5 steps boards can take to be ESG-ready for 2021

January 21, 2021 by  
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5 steps boards can take to be ESG-ready for 2021 Pamela Gordon Thu, 01/21/2021 – 01:40 Amongst the many dramatic challenges global businesses faced in 2020, one that had been simmering for years bubbled up and promised to stay at a high boil in 2021 is ESG: Environment, Social, Governance.  Signs that ESG expectations were becoming more ubiquitous included the establishment of global ESG standards published by the World Economic Forum’s International Business Council in September and BlackRock’s call for a globally recognized framework for investors to understand individual company risks.  Despite years of progress by leading corporations toward ESG, corporate social responsibility (CSR), environmental health and safety (EHS) and sustainability goals, the reality is that board members overseeing these companies are still trying to discern how all of this applies to them. In fact, in PwC’s annual Corporate Directors survey , which includes responses from more than 600 public board directors, only half (51 percent) say their board fully understands ESG issues impacting the company. That same study shows, however, that in 2020, 45 percent of directors say that ESG issues are a regular part of the board’s agenda, which demonstrates an increase from 34 percent in 2019. Time for training How can boards (public and private) improve their efficacy in ESG oversight for long-term value? As ESG experts, Presidians and members of the Athena Alliance (community of female corporate board directors and executives), we set out to help boards to become ESG-ready .  To start, we uncovered board members’ keenest ESG-education needs by surveying sitting board members at public (39 percent) and private (61 percent) companies, generating annual revenues of less than $50 million to $3 billion. They look to ESG to realize the following areas of corporate success: Source: Presidio Graduate School survey, October through December 2020 Then, we developed an ESG training for board members, along with the following five recommendations for board members to get ESG-ready for 2021. 1. Understand why boards need to be ESG-ready In our survey, 47 percent of directors believe ESG is important for brand equity and reputation, 24 percent cited both customer and investor pressure, and 18 percent pointed to risk management and board pressure. One sitting board member said that ESG is “an inherent part of the business model.” Board oversight includes advising the management team on the company strategy, and ensuring improved long term value for all stakeholders. Directors must understand how ESG issues can affect that strategy, and be in a position to assess and address both challenges and opportunities. To get started, align the board on why they should care, in light of demands from stakeholders such as customers, employees, investors, communities and suppliers. Invite an ESG expert to convey how ESG is material to your particular company.  2. Add ESG to your next board meeting agenda When asked what level of importance their boards put on ESG, 76 percent of our survey respondents said “important” or “very important,” yet only 47 percent said their companies report on ESG, and 35 percent said their board provides ESG oversight. Compare that to the 45 percent stated by public companies in the PwC survey, and we are still looking at less than half of company boards addressing ESG even as investors and other business stakeholders demand it. Add ESG to your next board agenda, even if only to start the conversation with the management team. You may be pleasantly surprised to learn that somewhere in the organization people have been working on ESG initiatives and have been waiting for the conversation to reach the board. Risk and reputation are two of the most fundamental aspects of “duty of care” for sitting board directors. Corporate leaders who take a broader view of their long-term strategy, including how they will meet ESG demands, will be better positioned to address new risks and opportunities.  3. Select an ESG oversight structure that aligns with your company More than half (52 percent) of our survey respondents serve on the Nominating and Governance committees of their boards, with 20 percent stating they sit on a specialized ESG/EHS working group or committee. Some companies split the elements of ESG between committees, with “social” sitting with the compensation committee for example, as they typically manage diversity, equity and talent initiatives. Because ESG strategy should align with business strategy and focus on material risks and business drivers, the full board will want to understand the ESG messaging and how those risks are being mitigated. A recent article by the Harvard Law School Forum on Corporate Governance offers an excellent guide on how to address ESG and corporate governance within the board committees, noting most importantly, “Because ESG strategy should align with business strategy and focus on material risks and business drivers, the full board will want to understand the ESG messaging and how those risks are being mitigated.”  4. Arm yourself with expertise In the PwC survey, respondents agreed that ESG issues are playing a larger role in their board discussions, and should be included in determining the company strategy. In fact, 67 percent of directors said the company should include climate change, human rights and income equality in the company strategy, a 13-point increase over 2019. Interestingly, female directors were more likely (60 percent) to see the link between ESG and company strategy than their male counterparts (46 percent), and agreed in higher percentages (79 percent vs. 64 percent) that climate change and human rights issues should be part of forming the company strategy.  As your board recruits new directors or replaces sitting directors, consider adding a director with ESG expertise, supplemented with an independent ESG consultant for a broader and future view. 5. Get educated When asked from which aspects of ESG education their boards would most benefit from, respondents prioritized: 1) diversity, equity and inclusion, 2) ESG/CSR reporting, 3) products’ environmental footprint/impact, 4) company operations’ environmental footprint/impact and 5) climate and renewable energy. Most prefer a half-day training, with some wanting a customized training for their entire board and others wanting to join training comprising individual board members representing diverse companies. Having interviewed board members over the years for materiality assessments, PGS Consults analysts note that board directors acknowledge their limited understanding of ESG and are genuinely open to learning more. The COVID-19 lockdown in March created a dramatic shift in board member interest in ESG — from polite inquiry to a more urgent need to know. Pull Quote Because ESG strategy should align with business strategy and focus on material risks and business drivers, the full board will want to understand the ESG messaging and how those risks are being mitigated. Contributors Leilani Latimer Topics Corporate Strategy ESG Collective Insight Thinking in Systems Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Shutterstock Freedomz Close Authorship

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5 steps boards can take to be ESG-ready for 2021

