Resource scarcity spotlight: Jochen Gassner, First Climate By Steven Wilding on Apr 2, 2013

“Ethical Corporation: Shared value or sustainability?

Jochen Gassner: Shared value to achieve sustainability.”

Resource scarcity spotlight: Jochen Gassner, First Climate

By Steven Wilding on Apr 2, 2013

A market approach to natural resource management

Jochen Gassner is a Board Member at First Climate Markets AG. His responsibilities encompass the development of international and national VER markets, the design of climate neutral products and services, and the consulting of private and public sector clients.

Before joining First Climate, he worked as Group Environmental Manager at Borealis and as Environmental Consultant for a number of industry sectors. He studied environmental engineering at the Leoben University of Mining and Metallurgy, Austria, and holds a PhD in sustainability research from Graz University of Technology, Austria.

Ethical Corporation: Tell us briefly what it is you do?

Jochen Gassner: At First Climate, we help companies measure, manage and compensate or offset their carbon and water footprints. We are one of the most experienced carbon offset providers in the market. We are now piloting a similar programme to help companies invest in water stewardship projects.

Ethical Corporation: What do you see as the big issues to look out for in 2013?

Jochen Gassner: As a company, we are always looking at the carbon space. The very interesting question right now is where to go after Doha [Climate Change Conference, November 2012]. We don’t see any real commitments yet to reduce greenhouse gas emissions after 2012.

As a German company, we are also watching the energy market as Germany is spearheading a change in its energy system. At the same time, Germany faces an an election year in 2013, so it will be interesting to see how politics influences developments in the energy system.

Ethical Corporation: What are your personal priorities in the year ahead?

Jochen Gassner: The key thing for us is to strengthen our role in the global carbon market. Historically we’ve been very active in the compliance carbon markets and we still are, but that marketplace now plays a smaller role than it did a few years ago.

Our focus is therefore moving more towards the voluntary carbon market. Then we’re also piloting other initiatives in the water and renewable energy space. To elevate those to a stage where they are profitable would be a change for 2013 as well.

Ethical Corporation: Do you anticipate any advances on international carbon policy in the future?

Jochen Gassner: The negotiation process certainly needs to be simplified if we are to take this forward. In the near future, we have to see what China is developing in terms of its regional schemes and where the US is heading after the re-election of [President] Obama.

But the big solution is for carbon markets to become like commodity markets of this world, which is off the table right now.

Ethical Corporation: What role do you feel collaboration will play in making a transition towards a more sustainable, low-carbon future?

Jochen Gassner: Companies won’t be in a position to do it alone. The order of magnitude of the challenge means that it needs industry collaboration, as well as governments. The role of government is key because someone needs to take the risk. So look at the German renewable energy system and the role that feed-in tariffs played in that. Without that, we wouldn’t have seen the same growth.

That said, with technological progress, we are moving to a point where some renewables in some parts of the world can be competitive without subsidies, which is when governments need to step out. I think citizen participation is important too. We’re always talking about consumers and what they can do, but I’m convinced that we need input from wider society because without that we can’t make the necessary transition.

Ethical Corporation: Do you think that companies are taking future resource scarcity issues seriously enough at present?

Jochen Gassner: Generally, the corporate sector has been focused on capital costs and labour costs, and not so much on resources because they seem readily available. When it comes to strategic management of scarcity risks, however, we’re only now beginning to see companies getting their heads around the issue.

Resource scarcity will bring with it a redistribution of risks and opportunities. For example, companies in the extractive industry will have to go to places where exploration and production is more risky and expensive.

It’s important to be mindful that there are certain resources that are already scarce. Think about water, fossil fuels, and minerals and metals, for example.

Then consider the rise of the global population by a couple of billion [over the next four decades], which will demand more consumption of these resources all the time. While we’ve seen some decoupling between GDP and resource use over the last decades, we are still in a situation where GDP growth is coupled to the use of resources.

Ethical Corporation: Water is a particular focus of your resource conservation attentions at this time, is that correct?

Jochen Gassner: Yes. It’s obvious, but water is one of the most important resources. It’s almost impossible to replace. We’ve set up a public-private partnership that brings together financiers with corporations with technical expertise and organisations such as the Gold Standard.

The idea is to develop an innovative financing mechanism for water saving, water purification and water supply projects – much like the carbon projects we are financing already. As it is, there are a number of projects in the carbon markets that have a focus on water element, such as irrigation projects.

But there’s no currency to fund these projects, so we’ve been financing them through the carbon. We’re now working on establishing Water Benefit Certificates to fund these projects.

Ethical Corporation: How exactly do you envision these Water Benefit Certificates working?

Jochen Gassner: We see them working very much like the voluntary carbon markets. So, on the one side, you’ve got someone who is willing to invest in a project, and on the other hand you have projects like drip irrigation and water purification that require financing.

We’ll establish a mechanism that allows us to quantify, monitor and verify the water savings of those projects, and will establish a currency that helps us to link financing to the water savings. So just as a Carbon Credit is issued for a tonne of carbon dioxide reduced, a Water Benefit Certificate is issued for each thousand cubic meters of water saved, supplied or purified.

Then, with the market, we’ll attach a value to those cubic metres, and then we’ll sell that saving as a financing opportunity for the corporate community.

Ethical Corporation: Where are you at today with the Water Benefits Certificates?

