Despite net-zero pledges, banks used $750 billion to finance fossil fuels in 2020

March 26, 2021 by  
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Despite net-zero pledges, banks used $750 billion to finance fossil fuels in 2020 Cecilia Keating Fri, 03/26/2021 – 00:05 Net-zero commitments may have ricocheted across banking sector over the last 18 months, but big banks’ attestations of climate concern did not stop many from expanding financing for the world’s top fossil fuel firms during the pandemic year. That is according to the latest edition of the Rainforest Action Network’s annual fossil fuel financing tracker, which reveals that while fossil fuel financing dropped by a record 9 percent during the pandemic-induced economic recession of 2020, the world’s top banks ramped up financing for the 100 largest fossil fuel expansion firms by 10 percent. The green groups behind the report have warned of an “alarming disconnect” between the global scientific consensus on climate change and the ongoing practices of the world’s leading banks. The analysis, ” Banking on Climate Chaos 2021 ,” underscores that while overall fossil fuel financing did tumble significantly in 2020, the total amount of financing provided to fossil fuel firms in 2020 was still more than $40 billion higher in 2020 than in 2016, at $750 billion. “Despite this significant drop from 2019 to 2020, the overall trend of the last five years is one heading definitively in the wrong direction,” the report states. Overall, the world’s leading banks have channelled $3.8 trillion to coal, oil and gas companies in the five years since the Paris Agreement was signed, it calculates. Lower levels of lending and debt underwriting to fossil fuel firms in 2020 were largely due to COVID-19 economic recession and not because banks are proactively distancing themselves from fossil fuels, according to the report. A separate score card ranking the banking sector’s climate policy commitments concludes that across the board, climate policies are “grossly insufficient” and out of alignment with global climate goals, with not a single bank surveyed racking up more than 94 points out of a total of 200. The overwhelming majority of fossil fuel financing goes unchecked by banks’ policies, it warns, given that climate pledges unveiled to date tend to focus on project-specific finance, which represents a mere 5 percent of all fossil fuel financing handed out by banks. Furthermore, the report underscores that more fossil fuel financing took place January through June than any six-month period since 2016, as large corporations around the world capitalized on low interest rates and central bank bond-buying programs to load up on cheap debt. This binge then was offset by record low financing in the second half of the year, it notes, leading to an overall fall of financing of 9 percent. Ginger Cassady, executive director of the Rainforest Action Network, one of the groups behind the analysis, said the banking sector faced a “stark choice” as it plotted its strategy for steering a global recovery from the coronavirus crisis. “The unprecedented COVID-19 dip in global financing for fossil fuels offers the world’s largest banks a stark choice point going forward,” she said. “They can decide to lock in the downward trajectory of support for the primary industry driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers.” The report reveals that U.S. banks continue to be the largest drivers of global emissions, with JP Morgan Chase retaining its position as the world’s largest fossil fuel funder. U.K. bank Barclays is singled out as being the most prolific fossil fuel funder in Europe over the five-year period surveyed, with the analysis highlighting it increased fracking financing by 24 percent in 2020. Meanwhile, BNP Paribas shot up the scoreboard after increasing its financing to fossil fuel companies by 41 percent in 2020 to $41 billion, making it the fourth worst financer of fossil fuels in 2020. The analysis is the latest in a long line of reports led by the Rainforest Action Network which hammer home the banking sector’s deep ties with the fossil fuel industries fueling the climate emergency, but this year’s edition is somewhat more poignant. The past 12 months have been a calamitous period for the fossil fuel industry amid shrinking demand for oil and gas and depressed prices during the pandemic, and it is against this backdrop the banking sector finally has acknowledged the critical role it must play in ensuring that global temperature increases are capped at safe levels by ending its support of environmentally destructive sectors. “Net-zero financed emissions” pledges have swept the banking sector since January 2020, with the U.K.’s largest fossil fuel financiers —  Barclays and HSBC — and many of the largest U.S. investment banks — Goldman Sachs , Citi Group , Wells Fargo , Bank of America and Morgan Stanley — all vowing to align their lending and debt with global climate goals over the coming 30 years. And yet, even as these pledges were made, investment in fossil fuel infrastructure has continue to flow largely unimpeded. Beyond a welcome tightening of lending policies to coal and tar sand firms, many of the world’s largest financiers have failed to translate their net-zero pledges into a meaningful shift in their investment activities. Banks can decide to lock in the downward trajectory of support for the primary industry driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers. As such, the green organizations behind the report have touted the latest findings as evidence of the “hollowness” of the wave of net-zero targets unveiled by the banking sector and have urged companies to match their 2050 goals with short term pledges to rapidly phase out financing for all fossil fuel infrastructure, including oil and gas projects. Policies are required to “lock in” the fossil fuel declines of 2020 and thus steer a managed decline of fossil fuel production over the coming decade, they warn. “Many of the world’s largest banks, including all six major U.S. banks, have made splashy commitments in recent months to zero-out the climate impact of their financing over the next 30 years,” said Ben Cushing, financial advocacy campaign manager at the Sierra Club. “But what matters most is what they are doing now, and the numbers don’t lie. This report separates words from actions, and the picture it paints is alarming: Major banks around the world, led by U.S. banks in particular, are fueling climate chaos by dumping trillions of dollars into the fossil fuels that are causing the crisis.” Lucie Pinson, founder and executive director of Reclaim Finance, said the numbers exposed “the hollowness of banks’ ever-multiplying commitments” to be net-zero or align with global climate targets. “BNP Paribas merits singling out as the world’s fourth-largest fossil financier in 2020, having funneled multi-billion-dollar loans to oil giants like BP and Total,” she said. “Nonetheless, it’s clear that all banks need to replace empty promises with meaningful policies enacting zero tolerance for fossil fuel developers.” The banking sector maintains that serious change is afoot, pointing to much more stringent lending policies for coal firms and the on-going development of new guidelines and policies that it is hoped will decarbonize their portfolios over the next three decades. They insist it will take time to shift investment practices in a way that delivers a managed transition for businesses and investors alike. Approached to comment on the report, spokespeople from Barclays and HSBC pointed to their respective 2050 net-zero commitments, despite the two banks being ranked the seventh and 13th largest most prolific fossil fuel lenders globally since 2016 by today’s report, having funneled $145 billion and $111 billion into coal, oil and gas, respectively. The banking sector maintains that serious change is afoot. “HSBC has announced it will propose a special resolution on climate change at its AGM in May which will set out the next phase of HSBC’s strategy to support its customers on the transition to net-zero carbon emissions,” the HSBC spokesperson said. “This includes to publish and implement a policy to phase out the financing of coal-fired power and thermal coal mining by 2030 in markets in the European Union and OECD, and by 2040 in other markets.” “We have made a commitment to align our entire financing portfolio to the goals of the Paris Agreement, with specific targets and transparent reporting, on the way to achieving our ambition to be a net-zero bank by 2050,” the Barclays spokesperson said. “We believe that Barclays can make a real contribution to tackling climate change and help accelerate the transition to a low-carbon economy.” JP Morgan Chase declined to comment on the findings, and BNP Paribas and CitiGroup did not respond for a request for comment at the time of going to press. While it is clear the banking sector has reached a turning point on sustainability over the last 12 to 18 months, today’s report provides compelling evidence that net-zero pledges need to be swiftly backed up by credible strategies that will quickly wind down bank’s exposure to fossil fuel assets and ramp up their support for clean infrastructure. Promises to establish climate-responsible investment portfolio in 30 years’ time are clearly meaningless if banks continue to channel hundreds of billions of dollars into the industries that are locking in several more decades of carbon intensive infrastructure. And yet, today’s report comes within hours of the U.K. government demonstrating how ministers are wrestling with precisely the same tensions , as they both talked up plans to slash emissions form the oil and gas industry and left the door open for new exploration in the North Sea. As the global economy rebounds from the pandemic, all eyes will be on whether major banks and governments finally can match their rhetoric on climate action with a managed decline of fossil fuel financing. Pull Quote Banks can decide to lock in the downward trajectory of support for the primary industry driving the climate crisis or they can recklessly snap back to business as usual as the economy recovers. The banking sector maintains that serious change is afoot. Topics Finance & Investing GreenFin Coal Decarbonization Business Green Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Tar sands in Alberta, Canada. Flickr Dru Oja Jay, Dominio Close Authorship

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Despite net-zero pledges, banks used $750 billion to finance fossil fuels in 2020