Welcome to a new era of ESG and sustainable finance

January 21, 2021 by  
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Welcome to a new era of ESG and sustainable finance Joel Makower Thu, 01/21/2021 – 01:30 Adapted from the premiere issue of GreenFin Weekly, a free e-newsletter focusing on trends in ESG and sustainable finance. Subscribe using this sign-up page . What a moment to launch a newsletter on ESG and sustainable finance. The topic has become front and center in sustainability and finance circles and, suddenly, in Washington, D.C. A vast ecosystem is in play. Investors have awakened to the notion that how companies manage environmental and social issues is nearly as key to their risk profile and profitability as are financial fundamentals. Banks and insurers are factoring climate risk and social issues into their products and portfolios, accelerating a shift that’s been gearing up for years. Companies are warming to a world of deeper transparency and disclosure demands by investors, lenders, customers and others, and are trying to keep up with the dynamic world of standards and frameworks with which they’re being asked to comply. Oh, and it’s the dawn of a new U.S. presidential administration that sees virtue in assertive action on a range of social and environmental issues. We’re entering a new era, one in which companies are less able to hide behind their pronouncements and good intentions. We’re entering a new era, one in which companies are less able to hide behind their pronouncements and good intentions. Accountability is the new watchword. Action, not announcements, is the currency. The arrival of Team Biden itself promises to be a game changer. By the time you read this, we already may have learned about some of the incoming president’s first moves in this arena. Suffice to say that the new administration’s ambitions are significant — and the expectations could not be higher. After years of spinning wheels and grinding gears, there’s renewed hope for moving forward. All of this is bringing new players to the table — those inside organizations whose remit up to now hadn’t included such things as climate risk and human rights. Those in finance, investor relations, government affairs and risk management are grappling with new kinds of disclosure, increased investor scrutiny, new regulatory regimes and stepped-up activist pressures (not to mention media enquiries) around a host of nonfinancial issues. Investors, for their part, are similarly finding themselves swimming in uncharted waters. Even job seekers are starting to scrutinize the ESG data of prospective employers. We’ve been covering many of these topics for years on GreenBiz.com. Now, we’re stepping things up, elevating ESG and sustainable finance across our portfolio, starting with this newsletter and the GreenFin 21 conference in April as well as through webcasts, podcasts and many other things we do. Each week, a member of GreenBiz’s stable of journalists will take the helm of GreenBiz Weekly on a rotating basis, offering a fresh perspective on ESG and sustainable finance, and point to key stories from across the Web. We won’t cover everything — just the important things. Here are just a few storylines we’ll be following in this newsletter: The convergence of standards: This is No. 1 with a bullet. The mélange — some would call it a morass — of ESG standards and frameworks has been a problem for years. Now, various efforts to align these disparate approaches aim to create harmony from this chaos. But even these harmonization efforts are competing with one another. Which one(s) will win out? It’s an open field. The secret life of ESG data: How it’s compiled and deployed isn’t always clear. As such data is used for everything from assessing creditworthiness to determining where the next generation of talent wants to work, understanding the data itself — how it is compiled and used — will be critical. It’s time to bring ESG out of the black box. The growth of sustainability-linked finance: Another year, another record in the issuance of green bonds, climate bonds, sustainability bonds and others, as well as sustainability-linked loans. But issuing such bonds can be fraught with complexity. How are companies managing? We’ll take you behind the scenes. Investor expectations on DEI: As diversity, equity and inclusion issues have grown inside companies, investors are struggling to understand how to assess company actions. Black Lives Matter, #MeToo and other social movements are seen as both risks and opportunities for companies, and large institutional shareholders are starting to weigh in. Nature on the balance sheet: Biodiversity is an emerging area of investor interest and concern and is being integrated into ESG disclosures. What should companies be doing to prepare? The role of boards: Getting boards of directors on board with ESG issues is no small thing, and many boards aren’t prepared to provide adequate guidance and oversight. What are the competencies boards need to have? What are some key policies boards are adopting? That’s just a taste. As I said, it’s a fast-growing, ever-changing field. There’s no shortage of topics — and we’re just getting started. We look forward to joining you on this journey each week as we uncover and analyze new topics, interesting people, insightful reports, emerging trends and other useful resources to help you and your team move forward. To subscribe to GreenFin Weekly, published Wednesdays, click here . Pull Quote We’re entering a new era, one in which companies are less able to hide behind their pronouncements and good intentions. Topics Finance & Investing ESG GreenFin 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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What I learned about water in 2020

December 30, 2020 by  
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What I learned about water in 2020 Will Sarni Wed, 12/30/2020 – 01:30 Last year around this time, I focused on digital technology solutions for water with this essay, ” 2019: The Year Analog Solutions Died .” I stand by this perspective, as the COVID-19 pandemic has accelerated interest and adoption of digital technologies across the water value chain. However, I wanted to share six new learnings from this pandemic year related to digital transformation along with other observations about the topic of water.   1. Digital transformation is about people: The digital transformation of water was well underway pre-pandemic and accelerated quickly during the past nine months. What was once anticipated to be a multiyear transformation occurred rapidly, with both the utility and industrial sectors scrambling to identify digital technologies and integrate them into their operations to adjust to remote workforces. Two aspects of the digital transformation took on more prominence: the critical importance of the workforce and the role of earth observation science (EOS) technologies. First, the critical importance of people in digital transformation cannot be underestimated. Transformation will stall or fail if there is no alignment between business strategy and culture, and there is a lack of investment in the workforce. The insights on digital transformation from 2019 papers and research came to the forefront (” IWA Digital Transformation ” and ” The Technology Fallacy “). The key takeaways are that successful investments in digital water technologies require a strategy, commitment by leadership, investment in the workforce and establishing and nurturing a culture of learning. The most important from my perspective is creating a culture of learning — it will contribute to attracting and retaining talent. We also witnessed the emergence of EOS technologies to provide real-time water quality, ecosystem health and flood prediction analytics from satellite data acquisition and analytics companies (such as Gybe , 52 Impact and Cloud to Street ). Digital technologies are connecting across the value chain of utilities and industries for a more real-time view of water quality, quantitative evaluations of ecosystems and flood prediction. 2. We need a “skunkworks” strategy for innovation: Innovation in water technology and business models is slow for several reasons. The competition is the status quo (the installed base). In general, organizations “try” to innovate from within, and water is a public health issue, so utilities can’t take risks. We don’t have the luxury of time to wait for innovative technologies and business models to scale. At this rate, we won’t achieve United Nations Sustainable Development Goal 6, which sets the goal of clean water and sanitation for all. What we need is a skunkworks mindset and strategy. If other industry sectors such as the aircraft and aerospace sectors can innovate quickly and at scale, so can the water sector. For those unfamiliar with the term, the relevant characteristics of a skunkworks project are outlined as a concentration of a few good people solving problems far in advance, at a fraction of the cost of other groups by applying the simple, most straightforward methods possible to develop new projects (paraphrased from Kelly Johnson ). 3. Water is not (just) the water industry: The issues and opportunities related to water are not just about the water industry. We need a more expansive view of the role of water in society and our environment. For example, water has economic, business, social and spiritual dimensions. The water industry sector mostly focuses on economic and business dimensions and rarely, if at all, on the social and spiritual dimensions. I would reframe the narrative to focus on humanity’s relationship with water (especially health and wellness, and natural ecosystems). Water doesn’t come from the tap or bottled water, so let’s protect watersheds and ecosystems. This message needs to be communicated simply and clearly to those outside the water sector. 4. Diversity is critical to solving wicked water problems: Society would benefit from greater diversity in solving water challenges as it is doubtful solutions exclusively will come from the usual suspects (myself included). We need vastly more diversity in age, gender, race, geography and from industry outsiders. Increasing diversity will not happen organically; we need to be proactive and work at it or we are destined to bring the same ideas to the party. As Ben Dukes, a friend and colleague, often says, “What got you here won’t get you there.” 5. Innovation in investing in water remains a challenge: Water technology entrepreneurs and startups continue to be challenged by traditional venture capital and private equity investment models. Water is not cleantech and requires more patient capital, which is in short supply. However, there are encouraging signs as initiatives such as Anheuser-Busch InBev’s 100+ Accelerator and Microsoft’s $1 billion Climate Innovation Fund invest in innovative water and sustainability solutions. The increased interest during 2020 in environmental, social and governance (ESG) performance has also focused more on innovative water solutions. 6. Water is not climate: The statement “If climate is the shark, water is the teeth” is misleading and not helpful. This year, climate change continued to gain traction within the private sector in the form of new commitments and investments from companies such as Amazon, Google and Nestle, among many others. This is certainly to be applauded. However, a cautionary word: Solving climate change will not solve the fundamental issues with water scarcity, poor quality and lack of access to safe drinking water, sanitation and hygiene. The potential and likely failure to achieve SDG 6 can be attributed to public policy failures sch as pricing, allocations and lack of funding. We can solve climate change and water and need to focus on both. There is no shortage of lessons learned from 2020. While it was a profoundly challenging year, we do have an opportunity to do better by critically examining what needs to change in the years ahead. This past year has framed my view of what the future may hold for 2021 as we build back better . I will share my thoughts on 2021 in my next Liquid Assets column. Topics Water Efficiency & Conservation Innovation Corporate Strategy Featured Column Liquid Assets Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Photo courtesy of Shutterstock/ Chepko Danil Vitalevich

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Why corporate partners are essential for Third Derivative, a new climate-tech support network

