Offshore Wind Power Is Crushing Carbon Capture Dreams

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Fossil fuel stakeholders are leaning on carbon capture to keep coal and other fossil fuels relevant, but the technology has yet to prove itself commercially. Meanwhile, renewables are beginning to surge within the global energy market at scale, and at competitive prices. The opportunity for future growth is particularly evident in the U.S., which has only just begun to tap into its rich offshore wind resources.

No country for carbon capture

When the global offshore wind industry began to accelerate several years ago, the U.S. sat on the sidelines. Technological obstacles held back offshore development along the Pacific coast. State-level political obstacles were just as challenging along parts of the Atlantic seaboard.

That presented an opportunity for carbon capture technology to enter the energy market. However, the window has already slammed shut. One key setback occurred in 2015, when the U.S. Department of Energy suspended funding for FutureGen, the nation’s showcase carbon capture research and development project.

Over four years later, the U.S. still has only one utility-scale carbon capture project in operation, located at the Petra Nova coal power plant in Texas.

A second utility-scale carbon facility was planned for a power plant Mississippi, but it has been shelved in favor of natural gas.

Meanwhile, offshore wind turbine technology has already proven itself in the global market, and those turbines will soon be peppering the waters of the U.S. east coast.

East coast offshore wind roars into life

For some perspective on the opportunities for offshore wind growth in the U.S., consider that the nation’s first offshore wind farm, Block Island, began operations in 2016 in the waters of Rhode Island, with only five turbines and a combined capacity of 30 megawatts.

Now, a slew of new offshore wind projects are in the pipeline, and these projects are massive in comparison.

One significant development occurred last summer, when New York state moved forward on a new offshore wind energy contract with the Denmark-based energy firm Ørsted.

Dubbed Sunrise Wind, the 880-megawatt project will be located off the coast of eastern Long Island. (Last year, Ørsted also acquired Deepwater Wind, the developer of the Block Island wind farm.)

The New York wind farm is particularly significant because it is part of the state’s ambitious plans for renewable energy and job creation.

On the strength of that plan, New York state has also been tapped to lead the newly created National Wind R&D Consortium. The organization was formed under the auspices of the U.S. Department of Energy in order to accelerate wind energy development, both offshore and onshore.

Last summer, plans for another Ørsted-backed, 1,100-megawatt wind farm off the coast of New Jersey also passed a major milestone.

Offshore wind has scaled up, so now what?

While U.S. offshore wind development demonstrates how quickly a previously untapped offshore wind market can open up, there is still much that policymakers can do to accelerate the trend.

“The offshore market is really taking off,” observes Devapriyo Das, senior communication advisor at Ørsted. “The technology is here, and the key is to scale it up faster. That will take more ambitious policies from governments around the world.”

Das notes three areas in which the wind industry can make the case for wind power as a matter of broad public policy, over and above simply providing more clean power. All three involve a web of challenges and opportunities.

One area involves the emerging concept of a just transition, in which displaced energy workers and other local communities benefit from jobs created by renewable energy projects.

“In both the New York and New Jersey projects, the question is: How do you enable jobs and growth in local communities?” Das says.

Another is to protect and promote biodiversity at the wind farm, an area in which Ørsted has a head start.

The third area involves local content, and that may be the most difficult to address. "A faster transition means you should go with most competitive price, exploit existing economies of scale, and exploit the existing supply chain,” says Das, but those goals can come into direct conflict with community benefits and the aims of a just transition.

Despite the challenges, Ørsted intends to lead by example. The company is rapidly shedding its coal portfolio and plans to be coal-free by 2023, as an interim step to becoming “virtually carbon-free” in energy generation by 2025 — almost 30 years ahead of carbon neutrality goals laid out in the Paris climate agreement to limit global temperature rise to less than 2 degrees Celsius.

It is difficult to imagine a scenario in which carbon capture could scale up quickly enough to change Ørsted’s mind about coal, and it’s a safe bet that other energy firms are keeping an eye on the company’s progress toward a carbon-free future.

A reminder: We're pleased to offer 3p readers a 25 percent discount on attending the Forum. Please register by visiting the 3BL Forum website and use this discount code when prompted: NEWS2019BRANDS.

Image credit of the Burbo Bank offshore wind installation in the United Kingdom: Ørsted

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The World’s Largest Berry Company Bets Big On Water Stewardship

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By Kirsten James and Nicole Tanner 

Chances are if you’ve bitten into a strawberry, blueberry, blackberry or raspberry lately, it was supplied by the world’s largest berry company, Driscoll’s. With products sourced from 21 countries, and sold in 48, Driscoll’s supplies a third of the global berry business.

But growing berries can be a water intensive proposition, with the added challenge that prime growing regions are often located in areas of high water stress: Eighty percent of Driscoll’s acreage globally can be found in California and Mexico, regions which coincide with significant water risks to businesses and the communities in which they operate.

Having weathered drought conditions in their North American growing regions through much of this decade, Driscoll’s doesn’t want to leave much to chance. The company recognizes that financial success and water stewardship go hand in hand—and it sees smart water management as a business imperative to ensure its growers can continue to produce for decades to come.

