Earth and Industry » William Sarni

Major US Retailers Drop Products Sourced from Canadian Oil Sands

William Sarni — Tue, 16 Feb 2010 12:04:22 +0000

Tailings pond at oil sands development along Canada's Athabasca River. (Photo Courtesy of David Dodge/Pembina Institute)

In an effort to slash CO2 output, Whole Foods, Bed Bath & Beyond announce they will no longer buy products sourced using Canadian oil sands.

Sure there is little to no progress from the COP15 summit in Copenhagen; the US Congress is gridlocked in beltway madness with regards to climate legislation; and the media can’t seem to understand that climate science is not a sound bite.

However, I remain hopeful because of voluntary actions by companies that recognize that we need to move to a low carbon economy -- and they have the power to make it happen. Why the hope? Many companies are voluntarily moving ahead with carbon cutting programs on their own.

Tucked away in the Financial Times last week, Sheila McNulty reported that Whole Foods Market and Bed Bath & Beyond have decided not to source fuel from Canada's oil sands (formerly tar sands).

Oil sands have a much higher carbon content than crude oil and many of the development processes have oil sands' negative impact on human health, water and wildlife.

Michael Besancon, Whole Foods’ senior global vice-president of purchasing, distribution and marketing, said: “We’re looking at our carbon footprint, and tar sands fuels are higher carbon,” Mr Besancon said. “We’re trying to be a leader – out in front on this issue.'

These latest actions are being encouraged by ForestEthics an NGO that is pushing to move US businesses away from the high carbon footprint oil sands. ForsetEthics is negotiating with 30 companies to follow the lead by Whole Foods and Bed Bath & Beyond.

Whole Foods looked at their supply chain carbon footprint and replaced Marathon Oil with CountryMark which sources from US oil sources. A simple and relatively small action but with significant implications for energy companies that source from oil sands. If industries decide to move to a low carbon source for energy to better manage risk (high carbon sources will at some point be regulated) and demonstrate leadership in sustainability, then it will have an impact on the energy sector.

Building a low carbon economy: the power of voluntary actions

Although the impact may be smaller, the move is like the Walmart sustainability initiative in that the greatest impact a company can have on their environmental footprint is typically within their supply chain.

Walmart is now positively influencing tens of thousands of their suppliers to pay attention to their resource use (energy, carbon, water and materials). Walmart, Whole Foods and Bed Bath & Beyond are not alone in quantifying their entire environmental footprint and looking a ways to reduce the supply chain portion of their footprint.

Based upon my experience with our clients influencing your supply chain is is where the real power resides in embedding sustainability thinking into a cross section of industry sectors. The approach: tell your suppliers that you are committed to a sustainability strategy and they are part of the solution. If they are not interested companies now have the option of sourcing from those companies that can provide “low footprint” products.

Marketing Products as Sustainable? Green? Carbon Neutral? The FTC Is Watching

William Sarni — Mon, 08 Feb 2010 18:19:47 +0000

It is time to get serious about your green performance claims. This means being sure your claims are well grounded in quantitative performance.

The recent guidance by the SEC recommending that companies report risk from climate change coupled with increased scrutiny by the FTC on green claims means that companies must (no longer optional) quantify and carefully communicate sustainability performance both at the company wide and product level.

For the past several months the Federal Trade Commission (FTC) has been working on updating their “Guides for the Use of Environmental Marketing Claims” better know as Green Guides. Section 5 of the FTC Act gives the agency the ability to “intervene” when businesses are misrepresenting their green performance. The original Green Guides have not been updated since 1998, which in view of all the progress with the greening of the global economy seems like an eternity.

For some perspective on what is happening at the FTC, there were no complaints filed by the Agency during the previous administration. However, over the past year seven claims have been filed. According to the FTC this sudden activity is in response to the dramatic increase in green marketing and the emergence of terms such as “sustainable” and “carbon neutral.”

