Linking Supply Chains and REDD+ to Reduce Deforestation

Two tropical forest conservation efforts have gained momentum in recent years: zero deforestation commitments from the private sector and the policy framework Reducing Emissions from Deforestation and forest Degradation (REDD+). Both efforts are necessary, but not sufficient in themselves to eliminate global deforestation.

Zero Deforestation Zones

Private sector conservation initiatives on individual farms (represented by green trees in the left image) can result in pockets of forest surrounded by deforestation, but Zero Deforestation Zones can conserve forests throughout entire jurisdictions (represented by the green state-wide program in the right image). Credit: Rick Velleu, EDF

In a recently published paper in the Journal of Sustainable Forestry, we find that linking REDD+ and zero deforestation commitments offers a more efficient and effective solution to stop deforestation, which we call Zero Deforestation Zones (ZDZ).

The current state of private initiatives and REDD+

Deforestation, which is responsible for 15% of global greenhouse gases, is primarily caused by conversion for the production of four commodities in Brazil and Indonesia: beef, soy, palm, and timber products. To address this urgent problem, companies that control more than 90% of soy purchases in the Amazon, around half of cattle slaughter in the Brazilian Amazon, and 96% of palm oil trade globally have committed to stop deforestation. Read more

Powerful Business: The Lever for Change Across the Supply Chain

Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.
-Archimedes

Sometimes when a problem seems too big, too ugly and too complex to handle, you need a lever to help move things along.  All of the big environmental problems we currently face fall into this category.

When it comes to tackling our planet’s biggest problems, there is a full spectrum of approaches and many different leverage points. For me, the most important lever is business. A thriving planet and a thriving economy don’t have to be at odds. EDF is focusing on helping businesses make their supply chains cleaner, more efficient and more profitable.

Working with powerful business has been a cornerstone of EDF’s approach ever since we launched our 1st partnership with McDonald’s 25 years ago. Since then, we have kick-started market transformations in fast food with McDonalds and Starbucks, shipping with FedEx, retail with Walmart, and private equity with KKR. With each partnership, we’ve worked to create new, sustainable demand signals that extend across the supply chain. When powerful business speaks, suppliers listen. EDF is helping the most impactful companies commit to selling sustainably-produced products, encouraging every supplier and producer contributing to those products to also adopt more sustainable practices. Read more

Denver Housing Authority Sets Bar for Municipalities Nationwide

To many, it may seem that pursuing environmental sustainability would fall relatively low on a municipal housing authority’s goals.  After all, providing moderate and low-income families with clean, stable homes in the face of uncertain federal subsidies and increasing taxpayer scrutiny is challenge enough.

North Lincoln Homes - PV SystemsThe Housing Authority of the City and County of Denver (DHA), therefore, deserves praise for its innovative solar power program that not only provides renewable energy, but creates revenue for the housing authority, creates green jobs in the region, and saves taxpayers’ money – all the while reflecting the spirit of the federal Department of Energy’s Better Buildings Challenge, which looks to reduce energy consumption by 20 percent by the year 2020. DHA serves as a model for municipalities across the country.

Andrea Davis of the DHA’s Real Estate Department and Chris Jedd, portfolio energy manager, showed the creativity and sheer will to make a lofty renewable energy goal affordable, manageable and successful, while providing their communities with empowerment, economic opportunity, and a vibrant living environment. Read more

Collaborative Logistics: Shipping Together to Save Together

Collaborative logistics – where multiple companies cooperate to share freight capacity – holds the key to dramatic reductions in freight emissions and costs. Unfortunately, most consumer packaged goods (CPG) companies continue to manage discrete lines of supply to retail customers, passing up these opportunities.

  • Partially full trucks today run side-by-side on the highway, even though they are travelling to the exact same retail distribution center (DC), and freight could have been combined.
  • Outbound deliveries of full trailers ride alongside empty trailers returning home to the same destination after a delivery, even though the outbound shipper could have leveraged the opportunity presented by the empty trailer for an aggressive backhaul rate.
  • Heavy and light products cause trucks to weigh out before they’re full and cube out below the truck’s weight capacity has been reached, even when the solution could have been as simple as combining shipments of cotton balls and hammers traveling along the same route.