To this end, this week Driscoll’s is taking its water stewardship one step further by becoming the latest company to join the Ceres-WWF AgWater Challenge. Through new ambitious commitments focused on its North American supply chain, Driscoll’s is looking  to reduce water impacts and help ensure sustainable water supplies in the basins where it does business. 

Ceres and World Wildlife Fund (WWF) launched the AgWater Challenge in 2016 to encourage better and more strategic water stewardship among the world's most influential food and beverage companies. Driscoll’s joins eight existing AgWater Challenge participants that represent over $264 billion in annual revenue. Through engagement from Ceres and WWF, the AgWater Challenge helps companies refine their approaches to sustainable sourcing and water stewardship in their supply chains.

The global food sector uses 70 percent of the world’s freshwater supply, yet water supplies face catastrophic threats from the combined effects of climate change, pollution and mismanagement. By 2025, half of the world’s population will live in water-stressed areas. Given these pressures, food and beverage companies must do more to value and protect freshwater in the regions they operate by reducing their impacts and partnering to protect and restore critical watersheds.

With a value chain that includes over 700 independent growers, Driscoll’s has set long- and near-term water stewardship goals for its Americas business unit, including several time-bound, measurable commitments to address water quality challenges across the value chain. These include:

  • Complete water risk assessments for all existing and new growing regions in the Americas and integrate them into the company’s fruit supply planning process by the end of 2021.
  • Create a water policy and framework by the end of 2020 which encompasses regional risk assessment, stakeholder impact and engagement, public policy engagement, roles and responsibilities, critical issues and responses, and internal targets and goals.
  • Identify key water impacts and set new goals to reduce those impacts in each high-risk sourcing region.
  • Provide training for every grower and functionally relevant employee in highest-risk districts, with additional training and resources to be provided to growers who wish to engage in water management planning at the community level.
  • Convene company peers in California regions (e.g. buyers, producers) to share learnings from California’s Sustainable Groundwater Management Act implementation and develop a common voice of support around the successful implementation of Groundwater Sustainability Plans.

In addition, Driscoll’s has committed to implement relevant regional programs that help meet groundwater sustainability plans in California and support stakeholder activities that ensure high-quality water is accessible, affordable and reliable to all members of the community.

Driscoll's new commitments build upon a solid foundation of existing efforts to manage water collaboratively, including its deep involvement in the passage of California’s 2014 Sustainable Groundwater Management Act (SGMA) and its ongoing implementation. As a leader in the industry, the company is setting a strategic example that water stewardship is a top priority. And by joining the AgWater Challenge, Driscoll’s is sending a clear message—smart water management is a business imperative.

A version of this story was previously published in the 3BL Media newsroom.

Kirsten James is the Director, Water at Ceres. Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy.

Nicole Tanner is World Wildlife Fund’s Water Stewardship Lead. WWF is one of the world’s leading conservation organizations, dedicated to delivering science-based solutions to preserve the diversity and abundance of life on Earth, halt the degradation of the environment and combat climate change.

Image courtesy of Driscoll' via PRNewswire

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International Airlines Group Commits To Net-Zero Carbon By 2050

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Last week, International Airlines Group (IAG) became the first airline group in the world to set a net-zero carbon emissions goal, which it plans to achieve by 2050.

As part of the commitment, IAG’s largest operating company, British Airways, will offset its domestic flight emissions beginning next year. In the near term, IAG will primarily reach its goal through offsetting—by British Airways and its other companies, such as Aer Lingus and Iberia—as well as significant investments in sustainable fuels and by replacing older aircraft.

Airlines have made offsets available to their customers for years, although uptake was never strong. In 2018, however, airlines with international routes agreed to offset any emissions over 2020 levels starting in 2021, under a U.N. agreement called the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

British Airways' announcement marks the first time an airline has pledged to offset all domestic air travel emissions. Much like Honda’s recent announcement about its large renewable energy investment, corporations in the transportation sector taking a stand to act on climate change sends a powerful message. 

Some groups have been critical of offsets as a strategy in the transportation industry, and for airlines in particular. Criticism is not without merit when looking at the history of offsets. When offset programs first began, they typically involved projects like planting trees—which, while extremely worthwhile, take 20 to 30 years to reach fruition. Such projects also led to challenges in accountability and counting carbon equivalents.

However, as the offset market has matured, so have both the projects and the accounting and transparency standards. For example, more common offset projects now include initiatives like methane capture for biogas from dairy farms and landfills, investment in wind farms, and financing for international aid projects that come with multiple environmental benefits including carbon emissions and beyond, such as distributing clean-burning cooking stoves

Further, critics say the airline industry should do more than offset, especially in light of the the fact that it accounts for about 2 percent of global carbon emissions and its impact has been rising in recent years. The problem with existing technology solutions for air travel, as opposed to road or rail travel, is that using electric and hybrid airplanes is simply not an option in the near-term. Although technology is advancing, for long-distance flights, it's simply not there yet. 

The key factor to note in IAG’s announcement is that while the bulk of the early reductions will be made through offsets, its commitment also includes other initiatives. In addition to investing in sustainable fuels and replacing older aircraft with newer, more efficient models, IAG says it plans to reduce weight and waste on board aircrafts, reduce energy use and increase the deployment of renewable energy, expand electric vehicle fleets, and invest in the development of hybrid and electric aircrafts.

