The Cost of Sustainability Capital and the Creation of Sustainable Value by Companies

We develop and apply a valuation methodology to calculate the cost of sustainability capital, and, eventually, sustainable value creation of companies. Sustainable development posits that decisions must take into account all forms of capital rather than just economic capital. We develop a methodology that allows calculation of the costs that are associated with the use of different forms of capital. Our methodology borrows the idea from financial economics that the return on capital has to cover the cost of capital. Capital costs are determined as opportunity costs, that is, the forgone returns that would have been created by alternative investments. We apply and extend the logic of opportunity costs to the valuation not only of economic capital but also of other forms of capital. This allows (a) integrated analysis of use of different forms of capital based on a value-based aggregation of different forms of capital, (b) determination of the opportunity cost of a bundle of different forms of capital used in a company, called cost of sustainability capital, (c) calculation of sustainability efficiency of companies, and (d) calculation of sustainable value creation, that is, the value above the cost of sustainability capital. By expanding the well-established logic of the valuation of economic capital in financial markets to cover other forms of capital, we provide a methodology that allows determination of the most efficient allocation of sustainability capital for sustainable value creation in companies. We demonstrate the practicability of the methodology by the valuation of the sustainability performance of British Petroleum (BP).

Assessing the Transaction Costs of Firms in the EU ETS: Lessons form Ireland

Until now, there has been little empirical evidence that EU Emissions Trading Scheme (ETS) transaction costs are incurred at firm level. The transaction costs (internal costs, capital costs, consultancy and trading costs) incurred by Irish firms under the EU ETS during its pilot phase (2005-2007) were measured and analysed. Evidence for the sources of transaction costs, their magnitude and the distribution of costs shows that these were mainly administrative in nature. Considerable variation in costs was found due to economies of scale, as the costs per tonne of CO2 were lower for participants with larger allocations. For the largest firms - accounting for over half the emissions - average transaction costs were €0.05 per tonne. However, for small firms, average transaction costs were €2.02 - over 18% of the current allowance price. This supports the concerns that transaction costs are excessive for smaller participants. The immediate policy implication is that additional attention will be needed to address different sizes of firms, number of installations per firm, and the size of the initial allocations.

The energy costs of sexual dimorphism in mole-rats are morphological not behavioural.

Different reproductive strategies of males and females may lead to the evolution of differences in their energetic costs of reproduction, overall energetic requirements and physiological performances. Sexual dimorphism is often associated with costly behaviours (e.g. large males might have a competitive advantage in fighting, which is energetically expensive). However, few studies of mammals have directly compared the energy costs of reproductive activities between sexes. We compared the daily energy expenditure (DEE) and resting metabolic rate (RMR) of males and females of two species of mole-rat, Bathyergus janetta and Georychus capensis (the former is sexually dimorphic in body size and the latter is not) during a period of intense digging when males seek females. We hypothesized that large body size might be indicative of greater digging or fighting capabilities, and hence greater mass-independent DEE values in males of the sexually dimorphic species. In contrast to this prediction, although absolute values of DEE were greater in B. janetta males, mass-independent values were not. No differences were apparent between sexes in G. capensis. By comparison, although RMR values were greater in B. janetta than G. capensis, no differences were apparent between the sexes for either species. The energy cost of dimorphism is most likely to be the cost of maintenance of a large body size, and not the cost of behaviours performed when an individual is large.

Energetic costs of parasitism in the Cape ground squirrel Xerus inauris

Parasites have been suggested to influence many aspects of host behaviour. Some of these effects may be mediated via their impact on host energy budgets. This impact may include effects on both energy intake and absorption as well as components of expenditure, including resting metabolic rate (RMR) and activity (e.g. grooming). Despite their potential importance, the energy costs of parasitism have seldom been directly quantified in a field setting. Here we pharmacologically treated female Cape ground squirrels (Xerus inauris) with anti-parasite drugs and measured the change in body composition, the daily energy expenditure (DEE) using doubly labelled water, the RMR by respirometry and the proportions of time spent looking for food, feeding, moving and grooming. Post-treatment animals gained an average 19 g of fat or approximately 25 kJ d(-1). DEE averaged 382 kJ d-1 prior to and 375 kJ d-1 post treatment (p> 0.05). RMR averaged 174 kJ d-1 prior to and 217 kJ d-1 post treatment (p

Differential energy costs of winter acclimatized common spiny mice Acomys cahirinus from two adjacent habitats

The common spiny mouse Acomys cahirinus, of Ethiopian origin, has a widespread distribution across arid, semi-arid and Mediterranean parts of the Arabian sub-region. We compared the daily energy expenditure (DEE), water turnover NTTO) and sustained metabolic scope (SusMS = DEE/resting metabolic rate) of two adjacent populations during the winter. Mice were captured from North- and South- facing slopes (NFS and SFS) of the same valley, comprising mesic and xeric habitats, respectively. Both DEE and SusMS winter values were greater in NFS than SFS mice and were significantly greater than values previously measured in the summer for these two populations in the same environments. However, WTO values were consistent with previously established values and were not significantly different from allometric predictions for desert eutherians. We suggest that physiological plasticity in energy expenditure, which exists both temporally and spatially, combined with stable WTO, perhaps reflecting a xeric ancestry, has enabled A. cahirinus to invade a wide range of habitats. (C) 2003 Elsevier Inc. All rights reserved.