Notable enforcement by the FTC includes going after Kmart Corp., which advertised paper plates as biodegradable. The FTC deemed this to be misleading as the plates would not decompose in municipal solid waste facilities. K-Mart ultimately agreed to change the marketing claims. The FTC also filed two other claims against the biodegradability of products, as well as four against companies using environmental claims in the marketing of bamboo clothing.

This is significant in that it will drive increased demand for verifiable data on energy, water, carbon and material use by companies. Moreover, it will require increased scrutiny of the quality of carbon offsets, renewable energy credits and eco-labeling.

These moves by the SEC and FTC are good for the industry. Adding rigor to sustainability performance will benefit all stakeholders, in particular consumers and investors. If I am going to buy a product or invest in a company, which makes claims that they are “sustainable” or “green”, I want assurance as to what this actually entails.

And finally I will be very pleased to see claims of “carbon neutrality” and hopefully “water neutrality” be examined carefully. They have been thrown around way too much over the past few years with little transparency to support the claims.

Photo: ItzaFineDay via flickr/Creative Commons

Why Voluntary Sustainability Reporting Is Dead

William Sarni — Mon, 01 Feb 2010 13:15:05 +0000

Corporate reporting of risk of rising sea levels and other impacts of climate change suggested by SEC. (Photo: go_green_oz/flickr)

The Security and Exchange Commission's new corporate guidance for disclosing climate change risk may signal the end of voluntary sustainability reporting as we know it.

Any notion that companies may have had that voluntary reporting was, in fact, voluntary has now disappeared.

The two key events that have laid this notion to rest were the announcement late last year by the Carbon Disclosure Project that they would be sending out a "Water Questionnaire"; and last week's announcement from the Securities and Exchange Commission suggesting companies “should warn investors of any serious risks that global warming might pose to their businesses.”

First, a little bit of background on the Carbon Disclosure Project is in order. The first CDP questionnaire was sent out in 2003 and now represents over 475 investors with roughly $55 trillion in managed assets. These investors are “asking” companies to disclose their carbon emissions and associated risk (along with potential business opportunities).

This is not an “ask.” There are increasingly few companies that do not respond to the CDP or are on the verge of responding to the CDP this year. Eighty-two percent (over 3,700 companies) of the Global 500 companies (as measured by market capitalization) responded to the 2009 questionnaire. The CDP is now moving ahead with “asking” companies what is their business risk from increasingly scarce water resources.

Water levels are dropping at Lake Mead and other reservoirs in the west. (Photo: 666isMONEY/flickr)

Now we move to the Securities Exchange Commission's new guidance that companies should report on climate risk to their businesses. The SEC has required companies to disclose possible financial or legal impacts from environmental issues (such as soil and groundwater contamination). However, this is the first time the SEC has specifically cited climate change as having potentially significant business risks (or opportunities).

The SEC’s “interpretive guidance” highlights that companies could be hurt or helped by climate related litigation, business opportunities or legislation. A straightforward example of a potential risk from climate change would be a company that has invested in coastal properties. Rising sea levels from climate change would represent a risk to these real estate investments.

Investors driving increase in transparency

The bottom line with voluntary reporting is that one of the most critical stakeholders a public company has is their investor group. When an investor asks for information on risk from climate change or water scarcity providing an answer is no longer optional.

No public company wants to be in a position of being asked a question they cannot answer. This why most companies are now working on their 2010 CDP responses, perhaps preparing to answer the CDP Water Questionnaire, and now, figuring out how to respond to the SEC guidance on climate change disclosure.

Follow Will Sarni on twitter @willsarni
Photo credits: go_greener_oz; 666isMONEY via flickr

Is Your Company Ready for Water Disclosure? Probably Not.

William Sarni — Wed, 02 Dec 2009 17:24:50 +0000

CDP announces The Water Disclosure Questionnaire for 2010 (Photo: laszlo-photo)

If you love the Carbon Disclosure Project Questionnaire, you will love the Water Disclosure Questionnaire. The question is: Are you prepared?

The CDP recently announced that they would begin sending out a Water Disclosure Questionnaire in 2010 to the largest 300 global companies and the questionnaires will be summarized in a report in late 2010.