While some of these investments aim to reduce emissions from the company's overall operations, not just flying, investment in improved efficiency and advanced technologies will address emissions directly related to those long-distance trips. With any luck, British Airways will soon go far beyond its domestic offsetting program.

Just like every other component of addressing climate change, there is no silver bullet in the transportation sector. IAG’s plan is a good first step, and hopefully one that other companies will follow. Still, there is considerable work to be done. 

Image credits: British Airways and Nathan Hobbs/Unsplash

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A Closer Look At Dick's Move To Destroy Unsold Firearms

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Big-box retailers can hardly afford to take risks these days. Thousands of U.S. retail stores have shuttered over the past few years, and experts say an economic slowdown is looming in the months ahead. Nevertheless, last week Dick’s Sporting Goods burst into the media spotlight by announcing that it had destroyed $5 million in gun inventory that went unsold after the company restricted firearm sales

That was a risky move. The gun safety movement is gathering steam, but the National Rifle Association is still a powerful antagonist. The NRA tweeted out the news to its more than 791,000 followers, most likely with the expectation that Dick’s would become the target of a consumer boycott. 

Crossing a line on gun safety

Instead of suffering a boycott, though, it appears that Dick’s may have set itself up for a fresh wave of new customers. That is partly because Dick’s has been advocating for gun safety for several years now, so it has probably weathered the worst that any boycotters could do.

In addition, Dick’s has gained a considerable amount of free publicity as a leader on gun safety by deciding not to sell certain types of guns and limiting sales to customers age 21 and up. That has attracted fans—and shoppers— among the gun safety movement

On the other hand, destroying guns is an entirely different approach than removing them from store shelves. It represents a leap into new, uncharted territory. The stage was set last year, when Dick’s raised an important question about retailers that decide not to sell guns: What are they doing with their unsold inventory? 

That’s a key question, because gun-rights laws in many states are still weighted in favor of gun ownership. Even the gun itself has rights: More than a few states have regulations on the books that require law enforcement agencies to sell guns seized from criminals, rather than destroying them.

In that context, Dick’s crossed a new line—and threw down a new challenge to the gun lobby.

The big gun meltdown: Money talks

The interesting thing about the new announcement is that Dick’s didn’t necessarily have to draw attention to the destruction of its inventory at this time. After all, the pledge was made months ago, and the media has moved on.

However, it appears Dick’s felt it was important to demonstrate that the pledge was made in earnest. On October 6, Edward Stack, the company’s CEO, sat for an an interview with CBS News and announced that the company had indeed destroyed its inventory as promised.

Dick’s has destroyed $5 million in gun inventory since last year, Stack said. Further, he estimates that the company gave up a quarter of a billion dollars in sales since 2017, when it stopped selling guns to customers under 21. The numbers were impressive enough to catch everyone’s attention, and the story has been rippling through the media world all week. 

Crossing another line on gun safety

Dick’s announcement increases the pressure on retailers and other businesses to upend the status quo on gun rights and normalize gun safety instead. A new wave of gun safety activism has been aimed at the National Rifle Association. Lately the organization has been weakened by internal strife of its own making, but it is still actively lobbying against gun safety legislation.

Another aspect of gun safety activism involves a business owner’s responsibility to create a safe environment for employees and customers. That responsibility has come into conflict with state laws that permit open or concealed carrying of firearms. Levi-Strauss was among the first leading brands to “respectfully request” that customers keep their guns away from its stores.

Momentum for this approach reinvigorated last summer. Following another mass shooting at one of its stores, Walmart asked customers to please leave their guns at home, with retailers including Kroger, Walgreens, CVS and Wegmans soon following suit. The common thread is a Levi’s-style plea for voluntary cooperation, but there has been a new twist: Some retailers are publicly stating that they will work with grassroots activists to lobby for gun safety laws.

A calculated risk

The end result has been to restore the shopping experience to some semblance of normalcy. For an increasing number of people, the sight of a stranger carrying a gun in a retail store for no discernible reason sets off alarm bells, not nods of approval.

The next challenge for gun safety activists is to de-normalize carrying guns in public, and that is exactly what Dick’s has done with its new announcement. During the CBS interview, Stack discussed the thinking behind the decision to destroy the company’s gun inventory. “You know what?” he said. “If we really think these things should be off the street, we need to destroy them.”

It is unlikely that other retailers will follow Dick’s latest move any time soon, at least not in large numbers. However, the company has blazed a new trail for others to follow, whenever the next mass shooting takes place.

Image credit: Flickr/Mike Mozart

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The NBA-China Relationship: An Acid Test For CSR

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The familiar warning, “be careful what you wish for,” hit the National Basketball Association in full last week when it became embroiled in the months-long clash between Hong Kong civil rights protestors and allies of the Chinese government. The NBA has now become a test case for leading businesses that seek to maintain a solid corporate social responsibility profile in the U.S. while tapping into the large, lucrative Chinese market.

The Hong Kong protests: It’s going to get worse before it gets better

Relations between Hong Kong and the Chinese mainland have been heating up ever since the British handed the former colony back to China in 1997. The tensions boiled over this year, and clashes between Hong Kong protestors and police have grown violent.

