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Australia's first bank Westpac has been ranked number one in ‘Global 100 Most Sustainable Corporations in the World’ at the World Economic Forum in Davos, Switzerland. 

The Global 100 is a data-driven corporate sustainability assessment published annually since 2005 by Corporate Knights, an independent media and investment research company based in Toronto, Canada.

Speaking from Davos, Westpac chief executive, Gail Kelly, said: “It is wonderful recognition of the work of our people to help create a sustainable future and deliver long term value for our customers, employees, shareholders and the community.”

As part of its 2017 sustainability strategy, Westpac says it is committed to finding ways to create a better future for the people who bank with, work with or invest in the Group, or are part of its wider community.

Performance achievements in 2013 include its employee engagement level which rose to its highest level of 87%, above the high global high performing norm of 85%, while 42% of Westpac’s leadership roles are now held by women. Westpac Group’s diversity and flexibility survey also indicated that 62% of respondents used some form of flexible work arrangement, up from 18% in 2010.

See here for a full list of Westpac's sustainability achievements.

The world’s largest privately owned drinks company, Bacardi Limited, has announced plans to strengthen and expand its responsible drinking and responsible marketing efforts globally.

The initiatives are designed to combat underage drinking, educate consumers on responsible consumption, garner increased support from retailers to promote responsible drinking and reduce the rate of drinking and driving-related accidents.

“These are very real CR commitments and ongoing initiatives,” commented Eric Kraus, senior vp, chief communications and corporate affairs officer. “We see these actions as not only an essential matter of corporate responsibility, but also an important area of collaboration with our consumers, key customers and suppliers, as well as with employees and opinion leaders.”

Bacardi has also undertaken a long-term responsible sourcing plan to purchase the sugarcane-derived products it uses only from sources that are certified as sustainable. These sources have to comply with stringent standards for fair labour, environmental protection and renewable energy, from farmer to end-user. Bacardi has been an industry leader in this effort as a founding member of Bonsucro, a not-for-profit initiative dedicated to reducing the environmental and social impacts of sugarcane production.

The company’s long-term target is to source 100% of its sugarcane-derived products from sustainable sources by 2022. Bacardi is currently on track to achieve its target to source more than 40% of sugarcane-derived products from sustainable sources by 2017.

The commitments follow Barcardi’s publication of its annual report on corporate responsibility entitled, Our Spirit is Clear.
 

The West Virginia chemical spill has already faded out of the national spotlight but local communities are still feeling the aftereffects. The spill contaminated the water supply of a private water company serving a nine-county area starting on January 9, making the water unfit for any purpose but flushing toilets. Three hundred thousand people have been affected along with businesses, hospitals, schools, and other institutions.

State and water company officials began declaring the water safe to use and drink in some areas last week, but shortly afterward they had to issue an advisory for pregnant women. Since then, the "safe" designation has expanded to cover all of the affected areas, but the West Virginia Gazette reports that hospital admissions for chemical-related symptoms have skyrocketed, indicating that the declaration was premature.

That's just one of the latest developments as West Virginia continues to deal with the aftermath of a major public health crisis, including a new report that the initial chemical identified in the spill may not have been the only one.

A textbook example of what not to do

The company responsible for the West Virginia chemical spill was Freedom Industries, which has since declared bankruptcy after, apparently, the principals took steps to protect themselves. The company's storage facility sits right above the banks of the river, clearly posing a potential hazard.

The chemical that spilled was Crude MCHM, a foaming agent used to wash coal.

Crude MCHM is not specifically covered by federal regulations, as described in a detailed article in the West Virginia Gazette. However, given the location of the Freedom Industries storage tanks above the river, close upstream to a major water supply intake, common sense clearly indicates that state agencies, at least, should have taken the lead to establish a hazard mitigation strategy, in the absence of any responsible measures taken by Freedom Industry.

Adding a new wrinkle to an already devastating situation, last night the West Virginia Gazette reported that another chemical product called "PPH" was included in the tank that leaked, but officials were not made aware of that fact until earlier yesterday, January 21 -- more than ten days after the spill occurred.

Chemical spills and "public culture"

As reported in the Gazette by Ken Ward, Jr. (@Kenwardjr), state officials never worked with Freedom Industries and American Water to develop an emergency response plan, to say nothing of a hazard prevention/mitigation plan. That elicited this comment from former U.S. Chemical Board member Gerald Poje:

Much remains to be investigated in the catastrophe -- managerial competency, local, state and federal competency, regulatory sufficiency and ultimately the public culture that protects or weakens the security of essential infrastructure.

While that phrase "public culture" sinks in, consider that at the height of the crisis, on January 14, Republican Speaker of the House John Boehner spoke with reporter Russell Bermann of The Hill and reaffirmed his party's longstanding commitment to rolling back environmental regulations:

I am entirely confident that there are ample regulations already on the books to protect the health and safety of the American people...What we try to do is look at those regulations that we think are cumbersome, are over-the-top and are costing our economy jobs. That’s what our focus continues to be.

In terms of public culture, two things are going on here. The first, apparently, is ignorance at the highest levels of public policy making. Assuming our sources are correct, Speaker Boehner -- who in this position inhabits third place in the succession line to be President of the United States -- is apparently unaware that there are no federal regulations dealing specifically with Crude MCHM, so "ample" is at the very least woefully understating the case.

Second, and more to the point, Speaker Boehner and his party have engaged in a generations-long effort to frame environmental protection as a jobs-versus-environment zero sum game, in which regulations are a "cumbersome" burden preventing job growth.

