No “alternative facts” needed: leading on sustainability is smart business strategy

A Businessman is looking out the window in a modern panoramic meeting room in New York. The concept of the meeting of the Board of Director of the huge transnational corporation.

For the people who dedicate their lives to helping keep the planet livable, it’s hard to wrap one’s mind around our new weird, warped, post-election world. Every day seems to bring some new government official denying facts and science (aka reality), or doing unthinkable damage to the suddenly-less-venerable institutions they now lead.

As someone who has a 20-year track record of working side-by-side with the private sector to create positive environmental change, I can just imagine how anxious business executives must be feeling these days. The specter of a three a.m. tweet from the White House demanding that they run their company according to a Presidential whim, rather than the realities of the global marketplace (or the expectations of shareholders), can make for a lot of sleepless nights.

Unlike certain “business-executive-Presidents", however, real CEOs have to be fact-driven.

And the forward-thinking executives—the ones who are thinking hard about the long-term growth, profitability and resiliency of their companies—are well aware of the facts. They know that human-caused climate change is real, and carries with it huge costs. Executives selling food grown in rapidly changing landscapes and/or products dependent on materials from across the globe aren’t playing in a fantasy world where climate change is a “hoax invented by China.”

And they know that how we deal with climate change will determine whether we will be a driver or a destroyer of business value. As a peer-reviewed study in the journal Nature recently found (and the New York Times reported): "even if the world is able to stave off an increase in atmospheric temperatures of 2 degrees Celsius or 3.6 degrees Fahrenheit — a goal agreed to as part of the Paris deal — climate change could wipe out $1.7 trillion worth of global financial assets."

So, I’m hopeful that, at least in terms of sustainability, the rational decisions being made on Wall Street will act as a counter-balance to what appears to be erratic decisions coming out of Washington. Consider just a few of the recent announcements and actions of the private sector:

  • In just the past 3 months, Google, Microsoft, Pepsi, Smithfield Foods, Walmart and many others have continued to lead the way and prove what’s possible through bold, science-based goals, investments in clean energy and expanded efforts to drive down emissions in their operations and supply chains.
  • At the recent World Economic Forum (WEF) in Davos, Unilever CEO Paul Polman said “to make America great again, climate action is very logical. This is a very convincing story for job creation and economic growth.” My colleagues at EDF Climate Corps back this up with data; the sustainability sector is booming with jobs that 1.) can’t be outsourced, and 2.) are readily available in all fifty states.
  • A WEF report on the future of retail talks about “the golden age of the consumer” and the implications and opportunities that are created for sustainability by addressing how goods are delivered—what is called the “last mile of delivery”—and how products are packaged.
  • Commenting on that same report, Walmart CEO Doug McMillon pointed out that sustainability will impact retail in ways far beyond logistics and packaging: in this age of social media sharing, the push for transparency in supply chains will be customer-driven. McMillon knows that “retailers will only survive if their business creates shared value that benefits shareholders and society.”
  • Finally, in a recent op-ed entitled Why Walmart is doubling down on its commitment to climate change, Walmart board member Rob Walton, gave a simple answer: because it’s good for business! “We set [our climate goals] because we wanted to help address climate change and improve lives, while also strengthening our company and reducing expenses,” he said. “We thought it would be a win-win: good for society, and good for Walmart.  Eleven years later, that's exactly what we've seen.”

    Elizabeth Sturcken, Managing Director, EDF+Business

    Elizabeth Sturcken, Managing Director, EDF+Business

That’s a long list—and one that adds to the mounting evidence that corporate America “gets it”:

momentum for business leadership on sustainability is here to stay. Which is in no way surprising, because after my many years of working with business, I’ve seen firsthand the immense value creation that comes with moving forward—not backward—on environmental issues.

So, for all that has changed in these times of “alternative facts,” those who care about having a livable, thriving planet can feel confident that they have a powerful ally in business. Because when it comes to our climate, our health and our planet itself, if we’re not making progress, we’re losing.

Target moves up the safer chemicals leadership ladder

Yesterday Target announced a new chemicals policy that applies to all products sold in its stores and to its operations. Does this policy have the capability to transform the marketplace by ushering in safer affordable products? Let’s take a look.

In the new policy, Target announces aspirations and time-bounded goals framed in three major areas: transparency, chemical management, and innovation.

