Insight Magazine - September / October 2009

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34 Water Water Everywhere

By Sheryl Nance-Nash

But maybe not for long…What could easily be dismissed as an environmental issue has a heavy impact on business and industry as well Here’s the business case for why water shortages matter

38 Is Green Worth the Money?

By Kristine Blenkhorn Rodriguez

Criticizing the green movement is not politically correct But is it wrong to want a sound business case for going green?

42 Green Power

By Carolyn Tang

What will alternative energies mean to the US economy?

8 Research How Green Are You Now?

By Judy Giannetto

Is Illinois’ finance community answering the call for business greening?

12 Investing Wind Fall

By Derrick Lilly

Are we poised for a heyday in green investing?

14 Corporate Watch Your Step

By Christine Bockelman

Dollars, cents and your carbon footprint

18 Small Business Feeling Green?

By Selena Chavis

Find room in your practice to go the eco route

22 Real Estate Urban Renewal

By Bridget McCrea

There’s a green and a financial incentive for breathing new life into old buildings.

24 Young Professionals Green Guru

By Robert J Derocher

“ Think Green” is the motto of the 21st century finance pro

By Selena Chavis & Derrick Lilly

Watch business green and cost savings grow

By Harvey Coustan, CPA

Repealing oil and gas exploration tax credits may push producers

I C P A S O F F I C E R S

Chairperson, Lee A Gould, CPA/ABV, JD, CFE, CFF Gould & Pakter Associates LLC

Vice Chairperson, Sara J Mikuta, CPA The Leaders Bank

Secretary, Charles F G Kuyk III, CPA Crowe Horwath and Company LLP

Treasurer, Robert E Cameron, CPA Cameron Smith & Company PC

Immediate Past Chairperson, Sheldon P Holzman, CPA, CFE, CFF Baker Tilly Virchow Krause, LLP

I

Brent A. Baccus, CPA Washington Pittman & McKeever

Therese M Bobek, CPA PricewaterhouseCoopers LLP

William P. Graf, CPA Deloitte & Touche LLP

Kelly J Grier, CPA Ernst & Young LLP

Cara C Hoffman, CPA Blackman Kallick LLP

James P Jones, CPA Edward Don & Company

Charlotte A Montgomery, CPA Illinois State Museum

Elizabeth A Murphy, PhD DePaul University

Annette M O’Connor, CPA RR Donnelley & Sons Company

Michael J Pierce, CPA RSM McGladrey Inc

Marian Powers, PhD Northwestern University

Daniel F. Rahill, CPA KPMG LLP

Lawrence H Shanker, CPA Shanker Valleau Accountants Inc

Edward H Stassen, CPA Recycled Paper Greetings Inc

With everything and everybody from Walmart to the Willis Tower (or, for the traditionalists among us, the Sears Tower), becoming more conscious of the environment, the phrase “going green” might be wearing a bit thin Late last year a reporter from t h e S a n F r a n c i s c o C h r o n i c l e i n c l u d e d “ g o i n g green” in his list of 11 overused phrases, suspecting i t w a s b e c o m i n g m o r e o f a P R b u z z w o r d t h a n a plan of action Hear a phrase one too many times, and you begin to tune it out

But it’s no time to ignore what’s happening on the e n v i r o n m e n t a l f r o n t C l i m a t e l e g i s l a t i o n m a y change not only our natural consumption patterns but our profession Just as International Financial R e p o r t i n g S t a n d a r d s t r a n s i t i o n f r o m a n e m e rg i n g issue to a real one, environmental accounting waits in the wings, equal in its global good intentions

Contemplate the possibilities for a CPA’s expertise Accountants will be needed to help industries calculate their emissions, and track and report their carbon footprints to the Environmental Protection Agency Climate change related risks and opportunities may creep into quarterly financial reports As companies develop environmentally friendly business practices, they’ll need someone to guide them though the financial pros and cons

We wouldn’t be doing another green issue if the Society didn’t think it was important to take a closer look at the increasing interest in the environment from the CPA’s unique perspective And from the results of our second How Green Are Y ou? survey (which INSIGHT’s editor-in-chief, Judy Giannetto, explores in this edition of INSIGHT), it seems that more of our members are recognizing the importance of this issue

To really grasp the implications of this movement a movement so popular that it has been labeled a fad by some many of us will need to take a step back We’ll need to be objective about what “going green” means to our clients, our staffs and our bottom lines, rather than what it means or doesn’t mean, as the case may be to us.

Bear that in mind the next time you hear the phrase “going green” yet again. Maybe it’s a positive sign that “being green” has become a part of our everyday lives and that we’ve moved beyond words to action. El

W

ss, JD, ICPAS Presi dent & CEO

to serve as the primary news and information vehicle for some 23,000 CPA members and professional affiliates Statements or articles of opinion appearing in INSIGHT are not necessarily the views of the Illinois CPA Society The materials and information contained within INSIGHT are offered as information only and not as practice, financial, accounting, legal or other professional advice Readers are strongly encouraged to consult with an appropriate professional advisor before acting on the information contained in this publication It is INSIGHT’s policy not to knowingly accept advertising that discriminates on the basis of race,religion, sex, age or origin The Illinois CPA Society reserves the right to reject paid advertis ng that does not meet INSIGHT’s qualifications or that may detract from its professional and ethical standards The Illinois CPA Society does not necessarily endorse the non-Society resources, services or products that may appear or be referenced within INSIGHT, and makes no representat on or warranties about the products or services they may provide or their accuracy or claims The Illinois CPA Society does not guarantee delivery dates for INSIGHT The Society disclaims all warranties, express or mplied, and assumes no responsibility whatsoever for damages incurred asa

SEEN H E A R D

eCycling Now in Vogue

Where do computers go to die? Actually, they don’t Rather, more and more of them are being refurbished and remarketed In other words, they ’ re being “eCycled ” Many computer and television manufacturers, as well as electronics retailers, are now offering take -back programs or sponsoring recycling events. What ’ s more, several states have passed legislation to manage end- of-life electronics, and more are expected to follow suit

The Environmental Protection Agency (or EPA, as it ’ s better known) has provided a list of initiatives currently involved in the eCycling movement They include: Earth911 [earth911 com]

Earth911 has consolidated environmental hotlines, websites and other nationwide information into a single network The site offers visitors community specific information on eCycling and more

My Green Electronics [www mygreenelectronics org]

Provided by the Consumer Electronics Association, this site is a resource for consumers who wish to purchase green products, search for local opportunities to recycle, or donate used electronics

EIA Consumer Education Initiative [www eiae org]

The Electronic Industries Alliance's (EIA) eCycling Central website helps visitors locate state -by- state reuse, recycling and donation programs for electronics products TechSoup [www techsoup org]

This comprehensive body of information promotes computer recycling/reuse, and provides a resource for refurbishers, hardware donations and recycled hardware acquisitions

RBRC [www rbrc org]

The Rechargeable Battery Recycling Corporation (RBRC) helps you recycle portable rechargeable batteries commonly found in cordless power tools, cellular and cordless phones, laptop computers, camcorders, digital cameras and remotecontrol toys Search for collection sites by zip code

Running for the Exits

Adecco Group North America's [Adecco com] latest American Workplace Insights Survey reveals that employers may see a mass exodus of talent at the recession’s end. Fiftyfour percent of employed adults report that they are at least somewhat likely to look for new jobs once the economy turns around What ’ s more, 71 percent of Generation Y employees (aged 18-29 years) say they ’ re at least somewhat likely to look for new jobs once the upturn begins.

156.5%

ROI realized after installing a programmable thermostat to automatically control indoor air temperatures (cost $115).

Source: The DailyGreen com

2008 Green Issue Honored

INSIGHT’s 2008 “Green Issue,” published in September of last year, has been named an honoree by the prestigious Magnum Opus Awards program, in the category of “Best CSR/Green Series or Article ” The program “gives industrywide recognition to writers, editors, designers and all communicators who do exceptional work in print and online ” In being named an honoree, INSIGHT joins the ranks of big name enterprises such as the Walt Disney Company, American Airlines Publishing and the Meredith Corporation

Manufacturing Execs Cautious

A Baker Tilly Virchow Krause [BakerTilly com] survey of 300 US manufacturing industry senior executives reveals that future outlooks are stabilizing, with 57 percent having a positive outlook for the economy over the next 6 months Still, they remain cautious about their own industry, with 49 percent expecting their firm’s performance to decline Over the next year, customer demand and access to credit and loans are expected to challenge growth Executives are responding by holding present staffing levels (70 percent) and investing in internal quality improvement systems (51 percent)

Green Technologies to Know

Recognizing what may lie ahead for green technology and understanding the potential impact of developments on both

r o f e s s i o n a l s considering a niche in this area According to George Elvin, director of the Green Technology Forum, a research and advisory firm, technological advancements to look out for include:

n Solar nanotechnology. “While not yet as efficient as silicon-based solar cells, nanotech-based cells like those made by Nanosolar can be printed on plastic or metal substrates, making them much less expensive than silicon ”

n L i g n o s i c c e l l u l o s e - b a s e d b i o f u e l s “ U s i n g f e e d s t o c k like corn to produce fuel isn’t economically viable in the long run The energy embodied in many non-food plants is in what ’ s called lignosic cellulose, but it ’ s harder to extract Companies like Range Fuels, however, are perfecting techniques that will enable us to make fuel from trees and agricultural waste ”

n Algae -based biofuels. “A number of companies worldwide are working to make fuel from algae, which is cheap to grow, requires little energy input and doesn’t compete for cropland the way corn does ”

n Carbon sequestration “ We can’t cut our carbon output fast enough to counter the effects of global climate change New technologies will enable us to store carbon underground or in oceans rather than release it into the atmosphere ”

TXT From the C - Suite

Senior finance executives and managers are increasingly using their mobile phones to email and text both in and out of the office, says a global NFI Research [NFIReseach com] survey While working, 59 percent of senior executives and managers use their phones to receive email, 57 percent to send email and 54 percent for texting This highlights the fact that cell phones and smart phones are becoming preferred network communication tools for work and personal use in the C - suite

$1.2

Bil lion

Approximate Q2 venture capital dollars invested in green/clean technology companies (up from $856 million in Q1) Source: GTMResearch com

Right Steps Out of Recession

A recent Robert Half International [RobertHalfFinance com] survey of 457 office-based workers suggests that the majority of professionals (69 percent) believe their employers are taking the right steps to successfully weather the recession What ’ s more, over half (55 percent) feel that their employers will emerge from the recession stronger than before. Though the consensus is mostly positive, there is a touch of gloom, with 30 percent of respondents believing that their companies are doing only some things right or nothing right.

Lifetime Achievement 2010

Award Recommendations Now Being Accepted

The Illinois CPA Society is seeking recommendations for the 2010 Lifetime Achievement Award, which is presented each year to an individual(s) who has provided distinguished service to the profession in Illinois and/or nationally.

Candidates are selected based on a lifetime of service to the profession. Factors to be considered include:

> Contribution to the profession

> Professional position attained

> Length of service

> Illinois professional involvement

Recent Award Honorees:

2009Cameron T. Clark

Duane D. Suits

2008Belverd E. Needles, Jr.

2007Edwin Cohen

2006Richard T. Sullivan

2005Vincent E. Villinski

Richard E. Ziegler

2004Lawrence M. Gill

Jerome A. Harris

Cheryl S. Wilson

2003Daniel W. Cadigan

Lester H. McKeever Jr.

Letters of recommendation with information supporting the individual’s qualifications (resume, biography, etc.) can be sent to:

Eileen Robbs, Lifetime Achievement Award, Illinois CPA Society, 550 W. Jackson Blvd., Suite 900, Chicago, IL 60661 Or by email to: robbse@icpas.org

Deadline for recommendations is December 15, 2009

How Green Are You Now?

By Judy Giannetto

When we published our first “green” special issue in September 2008, the response was rather mixed, as you might expect Some chastised us for exploring a topic so far removed from the accounting profession Others praised us for our foresight in exploring a topic that would undoubtedly impact the accounting profession in the not-too-distant future

When you consider the diversity of the 24,000 people who read INSIGHT, from accounting interns to high-profile captains of industry (and all who fall between), it’s really no great surprise that some praise while others balk

A l l t h i n g s , h o w e v e r, h a v e a context And for the purposes of I N S I G H T t h a t c o n t e x t i s h o w th e in c re a s in g p u s h fo r c o rp or a t e s o c i a l r e s p o n s i b i l i t y a n d sensitivity to our limited natural r e s o u rc e s w i l l i m p a c t b u s iness including the business of finance in 2010 and beyond. Wi t h t a l k o f g o v e r n m e n t m a nd a t i n g o f g r e e n i n i t i a t i v e s a n d cap-and-trade legislation to red u c e C O 2 e m i s s i o n s , “ g o i n g green” might well be a matter of necessity rather than choice. In that sense, whether you believe greening to be mass brainwashing or a legitimate response to impending crisis, is neither here nor there

A n d w i t h t h a t c a u t i o n i n m i n d , w e c o n d u c t e d o u r s e cond How Green Are Y ou? survey, gathering the responses of 337 Illinois CPA Society memb e r s t o g a u g e w h e r e o p i n i o n s t a n d s R e s p o n d e n t s h e r a l d e d predominately from small companies/firms (61 percent), with

large companies/firms filling out the next largest segment (27 percent) The majority ( 4 6 p e rc e n t ) w e r e d e s i g n a t e d a s p u b l i c practice, followed by business and industry ( 4 2 p e rc e n t ) a n d n o n p r o f i t / g o v e r n m e n t / education (12 percent)

When asked about the significance of green initiatives within their organizations, 65 percent of 2008’s respondents had reported greening to be of moderate to high importance This year ’s numbers show a slight upswing to 69 percent What’s more, whereas in 2008 only 11 percent stated that their organizations had a green policy in place, in 2009 that percentage increased to 22 “We have a written document with stated measurable goals,” explains one respondent “We take a ‘green oath,’” states another

While this is a significant increase, major barriers to developing and implementing a green policy remain. A commitment to other priorities (44 percent) tops the list, as it did a year ago. Cost and indifference share second place (30 percent each), with not enough time and lack of management support sharing third place (24 percent each).

