1 00:00:00,000 --> 00:00:04,160 So I'm the measurement guy, and the problem we have in this conference, 2 00:00:04,160 --> 00:00:08,400 we get lots of lofty rhetoric about the goals we have to achieve 3 00:00:08,400 --> 00:00:10,800 and how we have to mobilize and transform. 4 00:00:12,000 --> 00:00:16,000 But if we don't have the right measures for the people that are working on the ground, 5 00:00:17,199 --> 00:00:20,800 much of that effort will be dissipated and not be successful. 6 00:00:21,359 --> 00:00:27,120 And so what I'm going to share with you is how to come up with the right measurement... 7 00:00:27,600 --> 00:00:29,920 for the goals that we want to achieve. 8 00:00:30,720 --> 00:00:32,960 So in particular, there must be a lot of talk. 9 00:00:33,760 --> 00:00:35,280 Can we bring up the presentation? 10 00:00:37,359 --> 00:00:37,859 No. 11 00:00:39,200 --> 00:00:43,760 A lot of talk in this conference about measurement of corporate performance 12 00:00:43,760 --> 00:00:48,079 using what's called the ESG framework, which I am not a fan of. 13 00:00:49,600 --> 00:00:53,280 I think that there are some real problems with this, 14 00:00:53,280 --> 00:00:58,800 and this is inhibiting the right accountability for companies for doing the... 15 00:00:59,439 --> 00:01:03,280 In particular, ESG is not a unitary concept. 16 00:01:03,280 --> 00:01:07,599 I mean, it sounds like a three-letter acronym, but it's not a three-letter acronym. 17 00:01:07,599 --> 00:01:12,319 It's actually three very different domains of activity going on in the world. 18 00:01:12,960 --> 00:01:14,960 E, of course, is environmental. 19 00:01:14,960 --> 00:01:16,079 S, societal. 20 00:01:16,079 --> 00:01:18,240 And G is governance. 21 00:01:19,040 --> 00:01:21,120 And the problem is these are very different. 22 00:01:21,120 --> 00:01:24,240 Trying to treat them as one big blob of measurement 23 00:01:24,880 --> 00:01:30,719 prevents us from looking in detail of what has to go on inside each one of the... 24 00:01:30,719 --> 00:01:34,400 And if you look at it, E should be relatively easy, 25 00:01:34,400 --> 00:01:40,159 because E is based on physical measurements of gases, liquids, and solids. 26 00:01:40,159 --> 00:01:42,640 These are objective, measurable items, 27 00:01:42,640 --> 00:01:46,719 and we should be able to do a very good job of measuring E, 28 00:01:46,719 --> 00:01:48,960 even though I will show you we're not there yet. 29 00:01:49,919 --> 00:01:53,039 G, on the other hand, has no outcomes associated with it. 30 00:01:53,919 --> 00:01:56,879 G, governance is a process, not an outcome. 31 00:01:56,879 --> 00:01:59,839 I'm not sure how it ever got involved with this, 32 00:01:59,839 --> 00:02:03,919 and it's distracting attention from the two of those dimensions 33 00:02:03,919 --> 00:02:08,560 that really do have outcomes, because the third is S, societal. 34 00:02:09,199 --> 00:02:12,959 And there we can measure outcomes, but it's more complex than E, 35 00:02:13,599 --> 00:02:20,719 because there are value judgments of what are desirable and undesirable societal outcomes, 36 00:02:20,719 --> 00:02:26,400 and it involves issues of ideology and morality in some sense. 37 00:02:26,400 --> 00:02:29,280 But I'm going to try and simplify it and give us a path forward 38 00:02:29,280 --> 00:02:31,040 that we can start making work. 39 00:02:31,040 --> 00:02:35,600 In fact, my fundamental message is that sustainability 40 00:02:36,400 --> 00:02:41,760 is completely compatible with shareholder value in corporations, 41 00:02:41,759 --> 00:02:45,120 even though the common wisdom is shareholder value doesn't work, 42 00:02:45,120 --> 00:02:46,560 we have to go to stakeholders. 43 00:02:47,519 --> 00:02:52,159 No, actually, if you view environmental damage and societal damage 44 00:02:52,159 --> 00:02:57,039 as negative externalities that corporations impose on society, 45 00:02:58,399 --> 00:03:01,519 even Chicago economists like Milton Friedman would think, 46 00:03:01,519 --> 00:03:06,719 no, no, companies have to be cognizant of adverse community effects 47 00:03:06,719 --> 00:03:10,399 and adverse pollution effects from their actions. 