Leadership on Sustainability Must Include Helping Shape Smart Policy

This past year, we’ve seen some bold action by companies in what we’ve dubbed the business-policy nexus, and it’s taking several different forms. Some have been calling for state or federal action on environmental impacts, while others are taking far-reaching voluntary efforts that could help support policy advocacy in the future.

Whether you view engagement on public policy as risk mitigation, providing market certainty, supporting corporate sustainability goals or securing competitive advantage, leading businesses are increasingly stepping up their efforts to support smart policy reform that will benefit the environment and economy.

Keeping toxic chemicals out of supply chains

Walmart shopper

Walmart and Target are moving to proactively get harmful chemicals out of their supply chains, even though the nation’s main chemical safety law, the Toxic Substances Control Act (TSCA), is outdated and hasn’t been reformed in nearly two decades.

Earlier this year, our long-term partner in this area, Walmart, took a big step forward by announcing a new sustainable chemicals policy focused on cutting 10 chemicals of concern from home and personal care products it sells. Chemicals of concern – for example, formaldehyde, a known carcinogen – have been found in about 40% of the formulated products on Walmart shelves, including things like household cleaners, lotions and cosmetics.

That policy includes requiring Walmart’s suppliers to disclose the chemical ingredients of their products as well as phase out or declare on their packaging the ten high-priority chemicals of concern. Walmart is also moving to have its private label products meet the EPA’s Design for the Environment safety standards.

Building upon this, Walmart and Target convened a Beauty and Personal Care Products Sustainability Summit aimed at surfacing ways both companies and their suppliers can increase consumer safety, sustainability and transparency through the entire supply chains of their products.

By engaging early—especially in areas where federal action is expected in the future, as with reform of TSCA—companies can reduce their risks, whether from legal action or public perception, and build greater trust with the public. These efforts also create a lens into companies’ operations that will shape the debate as changes to federal regulations take form.

Curbing methane leakage from the oil & gas sector

Oil and gas well padAnother area where companies have been voicing support and helping guide policy is the push to reduce emissions of methane, a powerful greenhouse gas, from the oil and gas sector. Methane emissions are 84 times more potent than CO2 emissions over a 20-year timeline, and are increasingly seen as a major environmental and financial risk by both the energy and investment sectors.

That risk is driving companies in the oil and gas sector and elsewhere to encourage the federal government to regulate methane emissions. For example, in June Goldman Sachs CEO Lloyd Blankfein voiced his support of methane regulation on the Charlie Rose Show. Just two weeks ago, a group of investors managing $300 billion in assets (including the $160 billion NYC pension funds) sent an impassioned letter to EPA Administrator Gina McCarthy calling for federal regulation of methane emissions.

Your opportunity to lead in the transition to a clean energy future

Solar installationEngagement starts with being informed. That’s why EDF is eager to help you understand the need and opportunity for leadership on the EPA’s proposed Clean Power Plan (aka the Carbon Pollution Standards or 111d).

This proposed rule is the biggest single action the federal government has taken on climate change, and will help curb carbon emissions from the largest source of carbon pollution in the United States. Proposed by the EPA earlier this year, the Clean Power Plan is projected to reduce greenhouse gas emissions from existing power plants by 30 percent below 2005 levels, with room for custom implementations on a state-by-state basis so that state and local leaders can decide what solutions best fit the needs of each state’s specific economic, corporate and energy sectors.

Any sustainability officer who has tried to competitively price green power or build the business case for an energy efficiency program has a stake in the outcome. The Clean Power Plan can help shift us towards a lower-carbon economy and expand the demand and market for renewable energy and energy efficiency.  But this depends on how the plan is implemented, and getting that right depends on you.

Tom Murray, VP Corporate Partnerships, EDF

Tom Murray, VP Corporate Partnerships, EDF

Mandy Warner, Sr.  Manager, Climate and Air Policy

Mandy Warner, Senior Manager, Climate and Air Policy, EDF

Join us November 19th for a webinar with myself and Mandy Warner from EDF’s Climate & Energy team. We will walk you through how the Clean Power Plan is structured, what it means for businesses and why companies should make their voices heard as plans to implement the rule take shape.

