Materiality of ESG Issues Takes Center Stage at U.S. Congress​

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Wednesday, July 10, marked the first ever congressional hearing on environmental, social and governance (ESG) issues in the United States.

Entitled "Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social, and Governance Disclosures," the hearing was held by the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets. It was chaired by Carolyn Maloney from the Democratic Party, Representative for New York.

Standardizing ESG disclosure

With evidence mounting that companies who perform better on ESG disclosures also perform better financially, investors are increasingly clamoring for improved disclosure. Indeed, Maloney named ESG “one of the most important topics in the markets right now.” Although she felt this desire for disclosure represented progress, she added that “more must be done.”

“ESG disclosures,” Maloney argued, “often aren’t as detailed as they should be,” and because of the lack of a legalized framework, they’re also “difficult to compare across companies.” In order to standardize and embed disclosure that is comprehensive and consistent, she argued that the Securities and Exchange Commission (SEC) would need to establish standards on ESG disclosure that will apply to all public companies in the US. As such, the committee debated drafts of five bills that would require public companies to reveal more information on topics including climate policies, political expenditure, and human rights.

Disclosing on climate change

The hearing was attended by a number of leading figures in the sustainability arena, who shared their perspectives on the proposed legislation and outlined their views on how to improve ESG disclosures. Among them was Mindy Lubber, CEO and President of Ceres, a non-profit organization which works with influential investors and companies to tackle the world’s biggest sustainability challenges. She called for mandatory public disclosure of climate-related risks. “Climate change is the greatest economic crisis of this decade, and beyond,” she said. “And its implications must be disclosed.” Citing recent examples of Nike and PepsiCo, who acted quickly to put a stop to concerning practices in their supply chains, she also argued that disclosure actually forces companies to manage ESG issues.

Mindy Lubber, CEO and President of Ceres
Mindy Lubber, CEO and President of Ceres

(Mindy Lubber, CEO and President of Ceres)

Juan Vargas, Democratic Party Representative from California, spoke of the importance of the guidance frameworks in ESG reporting: “The use of ESG information by investors wouldn’t have been possible without the pioneering leadership of organizations like the Global Reporting Initiative (GRI).” He added: “Climate change is real. It’s something that’s impacting all of us, all of our communities… And that’s why I think it’s important for this information to be readily available and to be standardized.”

A single global standard

A lot hinges on the way that companies understand ESG issues. Tim Mohin, Chief Executive of the GRI, developer of the world’s most widely used sustainability reporting standards, said: “Climate change, human rights, ethics, diversity, environment, health and safety – these are critical issues. If they were included in the financial definition of materiality, we might not have these massive issues we’re facing today.” 

Various frameworks exist to provide guidance, the two discussed at the hearing being the GRI and the CDP, a non-profit organization that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Yet the lack of a legal framework serves only to create inconsistency in disclosure across different companies. Mohin added: “Just like financial disclosure, it’s essential that this committee, and policymakers around the world, focus on a single global standard, because we need a common global language if we are going to unlock free trade and capital flows that increasingly depend on this information.”

Tim Mohin, CEO of the Global Reporting Initiative (GRI)
Tim Mohin, CEO of the Global Reporting Initiative (GRI)

(Tim Mohin, CEO of the Global Reporting Initiative/GRI)

There was a consensus that an issue can be material regardless of whether it’s financial or non-financial: “Some like to believe that sustainability risks are not real financial risks,” said Lubber. “But let’s be clear: risks are risks, and they need to be disclosed – whether they come from trade agreements, fluctuating commodity prices, inflation, or climate change.” 

James Andrus, Investment Manager, Sustainable Investments at California Public Employees’ Retirement System (CalPERS), stated that environmental disclosures are necessary to reveal how companies will be able to generate sustainable returns in the future. He argued that all investors, from private individuals to large institutions, “should have access to financial reporting disclosures that allow providers of capital to make informed decisions whether to buy, sell, or hold certain securities.”

The first step towards mandatory ESG disclosure?

Poignantly, Vargas expressed his regret that “The United States is not leading on this as we should be.” Given Republican control of the Senate and President Donald Trump’s emphasis on deregulation, it’s by no means certain that any of these draft proposals will become legislation. But in keeping with the themes of transparency and disclosure, bringing them into the open in this landmark hearing is a crucial – albeit belated – first step.

The proposed bills discussed were:

  1. ESG Disclosure Simplification Act of 2019

  2. Shareholder Protection Act of 2019

  3. Corporate Human Rights Risk Assessment, Prevention and Mitigation Act of 2019

  4. Climate Risk Disclosure Act of 2019

  5. Country by Country Tax Payment Disclosure.

Reactions from the market

Evan Harvey, Global Head of Sustainability at Nasdaq, commented: “We are very pleased to see Congress take up the issue of ESG disclosure. Nasdaq has long advocated better understanding of ESG dynamics in the market, more equitable access to decision-making data, and better metrics themselves. Any emerging standard — whether voluntary or compulsory, driven by industry or government — must reckon with the disclosure burden that companies already bear and strike a balance between the burden and benefit of transparency.”

