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North Korea has joined the Asia Pacific Group on Money Laundering (APG) as an observer. The APG aims to prevent the funding of terrorism or for the development of nuclear weapons.

APG is the Asia Pacific unit of the Financial Action Task Force (FATF) under the Organization for Economic Cooperation and Development (OECD).

FATF has 41 member countries including the U.S., South Korea, China, and Japan and observers that include countries such as Germany, France, and the UK, as well as 27 international organizations including the Asia Development Bank and World Bank.
As an observer, North Korea must follow a long list of rules and abide by APG resolutions. The resolutions include prevention of money laundering, nuclear terrorism and development of nuclear weapons. These are the opposite of policies followed by the North Korean government for many years.

The APG could raise North Korea from observer status to a member country after three years, based on its performance and following inspection visits.

South Korea and other APG members are puzzled by this unexpected move by North Korea, because it previously opposed joining the APG.

The action is particularly surprising because up until last year’s APG meeting, North Korea refused to join the organization because of the rule requiring members and observers to follow global standards. North Korea at the time argued that it would join the APG only after the agreement to abide by UN resolutions was taken out.

However, for now at least, North Korea has agreed to follow all regulations presented by APG.

A report by the US State Department this May designating North Korea as a country that is non-cooperative against terror may have prompted the change. The State Department cited North Korea’s failure to join either the FATF or APG in its report. Additional pressures on the North have come as sanctions imposed have steadily intensified.

One theory is that North Korea has joined the APG in an attempt to ease the sanctions imposed on it. However, there seems little chance that the country will give up its nuclear ambitions.

Although suspicious, neighbouring South Korea does not oppose the move by the North, since there are positive aspects such as better transparency of North Korea’s finances if it follows APG regulations.

However, if North Korea fails to follow the rules and loses its license as an observer, the sanctions against it will become more severe.
 

In these days of increasingly sophisticated social media it only takes one off-message supplier and a backpacker with a phone camera, to bring corporate reputations crashing down. So what steps can a responsible business take?
Miranda Ingram reports

 

Smart companies have already made supply chains sustainable and are active in CSR (Corporate Social Responsibility), and promote their initiatives on web sites and Facebook in order to build trusted brands and reputations.

Yet in these days of increasingly sophisticated social media it only takes one off-message supplier and a backpacker with a phone camera, or a disgruntled customer whose complaints are being ignored, to bring those reputations crashing down.
What is seen in Bangladesh today can affect sales in Glasgow tomorrow; bad news travels from Twitter to Newsnight in a matter of minutes.

And this is happening in a world where increasingly conscientious consumers don’t just want a great product or service but demand good behaviour and full disclosure as well. In addition to these consumers, activists (who may have no interest in your product or service), regulators, bloggers, stakeholders - even employees - are scrutinising corporate behaviour as never before.
In this instant and global world, “managing” corporate reputations is no longer in the hands of CEOs or communications teams - it is every and anyone’s business. If kids with smartphones can bring down governments in North Africa and the Middle East they can certainly destroy a corporate reputation.

Or, as Greenpeace put it: “targeting brands was like discovering gunpowder for environmentalists”.

Successful companies have already understood that to be a sustainability leader they need active CSR policies, blogs and tweets, irreproachable supply chains, social media monitoring teams and a crisis management plan in place.
But matters have moved on - again. Forget trying to manage your communications - the big shift, now, is towards managing behaviours.

“Behaviour” is the new buzzword, according Sally McGeachie, Head of Communications at GoodCorporation, the business ethics advisors and auditors who count giants like BBC Worldwide, l’Oréal, O2 and the FTSE among their clients.

Behaviour focus
“It is no longer a matter of having a crisis management plan but about prevention. Every aspect of the corporation should now be behaviour focused,” she says. “This starts with identifying behavioural risks such as bribery, fraud, corruption, human rights abuses. Your code of conduct must be embedded in the company and your employees absolutely clear what it is.”

Indeed, one impact of social media is that employees not only have a bigger voice than before but can also play a huge role in shaping an organisation’s reputation. According to research carried out in the US in 2012, nearly twice as many people trust information about a company that comes from an ordinary employee than from a CEO.

All the more important, then, that they know and believe in - even contribute to - their company’s vision which is why internal communication is now as vital as external PR work. “Your stakeholders, employees and suppliers must understand what is expected of them, your standards of behaviour must be instilled into them,” says McGeachie.

“But at the same time you must be looking at how you behave as an organisation: how quickly do you pay your suppliers? What are their terms and conditions? What are your anti-bullying policies?

“What about whistle-blowing? Do you have a culture where a disgruntled employee can bring a problem to management - and be listened to - or will they seek out a journalist?

“It is all about managing behaviour and if you have an ethical culture inside the organisation, and one which your employees and suppliers are involved in and passionate about, this will pay off in terms of your reputation.’