Examples of collaborative logistics at work

ocean spray More and more companies are recognizing the value of collaboration in meeting their sustainability goals. It turns out that when shippers climb out of their silos, good things happen. These are just a few examples of solutions being employed by companies:

  • Ocean Spray and Tropicana.  Tropicana shipped orange juice north from Florida in refrigerated box cars, which often travelled back empty to Florida.  Ocean Spray trucked its juice products from New Jersey to Florida along the same route. By shifting most of this TL volume to utilize Tropicana’s rail backhauls (CSX), Ocean Spray cut freight costs 40% for this lane and reduced greenhouse gas emissions 65%.
  • Whirlpool and Daltile. Both of these large manufacturers have factories in Monterrey, Mexico and ship product into the U.S. via rail. Daltile’s heavy ceramic tile reach a rail box car’s 200,000 pound weight limit with enough room for a 53-foot trailer. Meanwhile, Whirlpool’s appliances were cubing out box cars at just 35,000 pounds.  The solution?  Put four truckloads of tile in each box car (160,000) and fill the rest with refrigerators.  Each company now pays just 50% of the cost for the trip, but gets 80 percent of the maximum cube or weight capacity. Daltile’s complete freight collaboration program, generates $3 million in annual freight savings and reduces diesel fuel usage by more than 600,000 gallons per year.

Here are some tips to help your company get started on collaborative logistics:

  • Leverage your 3PLs. They service many companies and are in a good position to identify collaborative logistics opportunities and partners.
  • Look to competitors. Your freight is likely going to the same customers and DCs.
  • Share cost information. When lo-loading freight, mutual trust is critical to determining an equitable cost-sharing arrangement. Both companies must be transparent about what they are paying now.
  • Dedicated the required resources. The right collaborative logistics projects can have a huge payoff, but they require significant time and resources to pull off. Don’t underestimate the time required to make these inter-company projects work.

Find more tips on collaborative logistics and other green freight initiatives in EDF’s comprehensive Green Freight Handbook – a free guide to helping you achieve your sustainability goals.

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Game Time for Fixing The Natural Gas Industry’s Achilles Heel

As the dog days of summer expire and football season approaches, many sports fans will anxiously scan their favorite team’s rosters for training camp injuries–finding everything from the innocuous, to the dreaded torn Achilles that already sidelined several pro players for the season’s start.

Gametime-300x250When it comes to the energy industry, methane emissions loom as the Achilles heel of natural gas. On the surface, natural gas appears to many as a star American player – abundant and cleaner burning than coal.

But unchecked methane emissions, which are 84 times more potent than CO2, undercut natural gas’ climate change performance.

This risk has grown particularly acute because the recently finalized Clean Power Plan, which targets carbon dioxide emissions from coal-fired power plants, casts natural gas as part of a viable near-term strategy to win the climate game.

The spotlight on natural gas’ performance is only growing as more viewers tune in.

The difference is, while there is no sure-fire way to prevent an Achilles tear on the athletic field, we have the means at our fingertips to dramatically reduce methane emissions and help natural gas become a stronger player that puts more points on the board for the economy and climate.

New EPA methane rules announced Tuesday can be an important step if finalized in strong form, yielding four business benefits: Read more

The Clean Power Plan is Out – Time for Business to Focus on the Certainties and Weigh In

Tom Murray, VP Corporate Partnerships, EDFCommuting home from work last week and listening to the radio, I heard the EPA’s Clean Power Plan (CPP) described as a big deal for our company, our nation, and our planet. When so much of the initial news coverage about the CPP was focused on uncertainty, it was terrific to listen to Ralph Izzo, CEO of Public Service Enterprise Group (PSEG) focus on the certainties.  According to Izzo, the science is in on climate change, the CPP creates business opportunities for PSEG and others, and the future for PSEG and utilities in general will be increased reliability, more energy efficiency, and increasing energy from carbon-free sources.

For nearly 25 years, EDF has partnered with leading companies to accelerate environmental innovation in their products, operations, strategies, and supply chains.  In fact, it was EDF’s early partnerships with McDonalds and FedEx that first attracted me to the organization.  While we’ve made considerable progress working with business, there’s still a lot of work to be done to reach the low carbon, clean energy future mentioned above.  To get there, we need more aggressive private sector leadership and strong support for solutions like the CPP.

Business weighing in on Clean Power Plan

 

What’s next with the CPP?  It’s time for business to focus on the certainties and weigh in… Read more

In Its 5th Citizenship Report, KKR Reaches Beyond ESG

This post is part of an EDF+Business ongoing series on sustainable finance, highlighting market mechanisms and strategies that drive environmental performance by engaging private capital. EDF is actively engaging leaders with the capital and expertise needed to catalyze sector-wide changes—from accelerating investment in energy efficiency and clean energy, to protecting tropical forests, restoring depleted fisheries and saving habitats of endangered species.

Sustainability pioneer and inspiration to many of us at EDF, Ray Anderson frequently talked about his company’s efforts to scale the seven faces of Mount Sustainability and develop a more responsible company along the way. Summiting a mountain is a good analogy for a company’s journey to improve its environmental performance. To succeed you need a plan, commitment, resources, and the ability to change direction if there are obstacles in your path.

In the case of a private equity firm like KKR & Co. L.P. – with over 56 portfolio companies participating in value creation programs linked to its environment, social and governance (ESG) strategy since 2009– the journey is more akin to traversing an entire mountain range, whose contours keep evolving as companies enter and exit their portfolio.

That changing landscape is what’s driven KKR to continue to adapt how it manages ESG challenges and opportunities. KKR’s recently-released 5th annual ESG & Citizenship Report details how these programs have continued to evolve since our initial partnership in 2008.

Our work together helped drive KKR’s Green Portfolio Program which, six years later, has added a cumulative $1.2 billion to its portfolio companies’ bottom lines while avoiding more than 2.3 million metric tons of greenhouse gases and reducing waste by 6.3 million metric tons and water use by 27 million cubic meters, according to results announced last fall.

kkr_logo_13932KKR’s latest report documents the firm’s progress in advancing ongoing efforts, including measuring and improving ESG performance at key portfolio companies, rolling out a publicly available ESG policy across its global private equity staff, contributing its expertise to the Sustainable Accounting Standards Boards’ development of ESG disclosure guidelines, bringing together sustainability professionals and other experts at its first Sustainability Summit last year, and hiring a full-time energy expert and two EDF Climate Corps fellows to help its portfolio companies more systematically adopt solutions for better energy management.

In addition, something new caught our eye. KKR plans to refocus its investment efforts through one of three lenses – responsible investing, solutions investing and impact investing.

  • Responsible investing incorporates ESG metrics and analysis into investment decisions.
  • Solutions investing refers to investments made in companies that have an intentional focus on solving a societal challenge and deliver traditional returns to investors, such as providers of reusable bulk shipping containers, developers of environmentally-responsible office buildings in Korea and microfinance groups increasing access to capital for business owners in rural and semirural India.
  • Impact investing goes beyond the other two, focusing on investments in companies that put environmental and social impacts on par or even ahead of financial impacts. KKR began advising two impact businesses in 2013 by providing technical assistance, helping the companies scale their businesses and secure additional funding. Moving forward, KKR will consider investing in such businesses.

At EDF, we believe that private capital can and must be part of the solution to our biggest environmental challenges. We’re encouraged to see major investors like KKR expand their investment strategy as the next step in this journey and eager to see the environmental and financial results it delivers.

Companies Hail Triple-Bottom-Line Benefits of Cleaner Trucks

Ben and Jerry’s became the latest corporate voice calling for strong fuel-efficiency and greenhouse gas standards for heavy trucks. In a Guardian op-ed, CEO Jostein Solheim made a compelling triple-bottom-line case for protective standards for new trucks.

holycowinc_2265_2844729Mr. Solheim noted that seventeen percent of the company’s carbon footprint is associated with transporting products. This includes bringing ingredients to manufacturing facilities (three percent) and moving the finished products to distribution centers (fourteen percent).

Like packaging, transportation and distribution is a consistent, significant carbon footprint component of every product: six percent of H&M clothes; twenty-five percent of the carbon budget from Mars; and thirty five percent of Philips operations, for example. And, trucks are the largest single component of distribution emissions, accounting for 57% of the collective impact. Therefore, it is in the interest of every product manufacturer and brand in the U.S. to see these trucks use less fuel.

Freight-share-GHGsThe single most impactful thing we can do today to reduce emissions from product distribution is to build more efficient trucks. We have the technical know-how to cost-effectively double the efficiency of freight trucks. We also know that having well-designed standards in place is a necessary step to bringing these solutions to market at scale. Read more

EDF Climate Corps Proves its ROI for Private Equity Firms

As summer officially gets underway, the 2015 EDF Climate Corps fellows are already off to the races seeking out energy and cost-saving opportunities for some of the world’s largest companies and organizations. Among those participating, we are pleased to place 13 fellows with private equity firms and their portfolio companies, the largest such cohort in a single summer, besting last year’s record of 12 fellows. This brings the grand total up to 57 EDF Climate Corps fellows who have worked in the private equity sector (including with portfolio companies) to date.

EDF Climate Corps fellows Yien Huang (left) and Jiamu Lu (right) collaborating at the fellow training

EDF Climate Corps fellows Yien Huang (left) and Jiamu Lu (right) collaborating at the fellow training

Since 2008, EDF has worked with the private equity sector to drive environmental results, beginning with a partnership with KKR & Co. L.P., and later with The Carlyle Group and Oak Hill Capital Partners. Resulting from this work was a suite of free tools designed to help firms identify and manage environment, social and governance (ESG) issues. EDF Climate Corps offers private equity firms a powerful resource that continues to deliver environmental benefits alongside real financial returns.

This year, as in past years, we continue to see a diverse range of participating companies and projects:

  • In 2015, we welcome new hosts Guitar Center, NBTY (vitamin/food supplement supplier), Ortho Clinical Diagnostics (medical equipment manufacturer), Pharmaceutical Product Development, and Gelson's Markets (a grocery chain in southern California).
  • Among returning companies, we’re excited to welcome back Floor & Décor, Philadelphia Energy Solutions, Avaya, and Caesars Entertainment, the last of which was featured in episode 7 of the Showtime series Years of Living Dangerously (now available on Netflix, Hulu and Amazon Prime), which profiled the efforts of EDF Climate Corps.
  • HCA Healthcare will also be returning, marking the company’s sixth straight year of participation.
  • KKR & Co. L.P., Carlyle Group, and Hellman & Friedman will have fellows working at the firm level this year.

The work that these fellows will engage in this summer ranges from energy benchmarking and efficiency upgrades to demand response assessments and green revolving loan fund design. We’ve written previously about the myriad ways that fellows can add value both at private equity firms and portfolio companies and we’re excited to see new stories unfold this summer. Watch this space as well as our Climate Corps-specific blog, where fellows across a variety of sectors will share their experiences and accomplishments.

Investor Ranks Top $1.5 Trillion in Support of National Methane Standards

California public school teachers. Religious charities. New York police officers and firefighters.

investorsWhat do all of these groups have in common? Investors representing them — who manage $1.5 trillion in retirees, current employees’, and others assets – are standing together and calling for strong rules limiting harmful methane emissions from the oil and gas sector. This level of outpouring – from diversified investors with holdings in the oil and gas industry – represents five times the support investors expressed for methane rules last year. A trend is emerging.

The investors, including the largest retirement funds in California and New York, issued a powerful statement in support of the president’s methane proposal aimed at cutting emissions nearly in half in a decade. A centerpiece is regulation of methane, the primary ingredient in natural gas, which has over 80 times the warming power of carbon dioxide in the first 20 years after it’s released and is responsible for 25 percent of the warming we are feeling today.

From their vantage point as long-term stakeholders, the “serious threat” methane poses to climate stability compels them, as fiduciaries, to support action to cut emissions and avoid near term threats to “infrastructure and economic harm that will weaken not only the companies we invest in, but the nation as a whole.” Market pressure like that is difficult to ignore. Read more