In light of this disaster, clearly the hundreds of West Virginia business owners affected by the spill, along with their thousands of employees, will have something to say about whether or not regulation of the local chemical industry has been cumbersome, and to whom.

[Image (cropped): Two of the storage tanks at Freedom Industries along the Elk River, courtesy of WVUMC (West Virginia Conference of the United Methodist Church)]

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Today, multinational giant Dow Chemical officially launched a new agriculture support program in Russia as part of its commitment to mitigate the environmental impacts of the 2014 Sochi Olympic Games. DowSeeds, a unit of their agricultural division,  is working with five large-scale farms across Russia to introduce their Nexera canola seed product alongside farm training programs to “optimize water and fertilizer use,” while also increasing yields. The pilot program, part of Dow’s “Sustainable Future” greenhouse gas (GHG) reduction program for the Sochi Olympics, focuses on canola farming and purports environmental, economic — and even health benefits. If you are wondering how the agriculture program ties in with the GHG mitigation program, read on.

Dr. Nicoletta Piccolrovazzi, Technology and Sustainability Director, and Sergey Belyavskiy, Business Development Leader of Dow Olympic Operations detailed the agriculture program exclusively to TriplePundit.

This agricultural pilot is being introduced as part of Dow’s Sustainable Future program in its role as the “official carbon partner” of the Sochi Games. Through a variety of technology projects in the fields of industry, infrastructure and agriculture, Dow’s Olympic team aims to offset the  estimated 360,000 metric tons (MT) of GHG emissions that will be produced by Olympic-related activities. Part of that mitigation will come through the agriculture projects. Project implementation will run from 2013-2014 and Dow expects it will take ten years to reach their 360,000 MT reduction target — 100,000 MT of which should come from agricultural program activities. Dow Corporation's Sustainability Goals for 2015 involve tackling “world challenges,” including global health.

Under the two-year program, five large Russian farms — Shatsk Zolotaya Niva LLC (AgroTerra), KFH Baigora, VAPC LLC, SKPSSK Izmalkovskiy and ADVAG – Baltic Farms LLC — will have access to the expertise of Canadian precision agronomy firm Farmer’s Edge to help optimize the yields of Nexera canola seeds, which grow best under “low-till” conditions, according to the company.

“Dow’s goal with the program – comprehensive training and the introduction of Nexera seeds – is to have the farms reducing the amount of tillage they perform on the land,” Dow Olympic program officials told TriplePundit via email. By reducing tillage, farms  help retain more of the GHG that is naturally sequestered in soil. Globally, agriculture is responsible for 10-12 percent of man-made greenhouse gas emissions (mainly nitrogen and methane), according to a 2007 IPCC report.

Nextera also has some health benefits. Dow currently produces four varieties of the Nexera hybrid seed, which it markets as a high-yield canola seed that produces oil low in saturated fat. The chemicals giant markets Nexera-derived oil as “Omega-9” oil to large-scale food processing plants and fast food chains as a “healthy alternative” to other vegetable oils. Dr. Piccolrovazzi says the company is aiming to produce the “healthiest oil available” as part of their Olympic program in Russia. Omega-9 oils contain no trans fats and have a “high degree” of unsaturated fats, enabling food producers to designate items as “trans-fat-free” and “low in saturated fats” on menus and nutrition labels. However, there is no consensus among medical researchers that processed and fried food - albeit, fried in “healthier” oil - necessarily has a positive effect on health. These products might be better classified as “less bad” for you.

The other selling point of Nexera seeds - higher yields - also seems ripe for further study. Canadian trials of Nexera seeds in 2012 showed varied results for yield improvements, compared to a Monsanto canola seed varietal marketed under the brand name De Kalb. Changes in yield using the Nexera seed ranged from an increase of $176/acre to a decrease of $157/acre, according to data samples on a Nexera website. Dow has been selling sunflower, corn and Nexera canola seeds in Russia for the past five years.

Dr. Piccolrovazzi and Mr. Belyavskiy were eager to make clear that Nexera is not a genetically-modified product. Rather, the seeds were devised using plant-breeding techniques to bring out certain DNA and growth characteristics. There are “no environmental risks” in introducing the Nexera seeds to new fields in Russian, they said.

Dow’s partnership with the Olympic Committee in Sochi and their Russian agricultural pilots, in particular, could serve as a model for future Olympic games. They are in fact already establishing teams for the 2016 games in Rio de Janeiro to lay down similar programs.

As for progress in Russia, the Dow team is hoping to cement sustainability-minded business practices on a higher level. “We’re trying to change the thinking of our partners,” Mr. Belyavskiy said, to build long-term habit changes within those businesses. Time will tell if the spotlight of the Winter Games will impact Russia for years to come. “We hope the excitement of the Olympics will help carry the program,” said Dr. Piccolrovazzi.

[Image Credit: leechantmcarthur, Flickr]

Joule Assets' founders Mike Gordon and Dennis Quinn have been helping small- and medium-sized enterprises (SMEs) save energy and boost energy efficiency for years. At the same time, they've been contributing to a wave of disruptive, fundamental change impacting U.S. power markets and industry – helping establish demand response as a viable means of better managing the flow of electricity across the grid, and the production and distribution of electrical power from variable renewable energy resources, such as wind farms and solar power plants.

