ESG investments: Exponential potential or surfing one wave?

September 21, 2020 by  
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ESG investments: Exponential potential or surfing one wave? Terry F. Yosie Mon, 09/21/2020 – 00:30 Amidst four concurrent crises — health, economic, race relations and climate — one stand-out 2020 development has been the rebound of major stock markets and, particularly, the growing performance and prominence of environment, social and governance (ESG) traded funds. ESG portfolios not only have outperformed traditional financial assets this year, but also a data analysis prepared by Morningstar, a financial advisory research firm, concluded that almost 60 percent of sustainable investments delivered higher returns than comparable funds over the past decade. Morningstar also found that ESG funds have greater longevity than non-ESG portfolios. About 77 percent of ESG funds that existed 10 years ago are presently available, whereas only 46 percent of traditional investment vehicles maintain that survivorship. These developments raise two overriding questions: what factors have converged to catapult ESG portfolios into the front rows of investment strategy, and what challenges can transform (for better or worse) ESG fund performance in the future? ESG investing has made important strides in the past decade and possesses significant momentum to expand its reach into the broader economy. ESG’s arrival at the Big Dance Since the rebound from the 2007-08 financial crisis, it would have taken a singularly motivated unwise investor to lose money in U.S. equity markets. ESG investors were not unwise. Several sets of factors converged to make these funds an even better bet than the S&P 500, Dow Jones or NASDAQ exchanges that covered a broad array of individual equities, mutual funds or indexed portfolios. These factors include: Less risk and volatility. ESG asset managers and their customers generally prefer a longer-term planning horizon than many of their traditional competitors whose reliance upon program trading or other methods result in more frequent turnover in holdings. In retrospect, it also turned out that ESG portfolios contained less financial risk because they had more accurately identified risks from climate change and considered other variables — such as resilience — for which no accepted risk methodology exists. The response to the international COVID-19 pandemic has become a de facto surrogate to measure corporate resilience and has previewed the economic and societal chaos that is increasingly expected to arrive from accelerating climate change. For investors, ESG portfolios have provided a welcome shelter in the storm and a more profitable one at that.   A declining investment rationale for fossil fuels. What was once a trend is now a rout. ESG asset managers, closely attuned to climate-related risks, recognized the receding value of first coal, and now, petroleum investments that are in the midst of an historic decline. Prior to the 2007-08 financial crash, ExxonMobil enjoyed a market capitalization in excess of $500 billion. By 2016 (and accounting for the rebound from that crash), it stood at about $400 billion. Today, it is $159 billion even as overall equity valuations reach historic highs. Asset write-offs from the oil sector continue to mount and include BP’s write-down of $17.5 billion and Total’s cancellation of $9.3 billion in Canadian oil sands assets. By virtually any established financial metric — net income, capital expenditures, earnings per share — petroleum companies are shrinking. As an industry group, energy is one of the smallest sectors in the S&P 500.   Convergence of transparency and governance. While there are frequent complaints about the lack of robust financial metrics to evaluate ESG investment opportunities, the fact is one of growing convergence around some critical reporting measures. For climate change, these include the information obtained from companies adhering to the Task Force on Climate-related Financial Disclosures (TCFD) that provide for voluntary and more consistent financial risk reporting. CDP is widely respected among asset managers, and there is growing interest in the efforts of the Global Reporting Initiative-Sustainability Accounting Standards Board to arrive at a simpler, sector-specific, financially relevant set of performance metrics. Governance expectations also have accelerated as more financial firms seek not only fuller disclosure but understanding of actual plans to achieve an impact through, as one example, Scopes 1, 2 and 3 reductions within specific time frames.   Collaboration among financial asset management firms. No longer is it necessary for nuns organized through the Sisters of St. Francis or the Interfaith Center on Corporate Responsibility to maintain their lonely vigil to persuade management of their social and environmental concerns. In recent years, their cause has been transformed by the world’s largest asset management firms that have the added advantage of being very large investors in the companies whose practices they wish to change. These organizations — including BlackRock, BNP Paribas Asset Management, CalPERS and UBS Asset Management — generally have no difficulty in meeting with CEOs or, more recently, obtaining increasingly large support for the shareholder resolutions they support. Most significant, in the aftermath of the 2015 Paris Climate Accord, these firms increasingly collaborate through organizations such as Climate Action 100+, known as CA100+ (which presently has more than 450 investor members with over $40 trillion in assets), Ceres and the Asia Investor Group on Climate Change. Their climate change action agenda includes setting an emissions reduction target, disclosing climate-related financial risks through the TCFD reporting framework and ensuring that corporate boards are appropriately constituted to focus upon and deliver climate results. In reflecting on this evolution, long-time sustainability investor John Streur of Calvert Research & Management wrote, “We need to spend more of our engagement time pressing for change, as opposed to asking for disclosure.” Disrupting and being disrupted — the road ahead The ESG investment movement has every reason to be optimistic in the short term. There is growing investor and stakeholder momentum for the goals of expanded disclosure, improved corporate governance and measurable plans and impacts, especially for climate change. There is significant expansion in the staff sizes and expertise that better enable firms with ESG portfolios to evaluate financial risks. And their financial performance continues to impress. What could go wrong, come up short or require adaptation? Several factors bear a closer scrutiny. ESG’s value proposition is principally based on de-risking assets. This is too limited a value proposition to meet future needs . For example, ESG data does not reveal much insight for identifying research and development priorities, product innovation opportunities or effective branding and marketing strategies. As Brown University professor Cary Krosinsky has commented, “ESG data doesn’t tell you the most important thing: who will win the race” in future business competition and success for the long-term. In short, is ESG investment too disconnected from the very purpose of an enterprise — to innovate new products, gain customers and make money over time through business development?   As ESG investment goes mainstream, it will face new challenges and risks. A current advantage that ESG managers possess is that their decisions focus more on pure-play outcomes such as de-risking companies from climate change or other sustainability challenges. As more traditional investment firms acquire or expand ESG capabilities, more complexity will enter into investment decisions to reconcile clients’ needs or manage the trade-offs between ESG performance measures and those applied through shareholder value driven outcomes (earnings per share, quarterly financial reporting). Aligning expectations concerning executive compensation, independence of directors and future investment opportunities are major unresolved issues between ESG and traditional investment practitioners.   To be more impactful, the composition of ESG portfolios will need to change. Currently, ESG funds are dominated by equities, but significant capital is invested in other sectors such as bonds, exchange traded funds (ETFs) and real estate. The methodology for evaluating these asset classes will need to be modified from that applied to the assessment of equities. At the same time, ESG funds are heavily weighted in ownership of technology stocks, particularly the so-called FAANG companies — Facebook, Amazon, Apple, Netflix and Google — in addition to Microsoft. A number of these firms have inadequate data security and privacy protections, weak corporate governance and poor business ethics. The long-term wisdom of piling so many investment eggs into a single sector basket, combined with the multiple ESG problems of current technology portfolios, challenges ESG asset firms to become more transparent about their own evaluation criteria and decision making about portfolio diversity.   ESG assessments should assign a higher priority to social issues. The “S” in ESG is the least understood of the three factors, and it will be the most challenging to apply. As diversity, inclusion and equity become a greater focus of corporate sustainability policies and programs, the methodology for their evaluation is the least advanced. In part, this reflects the cultural and racial filter of a largely white and wealthy investor class lagging in its comprehension that race and social justice are material investment criteria. Simultaneously, data on social indicators will be more difficult to collect. Large numbers of companies are reluctant to disclose such information because it will expose gender and racial gaps in pay and promotion and general under-representation of minorities. Again, the technology sector is a major laggard on such issues. More broadly, the collection of social data, especially for racial diversity, is made more difficult as a matter of policy by many governments outside the United States, including in Europe where it is illegal in some countries to collect ethic and racial information. Some ESG investors are beginning to expand their dialogue around these issues, but they are much further behind when compared to their assessments and investment policies on environmental and governance issues. ESG investing has made important strides in the past decade and possesses significant momentum to expand its reach into the broader economy. Karina Funk, portfolio manager and chair of Sustainable investing at Brown Advisory, sees an approaching convergence between ESG and traditional investment philosophies. “ESG is a value-add,” she noted in a recent conversation. “It provides an expanding array of tools — financial screening, data analysis, issue-specific consultations with companies, proxy voting and an emerging focus on social risks — so that, in five years, ESG will be a standard expectation in asset evaluations. The key will be to focus on all risks facing a company, quantifiable or not, the exposure of business models and identifying what factors are within a company’s control.” Will management listen to ESG investors? Voices as varied as the U.S. Department of Labor and Harvard economics professor Gregory Mankiw are urging company executives and fund managers to tip the scales against what they consider to be economically risky and materially irrelevant ESG factors. In re-asserting the primacy of shareholder value, they remind us that voice of Milton Friedman still echoes from the crypt even as it grows fainter within the rapid humming of today’s marketplace and changing society. Pull Quote ESG investing has made important strides in the past decade and possesses significant momentum to expand its reach into the broader economy. Topics Finance & Investing ESG GreenFin Featured Column Values Proposition Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Shutterstock

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ESG investments: Exponential potential or surfing one wave?

Earth911 Reader: Climate Migration, 2,700 EV Charging Stations, and ESG Investing

August 5, 2020 by  
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Semiconductor firm Applied Materials puts supply chain at center of new commitments