As one respondent comments, “We have created a green initiatives committee to study effects on our clients and possible opportunities. Partners have, to date, shown little interest in our own efforts because they don’t see the cost/benefit yet ” Another adds, “Since the top doesn’t much care about it, there is little anyone else can do Besides, the top is changing soon ”

It’s long been touted that taking a stand on environmentalism will boost employee morale, and these comments do seem to express a degree of frustration from within the rank and file When asked to explain, “What has been the impact of your green policy on employee morale,” the vast majority responded favorably Specifically, respondents stated that, “The employees consider this as a matter of great pride,” “They feel good about themselves and the organiza-

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tion,” “It lifts spirits to know our company is green,” and “Everyone is motivated ”

Howe v e r, whe n a sk e d to ra te the a c c ura c y of the sta te me nt, “Going green will help my organization hire and retain top recruits,” only 22 percent of respondents felt this to be true. Comments from younger respondents are notable, including, “The staff and young accountants would like to go green but the partners are too ‘old school’ and do not want to go green,” and “I’m a student member Going green definitely gets more students involved ”

Are “old school” finance pros taking too much of a blinkered view of the green movement? Are they too hung up on their subjective opinion of greening to gain an objective sense of the business opportunities the green movement offers? Perhaps

While cost, lack of company-wide support, inconvenience and t h e e f f o r t i n v o l v e d r e m a i n d r a w b a c k s t o m o v i n g f o r w a r d w i t h green initiatives, three defined areas of benefit were outlined in this year ’s survey, namely environmental sustainability, cost savi n g s a n d g o o d p u b l i c r e l a t i o n s I t “ w i n s u s w o r k , ” s t a t e s o n e respondent “Customers are demanding it,” states another And, in fact, when asked to rate the validity of the statement, “Going green will positively impact the organization’s public image,” 65 percent felt this to be true.

At the same time, only 28 percent agreed with the statement, “Going green will boost customer/client loyalty to our product/service,” and only 33 percent consider “Green initiatives are a high priority within my organization” to be true Most telling is the fact that only 24 percent feel that “Green initiatives would be more of a priority if funding were available ”

I f y o u r h e a d i s n ’t s p i n n i n g y e t , i t p r o b a b l y s h o u l d b e T h e r e s e e m s t o b e a “ s p l i t p e r s o n a l i t y ” e l e m e n t t o t h e r e s p o n s e s w e r e c e i v e d , a n d t h i s m a y w e l l b e b e c a u s e g r e e n p o l i c y - m a k i n g , while old hat in most of the developed world today, is still relatively new to the United States, and especially to the accounting p r o f e s s i o n W h a t ’s c l e a r, h o w e v e r, i s t h a t b u s i n e s s g r e e n i n g i s gaining attention within organizations large and small, perhaps not specifically out of concern for the environment, but definitely out of concern for public opinion and cost savings.

In fact, for many, green policies are in place “due to increased efficiencies” rather than a push for environmental sustainability. Supporting this is the finding that 64 percent feel, “The long-term impact of going green makes the short-term expense worthwhile ”

“Saving money has been the only motivation to date,” explains o n e r e s p o n d e n t “ We ’ v e a l w a y s b e e n i n t e r e s t e d i n r e c y c l i n g , ” another states, explaining that, ”We’re frugal, and thus we try to be cost-effective when it makes business sense to do so, which may make us appear green ” Yet another explains that, “Going paperless was driven by space and efficiency.”

And while 60 percent of respondents report that the recession has had a moderate to high impact on green initiatives (40 percent report little or no impact), those who have a green policy in place seem reluctant to let things slide just yet “We were green at least five years ago,” one respondent states. “We made a commitment to be green and used certified organic products exclusively in our services from day one, which was over three years ago,” says another.

Recycling, in particular, is in place at 69 percent of the organiz a t i o n s r e p r e s e n t e d i n t h e c u r r e n t s u r v e y t h e s a m e n u m b e r

reported in 2008 “We are a paper-intensive business,” explains one respondent “We should have programs in effect that address disposal of all the paper we use.”

For a few, however, “The economy has created less interest, as the more expensive alternatives are less desirable ” As one survey taker puts it, “The economy hurts all over, especially green initiatives.”

Looking more closely at the cost-cutting, eco-friendly products, practices and policies surveyed organizations are currently implementing, recycled paper (59 percent) and paperless technologies (58 percent) are firmly anchored at the top of the list, followed by telemeeting technologies (49 percent), energy-saving lighting (46 percent), telecommuting and work-from-home arrangements (42 percent), Energy Star-rated equipment (39 percent) and biodegradable/recycled office supplies (34 percent) Other practices respondents pinpointed include operating in LEED-certified buildings, raw material reuse or switching to more environmentally friendly raw materials, and greening company auto fleets

We also asked about the media play green initiatives are getting While increased media attention has meant increased awareness of the debate, some respondents react to the daily headlines with more than a touch of skepticism

“It has shown us that the socialists that control the media are trying to brainwash us,” states one respondent, while another explains that, “I personally think the green initiative craze is just another fad, perpetrated by those who will profit from the gullibility of the average American. I am very cynical about the whole thing….Global warming is a myth, and the environment is much cleaner today than it was 30 years ago Sorry, but I’m not buying into it ”

Yet another respondent states that, “This is nothing but propaganda There is no global warming and the environment is doing j u s t f i

, g e t a g r i p A l l m y employees know this is nonsense and an attempt by the government to gain even greater control over our lives All this green stuff makes all of us sick ”

While opinions swing between both extremes, this year ’s survey reveals majority support (54 percent) for government mandating of green compliance among US businesses In 2008, the pendulum swung the other way, with 52 percent being unsupportive of such a mandate.

It does seem that ICPAS member opinions are favoring green business practices a little more a year on, but the shift certainly isn’t a landslide. Admittedly, finance professionals carry an enormous responsibility within the business marketplace, which means they require the facts behind the claims before jumping on any bandwagons. As we said a year ago, though, cautiousness is not a bad thing; lagging behind is

The most enlightening aspect of our latest survey was the participant feedback we received, which has been quoted extensively in this article We’d like to hear from more of our readers on the topic of business greening If you’re interested in commenting, whether for or against, or if you’d like to share your thoughts on the results of the 2009 How Green Are Y ou? survey, please email the Illinois CPA Society’s Publications & Creative Services Group at giannettoj@icpas org Your comments may be published in an upcoming issue of INSIGHT.

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Wind Fal l

Are we poised for a heyday in green investing?

By Derrick Lilly

Green investing investing in companies that specialize in environmental technologies, alternative/ c l e a n / r e n e w a b l e e n e rg y a n d e c o - f r i e n d l y p r a c t i c e s h a s h a d i t s u p s a n d d o w n s . When oil prices were setting record highs g r e e n t e c h n o l o g y a n d a l t e r n a t i v e e n e rg y s t o c k s w e r e s o a r i n g B u t a s c r u d e p r i c e s collapsed and the broader economy worsened, the green technology sector was hit especially hard

Even so, a nationwide survey of investors conducted by Allianz Global Investors rev e a l s t h a t g r e e n i n v e s t i n g h a s l e g i t i m a t e s t a y i n g p o w e r. I n f a c t , 7 8 p e rc e n t o f i nvestors believe “environmental technology has the potential to be the next great American industry ”

What’s more, “72 percent of survey respondents say the recent decline in stock prices has had no impact on their inclination to invest in environmental stocks ” Instead, their long-term outlook on the sector is bullish Ninety-one percent “believe that finding solutions to environmental problems will be a major issue for years to come,” and 64 percent say “it’s important to look at investments in companies that are capitalizing on addressing environmental problems ”

Those results make it hard to say that green is just a fad The best part? Green investing is really just beginning With many companies’ technologies still in the R&D stage, the growth potential is unfathomable.

“Now is absolutely a good time to start investing in green technology companies,” says Judy L. Seid, CFP, founder and president of Blue Summit Financial Group Inc., a financial advisory firm specializing in socially responsible investing “We’ve seen prices in the sector come down with the broader market, but the best time to invest is when the market is down ”

What’s going to prop prices back up? “Truthfully, the stimulus bill in the United States has been a game changer,” says Kristina Hooper, head of Allianz Global Investors equity product group. “We’ve seen a lot of investment in green technology. In 2008 we saw $155 billion in investment in the United States primarily in clean energy, but the stimulus package in 2009 is injecting $70 billion directly into green initiatives That is a huge increase just from the new Administration alone ”

“The potential for alternative energy in the United States is really significant, and with the legislation put in place by the latest stimulus plan, the foundation is now well-laid for the United States to develop a significant industry there across wind, solar, potentially geothermal, and particularly on the efficiency and smart grid sectors,” says Matt-

hew Page, fund co-manager of London-based Guinness Atkinson Funds’ Alternative Energy Fund “If we had the current legislation in place in the United States 12 to 18 months back, the alternative energy industry would be on fire It would just be ripping The question really is, how long does it take for this industry to stand on its own two feet without government support and backing?”

Outside of government initiatives, says Hooper, “[A]s we saw the markets tighten, we continued to see private equity and venture capital investments really helping to accelerate what I think is not a fad, but a very long-term trend.”

The spectrum of technologies and companies to invest in grows daily. As governments and environmental agencies step up regulations and subsidies, the green sector will develop even further as a legitimate investment opportunity

“We believe these technologies will continue to reduce in price and become more economically viable Looking 20 years ahead, I don’t think we’ll be calling it alternative energy; we’ll just be calling it energy,” says Page

Green initiatives encompass much more than combating high oil prices and melting ice caps As sustainability becomes increasingly embedded in our daily practices, Seid believes that, “The green technologies that emerge will help every aspect of our economy.” And if that’s the case, it’s time to invest.

“Individual investors are recognizing green investments as an important part of their portfolios and a good opportunity. I think that’s an early indicator that we will see more investors moving into the green sector. This may be one situation where retail investors gain access to a sector or asset class more or less at the ground floor, along with venture capital and institutional money,” says Hooper

There is considerable risk, however “The environmental technology sector is still in its early stages and a lot of these are very small companies, so the biggest risk is individual company risk, which will be reduced when you get into an actively managed, diversified fund,” says Hooper “It would be a mistake to be a passive investor in this space, because this is an area where there are so many pricing inefficiencies because there’s not a lot of research coverage ”

Luckily, as the sector gains traction, more diversified fund offeri n g s a r e p o p p i n g u p . S o m e e c o - f r i e n d l y a n d g r e e n t e c h n o l o g y f o c u s e d m u t u a l f u n d o f f e r i n g s i n c l u d e A l l i a n z R C M G l o b a l EcoTrends (symbol AECOX), and Allianz RCM Global Water Fund (AWTAX); Winslow Green Solutions (WGSLX) and Winslow Green G r o w t h ( W G G F X ) ; G u i n n e s s A t k i n s o n A l t e r n a t i v e E n e rg y F u n d (GAAEX); and DWS Climate Change (WRMSX)

Of course, before buying into any sector, conduct your own market research or consult with an advisor, Seid stresses “It’s very important to realize that this sector is volatile largely because a lot o f t h e t e c h n o l o g i e s h a v e n ’t b e e n p r o v e n y e t , a n d a l o t o f t h e emerging companies aren’t profitable yet It’s going to be a highly volatile sector to be in and it probably shouldn’t make up more than 5 percent of your portfolio,” she explains

Still, Hooper says green investing “is a wonderful opportunity from a diversification standpoint and a growth standpoint I hope investors get on the bandwagon a little sooner than they’ve done in past cycles for other growing sectors.”

For more on the Al l i anz survey, vi si t www al l i anzi nvestors com To l earn more about green and soci al l y responsi bl e i nvesti ng, vi si t www bl uesummi ti nvest com

Watch Your Step

Dollars, cents and your carbon footprint

By Christine Bockelman

The Federal government, hoping to reduce carbon emissions from manufacturing and utility companies and other big energy users, is working to pass legislation that would require transparent documentation and auditing of the amount of carbon these corporations emit into the environment. If all goes as planned, the new capand-trade bill passed by the US House of Representatives will become Federal law before the end of 2009

The legislation itself is hugely complex and, at press time, largely undecided Basically, though, the government is consider-

This cap-and-trade would not only limit the tons of CO2 companies can emit, but

s c o u l d b e t r a d e d , bought and sold on the open market With

the combination of stricter CO2 emissions standards and the limited number of permits available, energy prices most likely will rise if the cap-and-trade legislation passes

Although this specific legislation is geared towards companies with the largest carbon footprints, the law will impact smaller c o m p a n i e s a s w e l l , s a y s M i k e Wa l l a c e , president of Wallace Partners, which specializes in sustainability and its application to corporate governance

Large corporations are realizing that their emissions footprints are influenced by the goods and services they purchase (i.e. the supply chain footprint) It then becomes necessary to ask suppliers to report their footprints as well. It seems that every company, regardless of size, will need to measure and report its carbon footprint to some degree

“Customers are already beginning to ask about companies’ environmental practices, and that number is only going to increase,” s a y s M a rg i e G a r d n e r, C E O o f B o n n e v i l l e Environmental Foundation, a nonprofit that s u p p o r t s c l e a n e n e rg y a n d w a t e r r e s t o r ation by selling carbon offsets to consumers and businesses.

I n f a c t , a r e c e n t s u r v e y b y c o n s u l t i n g f i r m A T K e a r n e y [ a t k e a r n y c o m ] f o u n d that companies which focused on sustainability outperformed industry peers in 16 of the 18 industries examined They did so by an average of 15 percent in a six-month period, ending in November 2008.