The discussion was indicative of increasing regulation in ESG disclosure. In the UK, it will be a mandatory requirement for all listed companies and large asset owners to report on climate-related risks and opportunities in line with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations by 2022.

Marjella Lecourt-Alma, CEO and co-founder of Datamaran, said: “It's another milestone to see this topic being discussed in US Congress. The problem with umbrella terms like ‘ESG’ or ‘sustainability’ is that they fail to capture the overall sense of urgency. Breaking them down into separate topics, like climate risk, can create that sense of urgency. When it comes to climate we can all see it happening around us; for those outside the community, it's evident this risk is real and clearly financial. Focusing on a single topic, a sense of urgency and the short-term financial impact is the way to the hearts and wallets of Main Street."

Marjella Lecourt-Alma, CEO and co-founder of Datamaran
Marjella Lecourt-Alma, CEO and co-founder of Datamaran

(Marjella Lecourt-Alma, CEO and co-founder of Datamaran)

The hearing certainly represents a significant milestone and Datamaran will keep you updated as new regulatory developments arise.

Previously posted on the Datamaran blog.

Image credits: Datamaran; Louis Velazquez/Unsplash

 

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3M Circles Back to Science for New Sustainability Building Product

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3M’s stated mission is to use science to help solve global challenges and to improve everyday life. To that end, the company insists it is continually stepping up these efforts, especially when it comes to sustainability.

For example, to help address the climate crisis, 3M introduced its award-winning, smog-reducing granule technology in June 2018—which is now available to asphalt roofing manufacturers.

3M’s smog-reducing granules use a specialized photocatalytic coating, which is activated by ultraviolet sunlight. The smog contacting the roof then turns into water-soluble ions that wash away over time. Testing at Lawrence Berkeley National Laboratory (LBNL) validated that the granules reduced smog and improved air quality.

The product’s launch, which was decades in the making, dates back to when the granules’ potential for smog reduction caught the attention of a sustainability-minded customer, Malarkey Roofing, back in 2017. The roofing company, which works with Habitat for Humanity, was the first national roofing manufacturer to include these granules in all of their asphalt roofing shingles.

 “This is an invention over a 20-year span,” says Lara Ughetta, application engineer specialist in 3M’s Industrial Mineral Products Division. “It finally came to fruition in 2018, but it's the culmination of a lot work by a lot of people.” 

3M continues to work with LBNL and the California Air Quality Board to understand the science of its smog-reducing technology and how it might have an impact on air quality for an entire community. And the company says it is actively looking to start a demonstration project in California.

The three C’s drive sustainability innovation at 3M

The new roofing material is part of a broader strategy to drive sustainable product innovation at 3M.

The company’s strategic sustainability framework applies science to three key areas—one of them being climate, through innovations like the smog-fighting roof, along with circular economy and community. For the latter, 3M advocates for science and encourages STEM (science, technology, engineering and mathematics) education. The company also has a program that sends employees around the world to do skills-based volunteer work with civic and community organizations pursuing sustainability goals.

In December 2018, 3M announced the first major goal of its framework: Beginning in 2019, all new products entering the commercialization process will “formally articulate a Sustainability Value Commitment (SVC) that demonstrates how the product drives impact for the greater good,” explains Dr. Gayle Schueller, VP and chief sustainability officer for 3M. “We will track SVCs in new products and will report annually on progress and how the products are changing the world.”

Though it’s known for legacy products like sticky notes and adhesive tape, 3M launches approximately 1,000 new products every year. And products released over the past five years comprise a significant fraction of its revenue. Given the pace at which new products move through its portfolio, the company believes the impact of this commitment will be immense.

Recycled fibers to the rescue

As part of its circular efforts, 3M is incorporating recycled content into several other new products beyond the aforementioned roofing material. For example, the company introduced the Scotch-Brite Heavy Duty Scrub sponge in June 2019. The green scrubbing fibers are made from 100 percent recycled content, including an average of 35 percent post-consumer recycled content. The recycled fibers are being incorporated into four other Scotch-Brite products.

Switching to recycled fibers wasn’t easy. Changing one component affected how the whole product held together and performed. That’s why engineers were excited when, after a significant amount of lab work, they were able to reformulate the green scrubbing fibers from 100 percent recycled plastic so they still matched the performance of traditional scrubbing fibers.

“It took years of formulation work to find a total construction that worked,” says Kaylee Schmall, a product developer in the company’s Home Care Division Lab.

This fall, 3M is also introducing the first Thinsulate Insulation made with 100 percent recycled plastic bottles. Thinsulate is part of 3M's efforts to help outerwear manufacturers reach their sustainability goals.

The new insulation is designed as a replacement for down and retains its extreme warmth even under damp conditions, based on extensive testing. Thinsulate is certified to the OEKO-TEX Standard 100 Class I, signifying that it meets the human-ecological requirements for products intended for babies and young children. It’s also Bluesign-approved, which means Thinsulate is produced with minimum impact on people and the environment.

