EDF Climate Corps Continues to Drive Results for Private Equity Firms

The results are in. As my colleague Victoria Mills wrote recently, this year’s cohort of EDF Climate Corps fellows found $130 million in potential energy savings across 102 organizations.

Among the engagements, 12 fellows worked with private equity firms and portfolio companies on a diverse set of projects. Each engagement offers its own story, but we’d like to showcase a few examples demonstrating the value the Climate Corps program can bring to firms of all sizes and at all stages of understanding of energy management.

Energy audits and retrofits for a major manufacturing company

amiHellman & Friedman’s portfolio company Associated Materials, which specializes in exterior building products, hosted two fellows this past summer, its first year with the EDF Climate Corps program.

Fellow Karunakaren Muthumani Hariharan audited two of the firm’s 11 manufacturing locations to identify opportunities for energy efficiency, including lighting upgrades, process equipment upgrades and manufacturing process modifications. He suggested improvements with potential net present value savings greater than $1.4 million and reductions of greenhouse gas emissions by approximately 2,700 tons per year. Hariharan also proposed funding the energy efficiency projects through a new Green Energy and Sustainability Fund.

Krishna Chaitanya Vinnakota analyzed Associated Materials’ total expenditure on energy, over $15 million, and focused on energy saving opportunities in the company’s supply centers, including an approach that could result in energy expenditure savings of 20 to 50 percent in some supply centers. He also suggested strip doors as a simple but effective way of conserving energy during winter. It’s a project that could save the approximately half a million dollars per year if rolled out across the company’s 125 supply centers and 11 manufacturing plants. Read more

Is Water the New Bottom Line for Companies?

On December 11th, the U.S. Chamber of Commerce Foundation (USCCF) Corporate Citizenship Center will host The Energy-Water-Food Nexus: Risks and Opportunities for the Private Sector, the second in a series of roundtables based on a report released earlier this year. The USCCF’s report and surrounding events are highlighting success stories, and more importantly, opportunities for the business community to address the energy–water nexus: the idea that energy and water use are Source-flickr-neilsingapore-300x228fundamentally intertwined. In order to accurately address water risks across operations and supply chains, businesses must take a more holistic look at their water and power usage.

The business world is quickly beginning to understand the intersection of these two sectors and the significant impact that they have on business operations.

Business and the energy-water nexus

In the commercial, industrial, and institutional sectors, energy efficiency and other measures could save as much as 15-30 percent of water use without reducing operations. This is particularly important as businesses consider how they manage water risks in areas where they operate. The 2014 Carbon Disclosure Project Water Disclosure Global Report, conducted on behalf of 573 investors with assets of $60 trillion, reported that 68 percent of responding companies say water is a substantial risk to their businesses, but only 42 percent have publicly demonstrated a commitment to water efficiency. Interestingly, 43 percent of reporting businesses said that water stress and/or scarcity was a top risk driver versus 16 percent that said drought was a top risk driver. This indicates that companies are more focused on longer-term risk management, as opposed to reacting primarily to drought conditions and concerns about short-term profits. Read more

Good News for America: Cleaner, More Efficient Trucks that Protect Our Environment and Strengthen Our Economy

jason_mathers2014 is shaping up to be a great year for truck equipment manufacturers. Sales through October are running 20% higher than their 2013 levels. It’s a banner year that continues to pick-up steam. 2015 is looking even stronger, with forecasts suggesting it will be the 3rd strongest year ever for truck sales. There are several factors driving this market. Higher fuel efficiency is top among them.

This point was brought home recently by the lead transportation analyst for investment firm Stifel, who noted that “the superior fuel efficiency of the newer engines” was a key in getting fleets to buy new trucks now.

The CEO of Daimler Trucks, the leading producer of class 8 trucks for the U.S. market, acknowledged recently that their most efficient engine and transmission combination was “already sold out for 2014” and that the “demand is beyond their expectations.”

It’s not just Daimler that is having a good year.

2014 is a banner year for truck sales; and 2014 trucks are the most efficient ever.  2014 trucks are the most efficient ever because of smart, well-design federal policy.  This is the first year of the 2014-2018 heavy truck efficiency standards that will:

  • reduce CO2 emissions by about 270million metric tons,
  • save about 530 million barrels of oil over the life of vehicles built between 2014 – 2018,
  • provide $49 billion in net program benefits.

The 2014-2018 heavy truck fuel efficiency and greenhouse gas program demonstrates that climate policy benefits businesses, our economy, and human health, while also cutting harmful climate pollution.

Or, as Martin Daum, president and CEO of Daimler Trucks North America noted, these standards “are very good examples of regulations that work well.”

In its first year of existence, the 2014-2018 fuel efficiency and greenhouse gas program is boosting sales for manufacturers, reducing operating costs for fleets, and cutting climate pollution for all of us. It is clear that well-designed federal standards can foster the innovation necessary to bring more efficient and lower emitting trucks to market.   That is very good news, because we have an opportunity to further improve and strengthen these standards – creating more economic and environmental benefits in the process.  For this, we all can be thankful.

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. Read more

New Report Supports Jurisdictional Approaches to Ending Deforestation in the Amazon

Andrew Hutson EDFThe world’s attention has been on Brazil lately.  With an exciting World Cup this past summer, an election season full of drama (including a plane crash), and the coming Summer Olympics in 2016, it has been easy to overlook the piece of news that has the greatest impact on all of our lives: the remarkable decreases in rates of deforestation in the Amazon.  With little fanfare (at least from the general public), deforestation decreased 70% since 2005 and Brazil has become the world leader in reducing greenhouse gas pollution.

But while this progress impressive, it is important to note that we’re still losing over 5,000 square kilometers of forest a year in the Amazon. More importantly, we’ve seen a slight uptick in the rate of deforestation over the past two years, with an increase of 29% from 2012-2013. That number looks likely to increase again this year.