“Today, you have to ask not only “is it profitable?” and “is it legal?”,’ she says, ‘but also “is it right?” And don’t for one moment think you can cover something up and that “no-one will find out”. This is the biggest sin of all.”

Externally, it is also a matter of studying and managing behaviour. What platforms do your consumers use and have you made it easy for them to complain effectively to the company rather than being forced to air your shortcomings on Twitter? Do you know how to communicate your CR triumphs in a way which engages your stakeholders?

And what about activists - how and where do they gather their information and are you making it easy for them to interact with you?

We live in a cynical age so it is no longer possible to slap a CSR statement on your website or to try and hide behind cloaks and screens, warns McGeachie. “Your behaviour, what you actually do, travels faster than your statements. It is when your actions underpin your words that you start to build trust.”

Of the social media platforms available to consumers, activists and stakeholders, Twitter is probably the most powerful, not least because most journalists (and politicians) use it. It is also a powerful tool in the hands of corporations - but handle with care, as these two examples quoted by the reputation management company Portland, illustrate.

Handle with care!
Clothing retailer Uniqlo, for example, created a great campaign with their Twitter page, the “Lucky Counter”. This featured ten items of clothing and the more people who tweeted about each one, the cheaper it became on Uniqlo’s website.
Starbucks, on the contrary, suffered a disastrous hashtag hijack when its UK tax avoidance was disclosed.
The company created its #sharethecheer tweet and displayed the messages on a big screen at the Natural History Museum. Unfortunately, they forgot to monitor the messages, leaving ‘tax dodging MoFos,’ and ‘Hey Starbucks, PAY YOUR ******* TAX.’ emblazoned across the London skyline.

More recently during the World Cup, both Delta Airlines, with their picture of a giraffe representing Ghana, where there are no giraffes, and KLM with their “Adios Amigos” departure sign, had to apologise for insensitive tweets.

Nevertheless, the worst corporate reaction to the digital media revolution is to live in fear of it. Yes, it has given the consumer a louder voice - thus altering the balance of power - and yes, it is forcing business to clean up its act, à propos employees and suppliers as much as consumers and activists.

But this is all to the overall good and even though it is impossible to control your reputation, if you imbue the company with an ethical culture and behaviour, this will go a long way towards building the trust good reputation you are after – as well as standing you in good stead in the case of an unforeseen disaster.

 

GoodCorporation’s Dos and Don’ts

Do
• Focus on behaviour: establish a clear code of conduct which states how the company will behave towards all stakeholder groups
• This approach should start with an overt commitment to establishing an ethical culture from senior management
• Ensure that the code of conduct is properly embedded and implemented through effective training and communication (e-learning can be a useful tool here)
• Identify the areas of the business that may expose the company to reputational damage and develop policies and processes to manage those risks
• Conduct internal and/or external audits of behaviour and conduct
• Create an open-door culture with a speak-up system that encourages malpractice to be reported and respond when it is
• Ensure that an effective and responsive customer complaints programme is operational
• Include a stakeholder feedback link on the website; monitor comments and respond promptly
• Provide clear guidelines for all staff on the responsible use of social media with examples of what would be considered misconduct and what is acceptable and appropriate
• Consider incentives for good behaviour, managed through the appraisal process
• Ensure a crisis management system is in place and understood.

Don’t
• Try to solve a problem by covering it up
• Assume that no one will find out
• Punish those who raise concerns
• Make promises that can’t be kept
• Make dishonest or misleading statements about company, products or services

 

Independent European financial services firm, Kepler Cheuvreux, reconfirmed its status this July as the leading local broker in Europe in the Thomson Reuters Extel/UKSIF SRI & Sustainability Survey for 2014 and beat off Société Générale (SocGen) and Bank of America Merrill Lynch (BoAML) - ranked in second and third places respectively - out of 25 firms.

The latest Extel annual survey, which represented the views of over 360 investment professionals from 27 countries (including 179 buy-side firms and 14 brokerage firms/research houses), also placed Kepler Cheuvreux top for Countries and within the Top 10 across eight equity sectors. The result for the leading Pan-European brokerage firm - SRI & Sustainability - mirrored the house’s top showing in 2013.

Laurent Quirin, ceo of Kepler Cheuvreux, described the firm as an “equity power-house that stands shoulder to shoulder with the global brokers” after the awards were handed out at an event hosted by Schroder Investment Management UK in The City. The results themselves were based on a weighted vote that was received from fund managers’ total commissions paid.

With the voting being conducted over a seven-week period from 24 March to 7 May 2014, the contributions were “slightly more extensive” than in previous years according to Steve Kelly, md of Extel at Thomson Reuters. It also makes it the most extensive assessment of socially responsible investing (SRI) in the European investment community.

Other key highlights from this year’s Thomson Reuters Extel/UKSIF Survey revealed that thematic reviews and ideas are the “most critical SRI/ESG research services” as far as buy-side institutions are concerned. Indeed, in excess 80% of those responding rated these as “very important”.