I fully expect the CDP Water Disclosure Questionnaire to be as successful as the climate CDP questionnaires based upon the relatively rapid adoption of the CDP in motivating companies to discuss the risk and opportunities of climate change to their businesses. The CDP was launched in 2000 with the goal of collecting and distributing information on climate risks and opportunities. The CDP now has over 2,500 organizations in 60 countries measuring and disclosing their greenhouse gas emissions and climate change strategies.

These organizations voluntarily quantify their greenhouse gas footprint, set reduction targets and improve performance. The disclosure information is made available to institutional investors, corporations, policymakers and their advisors, public sector organizations, government bodies, academics and the public.

Equally impressive as the number of organizations that disclose greenhouse gas information is that the CDP is represented by over 475 institutional investors, holding $55 trillion in assets under management. This is the real driver for voluntary disclosure—investors are asking for this information—and why the Water Disclosure Questionnaire will be a critical aspect of corporate strategies and communications.

The Water Disclosure Questionnaire will help institutional investors understand the risks and opportunities from water scarcity and water related issues confronting businesses. Global financial institutions such as NBIM, Schroders, APG Asset Management and Dexia Asset Management support this new CDP program and have taken the lead on developing an understanding of water risk to their investment portfolios.

According to the CDP, the rationale for the water disclosure questionnaire is that “companies face risks such as lack of water impacting agricultural and manufacturing processes and the threat of regulation increasing prices and limiting the volume of water available to them.” Moreover, the lead sponsor of the CDP Water Disclosure Project, NBIM stated “as water becomes an increasingly constrained resource, it also becomes an investment issue. It is vital that institutional investors have access to high quality information on how water-related risks threaten corporations, both directly and within their supply chains, in order to make better-informed decisions and direct the flow of capital away from risks and towards solutions. CDP Water Disclosure will be essential to providing investors with this information.”

Report shows ample room for improvement in corporate water accounting

The announcement of the project came with the release of a CDP report titled, “The Case for Water Disclosure”. This report is a must read as it not only lays out the rationale for water disclosure but summarizes the results of a small scale water disclosure pilot project initiated by CDP in 2008 (as part of the CDP Supply Chain project).

The pilot project demonstrated that for the most part companies have the ability and are willing to disclose information on water data and water issues. The key findings from the report were mixed:

The good news? Most companies do have information on their direct water usage. More than half of the respondents see water as an opportunity and many companies have a water management plan, but only for their own plants.

The bad news? Most companies do not have data on water use or water issues in their supply chain. Only half of the respondents saw water as a risk for their business and for their supply chain. And apparently that is especially true for the food and beverage industry as no companies in the industry responded to the questionnaire.

My advice for any company is to measure your water footprint, identify risks and opportunities (direct and indirect water use) and be prepared to disclose how you will manage your water related risks and what are your business opportunities look like.

Your investors are waiting for your response.

Why Google and Cisco will Soon Manage All Your Energy Use

William Sarni — Thu, 12 Nov 2009 04:02:00 +0000

Goolge and Cisco are both making plays to manage your energy. (photo: © Eimantas Buzas/Dreamstime)

Google and Cisco have the resources--and the head start--to lead the IT sector in energy management

The IT leaders have re-entered your home and business in a whole new way. Companies like Google and Cisco are providing the tools to help consumers and businesses monitor and manage their energy use to reduce carbon emissions.

So, how did this trend come about? And what does it mean for energy consumption in the U.S. and throughout the world?

The IT sector and energy management

Let’s start at the beginning. A report published in 2008 by The Global e-Sustainability Initiative (GeSI) called SMART 2020 (pdf) provided a clear picture as to how the IT sector has a major role to play in reducing energy use, and as a result, reducing carbon emissions. This report is key in understanding the global business opportunity of the IT sector in transforming energy use and carbon mitigation.

The report had two major components; it quantified the direct emissions from IT products and services based on expected growth in the sector and it quantified where IT could “enable significant reductions of emissions” in terms of carbon emissions and cost savings.