July 28, 2020 by  
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Semiconductor firm Applied Materials puts supply chain at center of new commitments Heather Clancy Tue, 07/28/2020 – 02:00 The sustainability ambitions of the world’s largest cloud software companies — Amazon, Google, Microsoft and Salesforce — have been well-documented. The broad semiconductor industry’s position to date, however, has been less transparent and less ambitious, with the highly visible exceptions of AMD, IBM and Intel.  That stance is shifting, as the sector contemplates the explosive growth projections for connected computing devices, including sensors, smartphones, tablet computers and personal computers, not to mention the massive server hardware needed to process artificial intelligence algorithms.  By 2030, there could be a half-trillion such devices “at the edge” of the digital networks driving business innovation around the planet, Applied Material President and CEO Gary Dickerson noted last week in a keynote address during a virtual edition of the industry’s annual conference, SEMICon West .  The association behind the gathering, SEMI , projects semiconductor revenue could reach $1 trillion by that same timeframe, more than double last year’s sales of about $470 billion. It previously took 20 years for the industry to double in size.  The big question for the sector at large and Applied Materials specifically, Dickerson said, is how to support accelerating growth without dramatically increasing the industrywide carbon footprint associated with creating all those components — currently estimated at 50 million metric tons of CO2 annually across more than 1,000 fabrication facilities worldwide (a.k.a. “fabs”).  We are going to hold our supply chain to the same standards that we hold ourselves in the areas of environmental impact, labor standards, and diversity and inclusion. “I’ve been amazed at the increasing amount of power required to manufacture these ever-smaller chips, and I would join with others in encouraging all of the equipment manufacturers to work together to reduce carbon emissions in the manufacturing of these advanced semiconductors and finally continue decarbonizing the power supply on which the data centers operate,” former Vice President Al Gore  told me last week , when I asked him how the semiconductor industry could step up. Applied, which specializes in materials engineering, sells equipment and services used in the production of virtually every new chip and advanced display in the world. It generated more than $14.6 billion in annual revenue in 2019, and Dickerson estimated its Scope 1 and Scope 2 emissions — mainly from the power used to run its labs and factories — was the equivalent of 145,000 metric tons of CO2 in 2019. (Disclosure: Al Gore’s investment firm, Generation Investment Management, holds a position in the company. Applied was responsible for my invitation to lead an interview with Gore last week during the same conference.) “The first thing we need to do is decouple our growth from our environmental impact,” Dickerson noted. “If we double or triple the size of our company, it would be irresponsible to double or triple our carbon footprint!” That conviction resulted in the company’s decision to adopt a series of new policies designed to shore up its environmental, social and governance (ESG) story, including a commitment to use 100 percent renewable energy worldwide by 2030 (by 2022 for its U.S. operations) and to cut its Scope 1 and Scope 2 emissions by 50 percent over the next decade. Moreover, Applied has created a sweeping new initiative intended to bring other companies in the semiconductor supply chain along for the ride. “We are going to hold our supply chain to the same standards that we hold ourselves in the areas of environmental impact, labor standards, and diversity and inclusion,” Dickerson said. “We’re introducing a sustainability scorecard into our supply selection process, alongside our traditional metrics for performance, cost and quality.” Making improvements of this magnitude and — at the same time — driving the technology roadmap forward is not easy and requires deep partnerships with customers. The new program, SuCCESS2030 (short for Supply Chain Certification for Environmental and Social Responsibility) will extend to all aspects of Applied’s operations, from procurement to packaging. It will now require these shared commitments from its suppliers, according to the press release about the program: A shift to intermodal shipping to reduce the industry’s reliance on air freight, aiming for an interim emissions reduction of 15 percent by 2024. A transition to recycled content packaging, with a target of 80 percent of such materials within three years. The complete elimination of phosphate-based pretreatments for metal surfaces within four years. The creation of a diversity and inclusion strategy to increase Applied’s spend with minority- and women-owned businesses by the same time frame. (There is no disclosed percentage for this goal.) “The response has been great, and we have six key partner suppliers already signed up to help us kick off this program,” Dickerson said. Those companies are Advanced Energy, Benchmark Electronics, Foxsemicon Integrated Technology, NGK Insulators, Ultra Clean Holding and VAT. Technically, Applied doesn’t yet have an official emissions reduction target in place for its Scope 3 footprint, but the company has joined the Science Based Targets initiative with the intention of doing so within two years, according to Dickerson. To improve its own competitive story with customers, Applied will use risk scenario analysis recommendations from the Task Force on Climate-related Financial Disclosures, and it has adopted a new “ecoUP” policy that includes a “3 by 30” goal for improvements in its own manufacturing systems on a per-wafer basis: a 30 percent reduction in energy consumption, a 30 percent cut in chemical consumption and a 30 percent increase in “throughput density,” the number of wafers that can be produced per square foot of cleanroom space. “Making improvements of this magnitude and, at the same time, driving the technology roadmap forward is not easy and requires deep partnerships with customers,” Dickerson said. Among those actively working with Applied on the new approach include Intel and Micro Technology, which is stepping up its own commitments. The latter intends to dedicate 2 percent of its annual capital expenditures over the next five to seven years — about $1 billion — on environmental and social stewardship.  Pull Quote We are going to hold our supply chain to the same standards that we hold ourselves in the areas of environmental impact, labor standards, and diversity and inclusion. Making improvements of this magnitude and — at the same time — driving the technology roadmap forward is not easy and requires deep partnerships with customers. Topics Information Technology Corporate Strategy Technology Manufacturing Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Courtesy of Applied Materials Close Authorship

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Semiconductor firm Applied Materials puts supply chain at center of new commitments

How Cargill’s new science-based water targets go with the flow

July 27, 2020 by  
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How Cargill’s new science-based water targets go with the flow Joel Makower Mon, 07/27/2020 – 02:11 Cargill, the giant food and ag conglomerate, last week announced a new set of 2030 corporate water targets, the latest to do so among firms in its sector. But this was no me-too kind of endeavor. Rather, it put the company at the front of the pack, going well beyond its own operational footprint to engage its entire supply chain, and to do so using a novel science-based approach for water. Specifically, Cargill said that by the end of the decade it would restore about 158 billion gallons of water, reduce about 5,500 tons of water pollutants and boost access to safe drinking water — all in what it refers to as  priority watersheds , regions around the world where the company has a significant operational or supply-chain water footprint.  This isn’t small potatoes. Agriculture represents about 80 percent of freshwater use in the United States and about 70 percent globally. Ag also is a major contributor both to water pollution and climate change; the water sector, which includes the collection and treatment of wastewater, accounts for 4 percent of total global electricity consumption,  according to the International Energy Agency . Few food and ag companies have taken on the full measure of their water footprint the way Cargill seems to have done, and by using a science-based approach. “If there’s a more robust enterprise level ambition for water, I haven’t seen it,” said Jason Morrison, CEO of the Pacific Institute and head of the United Nations  CEO Water Mandate , who advised on the project. “This is a really impressive piece of work that they’ve done and a pretty ambitious commitment they’re making. It’s got a lot to it.” If there’s a more robust enterprise level ambition for water, I haven’t seen it. Cargill has made water commitments in the past, but they covered only the company’s direct operations, a relative drop in the bucket of the water needed to bring to market the $114 billion or so of products and services it sells each year. About a year ago, the company set out on a journey to understand its water risks relative to its supply chain and operations, explained Jill Kolling, the company’s vice president for global sustainability. “Where does water really matter for us in our business?” she explained to me recently. “And where should we really be putting our efforts?” The goal, she said, “was to come out of this and have some aspirational goals to work against and also to make sure we’re working where it matters most. So, having that strong prioritization, backed up by science.” Science-based targets have become de rigueur in setting corporate greenhouse gas commitments. In effect, they ask what level of carbon reductions represents a company’s fair share, given its contribution to the climate problem. It was inevitable that this approach eventually be applied to water. Indeed, for the past two years a group called the Science-Based Targets Network has been looking at how to apply such methodologies to  a range of environmental impacts , including  water . But water is unlike climate gases in several fundamental ways. First, water is inherently local, with droughts in some areas and a surfeit in others. With climate gases, any improvement anywhere in the world helps alleviate the global problem; not so with water. Water is also temporal, with conditions changing throughout the year and from year to year, based on both normal and abnormal climatic shifts. And while the aggregate amount of available water is important, so is its quality. Having millions of gallons of water isn’t helpful if it is toxic, brackish or otherwise unsuited for human use. Rivers of data In the case of Cargill, these and other factors were applied not just to its own operation, but also to its more than 250,000 suppliers, ranging from multinational corporations to single-family farms in developing nations. They provide the raw materials for everything from cocoa and cotton to salmon feed and sweeteners. Cargill already had dipped its toes into water issues. It has invested in such programs as the  Soil and Water Outcomes Fund , which helps farmers adopt soil health and water conservation practices. It also participates in the  Midwest Row Crop Collaborative’s efforts to support and accelerate sustainable agricultural practices in Illinois, Iowa and Nebraska, including on improving water quality across the Upper Mississippi River Basin, which supports nearly 44 percent of U.S. corn, soy and wheat production. Still another Cargill initiative is  BeefUp Sustainability , which focuses in part on restoring grasslands, which perform many ecosystem services including filtering water. To develop its latest commitments, the company turned to World Resources Institute, with which it had previously worked on water issues. The first step was to aggregate the data Cargill needed to prioritize locally relevant decisions. “We’ve got  globally comparable data on water risks that we help companies leverage in order to look at water risks to their supply chain, and now increasingly use that same data to help think through what an effective science-based target could look like,” Sara Walker, WRI’s senior manager, water quality and agriculture, told me. “They’re kind of our science partner,” Kolling said of WRI. “What they bring to the table is datasets, tools and scientists who are able to help do the analysis. It’s also good to have an NGO partner working with you to push you to be more aspirational. They’ve provided tremendous guidance through this.” “There’s quite a lot of good data out there,” explained Truke Smoor, director of water at Cargill. “But if you look at the number of companies who have said they want data for water quality and costs, for both operations and the supply chain, you see there are very few.”  600 billion liters — it’s insanely large. It’s more than the total amount of water that we use in all our operations.   That may be in large part because the available data isn’t always consistent across watersheds and borders. Smoor said that Cargill ended up “combining a global data set with a better data set for the U.S. to meet our needs. And now we have the data we need to help us prioritize.” The commitments Cargill settled on were stretch goals, Smoor said. For example: “Six hundred billion liters — it’s insanely large. It’s more than the total amount of water that we use in all our operations. So, we’re basically offsetting double our total water use in those priority water systems in the regions where it’s needed most.” Down on the farm In some ways, getting the data was the easy part. Working with farmers — from Big Ag behemoths to smallholders in far-flung economies — is another matter. Promoting change can be hard work, although some farmers are beginning to realize the need to adapt new kinds of practices to ensure the long-term viability of local water supplies. “I think farmers are starting to realize that it’s ultimately the consumer who’s starting to care more and more about this,” Kolling said. “Over the coming years, those pressures and those desires from consumers to want to know more about how their food was produced and having greater expectations, we believe it’s going to grow and will continue to trickle back to the farmer. I think some of those more resistant farmers may realize that this is the way things are going.” Most farmers aren’t yet feeling those market impacts, she said, but there are other compelling arguments for their linking arms with Cargill on water. “At the end of the day, farmers are businessmen and women,” Kolling said. Toward that end, her company is helping farmers understand the business case today for improving water management practices, ranging from improving soil health to ensuring community water supplies. “It helps us make the change we want to make for the environment and for social and economic reasons.” And, of course, there’s climate change. Specifically, its relationship to both water quality and quantity, as well as the role of farming in sequestering carbon dioxide, which, in turn, improves soil health. “Water is so critical for nature, for agriculture, for communities,” Smoor said. “And it has that synergies with climate change.”  For example, she said, “Look at soil health practices. They help in carbon sequestration and they help in reducing greenhouse gas emissions. That is tied to fertilizer use, water quality and runoff. So, soil health practices provide water quality benefits. And through increasing soil moisture, we actually make sure that more water can recharge, so you have improved water availability. They really go hand in hand, which is such a powerful thing. Through combining these, you have so many touchpoints, whether it’s through farmers or regulators or the community.” Pooling resources As with every sustainability issue, one company’s leadership action is but a start. It will take collective action to achieve global goals, but also to ensure each company’s efforts aren’t undermined. For example, Cargill’s water conservation efforts in a particular basin may be for naught if other companies, large or small, aren’t similarly engaged there. In April, Cargill  announced that it would contribute $2 million to the next phase of its partnership with WRI. The two entities said they will combine their expertise to accelerate the development and improvement of tools, including a new Water Management Toolkit, to enable companies to set science-based targets for water. The toolkit “will allow us to address shared water challenges and promote sustainable water use within planetary boundaries across the industry,” they said in a statement. Cargill is already making its methodology publicly available. “We’re hoping we can invite others — customers, competitors, whomever — to collaborate with us where their sourcing and focus may intersect with our same watersheds,” Smoor said. But companies seem to be uncertain about when to jump into the pool. “We’re getting a lot of questions from companies like, ‘Should I wait for better data or should I wait for the Science-Based Target Network to tell me what exactly to do?’” WRI’s Walker said. “We’re really trying to encourage companies to act now. I think Cargill is a good example of this.” On the other hand, Smoor said, companies can wait until — some day. “You can continue to analyze everything forever, and especially in water, with all the different aspects. You can get stuck in risk analysis. You can get stuck in needing better data. Our approach is, we’re starting now; we’re going to drive the change. We will validate if we are doing the right thing.” I invite you to  follow me on Twitter , subscribe to my Monday morning newsletter,  GreenBuzz , and listen to  GreenBiz 350 , my weekly podcast, co-hosted with Heather Clancy. Pull Quote If there’s a more robust enterprise level ambition for water, I haven’t seen it. 600 billion liters — it’s insanely large. It’s more than the total amount of water that we use in all our operations. Topics Food & Agriculture Water Efficiency & Conservation Science-based Targets Featured Column Two Steps Forward Featured in featured block (1 article with image touted on the front page or elsewhere) On Duration 0 Sponsored Article Off Shutterstock

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How Cargill’s new science-based water targets go with the flow

Danone’s Eric Soubeiran: ‘The food system is broken’

July 20, 2020 by  
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Danone’s Eric Soubeiran: ‘The food system is broken’ Cecilia Keating Mon, 07/20/2020 – 00:30 Earlier this year, Danone became the first listed company to become an “enterprise à mission,” a new type of corporation created by a 2019 French law. The pioneering governance structure will see the food giant officially entrench environmental, social and societal objectives into its bylaws, alongside more typical profit goals. Danone, founded more than a century ago and famously declared an asset of national importance by the French government in 2005, has long prided itself on being a purpose-led business. Its new status is the latest in a string of moves the company has made to boost its environmental, social and governance (ESG) credentials as it works towards meeting a highly publicized aim of becoming one of the first B Corps certified multinational. Eric Soubeiran, the company’s vice president of nature and water cycle, explained that weaning the company off intensive farming is at the core of its new sustainability mission. Danone, which owns a range of household brands including Volvic, Evian, Actimel, Alpro and Activia, is first and foremost a dairy company, after all. “If you really want to do sustainability well in a company, you need to know your business well,” Soubeiran said. For a food company, that means knowing how and where you source your ingredients, what your customers want, and understanding the provenance of your direct and indirect carbon emissions. “Concretely, when you look at Danone, 60 percent of our carbon footprint is from agriculture,” Soubeiran acknowledged. “Eighty-nine percent of our water footprint is from agriculture. [Sustainability] starts from knowing your Scope 3 [value chain emissions]. It is looking at the elephant in the room, and going after it piece by piece. That is why it’s very important for us to have an opinion about the agriculture model we want.” [Sustainability] starts from knowing your Scope 3 [value chain emissions]. It is looking at the elephant in the room, and going after it piece by piece. As such, the company is working with farmers worldwide to adopt a regenerative approach to farming that encourages healthier soil and ecosystems, better water stewardship and a broader diversity of cultivated seeds and crops. Danone is providing training to farmers in France to make the switch to new techniques to meet a goal to rely on 100 percent regenerative farming in the country by 2025. And in order to encourage the approach beyond its supply chain, Danone recently founded the One Planet Business for Biodiversity (OP2B) initiative, a cross-sector effort to improve the private sector’s approach to biodiversity. The strained food production system is begging for reform, argued Soubeiran. “It is very clear in Danone’s vision that the food system is broken,” he reflected. The practices ensconced in the “green revolution” of the 1970s, he said, have “intensified agriculture practices to a point where we have created a situation where food has become a commodity. And by definition, a commodity has no value or very limited value. That’s why [as an industry] we are focused on volume, not quality, and how we have reached a point where we accept the fact that 30 percent of all food produced globally is wasted.” The transition away from intensive farming, he stressed, not only can prevent the loss of wild species, create better working conditions for farmers and livestock, end monocropping and protect local ecosystems, but is also a lever that Danone must pull if it is to reduce its carbon emissions to net zero by mid-century in line with global climate goals. Soubeiran has experience disrupting what he dubs “linearalized” food chains and moulding them to be more sustainable. In a previous role at Danone, he was charged with managing the company’s milk supply during the period when France liberalized its previously tightly controlled milk market. The company decided to eschew a price mechanism focused on volume and set its milk price based on the cost of production, giving Danone leeway to firm up production conditions with farmers. “We wanted to stabilize our relationship with farmers so that we could discuss the way they were farming, talk about sustainability and animal welfare,” Soubeiran explains. “It’s hard to do that when you have huge [price] volatility.” Indeed, Soubeiran is under no illusions that the wholesale transition to regenerative farming comes at a cost premium, despite growing interest in sustainable products from customers across Danone’s markets. “There is a market for sustainable food — people look for it — but we need to develop parallel stream of financing,” he said. “That’s why Danone has signed the green recovery appeal at the European level, because we believe the transformation and the renegotiation of the agriculture policy is instrumental to that.” There is a market for sustainable food — people look for it — but we need to develop parallel stream of financing. An additional stream of financing is targeted at helping farmers improve the quality of what they are producing while keeping prices down for the customer, Soubeiran explained. As such, in May the company urged the EU to use its upcoming Farm to Fork and Biodiversity 2030 strategies to establish an EU Common Food Policy that provides incentives to farmers to switch to regenerative practices. These, the company suggested, could range from crop and livestock insurance that minimizes the risk of lower yields through the transition process; “innovative multi-stakeholder financing mechanisms” or carbon bonds for agricultural products with pricing adjusted to reflect soil carbon sequestration performance; and guarantees of “first loss” inspired by the renewable energy sector that would allow farmers to fund the transition to more resilient agricultural systems. Soubeiran contends that the coronavirus has, in some respects, made his mission easier, given that the animal-originating coronavirus has underscored how ecological systems support human life. “If we protect biodiversity, we are basically protecting the diversity of DNA,” Soubeiran mused. “There’s also a sanitary aspect to it, given that we’re protecting corridors of biodiversity. While that was not that obvious six months ago, that’s obvious now for everyone.” He points out more than 65 percent of all emerging infectious diseases in humans are zoonotic — transmitted to people from animals. But, while the zoonotic coronavirus has turbocharged public understanding of biodiversity and served as a “call to action” for Danone’s corporate sustainability initiatives, Soubeiran concedes that on a practical level the pandemic has hampered the firm’s ongoing efforts to transition farmers to regenerative practices. For example, when social distancing regulations were at their most demanding, trips to train farmers on new practices and discuss investment and financing plans became logistically impossible. On the bright side, however, the crisis has underlined the resilience of Danone’s direct sourcing model, he says, which minimized supply chain disruptions caused by the pandemic. The firm sources 75 percent of products directly from suppliers, Soubeiran explained, adding that the model is a major boon in a world where collaborations and knowledge-sharing between multinationals and their suppliers are critical to meeting carbon targets and other joint sustainability objectives. Soubeiran contends that there is a healthy appetite from company shareholders for Danone’s growing file of sustainability initiatives, in particular its decision at the close of last year to publish carbon-adjusted earnings per share (carbon EPS) in its quarterly reports. The metric sends a very strong message to shareholders that the company “has done its homework” on counting its Scope 1, Scope 2 and Scope 3 emissions, according to Soubeiran, as well as exposing them to the invisible cost of carbon. Danone, banking on the assumption it reached peak emissions in 2019, is confident that its carbon-adjusted EPS will rise over the years to come. And investors are engaging with the approach — in 2018, Soubeiran estimates he had 70 interactions with shareholders; last year, it had more than doubled to 190. Moreover, in late June, 99 percent of shareholders backed Danone’s motion to become an “enterprise à mission,” a turnout dubbed “mind-blowing” by Danone chief executive Emmanuel Faber. “Huge kudos to our shareholders after today’s unanimous support of the change of Danone’s by-laws to incorporate health, planet, people and inclusiveness objectives as part of our mission,” Faber enthused. “You showed evidence that finance can change the world. It is on us, boards and CEOs, CFOs to engage finance on what matters. It responds. Big time.” Very often, sustainability is seen as a constraint — about less carbon, less pesticide, less fertilizer. Over the coming months, Soubeiran will focus on steering a cross-sector effort to improve the private sector’s approach to biodiversity, dubbed the One Planet Business for Biodiversity (OP2B) initiative. The coalition, launched by Danone at last year’s UN COP climate conference, counts consumer goods heavyweights L’Oréal, Google, McCain, Walmart, Kellogg, Nestlé and Unilever. The companies have promised to work together to scale up regenerative agriculture practices, to increase the number of ingredients sourced in order to reduce the world’s reliance on a handful of crops, and to better protect local ecosystems through nature restoration and eliminating deforestation. The group is developing a framework for action that will be unveiled at the IUCN World Conservation Congress, postponed six months to January in the wake of the pandemic. The initiative has been inspired by “systems thinking,” Soubeiran explained, and will focus on specific actions that can be monitored instead of overarching science-based targets or percentage-based goals. “With OP2B the focus is on action, action that can trigger a transformation,” he said, adding that that the single-issue, action-orientated initiative is “quite a new way of collaborating” for Danone. Overall, Soubeiran is buoyed by the boundless opportunities’ biodiversity boosting initiatives present to food companies looking to enrich their portfolios — a fact underlined by this week’s World Economic Forum study highlighting how a nature-focused recovery could deliver over $10 trillion of economic gains . “Very often, sustainability is seen as a constraint — about less carbon, less pesticide, less fertilizer,” Soubeiran reflected. “But biodiversity is about more: More choice, more taste, more experience. It’s a very interesting topic and creates a positive spin on sustainability.” Pull Quote [Sustainability] starts from knowing your Scope 3 [value chain emissions]. It is looking at the elephant in the room, and going after it piece by piece. There is a market for sustainable food — people look for it — but we need to develop parallel stream of financing. Very often, sustainability is seen as a constraint — about less carbon, less pesticide, less fertilizer. Topics Food & Agriculture Leadership COVID-19 Biodiversity Regenerative Agriculture ESG COVID-19 BusinessGreen Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Workers fills up milk storage tank at a Danone dairy plant in Normandy, France, April 2008. Source:  Photoagriculture Shutterstock Photoagriculture Close Authorship