Simon Howard, UK Sustainable Investment and Finance Association (UKSIF) chief executive, speaking after the Law Commission’s recent view that fiduciaries “should take financially material factors into account” and citing ESG (environmental, community, other societal and corporate governance) elements as an example of those factors, said: “This highlights how SRI and sustainability thinking is relevant to the mainstream. These awards showcase the financial sector’s successful integration of sustainability and ESG across the value chain, from brokers through fund managers to companies.”

Elsewhere in the survey, 34% of asset managers looked for all SRI/ESG research and insights to be integrated into all analyses they receive from brokers; and, sustainability is a growing element in remit and discussions of Investor Relations (IR) teams at companies, with 56% now including it as integral to their IR outreach.

Not to be outdone SocGen ranked as leading brokerage firm for SRI research - up from third in 2013 - with a team comprising Carole Crozat and Yannick Ouaknine based in Paris, Niamh Whooley in London and Rohit Malpani in India. The house beat last year’s winner Kepler Cheuvreux into second and BoAML in third.

BoAML analyst Sarbjit Nahal was voted leading brokerage individual for SRI research from SocGen’s Carole Crozat, while Kepler Cheuvreux emulated its top rank from 2013 as leading brokerage firm for corporate governance research thanks to the house’s Robert Walker ranking as top analyst in the category.

HSBC ranked top broker for integrated research on climate change, with the house’s Zoe Knight top analyst in this segment. Finally, L’Oréal took the spoils for the leading corporate in sustainability communication, followed by Eni in second and Carrefour in third.
 

The £6.31m Guinness Alternative Energy C fund yet again surpassed its peers in the UK Registered funds sector in the year to 30 June 2014 with a +28.34% cumulative return versus a less than spectacular past three- and five-year performances of -7.10%/179th and -17.53%/153rd, respectively.

Craton Capital Renewable, Alternative & Sustainable Resources A fund came in runner up on the past one-year horizon (+27.60%), ahead of the £66.13m Triodos Sustainable Pioneer K Retail fund in third spot (+25.45%) and Royal London UK Ethical Equity Inst M Inc fund ranking fourth top on +22.20%. Iveagh Wealth EUR X Acc fund took the sector’s wooden spoon over the past one year with -15.23% and a 205th rank.

MAP Clean Technology Fund I beat Economie Durable A fund by a long chalk amongst European funds over the past 12 months posting +133.65% and performed well over one- and three-year time horizons with respective performances of +66.47% and +71.47% - ranking it second top both times. MC02 New Energy FEIF fund bottom ranked out of 1,095 funds in the sector and was equally weak over the past three years on -73.14%/1,013th.

Within the US Mutual funds sector, which displayed the best peer group average at +97.33% over the last five years versus all other sectors in Morningstar’s analysis, the $19.02m Firsthand Alternative Energy fund outpaced peers on a past one-year horizon yet on an improving +53.08% versus a rather meagre +4.62%/172th rank over the past three years and +17.20%/159th rank over past five.

The $25.03m Guinness Atkinson Alternative Energy fund dropped one spot to third over the previous month’s analysis on +43.27% over the past year versus -9.17%/177th over the past three-years horizon and -23.44%/163rd over the last five.
The $724.12m Eventide Gilead N fund ranked fifth top on the past 12-month view (+34.87%) but top ranked over past three years (+75.75%) and came fourth over the past five years with an outstanding +178.19% performance. Pacific Financial Fth & Vls Bsd Mod Inv fund, a relative newcomer, bottom ranked out of 193 funds in this sector.

While the UK Individual Pensions sector posted the best peer group average over both one- and three-year periods against all the other sectors analysed at +27.37% and +38.43%, respectively, it lagged all other sectors with +37.02% for the past five years and was significantly distant from the European funds sector peer group performance at +58.37%.
 

After earning an MBA at Yale, Christine Bader spent nine years with BP as manager of policy development creating social programmes to aid workers and local residents as the energy giant built petrochemical plants and liquefied natural gas operations in remote areas of the world. In her new book, The Evolution of a Corporate Idealist: When Girl Meets Oil, Bader presents issues she and other corporate idealists confront as they work to improve business social and environmental practices. Now a lecturer and advocate, Bader says the needle has been moving incrementally, but more needs to be done.

 

Before BP you worked for nonprofits, what drew you to the corporate world?
After college, I served as a corps member with AmeriCorp’s City Year programme that aims to keep at risk children in school, and saw corporate sponsors donate time and materials. It was my first view of companies doing good works and made me aware of the role of business in society. While at Yale, I became intrigued with BP when CEO John Browne came to speak on greenhouse gas emissions, and shared his view that companies are not separate from the communities where they work.

