Adapting to Climate Change: Environmental Liability

By: Anthony Wagar

Over the past several years, more and more companies are becoming increasingly aware of climate change issues and the necessity for sustainability/resiliency planning.  This awareness comes in many forms but primarily centers on how their business might be affected financially (through legal liability, fines/penalties, government regulations, and financial disclosure requirements) or just simply public relations surrounding responsible corporate citizenship. 

As the climate change threat becomes more real, based upon its estimated path into the future, industries are preparing for the potential impact, the importance of sustainability planning and facing that possibility that they may need to be prepared to pay a price on their carbon output.

This is not isolated to only major oil companies or large manufacturing companies who utilize vast amounts of coal to generate energy (some companies that have already taken the initiative to consider sustainability planning include firms such as Microsoft, General Electric, Walt Disney, ConAgra Foods, Wells Fargo, DuPont, Duke Energy, Google and Delta Airlines just to name a few).

Storm Surge and/or Flooding

Adverse weather events such as flooding, storm surges, droughts and heat-wave could lead to unexpected clean-up costs and/or pollution legal liabilities issues.  A few “real life” examples illustrated below.

Historic/Pre-Existing Contamination

Properties having historical or pre-existing contamination could be disturbed and, subsequently, carry pollutants to multiple locations resulting in the cross-contamination of various parts of the property and/or neighbouring properties.

Landfills

Heavy water infiltration can cause landslides carrying with it pollutants and/or contaminated waste water into nearby waterways or sensitive third party receptor areas.

Drums and Storage Tanks

Drums containing hazardous waste and storage tanks containing oils and other chemicals could be raised afloat and damaged during transport from their original locations, thereby distributing pollutants downstream.

Sewerage Authorities

Sewerage authorities have limited storage and processing capacity, therefore, large unanticipated volumes of water could result in the overflow and/or release of raw untreated sewage.

Mold Damage

Mold can grow at alarming rates given proper moisture, temperature range and food source (cellulose based substrate) following a saturation event.

“Green” Materials

Many environmental insurers are now providing coverage which give Insured’s an option to replace property with “green” materials following damage from pollutants, hence, further reducing their “carbon footprint” and addressing sustainability issues.

Many businesses experienced these scenarios during Hurricane Sandy, which resulted in costly remediation, bodily injury/property damage and staggering legal defense costs.

Droughts and Heat-Waves

While most of these loss scenarios discussed above would be addressed under a pollution legal liability policy, there are other “non-pollution” related environmental damages that would not be covered. For example:

Loss of Operating License

A major soft drink company lost their lucrative operating license in India because of an exhaustion of water resources used as raw material.

Supply Chain Disruption

A major footwear and clothing manufacturer was disrupted because an extreme weather event negatively affected cotton growth (which as one of their primary raw materials).

From a risk-management perspective, all of these exposures affect a company’s business risk and, ultimately, how insurers may view them in terms of underwriting appetite, coverage, premium, and limit for certain classes of risk.

While public policy and government intervention can help raise the importance and address the climate change issue, it’s actual corporations that can make the most impact through their own individual greenhouse gas reduction and sustainability efforts to ensure their own business success and longevity.

Climate change will continue to be one of the top concerns facing businesses across the board. Therefore, adapting proper risk management strategies and loss control planning measures early on is key.

- See more at: http://blog.willis.com/2014/04/adapting-to-climate-change-environmental-liability/#sthash.7eCgYB7w.dpuf

Build the Clean Energy Movement with NRG

As NRG makes the transformation from being a traditional power company to being a leader in the clean energy economy, our basic objective is very simple: we want to continue to provide the vast number of energy consumers who either are current NRG customers (roughly 3 million)  or are prospective NRG customers (virtually everyone – we think big)  with safe, affordable and reliable power but we want to do so in a manner that doesn’t melt the earth. 

