Two years ago I had my first conversation with Stefan Karlsson, the Sustainability Compliance Manager for IKEA Purchasing Service (China) Co., Ltd. We talked about how IKEA was rethinking its business operations in order to green its global supply chain – and as the world’s largest go-to for affordable furniture – you can imagine how big a job that is. Right away, I could tell Stefan, and IKEA, was on to something big: encouraging hundreds of their suppliers to drive innovation and promote sustainability.
A goal, an opportunity and a partnership
IKEA isn’t unique in that it strives to provide affordable furniture. However, it is unique in that it strives to make products in ways that are good for people and the planet. That’s why in 2016, the company set a goal of encouraging its direct suppliers to become 20 percent more energy efficient by August 2017. As part of this target, IKEA initiated the Coal Removal Project – reducing coal use as a direct source from the energy portfolios of over 300 local supplier factories in China.
While a growing number of global oil and gas companies step up to reduce methane emissions, many operators in Canada have hesitated to take concrete action, perhaps waiting instead for federal and provincial regulations to address the issue.
EDF’s Sean Wright recently sat down with Jamie Bonham, Manager of Corporate Engagement at NEI, a Canadian investment firm based in Toronto with $6 billion in assets under management. Bonham is concerned many Canadian operators do not understand the full scope of their oil and gas methane problem, but says there is considerable opportunity for Canadian companies to exert leadership.
The demand for corporate transparency is here to stay. Just last year, 390 investors representing more than $22 trillion assets signed a letter in support of the Task Force on Climate-Related Financial Disclosures, advocating for a unified set of recommendations for corporate climate disclosure. So as financial markets increasingly recognize Environmental, Social, and Governance (ESG) risks, and increasingly embrace ESG strategies, oil and gas companies failing to report on environmental risks, like methane emissions, will be at a disadvantage.
Yet despite the reputational and financial risks posed by methane emissions in the oil and gas sector, over 40 percent of oil and gas companies analyzed in a new EDF report fail to report even basic information on methane management. The report finds that the quality and quantity of methane risk management reporting has increased amongst nearly 60 percent of companies analyzed. But the overall improvement has not been enough.
President Trump announced the outline of his long awaited infrastructure plan during his first State of the Union address Tuesday night. While broad bipartisan support exists for addressing the nation’s infrastructure needs, how to fund the $1.5 trillion plan continues to be a significant point of contention.
The president’s remarks confirmed rumors that have swirled for weeks about plans for leveraging federal dollars to catalyze public and private investment, and close critical infrastructure funding gaps. How these approaches materialize in a final plan is anyone’s guess, but after experiencing $306.2 billion in natural disaster-related damages in 2017, one thing remains abundantly clear, an infrastructure plan that fails to integrate and prioritize resilience and sustainability will lock the U.S. into a costly business-as-usual development pathway that makes us ill prepared for a changing climate. Unfortunately, the risks posed by rising sea levels and extreme storms are only the tip of the iceberg. A new report from Moody’s warns cities and states of potential credit downgrades from failing to develop climate adaptation and mitigation strategies.
The U.S. faces a $2 trillion infrastructure funding gap through 2025. Failing to close this gap has serious economic consequences including losses to GDP, business sales, and jobs. The American Society of Civil Engineers estimates failing to close the infrastructure investment gap costs US families $3,400 in disposable income per year. Filling this gap will not only require active partnership and collaboration between the public and private sectors, but also a commitment to inform our infrastructure investment decisions with the latest available science and technology. Infrastructure that integrates principles of sustainability and resilience fits that bill.
“Out of the mountain of despair, a stone of hope.” -Martin Luther King
Feeling down about our planet in 2018? Don’t!
There are many reasons to be hopeful around environmental action in the new year – and if the following developments don’t make you feel better, I’ve prescribed some action steps at the end that are guaranteed to set you on a healthier, happier path.
