Methane Emissions are Risky Business for Investors

No one likes uncertainty, least of all investors. From changes in interest rates, to supply chain disruptions, the list of risks investors must monitor is long and growing. Good, actionable information is investors’ most important tool for risk management and integral to successful investing. Without proper data, investors are flying blind.

Rising-Risk-coverA new report published by EDF this week  throws the spotlight on a growing risk for investors—methane emissions from the oil and gas sector. As so clearly demonstrated by the ongoing and massive leak at Aliso Canyon, methane emissions pose a multitude of expanding risks, with both short and long-term consequences.

Three key risks from oil & gas methane

At 84 times more powerful than carbon dioxide in the short-term, methane emissions represent a potent and fast-emerging form of carbon risk. In a world looking to reduce carbon pollution, methane emissions pose regulatory, reputational and economic risks. Preparedness to comply with forthcoming rules varies across the industry, methane undercuts natural gas’ ability to play a role in a carbon-constrained world, and emissions of methane are lost product amounting to $30 billion a year globally.

Investors should be asking themselves these questions:

  • Do you know how much money your oil and gas companies are losing?
  • Do you know if they have a plan to reduce emissions to limit impacts?
  • Do you know how prepared they are to comply with forthcoming regulation?

It’s difficult to find out, and that’s a problem. Read more

KKR Expands Its Green Portfolio by Shepherding Green Solutions

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.


We’re proud to see the Green Portfolio Program, an initiative we helped kickstart in 2008 with private equity firm Kravis Kohlberg & Roberts (KKR), evolve to identify and implement more efficient practices in its portfolio companies that drive business value and reduce environmental impacts. Last week, KKR relaunched this initiative as the Green Solutions Platform (GSP), expanding its mission to include companies outside of its private equity portfolio, as well as a wider range of business and environmental benefits.

kkr_logo_13932KKR announced a shift in its investment strategy in its latest ESG report, and the relaunch of the GSP gives us a first glimpse into what that means in practice. The GSP’s scope has expanded beyond finding energy, water and waste reductions – what KKR refers to as “eco-efficiency projects” – to include portfolio company projects that can drive both top-line and environmental gains (“eco-innovation”) and companies whose core business drives a positive environmental impact (“eco-solutions”).

Much like GE with its Ecomagination product line or social enterprises focused on delivering renewable energy or clean water, the GSP’s new direction has the potential to support business activity that, by its nature, curbs climate impacts and creates value for communities and companies alike.

In just eight short years, 27 KKR portfolio companies reported that they achieved nearly $1.2 billion in avoided costs and added revenue, and avoided more than 2.3 million metric tons of greenhouse gas emissions, 27 million cubic meters of water use, and 6.3 million tons of waste through eco-efficiency efforts. We’re heartened to see an already-forward looking firm push its boundaries further in the pursuit of greater environmental gains, and look forward to seeing what innovations emerge from the Green Solutions Platform.

How helping a multi-billion dollar company (aka Walmart) is like raising a child

When it comes to Walmart meeting its greenhouse gas goal, parenting and sustainability have more in common than you think.

Notes from the Nursery/Eco-Business Nexus

I’m proud to say that Walmart just announced that they’ve not only hit but surpassed a goal that was, at the time, considered nothing short of audacious: to reduce global greenhouse gas emissions (GHG) by 20 million metric tons (MMT) in just six years.

So why am I proud? Two reasons.

First, I’ve worked alongside them every step of the way. Environmental Defense Fund (EDF) has been Walmart’s lead partner throughout this process, and as a Supply Chain specialist for EDF, I know first-hand the massive amount of research, measurement, innovation, collaboration and communication that has gone into bringing this goal across the finish line.

Second, I’m a brand new mother – and as I stare down into my 5-month-old daughter Helen’s eyes, there’s nothing I care more about than ensuring she grows up in a world that is on course to thrive—both economically and environmentally.  Walmart’s achievement gives me hope for both.Helen and Jenny

So, yes, I’m proud. Because while it may seem that my two unique perspectives—one from the nursery, one from inside the halls of the world’s largest retailer—are worlds apart, they actually have a lot in common. Read more

Walmart Vaults Past Fleet Efficiency Goals Ahead of Schedule

It’s one thing to reach a goal, stop and toast your success. But in the case of Walmart’s announcement yesterday, the finish line became a mile marker and now the company is looking at how much farther it can go.