Now, Gordon and Quinn are taking their expertise public, for the first time offering accredited investors the opportunity to earn above-market returns by helping SMEs realize energy savings – otherwise known as “negawatts” – and take advantage of changing supply-and-demand conditions in electricity markets by shedding load during times of high and peak demand – so-called demand response.

The first investment fund of its kind, Joule Assets' planned $300 million-$400 million Energy Reduction Assets (ERA) Fund will monetize and distribute the energy savings and demand response cash flows Gordon, Quinn and team originate and finance between fund investors, technology providers and SME consumers.

Investing in negawatts and demand response

Estimated at some $900 billion, the energy conservation, energy efficiency and demand response industry has by and large been limited to industry insiders and private and public sector organizations looking to monetize energy savings and cash flows from demand response. For the most part, they are able to do so in-house. However, that's not typically the case with SMEs, who rely on entrepreneurial intermediaries, such as Gordon and Quinn, with the financial and operational expertise to design and carry out energy conservation and energy efficiency projects.

Such energy reduction projects can encompass one specific aspect of an SME's energy use, or the entire range of their operations. They can be realized at a widely varying lengths of time: from six minutes to 6 hours. The energy savings and demand response potential depends on the consumer, Joule Assets' co-founder Mike Gordon said in a 3p interview.

“For instance, there might be 1,000 retail stores that within six minutes could raise the temp by 2 degrees and checkerboard their lighting, and there goes 40 megawatts (MW) off the grid. There were many companies in Texas where we could take an assembly line offline in 6 minutes.

“Then there are opportunities like the had roughly 150 square feet of commercial facilities that could turn off lighting, shut down an elevator, lower the temperature a couple or few degrees, that would take a couple of hours.”

SMEs, smart energy technology and investors: A beautiful marriage

For the U.S. renewable energy markets – solar energy in particular – 2014 was a year that saw financial innovation really begin catching up with advances in technology and manufacturing that have driven well above-average growth. Having enabled individual investors to help finance and earn attractive returns from residential, commercial and municipal photovoltaic (PV) installations, Oakland's Mosaic is now looking to expand overseas.

While third-party residential solar energy leases continued growing by leaps and bounds, SolarCity also brought to market the first securities backed by residential, commercial and municipal solar photovoltaic (PV) leases. These asset-backed securities (ABS) monetize the income streams from the leases by creating securities via which most of their cash flows are passed along to investors.

Gordon and Quinn see a similar opportunity by giving investors the opportunity to earn above-average returns by doing what they have been doing for years: creating a stream of cash flows from negawatts that result from their designing energy reduction agreements and matching energy consumers in the SME space with innovative technology providers.

The latter, Gordon explained in a 3p interview, include companies offering the latest in energy efficient heating, ventilation, cooling and air conditioning (HVAC) systems and technology, smart thermostats – such as Nest, which Google just acquired for over $3 billion – and those providing intelligent lighting and LED systems.

Having raised $100 million of an intended $300 million-$400 million, Joule Assets' ERA Fund managers are initially working on projects such as air conditioning (A/C) optimization scans, heating and cooling systems and heating unit optimization scans. They're also working with steam-powered systems to make use of energy from wasted heat. As Gordon explained,

“It's a tremendous wasted resource, in some units, facilities are overheated in some units, in others they're underheated. It could be an industrial facility, it could be an office building. We're doing work with smart thermostat providers and with whole systems integrators, not the actual manufacturers.”

When it comes to energy use, many U.S. businesses and other organizations have come to take cheap, plentiful energy supply for granted. Attitudes have changed significantly, for environmental and social, as well as economic reasons, over the past decade, however.

Triple Bottom Line investing in the U.S. power markets

There's a dynamism in, and disruption to today's power markets and industry that has been lacking for decades, fueled by the rising financial, environmental and social costs of fossil fuel use and the rapid development and adoption of digital networking and renewable energy technologies. On top of this, investors are having trouble finding attractive returns in the prevailing low interest rate macroeconomic environment.

Gordon and Quinn see this confluence of factors as a win-win-win situation for energy consumers, technology providers and investors alike.

“It's an exciting time [to be in this space]. You have end users, communities and technology providers in need of financing and investors. It's a beautiful marriage,” Gordon elaborated. “With renewable energy generation, you have less predictable power generation, but with new control systems you have more control over power flows. From that perspective, a less predictable power supply has value.

“Then you've got municipalization, where individual communities are setting up their own utilities. Now, they can provide enhanced value to consumers. [Electricity generation] is moving much closer to the local level, and that's an exciting opportunity for scaling up all kinds of demand response and enhanced power management and control."

Less well known and less accessible, investing in Joule Assets' Triple Bottom Line energy conservation/demand response concept should be more lucrative in terms of returns than more traditional investment markets.

“Negawatts can be deployed in markets where you can get paid for temporary or permanent demand reductions, for reductions in kilowatt-hours or even BTUs (British Thermal Units). And you're getting getting paid for the environmental benefits, which include greenhouse gas emissions reductions and reductions in all the environmental risks and degradation associated with large-scale fossil fuel exploration, development, refining, distribution and combustion.

This market is broad, deep and growing fast, and “it's less well known and takes some operational expertise to access these more complex markets. A traditional investment vehicle hasn't been able to invest in these projects,” Gordon told 3p.

In previous ventures, Gordon and Quinn were paying energy consumers $100 million per year for roughly 100 megawatts (MW) of controllable energy consumption, “meaning on the flip of a button we could turn on energy savings in anywhere from 6 minutes to 2 hours notice. We've done this, we have the operational expertise in this area. We have the technology to monetize these cash flows,” Gordon stated. This includes software that automates the energy reduction process.

Energy conservation and energy efficiency technology developers need greater access to capital, while energy consumers have never had adequate financing for energy savings or to install smart energy technologies before, according to Gordon. Looking for secure, attractive investments, investors are increasingly looking to put their capital to work in projects that yield environmental and social, as well as financial, returns.

Gordon and Quinn's ERA Fund may pave the way and open up opportunities for other energy efficiency, conservation, demand response and negawatt investment funds. That would be a win-win-win situation.

GreenBiz has just come out with its seventh annual State of Green Business Report, which pulls no punches in terms of bad news. The raw numbers are nothing to shout about, some important metrics are flat or even declining. However, GreenBiz sees plenty of cause for optimism in several significant areas that are not quantified.

In particular, with the recent West Virginia chemical spill still fresh in our minds, we'd like to take a closer look at over-arching trend expressed by GreenBiz:

...a growing recognition among the public that “sustainability” isn’t just about preserving icebergs, rainforests and charismatic megafauna. It is also about public health, community well-being, food security, affordable housing and alleviating poverty.

Top Sustainable Business Trends

We highly recommend reading the full report, which is packed with relevant details, so here is just a quick tease.

1. Collaboration becomes an accelerator

Inter-company collaboration, assisted by non-profit conservation groups and other stakeholders, is becoming a greater force for change. Just a few recent examples cited by GreenBiz are: roundtables for sustainable beef, responsible soy, sustainable palm oil, sustainable forests, and sustainable manufacturing. To that we'd add campaigns like the Ceres BICEP initiative, which has united hundreds of diverse companies in a call for legislative action on climate change.

2. Chemical transparency creates a window of opportunity

Unfortunately, this is a lesson that Freedom Industries (the company responsible for the West Virginia chemical spill) ignored, but according to GreenBiz the increased pressure on retailers by concerned consumers is one factor pushing "regulation by marketplace." One result is a greater attentiveness to the kinds of products carried by retailers, and Walmart and Target are cited as standout examples of this trend. This can also be a self-reinforcing loop when companies actively court sustainability-minded customers with other green initiatives, such as drop-off recycling locations and EV charging stations.

3. Water rises as a risk factor

Water scarcity issues are forcing companies to think more strategically about water consumption and conservation, leading to change and innovation. One example pointed out by GreenBiz is Israel, with so many startups that GreenBiz dubs the country a "kind of Silicon Valley for water." That's in addition to leading  global companies, particularly in the beverage industry where Pepsi and AB InBev are just two among many examples.

More trends for sustainable business

That's just a taste of what Green Biz has to offer. Another trend that caught its eye is shadow pricing, which in this context refers to the estimated price of goods and services that nature provides to business. The integration of social issues into sustainability metrics is another important trend, with Levi-Strauss being a major force in that area. Food sustainability, employee engagement, energy storage (a critical trend for progress on renewable energy), urban innovation, and something we'll call "positivity" for short round out the top sustainable business trend. To expand on the positivity trend, think of a building that incorporates solar cells, so that it generates more clean energy than it consumes. Or, think of a beverage company that engages in water resource projects, so it adds back more to the global water supply than it extracts for its products. When you think about it, we are just at the beginning of a transformative era made possible by new technologies and new strategies that have only just begun to take effect, so we're with GreenBiz. The raw numbers may be disappointing this year, but they only tell part of a more hopeful picture. [Image: by Donkey Hotey via flickr.com] Follow me on Twitter and Google+.

It’s being touted as one of the top environmental crowdfunding successes of all time. Re-volv Solar, a San Francisco-based organization has come up with a way to fund solar projects whose successful completion becomes the seed for further projects. It also helps reduce the amount CO2 going into the atmosphere. And it’s all done through crowdfunding.

“What if we pool our money together in a fund that continually invests and reinvests in solar energy in our community?” explains Re-volv Solar’s founder and Executive Director Andreas Karelas on its crowdfunding video. “What if your $20 that you invest in solar energy today could become $100 in just a few years?”

That concept has received support and shout-outs from a host of environmental organizations, including the Sierra Club, American Council on Renewable Energy, Local Clean Energy Alliance, California Interfaith Power and Light, Audubon’s Toyota Together Green, the Wigg Party and 350.org’s founder Bill McKibben.

With the first solar project, a 10 kW installation for the Berkeley-based Shawl-Anderson Dance Studio now funded and installed, the crowdfunding concept has become a proven concept and funding has gained even more steam. A 22 kW project launched on Indiegogo on Dec. 3, 2013 that will provide 72 percent of the electricity for an interfaith synagogue in Oakland has received funding from more than 200 individuals in six countries, putting it in the top 10 most popular crowd sourcing projects of its kind.

Going solar can represent a hefty challenge for a small business. Plunking down $35-$55,000 may seem reasonable if it means that you’re going to be able to cut both your power bill and the carbon emissions for future generations. But for a dance studio or a religious center or any small community-oriented business for that matter, the cost can still be a formidable challenge.

Re-volv says it aims to change that. Using its funding model, Re-volv says each successful project will help pay for the funding for 3 to 5 more projects. “A community center leases solar equipment from RE-volv for 20 years, during which time the cost of the solar installation, plus a small fee, is recouped by RE-volv.  RE-volv continually reinvests this money back into the Solar Seed Fund to serve more communities with solar energy.”

The current project has earned $44,000 of the targeted $55,000 it needs to complete the solar panels on Kehilla Community Synagogue in Oakland. Re-volv has until the  end of tomorrow (Jan. 23 11:59 pm) to raise the remaining $11,000.

As is standard with crowdfunding projects, there are a variety of funding levels and perks that donors can choose from, ranging from $10 that earns the supporter a virtual “visit” in visit to the completed installation, to $10,000 and a personal visit from Karelas to speak to a designated group or organization about the benefits of solar energy.

“We can do something right now as a community that will make a real difference,” says Karelas. “If we come together, we can generate our own power right here on our rooftops, building an investment for a healthy and prosperous future.”

We are witnessing a leadership battle for ownership of sustainability transparency and it's not a good thing. Instead of playing to each organization's strengths, we are risking moving the needle back to only one strength: financial returns. The battle is being played out on the respective turfs of the IIRC, SASB and the GRI, where IIRC and SASB are focused on what investors want to know in order to make more money and GRI is focused on what companies are doing to the world that makes it more or less sustainable. If I were a publicly listed corporation, I would probably find myself rather confused, amused or bemused.

Creating a harmonized corporate transparency pathway which enables consistent and non-overlapping disclosure frameworks does not need to be a lost cause, although it looks that way at present. Even the definition of a core concept such as materiality is not consistent across these three leading organizations, as explained eloquently by Dunstan Alliston-Hope and Guy Morgan of BSR in a great article to which I have referred in the past.As I was considering this fascinating state of affairs, I noticed that a few other accomplished experts have also discussed what Dwayne Baraka calls the disconnect in ESG reporting.

In an article which outlines the strengths and weaknesses of the IIRC, SASB and GRI frameworks, Baraka concludes that, "each of the approaches will add something to various types of investors, and dialogue might increase, but companies and investors need to be involved if CEOs and responsible investors are to have a meeting of minds on the state of ESG reporting."

Another article, by Cornis van der Lugt, an independent consultant and researcher with a sharp mind, was published back in May 2013, just after GRI's G4 guidelines were revealed, entitled "Time to align forces." This was his first message of caution: "Used in combination, IR1 [Integrated Reporting Framework version 1] and G4 can have significant impact on measurement and disclosure by companies world-wide. Yet used non-aligned, and perceived to be competing, years of work on non-financial reporting and corporate sustainability may be lost."  van der Lugt goes on to present a fabulous evaluation of the IIRC and G4 frameworks and even offers his updated comparative analysis of both freely to all those who are interested.

However, even before the pronouncements on the state of affairs post-G4, the chronology of this leadership battle for corporate sustainability transparency was already apparent. These are my observations from afar and some, possibly irreverent and highly subjective assumptions about what's been going on.

Round One: May 2010: GRI goals in Amsterdam

Integrated Reporting is in the air. The May 2010 GRI conference ended up with CEO Ernst Ligteringen making a bold if not rather surprising declaration to 1,200 participants from over 70 countries. Two goals for the GRI.

(1) By 2015, all large and medium-size companies in OECD countries and large emerging economies should be required to report on their Environmental, Social and Governance (ESG) performance and, if they do not do so, to explain why.

(2) By 2020, there should be a generally accepted and applied international standard which will effectively integrate financial and ESG reporting by all organizations.

This second element, the surprising one, was clearly an expectation that GRI would become an integral part of the fabric of anything the IIRC would eventually come up with. It was also a clear expectation that it was going to take quite some time - ten years - to develop an international standard for integrated reporting.

This was the twilight period. Everyone was optimistic that we could have it all. Eventually.

Round Two : August 2010 : Formation of IIRC
There was a big buzz of excitement and anticipation when the IIRC was formed in 2010, called at the time the International Integrated Reporting Committee, with a lot of support from Prince Charles, who was moving full steam ahead with the Accounting for Sustainability Project at the time. IIRC (renamed in 2012 to Council rather than Committee) was chaired by Professor Mervyn E. King, the then Chair of GRI. Was this a conflict of interest? Apparently not at the time, when, to all onlookers, GRI and IIRC were euphorically optimistic that the solution to all the world's ills had been found in integrated reporting of the kind that would be jointly owned and nurtured by GRI with the IIRC filling in the gaps and making the connection to investors.

Soon the landscape would look rather different. However, three GRI leaders were on the original steering committee and working group of IIRC, and the shared objective to create a globally accepted standard for accounting for sustainability was the glue that stuck everyone together. (Apart from money of course. Let's not forget that the original IIRC governance bodies were composed of 53 members of whom 31 (58 percent) represented financial services institutions or associations or the financial function of corporations in one way or another. Contrast this with the governance bodies of the Global Reporting Initiative which has always been a collection of elected representatives from corporations, NGOs, labor institutions, academic institutions, consulting firms and individual experts, representing all corners of the sustainability spectrum including human rights, environmental protection, labor standards, economic development and more. IIRC and SASB are squarely focusing on an investor audience and therefore target publicly traded companies, while GRI is focusing on any and all audiences, and therefore targets all organizations, including government agencies, SMEs, non-profits and trade associations who are not required to deliver Annual Reports, integrated or otherwise).

The creation of IIRC was not entirely out of the blue. It followed the publication of the campaign book, One Report, by Eccles and Krusz, a heroic, if not a little rose-colored, effort to extol the benefits of integrated reporting, and the announcement of the South African Stock Exchange in June 2010, that listed companies would be required to deliver an integrated report if they wanted to stay listed, a coup-de-grace for non-reporting companies, masterminded by Mervyn King, the leading light in creating a pre-global South African Integrated Reporting Committee. The fact that King would ultimately find his home at the helm of the IIRC was probably not yet entirely predictable as, at this point, all seemed hunky-dory on the reporting horizon.

In the GRI 2010-2011 Year in Review, the optimistic intertwining of IIRC and GRI is evident:

"GRI’s Reporting Guidelines offer comprehensive and trusted guidance for sustainability reporting, and are an excellent tool for progressing towards integrated reports. GRI also aims for its Guidelines to be a provider of robust content for the forthcoming integrated reporting framework. GRI is present in the IIRC’s Secretariat and Committee, and in its content Working Groups and task forces."

Round Three: October 2011 : King defects

"Professor Mervyn King has been an outstanding Chairman for the Global Reporting Initiative, pushing the sustainability reporting agenda forwards in pursuit of a sustainable global economy. GRI congratulates Professor King on his new appointment and as an active member of the International Integrated Reporting Committee the GRI is looking forward to continue to work closely with Professor King in the important endeavor of promoting the development of Integrated Reporting."

Nonetheless, this divorce, amicable though it may be, sends a message to the aspiring Integrated Reporters of the world: Investors are King. (No pun intended). The Chief Exec of GRI, Ernst Ligteringen, however, remains in the loop as a Board Member of IIRC with its reorganization in late 2011.During the period up to the publication of the Integrated Reporting Framework in December 2013, IIRC is generating quick wins and momentum for integrated reporting. It gets the concept on the agenda at Rio, and a declaration (the famous Paragraph 47) which talks of "integrating" sustainability information in to the reporting cycle," publishes a draft integrated reporting framework for public comment and a consultation draft and establishes alliances and memorandums and a pilot program and more. Driving forward relentlessly, IIRC pretty well overlooks, it seems, a similar major reporting event which is taking place at the same time. The new-improved GRI Reporting Framework.

Round Four:  Mid 2012 Enter SASB
In October 2012, the newly-formed full-of-promise Sustainability Accounting Standards Board put out a press release claiming that "SASB will be the U.S. voice for material non-financial issues and how to recognize and account for them as part of corporate reporting." With bold plans to create a Materiality Map and a series of sector-based standards that identify material non-financial issues that should be included in mandatory reporting by publicly traded companies, SASB starts to shake up the mix. Notably at this point, SASB maintains a distance both from GRI and from IIRC, carving a place for itself on the reporting landscape which will rather disturb the status quo and leave corporations even more challenged and possibly, amused, bemused or confused.

Round Five: February 2013 IIRC and GRI agree to agree
Just as both GRI and IIRC are developing their respective frameworks, an MOU is signed between the two organizations, declaring that both parties will proactively engage with each other by sharing information and striving for "complementarity" in their respective frameworks. Shame they didn't agree to agree on a definition of materiality. That would have been an MOU with teeth. Instead, GRI made some more tangible resource commitments to IIRC. IIRC made rather fewer to GRI.

Round Six : May 2013 GRI good news
May 2013 was alive with the sound of eager applause at the GRI conference in Amsterdam, hailing the new G4 as the superhero way forward for sustainability reporting, with a materiality focus, and a shorter, sharper, cleaner, quicker way to relevant corporate transparency. Although ditching comparability, the process-oriented G4 framework was seen by (almost) all as a massive improvement on previous GRI reporting framework iterations and would substantively change sustainability reporting for the better.

Oops. Just one thing missing. Despite the stated objective of creating a sort of plug-and-play sustainability element which would fit snugly into integrated reports, by "offering guidance on how to link the sustainability reporting process to the preparation of an Integrated Report aligned with the guidance to be developed by the International Integrated Reporting Council (IIRC)," the G4 framework excluded all serious mention and reference to integrated reporting and all guidance relating to the process linkage. Why? Well, the IIRC was powering up full steam ahead with its own framework, and apparently didn't have the time to stop to think about how G4 could work to its advantage. Or it thought that G4 wouldn't work to its advantage. The official line was that the timelines for these two developments were different.

Round Six Part Two : G4 Research on Integrated Reporting
In 2013, GRI also demonstrated an interest in the progress of integrated reporting and led a piece of research which examined the sustainability perspectives of existing integrated reporters and other experts. One of the key conclusions placed G4 squarely into the round integrated reporting peg, describing GRI as "a compass of sustainability," saying that, "Some of the [reporters] want to see GRI hone key performance indicators specifically from the perspective of integrated reporters. Others appreciate how GRI ‘opens their eyes’ to the breadth of potential sustainability concerns for their business, and find the GRI reporting process a good reference point as they construct an integrated report. As one pioneer put it: ‘GRI guidelines helped us right from the start to answer the question: what does it take to be a sustainable company?’"

Round Seven:  December 2013 IIRC Framework Publication
Hot on the heels of the publication of the G4 Framework came the IIRC Framework, in December 2013, announcing that the framework marks "an important milestone in the market-led evolution of corporate reporting." The definition of the Integrated Report, in the framework is:

"a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term."

And we are left in no doubt about who the Integrated Report is designed to communicate this to. "The primary purpose of an integrated report is to explain to providers of financial capital how an organization creates value over time. It therefore contains relevant information, both financial and other."   Conspicuous by its omission in the < IR > Framework is any mention whatsoever of GRI. The word "sustainability" appears only twice. There can be no mistake that Integrated Reporting is not about sustainability impacts. It's about helping investors make financial decisions. If it happens that a sustainability impact is so unquestioningly obviously financially material, then it will merit inclusion in the integrated thinking and writing of the Integrated Report. Regrettably, or otherwise, that may exclude most of what is included in sustainability reporting.The < IR > framework ignores GRI, MOU or otherwise. GRI believes that sustainability reporting is a prerequisite for integrated reporting but in fact, it's not. Because nowhere in GRI - or in G4 - is the link explicitly made between sustainability issues and business profitability or shareholder return. And nowhere in < IR > is the link explicitly made between sustainability impacts and financial outcomes.

Perhaps it's time we stopped thinking of Integrated Reporting as an evolution of both Annual and Sustainability Reporting and accept that reality is different. Integrated Reporting plays an important role in filling in the gap between top line and bottom line and ensuring that the value-creation radar screen is not too narrow. Sustainability Reporting plays an important role in ensuring companies account for their impacts on all stakeholders. These are two purposes, two roles and despite the existence of a compelling connection between the two, no organization has successfully delivered a framework which encompasses both in a substantive way.

Round Eight: January 2014 IIRC and SASB sign an MOU
And still, the MOU game continues. This month saw the signing of an MOU between the IIRC and SASB "to more closely collaborate to advance the evolution of corporate disclosure and communicate value to investors...... Among other measures, SASB and the IIRC agree to strive for complementarity and compatibility in the ongoing development of their respective frameworks, guidelines and standards, and take proactive measures to share the work of the other organization." There's that complementarity thing again. If only we could save the world by signing MOUs and preaching complementarity, we would all be able to sit back and take a long rest by now.

Round Nine: Here we are. All Lose So far, in eight rounds, no single framework has emerged a clear winner. Sustainability Reporting is firmly entrenched and G4 is looking promising with uptake starting to emerge. The token number, growing though it may be, of integrated reports, some of which are evidence of integrated thinking and some of which are evidence of little thinking, is unlikely to increase substantially unless we see that investors are not only demanding, but using, these wonderful new documents. SASB is a great concept and has made fabulous progress in practice, but we have yet to see the detailed SASB standards being widely applied in any sector. In short, the fragmentation and apparently competitive battle for sustainability transparency leadership has not yet favored any of the protagonists in an outright way, which might suggest that time and energies might be more productively used in working together rather than working apart.Perhaps it is time that the leadership of the IIRC, GRI, SASB and even the UNGC - there's room in the corner - meet together at a Complementarity Retreat (no MOU necessary) and emerge with a set of agreed action items:

1. Recognize that G4, < IR > Framework and SASB Standards CAN each deliver unique and equally valuable elements of corporate transparency and accountability.


2. Harmonize the definition of sustainable business materiality and other key definitions across all frameworks.


3. Agree that < IR > is the standard for Integrated Reporting and that, as such, it must include a reporting against a set of common core sustainability material issues relevant to all businesses with linkage to business outcomes and financials, with harmonized performance indicators and methodologies to measure these.


4. Agree that G4 is the standard for sustainability reporting and that the material issues identified through the sustainability process must reference business outcomes, irrespective of where they occur in the value chain. Companies producing only one (integrated) report would be advised to include core material issues as identified in (3) above, and a set of sustainability material issues as required by G4.


5. Agree that SASB have got the sector materiality process nailed, and encourage the adoption, with perhaps some adaptation for non-U.S. non-publicly traded entities, of SASB standards in integrated and sustainability reporting without duplicating all that's being done in separate processes.


6. Agree to do things once and not three times, where reasonably possible.


7. Agree to be inclusive and not competitive, while retaining focus, where reasonably possible.


8. Have a celebratory ice cream, and get to work.

[Image credit: Biepmiep, Flickr]

A version of this piece was originally published on the CSR Reporting Blog.

Elaine Cohen is a CSR Consultant and Sustainability Reporter, founder/manager of Beyond Business Ltd and author of the CSR Reporting Blog

The conventional wisdom these days is that solar is a very hot play indeed. A list of cleantech stock picks for 2014 has First Solar (a solar manufacturer) and SolarCity (a solar installer) at Nos. 1 and 2, respectively, and further down the list are a solar holding company, Renewable Energy Trade Board, and a solar equipment company, Meyer Burger.

There are many reports that the solar market is heading for a “second gold rush” this year; there’s little to dispute the fact that solar is definitely in, especially for investors.

It could be that the gold rush is already on.

Mercom Capital Group, a clean energy communications and consulting firm, notes in an annual report released earlier this month that 2013 was a very strong year for funding and M&A in the solar sector.

Total corporate funding last year was up 25 percent to $10 billion, according to the report. But the solar funding tide was not universally high, as global venture capital (VC) investments actually declined 40 percent to $600 million in 97 deals in 2013 compared to $992 million in 106 deals in 2012. And the venture capital funding trend for solar during the fourth quarter continued downward from a dollars viewpoint to $87 million (24 deals) from $197 million (28 deals) during the third quarter.

Mercom says that since mid-2012 the “new normal” for VC funding has been smaller funding quarters and smaller deal sizes. “While venture funding levels were down, overall fundraising was up and public market financings were really strong in 2013,” says Raj Prabhu, Mercom’s CEO. “Higher valuations among public solar companies have opened up the capital markets again as an avenue for fundraising at attractive terms. IPOs are back.”

