Search

Why is it that inherently unsustainable oil and gas companies rank so well in sustainability indices, such as the Dow Jones Sustainability Index? Tom Idle explores a new approach to benchmarking - one that better understands how fit companies are to flourish in the future

Followers of solar pioneer and environmental activist Jeremy Leggett’s ongoing e-book serial, ‘The Winning of the Carbon War’, will be aware of the trends emerging on the frontline of the said-war against traditional fossil fuels.

The “tipping point in the demise of fossil fuel industries” that Leggett describes is certainly compelling. First, the cost of deploying renewable energy systems is falling. In fact, clean energy generation overtook conventional fossil fuel and nuclear installations globally in 2013.

At the same time, the cost of delivering hydrocarbons is rising. Drilling for shale is losing its appeal, with US shale companies going bankrupt, drillers losing money and assets being written off by the multiple billions. Last year saw the lowest rate of discovery of new oil and gas reserves in 20 years.

And then there’s the politics of climate abatement, which are showing signs of alignment. More than 100 countries now have a 2050 target to reach zero net greenhouse gas emissions. Even China has, for the first time, committed to cap its carbon output by 2030 while generating at least 20% of its energy needs using clean energy sources, such as solar and wind.

“Imagine yourself as the CEO of a big energy company, with these mega-trends playing out around you right now,” says Leggett. “Any one of these challenges would be bad enough to confront and face on their own. Facing them all at once is going to be tough and could trigger the downfall of the industry.”

Even the less avid followers of this shifting landscape will have struggled avoid the news that the heirs to the fabled Rockefeller oil fortune, who control around $860m in assets, withdrew their funds from fossil fuel investments last year as part of a wider divestment movement involving 800 global investors promising to remove $50bn worth of support over the next five years.

These waves of change serve up significant challenges for businesses to overcome - even if only a fraction of Leggett’s hoped-for future becomes a reality. Progressive organisations will ride these waves and flourish by creating new business models, reducing their dependence on natural resources and becoming energy-independent.

But many will collapse under the weight and sink.

So, how do investors assess which companies will sink or swim? As Carbon Tracker Initiative has spent the last few years pointing out, plenty of these assets could be left ‘stranded’, a term it uses to describe fossil fuel energy and generation resources which “at some time prior to the end of their economic life (as assumed at the investment decision point), are no longer able to earn an economic return…as a result of changes in the market and regulatory environment associated with the transition to a low-carbon economy”.

Currently, stakeholders are at the mercy of numerous non-financial ratings and rankings systems, designed to give a better understanding as to which companies are performing best when it comes to managing their social and environmental impacts.
Amongst the best-known are Dow Jones Sustainability Index, the Carbon Disclosure Project and FTSE4Good Index Series. But the list of organisations - from media agencies and consultants, to asset managers and publishers - attempting to compare the sustainability performance of companies is long and wide. It includes the likes of The Global 100 Most Sustainable Corporations in the World, CR Magazine’s 100 Best Corporate Citizens List and Ethisphere’s World’s Most Ethical Companies list, to name just a few.

But how credible are these benchmarking exercises? And do people pay any attention to them?

According to research produced by SustainAbility and Globescan as part of its ‘Rate the Raters’ project - designed to shed some light on the universe of corporate sustainability ratings, and ultimately improve their quality and transparency - the answer is ‘yes’. When asked how much trust they place in certain players to accurately judge a company’s sustainability performance, rankings organisations are only beaten by NGOs in the perceived credibility stakes - and that trust has been steadily increasing.
Rankings and ratings clearly have a role to play. More than 60% of respondents said that ratings will be more important three years from now in driving improved corporate sustainability performance.

But not everybody is convinced. Geoff Kendall, a former director at SustainAbility, is one of them. “Of course, there is value in external validation; and companies pay attention to the likes of DJSI.

“But most of them focus on current best practice, and often at the level of individual sectors. You can get a very good score if you are performing better than others in your sector, even if you have a business model that is doomed to fail.”

Kendall points to the example of Thai Oil plc which achieved an 85% score on last year’s DJSI rankings. “I’m sure they are progressive within their sector. But in a world where we are needing to wean ourselves off fossil fuels, is it right that we are telling them they are 85% sustainable? Will that score encourage them to change their business model?

“It’s the very definition of ‘thinking inside the box’ and not thinking about whether that box is being slammed against the wall.”
The problem, as Kendall sees it, is the continued focus on “today’s best practice in favour of tomorrow’s required practice”. And it is a concern raised by the SustainAbility/Globescan research, with most respondents claiming that ranking credibility could be best be improved by focusing on the right issues. “You won’t get the full picture if all you look at is where you are relative to the unsustainable status quo. You need to benchmark yourself against a sustainable future.”

But what does this sustainable future look like - and how can companies understand how far away they are from being safe and secure in the knowledge that they will be a part of it? Kendall’s new Future-Fit Business Benchmark (FFBB) is designed to answer these questions.

Using the four basic principles of sustainable development originally devised by The Natural Step, the FFBB has created a series of 21 goals that companies can use to track their true sustainability progress. These include things like making sure all product and packaging materials are repurposed at end of life, and all staff are paid at least a living wage. A second public draft of the goals will be published this summer, along with a new online wiki inviting feedback that might lead for a refined final list. Then, by the end of the year, the goals will be supported by a list of KPIs that companies can use to assess how they are getting on in achieving them.
“It’s a line in the sand that any company, regardless of size and sector, must reach if it is to get an entry ticket into the future,” says Kendall. “Some of the goals might seem impossible to some companies. But they are only ‘impossible’ in the context of current business models.”

This line of thinking is not new; Wayne Visser’s Kaleidoscope Five-S Future-Fitness Framework, for example, is similar in scope. But the FFBB is a tool designed to be used on a wide scale. Companies won’t be charged to use the FFBB, but they will need to get third party assurance if they want to talk publicly about their progress (with Kendall happy to train up any consultant that wants to play the role of assurer). “We want 1,000 companies to use the FFBB within three years.”