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Danone’s Eric Soubeiran: ‘The food system is broken’

An unexpected breakout year for the social side of ESG

July 13, 2020 by  
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An unexpected breakout year for the social side of ESG Mike Hower Mon, 07/13/2020 – 01:30 About six months ago, I wrote that 2020 would be a pivotal year for environmental, social and governance (ESG), and that what happens this year and over the next decade could determine the next century. While it would be the world’s biggest understatement to say 2020 isn’t turning out the way we all thought or hoped it would, I stand by my conclusion. This is a critical time for corporate sustainability. What we do or don’t do will change the world, but for reasons nobody could have predicted in December. The mass climate protests of 2019 and subsequent outpouring of major corporate climate commitments from the likes of Amazon, IKEA and Kering, among others, seemed to indicate that 2020 would be the year of the E in ESG — when corporate climate action hit critical mass. In January, the momentum built as Microsoft committed to becoming carbon-negative and BlackRock Chairman Larry Fink’s now-fabled letter to CEOs called the climate crisis a “defining factor in companies’ long-term prospects.” The climate crisis even topped the discussion list at the World Economic Forum Annual Summit in Davos. And then along came a global pandemic, and everything changed. As the world went into lockdown, ESG conversations shifted from the E to the S, or social — how companies were responding to COVID-19 in terms of employee health and welfare. The emphasis on the S intensified even further after the murder of George Floyd sparked a movement for racial justice and employees, customers and investors demanded companies take a stand.  As social issues move to the forefront of ESG discussions, 2020 is turning out to be the breakout year for the S. To better understand what this means for the future of corporate sustainability, thinkPARALLAX recently gathered investors and corporate sustainability practitioners from TPG, JUST Capital, Workday, The Estée Lauder Companies and KKS Advisors for a digital Perspectives discussion .  The S moves to the front seat In the long road trip of corporate sustainability, the S mostly has ridden in the backseat — with the E and G commandeering the wheel and Spotify playlist. That’s because social issues are tough to quantify.  While calculating a carbon footprint is comparatively easy, how does one create science-based targets for worker welfare or racial injustice? Sure, an organization can make efforts to diversify its board and workforce, or create programs to improve worker welfare, but this is only a start.  Addressing deeply rooted systemic inequalities requires a much greater commitment and means of measuring success. Until now, companies have gotten by with doing nothing or just the bare minimum. No longer, thanks to the events of 2020. “We’re at a turning point in ESG,” said Martin Whittaker, CEO of JUST Capital . “What’s happened in the past three months has done 20 years of S work.”  [node:field-gbz-pull-quote:0] Moving forward, corporate board members, investors and executives will be expected to consider worker welfare and complex social issues such as racial inequality. “Companies are scrambling to address these issues, and everyone needs to throw out the manual and completely rethink how they approach equity in the workplace, because something is not working,” Whittaker said.  But as the S takes over the wheel, are environmental issues, the E, getting pushed into the backseat? No, said Alison Humphrey, director of ESG at TPG . “It’s just joined climate in the front seat.” E and S: better together The great thing about ESG is that it isn’t a zero-sum game. A renewed focus on the S actually might help companies do a better job of addressing environmental challenges because the two are linked. People of color or low-income socioeconomic status, for example, are suffering and will continue to suffer first and worst from the negative effects of the climate crisis, says Union of Concerned Scientists .  “There’s so much interesting intersectionality with social justice and climate — they are both so connected,” Humphrey said. “Climate work is hard and exhausting, and many people don’t feel the urgency or balk at the initial cost of the transition or fail to grasp how dependent humanity is on our ecosystems. In many ways, it mirrors many of the challenges with social justice — and you can’t address one without the other.” While measuring social impact remains difficult, this no longer will be an excuse for companies not to try.  “With this sharp focus on how integral social issues are to our ability to achieve an equitable society and make environmental progress, we will collectively need to get a lot better at measuring and communicating the S, just as we have with environmental topics,” said Aleksandra Dobkowski-Joy, executive director of ESG at The Estée Lauder Companies. Even before the events of 2020, Workday factored social impact into its environmental sustainability strategy, said Erik Hansen, director of sustainability at Workday. “The events of the past months have illustrated how valuable systems thinking is, and showing that we are a connected, global community. That connection between climate, the environment, people and health.” When Workday installed EV chargers at its headquarters, for example, this was not just so software engineers could come to work in a Tesla, Hansen said. It was also so that the company could minimize environmental impacts such as air pollution, which disproportionately hurt disadvantaged communities. Likewise, as Workday works toward its 100 percent renewable energy goal, the company is advocating for a just transition to clean energy that accounts for those who might be affected economically — such as workers in the fossil fuel industry — and ensure that nobody is left behind. One of the most effective ways to honor the E and the S might be focusing on the G, according to Anuj Shah, managing director at KKS Advisors : “One of the things we’ve looked at is how the G — the governance part — supersedes the E and the S. If you can get the G right, the E and S will follow.”  What racial justice means for business As mass protests erupted across the globe after the murder of Floyd, a chorus of companies voiced support for addressing racial inequality, and some even committed to doing something about it. But what comes next? “We’re at a point where we need to take substantive action, as individuals and as corporations, to deliver on social justice. I’m incredibly proud of the commitment made by The Estée Lauder Companies to promote racial equity, as a starting point for real progress and lasting change,” Dobkowski-Joy said. According to Humphrey, TPG came out with a statement and commitment to take action by first taking a step back to reflect on its role and how it can best address system inequalities as a private equity firm. “The question is, what is your company’s role in rectifying injustice in our system? This needs to come uniquely from each department, a top-down and bottom-up approach.” A hopeful future for ESG Despite the setbacks of 2020, there remains reason for hope. The ongoing global pandemic is shattering the longstanding myth that companies must sacrifice return to be a good corporate citizen — ESG funds are outperforming the wider market during this economic downturn.  And we are learning through much trial and error — emphasis on the “error” — how to address an intractable problem that harms everyone yet that no single government, organization or individual can solve alone. Relentless competition may be giving way to constructive collaboration. And these lessons might still be applied to address the ultimately more existential crisis of the climate.  [node:field-gbz-pull-quote:1] “In the midst of this tremendous upheaval, we’re all pulling together in ways which were unfathomable just months ago — and showing that collective action is actually possible,” Dobkowski-Joy said. Climate may begin to take on a new importance as a long-term threat to society as climate risk exposes inequities just as COVID-19 has, Whittaker said. “COVID-19 has taught us the importance of resilience, interdependence and systemic risk and how to address that — and how we can be more effective working together. I’ve seen a lot of collaboration over the last three months, which I wouldn’t have expected to see. I think it has brought out a lot of humanity in business which has all been about profit making.”  Shah of KKS was more cautiously optimistic. “I’m concerned that a lot of companies are going to feel pressure to maximize profits coming out of the pandemic into a new normal. ESG and short termism don’t necessarily go together. Long termism is a prerequisite for ESG.” However, Shah added that he has been inspired by the mass movement for racial justice being driven by the younger generation. As Millennials and Generation Z continue to take over the workforce and enter leadership roles, this activist mindset could change the future of ESG.  Humphrey suggested companies should take a look at business model resilience and how it is intertwined with ESG issues. “Perhaps we can focus less on the rolling back of budgets, which has happened for many companies across the board, and instead on how the pandemic has compelled us to look beyond one-off CSR and sustainability initiatives toward a more strategic, integrated and business-aligned approach to managing these 21st-century risks,” she said.  As we continue to push forward toward an uncertain future, the only certainty is that things will change. And it’s up to all of us to make sure that it’s for the better. Pull Quote What’s happened in the past three months has done 20 years of S work. We will collectively need to get a lot better at measuring and communicating the S, just as we have with environmental topics. Topics Corporate Strategy ESG Environmental Justice Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off

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An unexpected breakout year for the social side of ESG