During an assignment in Papua, Indonesia, you relocated 127 families. How did you approach that?
We acknowledged what we didn’t know and realized that we needed to go out and look for world-class experts for the myriad challenges we faced —in this case the World Bank’s top resettlement expert. Humility and being open to other peoples’advice served us well. We learned from horrible situations around other extractive projects that the best and most secure perimeter around a project is not a big fence, but a community that is involved and has a vested interest in stability. The best way to ensure smooth operations is to engage the local community and try to find that sweet spot between the interests of business and the interests of the community.

At one point one resident lobbied to use brick in the new houses, believing it was what all modern societies had —but not a good material for that climate because it retains heat. The World Bank expert admitted we were in a bind: If we’re truly listening to their desires, what should we do if the choice they desire is a bad one? None-the-less we facilitated three more months of consultations about the availability and suitability of brick, and after three months had consensus to go back to wood.

You also were involved in developing support programmes for a joint venture petrochemical plant in China that brought 15,000 migrant workers into a village of 30,000. Tell us about that.
One of the biggest challenges on that project was ensuring that the temporary dormitories for those migrant workers met international standards for health and safety, like having smoke detectors and limiting the number of people in a room. Beyond the dormitories, the influx of so many workers could put strain on the town’s water supply and hospitals, spawn brothels and cause food prices to soar, all of which could make local residents and party officials resent the joint venture.

You mention a particularly startling revelation with your partner Sinopec, about mortality expectations during construction. Can you elaborate?
My first week in China, I learned that our partner company had projected eight worker deaths, based on past experience with projects like ours. I was horrified! We made it clear that the target was zero — and managed to achieve zero fatalities on-site during the construction period. Migrant workers are away from their families and want to maximize earnings. But long hours working with heavy construction equipment can lead to unsafe conditions.

You were working with the UN on development of the Guiding Principles on Business and Human Rights document when BP’s Deepwater Horizon explosion happened. Still, how did it impact you?
The BP that emerged in the various hearings and investigations in the months that followed that tragedy is what compelled me to write this book. It didn’t reflect the company I thought I knew so well — which in my experience went above and beyond what was required by law anywhere to protect people and the environment — but rather was projected as reckless and callous. I started speaking with others doing comparable work in other companies, and realized we face so many common challenges. I wanted to shine a light on the people deep inside companies, and ask why we fail and what we need to succeed.

What have you learned?
We are making progress, but still have a long way to go. The Business & Human Rights Resource Centre keeps a running list on companies with a human rights policy statement: It is still fewer than 400. Walmart alone has 100,000 suppliers!

One challenge with this kind of work is that no one gets rewarded when something doesn’t happen, and our success often means the absence of bad things.

Those of us who care about ethics and corporate responsibility can get preachy; but all of my interviewees agreed that evangelizing to our colleagues is not helpful. Figuring out how our work supports theirs is.
 

Christine Bader spoke to Laura Klepacki
 

Consumer scepticism and expectation of institutions is at an all-time high, and prominent brands are under more pressure than ever to do good… and prove it, writes Andrew Pederson.

As BP and Nike have learned, anybody with a creative idea and a few spare minutes can create a brand manager’s social media nightmare, and companies like KFC and Chevron have found out the hard way that consumers are increasingly likely to punish companies for missteps, even (perhaps especially) when the brand’s intentions are “good.”

The standards are now higher, and there is good reason to take a second, third and fourth look at the rapidly multiplying efforts to follow Bruce Burtch’s now famous exhortation to “do well by doing good.” But how do we know whether or not a cause marketing campaign will pass critical public examination? The six qualities below are good litmus tests to see whether a campaign is more “marketing” than “cause.”

At risk campaigns:

• Spread resources too thinly over a large number of unrelated activities
• Expect a huge sales return instead of intangible brand equity
• Provide an initially high level of support that cannot be sustained over time

Many organizations simply try to do too much with too little and communicate too much about too many different things. This is risky when many might disagree with the fundamental premises of a brand’s underlying business, i.e., that it exploits non-renewable resources, produces large amounts of carbon or hazardous waste or contributes to obesity or exploitation. Before beginning, it is important to ask, “Does this activity address the root cause of an important issue linked directly to the brand?”

Further, many campaigns attempt to define success by linking the amount of money raised to the number of products sold. This is wasted effort, as the campaign should focus on addressing the root cause of an important issue rather than fundraising or selling more product. If the effort is sincere and successful, count on those who benefit to promote the brand when and where it’s appropriate.

As well, campaigns that rely on large upfront cash commitments are often simply trying to do damage control or hedge against future risk rather than make a considered and intelligent investment to make significant change in the world. Once the issue becomes less prominent, initial goals can fade into the background, only to become liabilities once more in the future. As a final check, it’s important to ask, “Does this campaign set achievable goals over a reasonable time frame?”