The Mercom report says solar downstream companies saw the largest amount of VC funding in 2013 with $262 million in 34 deals, accounting for 45 percent of venture funding. Investments in commercial solar projects (CSP) reached $109 million in 12 deals and PV companies were close behind with $104 million in 17 deals. Thin film saw a 77 percent drop in funding from 2012, with $72 million in 2013 compared to $314 million a year earlier.

More from the report:

The top five venture capital-funded companies in 2013 were Chinese solar project developer Heifei Golden Sun Technology, which raised $69 million; followed by Clean Power Finance, a provider of third party financing for distributed PV projects, which raised $62 million; Solexel, a developer of high-efficiency crystalline silicon solar modules, brought in $55 million; Sungevity, a provider of residential solar installations, raised $43 million; and OneRoof Energy, a developer and operator of residential solar energy generation systems, raised $30 million.

The most active investor in terms of deal numbers was New Enterprise Associates, investing in three companies. New Enterprise Associates was also the top investor in 2012 with four deals. This was followed by Kleiner Perkins Caufield & Byers, PACA Investment, Firelake Capital Management, CCM US, and VisionRidge Partners all investing in two companies each.

Large-scale project funding announced in 2013 amounted to $13.6 billion in 152 deals, compared with $8.7 billion in 84 deals in 2012. Announced large-scale project funding in Q4 2013 increased as well, with $6 billion in 46 deals. The largest project funding deal announced in 2013 was the $1 billion bond financing completed by Solar Star Funding for its Solar Star 1 and Solar Star 2 projects. Top investors in large-scale projects were Kasinkornbank with 15 projects, and Bank of Tokyo-Mitsubishi UFJ with 10 projects.

Corporate M&A activity in solar amounted to $12.7 billion in 81 transactions compared to $6.7 billion in 51 transactions in 2012. M&A deal activity was up 59 percent in 2013 largely driven by strategic acquisitions and acquisitions of distressed assets. The largest M&A transaction in 2013 was the $9.4 billion acquisition of Tokyo Electron by Applied Materials, followed by ABB’s acquisition of Power-One, for approximately $1 billion. Shunfeng Photovoltaic International, acquired Wuxi Suntech Power, the main Chinese unit of Suntech Power Holdings, for $489 million, and Goldpoly New Energy Holdings acquired China Merchants New Energy Holdings in a non-cash transaction valued at $273 million. Dow Corning acquired Mitsubishi’s 12.5 percent stake in Hemlock Semiconductor LLC, giving it 100 percent ownership, and 12.5 percent in Hemlock Semiconductor Corporation, giving it 80.5 percent ownership.

Solar project M&A amounted to $1.7 billion in 2013, compared to $1.9 billion in 2012. Activity was up 20 percent year-over-year, with 112 transactions in 2013, compared to 80 transactions in 2012. Good solar projects with sound economics are in great demand.

Announced debt funding in 2013 totaled $6.2 billion in 38 deals, compared with $6.9 billion in 34 deals in 2012, and nearly $20 billion in 41 deals in 2011. The most active provider of credit in 2013 was China Development Bank, which provided debt funding for five Chinese solar companies.

Meanwhile, public market financings jumped considerably to $2.8 billion for 39 deals in 2013, up considerably from $893 million for 23 deals in 2012. Also last year, there were seven IPOs that together brought in more than $1 billion.

The Mercom report indicates that solar is already in a golden age, is much more than a fad or trend, and that there is lots of money available for projects. On the downside, venture capitalists appear more cautious, and debt funding is down, leaving the field clear for the stock market darlings. Beware the bubble.

[Image: Crawfordsville Indiana Solar Project by HomeEnergyLLC via Flickr CC]

Prosecutions for white collar crime in the financial services sector are likely to increase in 2014 following an 88% rise in the number of whistleblowing reports received by the Financial Conduct Authority’s (FCA) 'Whistleblowing desk', according to international law firm Pinsent Masons.

Data obtained from the FCA by Pinsent Masons shows that whistleblowing reports have increased by 88% since the FCA took over from the Financial Servies Authority (FSA) in April 2013. Reports increased from an average of 338 a month in the FSA's final year to an average of 638 a month in the first seven months since the FCA took over as regulator.

Over 1,100 reports (since March 2012) were deemed serious enough to be pursued by the regulator; of these around 60% (683) were about general regulatory concerns. Investigations into more serious wrongdoing were low: there were four reports of 'misappropriation of client money'; 23 of 'Insider trading'; 21 of 'market manipulation' and 25 cases of 'money laundering' were pursued.

Michael Ruck, a senior financial services enforcement lawyer at Pinsent Masons and formerly with the Financial Conduct Authority was keen to point out that the rise in reports was not necessarily a result of more wrongdoing in the City.

"It is likely the result of the combination of increased focus on compliance and the tightening of controls following criticism from the financial regulator," he explained.

"People working in FCA regulated firms are becoming increasingly aware of their reporting obligations. The threat of multi million pound fines and a new push toward personal accountability means that staff at authorized firms, their suppliers and clients are all now very aware of their compliance obligations.

"The UK already has some of the highest whistleblowing rates world wide* and numbers are set to increase even further if plans to financially incentivise whistleblowers who report crimes are implemented."

"Under new government plans Whistle-blowers who report financial crime could be rewarded with a cut of the money they gain back for the taxman. No doubt this will lead to a surge of white-collar informants seeking big payouts."

 

 

Picture credit: © Bobby Flowers | Dreamstime Stock Photos