As we have progressed towards that essential objective, we have realized that our most effective approach is to proceed on two tracks: certainly we have to invest in carbon capture and other approaches to reduce if not eliminate the GHG emissions from our traditional fleet of power plants – and that we are in the process of doing – but we also have to pave the way to a distributed “post-grid” future, where energy consumers are empowered by new technologies and by the freedom of choice to make their own energy decisions; to generate the lion’s share of their own energy needs from their own largely clean and inexhaustible resources whether it be wind, geothermal, in situ waste conversion or, most importantly, distributed solar.

But we have a problem and it is NOT that the appropriate new technologies don’t exist or haven’t reached a competitive price point. The problem is us.

We haven’t figured out how to engage and motivate the end use energy customer – which basically is the entire American public and electorate – to pay attention, to take control of their individual energy destiny, to make energy decisions that are not only in their economic self-interest but critical, collectively, to the long run health of the planet that we all cherish and depend upon.

We need your ideas and we need you to challenge and critique our ideas. The idea of blogging and on line conversations may not come naturally to us but we have to adapt to how things get done, problems get solved and movements get launched in the modern age. And that, first and foremost, is what we need right now, a consumer-driven clean energy movement.

Please help us figure out how to make it happen.

We are running out of time.

David Crane

NRG CEO 

Is Your Business Safe from Climate Change?

By: Anne Coglianese

Climate change poses global threats to the environment, but do you know how it will affect the quality of life where you live and work? If you own a business, do you know how climate change will affect your bottom line? A recent report called Risky Business: The Economic Risks of Climate Change to the United States helps businesses identify and prepare for the specific, local risks that climate change poses.

To the average citizen, climate change may feel abstract, and many people believe that only coastal communities will be affected. However, the Risky Business report draws attention to effects far beyond sea level rise, including mortality, storm surge, crop yields, and energy, to name just a few.  For the first time, individuals can narrow in on their region to learn which issues are most relevant in their state, discovering how closely climate change will affect all of us.

The report was released by the Risky Business Project, started in the fall of 2013 when the nongovernmental organization Next Generation paired up with Bloomberg Philanthropies and the Paulson Institute to research climate change’s economic threats. The report stresses “this is not a problem for another day. The investments we make today—this week, this month, this year—will determine our economic future.”

The Risky Business Project’s website makes the group’s report highly interactive and more informative. Due to the many videos, images, and charts found on the website, visitors can easily digest information on climate change risks.  For example, the website contains a video designed to help individuals understand the progression and threat of extreme weather changes.

What makes the report truly unique is the focused analysis provided. By breaking the US into regions and states, Risky Business targets the climate concerns in specific parts of the country as well as nation-wide.  The website then allows individuals to scroll through date on their prospective locations.

The report focuses on climate risk education in order to provide businesses with the information necessary to begin taking action to sidestep catastrophe. It highlights three areas to reduce risk: business adaptation, investor adaptation, and public sector response. Throughout various sections of the report, one thing becomes clear: a shift towards sustainable business and investment needs immediate action.

Former New York City Mayor, Michael Bloomberg, a co-chair of the Risk Business Project, and a key player in the development of this report, recently stated in an interview:

Damages from storms, flooding, and heat waves are already costing local economies billions of dollars—we saw that firsthand in New York City with Hurricane Sandy. With the oceans rising and the climate changing, the Risky Business report details the costs of inaction in ways that are easy to understand in dollars and cents—and impossible to ignore.

To learn more about climate change and find your business’ next move, visit the Risky Business Project website.

The Win-Win-Win of Impact Investing

By: Nathan Sell*

Ask not what your investment dollars can do for you, but ALSO what they can do for others, and the environment. That’s the idea behind Impact Investing, an emerging paradigm shift in philanthropy. This form of socially responsible investing generates both measurable social and environmental impact as well as returns on investment. Mark Tercek, CEO of the Nature Conservancy and former Managing Director at Goldman Sachs is at the forefront of linking business and the environment for a better world as he discusses in his recent book “Nature’s Fortune.” Tercek, and the new wave of impact investors are proving that your investments can make money AND do good.

Impact investing in the environment is quickly coming to scale as the value of ecosystem services to clean air and water, armor shorelines, as well as climate change mitigation and adaptation is being realized. Cities like Philadelphia are leading the way in green infrastructure investment. Over the next 25 years, Green Stormwater Infrastructure will help the city to combat the extreme weather patterns as well as prevent Combined Sewer Overflows resulting in greener cities and cleaner waters for which the initiative is named.