Don’t get me wrong, I know full well that 2017 was a hard year for the planet. I’ve lost count of the hurricanes, floods, droughts and fires—many linked to climate change—that rained upon us. It was a record-setting toll on the U.S. in 2017, with 16 enormous weather and climate events costing a total of $306 billion in damage (not sure how to calculate the emotional cost).
In closing out 2017, we are energized by successes in our work with oil and gas industry partners. And as we look forward to a new year and a fresh start, here are five things we’ll be looking for as industry leaders step up methane action in 2018.
This year, 10 leading companies through the Oil and Gas Climate Initiative supported the ambition of achieving “near zero” methane emissions, and committed to set quantitative methane targets in 2018. This was an important and welcome moment as CEOs upped their methane pledge. 2018 will be a key year for follow through in establishing and announcing those targets. We will look for targets that are ambitious, innovation-forcing, and linked to credible plans for verification. We will also look that this action addresses emissions from both oil and gas production, as the International Energy Agency’s data shows that more methane emissions comes from oil production than from gas production.
Two big developments this month suggest that investor interest in climate-related financial risk is at an all-time high. The first is Climate Action 100+, a new initiative led by Ceres and 225 investors with more than $26.3 trillion in assets under management to strengthen climate-related financial disclosures among the world’s largest corporations.
As investors work to increase reporting on climate risk, methane emissions will be top of mind. Methane, the main component of natural gas, is 84 times more potent than carbon dioxide when released to the atmosphere over a 20-year period – and is responsible for 25 percent of the warming we’re experiencing today.
That’s why the second development, this year’s Disclosing the Facts report, departed from its normal broad survey of chemical, air, water and community impact risks facing U.S. gas producers to do a deep-dive on methane reporting. (Full disclosure: I’m an acknowledged reviewer of the report.) The report is a joint effort between As You Sow, Boston Common Asset Management, and The Investor Environmental Health Network.
The report poses 13 questions that span both quantitative metrics and qualitative narrative with the aim of testing whether companies report a thorough, systematic approach to methane management. The disclosures of 28 U.S. producers are evaluated against these parameters and a company can earn one point for each of the 13 questions posed.
What is a leading opportunity for states to create energy security, job growth and economic development with their public dollars?
The answer? A public financing institution that can engage effectively with private sector players to meet them on their own terms – addressing real barriers and providing the right types of capital needed to make clean energy projects investable.
Take Connecticut for example. In 2011, the state established the nation’s first state green bank, the Connecticut Green Bank (CGB). Over the last six years, CGB has used $174.6 million of ratepayer funds to attract $914.8 million of private investment in clean energy for a total investment of $1.1 billion. These investments have supported the deployment of 234.4 MW of renewable energy, created thousands of jobs, and reduced an estimated 3.7 million tons of CO2 emissions over the life of the projects.
Now, there’s an immediate opportunity for companies to show leadership on climate change here at home: speaking up in defense of the Clean Power Plan, which the current Administration wants to eliminate but is still very much in play.
Here are three reasons for your business to publicly defend the Clean Power Plan before the EPA comment period ends on April 26, 2018.
After the United Nations Climate Change Conference in Paris (COP 21) in 2015, where the historic climate accord was established, it was near impossible to imagine a future COP where the US federal government wouldn’t play a central role. Yet now, at COP 23 in Bonn, Germany, the US government doesn’t have an official presence at the event – for the first time ever.
To fill the void of federal policy action, companies and organizations from across the US are voicing their support for the Paris agreement at the U.S. Climate Action Center, a pavilion sponsored exclusively by non-federal US stakeholders.
The Climate Action Center is an initiative of the We Are Still In coalition of cities, states, tribes, universities, and businesses that are committed to the Paris Agreement. Thus far over 1,700 businesses including Apple, Amazon, Campbell Soup, Nike, NRG Energy and Target have signed the We Are Still In declaration – evidence that public climate commitments are quickly becoming the norm.