November 30, 2020 by  
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Why corporate partners are essential for Third Derivative, a new climate-tech support network Heather Clancy Mon, 11/30/2020 – 03:00 Climate tech is more important than ever, but the systemic challenges entrepreneurs face in shepherding these solutions to commercial success is formidable. Most have incredibly long R&D lead times, while the systems that typically support startups cater to ones promising shorter-term payoffs. That’s why earlier this year, clean economy nonprofits Rocky Mountain Institute — known for its thought leadership on climate change issues — and New Energy Nexus — with deep bottom-up resources for founders — combined forces to create a joint venture centered on finding and scaling climate-tech startups focused addressing climate change across the electric grid, transportation, buildings, manufacturing and agriculture. Their mission: create a network of financial, technical and market development resources — including credible and powerful corporate connections — that gets these critically important solutions to commercial scale more quickly. The thesis: The most successful climate-tech startups will be those with early access to economic analysis, policy resources, financing and technical support. This week, the venture, Third Derivative (D3), is launching with a portfolio of close to 50 startups (both early stage and those closer to commercial readiness) and the support of nine corporate partners and nine venture capital firms. D3 is particularly interested in accelerating solutions for “hard to abate sectors” where there aren’t currently good options for decarbonization, according to its website. It is incredibly hard for investors to source, vet and execute investments across the many varied climate solution sectors. Of the 50-ish startup companies announced this week — dubbed ” Cohort 417 ” (for the peak of 417.1 parts per million in atmospheric CO2 concentration recorded in May 2020 — more than two-thirds are led by founders who are women, veterans or people of color, said Third Derivative co-founder and CEO Bryan Hassin. “We went out to meet them where they are,” he said. Both RMI and New Energy Nexus have committed “hundreds” of their market experts to supporting the venture with research, technical expertise and commercialization advice. The organization seeks to bridge knowledge and funding gaps at multiple phases of a startup’s life cycle — moving from basic research into a spinout; product development; demonstrations and market validation efforts; and commercial deployment. RMI and New Energy Nexus are a powerful combo, but the corporate connections and venture resources make the initiative unique by providing that active perspective far earlier in the innovation process, Hassin said, pointing to his own past career as a climate-tech entrepreneur with a background in nanomaterials, off-grid solar energy and artificial intelligence. “We have a systems-level problem that we’re working on here,” he said. “I think we can all agree that more is necessary.” Corporate support equals path to commercialization D3 certainly packs a punch from day one, with nine corporations lined up as backers that have pledged to provide technical resources and financial support over the next three years. That initial group includes AT&T, BP Ventures, Berkshire Hathaway Energy, Engie, Envision Energy, FedEx, Microsoft, Shell and Wells Fargo. Together, these big companies represent almost $3 trillion in market capitalization, although the energy company valuations are particularly subject to fluctuation at this time. These companies are “incredibly motivated and visionary,” Hassin said. They will play a hands-on role in startup mentorship and pilot projects, along with any other businesses that choose to join. But this isn’t just about money. “It doesn’t do any good for them to come in and just write a check,” Hassin said. Nine venture firms — representing more than $2 billion in funding and four continents — also have stepped up to support Third Derivative: Imperative Ventures, Skyview Ventures and Volo Earth Ventures from the U.S.; Chrysalix and Emerald Technology Partners from Europe; Factor[e] and Social Alpha from Africa/India; and Tsing Capital and CRCM from China. “It is incredibly hard for investors to source, vet and execute investments across the many varied climate solution sectors,” said Jan Van Dokkum, the former Kleiner Perkins Caufield and Byers partner who became chairman of Imperative in 2019, in a statement. “We see enormous value in Third Derivative applying RMI’s market knowledge and networks to cultivate a pipeline of game-changing climate-tech ventures validated by corporate partners. We are excited to make seed investments in those startups, and our ability to work with them over the duration of the program should dramatically increase their investability by the time they are ready for follow-on funding.” These are big ambitious goals for us, and we feel the sense of urgency to find scalable solutions that can help us meet both of them. AT&T, which has committed to carbon neutrality by 2035 for its own operations and is also interested in supporting technologies that help its customers work toward similar goals, was intrigued by the “rigor” that Third Derivative is using to evaluate potential portfolio companies and in allowing corporate partners to be part of that process. That was one reason it decided to shell out $900,000 for its first three years in the program, said John Schulz, director of sustainability integration for AT&T. The other motivator: the diversity of perspective the venture offers. “These are big ambitious goals for us, and we feel the sense of urgency to find scalable solutions that can help us meet both of them,” Schulz said. Aside from financial backing, AT&T is providing technical resources, especially those focused on how the various technologies being pioneered by D3 companies might be integrated with the internet of things — a major business development focus for the telecommunications company. “What are the connectivity solutions that could be the key to unlock success? That’s of particular interest,” Schulz said. A wide range of solutions D3 actually launched the application process for its first cohort in the spring and received more than 600 applications — many for what Schulz described as “mind-blowing” innovations. The corporate partners were actively involved with evaluating and recommending selections among the 200 finalists, which represent advances in hardware and business models and, to a lesser extent, software. They also represent countries including India, Indonesia, China and Italy, although the initial selections are weighted to companies from North America. “We were a little overwhelmed by the enthusiasm,” Schulz said. Some companies from the first cohort include: Antora Energy : A Stanford-born effort (also backed by Cyclotron Road) working on ultra-low-cost energy storage that could have applications as wind and solar farms. Blue Frontier : A startup supported by NREL, NYSERDA and others that is using saltwater energy-storage technology to create “hyper-efficient” air conditioners. Frost Methane :   An offsets market being created around methane flaring activities Kanin Energy : A venture focused on turning industrial waste heat into an emissions-free energy source. Membrion : A materials company developing environmentally friendly filtration membranes. Silvia Terra : A forest-mapping startup. TexPower : A small team working on cobalt-free batteries. Each D3 startup receives a $100,000 convertible note as well as the potential for $250 million in follow-on funding from the venture capital network that’s part of the program. Hassin said the mentorship process initially will last 16 months, but startups will be encouraged to remain connected. What’s more, companies will be added on an ongoing basis: applications will open up again in December. “We think there is value to working with a cohort for a while,” he said.  Pull Quote It is incredibly hard for investors to source, vet and execute investments across the many varied climate solution sectors. These are big ambitious goals for us, and we feel the sense of urgency to find scalable solutions that can help us meet both of them. Topics Innovation Climate Tech Featured Column Practical Magic Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Antora Energy, one of the Third Derivative startups, in the lab (L. to R: Tarun Narayan, David Bierman, Andrew Ponec, Justin Briggs) Courtesy of Cyclotron Road Close Authorship

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Why corporate partners are essential for Third Derivative, a new climate-tech support network

