Green financing,interrupted. Potential directions for sustainable finance in Luxembourg

ABSTRACT

This paper has a quintessentially explorative character. It aims at identifying existing as well as potential (yet missing) links between the finance industry and local businesses that aspire to more sustainable economic practices. Building on the observation that green investments have been gaining weight in global investors’ strategies, we analyse how sustainable – in the most comprehensive sense of the word – green investments could ultimately be(come), when green assets are still managed according to the logic of “financialised finance”. This latter’s technologies of commodification, securitisation and derivatives-trading allegedly oppose alternative economic practices that pursue economic sustainability through social and environmental gains. In contrast, we investigate how the finance industry relates to alternative financial practices, products and organisations that offer sustainability-oriented financing services, – for example, regional banks, cooperatives and the like, – with a specific focus on green, social and solidarity businesses. Both approaches subscribe to apparently contradictory ideologies. We establish a beneficial dialogue between the opposing models of “green capitalism” and “alternative economies” so as to identify potential points of intersection. The context of Luxembourg’s local/regional economies provides a great opportunity to empirically access three levels of investigation: the private sector, the public sector and an international financial centre, a key facilitator for green finance, thus utilising insights from the concept of bricolage. Whilst supporters of Luxembourg’s emerging green finance profile recognise its positive impact on the small country’s national branding, in combination with economic stimuli, more critical commentators point to pure “green washing” effects.     

Resilience certification for commercial buildings: a study of stakeholder perspectives

Infrastructure resilience has become a primary objective for homeland and national security organizations over the past decade. Recent initiatives have focused on resilient building design, and one approach under consideration is a voluntary resilience certification program for commercial buildings. The intent of this program would be to encourage the adoption of resilient design practices in construction and planning of the buildings. While resilience may be a frequently discussed concept within the security communities, its level of awareness within the construction, design, insurance, and building owner communities is not well known. Given the voluntary nature of the certification program under consideration, program development requires a comprehensive understanding of resilience as defined by the commercial building stakeholders. Toward this end, Sandia National Laboratories conducted a study of stakeholder perspectives on resilience to ascertain factors that would serve as motivation for participation in the resilience certification program. This paper describes how Sandia performed the study and the resulting conclusions. One of the key conclusions that the study found is that the term resilience is unfamiliar to many and inconsistently defined across the industries. Those familiar with the term frequently linked it to sustainability concepts. The study also found that increased participation in the resilience certification program is very likely affected by demonstrable returns on resilience investments and a public–private partnership model for program administration.     

Equitable distribution of green stormwater infrastructure: a capacity-based framework for implementation in disadvantaged communities

This study seeks to understand the factors that influence the variability in distribution of public and private sector investments in green stormwater infrastructure (GSI) projects across the diversity of neighbourhoods in the City of Philadelphia, PA, U.S.A. using indicators of community context and capacity. For this study, context is defined as characteristics of disadvantaged communities and capacity as factors that facilitate individual and collective action. Community context and capacity are deemed integral to the success of the Philadelphia GSI programme as the Philadelphia Water Department is relying upon collaborative approaches to facilitate public investments in neighbourhoods and voluntary implementation of GSI practices on publically and privately owned lands. Private sector investments in GSI mandated by stormwater regulations for new construction and major rehabilitation also are assessed in relation to these two sets of indicators. The geographic information systems and statistical analyses reveal an inequitable distribution of GSI projects, which largely is driven by market forces. The paper concludes with a community capacity-based framework to prioritise public sector investment in disadvantaged communities to achieve more equitable distribution of GSI projects and associated benefits.     

Life-cycle cost-benefit analysis of extensive vegetated roof systems

The built environment has been a significant cause of environmental degradation in the previously undeveloped landscape. As public and private interest in restoring the environmental integrity of urban areas continues to increase, new construction practices are being developed that explicitly value beneficial environmental characteristics. The use of vegetation on a rooftop--commonly called a green roof--as an alternative to traditional roofing materials is an increasingly utilized example of such practices. The vegetation and growing media perform a number of functions that improve environmental performance, including: absorption of rainfall, reduction of roof temperatures, improvement in ambient air quality, and provision of urban habitat. A better accounting of the green roof's total costs and benefits to society and to the private sector will aid in the design of policy instruments and educational materials that affect individual decisions about green roof construction. This study uses data collected from an experimental green roof plot to develop a benefit cost analysis (BCA) for the life cycle of extensive (thin layer) green roof systems in an urban watershed. The results from this analysis are compared with a traditional roofing scenario. The net present value (NPV) of this type of green roof currently ranges from 10% to 14% more expensive than its conventional counterpart. A reduction of 20% in green roof construction cost would make the social NPV of the practice less than traditional roof NPV. Considering the positive social benefits and relatively novel nature of the practice, incentives encouraging the use of this practice in highly urbanized watersheds are strongly recommended.     

USE OF SOIL AND WATER PROTECTION PRACTICES AMONG FARMERS IN THE NORTH CENTRAL REGION OF THE UNITED STATES1

ABSTRACT: Data were collected in the fall of 1998 and the winter of 1999 from 1,011 land owner‐operators within three watersheds in the North Central Region of the United States to assess adoption of soil and water protection practices. Farm owner‐operators were asked to indicate how frequently they used 18 different agricultural production practices. Many farmers within the three watersheds had adopted conservation protection practices. However, they also employed production practices that could negate many of the environmental benefits associated with conservation practices in use. Comparison of adoption behaviors used in the three watersheds revealed significant differences among the study groups. Respondents in the Iowa and Ohio watersheds reported greater use of conservation production systems than did farmers in Minnesota. However, there were no significant differences between Ohio and Iowa farmers in terms of use of conservation production practices. This was surprising, since farmers in the Ohio watershed had received massive amounts of public and private investments to motivate them to adopt and to continue using conservation production systems. These findings bring into serious question the use of traditional voluntary conservation programs such as those employed in the Ohio watershed. Study findings suggest that new policy approaches should be considered. It is argued that “whole farm planning” should be a significant component of new agricultural conservation policy.     

Making a stronger case for industrial energy efficiency by quantifying non-energy benefits

This paper describes a more compelling case for industry to promote the non-energy benefits of energy efficiency investments. We do this in two ways to actively appeal to chief executive officers (CEOs) and chief financial officers (CFOs) primary responsibility: to enhance shareholder value. First, we describe the use of a project-by-project corporate financial analysis approach to quantify a broader range of productivity benefits that stem from investments in energy-efficient technologies, including waste reduction and pollution prevention. Second, and perhaps just as important, we present such information in corporate financial terms. These standard, widely-accepted analysis procedures are more credible to industry than the economic modeling done in the past because they are structured in the same way corporate financial analysts perform discounted cashflow investment analyses on individual projects. Case studies including such financial analyses, which quantify both energy and non-energy benefits from investments in energy-efficient technologies, are presented. Experience shows that energy efficiency projects’ non-energy benefits often exceed the value of energy savings, so energy savings should be viewed more correctly as part of the total benefits, rather than the focus of the results. Quantifying the total benefits of energy efficiency projects helps companies understand the financial opportunities of investments in energy-efficient technologies. Making a case for investing in energy-efficient technologies based on energy savings alone has not always proven successful. Evidence suggests, however, that industrial decision makers will understand energy efficiency investments as part of a broader set of parameters that affect company productivity and profitability.     

Open data and stormwater systems in Los Angeles: applications for equitable green infrastructure

Urban stormwater systems traditionally used “grey” infrastructure to manage runoff. Contemporary designs now incorporate “green” infrastructure, which offers additional potential benefits such as urban amenities and health. Understanding how green and grey infrastructure investments are distributed across urban areas is important for new goals of promoting environmental justice in planning. In California, for instance, public investments increasingly require a percentage of funds to be spent in disadvantaged communities. Recent advancements in the availability of high-detail geographic data in cities can support prioritising investments to fulfil these multiple benefits. This paper analyses the distribution of stormwater infrastructure in Los Angeles (LA) County in relation to design criteria, urban structure and sociodemographic information. It demonstrates an approach for identifying projects that simultaneously address engineering needs and promote equity. Statistical analysis of high-detail sewer locations reveals geographic correlations with key local design parameters, urban characteristics and sociodemographic indicators. Watershed areas in LA County were identified that support multi-benefit projects, meeting dual criteria for infrastructure improvements and disadvantaged community status. As stormwater systems are increasingly designed for multi-benefit outcomes, new design frameworks can emphasise both performance and social equity.     

Coltan from Central Africa,international trade and implications for any certification

The exploitation of coltan in Central Africa can be considered a case of conflict minerals due to its nature. Many international organizations and bodies, national governments and private sector organizations seek to address this conflict, in particular via transparency, certification and accountability along the material supply chain. This paper analyses the international trade dimension of coltan and gives evidence on the dimension of illicit trade of coltan. The authors start from the hypothesis that illicit trade of coltan sooner or later will enter the market and will be reflected in the statistics. The paper is structured in the following manner: first, a short section gives a profile of coltan production and markets; second, an overview of the mining situation in the Democratic Republic of Congo (DRC) and related actors. The third section addresses mechanisms, actors and measurement issues involved in the international trade of coltan. The final part draws lessons for certification and conflict analysis and offers some guidance for future research.     

