International Day for Biological Diversity

‘We have not finished exploring the beauty of our planet’s biological diversity, nor have we fully gauged its role in humanity’s well-being and survival – yet we have begun to destroy it.’

Ms Irina Bokova, Director-General of UNESCO

As we go through today I wonder how many people are aware that it is International Day for Biological Diversity. With all the other pressing problems we face it is easy to forget that biodiversity loss is one the biggest issues of our time and we ignore it at our peril.

‘So far, our growing concern has focused on the level of CO2 in the atmosphere, and the associated changes in climate that directly affect us, such as reduced crop yields and rising sea levels. There are far more serious issues that are not given the attention they deserve. These range from slowly rising levels of background radiation from our nuclear activities, and the gradual poisoning of the oceans, to the loss of biodiversity and destruction of natural habitats’ (McManners 2009: Page 60).

We have become ever more capable of pushing nature aside to build our magnificent concrete jungle and expand the capacity of our industrialised agriculture hoping that nature will always be there for us.

‘We can be sure, using advanced measurement and imaging technology that we can record accurately the world we now have. There are growing archives of satellite imagery, photographs, film and video. Our descendents should be able to view the Earth as it used to be, with a vast reservoir of biodiversity in the rainforests and oceans. Whether we will have any live examples of nature to accompany the archives depends on what we do now’ (McManners 2009: Page 203).

The question is whether we allow the steamroller of human progress to crush all before it or invite nature back into our lives to enjoy its bounty and marvel in its diversity. For my part, I would like to work with nature, use its services and ensure we keep the biodiversity that we will need for a safe and vibrant future.

McManners, P.J. 2009. Victim of Success: Civilization at Risk, Susta Press, UK.

Share Transaction Tax NOW

I carried out an analysis of sustainability some years back which dug deep into the behaviour of corporate executives and the investment community who hold shares in listed companies.  Through a series of connected deductions I made the case for a share transaction tax.

This proposal came to my attention again today as I attended the Governance for Sustainability Conference in Oxford today. This is an excellent event convened by the Smith School of Enterprise and the Environment (SSEE) bringing together a range of experts from academia, business and NGOs. There was a particular set of problems came together in the discussion but a solution was elusive.

The observations were:

1. Environmental, social and corporate governance data (known as ESG) are being collected, collated and published ‒ but it is not being acted upon.

2. An investment expert one of the big banks explained why the most effective investment strategy was to invest and hold an investment for a time period beyond 10 years.

3. The head of sustainability for a FTSE 100 corporation explained that the investment analysts trading their shares do not ask questions that look further ahead than 18 months.

4. ESG data has little impact over the short-term (18 months) but can have huge impact over the ten years and beyond.

My deductions are:

1. For ESG data to be acted upon, investors have to take an investment view that extends out beyond ten years.

2. Persuading investors to take the long view is good investing in any case.

3. We need to reconfigure equity markets to steer investors towards taking a long view.

The solution that follows from linking the deductions from the observations is to introduce a share transfer tax (STT) at a level to drive change in investor behaviour. When there is a significant overhead to transfer ownership the logical behaviour change is to switch ownership less often.

The time has come to dust off this proposal and implement it (Adapt and Thrive: The Sustainable Revolution Pages: 178-179). Those who make money in the city of London through churning portfolios or high frequency traders will oppose such a move but the resistance should  be faced down so that sustainability measured by ESG can have real lasting impact.

Solar Impulse Flies into the future

Solar powered sustainable aviation seems like an impossible dream compared with the gas guzzling jets of today’s aviation industry, but Solar Impulse allows us to glimpse into the future. This solar powered plane is flying across America. The first leg from San Francisco to Phoenix was completed successfully earlier today.

 

 The dream of low-carbon sustainable aviation could become reality sooner than policy makers expect, and much sooner than the industry would want. Boeing and Airbus will want to sell a lot conventional planes before society demands change, but the timing of the transition is society’s call. There are aviation innovators and pioneers showing the way towards sustainable aviation.

 Photo: www.solarimpulse.com 

Solar Impulse weighs as much as a small car and carries one person – the pilot - at 70km/h (43 mph). In itself, this is little more than a curiosity but its value is the proof of the concept that solar power is a relevant and credible power source for air vehicles. As we observe the progress of Solar Impulse across the USA, there are entrepreneurs thinking about how to exploit the possibilities.

Flying high above cloud level, the sun is strong and consistent. Schedules would have to exploit daylight of course, taking off in the morning flying through the middle of the day, landing late afternoon. There would also have to be additional sources of power to take-off and climb to altitude but cruising above the clouds under solar power is entirely feasible. You could not of course fit a conventional plane with solar cells on the wings and electric engines because the design parameters are completely different, but give the aero engineer the freedom and we will be amazed what is possible.

The rich and time-poor will still want fly in fast aircraft that are an evolution from today’s models. But they will pay heavily for the privilege ‒ as the tax-free status of aviation fuel is removed. The industry’s plan to continue to operate, much as now, using biofuel will be exposed as disingenuous bluster (see pages 107-110 of Fly and be Damned). In this transformed industry, those of us who are less affluent will have to trade time for money. A new generation of air vehicle will become commercially viable that are, half air ship, half plane. These large, slow (relative to jets) air vehicles will be covered in state-of-the-art solar cells to provide cruise power; and, being spacious, provide a relaxed and comfortable journey experience.

I am confident that there is a golden age of aviation waiting to be launched (with Solar Impulse the first tiny step) but my vision remains grounded because of resistance from the industry (thinking about their shareholders) and politicians (worried at the backlash from a public that has become used to cheap flights). All of us can, and should, join together to insist on change. Aviation could be so much better, for passengers, for the new aviation entrepreneurs and for the environment. The industry may be reluctant but it will be able to make the transformation; the lever is fuel taxation; the people to pull the lever are the politicians. Politicians will act when we insist on change.  The power is with us all. Now is the time to join the growing body of people who want to see aviation transformed…

Thatcher's Example

 People’s opinions of ex-Prime Minister Margaret Thatcher tend to polarise along political lines with those of a Conservative leaning in support and Labour opposed.  Whatever side of the debate you are on, we can unite in admiring her principled approach. She did what she thought was right basing her decisions on the facts, not on whether it would increase her popularity. We need such clarity of purpose and strong leadership now as we face the challenge of transforming a deeply unsustainable society and economy. We need politicians who will put principle first, and do the right thing for society and the country without pandering to feedback from focus groups. We have to put aside the modern politics of spin where success is measured through standing in the opinion polls. We need again the Thatcher attitude to deliver real change based on clear thinking and unswerving logic.

When it comes to Baroness Thatcher’s legacy we should note that she acted in response to the challenges of her era. The unions had become politicised and over-powerful and the public sector was inefficient. She took on the vested interests and forced through change but there were consequences which remain with us today. As a consequence of her policies, we now rely too much on Financial Services and our manufacturing base is weak. Thatcherism also became associated with a focus on self and a greed-is-good culture. The cohesion of society was put at risk in the push for economic success and this needs rebalancing.

For today, the day of her funeral, let us focus on the example she set. Decide what you believe to be right and be unswerving in forcing through the required changes. Opinion poll ratings may suffer in the short-term but voters are not stupid all of the time and can see through the huff and bluff of political spin. We need more politicians of the stature of Thatcher, whether from the Right or the Left of the political spectrum, to reshape Britain for the challenges of the current era.

The euro - It is all about trust

The euro dominos are lined waiting to fall; first Cyprus then Greece then perhaps Finland. Where will it end?

Banking is all about trust. Even well run banks cannot survive a loss of trust. I give an example of the safest bank I know. Our local Building Society is mutually owned with a long standing place in the community; it is managed prudently and only lends to people who can afford to repay and then only against property where the loan taker has provided a substantial deposit. It has about £500 million in deposits from local people and a similar amount in mortgages on local properties. It also has around £30 million of other assets. There is no reason not to trust this bank but it does not have the cash paid in by its depositors. The cash has been recycled back into the economy as loans on property. If a rumour circulated that people took seriously, and they tried to withdraw their money, the cash reserves would soon be empty.

In Cyprus, trust in the entire banking system has collapsed and it will take months or years to be rebuilt. Contrary to speculation in the press, the big foreign investors had plenty of warning that this was coming and a wall of money left the Island before the banks closed. It is now Cyprus residents, small businesses and other local organisations that are caught up in this. It is no defence that they managed their own affairs prudently; if trust has gone everyone suffers.

Here is my analysis based on three assumptions:

1. People no longer trust Cyprus banks.

2. People will increasingly come to realise that the return of the Cyprus pound is the only credible solution.

3. People would rather have euros than have their savings converted into Cyprus pounds.

People with accounts outside the island will transfer electronically as much money as the rules allow out of the Cyprus banking system. Resident of Cyprus will withdraw their maximum daily allowance each day in cash (currently €300). In this case, cash kept under the bed really is a better investment than keeping it in the bank. No one with any sense will pay money into the banking system.

Let us say that the EU central bank shipped €5 billion in cash to Cyprus overnight (as widely reported). The population of Cyprus is a little more than one million. That means a demand for €300 million per day. In 17 days the €5 billion will have been paid out. Will another €5billion be sent from Frankfurt? That would give Cyprus another two weeks.

The bankers and politicians in Cyprus will have daily reports of the cash exodus and plan the shift to the Cyprus pound. I would hope the plan is already quite advanced and that the printing presses at De La Rue have already been set in motion to produce the new notes.

Cyprus will become the model for trouble euro zone countries. Greece will be watching closely and be the first to follow. The next domino to fall is a tough call but the surprise choice which I plump for is Finland. The prudent Finns may baulk at the prospect of paying for more bailouts and take the exit before they are presented with the next bill.