48 00:03:11,360 --> 00:03:14,319 If they're going to be sustainable in the long run. 49 00:03:14,319 --> 00:03:15,760 So I'm going to approach it. 50 00:03:15,760 --> 00:03:21,520 I still believe in shareholder value, but try to mitigate and reduce 51 00:03:21,520 --> 00:03:23,680 the negative impact that companies have. 52 00:03:24,640 --> 00:03:26,240 So I have to go through this very quickly. 53 00:03:26,240 --> 00:03:29,280 Again, each of us has limited time to go through this. 54 00:03:29,280 --> 00:03:35,040 One place to start on societal is actually to say, let's stop doing bad things, 55 00:03:35,040 --> 00:03:37,680 things that are harmful to our employees, 56 00:03:37,760 --> 00:03:41,439 that are harmful to our communities, that are harmful to our society. 57 00:03:42,080 --> 00:03:46,640 So this is really the Hippocratic oath applied to corporate behavior. 58 00:03:47,200 --> 00:03:48,719 First, do no harm. 59 00:03:49,599 --> 00:03:52,000 What are examples of harm is listed here, 60 00:03:52,000 --> 00:03:54,640 and I want to go down the list and we can look at it. 61 00:03:55,680 --> 00:03:58,159 But it is destruction of natural capital. 62 00:03:58,159 --> 00:04:02,560 Some of that is environmental, unsafe, unhealthy working conditions, 63 00:04:02,560 --> 00:04:05,439 discrimination, harassment, bribery, corruption. 64 00:04:06,400 --> 00:04:11,599 And there's actually one company in France which averages three or four suicides a year 65 00:04:11,599 --> 00:04:12,800 among its employees. 66 00:04:13,439 --> 00:04:16,160 I think we can all generally accept this is not a good thing. 67 00:04:17,120 --> 00:04:22,480 So the first minimum standard of measurement is to identify, measure, 68 00:04:22,480 --> 00:04:27,360 and have audited the lack of these negative occurrences, 69 00:04:27,360 --> 00:04:31,600 not just in the companies themselves, but in their supply chains. 70 00:04:31,600 --> 00:04:34,319 Because ultimately companies will be held accountable 71 00:04:34,319 --> 00:04:38,399 for what happens in their suppliers of their goods and services. 72 00:04:38,399 --> 00:04:40,240 Now that's a bit of a challenge, 73 00:04:40,240 --> 00:04:43,040 but I'll show you when we get to the environmental section 74 00:04:43,040 --> 00:04:47,439 how we might go about actually tracking social harms done 75 00:04:47,439 --> 00:04:51,600 not only in our own organization, but throughout our supply chains. 76 00:04:51,600 --> 00:04:54,480 But I'd like to focus more on the positive story, 77 00:04:54,480 --> 00:04:58,079 because corporations have the potential for doing tremendous good. 78 00:04:58,879 --> 00:05:02,399 And the income and growth that we've seen over the last 200 years 79 00:05:02,479 --> 00:05:05,439 is really the result of global capitalism 80 00:05:05,439 --> 00:05:10,239 enabling corporations to do the magic of income and wealth creation. 81 00:05:11,199 --> 00:05:12,479 But we have to do more. 82 00:05:12,479 --> 00:05:16,000 And there's the opportunity for companies now to take on 83 00:05:16,000 --> 00:05:18,479 these issues of inequality and poverty 84 00:05:18,479 --> 00:05:21,759 that Dr. Flo talked about just now, 85 00:05:21,759 --> 00:05:24,159 and has been discussed throughout the conference. 86 00:05:24,719 --> 00:05:26,079 How can you do this? 87 00:05:26,079 --> 00:05:30,479 Well, if you go out of business as usual to try to hire individuals 88 00:05:30,480 --> 00:05:33,600 who didn't get proper education and training 89 00:05:33,600 --> 00:05:36,400 from the national local education system, 90 00:05:36,400 --> 00:05:38,319 you know, and make them good employees, 91 00:05:38,319 --> 00:05:42,080 invest the six or nine months it takes to make them valuable employees, 92 00:05:42,080 --> 00:05:46,240 try to get more suppliers from marginalized communities 93 00:05:46,240 --> 00:05:50,000 who typically have not been good suppliers to corporations, 94 00:05:50,000 --> 00:05:52,879 reach out to them and help them become good suppliers. 