A project-based system for including farmers in the EU ETS

Farmers in the EU do not trade greenhouse gases under the Kyoto agreement. This is an empirical puzzle because agriculture is a significant contributor of greenhouse gases (GHG) in the EU and may harvest private net gains from trade. Furthermore, the US has strongly advocated land-use practices as 'the missing link' in past climate negotiations. We argue that farmers have relatively low marginal reduction costs and that consequences in terms of the effect on permit price and technology are overall positive in the EU Emission Trading System (ETS). Thus, we propose a project-based system for including the farming practices in the EU ETS that reduces the uncertainty from measuring emission reduction in this sector. The system encourages GHG reduction either by introducing a new and less polluting practice or by reducing the polluting activity. When doing so, farmers will receive GHG permits corresponding to the amount of reduction which can be stored for later use or sold in the EU ETS.     

Quantifying the human health benefits of curbing air pollution in Shanghai

Urban development in the mega-cities of Asia has caused detrimental effects on the human health of its inhabitants through air pollution. However, averting these health damages by investing in clean energy and industrial technologies and measures can be expensive. Many cities do not have the capital to make such investments or may prefer to invest that capital elsewhere. In this article, we examine the city of Shanghai, China, and perform an illustrative cost/benefit analysis of air pollution control. Between 1995 and 2020 we expect that Shanghai will continue to grow rapidly. Increased demands for energy will cause increased use of fossil fuels and increased emissions of air pollutants. In this work, we examine emissions of particles smaller than 10 microm in diameter (PM10), which have been associated with inhalation health effects. We hypothesize the establishment of a new technology strategy for coal-fired power generation after 2010 and a new industrial coal-use policy. The health benefits of pollution reduction are compared with the investment costs for the new strategies. The study shows that the benefit-to-cost ratio is in the range of 1-5 for the power-sector initiative and 2-15 for the industrial-sector initiative. Thus, there appear to be considerable net benefits for these strategies, which could be very large depending on the valuation of health effects in China today and in the future. This study therefore provides economic grounds for supporting investments in air pollution control in developing cities like Shanghai.     

The ‘green’ and ‘self’ in green self-governance – a study of 264 green space initiatives by citizens

Scholars observe an increased involvement of citizens in green space governance. This paper focuses on green self-governance, in which citizens play a major role in realizing, protecting and/or managing green space. While existing research on green self-governance focuses mostly on specific cases, we aim to contribute towards a large overview via an inventory of 264 green self-governance practices across The Netherlands. With this, we discuss the relevance of green self-governance for nature conservation and its relationship with authorities. In our analysis, we show that green self-governance practices are very diverse: they pursue a wide variety of physical and social objectives; employ a multitude of physical and political activities; involve different actors besides citizens; mobilize different internal and external funding sources; and are active within and outside of protected areas. While green self-governance can contribute towards protection and management of green space and towards social values, we highlight that this contribution is mostly of a local relevance. Most practices are small scale and objectives do not always match those of authorities. Although we speak of self-governance, authorities play an important role in many practices, for example, as financial donor, landowner or regulatory authority. In this, self-governance is often not completely ‘self’.

Abbreviations: PAA: Policy Arrangement Approach; NNN: National Nature Network; N2000: Natura 2000; NCOs: Nature Conservation Organizations; NGOs: Non-governmental organizations     

Gathering “wild” food in the city: rethinking the role of foraging in urban ecosystem planning and management

Recent “green” planning initiatives envision food production, including urban agriculture and livestock production, as desirable elements of sustainable cities. We use an integrated urban political ecology and human–plant geographies framework to explore how foraging for “wild” foods in cities, a subversive practice that challenges prevailing views about the roles of humans in urban green spaces, has potential to also support sustainability goals. Drawing on research from Baltimore, New York City, Philadelphia, and Seattle, we show that foraging is a vibrant and ongoing practice among diverse urban residents in the USA. At the same time, as reflected in regulations, planning practices, and attitudes of conservation practitioners, it is conceptualised as out of place in urban landscapes and an activity to be discouraged. We discuss how paying attention to urban foraging spaces and practices can strengthen green space planning and summarise opportunities for and challenges associated with including foragers and their concerns.     