Novo Nordisk entered China in 1994 and immediately noticed that a diet high in starch was leading to diabetes in a large portion of the population. Combined with rapid pathogen spread due to urbanization, the health of the people in China was (and continues to be) at risk. Novo Nordisk put their efforts toward alleviating some of these health concerns. By training doctors in diabetes care and prevention, the company has helped to save over 140,000 life years. The shared value of impact investment ensures companies like Novo Nordisk remain profitable while helping the communities in which they work.

Impact investing also has the potential to bring promising technologies to scale. Without investment, it’s possible that companies like d.light may never have gotten off the ground. With the help of investment, this for-profit social enterprise has been able to sell affordable solar lamps to those without reliable power. The result? D.light is bringing safe, bright and renewable lighting to people around the world, allowing students to do their homework, families to cook, and an overall better quality of life to over 34 million people.

Impact investing may prove better for people and the planet than charitable giving. Investing in businesses that do good by people and the planet can ensure the success of their mission, allowing for long term solutions, rather than a potential band-aid in the form of a grant or gift. If your investment could benefit the triple bottom line, rather than just YOUR bottom line then you’ve found the rare win-win-win scenario. The next time you invest, think strategically about what your money can really do.

*Nathan is a recent graduate of the Master of Environmental Studies program at the University of Pennsylvania and a current ORISE Fellow with EPA Water.

The Impact of Climate Change on Global Food Production

By: Anne Coglianese

Water scarcity is a growing global issue and one that is significantly exacerbated by climate change. Agricultural industries around the globe are facing drastic consequences due to limited access to freshwater. According to the Intergovernmental Panel on Climate Change [IPCC], the change in supply will “exacerbate competition for water among agriculture, ecosystems, settlements, industry and energy production, affecting regional water, energy and food security.”

Such scarcity may seem surprising because the world holds 332.5 million cubic miles of water, a seemingly infinite supply. However, very little of this is life-sustaining freshwater. In fact only 2.5% of water on earth is fresh, and much of this tiny amount is inaccessible for human use due to storage in either glaciers or the ground. According to the US Geological Survey, water sources, such as “rivers and lakes, only constitute about… 1/150th of one percent of total water.” However, these are the very water sources upon which humans rely most heavily.

The IPCC states in its 2014 report that climate change is projected to strain freshwater resources significantly. The report also states “each degree of warming is projected to decrease renewable water resources by at least 20% for an additional 7% of the global population.”

My interest in issues surrounding climate change and water grew as I attended a semester abroad last year with the International Honors Program, studying climate issues in four countries: the US, Vietnam, Morocco, and Bolivia. I, along with 25 other students, looked at ways to mitigate and adapt to issues that climate change will bring to food, water, and energy. Throughout the semester, I conducted independent research on the impacts that climate change and water scarcity have and will continue to have on agriculture around the world.

I learned quickly that the two are viciously linked: food production will be drastically affected by water shortages caused by climate change, but conversely agriculture plays a huge role in creating water shortages.

Technology is making great strides to help farms conserve water resources and adapt to an increasingly arid climate. Most farmers around the world use open-air irrigation systems, such as sprinklers or channels, which lose a large quantity of water to the air as vapor, long before reaching crop roots. This means that significantly more water is being used in irrigation than is being effectively used in crop production.

Drip irrigation systems have been developed to reduce water needed for irrigation. These systems dispense water directly to the crop roots through underground hoses that slowly release water. The implementation of drip irrigation can do an incredible job of reducing the strain agriculture puts on limited water resources.

Unfortunately, the average farmer in most countries cannot easily implement this technology. Whether in the US or in countries like Morocco, farmers already face narrow profit margins and struggle to become more sustainable without the financial support and education needed to implement new technologies.

Advances in technology are going to become key in preserving agricultural sectors around the world; however, technology will not be enough to sustain farming in many regions. It will become increasingly important for farmers to begin tailoring the food they produce to match the climate.