So, what does the future hold for the well-established sustainability ratings organisations? Well, there’s nothing stopping them adopting the FFBB goals and KPIs, says Kendall, while acknowledging the struggle ahead in encouraging companies to transition to a new sustainability scoring methodology. “If a company has consistently been scoring an 80% sustainability score and another organisation comes along and paints a truer picture that says it is more like 20%, they might want to stick with their original ratings organisation.

“But you only have to look at the wave of unacceptability that is beginning to break, with the divestment movement and talk of stranded assets. This can only help investors get ahead and ride the waves too.”
 

A white paper published from Generation Foundation (‘Foundation’), the advocacy initiative of Generation Investment Management (‘Generation IM’), a boutique investment firm with public equity, growth equity and global credit investing strategies founded in 2004, reasserted this summer the “ever-stronger business” case for Sustainable Capitalism. It’s not just a nice thing to pursue but fundamental to investment returns, which a raft of research supports.

Building on their previous report on Sustainable Capital in 2012, Foundation’s latest 24-page paper titled ‘Allocating Capital for Long-Term Returns: The Strengthened Case For Sustainable Capitalism’ (May 2015), makes a number of recommendations on how both the business and financial community can “better allocate capital to ensure long-term growth and outperformance”.
The Foundation, which was established alongside Generation IM, has been pursuing a strategy over a many years to “mobilise” asset owners, asset managers, companies and other financial market participants in “support of the business case for Sustainable Capitalism and to persuade them to allocate capital accordingly”.

Al Gore, former US Vice-President under Bill Clinton and Generation IM chairman, commenting at a briefing in London to accompany publication of this latest paper said: “The importance of sustainability to business and investing has intensified as financial markets are forced to address challenges posed by the realities of natural resource scarcity, the effects of unabated carbon emissions, rapid urbanisation and widening wealth inequality - to name just a few.”

The paper sets out to demonstrate how an “evolved model for capitalism”, in which business and capital seek to maximise long-term value creation, has gained significant momentum, and is increasingly supported by new research and performance metrics. Indeed, both the academic and real-world evidence increasingly demonstrates how the full inclusion of sustainability factors in economic decisions translates into better outcomes.

Evidencing this, Harvard Business School’s recent investigation (Corporate Sustainability: First Evidence on Materiality (Working Paper, 2015) has shown a “tangible link” between a firm’s integration of material sustainability issues and enhanced shareholder-value. Elsewhere, a meta-study from the University of Oxford (Sept 2014) in partnership with Arabesque Partners, collated findings in the area from over 190 of the premier academic papers, industry reports, newspaper articles and books.

The paper also highlights three core integrated ideas that investors, asset owners, corporate executives and boards will need to adopt in order to successfully allocate capital for long- term success. These ideas cover: (1) Price carbon in all capital allocation decisions; (2) Use sustainability analysis to enhance investment frameworks; and (3) Upholding the full remit of fiduciary duty whereby investors and companies have a “fiduciary duty to include sustainability into decisions”.

They are also strongly connected to the themes forming the “bedrock of Sustainable Capitalism”, which include decoupling prosperity from resource-intensive growth; revising investment time-horizons to target sustained value creation beyond quarterly profits; and, integrating sustainability factors into strategic decisions and asset valuations.

David Blood, Senior Partner at Generation IM sitting alongside Mr Gore at the briefing said: “Implementing the recommendations outlined in this report could radically transform the global economy by 2020. Financial markets would incorporate the price of externalities that are currently treated as nearly free resources, like unabated carbon emissions and water, and allocate capital accordingly.”

He added: “Asset owners, asset managers and companies would, in the process, adopt a more holistic definition of fiduciary duty - one which incorporates sustainability and shapes investment frameworks as a result. In so doing, investors should successfully build profitable investment positions for long term gain, while helping to mobilise action towards addressing urgent sustainability issues.”  

In the US mutual funds sector Eventide Gilead N, a $1,784.56m fund ranked top over the past one, three and five years to date out of 191 funds. With a cumulative performance of +27.60% over the last 12 months it outpaced the $1,126.37m Parnassus Endeavor Fund in second spot (+18.09%), Calvert VP SRI Mid Cap Growth (+17.82%) in third and Brown Advisory Sustainable Growth I in fourth (+17.21%). Eventide Gilead was even more impressive over 3- and 5-year time frames posting returns of +128.47% and +191.31%, respectively, and widening the gap over sector peers.

Boston-based Eventide Asset Management LLC that serves as adviser to Eventide Mutual Funds (managing over $2bn in net assets) and founded in 2008, has been become a leader in faith-based and socially responsibly investing.
As a diversified mutual fund that seeks to provide long-term capital appreciation, it primarily invests in equities that the managers - Dr. Finny Kuruvilla (lead) and David Barksdale (co-portfolio manager) - believe demonstrate values and business practices that are ethical, sustainable, and provide an attractive investment opportunity. But it also invests in securities viewed as having “significant near-term appreciation potential”. Highlighting the stellar performance, $10,000 invested in Eventide Gilead on 8 July 2008 (inception date) would have grown to $30,328 by Q1 2015 - significantly exceeding the S&P 500 Total Return Index over this period ($18,979) and the Russell Midcap Growth Index ($20,931). Not surprising then its size has been growing lately.

The fund’s top five holdings as at 31 March 2015 included Macquarie Infrastructure Company (2.84%), which operates in the aircraft services, liquid storage and marine terminals space; bluebird bio (2.80%), involved in new drugs for patients with severe genetic diseases; Lowe’s Companies Inc. (2.69%) ; Red Hat (2.38%), which distributes and supports open-source operating systems, and, Lear Corp (2.32%).

Amongst European funds the €1,118.61m Robeco Chinese Equities D EUR Acc fund came top over the past year on +74.86% - versus +95.96%/34th over past three years and over +91.35%/164th over five - pipping Hamon Greater China GBP (+62.46%) and Vontobel Sust Asian Ldrs (ex-Jap) A (+62.14%), respectively second and third from top.

The UK Individual Pension funds sector produced the best peer group average over the past year (+27.37%), while European funds took the spoils over three years (+48.97%) and US mutuals top ranked over past five years (+72.54%).

 

Roger Aitken
 

Neil Hawkins, corporate vp environment and sustainability, Dow Chemical spoke to Ethical Performance about his love of nature and the US company’s latest 2025 sustainability targets

Neil Hawkins has worked for Dow Chemical man and boy. For the past 27 years he has been involved in various aspects of the chemical giant’s environmental profile. Describing himself as always having been “an environmental, ecological guy”, he didn’t set out to work for a chemical company originally. However after working in nuclear engineering, where he was very much focused on protecting people from radiation and exposure to the ideas of chemical risk at graduate school, Hawkins felt Dow a natural fit.

So what’s his view of a sustainable chemical company? “Chemistry powers 96% of all products, so a company dedicated to the power of chemistry and solving challenges is a very powerful idea and a very powerful reality for Dow.”

He’s aware that even the word ‘chemistry’ doesn’t always sit comfortably within the sustainability sphere. Hawkins says that he wants stakeholders – particularly consumers – to gain an increasing confidence in chemical technology. “We want them to have confidence in the tool box. We need to address the concerns that people have and to do that we need to get involved in dialogue and help people understand how chemistry is helping them.”

The American chemical company has recently unveiled its 2025 sustainability goals, a strategic set of commitments designed to redefine the role of business in society. It has set bold and aggressive sustainability targets designed to develop breakthrough product innovations, positively impact the lives of 1 billion people, and deliver $1 billion in cost savings or new cash flow for Dow by valuing nature in business decisions.

“Our new goals are driven by stakeholder engagement. What we’ve tried to identify is a place ten years from now and how we can be an effective partner in a sustainable future,” explained Hawkins.

“The state of the planet, value chains, things today move fast so we have flexibility in our goals. They give a direction and are very helpful to everyone in the business as to where we’re headed. It’s about moving these principles into everyone’s day-to-day job.”

One of the goals – and he concedes that it’s a big one – sits right at the middle of the business and that is to have a positive impact in volunteering. “We’re very focused in this way. Our people are currently very engaged with many volunteering projects and we try and unlock this in every employee. It’s about taking what they know, their skills and to have an impact on a local scale, on the people on this planet. It’s good for the development of our people.”

Dow’s partnership with Acumen in Africa is a case in point. This is focused on the development of entrepreneurial skills. “We provide experts to their NGOs – if they need supply chain help or if they need an agricultural expert. It’s been extremely successful with 85% of projects being enabled,” explains Hawkins.

Another strand of its new sustainability blueprint is Delivering Breakthrough Innovations. By 2025, Dow’s product portfolio will have a six-fold net positive impact on sustainable development, the company pledges. Dow products will offset three times more carbon dioxide than they emit throughout their life cycle and save three times more energy than they use throughout their life cycle.

So what have been the advancements Dow Chemical has made in ‘green chemistry’ so far? “There’s been lots of exciting developments,” says Hawkins. With a research spend of $1.3bn, perhaps that’s not so surprising, but Hawkins emphasizes that all this research is being harnessed to the concept of sustainable chemistry.

“We are the leading company in low VOC paint. We produce paints that are functional,” explains Hawkins.

Evoque helps coatings formulators improve paint performance properties while using less titanium dioxide (TiO2), the white pigment that is energy intensive to manufacture but ubiquitous in architectural paint for its ability to provide quality hiding. In 2013 it won the Presidential Green Chemistry Award, which marked the ninth time that Dow and its affiliates have won the Presidential Green Chemistry Award, more than double any other company in award history.

Another Dow innovation was recognised this year when it won the Edison award for chemistry in electronics. Dow has developed a new solder that eliminates the use of lead. Soleron BP Tin-Silver helps ensures device performance, reliability and application flexibility in electronic material applications.

Going forward, Hawkins sees the future in more collaboration. “We don’t have all the ideas; to solve specifics challenges we’ll need to collaborate,” he said.

Indeed collaboration is the cornerstone to Dow’s 2025 targets. While you could argue that the targets are more narrow – it focuses on identified areas of energy, alternative energy, water, food, health and infrastructure - the approach is broader through opening up to collaboration. Dow will develop a more transparent approach. “We need to be collaborative, not combatitive,” said Hawkins. “Openness and transparency will be a hallmark of the company in the new decade.”

Valuing nature is another bedrock for the company’s 2025 strategy. Hawkins believes that Dow is very progressive in this area. “Five years ago, no company had a great approach. Now we view nature as natural capital. Through Nature Conservancy, a science-based NGO, and a year of dialogue, we’ve developed tools and a process to incorporate nature into business decisions,” he says.

“We wanted it to be actionable. Every decision at a local plant, for example, we’re going to apply land capital, so that we’ll be able to assess the impact we’re having and make things better for nature. It’s a big goal,” he admits.

Another example of this philosophy in action is in Texas where Dow built a constructed wetland instead of a sequencing batch reactor to solve a regulatory compliance issue in meeting suspended solids requirements for a wastewater treatment system. The financial results indicate that the total net present value savings calculated for implementing the constructed wetland instead of the sequencing batch reactor is $282m over the project’s lifetime.

Hawkins is a firm believer that you can value nature from a business perspective. “I’m a nature lover. The more we understand the value of nature, the more nature we’ll preserve. Nature as an economic value is better than philanthropy, and becomes an enabler for business,” he maintains. 

By Leah Tirpak

Over the years of working in international development, I’ve established a motto: If I can’t appeal to your heart strings, I’ll appeal to your pocket. More often than not, appealing to the pocket is the most effective approach. As a bit of a bleeding heart humanitarian, this can at times be disappointing, especially when one considers the numerous moral reasons to care about water (or lack thereof) in the undeveloped communities. Let these facts marinate in your think muscle ...

• 750 million people around the world do not have access to clean water.


• 842,000 people die every year from diarrheal disease caused by unsafe drinking water and lack of appropriate sanitation; that equates to 2,300 people daily. To put this further in perspective, more people are dying from diarrheal disease on a daily basis than the entire student population of my alma mater, Roanoke College.


• 500,000 of those deaths annually are children under the age of 5. That equates to one child death approximately every minute.

Reader, if those numbers aren’t enough to convince you that this is an area everyone should be altruistically concerned about, and one warranting more global intervention, then let me explain the economic benefits. The return on investment in water is incredibly high. According to U.N. Water, every $1 invested in water and sanitation produces a whopping ROI between $5 and $28.

The World Health Organization put together an enlightening study on the economic costs and benefits of investment in water. Let’s take a look at how the lack of access to clean water is negatively affecting the global economy:

• Approximately $24 billion worth of economic value is lost each year due to the time individuals spend collecting water rather than working or going to school, an activity that consumes, on average, 25 percent of women’s time in developing nations.


• $260 billion is lost each year as a result of limited or no access to clean water supplies and sanitation.


• Annually, 4.3 percent of sub-Saharan Africa’s GDP is lost due to the lack of access to clean water and sanitation facilities.

The good news is that if the global community steps up and increases their focus on water (from the stingy 6 percent of overall international aid allocated to water investments in 2011), the economic benefits would be massive. Universal access to clean water means deaths from waterborne illnesses would largely disappear, resulting in an estimated $18.5 billion in economic benefits annually. People would be healthier, which means health care costs would decrease and productivity would increase. This would result in an estimated $32 billion in economic benefits realized annually.

I’m going to take the argument a step further: Overall international development and aid funding would be much more effective and efficient once global access to clean water is achieved. It is my opinion that without access to clean water there is no way for undeveloped countries to pull themselves out of poverty, let alone be able to experience sustainable effects from development programs.

Here’s why: Inadequate access to clean drinking water in childhood leads to diminished brain development and physical stunting. This means that individuals without access to clean water are intrinsically disadvantaged from birth. No amount of education or “pull yourself up by your bootstraps” mentality will be able to reverse these biological side effects. However, once a full generation has access to clean water, there will be an overall increase in physical health and mental capacity -- better preparing communities to absorb necessary education and confront other issues such as health, employment, infrastructure, etc.

Beyond the initial investment in water, which as demonstrated above will result in huge economic benefits, every dollar of development funding invested thereafter will be more effective and result in further economic gains.

The bottom line is that the global community has a long way to go in addressing the issue of access to clean water. Whether the motivation is goodwill and morality or a smart investment opportunity matters little to me. What matters most is that serious action is taken now. Every minute wasted is a life (or dollar) lost. Quite literally.

Image credits: Leah Tirpak

Leah is an international development professional and a member of the Virginia Tech Executive Masters of Natural Resource 2016 Cohort. She spends about half of her time travelling throughout Southern Africa working on natural resource and sustainability related issues including water and agriculture.

This post is sponsored by Hormel Foods. Opinions are my own. 

Corporate leadership in environmental sustainability begins with appointing the right person or teams to set the strategic direction for a company. Demonstrably, Hormel Foods has exceeded its annual environmental impact goals for reducing the amount of solid waste it produces and sends to landfills -- working fluidly across its various plants to design achievable and measurable goals in pursuit of greater efficiency and success.

We sat down with Tom Raymond, director of environmental sustainability for Hormel Foods, to deep-dive into how the brand is keeping its commitment to reducing its impact on the planet.

TriplePundit: As director of environmental sustainability, how does Hormel Foods assess its goals?

Tom Raymond: At Hormel Foods, we take into account the important role environmental responsibility plays in our day-to-day operations and the responsibility we must uphold for minimizing our impacts in the world. In 2011, we completed our first set of environmental goals and established our second set in 2012, which span from 2012-2020.

Each year, we report on our progress toward these goals. This year, most notably, we’ve surpassed our solid waste goal by 20 percent, six years earlier than anticipated. We also made significant strides toward our other 2020 goals to reduce water, energy and greenhouse gas emissions.

To assess the goals, my team and I analyze data that all of our locations submit through our online environmental tracking system. Each facility tracks their own progress, with results consolidated for management review. Team members from across the company can track our progress in real time through a shared electronic environmental metrics reporting system. The expectation is that each facility strives to meet or exceed our companywide goal of reducing solid waste to the landfill, with a focus on waste reduction at the source.

---

"Waste reduction efforts should be viewed as an opportunity to maximize efficiency as opposed to a problem. With this mindset we can focus on waste reduction at the design phase."

---

3p: Discuss how your role as director of sustainability tackles the responsibility of setting corporate social responsibility (CSR) goals for Hormel and leading a team toward success.

TR: The greatest lesson for me is in setting a strategy for these goals because it forces us to take a fresh look at long-established policies and procedures. The team then formulates the day-to-day tactics and long-term planning to execute environmental programs that accomplish our goals.

It is critical we share information and best practices so we can help each other continually improve our practices. For example, we hold monthly conference calls with plant engineering and environmental staff to discuss environmental compliance and sustainability issues.

Also, we hold a biennial companywide environmental conference to discuss environmental compliance programs, sustainability initiatives and encourage knowledge-sharing among environmental representatives throughout the company. The most recent one occurred in San Diego in April of this year.

3p: Hormel has been quite successful in hitting past goals to reduce its solid waste and packaging, roughly 4.4 million pounds in 2014. This new milestone continues to iterate on these processes to reduce solid waste goals even further. What are some of the ways your team has pushed the bar to become successful?

TR: To encourage higher environmental standards in our company and recognize individuals who have achieved exemplary results in the area of environmental sustainability, each year Hormel Foods facilitates an internal Environmental Sustainability Best of the Best competition. This is a key way we’ve reached (and surpassed) our environmental goals.

We also recognize there is always more work to be done with minimizing our environmental impacts. To push the bar, we continuously reevaluate our goals and make sure to communicate that information to the appropriate teams.

3p: What processes changed significantly that impacted reductions throughout the production/manufacturing processes?

TR: Two specific project examples come to mind from our internal Environmental Sustainability Best of the Best competition:

• Saag’s Products (San Leandro, California) – The Saag’s team set out to reduce its solid waste to landfill contribution by 50 percent. By engaging employees in recyclable material training, the plant was able to reduce its solid waste to landfill by 89 tons, surpassing its original goal and improving recycling to 53 percent.

• Dold Foods (Wichita, Kansas) – Dold Foods originally aimed to eliminate 39 tons of solid waste by the year 2020. In a plant-wide effort to minimize all solid waste streams, the plant was able to realize an annualized savings of 127 tons of solid waste, or 330 percent of the 2020 goal, in fiscal 2014 alone.

3p: What advice would you give to other directors within this industry as it relates to solving the environmental waste problem through company-designed operations or policies?

TR: The first job is to change the viewpoint on waste generation. Waste reduction efforts should be viewed as an opportunity to maximize efficiency as opposed to a problem. With this mindset we can focus on waste reduction at the design phase. In operations, there needs to be specific measurements on waste available to help identify areas for continuous improvement. Where waste elimination seems difficult to achieve, start with smaller more achievable goals to get energy behind the effort.

3p: In what ways do you believe the end consumer will become much more cognizant of their own environmental footprint? (What educational tactics, if any, does Hormel provide around waste diversion to influence end consumer responsibility?)

TR: Overall, we concentrate our efforts at finding ways to improve our environmental performance in our operations first and foremost. If we can find a way to limit the packaging of a product, for example, that will have an impact regardless of what the consumer does at the end use; however, consumers have a role to play in their own consumption habits and practices.

By Elizabeth Hardee

In my daily work, I read a lot of online articles about climate change — both the science and the politics — and out of curiosity I’m invariably drawn to the comments section at the end of the page (first rule of the Internet — never read the comments!).

What I’ve observed is that these comments tend more often than not to be variations on one of the following themes:

• Climate change isn’t happening; we are only experiencing the Earth’s natural cycles.


• Climate change isn’t happening; it is a hoax perpetrated by the greedy.


• Climate change is a scientific fact which demands action.


• Climate change is a moral imperative which demands action.


• The climate might be changing, but there is nothing we as humans can do about it.

Though radically different, I think each of these arguments can be traced to a single origin: avoidance of emotional pain. This is completely understandable; after all, if climate change isn’t happening, or is the result of something beyond our control, or we are powerless to stop it, there is no need to feel the pain any normal human would feel in the presence of a life-threatening problem that they helped to cause. Rationalizing, by placing scientific or moral blame on others, also alleviates some of our own deep-seated fears about how our actions might contribute to the problem.

Avoiding pain can be a pretty strong motivator. It is for this same reason that arguments which pit the environment against economic progress can be so effective. If acting on climate change means destroying everyone’s wealth, it's little wonder that so few legislators are willing to take the lead. But “environment versus economy” is a deceptive argument for a few reasons.

1. We now know that the environment and the economy are not at odds. Plenty of “environmental” programs, from regulation of chemicals that destroy the ozone layer to California’s current cap-and-trade system, have been implemented without hampering economic growth.


2. Climate change actually crosses the line from an environmental problem to an economic and social issue. The cost of inaction would actually be far more detrimental to our economy (and our livelihoods) than any single environmental program could ever be.


3. Emotional pain is relative. Since our economy is based on a short-term return model which tends to exacerbate existing environmental and social problems, there is arguably an equal, if not greater, amount of collective pain associated with maintaining the economic status quo than with fixing the environment.

The belief that climate change is a painful problem that will require painful solutions indicates two things. First, the climate movement hasn’t done a good enough job at framing climate solutions as opportunities rather than losses — which is a shame, because climate solutions are, by and large, opportunities. Climate change is one of those once-in-a-lifetime, all-hands-on-deck problems that can only be solved through a combination of relentless optimism, innovation and community pride — DelAgua’s work on clean cookstoves in Rwanda is a great example. Second, organizations that have sown doubt about scientific consensus on climate change or positioned the problem as environment versus economy have done their jobs very well indeed.

So, how do we let go of the uncomfortable emotions associated with climate change? To me, the most heartening example of a way forward comes from the Yale Project on Climate Change Communication, which just released a new study of Americans’ climate change views, nicely summarized at Vox.com.

There are a lot of paradoxical findings here. The majority of Americans believe climate change is happening, but do not believe humans are the cause. They don’t think there is scientific consensus on climate change, nor do they think their own lives will be greatly impacted — though they do believe climate change will hurt future generations. They don’t support a carbon tax, but do support limits on CO2 emissions and greater renewable energy infrastructure.

The reason to be optimistic about such seemingly paradoxical results is they prove that only certain aspects of taking action on climate change trigger that emotional pain response, and that the desire to take actions that would curb climate change is not necessarily tied directly to climate change itself. You don’t need to “believe” in climate change to want to limit CO2 pollution, and you don’t need to know anything about CO2 pollution to wish your energy came from a wind turbine rather than an oil field.

When it comes to climate change, the cycle of pain and blame we’ve all been caught in is counterproductive. The majority of Americans share the same vision: a world with clean air and sustainable energy. Rather than being a source of pain, this vision can be a source of pride. Let’s start harnessing that pride — along with human ingenuity — to create the future we all really want. One of the best places to start might just be the comment section.

Image credit: Flickr/The Value Web

Elizabeth Hardee is a Senior Analyst for The Climate Trust

Israel has a message for California: You can beat this drought thing.

California is still counting up the damage from the 2014 drought, which resulted in more than $200 million in losses in the dairy and livestock industry and a staggering $810 million in crop production. And analysts are predicting this year to be even worse.

But many will admit that if there is any country on earth that knows how to trump a three-year (and counting) drought cycle and convert a wasteland to oasis, it's Israel. For thousands of years, populations have been wresting a livelihood from the desert of what is now Israel, refining the techniques that would one day result in an agricultural paradise.

Even before Israel became a state in 1948, 20th-century pioneers converted vast stretches of desert to productive farm lands and found ways to wring water from miles of sand. And just as difficult, they found ways to tame the Galilee's veritable mosquito-infested valley into what would eventually become the heartland to a booming agricultural market.

And yes, it has dealt with crippling drought -- the kind of water loss that comes from a population growing too quickly without consideration for the changing temperament of Mother Nature. In the 1980s and 1990s Israeli politicians and celebrities went on air to appeal to residents to support water restrictions and more prudent use. The alternative was much like what California is facing now: trucking in water from other areas and staring down a future without a dependable local water source.

That marketing strategy is credited with helping to turn around Israel's drought. But the country also stepped up measures that it had started as far back as the 1950s when Prime Minister Ben Gurion implemented water recycling methods. Those reclamation strategies of the mid-20th century later led to desalination plants, which were already in their nascent stages in the 1970s when I traveled to Israel.

But according to the Jewish National Fund, which supports many agricultural endeavors in Israel through the donations it raises abroad, nationalized water desalination plants and other government initiatives aren't the real reason that Israel is, even today, at the forefront of drought-resistant agriculture. It's the thinking that goes into the industry that has made the difference. Drip irrigation, created in Israel and now used throughout North America; digital monitoring systems that allow farmers to remotely regulate the irrigation of water-sensitive crops or soil moisture during hot periods; and technology that can find the minutest of leaks in water pipes are all hallmarks of a strategy directed at zero-tolerance of loss. So is the choice of plants and the research that has gone into determining the best options for success in a region that can receive rain only once or twice a year, and sometimes not even that.

And water isn't the only natural resource that is considered essential to Israel's success as a sustainable country. More than 85 percent of the wastewater produced in Israel is treated and reused. That success is in comparison to Spain (19 percent) and the U.S. (1 percent). Companies like Aquanos contribute to the endeavor by converting the leftover waste to energy sources.

But what seems to underscore Israel's success in this difficult climate-impacted arena is that it isn't the technology it has at its disposal, or the government controls it imposes, that make the difference. It isn't even the shock-value that can  be harnessed from a gorgeous celebrity imitating the appearance of a brutally dying landscape on the the TV screen.

It's attitude.

"How did we beat the water shortage? Because we said we would. We decided we would," Alexander Kushnir, the head of Israel's Water Authority, told Times of Israel editor and founder David Horovitz.

It's a kind of chutzpah, or moxie, that the small Jewish state is known for. And it's the kind of thinking that California pioneers, armed with little more than their horses and wagons, were known for as they patiently developed a land pocketed by desert into an agricultural paradise during the 19th and 20th centuries.

And it's that sixth-sense intuition that comes from living in one of the world's driest climates, where technological ingenuity defines success.

"In our region, you always have to save water,” Kushnir notes matter-of-factly.

And apparently, it's the willingness to share that technology with others. During the interview, he confirmed that he regularly meets with the Palestinian Authority to discuss techniques, and they ship water to both the PA and to Jordan for their populations' use. It's a regional concern and apparently a global one as well.

But will Israel's desert-crafted skills help California out of its drought? Some have already expressed doubt.

Israel "is about the size of New Jersey," opined Cohen (no first name given), a forester from the University of California, Los Angeles. Desalination plants wouldn't work for California's parched Central Valley region, he said, since it would require carrying water long distances over difficult terrain. And water regulation for an entire state would be a political nightmare. Plus, "in California you can't just build a plant."

But maybe the real issue is that California hasn't yet reached the point where the state of Israel was 20 years ago when the country's agricultural losses were threatening its very existence. Maybe Kushnir's point about need and survival becoming the driver to change indicates that we haven't yet reached that paradox in North America yet.

The good thing is that when we have, there's now technology and knowledge out there to help. Fixing California's water problem won't be easy to overcome, but having friends in knowledgeable places can't hurt.

Images credits: 1) The green Galilee - Israel Tourism 2) Man-made inland fish lake - State of Israel 3) Cowshed - State of Israel

Ben & Jerry’s believes that making ice cream and saving the world go together like its tasty flavors and your taste buds. Earlier this year, it asked: "How can we reduce our emissions?" It turned to CoClear, a New York consultancy that conducts lifecycle analyses (LCAs) on products.

CoClear said, “You can’t manage what you don’t measure.” Then it examined 21 of Ben & Jerry’s ice cream flavors. CoClear asked a lot of questions, dug through piles of data and punched numbers into its fancy LCA calculator. Measurements included greenhouse gas emissions and other environmental impacts across all stages of a production cycle, including raw material extraction, manufacturing, distribution, and recycling or landfill.

What do you think was the main villainous source of Ben & Jerry’s emissions? Cows. Cute cuddly cows.

In fact, 41 percent of Ben & Jerry’s carbon footprint came from cows. Apparently it takes a lot of gas to churn up milk for ice cream. When cows break wind it’s not just stinky; it’s blowing a hole in the ozone. And get this, cows produce gas out their front AND back ends. Okay, so maybe they’re not cuddly. Surprisingly, the methane from cows is about 21 times worse than carbon dioxide. No wonder they can jump over the moon. They are extremely non-aerodynamic rockets. Seriously, liquid methane is used as rocket fuel.

Here’s the breakdown of the culprits, which CoClear shared at this year's Sustainable Brands conference:

• Growing and producing ingredients: 54 percent (aka, mostly cows)


• Transporting ice cream from the plant to the distribution centers: 14 percent


• Freezing product at the stores: 10 percent


• All packaging throughout the production process: 10 percent


• Factory operation: 7 percent

The result is that each pint of ice cream adds up to 2 pounds of CO2 emissions to the atmosphere. For comparison purposes, when you jump in your medium-sized car and drive a mile you generate 1 pound of CO2.

So, if you drive your car for 2 miles to the grocery and buy a pint of Ben & Jerry’s ice cream, you have just contributed 6 pounds of CO2 to the atmosphere. It’d be tempting to walk to the store, but by the time you returned home you might have to eat your ice cream with a straw.

Here’s the plot twist. Ben & Jerry’s loves the environment. So, of course it’s doing everything it can to be kinder to our beautiful little blue marble of a planet. Most companies won’t care about the environment until the cows come home … only, the cows may never come home because their environment may destroy them. I’m not exactly sure what that means but it sounds deep.

There are so many reasons why Ben & Jerry’s is a hell of a company. But here’s a sample-size serving:

Two words: Lifecycle assessments

Ben & Jerry’s is one of the first companies to do a lifecycle assessment of its products. This is one reason it’s an industry leader. I spoke with Andrea Asch, Ben & Jerry’s director of natural resources, and Chris Miller, Ben & Jerry’s activism manager, about their experience with CoClear conducting a LCA. Here’s a snippet of our conversation:

TriplePundit: How long did the study take? What was it like to do the LCA?

Andrea Asch: It took six months. We picked the hardest [flavors] to measure. We chose the ones with the widest bandwidth of ingredients and complexity.

3p: Can companies save a significant amount of money by performing a LCA?

AA: It’s not about saving money. However, in the study CoClear does monetize electricity and solid waste so you can definitively measure each reduction and reallocate funds.

Chris Miller: There’s more than one way to look at ROI. Efficiency reduces energy costs which is strategic for minimizing environmental impact. [Also,] if you don’t do these things, there’s a cost in reputation.

3p: Would you recommend other companies perform LCAs?

AA: Absolutely. You see things differently. It provides a different lens to look at your business and identify opportunities.

CM: You can’t have a strategy unless you know with the impact is.

3p: How did you feel about disclosing the results? That’s a risky move that most companies are afraid to do.

AA: There’s nothing we wouldn’t disclose. If people can learn from what we’ve done, that’s great! It’s all about environmental benefit.

CM: [Companies should] be transparent about results. This creates the maximum impact. Disclosing stuff helps everyone. It builds affinity and authenticity. Measure. Manage. Disclose.

3p: What has your personal experience been in working with Ben & Jerry’s?

AA: You’re talking to two people who have the best jobs in the industry. I’ve been here 23 years.

CM: People want to show up to work and feel like they're doing more than selling stuff. There are a lot of benefits to this type of work. It helps build a culture of sustainability. It helps companies attract talent. The value in ROI can be measured in recruitment and retention. I left Ben & Jerry’s for 12 years. The people I worked with before I left were still there when I came back. Some people have been here 10, 20, 30 years.

Saving 10,000 metric tons of GHGs

When it comes to making changes based on the LCA results, Ben & Jerry’s is lucky because it has innovative and open-minded farmers. These farmers partnered with Native Energy and bought a separator that reduces 50 percent of the methane by making cow bedding out of manure. It sounds gross, but I assure you … the cows LOVE it. Here’s a picture for proof.

Happy cows make better tasting milk which fetches udderly better prices for farmers. (Sorry, couldn’t resist.) Here’s how it works. The machine separates the liquids and solids in manure. The liquid is used on the field as fertilizer. Solids are composted and create clean bedding for cows. Around 360 cows can make enough bedding for nearly 900 cows, so the excess bedding is sold for a profit. The bedding also saves farmers $30,000 annually because they no longer have to buy bedding.

And here’s the best part -- 10,000 metric tons of GHGs will not be added to the air over 10 years, this way the U.S. doesn’t end up looking like Bejing. It’s equal to keeping 5,000 cars off road for a year. Ben & Jerry’s is turning “a problem into a productive solution.”

Fancy new refrigerators

Ben & Jerry’s tapped the EPA on the shoulder and handed them legislation to legalize hydrocarbon refrigeration (aka, "cleaner greener freezers"). It said, “Sign on the dotted line and carbon emissions will be reduced.” It was a no-brainer, so the EPA signed. These freezers are energy-efficient and use a natural refrigerant with less global warming impact than hydroflurocarbon refrigerants commonly used in the U.S. These new freezers also save money: a cool solution.

The "Save Our Swirled" flavor

Ben & Jerry’s has the same philosophy about ice cream as it does about the planet. It says, “If it’s melted, it’s ruined.” So, it bravely decided to bring attention to global warming and polar bears balancing on melting mini icebergs by creating a new flavor. It’s called “Save Our Swirled” and is raspberry ice cream with marshmallow and raspberry swirls, plus dark and white fudge ice cream cones. It looks melted even when it’s not. The lid is covered in a myriad of “SOS” words.

The ice cream was such a great climate change message that Ben & Jerry’s decided to pack a Tesla electric car full of the ice cream and drive across the U.S. giving free samples to raise awareness. Tastiest climate change campaign ever.

The "Endangered Pints List"

These ingredients are “in the crosshairs of climate change.” Ben & Jerry’s says if the globe continues warming, these ingredients will be scarce or disappear. Warning: This is going to make you very sad, and in your state of depression you'll want to eat ice cream. Here’s the list:

• Chocolate: This would be disastrous for women everywhere.


• Nuts: No more Chunky Monkey. Nut trees require a winter chill to jump-start spring growth. Legumes that are must haves for the Peanut Butter Cup flavor require consistent temperatures and specific doses of rainfall.


• Coffee: Say goodbye to Coffee Coffee BuzzBuzzBuzz. Higher temperatures, heavier rainfall, droughts and more pests are ways climate change is reducing the ability to grow coffee. One study predicts that the areas able to grow coffee may shrink by 65 to 100 percent by 2080. As the Union of Concerned Scientists said, it’s time to “Wake up and smell the coffee.”

Ben & Jerry’s is the crème de la crème when it comes to companies lightening their environmental footprint. For most companies, the phrase “environmental footprint” is a misnomer. Footprints are cute, little and what you create when running along a sandy beach. But most companies are doing things that are driving species extinct, and causing hurricanes, tornadoes and droughts. That’s not a “footprint.” That's a ginormous environmental wrecking ball.

Many thanks and a big hug to Ben & Jerry’s for actually creating a “footprint.” Can someone please bring me a big bowl of “Save Our Swirled” ice cream?

Image credits: Ben & Jerry's

You probably won’t recognize the name Barbara Ann Berwick, but the self-employed investor and former phone-sex entrepreneur could become a key figure in the history of the sharing economy.

This is due to a California labor commission ruling, which earlier this month ordered Uber “to reimburse Barbara Ann Berwick $4,152.20 in expenses and other costs for the roughly eight weeks she worked as an Uber driver last year.”

To be more specific, this is due to one sentence in this ruling: “In light of the above, Plaintiff was Defendants’ employee.” The meaning is that the commission decided that Berwick should be classified as an employee, not an independent contractor, which is how most if not all the people providing services in the sharing economy are classified.

The news about the ruling generated an interesting discussion about its possible impact on the business model and valuation of Uber and other sharing economy companies. It also brought to mind the ongoing debate of whether the sharing economy creates good jobs as well as the pros and cons of the gig economy (aka 1099 economy).

I, however, think that this ruling could have a greater importance if we frame it in a larger context, which is the vision we have for the sharing economy, or in other words what the sharing economy should be all about.

The sharing economy reflects a growing tension between two main approaches, one focusing on value and the other on values. The approach focusing on value addresses the sharing economy as a disruptive force providing attractive opportunities to create and deliver value. Uber is probably the best example of this approach.

The second approach is maybe best described by Rachel Botsman:

“I tend to look at the space through the benefits to the user community. I would describe the core values as ‘empowerment,’ ‘collaboration,' ‘openness’ and ‘humanness,' and in terms of the underlying philosophy, it’s about putting these values above the end goal of profit maximization.”

This approach sees the sharing economy as a disruptive force as well, but this time mainly in terms of disrupting the economic system – some in this group see the sharing economy as playing a role of a catalyst in “the transition to a post-capitalist, sustainable economy.” Examples for this approach include time banks, barter platforms, tool-lending libraries, a cooperative version of eBay, and even Couchsurfing and Yerdle.

The question is if these two approaches are mutually exclusive. To answer this question, I go back to the thought-provoking talk of Aral Balkan from Ind.ie at OuiShare Fest last month. Balkan talked about differences between the Silicon Valley model and the free open-source movement, which correspond with the two approaches I presented here (value and values, respectively). He described a dichotomy – the Silicon Valley model produces delightful user experiences that pay very little attention to people’s freedom and human rights, while free open-source solutions care a great deal about human rights, but are not so good in creating delightful user experiences.

Balkan believes that what we need to move to the next iteration, which will be based on ethical design and won’t have any trade-offs between delightful and highly functional solutions and people’s human rights. We need products that are built for the people, not on the back of people, he said, framing the future we’d like to see as “independently-funded, sustainable, designed for the whole term, and distributed in topology.”

I agree with Balkan that it’s better to have a clear vision of what the future should look like, and I agree that we see clear strengths and weaknesses in each model. I don’t think, however, that the funding source (i.e. silicon valley vs. independent, or venture capital vs. community capital) should be the defining element making the difference between ‘good’ and ‘bad’ sharing economy platforms.

I believe the defining element should be the relationship between the different components of the platform, i.e. company/founders, service providers and customers. A good sharing economy platform will create and sustain mutually respectful relationships between these parties. A bad company will fail to do so.

These relationships should be based on four pillars – first, although these parties are not equal in their power they’re interdependent. Second, this is not a zero-sum game. Third, sharing economy platforms are similar to entrepreneurial ecosystems, and the secret sauce of successful ecosystems is a collaborative mindset, according to Gordon Jones, managing director of the Harvard Innovation Lab. Fourth, it’s no longer a shareholder, but a stakeholder world.

What does it mean? Mainly that we’re going to see evolution in the sharing economy. Brad Burnham, partner at Union Square Ventures, suggests for example that we’ll see “a broader distribution of wealth, and a greater level of agency and empowerment for the people who are participating in the economy.” I agree with him and believe it will be even a broader change, reflecting the need to create relationships between all parties involved that are truly based on respect, responsibility and fairness.

Can it really be done in a for-profit platform? I believe the answer is yes. We have already seen thousands of companies exercising meaningful corporate social responsibility (CSR) that could attest to that. Second, abusive or semi-abusive relationships are just not sustainable, no matter how successful they look for a while.

The final question is who will drive this evolution. I believe that it will be stakeholders like Barbara Ann Berwick, who will decide to take action and drive change, following a path President Barack Obama described in his remarks on Supreme Court ruling on same-sex marriage: “Progress on this journey often comes in small increments. Sometimes two steps forward, one step back, compelled by the persistent effort of dedicated citizens.”

Image credit: Derek Clark, Flickr Creative Commons