Green economy: Private sectors’ response to climate change

The focus of this paper is to present a discussion of the role of the private sector in response to the need for climate change adaptations. The study, which was conducted through a literature review, investigates the concept of the green economy and climate change, as well as businesses’ commitment to advance climate actions in ways that build resilience in vulnerable communities in developing countries. The paper calls on companies with national, regional, and/or global reach to adopt or develop strategies that improve resource efficiency, reduce greenhouse gas emissions, and reduce the loss of biodiversity. Businesses can accelerate this transition by aligning their investments with climate change adaptation opportunities, and thus, “green” the economy. In addition, green growth could be achieved through tactical public and private investments in mitigating climate change. The paper concludes that the private sector is a key sector in addressing the challenges of vulnerable communities, and it has much to contribute to the planning, development, and implementation of climate adaptation strategies, including sector‐specific expertise, technology, efficiency, financing, and entrepreneurship. Finally, some social conditions and environmental boundaries have been highlighted in this paper to attract the attention of business leaders who are trying to build initiatives and advance climate actions that will reduce socio‐community risks from climate change. Also, comprehensive initiatives and strategies have been recommended to private companies seeking to address climate vulnerabilities.     

Governing green stormwater infrastructure: the Philadelphia experience

Many cities throughout the world are adopting green infrastructure techniques to reduce stormwater and sewer overflows into waterways, which is particularly problematic for places experiencing more frequent and severe rain events. Governance of green stormwater implementation is proving to be as important as the techniques themselves. Building on the climate and sustainability governance literature, we argue that effective governance requires planning across city departments, experimentation and a strategy for organisational learning. We employ a case study of Philadelphia, the first city in the United States to attempt an entirely green approach to meeting federal regulations to examine issues of governance that emerged and how they were addressed. The case study draws on interviews with fourteen public and private sector actors involved in implementation, a site visit to observe the installations and to discuss the approach with a key planner, and grey literature. We find that silos can be broken down and that if open communications and a willingness to change practices are present, obstacles cited in the literature can be overcome. The key implication is that the three elements of governance need to be built into the green infrastructure planning process. While the analysis focuses on a US city, the departments involved and the governance needs of green stormwater infrastructure are similar in cities in much of the world.     

An institutional theoretic investigation on the links between internationalization of Chinese manufacturers and their environmental supply chain management

Increased market internationalization with more and stricter environmental regulations in different countries has caused manufacturers to extend their environmental management practices to cover their supply chain partners. Thus, environmental supply chain management (ESCM) has become an important competitive and environmental strategy for manufacturers to pursue. China, as a global manufacturer, is also facing this balance of economic development with environmental protection. The literature remains unclear on whether internationalization is beneficial or costly when it comes to environmental management practices such as ESCM within China. Further insight into this issue will be useful for organizations in developing and emergent economies to more effectively prepare for internationalizing their operations and markets. Using internationalization drivers that propel the implementation of environmental management practices in the Chinese manufacturing industry, we applied cluster analysis to group a sample of 377 Chinese manufacturers surveyed in 2007 into three clusters: mature internationalization, emergent internationalization, and domestic-focused. Institutional theory within an internationalization context sets the theoretical foundation for evidence that the international environmentally oriented institutional drivers encountered are positively associated with the adoption of ESCM practices by Chinese manufacturers. We also find significant differences in the environmental, economic and operational performance outcomes across the three manufacturer clusters. We conclude that manufacturing organizations experiencing internationalization with a greater extent of adopting ESCM practices tend to perform better.     

Costs and benefits of urban erosion and sediment control: The North Carolina experience

The EPA’s new nonpoint source pollution control requirements will soon institutionalize urban erosion and sediment pollution control practices nationwide. The public and private sector costs and social benefits associated with North Carolina’s program (one of the strongest programs in the country in terms of implementation authority, staffing levels, and comprehensiveness of coverage) are examined to provide general policy guidance on questions relating to the likely burden the new best management practices will have on the development industry, the likely costs and benefits of such a program, and the feasibility of running a program on a cost recovery basis. We found that urban erosion and sediment control requirements were not particularly burdensome to the development industry (adding about 4% on average to development costs). Public-sector program costs ranged between $2.4 and $4.8 million in fiscal year 1989. Our contingent valuation survey suggests that urban households in North Carolina are willing to pay somewhere between $7.1 and $14.2 million a year to maintain current levels of sediment pollution control. Our benefit-cost analysis suggests that the overall ratio is likely to be positive, although a definitive figure is elusive. Lastly, we found that several North Carolina localities have cost recovery fee systems that are at least partially self-financing. This article is based on research by the authors for the North Carolina Department of Environment, Health and Natural Resources (DEHNR). The views are those of the research team and do not necessarily reflect the position of DEHNR.     