It’s time to speed up the sustainability shift

March 23, 2021 by  
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It’s time to speed up the sustainability shift Katie Thompson Levey Tue, 03/23/2021 – 01:45 “I am discovering a whole new respect for chief sustainability officers,” I texted the facilitator of Leading the Sustainability Transformation . I was general manager of a mock company, Rio Negro Bioproducts, with the express goal to transform it from a traditional business to a sustainable one — economically, environmentally and socially — over a 20-year period compressed into a 10-week virtual simulation.   Powered by leadership readiness firm, WholeWorks through the University of Victoria, the simulation teamed me up with global counterparts, ranging from leaders at Griffith Foods and Plant Tech Alliance to designers, consultants and a former Airbnb executive. We assumed the roles you would expect at a manufacturing site designed to supply a global market — supply chain, operations, HR, marketing, sales, IT, EHS — as well as the roles sometimes considered “fringe” but that are in reality critical success factors such as government officials (a local mayor) and civil society (an NGO leader). We strove to adhere to Rio Negro’s vision and meet aggressive triple bottom-line targets as major systemic issues hit its operations — geopolitical tensions and natural disaster brought on by climate change. We did this all while facing, relentlessly, shareholder demands for their expected return on investment. Companies are under immense public and competitive pressure to change — to positively contribute to problems that seem nearly impossible to solve including climate change, racial inequity, an increasing cultural divide and the global pandemic. Where should a business begin?  The Leading the Sustainability Transformation is an opportunity to experiment with sustainable transformation — and accelerate the implications — both the good and the bad. Here are my lessons learned. 1. Vulnerability is the birthplace of innovation — embrace the mess A common cultural expectation of managers is to know the answer in advance, to be confident and ready to move. Researcher Brene Brown has long pointed out vulnerability is basically uncertainty, risk and emotional exposure. If it’s genuinely uncomfortable, why embrace it? Real innovation requires walking into the unknown — sometimes alone, sometimes with others. It requires you lead by acknowledging what you don’t know and inviting others along with you.  Sustainability is about aligning different departmental agendas and incentives, for which you have varying degrees of subject matter knowledge, to create a cohesive strategy. Allowing yourself to be vulnerable — to take risks — can open up business opportunity. Build an environment where individuals can introduce unproven or partial ideas that may not even make sense yet but have the seeds of something great.  But how do we create the conditions for this kind of environment? Applying the idea: Ask questions, rather than answer them. One person doesn’t need to have all the answers, and together with the knowledge of those around you, solutions can emerge that aren’t immediately obvious. When facing a particularly thorny problem, slow things down. Give people a chance to dwell more, instead of racing to the answer. 2. There are no absolutes — hypothesize, learn and adjust When approaching systemic problems, you’re heading into a situation that’s naturally messy. It’s not quite clear where you’re going with it, so by definition, there cannot be one right universal or pre-determined answer. In some ways, the answer is the path you forge with the unique communities or stakeholders you’re working with to do that. “Systemic problems affect people in so many different ways, there’s no one way to frame or define it. You can’t say at the onset this is one way to do it and we will know the solution when we’re done,” points out Matt Mayberry, Whole Works founder and designer of the LST curriculum. This principle of always starting from a place of acknowledging uncertainties was an ongoing refrain throughout the course. At times, I thought something was absolutely the right answer, only to be reminded through the experience of my colleagues that I could see only one part of the whole picture. Even when I served in the most senior team role of senior vice president, blind spots were not in short supply. While perception often seems like hard facts, in reality, it’s often a subjective set of assumptions. Applying the idea: Frame activities as experiments. Be upfront about your assumptions, uncertainties, and potential blind spots. This accelerates learning.   Move in shorter, faster intervals. What’s the easiest experiment you can do to test if what you think is aligned with where things really are?  3. Have the courage to fail and take personal responsibility for it Fail fast, learn and adjust. It’s a popularized notion, but it takes courage to fail. A less popular concept? Failure doesn’t feel good! Who wants to be in a high stakes situation and fail? Individuals and teams, for the most part, want to achieve their goals. Yet it’s inevitable: To create something that hasn’t been done before, you will fail along the way. At one point in our simulation, I, along with a couple of others, made an operational call early on that took us a hypothetical decade to recover from. Those of us who made the decision said, “We feel awful about this, but we made this decision and these are the impacts.” The decision cost a lot of money. Thankfully, it was hypothetical. Taking responsibility for the failure helped us move through it, learn and adjust. At one point, we thought our team wouldn’t recover. By acknowledging it in a provenly safe environment, our team helped others quickly learn from our failure. Applying the idea: Build an environment where individuals feel safe enough to acknowledge when an activity doesn’t meet expectations. Model taking personal responsibility by doing so if you experience failure. This sets the stage for others to do so. 4. Lead by asking what works Cross-functional teams perform better when they focus on peak experiences and best practices compared to teams that focus on problems and gaps. Groups initially characterized by dysfunction and defensiveness can be revitalized and energized through an approach called Appreciative Inquiry.  The Appreciative Inquiry approach asks what gives life to a system, what keeps it most healthy and alive. Ask questions about what’s working well and what are the possibilities of building on that. This creates a different frame than asking what is broken, who or what is causing it, and how it can be fixed. This approach does not suggest blindly ignore problems. It means leading by observing what is already giving healthy life to a system. “When we focus on problems, we start from a hole that we must crawl our way out of” was a key principle pointed out by Mayberry during the course. “Unfortunately, when working with a group, creating a shared negative view of the world tends to lead us to dig ourselves even deeper. This is not an inspiring place to be if you’re trying to imagine a better future and think of creative ways to make it a reality.” Applying the idea: When a group is faced with a difficult challenge, ask questions about what’s working well, what might be, and what should be? Frame an opportunity in a way that opens things up to a collaborative approach. Include the whole system in the room. Include stakeholders outside your immediate sphere of sight, such as those on the “fringe” — the poor, weak, isolated, non-legitimate and non-human (other species). This is part one of a two-part series. Keep an eye out for the next installment about strategy. The next Leading the Sustainability Transformation Professional Certification takes place April 19-June 27, with registration due by April 12. Learn more here. Topics Corporate Strategy Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Shutterstock Whyframe Close Authorship

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It’s time to speed up the sustainability shift

China’s new frontier for VOC regulations

March 23, 2021 by  
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China’s new frontier for VOC regulations Shuying Xu Tue, 03/23/2021 – 01:15 As the global economy reawakens after the COVID-19 shutdown, air emissions and VOC enforcement in China remain a hot topic. Volatile organic compounds (VOCs) combine with nitrogen oxide to create ozone, a key precursor to smog. Over the past several decades, public health and environmental concerns have made controlling smog a top national policy goal in China and enforcement an increasingly critical issue for companies to navigate. Industries getting particular focus when it comes to VOC management in China include electronics, packaging and printing, pharmaceuticals, petrochemical, chemical, industrial coating, oil storage and transportation. In March 2020, for example, China’s State Council announced four national requirements for VOC content in adhesives, coatings, inks and cleaning agents widely used in the electronics and electrical industry; the stringency and implementation of these mandates may have a significant impact on production and business risk moving forward. Implementation of these standards is scheduled to start in April. For any company operating in or with significant supply chain exposure to China, building an understanding of the national and local regulatory landscape and best practices related to VOC mitigation recently has become a vital step to reducing the risk of business interruption arising from environmental enforcement that began in 2016 . Air emission reform in China More than a decade ago, national policies laid the groundwork for reducing air emissions in China. In 2010, the Central Government of China integrated the “Guideline on Strengthening Joint Prevention and Control of Atmospheric Pollution to Improve Air Quality” into its 12th Five Year Plan. This enshrined into law China’s first air emissions management plan and formalized an approach to regional collaboration. The Law on Prevention and Control of Air Pollution, also known as the ” Air Law ,” was updated in 2015 (and again in 2018) to direct local governments in key regions to form emergency response plans for heavily polluting weather conditions. When energy use surges in the autumn and winter seasons, particulate matter and ozone increase to  dangerously high levels. Strategies include tackling large networks of smaller companies, which emit up to 60% of VOCs in China, and penalizing non-compliant companies by lowering their ‘social credit’ rating. The 2018 Three ? Year Action Plan for Winning the Blue Sky Defense Battle narrowed the scope of air emission management by focusing on the rectification of key regions and industries and establishing a goal of reducing 15 percent of emissions by 2020 (Chinese) , compared to 2015 levels. Strategies include tackling large networks of smaller companies, which emit up to 60 percent of VOCs in China , and penalizing non-compliant companies by lowering their “social credit” rating. For the past 15 years, the Institute of Public and Environmental Affairs (IPE) has collected and analyzed publicly disclosed environmental quality and pollution source records from hundreds of local governments and corporations across China. IPE’s online data analysis tool shows that while the total number of regulatory violations in China decreased across industries between 2016 and 2020, the proportion of enterprises with air emission issues, including VOC violations, has increased year over year. The overall decline in total violations across industries has been attributed to increased transparency among local governments and a 2016 spike in factory inspections (and shutdowns) that took place across China: The 2016 wave of enforcement actions resulted in renewed effort by companies that hadn’t been shut down to take regulatory concerns more seriously since then. Targets for regulation The unique regulatory demands and opacity of local governments, which can insist on short-term, emergency action to reduce emissions, can be a challenge to navigate. Yet, a predictable pattern gradually has emerged in how authorities determine non-compliant behavior. First, industries that emit or consume large quantities of VOCs are prioritized. Companies from such key VOC-emitting industries will be honed in on regardless of specific processes, consumption rates or volume of emissions. Second, authorities focus on specific companies within these industries that are large emitters and key industrial processes (coating, painting, printing, etc.) at those companies. Third, regional and local governments adjust reduction measures according to a factory’s environmental performance level. For example, if a total emission reduction goal of a region or city can be achieved, the least polluting companies may take reduction measures voluntarily (and not necessarily fully in accordance with regional guidelines) — while all others will be required to strictly follow reduction requirements Local governments maintain and, in many cases, publish lists that rank factories according to their performance level. Factories with substandard performance are required to monitor emissions and make the results available to the public, not dissimilar to the U.S. The contents of Environmental Impact Assessments (EIAs) and National Pollution Discharge Permit (PDPs) also may be used to determine if and how many VOCs will be generated when a factory completes a construction project or when a factory is fully operational. In a PDP, the maximum volume of VOC emissions that a factory can emit is stated. This number is calculated based on EIA documents, periodic factory monitoring and online monitoring data of a factory. Environmental capacity Local authorities have the ability to not only implement emergency restrictions during heavily polluting weather conditions but also may apply controls if total annual emissions by factories surpass regional emission caps. The Joint Group of Experts on Scientific Aspects of Marine Environmental Protection (GESAMP), a United Nations advisory body, describes the concept of environmental capacity as “a property of the environment and its ability to accommodate a particular activity or rate of an activity … without unacceptable impact.” Environmental capacity is widely used in China to define acceptable limits for the amount of pollutants produced or discharged into the atmosphere. Each region has its own capacity and local governments determine quotas for each factory. If no quota is available for a factory to construct, rebuild or expand the operation, they are generally prohibited from proceeding. Examples of best practices Once companies are identified and included in a governmental list, authorities can require industries and factories to set up online pollutant monitoring that is connected to the local authority’s supervisory system. Such systems are typically designed to capture instantaneous VOC emission data. While some multinationals with operations in China — such as Toyota and General Motors — have begun to establish VOC reduction goals comparable to their GHG emission reduction goals, efforts to address VOC emissions within industrial supply chains and operations remain varied and limited. Companies from key VOC-emitting industries will be honed in on regardless of specific processes, consumption rates or volume of emissions. Innovative practices often can be found at the local level. The municipality of Shanghai, China’s largest city, is often a leader in this regard. Shanghai offers an example of a municipal government that has established a long-term protocol for VOC emission management, aligning with the goals of the national Blue Sky Defense Battle. As part of its “One Factory, One Control Plan” (Chinese), Shanghai provides a comprehensive list of methods (and projected timelines) for reducing VOC emissions across 29 diverse industries, ranging from ink and adhesives to PVC and synthetic fiber production. Two industries that emit significant quantities of VOCs and have extensive supply chains in China are the electronics and cleaning agent industries. Shanghai outlines specific governance tasks for reducing VOC emissions along various stages of production. Selected examples of required and recommended actions include: For electronics production: Use powder or water-based coatings and UV curing processes. Use electrostatic spraying. Use automated and intelligent spraying equipment in place of manual application. Adopt processes in which coatings, thinners and cleaning agents are prepared, used and recycled within sealed storage and production spaces. Transport coatings, thinners and cleaning agents in closed pipelines or containers. Collect and treat wastewater in a closed process. For cleaning agent manufacturing: Specify limits on the use of chemicals such as methylene chloride, trichloromethane, formaldehyde, benzene and toluene and xylene, among others. Replace solvent-based cleaning agents with water-based and semi-aqueous alternatives. Reduce airflow around cleaning equipment; reduce the flow of liquid from items that are being cleaned. Designate rooms specifically for cleaning, exhaust air collection, and treating cleaning exhaust. Recycle cleaning solvents. Use activated carbon absorption; record the temperature, regeneration period and replacement amount of activated carbon. While this article provides select examples of steps being taken by companies and municipalities, corporate industry goals and action plans for VOC reduction remain unclear and inconsistent. The requirements and policies of VOC management in China are dynamic and growing more stringent both nationally and locally. Part of the challenge for global companies is understanding and interpreting requirements, identifying the potential for high-risk interruption and determining economical and environmentally responsible actions that can mitigate or avoid these risks. Furthermore, unique policy is being formulated according to the needs and specialties of different regions, industries and factory conditions. Companies that have responsibility for facilities and supply chains in China can benchmark against these to better understand their regulatory and business interruption risks. Pull Quote Strategies include tackling large networks of smaller companies, which emit up to 60% of VOCs in China, and penalizing non-compliant companies by lowering their ‘social credit’ rating. The 2016 wave of enforcement actions resulted in renewed effort by companies that hadn’t been shut down to take regulatory concerns more seriously since then. Companies from key VOC-emitting industries will be honed in on regardless of specific processes, consumption rates or volume of emissions. Contributors Christopher Hazen Topics Chemicals & Toxics Policy & Politics COVID-19 China Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off A regenerative thermal oxidizer unit in China. Image courtesy of Greenment