On transparency, Target has surpassed its competitors by committing to gain not only full visibility into the chemicals in final products but also into chemicals used in manufacturing operations. Target also takes a leadership stance by aspiring for this full material disclosure across all product categories. This goal is significant and noteworthy, considering the number and variety of products (and associated manufacturing processes) at the average retail store. Target will first implement this transparency goal in “beauty, baby care, personal care and household cleaning formulated products by 2020”. In one drawback, Target is quiet regarding if and how this enhanced supply chain transparency will translate into greater ingredient transparency to consumers.

In the second area, chemical management, Target vows to implement a hazard-based approach to prioritize chemicals. It announces the use of hazard profiles – which characterize the inherent health and environmental hazards of chemicals – in judging which chemicals get added to Target’s new Restricted Substances Lists (RSLs) and Manufacturing Restricted Substances Lists (MRSLs), for future reduction and/or removal. This approach is critical to fostering safer product design and is in line with the philosophy of the Commons Principles for Alternatives Assessment, guiding principles EDF helped develop.  To kick off this work, Target outlines chemical and product specific goals: removal of PFCs and flame retardants from textiles by 2022 and removal of formaldehyde and formaldehyde donors, phthalates, butyl paraben, propyl paraben, and NPEs from the formulated product categories mentioned above by 2020.

Finally, Target commits to directly support safer chemicals innovation. In doing so, Target has shown its understanding that eliminating hazardous chemicals from the consumer product value chain is half the battle; promoting the development or discovery of safer alternatives and enabling their usability in products is as important. Specifically, Target pledges an investment of up to $5 million in green chemistry innovation by 2022.

Target also pledges to publicly share progress against its new policy on an annual basis. We look forward to this regular engagement of the public and hope it will include quantitative measures of progress.

EDF commends Target for establishing a corporate chemicals policy, making it ambitious, and stipulating time-bound goals in specific product categories. Target continues the emphasis on beauty, home and personal care, and baby products that it initiated in 2013 with its Sustainable Product Index. New to the fold is action on safer textiles. In another welcome development, Target has publicly released a key set of chemicals of concern that it plans to remove from these product categories. Interestingly for formulated products, Target’s starting list of chemicals for removal is very similar to the initial set of high priority chemicals Walmart disclosed in 2016. With the two largest retailers in the U.S. not slowing down on safer chemicals leadership, the future of the marketplace looks healthier.  Will other retailers finally follow suit?

As Trump signals a rollback on environmental regulations, a new jobs report indicates that may not be such a good idea

Jobs coverPresident Trump’s regulatory freeze that halted four rules designed to promote greater energy efficiency appears to be just the first salvo in an ongoing plan to roll back environmental protections and slash environmental budgets. While that is obviously foolish from an environmental perspective, it is also problematic from an economic/job creation standpoint.

As program director of EDF Climate Corps, I have daily insight into how businesses are accelerating the transition to a clean energy economy while hiring the next generation of talented, motivated leaders – which is a good thing, because they’re needed.

Our new report, Now Hiring: The Growth of America's Clean Energy & Sustainability Jobs, underscores this trend. As the economy becomes more sustainable and energy efficient, a new market for clean energy and sustainability jobs is created. This market is large, growing and intrinsically local. Even better, these jobs span across economic sectors, including renewable energy, energy efficiency and other green goods and services, like local and state government, transportation and corporations.

The report revealed three key trends as sustainability jobs continue to grow across the country:

  1. Sustainability jobs represent a large and growing portion of the U.S. workforce across multiple sectors.

This isn’t a small, niche workforce. In fact, it’s outpacing the rest of the U.S. economy in growth and job creation. Solar employment opportunities alone are currently growing at a rate 12 times faster than the rest of the U.S. economy. And, they are generating more jobs per dollar invested–more than double the jobs created from investing in fossil fuels. Sustainability now collectively represents an estimated 4-4.5 million jobs in the U.S., spanning energy efficiency and renewable energy, to waste reduction and environmental education.

  1. Due to the on-site nature of many renewable and energy efficiency jobs, these jobs cannot be outsourced, and can pay above average wages.

 These aren’t just any jobs; they are well-paying, local opportunities that bolster our domestic economy. Most renewable and energy efficiency jobs can be found in small businesses, requiring on-site installation, maintenance and construction, making them local by nature. And, many pay higher than average wages. For example, energy efficiency jobs pay almost $5,000 above the national median, providing rewarding employment options to all Americans–even those without college or advanced degrees.

  1. Clean energy and sustainability jobs are present in every state in America.

The entire country has benefitted from the boom in clean energy and sustainability jobs, which has employed workers in every state. Energy efficiency alone provides 2.2 million jobs, spreading out across the nation.

Continuing the Momentum

So how do we continue this momentum? Investments in clean energy and sustainability pay off in the long run and foster a stronger economy—that equals more jobs and a cleaner future. This is why businesses are increasing their investments in sustainability. A recent survey found that three quarters of firms now have dedicated sustainability budgets, and even more have hired additional sustainability staff. But that doesn’t surprise me. Corporate America understands that prosperity and a low-carbon economy go hand-in-hand, and should continue to support investment in this area.

Policy makers at the local, state and federal level must also recognize the positive economic impacts of this new job class and support the policies and programs that encourage growth and investment in renewable energy, energy efficiency, green transportation and more. Efforts to roll back or weaken environmental and energy policies will negatively impact current and future U.S. jobs, while slowing clean energy innovation.

If the question is how to help both the environment and the economy, we don’t have to search for the answer: it’s already here. America is transitioning to a clean energy future—we can’t afford to stand in its way.


Additional Reading:

Will the new President flunk the climate business test?

China is going all-in on clean energy while the U.S. waffles. How is that making America great again?


Follow Liz Delaney on Twitter, @lizdelaneylobo


 

Will the new President flunk the climate business test?

The climate business test for TrumpFive years ago I turned in my laptop and brought my business consulting experience to Environmental Defense Fund. Some might see that move as making a break. I saw it as honoring a connection.

Public service may be the noblest calling. But it is also among the hardest. That’s why I believe business leaders have a role in government. Strong business leaders ask questions – and care about the answers. They consult experts who know more than them – and then solve thorny problems that matter to peoples’ lives. They take accountability.

So as a student of business, for much of my life I have casually told friends I would like to see an experienced business person in the Oval Office.

Now we have one.

As Donald Trump takes office, he must draw on the best skills represented in the business world.

Trump and his administration must make an urgent commitment on the economic issue of climate change and clean energy, before a problem worsens, accountability mounts, and the U.S., as the world’s second largest pollution emitter, is seen as a deadbeat on the global stage.

Trump’s handling of climate may well define his legacy, especially for generations of Americans to come.

Yet Mr. Trump has called climate change a hoax, nominated a climate skeptic to head our Environmental Protection Agency, and suggested he may pull the United States out of the Paris Climate Agreement.

We will learn a lot about the administration’s economic prowess by whether it remains lashed to a special interest agenda, or studies up and seizes climate action for the economic opportunity that it is.

The incoming administration should take a page from Gary Garfield – ex-CEO of Tennessee based Bridgestone. In an open letter to the President-Elect, Mr. Garfield observed: “A hasty decision on [leaving the Paris climate agreement], will likely isolate our nation, cede technology, innovation and jobs to China, and limit market access for our exporters.”

But it doesn’t have to be that way. Gary Garfield notes: “A decision to stay the course on climate and institute policies harnessing American ingenuity to create truly efficient clean energy technology — akin to the effort behind the Manhattan Project — will help drive both jobs and our economy for decades to come.” Mr. Garfield should know a business opportunity when he sees one; he grew profits at Bridgestone five-fold in six years.

And he is not alone. From technology to power, and investment to oil and gas, business leaders across sectors have pinpointed the urgency of addressing climate change, not just because it is the right thing to do, but because de-carbonization is one of the great economic opportunities in the 21st century:

  • “With tens of billions of dollars of U.S. renewable energy investment in the works this year alone, and far more globally, the question for American political leadership is whether they want to harness this momentum and potential for economic growth” – Jonas Kron, Trillium Asset Management
  • “We support [California’s] vision for a clean energy future and agree that we need to take action today to meet the challenge.” – Melissa Lavinson, PG&E Corporation
  • “In Statoil, we acknowledge that there is overwhelming evidence for human-induced climate change. Climate change is happening.”
  • “Finding more renewable and low-carbon energy alternatives and reducing energy intensity lowers operating costs and can enhance operational flexibility.” – Walmart

Low Carbon USAAnd there are scores more business leaders who recognize the data on climate change’s seriousness and recognize the responsibility – and the opportunity – their companies have to rise to the challenge. Over 600 business leaders wrote to Trump, Congress, and global leaders, to support continuation of low carbon policies, investment in the low carbon economy, and continued U.S. participation in the Paris Agreement.

There is no question that business leaders have spoken, and will continue to speak up.

Now the question is: Will Donald Trump have the business sense to listen and lead?


