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The concept of “peak oil” remains a touch too uncomfortable for most. Too close to being “big conspiracy”, too far from the everyday, and the implications too far reaching for the idea to sit comfortably in the repertoire of the polite dinner party conversationalist. Religion, politics, and peak oil to be avoided at all costs - best to stick to something safe and controversial like whether its OK or not to build a duck house at the taxpayer’s expense.

Only there are some interesting indicators pointing to the fact that in many ways, we’re already beyond the peak point. Here’s a list of indicators, which can be handily printed off, kept to hand, and ticked off the list as each occurs:

- the price of oil increases by a significant margin in a short period of time. Say, doubles within the space of 6 months. Its important that such price increases are not aberrations related to factors such as short term political instability in a producing country, or a war, extreme weather event, buy-side price manipulation and so on.
- the target price talked up by the various oil ministers of the major producers is even higher still, with the justification being that such a relatively high price is required “in order to fund the required infrastructural investments necessary to maintain supply”.
- the target price that OPEC et al aim for is within the range deemed by the USA’s Department of Commerce to be dampening (all other things being equal) on the US economy. Indeed, in this 2006 study the Department predicted significant downward GDP pressures, unemployment, and a slowdown in manufacturing sector output resulting from oil prices in the $70 to $80 range.
- vehicle manufacturers that have ignored fuel efficiency in their ranges struggle to sell their models as consumers become more sensitive to oil price.
- major oil consuming businesses like airlines post significantly poor results citing high oil prices as a major catalyst for their poor trading results.

So lets compare that to today’s reality:
- oil price has doubled so far in 2009 and is currently in the high $60 pbl range (hitting a $66 high Friday last)
- the target price is in the $70 to $80 range. OPEC Secretary-General Abdullah al-Badri has called for oil to hit that range by the end of 2009. Other OPEC ministers, including Ali al-Naimi of Saudi Arabia saying “the world was ready to cope with oil at $75-$80 and that it could reach that level before the end of the year.”
- GM has shed $50B of shareholder value in the last decade and will roll into Chapter 11 bankruptcy faster and more predictably than a Chevy Tahoe drinks Texas Tea.
- British Airways as one example posted a “worst ever loss” of £401M after being hit with a fuel bill just shy of£3B. The weak pound and the drop in passenger numbers as a result of trimmed travel budgets (itself a result of the recession) didn’t help at all. In the lead up to the loss it was reported that “Costs far outstripped revenues of just under £9bn due to high fuel prices”

So this is what it looks like - we’ll know where at the point of peak oil not when the unaudited reserves of Ghawar are finally shown to be a sham, but rather when the economic indicators “downstream” of the depletion point exhibit the market behaviours associated with sensitivity to the resulting high oil prices. Because at that point the level of actual reserves is somewhat academic, and we’re dealing with the reality of the actual price point.

Interestingly, the Department of Commerce itself states that “Over the long-run it is possible for the economy to adjust to the higher prices of energy imports by improving its energy efficiency, finding alternative sources of energy, or searching out additional supplies of energy. ”

So the bright lining is that investment in alternative energy sources, and also in fuel consumption efficiency ought to be accelerating.

Organisations seeking to develop a successful sustainability strategy will need to do much to develop and foster a “culture of sustainability” amongst staff. The aim for such an exercise is to develop a consideration for sustainability in all decision making that is second nature. There are a lot of parallels here to the efforts that companies undertake to bed in attitudes towards “putting customers first”, “ethical behaviour”, “thrift and financial efficiency”, “information security and handling practices” and even just the general “winner’s attitude” that is especially valued in sales teams. Developing such cultures involves leading from the top, and ensuring that staff are not simply trained, nor “wacked” when out of line, but rather than they are provided the skills and awareness they need in order to make informed decisions, while being rewarded and encouraged through alignment of organisational goals, compensation models and personal development goals towards that end.

Effectively leading from the top will require executives and senior management to set a direction and tone, and to clearly communicate goals and progress. While detailed measurement of progress will be part and parcel of project management efforts, internal and external reporting and strategic governance, there will also be a requirement for somewhat abstract “high level” signposting of the importance placed on sustainability, and the relative priority given towards achieving related targets.

Setting such a compass is about internalising a simple balanced ratio between the relative importance assigned to profit making compared to that assigned to “treading lightly”; “Economic Sensibility” versus “Ecological Sustainability” ($ES:ES). Imagine you have $/£/€200 to spend in the best way possible to help your business, how much of the money do you assign to “economic sensibility” measures and how much to “ecological sustainability”? $190:10 might be a score for Chernobyl Nuclear Power Plant (i.e. disproportionately more emphasis placed on revenue generating business as usual and hardly over that placed on safety and sustainability), while an eventual score for on target balanced company might be $105:95, and for one that has a lot to achieve on the green front perhaps $65:135 (note that putting the “$” at the front serves to remind everyone which number refers to profit and which to sustainability.). At a top level, a target $ES:ES score can be set toward which everyone in the chain of command can aim towards as they perform their everyday roles, providing a simple and perhaps more meaningful top level performance indicator than the “traffic lights” so often used.

Anyone who’s ever attempted to avoid certain foodstuffs, whether for reasons of taste, allergy, diet, belief or morals, will know that it’s the fine print in the ingredients list that is all important. The ingredients list, together with standardised disclosure labels such as the Soil Association’s “Organic” symbol, the Fairtrade mark, and the Food Association’s “traffic light” symbol help consumers make informed decisions over what they put in their mouths. It’s worth noting that many foods have ingredients lists longer than the fine print in a mobile phone contract, which is an indicator that when required to by legislation, manufacturing companies can manage to track a complex set of base ingredients in a way that supports required disclosure.
It must be said that such disclosure requirements aren’t always welcomed by industry, however there’s a grudging acceptance of the need to label together with a strong desire to happily seek a stamp of approval if having one is suddenly recognised as being a positive brand differentiator. Disclosure, and informed choice, are after all powerful market shaping forces that have created new markets and enabled the phasing out of products, sources, and manufacturing methods newly considered undesirable or dangerous. There are many examples of these phenomena, but the two most powerful examples in the fast moving consumer goods (FMCG) food market in the last two decades are the Fairtrade and Organic Produce marks. There have also been notable “issues based” campaigns such as that conducted by Hugh Fearnley-Whittingstall in the UK against battery farmed chickens during 2008 and 2009. The power of such issues-based campaigns ought not to be downplayed especially when sufficient media attention gets behind one. Consumer preference can be extensively shaped when attention is drawn to the sourcing of produce tainted with the whiff of dubious morals or unsustainable practices.

Disclosure also supports one of the most basic and powerful tools of international diplomacy; the application of economic pressure through sanctions and market control. Forcing companies to identify and disclose the use of materials sourced from a particular country allows for the enforcement of laws restricting trade between certain countries. The U.S.A’s Export.gov site provides full information regarding international trade restrictions, as does the UK’s Foreign and Commercial Office site. Such restrictions fundamentally shape market behaviour, and restrict everyday company actions such as selling to or sourcing from specific countries.

By now, you may be wondering what all this has to do with the ICT and consumer electronics industries; and the answer is Tantalum. Tantalum is a rare mineral with conductance properties that make it an essential ingredient in the capacitors inside every mobile phone (and many other ICT devices). Tantalum is sourced from only a few mines around the world, with the majority of supplies now coming from the Democratic Republic of Congo (DRC). The DRC has been in a state of guerrilla warfare for many years to the tune of around 6 million deaths, and Tantalum mining and export is to the conflict what opium poppy farming is to Afghanistan; providing a rich source of international trade that funds continued conflict. Tantalum’s role in the DRC conflict has long been recognised, with the U.N. creating a panel to look at the issue back in 2001, at the direction of then UN secretary general Kofi Annan.

While the intervening years have seen little real change, Tantalum’s presence in consumer and office electronics goods is facing renewed focus. In April, U.S. Senators Sam Brownback, Dick Durbin, and Russ Feingold drafted and introduced a new act called the Congo Conflict Minerals Act of 2009. Under the draft legislation, U.S.-registered companies selling products using columbite-tantalite (a source of tantalum), cassiterite, or wolframite, or derivatives of these minerals, would be required to annually disclose to the SEC the country of origin of those minerals. If the country of origin is the DRC or neighbouring countries, the company would need to also disclose the specific mine that the minerals are sourced from.

How significant that act might be in shaking up the electronic supply chain is perhaps indicated by the fact that meanwhile, the world’s largest source of Tantalum outside of the DRC is busy shutting down operations. Australia’s Talison Minerals, which previously enjoyed a 50% market share for supply of the mineral, mothballed its largest mine at the end of 2008, a move that reduced its active Tantalum mine operations from three to one. In announcing the action Talison cited unviable market prices related in part to cheap supply from the DRC. Perhaps the U.S’s Congo Conflict Minerals Act will see a reversal in this market state in the coming years, as the restrictions and market pressures make electronics manufactures reconsider their supply chains. Right now, electronics manufacturers are unnecessarily and significantly exposed as far as the provenance of the Tantalum supply.

All of which is a good lesson as to why “sustainable IT” is more than a passing nod toward an energy efficient server or a refillable printer cartridge. While the newly drafted Congo Conflict Minerals Act has a way to go before being adopted (as is or amended) it is a sign that far more scrutiny can be expected into the ICT industry supply chain in the future. Such scrutiny no doubt introduces complexity in both adherence by manufacturers, as well as in the level of consideration a buyer might have to take in selecting a product and supplier. However scrutiny crucially enables informed decision making, which is never a bad thing. Meanwhile, take another look at your mobile phone, there’s more inside it than just your contacts list and a battery that never lasts long enough.

Originally written for eWeek Europe:
http://www.eweekeurope.co.uk/comment/sustainable-supply-and-the-trouble-with-tantalum-850?page=1