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China’s new frontier for VOC regulations

China’s new frontier for VOC regulations

March 23, 2021 by  
Filed under Business, Eco, Green, Recycle

Comments Off on China’s new frontier for VOC regulations

China’s new frontier for VOC regulations Shuying Xu Tue, 03/23/2021 – 01:15 As the global economy reawakens after the COVID-19 shutdown, air emissions and VOC enforcement in China remain a hot topic. Volatile organic compounds (VOCs) combine with nitrogen oxide to create ozone, a key precursor to smog. Over the past several decades, public health and environmental concerns have made controlling smog a top national policy goal in China and enforcement an increasingly critical issue for companies to navigate. Industries getting particular focus when it comes to VOC management in China include electronics, packaging and printing, pharmaceuticals, petrochemical, chemical, industrial coating, oil storage and transportation. In March 2020, for example, China’s State Council announced four national requirements for VOC content in adhesives, coatings, inks and cleaning agents widely used in the electronics and electrical industry; the stringency and implementation of these mandates may have a significant impact on production and business risk moving forward. Implementation of these standards is scheduled to start in April. For any company operating in or with significant supply chain exposure to China, building an understanding of the national and local regulatory landscape and best practices related to VOC mitigation recently has become a vital step to reducing the risk of business interruption arising from environmental enforcement that began in 2016 . Air emission reform in China More than a decade ago, national policies laid the groundwork for reducing air emissions in China. In 2010, the Central Government of China integrated the “Guideline on Strengthening Joint Prevention and Control of Atmospheric Pollution to Improve Air Quality” into its 12th Five Year Plan. This enshrined into law China’s first air emissions management plan and formalized an approach to regional collaboration. The Law on Prevention and Control of Air Pollution, also known as the ” Air Law ,” was updated in 2015 (and again in 2018) to direct local governments in key regions to form emergency response plans for heavily polluting weather conditions. When energy use surges in the autumn and winter seasons, particulate matter and ozone increase to  dangerously high levels. Strategies include tackling large networks of smaller companies, which emit up to 60% of VOCs in China, and penalizing non-compliant companies by lowering their ‘social credit’ rating. The 2018 Three ? Year Action Plan for Winning the Blue Sky Defense Battle narrowed the scope of air emission management by focusing on the rectification of key regions and industries and establishing a goal of reducing 15 percent of emissions by 2020 (Chinese) , compared to 2015 levels. Strategies include tackling large networks of smaller companies, which emit up to 60 percent of VOCs in China , and penalizing non-compliant companies by lowering their “social credit” rating. For the past 15 years, the Institute of Public and Environmental Affairs (IPE) has collected and analyzed publicly disclosed environmental quality and pollution source records from hundreds of local governments and corporations across China. IPE’s online data analysis tool shows that while the total number of regulatory violations in China decreased across industries between 2016 and 2020, the proportion of enterprises with air emission issues, including VOC violations, has increased year over year. The overall decline in total violations across industries has been attributed to increased transparency among local governments and a 2016 spike in factory inspections (and shutdowns) that took place across China: The 2016 wave of enforcement actions resulted in renewed effort by companies that hadn’t been shut down to take regulatory concerns more seriously since then. Targets for regulation The unique regulatory demands and opacity of local governments, which can insist on short-term, emergency action to reduce emissions, can be a challenge to navigate. Yet, a predictable pattern gradually has emerged in how authorities determine non-compliant behavior. First, industries that emit or consume large quantities of VOCs are prioritized. Companies from such key VOC-emitting industries will be honed in on regardless of specific processes, consumption rates or volume of emissions. Second, authorities focus on specific companies within these industries that are large emitters and key industrial processes (coating, painting, printing, etc.) at those companies. Third, regional and local governments adjust reduction measures according to a factory’s environmental performance level. For example, if a total emission reduction goal of a region or city can be achieved, the least polluting companies may take reduction measures voluntarily (and not necessarily fully in accordance with regional guidelines) — while all others will be required to strictly follow reduction requirements Local governments maintain and, in many cases, publish lists that rank factories according to their performance level. Factories with substandard performance are required to monitor emissions and make the results available to the public, not dissimilar to the U.S. The contents of Environmental Impact Assessments (EIAs) and National Pollution Discharge Permit (PDPs) also may be used to determine if and how many VOCs will be generated when a factory completes a construction project or when a factory is fully operational. In a PDP, the maximum volume of VOC emissions that a factory can emit is stated. This number is calculated based on EIA documents, periodic factory monitoring and online monitoring data of a factory. Environmental capacity Local authorities have the ability to not only implement emergency restrictions during heavily polluting weather conditions but also may apply controls if total annual emissions by factories surpass regional emission caps. The Joint Group of Experts on Scientific Aspects of Marine Environmental Protection (GESAMP), a United Nations advisory body, describes the concept of environmental capacity as “a property of the environment and its ability to accommodate a particular activity or rate of an activity … without unacceptable impact.” Environmental capacity is widely used in China to define acceptable limits for the amount of pollutants produced or discharged into the atmosphere. Each region has its own capacity and local governments determine quotas for each factory. If no quota is available for a factory to construct, rebuild or expand the operation, they are generally prohibited from proceeding. Examples of best practices Once companies are identified and included in a governmental list, authorities can require industries and factories to set up online pollutant monitoring that is connected to the local authority’s supervisory system. Such systems are typically designed to capture instantaneous VOC emission data. While some multinationals with operations in China — such as Toyota and General Motors — have begun to establish VOC reduction goals comparable to their GHG emission reduction goals, efforts to address VOC emissions within industrial supply chains and operations remain varied and limited. Companies from key VOC-emitting industries will be honed in on regardless of specific processes, consumption rates or volume of emissions. Innovative practices often can be found at the local level. The municipality of Shanghai, China’s largest city, is often a leader in this regard. Shanghai offers an example of a municipal government that has established a long-term protocol for VOC emission management, aligning with the goals of the national Blue Sky Defense Battle. As part of its “One Factory, One Control Plan” (Chinese), Shanghai provides a comprehensive list of methods (and projected timelines) for reducing VOC emissions across 29 diverse industries, ranging from ink and adhesives to PVC and synthetic fiber production. Two industries that emit significant quantities of VOCs and have extensive supply chains in China are the electronics and cleaning agent industries. Shanghai outlines specific governance tasks for reducing VOC emissions along various stages of production. Selected examples of required and recommended actions include: For electronics production: Use powder or water-based coatings and UV curing processes. Use electrostatic spraying. Use automated and intelligent spraying equipment in place of manual application. Adopt processes in which coatings, thinners and cleaning agents are prepared, used and recycled within sealed storage and production spaces. Transport coatings, thinners and cleaning agents in closed pipelines or containers. Collect and treat wastewater in a closed process. For cleaning agent manufacturing: Specify limits on the use of chemicals such as methylene chloride, trichloromethane, formaldehyde, benzene and toluene and xylene, among others. Replace solvent-based cleaning agents with water-based and semi-aqueous alternatives. Reduce airflow around cleaning equipment; reduce the flow of liquid from items that are being cleaned. Designate rooms specifically for cleaning, exhaust air collection, and treating cleaning exhaust. Recycle cleaning solvents. Use activated carbon absorption; record the temperature, regeneration period and replacement amount of activated carbon. While this article provides select examples of steps being taken by companies and municipalities, corporate industry goals and action plans for VOC reduction remain unclear and inconsistent. The requirements and policies of VOC management in China are dynamic and growing more stringent both nationally and locally. Part of the challenge for global companies is understanding and interpreting requirements, identifying the potential for high-risk interruption and determining economical and environmentally responsible actions that can mitigate or avoid these risks. Furthermore, unique policy is being formulated according to the needs and specialties of different regions, industries and factory conditions. Companies that have responsibility for facilities and supply chains in China can benchmark against these to better understand their regulatory and business interruption risks. Pull Quote Strategies include tackling large networks of smaller companies, which emit up to 60% of VOCs in China, and penalizing non-compliant companies by lowering their ‘social credit’ rating. The 2016 wave of enforcement actions resulted in renewed effort by companies that hadn’t been shut down to take regulatory concerns more seriously since then. Companies from key VOC-emitting industries will be honed in on regardless of specific processes, consumption rates or volume of emissions. Contributors Christopher Hazen Topics Chemicals & Toxics Policy & Politics COVID-19 China Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off A regenerative thermal oxidizer unit in China. Image courtesy of Greenment

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China’s new frontier for VOC regulations

Diversity, equity and inclusion: Incremental reform or systemic change?