95 00:05:52,879 --> 00:05:54,080 And we can measure that. 96 00:05:54,080 --> 00:05:57,520 We can measure how many people, you know, we trained and educated 97 00:05:57,520 --> 00:05:58,800 and got into the workforce. 98 00:05:59,520 --> 00:06:03,040 We can measure how much more business is being done with suppliers 99 00:06:03,040 --> 00:06:05,360 who hadn't been working with corporations before. 100 00:06:05,920 --> 00:06:08,240 And the third, and this now is the growth story 101 00:06:08,240 --> 00:06:09,360 and the inclusive growth, 102 00:06:09,920 --> 00:06:15,120 is making specific targeted investments to really remedy poverty. 103 00:06:15,920 --> 00:06:19,759 And I'm going to say that if we're thinking about the poverty, 104 00:06:19,759 --> 00:06:23,759 and it's about, again, repeating figures that have been said, 105 00:06:24,400 --> 00:06:28,080 there's about still 800 million people in the world, 106 00:06:28,159 --> 00:06:33,759 a little over 10%, who live in the World Bank's definition of dire poverty, 107 00:06:34,399 --> 00:06:36,800 less than $2 a day, approximately. 108 00:06:37,359 --> 00:06:44,319 Of those 800 million, about 80% are involved in subsistence agriculture or fishing. 109 00:06:45,279 --> 00:06:48,000 And so if you want to deal with dire poverty, 110 00:06:48,719 --> 00:06:50,399 it's got to be in agriculture. 111 00:06:50,399 --> 00:06:52,079 That is the opportunity. 112 00:06:52,719 --> 00:06:54,639 Now, why has this persisted? 113 00:06:54,639 --> 00:06:58,000 Why in an era of tremendous growth do we still have 114 00:06:59,279 --> 00:07:03,519 600, 700 million subsistence farmers living? 115 00:07:04,240 --> 00:07:06,240 The answer is, this is hard. 116 00:07:07,360 --> 00:07:10,719 It's not about cash transfers with mobile phones. 117 00:07:10,719 --> 00:07:13,199 It's really about how do you make them more productive 118 00:07:13,839 --> 00:07:17,759 and higher quality producers, not just distributing money to them. 119 00:07:18,479 --> 00:07:21,279 But the problem is to make a farmer more productive 120 00:07:21,279 --> 00:07:24,399 is a very complex ecosystem. 121 00:07:24,399 --> 00:07:25,919 As you see in this diagram, 122 00:07:26,560 --> 00:07:30,959 more than a dozen different types of entities have to be involved. 123 00:07:30,959 --> 00:07:34,799 They need financing, long-term financing and short-term credit 124 00:07:34,799 --> 00:07:37,919 that has to come from banks, comes from insurance companies, 125 00:07:37,919 --> 00:07:40,159 and sometimes from external investors, 126 00:07:40,159 --> 00:07:45,839 including development agencies like the World Bank or UNAID. 127 00:07:47,279 --> 00:07:50,399 They need access to high quality inputs, 128 00:07:50,399 --> 00:07:53,599 seeds, fertilizer, crop protection, irrigation. 129 00:07:54,719 --> 00:07:58,639 They need access to capital, machinery to make them more productive. 130 00:07:59,359 --> 00:08:01,039 They need storage facilities. 131 00:08:01,039 --> 00:08:03,839 They need local aggregators and distributors 132 00:08:04,639 --> 00:08:07,759 and eventually corporate off-takers, agribusiness. 133 00:08:08,639 --> 00:08:10,560 They actually need training and education 134 00:08:10,560 --> 00:08:14,159 so they can use modern agricultural practices 135 00:08:14,159 --> 00:08:17,839 that are being learned and practiced throughout the rest of the world. 136 00:08:17,839 --> 00:08:20,319 And they need access to technology as well. 137 00:08:21,279 --> 00:08:23,439 No single company can do this. 138 00:08:23,439 --> 00:08:24,240 That's the problem. 139 00:08:24,240 --> 00:08:26,879 You can't have a point solution where one company says, 140 00:08:26,879 --> 00:08:30,159 I'm going to make these farmers more productive. 141 00:08:30,159 --> 00:08:34,319 The only way they become more productive is we create an ecosystem 142 00:08:34,319 --> 00:08:37,039 which has all of these entities involved in them, 143 00:08:37,759 --> 00:08:40,799 a dozen or more that come together 144 00:08:40,799 --> 00:08:44,799 and say, we're going to invest in this ecosystem 145 00:08:44,799 --> 00:08:47,360 to make farmers more productive. 