As the protests spread, they're gaining support among the general public in Hong Kong, with Reuters reporting that "school children, office workers, shoppers and the elderly" were among the demonstrators at some rallies. 

Adding more fuel to the fire, last week U.S. President Donald Trump announced a breakthrough in U.S.-China trade negotiations. The announcement all but green-lights China’s efforts to turn up the pressure on Hong Kong activists, potentially leading to more violence.

Brands under the bus

In the midst of this fraught situation, last week Houston Rockets general manager Daryl Morey posted a brief statement in support of the Hong Kong protestors on his personal Twitter account. 

He quickly deleted it, but the damage was done. The reaction in China was swift and furious.

NBA President Adam Silver eventually issued a formal public statement to defuse the situation, but he only touched off another firestorm in the U.S. by appearing to acquiesce in the suppression of free speech.

The problem, many say, was that Silver deflected. He pointed out that the NBA is just one among many global brands bringing “business to places with different political systems around the world.”

That much is true, but that is also where Silver’s argument goes south. Until recent years, U.S. brands doing business in other countries could position themselves as ambassadors of American culture, practicing “an important form of people-to-people exchange,” as Silver put it.  Brands could afford to ignore undemocratic practices in other countries only because they were cushioned by the firm hand of U.S. foreign policy, which has long positioned the U.S. as the keeper of the flame of democracy and civil rights.

During the Trump administration, however, some feel U.S. policy has become unpredictable, inconsistent and unreliable. In effect, businesses have been cut adrift from a vital support system.

The real problem is not the Morey tweet. The problem is that Silver failed to acknowledge that the concept of “people-to-people exchange” loses all value when it is not supported by strong U.S. policy on democracy and civil rights.
Other brands taking stands over social issues in the U.S. could also be at risk if they take a public position in support of the Morey tweet. So far, none have.

Democracy and personhood

There is another problem with Silver’s statement. He concluded by observing: “Sports can be a unifying force that focuses on what we have in common as human beings rather than our differences.”

In this context, Silver fundamentally misses the point. “What we have in common as human beings” is not simply a matter of enjoying the same extracurricular activities. The definition of a person is also a matter of national identity.

In the U.S., the definition of a person is written into the founding documents of the nation, most famously in the opening words of the Declaration of Independence: “…all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness…”

The Declaration also tightly links this rights-based definition of personhood to the role of government. As viewed by the founders, the primary purpose of a government is to secure the rights that define a human being: “…to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed…”

Those rights are further defined in the U.S. Constitution, which premises the expression of personhood on the ability to express ideas without fear of reprisal from the government.

The award-winning U.S. writer Mitch Albom drew out this difference in the Detroit Free Press last weekend. In particular, Albom cited one official response from China on the CCTV network. The statement neatly sums up the disconnect between personhood, government and free expression in China: “…any remarks that challenge [China’s] national sovereignty and social stability are not within the scope of freedom of speech.”

In this context, the idea that the NBA—or any brand, for that matter—is an ambassador for Western-style democracy is a hollow shell, one that Morey may have just cracked wide open.

Image credits: Brandi Redd and Tommy Boudreau via Unsplash

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Business Meets Climate Activism: Ready or Not, Change Is Coming

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(Image: Protestors gather for a Global Climate Strike demonstration in September 2019.) 

Social movements tied to climate change have been growing for some time. In 1999, more than 40,000 activists—including climate activists—took to the streets of Seattle, Washington, to protest a meeting of the World Trade Organization, voicing their support for workers' rights and sustainable economies in what became known as the Battle in Seattle.

Twenty years later, climate change social movements appear to have reached a critical mass. Various manifestations of these movements now engage a broad cross-section of society: NGOs, activist investors and investor networks are exerting pressure on companies to act on climate change through shareholder resolutions; students, academics, and other members of the public are now protesting and striking with regularity; and workers are walking out of companies they perceive to be climate change laggards.

In particular, Greta Thunberg’s Fridays for Future movement signifies the entry of new, younger and angrier generations into the climate change conversation. Thunberg’s speech to the United Nations Climate Action Summit exemplifies this movement’s anger and passion:

"My message is that we'll be watching you," Thunberg said at the U.N. on September 23. "People are suffering. People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you! For more than 30 years, the science has been crystal clear. How dare you continue to look away and come here saying that you're doing enough, when the politics and solutions needed are still nowhere in sight . . . You are failing us. But the young people are starting to understand your betrayal. The eyes of all future generations are upon you. And if you choose to fail us, I say: We will never forgive you."

This message is unlikely to fade quickly, if at all. And it's already gaining traction within popular culture and the arts—from viral music remixes of Greta Thunberg’s U.N. speech to climate-focused art exhibitions at major events. Climate movements are also joining forces with other social and environmental movements. For example, the recent fires in the Amazon rainforest—and the contribution of cattle ranching to them—led climate change activists and animal rights activists to join forces in more substantial ways than before.

In short: Climate change social movements are now embedded in everyday life, and they are here to stay. Climate activists are not only students and nameless members of the public. They are our friends, our relatives, our neighbors and our co-workers. From a business standpoint, this means they are employees, customers, suppliers and investors.

Some businesses have grown to understand this and, in response, are changing their approach to climate change. Two such examples are Amazon’s recent pledge to fight climate change, after employees called the company out for lack of action, and similar pledges by gaming companies like Sony Interactive Entertainment and Microsoft.

However, businesses need to move beyond reacting to the pressure exerted by these movements to proactively answer questions like: What will tomorrow's climate activists ask of us, beyond what's happening now? What could happen when youth activists can vote, begin and progress through their careers, and have more purchasing power? And what should we do to align with these social movements over which we have no control?

Answers to these and other questions will have long-term implications for product development, marketing, talent acquisition and retention, operations, governance, and overall strategic direction.

Some businesses are already looking far into the future to consider how climate change might affect them, but are still focused on trends relating to technological development and the need to reduce carbon emissions, policy development, and adapting to physical changes like sea-level rise and temperature change. Companies would be wise to add the long-range impacts of climate change social movements to these trends, because they are an increasingly important part of the strategic landscape—and will be for years to come.

Companies need to build new visions of their future selves that account for what Greta Thunberg declared in her U.N. speech: “Change is coming whether you like it or not.”

Image credit: Markus Spiske/Unsplash

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Etsy Makes the Case for C-Suite Buy-In Around Carbon Neutrality

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This article series is sponsored by 3Degrees and produced by the TriplePundit editorial team.

As the world’s largest logistics companies continue to incorporate electric and alternative fuel vehicles into their fleets, at first glance it may seem like technology is poised to propel shipping to carbon neutrality. But clean technology and zero-emissions vehicles are still many years away from transforming shipping as we know it.

Since the transportation sector is now the largest contributor to the United States’ overall greenhouse gas emissions, more urgency is needed while these technologies continue to scale. Some companies are taking the reins in their own hands to diminish the environmental impact resulting from transportation and shipping. Many are turning to carbon offsets, as an interim step, and winning over customers as a result.

Tackling shipping emissions in the e-commerce sector

E-commerce giant Etsy is one of those companies. For an online marketplace like Etsy, shipping is a crucial part of doing business. In fact, shipping and logistics account for 98 percent of Etsy's total carbon footprint.

Even though it doesn’t have direct control over the shipment of products sold on its marketplace—Etsy’s sellers ship directly to customers—the company decided to take action to address its carbon footprint and offset 100 percent of its carbon emissions from shipping earlier this year.

Etsy is the first major online shopping destination to offset all of its emissions from shipping, and customers won’t pay a penny for this perk. The move toward carbon-neutral shipping stems from a shared vision between Etsy’s sustainability department and C-suite leadership—and the results show that carbon neutrality does not have to break the bank.

C-Suite buy-in drives carbon neutrality at Etsy

Offsetting carbon emissions from shipping was Etsy’s next logical step in sustainability, Chelsea Mozen, Etsy’s sustainability lead, told TriplePundit. “We always knew the elephant in the room was our shipping footprint,” she says. “It’s been the key area of impact that we’ve needed to address after we got our operations in order.”

The company already achieved zero-waste operations two years ahead of its scheduled goal. It has also taken the necessary steps to be powered entirely by renewable electricity by 2020, part of which included securing a power purchase agreement that supports the development of two new wind and solar energy farms in Illinois and Virginia.

With support from CEO Josh Silverman, the online shopping destination teamed up with renewable energy and climate solutions partner 3Degrees to find offsetting solutions for shipping logistics, addressing that big elephant in the room.

Etsy considered two options: asking customers to pay for offsets at the point of sale, or covering the costs internally. Silverman agreed that the company should take full responsibility for its carbon footprint rather than requiring customers to opt-in.

“At the end of the day, we wanted to really say the full footprint was carbon neutral,” Mozen says. The company has offset its footprint from employee travel and commuting for years, so the sustainability team knew the cost wouldn’t be exorbitant. C-Suite leadership, however, was pleasantly surprised that investing in offsets to cover Etsy’s shipping footprint would cost less than a penny per package.

After doing his own research, Silverman started to understand the feasibility of addressing the company’s footprint. “In his mind, the question shifted from ‘Should we do this?’ to ‘Why didn’t we do this sooner?’” Mozen remembers. “It’s been wonderful having a CEO who is so invested and passionate about [sustainability] and so supportive of it.”

Shipping offsets pay off

If you’re wondering whether those pennies add up as packages ship across the country, you may be surprised to hear that the investment is actually helping, not hurting, the company’s bottom line.

When Etsy launched the initiative in February, it added a leaf logo in the checkout cart with information about carbon neutrality. Shoppers responded positively, and Etsy says it has seen a higher rate of conversions from the cart after advertising its commitment.

“The increase in conversion rate made this pay for itself,” Silverman told Jim Cramer of CNBC’s Mad Money. Mozen adds, “It really demonstrated that consumers are shopping their values and that they care about sustainability.”

And it appears to be paying off: In his appearance on Mad Money, Silverman referred to Etsy’s Q2 earnings as a “breakthrough quarter.” Gross merchandise sales grew by 21 percent, and revenue improved by 37 percent year-over-year.

It’s time to start thinking about Scope 3 emissions

As e-commerce companies proliferate and more people shop online while expecting one- or two-day shipping, or even same-day delivery, offsetting carbon emissions from shipping is more urgent than ever.

E-commerce sales rise steadily each year. Just last quarter, sales increased by 8.3 percent compared to the first quarter of 2019. Still, “companies aren’t accounting for [shipping] in their Scope 1 and Scope 2” emissions, Mozen says.

For most companies, including those in the e-commerce sector, greenhouse gases emitted during shipping are typically categorized as Scope 3 (supply chain) emissions, meaning they’re out of a company’s direct control. The vast majority of companies do not report on—or take steps to reduce—their Scope 3 emissions, and these emissions “haven’t been on the top” of many business leaders’ radar, Mozen explains.

But even for first-movers like Etsy, shipping offsets do not have to stand on their own—they can tie into other company objectives. For example, Etsy’s verified offsets tie into their goal “to build long-term resilience by eliminating our carbon impacts and fostering responsible resource use.” Offsets support bundled solar and wind projects in India, a forest conservation program in Minnesota, and an effort to reduce the impact of manufacturing lightweight auto parts, among other initiatives.

Yet when it comes to reducing the environmental impact of shipping, Mozen claims it can’t be done alone. “Etsy has a relatively small footprint for e-commerce compared to other companies. Us doing it alone isn’t going to solve the whole problem,” she says. “We claimed we were the first major global e-commerce company to offset our emissions from shipping, but we really hope that we’re not the last.”

Image and video courtesy of Etsy

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Etsy Makes the Case for CEO Buy-In Around Carbon Neutrality
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Etsy is the first major online shopping destination to offset all of its emissions from shipping—thanks, in large part, to buy-in and engagement from CEO Josh Silverman.
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Want to Be Known as a Responsible Company? Start with Trust

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Sustainability reporting has evolved rapidly over the past decade. What was known a decade ago as “corporate social responsibility” as largely morphed into “sustainability,” or as many companies now prefer to say, “ESG” (environmental, social and governance).

But according to Toronto-based The Works Design Communications, which describes itself as an “integrated design studio and communications agency with a focus on sustainability,” what you call your report really doesn’t matter, at least according to the firm’s latest research.

A responsible company is a transparent company

What does matter is that your stakeholders can find, understand and use this data seamlessly. To their credit, more companies are framing this information so that investors can better understand it. That, in the end, is a win for people, planet and the equity markets.

Wesley Gee, Works Design’s director of sustainability, also noted those tasked with composing these reports are speaking the languages of many stakeholders. “More recently, I’ve noticed that a lot of reporting has started to offer smart functionality enabling companies to develop a better experience for multiple users at once,” he said during a recent interview with TriplePundit.

Gee acknowledges that the challenges that face sustainability reporting teams are daunting, especially considering the alphabet soup of various reporting standards, including CDP, GRI, the SDGs, TCFD and SASB – just to name a few.

Focus on your purpose, not checking the boxes

Less important than meeting all those checkboxes of standards, however, is getting across the company’s purpose, goals, success and struggles. “There is no one-size-fits-all approach because most analysts still don’t really know what they want,” Gee explained, “so we recommend that companies report on a combination of two or three frameworks. But when sharing the data, don’t forget the story. Context matters.”

Indeed, Gee noted that more companies are striving so set the context as they establish their purpose in making it clear to stakeholders that they do, indeed, have a forward-thinking agenda. And corporate reporting can help in this quest, along with tools such as social media, which can help companies rally support for their efforts as they make these stories authentic and relevant.

The results seem encouraging. Years ago, sustainability reports were mostly storytelling. Then, as stakeholders blanched at the public relations-heavy, glossy PDF reports, more of them became heavily data-driven, which often can distract from a company’s core story and purpose.

“Today we’re seeing, and supporting, a reporting approach that is more intentional. We’re working in a more coordinated way with corporate communications, investor relations, human resources and sustainability leads to plan and deliver a complete solution,” said Gee. “We believe that good reporting acknowledges expectations and executes on a plan that is far more customized. The formats we choose, those who we engage with and the analytics we assemble enable us to be nimbler and more objective. It helps us all have a little more fun to thoughtfully and objectively adapt to this changing space.”

Transparency + accountability = trust

But the bottom line for companies is that once the formats, details and tone of reporting are sorted out, the real objective for companies should be to build trust.

You can’t sow trust if you’re not authentic. And you can’t be authentic if you don’t show your vulnerabilities. So what’s the answer, then?

Being upfront would be a start.

According to Works Design’s research, only one-fifth of companies included case studies that were related to a negative event.

“The fact that only 20 percent of companies will discuss or disclose a negative event is really surprising,” said Gee. “After all, we’re all grown-ups here and we know how to relate to other human beings, so let’s show our challenges, threats and risks – don’t just beat your chest; no one wants to read that.”

Gee nails it when it comes to is comments about trust and “beating your chest.” It was a reminder of earlier this year when one public relations rep contacted 3p’s staff about a client in the financial services sector that recently issued a sustainability report. And the key point of this report was that the company, unlike other high-profile companies within and beyond the financial sector, had not suffered a data breach over the previous year and were proud of it. My response, written but never sent, was, “Wait, they are proud they didn’t have a data breach? But isn’t data protection part of their job?”

