Tag Archives: sustainability

What would a net zero agrifood business look like?

Talking about creating net-zero businesses reminds me of the time when I wrote about zero-based thinking about the education system. Only by reconstructing what we want to achieve from scratch, can we try to uncover new innovations and ideas that we have been missing out to think about problems we have.

The agrifood industry supposedly produces about one-third of all the carbon emissions that humans are responsible for these days. We can try to think about where to cut emissions or we can consider how to overhaul things. One of the chief challenge of the world today is that we have been taking the theory of comparative advantage and trade too far, forgetting in part the risk of concentration, and the issues around carbon emissions of the logistics and supply chain. Once we start factoring in carbon costs, we can start considering more about growing and consuming local more because it might actually be worth the while.

Overspecialisation in the agrifood sector may bring about economic efficiencies at the expense of carbon emissions and food security. A long time ago, there were stories about fish being sent from the Nordic seas to China to be fillet only to be sold back in the Nordic states. It is a reflection of how capitalism have morphed our appreciation of craftsmanship, and our values around environmental stewardship.

So a net-zero agrifood business quite likely will have start from considering crop cycles, relevant crops to be growing for the local taste and preferences, and the techniques for cultivation, processing, and marketing these products. It will have to reduce distribution or tap on synergies with other nearby industries for distribution. It should concern itself with strong focus on quality and selection of robust crops.

Of course, it will also concern itself with minimizing packaging, pioneering newer retail approaches; once again leveraging more on synergies with surrounding industries. Of course, there is still room for trade and exporting but it might be harder especially if the produce is perishable. Nevertheless, the idea is no longer to use economies of scale and efficiency to sell to the mass market and allow the whole capitalist-industrial complex to be built upon heaps of waste and trash.

What would a net zero business in your industry look like?

We spend a lot of time thinking about emission reduction. And it is all based on considering the existing state of affairs and how to move ahead from here. So we often consider how a process can be optimised to use less energy, or to use alternative materials. So a decarbonisation roadmap plays an important role in considering an existing business and how carbon emissions can be gradually eliminated from the workings of the business to transit it towards a low-carbon economy.

But just as important is how we can envision a new business to perform exactly the functions of an existing business but with zero carbon emissions. It is no longer about mapping or developing emissions baselines but rethinking how the same process can be achieved without emitting as much carbon. It is rethinking processes altogether. Heck, it might even involve rethinking products.

Major oil & gas companies are now refashioning themselves as provider of energy, competing with their customers who are power generators. Or they can think of continuing to supply the electricity generation players by going into mining and extracting of minerals and metals that are needed for wind turbines and solar panels. Or they could reconsider that they are actually logistics players ferrying molecules around and look into dealing more with chemicals transport. They could even consider themselves producers or inventors of new materials.

This exercise can be repeated for other industries and we could potentially have very interesting outcomes.

Slow fashion

Lululemon had a “We made too much” sale ongoing. It is nothing new. All fast fashion brands tend to make too much. Because the strategy for fast fashion and the culture we created is to push out the latest design into the market, make it as widely available as possible in the shortest time pricing with markups that makes construction contractor mouth water and then just deal with the leftovers later.

So how do they deal with leftovers? Sometimes they discount, which is not the most common approach because discounting damages their relationship with customers. Customers would begin to expect cheaper price later and most of them would learn to wait. That is bad for margins and future profit. So the fast fashion brands dump their clothes into other markets which don’t carry their first-to-market goods, and then eventually just dispose of the clothes.

Precious cotton and fabrics that can be used to clothe someone else goes to waste. The world is not better for it but certainly there are people made richer by this model. And so it goes on. The focus on sustainability within the fashion industry is just beginning and hopefully gets to a level when it can start snowballing properly.

So what is the alternative? How about slow fashion that focuses on classic, proven designs, that uses materials in a sustainable way? Where the cost is towards improving material traceability, better sourcing and exploration of newer, shorter supply chains? Instead of fattening corporate wallets and perpetuating the fast fashion culture?

End of oil III

In the absence of the price signals I wrote about in End of Oil II, what do we do? And besides, there had been so many recent fiascos about carbon markets that this instrument risks losing its credibility entirely and make it even harder for carbon emissions to be priced.

Pricing carbon is not just about credits of course. Carbon taxes are forms of prices and if we want to be stigmatising carbon emissions, we can even call it a fine but then the difficult is that we all are emitting carbon so at the end of the day the price will still be sort of a “license to pollute”.

Perhaps better to suggest and highlight that the taxes, credit revenues are going to be reinvested into decarbonisation. In any case, we do need more investments, funds and support towards that. What better way to fund it than to use the proceeds from carbon pricing to achieve that?

And we really can’t wait for the private initiatives and the market to get that going. At the same time, governments cannot afford to try and design the perfect market for it all to work. Rather, if carbon credits is not going to take off, the whole slew of regulation will need to be rolled out including renewable portfolio standards, carbon taxes, renewable gas blending mandates, ban on internal combustion engines, etc.

Dig and ship

Australia is extremely resource rich and has low population density. The demand for its resources will come from elsewhere. And the reason is probably that those are industries already established elsewhere and needs those raw materials from Australia because they already squandered those they have nearer to them.

So for decades, minerals, and other resources have been dug up and then shipped to those other production locations. Global supply chains are formed this way. There is a mix of proximity to key resources or demand, as well as some path dependency and government competition to promote and attract investments inward. It is not formed by mere economic calculations at every moment.