March 23, 2021 by  
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Diversity, equity and inclusion: Incremental reform or systemic change? Terry F. Yosie Tue, 03/23/2021 – 01:11 Unresolved debates about the past frame choices about who owns the future. America has arrived, once again, at another momentous inflection point to try and resolve some of the most contentious issues the nation has faced and largely failed to resolve — the narrative of American history and culture, the persistence of systemic racism, and continuing debates over women’s empowerment, personal freedom and sexual orientation. The ability to reconcile these significant challenges into a workable and equitable societal consensus will require many additional decades, but many institutions and individuals are implementing partial solutions. Among the most prominent are initiatives to advance diversity, equity and inclusion (DEI) programs. Diversity is expressed through a variety of identities such as age, race, religion, sexual orientation and disability. Equity aims to provide everyone with access to opportunities and recognizes that advantages and barriers exist, while making commitments to address this imbalance. Inclusion results in individuals (and groups) with different identities feeling respected, accepted and valued. For many organizations, a direct DEI connection to their mission has not been made by leadership whose inattentiveness or nonreceptivity cascades downwards into the culture. In recent years, DEI has emerged as a distinctive field in governance and public policy that provides a key set of performance measures for economic and social progress. While originally separate from environmental sustainability, they now share common values to applying human capital towards resolving society’s most vexing inter-generational challenges, including access to health care, educational opportunities, and protection from toxic exposures and climate change. Evaluating DEI practices and performance Author Pamela Newkirk, in her comprehensive analysis “Diversity, Inc.,” has identified a core set of best practices within and beyond the workplace. They include: expanding recruitment through international outreach; identifying and removing hiring and promotion barriers; strengthening professional development opportunities; providing fair and equitable compensation; building an inclusive climate and culture; and applying business practices and accountability. Many companies already have grasped the significance of integrating DEI within their business strategies, governance, employee relations, operations, customer relations and engagement with external stakeholders. The range of their programs and initiatives vary considerably, a reflection of their market sectors but also of variable leadership commitments and inconsistent performance metrics. Leaders (as measured by Forbes and other surveys) currently include BlackRock, Duke University, HP, L’Oreal, Novartis, SAP and a variety of banking and healthcare companies. Even more striking than examples of corporate DEI leadership is information from lagging and failing companies and business sectors. The Wall Street Journal reviewed more than 160 annual reports filed by S&P companies for 2020. Only a third provided diversity disclosures. More specifically, GE reported that approximately 76 percent of its U.S. workforce was white as was 81 percent of its leadership. PwC declared that 60 percent of its employees were white. Sectors that are particular DEI laggards include academia, environmental organizations, fashion, journalism, museums, professional football and technology companies. Why has so little progress been achieved despite decades of implementing civil rights legislation, philanthropic activities, and more than $20 billion spent each year on DEI programs, conferences, consultants, surveys and training sessions? For many organizations, a direct DEI connection to their mission has not been made by leadership whose inattentiveness or nonreceptivity cascades downwards into the culture. Workforce composition may be insufficiently diverse to respond to DEI dynamics, thus limiting bottom-up pressures upon management (in contrast to much stronger employee engagement in environmental sustainability). Across many institutions, the motivation for maintaining even modest DEI activities stems from a desire to avoid legal risk from potential discrimination cases, or to communicate that “we care” about the issue. Beyond the issue of leaders and laggards remains the question of whether DEI, as presently designed and implemented, significantly advances racial and social justice. Dennis Kennedy, founder and CEO of the National Diversity Council, argues that the current focus of many DEI initiatives is unlikely to yield comprehensive commitments to social justice. His argument is that: DEI as presently constituted does not sufficiently explore the roots and explanations of systemic and institutional racism; bias training, diversity consulting and other initiatives were purposely implemented to avoid legal risk and public scrutiny and not to achieve social change; and DEI was introduced within public, private and non-profit institutions that provided limited authority, resources and power to effectuate change. Expanding the boundaries Through the political process, the marketplace and social dynamics, several factors have converged to motivate greater awareness and scope of DEI activities going forward. They include activities of: Government. At the national level, the Biden administration has expanded the scope of DEI initiatives: The Securities and Exchange Commission (SEC) announced on February 24 that it will review public companies’ disclosure requirements on race and gender diversity and strengthen guidance on boardroom diversity. The acting chair noted that the results of the SEC’s voluntary program for companies to submit diversity self-assessments were “disappointing.” This follows an August 2020 SEC mandate that requires companies to begin disclosing information about their “human capital resources” that includes employee turnover rates and training programs. Companies already privately report diversity data to the U.S. Equal Employment Opportunity Commission and are under increasing pressure to make such information public. The White House has announced that disadvantaged communities will receive 40 percent of overall benefits from public investments in clean energy and infrastructure. The U.S. Environmental Protection Agency is seeking added funding for environmental justice initiatives to reduce the high exposure to unsafe drinking water supplies, toxic air pollution and hazardous waste from industrial facilities to low income communities and indigenous peoples. Investor community. Some trading houses and institutional investors are advocating that companies provide better information on workforce diversity, and they’re beginning to include such data in their assessments and rankings. Prominent examples include: On December 1, Nasdaq filed a proposal with the SEC to implement new rules that would require all listed companies to publicly disclose consistent, transparent data that measure board gender and racial diversity. It would require companies to have two diverse directors (including a female or one who self-identifies as LGBTQ+), or explain why this rule is not attainable. On December 20, BlackRock, the world’s largest asset management firm, announced that, beginning in 2021, it will seek expanded ethnic and gender diversity data for company boards and workforces. BlackRock stated that it will vote against company directors that fail to adequately respond to this expectation. State Street Global Advisors and Goldman Sachs also announced diversity measures for their clients. Talent recruitment and retention. Millennials and Generation Z employees and job seekers are increasingly utilizing Glassdoor (a leading social media platform about jobs and companies) and LinkedIn to evaluate current and prospective employers on their DEI performance. In September 2020, a Glassdoor survey reported that 76 percent of employees and those looking for jobs said a diverse workforce was important to their evaluation of companies and employment offers. Nearly half of Black and Hispanic workers and job seekers said they had quit a company after witnessing or experiencing discrimination at the work place. The bigger questions By 2045, white Americans are projected to comprise less than 50 percent of the population, and the labor force will become more diverse and older than at any other time in the nation’s history. These anticipated facts alone have intensified the “fear of losing advantage” for an already existing movement of hard core white nationalists and others sympathetic to their cause. In its present form, DEI represents a set of modest efforts for legal and institutional reforms but nothing close to a mass movement capable of resolving the widening crevices of American society and politics. Some major unresolved challenges for DEI proponents and all citizens and civil society institutions include: Will leaders across the spectrum of American institutions collaborate with the commitment, urgency and scale necessary to preserve the American democratic experiment in the coming decades? Do companies operating in America believe that a dysfunctional democracy and growing societal disharmony can provide clear and consistent rules necessary for their economic success? Can they become engines of egalitarianism and more equitable social mobility rather than of inequality? xCan public policy develop remedies to systemic racism that have historically impeded access to educational opportunity, environmental protection, health care, unbiased law enforcement, living wages and resource allocations for lower-income populations? Can white Americans be reassured that their constitutional freedoms will be preserved even as their relative size and influence diminishes in a growing multiracial, multigender society? Absent an ability to act with confidence and sustained urgency to achieve demonstrable progress in the next few decades, America will become increasingly bewildered about its own purpose and values. It will begin to hear, once again, the “fire bell in the night” that awakened and terrorized Thomas Jefferson early in the 19th century as he feared for the preservation of the Union. Pull Quote For many organizations, a direct DEI connection to their mission has not been made by leadership whose inattentiveness or nonreceptivity cascades downwards into the culture. Topics Leadership Diversity and Inclusion 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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Diversity, equity and inclusion: Incremental reform or systemic change?

Can C-suite paychecks save the world?

March 9, 2021 by  
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Can C-suite paychecks save the world? Joel Makower Tue, 03/09/2021 – 02:11 Last week, the fast-casual restaurant chain Chipotle Mexican Grill announced a new policy that ties executive compensation in part to environmental, social and governance (ESG) metrics.  Going forward, 10 percent of the annual incentive bonuses for corporate officers — essentially, anyone with day-to-day responsibility for running the company — will be tied to the company’s progress toward achieving such goals as improving diversity, creating more opportunities for advancement amid Chipotle’s lower ranks and increasing the organic, local and regeneratively produced food served in its restaurants. Chipotle is the latest company to spice up its executive pay packages to include social and environmental goals. In January, Apple announced it will incorporate ESG metrics into the annual cash incentives for company execs, using a formula to either decrease or increase bonus payouts by up to 10 percent. The goal, per the company’s proxy statement : “to further motivate Apple’s executive team to meet exceptionally high standards of values-driven leadership in addition to delivering strong financial results.” What in the name of fringe benefits is going on? Linking executive bonuses to sustainability metrics is making waves. But is it making a difference? At long last, companies and their largest investors are recognizing that climate change, diversity and other sustainability issues represent risks to profits and productivity, and that companies that proactively manage these risks are better run and thus more attractive investments. And where investors go, corporate boards of directors quickly follow in the form of carrots and sticks for a company’s top brass. The trend to link ESG metrics to executive pay is a departure from traditional compensation packages, which have relied almost entirely on financial measures — earnings per share, revenue growth and other factors. Now, nonfinancial metrics are being folded into the mix, with a strong emphasis on climate change and diversity and equity issues. The trend is just ramping up, especially in Europe, where the main focus is on climate change. U.S. companies are still mostly at the starting gate. A 2020 analysis of company public disclosures by Willis Towers Watson found that while about 11 percent of the top 350 European companies have linked greenhouse gas emissions to their executive incentive plans, only 2 percent of U.S. S&P 500 companies have done so, as Willis’ Nidia Martínez and Ryan Resch wrote recently on GreenBiz. But a few U.S. companies have stepped up. In 2019, Clorox set a goal to tie executive compensation awards to elements of its ESG goals for members of its executive committee, including for the chair and CEO, although it hasn’t yet announced details on how it will do this, according to Andrea Rudert, its associate director for ESG stakeholder engagement. Starting this year, McDonald’s is linking executive bonuses to increased hiring of “women and historically underrepresented groups.” At Starbucks, compensation for top execs is tied to corporate diversity , with the goal of having at least 30 percent of corporate workers who identify as Black, Indigenous or people of color by 2025. Moving the needle Will all these incentives change anything? In theory, yes. In practice — well, it’s hard to tell. There’s no clear data that companies with sustainability-related executive comp packages perform better in either ESG or financial metrics. One reason is that it’s early days, with many of these policies just kicking in. Adding sustainability into the mix still can move the needle. Whereas most financial metrics are short-term, with a strong emphasis on quarterly or annual performance, most sustainability metrics are by their nature longer-term. And while many of these metrics can be tracked on a quarterly basis, progress in sustainability usually plays out over years. To the extent that ESG metrics lead the C-suite to think longer-term, they could be a positive influence. Moreover, linking executive pay to sustainability can send an important signal through the company, its industry and the corporate world in general that these issues are vital to business success. And to the extent that these early adopters create a bandwagon, social and environmental metrics will increasingly will become an expectation of investors. In many sectors, they already are. Initiating such measures does present some challenges, such as identifying metrics material to the company and its sector, creating stretch goals that demonstrate real progress and establishing time periods that engender meaningful change. And there’s disagreement among large institutional shareholders about which ESG metrics should take preeminence. But these are all surmountable, as the first wave of leadership companies is showing. One good resource: The Aspen Institute recently published a white paper, Modern Principles of Sensible and Effective Pay , designed “to advance fresh thinking in boardrooms about executive compensation given new market priorities, shifting public attitudes towards equity, fairness and the role of business, and fundamental changes in the role of the CEO and executive teams.” In the end, the question remains: Are these executive compensation plans making a difference or are they a check-the-box activity that’s more symbolic than substantive? As I said, there’s no clear evidence either way. And what, if anything, does all this have to do with the much bigger issue of skyrocketing executive pay relative to those further down the corporate ladder? After all, for the millions living paycheck-to-paycheck, the relatively modest compensation adjustments of those at the top are, at best, laughable. In 2019, the ratio of CEO-to-typical-worker compensation in the United States was 320-to-1, up fivefold from 61-to-1 in 1989, according to the nonpartisan Economic Policy Institute . It’s no secret that the rich keep getting richer while the poor stay poor. To the extent that executive compensation is also determined in part by reducing the earnings gap between those at the top and bottom, we’ll begin to see a fairer and more just economy, one that could provide a multitude of sustainability benefits to both people and the planet. 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 Linking executive bonuses to sustainability metrics is making waves. But is it making a difference? Topics Finance & Investing Corporate Strategy Leadership GreenFin Featured Column Two Steps Forward Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off GreenBiz photocollage via Shutterstock

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Can C-suite paychecks save the world?

