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 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of their supply chains, even though the nation’s main chemical safety law, the Toxic Substances Control Act (TSCA), is outdated and hasn’t been reformed in nearly two decades.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
The 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.
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.
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
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.
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:
There 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
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.
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.
by Rachel Finan, student at the Johns Hopkins University School of Advanced International Studies
Experts predict that by 2025 Sana’a, Yemen will become the first capital city to run out of water. They predict that by 2030 India will need to double its water-generation capacity or face the same fate, and water supplies in Istanbul, one of the world’s largest cities, is at just 28 percent. Yet before any of those cities run dry (in far off developing countries that most people in the United States associate with water scarcity issues), it could be a U.S. city that runs out of water. And it’s not just the usual suspects in the Southwest who face increasingly serious water concerns. Miami, FL is the second-most vulnerable U.S. city in a drought according to a University of Florida Environmental Hydrology Laboratory study. Cities such as Cleveland, OH; Chicago, IL; and New York, NY follow not far behind.
Just last February, California state officials announced that 17 communities and water districts could run out of water in as little as 100 days. In Texas, that number more than doubles. Earlier this year state officials reported 48 communities were within 90 days of water interruptions; as of August 20th, there are 27 communities on that list. One small town in TX reportedly already has run dry.
This begs an obvious question; what are we doing about it? Additionally, what should we be doing about it – not just as a temporary fix, but as a long-term, strategic response? What would you do if water stopped coming out of your tap? Imagine if your town was one of the California or Texas communities with only 90 days of water left. As an EDF Climate Corps fellow, I’ve spent the last several weeks contemplating these questions and identifying opportunities for Texas-based institutions to not only conserve water, but to save money while doing so. I’ve been inspired by many examples throughout the state.
Last month, twelve major corporations announced a combined goal of buying 8.4 million megawatt hours of renewable energy each year and called for market changes to make these large-scale purchases possible. Their commitment shows that demand for renewables has reached the big time.
We're proud that eight of the twelve are EDF Climate Corps host organizations: Bloomberg, Facebook, General Motors, Hewlett Packard, Proctor & Gamble, REI, Sprint and Walmart. The coalition, brought together by the World Wildlife Fund and World Resources Institute, is demanding enough renewable energy to power 800,000 homes a year. And while it's great to see these big names in the headlines, they're not alone in calling for clean energy: 60 percent of the largest U.S. businesses have set public goals to increase their use of renewables, cut carbon pollution or both.
Companies want renewable energy because it makes good business sense: it’s clean, diversifies their energy supply, helps them hedge against fuel price volatility and furthers their greenhouse gas reduction goals. Renewables are now the fastest-growing power generation sector, and by 2018, they’re expected to make up almost a quarter of the global power mix. Prices of solar panels have dropped 75 percent since 2008, and in some parts of the country, wind is already cost-competitive with coal and gas.
by Susannah Harris, 2014 Climate Corps Fellow
I received quizzical looks from family and friends when I told them I was working on water efficiency projects at Verizon this summer. They paused, racking their brains about where water is used within the telecommunications industry. “Like in the bathrooms?” they’d ask.
Susannah Harris pictured here on site at Verizon headquarters in Basking Ridge, NJ
The reality is that domestic telecom companies rely on billions of gallons of water per year to cool, clean and maintain the buildings and equipment that support their expansive networks. And because customers require networks to operate 24 hours a day, 365 days a year, much of that equipment is running around the clock. From cooling tower adjustments to grey water recycling, there are a number of water-saving opportunities available for the telecommunications industry. Implementing these practices – thereby reducing municipal water, sewer and energy bills – can also make a noticeable impact on the company's bottom line.
As an EDF Climate Corps fellow, my job was to chart a path forward for Verizon’s water efficiency efforts. The company has already made significant strides to reduce its carbon intensity – by 37 percent through 2012 over a 2009 baseline. “Verizon is taking a deeper dive into water efficiency to save critical resources for future generations,” says James Gowen, Chief Sustainability Officer and vice president of supply chain at Verizon. “Reducing our utility bills and increasing the effectiveness of our assets is a win-win for our business and the environment.”
Here are some lessons learned from my time at Verizon, which I hope will help other professionals developing corporate water strategies. The key is to gain a better understanding of how and where your company uses water – a critical building block for an effective program: