In this interview at the Fortune Brainstorm Green 2014 conference, Patagonia's Rick Ridgeway talks to Nick Aster about the state of the apparel industry and sustainability.
Image credit: Yukiko Matsuoka/Flickr
Ed note: This article is part of a short series on financing smart city infrastructure, sponsored by Siemens. Please join us for a live Google Hangout with Siemens, PwC and Berwin Leighton Paisner on June 12 at 10 a.m. PT/1 p.m. ET, where we’ll talk about this issue live!
If you were to watch a time lapse video of the history of human civilization, you would see something like this: Small bands of humans moved from hunting to agriculture, consolidating, and then developing all kinds of technology at a gradually increasing rate. Improved food security led to rising population levels which, in turn, led to more innovation. All of this is punctuated by numerous wars.
In more recent times there has been a massive migration into cities, leading to highly concentrated metropolises. If you were to look closely, you would also see a redistribution of power and resources. Where it was once almost exclusively held by ruling classes and governments, it is now being increasingly shared with businesses and an investor class. Now we find ourselves with resource scarcity, a disrupted climate and cities looking to find a way to manage their swelling ranks at a time of receding government support.
A new report, entitled Investor Ready Cities, jointly produced by tech conglomerate Siemens, consultancy PwC and law firm Berwin, Leighton & Paisner, looks unblinkingly at these trends and proposes a way forward through increased collaboration between cities, businesses and investors.
The main thrust of their argument centers on the notion of infrastructure value. It first challenges and then provides guidance to city officials to develop the “legal and governance structures that need to be in place to provide the necessary security and certainty to the investment community that will encourage them to invest in infrastructure projects.”
This is because, "Cities with the appropriate foundations of institutional stability can leverage financial mechanisms to their advantage to help deliver the infrastructure that is so critical to their future.”
This public-private partnership approach is a compelling path forward in today’s world, addressing the simultaneous challenges of:
The report lays out a number of ways forward, citing numerous case studies, towards:
Join Triple Pundit for a live Google Hangout with Siemens, PwC and Berwin Leighton Paisner on June 12 at 10 a.m. PT/1 p.m. ET, where we’ll talk about how to finance cities of the future.
Image courtesy of Siemens
RP Siegel, PE, is an inventor, consultant and freelance author. He writes for numerous publications including Triple Pundit, Justmeans, ThomasNet, Huffington Post, and Energy Viewpoints. He and Roger Saillant co-wrote the eco-thriller Vapor Trails. He 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 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.
By Meghan Ennes
If I were to sum up this year’s Shared Value Leadership Summit in one word, that word would take the form of a question: How? The conversations that took place in the ballroom of the Conrad New York earlier this month did not involve what shared value is and why organizations should consider it. Rather, the resounding question I heard discussed in that room – whether on the stage or in conversations between colleagues – was how organizations can execute on this strategy successfully.
The main point is that shared value – the approach that business can profit by doing good for society – is experiencing a shift from a conceptual idea to a full-fledged corporate movement: one that has budgets, spreadsheets and accountability. As Intel’s Suzanne Fallender put it, the next step is not as sexy as the first. Now is when we start the dirty work of implementation. Fallender explains in “What Is Strategy” for the CSR@Intel blog:
“Much of the discussions over the two days focused on the 'how' of shared value—how companies are building the concept of societal impact into their vision statements and executive compensation, organizing differently to increase internal collaboration and work toward shared goals, and collaborating in new ways with external stakeholders … as companies move into the implementation phase of shared value, it will be important for companies to share best practices, challenges, and case studies to advance learning.”
And it’s in this stage that we have to ask the tough questions about how we’re actually going to do this work. Shared Value Initiative consulting affiliate Phil Preston got to thinking about these execution questions (he posed 10 in his blog). For example: At the enterprise level do shared value initiatives need to be structurally protected? He followed up this list with a formal post on Asking Tough Questions About Shared Value. And for more on the nitty-gritty of implementation, Laura Palantone of APCO Worldwide wrote a very practical how-to post based on the common themes of the days’ speeches, panels and overall conversations.