Register here today for this informative webinar.

Investors Voice Market Support for Methane Regulation

banner_gasLast week, financial community leaders took a big step into the intersection of business and policy on the urgent need to curb methane emissions from the oil and gas sector. A group of investors managing more than $300 billion in market assets sent a letter to the U.S. Environmental Protection Administration and the White House, calling for the federal government to regulate methane emissions from the oil and gas sector. The letter urged covering new and existing oil and gas sites, including upstream and midstream sources, citing that strong methane policy can reduce business risk and create long-term value for investors and the economy.

Spearheaded by Trillium Asset Management, the cosigners of the letter to EPA Administrator Gina McCarthy included New York City Comptroller Scott M. Stringer, who oversees the $160 billion New York City Pension Funds, and a diverse set of firms and institutional investors. They spelled out in no uncertain terms that they regard methane as a serious climate and business problem – exposing the public and businesses alike to the growing costs of climate change associated with floods, storms, droughts and other severe weather.

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The Business-Policy Nexus: The Next Frontier for Corporate Sustainability Leadership

Tom Murray, VP Corporate Partnerships, EDFAs we approach the 25-year anniversary of EDF’s work with the corporate sector, it’s an opportune time to reflect on our successes and plan for the work ahead.

Over the years we have worked with McDonalds, Walmart, FedEx, KKR and many others to integrate sustainability into their operations, strategy, and supply chain management.  Together, we have kick-started market transformations in sectors including fast food, shipping, retail, private equity and commercial building energy efficiency.  While we’ve made great strides, there remains a huge distance to go in order to fully protect our natural resources, clean up our dirty energy system, and turn the corner on global greenhouse gas emissions in time to avoid the worst impacts of climate change.

Looking ahead, the opportunity and need for more aggressive private sector leadership has never been greater.  Moving from environmental progress today to full scale solutions tomorrow will require a new type of corporate leadership. This next step will require a willingness to align corporate sustainability operations, strategy AND policy.

Voluntary corporate efforts have made a difference and will continue to be a critical pathway for innovation. But this is not sufficient to meet the size and scale of the challenges we face.  Businesses must take the next leadership step – helping to shape and support the smart regulatory and policy changes required to preserve the natural systems that people, communities and companies need to thrive.

Simply put, the bar is now higher for companies that want to lead on sustainability.

 Corporate Leadership and Sustainability over time

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In New Report, KKR Deepens Commitment to Tackling ESG Concerns

Too often, environmental performance gets labeled as the responsibility of one team within a company – whether that of a dedicated sustainability staff, external or public affairs, legal or compliance, etc. As a result, a company’s staff can often think of environmental and social governance (ESG) issues as what Douglas Adams once famously termed an SEP – Somebody Else’s Problem.

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With the release of its 2013 ESG and Citizenship Report, private equity firm Kravis Kohlberg & Roberts (KKR) shows it’s taking a different approach:  KKR has adopted a new global policy that makes identifying and addressing ESG risks in both the pre-investment and investment phases, for its staff, everyone’s problem.

Notably, KKR’s private equity investment professionals are being integrated into the ESG risk assessment process: first, in assessing risks during the diligence phase, and second, working with portfolio companies, consultants and subject matter experts to set performance goals and measure against them during the typical five to seven years a company remains part of its portfolio.

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Raising the Bar for Private Equity ESG Reporting

As the old management adage goes, “what gets measured gets managed.” Private equity firm Apax Partners took an important step toward embodying that concept this spring by releasing a sustainability report rich with key metrics from its portfolio companies' progress in environmental, social and governance (ESG) management.

Apax Partners logo

As last year’s Pitchbook survey showed, ESG management is increasingly a mainstream issue for private equity firms. The detailed data that Apax portfolio companies are gathering — and reporting as a group — form the foundation for companies to manage ESG issues, as well as benchmark and then measure any advances.

This is all part of an important, ongoing shift in the private equity industry: from questioning if firms can create value through ESG management, to how can firms capture the value.