Investing in research and training

Building sustainability into every product isn’t easy and requires a major commitment in both time and money. 3M says it invests about 6 percent of its earnings in research and development each year, much of it for new product development. That level of commitment allows the company to fund its efforts to execute the new sustainability requirement across the company.

Training is another key component. The company says circular design is being embedded in every new product, and 3M has trained 1,000 designers and engineers in this concept. Staff are embracing the circularity mindset and are excited to upgrade their skill sets in this area, Schueller says. Other training efforts include orientation programs and mentoring. “Employees are a major focus of our engagement efforts, because they are how we make our ambitious sustainability goals happen,” she explains.

Toward a zero waste operation

3M doesn’t just design sustainable products. The company plans to have every plant reach zero-waste-to-landfill and has already exceeded its 2025 zero-waste goal at 30 percent of its global facilities. According to 3M’s 2019 sustainability report, manufacturing waste was also reduced by 11.7 percent, exceeding the targeted 10 percent reduction.

To achieve the next level of zero waste, Schueller says 3M will use a two-pronged approach:

  • Reduce overall waste, through a systematic value stream waste analysis and designing out waste across its portfolio.
  • Shift more manufacturing sites away from landfilled waste by cutting overall waste through design and finding creative ways to use byproducts in 3M’s and others’ manufacturing processes.

Other sustainability efforts include:

  • In Brazil, 3M is celebrating five years of a program that recycles its Scotch-Brite branded sponges; a total of 1.4 million sponges have been recycled.
  • 3M plants manufacturing Thinsulate insulation recycle 100 percent of their polyolefin waste material, selling it to companies that use it for everything from oil booms to furniture.
  • Globally, the Health Care Business Service Group helps extend the life of about 150,000 devices each year, which keeps electronic waste out of the landfill.

Circling back to the future

As part of 3M’s strategic focus on science for circular, the company recently joined the Ellen MacArthur Foundation’s Circular Economy 100 (CE100). 3M’s continuing efforts to design solutions that do more with less material will help motivate its competitors and, in the end, advance the circular economy far beyond its own four walls.

Image credit: Russell Holden/Pixabay

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Fossil Fuel Companies Shunned by London Stock Exchange

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In the latest indication that fossil fuels are on the way to becoming persona non grata for investors, the London Stock Exchange (LSE) has reclassified oil and gas companies as “non-renewables.” 

The move was made earlier this month at the request of index provider FTSE Russell, which is wholly owned by the London Stock Exchange Group. Companies formerly classified as oil and gas producers and now shifted to the non-renewable energy category include two of the world’s top 10 fossil fuel companies—BP and Royal Dutch Shell. Coal companies previously listed as “basic materials/mining” companies were also reclassified as non-renewables.

Renewables have more visibility at the London Stock Exchange

The index provider’s goal is to draw a clearer line for investors between heavily polluting and GHG-intensive fuels and cleaner ones. Its new ground rules for industry classification also rebrand producers of wind, solar, ethanol, methanol, hydrogen, biofuels and other cleaner sources under “renewable energy.” Most of these were previously listed as “alternative fuels.”

Taken together, these changes will provide “greater visibility to other forms of energy such as renewables," Susan Quintin, managing director of product management at FTSE Russell, told The Guardian. Since a company’s classification is based on its main source of revenue, oil and gas companies would have to make major investments in cleaner energy sources to avoid the “non-renewable” category.

Investor pressure piles on fossil fuel companies

The London Stock Exchange's move reflects growing investor pressure on fossil fuel companies to diversify in order to avoid climate-related business risks amid the growing urgency to combat climate change. The FTSE Russell is among many index providers that now offer climate-focused indices, including a climate risk government bond index, launched last week. S&P Global provides carbon-efficient and fossil-free indices for investors that measure the performance of companies in the S&P Global 1200 with a reduced carbon footprint or that do not own fossil fuel reserves.

The trend among large institutional and private investors to pull back from or abandon fossil fuels is also snowballing. Through December 2018, over 1,000 institutions with managed investments worth almost $8 trillion have committed to divest from fossil fuel producers, led by insurers, pension funds and sovereign wealth funds. 

In June, Norway’s parliament instructed its country’s $1 trillion sovereign wealth fund to divest an estimated $13 billion from eight coal companies and around 150 oil producers. The fund, one of the world’s largest, will also move up to $20 billion into renewable-energy projects and companies.

Insurance companies are also sending energy companies a message

On July 1, insurance giant Chubb joined an industry-wide shift away from coal-related underwriting and investment, joining the likes of Hannover Re, Allianz Group, Munich Re and Swiss Re. The firm announced it would stop underwriting the construction or operation of new coal-fired plants, and end debt or equity investments in companies that generate over 30 percent of revenue from coal production. The Swiss-owned company will phase out insurance coverage for firms exceeding the threshold by 2022. As the Insurance Journal reported, 57 more insurers committed to divesting some or all of their thermal coal investments in 2018 compared to 2016.