Jochen Gassner: At present, we’re focused primarily on methodology and concept development. The way forward is to get supply and demand to a scale where we can create the market. We need to build a larger portfolio of projects and identify potential [financing] bodies for the Water Benefit Certificates.

Then we might see something that is similar to what we see today in the voluntary carbon market, with an established market of buyers and projects which are financed by them.

Ethical Corporation: Climate change – mitigation or adaptation?

Jochen Gassner: I can’t say both? Where we stand today, I would hope for mitigation but I think we will need more adaptation.

Ethical Corporation: Name a government to watch on sustainability.

Jochen Gassner: The United States. We’ve had great hopes in Obama to move the green agenda forward. Perhaps he’s got some more freedom in his second term to do that.

Ethical Corporation: Corporation tax: higher or lower?

Jochen Gassner: That all depends on where we’re talking about.

Ethical Corporation: Corporate responsibility impact: Obama or Xi Jinping?

Jochen Gassner: I guess the answer again would be both. If I had to choose, maybe Xi Jinping just because of the magnitude of China and what it now means for the global economy. It’s imperative that they embark on the agenda as well.

Ethical Corporation: Shared value or sustainability?

Jochen Gassner: Shared value to achieve sustainability.

Jochen Gassner will be speaking at the Responsible Business Summit, 7/8th May 2013, where he we be discussing how to create and implement a business model to reflect water, food and energy shortages.

How the company of 2020 will operate in a resource-constrained world By Steven Wilding

“…94% of businesses lack an adequate long term strategy to deal with

resource scarcity.”

How the company of 2020 will operate in a resource-constrained world

By Steven Wilding on Feb 18, 2013

Key findings and challenges identified during the recent hour-long webinar

The extract includes some key findings and future challenges identified by our expert speakers and contributions from the audience. Several industry polls took place during the webinar which have also been factored into the selected findings.

The webinar featured the following expert speakers:

• Raji Hattar, Chief Sustainability and Compliance Officer, Aramex
• Nicola Kimm, Corporate Sustainability Director, CSM
• Ioannis Ioannou, Assistant Professor of Strategy and Entrepreneurship, London Business School

A few of the webinar’s key findings

1. 94% of businesses lack an adequate long term strategy to deal with resource scarcity.
2. Lack of C-suite engagement. Currently there is too much emphasis on so called “super CEOs” such as Paul Polman at Unilever. Most CEOs are not showing enough leadership on the issue of resource scarcity.
3. Sustainable products are only more expensive when a company has failed to innovate sufficiently to create a green and competitively priced product or not invested enough in R&D.
4. Greater competition for resources will lead to price volatility and supply shortage making it essential competing companies operate with suppliers in a collaborative way.
5. Creation of closed loop supply using by-products traditionally classed as waste will become the standard model.
6. Investors are increasingly taking note of resource scarcity as part of ESG assessment. Access to finance is improved for companies adopting a more sustainable business model.
7. Key to delivering a business model adapted to resource scarcity is the creation of a more sustainable supply chain.
8. Promoting sustainable consumption among consumers is of equal importance as engagement with frontline managers and staff.
9. Collaborative industry groups and associations, such as RSPO, are crucial for companies to manage their supply chain in a more resource friendly way.
10. Targets matter to frontline staff. Frontline managers and staff need to identify realistic, manageable and localised goals which will contribute to ambitious long term companywide targets to reduce resource usage.
11. In the Gulf States and the Middle East the attitude is moving away from sustainability as philanthropy and more towards integration of corporate responsibility in business processes especially amongst public shareholding companies.

Whilst the webinar was a solution driven debate and discussion, the challenges to overcome are immense with implementation taking place over the coming years and decades. As such, speakers and participants identified some future challenges to address in order to move towards a resource friendly business model.

Ten challenges for the future

1. Decoupling increased growth and profitability from greater use of resources.
2. Identifying resource scarcity not just as a business threat but an opportunity to develop long term partnerships with suppliers.
3. Adopting a “circular economy, cradle to cradle” approach.
4. Ending artificially cheap oil prices in resource rich states and creating awareness of its finite supply and true value.
5. Innovative development of renewable technology and its integration into mainstream energy generation.
6. Going beyond the niche of “eco labels” and “eco brands” to generate mainstream demand for sustainable products.
7. Teaching consumers which products are sustainable and why they should buy sustainable products.
8. Increasing government involvement to incentivise resource friendly business models and if necessary legislate to ensure it happens.
9. Increasing the pace of change in the Gulf States and Middle East where abandoning a philanthropic attitude to corporate responsibility is slow amongst medium sized and small companies.
10. Convincing companies of the business case for renewable energy in the long term even if the benefits may be limited in the short term.

A recording of the full hour-long webinar is available as a free download here

The discussion going forward…

All of the speakers who took part in the webinar at will be speaking at Ethical Corporation’s flagship Responsible Business Summit, May 7th and 8th in London where resource scarcity will form a key part of the agenda.

Debating resource scarcity on of the opening keynotes will be:

• Barbara J. Krumsiek, Chief Executive Officer and Chair, Calvert Investments
• Gerard Hoetmer, Chief Executive Officer, CSM 

This will be followed up by several roundtable debates looking at different aspects of resource scarcity in-depth. These will be facilitated and moderated by speakers from: Rio Tinto, Rezidor Hotel Group, ING Group, Aramex, CLP Group and First Climate.

For more information about this and all of the sessions download the Summit brochure.