Additional reading:

Business won't back down on clean energy future

With a record $1.4 trillion in sustainability assets, investors bail on fossil fuels


Follow Ben Ratner on Twitter, @RatnerBen


 

New CSPI report investigates "clean label" foods, offers key recommendations

Slightly more than a third of Americans think “clean-label” products are free from artificial ingredients. About a third think it means organic or natural. And roughly a third of Americans don’t know what clean label means. For retailers, restaurants, and food manufacturers, that creates a challenging landscape – and one with few [1] defined guardrails.

Today, the Center for Science in the Public Interest (CSPI) released a new report, Clean Labels: Public Relations or Public Health?, that assesses efforts by four restaurants – Chipotle Mexican Grill, Noodles & Company, Panera Bread, and Papa John’s – and nine grocers – Ahold Delhaize (Food Lion, Giant Food, Stop and Shop), Aldi, H-E-B, Kroger, Meijer, Supervalu, Target, Wakefern (ShopRite), and Whole Foods  – to deliver what they interpreted a “clean label” product to mean. The report is well worth the read.

EDF agrees with the CSPI report statement that, “[m]ost substances added to food—even ones with long chemical names—are safe… But some are not, and many have been poorly tested. Indeed, the system intended to ensure the safety of ingredients added to food is deeply flawed.”

We also agree with CSPI that, “To the extent that clean label products are healthier than their non-clean label counterparts, because they are made with actual foods instead of cheap chemical imitations, they deserve praise. Still, the absence of artificial ingredients does not make a food healthy, since it could still be loaded with saturated fat, salt, or added sugars and be largely devoid of dietary fiber and nutrients.” For EDF, clean labels also provide no assurance about other unknown and hazardous food additives such as those used in packaging like perchlorate or that enter food during manufacturing and processing like phthalates.

What should make the report of interest to all engaged in the business of food, from those making it to eating it, are the well-substantiated recommendations for addressing food ingredients in clean-label programs. The CSPI report defines and then assesses the suite of best-in-class clean label efforts by supermarkets and restaurants across three major components:  ingredients covered, food and beverage products covered, and transparency. In general, transparency efforts are strongest, coverage across products is weakest, with ingredient reformulation somewhere in the middle.

The report concludes with a trio of target recommendations and action steps, including:

  • Prioritize public health – Clean-label commitments should be accompanied by meaningful improvements to the nutritional quality of the foods and beverages sold.
  • Comprehensive policies – Lists of prohibited ingredients should apply to all products a restaurant makes or sells, including beverages, and supermarkets should expand clean label policies to all of their private-label brands.
  • Transparency – Restaurants should provide complete ingredient and nutrition information for all menu items, both on-site and on their website, and supermarkets should provide this information on their websites.

Given that natural is an artificial, and often erroneous, synonym for healthy, Clean Labels: Public Relations or Public Health? does just what CSPI intended – provides a useful assessment of clean label efforts that give direction and guidance to companies committed to improving the health and safety of the food they make and sell.

For companies seeking to improve their own food offerings, EDF+Business invites you to visit Behind the Label: A Blueprint for Safer Food Additives in the Marketplace. This online resource details best practices for the five pillars of leadership, offers a model policy and case example, as well as tracking corporate efforts in this space.

[1] “Certified organic” is a federally defined and regulated status.

Business won’t back down on clean energy future

Tom Murray, VP Corporate Partnerships, EDFMore than 530 companies and 100 investors signed the Low Carbon USA letter to President-elect Trump and other U.S. and global leaders to support policies to curb climate change, invest in the low carbon economy, and continue U.S. participation in the Paris Agreement.  It’s a powerful message from business leaders connecting the dots between prosperity and a low-carbon economy and confirming their commitment to continue to lead the way.

The private sector call for continued leadership on climate cannot be ignored. 

“All parts of society have a role to play in tackling climate change, but policy and business leadership is crucial,” said Lars Petersson, president of IKEA U.S. “The Paris Agreement was a bold step towards a cleaner, brighter future, and must be protected. IKEA will continue to work together with other businesses and policymakers to build a low-carbon economy, because we know that together, we can build a better future.”

Despite the climate uncertainty represented in President-elect Trump’s cabinet picks and campaign rhetoric, business is moving forward, actively building a clean energy future. In recent months, Google, Microsoft, Smithfield Foods, Walmart and others have continued to prove what’s possible through bold, science-based greenhouse gas reduction targets, investments in clean energy and expanded efforts to drive down emissions in their operations and supply chains. Adding to the mounting evidence that corporate America gets it and that momentum for business leadership is here to stay.