PepsiCo CSO on embedding sustainability into ‘day-to-day business’

February 1, 2021 by  
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PepsiCo CSO on embedding sustainability into ‘day-to-day business’ Heather Clancy Mon, 02/01/2021 – 02:00 The number of companies proclaiming their intent to go net-zero by 2050 has expanded exponentially in the past 12 months, but the ones short-cutting that commitment by a decade are a rarer breed. In mid-January, PepsiCo joined that club with a strategy to reduce its greenhouse gas emissions by 40 percent across its entire value chain by 2030 and to reach the elusive net-zero emissions status 10 years before it’s called for by the Paris Agreement. The latter commitment is one touted by members of The Climate Pledge, orchestrated by Amazon and Global Optimism, although PepsiCo isn’t a member of that campaign as of this writing. The same week that PepsiCo announced its new ambition, the company’s foundation extended the terms of its 14-year-long relationship with the Inter-American Development Bank — with initiatives including a fund meant to promote the inclusion of women in regenerative, sustainable agricultural models in Latin America. The extension will see $6 million more invested through 2026, initially in the Dominican Republic, Ecuador and Guatemala. Even though the foundation is a separate entity, there is a close link between its mission and the company’s sustainability goals, according to senior executives. These initiatives, for example, are thought of in terms of years rather than months. “We have to have the certainty that the community will invest the time and willingness to go on with a program for several years, and we need to create awareness,” said PepsiCo’s Latin America CEO, Paula Santilli, when I asked her about how communities are selected. “We choose mathematically and analytically and concentrate on those communities on the wrong side of the poverty line.” I’ve got history in sustainability, but I’m a business guy. In addition to Santilli, I recently chatted with PepsiCo Chief Sustainability Officer Jim Andrew about the link between sustainability and community development, as well as the strategy behind some other developments announced as part of its updated climate strategy — such as its new Sustainable from the Start product development philosophy and two new internal carbon pricing programs meant to embed climate-centric thinking into everyday business decisions. Andrew, an avid scuba diver who joined PepsiCo about 4.5 years ago after heading strategy and innovation at Royal Philips, took over as CSO after Simon Lowden retired last fall. “I think speed is of the essence, not just for PepsiCo, but for the whole world, for the planet and all the people in it,” Andrew told me when I asked for the motivation behind the accelerated goal. Following is a transcript of our discussion, edited for clarity and length. The Frito-Lay facility in Modesto, California. PepsiCo accelerates efforts to build a more resilient and sustainable food system, reducing absolute GHG emissions more than 4 percent by 2030 across entire value chain and pledging to net-zero emissions by 2040. Photo courtesy of PepsiCo Heather Clancy: The goals were finalized alongside the response to the COVID-19 pandemic. Did that experience influence the final shape of the climate goals? Was anything adapted or reconsidered because of what was going on? Jim Andrew: Certainly COVID-19 has been a challenge for everyone on multi levels. But what I think it’s done, it’s really shone a light on the need to be even bolder and move even faster. What has it done? It has, I think, sharpened the focus on the need to move urgently. We all saw that the food system is probably more fragile than we thought. We saw that the need for a food system that is sustainable, that is regenerative, that is inclusive, it’s probably bigger than we thought. In that respect, it didn’t influence what we wanted to do, but it probably helped re-emphasize the need to be big and be fast. Clancy: You mentioned a couple of interim goals to the 2040 one. I’m just curious if you have other short-term milestones that we should expect or watch for. What should we watch for? And how will PepsiCo disclose them? Andrew: You should watch for transparency, consistency and regularity in our reporting. We are completely open in that. Any goal we set, believe me, there’s a lot of work behind coming up with those goals. We put as much work into ensuring transparent reporting because it helps us be accountable — both internally and externally, candidly — and also helps us track progress. We’re a company that likes to set a big objective out there and then go get it. One of the big parts of my job is mobilizing the organization. I’ve got history in sustainability, but I’m a business guy. I didn’t major in environmental science. I’m a business guy working to drive in partnership with our CEO, Ramon Laguarta, and the rest of my executive peers to really drive the organization forward. Having clear goals, having really good data integrity, is at the heart of all of our ESG reporting. That’s important because then we know how we’re doing. It also builds trust. That’s something that we take really importantly. So what are you going to see from us? We’re going to report our progress annually in our sustainability report. We have one coming up in a few months and will be happy to talk to you again, when that comes out. Anytime we can provide real-time updates, we will. All of the reporting entities, we’re in alignment with — the Global Reporting Initiative, the CDP, the Task Force on Climate-related Financial Disclosures. We just issued our first [TCFD] report. So, we are going to be transparent; you’re going see it on a regular basis. Our objective is set some bold goals, and then go get them and hold ourselves accountable. Clancy: Since you brought it up, how will you engage the PepsiCo organization to deliver, especially when we’re all in this new age of remote work? Andrew: It’s been incredibly exciting to me to see just in four months the level of excitement in our organization. We’re 260,000-odd people around the world, 200-plus countries and territories. We’re a big complex organization, but there’s a level of interest and excitement. People get it. You ask me, how am I going to engage? There’s three things that you’ve got to do. The first is you’ve got to excite people. With PepsiCo, when you announce an ambitious goal, like our climate goal, people get excited and they get energized. Honestly, a lot of our partners — our bottlers, our co-manufacturers, our suppliers — I’ve had a lot of people reach out to me and say, “Hey, this is really exciting. How can we help? We’re in on it.” So the first thing you got to do internally and also externally is excite and a big goal does that. You know, make no small plans? I think that’s one of the real keys to make sustainability work. You got to embed it in the business strategy, the business processes and the actions everybody takes every day. The second is, there is a level of education that’s important. When we talk to people internally about regenerative agriculture, Scope 3 emissions, those are terms that to most people are new. So we need to introduce those terms. We need to educate people on why the goals matter, but most importantly, how are we going to achieve them. Because that’s what it’s all really about, and we’re doing that across the company. Because we’re Scope 3, it’s got to be across your whole supply chain. We’ve rolled out, as part of the climate goal, a really well-done employee training program specific to our employees to help them understand the role of us as a company, and then the role of them as individuals. What can they do to mitigate climate change? And then finally, it’s about engagement, it’s how do we take that excitement, take that education and then really engage people to drive real action. Because ultimately, it’s about action, it’s about results, it’s about moving the needle. And so that’s everything from, how do we give people the tools? How do we put it in their incentives? How do we talk about it on a regular basis? How do we measure it clearly, because what gets measured gets done, all those things. So: Excite, Educate and Engage. Clancy: How will the Sustainable from the Start Program be implemented, and which product divisions will be first to adopt it? Andrew: That’s a great question, because this is one of my real beliefs and one of my real emphases, which is how do you get sustainability not as something that happens “over there,” but that is really part of the day-to-day business, part of the day-to-day work. Because if it’s part of what we do every day, then it happens and that’s how you really drive action. So, we’re looking at where there are business processes where we can embed sustainability. New product development is a great example. Everybody, every part of the company is interested in and cares about what happens in new product development. So we started this program called Sustainable from the Start, and it really puts sustainability at the heart of product design and new product development, because what it does is it encourages, but it also enables product development teams to make environmental impact a part of their decision-making from the very beginning as they think about the whole product life cycle. We’ve rolled out some tools that really help, because you’ve got to make it simple. The less friction that we can introduce, the easier it’s going to be. So we gave people a set of tools, so that they can estimate, for example, the carbon and the water footprint of products and development, and what are the choices that they make early that are going to affect those footprints. And then they can compare that data to some best practice benchmarks that we’ve built in, so they know what good looks like and they can make more informed decisions. Things like recyclability impediments. If people don’t know, they will not be able to make the kind of decisions that they will if they’re informed. That gets back to the education point I was making as well. If they’re informed and they’re energized and they’re motivated, then they’re going to make decisions that will have big impacts as we move through the life cycle. A big focus of the Sustainable from the Start program is reducing GHG emissions, sure, but also things like discouraging the use of non-recyclable packaging, because that’s really important. So we’ve conducted life-cycle analyses, carbon footprints. We’ve done it for about a quarter of all of our brands now, and we’ve got plans to get all of them done. When you’re a company as big as PepsiCo, you’ve got a lot of brands, so it takes a little while to go through. We’ll have more to share on this — again, transparency, openness. But it’s a great business tool that we’re actively embedding, so that people are thinking about this, from the beginning, as a part of their day-to-day jobs. Because I think that’s one of the real keys to make sustainability work. You got to embed it in the business strategy, the business processes and the actions everybody takes every day. A farmer gives her livestock water in Cucungara, Peru. The success of infrastructure projects piloted by PepsiCo and the IDB in these rural communities has attracted additional support from international public sector partners that has been used to fund new infrastructure, including pipe systems and treatment plants. Photo courtesy of PepsiCo Clancy: Can you share more detail about the internal carbon pricing programs? Why are you embracing them now? Did they take effect? When will they take effect? Andrew: That’s another great example of where we’re trying to take environmental sustainability considerations and just put them in the normal flow of business. So, we’re going to have to collaborate and get employees involved, and also partners and suppliers and everything. There’s a couple that we mentioned. One is, how do we eliminate the carbon impact of employee business air travel? A lot of people travel; a lot of people may or may not fully understand what the implications are of that. What we have done is we have said that anytime any employee is going to travel by air for business, we’re going to put a price on that. And then we’re going to take that money, and we’re going to deploy it with a third party into our supply chain. It’s not something that’s out there, it’s put into our supply chain, to fully eliminate the impact of the emissions from that flight. And it’s flight by flight. And it allows every employee, every time they book a flight, to see that their choice has an impact and also that we as a company will do something. Again, it’s about how do you excite people because people get excited about, “Hey, I can do something.” It’s about how you educate them, because it’s right there, it’s going to be in the booking tool. We are programming it, as we speak. Then it’s ultimately about how you engage them, so they go do something. So that’s one. We’re rolling it out now. By the middle of this year, it’ll be up and running, full go. Then we’re also looking at how we build the carbon impact into carrier selection for third-party logistics. We’re working with our procurement team, so that the climate goals are a part of the consideration when they’re choosing carriers. Because what this will do is it will help you enforce, again, climate considerations and business decisions, which will help drive GHG reductions. And then we’re going to learn from these things, and we’re going to look for where can we continue to expand across other business processes, ways to just embed this into the everyday thinking in activities. Clancy: Those are great examples. Thank you for being so specific. Andrew: The carrier selection is being piloted right now. The employee air travel right now, obviously, we’ve got to do a little programming and not a lot of people are flying a whole lot right now. But the carrier selection program is being piloted right now. Clancy: The pandemic has underscored the fragility of the recycling infrastructure around the world, as well as the food system. What new investments is PepsiCo making to improve collection? And what steps are you taking to increase the use of recycled content in your packaging? Andrew: We have a very clear vision, and that’s a world where packaging never becomes waste. That is front and center for everything we do in packaging. There’s really three things that we have to [enforce that policy]. The first is reduce plastic use. The second is improve recycling, and the third is reinvent our packaging. Let me talk about those now and answer your question. To improve recycling, especially as you say, given some of the challenges, this is a systemic change that is necessary and it requires a lot of partnerships across the full value chain. It requires collaboration between the public sector and the private sector. And it really is how do we work together end-to-end for a circular economy for plastics? We set goals, and then we go and we work really hard to go achieve them. But you’ve got to be transparent along the way about what’s working, what’s not. Specifically to your question, in the last three years, we’ve pledged more than $65 million globally for recycling and collection. A little over a year ago we issued our first green bond. It was a $1 billion green bond. We’ve allocated just about half of that, I think it was $447 million, of the proceeds to projects that advance sustainability. Roughly $200 million of that was specifically to procure recycled PET in our North American beverage packaging. You want to talk about creating a market, that’s creating a market. We have brands, whole brands that are [using] 100 percent recycled PET in Europe. We’ve targeted 100 percent recycled PET in nine countries for our lineup of Pepsi-branded beverage bottles by the end of 2022. We’re working to both support the recycling infrastructure in partnership with other people in the supply chain, public entities, competitors, because this is something that we all have to work on. And then we’re also working at driving demand because if we drive demand and make clear what our commitments are, that helps support the investments that people need to make all along the chain. [Editor’s note: PepsiCo brands using 100 percent PET for their packaging include LIFEWTR, Tazo Tea and Naked Juice.] Clancy: The PepsiCo Foundation has invested considerably in cultivating economic growth and opportunities for women and disadvantaged communities around the world. How does the PepsiCo corporate sustainability team collaborate on those projects? How do they shape the execution of your strategy? How are they aligned? Andrew: We work very closely with the foundation. Again, this is a great example of where we work to use the scale and the reach that PepsiCo has to have a positive impact really across communities around the world, where we operate and to really show some leadership in helping to build a food system that’s sustainable, regenerative and inclusive, to your point. So what we’re always trying to do is work on both people and planet. The foundation and the business have very much those objectives. A good example of collaboration — in addition to the climate news we announced — was the announcement where PepsiCo, in particular our Latin American operations, with our CEO there, Paula Santilli, and the PepsiCo Foundation announced that they are expanding the social and environmental impact partnership that we have with the Inter-American Development Bank. We will go another five years through 2026. It’s a nearly $6 million investment. It builds on the heels of what has been a very successful investment in a partnership over the last 14 years. Over the last 14 years, we’ve supported about 19 million people across Latin America and the Caribbean, on five big pillars of things that are really, really important: water access; nutrition; sustainable agriculture; inclusive recycling; and disaster relief programs. There’s a great example of where the business, the foundation and third parties have been able to collaborate in ways that are more powerful. It’s one of those one plus one plus one equals probably seven. A lot of people have had been helped by a partnership that none of the organizations could do by themselves. Clancy: What’s on your mind right now that I haven’t asked about that you feel like we should talk about more? Andrew: This is something I’ve been thinking about a lot. The challenges that the world is facing, when it comes to climate — again, go back to our recent climate announcement, which is top of mind — are challenges where no company, no government, no NGO can do it themselves. The need for collaboration, for partnership, for working together, has never been higher. These are difficult challenges. These are not things that can be solved by any one entity, and they’re not things that are there to be solved overnight. But they are also things that we can’t wait on. The science is clear, the need is clear; the time to act is now. All of us have to find partners to move forward. There’s going to be some mistakes, there’s going be some things that won’t work but together, we have to work together, find those areas of common interest and where we can complement each other, and then move forward with urgency. That’s why we looked and said: “We want big goals, we want goals that will motivate not only ourselves internally, but also other folks externally.” I’ve gotten a lot of calls from people saying, “Hey, great, how do we team up? I see you’re interested in this; how can we work together on that?” That’s what we need. I wake up every day, I wake up every morning, and I worry about what’s going on and sustainability and how PepsiCo is going to drive forward and meet our goals and move the needle on things. But I also think about, how can we do that with others? So, to me, that’s so important and I’m not sure that is fully appreciated by everybody who needs to work together. Clancy: There is a certain amount of skepticism about some of these big alliances right now. How do you keep them relevant and authentic? Andrew: You have to be open, transparent; you’ve got to build trust; and then you’ve got to show results. I think if those things happen, a lot of problems are going to take care of themselves. Back to the question you asked about milestones, transparency. We don’t set goals that we don’t think we can achieve. We don’t know always how we’re going to achieve them because they are big goals, and they’re bold, and they’re aggressive. But that’s what’s needed. But we don’t set ones just to get a headline or, as much as I love talking to you, we don’t set big goals just to be able to go do interviews. We set goals, and then we go and we work really hard to go achieve them. But you’ve got to be transparent along the way about what’s working, what’s not. How are we doing? Clancy: I just have one last question. What’s your most important priority as a chief sustainability officer at this time? Andrew: Oh, that’s easy. I’ve probably got the best job in the company because I get a combination of the chief sustainability role, and also some business responsibilities, which are all about sustainability. But the most important thing is easy, which is achieving the goals we’ve set. That’s hard to do, but easy to say. But that’s the priority. Ultimately it’s about how do we make the planet better for both the planet and for the people on the planet. How do we drive forward results around climate? How do we reduce emissions? How do we increase our renewable electricity to 100 percent globally? How do we end up at net-zero? That’s what is the most important part of my job. That’s what motivates me, because that’s what ultimately will show up and create real change. I need to work with a whole lot of people internally — 260,000 people have all got to be pulling in that direction. It starts at the top and goes all the way down to our frontline workers, but it also is true externally. But that’s my priority 1, 2, 3, working in every way that I can, with everybody to help us achieve the results that we know are necessary for the planet and the people on it. Pull Quote I’ve got history in sustainability, but I’m a business guy. I think that’s one of the real keys to make sustainability work. You got to embed it in the business strategy, the business processes and the actions everybody takes every day. We set goals, and then we go and we work really hard to go achieve them. But you’ve got to be transparent along the way about what’s working, what’s not. Topics Corporate Strategy Corporate Social Responsibility Net-Zero Carbon Pricing Collective Insight The GreenBiz Interview Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off PepsiCo CSO Jim Andrew