In his keynote address, Prof. Michael E. Porter expressed optimism in the progression of what he himself called the shared value “movement.” But he acknowledged that there’s still work to be done. Devex’s Adva Saldinger reported, “One of the key challenges [Porter] raised is that there's really a reluctance on the part of business to talk about profiting by doing good.” This presents a barrier to making the business case, where you need to talk about where the money is coming from:
The next day, Saldinger followed up with another video wrap-up on Nestlé’s success with leadership buy-in, partnership lessons from Rockefeller Foundation and TechnoServe, and a sneak peek of new investor research from Michael Porter and Mark Kramer:
The event not only staged a conversation on shared value, but some exciting announcements for its presenters as well. Speaker Tony O. Elumelu held a press conference to discuss his recently announced Africapitalism Institute to promote economic and social wealth across the continent. In the Investing in Prosperity panel, Elumelu also stressed the power of governments – especially in emerging markets – to better enable the private sector’s role in development, which was covered in the Nigerian Tribune.
The International Finance Corporation (IFC) also announced at the Summit the launch of a database of the spending patterns of low-income consumers, reports Devex Impact. “Why do we care about these companies that include the poor?” asked Eriko Ishikawa, IFC global head of inclusive business, “Because we see that the needs are so huge, and governments and philanthropies can only do so much.” In a statement made that day, IFC CEO (and Summit speaker) Jin-Yong Cai stressed the importance of making this information “freely available in a form that is useful to the private sector.”
And on a personal note for our team, the Clinton Global Initiative also covered the Summit, a great reminder of the CGI Commitment to Action to launch the Shared Value Initiative back in 2012. CGI noted that the Initiative has surpassed those goals and helped others like Western Union and BD (also in attendance at the Conrad) shape their own.
For more summary of the Summit, I suggest taking a look at JWN Event’s recap of day one. And consulting affiliate Jocelyne Daw’s “brief debrief” of both days is a meaty outline of five highlights which represent bigger developments in the shared value field.
Although the state of shared value is still in flux, this moment is a great one to note its progress. In his reflections on the event, TriplePundit’s Raz Godelnik muses that shared value could be the bridge where the elite Davos types and the 99-percenters can find common ground. And as we convened with 400 other eager practitioners at the Shared Value Leadership Summit last month, I couldn’t help but also notice that power of shared value to bring people together.
The EPA recently announced a proposed rule to reduce carbon emissions from existing power plants to 30 percent below 2005 levels by 2030. We interviewed Tom Vinson, vice president of Federal Regulatory Affairs for the American Wind Energy Association, to learn how wind energy can help states respond the EPA proposal to cut power plant emissions.
TriplePundit: Is wind energy uniquely suited to help utilities comply with the new proposed EPA regulation?
Tom Vinson: The deployment of wind energy has grown significantly over the last decade, and a variety of energy sources have been displaced as a result of that, including coal. This is evidence that we can grow the deployment of wind energy and maintain a reliable, affordable electric system for consumers.
There are 11 different states that have achieved emission reductions of 10 percent or more because of wind and another three states that are just below 10 percent. Twenty percent wind in the eastern U.S. would yield emission reductions of 25 percent. Wind energy can be a significant player in the draft requirements that the EPA just issued.
3p: Many interest groups are creating ads for or against the proposed rules. What message would you like to send to the American people?
TV: One of our messages is that there is no need to panic. There are effective emission reduction options that are available now. We think the EPA rules are achievable with wind energy and other options.
3p: Does wind have the ability to displace the baseload power that is currently generated by coal?
TV: All power plants on the system back up all other power plants. Displacing coal provides wind an opportunity to meet that demand, that would otherwise go unmet. Natural gas and other plants on the system will help balance things out when the wind isn't blowing.
3p: Do you think the EPA proposal could help mitigate the impact of the removal of the Production Tax Credit and Investment Tax Credit that were not renewed in 2014?
TV: We're confident that the PTC and ITC will be renewed and fully expect that it will help. The EPA rule will have an impact in the mid and long term, but certainly [isn't] a replacement for them in the short-term.