146 00:08:48,000 --> 00:08:51,200 This is actually a big deal for the GCC in general 147 00:08:51,200 --> 00:08:53,440 and for the Emirates in particular, 148 00:08:53,440 --> 00:08:56,879 who is worried about food security over the next 30 years. 149 00:08:56,879 --> 00:08:58,879 How are we going to feed our populations? 150 00:08:59,759 --> 00:09:03,200 The answer is actually right there in East Africa, 151 00:09:03,840 --> 00:09:07,680 or it's in Southeast Asia, in India, or in Indonesia. 152 00:09:08,399 --> 00:09:12,720 There are tens of millions of farmers that are available 153 00:09:12,720 --> 00:09:17,279 to provide you with more food security in the United States. 154 00:09:17,360 --> 00:09:18,960 If you're prepared to invest in them, 155 00:09:19,840 --> 00:09:22,560 on the ground, putting together these ecosystems. 156 00:09:23,200 --> 00:09:24,000 And we've done this. 157 00:09:24,000 --> 00:09:26,639 We have examples where it's worked in Uganda, 158 00:09:26,639 --> 00:09:29,759 in India, in Indonesia, in Central America. 159 00:09:29,759 --> 00:09:33,039 And by creating an ecosystem around this, 160 00:09:33,039 --> 00:09:36,720 the income of the farmers goes up by factors of three and five. 161 00:09:36,720 --> 00:09:39,120 And the quality goes up, productivity goes up, 162 00:09:39,120 --> 00:09:40,159 and income goes up. 163 00:09:40,800 --> 00:09:43,360 And it repays all the investments that you've made in them. 164 00:09:44,000 --> 00:09:48,720 Now, the challenge is how do you get 12 organizations 165 00:09:48,720 --> 00:09:51,600 across the private sector, the NGO sector, 166 00:09:51,600 --> 00:09:54,800 and the public sector to collaborate and cooperate 167 00:09:54,800 --> 00:09:56,240 in one of these ecosystems? 168 00:09:56,800 --> 00:09:58,960 Some of these sectors don't even trust each other. 169 00:10:00,480 --> 00:10:01,440 And they don't like each other. 170 00:10:01,440 --> 00:10:02,960 How do you get them to work together? 171 00:10:02,960 --> 00:10:04,080 Well, that's where I come in, 172 00:10:04,080 --> 00:10:06,240 because I have a management system 173 00:10:06,240 --> 00:10:08,000 that was called the Balanced Scorecard 174 00:10:08,720 --> 00:10:12,639 that helps an organization come together on its strategy. 175 00:10:13,199 --> 00:10:17,039 And so what we're now doing is expanding the Balanced Scorecard 176 00:10:17,039 --> 00:10:22,319 to reflect these goals of getting people together in an ecosystem. 177 00:10:22,319 --> 00:10:24,879 And the top line is not just financial. 178 00:10:24,879 --> 00:10:27,840 It's financial, societal, and environmental. 179 00:10:27,840 --> 00:10:29,840 And we have specific objectives. 180 00:10:29,840 --> 00:10:32,240 And instead of having customers in the middle, 181 00:10:32,240 --> 00:10:35,039 the second row, these are all the stakeholders. 182 00:10:35,039 --> 00:10:38,720 These are the suppliers of goods, the suppliers of capital, 183 00:10:38,720 --> 00:10:42,960 the suppliers of distribution, suppliers of training and technology. 184 00:10:43,519 --> 00:10:46,320 And each one of them comes in with a different objective. 185 00:10:46,320 --> 00:10:48,480 And we have to meet all of their objectives. 186 00:10:48,480 --> 00:10:50,399 And so through that second row, 187 00:10:50,399 --> 00:10:53,120 we're able to specify the objectives and the metrics 188 00:10:53,840 --> 00:10:57,840 that will bring these people into the ecosystem and keep them there. 189 00:10:58,399 --> 00:11:02,160 And the third row are the new processes of collaboration and the like. 190 00:11:02,160 --> 00:11:05,440 So I'm going to illustrate this with another example at the end of the talk. 191 00:11:06,080 --> 00:11:08,800 But I would say my first challenge to the delegates here, 192 00:11:08,800 --> 00:11:10,240 particularly from this region, 193 00:11:11,040 --> 00:11:14,800 is who's going to be the first to take on a region 194 00:11:14,800 --> 00:11:19,920 and put together one of these ecosystems for productive, inclusive growth 195 00:11:19,920 --> 00:11:25,200 that can triple or quadruple the output from the existing set of farmers, 196 00:11:25,200 --> 00:11:28,480 raise their standard of living, raise their quality, 197 00:11:28,480 --> 00:11:32,560 and by the way, also provide you with a very secure food supply. 