While fossil fuels remain the dominant global energy source for the time being, accounting for roughly four-fifths of energy consumption, the longer-term outlook for oil, coal and gas companies that do not diversify looks increasingly cloudy. BP’s group head of energy strategy, Dominic Emery, appeared to acknowledge as much in a recent interview with Bloomberg when he conceded that some of the company’s “more complicated to extract” oil resources “won’t come out of the ground.”

As the London Stock Exchange’s reclassification suggests, the time is overdue for fossil fuel companies to escape the risk of stranded assets and move beyond a “non-renewable” approach to meeting the world’s energy needs.

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Agroforestry Can Combat Climate Change, But Is It Scalable?

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What do you think of when you hear “agroforestry?”

Do you think of trees planted amongst crops in a harmonious ecosystem? Do you see pigs in the mix?

Well, in Portugal you might. The main local agroforestry system is called montado, a system in which cork oak grows amongst cereal crops and livestock.

Yes, in the montado, trees and plants are more productive than they would have been on their own. The benefits, though, extend further. Healthier soil, higher biodiversity and sequestered atmospheric CO2 are just a few other advantages of combining farms and pastures.

The montado is an ancient farming system. Its stewardship was so successful over the centuries that the ecosystem now persists in Spain, France, Italy, Morocco, Algeria and Tunisia. These forests came about with the activity of pre-medieval humans tending to the species they found useful in the environment.

Today, farmers in Portugal are getting back to their roots and turning unproductive land into montado.

A healthy montado takes years to build. As the forest grows, chickens are added, then pigs and sheep. Cows come last. In the midst of it all, wild animals—wild boar, lynx and deer—come and go.

And how does the symbiosis between pigs and trees work? Alfredo Cunhal, a new montado farmer interviewed by The Guardian, answers:

“Animals are the key. They are important for the whole ecosystem, as well as part of the food chain. They must be balanced with the tree system. Pigs provide digestion, and are good for the soil, they disturb the ground and fertilize the land. The natural fertility cycles work better with them. The pig is not a meat machine but a friend of nature.”

The vegetation, of course, provides food for the livestock, but also much-needed shade, especially as summers continue to grow hotter around the world.

The ninth most effective way to combat climate change

Away from the Mediterranean, this form of agroforestry has another name: silvopasture.

Silvopasture was ranked number nine on the climate research organization Drawdown’s list of the 80 most effective ways to battle climate change, mostly for its ability to counteract the methane produced by cows.

Livestock is estimated to produce 27 percent of the methane in the atmosphere through their digestive processes. And methane is the second most prevalent greenhouse gas, following carbon dioxide, at 10 percent of total annual emissions.

Farmers who invest in silvopasture see many more benefits than sequestering carbon. Drawdown lists the following:

  • Year-round income from trees, livestock and forestry products like fruit, nuts and mushrooms
  • Healthier plants and animals
  • And greater resiliency because of the diversity of the ecosystem

After a $42 billion investment, Drawdown estimates that farmers would find $699 billion in financial gain from diversifying their revenue.

What will it take to scale silvopasture?

Drawdown notes that 2.7 billion acres are suitable for silvopasture worldwide. If the current 351 million acres increases to 554 million by 2050, silvopasture would be able to reduce atmospheric CO2 by 31.2 gigatons.

In 2018, a total of 37.1 gigatons of CO2 was emitted just from fossil fuel energy, and emissions in 2019 are projected to be even higher.

The potential for silvopasture is there. Farmers only need the knowledge and incentive to transition. Drawdown claims that, historically, the practice has spread most effectively through farmer-to-farmer communication. But there are also grants to support those who are interested.

In Raleigh, North Carolina, the NC Choices initiative at the Center for Environmental Farming Systems is assisting 15 farmers interested in raising livestock in small woodlots. The owners of these lots are considering using the trees for timber.

The cattle, sheep, goats and hogs will benefit from the food and shade under the canopy, and the trees will benefit from the fertilizer.

Silvopasture is Drawdown’s top-rated agricultural practice for combatting climate change. With communication, grants and initiatives, the hope is that farmers and ranchers around the world will increasingly reap the benefits of growing trees, shrubs, cows and pigs together.

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Report: Food and Retail Companies Moving Too Slow on Deforestation

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Deforestation occurs at a rate of over 12 million acres (5 million hectares) a year—or the equivalent of about 15 soccer fields a minute. Yet according to CDP, many of the world’s leading retail and food brands are not taking enough action on stalling deforestation, which has a massive impact on biodiversity and climate change.

With countless 2020 environmental deforestation commitments fast approaching, CDP’s recent report on the role of corporations in the struggle against deforestation is as much a call to action as a cause for worry—despite the fact that more companies are engaging with NGOs to take on this problem. If companies don’t step up, young people, environmental activists, NGOs and governments certainly will.