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PepsiCo CSO on embedding sustainability into ‘day-to-day business’

PepsiCo CSO on embedding sustainability into ‘day-to-day business’

February 1, 2021 by  
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PepsiCo CSO on embedding sustainability into ‘day-to-day business’ Heather Clancy Mon, 02/01/2021 – 02:00 The number of companies proclaiming their intent to go net-zero by 2050 has expanded exponentially in the past 12 months, but the ones short-cutting that commitment by a decade are a rarer breed. In mid-January, PepsiCo joined that club with a strategy to reduce its greenhouse gas emissions by 40 percent across its entire value chain by 2030 and to reach the elusive net-zero emissions status 10 years before it’s called for by the Paris Agreement. The latter commitment is one touted by members of The Climate Pledge, orchestrated by Amazon and Global Optimism, although PepsiCo isn’t a member of that campaign as of this writing. The same week that PepsiCo announced its new ambition, the company’s foundation extended the terms of its 14-year-long relationship with the Inter-American Development Bank — with initiatives including a fund meant to promote the inclusion of women in regenerative, sustainable agricultural models in Latin America. The extension will see $6 million more invested through 2026, initially in the Dominican Republic, Ecuador and Guatemala. Even though the foundation is a separate entity, there is a close link between its mission and the company’s sustainability goals, according to senior executives. These initiatives, for example, are thought of in terms of years rather than months. “We have to have the certainty that the community will invest the time and willingness to go on with a program for several years, and we need to create awareness,” said PepsiCo’s Latin America CEO, Paula Santilli, when I asked her about how communities are selected. “We choose mathematically and analytically and concentrate on those communities on the wrong side of the poverty line.” I’ve got history in sustainability, but I’m a business guy. In addition to Santilli, I recently chatted with PepsiCo Chief Sustainability Officer Jim Andrew about the link between sustainability and community development, as well as the strategy behind some other developments announced as part of its updated climate strategy — such as its new Sustainable from the Start product development philosophy and two new internal carbon pricing programs meant to embed climate-centric thinking into everyday business decisions. Andrew, an avid scuba diver who joined PepsiCo about 4.5 years ago after heading strategy and innovation at Royal Philips, took over as CSO after Simon Lowden retired last fall. “I think speed is of the essence, not just for PepsiCo, but for the whole world, for the planet and all the people in it,” Andrew told me when I asked for the motivation behind the accelerated goal. Following is a transcript of our discussion, edited for clarity and length. The Frito-Lay facility in Modesto, California. PepsiCo accelerates efforts to build a more resilient and sustainable food system, reducing absolute GHG emissions more than 4 percent by 2030 across entire value chain and pledging to net-zero emissions by 2040. Photo courtesy of PepsiCo Heather Clancy: The goals were finalized alongside the response to the COVID-19 pandemic. Did that experience influence the final shape of the climate goals? Was anything adapted or reconsidered because of what was going on? Jim Andrew: Certainly COVID-19 has been a challenge for everyone on multi levels. But what I think it’s done, it’s really shone a light on the need to be even bolder and move even faster. What has it done? It has, I think, sharpened the focus on the need to move urgently. We all saw that the food system is probably more fragile than we thought. We saw that the need for a food system that is sustainable, that is regenerative, that is inclusive, it’s probably bigger than we thought. In that respect, it didn’t influence what we wanted to do, but it probably helped re-emphasize the need to be big and be fast. Clancy: You mentioned a couple of interim goals to the 2040 one. I’m just curious if you have other short-term milestones that we should expect or watch for. What should we watch for? And how will PepsiCo disclose them? Andrew: You should watch for transparency, consistency and regularity in our reporting. We are completely open in that. Any goal we set, believe me, there’s a lot of work behind coming up with those goals. We put as much work into ensuring transparent reporting because it helps us be accountable — both internally and externally, candidly — and also helps us track progress. We’re a company that likes to set a big objective out there and then go get it. One of the big parts of my job is mobilizing the organization. I’ve got history in sustainability, but I’m a business guy. I didn’t major in environmental science. I’m a business guy working to drive in partnership with our CEO, Ramon Laguarta, and the rest of my executive peers to really drive the organization forward. Having clear goals, having really good data integrity, is at the heart of all of our ESG reporting. That’s important because then we know how we’re doing. It also builds trust. That’s something that we take really importantly. So what are you going to see from us? We’re going to report our progress annually in our sustainability report. We have one coming up in a few months and will be happy to talk to you again, when that comes out. Anytime we can provide real-time updates, we will. All of the reporting entities, we’re in alignment with — the Global Reporting Initiative, the CDP, the Task Force on Climate-related Financial Disclosures. We just issued our first [TCFD] report. So, we are going to be transparent; you’re going see it on a regular basis. Our objective is set some bold goals, and then go get them and hold ourselves accountable. Clancy: Since you brought it up, how will you engage the PepsiCo organization to deliver, especially when we’re all in this new age of remote work? Andrew: It’s been incredibly exciting to me to see just in four months the level of excitement in our organization. We’re 260,000-odd people around the world, 200-plus countries and territories. We’re a big complex organization, but there’s a level of interest and excitement. People get it. You ask me, how am I going to engage? There’s three things that you’ve got to do. The first is you’ve got to excite people. With PepsiCo, when you announce an ambitious goal, like our climate goal, people get excited and they get energized. Honestly, a lot of our partners — our bottlers, our co-manufacturers, our suppliers — I’ve had a lot of people reach out to me and say, “Hey, this is really exciting. How can we help? We’re in on it.” So the first thing you got to do internally and also externally is excite and a big goal does that. You know, make no small plans? I think that’s one of the real keys to make sustainability work. You got to embed it in the business strategy, the business processes and the actions everybody takes every day. The second is, there is a level of education that’s important. When we talk to people internally about regenerative agriculture, Scope 3 emissions, those are terms that to most people are new. So we need to introduce those terms. We need to educate people on why the goals matter, but most importantly, how are we going to achieve them. Because that’s what it’s all really about, and we’re doing that across the company. Because we’re Scope 3, it’s got to be across your whole supply chain. We’ve rolled out, as part of the climate goal, a really well-done employee training program specific to our employees to help them understand the role of us as a company, and then the role of them as individuals. What can they do to mitigate climate change? And then finally, it’s about engagement, it’s how do we take that excitement, take that education and then really engage people to drive real action. Because ultimately, it’s about action, it’s about results, it’s about moving the needle. And so that’s everything from, how do we give people the tools? How do we put it in their incentives? How do we talk about it on a regular basis? How do we measure it clearly, because what gets measured gets done, all those things. So: Excite, Educate and Engage. Clancy: How will the Sustainable from the Start Program be implemented, and which product divisions will be first to adopt it? Andrew: That’s a great question, because this is one of my real beliefs and one of my real emphases, which is how do you get sustainability not as something that happens “over there,” but that is really part of the day-to-day business, part of the day-to-day work. Because if it’s part of what we do every day, then it happens and that’s how you really drive action. So, we’re looking at where there are business processes where we can embed sustainability. New product development is a great example. Everybody, every part of the company is interested in and cares about what happens in new product development. So we started this program called Sustainable from the Start, and it really puts sustainability at the heart of product design and new product development, because what it does is it encourages, but it also enables product development teams to make environmental impact a part of their decision-making from the very beginning as they think about the whole product life cycle. We’ve rolled out some tools that really help, because you’ve got to make it simple. The less friction that we can introduce, the easier it’s going to be. So we gave people a set of tools, so that they can estimate, for example, the carbon and the water footprint of products and development, and what are the choices that they make early that are going to affect those footprints. And then they can compare that data to some best practice benchmarks that we’ve built in, so they know what good looks like and they can make more informed decisions. Things like recyclability impediments. If people don’t know, they will not be able to make the kind of decisions that they will if they’re informed. That gets back to the education point I was making as well. If they’re informed and they’re energized and they’re motivated, then they’re going to make decisions that will have big impacts as we move through the life cycle. A big focus of the Sustainable from the Start program is reducing GHG emissions, sure, but also things like discouraging the use of non-recyclable packaging, because that’s really important. So we’ve conducted life-cycle analyses, carbon footprints. We’ve done it for about a quarter of all of our brands now, and we’ve got plans to get all of them done. When you’re a company as big as PepsiCo, you’ve got a lot of brands, so it takes a little while to go through. We’ll have more to share on this — again, transparency, openness. But it’s a great business tool that we’re actively embedding, so that people are thinking about this, from the beginning, as a part of their day-to-day jobs. Because I think that’s one of the real keys to make sustainability work. You got to embed it in the business strategy, the business processes and the actions everybody takes every day. A farmer gives her livestock water in Cucungara, Peru. The success of infrastructure projects piloted by PepsiCo and the IDB in these rural communities has attracted additional support from international