5 ways businesses can take action to reduce environmental racism

November 16, 2020 by  
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5 ways businesses can take action to reduce environmental racism Samantha Harris Mon, 11/16/2020 – 00:20 For decades, Black, indigenous and people of color (BIPOC) in the United States have sought environmental justice as a civil right, but now, the grave disparities in environmental harms are coming into national prominence . This year’s COVID-19 crisis and racial justice movement have highlighted the systemic inequities in the U.S. and revealed how crises disproportionately affect certain populations. The urgency of now is underscored by the climate crisis and the need for climate justice.  Businesses continue to lead on climate in the absence of U.S. political will. And while we have a long way to go, businesses are also stepping up in the fight for racial equity  — some leading the pack, such as Starbucks , and beginning to integrate equitable strategies across their business, particularly in their climate solutions. Whether we say climate justice, climate equity, the intersection of climate change and people or the social impacts of climate change, one thing is clear: Business has a role to play in addressing the structural inequity that causes low-income populations and communities of color to bear the brunt of the climate crisis.  Extreme heat and storms, sea level rise, intense wildfires — climate change may threaten everyone, but many BIPOC communities are more vulnerable to climate impacts. These communities also suffer disproportionately from the broader socioeconomic impacts of climate change, such as disrupted access to social services and increased energy costs — so much so that race is the most salient indicator in the U.S. of how the climate crisis affects people. This includes poor air quality due to proximity to polluting facilities such as fossil fuel power plants and refineries, which compounds the impacts of crises such as COVID-19.  The business role in climate justice  Business has an important role to play in helping to bring climate justice and racial equity front and center while shifting the finance for the energy transition. Business action, supported by government regulations, investments and incentives, is absolutely critical for transitioning to net-zero emissions by 2050. Achieving this not only addresses the climate crisis writ large, but it also improves local environments and economies to be more sustainable for everyone.  The move to a net-zero GHG emissions economy will require systemic transitions in business operations; however, the benefits of this shift are immense both for business and for broader society. Billions of dollars will be spent, saved and made during this transition. A fair, just and inclusive transition with justice at its core calls for climate investments to alleviate or eliminate existing disparities in environmental, social and economic opportunities and outcomes. Billions of dollars will be spent, saved and made during this transition. Traditionally, climate action has focused too narrowly on only the global benefits of reducing greenhouse gas emissions, ignoring the potential to generate immediate benefits for community well-being, such as “improving local air quality and economies through investments in infrastructure, restoring ecosystems and increasing community vitality .”  Stakeholders, people, matter to business — whether through direct employment, raw material production in value chains, or markets. The barriers that prevent BIPOC communities from thriving also hinder business growth and sustainability. No longer can businesses ignore entrenched social inequality — greater inequality leads to greater environmental degradation. This phenomenon, also known as intersectional environmentalism , means that instead of one bottom line, there are three: environment; economy; and equity. Businesses can and should design all activities, especially those that address the climate crisis, with a racial equity and justice lens. As we transition, we must bring BIPOC communities along with us; otherwise, there’s a risk that they’ll continue to be left out, even in the new structure we create. What business can do about climate justice While many businesses are stepping up by setting the necessary ambitious climate targets in line with the Paris Agreement, it simply isn’t enough to protect those most affected by the climate crisis. The good news is, businesses can do many things to promote climate justice activities, including learning from what others already have done. For example, learning from the cities of Portland, Oregon and Oakland, California, businesses can take steps to place social justice at the center of their core activities, including those related to climate, within their own operations; enable others to do the same; and influence policies to reduce systemic inequities at their roots. Portland’s 2015 Climate Action Plan and Oakland’s 2030 Equitable Climate Action Plan (ECAP) center climate solutions that address existing disparities, transitioning away from fossil fuel dependence while increasing community resilience. A companion document to Oakland’s ECAP, the Racial Equity Impact Assessment & Implementation Guide (REIA) , describes how to identify the most affected communities and reduce equity gaps in resource allocation and climate vulnerability.  Here are more ways in which businesses can lead:  Center climate justice and racial equity in climate activities Commit to a net-zero GHG reduction target by 2050, or sooner, across the entire value chain. Identify the business activities that disproportionately affect communities on the basis of race, and develop solutions centered in climate justice and racial equity. This can include reducing harmful on-site emissions as well as off-site fleet electrification in high pollution areas. Identify the business activities that disproportionately affect communities on the basis of race, and develop solutions centered in climate justice and racial equity. Companies also can develop green jobs in a just manner that respects human rights and livelihoods. Resilience solutions should also ensure that those across the company operations and value chains (employees, factory workers, smallholder farmers, vital communities) are protected from climate-related events.  Engage those most affected by the climate crisis Assess your business’ climate impact and compile data showing the impacts on the communities and stakeholders most affected by the structural inequalities (climate risk and vulnerability assessments). Engage them in community-driven climate resilience planning. For example, businesses can diversify the value chain to support small disadvantaged business enterprises (DBEs) with sustainable practices and enter Community Benefits Agreements with residents living near business facilities to increase climate benefits such as urban tree cover, home weatherization and electric vehicle (EV) access. Educate and build awareness about climate justice Educate leadership and employees internally on how race intersects with the climate crisis. Build awareness externally and help educate others on the issue. Earlier this year, the B Corp Climate Collective launched its Climate Justice Learning Task Force , intended to help others access resources about climate justice. Collaborate to scale impact Solving the climate crisis is too big to only act alone — companies should collaborate with others across industries and with expert stakeholders. For example, companies can commit to the Business Pledge for Just Transition and Decent Green Jobs . And Starbucks is collaborating with partners to identify areas across their business to incorporate climate justice, including how they procure renewable energy and build infrastructure.  Leverage influence and advocate for public policy Call on all levels of government to integrate a justice lens into their climate solutions. The climate action plans developed by the cities of Portland and Oakland are great examples of how to integrate racial equity into government plans.  We commend the efforts that businesses already have made, with over 1,300 commitments that formally recognize the transition to a net-zero economy. But businesses are only starting to scratch the surface on climate justice solutions. When business solutions center those most affected by global crises — whether a pandemic or climate change — and improve these communities, everyone benefits. When they are left behind, everyone’s harmed. Now’s the moment to build a truly inclusive future. Pull Quote Billions of dollars will be spent, saved and made during this transition. Identify the business activities that disproportionately affect communities on the basis of race, and develop solutions centered in climate justice and racial equity. Topics Social Justice Leadership BSR Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Global Climate Strike in New York City. Photo by Katie Rodriguez on Unsplash. Close Authorship

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Corporate sustainability leadership during a pandemic

November 2, 2020 by  
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Corporate sustainability leadership during a pandemic Tove Malmqvist Mon, 11/02/2020 – 01:00 As we continue to grapple with the COVID-19 pandemic and its devastating social and economic effects, companies are continuing their efforts to become more sustainable — and some are being recognized for their efforts. The 2020 Sustainability Leaders , a GlobeScan- SustainAbility survey of experts worldwide, reveals which companies are perceived to be leaders on sustainability during this challenging time by sustainability professionals representing business, government, NGOs and academia. Over 700 experts were surveyed online across 71 countries in May. Results show that Unilever continues to dominate as a recognized leader among the sustainability community, securing the leading position for the 10th year in a row, with Patagonia and IKEA following in the second and third spots, respectively. Data from the survey indicate that corporate sustainability leaders need to navigate an increasing sense of urgency for almost all sustainability challenges. At the same time, about half of experts fear that the impact of the current pandemic will deprioritize the sustainability agenda over the next decade. While environmental issues such as climate change, biodiversity loss, water scarcity and water pollution dominate the list of issues that experts say are the most urgent — these are all considered more urgent than they were in 2019 — the perceived urgency of social issues is also on the rise. Experts express significant increases in concern about poverty, economic inequality and discrimination, and growing attention is also given to accessibility of needs such as education, food and energy. Although the issues we are facing are becoming more urgent, most experts believe that the pandemic will have a negative impact on the sustainable development agenda over the next 10 years, potentially making the transformation to sustainable business much more challenging. The pandemic and its economic aftermath are expected to further exacerbate inequalities and poverty, emphasizing the importance of the social aspects of the sustainability agenda. However, almost a third of experts also believe that the pandemic will lead to a renewed focus on environmental issues, and some point to shifting supply chains and changes in consumer behaviors and travel as potentially positive outcomes. In this challenging context, experts in North America as well as globally continue to recognize the efforts made by Unilever to advance the sustainability agenda. Unilever has dominated perceptions of sustainability leadership among sustainability professionals for a decade, but there are some signs that the leadership landscape may be beginning to shift. At the global level, four new companies enter the list this year: Microsoft; Ørsted; L’Oréal; and Tata. North American experts’ views on which companies are leaders largely line up with the global average, although recognition of both Unilever and Patagonia is even stronger among this group. Experts based in North America also recognize additional North American-based companies as top-tier sustainability leaders, including Mars, Nike, Walmart and Maple Leaf Foods. While having sustainability as part of the core business model continues to be a major factor of recognized sustainability leadership, setting ambitious targets and committing to the United Nations Sustainable Development Goals are the top issues in the eyes of experts. As we confront a global pandemic and the economic hardship it is producing, efforts around communications and advocacy alongside health, social engagement and human rights have become increasingly important criteria as well. In order to increase resilience and their ability to withstand future systemic shocks, businesses are first and foremost expected to double down on their ESG commitments. Beyond ensuring business continuity and risk preparedness, the private sector is encouraged by experts to take far-reaching action by rethinking business models, transforming supply chains and focusing on lowering GHG emissions. Collaboration and partnerships with governments are also pointed to as urgent actions that companies should take to build resilience. The findings of this 2020 survey make it clear what the private sector must do to increase resilience and the ability to withstand future shocks in the wake of COVID-19: embed environmental sustainability and ESG in strategy, develop new and sustainable business models, improve risk management and business continuity planning and transform supply chains. The time to act is now. Topics Consumer Trends Public Opinion 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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Kraft Heinz sustainability chief reflects on ‘interdependence’