One of the conclusions of the report was to identify (no real surprise) that the IT sector had a major role to play in improving energy efficiency in power transmission and distribution (T&D) in buildings and factories that demand power and in the use of transportation to deliver goods.

The GeSI report estimates that the entire IT sector could reduce approximately 7.8 gigatons of CO2 of emissions savings by 2020 or about 15 percent of emissions project by 2020.

So, the IT sector has a significant role to play in reducing energy use and carbon emissions, presenting an enormous business opportunity. Companies such as Google, Cisco and others are now focused on smart grid and smart buildings; your home and your office. Smart grid and smart buildings refer to the ability to monitor energy use and adjust based upon real time data, a two way exchange of energy information. For now, Google is focused on home energy management and Cisco on commercial energy management. However, considering the blurring of market boundaries, this may separation may change over time.

The new energy management products

The two most interesting developments currently are from Google and Cisco (full disclosure, Cisco is a client of DOMANI). Google has essentially bypassed the need for a smart meter by partnering with Energy Inc. to provide a home energy meter, which works with Google’s energy management software. The Google PowerMeter and Energy Inc.’s TED 5000 (The Energy Detective) monitor energy use from a web browser or smart phone. The information from the system includes real time energy use and approximate cost, trends and comparisons to previous use.

Google is “everywhere” and now may become your trusted source for home energy management, in particular with Android entering the Smartphone market.

Now let’s take a look at Cisco and their EnergyWise product (Cisco also has an Energywise calculator to quantify projected performance). According to Cisco, EnergyWise can:

Monitor the power of all Cisco network-connected devices, from Power over Ethernet (PoE) devices to IP-enabled building controllers;
Report aggregated power consumption to provide a clearer understanding of an organization's power-consumption habits;
Optimize overall power usage based on user-created policies across the entire corporate infrastructure;
Provide reports of current power conditions and suggest potential changes and;
Regulate companywide energy consumption using scalable domain approach which brings IT and facility networks together.

Just like Google, Cisco is using the Internet to monitor and manage energy use.

We are quickly moving towards the ability to effectively manage energy use (and reduce carbon emissions) through the web or your smart phone (we still have a way to go before it is mainstream).

What will be next? Managing water resources (which we are also notoriously good at wasting)? Perhaps this is not very far off in the future.

Greenwash Hits the Courtroom: Why the ‘Green Wave’ Now Includes Litigation

William Sarni — Tue, 29 Sep 2009 17:43:14 +0000

The 'green wave' of sustainability now includes, and will increasingly include, an aspect of litigation. Why litigation and what will be litigated?

As sustainability becomes increasingly regulated, litigation is inevitable. This week we saw movement towards increased threat of litigation in two key areas; greenwashing and climate change. While I will focus on the Federal Trade Commission (FTC) move to prosecute misleading environmental claims, the week also included a ruling that states can bring litigation against utilities that emit greenhouse gas emissions.

Let’s take a look at greenwashing claims. The “green wave” has witnessed an increased number of products with green claims. In June 2009, the FTC charged Kmart Corp., Tender Corp., and Dyna-E International, Inc. with making false claims that their paper products were biodegradable. According to the FTC the products do not degrade in landfills.

In August 2009, FTC charged four companies—Jonno, Mad Mod, Pure Bamboo, and Bamboosa—for claiming to have used an “environmentally friendly” method to make biodegradable, antimicrobial clothes from 100 percent bamboo fiber. However, according to the FTC, these clothes were actually made with rayon with no resultant “green qualities.”

As of this week, Jonno, Mad Mod, Pure Bamboo, Kmart, and Tender have settled FTC complaints while the FTC charges against Dyna-E International and Bamboosa remain in litigation.

The FTC views the marketplace as chaotic with numerous vague green claims and an overwhelming flood of consumers in need of help in sorting out what is real from what is false. The FTC has prosecuted 37 companies for allegedly making false energy or environment claims since 1990. Twelve of these were prosecuted over the past decade.

These prosecutions reflect FTC’s aim to police a chaotic marketplace teeming with ambiguous labels, such as “all-natural” and “non-toxic”. But experts warn that FTC and its limited staff are overwhelmed by growth in the green-products sector, which leaves consumers increasingly vulnerable to deception.

Help on the way: Washing away the greenwash

There may be some help on the way as the FTC moves ahead to update their “Guides for the Use of Environmental Marketing Claims,” known as the “Green Guides.” The updated guides are intended to address new green claims such as “sustainability” and “carbon neutral” - which is no small task.

My strong recommendations are to ensure that sustainability performance is quantified to develop proof points prior to making any marketing claims. Not only do companies run the risk of damage to their brands but the FTC will be watching and you run the risk of litigation.

Quantitative performance is critical in crafting product claims and, at the very least, will come in handy in the event you and your company show up in a deposition.

Image via Krassy Can Do It

2009: The Birth of the Electric Car

William Sarni — Tue, 22 Sep 2009 13:27:50 +0000

Tesla Roadster Sport. Image courtesy of Tesla Motors, Inc.

I have to confess, I like cars a lot. I also love mass transit (in particular, the light rail in Denver and fast rail in Europe), but there is something very special about a car such as the Porsche 356 or the Tesla Roadster. As a result, I tend to follow the auto sector somewhat closely and track new design and technologies.

So, for me, I am convinced that 2009 was the year of the electric car even though the numbers of actual cars sold or projected to be sold this year do not appear to support this conclusion.

However, this really was the year where the electric vehicle (EV) and the Plug-in Hybrid Electric Vehicle (PHEV) became accepted in the minds of both the auto industry and consumers. This was the year for breakthrough thinking, technology and investment.

My reasoning is as follows:

Detroit—in recent years not noted for innovative thinking—suddenly understood that PHEVs and EVs represent the future;
The innovative Tesla not only became profitable but attracted mainstream investment (from Daimler);
Innovative business models are emerging, with Better Place taking the lead; and
Significant investment is being made in PHEV/EV vehicles as well as battery companies as reflected in Warren Buffet’s investment in China’s BYD.

In the United States, several key developments highlight my thesis that this is the year of the EV. The first is that the U.S. auto industry let go of some very old thinking, albeit due to the economic meltdown, and accepted that the PHEV/EV is a market opportunity. This goes well beyond the hype of the Chevy Volt.

The second is that this is the year that Tesla became profitable and received a six-percent investment from Daimler.

Third, Project Better Place, led by Shai Agassi, is rethinking the auto business model and planning the redesign of the auto infrastructure. The vision of Better Place is to provide a network of recharging stations and swappable battery stations. The business model will be to separate the ownership of the battery from the ownership of the car (similar to the separation between cell phone service and phone ownership as a close model). Essentially the concept is to charge for services (battery and electricity) per miles traveled.

This business model is gaining traction. Tesla plans to offer a swappable battery for its S model next year. Israel is building the Better Place infrastructure; Nissan is tooling up swappable batteries for its EVs; Better Place has signed deals with Hawaii, Denmark and Australia; and Tokyo’s largest taxi operator has partnered with Better Place for a new fleet of taxis in Tokyo (about 60,000 vehicles). Better Place also has a “soft” initial order for 35,000 cars in Israel with a rollout in 2011. Better Place has also demonstrated software that directs drivers to the nearest charging station and enables them to monitor the location of available batteries for their vehicles.

Finally, in addition to the United States’ move to EVs, global companies are quickly moving forward with new proposed models and new technologies. Carlos Ghosn, CEO, Renault-Nissan, is committed to producing four EVs within three years and reaching six-figure sales by the middle of the next decade. He plans to produce an EV van, family car and city car by 2011, and a five-seater by 2012. The Renault-Nissan alliance is committed to the Better Place “quickdrop” battery replacement technology in which batteries can be replaced in less than a minute.

2009 was a breakthrough year for EVs and PHEVs. While significant advances are being made in conventional gasoline-powered engines (Ford’s “Ecoboost” technology), EVs and PHEVs are gaining ground and have moved from a technical curiosity to a more mainstream alternative.

Amazing progress in just one year. Wait until next year.