Saturday, March 29, 2014

When A Butterfly Comes Back to Life and Flap Its Wings . . .

Since China’s Opening Up in the 1980s, its government has been navigating the murky waters of GDP growth and economic incentives to put its people on the path out of poverty. Its success is unquestioned, but putting millions into the global middle class came at the price of environmental degradation and deteriorating health and welfare of the Chinese people.

The blind pursuit of wealth and economic growth is not self-contained—as China emerges a global power, the rest of the world feels the impact from the Chinese ambitions. Commentators are starting to recognize this problem: when a butterfly in China dies from pollution, the whirlwind of social change in places like Brazil ceases. So when China flexes its muscle to bring that butterfly back to life, the world watches for the gale of disruptive force that reshapes whole industries for the better.

In more recent days, China began to enforce a “Green Fence” around its trash import and material harvesting businesses. It is a campaign aimed to strengthen waste import standards to mitigate the environmental problems associated with the waste management industry. To some, this is detrimental to business. The increased cost and delay for inspection hurts the bottom line for those who export trash to China. It also hurts Chinese businesses looking to harvest the trash and process them for precious materials. Down the supply chain, other businesses are hurting for material supply that once came from the spew of the dirty business.

But this is not just about the bottom line. The abrupt changes seem to suggest a sudden grasp of a Chinese backbone. China no longer wants to be the dumping ground for the world’s problems. It now demands higher standards by limiting “unrelated material” to no more than 1% cutting the transportation of unrecyclable trash. Recycling companies also face fees assigned at the ports for storage while waiting for inspection. Sure this slowed things down a bit, but it has also raised standards all around—recycling businesses are forced to consider cost and efficiency when they process their recyclables. The regulators are also forced to look at their own trash deposit laws and drive up the standards locally.

Yet not all is well. The Green Fence does seem to drive a “race to the bottom” problem—those who aren’t willing to change their recycling standards and practices are looking for the next dumping ground: Africa, India, Vietnam, Turkey.  If it's not possible in China and the profit margin is thin, let's look elsewhere to see who is stupid enough to take on the burdens.

Well, I for one have no answers to this quandary. It is a question left to those who sees their self-worth beyond the glittering coins. It is a questions of existentialism that every nation must ask of itself.

A friend of mine once asked what I thought of Chinese Existentialism. Pontificating as a self-disrespecting existentialist, I began the answer with a “to me . . . .” Put aside the egocentric, Chinese existentialism is about looking past the present problems and working towards bettering oneself for the future. Yet, that is only a third of the whole. An honest Chinese person accepts the Way within the peace of the Chinese psyche and then offers kindness to the things that he has no control.

At the core of Confucianism is the idea that every man woman and child deserves the opportunity and owes the obligation to work hard. Without it, society would not more forward. The structural integrity of Confucianism is the order of things—a hierarchy built on respect and learning. Taoism teaches us to be at peace with oneself and the world around us. To accept the Way is not only to be ignorant and blissful; it is about knowing one’s place in the grand scheme of things and accept the outcomes that we have no control. The Buddhist in a Chinese psyche extends compassion and goodwill towards others. It bridges the gap between the Confucian work ethics and the Taoism laissez-faire mentality to create a socially balanced collectivism.

From these three, we see the Chinese as individuals working together towards common goals. That is a self-respecting answer to the question posed: “to the Chinese, existentialism is about knowing who we are and doing something about it.” While many criticize the Chinese government for corruption, the Chinese people for lack of civility, and the Chinese society for its carelessness, I see China as a maturing echo of the once proud culture--now with a proper backbone.

The controversies of Green Fence aside, it is deeply disturbing that others are more willing to bend to the will of profits and pollution rather than standing up to demand better things.

Friday, January 10, 2014

SEC Encourages "Sustainable" Shareholder Activism


Shareholder activism has been an emerging trend for some time now. ESG, which stands for Environment, Social, and Governance, is meant to capture the three Ps of sustainability in the corporate context. It has been commonly accepted in academia and its popularity has now been surging in the main stream for some years. Socially responsible investment funds are also trending like hashtags.


#MoneyTalks


The landmark case in the 70s made this popular. A group of activist investors then were able to convince the court that SEC was wrong to allow Dow Chemical to omit the shareholder resolution that limited the sale of napalm for use in the Vietnam War. After the court’s decision, there were close to 600 socially oriented shareholder resolutions filed between 1973 and 1978. See Proffitt & Spicer, 2006.