In 2005, we worked with Walmart to set its first long-term freight goals – to increase its fleet efficiency by 25 percent by 2008 and then to double it by 2015. Walmart cleared the first goal with room to spare and announced yesterday that it has not only doubled fleet efficiency but is now on track to go further – and in the process, will avoid almost 650,000 metric tons of CO2 and save nearly $1 billion in this fiscal year alone.Trucks-Walmart

It’s a testament to the holistic approach Walmart’s taken to improve the efficiency of its fleets. The Walmart sustainability team started by choosing a specific metric of cases shipped per gallon burned in 2005 – shipping the most cases of goods the fewest miles using the most efficient equipment – and then attacked the problem from all sides to get it done.

As companies work to increase the efficiency of their freight moves – taking steps on their Green Freight Journey – it’s tempting to choose one area to work on at a time. But by choosing a few key areas to focus on – developing innovative solutions for loading, routing and driving techniques, and collaborating with tractor and trailer manufacturers on new technologies – Walmart was able to bolster freight efficiency along its supply chain at multiple points. Read more

Climbing Toward Corporate Sustainability, Even Walmart Can’t Do It Alone

ElizabethSturcken-(2)_287x377Ten years ago, the CEO of Walmart and the president of Environmental Defense Fund hiked together on Mount Washington in New Hampshire. Along the way, Lee Scott of Walmart (now retired) and Fred Krupp of EDF talked about climate change and the environmental challenges of our time. They also talked about ways that Walmart could drive positive environmental change in its product lines and operations.

The hike turned out to be the start of a ten-year journey of collaboration between Walmart and EDF, one that has helped define a new model of corporate sustainability.

In a speech that year, Lee Scott laid out three aspirational goals:

“Our environmental goals at Walmart are simple and straightforward:
1. To be supplied 100 percent by renewable energy.
2. To create zero waste.
3. To sell products that sustain our resources and environment.

These goals are both ambitious and aspirational, and I’m not sure how to achieve them…..at least not yet. This obviously will take some time…”

Lee Scott, Oct. 23, 2005

Now, on the ten-year anniversary of the 21st Century Leadership speech, EDF is taking a moment to take stock of how far this journey has taken us and the distance left to travel.

First, what have we achieved? Here are three of our proudest accomplishments:

EDF and Walmart - removing 20MMT of GHG from its global supply chain

Click to enlarge

1. Today, Walmart is announcing that it will surpass its aggressive goal of reducing 20 MMT of greenhouse gas emissions from its supply chain. In total, Walmart will reduce 28 MMT of GHG from its supply chain by the end of 2015. To achieve this goal, Walmart tackled a diverse range of projects: from helping end consumers through improving products like LED light bulbs; to creating a Closed Loop Recycling fund, and changing food date labeling to reduce waste; and working with EDF to conserve fertilizer use on over 20 million acres of U.S. farmland.

Overall, the 20 MMT reduction of GHG from Walmart’s supply chain is the equivalent of getting almost six million cars off the road.

Yes, EDF pushed Walmart to set this goal; but we also worked side by side with them to achieve it. It is this type of long-term collaboration that drives results at scale, an achievement foreshadowed by EDF president Fred Krupp when he said, "When you can get big companies to do important things, you can change the world."

2. In 2013, Walmart put a chemicals policy in place that is phasing out chemicals of concern in over 100,000 home and personal care products like laundry soap and shampoo. Private brand products now list all of their ingredients online so consumers have more transparency into what chemicals they are using in their home and on their bodies.

3. EDF and Walmart helped create the Sustainability Index, a tool powered by The Sustainability Consortium (TSC) that has evaluated billions of dollars of products on Walmart shelves. To date, 70% of Walmart suppliers have filled out the Index. Read more

Cameras, Drones and Lasers: How They're Tackling Oil and Gas Pollution

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Heath Consultants' methane-measuring drone

Dr. Jason Gu was still a graduate student when he developed the technology behind SenSevere, a start-up that creates laser-based gas sensors for use in heavy industry and power plants. Today, he’s working to apply this technology to methane emissions from the oil and gas industry, making him one of the many entrepreneurs developing solutions to tackle the problem. His fascination with innovation isn’t just making his clients more efficient—it may also be saving the planet.

The hidden cost of methane

Methane, the main component of natural gas, is a powerful pollutant responsible for a quarter of the global warming we feel today. The oil and gas industry releases 7 million tons of it into the atmosphere every year through emissions from oil and gas fields and associated pipelines, resulting in over a billion dollars’ worth of wasted American energy resources. And, toxic chemicals like benzene, a known carcinogen, can accompany methane emissions, posing a potential threat to public health.

“The industry is beginning to become more sensitized to the fact that methane is an aggressive greenhouse gas,” said James Armstrong, president of Apogee Scientific, a Colorado-based methane mitigation company. For more than 15 years, Apogee has manufactured a methane detection system that uses a vacuum and infrared sensors and can be mounted to trucks, ATVs and helicopters to identify leaks in the field. “If you find the leaks and repair them, you’re not only helping the environment…you’re extending the resource.” Read more

Innovations in Sustainable Finance: The View From SOCAP15

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.


SOCAP logoI recently returned from SOCAP15, an annual conference “at the intersection of money + meaning”… in other words, a good place to be if you’re interested in how to harness markets to deliver financial, as well as social and environmental, returns. A record 2,600 attendees turned up this year, evidence of the growing interest in sustainable finance.

The increased focus on this space has triggered a wave of innovations aimed at addressing some of the sector’s key challenges, such as building and supporting a pipeline of investible entrepreneurs, securing sufficient demand from investors, and linking those players so that capital can flow efficiently to provide the greatest impact. It’s a challenging road ahead, but the conference offered important proof points that help show the way forward.

Growing support for entrepreneurs

Now is a very good time to be a social or environmental entrepreneur. We are witnessing a growing array of resources, services, and incubator and accelerator programs aimed at kick-starting ventures and preparing them for investment. One exciting example: Agora Partnerships hosted 20+ “deal rooms” at this year’s conference, offering Latin American-based entrepreneurs who had completed Agora’s intensive six-month accelerator program the chance to pitch to interested investors. Last year, these deal rooms resulted in eight investments, ranging from $50,000 to $500,000. EDF is in the early stages of engaging with Agora as we look to scale our sustainable fisheries finance work in Latin America.

Increasing demand from investors

Investor demand is rising to meet the growing supply of social and environmental ventures. A recent survey by US SIF – The Forum for Sustainable and Responsible Investment shows that U.S.-based sustainable, responsible and impact investing assets grew 76% from 2012 to 2014. Another driver of demand is the growing trend of big banks, such as Citi, Goldman Sachs, and Bank of America, committing to increased investment in environmental innovation.

The demand extends beyond banks and institutional investors – to individuals, foundations, and companies, all of which have roles to play. During a panel discussion, Sasha Dichter, Chief Innovation Officer of Acumen Fund, an international nonprofit venture fund, noted a recent shift in how companies invest in their supply chains to build more sustainable businesses: moving from funding initiatives to becoming more deeply engaged, strategic partners. He cited the example of Acumen’s partnership with Unilever and Clinton Giustra Enterprise Partnership, which will improve the livelihoods of up to 300,000 smallholder farmers globally by investing in enterprises to support farmers and incorporate them into Unilever’s global supply chains. Read more

How Fast is Fast Enough to Solve a Challenge Like Methane?

aileen_nowlan_31394Bill Gates, in an interview with The Atlantic, reminded us that if Thomas Edison were alive today, he’d probably recognize a lot of our energy infrastructure – batteries and most coal plants, for example. Gates argued in the interview that we need to drastically speed up the pace of innovation to bring our energy infrastructure out of the Victorian era. But how do we change how we make and use energy? It touches everything we do, but in less than a decade we will be living, working, and traveling differently.

