forum

C'COj n(,ll-&: dcveloprrient more sustainable has 1)een labeled a critical issue for thc 21st century, little progr-ess has becn made. Making economic developrnent sustaiiiable over tlie long term will require it complete o~~erliattl of our tures, replacing legacy materi-ais, processes, SJJ

structures with those that are increasingly inore sustainable. To meet this challenge, the engineering conimiiiii~--tIic sector most qwalified to effect this change-inust alter sub- stantially the way it approaches planriiiig, design, construc- tion, arid operatioii. ilcqiiiescence to tlie status qiio is no longer acceptable. The engineering cnmniiinity needs to take the lead in deidoping and applying more innovative technologies to achieve sustaiiiabilit y.

Right iiow other groups are beginning to fulfill that

need, and arc doiiig so at the engineering community's expense. For example, Rocky Mountain Institute has begrin a program called Factor Ten Engineering (IOXE) to develop iiii instructive toolkit and associated case stud- ies showing how whole-system design can boost resource productivity at least tenfold over traditional engineering approaches. Interestingly, tlie program's stated goal is the " n oiivi o le 11 t over th row of bad en gi II e e ring. "

This article is in tended to stiinulate discussion, spe- cifically exploring tlie connection between sustainable development and iiiiiovation. Many questions still exist in the minds of the public as well as the practitioners: Is sustainability a significant issue? What are the impacts of i~onsustaiiiability and are they serious enough to warrant substantial action? What are the barriers to achieving con-

ditions oC sustainability? What has been our experience to date in projects that purport to deliver improved sus- tainable performance? What is keeping the engineering conimrmity from becoming inore involved in addressing the problems? What should be done to improve our facili- ties and infrastructure? By identifying the issues and the

progress toward sustainability can be made. i,, a " 1 *' leis - to addressing them, it is hoped that inore rapid

g$#qpTQFfis sa pJ Rising energy prices, iiicreasiiig water shortages, overtaxed electrical power grids, traffic congestion, urban sprawl, unprecedented flood daniagc, a perennial dead zone in the Gulf of'illcxico, loss of fisheries resources, food safety issues, global climate change: viewed individually, these ti~ciicls aiid eveiils might be dismissed as the inevitable conseqiieiices of an incimsingly complex world, necessary sacrifices to inaint-ain our high standard of living. Viewed collectively, liowovci-, they can be seen as the perilous conseqiiences of society's crirrent and iionsiistainable approach to cconoinic developmeit t. This is ail approach that uses resoiirces wit hotit milch restraint, burdens our ecosystems with more waste arid pollution, neglccts the care and lipgrading of supporting infi-asiructiires, aiid disrupts the social Cdxic of societies.

For developing nations, matters only get worse. Rapid population growth cornbiiicd with eqiially rapid urbaniza-

lining infrastructure beyond the breaking point. Megacities (i.e., urban areas ~ i t h populations of10 million

awma.org april 2007 en't 5

or greater) ai-e now being created in inany developing nations. The National Research Council notes that by 2030, more than 80% ofthe population of North America, Europe, Oceania, aiid Latin America, and more than 50% of tlie population of Asia and Africa, will be living in urban areas.' In many instances, these cities lack even the most basic infrastrrrctures and are highly vulnerable to disasters, natural or man-made. Severe traffic congestion, \videspread power outages, aiid the lack of clean water and sanitation are coininonplace.

As they try to modernize, developing nations appear to be using whatever tecl111ology is available, without much regard for its impacts. For example, to support its growth arid attendant energy needs, China is adding one new coal-fired power plant every 7-1 0 days." Combined with its increased use of automobiles, China is projected to surpass the United Sates in greenhouse gas emissions by 2020."

While these nations are expanding economically, the people in the poorest nations are struggling for survival. Today, 1.1 billion people do not have ac- cess to fresh water, and more than 2.6 billion do not have access to sanitation. Food shortages are wide- spread. Approximately 1.2 billion people suffer from hiriiger (i.e., deficiency of calories and protein) and approximately 3.5 billion people have micronutrient deficiency (Le., deficiency of vitamins and minerals).

Taken together, these problems should serve as warning signs h a t society's current method of economic devel- opment is not sustainable in the long term. In order to support the lifestyles of developed nations and to meet the needs and aspirations of those still developing, we are using LIP essential resources and ecological carrying capacity faster than they can he replaced or replenished. Studies have shown that the resources and ecological capacities used by humanity are now well in excess of the resources and capacities available (see Figure 1). At tlie same time, developed nations have not been able to adequately assist the people in the poorer nations to meet basic needs.