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Harnessing Innovation to Cut Methane Emissions

Murray_TomI believe that Environmental Defense Fund (EDF) is at its best when we are leveraging the power of market leaders to drive innovation and solve environmental challenges.  Over the years we have worked with McDonalds, Walmart, FedEx, KKR and many others to kick start market transformations in sectors including fast food, shipping, retail, private equity and commercial building energy efficiency. Notable initiatives included slashing supply chain greenhouse gas emissions with Walmart, creating a market for hybrid trucks with FedEx, and launching an innovative business internship program to catalyze energy efficiency in business.Notable initiatives included slashing supply chain greenhouse gas emissions with Walmart, creating a market for hybrid trucks with FedEx, and launching an innovative business internship program to catalyze energy efficiency in business. Read more

New Report Shows Path Forward on Cutting Methane Emissions

Murray_Tom

Environmental Defense Fund was the first environmental group to hire a full-time economist, way back in the 1970s. At the time, many wondered what economics had to do with protecting the environment. We saw an opportunity and seized it because we believe prosperity and stewardship can go hand-in-hand, and solutions that make good business sense have the best chance of catching on and delivering environmental benefits that stick. That idea remains one of our guiding principles today.

So, it should be no surprise that EDF recently commissioned a detailed economic analysis of opportunities to cut methane emissions from the U.S. oil and gas industry. Our objective was simple – show how leading companies can cut methane emissions quickly and cost-effectively.

Why focus on methane emissions, and why now? Because pound for pound, methane is a very potent greenhouse gas – 84 times more potent in the short term than CO2 when released into the air. Whether intentionally vented or inadvertently leaked, methane from the oil and gas sector is America’s largest industrial source of U.S. methane emissions.

It’s a serious problem… but after extensive analysis and discussion with industry leaders and other experts, this study shows us it’s a solvable one. Better yet, it makes a solid case for immediate action.

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EDF named “Trusted Leader” in Inaugural GreenBiz NGO Report

Environmental Defense Fund (EDF) is honored to be ranked by GreenBiz as one of the three trusted leaders among environmental nonprofits, along with World Wildlife Fund (WWF) and The Nature Conservancy (TNC) – truly excellent company.

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In its inaugural NGO Report, GreenBiz asked hundreds of sustainability executives from large corporations to rate and rank 30 leading NGOs in terms of influence, credibility and effectiveness. GreenBiz charted the responses and grouped the NGOs in four categories:

  • Trusted Partners – Corporate-friendly, highly credible, long-term partners with easy-to-find public success stories
  • Useful Resources – Highly credible organizations known for creating helpful frameworks and services for corporate partners
  • Brand Challenged – Credible, but not influential, organizations
  • The Uninvited – Less broadly known groups, or those viewed more as critics than partners Read more

PitchBook Survey Highlights Growing Importance of ESG

A recent report by PitchBook is telling on several levels when it comes to the changing state of environmental, social and governance (ESG) management in private equity (PE).

Pitchbook report cover

First, the survey highlights the growth in the number of PE firms, limited partners (LPs) and general partners (GPs) who are engaged on ESG issues. A whopping 84 percent of LPs told PitchBook that ESG is at least somewhat important when deciding whether to invest, and 24 percent said a strong ESG program could outweigh slightly lower historical performance. A majority of GP survey takers (60 percent) have an ESG program at their firm, up from 49 percent last year. Another 26 percent either are developing an ESG program or plan to do so in the near future. This year’s survey included 54 GP and 54 LP respondents, up from last year’s 48 GP and 4 LP respondents.

Then, there's the fact that a prominent industry publication like PitchBook is now regularly reporting on ESG. This is a pretty clear signal that ESG management is now a mainstream issue for private equity.

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Survey Highlights Public Trust in Companies Addressing Climate Change

For nearly 25 years, EDF has been working with the country’s leading businesses – McDonalds, FedEx, Walmart, and others – to improve efficiency, reduce pollution, and drive business value.  Together we have proven that environmental strategy is good business strategy.

Now, a new survey spotlights a less-talked-about benefit to environmental, social and governance (ESG) management: greater public trust. An impressive 82 percent of respondents said their trust in a business would increase if the company provided greater visibility and transparency into efforts to cut down on emissions and mitigate climate change, according to new research conducted by Research+Data Insights on behalf of H+K Strategies and EDF.

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