That’s where I – and EDF – come in.  I joined EDF this fall after working as a lawyer, consultant and accelerator for business-social collaborations, and I’ve found that it takes all kinds of skills and experiences to set ambitious targets and turn the impossible into the inevitable. From energy retrofits for churches to starting a clean energy incubator with global energy companies, I’ve attacked the challenge of achieving a low-carbon future from many angles. I’ve been drawing on all of that experience since joining EDF, at what’s proving to be an exciting time for climate change leadership.

Methane: a challenge we have to tackle today

One area where we know we have to innovate – like people stranded on a desert island – is methane emissions from oil and gas. Methane is the most powerful greenhouse gas that almost no one has heard of. And more importantly from a climate perspective, methane emissions from the oil and gas industry are cheap to eliminate, if you can find them. The recently-announced regulations on methane emissions from the oil and gas industry won’t take us all the way to the 40-45% reduction in methane emissions the administration has set as a priority. We need action at hundreds of thousands of oil and gas facilities, and that’s just for U.S. onshore oil and gas. Worldwide, methane leaks amount to 8% of global greenhouse gas emissions in 2012, or the equivalent of 40% of the total CO2 emissions from burning coal.

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How do you innovate fast enough to attack this challenge? One approach we at EDF have taken with the Methane Detectors Challenge is to identify a need – invisible methane leaks – and envision a tool that didn’t yet exist that could enable the action we need – operators finding and fixing leaks faster. The ultimate goal is to make tools like that a reality, and bring to market continuous methane detection systems that are so affordable they can be deployed throughout the oil and gas supply chain. Read more

How Campbells is Helping to Make Sustainable Growing the New Normal

There’s a lot of momentum in the sustainable agriculture world. We helped Walmart discover that fertilizer runoff is a significant source of greenhouse gas emissions in its supply chain, and they’re now working with suppliers to improve the way grain is grown across the U.S. That’s because half of all fertilizer applied to crops runs off the field, leading to water pollution, aquatic dead zones that kill marine life, and contributing to climate change – since the nitrogen in fertilizer runoff converts to nitrous oxide, which is 300 times more powerful than carbon dioxide.

Major food companies are also recognizing that increased weather variability from climate change can cause supply chain disruptions, that their customers are demanding transparency for how their food was grown, and that it’s in their best interest to meet retailers’ demands for sustainably grown grain.

Campbells

That’s why Campbell’s Soup has focused on growing its vegetables as sustainably as possible, and why its Pepperidge Farm subsidiary is now investing in wheat sustainability in their Ohio and Nebraska sourcing areas.

My colleague Suzy Friedman, director of agricultural sustainability at EDF, recently interviewed Dan Sonke, manager of agricultural sustainability at Campbell’s, to get his take on this unprecedented momentum. Below are the highlights of their conversation on why his company is working with farmers to reduce environmental impacts, what they’re hearing from customers, and about why sustainable grain is becoming the new normal. Read more

Leadership + Collaboration = Impact: The Equation That Will Lead to Climate Solutions

Hand of a student pointing at green chalk board2015 has been an exciting year for action on climate and energy management. In the EDF Climate Corps network, there is a strong feeling of momentum, as company after company steps up to answer the call on climate action and demonstrates concrete ways that they are greening their energy programs. Looking around at last week’s Energy Solutions Exchange (ESE), which brought together 150 people from top organizations to share stories and insights, I was struck by all of the connections and interactions taking place in the room.

But if I learned anything from this year’s event, it’s that in order to continue this momentum and create lasting impact, we need to form a new equation: leadership + collaboration = impact. Leadership and collaboration are essential as there is a limit to how far we can get by ourselves – to get the big stuff done, we have to work together.

Companies are leading, but they need to talk about it more

I learned from our dynamic speakers that organizations are doing amazing things in energy management: like pioneering microgrid installations, scoping out solar PPA agreements, and scaling LED and VFD retrofits across their operations, yet many more are doing things that we don’t even know about.  To truly lead in this space, we need companies to start talking about their concrete energy solutions. Read more