According to the United Kingdom-based organization, of the 306 companies that CDP currently describes as having “high impact forest risk,” these five conclusions generalize the state of the world’s forests and how these companies affect them:

  • Companies’ disclosure and transparency on the subject of deforestation overall can be described at best as poor. CDP claims 70 percent of the companies asked to disclose forest-related information by investors declined to do so.
  • Transparency matters: Almost a third of reporting companies do not disclose forest-related matters in their risk assessments. But of those that do, 92 percent identify substantial risks linked to deforestation.
  • Of those companies that understand forest-related risks, together they report a combined $30.4 billion in potential long-term losses connected to deforestation.
  • About a quarter of reporting companies still have not begun to eliminate deforestation within their supply chains.
  • There are benefits for companies willing to take a stand on deforestation, including an estimated total business opportunity of almost $27 billion, according to CDP’s researchers.

CDP has called out 30 global companies that did not report forest-related disclosures between 2016 and 2018. These include widely-recognized brands that can be found along many a high street or within a shopping center, including British American Tobacco, Walgreens Boots Alliance, Mondalez, Kroger, Macy’s and Gap, Inc.

Social movements are helping to raise awareness about risks related to deforestation, and companies would be wise to follow these activists’ lead. The first half of 2019 alone witnessed large numbers of demonstrations worldwide that urged governments to take action in order to protect the planet from what they described as impending climate disaster. School strikes for climate action, for example, included over 1.4 million young people, from Australia to the U.S., who walked out of school and demanded faster action on climate change. In turn, governments and industries from a range of countries, including Colombia (of which a forest in the country’s coffee growing region is shown above), Norway and South Africa (as well as the U.S.) have been sued over their alleged roles in climate crisis.

Litigation often stems from inaction, and this is where companies can step in and be a part of solving the climate crisis instead of having their brand intertwined with, and signifying, the problem of deforestation. “Identifying risks is a critical element in driving action. [There is] a significant relationship between the awareness of substantial risks and the following company implementation of mitigation actions,” concluded the authors of CDP’s report. “If a company identifies substantial risks, it is more likely to be working to address them.”

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Pioneering Impact Investing Platform Pushes for Widespread Change

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With the goal of shaking things up on a global level, the Andreessen Horowitz-backed asset management platform OpenInvest has become a signatory to the United Nations-supported Principles for Responsible Investment (PRI), the world’s leading proponent of responsible investment.

Since its founding in 2015, OpenInvest’s mission has been “to democratize capital and give every investor an easy and low-cost way to fully reflect their values in their portfolios, using their investments as a powerful tool to drive social change.”

The company’s platform enables customization, direct indexing and impact investing at scale for financial advisers, institutions and individual investors. It works by asking investors about issues they care about—with examples including climate change, human rights and gender equality—and then automatically creates a customized index fund comprised of companies that do best on those topics. Individuals can join the platform with a minimum $100 investment.

The future of impact investing

“We call it the post-fund future,” Claire Veuthey, director of ESG and impact for OpenInvest, told TriplePundit. “We strongly feel this is where industry is heading. Technology has made possible direct indexing which enables a ton of customization. An investor on our platform can buy individual stocks and maintain a product that looks like an ETF [exchange-traded fund] product but is customized to what they care about. It’s part of the growing conscious consumer trend and a really intense desire for customization.”

Joining the PRI will bolster OpenInvest’s desire to change the asset industry and improve the industry’s technology by giving them a seat at the table with the broader investment community, Veuthey said.

The PRI, launched in 2006, today has over 2,300 signatories. It's made up of six voluntary and aspirational investment principles that offer a menu of possible actions for incorporating ESG (environmental, social and governance) issues into investment practice.

The OpenInvest platform integrates multi-sourced ESG data and offers a number of causes, such as divestment from fossil fuel producers and major greenhouse gas emitters, as well as investment in corporate women leaders, LGBTQ-friendly companies and companies supporting refugees. 

Joining the PRI is “not really a stretch for us," Veuthey added. "There’s nothing we’re doing that is not ESG, but being under the auspices of a global collaborative organization is a way to keep moving the industry forward.”

It’s not surprising that OpenInvest chose this moment to join the global movement in responsible investment—which, as 3p has reported on extensively, is growing in leaps and bounds. According to a recent survey, global sustainable investment reached $30.7 trillion at the start of 2018, and investors who integrate environmental, social and governance principles into their portfolios now represent about $17.5 trillion, up 69 percent from 2016. 

An industry ripe for disruption

It seems that OpenInvest’s largest backer, Andreessen Horowitz, one of the world’s most well-known venture capital funds, agrees. It led OpenInvest’s $3.25 million investment seed round in 2017. 

“Their support is a huge testament to what we’re doing,” Veuthey told us. “They see the investment industry as very much ripe for disruption. The large investment institutions have worked the same way for decades. My sense is that venture capitalists like Andreessen Horowitz see the writing on the wall and understand the shift that is taking place.”

The founders of OpenInvest, one of the first venture-backed public benefit corporations, come from the hedge fund industry or large banks (Veuthey is former head of ESG for Wells Fargo Asset Management) and some are civil society leaders. What they have in common “is changing the game of what is possible in public investing,” Veuthey said.