3p: Natural gas has been competing with wind energy. How could the proposed rules impact this competition?
TV: We already compete with natural gas in many regions. What the rule does is that various zero and low-carbon generation resources will have to compete to serve the market, including efficiency, natural gas, nuclear and renewables. The EPA doesn't take a position on which of those options should be used by states, so it's up to each individual state which they should use. Wind energy is reducing emissions in almost every state today, and to a significant degree in many states.
3p: Who will be some of the big players in reaching these proposed emission reduction rules?
TV: The EPA sets up the overall framework and all the compliance options, which are primarily efficiency, natural gas, renewables and nuclear. [Companies] will all now work at the state level on the state plans and compete for the market that results from the requirements.
We do believe that wind energy is an affordable, reliable and widely available compliance option that will be attractive to states. Given the 43 percent cost reduction [in the average power purchase price of wind energy] over the last four years with more to come, the speed with which wind energy projects can be deployed and scaled up, and the value that wind energy provides by locking in a price for 20 or more years, which isn't available by the fossil technologies.
3p: Does wind energy have advantages over efficiency in complying with the proposed EPA rules?
TV: One of the advantages of wind is the utility-scale aspect of it, that you can get in one shot by building a 100-, 200- or even 300-megawatt wind farm. We've seen wind capacity grow from doing a couple thousand megawatts [of new installed capacity] a year to 13,000 megawatts a year, with the DOE calculating that we can do even more.
3p: Do you think both a health economy and a healthy climate are possible, or do you think the two are mutually exclusive?
TV: They are both possible. A healthy climate goes hand in hand with a healthy economy. Look at states like Iowa, that have deployed a lot of wind power and had relatively robust economies. The wind energy industry supports 50,000 jobs today across the country, roughly 550 manufacturing facilities in more than 40 states, and utility-scale wind turbines installed in 39 states and Puerto Rico -- which pay rent to land owners and taxes to local communities and states. There are definite upsides to the deployment of wind energy, and if you look at the EPA analysis, they project the net economic, health and climate benefit is very large.
3p: How quickly do you expect these EPA proposed rules will impact the wind energy market?
TV: The EPA is saying they will finalize the rule in June of 2015, and they want state plans submitted by June of 2016. They are offering extensions in certain circumstances to June of 2017, if a state needs it. They are offering extensions to June of 2018 if they are working on plans that encompass multiple states in the same plan. The EPA gives itself one year to review plans after they are submitted. State plans could be approved as soon as 2017 and as late as 2019. Utilities and others will see the writing on the wall and start making decisions between 2017 and 2019.
Sarah Lozanova is a regular contributor to environmental and energy publications and websites, including Mother Earth Living, Green Building & Design, Triple Pundit, Urban Farm, and Solar Today. Her experience includes work with small-scale solar energy installations and utility-scale wind farms. She earned an MBA in sustainable management from the Presidio Graduate School and she resides in Belfast Ecovillage in Midcoast Maine with her husband and two children.
Finding in favor of an international trade petition brought by leading U.S. solar manufacturer Solar World Americas, the U.S. Department of Commerce made a preliminary decision to close a loophole that Chinese manufacturers have been exploiting. Through the loophole, these companies manufactured crystalline silicon (c-Si) solar photovoltaic (PV) cells in Taiwan and other third-party countries, shipped them to China for assembly into modules and panels, then exported them to the U.S.
Widening the scope of unfair trade and anti-dumping duties and tariffs imposed on Chinese c-Si PV products, the Commerce Department issued preliminary countervailing duties (CVDs) ranging from 18.56 percent to 35.21 percent. These CVDs apply to c-Si PV cells and modules, as well as laminates, panels and other products, consisting of c-Si PV cells produced and/or partially or wholly assembled into other products by Chinese manufacturers in China or other countries.
Commerce's preliminary decision in favor of SolarWorld America's petition reignites controversy over an issue that has divided the solar PV industry in the U.S. and globally.
