By Max Tau, Capgemini Netherlands
Writing for the Guardian Sustainability Blog last week, Professor Allison Kemper, of York University, and Roger Martin, Dean of University of Toronto’s Rotman School of Management and academic director of the school’s Michael Lee-Chin Family Institute for Corporate Citizenship, shed an interesting light on recent catastrophic climate developments.
Focusing on America’s Mississisippi basin, including the seas of corn, cereals, and meat farms, a serious business case was laid out for companies to hold both medium and short term effects of enterprise in mind. The very real threat that drought and record temperatures can pose challenge business lines and the flow of product.
Explaining how vital the Mississippi River is for commerce, Kemper and Martin explain that “566 million tons of goods are shipped on the river annually. Barges haul $180bn worth of goods. To keep traffic (and the US economy) moving, the coastguard is directing barges through the reduced stream, and the Army Corps of Engineers is dredging critical channels.”
This is an interesting read for those interested in risk management, response, and the preparation for these incidents as well. Discussing the effect that this summer’s detrimental climate conditions have brought on the foods industry, the ripple effect has caused major turmoil among feeder industries. Insurance companies, and the financial institutions that back them, have felt the hit through increased (unforeseen) claims and damages. While some opponents to a long term view claim that these kinds of things are unpredictable, there is a solid argument for industry to step up and make these things predictable, with a profit driven inspiration.
It segways nicely to a discussion on strategy and foresight. How can companies be inspired and invigorated into encouraging innovation?
We can look to government to play the role of enforcer, where they have a financial incentive to execute better oversight. However, that is far too near sighted and in most cases only involves incidents and infractions that have already taken place. In order to play a role in guiding industry towards real committed reductions in environmental impact, governments have to view sustainability in the same way they viewed 3G technology and international security alliances (as examples).
3G was developed, initially, by the Specialized Agency of the United Nations called the International Telecommunications Union (ITU). This internationally funded branch fostered perhaps the single greatest development to date in consumer access to technology and information.
A similar approach needs to be made with environmental viability, but this time, it needs to come from industry itself. Governmental benefit of 3G is apparent in military, security, intelligence, regulation, communication, transparancy and efficiency. Having been the primary shareholders, military was the initial client.
With sustainability, the main culprit of emmissions are the core business processes of industry leaders. Yet it is these core elements that have become the most vulnarble. Creating an amazing outcome, a serious incentive for companies to recognize and innovate sustainability seriously.
To sell a proactive approach, companies can look to the nightmare scenario of August 20th, where 97 vessels were stranded at a bottleneck near Greenville Mississippi due to dangerously low water levels as a result of the summer drought. This dry spell, the worst in over 50 years, has governmental agencies putting shipping companies on alert. With calls for less-than-loaded cargo holds and smaller linked up barge chains is costing comapines serious money.
A reduction of 30% was recommended by the US Coast Guard and state waterway agencies as early as June.
What impact does this have down the line?
Jay O’Neil, senior agricultural economist at Kansas State University, explained to Reuters that “all of the grain export houses are impacted by the closures on the river and, when the river is open, by the reduced drafts. It drives up the costs of delivering grain to the port and it makes logistics a bit of a nightmare.”
This is true for steel, natural gas, manufactured goods, food products, and all varieties of bulk.
By Scott Olson, Getty Images
With the Army Corps of Engineers stepping up to dredge deeper channels, the question is how long can we keep digging until we have a Grand Canyon that splits America in two. The Mighty Mississippi is a powerful image to use when articulating the seriousness of taking steps to mitigate the risks of climate change, or prepare for a very different kind of future.
Max Tau is a technology and Supply Chain Execution consultant at Capgemini Netherlands. As a member of the Sustainability Framework within Capgemini, he specializes in information technology based solutions to environmental and governance related targets.