While cause marketing has been in vogue for a number of years, IEG projected earlier this year that corporate spending on cause sponsorships will slow to 3.4% YoY growth to an expected $1.84 billion in 2014. This slowdown is likely due to difficult lessons from less successful campaigns and the high costs of quality campaigns. When successful, however, the results are enviable, as Charity Water and RED’s respective celebrity-studded breakthroughs show.

Like Charity Water, successful campaigns:

• Report directly from the field, linking specific individual examples and general trends
• Focus on one strategically relevant and proven intervention that can scale
• Engage reputable experts in the field

Corporate transparency and reporting are still very new and underdeveloped practices, and though most consumers don’t yet have the patience or desire to comb through hundreds of pages of .pdf reports, mobile devices will soon transmit the current reality of any part of any supply chain to whoever is interested in viewing it. Well-designed cause marketing programs with nothing to hide will be able to adapt easily, while competitors who rely on traditional brand communications and mass-media-driven fundraising will be exposed.

No single organization can unilaterally solve even one complex social problem completely, and yet brand and corporate commitments often spread time, money and other resources thinly across a broad portfolio of geographies and topics. Focus, whether on a smaller number of more effective implementing partners or on a single direct investment, is critical to get the most out of scarce resources and avoid later disappointments. Rather than spread smaller contributions across a vast array of nonprofit grantees or field initiatives, campaigns should focus on one relevant issue, ideally the root cause of a significant issue directly related to the production or consumption of the brand’s product.

Cause marketing campaigns often lead companies out of their areas of core competency, and nobody is expecting major brands to become experts in poverty reduction or water policy overnight, if ever. Patagonia’s approach, for example, covers every aspect of their core business, garment manufacturing, yet does not stray into lofty discussions about poverty reduction or infrastructure development. Quite the contrary, brands should find the most capable person or organization in the desired field, let them lead and provide all the necessary support rather than attempt to implement in the field.

Charity Water is an excellent case study in all these respects, and this high standard is what every other cause marketing campaign should strive for.

If a brand is unable to step up to these expectations, then it should step back and let others lead. Coca-Cola, are you listening?
 

Flooring that converts footsteps into renewable electricity, a house built almost entirely from waste products and Sky’s Rainforest Rescue campaign with WWF were among the winners at the recent 2degrees Champions Awards.

The University of Brighton’s “Waste House” won both the Building or Property Project award and the Waste & Resource Management award. It has proven that it is possible to build a house almost entirely from waste products.

Pavegen won the Energy & Carbon Man-agement (Long-Term Payback) award, for its innovative flooring tile that converts the kinetic energy from people’s footsteps into renewable electricity. Installed successfully at sites around the world, including the 2013 Paris Marathon and London 2012 Olympics, the Pavegen flooring tiles are designed to encourage communities to engage with a tangible and people-powered solution, and help them recognise the opportunities for an innovative off-grid energy technology.

The External Communications Campaign award was given to Sky for its Rainforest Rescue campaign. It is an integrated partnership with the WWF UK, WWF Brazil and government of the state of Acre in Brazil, delivered over four years. Sky’s research shows that 40 per cent of its customers are now more aware of the issue of deforestation and now understand why it is important.

The Solution of the Year Award (pictured above) was collected by Vegware for its range of compostable food packaging, while Pukka Herbs won the Supply Chain Management award for encouraging its supply chain to adopt the FairWild Standard.
The Sustainability Champion of the Year was named as Eldad Umenjoh, who has successfully changed the attitude of palm oil farmers in Cameroon, and the Social Value award was given to Carbon Solutions Global for its project which teaches local farmers in Hungary the importance of using environmentally sound fertilizer.

For a full list of this year’s winners visit www.2degressnetwork.com/awards/winners 

Last month, we discussed the implications of indoor air quality (IAQ). We asked why you should care, and came up with a number of answers focused on health. If that weren’t reason enough, there is another reason that IAQ should be of particular interest to business owners: employee productivity.

A number of credible studies have shown that indoor air quality can have a significant effect on employee productivity. And we’re not just talking about air that’s so bad that you can’t see or breathe. Generally speaking, OSHA takes cares of those (though I could tell you a story about an agricultural processing job I once worked in Arkansas). What we're talking about here is much more subtle than that.

For example, a series of laboratory studies at Lawrence Berkeley Laboratory (LBL) examined typing speed and accuracy, as well as addition and proofreading error rate, with and without a section of 20-year-old carpet present in the room. The carpet, which was known to emit volatile organic compounds (VOCs), was hidden from the subjects. (VOC s are used and produced in the manufacture of paints, adhesives, petroleum products, pharmaceuticals, dry cleaning agents and refrigerants.) Results found a 4 percent improvement in speed and accuracy when the carpet was absent. The amount of ventilation used also had a significant impact. Results above were achieved with 20 cubic feet per minute (CFM) per person being blown into the room. Dropping that down to 6 CFM per person led to an additional 4 percent decrease in performance. Increasing the ventilation to 60 CFM per person achieved the same result as removing the carpet.