Look to Down Under for a great example of building trust

One example Gee held up as an example of a company that does as much as possible to build that trust, and is doing so with authenticity, is Westpac Banking Corporation, based in Sydney, Australia. (We should add Gee made it clear this company is not a client of Works Design).

The title of Westpac’s latest sustainability report makes it clear: “Strength. Service. Trust?” And that final word, along with the question mark, is colored in bold red. “They had undergone challenges, including data security,” Gee said. “And this report is a way for them to explain how they are working to do what they can to gain, earn and keep that trust.”

That’s a pretty bold chance Westpac is taking to admit it has struggled with trust. But there you have it, on page 109 – the bank had received over 600 substantiated complaints related to breaches of customer privacy or loss of data.

This frank approach to sustainability communications may rattle many communications professionals, but to reiterate what Gee said during his talks with 3p, trust and accountability matter. There’s no sense in trying to overlook it or sweep it under the rug – as it will come out eventually.

A reminder: We're pleased to offer 3p readers a 25 percent discount on attending the Forum. Please register by visiting the 3BL Forum website and use this discount code when prompted: NEWS2019BRANDS.

Image credit William Iven/Unsplash

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Want to Be Known as a Responsible Company? Start with Trust
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Determined to be a responsible company? What you call your 'ESG' report doesn’t matter; but what does matter is that your organization has built trust.
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ESG Regulations Swim Against the Tide in the U.S., But the Fight Is Worthwhile

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There’s been a great deal of skepticism about the ESG (environmental, social and governance) disclosure regulations being put through U.S. Congress in recent months. Republican control of the Senate and the Donald Trump administration’s tendency toward deregulation, particularly in relation to environmental rules that could curtail the activities of the fossil fuel industry, make it hard for anything related to ESG regulations to gain any traction.

The latest development was the Sept. 27 passing of the ESG Disclosure Simplification Act (during Climate Week, fittingly enough) which mandates the definition of ESG metrics by the Securities and Exchange Commission and makes these metrics far more seamless to audit. But why, despite all the political challenges, should this act become law?

Building momentum for ESG regulations

The value of the legislation is not in changing the world in a single, all-powerful legislative swoop; it’s in building momentum. The first big step was seeing these topics discussed in Congress back in July. The passing of the Simplification Act represents another stride forward on ESG disclosure and a real opportunity for the U.S. to lead the way.

Though progress is slow, the movement seems to be inexorably toward mandatory reporting. Chris Burkett, a partner at multinational law firm Baker McKenzie, says: "Under the current state of political affairs in the U.S., I think it's highly unlikely that this will become law in the near term. However, it is certainly a sign of progress that this is on the Congressional agenda. In my view, it is only a matter of time until ESG reporting is mandatory—the trend is clear and investors will ultimately demand it.”

Speaking at a recent conference held by the Task Force on Climate-related Financial Disclosures (TCFD) in Tokyo, Mark Carney, governor of the Bank of England, observed a growing appetite among investors to support companies that understand their climate risks, following research that showed these companies are likely to expand at a faster rate.

Building the business case

There’s a huge value in laws that focus on specific challenges—like climate change, for example—which umbrella terms like 'ESG’ or ‘sustainability’ simply do not capture. It’s a sad fact of life that businesses will recognize the significance of a particular issue only when it bites away at their bottom line. A specific risk is far more tangible, and its financial implications are clear to business leaders. This is why the TCFD has been so successful in gaining traction. Focusing on a single issue that’s framed as a clearly defined business risk generates a sense of urgency among CEOs.

It is only by discussing environmental issues in the public eye that we can pluck them from the back of executives' minds and bring them to the forefront of corporate thinking. That’s why it’s important for us to see these issues being spoken about in Congress, on the news and in social media. More importantly, policymakers actually went through the effort of putting the Act in writing, for it to be either enacted or built upon.

Building pressure

Passing this legislation is another step toward consistency. Elsewhere, things are happening. The United Kingdom has obliged all listed companies and large asset owners to report on climate-related risks and opportunities in line with the TCFD recommendations by 2022. Relating only to climate change rather than to wider ESG issues, the TCFD gives companies a clear focus for their activities. From what our community is saying, European investors are putting pressure on U.S. companies to align their strategy with the Paris climate agreement. Perhaps as other nations introduce laws that encourage greater environmental awareness, the pressure on the U.S. to do the same will also increase.

Carney said companies should use their next two annual financial reports to test how they document the impact of the climate emergency on their businesses. “The TCFD needs to reach a definitive view of what counts as a high-quality disclosure before they become mandatory,” he said. “In my view the next two reporting periods should balance the urgency of the task and the imperative of getting it right.” Once we derive best practice, we can then go about making it law.

We’re a long way off, but act by act, discussion by discussion, bit by bit, ESG issues are clawing their way into the public consciousness. The ESG Disclosure Simplification Act is another such example. Maybe the act in itself won’t bring about the wholesale change needed, but it’s another step forward. Another blow struck in the fight. In the same way that the reality of global climate change will not go away by itself, demand for disclosure is very much here to stay.