She sees a tipping point on the horizon, where OpenInvest’s vision of mainstreamed ESG investing and a more democratized form of impact investing becomes a standard approach.

“Will it happen in 2019? I’m not sure, but it is starting to happen in smaller networks, [based on] the conversations we’ve seen," she said. "There’s a real tension between what compliance regulations and control require in large organizations and the customization that technology enables. We think that the transparency we can offer financial advisors—which they can share with their clients—is going to become even more important.”

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Latest California Oil Spill Builds the Case for More Renewable Energy Investments

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The latest California oil spill should make it loud and clear to energy companies that the time to shift more of their portfolios to renewables was yesterday—considering the fact that California has one of the most ambitious clean energy plans across the globe.

The latest accident isn’t on the Golden State’s coast, so it lacks the visual impact of other oil spills that have quickly generated a sense of urgency. Of course, the oil exploration industry in California has undergone a complete makeover since the infamous Santa Barbara oil spill of 1969. That catastrophe led to landmark environmental legislation both within the state and at the federal level.

This oil spill—which totals about 800,000 gallons of oil and water combined, the Associated Press reports—is occurring inland in Kern County, the base of California’s oil patch. For film buffs, this southern region of the San Joaquin Valley, about a two-hour drive north of Los Angeles, was the setting of the 2007 movie There Will Be Blood starring Daniel Day Lewis.

As of press time, there has been no blood resulting from the accident at the Cymric Oil Field, located 35 miles west of the city of Bakersfield. But heads have rolled, as California Gov. Gavin Newsom recently fired the chief of the state’s oil and gas division in the wake of reports that the regulating agency has issued twice as many fracking permits this year compared to 2018.

According to several press reports, Chevron, the company managing operations at Cymric, is covering the cost of the cleanup and has hired contractors to do so with state supervision. Most accounts of this accident describe the loss of wildlife as minimal, and the area affected is in a remote part of the state. The spill is largely contained in a canyon, though critics say long-term damage could prove to be problematic due to regulatory exemptions that nixed any protection of a nearby aquifer. Regulators and energy industry analysts can breathe a sigh of relief as the sense is that it the environmental damage could have been worse.

Nevertheless, the lack of photos of oil-soaked seals and birds doesn’t make this most recent California oil spill any less urgent. Opponents of California’s oil and gas sector claim that this spill demonstrates that state regulators have become complacent about their role in monitoring the region’s energy sector.

“Disasters like these are terribly dangerous yet utterly predictable,” said Hollin Kretzmann, a senior attorney at the Center for Biological Diversity, in a public statement. “California’s industry-friendly oil regulator continues to provide about as much protection as a screen door on a submarine. Gov. Newsom can create a safer future for the state and the planet by reining in the state’s dirty fossil fuel production and infrastructure.”

Environmentalists and other activists say the Cymric accident is linked to the use of steam injection techniques that oil companies often use to extract petroleum from the oil field. While the land mass of the Cymric field is relatively small, the amount of potential reserves makes it the site of one of the state’s largest oil reserves. But as is the case with many legacy oil deposits, conventional oil extraction techniques aren’t enough to obtain all that black gold.

Rhetoric, accusations and wrist-slapping aside, the mess in Kern County is an opportunity for the state’s leadership to showcase its various clean energy incentives and work with the private sector. There is no shortage of programs in which companies can invest—whether they help make the state’s agriculture sector more sustainable or clean tech solutions like energy storage. But such a shift is about more than transitioning away from fossil fuels: Aligning with California’s clean tech agenda is also a way to build trust with stakeholders, improve a company’s brand reputation and mitigate long-term risks linked to stranded assets.

Image credit: California Office of Spill Prevention and Response; Instagram

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Juul: When an Apology Makes a Crisis Worse

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In case you missed it late last week, we saw a rare case of a corporate leader making an apology for the harm a product caused. The apology came straight from the CEO of Juul, Kevin Burns, and not from the company’s communications department. Well, sort of.

“First of all, I’d tell them that I’m sorry that their child’s using the product,” Burns said to a CNBC film crew during an interview for a documentary aired last night that covers the rise of vaping across the U.S.

Unfortunately for Burns and his company, the apology came with a caveat that only incensed Juul’s critics even more.

“I hope there was nothing that we did that made it appealing to them,” he continued.

Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, didn’t mince any words:

“Once again, Juul is following the tobacco industry’s playbook: Proclaim loudly that they don’t want kids to use their product, while never admitting that their marketing targeted and attracted kids. Like its partner Altria, Juul still refuses to admit that the company’s marketing targeted kids or has played a major role in youth use of its e-cigarettes—despite overwhelming evidence to the contrary.”

Myers pointed out common criticisms of Juul, including allegations that the company used “sleek” marketing tactics which showcased sweet-tasting flavors that appealed to teens—and hooked them with high doses of nicotine that researchers say come with a bevy of health risks. Meanwhile, despite Juul’s rapid pivot and increased news about the risks of using e-cigarettes, teen vaping continues to surge across North America.