In the last fifty years, our export-oriented world has driven farmers to seek out the most profitable crops and grow them in the highest quantity possible. For example, Morocco has high fruit exports and high imports of grains; however, the arid farms of the Atlas mountains would be better suited to growing less water-demanding crops, like grains, rather than the more water-intensive crops, like fruits. Around the world, crops produced for export often lead farmers to strain the natural capacity of the land, requiring the use of fertilizers and extensive irrigation, which threaten water supplies.

The scope of the issue of water scarcity and food production is vast and growing due to climate change. No one individual or farmer has the power to reverse this scarcity, but with needed support from governments and corporations the agricultural sector can transition to widespread sustainable food production in order to avoid looming social and economic fallouts.

Andrew Winston’s “The Big Pivot”

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By: Nathan Sell*

What does it mean to live in a world that is hotter, scarcer and more open?  Andrew Winston, business sustainability guru, debuts his follow up work to “Green to Gold.”  “The Big Pivot” looks at what it means to live in a world ravaged by unpredictable weather patterns, scarcity of precious resources, and openness of information that comes with living in the world of today and tomorrow.  Most importantly, Winston examines how businesses must react (or pivot) for survival.  Sustainability has slowly been gaining ground in business, but it can no longer be a “buzz word,” but rather a piece of day-to-day operations and decision making in every company and business.

There’s quite literally a storm brewing, as Hurricane Sandy, and numerous other disasters have proven in recent years. Climate Change is not an event that will happen one day, it is happening now.  The demands of seven billion inhabitants on this planet is showing in nearly every way, from resource use and carbon emissions, to water and food scarcity.  We’ll reach the nine billion mark somewhere around 2050.  Not only will there be nine billion people, but the emerging global middle class means that those nine billion people will be more demanding on the earth’s resources than ever before.  To sustain the human race “The Big Pivot” must take place.

While sustainability, social responsibility and environmental programs have long formed niche departments in a variety of businesses, Winston identifies the “Pivot” as moving these “niche” departments into leading roles.  Businesses operate within the confines of our planet’s resources. The sooner environment and sustainability are the main informants in decision making, the sooner we can hope to operate within the limits that exist, yielding a zero footprint or even restorative change.

Many “early movers” in the sustainability realm are reaping the benefits of sustainable operations.  By dismissing the notion of operating on a quarter-by-quarter basis, but looking to long-term sustainable investment as a means of ensuring longevity and continued growth, these companies are leading industries in both sustainability and sales.  Some of these forward thinking companies include IGEL Corporate Advisory Board members such as Dow, Johnson & Johnson, Xerox and GE to name a few.

Winston reminds us that when taking action to enhance business in a hotter, scarcer and more open world, the first step is goal setting.  These goals must be informed by science.  If we hope to live in a world with no more than a 2 degree Celsius rise in temperature, emissions must be curbed 80% by 2050.  It is clear that working in the confines of “what we think we can do” is no longer acceptable.  Aggressive, process altering goals must be set, and these goals must align to the 2050 benchmark or they are too little too late.  The proof is out there, as outlined in Winston’s writing, that not only do these reductions yield environmental benefits but profits as well.  Evaluating how your company can help to reach this 2050 target can be daunting but the tools available at pivotgoals.com can help to guide change.  Still unsure that your business can benefit from “The Big Pivot?” Get your copy, available on Amazon.

*Nathan Sell is a recent graduate of the Master of Environmental Studies program at the University of Pennsylvania, and is the current IGEL Coordinator.

3rd Plasticity Forum comes to NYC June 24th

plasticity_high_newNY small PNG

By: Nathan Sell*

The 3rd Plasticity Forum kicks off next week on June 24th in New York City.  Originally launched in Rio at the Earth Summit, and last year in Hong Kong, New York is an opportune location for Plasticity’s first US forum, given the innovative work America’s biggest city has been undertaking.  Many may wonder, what is Plasticity, and why should I care?  To begin, consider this: how long could you go without using or wearing an item made of, or containing plastic? A day? An hour? A minute?  Plastic is cheap, versatile and convenient.  Because of this we view many plastic products as “disposable,” but even if their functional life is a short, like a stir straw or a soda bottle, their actual lifetime is decades or centuries. Despite our best intentions, only 10% of the plastic we use is recycled, much is landfilled, and still a great deal ends up as pollution, often in the “great pacific garbage vortex” where ocean currents move much of our plastic waste debris.  This debris is confused for food by many marine animals from birds to fish and turtles, and wreaks havoc on delicate ecosystems.

