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

Start Your Green Freight Journey with EDF

Many leading companies are creating business value today by cutting carbon emissions from freight moves. These companies, such as Walmart, Ikea, Unilever and Ocean Spray, are following a similar path, one we at EDF are calling the Green Freight Journey, a five-step framework for freight optimization projects.

Sign up to learn more about the Journey.

Define the path. Then take a step. Then take another.

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Companies start by taking the nebulous concept of sustainability and making it mean something specific and material to their company, for example, “we are going to use fuel more efficiently." They create specific metrics to track this objective, such as product moved per gallon of fuel consumed, or emissions per ton-mile.

Next, these companies develop pilot green freight projects to test out that objective, using the metrics they chose to evaluate the projects’ efficacy. The projects that deliver financial and environmental returns are scaled up and those that don't are redesigned or scrapped.

Leaders have a critical role to play in this process as well: they create long-term improvement goals for their company’s key metrics. This enables them to focus day-to-day on continuous improvement, and it inoculates them against the siren call of “big shiny object” projects – ones that might be good for a press release but won’t move the needle on their metrics.

By taking these steps, companies advance along their Green Freight Journey, and along the way, cut costs and emissions.

Now it’s your turn.

Every company that uses the freight system to move products to market has opportunities to reduce operating costs and greenhouse gas emissions by taking a Green Freight Journey. Join me on January 14 at 12PM ET for a webinar that will introduce you to the Green Freight Journey framework, review real-world case examples and highlight tools EDF is making available to help companies progress on their journey.

During the webinar, participants will:

  • Be introduced to the steps of a Green Freight Journey and receive tips for success on each;
  • Hear real-world examples of companies that have cut emissions and costs by optimizing freight moves;
  • Review existing tools, including a green freight benchmarking survey and the EDF Green Freight Handbook; and
  • Learn how an EDF Climate Corps fellow helped Ocean Spray Cranberries identify new green freight opportunities.

Register here today for this informative webinar.

Oak Hill Capital Continues to Chart the ESG Course for Middle-Market Private Equity Firms

Last year, Oak Hill Capital Partners released its inaugural environmental, social, and governance (ESG) performance report. While you may have read about similar reports from private equity firms like KKR and The Carlyle Group on this blog, Oak Hill Capital’s report was significant because it were first among U.S. middle-market private equity firms to publicly release an ESG performance report. In doing so, the firm increased transparency and offered other mid-market firms a blueprint to follow. Last week, it issued its second annual report, offering an inside look at the firm’s progress to date.

Oak Hill Capital Partners logoA comprehensive approach

In its new report, Oak Hill Capital outlines its approach to ESG management, measuring progress in integration, results and leadership: three of the key building blocks for a successful ESG management program that are included in our ESG Management Tool for private equity.

For Oak Hill Capital, integration refers to the ways it embeds ESG management practices across the firm’s operations to ensure it can best deliver results at portfolio companies. Key examples from the report include its responsible investment policy, incorporation of ESG in due diligence, and its recently becoming a signatory of the United Nations Principles for Responsible Investment (UNPRI). Management of environmental performance is also woven into the management of the firm, through its ESG Committee, which is made up of senior executives and chaired by Oak Hill Capital’s general counsel.

Results speak to how the firm evaluates the ESG performance of potential new investments and how it tracks and supports the sustainability efforts of portfolio companies. This year’s report includes how the firm considered ESG factors in the due diligence process of three new investments and how existing portfolio companies have benefited from the firm’s expertise in ESG issues. One example is an energy efficiency project Oak Hill Capital initiated at its portfolio company, Dave and Buster’s, with Entouch Controls, a leading energy management solution for restaurants and schools.

Lastly, Oak Hill Capital takes a broad approach to leadership, both within the industry and in the communities in which it operates: promoting lessons learned among similarly-sized firms, as well as engaging employees in business-focused mentorship opportunities.

A diverse portfolio of sustainability initiatives Read more

General Mills selects United Suppliers to increase fertilizer efficiency in the field

SUSTAIN-logo_circle_4c-300x300Isn’t it nice when somebody steps forward boldly to do the right thing and is rewarded for doing so? General Mills did just that for United Suppliers and the SUSTAIN platform, which will help farmers improve nitrogen use efficiency and productivity.
In July, General Mills put out a call for proposals to help the company meet increased production needs in ways that contribute to cleaner air and water.

It was almost like a future posting in sustainability want ads: “General Mills, a 17+ billion dollar food company, has the following need: Seeking best practices in nitrogen fertilization (nitrogen optimization) technologies for sustainable agriculture.”

The company recognized the pressing need to limit nutrient losses while also helping farmers produce more of the wheat, corn, soybeans and other crops it needs to make the products we buy.

And the winners are….

United Suppliers got the nod with its SUSTAIN platform. As I blogged earlier this fall, United Suppliers has really stepped out front with this platform, recognizing the growing  sustainability demands from retailers and food companies as a real business opportunity. They knew they were taking a risk when they reached out to Environmental Defense Fund last spring for help in developing a program to meet the changing needs of the supply chain.

If they built this program, would anyone care? Would their owner retailers sign up to implement the program? Would food companies want to use it?

Well, we still have a long way to go. But the signs are good, and this success with General Mills is a big step forward. General Mills saw the huge value in SUSTAIN, which includes nutrient use efficiency and soil health technologies, practices  and products, as well as the extensive training and implementation infrastructure needed to take it to scale.

The other winner of the General Mills competition was Adapt-N, a breakthrough nitrogen use efficiency platform that is also included in SUSTAIN.

Ramping up

This winter will be very busy with grower meetings and trainings for the agronomists and owners of participating ag retailers and cooperatives, as well as deployment of the robust data platform needed to maximize value back to the ag retailers and growers and aggregate data for supply chain reporting.

We are very excited to see SUSTAIN become part of General Mills’ work to meet its goal of being 100 percent sustainably sourced by 2020 for its 10 priority ingredients. These ingredients – corn, oats, wheat, dairy, fiber packaging, cocoa, vanilla, palm oil, sugar cane and sugar beets – represent half of the company’s total raw material purchases.

The commitment builds on the company’s sustainability mission to conserve and protect the resources upon which its business depends. Currently, General Mills has five regional sustainability engagements for commodity crops using the Field to Market continuous improvement framework , and it will deploy SUSTAIN and Adapt-N across these regions.  These programs will support General Mills’ primary purpose in advancing agriculture sustainability and grower profitability.

This post was originally published on EDF's Growing Returns blog.

It’s Got to Be About What You Do: KKR’s Green Portfolio Program Matures

Ken Mehlman, KKR

Ken Mehlman, Global Head of Public Affairs, KKR

Last week in Atlanta, Kohlberg, Kravis & Roberts (KKR) Member and Head of Global Public Affairs Ken Mehlman summed up his approach to sustainability in a single sentence:  “it’s got to be about what you do.” The comment was in response to a panel that EDF moderated at KKR’s first annual sustainability summit, where guest panelists Jeff Foote from Coca-Cola, Mitch Jackson from FedEx, and Maury Wolfe from Intercontinental Hotels Group shared their successes and challenges in improving their organizations’ environmental performance. Ken highlighted a common theme in all three panelists’ remarks: for a company’s work on sustainability to have a real impact, it needs to be integrated into its core business model.

KKR has clearly taken the same lesson to heart. By integrating environmental, social and governance (ESG) issues into how it evaluates and manages portfolio companies, KKR has shown what that thinking can achieve for a private equity firm and its portfolio companies. Read more

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

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.

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.

Read more

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.

Read more

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