That is to say that in the energy transition, Australia has the chance to attract actual industries needing their raw materials to situate in Australia. This will also mean pushing up the population of the country and potentially straining what is conceived as the carrying limits of the land. So it is a trade off to consider. But either way, the world could be better from this logistics chain optimisation at regional level.

Making excuses for yourself

Barely 10 hours before we were slated to meet for a trek, they messaged, “Had a late night today and just got home so we’ll sleep in and skip the trek tomorrow”. We learnt from young to steer our lives using excuses in order to align it with our periodic whims and fancies, but also to ensure we stay on course in our long-term goals when we find ourselves inconsistent. So they are a double-edged sword depending on how you wield it.

Using excuses that comes out of trying to steer towards long-term goals such as having a policy of sleeping 7.5 hours each night, not signing petitions, eating low-carb, etc can be great. And at times, you might just need to give yourself some wriggle room from low-stake commitments.

But the kind of excuses you need to catch yourself on, is when you’re bailing yourself out of the future you were committing to create for yourself or others. Especially so out of whims and fancies. When you make excuses not to do the work, or to deplete the trust people have in you, or to belittle the cultivation of small positive habits.

What is the right scale?

Some impacts are hard to scale spatially, or geographically, or culturally. But they can be persistent, and in time, they scale well. For example, if you’re a teacher of a classroom of 40, you might impact at the most 40 lives. And that is not easy to scale, because enlarging the class does not necessarily mean more lives are impacted though the education system might want to think that way.

I once asked talked about scaling Laksa (a Singaporean dish) in an article about the narratives of millennials. I wondered if it matters that we created products which didn’t scale at least during the moment they were created. If we create products only to ride waves of growth, than majority of the products and service offerings in the world would not exists. It is often seeking to serve a particular audience that an offering comes into play and then gradually finds either more audience or more application in order to scale.

So what is the right scale for the impact that we make, or the offering we’re trying to put out in the world? It is exactly the scale that keeps things going, that keeps you doing what you want to do. If you’re happy to keep doing supporting under-privileged kids one by one, go for it; make sure it pays you enough to keep you going as well. And it is the same for a business, you just need the smallest viable audience (a concept that is popularised by Seth Godin).

Sustainability is the right benchmark, not just for the environment, but also the scale of what we do.

Demand response to the future

The market system likes to pretend the consumer is king and producers are just responding to market demand. It is usually an excuse to avoid the responsibility of building a better future. The market system constantly tries to get ahead by shaping demand, through advertising and influencers. The whole system of exchange of influence and money takes place within the market context and that’s enough to refute the claim that consumers reign sovereign.

And that means consumers needs to be more conscious of what stories they are taking in. And more than being passive receivers of goods and services, consumers have more chance than ever to shape them. Demand is usually decentralised but it can respond to so many things beyond price signals. The problem with our economic view of the market is that we only try to capture market power in the form of price-setting and ability to substitute (even this is not so well considered despite the crazy mathematical gymnastics required).

Sustainability cannot depend on corporates championing causes and trying to come up with new products and services. Consumers need to and can respond by requesting to reuse their bottles, avoiding products with too much packaging, reducing gifting of everyday items with expensive packaging.

The easiest criteria to default towards is convenience and costs but we can also think in terms of alignment of values and cost to the future. If we are able to adapt our demand to these dimensions, we can co-create a future we want to be part of.

Feeling helpless

Things are happening to me. When we experience that, we lose sight of our agency. We were not consulted, we’re not in control, not any semblance of control. We don’t seem to have a choice. We feel helpless.

Recently, I was attending an investor conference that was focused on the topics around impact, sustainability and ESG (environmental, social, governance). There was a broad spectrum of attendees; some were well-versed in the topic tossing out various acronyms while others were confused, lost, frankly a little unhappy about how the investing industry is taken over by metrics beyond the financial ‘fundamentals’. Personally I think that capital can act differently from a while back and that we have the responsibility to ensure that it is no longer perpetuating the system as it is.

Of course, there would be naysayers who dismiss impact, sustainability and ESG as fluffy, intangibles which are running counter to the money-making that investing is all about. But even the naysayers, confronted with climate science would acknowledge there is a problem we are facing with climate change and all. Naysaying helps them soothe themselves because at least if there’s nothing much they can do, the eventually downfall of the earth is not on them. We choose to be helpless that way; even when we do have a choice.

The better road is towards action. When it comes to the climate challenge, a strong and useful key message is that it is not too late to make that impact and make the change.

Primitive technology

Had a chat with a friend who used to be in the oil & gas industry; well at least along the value chain. He was also a bit on the old school side of things and he calls solar PV technology primitive because compared to the gas turbines whose efficiency is 60% when using combined cycle, the efficiency of converting solar energy into electricity is only 15-20%.

I was a bit surprised at that idea given that inputs in terms of the energy from the sun is free whereas you might need to calculate the energy cost from the drilling, piping, even liquefaction and then gasification of gas. Nevertheless, the point is that turbine technology has been widely adopted and used for many more decades than the solar panels. So a lot more money, time, resources have been invested into that those technology compared to renewables. That is simply fact.

Yet if you consider which technology has more room for progress and can move us to a future that we want to live in, the answer is just as clear. The problem again, with the economic analysis undertaken is that they are all based on individuals considering Ceteris Paribus everywhere else. The energy transition, decarbonisation is more than just that an individual decision and it was never meant to be worthwhile done alone. It was something to be coordinated, actions taken together. Which is why we cannot allow all of these technologies like solar, wind, EVs, hydrogen to be as primitive as they are.