Another study found the presence of CRT monitors led to a 16 percent increase in typing error rate. A similar study found a 10 percent improvement in call center talk times when additional fresh air ventilation was provided. In many of these studies, the inhabitants made no complaints and were unaware of any issue with respect to the air quality.

Another extensive study performed at the Technical University of Denmark had similar results: A series of 8-week-long intervention experiments in call centers found performance improvements in the 6 to 9 percent range. While these numbers may not seem particularly high, they could be achieved at relatively low cost, or, in the case of new facility construction, built-in at the outset.

When you consider the fact that 90 percent of the total operating cost of a commercial office building goes into the salaries of the people working inside it, a simple change like improving the ventilation can yield substantial dividends. A Swedish study found that a 1 percent improvement in employee productivity was enough to offset the increased cost of proper ventilation.

Finally, a paper prepared by the Environmental Protection Agency makes a case for IAQ management in schools: The agency cites not only health impacts, particularly asthma, but also academic improvements. One cited study found that students in classrooms with higher ventilation rates scored as much as 14 to 15 percent higher on standardized tests than those in rooms with less ventilation.

UL Environment has developed a number of new test methodologies for indoor air quality. The company also released a study on the impact of paint on school air. In that report, researchers found that half of the nation’s 115,000 schools have issues with indoor air quality. Focusing initially on paints, they evaluated various paints -- both those that emit low VOCs, as well as others designed to pull VOCs out of the air. The study identified paints of both types that were effective in reducing VOCs in the classroom, particularly in the days and weeks after application, which is when the problem was most prevalent.

We’re just beginning to understand some of the impacts of air quality on our health, wellness and ability to perform tasks. The picture that is now emerging shows us that we need to be concerned about air quality, indoor and out, and that we can improve that air quality by understanding the impact that man-made processes and products can have on our air.

Image courtesy of UL Environment

RP Siegel, PE, is an author, inventor and consultant. He has written for numerous publications ranging from Huffington Post to Mechanical Engineering. He and Roger Saillant co-wrote the eco-thriller Vapor Trails. RP sees it as his mission to help articulate and clarify the problems and challenges confronting our planet at this time, as well as the steadily emerging list of proposed solutions. His uniquely combined engineering and humanities background help to bring both global perspective and analytical detail to bear on the questions at hand.

Follow RP Siegel on Twitter.

 

Lurking inside your bed, your couch, your carpet and the upholstery of your car is a secret arsenal. You can’t see it, you can’t usually smell it, and most of the time, you’re likely unaware that it’s even there.

The U.S. chemical industry will tell you that it’s there to save lives. And the truth is, in many cases it has. Since 1976 when the federal Toxic Substances Control Act (TSCA) was passed, says the North American FlameRetardant Alliance (NAFRA), deaths from furniture and furnishing fires have dropped dramatically. According to studies conducted during 1981-1985 and 2000-2007, “The number of fire deaths fell by 64 percent for furniture and furnishings [f&f] fires.” The American Chemistry Council (ACC) attributes that reduction to flame-retardant chemicals that slow the spread of a devastating house fire.

Chemical flame retardants: Are they helping?

But critics ask, at what cost? Improved technology now places the cause of some cancers, developmental problems and other diseases squarely on the types of chemicals we use in our homes. Substances that have long been used with the blessings of TSCA, such as polybrominated diphenyl ethers and phosphate esters, are now showing up in our water, our food and have been detected in the air we breathe. Research has also linked childhood developmental problems to the chemicals found in our furniture and other upholstery

Organizations like Center for Environmental Health (CEH), Safer Chemicals, Healthy Families and Health Care Without Harm and Practice Green Health have long argued that spraying the interior of our beds and upholstery doesn’t just change the flammability of the furniture, it just subjects their users to an onslaught of toxic chemicals on a daily basis, and that there are better, safer ways to address f&f fire risk in our homes. 

California's new chem-free smolder test

While the federal government has been slow to implement changes to TSCA, advocates in California have been successful in getting the state standard changed so that furniture can be sold in California without flame retardant chemicals. Technical Bulletin 117 (TB-117-2013) puts the focus where the real issue is, says CEH Pollution Protection Co-Director Judy Levin, by testing the level of flammability of furniture where the fire actually starts: in the fabric.

“The smolder test actually addresses the major cause of fires, which is smoldering sources like cigarettes on fabrics,” says Levin, “because fires begin on the outside of furniture on the fabric, not on the inside foam, which is where TB, the old standard, tested.” 

Kaiser drops toxic chemical flame retardant

In June of this year, California-based HMO Kaiser Permanente embraced the change in the law, by announcing that it would no longer purchase furniture that contains flame-retardant chemicals. The announcement from one of the country’s largest not-for-profit health care providers sent reverberations through the healthcare sector and received instant response from NAFRA with a call for Kaiser to reconsider its decision.