  • Google has pledged to operate on 100% renewable energy in 2017.
  • Microsoft recently announced the largest wind power purchase agreement to date with a deal to buy 237 megawatts of capacity from projects in Wyoming and Kansas.
  • Smithfield Farms, the largest pork producer in the world, will reduce greenhouse gas emissions 25% by 2025.
  • Walmart has committed to removing a gigaton of emissions from its global supply chain by 2030.

US investment in solar is on the riseAnd clean energy investment is on the rise:

  • U.S. investment in clean energy soared from an impressive $10 billion to $56 billion between 2004 and 2015.
  • Microsoft-founder Bill Gates and nearly two dozen other business leaders launched a $1-billion fund that will finance emerging energy innovations.
  • A new report shows investors controlling more than $5 trillion in assets have committed to dropping some or all fossil fuel stocks from their portfolios.

These efforts are focused on accelerating the transition to a clean energy future. This might be surprising given the current political climate, but smart business leaders understand that decisions must be driven by long-term economics, not short-term politics. A thriving economy depends on a thriving environment.

"With tens of billions of dollars of U.S. renewable energy investment in the works this year alone, and far more globally, the question for American political leadership is whether they want to harness this momentum and potential for economic growth," said Jonas Kron, senior vice president at Trillium Asset Management.

“Creating jobs, and establishing the United States as an innovative world leader in creating a clean energy economy is a no brainer for the Trump administration,” said Aspen Skiing Company CEO Mike Kaplan.

The list of signatories to the Low Carbon USA letter has doubled since November, and includes some of the world’s biggest and most innovative companies, including DuPont, General Mills, HP Enterprises, Pacific Gas & Electric, Salesforce.com, Unilever, and more. These business leaders and many others know that accelerating climate policy and innovations is a pathway to creating jobs and strengthening the economy.

Solar jobs in the U.S. on the rise

A growing low carbon economy already has created jobs and driven economic growth across the U.S. In fact, over 2.5 million Americans now work in the clean energy industry, making above average wages. With China investing over $360 billion in renewables, the U.S. simply cannot afford to change course on this powerful opportunity for environmental protection and economic growth while other countries capitalize.

Business is ready to lead the way and accelerate the path towards a low carbon economy. Business has spoken. Will the President-elect and his new administration listen?


Additional reading:

China Is Going All In On Clean Energy As The U.S. Waffles. How Is That Making America Great Again?

With a record $1.4 trillion in sustainability assets, investors bail on fossil fuels


Follow Tom Murray on Twitter, @TPMurray


Food waste, guilt and the millennial mom: how companies can help

edf-business-of-food-blog-graphic_shelton-grp_12-7-16I spend a lot of time these days thinking about food waste.

Why? First, I’m the mother of a toddler who oscillates between being a bottomless pit, easily cleaning her plate, to being a picky eater who only takes a couple of bites before the bulk of her meal ends up in the trash.

Second, I’m married to a chef who, because he’s a smart businessman, runs his kitchen with the precision of a comptroller: wasted food means lost profit, so every scrap of food is utilized wherever possible.

Finally, I interface almost daily with Walmart, the world’s largest grocer. Walmart recently pledged to root out 1 gigaton of greenhouse gas reductions from its global supply chain, and I’m certain that food waste will play an integral part in reaching that goal.

But before you conclude that I’m an outlier—some sort of obsessive, “food waste weirdo”— a recent study shows that I’m not the only one struggling with this issue:

Now we all know that just because one feels guilty about something doesn’t mean one’s behavior will change.  Cost, however, is a frequent driver of behavior, so consider these numbers:

In other words, 2.5-4% of the 2015 US median household income is being thrown away! That’s bad news for our wallets—and our planet (NRDC estimates that food rotting in landfills accounts for 16% of U.S. methane emissions).

So it’s a no-brainer that wasting food serves no one’s interests.  What’s not so clear is: what can be done about it?

A business opportunity… with a coveted consumer

This is where I see a real opportunity for grocers—like Walmart—and the food companies that fill their shelves. For the most part, these companies are talking non-stop these days about how to win over the most coveted customer of all, the “millennial mom”.

Inviting millennial moms to be partners on eliminating food waste could be the perfect strategy. They jenny_helen_expertare young (meaning they have years of brand loyalty ahead of them), cost-conscious and environmentally engaged; saving them money while alleviating their food waste guilt is a clear win-win.