SolarWorld and supporters applauded the department's preliminary decision, saying it will protect manufacturing jobs and level the playing field for U.S. solar manufacturers. Critics, led by the Coalition for Affordable Solar Energy, say that it will lead to higher solar energy costs, weigh on downstream solar energy industry participants and constrain growth in a fast-growing U.S. residential solar PV market.
The largest manufacturer of c-Si PV cells in the U.S. for many years running, SolarWorld Americas, a subsidiary of Germany's SolarWorld AG, has been the driving force in legal efforts to offset what U.S. international trade authorities have agreed are illegal Chinese government subsidies granted to Chinese c-Si PV manufacturers and unfair trade practices on their part, namely “dumping” of product in U.S. markets.
Supported by the Coalition for American Solar Manufacturing (CASM), an association of some 250 U.S. PV manufacturers and downstream solar energy providers, SolarWorld filed an initial petition with the Commerce Department in October 2011.
Late in 2012, U.S. international trade authorities imposed duties averaging 31 percent on imports of certain c-Si PV products from China. Seeking to avoid the import duties, Chinese manufacturers began commissioning production of c-Si PV cells in other countries – Taiwan in particular – then shipping them to China for assembly into modules and panels for export to the U.S.
According to SolarWorld, “State-controlled Chinese media said at least 70 percent of U.S. imports from China contain Taiwanese cells.”
Seeking to close this loophole by widening the scope of the initial import duties, SolarWorld on Dec. 31, 2012 filed a second petition with the Commerce Department.
In its June 3 preliminary determination, Commerce agreed with SolarWorld's assertions and set out preliminary countervailing duties of 18.56 percent on Trina Solar and 35.21 percent on Suntech Power and five affiliates. A CVD of 26.89 percent applies to imports of all other specified c-Si PV products from Chinese manufacturers.
“Today is a strong win for the U.S. solar industry. We look forward to the end of illegal Chinese government intervention in the U.S. solar market, and we applaud Commerce for its work that supports fair trade.”
As CASE argues in a statement:
“Today’s announcement is just the first determination in a legal process which is set to drag on throughout this fall, taking its toll on the industry with every step."At a time when the U.S. solar industry is primed to continue its record-breaking growth and began 2014 recording the second largest quarter for solar installations in history, U.S. solar businesses now find themselves collateral damage to litigation which is increasing module costs and freezing future investment through pricing uncertainty."
“This is a global dispute that will not be resolved through litigation alone. The best path forward continues to be a negotiated settlement between the U.S. and Chinese governments to end this dispute and create the conditions for growth.
Looking ahead, Commerce is scheduled to issue additional anti-dumping duties in this latest investigation around July 25. A final determination is expected on or about August 18. If affirmative, the case will proceed to the U.S. International Trade Commission (ITC).
The ITC will issue a CVD order instructing the U.S. Customs Bureau to impose the specified countervailing duties at U.S. ports of entry if it affirms an affirmative final determination by Commerce, agreeing “that imports of certain crystalline silicon photovoltaic products from China materially injure, or threaten material injury to, the domestic industry.” The ITC's decision is due around 45 days subsequent to an affirmative final determination by Commerce.
*Image credits: 1) Suntech; 2) Datamyne; 3) The Guildhall, Bath, U.K.
Editor's Note: This is the third post in a three part series on impact investing in finance. In case you missed them, you can read part one here and part two here.
By Marta Maretich
With the beginnings of a track record to back up its claims (including that much longed-for evidence of successful exits) finance remains a solid bet for impact investors. The future looks positive as a new generation of impact-backed financial service providers hone their skills, diversify their products and discover untapped markets of underserved clients in different parts of the globe.
Many of these customers will be in emerging economies, where demand will be fueled by growing populations needing access to financial services. There will be a continued need for small-scale lending to individuals, such as that provided by groups like Kiva, as well as philanthropically motivated programs to provide vital financial services at the bottom of the pyramid. Increasingly, however, there will be a demand for more sophisticated services and products in emerging economies as populations there urbanize and become more affluent.
These consumers will be joined by successful local companies, which, as they scale up, will need access to more sophisticated services on a bigger scale. Evidence suggests that such companies may still lack access to mainstream banking services, and so will need to rely on specialist finance providers in order to grow and gain access to world markets. Experienced social finance providers, like Root Capital, are already beginning to expand and diversify their offerings to meet the needs of maturing market sectors.
To effectively serve these markets, financial providers will need local knowledge and a good feel for the needs of specific consumer groups in specific locales. Providers with experience in certain markets—for example those that have grown out of philanthropic programs to become self-sustaining for-profit businesses—will be well positioned to use their knowledge to successfully, and profitably, meet client needs. Impact investors should be on the lookout for finance providers with a track record that stretches over years and gives evidence of deep local knowledge and connection.
The developed world also holds growth potential for finance businesses with impact aims. Though countries like the U.K. and the U.S. are well-served with mainstream providers, many individuals still lack access to affordable credit and other services. Some are forced to rely on expensive payday loan services and other potentially exploitative forms of credit, often compounding their debt problems. Meanwhile, many poor citizens remain “unbanked” for a variety of social and economic reasons. There is scope for alternative finance providers, some working in cooperation with local governments, to provide solutions to these and other finance-related issues.
Home finance should be another area of focus in developed economies. Kicked off by poor practice in mortgage lending, the financial crash saw mainstream lenders backing away from what they saw as risky markets, leaving a gap in service provision to poorer communities that can be filled by specialist financial providers under the umbrella of “community development finance." Increasing environmental regulation, and the need to bring down energy spending, will drive government-backed home improvement initiatives (such as installing insulation and clean energy systems) and green construction programs, which in turn will require financial facilities to see them through.
Impact investors can expect to see more regulation and oversight in the social finance market in the future, especially in emerging economies. This is good news. Though it may affect profits, oversight will also make finance more attractive for mission-driven investors who want to back positive change. The application of impact metrics and quality ESG standards will be key to distinguishing good financial providers from not-so-good ones, and this will help investors choose the best places to put their capital. In time, the evolution of metrics, rankings and accreditation for social finance companies will help make practice on the ground more effective as the industry matures and grows.
These are just a few examples of what the future may bring for impact-backed financial service providers. In brief, there is great potential for impact investors to get behind innovative businesses bringing the benefits of appropriate, ethical finance to underserved markets. The potential for impact is huge—and the positive results are already being seen in some sectors. Having already come a long way from its humble origins in microlending, the practice of socially responsible finance provision continues to grow in popularity and evolve to meet a wide range of needs. Impact investors have played an important role in its success so far—and there’s no reason why they should stop now.
Browse live impact finance deals.
Image credit: badboo / 123RF Stock Photo
About the author: Marta Maretich writes about impact, sustainable and social investing for Maximpact.com, a deal listing portal and information hub for the new finance sector. She is Chief Editor of the Maximpact blog.
About Maximpact: Maximpact is a free global portal for the social, impact and sustainability sectors. It operates as a secure web-based listing service that allows sustainability, philanthropy and CSR professionals, as well as entrepreneurs, intermediaries, and funds to share information about initiatives and impact investment deals, online. For more information on the platform or to review latest impact projects visit: www.maximpact.com. This article first appeared on Maximpact’s blog.
TriplePundit reported live from the Fortune Brainstorm Green 2014 conference in Laguna Niguel, CA. Follow along on this page for ongoing video interviews with sustainability thought leaders, corporate change agents and entrepreneurs who are leading the way to a more sustainable future.
Tom Kadien talks to Nick Aster about what sustainability means for International Paper and for the paper industry in general.
Coca-Cola, Microsoft, Samsung, Tata, Unilever and Nestlé top the list of the world’s most responsible companies based on a new global survey of Aspirational consumers by BBMG and GlobeScan.
According to The 2014 Aspirational Consumer Index, brands that deliver exceptional products and services, inspire personal relationships, support community initiatives and protect the environment are most likely to drive perceptions of responsibility.
Others ranking among the top three most responsible companies across the 21 markets include BMW, Carrefour, Ford, Google, Honda, Hyundai, IKEA, McDonald’s, Natura, PepsiCo, Petrobras, Target and Tesco.