Information Disclosure, Market Discipline and the Management of Bank Capital: Evidence from the Chinese Financial Sector

Is there evidence that market forces effectively discipline risk management behaviour within Chinese financial institutions? This study analyses information from a comprehensive sample of Chinese banks over the 1998-2008 period. Market discipline is captured through the impact of four sets of factors namely, market concentration, interbank deposits, information disclosure, and ownership structure. We find some evidence of a market disciplining effect in that: (i) higher (lower) levels of market concentration lead banks to operate with a lower (higher) capital buffer; (ii) joint-equity banks that disclose more information to the public maintain larger capital ratios; (iii) full state ownership reduces the sensitivity of changes in a bank's capital buffer to its level of risk;(iv) banks that release more transparent financial information hold more capital against their non-performing loans. © 2010 Springer Science+Business Media, LLC.

Can the protein costs of bacterial resistance be offset by altered feeding behaviour?

1. Mounting an immune response is likely to be costly in terms of energy and nutrients, and so it is predicted that dietary intake should change in response to infection to offset these costs. The present study focuses on the interactions between a specialist grass-feeding caterpillar species, the African armyworm Spodoptera exempta, and an opportunist bacterium, Bacillus subtilis.
2. The main aims of the study were (i) to establish the macronutrient costs to the insect host of surviving a systemic bacterial infection, (ii) to determine the relative importance of dietary protein and carbohydrate to immune system functions, and (iii) to determine whether there is an adaptive change in the host's normal feeding behaviour in response to bacterial challenge, such that the nutritional costs of resisting infection are offset.
3. We show that the survival of bacterially infected larvae increased with increasing dietary protein-to-carbohydrate (P:C) ratio, suggesting a protein cost associated with bacterial resistance. As dietary protein levels increased, there was an increase in antibacterial activity, phenoloxidase (PO) activity and protein levels in the haemolymph, providing a potential source for this protein cost. However, there was also evidence for a physiological trade-off between antibacterial activity and phenoloxidase activity, as larvae whose antibacterial activity levels were elevated in response to immune activation had reduced PO activity.
4. When given a choice between two diets varying in their P:C ratios, larvae injected with a sub-lethal dose of bacteria increased their protein intake relative to control larvae whilst maintaining similar carbohydrate intake levels. These results are consistent with the notion that S. exempta larvae alter their feeding behaviour in response to bacterial infection in a manner that is likely to enhance the levels of protein available for producing the immune system components and other factors required to resist bacterial infections (‘self-medication’).

Costs of resistance: genetic correlations and potential trade-offs in an insect immune system

Theory predicts that natural selection will erode additive genetic variation in fitness-related traits. However, numerous studies have found considerable heritable variation in traits related to immune function, which should be closely linked to fitness. This could be due to trade-offs maintaining variation in these traits. We used the Egyptian cotton leafworm, Spodoptera littoralis, as a model system to examine the quantitative genetics of insect immune function. We estimated the heritabilities of several different measures of innate immunity and the genetic correlations between these immune traits and a number of life history traits. Our results provide the first evidence for a potential genetic trade-off within the insect immune system, with antibacterial activity (lysozyme-like) exhibiting a significant negative genetic correlation with haemocyte density, which itself is positively genetically correlated with both haemolymph phenoloxidase activity and cuticular melanization. We speculate on a potential trade-off between defence against parasites and predators, mediated by larval colour, and its role in maintaining genetic variation in traits under natural selection.

The costs of bearing arms and armour in the hermit crab Pagurus bernhardus

Hermit crabs use empty gastropod shells as protective armour and enlarged chelipeds as signals and weapons. However, carrying armour and arms may impose energy costs that result in increased lactate and hence potential fatigue and there may be consequent effects on general activity. We investigated whether variation in shell and cheliped size influences lactate levels in hermit crabs. Lactate was positively related to residual cheliped size for both sexes and was higher in males than females; when we controlled for body size, the former had larger chelipeds. Shell weight unexpectedly had no effect on lactate but crabs in small shells had high lactate, possibly because of reduced ability to maintain a respiratory current. The size of natural shells had no effect on activity but the addition of food odour increased locomotion. However, activity was not related to lactate. We conclude that possession of larger chelipeds than expected for body size imposes significant costs and may limit development of sexual dimorphism. (C) 2010 The Association for the Study of Animal Behaviour. Published by Elsevier Ltd. All rights reserved.