I’m not saying this will be easy; that same study reveals that real barriers exist:

However, while conceding that it’s difficult (if not downright un-wise) to portray millennial moms as a monolithic group, marketing profiles of these women consistently portray them as, a.) hungry for information about products; and b.) willing to take action on issues… but only if roadblocks or impediments have been removed.

So, grocers and food companies, how can you burnish your brand with millennial moms while making a real dent in food waste?

Step number 1: engage and educate

Run marketing campaigns, both in-store and out, that will inform these coveted customers on:

  • Proper handling and storage of their food to minimize spoilage; and
  • How to fully utilize their food purchases. In other words, teach them to think like my husband, the chef, so they can make use of scraps and leftovers.

Step number 2: make it easy

Design and implement initiatives that make for fun, easy adoption:

  • Clarify date labeling so that perfectly good food isn’t perceived as bad. The USDA just requested that companies switch to “best if used by” language to give consumers more accurate guidance.
  • Suggest meals that enable moms to buy just what they need—and use it up. There’s a real business opportunity here: did you know that, as of 4 pm each day, 80% of mom’s don’t know what’s for dinner that night? Suggesting recipes that will be totally consumed will make her life easier!
  • Inspire composting (and discount composters)… their garden will thrive because of you! Or help make curbside composting possible like in Boulder, Seattle and San Francisco.
  • Be creative… people love to compete! Only 13.5% think that their household wastes more than their average neighbor. Help people understand that they may in fact be wasting way more food and money than their friends, family, and neighbors to motivate them to do something about it.

In the meantime, I will carry on, hopeful that while my daughter learns to clean her plate, an array of giant food companies and grocers will take up the mantle of tackling food waste on a massive scale.

How can your company detox in 2017? EDF’s new tools for safer chemicals in products

Green Business Businessman Inspiration Peaceful Concept

Becoming a leader on safer chemicals is a meaningful way to address increasing consumer demand for ingredient transparency and safer products. The good news: taking the first step is easy to do.

In these uncertain times, corporate leadership is more important than ever in maintaining momentum to address our most serious environmental challenges – from climate change to water depletion to exposure to hazardous chemicals. Recently, I participated in the 11th annual BizNGO Conference titled “Measuring Progress to Safer Chemicals.” The event was full of solutions-oriented dialogue among NGOs, investment firms, and leading consumer product companies – in textiles, personal care, health care, electronics, cleaning, and more – about topics from meaningful transparency to measuring the ubiquity of chemicals of concern. Overall, the conference renewed my belief that companies are ready and willing to accelerate the adoption of safer chemicals in the marketplace. For example, now over 60 organizations, including Staples and CVS Health, have signed on to the Chemical Footprint Project, which recognizes companies that have effectively demonstrated public commitment to improved chemicals management. Elsewhere, some companies are publicly showing success at reducing the use of chemicals of concern.

Although leading companies are paving the way, it is clear that we need more companies, especially more retailers, to achieve full marketplace transformation. Companies that are interested – but uncertain of where to start – should explore building a chemicals policy.

A written corporate chemicals policy is the most effective tool in jump-starting and sustaining Institutional Commitment for safer chemicals. It helps a company articulate its chemical management goals and set a course for success. A strong chemicals policy begins with an overarching aspirational vision that conveys the company’s desire to take a leadership stance. The company’s specific objectives for attaining leadership on safer chemicals are the meat of a chemicals policy. At a minimum, these objectives should focus on:

  • Improving Supply Chain Transparency
  • Cultivating Informed Consumers
  • Embedding safer Product Design, and
  • Showing Public Commitment

What are the benefits of writing all of this down? Goal embedment and alignment, employee empowerment, and sparking accountability internally and within the company’s supply chain – to name a few.

But what does all of this really look like on paper? EDF has created templates retailers can use when fleshing out their own chemicals policy. Our templates provide starting text as well as tips and resources for customization.

Consumers are looking to companies to lead the way — publicly and credibly. Use our templates to help you build a chemicals policy that gives you a competitive edge and builds consumer trust.

 

Things You May Have Missed During the Election #2: Deforestation and Walmart’s Gigaton Goal

edf-business-of-food-blog-graphic_shelton-grp_12-7-16Editor's Note—We're proud to make two, new introductions this month: Katie Anderson joins our Supply Chain team as a Project Manager with a focus on deforestation, and "The Business of Food" is born as a new category dedicated to exploring how the growing, processing, distributing, purchasing, consuming and disposing of food impacts our communities, our economy and our planet.

A month out from the election, we know that the global community faces significant uncertainty about what President-elect Trump and his administration will mean for climate outcomes. But with the 24-hour news cycle making it clear just how “transitional” this presidential transition period is, I think it’s worth shining a light on three recent events that I’m going label has hopeful, tragic and confounding:

  1. Hopeful: as part of its 2025 sustainability goals, Walmart announced a target reduction of 1 gigaton of greenhouse gases from its supply chain;
  2. Tragic: Brazil’s National Institute for Space Research (INPE) announced a 29% increase in deforestation over the past year;
  3. Confounding: thinking he was going to have a climate change chat with Ivanka Trump, Al Gore made a trip to Manhattan—and ended up sitting down with the President-elect as well.

Let’s take the second part first and talk about deforestation.  Tropical deforestation contributes about 15% of the world’s greenhouse gas emissions, making forests an incredibly valuable part of the climate conversation.

Katie Anderson Project Manager, Supply Chain

Katie Anderson
Project Manager, Supply Chain

Alongside the climate benefits, forests also provide habitat for 70% of the world’s species, allow for improved water quality and support livelihoods for indigenous communities. So INPE’s announcement is absolutely tragic—especially when you consider that the amount of tropical forest lost in just one year equals the size of the state of Delaware.

So let’s move on to the hopeful part: Walmart’s goal. Just how much, exactly, is 1 gigaton of greenhouse gas? Most often it’s held up as being equal to the annual emissions of Germany (the world’s 4th largest economy). But just so you can appreciate the scale of both Walmart’s audacious ambitions and the problem we’re facing in our rainforests, Walmart’s goal is equivalent to only ¼ the annual GHG emissions caused by global deforestation!

Which means we’ve got a long way to go.

On to the confounding part: kudos to Ivanka Trump for inviting Al Gore for a talk on climate change. Sadly, it seems her dream position of being the “Climate Czar” will be ceremonial at best, because whatever was discussed at their Manhattan meeting was likely rendered moot by her father’s nomination of Scott Pruitt to be head of the Environmental Protection Agency (EPA). I’m guessing we’ll never really know what was said, but if Donald and Ivanka are even half the business geniuses they claim to be, they should have listened to Gore, particularly if he brought up deforestation. Here’s why:

Sustainable sourcing drives business value

Creating deforestation-free supply chains provides value to corporate bottom lines. Effective work on reducing deforestation in supply chains reduces reputational risk, builds trust and transparency with consumers, and drives investor value. Just two examples include:

In other words, customers and shareholders around the world are waking up, and business leaders are responding accordingly. Given that agriculture drives 70% of global deforestation, corporate actors who source our everyday products now realize they have big role to play in finding a solution.

Walmart is a perfect example: the need to expand the sourcing of commodities produced with zero net deforestation was cited as an essential component of meeting the 1 gigaton goal. And Walmart is by no means alone: to date, 366 companies have made public commitments to reduce deforestation in their supply chains—for the simple reason that they’re becoming aware of the major risks of not engaging in deforestation-free sourcing.

Unfortunately, public information on if/how companies are achieving these goals is only available for one-third of these commitments, but it appears that, while they’re a good start, commitments alone not enough.

Given all that, what’s a forward-thinking CEO to do regarding deforestation?

Landscape-scale approaches are critical to hitting targets

An emerging opportunity is in engaging landscapes, or jurisdictions, in reducing deforestation across the entire area. Rather than going farm-by-farm to achieve certifications—which is likely to lead to islands of “green” in a sea of deforestation—a jurisdictional approach allows whole regions to be categorized as reducing deforestation.

This is valuable for many reasons:

  1. the costs of monitoring compliance are shared among governments, corporate actors, and other stakeholders;
  2. it avoids leakage—a problem where one farm may reduce deforestation but will push deforestation into a different farm;
  3. it works across all commodities that drive deforestation rather than solely through certain supply chains;
  4. it protects the rights of landholders and indigenous communities.

Now, more than ever, business needs to lead

President-elect Trump often cites business as “the solution” to what’s ailing our country. In terms of climate change, this is one area where he and I agree.

In these uncertain (read: hopeful, tragic, confounding) times, it is incredibly important for corporations to publicly lead on how they work within their operations and their supply chains to reach climate balance. This means setting bigger goals, digging more deeply into the weeds to understand the impacts of their supply chains, and reaching beyond their walls to find the solutions that are most likely to bring the change we need.

Will Shareholders Get Money’s Worth As Oil Giants Link Executive Pay to Climate Results?