The findings are based on a telephone and in-person survey of 20,779 consumers across 21 international markets performed in January through April of 2014.
Picture courtesy: © Simon Alvinge | Dreamstime.com
ITV and sports charity Join In are partnering for the launch of a new campaign to encourage volunteering in local sport. It has set a target of generating interest in 100,000 new volunteers.
ITV says it want its Local Heroes campaign to inspire and empower viewers to get active and make a difference in their local communities.
Join In is partnering in order to connect viewers who register interest in volunteering with opportunities at local sports clubs in their local community.
Join In's research suggests that every volunteer allows 12 participants to enjoy community sport, so with a target of generating interest from a further 100,000 new volunteers, a boost of this kind could mean up to 1.2 million new participants involved in sport in their local clubs.
The campaign kicked off this week with a promotional trail starring England football legend Ian Wright. The promo will highlight the importance of volunteers within community sport and debuted during England's pre-World Cup friendly against Ecuador.
Sara Hanson, ITV's Head of Corporate Responsibility commented: “This summer ITV will be bringing some of the world's biggest sporting events into our homes, and we hope to channel some of that national pride and emotion into local community sports. Over the year we run a number of public campaigns linked to our programming or national events to encourage more viewers to make a difference. Our hope is that fantastic events like the World Cup will inspire viewers to get active and offer their help, so even more people can enjoy community sport - there is no better time to become an ITV Local Hero.”
By Christine Arena
The climate is getting stickier, and it’s not just the weather. Today, even the most socially and environmentally responsible brands can find themselves on the receiving end of heated activist campaigns. As I’ve previously written, corporate activism is today reaching new heights -- growing bolder, more organized and artful all the time.
Now, with the combination of corporate back stepping on major issues like global warming and intensifying public scrutiny around the slow pace of reform, corporate activists are not likely to give up anytime soon. If the latest campaigns from groups like Greenpeace, Sierra Club and ForestEthics reveal anything, it’s that this is just the beginning. Going forward, we can expect things to heat up a whole lot more.
“The corporate world isn’t moving fast enough on major environmental issues,” says ForestEthics senior campaigner Jim Ace. “In some cases, they are regressing backwards, reverting to strategies and tactics that may have been relevant in the 1950’s.”
To Ace’s point, it’s a changed world, one that far too many companies find themselves ill prepared to navigate. When faced with criticism, brand leaders often fail to properly engage with detractors, instead choosing to ignore accusations and hope problems go away on their own. “We want these brands to know that they are at risk and might be next,” Ace says.
For instance, at this week’s Sustainable Brands conference in San Diego, thousands of socially minded business leaders got a special taste of what the new activist climate can mean. Set against a backdrop of a pristine marina and recycled ATM machines, ForestEthics waged a 3-day campaign against 3M, a major sponsor at the event.
Crowds gathered as boats wielding protest signs circled the Marina, while postcards, banners and a dedicated radio station informed conference attendees of the company’s alleged environmental missteps.
“We’ve been trying to engage 3M around its so-called responsible forestry practices for nearly decade,” Ace says. “They’ve refused to deal with us or do the right thing, so they’ve put us in a position where we needed to drag the brand out and make an example of it.”
Ace links 3M products like Scotch Tape and Post-it-Notes to forest destruction around the world, accusing the company of taking a less stringent approach to sustainable sourcing and certification than competitors.
During her on-stage talk at Sustainable Brands, 3M’s Vice President of Sustainability Gayle Schueller made no mention of the protesters outside, instead honing in on the company’s efforts to develop new products around the needs of Indian housewives.
“At 3M, we tailor innovation around developing economies, uplifting lives while preserving (local) heritage,” she said.
It was indeed a missed opportunity – not only for 3M to level set, but garner support by inviting people to join a relevant and worthwhile conversation.
There is no doubt that sustainable innovation is hard – particularly resource intensive industries. A key success factor for companies like 3M is deeper and more visible engagement around challenging issues. Now more than ever, it’s essential that more brands develop a playbook for that.
Here, in my view, is where they can start: