on the world stage. In the Middle East it is hard to imagine that his moving the U.S Embassy to Jerusalem, giving a blank check to Saudi Arabia in Yemen, abandoning the Syrian Kurds or assassinating Soleimani will make the region more peaceful or prosperous.

Likewise the deal with China does not promote free trade or remove tariff and non tariff barriers but simply sets high and perhaps unattainable targets many of which are still secret!

His approach to governing should concern every member of the U.S. Senate and they should remove him because he clearly went over the line in the case of the Ukraine and is, in any case unfit for office.

The post Trump, China and the Thucydides Trap first appeared on Doing Business on the Earth.

In the first place, Wallace-Wells is not a scientist. He is a a deputy editor of  New York Magazine in which he published an article with the same title back in July, 2017. What impresses me about the book is the writing which is wonderful. He takes a terribly complex and scary topic and breaks it down in fluid, almost lyrical prose which I strongly recommend. You can see the original article here.

The core of the book is to imagine the world we are heading to and to underline that in some ways we are already there. For Wallace-Wells there are 12 manifestations of the systemic changes that will take place if the world does not act to reduce atmospheric carbon. He refers to these effects as cascades as they are all interrelated.  They are:

1. Heat Death: Very high temperatures will make parts of the planet unfit for people to live or require enormous energy to essential cool all indoor spaces. The energy needed, of course, adds to the problem.
2. Hunger: While some research has pointed out that higher levels of carbon make plants grow, the book points to other studies which will decrease grain production  in North America and other critical agricultural producing regions.
3. Drowning: Sea levels will eventually rise as well as storm surge and flooding as torrential rains become the new normal.
4. Wildfire: Based on the trend line, the situation in Australia will also become common around the world.
5. Not so natural disasters: Extreme weather events are already increasing and the central point is that these disasters are not really natural anymore. What used to be the worst storms in 50 or even 500 years are not happening with frequency due to increased energy in the global climate.
6. Shortages of fresh water: There is already a water crisis in many places around the world and this has to do with the politics and economics of water management as well as geography. Desalination offers a path to a solution but again requires energy which can make the overall situation worse.
7. Dying oceans: The oceans are absorbing much of the excess heat we are producing and that is changing their salinity and ability to carry life.
8. Unbreathable air: Air pollution is already a problem in many parts of the world and particularly in the mega cities of Asia such as Beijing and New Delhi.
9. Disease: It seems that as the planet warms up, tropical diseases such as cholera will migrate North.
10. Economic collapse: Wallace-Wells cites research which shows how warmer temperatures will reduce productivity and cause other economic problems.
11. War: The link between ecological stress and civil war in places such as Yemen and Syria is well established and will certainly get worse as the crisis worsens.
12. Other systemic issues: There are a number of other feedback loops and impacts including psychological issues that will play out if and when these effects start to play out.

What Wallace-Wells does not do is put a clear time line to his list of doom and destruction and while he does cite relevant research, much of it can be questioned or discussed. Bjorn Lomborg, for example, the author of the Skeptical Environmentalist,  had a twitter exchange with him suggesting that his economic projects are off by an order of magnitude.

The last part of The Uninhabitable Earth discusses what the author calls the Climate Kaleidoscope or the impact that climate change is and will have on storytelling, politics and our relationship with technology, consumption and ethics. Again Wallace-Wells is a writer, not a scientist and his reflections on these topics are interesting mainly for the bibliography he is acquainted with and the perspectives he draws on.

For me the value of the book is not in the facts and the footnotes but in the power of the overall narrative. Give or take fifty or a hundred years, David Wallace-Wells has described the world’s future if we do not embrace the challenge and pursue the transition to a low carbon economy.

The post The Uninhabitable Earth first appeared on Doing Business on the Earth.

As you probably know Australia is suffering from the worst start to its annual fight against brush fires in history. You can find extensive coverage in the international news media on the crisis which has eventually led the Australian government to call in the military to help with evacuation and rescue. Over 1,000 homes have been lost so far.

What I have been able to understand is that the situation is due to a combination of record breaking hot weather, a devastating draught and very strong winds.

Not only was last year the hottest year ever in Australia but December 18th was the hottest day ever recorded with temperatures averaging 107 ºF (42ºC). My friend said it was 48 degrees at his house outside of Sydney!

The drought has been a problem in New South Wales (Sydney)  and Queensland (Brisbane) since 2017 and this Spring (our fall) was the driest on record. The drought appears to be caused by a weather pattern called the Indian Ocean Dipole (IOD) which is sometimes called the India el Niño.

The third cause of the situation can be traced to warmer air over Antartica which is causing something called Sudden Stratospheric Warming.

One of the questions that has scientists and activists engaged is the degree to which the current situation is caused by global warming? If you follow the links above you can get a glimpse of the debate and it seems to me that while the IOD and the draught might not be linked both the high temperatures and winds clearly are.

The New York Times ran an insightful op ed article on the situation by Richard Flanagan, a well known and respected Australian Novelist on January 3rd. One of the things that Flanagan points out is that the current Australian Government and its Prime Minister, Scott Morrison, have not taken Climate Change seriously and even the opposition Labor Party is beholden to the country’s coal industry.

According to an article in National Geographic, Australia’s performance on climate change is very disappointing especially considering it was one of the first countries to try and implement a tax on carbon back in 2012. That effort failed spectacularly as Australian’s citizens were told that there was a trade off between economic prosperity and responsibility responsibility.

This nonsense is largely funded by the lobbies of coal, oil and gas. From an economic viewpoint, the transition to a low carbon economy has the potential to be the biggest economic boom of all time and political leaders should make sure their countries are at the leading edge of it rather than cling to fossil fuels beyond reason and common sense.

Perhaps the silver lining of the current crisis will be to convince Australians that the climate issue is real and that action should be taken sooner, rather than later. In line with this thinking is David Wallace-Wells’ best selling book, The Uninhabitable Earth where he makes a compelling case that the crisis is upon us today, not 50 or 100 years from now.

The post Australia is burning first appeared on Doing Business on the Earth.

Too old, white and male?

Bloomberg will turn 78 next February and if he were to win the election he would be the oldest person to assume the office even beating Ronald Reagan who was 73 when starting his second term.

My issue is not that people in their late 70s can not do amazing things and I suspect that Mayor Bloomberg, like Joe Biden, who is three months younger, are in perfectly sound mental and physical shape.

One of my concerns is that it may be difficult for either Bloomberg or Biden to connect with younger voters without whom it will be difficult for any Democrat to beat Donald Trump.

The other is that its hard for me to see Mayor Bloomberg bringing together the different threads of the Democratic party that include younger people, African Americans, Latinos, Union members, the LGBT community and older americans who lean left but would never identify themselves as a socialist like Senator Bernie Sanders.

Barack Obama was able to win in 2008 because he did manage to bring all of these threads together and also get more people out to vote. In 2008, a stunning 62.3 % of americans actually voted compared to only 55.7% in 2016. I was hopeful that either Kamala Harris or Beto O’Rourke could pull off something similar but both have had to drop out of the race due to a lack of funds.

Senators Sanders and Elizabeth Warren both believe that they can mobilize a large group of people who normally do not vote because of their focus on rising inequality and social justice.

Bernie Sanders has even won the endorsement of Alexandria Ocasio-Cortez who at 29 was the youngest woman ever to take their seat in the U.S. Congress even though he is about 5 months older than Bloomberg.

Show me the money!

Despite my skepticism, what makes me happy about Bloomberg’s entry into the race are his enormous fortune and willingness to put his money at the service of defeating Donald Trump.

According to two recent articles in the New York Times, the Bloomberg campaign has much more money than any of its rivals and is using it to launch a barrage of advertisements in critical states to weaken Trump’s support. According to the Times, Bernie Sanders leads the traditional Democrats with just under $40 million cash on hand while , while Trump has over $ 83 million.

In contrast, Bloomberg is expected to spend $ 3-400 million before the Super Tuesday primaries but is, in any case, targeting swing states with a combination of TV and social media advertising designed to focus on Trump’s conduct and character according to the Times. According to Bloomberg’s campaign web site, he is also spending $15-20 million to register half a million voters.

A number of people are even more skeptical about Bloomberg’s chances including Donald Trump, Bernie Sanders and Trevor Noah, who is clearly the funniest political commentator. His issue is that Bloomberg’s fortune gets him out of touch with normal people.

Its all Good

Bloomberg’s strategist apparently feel that 10-15% of Trump voters really would rather not vote for the President and his ads are targeted to get them to move to someone else.

My own view is that I doubt that Bloomberg will be the nominee but welcome his putting serious money against President Trump. In the unlikely event that he does make it, we could do far worse than have Michael Bloomberg as President given his stance on the environment, education, free trade and gun control.

What he would need is a very compelling vice presidential candidate and maybe Kamala or Beto would round out the ticket. Both would help the Mayor connect to other audiences and Beto might even deliver Texas.

The post Welcome to the race Mr. Mayor! first appeared on Doing Business on the Earth.

The President of the European Parliament, Ursula von der Leyen, has gone ahead with an ambitious legislative, economic, and political agenda to push Europe to the forefront in the struggle against climate change. The initiative is called The European Green Deal and is analogous to the New Green Deal, put forward by U.S. Congresswoman Alexandria Ocasio-Cortez and Senator Ed Markey last spring. She compared it to the U.S. effort to put a man on the moon in the 1960’s.

I recommend reading the full text of the proposal which is available here in order to get a sense of the full scope of the European Parliament’s ambition. Overall, the idea is to make the EU climate neutral by 2050. The proposal covers all of our modern society including products and packaging, buildings, industry and transportation in addition to energy which is a critical part of the initiative.

To actually make it happen, Ms. von der Leyen, has asked the chamber’s Vice President, Dutch Socialist, Frans Timmermans to lead the effort. Timmermans is a good choice because ti will be very difficult to get all of the 28 member states to agree to the proposal and he has a deep diplomatic background. It is hard to see how Poland will agree, for example, to phase out coal and lignite which represent more than three quarters of the country’s energy mix.

Another international issue is that he proposal aims to re-boot Europe’s carbon trading mechanism by enacting legislation to impose a carbon tax at Europe’s border on those countries and products which threaten its integrity. This issue is often referred to as carbon leakage. What this means is that if Europe imposes a real price on carbon of say, €50/Ton, then carbon heavy industries would lose competitiveness compared to imported goods which pay little or nothing.

Importing bricks or cement, for example, from Asia or Latin America is environmentally silly but would be profitable if there was a real, enforced cost on European manufacturers and nothing on the imported goods. Not only would the bricks and cement likely be made with an even higher carbon footprint  but would then have to be shipped halfway around the world.

What the European Green Deal envisions is an economic penalty for such behavior which will allow the European regulator to apply stricter carbon controls across the board in Europe and thus stimulate the carbon trading scheme.

Perhaps the most daring part of the proposal is to set a target of € 260 billion per year to actually make it happen. Ms. von der Leyen’s point is this is only 1.8% of the European economy and well worth it to solve the problem. The issue is how to actually get the money.

The proposal specifically mentions tying europe’s agricultural subsidies to progress on climate change and proposes a number of other mechanisms to use activate both public and private money.

Personally I think the initiative is terrific in its scope and ambition but does fall on the heels of a disappointing COP 25 in Madrid last week. The good news is that if the Democrats do win in 2020, and I know that will be difficult, then the United States will likely pass its own Green Deal. China is already moving full speed ahead with its own environmental program and if all three of the world’s major regions embrace a low carbon future, then it might actually happen in time to avoid the worst consequences of climate change.

Another thought is that perhaps the European Green Deal is the mechanism that Europe will use to abandon the economic austerity of the last 12 years. A huge injection of money to re-build europe’s energy infrastructure, make its buildings ecological efficient, and make its cities the smartest and most efficient in the world, would do wonders for the economy in general.

The post The European Green Deal first appeared on Doing Business on the Earth.

The good news is that it seems that 73 countries have already increased the targets they shared as part of the Paris Framework and another 11, including Spain, are in the process of doing so. Essentially all the countries in the world need to do more than the voluntary targets  (Nationally Determined Contributions, to use the official name), that they have already committed to if the world want to avoid even more significant climate change.

The bad news is that neither the United States or China are on the list and the specialists at the conference are reportedly still arguing over the rules connected with Article 6, which as I discussed in last week’s post, is the framework for global carbon trading.

To give some context to the entire issue, this post will focus on the facts about the current situation in terms of concentrated carbon in the atmosphere. Perhaps the most worrying issue facing the world today is that distortion, mis-representation, and lies appear to be the new normal in politics. I therefore wanted to make sure I have my own facts straight with respect to the climate debate and decided to share them this week.

To start with, I am using the Global Carbon Project as the source for the data. The project is science based, has been running since 2001, is very transparent about the members of its scientific steering committee and it’s sponsors. For people who like data, I recommend digging into the infographics and other information on the web site as it gives detailed information on all of the sources and sinks of carbon based on the best data and estimates the organization can find.

For those without the time or inclination to get into it. I have picked these four charts that I think summarizes the situation.

In my view, the starting point for any serious discussion about climate change is the fact that the world continues to put more and more carbon in the atmosphere and we have actually doubled the total amount in the last 30 years or so.

On the same graph you can also see that the problem lies in the rising emissions of China and India and the fact that, while slowly tapering off, the pace of change in the US and Europe is far to slow to offset the increase. Emissions are rising in many developing countries as their populations enjoy more and more of the benefits of modern life. One of the central ideas behind the Paris Accord is that the way to fix the problem can not be to deprive billions of people from prosperity.

The second graph shows emissions by the source of the energy produced and coal is still the number one culprit. Emissions for gas has also risen as coal has been substituted with gas. This is a good thing in terms of the overall carbon balance since gas is much cleaner than coal but clearly the world needs to do much more to continue to develop renewables and other low carbon source of energy.

The third chart shows emissions by sector and the key thing to understand is that energy efficiency could potentially cut emissions by 25-50 percent across all categories. Much of this can be done with well proven and readily available technologies such as insulation, double plated glass, electric vehicles, etc. The thing is that we have largely built the world using technology from the 40s, 50s and 60s when energy was practically free and the climate was not yet an issue. By rebuilding our homes, buildings, factories, and transportation infrastructure with efficiency in mind we will be able to ensure that the world can enjoy a prosperous life with less energy.

The last chart shows projects based on the amount of carbon in the atmosphere and the impact on the average rise in temperature as opposed to pre-industrial times. The chart is about pathways or the sum total of different solutions which give different results over time. The important thing to take away from this chart is that to stay under 1.5 degrees of average warming, it will probably not be enough to become carbon neutral by 2050 as many countries, cities and organizations are pledging to do.

I say probably and maybe because, while the science of global warming is perfectly clear, we do not have a full understanding of the all of the myriad feedback loops that can affect the system.

The post Four graphs to understand the facts on carbon first appeared on Doing Business on the Earth.

According to the specialists, one key issue to resolve at this year’s meeting is the details associated with Article 6 that has to do with the rules for setting up a global carbon trading system. The basic idea behind carbon trading is that if one country is ahead of its de-carbonization targets, it could potentially trade or sell it to another which is behind. As I wrote in a post last year at this time, the 24th meeting, which was held in Poland, made progress on a number of issues but not this one. For more details on article 6, you can see an article published last week on Climate Home News, a web site.

While carbon trading is clearly an important part of the overall mechanism, a second item on the agenda this week is climate finance and I think this is where were are, far, far behind. The good news is that the Global Environmental Facility has about $ 14 billion pledged to it and the Green Climate Fund has another $ 10 Billion. Both of these entities were created as part of the overall UNFCCC system and both have disbursed significant amounts of money to well deserving projects all over the world. If you are interested both organizations are very transparent and provide detailed information on how to apply for funds as well as the projects they are financing.

The problem is that according to the Paris treaty (article 54), a minimum of $ 100 billion per year will be needed to actually fix the problem at the global level and we are far from there. In a report on Climate Finance and Sustainable Cities, for example, the UNFCCC’s Standing Committee on Finance estimate a need for $ 53 trillion over the next 15 years for low-emissions infrastructure in cities and that current sources of funding will only supply about half of the money needed.

According to The Hindu, the Indian delegation to Madrid will insist that the developed countries honor the $ 100 billion annual pledge starting in 2020 to build this kind of infrastructure across the developing world. This will be much harder if the Democrats do not manage to re-take the White House in the next presidential election in the United States or the Tories win in the United Kingdom next week. While Trump’s opposition to the Paris agreement is well known, it seems that Boris Johnson has little interest in the subject as he chose not to participate in a televised climate debate a couple of weeks ago.

A third thread I will be watching for at COP 25 is the list of countries which move ahead of the targets agreed to in Paris and go further. The initiative of Chile, which was supposed to host the conference, is called the Climate Ambition Alliance and the idea is to get governments, cities, companies and investors to pledge that they will accelerate their own goals and reach net zero emissions by 2050.

In a bid to bring greater attention to the issue in the run up to the American election, Jane Fonda has decided to emulate Greta and hold a protest in Washington every Friday. Ms. Fonda is 81 and has a long history as a political activist. A year after winning her first Oscar for Best Actress in 1971, Fonda became very active in her opposition the Viet Nam war. In an opinion piece on the front page of the International New York Times this weekend, Fonda quoted sources saying we have 11 years to cut emissions by half and about 20 to reach net zero.

As always with these meetings, Madrid will be a step forward in many respects as well as highlight how far the world has to go.

The post COP 25 In Madrid first appeared on Doing Business on the Earth.

In the video, Representative Pelosi wraps the impeachment in the Declaration of Independence, the  Constitution, the rule of law, and the future of American democracy.

The response from the White House has been to ridicule the process, and to prevent people working in the administration to provide further information to Congress. This might actually open the President to further charges or articles of impeachment as he is clearly doing his best to hamper the investigation.

My distaste for President Trump goes well beyond the narrow issue for which the Democratic leadership will proceed with impeachment.

The man managed to win the election by playing on people’s fears and has pushed the american people apart by appealing to their worst opinions of each other. Instead of talking honestly about the economic and technological changes affecting the country, he has sold simple populist solutions which I doubt he and his advisors really believe in. In the international arena he has damaged the United States’ position in the world and turned his back on the climate crisis, which is clearly one of the largest challenges facing the world today.

The fact is that many people in the Republican Party would agree with me on these and other topics and one of my biggest disappointments is that they have looked the other way and supported this administration simply in order to stay in power.

Many Republican politicians, it seems, are also afraid that the President’s core supporters would turn on them if they did not roll over and continue to support his ill founded policies and poor choices for cabinet level appointments and other officials.

A few weeks ago I wrote a post explaining the impeachment process and re-iterated in another post on his possible re-election that it will be very difficult for the Democrats to get 20 of the 53 Republic Senators to break ranks and vote to impeach Trump.

Although he has refrained from saying so publicly, it seems likely that Mitt Romney will vote to Impeach. The Atlantic has recently published an insightful profile of the Senator from Utah and former presidential candiate who has been signalled out by Trump and subject to to a number of negative tweets.

My message to the republican party is that the Democrats have given it a perfect mechanism to get rid of Trump and take their party back to its much more sensible and measured roots. Issues such as environmental protection, support of NATO, international trade, and a balanced approach to immigration used to be mainstream Republican issues and have been attacked by this administration.

The case of the Ukraine is clear cut and the essential facts are not in question. If Mitt Romney and 19 of his colleagues were to say that their conscience forces them to vote with the Democrats then Trump will become the first U.S president ever to be removed from office and his political career will be over. This will probably hand the White House to the Democrats in 2020 but will allow the Republican party to re-build itself over the next few years and emerge as a force of moderation and reason in the future.

With luck the radical fringe which has emerged from the shadows and is the core of Trump’s support will go back to the side lines of the country’s political discourse. In the worst case scenario the Make America Great Again people will split off and form a 3rd party which might get some votes for a few election cycles form both parties but will at least allow the Party of Abraham Lincoln to stand for its core values.

The alternative is to support this man who has violated most of the principals for which the party, and the 53 Senators in question, stand for. If he does go on to win re-election, then his brand of populist, xenophobic and protectionist policies will further define the party for many, many years.

This is a unique opportunity for Mitch McConnell and his Majority Whip, John Thune,  to take back control of their party. Such a move will surely cause a reaction in the home states of Republican Senators from Trump’s base of support. The issue is that if they vote with the President, their Democratic opponents will hammer them on the same issue in any case.

Just for the record, there are 21 Republican Senators up for re-election in 2020. Even if the Party as a whole chooses not to take this unique opportunity then I would suggest that these Senators look carefully at the polls in their states before deciding to support this man and his legacy.

The post A message to the Republican Party: Dump Trump first appeared on Doing Business on the Earth.

In my view this polarization goes well beyond the old labels of left and right and have to do with fundamental disagreements about the nature of civil society, the role of government, and the responsibilities of every citizen and even what it means to be a citizen.

Clearly one cause of this polarization is economic as not everyone has benefited from the last 20-30 years of globalization, economic integration and automation equally.

In the United States, for example, 30 years of factory automation has reduced the number of people, largely men, working in factories around the country. While automation and digitalization has created new jobs for college educated people who can manage computers, it is leaving an entire generation of people behind. Many of these men are no longer even looking for work which gives a misleading view as to the unemployment statistics. They are also living in increasing despair and for the first time in memory, the average life expectancy for white men has dropped in the United States.

Economists will tell us that eventually the economy will improve and more jobs will be created but lately, much automation has replaced or displaced labor rather than enhancing its productivity. As well documented by Oxford’s Carl Benedikt Frey in The Technology Trap,  it took approximately 3 generations – in what was called Engels pause – for real prosperity to be felt by the working class during the industrial revolution.

In many parts of the world including the United States, the benefits of automation and digitalization as well as global economic integration are seen most clearly in specific cities and hubs leaving secondary towns and cities far behind as well as the countryside. This economic inequality and the drying up of middle class manufacturing jobs is, in my view , one of the causes of polarization as well as the root cause of the election of Donald Trump,  Brexit, and the rise of populism in many parts of the world.

Another reason for the level of political polarization around the world is that not everyone actually votes except for a handful of countries in which it is obligatory such as Australia. According to the International Institute for Democracy and Electoral Assistance (International IDEA), voter turnout in 2019 was 57% in the United Staes, 69% In the United Kingdom and just 47 and 49% in Columbia and Chile. In Spain it only reached 76% even as the country had to vote a second time in the same year in an attempt to resolve the situation.

The thing is that 25 – 40% of people do not vote, then often the tone of political discourse gets sharper and even, as it is in my country, quite nasty. This is because the debate is no longer about convincing anyone about anything but getting a politician’s natural allies – the ones who agree with them anyway – out to vote.

The third thing driving this polarization is the way this sharper political discourse generates feedback loops and echo chambers within the digital and social media space. Essentially, people who agree with one another go to the same media outlets in which their views are re-enforced and where they can trade even more outrageous stories about their political opponents on social media. These stories in the 2016 election were often planted by Russian hackers (trolls) working for the Russian government and then fed into the news feeds on Facebook and other platforms causing people to firmly believe what is essentially fake news.

What makes the problem even more acute in the United States is that the current President is a pathological liar. According to the Washington Post, Donald Trump has made 13,435 false or misleading claims in the first 993 days in office and they actually track how many times he lies every day. This includes his press conferences, speeches and, of course, on his twitter account where he does his best to feed the disinformation bubble around his core supporters while decrying the traditional media outlets like the Post and the New York Times as being outlets of fake news.

Part of the story is a deliberate political strategy of mixing truth with so much other noise that normal people tune out and just go with what they believed in the first place. Psychologists have actually measured the impact of information which goes against what we believe and in most cases people not only do not change their minds but hold on to their beliefs even tighter and discredit the source.

The motto of the Post is Democracy dies in Darkness and while it is part of the problem, the media is also a key to the solution. perhaps the key challenges for the news media in the digital age is how to tell the truth when it can be difficult to determine, may take time to check, and when there is less money available for quality journalism.

The post The root causes of political polarization first appeared on Doing Business on the Earth.

Before I answer the question, I must say I published a total of 8 blog posts in which I explained why it was not possible for him to win the 2016 election so perhaps I am not the best person to ask what will happen next year.

In any case I will share my view that the outcome of the election depends on three different topics. They are the economy, what I will call impeachment plus, and finally who the Democrats pick to run against him.

1. The Economy, Stupid

The first topic is the economy. Since World War II, American presidents win re-election when the economy is  going well and lose when it is not. Bloomberg Business Week is projecting that the United States will avoid a recession in 2020 and therefore suspect that Trump will be re-elected. They project 2% growth for 2020 but also say that the trade war could push that number down and that a drop in consumer or investor confidence could bring the 11 year economic expansion started by Barak Obama’s administration to a halt.

2. Crime and Punishment

The second issue has to do with the impeachment process and parallel demand that Congress be allowed to examine 8 years of Trump’s tax returns.

As I wrote in another post, it will be difficult for the Democrats to impeach Trump no matter how clear his abuse of power with Ukraine has been. The issue is that it takes two thirds of the Senate too convict and the Democrats only have 47 Senators and 2 independents they can count on. Throw in Mitt Romney and a few others and they will still be far short of the number needed.

It may also take a number of months for the Ways and Means Committee Chairman, Richard Neal, to actually get copies of Trump’s tax returns and it is unclear what they will show. The New York Times already reported that the tax returns will show that much of Trumps business success is fabricated and you can listen to what they found out here.

For me the issue is that both of these processes are putting increasing pressure on Trump and his closest circle. That pressure could lead him to lash out in unpredictable, and possibly illegal ways. There is already reports that his tweets against ousted U.S. Ambassador to Ukraine, Marie Yovanovitch, might be a case of obstruction of justice.

Based on his history, he might actually go even farther over the line possibly adding charges to the impeachment proceedings and even making it impossible for the Republican party to continue to support him.

3. Who’s at first?

The third issue is how the democratic primaries will play out and who will be the nominee. Joe Biden is increasingly seen as a bit out of touch and may not be able to keep the party together. Massachusetts Senator, Elizabeth Warren is, in my view, the most sensible candidate but she is perceived as too far left economically to be electable by most of the people I spoke to this week.

The challenge for the Democrats is to find someone who can both carry the party’s moderate base and also get people out to vote.   Hillary Clinton failed to get the millions of younger voters and minorities who supported Barak Obama to the polls and that, plus Trump’s advice from Stephen Bannon allowed him to pull off his upset victory.

How to find someone interesting enough to get out the vote and also safe – that is the challenge. So far my own favourite, California Senator, Kamala Harris, has not connected with the mainstream and has poll numbers in the single digits.

So back to the question. Trump will win if the economy is strong and he does not do anything else as stupid as trying to strong arm Ukraine on an official phone call. He will also win if the economy is more or less ok, he is not impeached and the democrats do not find a strong candidate.

He will lose, or perhaps be barred form running if he goes way over the line, is impeached, or the economy falls apart.

Finally, if the Democrats do rally around someone such as Senators Warren or Harris, Pete Buttigieg, or former Massachusetts Governor Deval Patrick, who announced yesterday,  then maybe they can re-build the Obama coalition and send Donald Trump back to reality TV where he belongs.

The post Will Trump be re-elected ? first appeared on Doing Business on the Earth.

In preparation for the talks, I first reviewed the different ratings agencies that pay attention to these things as I wanted to highlight the leaders in the different industries. I then looked in some detail at the leading companies sustainability reports and saw a common thread throughout the reports which cut across industries and even geographies.

What I saw is that companies all over the world are adopting the UN’s Sustainable Development Goals as an integral part of their sustainability agenda.

The 2030 Agenda for Sustainable Development was adopted by all United Nations Member States in 2015. At its heart are the 17 Sustainable Development Goals (SDGs) which include ending poverty and hunger, providing water and sanitation, promoting gender equality, and of course tackling the problems associated with the environment including air and water pollution and climate change. The large number of goals are then broken down into 169 specific targets

What the leading companies are doing is to explicitly link their own sustainability and broader Corporate Social Responsibility agenda to the 17 goals and their more specific targets. Most companies that do this have selected the 4-6 SDG’s that they feel are particularly relevant given their line of business, geographic location, and the specific concerns of their customers, employees, shareholders and other stakeholders.

Typically the selection of which goals to pursue come out of a materiality matrix in which the company publicly looks at many of the issues facing it and society in general and then ranks them as being important for the world on the one hand and the company on the other. Obviously the matrix for a bank will be different for that of an oil and gas or a mining company and there also be differences in different parts of the world.

I was asked several times over the last few months if I thought the lists of initiatives and progress that the reports refer to were something new or were in fact the same activities repackaged using the SDGs as a communication framework.

What I see in looking at the lists of activities is that many of them have been going on long before the SDGs were published. In many cases the focus has been on reframing activities that the company was already doing and using the structure of the SDG’s to tell the story.

The Coca Cola company, for example, began its efforts to manage its global water footprint in 2004 after it was forced to close a bottling plant in a village in the province of Kerala in India. Coke was charged with using up much of the villages ground water to the detriment of the local population. Since then, Coke has embarked on a comprehensive program to reduce its water footprint in the worldwide operations of itself and its bottlers and to invest in developing additional water resources.

The program has proven hugely successful and Coke was able to determine that it is water neutral since 2015, 5 years ahead of its 2020 goal.

In my view there is nothing wrong with this approach and I do think it is actually very positive because the SDG’s are becoming a common language with which to discuss the issues connected to both social and environmental sustainability.

What it also allows for is to easily look at those activities that a company is doing and to consider to what degree certain initiatives might be missing or could be added. In my view the fact that Coke now talks about water in terms of goal number 7, does not take anything away from the story.

Businesses around the world appear to be embracing the SDGs as a language with which to communicate their activities and this is yet another example that we appear to be reaching a tipping point in terms of business accepting sustainability as a useful way of interacting with civil society for business.

The post The Sustainable Development Goals are gaining traction first appeared on Doing Business on the Earth.

The conference was initiated back in 1986 by Professor Pedro Nueno and Juan Llorens, an experienced Spanish automotive executive who among other things negotiated the acquisition of SEAT by the Volkswagen group. The title of the first conference was The Future of The Automotive Industry and in his remarks Professor Nueno highlighted some of the predictions that had been made at the conference that later turned out to be true.

One of the two ideas that he pointed out was the concentration that occurred in the automotive industry that he correctly foresaw. The other was the rise of China as the largest car manufacturer and market in the world. Nueno was one of the few Western intellectuals to really understand how the modernization of China driven by Den Xiaoping would re-shape the business world in general and automotive in particular.

In terms of electric vehicles, Professor Nueno has always been skeptical and he pointed out the other day how Nissan’s Carlos Ghosn had incorrectly forecasted that 20% of all new cars would be electric in 2015 when he spoke at the conference in 2010. In 2008 global sales were just over 2 million units or about 2% of the global market and they will be under 3% this year.

This year, my colleague Marc Sachon, who chairs the event, invited another speaker from Nissan, Gareth Dunsmore to speak. According to Dunsmore, Nissan sold 60,000 electric cars in Europe last year which is almost 10% of the total. Although he recognized that there is still a long way to go, Dunsmore felt that the combination of a number of new , affordable, electric cars coming to market in the next couple of years together with increased pressure on air quality and climate change will push EV’s into the mainstream.

His view is that we will see EV’s accounting for 30% or more of new vehicles in 2030 and following an exponential rise after that. The penetration of EV’s depends very much on location with sales in Norway, for example, exceeding 50% for Spain, Nissan will only managed to sell 2,000 Leafs this year.

Many analysts agree with Dunsmore and see a sharp rise in EV’s in the years ahead although there is a wide variety of estimates available as reported by Quartz, a business focussed website. In the chart below, they show the latest projection of Bloomberg New Energy Finance, Opec and Exxon Mobile.

Over the years I have debated the future of electric vehicles with my colleagues Pedro Nueno and Marc Sachon and agree with Dunsmore and the estimates from Bloomberg. A few weeks ago I wrote another post on EV’s and showed the estimates from EV Outlook which are even more positive than Bloomberg in their optimistic scenario.

The main point of that post was that while I believe that EVs are happening, I do not think they will be disruptive to the automotive industry because of companies like Nissan and Volkswagen who are investing heavily in the technology.

What is not so clear to me is the impact that EVs will have on the dealer networks that sell and service most of the new cars sold all over the world. The issue is that EV’s have about one third as many components as a traditional car and while they will need to be serviced form time to time, their massive introduction will have an enormous impact on the economics of car dealers as they make much of their profit from service parts. Nissan’s Dunsmore sees a possible business for them in operating charging infrastructure at the local level.

Also speaking at the conference was Gerardo Pérez, President, of the association of dealers in Span (FACONAUTO). Pérez recognized the issue but felt that it was far in the future and that dealers would adapt.  In his view the primary role of car dealers was to make local investments in the industry. His view, which I think has merit, is that dealers could emerge as a major player in providing local mobility.

The post The past and the future in Automotive first appeared on Doing Business on the Earth.

The blackouts are a deliberate move by the electric utility to prevent forest fires being caused by a combination of very dry conditions, high winds, an a high tension electric infrastructure that is in desperate need of renewal. According to the New York Times, the intervention “did not go well”.

It seems that PG&E was responsible for 1,500 fires in California in recent times including the fire that destroyed the town of Paradise and killed 85 people last November. The problem is that the power lines are old and in ill repair and that enormous amount of trees and brush have grown up around them. As I wrote in a post at the time of the fire in Paradise, part of the problem is that climate change has made the fire season longer according to NASA.

As I understand it, there are essentially three levels of solutions to the problem and all of them will cost huge amounts of money that most utilities do not have.  PG&E, for example, has already filed for Bankruptcy as a result of its liabilities for fires it has already started.

The fastest solution is to cut back the trees and foliage along the actual power lines and to inspect and replace the wooden poles which make up much of the system and can be knocked down in heavy wind.

The next level is to actually rebuild the grid using insulated power lines, steel and concrete poles and burying power lines underground. In many parts of the United States and the world, the grid needs to be updated anyway and replaced with what is called a smart grid to be better able to incorporate renewable energy and other forms of distributed power.

Many people believe that the real answer is to forget the centralized power utility model all together and to build microgrids that cover the needs of a neighborhood, small city, or large industrial facility such as an airport. For more information about microgrids you can read a report done for California or visit a specialized website.

A number of such projects are in progress such as a new microgrid for New York’s Kennedy Airport that is being built by a joint venture between Schneider Electric and Carlyle. The vision is that the microgrids would be powered by smaller scale power plants and renewables and then perhaps be connected with each other over a smarter and safer grid.

Beyond solving the issues connected with the power grid, another The approach is to do without any grid at all. With a solar roof, a large battery in the house and perhaps an electric car, a home can be potentially be fully independent. Tesla is for example, currently launching the 3rd iteration of its solar roof design which is estimated to cost just under $ 50,000 for an average home.

The post California Goes Dark first appeared on Doing Business on the Earth.

According to the The Corporate Sustainability Assessment (CSA) and the Dow Jones Sustainable Indexes, the leading bank in this regard is Spain’s Banco Santander, led by Ana Patricia Botín who is a member of the World Council for Sustainable Development (WBCSD).

Although Ms. Botín’s father, who proceeded her as Chairman of the bank, was committed to social programs such as its support for universities around the world, it has been Ana Patricia who has doubled down on Santander’s commitment to sustainability.  Today, the bank’s “responsible banking” strategy has six parts:

1. Financial Empowerment – with a focus on the unbanked population of Brazil and the other Latin American countries in which they do business, Santander considers the things they do for inclusion to be a key part of their sustainability story. This includes access for the poor and people in remote locations, Microfinance initiatives, and the promotion of financial education.
2. In 2018, Santander spent 121 million euros on its university outreach program which impacts about 1,000 universities around the world and has been going on since 2002 with a total investment of € 1.5 Billion
3. Community investment which is about supporting early childhood education, social welfare projects, cultural initiatives and again financial education
4. Sustainable finance with its own Green Bond framework in place that has been independently assessed both in terms of the framework and the process
5. Santander is also party to the Equator Principles which govern how to look at the social and environmental risks of every project it invests in and the UNEP Finance Initiative
6. Finally Santander is committed to reducing its own environmental footprint, for example in its data centers,  and reports it has reduced total carbon emissions by 1.5% 2018 as compared to 2017 

The Equator Principles (EPs) are a set of 22 categories of risk management that banks ought to look at when lending money for advisory, project finance, corporate loans and bridge loans. 98 financial institutions in 37 countries have adopted the Equator Principles which look at everything from baseline environmental conditions to fire prevention and life safety.

Santander is also one of the founding members of the UN Environmental Program Finance Initiative which is essentially about linking the business of banking with the United Nation’s 17 sustainable development goals and making sure that the banks which join the initiative have the processes, governance, and transparency in place to make sure it actually happens.

Banco Santander is the largest bank in Spain and according to FXSSI, a website, is the world’s 16th largest bank. For it to be very public about its commitment to sustainability and to apparently make the deep changes required to come out as a sector leader in the Dow Jones Index, is an example of how sustainability is going mainstream in the corporate world.

Another example is called the The U.S. Alliance for Sustainable Finance (USASF), based in New York City and led by former Mayor Michael Bloomberg.  The idea behind the USASF is to make it easier for financial institutions to lend money for clean energy projects snd also for infrastructure designed to increase resilience in the face of climate change. Founding members include Citi, Chase, Goldman Sachs and J.P.Morgan.

All of this activity in the banking sector makes me think we are at or approaching a tipping point in sustainability. In 1972, the Associate Director of the FBI, Mark Felt, said to the young Bob Woodward and Carl Bernstein that they should “follow the money” during their investigation of the Watergates scandal.

If “the money” is becoming sustainable, then industry will quickly fall into line.

The post Banking & Sustainability first appeared on Doing Business on the Earth.

Last week there were Parliamentary elections in Poland and municipal elections in Hungary which could be interpreted as a check on the populist governments in both countries although there appears to be a deeper process going on which has to do with the benefits of the transition to democracy and the European Union which began some 25 years ago.

The news reports about the Polish election discuss how Jaroslaw Kaczyński’s Law and Justice party has held on to its majority in the lower house but narrowly lost control of the Polish Senate. Law and Justice has been accused by the European Union of stifling the courts and pursuing a populist, anti democratic agenda. In the campaign, the party came under criticism for its tough stance against the gay and lesbian community in the country.

With respect to Hungary, the news was all about how Gergely Karácsony managed to unite the opposition to Viktor Orban and his Fidesz and win election as the new mayor of Budapest last week. I was told that Karácsony means Christmas when I was in Vienna last week so perhaps the new Mayor is a present for the citizens of the capital. The opposition managed to win 13 of Hungary’s biggest cities last week.

Just a few days after the election of Karácsony, the European Parliament voted to sanction Hungary for supposedly reducing freedom of the press and the independence of the judiciary. Orban hit back saying the sanction was petty revenge for his tough stance against middle eastern refugees.

30 Years for what?

Concern about the governments of Poland and Hungary are widespread amongst liberal Europeans who see danger in their populist rhetoric and focus on the personal leadership produced by men like Poland’s Kaczyński and Hungary’s Orban. For Attila Agh, a professor at Corvinus University of Budapest, the issue is not so much what these populist politicians are doing or not doing but why they were elected in the first place. In his view, the election of populist leaders and the formation of the Visegrad Group (Czechia, Hungary, Poland, and Slovakia) is all about a deep disappointment on the part of the people of these countries with respect to their expectations after the fall of the iron curtain and their adhesion to the European Union.

1989 brought the prospect of Freedom to Central Europe. Orban, for example, formed Fidesz as a protest vehicle against communist rule and was a champion of Democracy. He became Prime Minister Hungary after the elections of 1998 but was then voted out of office in 2002. According to a Hungarian executive who I met with last week in Vienna, Orban is not an autocrat but learned from that experience that a politician must appeal to the hearts of the people and not so much to their minds.

In its own report on the transition to democracy and EU membership in Central Europe, the EU recognizes that the transition has brought enormous change to the countries of the region as well as some disappointment Professor Agh says the results have been controversial and road to prosperity a “bumpy” one. His view is that while there have been attempts at political and economic change, social change happens slower and that this is one of the causes of democracy to suffer.

Economically, the region has done well over these 30 years with GDP per capita increasing sharply all across the region. The biggest gains have occurred in the capitals of the different countries and in some cases other large cities. In many ways the countryside is the same as it ever was or perhaps even worse than people remember in earlier times.

In Hungary, Fidesz lost in Budapest and 12 other cities but is likely to continue to dominate in the countryside. In Poland the election results in Warsaw itself also confirmed this urban and rural split. According to the Polish Electoral Commission, at the national level Law and Justice received 43.6 % of the vote compared with 27.4% for the largest opposition group. In Warsaw itself, however, the numbers were reversed with the PO winning 42.0% compared to Law & Justice which only had 27.5%.

Central Europe has always been either a bridge between East and West or a buffer zone for either side. While I applaud efforts by Western Europe to keep the governments of the region firmly anchored to the democratic values of Europe, the policy framework needs to make sure that the people in the countryside feel the real benefits of being part of the West. If not, they will continue to look for easy solutions to complex problems and vote for politicians like Viktor Orban and Jaroslaw Kaczyński who speak to their heart.

The post Central Europe At The Crossroads first appeared on Doing Business on the Earth.

The company is in the news due to the appointment of a new CEO last week after Mr. Ghosn’s successor was forced to resign after irregularities were discovered concerning his compensation in an echo of the charges filed against Mr Ghosn.

In my view there is really nothing deeply wrong about Nissan’s fundamentals. True, their sales were down about 5% globally last year due to problems in the US and Europe which I understand had different reasons. They did grow the business a bit in China which is probably one of the reasons Makoto Uchida was chosen as CEO since he was leading the JV in China.

Nissan, however, has a solid fleet of vehicles, great dealer networks around the world, good brands, and a lead in electric vehicles compared to many of all the other large, mid market manufacturers. The new Leaf is still probably the best car for the money and is significantly lighter than the flashier Tesla Model 3. 

The problem at Nissan is governance and morale. Ever since Carlos Ghosn launched the Nissan Revival Plan in 1999, Nissan has been linked with the personality and drive of Mr. Ghosn. Nissan has been tremendously successful over the last 20 years thanks to his ability to keep the company focused on delivering a series of medium term plans. He built a culture where people “do what they say and say what they do” and my perception is that after his removal there simply was not the same kind of drive from the top causing some targets to slip and some problems to fester.

The Nissan Leaf was one of three commitments he made in 2007 as part of the Nissan GT 2012 and the full story of its development makes another great case study. As mentioned in another post this week, the new Leaf is the number three selling EV in the world and Nissan sold about 85,000 Leafs in its fiscal year 2018/19.

In the Video he released last April, Ghosn insisted in his innocence on all charges and also the idea that he was a greedy dictator. He says that his arrest was the result of a conspiracy by Sr. Nissan executives who feared they would lose autonomy and position in the next phase of the alliance with Renault. He also insisted that management by committee was insufficient in the fast moving and competitive automotive industry and real leadership was needed.

Nissan has responded by apparently strengthening its corporate governance with an external chairman. That new Board has now chosen Uchida but also named two of his rivals for the CEO position as COO and Vice COO creating the kind of committee approach that Ghosn warned against in April. 

If Uchida and his colleagues are going to be successful they will need to deliver Nissan’s current plan of MOVE to 2022 and even more importantly heed Mr. Ghosn’s advice and articulate a vision for the company (and the alliance) in the future. Back in 2007, Mr. Ghosn publicly reversed himself on the issue of electric vehicles and pushed both Nissan and Renault to develop what became the Leaf and the Zoe.

If Nissan is going to survive and prosper I humbly suggest that Uchida and his colleagues make sustainability and electric vehicles an integral part of that vision.

The post Leadership After Carlos Ghosn first appeared on Doing Business on the Earth.

The term was coined by Harvard’s Joseph Bower and Clay Christensen in an article published in the Harvard Business Review in 1995 and the basic ideas were then used in Christensen’s different books including The Innovators Dilemma. While my interest is not to go through the whole theory here, I do want to highlight what was meant by disruption. The article and the books talk about how new technology is sometimes ignored by large, succesful companies and is then developed in niche applications. In some cases the new technology is eventually adopted by the mass market and in some of those cases, the large firms who dominated the field before are not able to make the technological shift and fall by the wayside.

To use Christensen’s terms the incumbents are disrupted and a new set of companies emerge which dominate the business. The issue with such innovation is that it is very difficult-or even impossible- to say if a technology will be disruptive or not as it emerges. If the incumbents successfully make the transition, then it will not be. If new players replace them in the mainstream business then it will have been so.

An example which is particular close to my heart is the shift which is currently underway in the automotive industry towards hybrid and electric cars. As I have written in other posts, there is evidence that electric vehicles may be reaching the tipping point. What I do not see yet is clear evidence that they will be disruptive in the sense that Professor Christensen used the word.

According to the Global EV Outlook 2019, published by the International Energy Agency (IEA), just under 2 million electric vehicles were sold around the world in 2018 including battery electric and plug in hybrids. Over one million of them were sold in China which is just under 5% of the market. Speaking of market share, due to its aggressive tax policies in favor of EV’s, 46% of new cars in Norway were electric last year and that might be the shape of things to come. In the report, the IEA explores two favorable scenarios for EV’s to 2030 with a global share of either 15 or 30%.

Assuming that the report is directionally correct, the question about disruption is who will be making these cars?

One part of the story is that virtually all of the major automotive companies have announced initiatives to launch a number of fully electric models in the next few years. Examples which are cited in IEA report include Ford (40 models by 2022, VW (80 models by 2025) and of course Toyota which is not only offering hybrid models of most of its cars but will launch 10 fully electric cars and already has a fuel cell electric vehicle on the market.

In a move which I have long thought made sense, luxury carmakers such as Rolls Royce and Mercedes Benz are also developing all electric models.

Another part of the story is, however, that today EV’s make up a tiny slice of the business for most of these companies and their attention is still firmly rooted on the internal combustion engine. Nissan is a good example and while the Leaf is the third highest selling electric vehicle in 2018, they made up only 1.5% of Nissan’s total of just over 5.5. million cars. Nissan sold almost 42,000 leafs in Europe but that is still only 6 % and the company does not sell the Leaf in China although there is an EV version of its high volume Sylphy sedan.

I had dinner this weekend with a friend who has finally received his Tesla Model 3. He was one of the hundreds of thousands of people who paid Tesla $ 1,000 to reserve the new car before it was launched and had to wait many months to receive it. The net result is that he could not stop talking about the car and how much he loved it. He was exited about the automatic driving, the range and being able to charge it at night. He and his family are planning a trip to his native Sweden in the Tesla and are quite comfortable with using the super charge network which he says can give him 80% of the cars range in about 20 minutes. His view is that you want to stop anyway every 300 KM or so and is planning to make the trip in three days.

At this moment, the leaders in the EV race appear to be Tesla, BJEV and BYD. BJEV is 60% owned by BAIC, A Chinese automaker which has joint ventures with Mercedes Benz and Hyundai  but is essentially an electric vehicle start up. Another Chinese company, BYD, is a diversified manufacturer of electric powered equipment and batteries. Its EV play is the only bet it has in automotive.

Tesla is also in the battery and solar power business but like its Chinese rivals is focused on electric  vehicles when it comes to cars.

Looking ahead, one important question is if the scenarios put forward by the IEA are realistic? In my view EV’s will one day represent 30% of the vehicle market and then go beyond that. What I do not know know is if that will be in 2030 or 2050.

The second question is if those cars will be Fords, Nissans and VW or will they be made by Tesla, BJEV and BYD? This is what disruption is all about.

The post Electric Disruption ? first appeared on Doing Business on the Earth.

When Jim Mattis resigned as U.S. Secretary of Defense last December I wrote a post about my concern of what that would mean for the people and fighters of Rojava, the Kurdish region of Norther Syria. As I wrote at the time of his election the presence of four Generals in his cabinet reassured me that while Trump was unstable and unpredictable, accomplished public servants such as Mattis and General John Kelly would keep him in check and not let him do anything too stupid.

Since January Trump has been surrounded only by people who are totally loyal to him regardless of what he does or say. This was clearly in evidence when he made his now infamous requests to Ukrainian President Volodymr Zelensky to investigate Joe Biden’s son. Trump says the call was “a very friendly and totally appropriate call” and the White House has released what it calls a partial transcript which you can read curtesy of CNN here. According to reports about the call the aides who were listening were appalled at what they heard and the tape and subsequent transcript were classified and an effort was made to suppress it

The other part of the story is that $ 400 millions of dollars in military assistance to the Ukraine were delayed while the President’s lawyer, Rudy Giuliani, travelled to the Ukraine to make it clear that there was a link between the favor that Trump requested and American government assistance in fighting Russian backed militia in the Eastern part of the country. An example of the dozens of stories on this subject can be found in Defense News.

This is the issue that convinced the Democratic party to begin the process to impeach Trump and possibly remove him from office. As I have explained in other posts, impeachment in the U.S. is fundamentally a political process as the U.S. constitution is deliberately vague on what counts as an impeachable offense. For a President to be removed form office, the House of Representatives must pass, by simple majority, articles of impeachment or in other words the list of “high crimes and misdemeanors”, to quote the constitution. These then are discussed in the Senate and two thirds are needed to convict.

In the case of the Republican attempt to impeach Bill Clinton in 1998, the House passed 2 of the four articles presented to it and in the Senate he was acquitted on one while the other ended up in a 50-50 vote which is far short of the 67 required. To impeach Trump, the Democrats will have to have all of their 45 senators as well as Angus King (Maine) and Bernie Sanders (Vermont) who are independents and 20 Republicans to vote to convict.

There are, however, 19 Republican Senators who are up for re-election including Mitch McConnell, the Senate Majority Leader and Susan Collins from Maine. Depending on how the voters in their state see the issue, these Senators may feel that they need to take the moral high ground in a vote on impeachment or face a certain loss in November 2020. In addition to them there are other Republican Senators such as Mitt Romney who have no love for Trump and others such as Lindsey Graham who are very upset about his latest decision to abandon the Syrian Kurds.

In my view the strong arm tactics on the Ukraine are clearly reprehensible but the betrayal of the Kurds is much worse. Trump has tweeted that he made the move due to his “great and unmatched wisdom” and has given permission to Turkey to attack the fighters of Rojava, the Turkish enclave in Northern Syria which provided the ground troops in the fight against ISIS in Syria.

Trump’s tweet seems to imply that he has given Recep Erdogan limited permission in its new war and that may be to create a buffer zone between Turkey and Syria. The Turk’s have said that there intention is to forcibly move the millions of Syrian refugees to this border area which might create another humanitarian disaster. The fact, as reported by Mother Jones, that there are two Trump towers in Istanbul and that Trump’s partner in the country is close to Erdogan is just another example of how sleazy this administration is.

A full blown impeachment process may distract the public from the democratic primary and allow Donald Trump to remain in the spotlight. The issue in the Ukraine is, however, so far over the line that Democratic House Leader Nancy Pelosi had no choice but to start the process.

One way that Republicans could avoid impeachment is to invoke article 4 of the 25th amendment and say that Trump has lost the plot and “is unable to discharge the powers and duties of his office”. Article 4 allows the Vice President and the Cabinet (or some other congressional commission) to declare that the President is “unable”. The Presidency then falls to the Vice President and if the former President then insists then he is actually able to function, then Congress gets involved and needs a two thirds majority of both houses to keep the V.P. in place.

Last year at this time there were rumors that Vice President Pence was considering doing just that although he denied it.

Either through impeachment, article 4, or the election in 2020, the sooner we have a change in Washington the sooner the world can back to fixing some its urgent problems.

The post Trump becomes dangerous and risks impeachment first appeared on Doing Business on the Earth.

GALP

Galp is, according to Platts, the world’s 83rd largest oil and gas company. Like industry leaders such as Shell and ExxonMobil, it is working to transform itself into an energy company. The main priority of Susana Quintana, an experienced leader in innovation and transformation is to build the companies renewable energy business. In its strategy statement Galp says its business is supported by “innovative and differentiating solutions that promote the transition into a low carbon economy”. For Ms. Quintana that will a world of decentralized, low carbon energy and she is committed to transforming Galp so that it can play a leading role in the countries where it operates.

Acciona

Since 2004, Acciona’s strategy has been to focus the company on infrastructure, renewable energy, and water. Today, sustainability is central to Acciona’s message and activities. The company says it is “pioneering a different way of doing business, in that we offer sustainable solutions for the main global challenges, contributing to the creation of more resilient societies and designing a better planet”. An example of Acciona’s commitment is the presence of Christiana Figueras, who led the negotiations for the Paris Climate Agreement, on its board of directors. According to its General Director for technology and Innovation, Arantza Ezpeleta, leadership on this issue comes straight from the company’s Chairman, Josè Manuel Entrecanales Domecq.

Schneider Electric

Schneider Electric runs innovation forums in different parts of the world to showcase its technology to its customers and potential customers and every year there is a very large event with a global focus. Emmanuel Lagarrigue is the Chief Innovation Officer of the company. His view is that even though Schneider is well positioned for two of the major transformations underway in the world i.e. Energy and Digital, the company needs to go further and do what he calls innovation at the edge. One aspect of that is looking for ways to bring clean energy directly to industrial and retail consumers through independent micro grids which operate independently from the traditional electric utilities. For Schneider’s Chairman and CEO, Jean-Pascal Tricoire, “sustainability is becoming mainstream”. Schneider Electric has, for example, committed to become carbon neutral by 2025 and net zero emissions by 2030.

In their own way, each of these companies has embraced the idea that the transition to a low carbon economy is already underway and will become an even more important part of the future. Although the specific topic of the panel was more focused on the how of producing such fundamental change than the what of the transition itself what struck me most was that the question of why almost never came up.

For these three companies, at least, the way ahead is clear.

The post 3 Businesses Leading the Way first appeared on Doing Business on the Earth.

At the World Knowledge Forum in Seoul last week, I had the privilege to listen to and chat with a number of experts on the situation on the Korean peninsula, meet many people of different ages, and even managed a side trip to the demilitarised zone (DMZ) which marks the location of the cease fire which brought an end to the Korean War in 1953. The South Koreans have built a tourist attraction around the site which includes an empty railway station that was supposed to connect the North and South, an observation platform and access to one of the four tunnels that the North Koreans had built in the 1960s under the DMZ.

Korea has been in the news for the last two years as the world has watched in wonder at the antics of Kim Jong-un and Donald Trump. Kim started off the latest round of events back in the summer of 2017 by testing nuclear weapons and a ballistic missile system which could potentially deliver them to the United States.

President Trump responded with an impromptu speech in which he promised “fire and fury” that would send the country back to the “stone age”. The interchange and rising tension was greeted with dismay in Seoul which is 52 KM from the border and home to 12 million people not counting the wider metropolitan area. The border itself is heavily fortified on both sides although there is a strip 250 km long and 4 kilometer wide in which no heavy weapons are allowed called the demilitarized zone or DMZ.

Trump first visited Seuol in November, 2017 and since then has had 8 meetings with South Korea’s President Moon Jae-in and face to face meetings with Kim one in Singapore and one at the DMZ itself where he actually crossed the line giving de-facto recognition to North Korea’s border even though no peace treaty has been signed.

In a gesture of good will, the United States has suspended joint military manoeuvre with the South Korean army although such activities are thought to be needed to keep the joint forces ready in case of war. For its part, North Korea has not tested a bomb or a ballistic missile since the summits began although it is routinely testing its short range missiles which could, for example, cause massive destruction to Seoul and threaten the South Korean army and the 28,000 U.S. soldiers and their dependents stationed in the country.

For Trump the engagement has been a complete success and he has declared his “love” for the North Korean leader who he now   says has “great personality and is very smart”.

The consensus in Seoul last week was, however, that the initiative has so far achieved nothing of substance and in fact has elevated President Kim’s status as an international statesman. He has met with President Xi of China 5 times., was received by Valdmir Putin in Moscow and has held eight meetings with South Korea’s President Moon and even made a declaration calling for unification and complete de-nuclearization.

One South Korean economist, Byung-Yeon Kim,  felt that full and fast normalization was unlikely as was a return to the fire and fury rhetoric and a possible war. In his view, the most likely scenario was to see a gradual opening up of North Korea’s economy in line with a step by step approach to the freezing and dismantlement of its nuclear program.

What I found very interesting is that no one I spoke with could see a scenario where the North would be economically and politically absorbed by the South much like East Germany was during German unification in 1991. The thought is that the East German experienced was a terrible burden for the West Germans and it would be even more difficultly were it to happen in Korea.

Professor Kim pointed out that East Germany had a population about one quarter of the west and in economic terms had a GDP per capita which was about half. North Korea has about half the population as the South but its GDP per capita is 30 times less.

While over time most people I spoke with could see the logic of unification, no one believed that South Korean citizens want to pay for it and many are concerned that any money sent North would be stolen by corrupt government officials.

In addition to the geo-political division of the country, the three other issues being discussed last week was the trade war between the U.S. and China, increasing tension between South Korea and Japan, and American insistence that South Korea increase its contribution to the cost of maintaining the U.S. presence in the country.

This year, South Korea will contribute $ 870 million to the effort but President Trump and Mike Pompeo are reportedly asking for $ 5 billion. During the conference I was struck by the number of times that American speakers tried to re-assure the mainly Korean audience that the alliance between the U.S. and South Korea was solid as a rock regardless of where the negotiation ended up.

The biggest unspoken fear was that Trump would agree to withdraw the American troops in another gesture of good faith to his new best friend Kim Jong-un.

Trumps new friend spends huge amounts of money on the fourth largest army in the world and has developed his missiles and nuclear weapons while his people are amongst the poorest on the planet. They have no free press or elections and are understood to live in a distopian police state.

To my relief, several retired and active American military officers told me that such an outcome was not possible in the medium term regardless of what the President tweeted as their were a number of checks and balances in place to prevent a sudden withdrawal.

I for one am confused by this President’s strong actions on China and the apparent appeasement of North Korea. As a counterpoint, the policy of the Obama administration was to isolate North Korea diplomatically until it agreed to dismantle its nuclear program.

The post Scenarios for North Korea first appeared on Doing Business on the Earth.

The opening panel of the three day event featured Niall Ferguson, who is one of my favourite historians, as well as Justin Yifu Lin  a Chinese economist from Peking University. The panel was supposed to be about the economic trade tensions between the United States and China but Professor Ferguson quickly moved the conversation to tense debate about the future of the world much to the dismay of CNN’s Christie Lu Stout, who tried to moderate the discussion.

While it seemed clear that Ferguson does not fully endorse Donald Trump, he did think that the current trade dispute was a step in the right direction even if he felt the United dates should go even further to limit China’s role in the region and the world. I will summarize his points below due to the respect I hold for Professor Ferguson as an historian although I am not fully on board with his thesis. For a list of his books, all of which I recommend, click here.

In Ferguson’s view the current trade dispute is not really about trade but is the beginning of what he called Cold War 2.0 or a conflict between the United States and China. This conflict will be different than the 70 year struggle between the U.S. and the former Soviet Union as it will not necessarily focus on military forces but instead have to do with economic and information security.

He believes that the West has been naive in its support of China’s modernization and economic progress and that if China is not brought under control it, and its totalitarian system, will engulf the democracies of the region and perhaps the world.

For Ferguson China owes its economic progress to its stealing intellectual property; practicing large scale industrial espionage; bending, if not breaking, WTO rules; manipulating its currency; excluding international competitors from its markets through non tariff barriers; and provoking a global climate crisis.

In this context, the move by the Trump administration to end China’s free ride is overdue and needs to go further.

Ferguson glossed over South Korea’s own defence of its large Chaebol companies in its economic rise and praised the country and its people for its transition to fully democratic government and commitment to human freedom as well as economic progress.

The error he thinks that the West made was to assume that China would undergo a similar transition as it developed its economy but that the communist party is firmly in control of the country and has, in fact, placed its 1.2 billion citizens under surveillance in a reality that echoes the dystopian futures seen in Aldous Huxley’s Brave New World.

He felt that the countries of the region would have to choose between China and the U.S. but he felt that the choice was an obvious one. He believes that China plans to extend its totalitarian system to others as it is doing in Hong Kong despite its public commitment to not interfere with the choices of other nations.

It seemed to me that Yifu Lin, the Chinese economist, was totally unprepared for the substance and tone of Ferguson’s remarks although he tried to defend his country and its right to its own system of government and economic planning.

Over the weekend there were two stories concerning Donald Trump’s administration. One had to do with the start of impeachment proceedings and another on a possible move to prohibit Chinese companies from listing on U.S. stock exchanges.

Since my understanding is that President Xi will not back down in the current spat with the United States, the economic cold war will become a reality unless Trump makes some major concession to China and calls it a success.

The post Niall Ferguson on China first appeared on Doing Business on the Earth.

In the 1990s I became increasingly convinced that business world needed to re-think its approach to the natural environment. While many of my friends and acquaintances were getting excited about the boom in internet companies, I thought that the environmental challenge was much more important and would prove to be a much bigger business opportunity in the long run. I therefore quit my job and starting teaching so I could spend more time on issues that I thought mattered. I did my Ph.D, for example, on the deployment of new technology in the automotive industry with particular interest in hybrid, battery electric, and fuel cell vehicles. 

As one of the few academics studying and teaching the issue in business schools, I was often asked why I was spending my time on such a secondary issue and even received advice to change the topic of my doctoral thesis to something more “relevant”.

Over the last 20 years issues connected to the natural environment have become an increasingly visible part of the business landscape but I think that we might finally be seeing a tipping point in the response of business.

Up until now the issue has come in and out of focus depending on a number of economic and political factors. The financial crisis, for example, absorbed most of the attention of many corporate leaders at the expense of their initial sustainability efforts.

A clear spike in awareness and public commitment occurred as part of the Paris climate agreement in 2016 when hundreds of companies proudly joined political leaders from around the world in making an historic pledge to begin addressing the issue seriously.

Some of that enthusiasm appeared to dim in recent years at least in the United States due to Donald Trump’s anti-environmental policies the the collapse of a bi-partisan commitment to protect the air and water quality and combat climate change.

In an effort to keep momentum going, UN Secretary-General António Guterres, has held a Climate Action Summit, this week in New York that featured political leaders from around the world as well as youth activists including Greta Thunberg who travelled to New York by sailing yacht to keep her carbon emissions down. Thunberg chastised world leaders by asking “How Dare You?” again and again and insisting that change would happen with or without them.

While there is a view that the summit will produce little tangible results, there are a number of signs that make me think I that we may be at the tipping point.

• The depth and breadth of the current investment in electric and hybrid vehicles that is currently underway in the automotive industry has surpassed even the most optimistic scenarios I looked at ten years ago
• The cost of solar and wind energy has also fallen faster than expected and renewable is now a more inexpensive option in many parts of the world.
• The Corporate Roundtable explicitly committed to “embracing sustainable practices across our businesses” in its latest articulation of the purpose of business for the leading US companies
• Over 5,000 companies including 80% of the world’s largest use the Global Reporting Initiative’s standards in producing sustainability reports making the current state of play transparent

All of this comes on top of the views expressed by Black Rock’s Chariman, Larry Fink back in 2016 and increasing interest in shareholders in looking at the environmental performance of the firms they invest in.

As Al Gore wrote in the New York Times last week, we can win the climate battle. Gore’s focus in the article is on the policy side and he correctly calls out the importance of next year’s elections in the United States. Virtually all of the Democratic Candidates have endorsed the idea of the New Green Deal which I discussed in this space when it was introduced.

I believe, however, that business is the force that has the most potential to lead the transition to a low carbon economy and to bring about a boom in new technology, jobs, and prosperity that the transition can bring about.

For this to happen, however, change must begin from the top and company boards must recognise that the best way for them to do their fiduciary duty is by assuring that their firms are successful over the medium and long term.

That is only possible if they find a way to add value consistent with the protection of the natural environment and it is also the only way they will be able to participate in the  transition to a low carbon economy.

The post Sustainability may be approaching the tipping point! first appeared on Doing Business on the Earth.

The Houthi’s position is that the attack, and the 18 similar strikes using drones and cruise missiles that it carried out in the last 2 years, is a legitimate response to the bombing of Yemen done by the Saudi led coalition that has been waging an inconclusive war against the Houthis since 2015.

Both the Saudis, Donald Trump and Mike Pompeo, the current Secretary of State, were quick to blame Iran for the attack although at that time it was unlikely that they had yet to ascertain any hard evidence of Irani involvement.

World oil market spiked on the news and have only dropped back down as Saudi Arabia has announced that it will have its facilities repaired and fully operational in a few weeks.

On Wednesday, Saudi Arabia showed a number of pieces of what it said were the remains of the drones and cruise missiles used in the attack which it maintains were manufactured in Iran. The Saudis also have some evidence that at least some of the weapons approached from the North indicating that they did not come from Yemen but so far have not been able to establish the original launch site.

Iran has denied all along that it carried out the attacks and on Friday threatened “all out war” if the Saudis or the United States were to take military action against his country.

The latest move from the Trump administration was to place further sanctions against Iran showing once again how closely the administration follows Saudi Arabia policy. In my view, the most publically appalling example of this administration’s support for the Saudi monarchy was its acquiescence in the murder of Jamal Kashoggi although continued U.S. support for the war in Yemen is far worse as as many 60,000 people have died in the war and the famine that it has caused.

Although the Obama administration also supported the Saudis at the start of the conflict, President Trump has gone further in his support and vetoed a bill that passed both the House and the Senate to end U.S. involvement in the way last May.

As I have written in this space before, my view is that Saudia Arabia and Iran are locked in a multifaceted struggle for control of the region and this will continue for some time. In this context, the role of the US Navy’s 5th fleet stationed in Bahrain can not be underestimated. The fleet has been deployed in the Gulf since 1995 and is thought to have enough firepower to destroy the Iranian Navy and Airforce in the event of all out war. Without it, the Saudis may not be able to hold their own.

My understanding is that the fleet was deployed primarily to protect tanker traffic in the Gulf at a time when the United States was still importing huge amounts of oil from the region. Today 80% of gulf oil flows East to Singapore and China and the United States is close to energy independence.

This last week Donald Trump said that he was ready to go to war with Iran over its supposed support to the Houthis and the possibility that it fired the missiles and drones. Interestingly, the world oil markets do not seem to think that such a war is likely and I hope they are right.

The post War with Iran ? first appeared on Doing Business on the Earth.

Not surprisingly the biggest geo-political concern facing the people I met in both places was China and the complex relationship between China and the United States.

The history of both countries in very different but they both share some aspects and both are caught in the current trade war and geopolitical conflict between the two super powers.

Singapore

Modern Singapore was founded by Stamford Raffles, the English Lieutenant-Governor of Bencoolen in Sumatra in 1819 who leased the island from the rulers of Johar and developed it as part of the larger struggle between the English and the Dutch for control of the region.

If you manage to get there, you can see the history at the National History Museum which lays out Singapore’s emergence as a critical piece of Great Britain’s network of coaling stations in South East Asia until its occupation by the Japanese in 1942. After the Japanese surrender, Singaporeans  pushed for independence and achieved limited self rule in 1959.  A  lawyer and nationalist advocate, Lee Kuan Yew became the island’s first Prime Minister. After a brief unification with Malaysia, Lee Kuan declared Singapore’s independence in 1965 and proceeded to lead it until his death in . Under his leadership Singapore negotiated its merger with the newly formed state of Malaysia but then broke off as an independent country in 1965.

Under Lee Kuan’s leadership, Singapore emerged as a financial and industrial powerhouse in South East Asia achieving unprecedented wealth and prosperity. In 1967 Singapore joined Indonesia, Malaysia, the Philippines, and Thailand in creating the Association of Southeast Asian Nations (ASEAN).

Although not an official ally, Singapore has been working in close military cooperation with the United States for over 50 years, according to the Brooking Institution, and signed an memorandum of understanding in 1990 allowing the U.S: Navy to use its facilities.

Lee Kuan’s son, Lee Hsien Loong is the current Prime Minister of Singapore and has re-affirmed the tie in with the United States as recently as May, 2019-

The Philippines

Part of the impetus for the 1990 agreement with Singapore was the closing of the United State’s two major military bases in the region which were located in the Philippines in 1990. The Clark Air Force Base and the Subic Bay Naval station were part of the legacy of the American occupation of the Philippines that lasted from 1898 to 1946. The Americans took The Philippines from the Spanish as a result of the Spanish American War.

Ferdinand Megallan “discovered” the Philippines for the Spanish crown in 1521 and it became an official colony in 1565. Spain ruled over the archipelago for the next 333 years managing to put down periodic independence movements such as that associated with the country’s national hero, Jose Rizal, who was executed in 1896.

Like Singapore, The Philippines were occupied by the Japanese during World War II and was granted its independence after liberation.

Due to its long relationship with the United States, the country maintained close military ties to the U.S. after independence and especially during the long tenure of Ferdinand Marcos who was president from 1965 to 1986. The two bases were closed during the tenure of Corazon Aquino after a breakdown in negotiations over the lease the U.S. was paying for the land.

The U.S., however, has enjoyed a close relationship with subsequent administrations until the election of Rodrigo Duterte in 2013 who had a particularly bad personal relationship with Barak Obama. Since he has been in office Duterte has travelled to China 5 times and not been to the U.S.

Stuck in the Middle

Both Singapore and The Philippines were parties to the Trans Pacific partnership which was the plan that the Obama Administration (and Secretary Hillary Clinton) had to further cement the countries of South East Asia to the American side in the looming trade war with China.

Having seen that agreement scrapped by Donald Trump, both countries have been moving closer to China in terms of economic cooperation. China’s proposal is the One Belt, One Road initiative which promises infrastructure investments, trade, and strict non interference in domestic issues.

In terms of geo-politics, what is at stake is the future of the South China Sea which is claimed by China despite the most recent ruling of the United Nations Convention on the Law of the Sea (UNCLOS)  that defended a claim made by the Philippines that dates back to the 1950s concerning the ownership of some islands between the two countries.

In speaking with former students and business leaders in both countries, what seems to have emerged is a consensus to continue to do business with China – the more the better – but to rely on the United States for military protection in case it is needed sometime in the future.

The danger, according to Robert D. Kaplan, author of Asia’s Cauldron, is the gradual absorption of the region into China’s economic sphere of influence. Most economists agree that the world economy will gradual shift to Asia in the next 20-30 years and this is the back drop in which the current tit for tat trade war is playing out.

The post Stuck Between China and the U.S. first appeared on Doing Business on the Earth.

What makes the trip even more interesting than it normally wold be is the particular geo-political situation in India at this moment in time. This has to do with the events connected to Jammu and Kashmir that have played out over the last few months.

The Situation

If you have not been paying attention, in February there was a brutal suicide attack in Srinager (Kashmir) which killed 42  para military recruits. India responded by sending its warplanes to bomb the training camps of the terrorists who it thought were responsible which are located in Pakistani territory. Although India has claimed that heavy casualties were inflicted on the group, Pakistan has insisted that the bombs fell harmlessly in the forest. Pakistan later shot down an India plane publicly returning the pilot and then went and bombed unoccupied land in India as a response.

All of this happened just a couple of months before India’s general election which Prime Minister Narendra Modi’s BJP party won in a landslide of support. Before the most recent conflict with Pakistan, opinion polls showed it likely that Modi’s government would lose votes and he would have a difficult time assembling a majority in the newly elected parliament.

Perhaps as a result of nationalist feeling, Modi’s coalition now has 303 seats in Parliament giving him a clear majority in order to continue his policies of reform. A few weeks ago, India’s government decided to change its policy in Kashmir and Jammu and suspended article 370 in the Indian constitution which granted the province a special autonomous status within India.

Pakistan has responded with political statements by its Prime Minister, the former cricket star Imran Kahn who has declared that he will continue to work for the Freedom of Kashmir and threats of war from its military. Kahn is trying to internationalize the situation and managed to get the UN Security Council to discuss it a few weeks ago.

What People Say

The most interesting thing for me about doing these alumni sessions is the different points of view that I get to here. In India, Prime Minister Modi dominates the political landscape and different people have different views. Here are some examples:

• Modi is reforming the country and has the political mandate to do so.
• 98% of Kashmiris are delighted with the change and you can not believe anything in the New York Times or the BBC as they are biased against India
• You can not believe the Indian press as it is 100% controlled by the government and big business
• Modi is not a Hindu nationalist, he is an India nationalist and has wide support from Muslim women due to the criminalization of triple Taloq (Muslim divorce)
• Modi is a Hindu nationalist and takes orders from the RSS (paramilitary Hindu organization)
• The reform agenda is only marketing slogans with no real substance
• Modi is hurting business and the economy with badly conceived ideas such as the 2016 demonetisation which devastated the black economy and the real estate market
• Modi’s election was rigged by sophisticated manipulation of the digital voting system
• The so called conflict with Pakistan is all show. Modi and Kahn are in constant communication and just helping each other out politically.

After more than a week in India I am as confused as when I arrived. Over the last 50 years the country’s economy has boomed lifting tens of millions of people out of poverty and extending life expectancy. Our alums work in some of the most exciting companies in the country and others have made industrial joint ventures and high tech start ups.

At the same time there are still millions of poor people in the country who are only starting to enjoy modern technology. The country also suffers from an energy shortage and serious problems of air and water pollution.

With regards to the Prime Minister it seems there are two possibilities. One is that Modi is committed to reforming India and has used the issue of Kashmir and Jammu as well as the uglier aspects of Hindu nationalism to secure the mandate he needs to fix the country. The other is that he is a Hindu nationalist who uses the banner of reform to secure the support of big business and the international community.

India and Pakistan have gone to war four times since Partition in 1947 and may do so again because of Jammu and Kashmir. No one I met is seriously planning for such a contingency or any serous disruption to business as usual. In the event of conflict, would Pakistan, try to shut down India’s telecommunications and data networks? Is that technically possible?

What would that mean for global companies who depend on their people and partners in India to run their computer systems and many business processes?

The post Views from India first appeared on Doing Business on the Earth.

I have come to see Donald Trump as a symptom of the what is wrong with the United States and much of the world rather than an independent actor in the what seems to be the craziest times I can remember from a political, ecological and geo-political point of view.

Trump is just another of a number of unconventional and possibly dangerous, right of center, politicians who have come to power in countries all over the world. In order of their taking office I would include Trump in the following group:

• Viktor Orban, Hungary, 2010
• Narendra Modi, India, 2014
• Rodrigo Duterte, Phillipines, 2016
• Jair Bolsonaro, Brazil, 2019
• Boris Johnson, United Kingdom, 2019

What truly worries me about all of these people is that they appear to have limited respect for the democratic traditions of their countries and mobilize at least part of their political base by demonizing segments of their own or neighboring populations.

What is truly disturbing is that the real problems facing ordinary people stem from the impact that globalization, digitalization, and in some places climate change is having on our society. One thing that ordinary people can see it the rising levels of income inequality as shown in the chart to the right showing the Gini coefficient for the United States over time.

The rise in inequality is clearly the result of long term changes to the american economy including globalization and digitalization and not the result of any single policy of this or any other american administration. In the U.S. what is particularly annoying to normal people is that a number of government services such as airport security and even some highways have reserved pathways for people who pay more money. The fact that government pays more attention to privilege is nothing new in the world but to make it so obvious is a reflection of how far things have gone in this direction.

In other countries the problems also have to do with underlying economic and social issues but their leaders offer simple ideas that only mislead and divide the country. Viktor Orban took advantages of fears of immigration and has attempted to unwind many of the democratic safeguards of Hungary’s Democracy. Modi has used Hindu nationalism as a vehicle to gain and then maintain power. For Duterte the issue was drugs resulting in the killing of over 12,000 Philippines according to human rights watch. Jair Bolsonaro disparages women, blacks, immigrants and gays in his remarks and for Boris Johnson leaving the EU will solve all of the United Kingdom’s problems.

Although I have discussed his work in other posts, Dean Williams, has written about what he calls real leadership. In his view real leaders help people understand the challenges facing them and rally them to make extraordinary efforts to overcome them. Donald Trump is not to blame for the problems facing the United States but he is responsible for seeking the highest office in the land and then using it to tear apart the social fabric and encourage acts of violence like the shooting in El Paso.

Looking ahead the United States and other leading countries nead real leaders to bring out the best in us and make the world a better place.

The post Crazy Times first appeared on Doing Business on the Earth.

One sector which is moving forward is the global mining industry. Mining, of course, has an enormous environmental impact but that impact is typically confined to the site of the mine and the beatification or processing plants of the ores that are extracted.

In addition to the industry specific guidelines that GRI provides, the large international companies also adhere to the ten sustainable development principles of the International Council on Mining & Metals (ICMM). Mining pays particular attention to both the environmental aspects of their activities as well as the social impact they have on the communities in which they operate.

The issue which is at the top of the list in terms of materiality to both business and stakeholders is the integrity of the dams that hold the tailings from the mines. Tailings are the mud, rocks, and other waste from the processing of ores which are suspended in water and needs to sit for extended periods of time. They are usually placed in artificial lakes adjacent to the processing facilities and can also contain heavy metals and other contaminates depending on the mining process and the thoroughness of the site’s water treatment plants.

On January 25th this year, a tailings dam at the Córrego do Feijao mine in Brumadinho, Brazil gave way flooding 295 hectares including the administrative offices of the mine itself and flowing into the Paraopeba river. 245 people are known to have dies in the accident and another 25 are still missing. The mine is a joint venture between Vale and BHP but is operated by Vale and they have assumed reposnsibility for the disaster. Vale insists that the dam was well maintained and complied with all the necessary permits and inspections and you can see their position in their 2018 sustainability report found below.

World Mine Tailings Failures is a watchdog non for profit and keeps a database of such failures and have a different view of the disaster in Córrego do Feijao. Similar disasters have occurred from time to time in the industry including a similar collapse at a  mine called los Frailes in Spain which threatened the environmental sensitive Doñana national wildlife preserve in 1998.

The good news is that Vale and its global competitors are paying increased attention to the issue as well as a number of other environmental and social issues.

Mines typically use large amounts of water in the mining and processing of ores and most large companies have put a process in place to measure the water they use and to recycle as much as economically feasible particularly in areas suffering from water stress.

Another issue that mining companies are paying close attention to is the carbon footprint of their operations as well as other contaminants such as SOx, NOx and other pollutants and waste. Interestingly enough some companies, such as Rio Tinto have phased out their production of thermal coal and make the point that the minerals they produce such as aluminium and copper are needed for the creation of a low carbon economy.

Mining companies are also looking downstream in to the entire value chain that reaches the end user. Rio Tinto, for example, is developing a emissions free aluminium smelting process together with Alcoa and ERG is working with block chain technology to provide traceability to ensure that cobalt is made without child labor and outside of war zones.

Besides commit¡unity development, the most central issue facing mining companies is worker safety as mining continues to be dangerous and almost every major firm has a few fatal accidents each year.

Anglo American goes even further than most of its competitors across all of the major sustainability areas. Anglo’s CEO, Mark Cutifani, has the conviction that only the most sustainable mining companies will be given a licence to operate in the future and has committed his company to the development of a number of technologies designed to make mining both safer and cleaner in the years to come.

While many ecologists express legitimate concerns about specific sites  and companies in many places around the world, the leading companies at least are taking sustainability seriously and making it a priority for Senior Management and even their boards of Directors. If interested I suggest looking through some of the sustainability reports below:

Vale

BHP

Rio Tinto

Anglo American

The post Mining of the future today first appeared on Doing Business on the Earth.

The event in San Fransisco is the first of a series of such talks in Asia which continues the tour that I started in New York in November, 2017. Since then I have had similar sessions in 15 different cities including Moscow, Berlin and Brussels. In each place the interests and concerns of the participants are different, reflecting the national character of the location as well as the type of work our Alumni and guests are engaged in.

San Fransisco was interesting for a number of reasons. One is that the group was largely drawn from software companies which make their home in the exciting start up scene in the city. I also was teaching in Silicon Valley this week and the companies there are more about the hardware and consolidated software players while our San Fransisco alumni work in companies developing Software as a Service as well as innovative start ups in a wide variety of applications and places.

From a geo-political point of view software executives, as a group, say their firms do not pay too much attention except for an overwhelming focus on China as both an opportunity and a threat. One concern expressed was the apparent the willingness of the Chinese government to go much farther than the West in terms of using the power of digital technologies to control and monitor its citizens. Another was China’s involvement with Latin America and Africa in its need for expansion and hunger for raw materials.

One thing I enjoyed in California was that I did not have to temper my concerns about Donald Trump and what I feel is his deeply misguided foreign policy and unethical use of fear and hate as tools in the political give and take. California has voted Democratic in the last 7 presidential Elections and will almost certainly give its 55 electoral votes to Joe Biden or whoever runs against Trump in 2020.

What was also not surprising was the connection in the minds of many of the participants between geo-politcs and the larger issues of climate change and environmental protection. Specifically, there was concern that China was adding to the planet’s looming environmental crisis. As readers of Doing Business on the Earth already know, these two issues are deeply connected in my own view.

I will spend part of August and September on the other side of the Pacific Ocean and will visit 5 Asian cities:

• New Dehli  – August 30th
• Mumbai      – September 1st
• Bangalore   – September 2nd
• Singapore   – September 4th
• Manila        – September 6th

One of the issues that we discussed in San Fransisco was China’s One Belt , One Road initiative and the Trump administration’s decision to pull out of the Trans Pacific Partnership agreement. My understanding is that the TPP was designed to further entrench the American position in South East Asia and that by scrapping it, China is able to step into the vacuum.

I am looking forward to seeing how IESE’s alumni in SIngapore, India, and the Phillioines see this playing out.

The post Strategy & Geopolitics goes to Asia! first appeared on Doing Business on the Earth.

The best person for the job in my view is Rory Stewart, a Scot, who represents a district in the North of England just south of the border. In the first round of voting Stewart received 19 votes which has kept him in the race although he was in last place and far behind Boris Johnson.

The Party will hold up to 6 votes over the next few weeks with the candidate with the lower number of votes required to drop out until only two are left. Stewart appears upbeat despite his numerical disadvantage and has insisted that in the end it will be a choice between him and Johnson. By Tuesday he needs to secure an additional 14 votes just to stay in the game.

To a large degree the leadership contest is dominated by the candidates’ positions on Brexit but for me there are many other issues facing the world in which the United Kingdom, either inside the EU or outside of it, plays a critical role. Two such issues in the news this week are the increasing protests in Hong Kong and the latest crisis in the Gulf.

In Hong Kong, millions of protesters took to the streets to force the city’s administrator, Carrie Lam, to rescind a rule that would allow Chinese authorities to extradite Hong Kong citizens and are now calling for her resignation. The issue today, like during the 2014 umbrella protests, is that the many of the city’s 7.5 million residents simply do not trust China and feel their institutions, built by the Brittish, are being attacked.

On the other side of the Indian Ocean, someone has attacked oil takers in the last few weeks, two on each side of the straits of Hormuz creating an increasingly tense situation between the United States and Iran. The American administration accuses the Iranians of carrying out the attacks which it vehemently denies.

Since 1995, the United States has based its fifth fleet in Bahrain to protect the enormous volume of oil and gas that flows through the straits every year.

According to the BP’s Statistical Review of World Energy, the countries of the Middle East exported over 1,138,000,000 tons of oil to the world in 2018 which is a little over half of the global total. The thing is that the United States actually only takes less than 8% of oil from the Middle East and could probably survive without it. 75% goes East to India, Japan, Indonesia, Singapore and China. China for example gets about half of its external oil from the region.

The United Kingdom took responsibility upon itself for keeping the sea lanes open on both sides of the strait for over 100 years and was deeply involved in the region until 1971 when it withdrew from both sides of the Persian or Arabian gulf depending on what you choose to call it. The UK did, however, stay very much involved with Oman and was instrumental in Sultan Qaboos’ rise to power in 1970 as well as providing assistance to his government every since.

Like his friend Donald Trump, I will be concerned about Boris Johnson’s depth, ability and temperament to deal with crisis like these. Stewart, on the other hand is not only well read, he is also very well travelled and is the author of five books.

One of his books, The Places In Between (Mariner, 2007) tells  the story of his walking across Afghanistan in 2002 just after the fall of the Taliban. He had actually walked alone across Iran, Pakistan, India, and Nepal as part of the trip. I read the book over the last few days and although Stewart is clearly a loyal member of the Conservative Party, he does understand the limits to power and the complexity of the world.

In a column in the Telegraph, Tom Peck, insisted that Stewart did not have much chance to pass the first round of voting becasue he feels compelled to speak the truth.

While I may not agree with his support for Brexit and other conservative policies, the world needs leaders who understand its complexities and will tell people the truth. If he can walk across Asia then maybe he can emerge as one of the finalists and beat Boris!

The post Rory Stuart for Prime Minister first appeared on Doing Business on the Earth.

The second was “The Economy, Stupid” and Clinton hammered away at Busch essentially blaming him for the 1990 recession and relatively sluggish recovery. Carville’s point, which is backed up to some degree by academic research, is that people will vote against the incumbent if they think they are or will be worse off economically.

The good news for the Democratic Party is that many sources including Fortune magazine are forecasting an economic slowdown in 2019 and often the blame is put on Donald Trump’s trade policies which are starting to be felt around the country and hitting at the overall confidence level of American business. My guess is that this will be the number one issue in the 2020 campaign.

As the election season gets underway, it looks like issue number two might be the environment. As I have pointed out a number of times in this space, Donald Trump’s administration has worked to undo 45 years of progress on environmental issues which began under the Nixon administration with the establishment of the Environmental Protection Agency in 1972. National Geographic recently published a list of 15 ways that the administration has hurt the quality of air, water and the protection of wildlife.

The Democrats, on the other side fully embrace the Paris Climate Accord and many have gotten behind the New Green Deal proposed by new York Congresswomen Alexandria Ocasio-Cortez and Senator Ed Markey  from Massachusetts.

Joe Biden, the former Vice President who is ahead in the polls, has embraced the New Green Deal and gone even farther on some issues with his own environmental plan which promises to:

1. Ensure the U.S. achieves a 100% clean energy economy and reaches net-zero emissions no later than 2050. 
2. Build a stronger, more resilient nation. 
3. Rally the rest of the world to meet the threat of climate change. 
4. Stand up to the abuse of power by polluters who disproportionately harm communities of color and low-income communities. 
5. Fulfill our obligation to workers and communities who powered our industrial revolution and subsequent decades of economic growth.

According to analysis done by Real Clear Politics, a website, Joe Biden will defeat Trump in a head to head race by a significant margin in virtually all the polls including that done by Fox News.

As we ramp up to the next election my guess (or hope) is that the environment will take center stage as it is much more important than the constant stream of noise coming from Donald Trump. Americans as a general rule want to take care of nature and do the right thing. Joe Biden and the other democratic contenders will appeal to their better natures and I fervently hope win the election and get the country moving in the right direction again.

The post The environment, stupid ? first appeared on Doing Business on the Earth.

My understanding of the deal that she has attempted three times to push through is that it allows the UK to officially endorse the results of the referendum without actually cutting most of the critical ties between it and the rest of Europe.

The New York Times gives a list of MPs who have announced their candidacy to replace Mrs. May and it includes people who support her line of compromise such as Michael Gove and Jeremy Hunt and others who want to have a harder Brexit such as Boris Johnson and Dominic Raab. The words used to describe a hard Brexit are to call it either a “clean break” or “crashing out of the EU” depending on the who is talking.

My view of Mrs. May’s tenure in the role is that she took the job with the express intention of avoiding a hard Brexit at any cost and maybe even never intending to allow Brexit to proceed. In my view this is the only explanation that fits her government’s gross mishandling of the process.

Think about it. Would the government of the United Kingdom, with its long history of extraordinary diplomacy and deep bench of skilled government officials really send an ill prepared and inexperienced team to negotiate something this important by mistake? Would Mrs. May call for a snap election in June 2017 and find herself losing her parliamentary majority due to miscalculation? Would she place a plan before parliament three times knowing full well that it would fail each time?

Every move, every vote and every emergency extension of the deadline has served to draw the process out and give greater strength to that segment of civil society who call for another referendum and an end to Brexit. In the recent local elections, the Conservative party lost over 1,300 of their local council seats while the pro-European Liberal Democrats won an unprecedented 700 seats in a clear signal of what parts of the electorate think think today.

According to NatCen, a social research group which runs a web site called whatukthinks.org, remain would win a new referendum today by 52 to 45%. Although the UK voted in the European elections on Thursday, the results will not be announced until later today as the last countries go to the polls. The hard Brexit UKIP is expected to do well in the vote as a result of frustration by pro-Brexit voters in Mrs. May ‘s failure to deliver.

Even in her leaving the scene, Mrs. May stalls for time. Rather than resigning last week, she announced that she will resign on June 7th. Her party will have to go through an arduous and complicated election process that is hoped will be over by the end of June.

The new Prime Minister will then need to form a government, figure out what to propose to Europe and Parliament and then try to get it to a vote. It seems unlikely that this will be possible before parliament breaks for its summer recess which normally happens in late July.

What might occur is a major battle over a new plan in September with the new October 31st deadline for a negotiated Brexit settlement looming over it. If that plan were to fail and the new Prime Minister was unable to govern, then perhaps he or she would have to call for new elections which would take at least another 6 weeks.

After her announcement, Boris Johnson answered Mrs. May on twitter, thanking her for her  “stoical service to our country and the Conservative Party”. That service, it seems to me, has been to delay Brexit as long as possible and to work for either a repeal of the whole idea or at worst a deal which leaves as much as possible intact while allowing the public to feel that the referendum was respected.

The post Theresa quits…..now what? first appeared on Doing Business on the Earth.

What is difficult to judge is the degree to which the apparent escalation of rhetoric between the Trump administration and Iran is just this administration’s normal blustering or if there is serious interest in involving the country in another war.

If you have not been paying attention, there were reports that a few oil tankers were attacked in the Persian/Arabian Gulf last week as well as a drone attack on two oil pumping stations in Saudi Arabia launched by Somali Houthis who are at war with the Kingdom and its allies.The details of the attacks are a bit thin in the press but one analyst thought that they were small (4kg) explosives.

The U.S. seems to believe the attacks were all ordered by Iran in response to the tightening of U.S. sanctions which have to do with the end of theThe Joint Comprehensive Plan of Action (JCPOA) reached between Iran and the West concerning its nuclear program in July 2015.

Donald Trump’s current National Security Advisor, John Bolton, requested the Pentagon draw up plans to invade Iran just in case and to confuse things even further President Trump has tweeted that he does not want to go to war with Iran but would send many more troops if he did.

The latest episode makes me think of Trump’s empty threats against North Korea and Venezuela as well as his statement that he would withdraw all troops from Syria. Trump frightens me because he does not seem to understand or think through the implications of his tweets and ad-hoc speeches. While it may be that making threats can eventually achieve some sort of accommodation, I am not convinced that these crisis come out of a rational process of calculation.

To quote an article from the Atlantic “The first year of the Trump administration had been lost to poor planning and lack of familiarity with government, otherwise known as rank incompetence.”

The article is an essay on the worldview of Bolton who is the only official in Trump’s White House with prior experience at that level. According to Graeme Wood, who wrote the article as well as an interesting book on the Islamic State, Bolton “has been called many things—vain, miserly, rage-prone—but never incompetent, and his arrival disrupted a delicate balance of idiocy”

As I have written in the past, I was actually glad when military men such as Generals John Kelly (Chief of Staff),  James Mattis (Secretary of Defense)  and H. R. McMaster (National Security) were present to control Trump’s impulses and to help him understand the international security system that the United States has built over the last 70 years.

Bolton, by his own account, sees the system as holding the United States back and is of the view that the U.S. should do whatever it sees to be in its self interest. He appears to have no morale compass and disdains principles with a complete faith in realpolitic.

As things stand now we can only hope that President Trump really does have the last word and will control Bolton’s instincts. With just over 600 days until Jan 20th 2021, I can only hope that congressional oversight, the judgement of the American military and good fortune can keep this President from doing any irreparable damage to the country and the world.

The post War and peace and Donald Trump’s advisors first appeared on Doing Business on the Earth.

Imamoglu ran under the banner of the Republican People’s Party (CHP) which is the strongest part of the opposition to the President’s party Justice and Development (AK). Together with its allies from the far right, Nationalist Movement Party (MHP) Erdogan has a slim but sufficient majority in the 600 member Parliament.

Kemal Kılıçdaroğlu, the head of the CHP party denounced the decision but declared that his party will win the new election on June 23rd. Mr. Kılıçdaroğlu was actually attacked by a mob at the funeral of a soldier killed in combat in Syria a couple of weeks ago. He said that the mob was instigated, not by the family of the killed soldier or their neighbours but, by people from the outside who went their deliberately to disrupt his show of support to the “martyrs”.

My guess is that the election is of personal importance to President Erdogan because he started his political career after becoming Mayor of the city in 1994. At that time, Erdogan was a young football player and was recruited to run by the Welfare Party, Turkey’s first openly islamist Party. His election was a watershed moment in Turkish politics and, according to an essay by Deborah Sontag in the New York Times Magazine, he was an excellent Mayor.

Turkish politics are, however, very complicated and there are a number of conspiracy theories about Erdogan and what the deeper game might be. I was told for example, that he met with George W. Bush 7 times in his first year of office giving proof to the idea that he is really an agent of the United States.

According to this theory, Erdogan and the party he founded in 2002 was created as part of an American plan to re-make the Middle East and gain control of its natural resources. Part of the plan was to create an Independent Kurdistan which would then be connected to Turkey and the West through pipelines for oil and gas.

I actually checked records of the U.S. Department of State and found that Erdogan actually met with Bush 8 times between January 2004 and December 2009 either in face to face meetings or in the context of a larger gathering such as the meetings of the G20 in 2008 and 2009. Perhaps there were other secret meetings but the theory sounds far fetched in any case.

Abdullah Öcalan, the leader of the Kurdish political organization in Turkey has been in jail for 20 years and Turkey has sent its army across the border into Syria to fight the Rojave (Kurdish for West) as the Syrian Kurds call their region.

I understand relations are better with Iraqi Kurdistan and Genel Energy, an Anglo-Turkish venture, has been instrumental in developing the regions oil and gas.

The reason the political situation in Turkey is so important is that the Ottoman Empire effectively governed the entire Middle East for approximately 600 years until its collapse after the first World War. Erdogan, it appears, aspires to re-assert Turkish leadership or at least its influence in the region.

If there ever was a dream of bringing real representative government and regular elections to the region, what happens in Turkey is very significant.

The post Talking Turkey first appeared on Doing Business on the Earth.

Baghadi’s full name is Ibrahim Awwad Ibrahim al-Badri. He is an Iraqi with a Masters Degree in Quranic studies and was reportedly enrolled in the PhD program at Saddam University before setting up a Sunni militia to fight the U.S. troops which had invaded the country. According to the Counter Extremism Project, Baghadi was actually held by American forces at Camp Bucca in Iraq for a number of years until being released. After his release he managed to unify command of the Islamic State and proclaimed himself Caliph and rightful leader of Islam.

What is most important is not so much Baghadi’s survival  but the fact that the ideology that the group defends still resonates with some people and an estimated 13-15,000 fighters are still at large.

In his speech Baghadi claimed responsibility for the attacks on churches in Sri Lanka that killed over 250 people on Easter Sunday and linked them to the final defeat of the Islamic State in Baghouz, a village in Syria. You can read an english translation of the speech here.

The speech is worth reading in its entirety as it gives a very clear message to the supporters of the Islamic State that they should be patient and that the war is far from over. He also appeals to the wider community of Islam and specifically calls for the people of Saudi Arabia and Jordan to rise up against their governments.

Casting an even wider net, Baghadi calls to “The armies of the Khilafa in Iraq, Syria, Khurasan, Yemen, East Asia, West Africa, Central Africa, Somalia, Libya, Sinai, Najd, Hijaz, Tunisia, Jazair, Qawqaz, and Kashmir” to “strive hard for victory and sacrifice, seek shahada with patience and anticipation [of Allah’s reward]”.

Towards the end of the speech Baghadi makes reference to terror cells operating in the West urging them to strike. He said “we congratulate the fierce lions in the lands of the Cross—Canada, Europe, and elsewhere—on their noble deeds in support of their brothers. May Allah bless your endeavours and accept your tremendous heroism. Proceed and follow in their footsteps, O supporters of the Khilafa. Make whatever preparations are easy for you, place your trust in the Most High and Capable, select your targets, and carry out a strike that will tear out their hearts and make them lose their minds, for a piercing bullet, or a stab deep in the intestines, or the detonation of an explosive device in your lands is akin to a thousand operations here with us. So equip yourselves for your war, and ignite its fires so that its flames may consume the Crusaders and the murtadeen.”

 By Crusaders he means the west in general. The Murtadeen are what he and his group considers apostates.

The U.S. government has offered a $ 25.000.000 reward for Baghadi.

While catching him and as many of the former fighters as possible is clearly important, the bigger question is build stronger bridges between the people of the world.

In an example of the way forward, in honor of Pope Francis’ historic visit to Morocco in March, the Morocco Philharmonic Orchestra played a special concert showing how Muslims, Jews and Christians can respect one another in peace. Watching the concert is a the best therapy after reading the translation of Baghadi’s speech.

The post Not Dead Yet first appeared on Doing Business on the Earth.

• Wind Energy

One group built a wiki dealing with the evolution of wind energy as it comes into mainstream use in Europe and Asia. One of the key issues was how many of the best on shore locations for wind are already taken and the business is increasingly moving off shore. The challenge for the industry is that although prices have fallen for the technology itself, the price of long term power contracts has also fallen and offshore has significantly higher construction and operating costs.

• Energy Waste

Another group looked at all of the major parts of the global energy mix and went into detail on what the waste streams from each of them were including carbon dioxide and other air pollutants as well as ash and other waste streams. Coal, despite technological advances, was the most problematic of the major sources of energy.

• Fine particulates in Asia

A group of Asian students looked at air pollution in the great cities of Asia and specifically looked at fine dust and the health problems it is creating. One of the key issues in the region is the degree to which such pollution crosses borders, for example, from China to South Korea, and has become an international issue.

• Space as part of the solution

This group looked at different applications of space technology to solve ecological problems on earth. The project looked at beaming electricity directly from space, better understanding of what is happening via satellites, and the fascinating idea of measuring the achievement of the UN’s sustainability goals using direct measurement from Space.

• Plastic Packaging

What struck me most about this group which looked in detail at the issue of packaging is that they took a relatively balanced view highlighting the advantages of plastic packaging as well as the ecological problems that it has created. What I also saw in this wiki was an expression of the move away from single use plastics we are seeing in the developed world and toward more sustainability re-usable solutions.

• Food Waste

it seems that there is a group working on this topic every year and I learning something from each one of them. What this group did in a very compelling way was show how the ordinary tomato goes from farm to fork and what the losses and problems can be. Much of the food we produces is lost in the supply chain and after distribution and the group did a careful, step by step analysis showing what could be done.

• Social Entrepreneurship

The last wiki in this year’s class looked at the role that social entrepreneurs can play in both environmental and social sustainability. The group also produced a guide on how to become a social entrepreneur.

What these project show is the interests of this year’s MBA students which touch on some of the hottest topics in sustainability.

The post Sustainability projects 2019 first appeared on Doing Business on the Earth.

In this class the 85 students organized themselves into 21 project teams which looked at a specific company, or industry and then explore the link between business strategy and the geo-political situation of a specific part of the world they are doing business in.

• China

Probably the most remarkable statistic is that of the 21 groups, 7 of them were about China. Two different groups, for example, looked at China’s one belt and one road initiative and the impact it had on the high speed trains industry in one case and on ports in the Indian Ocean in the other.

Another group drilled down into the accommodation that many companies have done concerning China’s one China policy for example listing Taipei as being a destination in China for their customer facing websites in China. For the time being, most companies continue to list Taipei as being in Taiwan on their global sites.

A fourth group compared Belgian and Chinese manufacturers of weapons in light of Saudi Arabia’s increasing level of spending. The main point was that if the European Union chooses not to sell weapons systems to the Saudi’s, the Chinese will.

Another group looked at the fortunes of GM in China and at the specific program of building the new Buick Envision in Shanghai for export to the U.S. The question is what would happen with the program given the brewing trade war between the two countries and the opposition to the project by the Trump administration.

In terms of the Chinese consumer and Western brands, two groups looked at different examples but both highlighted the sensitivity of the Chinese to perceived slights or criticism from Western brands. In some cases, they found that “spontaneous” protests and boycotts were, most likely, initiated by agents of the Chinese government but then went viral on their own.

• Latin America

Two of the projects concerned foreign companies operating in Venezuela as that country and its current situation has been a focus of our class discussions. One concerned Bimbo, the Mexican bread giant, and the other Toyota. In both cases the students felt that by staying in Venezuela and doing what they could for their employees and customers, both companies would be seen in a positive light in the long term.

Another two projects focused on Brazil. One on the issue of Boeing’s purchase of the civilian part of Embraer and the other on Odebrecht and its part in regional corruption,

• India, Africa, and the Middle East

Additional projects looked at the tourism industry in Kashmir, differences in social norms between India and Pakistan, the role of the Indian Diaspora in Africa and Vodafone’s difficulties to extend mobile payments to Egypt and Tanzania despite its success in Kenya. There was also a project which considered the strategic options facing Saudi Aramco as it decides where to make its initial public offering i.e. London, New York or somewhere else.

• Other topics

Finally there were four projects on very specific topics. One dealt with the potential impact of Brexit on British Airways. A second on the issue of Catalan independence on Caixa Bank. The third was all about the role that geo-politics has had on international sporting events and the last one on the geo-political implications of the gradual legalization of Cannabis in North America.

I list all of these projects as evidence of the curiosity that women and men in the late 20s have on the geo-political issues facing the world and the implications those issues have for developing and executing business strategy.

The post Geo-politics According to MBA students first appeared on Doing Business on the Earth.

In the first place both countries have different people claiming leadership. In Libya,  Field Marshal Khalifa Hafter broke ranks with the internationally recognized government and has since managed to occupy or otherwise gain the allegiance of much of the country. The United Nations officially still recognizes the Government of National Accord and its leader, Fayez al-Serraj but his authority does not extend far from Tripoli. Hafter announced an assault on the capital a few days ago but it is unclear if he has the military forces required to take and hold the city. With a scheduled U.N. peace conference just a few days away, the country seems to have two leaders and two governments, each pursuing alternative narratives about what is really happening.

A very similar situation is playing out in Venezuela only although only one side in the that conflict controlling a significant military presence. Nicholas Maduro claims that his election in 2018 was legitimate and that he still has five years left in power. The president of the congress, however,  Juan Guaidó insists that the election was unconstitutional an fraudulent and therefore he is a the legitimate acting President of the country.

Both situations are also made more complex by outside powers who back different sides in the conflicts. In Libya,it appears that Russia, the UAE and Saudi Arabia are supporting General Hafter while the United States, France and Italy still support the government in Tripoli. In Venezuela, Russia, China, and Turkey support Maduro while the United States, the EU and many South American countries have officially recognized Guaido as the legitimate president.

The oil wealth of both countries is clearly part of the reason why the outside world is so interested in the outcome and in both countries output has fallen sharply in recent years. In Venezuela this is due to gross mismanagement and underinvestment in the national oil company PDVSA and in lLibya it has mainly been due to the civil war.

There is also huge amounts of money at stake in both situations although in very different circumstances. War on the Rocks, a website reports that part of the conflict in Libya is about who will control the country’s central Bank which has continued to function throughout the country’s long process of collapse and national re-construction and is currently reported to have $ 70 billion in cash held in international banks. Venezuela, on the other hand is technically in default although it does have assets outside the country such as the oil company Citgo in the U.S and reportedly owes China and to a lessor extent Russia billions of dollars for loans extended to Maduro and his predecessor, Hugo Chavez.

The deeper question is what is legitimacy and who decides who should be in power if a country is at conflict with itself? When that conflict turns to open war as it did in Syria then the guns and bombs will determine the outcome. When things are more political, however, it is harder to say what will happen.

The Army, to date, has appeared to back Maduro but stopped short of imposing marshal law and may be waiting to see who will emerge victorious. According to Jason Pack who runs a  web site and a consulting company on Lybia., the situation in Libya is actually not so violent and while the two sides talk about war, there have actually been few casualties in the last few years. His view is that General Hafter is trying to emerge as the right person to lead the new government with the support of the international community.

Once upon a time, the British Empire could determine which side would “win” in such civil conflicts. During the cold war Washington or Moscow could determine what would happen in their respective spheres of influence. Today, however, things are much more complicated.

In a sign of the times, the BBC reports that Recep Erdogan’s AK party may not accept the result of municipal elections held last March 31st where they appeared to lose control of Ankara, Istanbul, and Izmir.  It seems that the international community still has the ability to ensure that countries celebrate elections but may no longer be able to ensure that such elections are fair or that the will of the people is really respected.

The post Who’s in Charge ? first appeared on Doing Business on the Earth.

One of the speakers at the event was Ryan Gellert, the General Manager for Patagonia in Europe, the Middle East and Africa. Patagonia has always been a reference in the green economy space due to the deep environmental convictions of its founder, Yvon Chouinard, and the management team he has built up over the years. For many years Patagonia’s mission statement has has a strong environmental focus and fell into what I call “Pay for Principal” which is an environmental strategy based upon the convictions of a company’s majority shareholders. In my view Patagonia has been succesful over the years because it has attracted a customer segment which is willing to pay a premium for the highest quality outdoor gear and to some degree is happy to support those convictions.

The mission of the company has been “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis“. Besides telling his personal story and talking about Patagonia in Europe, Ryan spent some time telling us about Patagonia’s new mission statement which goes even further than the previous one and is “Patagonia is in business to save our home planet.”

The United Nations Environment Program defines the Green economy as “one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities”. An increasing number of companies around the world have embraced the idea to reduce their environmental impact. Others, like Unilever and Henkel, have made such commitments an integral part of their internal and external communications.

What Patagonia is doing is going a step further and taking an activist stance on the environmental challenge and re-orienting the entire company to be a force of positive change.

Interface, a carpet manufacturer based in Atlanta, is another firm which has now changed its mission to go beyond sustainability. The late Ray Anderson had taken Interface on its sustainability journey in 1994 and up until recently the target had been what they call “Mission Zero“. Like Patagonia, Interface’s new mission goes beyond doing less harm and is built around the idea of “Climate Take Back” or reversing the process of climate change.

The approach of Patagonia and Interface are similar in direction to the work of Gunter Pauli who published the first edition of The Blue Economy in 2010. Pauli, who founded Ecover, a leader in sustainable soaps, sold that business when he realized the devastation that palm oil was doing to the rainforests of Indonesia. His view has been for years that the green economy was a flawed concept from the start and a new paradigm was needed.

Pauli recently spoke at IESE Business School’s Energy Day and explained that the failure of goods and services provided by the green economy was that they were, in general, too expensive and only available to the affluent. What he argues for is a new approach that takes inspiration from nature and uses non-linear feedback loops and multiple revenue streams to design systemic solutions to the world’s problems. In his books and on his web site, he highlights over 100 projects and initiatives which provide ecologically sustainable products at low cost and also stimulate local employment. For Pauli, reducing environmental impact is like stealing less. Its still wrong.

Another of Pauli’s convictions is that the next generation will lead the change and he therefore is developing a line of children’s books or fables which outline the concepts behind the Blue Economy and encourage children to think outside of the box that our industrial and consumerist society has built.

Examples of the kind described by Gunter Pauli and the new missions of Patagonia and Interface underline the role that business can play in not only going beyond legal compliance but even beyond the goal of sustainability itself.

The post Going beyond “do no harm” first appeared on Doing Business on the Earth.

Israel occupied the Golan during the 1967 war and has maintained control ever since, formally annexing the region in 1981. The BBC provide a fairly concise history of the region and explain its strategic importance here.

Israel’s interest in controlling the Golan is essentially about maintaining military security and controlling the water resource including the Eastern shore of the Sea of Galilee. My guess is that very few analysts or political leaders really believed that Israel would ever hand back the region in its entirety to Syria but there have been hopes of some sort of compromise emerging.

By recognizing Israeli’s annexation of the Golan, albeit 38 years after the fact, the Trump administration has essentially taken away any possible leverage that could be used in the future with Israeli on this issue. His administration did the same thing last year by moving the U.S. Embassy officially to Jerusalem, essentially acknowledging the city as the capital of Israel.

In the declaration, which can be found here, Trump specifically mentions the threat poised by “Iran and terrorist groups, including Hizballah, in southern Syria” as the compelling reason for making the move at this point in time.

While it is clear that the Syrian government has lost its ability to control such groups in the chaos of the civil war and such groups do poise a threat to Israel. What is not clear to me is why the Trump administration felt it was necessary to make such a declaration as U.S. policy has been to support Israeli’s legitimate security interests since the founding of the country in 1948.

Like the ambiguous status of Jerusalem, which I discussed in another post at the time, the situation in the Golan has been stable since the last war in 1973. Israel is already monitoring the activities of Hizballah and Iran and in January took action to destroy Iranian missile batteries outside of Damascus.

The announcement in Washington has provoked a strong response from political leaders across the Arab world including close U.S. allies such as Oman and Saudi Arabia as reported by Al Jazeera and the Arab News. What is not clear is the depth of conviction of these complaints and whether they are only for public consumption or represent a serious blow to the administration’s plans for increased American involvement in the Arabian (or Persian) Gulf.

What seems most likely is that the timing of Netanyahu’s visit and the announcement concerning the Golan has more to do with Israeli and American politics than with regional peace and security.

Israeli holds elections on April 9th and Netanyahu is being challenged by a new centrist political party in Israel, the Blue and White Party, led by three former Generals and a celebrity journalist. Even after the announcement, the latest polls show Blue and White ahead of Netanyahu’s Likud party although either one of them will have an arduous task of building a coalition broad enough to actually form a government.

In the U.S., President Trump is dealing with the release of the Muller report. Fortunately for the President, it appears that the report has not found clear conspiracy to affect the election by him or his team although there is more confusion concerning the charge of obstruction of justice.

In any case the declaration concerning the Golan and Netanyahu’s visit has certainly served to change the subject or at least water down the media’s focus on the investigations and its conclusion that the Russian did interfere in the election and hand down indictments against 34 individuals 6 of whom worked for Trump’s campaign as reported by the Washington Post.

It seems to me that the announcement concerning the Golan Heights may not actually serves the national interest of either Israel or the United States and only that of its current political leaders.

The post Golan Heights of Folly first appeared on Doing Business on the Earth.

You can watch her Ted talk on the subject below. One of the most compelling parts of her speech is when she talks about celebrating her 75th birthday in 2078, much later than most of us are thinking about the impact of climate change.

While I normally avoid using Wikipedia as a primary source for information, it has a list of the student strikes which have been building since Ms. Thunberg first started skipping school on Fridays in August 2018. What I found most compelling is the list of sources for the Wikipedia entry, which are in a number of languages, all reporting local groups of students who are organizing to push forward the idea.

Overall the goal of the students is to call for a fast transition to renewable energy and essentially to heed the warnings of the latest report of the IPCC which you can find and download here. In addition, different groups of students call for different things.

The Australian group, for example, also calls for a moratorium on the Adani or Carmichael coal mine. The project is in Queensland and is being developed by Adani, an Indian conglomerate which has other investments in Australia.

My understanding is that the controversy over the project has to do with Adani’s overall environmental record as well as its location close to the Great Barrier Reef. The thought is that if the entire region were to be developed for its coal resources, environmental damage will likely follow. You can see what the opponents to the project have to say about it on one of their websites, here.

The demands of the English group, the UK Student Climate Network, are broader in scope. Their four demands are shown here and you can also follow the link.

What is clear in reading the different websites, lists of demands and links of the different groups is that the students are sincere in their efforts to call attention to the issue. It also appears that they are getting some support in terms of organization, website design, donation management, etc. from adults or least young adults and I applaud those who are giving their support.

According to Climate Strike, another website, the idea for the strike originated in the Global Youth Summit in 2015 and why I find this interesting is that it was not until Greta Thunberg stepped forward that the whole idea really began to take off.

She is clear, articulate and comprehensive in her call to action. She also makes the point that she is on the autism spectrum and therefore has difficulty lying. She therefore speaks the truth as she sees it.

The post Students Strike in 2,000 Cities first appeared on Doing Business on the Earth.