October 28, 2020 by  
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Kraft Heinz sustainability chief reflects on ‘interdependence’ Heather Clancy Wed, 10/28/2020 – 01:00 Food company Kraft Heinz has been relatively quiet about its corporate sustainability strategy in the five years since it was formed through the merger of food giants Kraft and Heinz — stepping out in early 2018 to provide an update . In September, the maker of well-known brands such as Kraft Macaroni & Cheese, Planter’s Nuts and Heinz Ketchup — which had $25 billion in revenue last year — spoke up again with a second combined report that shows it stalled on 2020 goals for energy and water through last year (it will miss both) and doubles down on work to create circular production processes for packaging (it’s ahead of schedule and will introduce the first circular Heinz bottle in Europe next year). Kraft Heinz also updated its commitments with new targets pegged to 2025. Here are some of the latest commitments, along with perspective on progress so far: Procure most electricity from renewable sources by 2025 and decrease energy usage by 15 percent. The company didn’t previously have a renewables target, but it has been emphasizing a goal to reduce energy consumption (per metric ton of product produced) by 15 percent, which it had hoped to achieve by this year. Through 2019, it managed a 1 percent reduction against a 2015 baseline. Decrease water usage by 20 percent at high-risk sites and 15 percent overall by 2025 (per metric ton of product made). The company had hoped to reduce consumption by 15 percent by this year, against a 2015 baseline, but it actually increased water use by 1 percent per metric ton of product produced.   Decrease waste by 20 percent across all Kraft Heinz manufacturing operations by 2025. That’s a higher percentage than its previous commitment, which focused on waste to landfill. The company actually increased waste to landfill by 16 percent through 2019 but is has pledged to focus more closely on “a strong byproducts plan, product donation strategy and improved forecasting.” Make 100 percent recyclable, reusable or compostable packaging by 2025. Through 2019, it has achieved 70 percent. Kraft Heinz is undergoing an assessment so it can set a science-based target for greenhouse gas emissions reduction. Emissions have increased since its 2015 baseline, although the company managed a 5 percent cut from 2018 to 2019. Responsible sourcing is a big focus , with the company aiming for 100 percent sustainably sourced tomatoes by 2025, 100 percent sustainable and traceable palm oil by 2022, and 100 percent cage-free eggs globally by 2025 (among other ingredients). Rashida La Lande, general counsel at Kraft Heinz, took on responsibility for the company’s environmental, social and governance (ESG) strategy at the end of 2018. I caught up with her recently for a brief conversation as the company disclosed its new target, chatting about how best practices from the previously independent companies have been shared, how the pandemic has affected progress and what’s to come for sustainable agricultural practices. Below is a transcript of that discussion, edited for style and length. Heather Clancy: It seems unusual for a general counsel to have this role. What prompted the decision to make it part of your responsibilities? Rashida La Lande: I think it was a couple of things. There are some general counsels that have it. It sometimes falls within corporate affairs, sometimes it falls within procurement. I think for depending on where you see it, it kind of reflects the way that the company might focus on the issue. From our perspective I think it reflects several things. One, it reflects the fact that it’s a passion of mine. It’s something I view, and I think is important. And I think at the time our CEO wanted to make sure that someone who was passionate about it and had real sense of the business and the industry was leading it. The environmental and, of course, the social are hugely important to us but we really start from the perspective of how can we design policy and reporting to maximize our result. In addition, when we look at ESG, I think the fact that it’s within legal also reflects the heavy importance that we put on its governance. From the governance part of it — meaning the reporting level of the board, the oversight, the disclosure — we really truly do believe that what you track, what you measure, what you report on, what you compensate on are the things that you see effectively change. So, of course, the environmental and, of course, the social are hugely important to us but we really start from the perspective of how can we design policy and reporting to maximize our result. Clancy: How is your team blending the legacy knowledge of the two separate programs at Kraft and Heinz? La Lande: That’s a really good question. Business continuity was the primary focus of the merger and of aligning the two companies. And they had very different sustainability programs at the time. Right now, what we’re trying to do is to make sure that the ESG focuses on the key parts of our enterprise strategy so we put the time and resources behind our commitments and where we think we can drive the biggest change. With the merger, we’re able to assess what each company was doing and how they were thinking about it. Frankly [we could] identify where we can take the things that they were doing best and then identify the things that each side needed to do better. So, for example, we had strong sustainable palm oil sourcing programs on the Kraft side whereas on the Heinz side there was a really strong focus on agricultural and sustainable agriculture commitments stemming from ketchup and our use of tomatoes. … Both companies had really strong histories of philanthropical support, Heinz in particular with the relationship it had in Pittsburgh. And so it’s coming together and really thinking about as a food company how can we best talk about food insecurity and feeding people globally, which is something that really gels from both companies’ background. Media Source Courtesy of Media Authorship Kraft Heinz Close Authorship Clancy: How has the pandemic changed the focus of the Kraft Heinz ESG team? La Lande: It really put a focus on how much of a global company we are and our interdependence through all of our systems, businesses, units and people. And frankly, it has highlighted some of the ways that our global ESG perspective [is a strength] for us as a company and how important it is for our strategy. One of the things that we have been talking about since I started working on ESG is how important it is for us to support our community in their time of need. So we really looked at places where we’ve got employees and factories and consumers and customers, and we started to do more programming around not only the food insecurity but also making sure that we were available to people at the time of the disaster. So when the pandemic hit, it really caused us to quickly recognize that how we were thinking about this already, in terms of community, disaster relief and feeding people, put us in a really unique position to be impactful and to think about the global need that was going to be coming from the pandemic. So, we committed to provide meals to those in need and trying to do what we could to eliminate global hunger. And the pandemic just punctuated the need. At this point, to date, we’ve donated more than $15 million in financial and product support to help people all across the globe access the food that they need. And we’ve done it both in a fast time, mobile way as well as [through] a local touchpoint where we have business and community impact. Clancy: I know I’m jumping around a little bit. That’s the nature of having only a few minutes with you. What is the company’s policy for protecting biodiversity? La Lande: Right now, we’re working to update our sustainable agricultural practice by the end of 2020. We’re doing the work with a very seasoned agricultural team … primarily coming from the Heinz side but not exclusively. We have a strong history of sustainable agriculture. We’re working with developing that program further based on input from our growers and our suppliers, the farmers that we buy from. And we even have an upcoming “In Our Roots” program where we’re going to be working with suppliers to ensure that all of their agricultural practices satisfy our customer needs for safe food and traceable origin, [and] satisfy consumer demands for reliable supply, particularly of affordable nutritious food. We focus on promoting and protecting the health and welfare and the economic prosperity of the farmers, the workers, the employees and the communities within our supply chain. We’re very focused on minimizing our adverse effects on the Earth’s natural resources and biodiversity. We think those are the ways that we’re going to contribute, and that’s what we’re focusing on as we develop this program. We expect to roll it out more effectively — more widely, I should say — in 2021. Our main focus is on being good stewards of the environment, sourcing responsibilities, tracking and verifying where our ingredients come from, making our concerns and commitments with our suppliers and our supply chain very clear. Clancy: Will regenerative ag be part of that? La Lande: I think that is one of the things that we’re talking about, but I think we’ll have an ability to think more specifically about it once we make a more specific announcement in 2021. Clancy: Fair enough. How does Kraft Heinz blend environmental justice considerations into its ESG strategy? La Lande: Our main focus is on being good stewards of the environment, sourcing responsibilities, tracking and verifying where our ingredients come from, making our concerns and commitments with our suppliers and our supply chain very clear. Working and partnering with our supply chain to make sure that they have the training and expertise and understanding of our expectations. And verifying our ingredients, where they come from, what the impacts of our operations are. Through all of this, we think we’re better able to ensure that our environmental impacts are not so delineated by socioeconomic or demographic lines and instead really focus on how we can impact and have good stewardship worldwide. That’s why you see one of our key pillars being environmental stewardship as a global strategy. Clancy: You probably have 18 priorities or probably 18 million priorities. But what do you feel is your most important priority in this moment? La Lande : My goodness. I do have 18 million priorities. But for me, I think in this moment in the pandemic it’s really the focus on feeding people. There is a lot of hardship that people are facing. Unfortunately, I think there’s going to be more hardship kind of globally before we [as a society] get ourselves out of the position that we’re currently in. So I think while everything that we’re doing is extremely important, I think the day-to-day needs that we’re seeing and addressing those needs for people have to be at the forefront of what we do and have to be our first commitment. Pull Quote The environmental and, of course, the social are hugely important to us but we really start from the perspective of how can we design policy and reporting to maximize our result. Our main focus is on being good stewards of the environment, sourcing responsibilities, tracking and verifying where our ingredients come from, making our concerns and commitments with our suppliers and our supply chain very clear. Topics Food & Agriculture 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 Kraft Heinz general counsel Rashida La Lande leads the giant food company’s corporate social responsibility and ESG strategy. Courtesy of Kraft Heinz Close Authorship

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Lisa Jackson: How Apple aims to lead on environment and equity

October 27, 2020 by  
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Lisa Jackson: How Apple aims to lead on environment and equity Elsa Wenzel Tue, 10/27/2020 – 02:00 Apple’s Lisa Jackson is moving social justice to the top of the list for protecting the environment. Coming from one of Fortune’s “most powerful women in business ” at one of the world’s largest companies, she has views that could have a long-term global impact. Apple’s big-ticket sustainability goals released this year for 2030 include becoming carbon-neutral and achieving a net-zero impact in all operations. The company also recently embraced an outward-facing leadership role on its social impacts, with a $100 million investment to create a Racial and Equity Justice Initiative (REJI), which CEO Tim Cook asked Jackson to lead in June. How can we grow some Black and brown-owned businesses that are working on the issue of climate change? It’s not new for Apple’s vice president of environment, policy and social initiatives to see racism and climate change as intertwined. She capped off her two-decade career with the U.S. Environmental Protection Agency as its chief under President Barack Obama. Jackson recalled a key lesson from her New Orleans childhood to GreenBiz co-founder Joel Makower during a VERGE 20 virtual event Monday. 1. Identifying intersections “I know what it means to be at the receiving end of our industrial society, whether it’s the air quality coming from petrochemical facilities, of wind, or the water quality coming down the Mississippi River, or the Gulf of Mexico’s health — and that ecosystem and diversity, all those issues, conflate to me around the place I call home,” the chemical engineer said. For example, she has seen the resources of the world flow upward to the people who make inequitable decisions around land use and then profit from them — but not flowing back to the people who become victims of flooding, fires or other consequences of poor planning. “Those are the questions we have to solve if we’re really going to solve the climate crisis,” Jackson said. Fighting for equality and justice for my community has driven my career as an environmentalist. I’ll continue the work leading Apple’s Racial Equity and Justice Initiative. #BlackLivesMatter https://t.co/JKuaQP3I2r — Lisa P. Jackson (@lisapjackson) June 11, 2020 Jackson’s passion for addressing these problems deepened recently when she witnessed the combustive mix of poor air quality and high COVID-19 fatalities within historically underserved frontline communities. “It all comes together because we know that the co-pollutants of CO2 from fossil fuel, and from the fossil fuel-burning power sector and transportation sectors, are all part of that justice equation,” she said. 2. Empowering communities As part of its REJI initiative, which centers around representation, inclusion and accountability, Apple describes using its voice and cash to transform systemic disempowerment into empowerment. One way is to hire more coders of color and to build up wealth in underserved communities by doing more business with suppliers owned by people of color. “One of the things we did in the economic empowerment space is come up with this idea of an impact accelerator,” she said. “How can we grow some Black and brown-owned businesses that are working on the issue of climate change? Because we’ve always said that climate change is an economic opportunity, how can we make sure that opportunity is spread equally?” Plus, Apple is also nurturing coding hubs at historically Black colleges and universities. Apple’s $100 million toward REJI is nine to 10 times the investment committed by Amazon, Google and Facebook each toward racial justice causes. 3. Making the human factor material It’s been two years since Apple planted the seeds to grow a circular economy by committing to make all of its devices from recycled or renewable materials eventually. Jackson described how the iPhone maker quickly found that its “moonshot” of shunning ingredients that need to be mined is not just about closing the loop on material resources, but on human resources as well. The tech giant prioritized eliminating conflict minerals and questionably sourced rare earths early on because of the labor and supply chain difficulties involved. In this area, Apple so far has created its own recycled aluminum alloy for devices including the Apple Watch, MacBookAir and iPad, and it uses recycled tin in solder in some logic boards. It has developed profiles of 45 materials in terms of their impacts on the environment, society and supply chains, singling out 14 for early action on recycled or renewable sourcing. The haptic engine, which enables a variety of vibrations in iPhone models 11 and up, uses recycled rare earths. The Daisy disassembly robot gained a cousin, Dave, which recovers rare earth elements, steel and tungsten from spent devices and scrap. Apple is still aiming to make all of its products and packaging from recycled and renewable materials. So far all paper materials are recycled, and plastics have been reduced by 58 percent in four years. The company is more quietly progressing on safer chemistry. Toward its goal of gathering data on all the chemicals that comprise its products, it has information from 900 suppliers on 45,000 parts and materials. “As much as we want to continue to engage in communities to try to lift up the standards and use our purchasing power to lift up, we also have to be honest with ourselves and say, there’s also a need for us to show an alternative path,” Jackson said. 4. Being first and bigger Where Apple leads, others in the market listen. For instance, so far it has nudged more than 70 of its suppliers to adopt clean energy, which Apple has fully implemented in its offices, data centers and stores without leaning on offsets. The company’s supply chain partners of all sizes are ripe for doing something differently, Jackson said.  Because we’ve always said that climate change is an economic opportunity, how can we make sure that opportunity is spread equally? “They’ve seen what COVID can do, or a crisis can do, to a business that hasn’t thought about resilience and sustainability,” Jackson said. “Apple can help by modeling and also taking a risk on technologies and ways of doing business, and quickly scaling them.” For example, Apple was able in a single year to embed 100-recycled rare earth elements in the magnets of its iPhone 12 series. “If we can come up with a cleaner alternative, then our belief is that these other places will have no alternative but to clean up as well so that they can be competitive not just on an economic level, but on a social and environmental level as well,” she said. “That’s going to be the exciting work for Apple … in the next few years is to not only do it first but to do it bigger, and to hopefully leave behind a supply chain that’s now economical and accessible for other people. Because those industries, those enterprises will say, ‘OK, there are probably more people who want to buy recycled material as well’ — and that’s the circular economy.” Pull Quote How can we grow some Black and brown-owned businesses that are working on the issue of climate change? Because we’ve always said that climate change is an economic opportunity, how can we make sure that opportunity is spread equally? Topics Human Rights Equity & Inclusion Supply Chain VERGE 20 Featured in featured block (1 article with image touted on the front page or elsewhere) On Duration 0 Sponsored Article Off Apple’s Vice President, Environment, Policy and Social Initiatives Lisa Jackson. Apple Close Authorship

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Microsoft, Tiffany help carve out new responsible mining standard

October 21, 2020 by  
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Microsoft, Tiffany help carve out new responsible mining standard Jesse Klein Wed, 10/21/2020 – 00:01 Not many audits are 14 years in the making. But after almost a decade and a half of creating the most holistic and encompassing mining standard, the Initiative for Responsible Mining Assurance (IRMA) released its first audit of a mine today . That mine is Carrizal, based in Mexico. It extracts zinc, lead, copper and silver, important minerals for many consumer electronics, jewelry and auto manufacturers. The mine achieved an IRMA Transparency designation, meaning the site was audited by a third party and shared its results about the operation of the mine with the industry so partners may have a clearer picture of where the mine succeeds and where it needs improvement. For decades, many mining activities have caused acid runoff into essential water and food sources, noise and air pollution, and even the uprooting of native communities. When public advocates get wind of these environmental and human rights abuses, they often show up on the doorsteps of consumer-facing jewelry and electronic brands that use mined materials. Protesters hold these companies responsible for violations happening a long way down their supply chains. Most of these companies don’t have any direct contracts with mines, but they still need to respond to the public outrage and be part of the solution.  “There is a deeply broken trust between many mining companies and the communities that are around them,” said Aimee Boulanger, executive director of IRMA. The IRMA standard is a chance to put mining onto a new path of sustainability and accountability. As part of the audit disclosed this week, Carrizal was rated quantitatively with a percentage on each of IRMA’s 26 sections with over 400 requirements. It scored at least 50 percent in more than a third of the chapters. For example in principle three, Social Responsibility, it achieved a 49.7 percent across categories such as fair labor, occupational health and safety, community health and safety, security arrangements and cultural heritage preservation. When a mine achieves an average of 50 percent, 75 percent or 100 percent on all sections, the mine gets an IRMA 50, 75 or 100 score respectively. The sections cover a range of concerns including environmental impacts on air, water and waste, human rights and safety requirements, native community relationships, greenhouse gas emissions and even how the mine will be responsibly closed when it stops operating in the future. The mining industry has broken many trusts along the way. It’s starting to turn that around.//Courtesy of Carrizal Calling all stakeholders To develop the standard, IRMA brought together multiple stakeholders in mining; nonprofit groups, mining-affected communities, mining companies and the purchasers of mined materials including Tiffany & Co. and Microsoft, which are all members. This group worked together with IRMA to create a standard that covers the major mining issues for the environment, workers’ rights and community relationships. According to Anisa Kamadoli Costa, chief sustainability officer at Tiffany, the company helped create and pushed forward a methodology for determining a living wage in a variety of countries.  The IRMA standard is extremely attractive to companies such as BMW (another member) and Microsoft because it covers all minerals and all issues. A car or computer has dozens of mined materials including cobalt, lithium, copper, gold and zinc. The supply chain is extremely lengthy and confusing. “In case of the wiring harness, there are roughly 100 partners in the supply chain for just that one part,” said Claudia Becker, a senior expert on sustainability and responsible supply chain management at BMW. “So the transparency is incredibly difficult to achieve.” Ephi Banaynal dela Cruz, senior director of responsible sourcing at Microsoft, agreed: “Our supply chain has a lot of ambiguity built into it.” Having an individual standard for each material is much too cumbersome, especially when many issues overlap or are very similar. The IRMA standard is for all materials and covers both human rights issues and environmental issues.  For those who just hope this goes away, and they continue business as usual, they’re about to find that business as usual is no longer an option. “The idea was to bring all these issues under one house,” Boulanger said. “We don’t want to talk about human rights or clean air or worker safety or how the mine is going to be cleaned up. We don’t want them traded off against each other anymore.” And when there is a substantial difference in mining practices, IRMA is dedicated to filling in the gaps. For example, Boulanger indicated that the standard is looking into creating a more comprehensive guide for lithium brine extraction, an important and very different kind of mining for the electronics and battery industries.  While having such a broad standard and a varied board means that the priority materials, locations and environmental issues will vary extensively from stakeholder to stakeholder, Banaynal dela Cruz thinks that’s to the organization’s advantage.  “It’s a way to divide and conquer,” she said. “We will prioritize things differently, and it could allow us to get the scale of adoption [of the standard] much faster.” According to Banaynal dela Cruz, the goal is a world where Microsoft will have many options for responsible mines to work with. Because consumer-facing brands such as Microsoft don’t work directly with mines, it is a lot of effort to verify the mines far down their supply chains. The best bet for having a responsible mine in their supply chain is to encourage responsible mining everywhere. And there is a need for a global standard so companies don’t just pick up and go somewhere where laws and protections are weaker.  According to Becker, she has sent 20 letters off to mining companies in BMW’s supply chain to encourage them to complete an IRMA audit and the company is requiring an IRMA audit in all contracts starting this year. But even though companies are moving towards requiring audits, none that spoke to GreenBiz plans to sever ties with mines that don’t obtain a certain score.  “We are happy about every mining company that undergoes the IRMA audit,” Becker said. “I think it’s a huge step. This level of transparency is really unique for the industry. And that takes a lot of braveness for companies to sign up for that audit.” Instead, there is a focus on continuous improvement. According to Boulanger, many IRMA standards go way above and beyond traditional government regulations in countries with large mining industries, so the organization isn’t expecting many mines to meet the standard right away.  “We really believe that we should not dilute the standard,” Banaynal dela Cruz said. “But we need to make sure that there is a pathway for different mining entities to enter the standard.”  Carrizal is leading the way forward for transparency in mining, but it will need to continue implementing improvements to remain in good standing with IRMA and work towards the IRMA 75 or 100. For example, according to Carlos Silva, head of Carrizal, the audit revealed the mine wasn’t sharing enough information with workers about the option to unionize. IRMA pushed it to do so more explicitly.  “[IRMA] wants us to make sure to share the information about unionization,” he said through a translator. “That was a little bit surprising. We thought we were sharing that they are free to do it. But IRMA wants us to emphasize that part.” This is just one small example of what changes will need to come to mines all over the world if IRMA gets its way. Mining has a torrid history and an uncertain future as companies continue to tear through mineral deposits for their products. It won’t be solved overnight, IRMA is just starting to turn the industry in a new direction. “It’s a moment for those who are willing to step to it,” Boulanger said. “For those who just hope this goes away, and they continue business as usual, they’re about to find that business as usual is no longer an option.” Pull Quote For those who just hope this goes away, and they continue business as usual, they’re about to find that business as usual is no longer an option. Topics GHGs Human Rights Chemicals & Toxics Minerals Mining Featured in featured block (1 article with image touted on the front page or elsewhere) On Duration 0 Sponsored Article Off Carrizal becomes the first mine to participate in an IRMA audit, signally a new normal for the industry. //Courtesy of IRMA