Where are they now? Catch up with 30 Under 30 alumni

June 29, 2020 by  
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Where are they now? Catch up with 30 Under 30 alumni Heather Clancy Mon, 06/29/2020 – 02:30 June 22 marked the publication of the fifth annual GreenBiz 30 Under 30 , our report celebrating rising young professionals in the field of corporate sustainability.  What’s up in the worlds of the 120 alumni from past lists? We reached out this spring to check in, asking those inclined to weigh in on how current events have changed their world views. We asked them to consider two questions: With the world turned upside down, what is your focus at work? Do you think the COVID-19 crisis marks a turning point for the sustainability movement?  Following are some of their responses, lightly edited, representing perspective from all four past cohorts. We did not specifically ask the alumni to consider the broader question of systemic racism, as our outreach was completed prior to the national protests triggered by the death of George Floyd in Minneapolis. But look for future updates and essays on this topic, such as the one digitally penned recently by Jarami Bond (named in 2017). One final note: Be sure to check the end of this article for quick job updates from others who responded to our outreach but chose not to comment on the two questions. Without further ado, here’s what’s up with members of past GreenBiz 30 Under 30 cohorts. And, if you want to consult those lists in their entirety, here are the links: 2016 , 2017 , 2018 and 2019 . Jessica Artioli Centurião ( 2018 ) Digital Innovation Manager, BASF; Sao Paulo, Brazil COVID-19 will definitely change the world, and I truly hope that this will bring a new priority for sustainability topics. We as human beings and our planet are all connected. That’s why I hope that after COVID-19 we will be more human and environmental-driven than money-driven. If our environmental is suffering, we will suffer at some point. We cannot forget that a better future is 100 percent in our hands, because WE, and only WE, have the power and the resources to make better decisions, to be more conscious. Sustainability must be a must have and not a nice to have. We are constantly looking for innovation and solutions that can help us in this new way of remote work, to improve our interactions to our customers and to be more emphatic than ever. We don’t need outstanding experiences now; we need to shelter our customers, our people, our environment.  Holly Beale (2019) Program Manager, Datacenter Environmental Sustainability, Microsoft; Seattle My environmental work in Microsoft’s datacenter communities has certainly been disrupted by the global crisis. Plans for tree-planting programs have been postponed; workshops for sustainability employment training are on hold; and community gatherings for local environmental projects are on hiatus.  As I get the chance to meet in virtual roundtables with community members, it can easily get pretty discouraging. However, right now I’m focusing on two main things: Focus on being flexible and understanding the unpredictability our community groups are facing; being sympathetic and supportive in the ways they need, even if this differs from our original approach. And turning towards smaller-scale, grassroots engagement. We’ve been able to shift many environmental projects’ approaches to the home-scale, like home gardens, yard tree plantings and home recycling campaigns.  As we emerge, we are learning how to build the capability to truly understand, qualitatively and quantitatively, our communities’ vulnerabilities against a much broader set of scenarios. In a way, we are seeing this crisis as an illustration of how expensive the failure to build resiliency can ultimately prove. As we are learning, in climate change as in pandemics, the costs of a global crisis are bound to vastly exceed those of its prevention. We’re understanding that the seeds we sew today will grow our shade for the future, and without rolling up our sleeves now and getting dirty, the future will force our path in a direction we do not desire.  Can I talk about one trend that’s emerging which is giving me incredible hope? The shift towards plant-based protein has been a movement I’ve been following closely, with baited (tempeh) breath. We know that animal agriculture is now recognized as a leading cause of global warming. According to Project Drawdown, eating a plant-based diet is “the most important contribution every individual can make to reversing global warming.” But even in parts of the population unconcerned with the devastating environmental effects, this virus’s life disruption is forcing our awareness of meat farms being a “breeding ground for pandemics.” Issues of health, the working poor and racial justice are making people uncomfortable, and with the supply chain disruption with the closing of meatpacking cesspools, Jonathan Safran Foer writes, “Our hand has been reaching for the doorknob for the last few years. COVID-19 has kicked open the door.” And it’s really happening. Earlier in May, sales of alternative meat products in grocery stores went up 264 percent! I’ll certainly be watching this trend, and I’m more hopeful for it than I’ve been about any singular issue in a long time. John Bello (2018) Project Manager, Skanska; Portland, Oregon After doing some research in Prague on carbon negative building materials, I have relocated to Portland and am currently working as a project manager/sustainability lead on the PDX Airport Terminal Core Redevelopment (TCORE) Project. We are using the newly developed Embodied Carbon for Construction Calculator (EC3) to support low-carbon procurement on structural steel, piles, rebar and concrete. We are also working directly with Pacific Northwest lumber suppliers to procure sustainably harvested glulam beams for the airport’s new undulating roof structure. Fortunately, we have been able to continue construction during the pandemic and have made several changes to our operations to promote social distancing, hand washing and face coverings. Despite the crisis, I am pleased to see that we have not wavered on our approach towards sustainable procurement and low-carbon development.   Sara Bogdan (formerly Lindenfeld) (2016) Manager Sustainability and ESG, JetBlue; New York  My job is typically one where I am frequently traveling and in the operation. My favorite part of my work has always been implementing emissions and waste reduction projects, allowing me to visit airports and meet crew members all across our network.  But now, being “grounded” along with everyone else, of course my day-to-day has shifted. We are inventing new ways of coordinating sustainability programs from afar. Our priority and resolve hasn’t changed. For JetBlue and my team, COVID-19’s massive impact to our business and way of life has only reinforced the importance of smart, sustained ESG risk management. Our industry was, of course, abruptly and majorly changed by the global pandemic. For us, this only bolsters the imperative of thinking through how we can mitigate additional ESG risk factors that may present themselves next — such as those associated with a warming climate. I am proud that we have already made industry-changing moves to set JetBlue up for success, including the first U.S. airline to announce a carbon-neutral domestic operation, purchasing sustainable aviation fuel and rolling out fleets of airport electric ground vehicles, to name a few. Willemijn Brouwer (2018) Lead, Internal Engagement for Sustainability, DSM; Heerlen, Holland While the dystopic headlines made me temporally get rid of my news apps, I now truly believe we can seize this global crisis as a tremendous opportunity. Albeit the virus bringing terrible consequences for the vulnerable in our society, it has demonstrated to be very inclusive and diverse in who it has hit. In other words, all countries and all people are experiencing the consequences. It’s a truly global challenge, but that also ignites a global awareness we have to build back better. In my own job at RoyalDSM, I was afraid my co-workers couldn’t be bothered less with my projects around sustainability ambassadorship. And I couldn’t be more wrong! There is a genuine and collective interest how we as a company and as individuals can contribute to the sustainable future of society at large. The past months have shown me that together we stand strong and we can achieve a lot — faster and more determined than ever. Devin Carsdale (formerly Kleinfield-Hayes) (2017) Sustainability Compliance Auditor, Inter IKEA Group; Philadelphia I do think this crisis will force business to rethink its many assumptions about how it has conducted itself up until now. I traveled quite extensively for my job, securing IKEA’s supply chain throughout the Americas and meeting with suppliers to advise or verify the compliance of its many social, labor and environmental requirements. This situation has forced our team to do all of those activities virtually; some of which have the potential of staying that way permanently and others that may still need our attention in person. I have heard IKEA leadership referring to coming back stronger than ever and there is no question that its 2030 strategy is at the heart of it; with product circularity, renewable energy investment and taking care of workers as some of the key tenants, IKEA’s stewardship continues to be part of its core business model. My hope is that customers will reward companies that prioritize workers and the environment and have their precious purchasing power signal to the markets that “sustainable” business is the only kind of business here to stay. HY William Chan (2019) Urban Designer and Planner; Sydney, Australia We won’t have business as usual again, and we shouldn’t want it. Business as usual wasn’t working. We can evolve business (and cities, governance and individuals) to be and do better. The time is now to flatten the climate change curve. My focus is on “unlearning” the urban systems that we had taken for granted, the city challenges that were hidden until now, and shifting that paradigm long term. This includes a radical redesign of sustainable high density living, the development of better public spaces that support sustainable, personal active transport of walking and cycling, and to address gaps in food supply by innovating for more localized urban “farm to fork” approaches. I see these urban challenges as long-term opportunities in sustainability, catalyzed by what we have experienced together during the pandemic. Alexandra Criscuolo (2019) Environmental Sustainability Manager, New York Road Runners; New York As New York Road Runners’ Environmental Sustainability Manager, I have been tasked with developing and driving the execution of NYRR’s organization-wide sustainability strategy, which includes improving the sustainability of the TCS New York City Marathon, NYRR’s weekly running races, and our facilities.  Just prior to the pandemic, we wrapped up measuring our sustainability baseline with Waste Management Sustainability Services, and I was developing our detailed plan for the year ahead. As our programs and offerings began to shift and events were canceled as a result of the pandemic, we pivoted to donate unused equipment and other items to help frontline medical workers and others in need. I organized virtual meetings with stakeholders across the organization to determine a plan to keep the items from the landfill and give them another life. I am optimistic and believe this major disruption of our “business as usual” will allow us to rebuild a more sustainable future. A future that is more regenerative, circular and healthy for humans and the planet we call home. While operations have come to a halt, the climate crisis has not, and this pandemic can certainly be a turning point for the sustainability movement. We are focusing on two major goals: Planning for future events to be as sustainable — and safe — as possible while also using this time to enhance our sustainability data gathering process to make it as smooth as possible for the time when we return to operating races. Joseph Gale (2018) Environmental Specialist, RS&H; San Francisco RS&H Practices and Resource Groups are pushing forward to meet the ever-changing needs of our clients, as well as are furthering internal initiatives and external growth strategies. I am pleased to announce that in May, I received the approval to initiate an enterprise approach to corporate sustainability. Through collaboration with an internal cross-practice committee, this two-year effort achieved success with development of a business case, scope of services, and presentation to the company CEO in October. The Corporate Sustainability Team will be working with our CEO and executive team to implement new initiatives as they relate to sustainability and operational resilience. Alison Humphrey (formerly Larkins) (2019) Director, ESG, TPG Capital; San Francisco The COVID-19 pandemic has compelled world leaders, companies, communities and individuals to take urgent, collective action to confront a critical issue risking harm to people across the globe. It also illuminated challenges and opportunities previously obscured in the blurred corners of complex and interconnected global supply chains. My hope is that we can harness this energy and approach to address the climate crisis. In this spirit, I’m hearing from many companies that they are seizing this opportunity to reset, reassess and consider how we enhance and “rebuild” business and civic processes through an ESG and climate lens. From where I sit, I don’t see us losing momentum. Certainly, we’ll need hold ourselves and each other accountable, but I think ruthless optimism and hard work are ultimately what will get us to where we need to go. Kamillah Knight (2019) Diversity and Inclusion Lead, Unilever; Englewood Cliffs, New Jersey My focus at work has been providing tools, trainings and resources for all of Unilever’s employees in North America, focusing primarily on parents, women and our POC talent. My goal is to continue to create new and innovative ways to engage people both during and outside of their workday to ensure that they can show up as their best self no matter what. I do believe that the COVID-19 marks a turning point in the sustainability movement. We have seen countless reports during this time that make mention and provide facts around the decrease of pollution and harmful effects on the environment as a result of everyone being quarantined. This has led many people to say that they think it should be required for people to stay home for a certain amount of days in the year to give the environment a “break.” This time has not only changed the way that we see the environment and how it should be (without pollution), but it has also changed the way that people view other people and their needs given the huge disparities that exist in different communities, in addition to the value that people bring in the work that they do. The needs and diversity of communities is a huge component of achieving the SDGs and/pushing forward the sustainability movement. With the change in thought I am confident that we will see more people that will lean into sustainability than ever before. Just look at how companies are even responding. The most pressing issue on my mind right now is using the time that I am privileged to have right now to build stronger relationships and connections with my loved ones and to do the things that I didn’t have time to before. This is time that we will never get back in the same capacity. I am grateful and I know how I use this time will be reflected in how I “re-enter” the world once things open back up. Media Authorship UN Global Compact, Arlene Thompson Close Authorship Jillian Lennartz (2016) Manager, Sustainability Reporting, Teck Resources; Vancouver, British Columbia The COVID-19 pandemic has hit at a particularly interesting time for me. I moved from the U.S. to Canada in mid-February without any inkling that the border would snap shut behind me and the job market would suddenly all but dry up. Being a new immigrant looking for a job while there is a global health and economic crisis is not a situation I anticipated being in when I made plans to move. However, I was fortunate to have landed in an area with a few exciting roles that remained open despite the shutdowns. I’m beyond ecstatic to have started in a role with Teck Resources. I’ll be standing in for a fellow 30 Under 30 honoree (Katie Fedosenko, 2017 cohort) who will be going on a year of parental leave. She has built an impressive ESG program, which I anticipate will further evolve as the current global crisis plays out. SARS-COV-2 has noticeably impacted the entire process of interviewing and on-boarding. I have yet to step foot in Teck’s headquarters. Every interview, meeting and training has been remote, which has been an adjustment for both myself and the teams with Teck. Fortunately, I come from a generation and a culture that’s already very accustomed to using technology to its fullest; I believe we may have been the first generation to be referred to as “digital natives.” It therefore hasn’t been an entirely foreign experience to have meetings over teleconference and use cloud-based file sharing for collaboration. Especially as sustainability practitioners we have worked with stakeholders around the globe and formed relationships with site representatives we may never meet in person. I feel that as a profession we’re well-situated to continue our work as uninterrupted as possible. Ding Li (2018) Partner Business Development Manager, CLP Innovation; Hong Kong Ever since the COVID-19 crisis started in January in Hong Kong, I have been working from home and minimizing contact with people. As an extrovert, I have a strong need to be surrounded by people. I remember the first week of staying at home, I felt really bad. Boredom turned into negative thoughts, and negative thoughts turned into depressing thoughts. At the end of the week, I almost vomited because mentally I felt really sick.  