120

Ecological 100

mber of Earths Available, P tf: 080 r

pesenting the Total Biocapacity L

2oi O O O ~ - - - - - - -

61 53 65 61 69 71 73 75 71 79 81 53 85 87 89 S i 93 95 97 99

Figure 1. Ecological overshoot: consuming our natural capital faster than it can be replaced or replenished. Source Wackemagel, M, et. al Tracking the Ecological Overshoot of the Human Economy; Proc /Vat/. Acad. S o US.A 2002, 991141. 9266-9271

The consequences of these excesses are expected to reach crisis proportions soon, perhaps in the next 20 years. If developed nations continue on their current coni-se, indi- cations are that they could face severe shortages in fossil fuels, electricity, and water resources. The signs are every- where. Political unrest in the Middle East isjeopardizing oil supplies to Western countries. Increased or new violence, cuts in production by the oil-producing nations, or acts of sabotage could disrupt the flow of oil at any moment. Mean- while, demands for electricity are outstripping generating and transmission capacity.

Although, the 20-years-to-a-crisis estimate is admittedly a guess, it is generally supported by other sources. In his book, Hagh Noon: 20 Global Problems; 20 Ears to Sohoe Them, author J.F. Rischard notes that two big forces-population growth and the new world economy-will bring about unprecedented changes over the next 20 years, taxing our institutions beyond their limits." Moreover, popula- tion growth and demographic shifs in the western United States are taxing already scarce and drought-depleted water supplies. These are being taxed to such an extent that the federal government has identified more than 30 fkture "hot spots" (i.e., areas of potential water crises) in the western United States by 2025.? These worsening trends continually increase the chances that a number of severe events will occur, perhaps siinultaneously, with devastating consequences.

The United Nations' Milleiiniuin Ecosystem Assessment reports that the degradation of many ecosystem services could be reversed by 2050, but that needed actions are significant and currently not underway. Actions include significant investments in environmentally sound technol- ogy, active adaptive management, aiid proactive action to address environmeii tal problems before their full conse- quences are experienced.x

The seriousness and urgency of this situation demands strong and immediate action to head off these potential crises and to move us onto a pathway toward an increas- ingly inore sustainable form of economic development. We need to begin at once to reverse the current trends of resource usage and environmental damage. Ultimately, it

6 ei-x april 2007 awma.org

will require a comfjlete overhaul of our current forms of production, replac ing the legacies of a norisustainable past with new processes, systems, and infrastructures that use increasingly less energy and materials, that are reusable and recyclable, and that cause less harm to the environment.

However, given today’s economic and political condi- tions, it is highly improbable that any single organization could muster the support or the funding to launch and main! tin such a complete overhaul. Therefore, until suf- ficici pressures build, progress toward sustainability will continue incrementally, project by project, as directed by project owners and their engineers. .

connect back to the fundamental issues, goals, and priorities of susainable development as the world percei~es them.

Help along these lines may come from the Interna- uonal Federation of Consulting Engineers’ (FIDIC) Prqert SuJtainaba1zt.y illanugement (PSl14) Guzdelanes.gThe guidelines offer a framework and a process that enables project own- ers and engineers to formulate sustainability project goals and measures that are aligned and traceable back to what the world thinks are the issues, problems, and priorities related to sustainability, documented in Agenda 21,” and converted to goals and indicators by the United Nations Commission on Sustainable Development.

The pace of progress will be-will be governed by existing rules, regulations, and standards, and subject to the sus- tainability goals, agendas, dnd appetites of pioject owners.

amental task be- fore us is to change the trajectorv of humanity’s use of ecological resources, to a level of less than one planet in 20 years. To do this, we must:

1. Define the dimrnsioiis, goals, and indicators of what constitutes sustainable development. This definition must be framed around recognized issues, problems, and piiorities of nonsustainability.

2. Survey the dimensions of sustainable development and cslablish current perfoi inance benchmarks. Undei.;tand the current state of the practice.

3. Develop and apply innovative and increasingly more sustainable technologies that 8 1 1 the perforlmnce bai acrcl,., one or moie dimensions of sustainability.