Money talks. That’s why one key element in the battle against climate change must be aligning the financial compensation of executives to tangible corporate efforts to decarbonize.

Better aligning incentives is particularly important in energy intensive industries, where the status quo can encourage decisions on strategy, investment, and operations that jeopardize the planet’s climate, while also generating risk to investors that can, ultimately, undercut a company’s  long-term viability.

In a promising sign, Royal Dutch Shell CEO recently announced that executive bonuses at the oil and gas giant will include greenhouse gas goals. “We have linked executive remuneration in the past to energy intensity and next year we are going to make it even more specific to the CO2 footprint metrics associated with these energy efficiencies” he said. Ten percent of bonus payments to executives, including the CEO and CFO at Shell, will reportedly be linked to “greenhouse gas management”.

Indeed, a broader trend toward heightened sustainability in governance is underway. Analysts at the nonprofit organization CERES report that as of 2014, 24% of examined companies linked executive compensation to sustainability performance, up from 15% two years earlier.

Do These Pay Policies Measure Up?

As companies like Shell translate aspiration into practice, the big questions now are how will executive pay linked to de-carbonization be operationalized, and will it be enough to make the difference demanded by the dire science of climate change. There are two key issues in particular that boards, shareholders, and others can ask as GHG bonus measures are developed and assessed:

1. Are bonus payments tied to explicit, ambitious and well-chosen metrics?

The mere act of including greenhouse gas management in compensation is not sufficient. CERES found that of companies linking executive pay to sustainability, few used sustainability performance targets that go beyond goals driven by compliance with laws and regulations. In the absence of comprehensive climate policy – for example market-based signals that put a price on carbon pollution – operators like Shell must go above and beyond compliance metrics for their bonuses to be meaningful. Mere compliance should be expected as a matter of course; winning a GHG bonus must require another level of executive leadership and results.

There are a host of metrics that oil and gas operators can consider as they link compensation to GHG management. Those metrics may differ for large vertically integrated oil and gas majors like Shell, versus smaller companies that operate in just one or two segments of the oil and gas value chain. One common element is incentivizing strong methane management.

Methane emissions are a widespread issue across the oil and gas supply chain. Leaks and other intentional releases waste valuable product, speed climate change, and cast serious doubt on the ability of natural gas to play a constructive role in the transition to a cleaner energy economy. However, as Environmental Defense Fund found in Rising Risk: Improving Methane Disclosure in the Oil and Gas Industry, as of early 2016, none of the leading 65 oil and gas operators disclosed a quantitative target to reduce methane emissions.

As Principles for Responsible Investment noted in its recent Investor's Guide to Methane developed with EDF, investors should expect operators to put governance to work to get the incentives right for enhanced methane management. After all, what gets measured, gets managed, and creating incentives to address invisible gas leaks can make a visible difference.

The ultimate methane metric would operationalize the same kind of “zero tolerance” approach to methane leaks that companies take to preventing fatalities. In the near term, we look for incentives tied to comprehensive, direct methane measurement; leading practices including minimizing venting and conducting regular leak detection and repair; and achievement of verifiable emission reductions.

Beyond methane, GHG metrics may encompass reducing CO2 intensity from fossil fuel operations, but also expanding into renewable energy, as Total, Statoil, and others have signaled. Taken together, an appropriate mix of GHG metrics will send an unmistakable signal to executives that a holistic approach to de-carbonization is the new order of the day.

2. Is the bonus a token or a change agent?

Even well-defined de-carbonization metrics can prove insufficient if the incentive is not strong enough, particularly compared with the full suite of executive motivators. In Shell’s case, while its commitment to tie 10% of executive pay to greenhouse gas management puts it 10% ahead of most of its peers, the question remains: is the incentive adequate enough to change decision making with the speed and seriousness required to achieve the energy transformation we need.

We expect institutional investors and others to look carefully not only at the specifics of the 10% bonus on GHG management, but the 90% on other factors. For energy operators taking the positive step to link pay to climate performance, it will be important to guard against also using contradictory factors that could send mixed messages, such as rewarding executives for expanding carbon reserves, a practice that 13 of 30 major U.S. fossil-fuel corporations practiced, according to a recent report by the Institute for Policy Studies.

We applaud Shell’s intent to link climate performance to pay and look forward to examining the details. In the meantime, as pressure mounts for more oil and gas operators to follow suit, varying operator reactions will tell investors a lot about which companies are poised to adapt best to a lower-carbon energy future.