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GUEST ARTICLE: Building Bridges In Thinking About Impact Investing - Part 6

Benjamin Bingham, February 16, 2018


In a series of articles, a prominent US figure in the impact investing space explores how to pull together disparate ways of thinking about the world to show how this model of managing money should be addressed. Here is the sixth essay.

This is the sixth instalment from author, Benjamin Bingham, CFP, founder and CEO, 3Sisters Sustainable Management. He is the author of Making Money Matter/Impact Investing to Change the World (www.makingmoneymatterbook.com). His previous essay in the series can be found here and an item introducing Ben can be seen here. As ever, the views of guest authors are not necessarily shared by the editors of this news service and we invite readers to respond. Email tom.burroughes@wealthbriefing.com

Transportation – affordable and efficient mobility using renewable, clean sources of power while respecting home and neighborhood spaces

Walking is an inherently healthy activity for human beings and especially if it can be done in a way that allows time to observe the beauty of nature, to smell the roses.  But this takes time and is limited in space…we can only walk so far so fast while carrying so much.  The discovery of wheels helped us carry more, then, pulled by various animals, humans picked up speed and the potential world experience grew.  The steam engine came next and with it a new limitation:  how much fuel is available at what cost?  During the World Wars, farmers adopted the tractors that had replaced horses and oxen so they could run on coal or even firewood.  After the World Wars until the Carter years it seemed there would be no end to fossil fuels and few were considering the next limiting factor:  how much of this black smoke pollution could the earth and its inhabitants stand?

From this point the transportation sector has driven the search for oil and will drive the development of greater and greater fuel efficiencies and solutions that are completely divorced from fossil fuels.  What is important commercially is the efficient movement of goods and services in support of a world economy. What matters culturally and socially is the ability for human beings around the world to meet one another regardless of geography in an efficient comfortable and timely way and without poisoning the air we breathe with toxic fumes, and overwhelming walkable neighborhoods with the noise and dangers of traffic.

Efficient mobility is what is called for.  Mobility is essential to humans as social beings.  Efficient mobility includes (1) efficient use of materials (2) efficient sources of renewable fuels (3) and ultimately the efficient use of energy.

1) Efficient Use of Materials:  The transportation industry made the first strides in streamlining production and reducing waste in the “Just in Time” (JIT) building of cars, though this way of thinking has become universally practiced in manufacturing. The JIT concept was described early on by Henry Ford in his 1923 book, My Life and Work:

“We have found in buying materials that it is not worthwhile to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials.”

But W Edwards Deming is more often given credit for his impact on the Japanese resurgence after WWII, characterized first by Toyota’s explosive success in cutting costs. By eliminating waste, keeping inventory just sufficient to fill orders, and improving overall quality by focusing more on workmanship, on the job training and attention to detail in a collaborative environment, Toyota became a global leader for inexpensive, quality management and eventually pioneered the hybrid use of electricity with gasoline as a back-up.

2) Efficient Sources of Renewable Fuels:  It is still early days to see which way we will be powering transportation in the future, whether driving, traveling by rail by ship, or flying by air. Currently, the transporting of materials is powered mostly by fossil fuels and the efficiencies vary tremendously:

                                            US Fuel consumption by Mode of Transportation

                                            Mode of Transport         BTU per ton-mile*           ton-miles per gallon (Diesel)

                                              Trucks                                 3357                                    40.9

                                              Rail                                      292                                      470.7

                                              Marine Transport             210                                      654.5

                                              Air Freight                          9600                                    14.3

Numbers vary by load capacity utilization, country, fuel type, size of transportation mode, age, weather conditions, fuel quality, and speed. *1 gallon Diesel fuel = 137k BTU’s                                    

 Whether hydrogen fuel cells or electric vehicles win the day for wheels on the ground, the ability to recharge or refuel will be one critical question. This will require major infrastructure decisions by “Sustainable Cities” and governments, such as California’s commitment to hydrogen fueling stations.

The other question for discerning consumers and investors will be the source of electricity, for hydrogen can only be isolated from water with the use of electricity, and electric cars run on electricity from coal is hardly the answer for Climate Risk considerations. Wind and solar are obvious choices and on the street solar lighting fixtures with electric plug-ins for electric vehicles (e.g. Envision Solar) is one emerging answer.

3) Efficient Use of Energy:  Clearly, the biggest saving in energy costs will be the sharing of vehicles, and the improvement of public transportation services. It is said that Millennials who live in cities tend to eschew the cost and inconvenience of owning cars and prefer “JIT” vehicles whenever they want or need to go off the public transportation grid.  Uber’s explosive growth followed by Lyft and others is crowding cities’ streets and angering traditional taxi and limo services.

It is likely that sustainable cities will invest in new modes of transportation that will maximize independence and security, while minimizing noise and congestion. The new system at Heathrow that moves passengers in small pods to their correct terminal gives a hint of what is yet to come: http://www.ultraglobalprt.com/wheres-it-used/heathrow-t5/ .  For longer distances we can expect future construction of Hyperloop trains moving magnetically between cities through vacuum tubes at 500 MPH or more! https://www.pocket-lint.com/gadgets/news/132405-what-is-hyperloop-the-700mph-subsonic-train-explained .

This will need to be balanced with lots of open space and green landscapes in walkable cities that encourage us to slow down upon arrival.

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