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Luxury in the new normal: Leadership and innovation in 2020 and beyond

October 16, 2020 by  
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Luxury in the new normal: Leadership and innovation in 2020 and beyond Elisa Niemtzow Fri, 10/16/2020 – 01:00 Business as usual for the luxury industry is over. 2020 brings with it the end of a positive growth cycle, as analysts expect global luxury sales to contract 25-45 percent in 2020 , with a recovery that could take up to three years. And yet, the coronavirus pandemic, for all the havoc it has wrought on the industry, has pushed the sustainable business agenda even further, forcing business leaders to reevaluate their role in society and better articulate their value, not just in terms of money, but also in terms of corporate purpose and the way they contribute to the world.   Recent months have revealed several fragilities and also several strengths as the luxury industry navigates its future. Companies demonstrated the depth of their commitment and a certain financial resilience by shifting production lines to manufacture hand sanitizer and masks or forgoing government aid to demonstrate social solidarity. Brands have reimagined design and distribution of products in a context of lower sales volumes and digital acceleration. The crisis also has multiplied the insecurity of some workers and left some precious material supply chains, such as cashmere and exotic skins, even more vulnerable.   As luxury fashion brands adapt and survive in the “new normal,” they can drive a renewed vision of the luxury business that demonstrates how to decouple volume growth from value growth. They can seize opportunities to strengthen resilience and further set the example when it comes to long-term value creation, business transformation and progressive leadership. To drive innovation and demonstrate leadership in the years ahead, luxury leaders should consider these three opportunities: 1. Deepen luxury’s value proposition Luxury brands can deepen their value proposition by further embedding efficiency, sustainability and inclusion into business models and practices, building on the new approaches that the pandemic accelerated. Designers are streamlining collections, focusing on evergreen best sellers and incorporating upcycling, regenerative materials and use of dead stock (French) in collections. Meanwhile, digitization is accelerating efficiency and agility. Design teams are working together online and using virtual sampling. Showrooms and fashion weeks have gone digital. And brands are hurrying to transfer business to online outlets. Supply chain experts argue companies can make less product and increase margins as they reduce waste (via better inventory management), better connect supply and demand (via strengthened omni-channel programs) and optimize understanding of client needs and trends (via enhanced client data). For an industry on the receiving end of considerable finger-pointing for its destruction of unsold merchandise, the win-win of increased embedded efficiency and sustainability is substantial — less environmental impact, more financial resilience and, potentially, redistribution of investment across the supply chain to benefit primary raw material producers and workers upstream. For an industry on the receiving end of considerable finger-pointing for its destruction of unsold merchandise, the win-win of increased embedded efficiency and sustainability is substantial. Optimized distribution of value creation is important in a context where the pandemic has rendered raw material and manufacturing workers more vulnerable. For example, the Sustainable Fibre Alliance raised the alarm of COVID-19’s considerable consequences for the economic security and well-being of cashmere goat herding families. In the case of exotic leather, a controversial material prior to the pandemic according to animal rights activists, conservationists recently have raised their voice about the necessity of protecting the benefits to species, people and ecosystems generated by this trade. At the moment, luxury brands are still struggling to develop the business cases and financially support all of these actors. One promising mechanism to explore is a “reverse-sourcing” approach whereby value chain actors for a specific raw material pilot interventions to drive positive change and then connect the dots to create a traceable, sustainable supply chain. In one example, this approach allowed vulnerable suppliers who committed to improved environmental and social practices to broker a long-term contract with a global beauty company at a premium — enabling investment in long-term sustainability while the beauty brand achieved the security of a traceable, sustainable supply chain. Additionally, luxury brands can leverage sustainable finance mechanisms and growing investor interest in ESG to partner on long-term value creation. Following on the heels of Prada, Burberry, Moncler and other players outside the sector, Chanel made its first public offering on the Luxembourg Stock Exchange in September. Its sustainability bond will support business transformation including raw material extraction, regenerative agriculture and innovation across its supply chain. This announcement is notable as it signals the emergence of a deeper value proposition and the importance of communicating this value to key stakeholders. 2. Build on luxury’s predisposition for circular and regenerative practices Over the last several years, the industry has adopted several circular economy initiatives, such as the CEDRE recycling platform  (French) initiated by LVMH, support for innovation via Fashion for Good and training designers on circular economy principles. Yet huge barriers still exist to scaling an efficient luxury fashion circular ecosystem — whether it’s closing the loop on certain product categories such as luxury leisurewear and sneakers, which have shorter lives than typical luxury items; acquiring sustainable, regenerative materials in sufficient quality and quantity (such as leather); or fully embracing the idea of producing fewer new items, including encouraging the multiple lives of products and brand-controlled secondhand markets (as Gucci has just done with The RealReal). Further, as luxury companies make their way in the “new normal,” there is a strong rationale to focus on the third leg in the circular economy stool: regenerating the natural and agricultural systems they rely on for their high-quality natural materials . With 60 percent of species and ecosystem functionality lost, the clock continues to tick. In 2021, the Convention on Biological Diversity will launch a new 10-year strategic plan with the Business for Nature coalition driving business support for policy changes and new targets. Additionally, late last month, an informal working group, Task Force on Nature-related Disclosure, was launched. The work will take several months but signals an expectation of increasing accountability for companies and investors related to their impacts on nature. Luxury brands are well-poised to demonstrate leadership on this and other aspects of the circular economy. Luxury brands also can explore two newer areas: first, assessing their performance against a comprehensive set of circularity indicators to focus on circular economy practices across entire operations and increase robustness of efforts. Second, brands can explore how to take a people-centered approach to circular fashion systems which ensure that as new infrastructure and business models are created, they are inclusive and fair for people from the outset. 3. Demonstrate socially progressive leadership As described above, in the urgency of initial responses to the coronavirus, luxury companies relied on their financial resources and business infrastructure to contribute to their workforce and local communities. Against the profound upheaval transforming our world, luxury leaders have significant opportunity to continue using this power to drive positive change. Doing so will help to preserve the social acceptance of luxury and create the stable operating environment needed by all businesses. Earlier this year, BSR published a report discussing five principles for business action to contribute towards creating a 21st century social contract that supports economic prosperity and social mobility. While the luxury industry can contribute to all principles, it is well-placed to focus on contributions to developing stakeholder capitalism, an approach to business strategy focused on long-term value creation and based on a multi-stakeholder model. Specific actions luxury companies can take include: ensure that corporate governance structures, including board and executive leadership, are inclusive and consider the interests and perspectives of all; pay their fair share of taxes; and align policy advocacy, participation in industry associations and monetary contributions with environmental and social objectives. What’s next Given luxury’s outsize influence on society, luxury brands and their leaders have significant opportunity to build on their efforts and demonstrate the behaviors we need to drive resilient and thriving societies. When will we see every luxury CEO’s bonus dependent on achieving Scope 3 climate targets, paying a living wage in supply chains and achieving zero product destruction? Thriving in the “new normal” will take nothing less than bold leadership such as this. Pull Quote For an industry on the receiving end of considerable finger-pointing for its destruction of unsold merchandise, the win-win of increased embedded efficiency and sustainability is substantial. Topics Circular Economy Fashion Collective Insight BSR Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off LVMH’s partnership with CEDRE centers on finding second-life uses for its products.

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Luxury in the new normal: Leadership and innovation in 2020 and beyond

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