As the number of companies, governments, NGOs, and indigenous peoples who signed the New York Declaration on Forests last month demonstrated, there is an eagerness to address this issue across all sectors of society. Among other goals, signatories to the Declaration seek to halve the rate of loss of forests globally by 2020 and end natural forest loss by 2030. To get there, we need a scalable and systematic approach to meet this ambitious, yet achievable goal. EDF believes one solution is the creation of Zero Deforestation Zones (also referred to as jurisdictional approaches) – nations or states that are able to demonstrate reductions in deforestation within their borders as the most effective way to save forests the scale of entire landscapes, rather than individual parcels of land.

A new report by Datu Research, Deforestation in the Brazilian Beef Value Chain, supports this notion.

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The Business-Policy Nexus: Clean Power Plan Offers Opportunity for Companies

Namrita Kapur

In our inaugural post on the business-policy nexus, Tom Murray highlighted the implementation of President Obama’s Clean Power Plan as an opportunity for companies to be leaders. Why should companies be motivated to get involved? Because they care about having access to competitive, clean energy and tools and incentives for smart energy management, which will help them meet their sustainability and carbon goals while cutting costs.

The decisions being made in the coming months on the Clean Power Plan proposal can help accelerate the transition to a cleaner energy economy for years to come, expanding the demand and market for renewable energy and energy efficiency. Any sustainability officer who has tried to price green power on the market or build the business case for an energy efficiency program has a stake in the outcome.

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EDF Climate Corps Fellows Finding Gold in the Value Chain

Energy efficiency is a goldmine, but not everyone has the time or resources to dig. That’s why for the past seven years, over three hundred organizations have turned to EDF Climate Corps for hands-on help to cut costs and carbon pollution through better energy management. And every year, the program delivers results: this year’s class of fellows found $130 million in potential energy savings across 102 organizations.

But this year we also saw something new. In addition to mining efficiencies in companies’ internal operations, the fellows were sent farther afield – to suppliers’ factories, distribution systems and franchisee networks. What they discovered demonstrated that there is plenty of gold to be found across entire value chains, if companies take the time to mine it.

Here are three places where EDF Climate Corps fellows struck gold: Read more

From the inside-out: Warburg Pincus and EDF Climate Corps’ recipe for replication

Since 2008, EDF has worked with private equity firms to integrate environmental, social and governance (ESG) management into their practices. Leveraging our EDF Climate Corps program is a key strategy for replicating our work and we have now placed 44 EDF Climate Corps fellows among private equity firms and portfolio companies, to date. To learn more about how a particular firm has benefitted, I recently spoke with representatives at Warburg Pincus to hear how the EDF Climate Corps program has enhanced their continued efforts to share ESG-related best practices with Warburg Pincus' portfolio companies.

warburg1

This summer, Warburg Pincus hosted an EDF Climate Corps fellow for the second year in a row, and again chose to place the fellow at the firm level, rather than with a single portfolio company. “Running this process from the center allowed us to identify different opportunities, across our portfolio and coordinate work on each of them,” Warburg Pincus Vice President Michael Frain told me.

From speaking further with Frain and Daphne Patterson, Warburg Pincus’ first EDF Climate Corps fellow and newly minted associate, four key themes emerged:

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SXSWEco Day One Epiphanies, Head-scratchers, and Bravery Awards

SXSWEcoThere is so much going on at SXSWEco this week that it would be impossible for one person to do a comprehensive wrap-up, so please take this commentary as a slice of a very big pie. And, note that my particular slice is viewed through a very marketing- and business-oriented lens. Still, as an EDF’er working with the private sector, I’m always looking to share new, pragmatic ideas and business cases for saving the environment. I think the most pleasant surprise of SXSWEco Day One was that so many others feel the same.

But first a head-scratcher. Why is it that the regions that are the most climate and socially vulnerable (Southern U.S.), are also home to some of the biggest climate science-denying politicians? Many thanks to Dr. Robert Bullard of Texas Southern University for so eloquently tying environmental justice to social justice; for me this was a necessary epiphany for how we think of building resilience in the face of climate challenges.

At EDF we believe that the corporate sector can thrive by valuing, protecting, and improving the environment, so the session on Creating Climate Wealth held a ton of appeal. Ann Davlin and Jigar Shah threw out business scenarios for environmental impact like candy from a parade float. I managed to grab a few choice nuggets: Read more

Impact Investing: Green Bonds 101

Prior to joining EDF, I worked in a variety of finance-related roles, from building the alternative energy franchise at an investment bank to pioneering investment in rural communities in the developing world at Root Capital. As part of my work at EDF, I’m investigating what financing mechanisms can drive investment in projects with big environmental returns, as well as financial ones. This post is the start of a new series looking at the green bond market, and in the future, I’ll be delving into other areas of impact investing.

Namrita Kapur

Eighteen months ago, you might have never heard of a green bond. The market averaged less than $3 billion per year, but that is quickly changing.  $14 billion in green bonds were issued in 2013 and Bloomberg New Energy Finance projects as much as $45 billion to be issued this year. One expert even sees the market climbing to $100 billion in 2015.

Flexible financing for sustainability projects

So what are green bonds, and what is driving this market growth? Simply put, they’re a debt instrument that can be linked to an environmental benefit. One compelling aspect of green bonds is their flexibility. While some may be tied to energy efficiency and renewable energy projects, others are used for projects around climate resiliency, water infrastructure and a growing list of other high-priority sustainability areas.

As countries experience the mounting impacts of climate change, there is an increasing global demand for capital in these critical infrastructure categories. At the same time, funds that are integrating environmental, social and governance criteria in their investment decisions are looking for these types of instruments to add to their portfolios.

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