198 00:11:33,120 --> 00:11:34,640 So we have candidates out there. 199 00:11:34,639 --> 00:11:38,720 We just need people to set up and say, yes, I want to lead one of these. 200 00:11:39,679 --> 00:11:40,879 Let's turn to the environment. 201 00:11:40,879 --> 00:11:42,080 So this is the second theme. 202 00:11:43,039 --> 00:11:45,600 The current measurement system for corporations 203 00:11:45,600 --> 00:11:48,080 on how well you're doing environmentally 204 00:11:48,080 --> 00:11:50,399 comes from what's called the Greenhouse Gas Protocol. 205 00:11:51,039 --> 00:11:55,039 This was developed more than 20 years ago by a volunteer group. 206 00:11:55,039 --> 00:11:59,840 And the Greenhouse Gas Protocol has divided emissions into three categories, 207 00:11:59,840 --> 00:12:01,039 which they call Scopes. 208 00:12:01,039 --> 00:12:03,759 Scope one are your own emissions from your own company 209 00:12:03,759 --> 00:12:05,200 or your own entity. 210 00:12:05,200 --> 00:12:07,279 This is not limited to corporations. 211 00:12:07,279 --> 00:12:10,080 I mean, Harvard University and Mayo and Cleveland Clinic, 212 00:12:10,080 --> 00:12:13,039 which are not corporations, they have this issue too. 213 00:12:13,039 --> 00:12:16,080 So don't think of this too narrowly just as corporations. 214 00:12:16,639 --> 00:12:20,879 Scope two is the emissions from the energy that you purchase. 215 00:12:20,879 --> 00:12:24,559 And scope three are all the emissions from your suppliers 216 00:12:24,559 --> 00:12:27,279 and your customers across your whole value chain. 217 00:12:28,000 --> 00:12:31,120 Now, why are scope two and scope three in there? 218 00:12:31,120 --> 00:12:35,360 Well, it turns out not that many companies are huge scope one polluters. 219 00:12:35,360 --> 00:12:38,799 You know, if you're not in cement or steel or agriculture, 220 00:12:39,840 --> 00:12:44,080 your basic own entity emissions are relatively small 221 00:12:44,080 --> 00:12:47,440 compared to the emissions that are coming from all your suppliers. 222 00:12:47,440 --> 00:12:51,200 And this is a chart that shows that for the average company, 223 00:12:51,200 --> 00:12:54,639 the supply chain emissions are five and a half times 224 00:12:54,639 --> 00:12:57,600 as large as the company's own scope one emissions. 225 00:12:58,320 --> 00:13:01,120 So if corporations are really going to be accountable for the emissions, 226 00:13:01,120 --> 00:13:05,279 they have to be thinking about their supply chain as well as themselves. 227 00:13:05,920 --> 00:13:09,920 But the problem is the GHG protocol made some fundamental errors 228 00:13:09,920 --> 00:13:12,320 when it set up the scope three standard, 229 00:13:13,440 --> 00:13:17,840 which we only discovered personally about less than two years ago. 230 00:13:18,800 --> 00:13:23,360 One is if you think about a company like Toyota or Boeing, 231 00:13:23,360 --> 00:13:25,920 which has 30 to 50,000 suppliers, 232 00:13:26,639 --> 00:13:29,839 how is it going to get this information from all of the suppliers? 233 00:13:29,839 --> 00:13:32,479 And it doesn't even know the names of 80% of them 234 00:13:32,479 --> 00:13:35,039 because they're so far upstream from them. 235 00:13:36,240 --> 00:13:39,279 So it never seemed possible that this could be done, 236 00:13:39,279 --> 00:13:42,399 that you could call up your suppliers and tell us how much pollution 237 00:13:42,399 --> 00:13:44,719 is in the product that I just purchased from you, 238 00:13:44,719 --> 00:13:46,959 which is basically what the standard said. 239 00:13:46,959 --> 00:13:50,159 And the way to get around it is that, well, you can just use averages. 240 00:13:50,159 --> 00:13:52,000 You don't have to use actuals. 