I realized this is a problem and I have to fix it — I started to schedule virtual coffee meetings with friends in the sustainability industry. They shared with me how COVID-19 has impacted their organizations, their job roles and their personal life. Facility managers say they have discovered energy use issues in their buildings — buildings are not able to adjust loading with the decrease in occupancy; sustainability managers shifted their focuses from environmental issues to community engagement; and others say they spent more time with their family and experienced work-life balance for the first time. They have taken advantage of the situation and used it to enhance their companies’ sustainability strategy and their own personal goals. It is a rare opportunity for me to engage people who I know professionally in a personal way. It helped me to cope with the difficult self-isolation situation and allowed me and my friends to be united in this crazy time.  Meanwhile, I built an office space at my rooftop, which helps me to stay focused and separate work from personal life. I have cooked more healthy meals and now I am enjoying my time at home. If not because of COVID-19, I would not know how resilient and adaptive everyone can be.  We would not have imagined millions of people could stay at home to avoid a pandemic, just like we would not have imagined countries and businesses could truly collaborate and build a zero-carbon economy.  I am proud of what humanity has accomplished so far when facing the challenge of COVID-19, and I believe this gives us a reason to be optimistic when facing the climate crisis. We are more resilient and adaptive than we think. When there is a will, there is a way! Idicula Mathew (2019) Founder and CEO, Hera Health Solutions; Memphis Throughout the COVID-19 pandemic, our team at Hera Health Solutions has been closely interacting with leaders in the industry to build strategies and innovations that will outlast to redefine the new normal in healthcare. As a startup that is an innovator in pharmaceutical devices, Hera Health Solutions is now looking forward to help shape the future of sustainable long acting medications. Since my being featured in GreenBiz 30 Under 30 in 2019, Hera Health Solutions has closed a more than $1.25 million investment round led by leaders in healthcare venture capital firms and impact organizations. With the new funding, the Hera Health Solutions team has grown. Now even more notably, Hera Health Solutions has kickstarted new R&D for its proprietary implantables for areas of other extended release medication potentials including vaccinations. On the other side of this global pandemic is a new normal that we will establish together. And while there is an undeniable number of uncertainties, one thing for sure is that the healthcare and pharmaceutical industry has now changed. The world had to witness the sudden and overnight decline of hospital and physician resources. The new demand in contactless and physically distant healthcare has now become a precedent for the future. Now more than ever, the need for more effective and sustainable long acting medications to patients and users is highlighted more than ever.  Ana Sophia Mifsud (2019) Senior Associate, Rocky Mountain Institute; New York Life in New York has certainly felt intense over the last couple of months. In the midst of all the chaos, my work has never felt so important. Since my 30 Under 30 nomination, I have shifted roles and am now working on deep decarbonization a little closer to home. I have joined RMI’s Building Electrification program, which is focused on eliminating fossil fuels in buildings. What many don’t realize is that roughly 70 million homes and businesses directly burn fossil fuels for heating and cooking. In addition to contributing to almost 10 percent of the U.S.’s climate impact, these emissions lead to unhealthy living situations. Even before the pandemic hit, on average, Americans spent about 90 percent of their time in buildings. Yet, indoor air quality has remained largely unregulated, leading to disproportionate health impacts, particularly in already vulnerable populations.  While our work is more important than ever, we’ve had to make some adjustments in order to continue convening and strategizing virtually. I’ve developed some best practices to help guide this recalibration and am putting them in practice while facilitating an eLab accelerator team focused on decarbonizing affordable multi-family housing in Chicago. In this decisive decade of climate action, I feel fortunate to be working on developing solutions that create sustainable jobs, reduce our climate impact and create healthier places for us all to live and work.  With regards to whether the COVID-19 crisis marks a turning point for the sustainability movement, I’m not sure. But I firmly believe we should all act in the spirit of applied hope . The type of hope that catalyzes action out of the belief that we can create the type of future we deserve. Catherine Queen (2017) Senior Manager, Sustainable Development and B Corp, Danone; Broomfield, Colorado As a sustainability professional, and a stubborn climate activist, I see the stark parallels between the pandemic and climate change. Climate change is unseen in our daily lives — until it isn’t — much like this virus. Those impacted the hardest are vulnerable populations.  Amid the uncertainty, my specific focus at work has not shifted. After leading Danone North America to become the world’s largest Certified B Corporation, I continue to work to integrate the environmental and social mission into how we run our business — inspiring and engaging teams to take action every day to balance short-term profits and results for long-term social and environmental implications, including and especially during a pandemic.  While the pandemic has shown how interconnected we all are, and I have seen many inspiring examples of our shared humanity, it is devastating to see continued areas of grave disconnectedness with ongoing inequality and inequity. Our collective response to the pandemic has also shown what we can do, as a company and as a society, when we use our collective voices and action. I hope next year when these updates are requested, we will have globally proven that collectively we made a difference, to create a better and more equitable for us all.  Similar to the mission of the B Corp Movement, this year is illustrating the importance of being bold and taking a leadership stance — even when you don’t have all the answers. We can’t address crisis on our own and my hope is this time serves as a call to action — to join together to solve the issues of our times.  Alexis Rocamora (2019) Senior Sustainability Consultant, EY Japan My focus since last year has been to help companies in Japan integrate sustainability into their supply chain management. I do so by helping them adopt supplier policies and by conducting due diligence processes to verify suppliers’ compliance with sustainability obligations (environment, health and safety, labor and human rights).  Even before the COVID-19 crisis, companies were increasingly carrying out such assessments, for several reasons (rise in due diligence legislation, ethical concerns, willingness to limit corporate risks, etc.). However, as COVID-19 is amplifying inequalities worldwide, companies are realizing that knowing their suppliers is not merely about keeping the business as usual while applying green paint on the surface, or avoiding a few inconvenient headlines in the media. As it turns out, sustainability risks of suppliers act like a cascade effect on the most vulnerable in a time of crisis: Part-time workers are being laid off, foreign workers are forced to repatriate at their own expense, workplaces with poor health and hygiene measures become hot spots for the virus to spread.  So in the future, supply chain relocalization, full transparency and mandatory supplier due diligence might become mainstream, not (only) because it is the sustainable thing to do, but because businesses depend on it. Companies have a tendency to relegate sustainability to “non-financial” issues (which doesn’t matter much to shareholders, and thus to management). I have the feeling that this crisis will contribute to the realization that businesses actually depend more than they thought on real-world considerations, which are better embedded into sustainability factors than financial statements. This might lead to giving corporate sustainability a strategic and transformational role rather than a PR and risk management one.  I’ve been re-reading “This Changes Everything” from Naomi Klein recently. In the same way that she pointed out that the sustainability movement could have been successful if it had been put at the center of mass economic transformations (such as the spread of neoliberalization since the 1980’s or the economic stimulus granted to the banks after the financial crash of 2008), I believe that the economic crisis unleashed by COVID-19 should only be addressed by measures that aim to redefine our societies’ economic model towards a sustainable and equitable one.  Regarding adaptation to the situation, my company (even in Japan) has been promoting flexible working arrangements for a long time so the transition was rather easy. What I can tell about the situation here overall is that Japanese companies are known to have a conservative corporate culture with long working hours, mandatory drinking activities with teammates and an obsession for physical workplace attendance. COVID-19 has disturbed this prehistoric work culture by forcing even the most traditional companies to massively adopt flexible working arrangements (some are even in the process of ditching the mandatory use of the Japanese “seals,” used for hundreds of years to sign every official documents!) and I hope that these changes survive the pandemic.  Alejandra Sánchez Ayala (2019) Sustainability Leader, C&A Mexico; Guadalajara, Mexico My focus for the last 12 weeks has been to make sure my team is prepared for the new normal we will be facing in the short and medium term. We have been preparing strategies for adapted versions of our programs and revisiting the ideas of what makes sense in our supply chain. In Mexico, a lot of small business have been severely affected by the economic crisis linked to the lockdown, and we have a shared responsibility to take this into account for future decisions. I do believe that this crisis has arisen questions about the implications of the environmental challenges that we might face due to climate change and what role we play as society, consumers and professionals. We are facing challenges we never believed we’d have to face. I had a conversation with some colleagues about the almost apocalyptic sight of people wearing masks all the time. Now it’s about protecting ourselves from a virus, but what if this was linked to permanently poor air quality?  Sadly, I don’t think all governments are living up to the requirements of this crisis. For example, in Mexico, due to COVID-19, some highly questionable decisions have been made regarding environmental topics, which now seems to be even a lower priority than ever. Renewable energy projects have been threatened under the excuse of COVID-19, to favor fossil fuels, a strategy the government is pushing since last year. In this context, I believe that although consumers might be willing to engage in more conversations regarding sustainability (engrained in the core of business and not as a nice to have added value), this also requires participation from governments and private industry. But in the current landscape, I don’t believe that in the short term we will be seeing the turning point we wish regarding sustainability. Devan Tracy (2018) Smart Buildings and Energy Analytics Lead, Lockheed Martin; Washington, D.C. With the world turned upside down, I’ve noticed that data visualization has been used more frequently in mainstream media to depict COVID-19 spread projections, medical supply inventory or supply chain interrelationships. We are all becoming better data scientists as a result. In the smart buildings world, this is key. I’ve partnered with our data and analytics office to continuously optimize algorithms, explore anomalies, detect faults and jump on opportunities for our newly launched, large-scale smart buildings pilot. This pilot set the stage for an expansion of the program to 50,000 additional sensors across an additional 5.8 million square feet at Lockheed Martin this year. And the beauty of smart buildings is that they were designed from day one to support remote work. It is no longer a requirement to be onsite to operate and optimize a campus.  Powerful visualization underscores the importance of the effective translation of data, allowing us to address problems quicker than ever before — and helping everybody get to the future faster, together. Check out this quick video where I talk about our smart buildings program on the LM YouTube Channel “Talk Techy to Me” series.  We are all emerging from the crisis with a refined perspective. Now more than ever, dog barks and baby cries are welcome additions to conference calls. This is humanizing and reminds us that we are all multidimensional creatures. Colleagues are increasingly accommodating, and interactions more frequently extend beyond surface level chatter. These snapshots into our personal lives bring teams closer together and make us more cohesive teams. After all, we are human beings and not just human doings. Finally, here’s a list of other comings and goings among the 30 Under 30 (presented in alphabetical order): Kelly Elizabeth Behrend (2016) left New York City for San Salvador, El Salvador, to become director of sustainability at hugo, “the first Central American superapp.” Former Easton sustainability analyst Claire Castleman (2018) has started a new position as Small Business Support Program Associate at Self-Help Credit Union. James Connelly (2016) left the Living Future Institute after eight years to become CEO of My Green Lab, a nonprofit in the life science Industry.  Fifth Element Group partner Pratik Gauri (2019) is the India host of Fintech.TV, which produces a program on ESG investing and the United Nations Sustainable Development Goals. He’s also started a new blockchain venture and is a new global youth lead for innovation nonprofit Dream Tank .   I hear Lizzie Horvitz (2017) recently started a company (still in stealth) that helps incentivize consumers to make better purchasing decisions based on the greenhouse gas emissions associated with products.  Jeffrey Jennings (2016) in January started a new role as a senior supply chain sustainability process leader with Freeport-McMoran. He’s assisting with the development of a responsible sourcing program and assessment of environmental, social, and governance (ESG) risks in our supply chain.  Entrepreneur Andrew Krioukov (2016) has become an adviser to an early stage venture fund focus on artificial intelligence and internet of things, UNION Labs. His startup, Comfy, was acquired by Siemens two years ago.  Isabel Mogstad (2019) has left the Environmental Defense Fund to become director of U.S. policy and engagement at BP.  Former Sula Vineyards and PepsiCo sustainability team member Inesh Singh (2019) recently took over as manager of agro development at Anheuser-Busch InBev in India.  If you’re a GreenBiz 30 Under 30 honoree who’d love to engage — or contribute essays about the cause of corporate sustainability, environmental justice and the clean economy imperative — reach out to me by email at heather@greenbiz.com . Topics Careers COVID-19 Corporate Strategy Collective Insight 30 Under 30 Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off