Part of why Juul and the tobacco giant that invested heavily in the startup, Altria, are now grappling with this mess is because the companies’ founders focused so much on the products’ perceived innovation without anticipating any negative impacts.

“Juul’s damage was accelerated by its rapid scale,” Barie Carmichael, author and Batten Fellow of the University of Virginia’s Darden Business School, told TriplePundit earlier this year.

The company's founders said they wanted to find a healthier alternative to smoking for adults. The problem, however, was that teens took to Juul like wildfireand it turns out the brand’s nifty and flavorful products contained way more nicotine than conventional cigarettes. The company has since changed its marketing tactics, but so far, it has not been enough to satisfy parents, public health advocates and, now, the U.S. Food and Drug Administration (FDA). Meanwhile, many of Juul’s loyal customers have not been pleased with the changes either. 

The bad news for Juul will most likely continue to pile on. As a statement issued yesterday by the FDA reads:

“While certain ENDS [electronic nicotine delivery systems] products may hold some promise in helping addicted adult smokers transition away from combustible tobacco to a potentially less harmful form of nicotine delivery, these products—like all tobacco products—pose risk, and should not be used by kids.”

And therein lies Burns’ problem: His half-baked apology comes across as insincere. At the same time, he presented his company’s legal and communications team with even more headaches due to a comment that comes across as acknowledging that all that youthful, lifestyle-oriented marketing could have lured more nicotine addicts after all.

Meanwhile other companies are fleeing the brand, along with similar products, in droves. Retailers including Walgreens and Walmart have ceased selling e-cigarettes, and San Francisco has banned their sales altogether.

Burns’ apology, along with the CNBC documentary covering teen vaping, together make it far more difficult for Juul to salvage its reputation. And as corporate apologies go, Burns’ attempt falls flat for its inauthenticity—akin to those airline apologies we’ve long rolled our eyes at: “We’re sorry for any inconvenience your delay may have caused.”

As investigations and even lawsuits continue to mount, Burns will most likely regret he ever uttered those words.

Image credit: Itay Kabalo/Unsplash

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Finding New Life for Single-Use Biopharma Plastic Waste

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The picnic table at which you’re enjoying your summer BBQ may have been a plastic glove, shoe cover or chemical container involved in the manufacturing of biopharmaceuticals in its past life.

Thanks to a partnership between global biopharmaceutical products supplier MilliporeSigma and specialty waste management company Triumvirate Environmental, a portion of single-use biopharma plastic scrap is now being diverted from landfills and upcyled into salable products.

30,000 tons of biopharma plastic waste are landfilled or burned annually

Globally, an estimated 30,000 tons of biopharma single-use products are landfilled or burned each year. One reason is that recycling biopharma plastics isn’t as simple as recycling ordinary plastic. The plastic items used in the production of pharmaceuticals – such as bioreactor bags, tubing, filtration systems and chemical containers -- often contain a combination of materials such as silicon, polyethylene and polypropylene. When combined, these materials are difficult to separate.

Despite the difficulty, MilliporeSigma, which manufactures such items, wasn’t deterred. The company is part of German-based Merck KGaA, which reports a commitment to using its “expertise to improve the sustainability balance” of its products, as well as to developing new solutions that support its customers in reducing their environmental impact.

As part of its commitment, MilliporeSigma piloted a recycling program where staff manually cut up items to separate the different plastics before they were shipped to a reclaimer.

Jacqueline Ignacio, global manager of customer sustainability solutions for MilliporeSigma, recently explained to Plastics Recycling Update that the approach was neither safe nor cost-effective, and it couldn’t provide the volumes the recycling vendor needed.

“Obviously, if we were to roll out a program like that, the cost of that would have outweighed the benefits and we would not have been able to maintain it,” Ignacio said.

Persistence pays off

But MilliporeSigma and Ignacio didn’t give up. They found a willing partner in 2015 with Triumvirate Environmental, a Massachusetts-based company that provides collection and disposal of dangerous chemicals and bio-hazardous waste. Together, they developed the Biopharma Recycling Program, which finally found an efficient way to fully recycle single-use and disposable single-use biopharma plastic products without segregation or disassembly.

This is how it works: MilliporeSigma’s customers in the Eastern half of the United States contract with Triumvirate to have their scrap plastic materials collected. Triumvirate transports the plastics to its Pennsylvania facility where they grind, shred and separate the plastics before blending them into a homogenous mix. If any plastics have been in contact with biohazardous waste, they also sterilize them.

Triumvirate employees then mold the mix into plastic lumber, speed bumps and shipping palettes. Voila! Closed-loop.

Triumvirate sells the products under its BestPLUS brand. Available in multiple sizes and colors, the lumber is used in landscaping, picnic tables and other applications. Triumvirate also sells the plastic shipping pallets to biopharmaceutical manufacturers to reduce the risk of contamination brought into facilities by wooden pallets.

To date, MilliporeSigma is the only company that has partnered with a waste management company to address the unique and challenging disposal issues that come with single-use products. In recognition of its efforts, in 2018, it was awarded a Pharma Innovation Award by Pharmaceutical Manufacturing magazine.