“By prohibiting flame retardants in furniture at its facilities, Kaiser will increase its reliance on technologies designed to reduce the effects of a fire after it has started (e.g., sprinklers), rather than preventing fires from starting in the first place,” Cal Dooley, president of the American Chemistry Council, which sponsors NAFRA, said in an open letter to the HMO.

But Levin says that isn’t what organizations are advocating. Improved technology now allows furniture manufacturers to choose denser fabrics and construction methods that are naturally more fire resistant. Materials that weren’t as easy to produce, or weren’t considered in vogue in our living rooms, like wool, latex or hemp have been proven to resist or slow the spread of fire. Better design, more focus on smolder tests and smarter choices of materials are removing the need for toxic chemicals in hospitals as well as homes.

Kathy Gerwig, who serves as Kaiser’s environmental stewardship officer, says the HMO’s decision has been a long time in the making.

“For many years, we have been pursuing a policy around safer chemicals and safer products and that has included targeting a variety of chemicals of concern, for which there is evidence that there might be harm from a health standpoint,” said Gerwig in a phone interview earlier this month. She said Kaiser was ready to start implementing changes to its purchasing methods when the update was implemented last year.

“We have terrific suppliers and they have been well aware of our desire to move to safer products for a very long time,” said Gerwig. She said earlier studies by Kaiser allowed the HMO to determine what kinds of sustainable fabrics might work in a hospital setting. “So it’s no surprise to our furniture [suppliers] that we would want to move in this direction.”

Healthier Hospital Initiative's growing base

Health Care Without Harm’s safer chemicals director, Rachel Gibson, said finding ways to transition away from toxic flame-retardant chemicals has become a movement spearheaded by several committed organizations that feel it’s important to safeguard safety standards in healthcare settings.

“Two years ago, Health Care Without Harm, along with Practice Green Health, launched the Healthier Hospitals initiative,” said Gibson in a recent interview. The initiative brought together hospitals, national and state organizations all across the healthcare sector, and provided further initiative to California’s unprecedented decision to modify the way flammability standards are addressed.

It also offered a challenge to hospitals to change the way they look at health care.

“[Hospitals] that enroll in the Healthier Hospitals Initiative commit to one of three challenges. As a baseline, they have to commit to the overall elimination of mercury in hospitals,” said Gibson. They also agree to commit to one of three challenges “and one of those challenges focuses on [the sustainability of] interior furnishings,” like beds, medical equipment, waiting room furniture, and carpets and their long-range conversion to products that use environmentally safe materials and don’t contain chemical flame retardants. She pointed out that getting rid of flame retardants falls under the broader goal of "safer chemicals," which a growing number of hospitals have already endorsed as a personal goal.

The HHI’s own goal is to get as many hospitals to join their coalition as possible, and the support that Kaiser has received for its decision has served as great encouragement for many institutions.

Gerwig said the HMO has already garnered interest from a number of other healthcare providers that are looking for ways to transition to more sustainable products. Many have already joined HHI and started their own list of sustainability goals.

“I expect in the not-too-distant future that we will see other systems coming out with similar systems to ours that basically tell their supply chain that they want to avoid chemical flame retardants in their upholstered furniture,” Gerwig said.

Federal Reforms Still Stalled

For healthcare providers, just like private citizens who reside outside of California, however, purchasing furnishings that don’t have chemical flame retardants in them is still a problem, said CEH’s Judy Levin, and largely because of the clout that lobbyists for chemical coalitions like the ACC and NAFRA have in Washington.

“The [U.S.] American Chemistry Council is a very powerful lobby and [it has] been successful in creating doubt and uncertainty in the legislature and continues to perpetuate myths that flame retardants equal fire safety. And they present this false dichotomy, that you either can flame retardant or you can have fire [heightened fire risk], and that’s simply not true,” said Levin.

Andy Igrejas, who serves as the director to Safer Chemicals, Healthy Families, said that there is ongoing effort to get Congress to update TSCA, but it remains a slow process.

“The TSCA reform legislation has been stalled as the chemical industry has insisted on a version of reform that contradicts mainstream scientific and medical recommendations and also the principals for reform laid out by the Obama administration,” said Igrejas.

And even though some of those flame retardants are currently under review by the Environmental Protection Agency, Igrejas said progress in changing the legislation remains at a crawl. “I don't think TSCA reform is likely to move in the near term unless the chemical industry changes heart and accepts basic minimum precepts of reform like a health-based standard that explicitly protects pregnant women and children.”

He said the chemical industry’s continuing demand has been an impediment to efforts to upgrade TSCA.

“Flame retardants are a great example of our broken chemical safety system. Until the federal government can put in place a system that 1) removes known harmful chemicals and 2) requires the rest to undergo a thorough safety review that adheres to modern scientific standards, it will be entirely up to states and enlightened players in the private sector like Kaiser,” said Igrejas.