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Where are they now? Catch up with 30 Under 30 alumni

How COVID-19 can shape the response to climate change

May 13, 2020 by  
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How COVID-19 can shape the response to climate change Terry F. Yosie Wed, 05/13/2020 – 02:31 Part Two of a four-part series. Part One can be found here . As the consequences of the COVID-19 pandemic continue to unfold, insights are emerging on how to repurpose what’s been learned for the benefit of climate change mitigation. To date, most of the focus on the pandemic-environment nexus has been short-term. A number of environmental activists, for example, have recommended that temporarily reduced air pollution levels be made permanent through regulatory controls. Conversely, the Trump administration has used the pandemic as an argument to issue an open-ended suspension of the enforcement of environmental laws. These examples reflect the battle lines being drawn for an even larger conflict that is emerging over climate change policy.  Three key facts Three key facts highlight the growing stakes in play for climate change decision making. First, many parallels exist between arguments that deny the existence of climate change and the assertion that COVID-19 is a large-scale hoax designed to reduce personal liberty, confiscate the purchase and use of weapons and alter the traditional American way of life. Using Facebook and YouTube as principal social media organizing platforms and Fox News as a megaphone to broadcast their views, “denialists” have proven their ideology to be adaptable across multiple issues, including climate change, stratospheric ozone depletion and vaccinations against communicable diseases. Recent Washington Post investigations have reported linkages among groups that organize and financially support denialist demonstrations. Some of these groups also fundraise in behalf of the Trump re-election campaign. As the consequences of the COVID-19 pandemic continue to unfold, insights are emerging on how to repurpose what’s been learned for the benefit of climate change mitigation. Second, a principal argument used against greenhouse gas controls — that they rely upon data and protocols developed by scientific experts — has garnered substantial public support when applied to combating the COVID-19 pandemic. This result occurs because individual citizens understand that their personal well-being is at risk. Thus, they are more receptive to receiving guidance on how to mitigate this risk from medical professionals that they know of and trust. Also, the medical advice provided is both direct and practical — shelter-in-place, wear a mask, maintain social distancing. A similar opportunity exists to provide more specific climate change mitigation advice from independent scientists and professional bodies directly to citizens whose awareness of climate risks continues to grow. Third, there is overwhelming evidence that both the coronavirus pandemic and climate change damage were knowable and preventable. Numerous scientific reports, intelligence community assessments and public pronouncements from well-known public health or technology authorities such as Bill Gates warned, over a period of years, of the probability of a pandemic. The inability to respond to these warnings represents a system-level failure on the part of those responsible for protecting public health. A similar failure towards a system-level set of risks is unfolding with accelerating climate change. Over the past three decades, an elaborate evidence-based system has been in place for evaluating scientific data, modeling temperature changes and effects as varied as the melting of polar ice caps, sea level rise, heat waves and droughts and the spread of disease vectors. Unlike their health scientist counterparts, climate scientists have encountered a longstanding, organized campaign of skepticism and denial — funded by dark money business interests — about their peer-review procedures and their conclusions. This has resulted in direct harassment of both Individual climate scientists and established scientific bodies such as the Intergovernmental Panel on Climate Change, and has directly slowed policymakers’ and civil society’s ability to respond to life-threatening climate risks. COVID-19 outcomes for climate change planning At this juncture of managing the COVID-19 crisis, three significant outcomes have emerged that can inform responses to the climate crisis: People have connected their personal well-being to expectations of government action. They expect the institutions of government (and civil society organizations) to act on their behalf by defining essential economic activities, providing needed medical infrastructure (hospital capacity, critical supplies and tests) and maintaining civil order. Governmental officials, medical professionals and citizens have embraced the need to “bend the curve” for COVID-19 incidence and mortality. Citizens believe they have a responsibility to each other by sheltering in place, frequently washing their hands, maintaining appropriate distances, limiting their mobility and wearing masks outside of their homes. This has occurred for reasons of self-interest but also stems from moral and ethical values and notions of good citizenship. Actions to bend the climate curve Public support for a goal to “bend the climate curve” can be built but will require national and International efforts to limit/reduce future greenhouse gas concentrations in the atmosphere and contain a worldwide temperature increase to between 1.5 and 2 degrees Celsius over the next few decades (the two pre-eminent metrics for measuring success in bending the curve).  Three types of actions are required to achieve this goal: policy initiatives that can acquire sufficient political support to be enacted within the next two years; interventions by investors on climate governance; and behavioral change through moral and ethical appeals to individuals and groups. Policy actions Policy actions should be guided by the “Bill Gates Principle”: People should not waste idealism and energy on a policy that will not cause any reduction in the use of fossil fuels. Policy actions should encompass regulatory, tax and budgetary actions. They include: Rejoining the Paris Climate Accord , with the objective of renegotiating more ambitious climate targets and timetables with added transparency. Setting a U.S. objective of decarbonizing the economy through a policy of net-zero carbon emissions by 2050 across all major industry sectors. Appropriate interim objectives also should be established. For example, the U.S. government and the utility industry should establish a goal for phasing out coal-fired power plants by 2030. The Obama administration’s Corporate Average Fuel Economy standards should be maintained and periodically updated. Removing all energy subsidies , including those for solar and other renewables. The latter have achieved a level of market competitiveness and will succeed in gaining expanded access to various energy markets. Fossil fuel companies, a growing number of which are heavily indebted or experiencing reductions in their customer markets, should compete in the future only on a market-clearing basis and not as rent-seeking enterprises. Avoiding transfer of public funds to large, carbon-intensive companies. Innovation potential is higher when funds are directed at new technology development rather than larger, more heavily capitalized firms with existing access to credit markets. Investor actions Investors have become increasingly active in engaging multinational companies on their environmental, social and governance (ESG) commitments. Their influence is greatly strengthened by the performance of ESG or sustainability fund investment portfolios when compared against traditional benchmarks such as the S&P. Moving forward, investors should be: Intensifying engagement with CEOs and corporate boards on climate governance and commitments. Increasing synergy involving Climate Action 100+ (and allied partners) advocates, ESG-focused investment firms, individual analysts and shareholders have achieved some impressive gains in recent years and should accelerate. Shell Oil Company’s April 16 declaration to become a net-zero emissions energy business by 2050, followed shortly thereafter by a similar announcement by French oil giant Total, are examples of such engagement. Investors should espouse that all Fortune 500 companies achieve net-zero carbon emissions by 2050 with interim, transparent reporting benchmarks established for 2030 and 2040. Advocating the elimination of deferred carried interest. This refers to the preferred tax treatment received by hedge fund and private equity fund managers. Current rules treat carried interest income as a long-term capital gain (taxed at a U.S. rate of 23.8 percent) rather than as ordinary income (subject to a rate of 39.6 percent). This favored tax treatment is completely artificial, and benefits investors primarily interested in accumulating short-term gains rather than longer-term focused portfolios such as investments in sustainable energy. Carried interest deferral also contributes greatly to social inequality. Recommending that the financial transaction tax (FTT) be raised . Presently, each stock transaction is taxed at a rate of 2 cents per $1,000. Raising the FTT to $1 for each $1,000 of transactions will disincentivize high-frequency trading, create fairer markets, encourage longer-term possession of stocks and lessen inequality. Mobilizing citizens Persuasive facts directly engaging citizens must accompany policy and investor actions if a growing public awareness of climate change is to mobilize an aggressive movement to support greenhouse gas reductions. A citizen mobilization strategy should include: Expanding philanthropic support for grassroots citizen participation to distill climate change science into usable, actionable knowledge. This can be done by establishing academic fellowships, research centers and grants to develop position papers and other content; training citizens to participate in government decision making; and multiplying citizens’ voices at the grassroots levels and through social media. Leading philanthropists should pool their resources, using nonprofit, tax-deductible organizations, to invest at least $1 billion annually within the next two years and subsequently. Unlike the “dark money” contributions of foundations, whose aim is to weaken health and environmental protections and sow political divisions, the sources of pro-climate change philanthropy should be completely transparent. Convening community climate risk commissions to evaluate risk scenarios, the resilience of current infrastructure (drinking water systems, the electricity grid, subways and bridges). The outcome of this effort — ideally a collaboration of local governments with universities, nongovernmental organizations, progressive businesses and interested citizens — would be the development of a community climate plan to identify key local risks and recommended priorities and budgets for their resolution. Expanding the moral and ethical rationale for climate actions. The moral basis for reducing climate risks includes: self-preservation of humans and ecosystems that sustain all life forms; expanding economic opportunities that broadens the middle class, expands the social safety net and rewards investors; creating a fair and more equitable society; and protecting the earth for future generations. Coupling moral arguments with expanded economic opportunities (job creation, purchase of newer and cleaner products, investing in companies with highly rated environmental, social and governance portfolios) can unleash powerful incentives at market scale to transform enterprise management and consumer behavior to better manage climate risks. Contemporary society already has entered the era of system-level risk from climate change. By way of context, scientists evaluating the onset of the COVID-19 pandemic have concluded that mitigation measures taken in January-February were far more effective in avoiding disease incidence and mortality than later initiatives to self-isolate and shut down non-essential economic activities. In a similar fashion, delays in implementing climate mitigation and adaptation measures across the globe will result only in more draconian setbacks to life as we’ve come to know it. Leadership consists of mobilizing governments, businesses and citizens to support initiatives that can begin to bend the climate curve in the next two years. Pull Quote As the consequences of the COVID-19 pandemic continue to unfold, insights are emerging on how to repurpose what’s been learned for the benefit of climate change mitigation. Topics Climate Change COVID-19 Policy & Politics Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Shutterstock Catherine Zibo Close Authorship