241 00:13:52,000 --> 00:13:54,480 Well, imagine running a financial system 242 00:13:54,480 --> 00:13:57,600 where you don't have to tell people your actual cost of goods sold, 243 00:13:57,600 --> 00:14:00,399 just your industry average cost of goods sold. 244 00:14:00,399 --> 00:14:02,159 Well, it's not much incentive to get better 245 00:14:03,039 --> 00:14:06,080 if you're using industry averages and not your own particular ones. 246 00:14:06,720 --> 00:14:10,800 Second, the scope three standard treats upstream emissions, 247 00:14:11,440 --> 00:14:13,440 which companies can control, 248 00:14:13,440 --> 00:14:16,240 the same as downstream emissions that their customers, 249 00:14:16,240 --> 00:14:18,560 over which most companies have no control. 250 00:14:18,560 --> 00:14:22,159 And so they've lost focus trying to do both at the same time. 251 00:14:22,159 --> 00:14:25,519 And the third, because everyone's counting up and down the supply chain, 252 00:14:25,519 --> 00:14:28,079 you get multiple counting of the same emissions. 253 00:14:29,039 --> 00:14:32,480 So this huge over counting of the corporate emissions. 254 00:14:32,480 --> 00:14:34,799 And savings get multiplied 255 00:14:34,799 --> 00:14:38,559 depending upon how many companies are all claiming the same savings. 256 00:14:38,559 --> 00:14:41,279 And everyone's doing the same calculation over and over again 257 00:14:41,759 --> 00:14:43,439 at each stage of the supply chain. 258 00:14:44,240 --> 00:14:47,679 So this is a solution that we came up with, relatively new. 259 00:14:47,679 --> 00:14:49,360 We called it the e-liability 260 00:14:49,360 --> 00:14:52,800 because when we pollute, we're putting a liability on nature. 261 00:14:52,800 --> 00:14:55,279 We're subtracting from the asset of clean air. 262 00:14:56,240 --> 00:14:59,759 And we say, let's just treat the pollution 263 00:14:59,759 --> 00:15:01,840 and the greenhouse gases in our supply chain 264 00:15:01,840 --> 00:15:04,560 the way we treat cost of goods sold in inventory. 265 00:15:04,560 --> 00:15:06,159 In other words, each company, 266 00:15:06,159 --> 00:15:09,759 if it knows how much carbon it's getting from its suppliers 267 00:15:09,759 --> 00:15:12,159 and it knows its own scope one emissions, 268 00:15:12,639 --> 00:15:17,120 then it assigns it out to its outputs of all the products and services. 269 00:15:17,279 --> 00:15:21,679 And so the products, the outputs actually carry the information 270 00:15:21,679 --> 00:15:28,399 of how much CO2 or CH4 has been issued up to that point in the supply chain. 271 00:15:28,399 --> 00:15:31,279 And so this is basically straightforward cost accounting, 272 00:15:31,279 --> 00:15:36,799 but with the units not being currency, but kilograms of CO2 or CH4. 273 00:15:37,919 --> 00:15:41,440 We actually almost run the same cost accounting software to do this. 274 00:15:41,440 --> 00:15:45,680 And then, you know, what the statement is for a given company, 275 00:15:46,639 --> 00:15:50,239 you know, it has its own emissions, its purchased emissions, 276 00:15:50,239 --> 00:15:52,399 then it allocates it out to its outputs. 277 00:15:52,399 --> 00:15:55,199 And when the customer buys it, they get the product 278 00:15:55,199 --> 00:15:57,599 and they also get the accumulated emissions. 279 00:15:57,599 --> 00:16:01,199 So that's the debit side of how you clear out the liability. 280 00:16:01,199 --> 00:16:04,399 And this naturally ripples all the way through the supply chain. 281 00:16:06,079 --> 00:16:08,879 And the neat thing is that any company 282 00:16:09,839 --> 00:16:12,639 only needs to work with its immediate suppliers 283 00:16:13,199 --> 00:16:14,720 and its immediate customers. 284 00:16:14,720 --> 00:16:18,480 And all the information just gets recursively calculated 285 00:16:18,480 --> 00:16:21,759 and transmitted all the way down the value chain. 286 00:16:22,480 --> 00:16:25,919 So it's a very, basically a simple calculation. 287 00:16:27,039 --> 00:16:29,600 And you end up with a statement that looks like this. 288 00:16:29,600 --> 00:16:32,799 So we now have this, you could have a standard statement for any company. 289 00:16:32,799 --> 00:16:37,360 Here's how many scope one emissions we put in the atmosphere on our own operations. 290 00:16:37,360 --> 00:16:41,279 Here's how much we purchased from our suppliers, went into finished products. 291 00:16:41,279 --> 00:16:43,360 Here's how much we transferred to our customers. 292 00:16:44,000 --> 00:16:46,000 And they now have accountability for it. 293 00:16:46,639 --> 00:16:49,839 And when you do this, and now you're clearly accountable, 294 00:16:49,839 --> 00:16:52,959 now you have an incentive to reduce the emissions 295 00:16:52,959 --> 00:16:54,879 that are going through your organization. 296 00:16:54,879 --> 00:16:58,240 You redesign products so the components, you know, 297 00:16:58,240 --> 00:17:01,439 generate less emissions when you purchase them. 298 00:17:01,439 --> 00:17:05,680 And you choose suppliers who are more efficient in the production 299 00:17:05,680 --> 00:17:08,319 relative to the emissions that they produce. 300 00:17:09,279 --> 00:17:12,079 This is the decarbonization of supply chains. 301 00:17:12,079 --> 00:17:13,679 This will make it feasible. 302 00:17:13,679 --> 00:17:17,599 And there's been very little decarbonization over the last 20 years 303 00:17:17,599 --> 00:17:21,599 because the scope three standard was so vague and difficult to implement, 304 00:17:21,599 --> 00:17:24,960 no company could take it seriously and put it into action. 305 00:17:24,960 --> 00:17:26,480 So this is now actionable. 306 00:17:27,200 --> 00:17:30,240 So which company should be the first? 307 00:17:30,240 --> 00:17:32,639 Now, again, I'm going to come up with the challenge here for you. 308 00:17:33,439 --> 00:17:37,839 But it's basically those who have environmentally sensitive customers 309 00:17:37,919 --> 00:17:42,399 and investors should be the ones to want to adopt this system 310 00:17:42,399 --> 00:17:44,799 because they can be clearly accountable for it. 311 00:17:44,799 --> 00:17:47,839 And they get all the benefits when they're able to reduce it, 312 00:17:47,839 --> 00:17:51,119 not only from themselves, but from in their suppliers. 313 00:17:53,039 --> 00:17:56,159 And we've my colleague, Karthik Ramana, 314 00:17:56,159 --> 00:17:59,039 who has developed the Eliability Method with me, you know, 315 00:17:59,039 --> 00:18:02,559 we've set up an Eliability Institute just to get a little funding 316 00:18:02,559 --> 00:18:06,079 because we're trying to run projects on this and show how this works. 317 00:18:06,879 --> 00:18:11,519 You know, and we already have work and pilot projects with automobiles, 318 00:18:11,519 --> 00:18:15,359 with cement, with tires, steel, electric generators. 319 00:18:15,359 --> 00:18:17,519 And the good news is this is really working. 320 00:18:17,519 --> 00:18:19,439 The companies say, this makes sense. 321 00:18:19,439 --> 00:18:23,279 We can put this into action and we can make decisions 322 00:18:23,279 --> 00:18:25,279 that will lower our carbon footprint. 323 00:18:27,199 --> 00:18:29,519 So now let's get down to a quick case study. 324 00:18:29,519 --> 00:18:33,359 And this is the final challenge to the Emirates here. 325 00:18:33,359 --> 00:18:37,519 Second one is embedded in the Eliability Method 326 00:18:37,519 --> 00:18:40,559 is if you can get legitimate carbon offsets, 327 00:18:41,519 --> 00:18:45,519 you've invested in technology, typically agricultural, 328 00:18:45,519 --> 00:18:47,759 that actually removes carbon from the air, 329 00:18:48,479 --> 00:18:50,000 you can get credit for it. 330 00:18:50,000 --> 00:18:52,799 And that will reduce your Eliabilities, 331 00:18:52,799 --> 00:18:57,439 which means you transfer less Eliabilities to your customers, 332 00:18:57,439 --> 00:18:59,199 which your customers will like. 333 00:18:59,199 --> 00:18:59,699 Okay. 334 00:19:00,079 --> 00:19:01,919 Now, what is the opportunity? 335 00:19:02,880 --> 00:19:07,840 Well, turns out mangroves just love to eat up carbon dioxide. 336 00:19:07,840 --> 00:19:10,320 They're great carbon dioxide absorbers. 