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Sunday, March 6, 2011

Adding Value: An Enlightening Analogy

"We're going to make it in time, we're just going to have to change how we live our lives."

A couple of weeks ago, I was fortunate enough to have coffee with Tim Stoate, Associate Director of Toronto Atmospheric Fund (TAF).  For 20 years, TAF has been providing air pollution, energy use, and climate solutions to institutions around Toronto.  They have saved the city millions of dollars on energy costs and helped citizens live greener, healthier lives.

Basically, TAF was impact investing before I learned to speak.

I expressed my concerns to Tim about the cross-generational apathy toward the threat of climate change.  In my mind, there is only a finite amount of resources on earth, and without serious behavioural changes we are going to deplete them, ultimately killing ourselves.  Quite a cynical view for someone who is such an optimist!

Tim's response had a more hopeful yet realistic conclusion: "We're going to make it in time, we're just going to have to change how we live our lives.  It won't be perfect, we're just going to learn to adapt."

Then Tim presented what I see as a brilliant analogy.

He asked: In the three words, what is business really about?  What are the three things a business cannot live without?

Answer: Sales. Profits. Cash. 

He said, "Think about it.  When you peel off all the layers, what in business is not about sales, profits, and cash?"  Consistently working on each of these three things is how to keep your business model sustainable.

Then Tim asked me, "What value have we added to the earth, land, and water?"

I hesitated for a few moments, because I really was trying to think of something positive humans could have done.  But nothing came, and I answered, "None".  We do not add any value to the three very components that keep us alive.

And so there is a parallel between business and the environment. In business, we are so focused on adding value to procure sales, profits, and cash to keep the business sustainable.  And if you would never sacrifice the sales, the profits, and the cash, why would you sacrifice the earth, land, and water if these are the fundamentals that sustain our very being?

I think the problem is that the sales, profits, and cash are short term wins which is a huge motivator for companies.  People (mainly those in developed countries) do not yet see the consequences of climate change and so there is no motivation to change behaviours.  I look to the future generations and am very concerned that my kids will not enjoy the same opportunities my parents, grandparents, and I have had.  The proof is there, and the numbers aren't lying.

So what is Tim's conclusion?
  Add value to the earth, land, water, or one of them, because that's what will matter to people in 30 years. And it's the long-term goals that ultimately maintain sustainability, be it a business or the environment.

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