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How COVID-19 can shape the response to climate change

How COVID-19 can shape the response to climate change

May 13, 2020 by  
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How COVID-19 can shape the response to climate change Terry F. Yosie Wed, 05/13/2020 – 02:31 Part Two of a four-part series. Part One can be found here . As the consequences of the COVID-19 pandemic continue to unfold, insights are emerging on how to repurpose what’s been learned for the benefit of climate change mitigation. To date, most of the focus on the pandemic-environment nexus has been short-term. A number of environmental activists, for example, have recommended that temporarily reduced air pollution levels be made permanent through regulatory controls. Conversely, the Trump administration has used the pandemic as an argument to issue an open-ended suspension of the enforcement of environmental laws. These examples reflect the battle lines being drawn for an even larger conflict that is emerging over climate change policy.  Three key facts Three key facts highlight the growing stakes in play for climate change decision making. First, many parallels exist between arguments that deny the existence of climate change and the assertion that COVID-19 is a large-scale hoax designed to reduce personal liberty, confiscate the purchase and use of weapons and alter the traditional American way of life. Using Facebook and YouTube as principal social media organizing platforms and Fox News as a megaphone to broadcast their views, “denialists” have proven their ideology to be adaptable across multiple issues, including climate change, stratospheric ozone depletion and vaccinations against communicable diseases. Recent Washington Post investigations have reported linkages among groups that organize and financially support denialist demonstrations. Some of these groups also fundraise in behalf of the Trump re-election campaign. As the consequences of the COVID-19 pandemic continue to unfold, insights are emerging on how to repurpose what’s been learned for the benefit of climate change mitigation. Second, a principal argument used against greenhouse gas controls — that they rely upon data and protocols developed by scientific experts — has garnered substantial public support when applied to combating the COVID-19 pandemic. This result occurs because individual citizens understand that their personal well-being is at risk. Thus, they are more receptive to receiving guidance on how to mitigate this risk from medical professionals that they know of and trust. Also, the medical advice provided is both direct and practical — shelter-in-place, wear a mask, maintain social distancing. A similar opportunity exists to provide more specific climate change mitigation advice from independent scientists and professional bodies directly to citizens whose awareness of climate risks continues to grow. Third, there is overwhelming evidence that both the coronavirus pandemic and climate change damage were knowable and preventable. Numerous scientific reports, intelligence community assessments and public pronouncements from well-known public health or technology authorities such as Bill Gates warned, over a period of years, of the probability of a pandemic. The inability to respond to these warnings represents a system-level failure on the part of those responsible for protecting public health. A similar failure towards a system-level set of risks is unfolding with accelerating climate change. Over the past three decades, an elaborate evidence-based system has been in place for evaluating scientific data, modeling temperature changes and effects as varied as the melting of polar ice caps, sea level rise, heat waves and droughts and the spread of disease vectors. Unlike their health scientist counterparts, climate scientists have encountered a longstanding, organized campaign of skepticism and denial — funded by dark money business interests — about their peer-review procedures and their conclusions. This has resulted in direct harassment of both Individual climate scientists and established scientific bodies such as the Intergovernmental Panel on Climate Change, and has directly slowed policymakers’ and civil society’s ability to respond to life-threatening climate risks. COVID-19 outcomes for climate change planning At this juncture of managing the COVID-19 crisis, three significant outcomes have emerged that can inform responses to the climate crisis: People have connected their personal well-being to expectations of government action. They expect the institutions of government (and civil society organizations) to act on their behalf by defining essential economic activities, providing needed medical infrastructure (hospital capacity, critical supplies and tests) and maintaining civil order. Governmental officials, medical professionals and citizens have embraced the need to “bend the curve” for COVID-19 incidence and mortality. Citizens believe they have a responsibility to each other by sheltering in place, frequently washing their hands, maintaining appropriate distances, limiting their mobility and wearing masks outside of their homes. This has occurred for reasons of self-interest but also stems from moral and ethical values and notions of good citizenship. Actions to bend the climate curve Public support for a goal to “bend the climate curve” can be built but will require national and International efforts to limit/reduce future greenhouse gas concentrations in the atmosphere and contain a worldwide temperature increase to between 1.5 and 2 degrees Celsius over the next few decades (the two pre-eminent metrics for measuring success in bending the curve).  Three types of actions are required to achieve this goal: policy initiatives that can acquire sufficient political support to be enacted within the next two years; interventions by investors on climate governance; and behavioral change through moral and ethical appeals to individuals and groups. Policy actions Policy actions should be guided by the “Bill Gates Principle”: People should not waste idealism and energy on a policy that will not cause any reduction in the use of fossil fuels. Policy actions should encompass regulatory, tax and budgetary actions. They include: Rejoining the Paris Climate Accord , with the objective of renegotiating more ambitious climate targets and timetables with added transparency. Setting a U.S. objective of decarbonizing the economy through a policy of net-zero carbon emissions by 2050 across all major industry sectors. Appropriate interim objectives also should be established. For example, the U.S. government and the utility industry should establish a goal for phasing out coal-fired power plants by 2030. The Obama administration’s Corporate Average Fuel Economy standards should be maintained and periodically updated. Removing all energy subsidies , including those for solar and other renewables. The latter have achieved a level of market competitiveness and will succeed in gaining expanded access to various energy markets. Fossil fuel companies, a growing number of which are heavily indebted or experiencing reductions in their customer markets, should compete in the future only on a market-clearing basis and not as rent-seeking enterprises. Avoiding transfer of public funds to large, carbon-intensive companies. Innovation potential is higher when funds are directed at new technology development rather than larger, more heavily capitalized firms with existing access to credit markets. Investor actions Investors have become increasingly active in engaging multinational companies on their environmental, social and governance (ESG) commitments. Their influence is greatly strengthened by the performance of ESG or sustainability fund investment portfolios when compared against traditional benchmarks such as the S&P. Moving forward, investors should be: Intensifying engagement with CEOs and corporate boards on climate governance and commitments. Increasing synergy involving Climate Action 100+ (and allied partners) advocates, ESG-focused investment firms, individual analysts and shareholders have achieved some impressive gains in recent years and should accelerate. Shell Oil Company’s April 16 declaration to become a net-zero emissions energy business by 2050, followed shortly thereafter by a similar announcement by French oil giant Total, are examples of such engagement. Investors should espouse that all Fortune 500 companies achieve net-zero carbon emissions by 2050 with interim, transparent reporting benchmarks established for 2030 and 2040. Advocating the elimination of deferred carried interest. This refers to the preferred tax treatment received by hedge fund and private equity fund managers. Current rules treat carried interest income as a long-term capital gain (taxed at a U.S. rate of 23.8 percent) rather than as ordinary income (subject to a rate of 39.6 percent). This favored tax treatment is completely artificial, and benefits investors primarily interested in accumulating short-term gains rather than longer-term focused portfolios such as investments in sustainable energy. Carried interest deferral also contributes greatly to social inequality. Recommending that the financial transaction tax (FTT) be raised . Presently, each stock transaction is taxed at a rate of 2 cents per $1,000. Raising the FTT to $1 for each $1,000 of transactions will disincentivize high-frequency trading, create fairer markets, encourage longer-term possession of stocks and lessen inequality. Mobilizing citizens Persuasive facts directly engaging citizens must accompany policy and investor actions if a growing public awareness of climate change is to mobilize an aggressive movement to support greenhouse gas reductions. A citizen mobilization strategy should include: Expanding philanthropic support for grassroots citizen participation to distill climate change science into usable, actionable knowledge. This can be done by establishing academic fellowships, research centers and grants to develop position papers and other content; training citizens to participate in government decision making; and multiplying citizens’ voices at the grassroots levels and through social media. Leading philanthropists should pool their resources, using nonprofit, tax-deductible organizations, to invest at least $1 billion annually within the next two years and subsequently. Unlike the “dark money” contributions of foundations, whose aim is to weaken health and environmental protections and sow political divisions, the sources of pro-climate change philanthropy should be completely transparent. Convening community climate risk commissions to evaluate risk scenarios, the resilience of current infrastructure (drinking water systems, the electricity grid, subways and bridges). The outcome of this effort — ideally a collaboration of local governments with universities, nongovernmental organizations, progressive businesses and interested citizens — would be the development of a community climate plan to identify key local risks and recommended priorities and budgets for their resolution. Expanding the moral and ethical rationale for climate actions. The moral basis for reducing climate risks includes: self-preservation of humans and ecosystems that sustain all life forms; expanding economic opportunities that broadens the middle class, expands the social safety net and rewards investors; creating a fair and more equitable society; and protecting the earth for future generations. Coupling moral arguments with expanded economic opportunities (job creation, purchase of newer and cleaner products, investing in companies with highly rated environmental, social and governance portfolios) can unleash powerful incentives at market scale to transform enterprise management and consumer behavior to better manage climate risks. Contemporary society already has entered the era of system-level risk from climate change. By way of context, scientists evaluating the onset of the COVID-19 pandemic have concluded that mitigation measures taken in January-February were far more effective in avoiding disease incidence and mortality than later initiatives to self-isolate and shut down non-essential economic activities. In a similar fashion, delays in implementing climate mitigation and adaptation measures across the globe will result only in more draconian setbacks to life as we’ve come to know it. Leadership consists of mobilizing governments, businesses and citizens to support initiatives that can begin to bend the climate curve in the next two years. Pull Quote As the consequences of the COVID-19 pandemic continue to unfold, insights are emerging on how to repurpose what’s been learned for the benefit of climate change mitigation. Topics Climate Change COVID-19 Policy & Politics Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Shutterstock Catherine Zibo Close Authorship

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How COVID-19 can shape the response to climate change

Downturn signals opportunity for climate-aligned investing

April 27, 2020 by  
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Several frameworks are emerging that sets performance thresholds identifying economic activities that align with the Paris Agreement emissions reduction targets.

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Downturn signals opportunity for climate-aligned investing

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