public sector partners that has been used to fund new infrastructure, including pipe systems and treatment plants. Photo courtesy of PepsiCo Clancy: Can you share more detail about the internal carbon pricing programs? Why are you embracing them now? Did they take effect? When will they take effect? Andrew: That’s another great example of where we’re trying to take environmental sustainability considerations and just put them in the normal flow of business. So, we’re going to have to collaborate and get employees involved, and also partners and suppliers and everything. There’s a couple that we mentioned. One is, how do we eliminate the carbon impact of employee business air travel? A lot of people travel; a lot of people may or may not fully understand what the implications are of that. What we have done is we have said that anytime any employee is going to travel by air for business, we’re going to put a price on that. And then we’re going to take that money, and we’re going to deploy it with a third party into our supply chain. It’s not something that’s out there, it’s put into our supply chain, to fully eliminate the impact of the emissions from that flight. And it’s flight by flight. And it allows every employee, every time they book a flight, to see that their choice has an impact and also that we as a company will do something. Again, it’s about how do you excite people because people get excited about, “Hey, I can do something.” It’s about how you educate them, because it’s right there, it’s going to be in the booking tool. We are programming it, as we speak. Then it’s ultimately about how you engage them, so they go do something. So that’s one. We’re rolling it out now. By the middle of this year, it’ll be up and running, full go. Then we’re also looking at how we build the carbon impact into carrier selection for third-party logistics. We’re working with our procurement team, so that the climate goals are a part of the consideration when they’re choosing carriers. Because what this will do is it will help you enforce, again, climate considerations and business decisions, which will help drive GHG reductions. And then we’re going to learn from these things, and we’re going to look for where can we continue to expand across other business processes, ways to just embed this into the everyday thinking in activities. Clancy: Those are great examples. Thank you for being so specific. Andrew: The carrier selection is being piloted right now. The employee air travel right now, obviously, we’ve got to do a little programming and not a lot of people are flying a whole lot right now. But the carrier selection program is being piloted right now. Clancy: The pandemic has underscored the fragility of the recycling infrastructure around the world, as well as the food system. What new investments is PepsiCo making to improve collection? And what steps are you taking to increase the use of recycled content in your packaging? Andrew: We have a very clear vision, and that’s a world where packaging never becomes waste. That is front and center for everything we do in packaging. There’s really three things that we have to [enforce that policy]. The first is reduce plastic use. The second is improve recycling, and the third is reinvent our packaging. Let me talk about those now and answer your question. To improve recycling, especially as you say, given some of the challenges, this is a systemic change that is necessary and it requires a lot of partnerships across the full value chain. It requires collaboration between the public sector and the private sector. And it really is how do we work together end-to-end for a circular economy for plastics? We set goals, and then we go and we work really hard to go achieve them. But you’ve got to be transparent along the way about what’s working, what’s not. Specifically to your question, in the last three years, we’ve pledged more than $65 million globally for recycling and collection. A little over a year ago we issued our first green bond. It was a $1 billion green bond. We’ve allocated just about half of that, I think it was $447 million, of the proceeds to projects that advance sustainability. Roughly $200 million of that was specifically to procure recycled PET in our North American beverage packaging. You want to talk about creating a market, that’s creating a market. We have brands, whole brands that are [using] 100 percent recycled PET in Europe. We’ve targeted 100 percent recycled PET in nine countries for our lineup of Pepsi-branded beverage bottles by the end of 2022. We’re working to both support the recycling infrastructure in partnership with other people in the supply chain, public entities, competitors, because this is something that we all have to work on. And then we’re also working at driving demand because if we drive demand and make clear what our commitments are, that helps support the investments that people need to make all along the chain. [Editor’s note: PepsiCo brands using 100 percent PET for their packaging include LIFEWTR, Tazo Tea and Naked Juice.] Clancy: The PepsiCo Foundation has invested considerably in cultivating economic growth and opportunities for women and disadvantaged communities around the world. How does the PepsiCo corporate sustainability team collaborate on those projects? How do they shape the execution of your strategy? How are they aligned? Andrew: We work very closely with the foundation. Again, this is a great example of where we work to use the scale and the reach that PepsiCo has to have a positive impact really across communities around the world, where we operate and to really show some leadership in helping to build a food system that’s sustainable, regenerative and inclusive, to your point. So what we’re always trying to do is work on both people and planet. The foundation and the business have very much those objectives. A good example of collaboration — in addition to the climate news we announced — was the announcement where PepsiCo, in particular our Latin American operations, with our CEO there, Paula Santilli, and the PepsiCo Foundation announced that they are expanding the social and environmental impact partnership that we have with the Inter-American Development Bank. We will go another five years through 2026. It’s a nearly $6 million investment. It builds on the heels of what has been a very successful investment in a partnership over the last 14 years. Over the last 14 years, we’ve supported about 19 million people across Latin America and the Caribbean, on five big pillars of things that are really, really important: water access; nutrition; sustainable agriculture; inclusive recycling; and disaster relief programs. There’s a great example of where the business, the foundation and third parties have been able to collaborate in ways that are more powerful. It’s one of those one plus one plus one equals probably seven. A lot of people have had been helped by a partnership that none of the organizations could do by themselves. Clancy: What’s on your mind right now that I haven’t asked about that you feel like we should talk about more? Andrew: This is something I’ve been thinking about a lot. The challenges that the world is facing, when it comes to climate — again, go back to our recent climate announcement, which is top of mind — are challenges where no company, no government, no NGO can do it themselves. The need for collaboration, for partnership, for working together, has never been higher. These are difficult challenges. These are not things that can be solved by any one entity, and they’re not things that are there to be solved overnight. But they are also things that we can’t wait on. The science is clear, the need is clear; the time to act is now. All of us have to find partners to move forward. There’s going to be some mistakes, there’s going be some things that won’t work but together, we have to work together, find those areas of common interest and where we can complement each other, and then move forward with urgency. That’s why we looked and said: “We want big goals, we want goals that will motivate not only ourselves internally, but also other folks externally.” I’ve gotten a lot of calls from people saying, “Hey, great, how do we team up? I see you’re interested in this; how can we work together on that?” That’s what we need. I wake up every day, I wake up every morning, and I worry about what’s going on and sustainability and how PepsiCo is going to drive forward and meet our goals and move the needle on things. But I also think about, how can we do that with others? So, to me, that’s so important and I’m not sure that is fully appreciated by everybody who needs to work together. Clancy: There is a certain amount of skepticism about some of these big alliances right now. How do you keep them relevant and authentic? Andrew: You have to be open, transparent; you’ve got to build trust; and then you’ve got to show results. I think if those things happen, a lot of problems are going to take care of themselves. Back to the question you asked about milestones, transparency. We don’t set goals that we don’t think we can achieve. We don’t know always how we’re going to achieve them because they are big goals, and they’re bold, and they’re aggressive. But that’s what’s needed. But we don’t set ones just to get a headline or, as much as I love talking to you, we don’t set big goals just to be able to go do interviews. We set goals, and then we go and we work really hard to go achieve them. But you’ve got to be transparent along the way about what’s working, what’s not. How are we doing? Clancy: I just have one last question. What’s your most important priority as a chief sustainability officer at this time? Andrew: Oh, that’s easy. I’ve probably got the best job in the company because I get a combination of the chief sustainability role, and also some business responsibilities, which are all about sustainability. But the most important thing is easy, which is achieving the goals we’ve set. That’s hard to do, but easy to say. But that’s the priority. Ultimately it’s about how do we make the planet better for both the planet and for the people on the planet. How do we drive forward results around climate? How do we reduce emissions? How do we increase our renewable electricity to 100 percent globally? How do we end up at net-zero? That’s what is the most important part of my job. That’s what motivates me, because that’s what ultimately will show up and create real change. I need to work with a whole lot of people internally — 260,000 people have all got to be pulling in that direction. It starts at the top and goes all the way down to our frontline workers, but it also is true externally. But that’s my priority 1, 2, 3, working in every way that I can, with everybody to help us achieve the results that we know are necessary for the planet and the people on it. Pull Quote I’ve got history in sustainability, but I’m a business guy. I think that’s one of the real keys to make sustainability work. You got to embed it in the business strategy, the business processes and the actions everybody takes every day. We set goals, and then we go and we work really hard to go achieve them. But you’ve got to be transparent along the way about what’s working, what’s not. Topics Corporate Strategy Corporate Social Responsibility Net-Zero Carbon Pricing Collective Insight The GreenBiz Interview Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off PepsiCo CSO Jim Andrew

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PepsiCo CSO on embedding sustainability into ‘day-to-day business’

Amazon aims to clean up aviation

January 27, 2021 by  
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Amazon aims to clean up aviation Katie Fehrenbacher Wed, 01/27/2021 – 02:00 The aviation sector in a pandemic has 99 problems. And climate change remains a big one.  The industry aims to build back better, aware that it’s one of the few sectors that hasn’t yet embraced electrification. The key solutions today are biofuels, only displacing a mere fraction of fossil fuels-based jet fuel, and offsets. But in reality, with revenues and ticket sales way down, there’s only so much commercial airlines actually will do to meet decarbonization goals. And if you look at the aviation industry’s historical pledges to add in bio-based jet fuels, before the pandemic, it’s fallen woefully short. Enter air cargo. More specifically, Amazon’s air shipping business, which along with its entire global logistics supply chain juggernaut is booming.  A startup called Infinium announced it has raised a round of funding including backing from Amazon’s Climate Pledge Fund. Infinium makes biofuel by taking hydrogen made with clean power and electrolysis, combining it with carbon dioxide and running it through two thermochemical processes — turning it into a replacement fuel for airplanes, ships and large trucks. Infinium, spun out of another company called Greyrock Energy , says because the biofuel (dubbed an “electrofuel”) is made with clean energy and CO2, it’s a “net-zero carbon” fuel. The fuel isn’t yet being made commercially just yet, and it’ll take at least three years to build a factory and start making it at any kind of scale. Economic production at scale is the key metric for biofuel makers.  Still, Amazon’s support is the latest indicator that the logistics giant is eyeing ways to clean up aviation. Amazon Vice President of Worldwide Sustainability Kara Hurst released a statement about the investment: Amazon created The Climate Pledge Fund to support the development of technologies and services that will enable Amazon and other companies to reach the goals of the Paris Agreement 10 years early — achieving net-zero carbon by 2040. Infinium’s electrofuels solution has real potential to help decarbonize transport that carries heavier loads and travels long distances, including air and freight, as well as heavy trucks. This isn’t Amazon’s first investment in biofuels. Last summer Amazon announced that it plans to buy 6 million gallons of bio-jet fuel via a division of Shell and produced by World Energy, a big biodiesel producer. The companies said the jet fuel will be made from agricultural waste fats and oils (such as used cooking oil and inedible fats from beef processing). The world of bio-jet fuel is just getting started. Shell is emerging as a player, but so is Neste, a Finnish company that also makes a renewable diesel product for trucking. Last year, Neste delivered its first batch of sustainable aviation fuel via pipeline for airlines refueling at San Francisco International Airport to use. DHL Express is using Neste’s sustainable aviation fuel at SFO.  Amazon is worried about the carbon intensity of the fossil fuel-based jet fuel it uses because it’s trying to get to zero carbon by 2040. Air shipping, a growing sector, is the most carbon-intensive way to ship a product. As Amazon Air Director Raoul Sreenivasan said at our VERGE 20 online conference in October: “The world is watching what we do. And we believe we have a responsibility to use our scale for good and make the appropriate investments to achieve this goal.” Because bio-jet fuel is at such an early stage, Amazon can’t just go out and switch over its entire air fleet to the stuff. But there are a couple of things Amazon can do as the industry is still maturing. Amazon is already electrifying the ground air equipment at its airport facilities. It’s also putting solar up on buildings at the airports. Most important, Amazon can use its heft to help move the sustainable aviation fuel (SAF) industry forward. As Sreenivasan said about SAF at VERGE 20: “Our hope is that by making an investment and a commitment that others will partner with us and cause somewhat of a ripple effect in the industry that will drive demand and supply.” Essentially, if Amazon’s moving in, hopefully the rest of aviation will follow. With more supply deals and investments in new players, we’ll see if the logistics world leader can green up one of the hardest-to-abate sectors: aviation.  Want more great analysis of electric and sustainable transport? Sign up for Transport Weekly , our free email newsletter. Topics Transportation & Mobility Supply Chain Aviation Logisitics Featured Column Driving Change 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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Amazon aims to clean up aviation

Amazon aims to clean up aviation

January 27, 2021 by  
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Amazon aims to clean up aviation Katie Fehrenbacher Wed, 01/27/2021 – 02:00 The aviation sector in a pandemic has 99 problems. And climate change remains a big one.  The industry aims to build back better, aware that it’s one of the few sectors that hasn’t yet embraced electrification. The key solutions today are biofuels, only displacing a mere fraction of fossil fuels-based jet fuel, and offsets. But in reality, with revenues and ticket sales way down, there’s only so much commercial airlines actually will do to meet decarbonization goals. And if you look at the aviation industry’s historical pledges to add in bio-based jet fuels, before the pandemic, it’s fallen woefully short. Enter air cargo. More specifically, Amazon’s air shipping business, which along with its entire global logistics supply chain juggernaut is booming.  A startup called Infinium announced it has raised a round of funding including backing from Amazon’s Climate Pledge Fund. Infinium makes biofuel by taking hydrogen made with clean power and electrolysis, combining it with carbon dioxide and running it through two thermochemical processes — turning it into a replacement fuel for airplanes, ships and large trucks. Infinium, spun out of another company called Greyrock Energy , says because the biofuel (dubbed an “electrofuel”) is made with clean energy and CO2, it’s a “net-zero carbon” fuel. The fuel isn’t yet being made commercially just yet, and it’ll take at least three years to build a factory and start making it at any kind of scale. Economic production at scale is the key metric for biofuel makers.  Still, Amazon’s support is the latest indicator that the logistics giant is eyeing ways to clean up aviation. Amazon Vice President of Worldwide Sustainability Kara Hurst released a statement about the investment: Amazon created The Climate Pledge Fund to support the development of technologies and services that will enable Amazon and other companies to reach the goals of the Paris Agreement 10 years early — achieving net-zero carbon by 2040. Infinium’s electrofuels solution has real potential to help decarbonize transport that carries heavier loads and travels long distances, including air and freight, as well as heavy trucks. This isn’t Amazon’s first investment in biofuels. Last summer Amazon announced that it plans to buy 6 million gallons of bio-jet fuel via a division of Shell and produced by World Energy, a big biodiesel producer. The companies said the jet fuel will be made from agricultural waste fats and oils (such as used cooking oil and inedible fats from beef processing). The world of bio-jet fuel is just getting started. Shell is emerging as a player, but so is Neste, a Finnish company that also makes a renewable diesel product for trucking. Last year, Neste delivered its first batch of sustainable aviation fuel via pipeline for airlines refueling at San Francisco International Airport to use. DHL Express is using Neste’s sustainable aviation fuel at SFO.  Amazon is worried about the carbon intensity of the fossil fuel-based jet fuel it uses because it’s trying to get to zero carbon by 2040. Air shipping, a growing sector, is the most carbon-intensive way to ship a product. As Amazon Air Director Raoul Sreenivasan said at our VERGE 20 online conference in October: “The world is watching what we do. And we believe we have a responsibility to use our scale for good and make the appropriate investments to achieve this goal.” Because bio-jet fuel is at such an early stage, Amazon can’t just go out and switch over its entire air fleet to the stuff. But there are a couple of things Amazon can do as the industry is still maturing. Amazon is already electrifying the ground air equipment at its airport facilities. It’s also putting solar up on buildings at the airports. Most important, Amazon can use its heft to help move the sustainable aviation fuel (SAF) industry forward. As Sreenivasan said about SAF at VERGE 20: “Our hope is that by making an investment and a commitment that others will partner with us and cause somewhat of a ripple effect in the industry that will drive demand and supply.” Essentially, if Amazon’s moving in, hopefully the rest of aviation will follow. With more supply deals and investments in new players, we’ll see if the logistics world leader can green up one of the hardest-to-abate sectors: aviation.  Want more great analysis of electric and sustainable transport? Sign up for Transport Weekly , our free email newsletter. Topics Transportation & Mobility Supply Chain Aviation Logisitics Featured Column Driving Change 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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