New Metrics
Caterpillar, TNC, JPMorgan Chase Convene to Discuss Natural Infrastructure Restoration

Construction machinery and equipment giant Caterpillar recently hosted the first major national summit on infrastructure restoration, with the clarion call that investing in nature is smart business. As a major player in the manufacturing industry, Caterpillar reached the conclusion that moving beyond technical principles and establishing a broad coalition of stakeholders is required to bring the restoration conversation mainstream.

Time is of the essence. The United Nations projects that more than 25 percent of the earth’s land, about the size of North America, is highly degraded from decades of poor management resulting in deforestation, desertification, wetland destruction, severe erosion and contamination.

As the planet’s population grows from seven to nine billion in the next few decades, restoring our infrastructure is of paramount importance.

Karl Weiss, VP of Caterpillar’s Earthmoving Division, led off the day’s events.

“Today is a step towards building a new industry,” Weiss said. “Sustainability didn’t exist 25 years ago and it’s important now to make up for lost time. Our lands, not our infrastructure, need to be restored. Planting a tree today is the second-best time to 30 years ago.”

Weiss also spoke of the need to create “rebuild-able machines with multiple life cycles.”

While C2C brands have moved to the forefront of the sustainability conversation, largely fueled by consumers and social media, B2B companies such as Caterpillar are just beginning to leverage their unique relationship with a broad range of infrastructure businesses from construction, energy and transportation – and the rich skills of a core of engineers.

The Summit presented a science case and business case for infrastructure restoration including panelists from the UN Foundation, Woods Hole Research Center, JPMorgan Chase, The Nature Conservancy, the U.S. Army Corps of Engineers and AECOM.

The overriding theme: the need to build a new industry for balancing productivity and long-term sustainability through environmental stewardship, social responsibility and economic growth.

The sobering question of what today is irreversible if we don’t take immediate action resonated throughout the day.

I asked Kathryn Karol, VP of Global Government and Corporate Affairs, about why Caterpillar is taking the lead in this movement.

“Natural infrastructure is part of Caterpillar’s legacy for 90 years,” she said. “We committed to rebuilding after World War I. Restoration issues are part of our culture and as the signs of deterioration and erosion become more visible, and government is getting involved, it’s time the corporate sector steps up.”

Dealers who buy and sell Caterpillar equipment are the public face of the company and Karol admits it’s a steep learning curve for all.

“There are so many challenges but our leadership sees it as a great opportunity, and two years ago embraced sustainability as a core value,” Karol said. “Our dealers are the ones on the ground with the equipment – and that equipment, heavy equipment, can play a crucial role in restoration. We need to tell the story better, less advocacy on what’s being done. So many conversations and conferences in theUSare about LEED certification and outdated tax structures and regulatory challenges. Business is not trained in the importance of the decisions we are making to the environment and sustainability - like a flat screen versus a curved television. The whole ecosystem needs to be taken into account.”

Karol emphasized the new opportunities as NGOs and investment bankers shared the room. Matt Arnold, Managing Director and Head of Environmental Affairs at JP Morgan Chase, said he was looking for deals and added, “Smart failure is okay.”

Mark Tercek, President and CEO of The Nature Conservancy, said, “Engineers know a lot about infrastructure - sometimes more than environmentalists in making investment sensible to the business case. Environmentalists can be proud of great projects they’ve put in place as the morally right thing to do. But there are not enough people who think that way.”

Making the business case with a broad coalition of stakeholders is crucial to augmenting infrastructure restoration. Adding the issues to our education system is critical as connectivity has redefined communications.

“How can we incentivize regulatory reform?” Karol asked, citing a billboard advertisement referring to telecom regulatory policies in the 1970s when Blackberry was still just a fruit. “Funding and innovation are required. Taking more risk with pilots to see what’s working and a new set of metrics for infrastructure ROI – a place for the insurance industry to weigh in. We need broad collaboration.”

In September 2014, a New Climate Economy report proposed that restoration of 150 million hectares of degraded agricultural land could generate additional farm incomes of US$36 billion, feed up to 200 million people and store about 1 billion tons of CO2e per year by 2030.

Furthermore: “Governments, with the support of the international community, should commit to and start the restoration of at least 350 million hectares of lost or degraded forest landscapes through natural regeneration or assisted restoration by 2030. This could generate an estimated US$170 billion per year in benefits from ecosystem services, and sequester 1-3 billion tonnes of CO2e per year.”

At its most basic, restoration of forests and woodlands to sustainable agriculture, agroforestry, silvopasture or intact forests, can dramatically reverse the current erosion and degradation. Caterpillar’s Chairman and CEO, Doug Oberhelman, shows his personal and business commitment in this video about QuailLakes, a successful restoration of eight acres of degraded land from a former coal mine to a working farm with prairie grasses that flourished hundreds of years ago.

“Investing in nature builds a competitive advantage,” Karol asserted.