All eyes on the West Coast

Due to the cost and environmental impact of transport, Triumvirate currently only collects plastics from biopharmaceutical manufacturers east of the Mississippi River. Not a bad place to start, however, given that East Coast biopharmaceutical drug sites generate an estimated 4,500 tons per year of single-use plastics.

Ultimately, MilliporeSigma and Triumvirate would like to find a way to serve manufacturers on the West Coast as well.

“Hopefully, in the next year we’ll have a way to at least collect and condense the shipments from the West Coast to the east so that it makes more sense from a greenhouse gas footprint – carbon footprint – as well as the transportation costs,” Ignacio said during her interview with Plastics Recycling Update.

As biopharmaceutical manufacturing continues to increase and with it the use of single-use plastics, MilliporeSigma’s and Triumvirate’s Biopharma Recycling Program will continue to do its part to divert the waste from landfills and incinerators. Hopefully others will join them.

Image credit: Roberto Nickson/Unsplash

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JetBlue Helps Rebuild Puerto Rico with Habitat Restoration

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Two years ago, Puerto Rico made the news after Hurricane Maria swept through the commonwealth, causing thousands of deaths and destroying homes and infrastructure. Puerto Rico’s plight stayed in the news because of insufficient disaster relief.

The U.S. government’s ongoing delays in providing emergency aid to rebuild homes, schools and hospitals created an opening for businesses to do their part. Many, including Google and Lowe’s, donated millions of dollars, and other organizations have been going even further.

Just a week after Maria hit landfall, JetBlue launched 100x35JetBlue — a program to provide practical and monetary support to the islands over 100 days and beyond with 35 initiatives. The name refers to the size of the territory’s mainland in miles. JetBlue continues its efforts this year by restoring the seagrass and mangrove habitats of the Jobos Bay National Estuarine Research Reserve, near Ponce.

This summer, JetBlue joined The Ocean Foundation and other local organizations to learn how to restore ecosystems that protect coastlines. These are some of the habitats that were decimated during Hurricane Maria. In addition to hands-on work, JetBlue also offered financial support to The Ocean Foundation.

These rehabilitation efforts fit into number 31 of JetBlue’s initiatives — “Supporting the replenishment of vegetation.”

Other initiatives included immediate help, such as:

  • Providing daily relief flights for customers at reduced fares
  • Offering volunteer infrastructure experts seats on flights at no cost
  • And the transport of supplies from non-profits, NGOs and government agencies at no cost to those organizations

Number 35 of all these initiatives involved developing a long-term plan outlining JetBlue’s continued support for the Puerto Rican community and economy.

Does Puerto Rico still need help?

Two years after Hurricane Maria, Puerto Rico is still recovering from the aftermath. While Congress allocated $35 billion to disaster recovery after the 2017 hurricanes, application has been slow. As of spring 2019, much of the money has remained unspent in Puerto Rico, in part because plans for allocation are still in the planning phase (in addition to allegations of corruption).

This money remains essential, as estimates have gauged that as much as $94 billion in damages occurred. The mass exodus of Puerto Ricans also exacerbates the problem. Of the 3.3 million population in 2017, 130,000 have left, and the government expects an additional 8 percent to leave by 2024.

There is still much rebuilding to be done. Approximately 80 percent of the islands’ crop value was erased by the storm. Replanting takes time and money. Additionally, many homes still have tarps for roofs. Even now, many Puerto Ricans have trouble accessing adequate food and social services.

Moving forward, economic recovery and hurricane resilience are essential. Projects like mangrove and seagrass restoration help ensure that Puerto Rico remains strong amidst coming summer storms.

This season, meteorologists are expecting four to eight storms that could become hurricanes in the Atlantic.

Mission in action

Ever since its inception in the late 1990s, JetBlue has sought to differentiate itself from other airlines by maintaining superb customer service. “We’re going to bring humanity back into air travel,” David Neeleman, JetBlue’s founder, promised in 1999.

From there, its mission became: “to inspire humanity — both in the air and on the ground. We are committed to giving back in meaningful ways in the communities we serve and inspire others to do the same.”

JetBlue’s focus on culture has helped it maintain a competitive advantage over other airlines. Its commitment to specific communities that the company calls home reinforces its niche in air travel — re-introducing humanity where it is lacking.

This year marks the 13th time JetBlue has ranked first in customer satisfaction among low-cost carriers, according to the J.D. Power North America Airline Satisfaction Study.

JetBlue’s mission — as well as its presence on the islands, with around 500 crew members living in Puerto Rico — has propelled the airline to do more than give a lump sum to nascent relief efforts.

While JetBlue’s promises and pledges may have seemed ambitious when the company first came onto the scene twenty years ago, the airline has shown that commitment to principles can bring about success.

Its continued commitment to Puerto Rico is just one example of JetBlue’s dedication to its customers and communities.

Would you like to do your part for Puerto Rico? You can find a charity here.

Image credit: JetBlue’s 3BL Media Newsroom

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