The effectiveness of market-based conservation in the tropics: forest certification in Ecuador and Bolivia

During the last decade, forest certification has gained momentum as a market-based conservation strategy in tropical forest countries. Certification has been promoted to enhance forest management in countries where governance capacities are insufficient to adequately manage natural resources and enforce pertinent regulations, given that certification relies largely on non-governmental organisations and private businesses. However, at present there are few tropical countries with large areas of certified forests. In this study, we conducted semi-structured stakeholder interviews in Ecuador and Bolivia to identify key framework conditions that influence the costs and benefits for companies to switch from conventional to certified forestry operations. Bolivia has a much greater relative area under certified forest management than Ecuador and also significantly more certified producers. The difference in the success of certification between both countries is particularly notable because Bolivia is a poorer country with more widespread corruption, and is landlocked with less access to export routes. Despite these factors, several characteristics of the Bolivian forest industry contribute to lower additional costs of certified forest management compared to Ecuador. Bolivia has stronger government enforcement of forestry regulations a fact that increases the cost of illegal logging, management units are larger, and vertical integration in the process chain from timber extraction to markets is higher. Moreover, forestry laws in Bolivia are highly compatible with certification requirements, and the government provides significant tax benefits to certified producers. Results from this study suggest that certification can be successful in countries where governments have limited governance capacity. However, the economic incentives for certification do not only arise from favourable market conditions. Certification is likely to be more successful where governments enforce forestry laws, provide financial incentives for certified forestry, and provide land tenure security, and where large-scale and vertically integrated forestry operations are commercially feasible. For this reason, at present, there are few developing countries where forest certification is likely to achieve widespread success.     

A Case Study of Ecosystem Services in Urban Planning in Finland: Benefits,Rights and Responsibilities

The concept of ecosystem services is entering the agenda of land-use planning and scientists optimistically expect it to inform planners and decision-makers about the benefits that ecosystems provide. While tools and methods have been developed for mapping and valuing ecosystem services, only little attention has been paid to the practical application of the approach or its institutional preconditions and implications. We empirically analysed two urban planning processes for building residential areas in the outskirts of growing population centres in Finland. Our analysis of documents and interviews with planners focused on the benefits provided by ecosystems as well as the associated rights and responsibilities. We found that the concept ‘ecosystem service’ was not used, yet various benefits were identified. The rights of different stakeholders to ecosystem services were not explicitly identified, but many ecosystem services were perceived as public goods and particularly access to recreation was highlighted as an important justification for green areas. The results show that while the ecosystem services approach introduces new insights to land-use planning, it is still not embedded in the current practices or institutions. Operationalizing ecosystem services requires institutional adaptation, case-specific tailoring of methods, and deliberation among practitioners and stakeholders.     

Improving communication resilience for effective disaster relief operations

The objective of this paper is to identify strategies to improve the resilience of interagency communication between relief organizations and the community when dealing with an emergency. This research draws from frameworks including information theory, organization design, and how the private sector has learned and evolved from the challenges of information flow to provide guidance to disaster relief agencies. During times of emergency, private organizations as well as public authorities must coordinate in real time to create an effective response. When coordination is absent, failure results, as was seen after Hurricane Katrina and the Haiti Earthquake. Using data that the authors collected immediately after these disasters, two case studies of systemic failure are presented to extract lessons that might be used to improve communication resilience through coordination between parties in humanitarian relief operations. Recent emergency response trends are identified, and the paper argues that the persistence of response failures is not surprising, in part because response organizations normally operate independently, and their operations evolve at different rates. As a result, the organizational interfaces that enable rapid integration during a disaster naturally degrade and may be weak or absent. Integrating the literature on information processing theory and organization design with the data from the two case studies, the paper proposes that increasing the resilience of disaster response systems can be achieved by (1) improving the interoperability and information flow across organizational boundaries; (2) increasing the synergies between organizations on adapting new technology such as social media for the coordination of structured and unstructured data for use in decision-making, and (3) increasing the flexibility of relief organizations to use external resources from areas not affected by disasters on an opportunistic basis. The paper concludes by discussing resilience enhancing solutions including boundary spanning investments and argues that effective emergency response does not result from sporadic or intermittent efforts but rather requires sustained investment, continuous monitoring, and data collection.