Those Great Chemicals: Benign by Design

Contrary to common opinion, said Gerwig, it is possible to make better chemicals, just like it’s possible to make better furniture that isn’t toxic to those who use it.

“There are plenty of great chemicals out there, and there are plenty of chemicals of concern. And the thing that separates them is that the great chemicals have been tested and the consequences of them on human health and the environment are understood and manufacturers who are interested in green chemistry are developing chemicals that are benign by design, as the saying goes. That is what we would like to see more of,” Gerwig said.

Dedicated in memory of May Thiem, 1920-2014, former cancer survivor.

Image of Kaiser's South Sacramento's waiting room courtesy of Kaiser Permanente

People rarely use the expression “ignorance is bliss” when referring to themselves. To do so would be to suggest that they at least know that there is something that they don’t know, even if they don’t know what that is.

When it comes to climate change, there is a lot of ignorance being bandied about -- both about the weight of scientific understanding and evidence that exists underscoring the role of human activity, and the economic and social impact of dealing with the crisis in a meaningful way.

Despite the efforts of a regiment of doubtmongers, assigned to keep the debate going, most Americans have heard enough of the science and understand that the crisis is real. And even among those who are skeptical, many understand that making this country more efficient in every major aspect of the economy would be a good thing, even if were undertaken on the basis of a miscalculation.

Given the inability of Congress to act effectively, the president has given executive orders to the Environmental Protection Agency to reduce power plant carbon emissions, which will be achieved through the Clean Power Plan (CPP).

But there are still a number of holdouts, in a position to make a difference, who continue to gum up the works. Among them are Sen. James Inhofe of Oklahoma and Gov. Rick Perry of Texas. Both of these men insist not only that the science establishing human’s role in climate change must be wrong, but also that doing anything about it would represent economic disaster. I won’t take the time here to recount the volumes of data refuting their first point. Instead I’d prefer to focus on a new report issued by the Center for Strategic and International Studies and the Rhodium Group, which looks at “The Economic and Energy Impacts of Power Plant Emissions Standards.” This report sheds some light on the distinguished gentlemen's second point: The study finds that both of the states these avid deniers and obstructers represent and vow to protect, Oklahoma and Texas, would, in fact, benefit by following the EPA rules rather than resisting them.

The reason for this is natural gas, which frankly, has turned many energy calculations and positions on their heads. The move to generate cleaner electricity will lead to a conversion of more power plants from coal to natural gas, which emits roughly half as much carbon. In fact the study, assessing the projected impact of the EPA’s CPP, shows only a modest increase in renewables, from 14 percent to 15 percent. Comparatively, they expect natural gas to rise from 29 percent to 43 percent, while coal decreases from 38 percent to 21 percent by 2030, when compared to the reference, business-as-usual scenario. This increased demand for gas will create increased profits for corporations, jobs for workers, and government revenues at the same time. Of course, Texas has already been seeing this with their wind power boom, though natural gas plays more squarely into the hands of those close to the political establishment. With their robust transmission infrastructure, Texas is well prepared to deliver considerably more renewable energy than this report predicts.

According to the study, Arkansas, Louisiana, Oklahoma and Texas, the states that would be asked to make the steepest cuts to their carbon emissions, would see a combined annual net economic benefit of up to about $16 billion.

So that makes just about everyone happy except for those few poor folks whose livelihoods truly depend on coal. Inhofe points out plans to build a new coal mine in a very poor part of Oklahoma, near Poteau. Those people “would be devastated,” he said. It’s a fairly localized effect. Overall, many states are getting into the gas-drilling boom, which, of course, has problems of its own. Those areas that had coal may not necessarily have gas. That is the sad reality. But then, a lot of good people lost their jobs making buggy whips when the automobile came along.

The wild card in all of this is energy efficiency (EE). The report acknowledges that EE can make a huge difference in these outcomes, though it’s difficult to predict just how much of it will be implemented.

With change comes dislocation, and both winners and losers. Those people working coal had their turn. They made their money and in the process did a lot of damage to the planet, without meaning to. Now it’s time to move on. But that doesn’t mean there won’t be pain.

Take Virginia, for example. Here is a state where on the eastern end, in Norfolk, the shipyards are spending tens of millions dealing with rising seas, while on the western end, coal miners are terrified of losing their jobs. It’s a pretty tricky row to hoe for politicians.

These same politicians will ultimately decide whether to follow the EPA rules or defy them. Senate Minority Leader Mitch McConnell (R-Ky.) is already preparing legislation to override the rules in order to protect his coal-rich home state, but it won’t pass the Senate. Meanwhile, with each passing day, week, month, year — the case for taking action becomes ever more compelling.

Image credit: Magnolia677: Wikimedia Commons