Walmart has stepped into a leading role in the issue The retail giant has asked more than 60,000 of its suppliers for their carbon footprint information, and is working with the Carbon Disclosure Project (CDP) [cdproject net], a nonprofit group with the largest database of corporate climate change information in the world Many big players in the finance arena, including Bank of America and State Street Corporation, also are participating in CDP studies by voluntarily reporting information on their energy use and other environmental issues 8

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A n a l y z i n g y o u r c a r b o n f o o t p r i n t , r e p o r t i n g o n s u s t

and

monitoring tools

Countless businesses across multiple sectors, municipalities and governments are implementing CSR services from companies like Five Winds [FiveWinds com] and Hara Software Inc [Hara com] GreenBiz Intelligence [www greenbizintelligence com] VP John Davies points to other vendors, including Environmental Support Solutions [ESS-Home com] and Enablon [Enablon com], which

Shareholders, too, are beginning to ask questions, particularly as rising utility costs, weather pattern changes and other environmental factors affect profits

Recently, Sisters of St. Dominic of Caldwell, NJ, a faith-based institutional investor and member of the Interfaith Center on Corp o r a t e R e s p o n s i b i l i t y, m a d e h e a d l i n e s w h e n i t d e m a n d e d t h a t Chevron Corp track and report the carbon content of its products Shareholders in Home Depot, Avis Budget and other companies are also asking for reports on carbon emissions

A l t h o u g h t h i s t y p e o f r e p o r t i n g h a s n ’t y e t b e e n m a n d a t e d , i t may well be in the future Finance professionals likely will play a big role in company sustainability initiatives, stepping in to tabulate and audit information Smart professionals therefore will take the lead now, ensuring that they’re ready when the CEO asks for a measure of the company’s environmental impact.

However, some are in danger of getting ahead of themselves

“Companies are, quite frankly, rushing into this,” says Wallace. “They’re jumping into things like promoting carbon-neutral products when there’s really no such thing as a carbon-neutral product. It’s basically a PR gimmick Rather than marketing and promotion, companies should be focusing on accurate measurements and strategic disclosure Carbon emissions are quantifiable, are linked to financials (energy used = carbon emissions = dollars spent) and are being increasingly tied to overall good corporate governance Companies that demonstrate leadership and performance in this area are tackling these issues at the board level Given these are ‘accounting issues,’ this should be driven by the audit committee ”

How is a carbon footprint measured? Using three main categories or “scopes ”

“Scope One is the actual fuel you burn It’s the oil burner in the b a s e m e n t o f t h e b u i l d i n g , t h e g a s i n t h e c a r ’s t a n k , ” e x p l a i n s Byron Stigge, associate principal at sustainable engineering firm Buro Happold, and a founding member of the sustainability group InTERRAction.

Scope Two is primarily your electricity use “As purchasers of electricity we don’t have any control over the fuel used to create e l e c t r i c i t y, ” Wa l l a c e e x p l a i n s “ U t i l i t y c o m p a n i e s t h a t p r o d u c e electricity using hydro, solar or natural gas have lower ‘carbon containing kilowatts’ than utilities burning coal to produce kilowatts ”

i n g E S S ’ u n i f i e d e n v i r o n m e n t a l r e p o r t i n g s o f t w a r e p l a t f o r m ,

which tracks

enacted laws, norms, codes,

S c o p e T h r e e i s t i e d t o t h e g o o d s a n d s e r v i c e s t h e c o m p a n y uses, and includes emissions from air travel and company cars

There are thousands of online calculators designed to help companies get a handle on their carbon footprints Wallace and Gardner both suggest starting with calculators on the Environmental P r o t e c t i o n A g e n c y w e b s i t e [ e p a . g o v ] t o g e t a r o u g h e s t i m a t e . G a r d n e r a l s o p r o v i d e s a c a l

“Any carbon footprint calculator will ask for the same type of information airline miles traveled by employees, electricity used, etc , ” says Gardner “This is all measurable data If nothing else, it’s a great and very useful exercise in examining how much energy your company uses” and how much money it spends in this area.

Measuring a carbon footprint online is far from an exact scie n c e , h o we v e r, a n d th e re a re o fte n d iffe re n c e s in th e n u mb e rs calculators output. “It’s a wild market out there right now,” says Gardner “There are no easy benchmarks ”

That’s why some experts recommend staying away from online carbon footprint calculators altogether. “I don’t like them,” Stigge states “There’s huge variability Time of day is a factor, for instance Night-time electricity is ‘dirty’ and the afternoon is ‘clean’ electricity. It’s so hard to accurately measure a carbon footprint.”

Instead, Stigge recommends hiring consultants who specialize in carbon emissions measurement, and who have experience conducting energy audits What’s more, Wallace suggests contacting your local utility company or the largest one in your area. Many are now offering free support such as energy audits and efficiency programs

N o m a t t e r h o w y o u c r u n c h t h e n u m b e r s , t h e m i s s i o n i s t h e s a m e r e d u c i n g t h e o v e r a l l e n e rg y y o u r c o m p a n y u s e s . Even though this is not an exact science, finance professionals should “use the estimated size of your carbon footprint as a new lens to look at energy use,” says Stigge. “The point isn’t to come up with an exact number The point is to better understand your business ”

With predictions that energy costs will rise as a result of the impending carbon footprint legislation, keeping track of corporate energy use is a bit of a no-brainer. Even if your company’s energy costs are just a few percentage points of total expenditure, reducing the size of your footprint will help to reduce spending

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Feeling Green?

Find room in your practice to go the eco route

By Selena Chavis

It may not have made its way into mainstream accounting yet, but it’s coming. That’s what industry experts say about h o w t h e g r e e n m o v e m e n t w i l l i m p a c t accounting measures and reporting in the coming years

Joel Makower, executive editor of Greenb i z c o m a n d a u t h o r o f S tr a te g i e s f o r th e Green Economy, notes that green accounti n g h a s b e e n a f o c a l p o i n t f o r i n d u s t r i e s such as oil and gas and manufacturing for a number of years, and that honed accounti n g s k i l l s f o r t h e s e t y p e s o f i n d u s t r i e s a r e already needed and expected. “If you are working in highly regulated industries, the levels of accounting and accountability will b e d i f f e r e n t t h a n i f y o u a r e w o r k i n g f o r retail or finance,” he says

A n d w h i l e t h e c u r r e n t i m p a c t o f t h e green movement has infiltrated large busin e s s e s a n d h e a v i l y r e g u l a t e d i n d u s t r i e s more than others, the expectation is that it w i l l t r i c k l e d o w n t o s m a l l a n d m i d - s i z e d businesses as well

“If it isn’t a demand now, it soon will be,” says Makower. “As sustainability gets driven up the supply chain, it’s growing from tier-1 companies to tier-2 and tier-3 suppliers ”

Consider companies like Coca-Cola and U P S i n d u s t r y g i a n t s w i t h f a r- r e a c h i n g g l o b a l i m p a c t s , h u g e s u p p l y c h a i n s a n d many stakeholders Alongside their public financial reporting initiatives, these companies have also opted to voluntarily divulge how their operations and strategies affect the social and environmental landscape. To

truly address the need for green practices, companies like these a r e e x p e c t i n g t h e s a m e c o m m i t m e n t f r o m t h e i r s u p p l i e r s , Makower notes

The Big Four accounting firms and many other large firms are already gearing up to provide expertise to clients on this level Should small firms be doing the same?

Makower says “yes ” “It requires some new knowledge and the willingness to be adaptable in a quickly changing environment,” he explains, adding that it’s really pretty easy to establish a niche a d d r e s s i n g g r e e n a c c o u n t i n g i s s u e s . “ I t ’s a r e a s o n a b l y s m a l l t o o l k i t . I t w o u l d n ’t t a k e m u c h f o r a n a c c o u n t i n g f i r m t o p u t together a reasonable toolkit or advisory service for clients.”

Acknowledging that a lack of standards is one of the challenges facing accounting firms and companies in their efforts to institute a green practice, many industry professionals point to recommendations outlined by the Global Reporting Initiative (GRI), whose m i s s i o n i t i s t o m a k e s u s t a i n a b i l i t y r e p o r t i n g a s r o u t i n e a n d a s comparable as financial reporting

Aside from client services, today’s small and mid-sized firms need to ask themselves, “Can we practice what we preach?”

Faced with pressures to implement green practices, Leisha John, the America’s director of environmental sustainability with Ernst & Young (EY), recommends that small and mid-sized firms get involved with the green movement to add credibility to their efforts

Getting the ball rolling, she says, doesn’t require a huge investment

Started on the grassroots level more than six years ago, EY’s volu n t e e r E c o C a r e n e t w o r k n o w i n c l u d e s 1 , 0 0 0 e m p l o y e e s , w h o strive to increase awareness of environmentally friendly practices The initiative’s successes have included programs for recycling, waste reduction, environmentally friendly procurement practices and community activities.

“ W h a t I ’ v e d e t e r m i n e d i s t h a t a l o t o f s m a l l f i r m s c o u l d d o m a n y o f t h e t h i n g s t h a t E Y i s d o i n g , a n d m a n y h a v e n o c o s t s attached to them,” John explains “A lot of grassroots programs are easy to get started ”

However, Makower adds, it can be tough to leap into green practices that require a financial investment because small businesses don’t have the deep pockets and economies of scale of their larger counterparts, especially in a tough economic market.

“This isn’t easy. It requires things companies don’t have time, resources and patience. Saving the planet may take a backseat to s a v i n g t h e d a y, ” h e s a y s “ T h e b i g g e s t c h a l l e n g e i s f i n d i n g t h e opportunities that make financial sense ”

Whether right or wrong, companies may feel pressure to step into the movement because there are savings that can be achieved; they need to keep up with the competition; employees and constituents are demanding it; or they need “a story” to prove they are environmentally conscious.

“The first step is to understand what your impacts are. Until you know that, it doesn’t make sense to try anything,” says Makower, adding that the two most important tools small companies have are their checkbooks and their dumpsters Analyzing where a company is spending its money and what’s winding up as waste often can provide a lot of insight into inefficiencies and poor business practices

Start small, John suggests Because accounting firms tend to be very paper-intensive, look for ways to reduce paper consumption Buy paper made from recycled content as a first step, eliminate

banner sheets, invest in printers that print on both sides of a sheet of paper, reuse paper for scratch pads or shred used paper for use as recycled material

“There are a lot of efforts that can be implemented around paper in accounting firms,” John notes “Our paper consumption went down by 60,000 reams last year that’s 30 million sheets of paper ”

saving resources already at their disposal, such as “print preview” functions that help to avoid unnecessary printing And, since it’s much easier to rationalize an effort if it is going to impact an organization’s financial picture positively, Makower recommends taking advantage of the free audits most energy companies offer as a way to minimize energy consumption

For small businesses interested in implementing greener business practices but struggling to find the capital for the investment, EarthShare [www EarthShare org] suggests contacting the US Department of Energy ’ s Energy Efficiency & Renewable Energy division [EERE Energy gov], which awards hundreds of millions of dollars each year in financial assistance to b

“First and foremost, it’s about saving money; it creates a ‘green story’ for clients,” he says “It’s hard to do things that don’t have a specific business rationale.”

John suggests using LED lighting and remanufactured toner cartridges EY, she says, saves $500,000 a year by using remanufactured toner cartridges alone.

Lindy Antonelli, president and CEO of Illinois-based AccessTe k , s a y s t h a t s o m e t e c h n o l o g i c a l i n v e s t m e n t s s u c h a s Vo i c e over Internet Protocol are sure wins, since they provide virtually immediate returns

“Unifying communication tools such as phone and email lets p e o p l e u t i l i z e t h e i r t i m e b e t t e r U t i l i z i n g v i r t u a l m e e t i n g s w i t h conference calls and online meeting tools built into the phone systems provide for decreased use of gas,” she explains “It’s so easy to do that; it should be a simple decision, and it saves on long distance as well ”

E f f o r t s s u c h a s c l o u d c o m p u t i n g a n d v i r t u a l i z a t i o n a r e a l s o smart investments that are “really not out of reach” for most small b u s i n e s s e s , s a y s A n t o n e l l i C l o u d c o m p u t i n g i n v o l v e s a n o ndemand self-service Internet infrastructure through which users pay as they go and use only what they need Also think about using electronic interchange of data “You can request from your bank that you get all your files online,” Antonelli explains. “How many bank statements do companies get? It adds up ”

Often, the first steps come down to simply changing a few basic business practices, she adds “Smaller companies think it’s going to cost too much, but really, it doesn’t because the effort can produce payback Are most of us doing this in our personal lives? Yes, but, in a corporate environment, the attitude is more along the lines of ‘it’s not my money buying that paper.’”

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Urban Renewal

There’s a green and a financial incentive for breathing new life into old buildings

By Bridget McCrea

There was a time when developers and investors contemplating a new structure would scout around for vacant land to build on With empty lots becoming harder and harder to find, though, they’re now looking at a different strategy recycling what’s already there, or “adaptive reuse.” Another plus in the age of environmentalism is that the strategy is green

often results in urban renewal in formerly undesirable areas Drive through Chicago’s West Loop and East Village neighborhoods and you’ll see adaptive reuse in action

On the financial front, adaptive reuse offers various tax incentives and cost savings In fact, the Federal Historic Preservation Tax Incentives program, which fosters private-sector rehabilitation of historic buildings, is one of the nation's most successful and cost-effective public/private revitalization programs

Federal Historic Preservation Tax Incent i v e s a r e a v a i l a b l e f o r b u i l d i n g s t h a t a r e National Historic Landmarks, are listed in the National Register, and that contribute to National Register Historic Districts and certain state or local historic districts Propert i e s a l s o m u s t b e i n c o m e - p r o d u c i n g a n d rehabilitated The program is jointly mana g e d b y t h e N a t i o n a l P a r k S e r v i c e ( N P S ) and the Internal Revenue Service (IRS) in partnership with State Historic Preservation Offices (SHPOs)

For both credits, the rehabilitation must b e s u b s t a n t i a l ( m e a n i n g t h a t t h e c o s t o f r e h a b i l i t a t i o n m u s t e x c e e d t h e g r e a t e r o f $5,000 or the adjusted basis of the property), and must involve a depreciable structure (one that, after rehabilitation, must be used for an income-producing purpose for at least five years). Owner-occupied residential properties do not qualify for the 20percent federal rehabilitation tax credit.