LE

If progress toward sustainability is to be achieved, it is essential to define the dimensions of sirstainability and agree 0x1 the sustxiiability goals and the in- dicators for measuring progress. Many organizations have devised various sets of sustainability goals and indicators reflecting their own perceptions and agendas. However, the): generally do not relate to projects, nor do they fully

. .. . . . . . . .. . . .. . . . .

awma.org 9 april 2007 em 9

Once the dimensions of sustainable development are established, i t is necessary to understand what levels of performance have been achieved through the applica- tion of various technologies. Performance will range from what is normally achieved using conventional technologies through best in class. The current state-of-the-practice is defined as what is considered nonnal, everyday practice by the

I Range of project owner I sustainability goals

Range of project owner implementation choices

Hig

Vanes based on new evidence Suslainability goal (ideal) lechnoiogical developments

Advances through innovation and nsk taking with new processes, syslems and technologies

Set a new benchmark for sustainable performance

Apply what is currently achievable

Advances through lhe applicalion of best-inclass processes, syslems and technologies

Apply convenli~nal Current slale.of-the-pmclice

Achieve Compliance Vanes based on laws, regulalions

Low 1

Figure 2. Example of a sustainable development objective and indicator. Source: FIDIC‘s Project Sustainability Management Guideli~~es.~

New Benchmarks Best in Class

State-of-the-practice

Compliance

Proiect Achievements

Conventional performance

More sustainable 0 performance

Existing benchmarks, e.g., LEED

Range of application (varies by industry, location. situation)

Figure 3. Project achievements within a sustainable development objective and indicator.

“7

umber of Earths Ava

0.2 0.41 I Today

0.0 I I I I I I I I +

1970 1980 1990 2000 2010 2020 2030

Figure 4. The role of innovation in creating a more sustainable future.

El ern april 2689

en gi ne e ring commtiii i ty, achieving an acceptable level of performance based on currentstandards, codes, and regulations. The concept of sustainable performance is depicted in Figures 2 and 3.

The state-of-the-practice is an important concept for practicing engineers, since it is the criterion by which their designs are legallv judged. IP designs do not perform as expected, the project owner may initiate claims against the engineer. In these cases, the engineer’s primary defense is that tlieir work matched the current state-of-the-practice (i.e., they did the projectjust like other engineers do these sorts of projects). Improve- ments in sustainable perfor- mance are achieved by the successful application of increasingly more sustain- able technologies, reaching or perhaps going beyond existing sustainability bench- marks to set new levels of performance. Almost by definition, the application of these technologies to proj- ects would not fall within the current state-of-the-practice, and thus would open the door for claims against the engineer.

Achieving new levels of sustainable performance, and thus malting progress toward sustainability, de- pends upon the ability of

iweim& Rocky \loiintciin Inmtute, Iloumdss, CO, nvailnble at IVWY

rmi org/sitepages/ptdl081 php 2 Koelinan, 0 Bzometnc Llutldrng~

Undm landing e’Api,l) 23Zg the I.C$SOM untain Institute,

T m n Wzrc (Agence Francc-Piesse), Noveriihci 11,2004.

Intematlonal Fedeia

the 1992 Rio Earth nda21 rsa40-chapter, iiment that outlined actioii progrmis for tainahility It \et out

s t time a compiehensive Is and priorities lor re-

of the woild’s

--

engineers to innovate: to imagine, invent, develop, test, and apply new processes, systems, and technologies to the problems at hand (see Figure 4). As with all technological advances, progress toward sustainabilitywill be a messy, non- linear process filled with numerous fits and starts. Until we fully understand all of its elements, a particular technology may not perform as anticipated or deliver the desired result. Progress will be achieved through incremental learning of what worked and what didn’t, and how increasingly more sustainable technologes can be applied successfully.

Given the exciting challenges and opportunities for enp- neers in the areas of sustainable development, it is hard

awma.org

to understand why the engineering community has not assumed a strong leadership role in advancing the state of the sustainable development engineering practice. Pos- sible reasons are offered below.

Making good progress in developing the requisite tech- nologies requires an environment for innovation: an open environment in which diversity is encouraged, knowledge is exchanged, and risk is shared among the participants. Unfortunately, engineers work in a highly litigious environment that discourages risk-taking. Do- ing engineering work in an environmeint in which your chief defense against claims of negligence is that you did it like everyone else does is not particularly conducive to innovation.

Also, for whatever reason, the engineering disciplines tend to operate in relative isolation, doing their work and passing the results on to other disciplines at the appropri- ate project moment. Such practices make it very difficult to look at problems holistically and find opportunities to take advantage of design synergies, or eliminate redundancies and defensive designs.

Given the risks involved in bringing in new and relatively un- tried technologies, engineering firms have not developed much of an appetite for innovation. Moreover, the threats of business risk have forced them to stick closely to what they know and can do well over and over again, working within the confines of the current state-of-the-practice.

Additionally, engineering firms that are organized to effectively perform the same kinds of projects year after year are not well equipped to identify and assess new problems or issues. Indeed, bringing in new and innovative technologies could be seen as a disruption of established practices and a cause of lower profitability.

Operating continually under the threat of litigation and working tediously within the status quo tends to dampen enthusiasm and smother new ideas.

Given the urgency and serious consequences of our cur- rent nonsustainable operations, it is clear that actions need to be taken soon to create a more sustainable fu- ture. The answers lie in removing the barriers, and in so doing, enhancing our ability to innovate: replacing exist- ing technologies with those that are new, innovative, and increasingly more sustainable.

The engineering community must be the change agent, taking the lead in identifying, developing, and applying new and more innovative technologies to achieve sustain- ability. Although this is a challenging and risky course, it will open up many new opportunities and do the world a lot of good-preserving and enhancing resources and the environment for current and future generations. em

awma.org

f e a t u r e

r years on the subject of the U.S. Securities and Exchange Commission’s (SEC) requirements for environmental disclosure by publicly traded companies and how the general provisions of Regulation S-K’ (plus a number of environment-specific guidances and in terpre tatioiis from the SEC and others) affect the inclusion of en\‘ w-onmen- tal factors in corporate financial disclosure documents. Less attention seems to hare been paid, hodever, to the way in which these securities laws and mark ts have led to a noticeable evolution in corporate repo ing as evidenced by dramatically broader corporate en ’ron- mental-, sustainability-, and social responsibility-rela ed

tary reports-even in tlie absence of dramatic changes i the underlying environmental statutes or in Regulation

disclosures-both in required SEC filings and in volu ‘z S-K itself.

Recent trends reflect that publicly traded companies are producing noticeably expanded environmental disclosures in their mandatory SEC reports while, in tandem, produc- ing additional voluntary reports-variously styled as corpo- rate sustainability, environmental, or social responsibility reports-relating to environmental and other social effects of corporate activity that are targeted at the investing public and other communities relevant to a company’s reputation and success. This article discusses how stakeholder influence and other changes in the securities laws and markets have real potential to be a significant driver for transparency and innovation in the sustainability and environmental arenas.

The following is a brief primer on SEC enviro disclosure requirements.

Regulation S-K’ conta

which requires discussion of material costs and consequenc- es of compliance with laws, including environmental laws, in terms of the company’s capital expenditures, earnings, and competitive position; Item 103, which directs companies to describe material pending legal proceedings, including, without limitation, significant environmental penalty actions (which are expressly deemed material if expected to result in monetary sanctions of US$lOO,OOO or more) or material cleanup actions; and Item 303, which focuses on the report- ing of “management’s discussion and analysis” about known trends and uncertainties that are reasonably anticipated to be material. This disclosure framework motivates publicly traded companies to worry about environmental results because they have to report on those results to institutional investors, the media, and the investing public.

The black letter -K on what must be disclosed in corporate SEC filings have also received

10 april 2007

erpretive gloss from instructions that are n, from subsequent

Financial Accounting Standards Boa influential third-party

ational and the Ameri-

and depth of Regulation S-K by es and activities companies must

cuses for not report- on how uncertainties

should be reported or u n c e r ~ n costs calculated. These interpretations seemed geared toward capturing

in mandatory filings items that traditionally might have been omitted from many corporate financial reports because either they were not fully manifested or calculating their potential materiality with any certainty would be difficult. While a diversity r erriairis in the approaches companies use to discuss environmental costs and consequences in their SEC filings-and while the above-referenced guidances and interpretations by no means eliminate uncertainty about what the SEC requires-by expanding the topics expressly required to be covered and by narrowing the available reas- ons companies might use to not report on certain issues, these efforts by the SEC, FASB, and othei-s appear calculat- ed to broaden environmental disclosure and transparency in companies’ mandatoiy SEC filings.

The adoption of tlie Sarbanes-Oxley Act in 2002 announced a broad effort to enhance the accuracy of corporate finan- cial disclosure by tightening certain standards, requiring

awma.org