Nowadays, NGOs and socially orientated groups have begun to use a combination of street protests and shareholder activism as their tactics to promote their cause. ESG, in this sense, has real teeth to take a bite at getting publicly held corporations to be more responsible.

But is shareholder resolution really a good method to force the corporate hand?

First, most publicly held companies have so many institutional and entrenched shareholders that it is almost impossible to get the majority to take any kind of meaningful action. Although the regulatory barrier of entry is low (SEC only requires $2000 in shares and commitment of holding the shares until after the annual meeting), the cost of coordination and filing the resolution may be high. Usually activist shareholders are required to have third party brokerage firms confirm their holdings. The activist shareholders are also required to have the resolution drafted which means time and research. Poorly drafted resolution may be worse than no action at all, so activist shareholders must do their due diligence. All of these translate into cost that activist shareholders may not have.

In addition, there is also a little well know SEC Rule called 14a-8. Under this Rule, SEC staff often will side with corporations and permit the omission of activist shareholder resolutions from the corporate proxy statement because the resolution is either a matter related to the company’s ordinary business operations and therefore excludable from the proxy statement at the discretion of the board of directors; or the resolution relates to less than 5% of the company’s assets, sales and revenue, and therefore excludable.

These shareholders are also seldom passed. Even if passed, these resolutions are often non-binding. So aside from harm to good-will, corporations often face little pressure to do anything about the activist shareholders.

The SEC recently issued guidance that companies are encouraged to allow sustainability oriented shareholder resolutions make its way onto the proxy statement. SEC Staff will also no longer consider Rule 14a-8 a default win for companies with respect to activist shareholder resolutions dealing with sustainable developments. Whether this new SEC direction will make an impact is hard to say. Even if more and more shareholder resolutions are passed, companies will still have to comply and the public and potential investors will still have to do their due diligence and keep sustainability on their radar.

Friday, November 22, 2013

I LEED A QUESION


There are three ways of motivating people to think LEED (that I know of). First is the enforcement type, the municipality adopts private standards, like LEED, into their building codes by specific incorporation—“compliance shall be what LEED requires.” There is at least one municipality that I know of adopted this approach, but the problem here is constitutional: the public governance is essentially handing over legislative power to the private sector since the private sector is responsible for updating the standards; but what happened to the voting process and public accountability if this is going to be the LAW?

Second is the not-so-lazy-man approach: adopt some LEED standards in substance into the building codes but no specific incorporation-[of LEED]-by-reference (the paint must meet this low Volatile Organic Compound (VOC) level to be in compliance and that level just happen to be the LEED standard. So by complying with the law, you are getting LEED credits, two birds with one stone—that’s if you documented it in the first place). Some places in California adopted this approach if I remember correctly. However, the problem here is that the private sector is then subject to the slow pace of public consensus—if we learn new knowledge about best practices, we have to wait for politicians to come together to get us there in terms of law making. We all know how much politicians like to work together and get things done.

Cincinnati adopted a third approach—tax rebates—the “let’s just give them money” method. If you build a Platinum LEED building, the city of Cincinnati will not collect city property tax from you for up to 15 years with no upper limit on amount. This means you can build a new million dollar home taxed at 2.2% tax on average, but you do not pay a dime for 15 years if your house is LEED Platinum. That's roughly $330,000 you avoid paying the government. (Well, technically if you don't build the home, the government doesn't collect taxes anyway, so it wouldn't make the money regardless.) With it being only a city tax incentive, it controls the urban sprawl problem to a degree. LEED also considers remodeling 50% or more of an existing building a new construction so you can get the tax credit even if you don't build new buildings. This will be added incentive to revitalize old neighborhoods. But as your average consumers consider a somewhat updated home, there is not much incentive to incorporate LEED standards at a higher cost. The tax credit is a good thing in my opinion, but it doesn't go far enough to get people to really look at LEED on a scale.

But these approaches are all about extrinsic motivations.
So I LEED this question to you:

It is not enough to do, what will make us want to do better?

Wednesday, November 20, 2013

Forward Compatibility – Talking Pass One Another

(I wrote this one a while ago and felt I should resurface it. It's a companion piece to this one: On Language and Games – the Wittgensteinian Fly From a Bottle. Cheers)

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During the final stages of reviewing my article on China, its sustainable urgency, and its formative free speech needs, and until now, I constantly worry about the meaning lost in the linear mindset that people often bring to the analytical table. The story of my life: getting lost on a straight road because I walk in circles, and I am never to be found again.
Here’s the problem: I believe there is an ontological gap between the east and the west and this gap manifests itself in many different ways. The most obvious is in language—the meaning and intent problem—what precisely is meant not well understood, and what is intended are completely incompatible at times. Between China and its western observers, there often exists an animosity precisely because we failed to understand each other and discrepancies are explained as errors. In terms of sustainability, there can be no greater debauchery than stopping progress for the sake of debating who is right and who is wrong and who should correct their errors. But does it really matter that we come from different places? Or is it the “forward compatibility” more important.
 

Monday, November 18, 2013

Keys to a Sucessful LEED Building: Communication, Documentation, and a Concrete Vision - by Lauren Campbell Kong

After being in Cincinnati a few months, I finally found a group of individuals at Lohre & Associate who shares my passion for green buildings and marketing. Meeting people like this is difficult and when Mr. Lohre offered me an internship and would pay pay for my LEED AP exam, I was even more excited.

The internship involves working on a LEED project, something that I have wanted to do for over a year and something that wasn’t available to me in Indiana. The experience of working on an actual project is needed to take the LEED AP exam and all the nuances I am learning are immensely valuable. The project is hoping to get certified for LEED gold status and with that comes serious documentation of all aspects of construction. The project involves a major renovation and under LEED standards it is labeled as new construction. This means that everything from what type of dry-wall was used to what kind of paint was put on the dry wall, to what kind of grout and caulk was use to seal it tight must be documented. Needless to say, getting deep into the details of a LEED project is similar to delving into a crime mystery looking for clues or searching through a massive academic database for a specific research paper. It is right up my alley.

Friday, November 8, 2013

I Pledge Allegiance to My Trash


Our world is a trash producing culture. We are so embroiled with our sense of entitlement with modern amenities, packaging and wasting that we ignore how precious our resources are and why we throwing away things unnecessarily. We package and consume and we let the trash collectors worry about disposing our shame. After all, out of sight, out of mind is how the general populace approaches the issue of trash and just like everything else, out of mind means there is no problem; or is there?

According to a 2012 World Bank report, the world’s cities generate about 1.3 billion tons of solid waste per year. The World Bank expects this volume to increase to 2.2 billion tons per year by 2025. The cost is even more staggering: collectively the world spends roughly $200 billion per year on waste management but by 2025, that number is expected to reach close to $400 billion per year.

Thursday, October 24, 2013

Look Out Chicago, The Koch Brothers Are at it Again by Lauren Campbell Kong

I have been reading a lot of press lately discussing the Koch brothers and their petroleum coke storing facility in Chicago. The situation is looking pretty bleak. Not only does this worry me for our environment, but I have good friends who live in Chicago. Now they and their families are at serious risk for asthma, cancer, and other adverse health effects. The Koch brothers, who own such companies as Oxbow, Koch Carbon, and KCBX an affiliate of Koch Carbon, (just to name a few) have single handedly effected thousands of individuals and exposed them to some of the dirtiest air imaginable.

Currently, petroleum coke which is a waste by-product of oil refining, is piling up along Chicago’s southeast side. Citizens of these Chicago neighborhoods have complained to the proper channels, but it seems that little is being done to give them immediate help. This comes as no surprise after the huge complaint Koch Carbon received from Detroit, MI citizens a couple of months ago. After two months of complaints, media frenzy, and a single cell phone video showing a huge, dark, billowing cloud of petroleum coke wafting through the air went viral, the Mayor of Detroit finally ordered the pet coke removed; the state Department of Environmental Quality is now doing a review on the impact of such large amounts of pet coke on citizens and the environment.

Saturday, October 19, 2013

The Chinese Dream

I’ve been seeing a lot of chatter online about the “Chinese Dream” lately. Naturally, I have to question what exactly is this new Chinese dream other than just another shrewd attempt at propaganda?

China is famous for its slogans since the establishment of their new People’s Republic. Mao had his personal slogans; so did Deng Xiao Ping with his “Reform and Opening Up.” Jiang Ze Min had his “Three Represents” and thereafter Hu Jin Tao had “Scientific Development Outlooks.” Naturally, Xi’s new slogan did not surprise me, but there is something different. Xi’s slogan seems a bit more than just a slogan to inform; it is rather inspiring in an abstract and non-informative way!?

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