I t ’s i m p o r t a n t t o n o t e t h a t t h e t w o t a x credits are mutually exclusive in that only o n e c a n b e a p p l i e d t o a g i v e n p r o j e c t . Exactly which credit applies in each case d e p e n d s o n t h e b u i l d i n g i t s e l f B u i l d i n g s listed in the National Register of Historic Places are not eligible for the 10-percent credit, for example

Several states offer additional tax incentives for historic preservation, including credits for rehabilitation of owner-occupied residential properties, tax deductions for easement donations, and property tax abatements or moratoriums Requirements for state incentives may differ from the requirements of the Federal Tax Incentive program

The Illinois Historic Preservation Agency, for example, administers several incentive programs, most of which are linked to renovation projects Eligibility is based on the type of property ownership Public and nonprofit organizations are eligible for matching funds from the Illinois Heritage Grants program, and homeowners can receive property tax benefits by qualifying for the Property Tax Assessment Freeze Program.

b i l i t a t i o n o f c e r t i f i e d h i s t o r i c

C u r r e n t t a x i n c e n t i v e s f o r p r e s e r v a t i o n , established by the Tax Reform Act of 1986, include a 20-percent tax credit for the cert i f i e

r

s t r u c t u r e s a n d a 1 0 - p e rc e n t t a x c r e d i t f o r the rehabilitation of non-historic, non-residential buildings built before 1936

J o e l C o h n , p r i n c i p a l w i t h r e a l e s t a t e c o n s u l t i n g f i r m R e s n i c k G r o u p P C , s a y s i n t e r e s t i n a d a p t i v e r e u s e i s o n t h e r i s e , spurred in part by the Federal Tax Incentive program and the public’s increased awareness of the need to go green He explains t h a t t h e t r e n d i s g r o w i n g a c r o s s t h e r e s i -

dential, commercial and industrial sectors, with some activity in the hospitality space as well

“ O n l a rg e r p r o j e c t s w h e r e t h e r e h a b c o s t s a r e $ 5 m i l l i o n o r higher, the tax credits are often sold to third parties and used to fund the development,” he says Cohn works with clients who are eligible for the 10- or 20-percent federal tax credit, and explains that those credits are often paired with the Federal New Markets Tax Credit (NMTC) program

Launched in 2000, the NTMC provides tax incentives to induce private-sector, market-driven investment in businesses and real estate development projects located in low-income urban and rural communities nationwide. Individual and corporate taxpayers can receive a credit against federal income taxes for making qualified equity investments in Community Development Entities (CDEs) The credit provided totals 39 percent of the cost of the investment, and is claimed over a seven-year period.

According to Cohn, investors and/or property owners involved with adaptive reuse do face several challenges With respect to the “historic” credit, he says obtaining the necessary architectural approvals can take time a n d i n v o l v e a n a p p l i c a t i o n p r o c e s s “ T h e property owners submit an application to a state preservation officer who then forwards i t o n t o t h e N a t i o n a l P a r k S e r v i c e f o r f i n a l a p p r o v a l , ” h e e x p l a i n s “ T h e p r o c e s s c a n hold up the start of a project and add time to the adaptive reuse initiative ”

T h e p r o c e s s c a n t a k e e v e n l o n g e r w h e n the developer ’s proposed plans don’t meet the reviewer ’s strict standards “Many times the developer will need to find ways to compromise in order to meet those architectural standards,” says Cohn, “while still maximizing the efficiency of their buildings ”

Ken Ortiz, regional manager for The ReUse People of America, says that when his company came into the Chicago market four years ago, the deconstruction and donation of reusable building materials was “pretty much unheard of.” The trend has grown quickly since then, and today finds the group getting involved with the adaptive reuse of homes, warehouses and other commercial structures.

“It’s a green movement that’s just gotten b i g g e r a n d b i g g e r o v e r t i m e , ” s a y s O r t i z , w h o p o i n t s o u t t h a t t h e t a x i n c e n t i v e s a r e particularly attractive for investors, owners and developers “The big question now is, why aren’t more people doing this?”

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Al so, the Il l i noi s State Hi stori c Preservati on Offi ce (SHPO), at the Preservati on Servi ces Di vi si on of the Il l i noi s Hi stori c Preservati on Agency, i s charged wi th admi ni steri ng federal and state preservati on l aws, i ncl udi ng rehabi l i tati on tax i ncenti ves for qual i fi ed hi stori c bui l di ngs. For more i nformati on, cal l 217.782.4836 or vi si t the SHPO websi te at www.i l l i noi shi story.gov.

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Green Guru

“Think green ” is the motto of the 21st century finance pro

By Robert J. Derocher

Th e m e s s a g e f o r C PA s a n d f i n a n c e professionals is that green eyeshades a r e f a s h i o n a b l e a g a i n b u t i t h a s nothing to do with outdated stereotypes and everything to do with a continuing focus on how environmental policies and technologies are shaping today’s business and financial environment

“As the green movement continues to grow, those CPAs who are practicing being green and aware of the most current green incentives will be ahead of the curve,” says Hilary Kusel, executive director of the Green

Business Alliance, which helps companies incorporate environmental stewardship into their daily business practices

T h e e m e rg e n c e o f g r e e n a c c o u n t i n g , along with growing public scrutiny of corporate environmental policies and actions, are beginning to translate into new opportunities for young finance professionals But taking advantage of those opportunities will require new skill sets and new thinking to keep pace with rapidly changing technology and public opinion

The good news, experts say, is that green accounting is still in its infancy And if fluctuating gas prices, global warming and the growing number of “environmentally friendly” products on supermarket shelves are any indication, the green movement looks less like a fad and more and more like a mainstay of business life.

W h e t h e r t h r o u g h p u b l i c s e n t i m e n t o r l e g i s l a t i v e m a n d a t e , c h a n g e s h a v e b e e n coming in the way companies of all sizes and in every industry sector do business. A survey of more than 11,000 people in the U n i t e d S t a t e s , t h e U n i t e d K i n g d o m a n d seven other countries released in 2008 by Havas Media found that more than 80 percent of respondents would buy more green g o o d s a n d s e r v i c e s i f t h e y w e r e r e a d i l y available Additionally, 79 percent of respondents would prefer to buy from companies that are actively trying to reduce their carbon footprints And when asked if they would be likely to buy more environmentally friendly goods in the next 12 months, 89 percent said they would.

W h a t ’s m o r e , a w h i t e p a p e r i s s u e d i n M a y 2 0 0 8 b y t h e e x e c u t i v e s e a rc h a n d consulting firm Heidrick & Struggles estim a t e s t h a t c o m p a n i e s w o r l d w i d e w i l l b e required to cut about 25 percent of carbon emissions by 2020, and 50 to 80 percent b y 2 0 5 0 . I n t h e U n i t e d S t a t e s , 11 s t a t e s have already adopted those carbon limits, with another 20 states expected to follow suit Federally mandated caps on all green-

2009 is a CPE Reporting Year

Licensed CPAs need 120 hours of CPE* by September 30, 2009. *Must include 4 hours of Ethics CPE

house gas emissions are also on the horizon Basically, this translates to a rise in the demand for green accountants.

“Green accounting,” says Karen Schuele, CPA, dean of the Boler School of Business at John Carroll University, “is the process of i n c o r p o r a t i n g e n v i r o n m e n t a l c o s t s o f o p e r a t i o n i n t o a n e n t i t y ’s financial results and financial reporting The definition of green accounting has not changed over the last few years; however, the familiarity of the term has grown and continues to grow.”

Gernot Wagner, an economist with the Environmental Defense Fund in New York, sees it in much the same way

“ G r e e n a c c o u n t i n g a t i t s s i m p l e s t i s n o t h i n g n e w : i n s t e a d o f a d d i n g u p d o l l a r s a n d c e n t s , t h e f o c u s n o w i s o n t o n s a n d pounds,” he says “But it requires a shift in mindset ”

For most companies, green accounting falls under the umbrella of Corporate Social Responsibility (CSR), a concept that meshes business operations with a company’s responsibility to society On t h e e n v i r o n m e n t a l f r o n t , t h e k e y i s s u s t a i n a b i l i t y : “ M e e t i n g t h e needs of the present without compromising the ability of future generations to meet their own needs,” according to the US Environmental Protection Agency [epa gov]

And the best way to get companies to buy into sustainability and to embrace green accounting is to make a financial case for it, says Jim Key, CIA, managing partner of the Shenandoah Group, a risk management consulting firm

“There has to be a financial interest for most businesses to embrace sustainability The basic assumption of CSR is that sustainability performance is a concept in which investment can be made,” says Key. “This is crucial in driving interest and investments in sustainability to the mutual benefit of companies and investors ”

But implementation of a green accounting standard can be challenging, according to Schuele, because there are no existing standards for measurement and reporting of environmental costs

“ T h e r e q u i r e m e n t s f o r r e p o r t i n g w i t h i n f i n a n c i a l r e p o r t s a r e g r o w i n g w o r l d w i d e b u t m o s t a r e r a t h e r v a g u e , ” s a y s S c h u e l e .

“Comparisons across companies are nearly impossible, and it is hard to refute the argument that some companies use these reports as glossy PR instruments without the ability of the reader to discern their legitimacy ”

However, Schuele, Key and others in the field say that CPAs are well positioned to fill the financial gaps in green accounting and that’s just what they expect in the months and years ahead

“External auditors that is, Certified Public Accountants in the course of their audits help to ensure that any material environmental liabilities are properly reported on the company financial statements,” says L. Murphy Smith, CPA, an accounting professor a t Te x a s A & M U n i v e r s i t y w h o h a s w r i t t e n o n e n v i r o n m e n t a l accounting and auditing “Thus, accountants who work for industry firms or public accounting firms can specialize in environmental reporting issues, and thereby contribute to corporate efforts to be responsible environmental citizens ”

Key agrees, but adds that auditors in the United States have been slow to embrace the emerging opportunities as CSR becomes more ingrained in corporate culture. “I believe it is an opportunity for CPA and audit professionals to add value to the companies they serve,” says Key, a former director of internal audit at IBM “They can identify processes that present opportunities for the enterprise, and provide consulting and assurance services to provide management with recommendations to more effectively meet CSR objectives.”

While governments and financial regulators in the United States continue to grapple with environmental reporting standards and disclosure requirements, it is vital, says Schuele, for young accountants and finance professionals interested in green accounting as their area of focus to continually monitor environmental technology, as well as the local, state and national regulatory landscape.

“More and more companies are recognizing the need to begin to measure environmental impact, and accountants are a natural to lead this effort,” she says “In addition, as the requirement for external reporting on environmental issues grows, accountants must be proficient in this area ”

Although the unrelenting focus on the corporate bottom line will continue to make environmental impact measurement and reporting a tough sell at many corporations, “As CSR becomes the rule and not the exception,” says Key, “audit professionals will be called on to assure the processes that support these efforts Boards and executive management will increasingly turn to audit professionals to assist ”

The CPA Life Insurance Plan— Designed with you in mind

Your State Society membership has brought you the trust of clients and customers, as well as the respect of your peers. Now it can help bring a sense of security to your loved ones. That’s because your membership provides you with the opportunity to request coverage under the CPA Life Insurance Plan, issued by The Prudential Insurance Company of America.

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Coverage under CPA Life offers important benefits your family may need to take care of financial obligations if you were to die. And with our competitive rates, you won’t have to search to find insurance that works with your lifestyle. In fact, rates were recently lowered for most participants ages 50-64.

Eligible members may request up to $500,000 in term life coverage—up to $2 million if you’re also a member of the AICPA. And if you’re approved for coverage and between the ages 45-74, you’ll automatically pay Select Status rates— 25%-50% lower than standard rates.

Opportunity for cash refunds

Every year, the money not used for claims or other expenses is paid to eligible Plan participants as a cash refund. These cash refunds are paid by the Insurance Trust from premium refunds received from Prudential and can lower your costs even further. Although not guaranteed, cash refunds have been paid every year since 1958.

Optional CPA Life Benefits: Waiver of Contribution during Disability

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Protecting your family’s future is a job you take very seriously. With coverage under the CPA Life Plan, it may just get a little easier. Join over 175,000 of your fellow CPAs who have chosen CPA Life for their insurance needs. Visit www.cpai.com/lifeil to learn more about the Plan or to apply online.

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Flowering Technologies

Wa tc h b u s i n e ss g re e n a n d co s t s av i n g s g row

By Selena Chavis

Continental Airlines’ newly installed teleconferencing infrastructure has s a v e d $ 1 m i l l i o n i n t h r e e y e a r s

R e t a i l g i a n t D i l l a r d ’s ’ d i g i t a l d o c u m e n t workflow system has reduced signage printing costs by 80 percent A manufacturer ’s paperless workflow process has produced savings of $15-$20 million annually

T h e s t a t i s t i c s s p e a k f o r t h e m s e l v e s ; t h e movement towards green technologies and business practices is a win-win for the environment and enterprise alike From global f i n a n c i a l p o w e r h o u s e G o l d m a n S a c h s t o local sole practitioners, implementing green technologies and practices reduces expenses and strengthens profits no matter how small the business

“ E l i m i n a t i n g w a s t e r e s u l t s i n s a v i n g money,” says John Davies, vice president of

GreenBiz Intelligence “Almost all companies face the same ROI scrutiny,” especially when it comes to productivity.

N a t u r a l l y, b e i n g e n v i r o n m e n t a l l y a n d s o c i a l l y r e s p o n s i b l e i m p r o v e s m o r e t h a n c o m p a n y r e s u l t s . A c c o r d i n g t o M a r k S a rr o s , p r i n c i p a l i n C r o w e H o r w a t h ’s O a k Brook, Ill office, investors and consumers a r e i n c r e a s i n g l y v i g i l a n t o f p r o d u c t s a n d s e r v i c e s c o m m i t t e d t o c o r p o r a t e s o c i a l r e s p o n s i b i l i t y a n d e n v i r o n m e n t a l s u s t a i nability. They see this as a direct reflection of the trustworthiness of the company

Kim Carlson, business owner, speaker and author of Green Y our W ork: Boost Y our Bottom L i ne W hi l e Reduci ng Y our Carbon Footpri nt, emphasizes that more and more small to mid-sized businesses need to realize the benefits of greener business practices “It’s

“No-one wants to pay for travel. You can save anywhere between $500 and $1,000 in hard costs alone by not sending an employee to a meeting or training session, not to mention costs associated with time lost.”

the last thing we as small-business owners want to spend our time doing,” she says, “but the devil is in the details.”

For time-starved business professionals, the green storm may be overwhelming (or, at the very least, irritating), but it’s worth putting in the research.

Paperless technologies and multifunction devices, for example, aren’t new concepts, but as the years go by, product lines continue to become easier to use, more efficient and, of course, more pocketbook- and earth-friendly

The ability to copy, fax, print and scan documents is essential to every business. By combining all of these functions into a single, centrally located, user-friendly piece of equipment, time and material savings quickly add up In fact, the power savings by running one multifunction device as opposed to three or four standalone units can justify the investment on its own

Canon [USA.Canon.com] and Xerox [Office.Xerox.com], leaders in document-imaging and office products, offer a wide range of ecofriendly multifunction devices Each company has different product lines developed specifically for the personal office on up to corporate solutions with environmental awareness features

Solutions in Canon’s imageCLASS, imageFORMULA and imageRUNNER lines tout a number of eco-advancements, including USBpowered, ENERGY STAR® rated devices for 25-percent better power efficiency; double-sided printing and duplexing that can reduce paper consumption by 50 percent; toner-saving modes that allow 20-percent more cost-effective toner usage; individual ink

tanks allowing replacement of only the colors needed; ink-saving features that can reduce ink consumption by 33 percent; and resized, recycled packaging and cartridges that reduce landfill waste What’s more, Canon’s multifunction personal office all-inone devices start at a mere $99.99.

Xerox’s business line of ColorQube 9200 multifunction devices also offer a variety of environmentally savvy features, but their new solid-ink technology stands out. The cartridge-free design promises to produce 90-percent less waste over four years of use compared to similar devices ColorQube 9200 devices start at a hefty

o n s t h a t s p a n a broad price range Incidentally, Xerox also offers a range of paper products composed of 100-percent post-consumer waste

“It’s not just about how companies can use less paper, it’s also about creating workflow efficiencies and saving space. Paperless technologies, document management solutions and multifunction devices are creating obvious and tangible benefits to companies large and small,” says Carlson. “We’ve talked about reducing our use of paper for years What I am seeing is that the technology has caught up with the idea and become more cost efficient ”

Along with workflow advantages and the tangible benefits of paper consumption reduction, there are also advantages associated with space and security Storing and sending documents electronically allows for encryption and virtual storage, rather than physically filing sensitive materials and finding ways to safely dispose of them Carlson states that paperless technologies allowed her organization to turn space previously designated for storage into more functional work areas that directly impact the company bottom line

Another hot area to look at is tele-tools. While doing business in person is nice, it isn’t always cost-effective or convenient And with travel costs constantly rising, businesses that need to crack down on expenses can find a solution in teleconferencing and telecommuting solutions

“No-one wants to pay for travel,” says Carlson “You can save anywhere between $500 and $1,000 in hard costs alone by not sending an employee to a meeting or training session, not to mention costs associated with time lost ”

Systems Inc. [Cisco.com] offers a number of products for

o n f e r e n c i n g , r a n g i n g f r o m s m a l l - b u s i n e s s s p e c i f i c t e l e c o m m u n i c a t i o n s s o l u t i o n s t o g l o b a l enterprise live-video meeting tools. In response to demand, Cisco recently debuted a lower-cost personal teleconferencing system for mid-sized businesses, specifically.

Citrix Online LLC’s GoToMeeting [GoToMeeting com] is another popular tool Whether you want to demo a product, present files and applications from your desktop, or simply use VoIP technology for a conference call, this product which CNET described as “The best interface in Web Conferencing” offers a simple all-in-one solution at a flat rate of $49.00 a month or $468.00 a year.

Offerings in what are essentially the most fundamental aspects of business today continue to grow as technology and software developers respond to the increasing demand for not only technology efficiency and cost savings, but also a greener approach to business What these new products offer businesses is a double win cutting costs and looking good in the public eye as they do it.

Illinois CPA Society member town hall forums

Peoria | September 14, 2009

11:30AM - Networking and Lunch

12:00PM - 1:00PM - Program and Q&A

Hotel Pere Marquette 501 Main Street, Peoria, IL Code: C36782

Bloomington-Normal | September 15, 2009

8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

Chateau Hotel and Conference Center 1601 Jumer Drive, Bloomington, IL Code: C36783

Champaign-Urbana | October 5, 2009

11:30AM - Networking and Lunch

12:00PM - 1:00PM - Program and Q&A

Hawthorn Suites 101 Trade Centre Drive, Champaign, IL Code: C36784

Springfield | October 6, 2009

8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

President Abraham Lincoln Hotel 701 E. Adams Street, Springfield, IL Code: C36785

Rockford | October 26, 2009

11:30AM - Networking and Lunch

12:00PM - 1:00PM - Program and Q&A

Best Western Clock Tower Resort 7801 E. State Street, Rockford, IL Code: C36786

Glenview | January 20, 2010

8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

Wyndham Glenview Suites 1400 N. Milwaukee Avenue, Glenview, IL Code: C36819

Oak Brook | January 25, 2010

8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

The Hyatt Lodge at McDonald’s Campus 2815 Jorie Boulevard, Oak Brook, IL Code: C36820

Downtown Chicago | January 26, 2010

8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

The Crowne Plaza 733 West Madison, Chicago, IL Code: C36821

Please

Come for complimentary breakfast or lunch and hear the latest on current and emerging issues and what they mean to you, including:

>FEDERAL REGULATIONS

Financial services industry regulatory changes and their potential effects on CPAs.

>NEW ECONOMIC REALITIES

How they are impacting the CPA profession.

>TECHNICAL ISSUES

Proposed tax preparer registration, mandatory peer review, IFRS and more.

Don’t miss this opportunity to share your thoughts and ideas with Elaine Weiss, ICPAS President & CEO, and Lee Gould, Chair of the ICPAS Board of Directors.

Bring

a Young Professional Colleague

Help develop the future of our profession. This is an excellent opportunity for young professionals to network with colleagues and hear first-hand the latest developments within the profession.

TOREGISTER for this complimentary program in your area, call 800.993.0393.

Wel l Oiled

Repealing oil and gas exploration tax credits may push producers towards greener practices

By Harvey Coustan, CPA

Last September, I described some of the many tax incentives available to businesses and other taxpayers for supporting the environment. There are many ways to reward taxpayers who “think green ” However, the Internal Revenue Code also can be used to discourage taxpayers who pollute or participate in other activities that are detrimental to the environment

The Treasury Department’s General Ex pl anati ons of the Admi ni strati on’s Fi scal Y ear 2010 Revenue Proposal s contains a number of items that actually remove tax incentives presently available to oil and gas producers Discussing the proposed repeal of the credit for production from marginal wells, the document states, “To the extent the credit encourages overproduction of oil, it is detrimental to long-term energy security and is also inconsistent with the Administration’s policy of reducing carbon emissions and encouraging the use of renewable energy sources through a cap-and-trade program.”

The other proposals in this area would s e v e r e l y r e d u c e m a n y o f t h e t a x b e n e f i t s currently associated with oil and gas prod u c t i o n i n y e a r s b e g i n n i n g a f t e r 2 0 1 0 Many of the benefits originally enacted to encourage further production of oil and gas a r e n o w o n t h e l i s t f o r r e p e a l o r a m e n dment, including,

n L e v y Ta x o n C e r t a i n O f f s h o r e O i l a n d Gas Production

n Repeal Credit for Enhanced Oil Recovery Projects

n Repeal Intangible Drilling Cost Expensing

n Repeal Tertiary Injectant Deductions

n Repeal Passive Loss Exception for Work ing Interests in Oil and Gas Properties

n Repeal Percentage Depletion (for oil and gas production)

uction for Oil and Gas Production

Seven Years (presently two years for independent producers)

The repeal of percentage depletion would be a dramatic change for investors in oil and gas interests. Percentage depletion for mineral properties has been in the Internal Revenue Code since 1926 Depletion, of course, is a concept that applies to investments in “wasting” assets. Similar to depreciation, which applies to assets whose value theoretically decreases economically and functionally over a period of time, the amount is calculated to allow a taxpayer to recover the basis in his or her investment

Tax depreciation is generally calculated by allocating the basis of an asset investment over a useful life, which is expressed in years and determined by a statutory schedule that often is different than the asset’s actual economic or functional life. Cost depletion is calculated by applying the ratio of actual annual production to total estimated production at the beginning of the year Total depreciation and cost depletion are limited to the basis in the property. However, percentage depletion, calculated by applying a statutory percentage to the “gross income from the property,” can exceed the basis in the depleteable asset.

Many taxpayers claim depletion for a number of years after the total basis has been recovered by depletion. Available only to independent producers, royalty owners and non-integrated oil companies, several limitations apply: The amount of percentage depletion cannot exceed 100 percent of the taxable income from the property, nor can it exceed 65 percent of the taxpayer ’s overall taxable income Percentage depletion for oil and gas investments can only be claimed on average daily production up to 1,000 barrels Cost depletion would still be allowed under the proposal

Many taxpayers have invested in working interests in oil and gas properties and have benefited from the ability to avoid passive loss limitations on deductions and credits on the ROI in these working interests The Administration’s proposal would repeal the exception for working interests in oil and gas properties effective for tax years beginning after 2010.

An additional change described as “Eliminate Oil and Gas Company Preference” was not contained in the section of the Administration proposal aimed at the oil and gas industry, but will have a significant negative impact on major integrated oil producers This proposal would eliminate the use of Last-in, First-out (LIFO) methods of calculating inventory value for all taxpayers However, it’s well-known that the LIFO reserves (the difference between Firstin, First-out [FIFO] and LIFO values) of the major US oil companies total billions of dollars In its 2007 report to the SEC, Form 10-K, ExxonMobil indicated that the average replacement cost of its ending inventory exceeded its LIFO cost by more than $25 billion.

Taxpayers would need to restore LIFO reserves to gross income ratably in the first taxable year that begins after 2012, and in the following seven years. Of course, present International Financial Reporting Standards (IFRS) do not allow the use of LIFO, and the US Congress will have to act to eliminate the present requirement for US taxpayers to use LIFO for GAAP financial statements when the United States adopts IFRS as GAAP If this financial statement c o n f o rmi t y re q u i re me n t i s n o t re p e a l e d , t h e U S L I F O u s e r w i l l need to restore the LIFO reserve to income

The repeal of LIFO is not the only proposal that would have a major impact on the oil and gas industry For periods after 2010, recognizing the need for funds to remedy the damages caused by releases of hazardous substances, the Administration proposes to reinstate the Superfund Excise Taxes. These taxes were imposed b e f o r e 1 9 9 6 a n d w e r e d e d i c a t e d t o t h e H a z a r d o u s S u b s t a n c e S u p e r f u n d Tr u s t F u n d ( t h e S u p e r f u n d Tr u s t F u n d ) a v a i l a b l e f o r expenditures incurred in connection with “releases of hazardous substances into the environment ”

One tax that is being proposed for reinstatement is the 9 7 cents per barrel tax on domestic crude oil and imported petroleum products In addition, the Superfund Environmental Income Tax, also applicable to years prior to 1996, would be reinstated for years beginning after 2010 This tax was dedicated to the Superfund Trust Fund and would apply to all corporations whose alternative minimum taxable income (slightly modified) exceeded $2 million. It would be applied at a rate of 12 percent on the excess of modified alternative minimum taxable income over $2 million.

As you can see, the adoption of the Administration’s proposals w o u l d h a v e a p r o f o u n d e f f e c t o n t h e o i l a n d g a s i n d u s t r y O f course, there’s a long road from proposal to adoption, and Congress might not approve all of the proposals Lobbying against a number of them will no doubt be intense Nevertheless, it’s clear that the industry is in the “tax reform” sights of the current Administration, and the move to remove tax incentives enacted when the government was trying to encourage the exploitation of certain natural resources has begun.

making your

www.CCFLinfo.org

upcoming events

September 14, 2009 - Northbrook, IL

September 16, 2009 - Chicago, IL

September 21, 2009 - Oak Brook, IL

BREAKFAST SERIES: All Customers are NOT Created Equal

Thomas L. Zeller, PhD, MBA, CPAProfessor of Accountancy and University Scholar in the School of Business Administration at Loyola University Chicago

September 25, 2009 - Rosemont, IL

Midwest Financial Reporting Symposium

October 16, 2009 - Chicago, IL

Implementing FIN 48 for Privately-Held Companies

Mark A. Sellner, CPA, JD, LLM (taxation)Graduate Tax Professor in the Master of Business Taxation Degree Program at the University of Minnesota’s Carlson School of Management

December 15, 2009 - Chicago, IL

Strategic Cost Analysis: Tools for Lowering Your Company’s Costs

John W. Hill, PhD, MBA, JD - Arthur M. Werner Chair in Business, Kelley School of Business, Indiana University

February 5, 2010 - Chicago, IL

Strategic Risk Management: Aligning Strategy and Performance Measures with ERM

The Center for Corporate Financial Leadership is a service of the Illinois CPA Society

www icpas org / insight htm SEPTEMBER/OCTOBER 2009 33

W A T E R W A T E R

ever ywhere

But maybe not for long What could easily be dismissed as an environmental issue has a heavy impact on business and industry as well Here’s the business case for why water shortages matter

By Sheryl Nance-Nash

The use of natural resources is inextricably linked to business culture And what happens to one directly impacts the other. According to Cl imate Change and the Gl obal W ater Cri si s: W hat Busi nesses Need to Know and Do, published in May by the Pacific Institute and the United N a t i o n

with other greenhouse gases (GHG) are changing the planet’s climate Global mean temperatures have increased three-quarters of a degree celsius since 1990, and 11 of the 12 warmest years since 1850 have occurred since 1996 These climate changes are expected to accelerate over the coming decades Another report, W ater Scarci ty & Cl i mate Change: Growi ng Ri sks for Busi nesses & Investors, released earlier this year by the Pacific Institute and Ceres, revealed that problems associated with water shortages are already occurring.

DDrought-induced water shortages, for example, caused power plant shutdowns in Europe, Brazil and the southeast United States. These shut-

heavily on water and accounts for 39 percent of freshwater withdrawals in the United States

What’s more, 11 of the world’s 14 largest semiconductor factories are in the Asia-Pacific region, where water scarcity risks are severe Since IT firms require vast amounts of clean water to operate, the implications are huge Intel and Texas Instruments alone used 11

b i l l i o n g a l l o n s t o m a k e s i l i c o n c h i p s i n 2 0 0 7 , a n d a w a t e rrelated shutdown at a fabrication facility operated by those firms could result in $100-$200 million in missed revenue during a single quarter

Reduced water availability has also impacted food commodity prices Triggered by a drought-induced collapse of rice production in Australia, global rice prices skyrocketed Some 70 percent of the water used worldwide is for agriculture, and that figure climbs as high as 90 percent in developing countries where populations are growing at the fastest rates.

What does this mean to your business? “Climate change brings enormous uncertainty to business. If we thought that for the past 50 years weather forecasts were unrelia b l e a n d m o s t l y u s e l e s s , i m a g i n e w h a t t h e f u t u r e holds,” says Jack Oswald, CEO of SynGest, which recently announced construction of the world’s first biomass-to-ammonia plant “This is the biggest risk t o a l l b u s i n e s s e s We h a v e n o i d e a h o w l o c a l weather changes will affect our businesses in terms o f p r o d u c t i o n , d e m o g r a p h i c s , p o p u l a t i o n m o v em e n t s o r p e r i o d i c c a t a s t r o p h e s . U n c e r t a i n t y i s a k i l l e r i n a l l b u s i n e s s e s , a n d t h a t i s w h a t c l i m a t e change brings.”

D e c r e a s i n g w a t e r a v a i l a b i l i t y a n d q u a l i t y, a n d increasing water demand, are creating challenges to e n t e r p r i s e s a c r o s s a l l i n d u s t r i e s , s t a t e s t h e W a te r Scarci ty & Cl i mate Change report The trends point to decreases in water allotments for manufacturing, shifts toward full-cost water pricing, more stringent w a t e r q u a l i t y r e g u l a t i o n s a n d i n c r e a s e d p u b l i c scrutiny of corporate water practices.

Virtually every sector faces some risks: Regulatory risks, meaning new government rules to address climate change; market risks; increased energy prices; potential supply chain disruptions; consumer demand for greener products; and physical risk in terms of increased weather severity and rising sea levels

For example, says Elise Dieterich, a partner with Sullivan & Worcester, LLP, “Utilities face increased regulation and costs under the greenhouse gas emissions cap-and-trade system....Energy-intensive businesses such as manufacturing, transportation and commercial buildings face energy price volatility and possible government mandates for increased energy efficiency Weather-sensitive businesses such as agriculture face risk from climate changes that are predicted to affect temperature and precipitation patterns Supply chain dependent businesses face disruption due to energy or weather impacts on their suppliers and transporters. Other risks can include litigation risk (lawsuits against large GHG emitters) and competitive/reputational risks to companies perceived as ‘environmentally unfriendly,’” she explains.

“

about climate change in their planning processes,” says Jessica Haller, CEO of Svante Scientific, Inc.,

Haller is

H2O Measures

From recycling and purification practices to flat-out conservation, companies are finding ways to measure and reduce their environmental waste And while the savings currently are “soft,” many companies see these initiatives as having greater impacts down the road

“All resources have costs in some way, shape or form,” says Kim Carlson, business owner, speaker and author of Green Your Work: Boost Your Bottom Line While Reducing Your Carbon Footprint “As there is less and less available clean water, it will become more and more expensive The goal is to make sure it isn’t scarce.”

According to the EPA, letting a faucet run for five minutes uses as much energy as running a 60-watt light bulb for 14 hours When equated to commercial buildings, a substantial amount of energy, water and expenses could be saved through simple efficiency practices In fact, according to the Natural Resources Defense Council, the New York and New Jersey Port Authority’s initial $90,000 investment in water-efficient restroom facilities has yielded an annual savings of $190,000

To get your business on track, the American Water Works Association [AWWA.org] offers free water audit software, which is an easy way to get an overview of your water supply and billing operations, and to identify ways to control water loss

Selena Chavis

also a founding member of InTERRAction, a multidisciplinary consortium that advises businesses on climate change risks and sustainable solutions She says there are two important questions to ask: “Will any supply or manufacturer be impacted by changes in temperature, rainfall (or lack thereof) or wind speeds?” and “Will any regulation or policy change the requirements regarding use of land, water or air?”

“If businesses hope to effectively adapt to the changing climate, they need to know how the climate currently impacts their operations and how it will affect them in the future Specifically, they need to assess the impact that temperature, rainfall, wind speeds and other climate conditions have on their business or organization, and they need to understand how these conditions might change 5, 10, or 15 years down the road,” Haller explains

“Without this intelligence, organizations are flying blind into the climate change storm suspecting that they face dire threats, but not knowing where those threats will come from or what they will look like. If they can see the threats, they can both minimize the damage caused by climate change and seize the opportunities it offers,” she says.

identify how the three are interlinked, which in turn provides key information for developing a holistic management strategy Assess Physical, Regulatory & Reputational

Water Risks

Specifically, understand the energy-related risks posed by water, and the water-related risks posed by energy, as well as any potential competing demands the company may have for water and energy. Companies should align, if not integrate, their water and climate risks assessments Having a detailed understanding of local water conditions, including hydrological, social, economic and political factors, can give a company insights into the risks it faces from water challenges, and will allow it to be transparent about the energy trade-offs it may need to make to address those challenges.

Integrate Water & Climate Issues into Strategic Planning

When developing water management plans, companies should consider the potential impacts of climate change on water supplies and water quality Climate-related impacts on water also should be considered when making other business decisions, from factory design and siting to new product development.

Engage Key Stakeholders

W

plan, managers might benefit from sharing information with and getting feedback from employees, investors, customers, local communities and other key stakeholders. Communication will help companies better understand, anticipate and respond to emerging issues and expectations Open dialogue with water providers and local communities also may help to prevent or reduce the risk of future water and climate change related disputes or disruptions

Disclose & Communicate Water & Carbon Performance

Publicly report management activities and key metrics. This information may help stakeholders and shareholders assess how companies are addressing their water and climate change risks

Seek

Opportunities for Collective Action

Because water and energy are connected to social, cultural and environmental issues, companies rarely achieve the best management outcomes on their own. Pool resources and bring together a wide range of expertise and knowledge through partnerships with organizations such as the United Nations Global Compact

D i e t e r i c h a d d s a f e w m o r e s u g g e s t i o n s : “ C o m p a n i e s s h o u l d c o n s i d e r c o m m i s s i o n i n g a c l i m a t e r i s k a u d i t t o i d e n t i f y t h e i r potential climate-related exposures. The results of the audit can then form the basis for immediate, mid-term and long-range action plans,” she explains For example, an audit might reveal that a business is perceived as environmentally unfriendly, and then suggest relatively easy ways to improve the company’s public image Or the audit might reveal potential weather-related risks for which insurance products are available.

t h e

the Value Chain

a te Change and the Gl obal W ater Cri si s report outlines some options: Measure Water & Carbon Footprints Throughout

Some of the most significant water and climate-related risks can be embedded in a company’s value chain, well outside of its direct operations or control Companies can manage only what they measure, so to accurately assess risks and opportunities, a first step is to conduct comprehensive, integrated water and carbon accounting

By aligning water, carbon and energy measurements, businesses can

“ R e g u l a t o r y, m a r k e t , c o m p e t i t i v e a n d l i t i g a t i o n r i s k s m a y require disclosure in a company’s annual 10-K or other financial statements It also is prudent for companies to consider their ‘carbon footprint’; that is, the amount of GHG emissions associated with their business operations, and to look for ways to reduce their carbon impact, whether through energy efficiency or purchasing carbon offset or renewable energy credits,” says Dieterich

“Remember that this isn’t a one-sided issue,” Haller adds “Businesses must address both mitigation through reducing the impact o f t h e b u s i n e s s o n t h e e n v i r o n m e n t a n d a d a p t a t i o n t h r o u g h reducing the impact of the environment on the business.”

Green wor th mone ? Is the

Criticizing the green movement isn’t politically correct . But is it wrong to want a sound business case for going green?

By Kristine Blenkhorn Rodriguez

The cautionary tales are few and far between. There are snippets in this journal or that, rumblings of an executive ousted because of a failed project, but very little that truly, concretely points to the business case against going green.

That’s no coincidence, says Pete Davis, president of Davis Capital Investment Ideas. “I’d be surprised if you’d find any CEO, no matter how ‘dirty’ the industry, who’s willing to be quoted as not being green. Especially in a time when green businesses will likely get money from Capitol Hill.”

Rather, it’s the columnists who are paid to be opinionated.

THE VOICE OF SKEPTICISM

The W ashi ngton Post’s Robert J Samuelson closes his April 27 colu m n w i t h : “ T h e s e l l i n g o f t h e g r e e n e c o n o m y i n v o l v e s m u c h make-believe Environmentalists not only maximize the dangers of global warming from rising sea levels to advancing tropical diseases they also minimize the costs of dealing with it Actually, no one involved in this debate really knows what the consequences or costs might be All are inferred from models of uncertain reliability Great schemes of economic and social engineering are proposed on shaky foundations of knowledge Candor and common sense are in scarce supply ”

Samuelson goes beyond pure rhetoric and backs up his statements with numbers His beef is with a “typical” claim from the Environmental Defense Fund (EDF), stating that for about a dime per person, per day, we can resolve climate change, invest in clean energy and save billions in imported oil Samuelson argues that the EDF uses “general equilibrium” models when factoring costs and usage “The trouble is that these models embody wildly unrealistic assumptions,” he says “There are no business cycles; the economy is always at ‘full employment’; strong growth is assumed, based on past growth rates; the economy automatically accommodates major changes if fossil fuel prices rise (as they would under anti-global warming laws), consumers quickly use less and new supplies of ‘clean energy’ magically materialize.”

He may have a point. The Energy Information Administration (EIA) estimated America’s energy needs in the year 2030. Compared with 2007, it projects that the United States will have almost 25 percent more people (375 million), an economy about 70 percent larger ($20 trillion), and 27 percent more light-duty vehicles (294 million). It also estimates that oil will be at $130 per barrel (in today’s dollars). On the flip side, solar power will grow 18 times and wind power six times its current size. Cars and trucks will get 5 0 - p e rc e n t b e t t e r g a s m i l e a g e . A p p l i a n c e s a n d l i g h t b u l b s w i l l b e c o m e m o r e e f f i c i e n t . A n d , i n t h e e n d , U S C O 2 e m i s s i o n s i n 2030 will be 4-percent higher than in 2007. A more recent EIA press release claims that world energy usage will increase 44 percent from 2006 to 2030

Samuelson’s conclusions do not win him many popularity contests And he doesn’t seem to be anti-green for any nefarious reasons Instead, he’s just one of a very few high-profile voices that wants the numbers to make sense

Arnold Kling might be called Samuelson’s compatriot, and he’s no slouch Kling earned his doctorate in economics from MIT, and has served both as an economist on the staff of the Federal Reserve’s Board of Governors and as a senior economist at Freddie Mac His bias is, of course, towards initiatives that make economic sense

“Here’s a scenario they might paint for you in freshman economics,” Kling explains “You’re a business Gasoline costs $5 per gallon and a worker costs $10 per hour If you’re only focusing on efficiency, and you know you can use one gallon of gas to save half an hour of time or more, you do it That’s what the economics of the situation dictates If you are in a competitive market, you have no choice but to make that choice In that market, if you try to be green and not use the gas, you’ll go out of business ”

Kling realizes the argument against his rationale “The green argument would be that the price of gas doesn’t include the social cost global warming, feeding money into economies in totalitarian regimes, etc This reasoning is fine if you’re a monopoly Then

you can probably afford to be green. Otherwise, forget it. You’ll go out of business ”

Davis takes the argument a step further “Traditional gasoline may seem like the less green option here, but I’d say ethanol gas is actually the least green option. First, the United States just doesn’t have the electricity grid to handle ethanol on a large scale, and s e c o n d , S o u t h A m e r i c a n r a i n f o r e s t s a r e n o w b e i n g c l e a r e d because the United States has stopped exporting its corn to them on a large scale Does any of this sound green to you? Or cost-efficient? Or profitable?”

And therein lies the question: Is it ethical to require a business case for going green?

BUSINESS CASE REQUIRED

It’s not only ethical, but necessary, says Dave Douglas, chief sustainability officer (CSO) for Sun Microsystems “We have always baked financial analysis into our projects Positive ROI is a must ”

Douglas says a sustainability officer ’s first job is to do what’s good for the business, but that route doesn’t negate the responsibility to do what’s good in general “Usually, if a practice means we get to stay in business over the long haul, it also means that it’s good for the environment over the long haul If we’re stripping the Earth of aluminum at an alarming rate to build technology produ c t s , i t ’s n o t l i k e l y w e ’ l l b e a b l e t o p r o f i t o v e r t h e l o n g h a u l because we’ll run out of resources and so will the Earth Business practices like that died awhile ago, didn’t they?”

Lisa Walker, senior client partner for executive search and tale n t m a n a g e m e n t f i r m K o r n / F e r r y I n t e r n a t i o n a l ( a n d o n e o f t h e firm’s sustainability sector leaders), certainly thinks so “At best-inc l a s s c o m p a n i e s , t h e C S O s a r e p a y i n g f o r t h e m s e l v e s , ” s h e explains. “If the role doesn’t pay for itself, if the CSO doesn’t have technical and financial credibility, it goes away Sustainable practices generally make good business sense as well as good overall sense. A green supply chain will secure the availability of scarce resources because you’re not depleting limited resources ”

Douglas cites Sun’s success with projects as high level as reducing greenhouse gas emissions by 23 percent over the past five years and eliminating water bottles in customer briefing centers “How can you be against a project that pays for itself in three months?” he asks. “We had tried to get rid of water bottles in our customer briefing centers because we thought we could save money and do a good deed at the same time But the first three proposals could show no positive ROI so it wasn’t done. Then someone came up with the proposal to use attractive bubblers and forget the individual plastic water bottles Three months later, we’d saved what we spent on the project From here on, it’s all found money ”

K l i n g ’s r e a c t i o n t o l a rg e c o m p a n i e s t o u t i n g g r e e n p r o j e c t s i s s k e p t i c a l “ T h e y a d o p t t h e m o s t e f f i c i e n t t e c h n o l o g y a n d t h e y shout, ‘I’m green! I’m green!’ when they really would have done it anyway because it’s a competitive advantage either it saves or makes them money ”

Douglas sees it as a win-win “If we can give people ideas about how to do things better better business, better for the environment and it financially helps the company that employs us, how is that a bad thing?” he asks

It’s hard to argue with Sun’s savings: More than $1 million in power costs after improving energy efficiency at data centers, not to mention the savings associated with the use of less fresh water for cooling those same data centers. In fact, Sun found a way to recycle its water, saving not just energy, but water costs too

THE BEEF IS GREEN

We said at the beginning of this article that cautionary tales are few and far between But they’re certainly not unheard of Remember when S t a r b u c k s w a s a c c u s e d o f w a s t i n g 6 2 m i l l i o n g a l l o n s o f water in Europe due to a company policy regarding constantly running taps for public health reasons? It’s not just the environmental issue it’s the business case Paying for that alleged waste of water as a cost of business doesn’t make sense if it’s not absolutely the most efficient, necessary route

Starbucks is not alone Even entire countries are not immune Earlier this year, Canada’s commissioner of the environment and sustainable development was far from happy when the government couldn’t definitively report whether the billions it was spending on green initiatives was money well spent “I have been surprised that there haven’t been clear reporting systems,” Sun Media quotes him as saying in a report “You need to know whether the problem you’ve identified is getting worse, better or remaining the same, and there are not systems in place to give the government information back to let them know how they are doing ”

It’s this kind of attitude failing to adequately report, the lack of clear-cut goals and the absence of regular measurement that has given going green a bad name in financial circles In reality, it seems there are few executives who are truly anti-green, except those on the far fringe Most who question green initiatives seem to struggle only with those that are strictly altruistic and far too loose in terms of controls And since executives are paid to help a company save and generate money, asking for a business case for going green pretty much falls under the heading of doing the job they’re paid for

Douglas shares what could be a hokey internal corporate slogan, if it wasn’t taken so seriously at Sun and executed with precision “Every job is an eco-job,” he says “Eco stands for ecology and economy Both are taken into account when we undertake a project And it works It’s just how the job should be You use an integrated decision process and you come up with better decisions that save or make you money And you do less harm to the external world Again, explain to me how that is not just good business ”

THE CASE FOR GREEN

W h e n t h e e c o n o m y s p u t t e r s , c h o k e s o r j u s t p l a i n c o m e s t o a screeching halt, it changes the way companies do business The first areas to be cut are generally “soft” areas areas that don’t help the bottom line directly Environmental initiatives used to be in this gray area, but not anymore, says Walker

“ W h a t w e ’ r e s e e i n g f r o m s o m e v e r y h i g h - l e v e l c l i e n t s i s a n increase in wanting to appear green for competitive advantage,” she explains “They’re downshifting slightly, but still forging ahead ”

According to Walker, since Q3 2008, companies that are committed to sustainable practices have shown more hesitancy to hire from the outside due to cost, and may in fact fill a CSO position from within, adding it to another executive’s roster or splitting the job “But, on the flip side, clients who are hiring for a CSO-type position are now asking to incorporate the word ‘environment’ or ‘environmental’ into the title They want the public to recognize they’re focused on this area ”

However, business and law professor Andrew Morriss of the University of Illinois says companies may be putting too much stock in green as a competitive advantage “People will answer

public opinion polls saying they want green, but it’s the buying behavior you need to look at,” he says

And companies are not always on the up and up when trying to make being green a differentiator, says Kling. “Trying to ask me to be an environmental scientist when I’m buying products at the store is not right,” he says. “The average consumer gets fooled and can’t figure out the labels Putting a sticker on saying something is ‘green’ doesn’t mean it is ”

But putting a sticker on something and saying it’s green isn’t what savvy companies are doing Dell, for example, declared its intent to eliminate 20 million pounds of packaging worldwide, saving $8 million over the next four years The United Kingdom’s Sainsbury’s Supermarkets Ltd found that energy-saving refrigeration and air-conditioning systems provided an average 30-month payback on capital invested In early 2008, the McKinsey Global Institute issued a report stating that if investors provided a targeted a n n u a l i n v e s t m e n t o f $ 1 7 0 b i l l i o n , t h e y c o u l d h a l f t h e r a t e a t which global energy is projected to grow over the subsequent 13 years. For that large dollar amount, they could expect an annual average return of 17 percent Not too shabby

In late 2008, GreenBiz Intelligence surveyed more than 100 companies to determine how the economy was affecting spending priorities and green strategies Seventy-three percent of responses were from Fortune 500 firms Nearly 47 percent had increased their investments in the area in 2008, with plans to continue in 2009 A surprising 46 percent of environmental, health and safety budgets were remaining the same in 2009, with no cuts

Will the investment pay off? That remains to be seen. In 2008, the study Consumers, Brands and Cl i mate Change revealed that of t h e 1 , 0 0 0 A m e r i c a n s s u r v e y e d , 6 5 p e rc e n t c o u l d n o t i d e n t i f y mainstream companies taking a significant stance against climate change However, Clorox has had to raise sales projections of its Green Works line of eco-friendly cleaners six times in 12 months because of consumer demand

And it’s not just consumers the Fortune 500 need to worry about in this economy, says Walker “Jobs are not plentiful, but switching costs are also very low for young people If you’re trying to employ the heavy hitters in the under 35 set, you need to think g r e e n T h e y

w h o shares their values ”

greenpower

What will alternative energies mean to the US economy?

By Carolyn Tang

According to the US Department of Energy (DOE), the United States is the largest oil importer in the w o r l d O i l s u p p l i e s m o r e t h a n 4 0 p e rc e n t o f t h e country’s total energy demands and more than 99 percent of t h e f u e l u s e d f o r t r a n s p o r t a t i o n H o w e v e r, i t ’s a l i m i t e d resource, and the DOE estimates that the global oil supply is restricted to approximately three trillion barrels. Add increasing uncertainty caused by global warming and political instability, as well as a growing concern for the environment, and we have a society incentivized to develop renewable, preferably “green” energy sources

“The wide range of stakeholder concerns has led to the fairly consistent support for alternative energy policy measures across the political spectrum, from Al Gore to Paul Wolfowitz,” explains Dr John Norton, the North American Renewable Energy Practice lead for MWH, Inc , a global water and energy consulting firm

No rto n a ls o p o in ts o u t th a t re g u la to ry re q u ire me n ts , s u c h a s r e n e w a b l e p o r t f o l i o s t a n d a r d s , f u r t h e r m o t i v a t e b u s i n e s s e s t o i m p l e m e n t a l t e r n a t i v e e n e rg y s o l u t i o n s “ T h e s t a t e a n d f e d e r a l

governments are incentivizing businesses and residences as complimentary policy to existing energy requirements. It is the carrotand-the-stick approach They are trying to harness market mechanisms to achieve the same types of benefits they had hoped to achieve through their renewable portfolio standards, but at lower social resistance, by leveraging the inherent creativity of the early adopters,” he explains Early adopters help to spread the word by increasing the social familiarity of a new technology.

“The early adopters are also the market segment most likely to persevere when confronted with problems in the implementation and operation of the new technologies Market-based incentive policies promote the technologies by enhancing and leveraging the efforts of the early adopters,” says Norton

T h e t r a n s i t i o n t o r e n e w a b l e e n e rg i e s , h o w e v e r, h a s n o t y e t gained full momentum, in part because technical and financial realities preclude a quick switch “For instance, there are tremendous technology lock-in and switching cost constraints that affect both the demand and supply components of the energy sector There are huge capital costs of the transition involved with new technology implementation,” Norton explains

What’s more, sometimes a business is simply incapable of planning for the long run. One global household consumer products company that engaged Norton’s team was unable to capture the

because it had a maximum planning horizon of 10 years “Because of their market sector, they couldn’t plan on even owning the facility longer than that, let alone producing the same product and having the same processing and energy demands,” he says

However, Norton emphasizes that the benefits of large-scale transitioning to alternative energies would mean, at a minimum, a more stable supply of energy, reduced pollution and potentially a reduction in regional unemployment as the infrastructure is upgraded, renovated and replaced to handle the new technologies

Much of the discussion centers on three potential renewable energies wind power, biofuels and solar energy each of which has its supporters and its opposers.

WIND POWER

David Loomis is a professor of economics at Illinois State University and director of the Center for Renewable Energy He says that businesses that transition to alternative energy sources have the potential to recognize tremendous economic benefits For his part, Loomis specializes in wind power, which catalyzes several direct and indirect economic benefits.

According to Loomis, the state of Illinois is just reaching the 1,000 megawatt mark of installed wind energy This kind of output has yielded construction jobs, ongoing operations and maintenance jobs, payments to landowners and tax revenues He goes so far as to say that a wind farm has greater economic benefit than a residential subdivision.

“School districts especially find that wind farms are favorable to them, because if a residential subdivision comes in, they increase the tax base, but then they have a lot of kids to educate, so it raises their expense profile as well,” he explains “A wind farm will raise the tax base without the corresponding increase in expenses ”

I n t e r m s o f i n d i r e c t e c o n o m i c b e n e f i t , L o o m i s c o n t e n d s t h a t c o n s t r u c t i n g a w i n d f a r m m e a n s a b o o s t t o c o n s t r u c t i o n j o b s .

“Those workers are going to spend money in the local restaurants T h e n , i f t h e y ’ r e n o t f r o m t h e a r e a , t h e y m a y r e n t h o t e l r o o m s , spend money at the local stores, etc This multiplier effect ripples throughout the economy ”

The United States is among the world leaders in generating elect r i c i t y u s i n g w i n d p o w e r. I n f a c t , i n 2 0 0 8 , t h e A m e r i c a n Wi n d Energy Association estimated that the United States generated 48 billion kilowatts per hour, which is enough to power the equivalent of 4 5 million average US households

Wind power also provides several environmental benefits For one, “It doesn’t cause a greenhouse effect or carbon emissions,” Loomis explains. “The other advantage is that wind energy doesn’t waste water resources Most other fossil fuel or nuclear fuel technologies require large amounts of water for steam generation ”

Biofuels

Biofuels are a very visible alternative energy source in the Midwest particularly They are generally derived from natural sources, and are non-toxic, biodegradable alternatives to petroleum-based fuel They’re also a renewable energy source, and burn cleaner than petroleum. Biofuels can power vehicles, heat homes and even be used for cooking

“Biofuels already play a critical and much needed role today,” says Robert White, director of market development for the Renewable Fuels Association “Petroleum is a limited resource, and one

that gets harder to find and capture with each year that passes. It is typically found in parts of the world that are not necessarily friendly towards American policy This dependency on unstable countries and on a limited supply is dangerous ”

Ethanol is perhaps the most familiar biofuel It is domestically produced using a variety of feedstock, including switchgrass, corn and sugarcane And since it is renewable, it can be produced year in and year out What’s more, it’s environmentally friendly, since ethanol reduces greenhouse gas emissions and particulate matter. In fact, according to the University of Nebraska-Lincoln, ethanol reduces direct greenhouse gas emissions between 48 and 59 percent compared to gasoline.

Some experts suggest that ethanol has the potential to replace p e t r o l e u m a s t h e f u e l o f c h o i c e f o r a l l d o m e s t i c t r a n s p o r t a t i o n needs And, in fact, says White, in June Brazil announced that 75 percent of its transportation fuel needs will be met with ethanol “ T h a t ’s a s h i n i n g e x a m p l e f o r t h e U n i t e d S t a t e s t o f o l l o w, a n d shows that great strides can happen,” he says

So why hasn’t ethanol been adopted more widely? According to White, part of the challenge is that farmers and ethanol biorefineries don’t own fueling stations, which means that in order to get broader distribution, they have to convince those in the petroleum industry to use ethanol

“ U n t i l r e c e n t y e a r s , t h e b u s i n e s s c a s e w a s h a r d t o p u s h , b u t times are changing Federal, state and local incentives are becoming common to help with adding infrastructure,” he says

Additionally, domestic auto-makers have pledged that half of their fleet in model year 2012 will be flex-fuel These vehicles will be able to operate on unleaded fuel, fuel blends that consist of at least 85 percent ethanol (E85), or any combination of the two fuels. This enables consumers to use E85 when available, and regular gasoline when it’s not. Lower cost is an additional consumer benefit associated with ethanol “According to industry statistics, E85 on a national basis costs 19 3 percent less than unleaded gasoline,” says White

As for overall economic impact, in 2008 the ethanol industry contributed 494,177 jobs to the US economy “It is also reducing the need for farm subsidies and lowering the tax bill to consumers Ethanol helped to contribute more than $65 billion to GDP, and $20 billion to household incomes in 2008 alone,” White explains.

There are a few challenges associated with biofuel production, h o w e v e r. O n e o f t h e m i s t h e f o o d - v e r s u s - f u e l d e b a t e . S i n c e ethanol is generally made from food sources, like corn and soybeans, the increased demand for these crops could drive prices higher And since these crops are used as feedstock, the trickledown effect potentially could lift the price of meat, poultry, etc

Additionally, there’s the issue of energy return An imbalance occurs when more energy is needed to produce a single British Thermal Unit (BTU) of biofuel than the energy that is subsequently provided by that same BTU.