Image credit: Darren Halstead/Unsplash

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ESG Regulations Swim Against the Tide in Congress
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It's time to push back against the skepticism about the environmental, social and governance (ESG) regulations currently being debated within the U.S. Congress.
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This Family-Owned Company is Striving to Be a Hallmark of Transparency

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When we talk about responsible, sustainable or transparent companies (or all of the above), most of the focus is on publicly traded companies. Our annual list of the 100 Best Corporate Citizens, for example, only includes publicly owned corporations, as quite simply, the data needed to evaluate them is readily available. These companies have little choice to share their financials and material risks, due largely to U.S. securities laws on this side of the pond. While privately owned corporations don’t have that legal requirement to share financial and non-financial information at the same level of disclosure, in this day and age, it certainly behooves them to do so for many reasons. To that end, such companies may want to take a look at the actions Kansas City-based Hallmark has been taking.

The company, known of course for its greeting cards and eponymous channel on cable television, has launched a robust corporate citizenship program in recent years.

One’s gut reaction to Hallmark and its corporate citizenship program could be: We’re talking about greeting cards and Christmas ornaments here. What kind of impact could it possibly have? Well, all those retail stores, paper and materials needed for those Crayola crayons and colored pencils, which together comprise a $4 billion company, do have an impact. Energy and power are consumed; factory workers are subjected to risks on the shop floor; and today’s fickle workforce needs that healthy dose of inspiration once in a while.

Hence, we now know more about what goes on Hallmark behind the scenes. At the same time, the company’s approach toward corporate sustainability is driven by the goodwill it has long had towards the Kansas City community.

“Like many companies, we’ve seen the need by our customers and consumers to have greater insight into what causes and initiatives we support outside of a product line,” said Andy DiOrio, the company’s public relations and social media director. “What difference are we making in our communities? How are we caring for the workers that make our product both domestically and abroad? How are we being mindful of any waste, water or other materials as part of the sourcing or end-user impact?”

The bottom line for Hallmark is that these are all questions from the company’s stakeholders that have taken on a sharper focus in recent years, and according to DiOrio, the company is determined to join them in ensuring it can create and maintain a sustainable impact across its operations and supply chain.

Part of maintaining that impact is ensuring its employees are engaged and suppliers. Just take a look at its core business: Greeting cards. Composing a greeting card is like composing a Piet Mondrian painting – just try it, and see how the results pan out. There's no crowdsourcing this creative material - Hallmark hires employees to do that.

“At its core, Hallmark is a creative company with one of the world’s largest creative workforces, topping more than 1,000 professionals across the globe,” noted DiOrio. “Creativity is at the core of what we do, and the lifeblood of our company. Not only is this reflected in the products or entertainment we produce, but it can also translate into creative ways we create solutions on better ways to manufacture these products, source the materials and contribute toward important causes in our communities.”

That deep reverence for creative work guides Hallmark’s community engagement programs. Various initiatives include giving employees within the company’s “creative community” (including those who write and design products) five paid days a year to take a break from their daily roles and explore projects that can help keep those passions ignited. Last year, the company decided to expand this program so local community organizations could benefit from such volunteerism. In addition, Hallmark has supported a community theater program in downtown Kansas City for 40 years; across the U.S., its Crayola division runs a grant program that offers schools support to bolster art education curricula.

These programs didn’t occur in a vacuum – much of this community-focused work dates back to the company’s earliest days over a century ago. The Hall family, which still owns the company, has been mindful of the role it can play in the Kansas City region, and nowadays, its overseas suppliers.

Hallmark’s owners have long had an affinity for its home base of Kansas City. During the winter of 1915, the young company came off a successful Christmas season and was planning for the upcoming Valentine’s Day rush, only to lose its entire inventory in a disastrous early morning fire. The community rallied around the young company; supporters included a piano company owner who offered some of its unused office space free of charge.

It today’s political and social climate where you’ve got to be on one side or the other, Hallmark benefits from the fact that it has a product portfolio that can bring people together – no one (level-headed) ever got livid from getting a 64-pack of crayons as a gift or a card in the mail.

Nevertheless, you count on the fact Hallmark will keep the lines of communications open when it comes to it challenges. The company is currently formulating its goals for 2030, while the moment of truth for its 2020 objectives is coming along fairly quickly.

“Hallmark has and continues to play a unique role, especially in todays’ society. We are a company about caring and fostering emotional connections between you and the ones you love,” DiOrio explained. “During a time where it feels very divisive and you must be on one side of an issue or the complete opposite, Hallmark and its business are about bringing people together, celebrating our commonalities, and fostering a sense of togetherness; something needed perhaps now more than ever.”

A reminder: Hallmark is one of several legacy companies onstage during the Forum. We're pleased to offer 3p readers a 25 percent discount on attending this two-day event. Please register by visiting the 3BL Forum website and use this discount code when prompted: NEWS2019BRANDS.

Image credit: Hallmark

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A Family-Owned Company Becomes a Hallmark of Transparency
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Privately-owned companies considering a leap into transparency may want to take a cue from Kansas City-based Hallmark.
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