337 00:19:10,320 --> 00:19:14,480 And it's a very widespread crop, I'm told, in this area. 338 00:19:14,480 --> 00:19:16,400 And yet it's been allowed to degrade. 339 00:19:18,000 --> 00:19:20,800 Imagine now if we started to here locally, 340 00:19:22,800 --> 00:19:25,360 started maybe this month or next month saying, 341 00:19:25,360 --> 00:19:28,800 okay, we're going to start building mangrove forest back again. 342 00:19:29,759 --> 00:19:33,279 You know, I said as a goal when we had that inspirational talk 343 00:19:34,000 --> 00:19:37,519 at noontime from the minister who's leading COP 28. 344 00:19:38,319 --> 00:19:39,599 That's nine months from now. 345 00:19:40,159 --> 00:19:42,879 Why can't we have a project get underway 346 00:19:42,879 --> 00:19:45,759 that we can have somebody come up on this podium and said, 347 00:19:45,759 --> 00:19:49,440 yes, here's the project in mangroves that's going on in the UAE. 348 00:19:49,440 --> 00:19:53,440 And here's how much kilograms and tons of carbon we expect to capture. 349 00:19:54,079 --> 00:19:57,359 And if we do this, this is really where the mitigate, 350 00:19:57,599 --> 00:20:00,000 where we can make some substantial benefits. 351 00:20:01,439 --> 00:20:03,519 But this is a complicated story. 352 00:20:03,519 --> 00:20:05,759 So now if I combine my two stories, 353 00:20:05,759 --> 00:20:11,279 we have to create this ecosystem around investing in mangrove forests. 354 00:20:11,279 --> 00:20:13,199 You know, the top line is economic. 355 00:20:13,839 --> 00:20:17,199 You'll be able to sell those carbon credits for a really good price. 356 00:20:17,199 --> 00:20:20,559 There is a huge demand for legitimate carbon credits. 357 00:20:21,919 --> 00:20:25,039 It'll improve the livelihood of the farmers who are involved in this 358 00:20:25,039 --> 00:20:27,199 and all the suppliers to building the forest. 359 00:20:28,240 --> 00:20:34,639 It's going to conserve the land and also absorb the CO2 and CH4 from the environment. 360 00:20:34,639 --> 00:20:35,839 Who are the stakeholders? 361 00:20:36,799 --> 00:20:40,399 Businesses that are going to purchase those legitimate carbon credits, 362 00:20:40,399 --> 00:20:44,719 the investors who will put the money in and get the return from the financial return. 363 00:20:45,919 --> 00:20:48,159 Government will get better use of the land. 364 00:20:48,159 --> 00:20:51,759 And the communities where this takes place, they will all benefit. 365 00:20:52,319 --> 00:20:55,759 So the beauty about these inclusive growth programs 366 00:20:56,000 --> 00:20:58,400 is the win, win, win. 367 00:20:58,960 --> 00:21:00,559 It's not a zero sum game. 368 00:21:00,559 --> 00:21:03,839 That's the beauty of capitalism and productivity. 369 00:21:03,839 --> 00:21:08,640 You create something where everybody wins and everybody shares in the benefits. 370 00:21:08,640 --> 00:21:12,640 And we have, you know, typical processes that we have in that third sector. 371 00:21:13,839 --> 00:21:19,200 So wouldn't this be exciting, you know, if somebody says, hey, this is a good idea. 372 00:21:19,200 --> 00:21:21,359 You know, this is an imminent crisis. 373 00:21:21,359 --> 00:21:25,200 You heard the idea, you know, one and a half degrees, what's happening in 2030. 374 00:21:26,160 --> 00:21:29,200 So we're getting lots of rhetoric at the minister's level. 375 00:21:29,200 --> 00:21:30,799 Lots of people go to conferences. 376 00:21:32,400 --> 00:21:34,640 Who's investing in a mangrove forest? 377 00:21:34,640 --> 00:21:39,519 Who's investing in that farming community in East Africa or in Sri Lanka? 378 00:21:39,519 --> 00:21:41,519 So that's the challenge I put in front of you. 379 00:21:42,799 --> 00:21:44,480 We know how to make this work. 380 00:21:44,480 --> 00:21:46,720 We know how to put these systems in place. 381 00:21:46,720 --> 00:21:50,880 What we need is some leaders to step forward, take up this challenge. 382 00:21:50,880 --> 00:21:53,759 We'll work with you and see if we can get this moving. 383 00:21:53,759 --> 00:21:54,559 Thank you very much. 384 00:21:55,200 --> 00:21:57,200 Thank you.