John Aikens, VP of Lybradyn, a biotechnology company based in Oak Brook, Ill., explains. “Plants have the limitation that you have to cultivate, fertilize, harvest and process them,” he says “In addition, crops use a lot of land, all of which requires consumption of petroleum fuel ” The challenge, therefore, is to determine how to minimize the amount of energy needed to create a BTU

That’s where Lybradyn comes in “We looked at this problem and realized that we needed to come up with a better, more effi-

c i e n t w a y t o m a n a g e c a r b o n , ” s a y s A i k e n s . H e r e f e r s t o t h i s process as a “biosolar concept ”

“ W h a t p l a n t s b a s i c a l l y d o i s h a r n e s s s u n l i g h t t o c o n v e r t t h e greenhouse gas carbon dioxide into biomass This biomass is further processed and used to make energy,” he explains. “Lybradyn recognized that the key step is creation of biomass, and as such

What’s more, by converting carbon into energy, Lybradyn succ

l a n d e n e rg y - r e t u r n debates The concept also resolves another regional issue associated with biofuel production: “In the Midwest, we have lots of bioenergy feedstock: corn, soybeans, so on and so forth However, the lion’s share of energy production is not done in the Midwest The major challenge is to overcome the existing logistical transportation issue to enable bioenergy products to reach the markets that need it,” Aikens explains “The idea here is to create a biofuel industry situated in the Midwest that would be co-located with energy production and utilization.”

SOLAR ENERGY

Solar Energy is almost ubiquitous in small consumer goods, powering anything from calculators to landscape lighting Today, however, solar energy is applied in a greater range of ways.

Passive solar design involves designing and locating a structure to enhance its ability to use solar energy to reduce heating and cooling needs. Solar thermal design uses mechanical equipment to convert solar power to usable heat (This application can be found in houses and swimming pools ) Both passive solar and solar thermal design would be considered mature technologies, since they’re currently available for use in both residential and business buildings.

A newer application of solar power is the solar photovoltaic system This technology concentrates sunlight, therefore providing high-temperature heat that can be converted into electricity. In some cases, a solar photovoltaic system is also connected to the power grid, and the generated electricity is fed into the grid

As expected, there are hefty costs involved in retrofitting a structure to use solar power. Even so, there are government incentives in place that can offset some of the costs For example, the Illinois Department of Commerce and Economic Opportunity offers a Solar Energy Rebate Program, which provides rebates of up to 30 percent of the project cost to a maximum of $10,000 for new photovoltaic or solar thermal installations This rebate is in addition to a 30-percent Residential Renewable Energy Tax Credit provided by the federal government for the installation of solar-electric systems, solar water-heating systems and fuel cells This tax credit was amended in 2008 to provide for an eight-year extension until 2016, and to include small wind-energy systems and geothermal heat pumps.

The trend in Illinois is echoed across the United States In the state of Washington, for example, the government provides grants and funding to companies within the renewable energy industry. The state has also waived sales tax on consumer purchases of solar and renewable energy technologies

“Throughout the country, states are passing legislation making it

David Winterton, a member of EFS, LLC, a green energy company based in Walla Walla, Wash “This inevitably will

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Illinois CPA Society Leadership

We Salute You

The Illinois CPA Society applauds its outstanding volunteer leaders. Their tireless dedication and contributions help elevate the Society as the premier organization for CPAs and finance professionals.

2008-09 Board of Directors

CHAIRPERSON

Lee A. Gould, CPA/ABV, JD, CFE, CFF Gould & Pakter Associates LLC

VICE CHAIRPERSON

Sara J. Mikuta, CPA Leaders Bank

SECRETARY

Charles F. G. Kuyk lll, CPA Crowe Horwath and Company LLP

TREASURER

Robert E. Cameron, CPA Cameron Smith & Company PC

IMMEDIATE PAST CHAIRPERSON

Sheldon P. Holzman, CPA, CFE, CFF

Baker Tilly Virchow Krause, LLP

DIRECTORS

Brent A. Baccus, CPA Washington Pittman & McKeever

Therese M. Bobek, CPA PricewaterhouseCoopers LLP

William P. Graf, CPA Deloitte & Touche LLP

Kelly J. Grier, CPA Ernst & Young LLP

Cara C. Hoffman, CPA Blackman Kallick LLP

James P. Jones, CPA Edward Don & Company

Charlotte A. Montgomery, CPA Illinois State Museum

Elizabeth A. Murphy, PhD, CPA DePaul University

Annette M. O’Connor, CPA RR Donnelley & Sons Company

Michael J. Pierce, CPA

RSM McGladrey Inc.

Marian Powers, PhD Northwestern University

Daniel F. Rahill, CPA KPMG LLP

Lawrence H. Shanker, CPA Shanker Valleau Accountants, Inc.

Edward H. Stassen, CPA Recycled Paper Greetings Inc.

Committees

ACCOUNTING PRINCIPLES

(Chair)

Reva Steinberg, CPA

BDO Seidman, LLP

(Vice Chair)

Jeffrey Watson, CPA Blackman Kallick LLP

AGRIBUSINESS (Chair)

Brian Brown, CPA Illinois Agricultural Auditing Association

AUDIT & ASSURANCE SERVICES

(Chair)

Jon Hoffmeister, CPA

Clifton Gunderson

(Vice Chair)

Kevin Wydra, CPA Crowe Horwath & Co.

ETHICS

(Chair)

Keith Martin, CPA Plante & Moran PLLC

(Vice-Chair)

Rick Franklin, CPA Warady & Davis LLP

FINANCE & TREASURY MANAGEMENT

Robet E. Cameron, CPA Cameron Smith & Co., PC

GOVERNMENT EXECUTIVE

Linda Abernethy, CPA McGladrey & Pullen LLP

GOVERNMENT REPORT REVIEW

Richard Gaul, CPA Mathieson, Moyski, Celer & Co., LLP

ILLINOIS CPAS FOR POLITICAL ACTION

Sheldon P. Holzman, CPA, CFE, CFF Baker Tilly Virchow Krause LLP

NOMINATING

Sheldon P. Holzman, CPA, CFE, CFF

Baker Tilly Virchow Krause LLP

NOT-FOR-PROFIT ORGANIZATIONS

Floyd Perkins, CPA Ungaretti & Harris

PEER REVIEW REPORT

ACCEPTANCE

(Chair)

John Belletete, CPA Striegel Knobloch

(Vice Chair)

Gregory Pierce, CPA Pierce Riesbeck & Associates

REGULATION & LEGISLATION

Lawrence A. Wojcik, CPA DLA Piper US LLP

TAX ADVISORY GROUP

Brian Whitlock, CPA Blackman Kallick LLP

TAXATION BUSINESS

Linda Martin, CPA Clifton Gunderson LLP

TAXATION ESTATE, GIFT & TRUSTS

Fred Jahns, CPA Brookwood Vance LLC

TAXATION EXECUTIVE (Chair)

Edward Hannon, CPA Freeborn & Peters LLP

(Vice-Chair)

Mary Lou Pier, CPA Pier & Associates

TAXATION FLOW-THROUGH ENTITIES

Michael Radencich, CPA Trimarco, Radencich, Schwartz & Mrazek, LLC

TAXATION INDIVIDUAL

Cara Hoffman, CPA Blackman Kallick LLP

TAXATION PRACTICE & PROCEDURES

Michael J. Singer, CPA Michael J. Singer & Co., P.C.

TAXATION STATE & LOCAL

John S. Bird, CPA McGladrey & Pullen LLP

WOMEN'S EXECUTIVE

Jennifer Cavanaugh, CPA Grant Thornton LLP

Task Forces

COMMITTEE STRUCTURE & VOLUNTEERISM

Sara J. Mikuta, CPA Leaders Bank

CPA EXAM AWARD PROGRAM

Deborah Lindberg, CPA Illinois State University

DIVERSITY INITIATIVES

Anthony Fuller

Grant Thornton LLP

LIFETIME ACHIEVEMENT AWARD

Sheldon P. Holzman, CPA, CFE, CFF

Baker Tilly Virchow Krause LLP

OUTSTANDING EDUCATOR AWARD

Penny Yunker, CPA

Retired

OUTSTANDING LEADERSHIP IN ADVANCING DIVERSITY

Anthony Fuller

Grant Thornton LLP

PUBLIC SERVICE AWARD

(Co-Chair)

Linda Forman, CPA

Linda Forman, CPA PC

(Co-Chair)

Christopher Beaulieu, CPA

Clifton Gunderson LLP

SMALL PRACTICE ADVISORY

Mary Ann Webb, CPA

Sulaski & Webb, CPAs

WOMEN'S INITIATIVES

Connie Kravitz, CPA Chicago Park District

YOUNG PROFESSIONALS GROUP

(Co-Chair)

Jonathan Hauser, CPA KPMG LLP

(Co-Chair)

Betsy Mattews, CPA

Lake County Neurosurgery, LLC

Member Forums

CHICAGOLAND CONTROLLERS

Norman Serlin, CPA

EMPLOYEE BENEFIT PLANS

(Co-Chair)

Janice Forgue, CPA

McGladrey & Pullen LLP

(Co-Chair)

Erik Pienkos, CPA

Grant Thornton LLP

FUTURES, SECURITIES & DERIVATIVES

Jonathan Waterman, CPA McGladrey & Pullen LLP

INVESTMENT ADVISORY SERVICES/PFP

Mark Gilbert, CPA Reason Financial Advisors

MERGERS & ACQUISITIONS

Mary Warmus, CPA Kensington Financial Consultants

NOT-FOR-PROFIT ORGANIZATIONS

Rose G. Doherty, CPA Legacy Professionals LLP

TAXATION NW SUBURBAN

Samuel Pass, CPA

Samuel Pass CPA Ltd.

TAXATION NORTH SHORE

Joe Rieber, CPA

Joseph H. Rieber CPA

Chapter Presidents

CENTRAL CHAPTER

Mickey M. Scheffki, CPA Clifton Gunderson LLP

CHICAGO METRO

Burton W. Goode, CPA

Burton W. Goode, CPA

CHICAGO SOUTH

Kathy Orlando, CPA

Kathleen Orlando & Associates, Inc.

FOX RIVER TRAIL

Kurt Schneider, CPA

Dam, Snell & Taveirne, Ltd

FOX VALLEY

Gary Steeno, CPA

Ayotte Samonds Brdar & Decker, Ltd.

NORTH SHORE

Jodi Brennan Kunzik, CPA Baxter Healthcare Corp.

O’HARE

Norris C. Harstad, CPA

Benchmark, Aspen & Associates, Ltd.

WESTERN

Michelle J. Ingersoll, CPA

Project NOW

TIME TA L E N T

Serving Those Who Serve the Nation

I l l i n o i s C PA S o c i et y m em ber v o l u n t eer s h av e dev o t ed t h ei r v a l u a b l e t i m e a n d s k i l l s t o b e n e f i t t h e M i l i t a r y S e r v i c e Ta x Preparation Program As a result, since January 2009 member volunteers have prepared tax returns for 78 active duty personnel and recently returned members of the US Armed Forces in Illinois. Any active duty or recently returned member of the US Armed Forces who is an Illinois resident can take advantage of this free tax return preparation service Member volunteers are matched with requests based on geographic proximity, and work directly with service members or their families

We’d like to thank this year ’ s volunteers, including:

Danielle Aeschbacher

Brian Anderson

Randall Anderson

Matt Barton

Ilana Bromber

Gregory Brown

Kymberly Buchanan

Julie Butler

Robert Cameron

Doug Canfield

Brenda Cheuvront

Julie Cunningham

Gregory Dunham

Robert Engstrom

William Erdmann

William Fates

Marian Flynn

Jennifer Foley

Lawson Giles

Pauline Halgas

Patsy Hasty

David Hensley

James Hogan

Philippe Jean-Louis

Nicholas King

Andrew Klemens

John Lamszus

Sheila Latting

Sue Legris

Jack Levine

Cherry Llave

Ghadir McCauley

Sally Murray

Brent Olson

Larry Owens

Andy Park

Marianne Phelan

Thomas Phillips

Daniel Reily

Benjamin Settler

Crystal Smith

Thomas Smith

Rebecca Sommer

Michael Tatman

Joshua Ticho

Jim Turner

Valerie Varney

Silene Walters

Kara Weber

Joe Wilson

As we continue to welcome home our returning service men and women in Illinois, we are thankful for all of our volunteer members who stand at the ready to be matched with a military family for this important and much appreciated program

If you’d like to volunteer for or refer a member of the armed forces to this program, please contact Jill Wiles, community service manager, at wilesj@icpas.org.or 312.993.0407 ext 277.

Pl ease note: W e have done our best to compi l e the ful l l i st of vol unteer names However, i f we mi ssed anyone, we deepl y regret the omi ssi on

Young Professionals Group Helps College-Bound Students

The FAFSA (Free Application for Federal Student Aid) has grown in length and scope over the past several years, and college-bound students and their parents often find that they ’ re in need of answers in order to accurately complete this important form. This year, five members of the ICPAS Young Professionals Group received training from the Ladder Up organization to volunteer at FAFSA workshops at Chicago Public Schools These volunteers worked with students and parents at Lane Tech High School’s computer lab to complete and submit the FAFSA, which will determine eligibility for scholarships, grants and loans

Thanks to Aamer Jahved, Chris Manderfield, Lanesha McDaniel, Martrice Caldwell and Genevieve Waldron for their participation in the program

You may already know Paychex is one of the largest payroll and human resource companies in the U.S., ser vicing over 550,000 businesses nationwide. But that’s just the beginning Paychex is also one of the industr y’s largest 401(k) recordkeepers, and offers a full complement of HR-related ser vices Paychex can provide your clients a wide range of integrated payroll and HR offerings, allowing you to broaden the client ser vices you provide, while enhancing your status as a valued and trusted advisor.

The Paychex Partner Program from AICPA Business Solutions is a valuable resource in this challenging economic environment. Paychex will ensure that your firm and clients are staying up to date with ever-changing legislation–including the new tax incentives and COBRA premium subsidy programs Learn why over 20,000 CPA firms rely on the Paychex Partner Program to continually keep their firms and clients in compliance with all the latest regulations

To learn more, contact your local Paychex representative, call 877.264.2615

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