We should remind ourselves that plastics are made from a non-renewable resource which takes a great deal of energy to extract, refine, mold, and transport.  This begs the question, why would we throw this stuff out?  When we take this into consideration it becomes clear that there’s a great opportunity in changing the way that we use and reuse plastics.  We need to take a look at plastics from their formation (cradle) to their disposal (grave).  Better design (sometimes referred to as “design for the environment”) can make plastic products more easily recycled, diverting waste where it can be used as a raw material again (cradle to cradle). Reducing the amount of plastics in products, light-weighting and biodegradability are all solutions that need to be brought to scale in the plastics industry.  Technologies exist that can turn plastics into fuel (low-sulphur diesel fuel, giving an air pollution improvement along the way), making plastic waste a desirable system input.  These technologies should be considered prime investment opportunities.

Plasticity Forum will bring together leaders in industry including Nike and Dell together with leading advocates of responsible product use/reuse such as Interface and the Cradle to Cradle Products Innovation Institute.  Altogether, the forum will be the most influential dialogue on plastic pollution, design, reuse and innovation, all of which need to scale for us to bring out the opportunities that these issues represent.  Make sure to register and be part of this important conversation.

www.plasticityforum.com

View the Plasticity Forum Trailer Here

 * Nathan Sell is a recent graduate of the Masters of Environmental Studies program at the University of Pennsylvania and is the current IGEL Coordinator.

A Global Push For Climate Finance

By Aubrey Sherretta

June 3rd 2014 marked the launch of the Global Innovation Lab for Climate Finance, a partnership between the US, UK and German governments with several private sector representatives to develop and promote climate finance instruments globally.  The lab includes leaders from governments and financial institutions who will identify and analyze financial opportunities for private investment that could have large-scale impacts on both climate change mitigation and adaptation.  Overseeing the analysis of proposed climate finance instruments are the Climate Policy Initiative and Bloomberg New Energy Finance.

Lab Principal Purna Saggurti, chairman of global corporate and investment banking at Bank of America Merrill Lynch said: “We look forward to sharing our experience from structuring and financing numerous transactions in clean energy, green bonds, and environmental markets.”  Bank of America, a Wharton IGEL corporate advisory board member, along with Merrill Lynch have already committed to mobilize 70 billion dollars for low-carbon business opportunities.

Large-scale investments are required to reduce emissions and adapt to the effects of climate change, according to the United Nations.  The Global Innovation Lab for Climate Finance’s push to incentivize climate investment may be viewed as a major step towards mitigating the adversities of a changing climate.  The lab has already attracted more than 80 ideas for potential climate finance instruments from the public and private sectors, and hopes to attract billions in private investment for climate-conscious investment opportunities in developing countries.  Changing the dialog around climate change from financial burden to opportunity may be the greatest motivator to bring about a new era in climate action.  Keep an eye out for chosen ideas to be released by the lab in the coming weeks.

Also, stay tuned for Knowledge@Wharton Special Report on this topic coming later this year.

“Yes We Can” Obama’s environmental legacy begins with reducing US carbon emissions

By: Nathan Sell**

Seventeen years after the United States failed to ratify the Kyoto Protocol; the first steps have been taken to address greenhouse gas emissions. President Obama and the EPA have taken a historic stance, solidifying the environmental legacy of this administration. As one of the world’s greatest carbon emitters, this will have a real impact on global emissions, but perhaps more importantly, show that the US will no longer stand idly by when it comes to climate change, setting an example for other large emitters like China and India.

Power plants account for roughly 30% of carbon emissions in the US, and new regulations will reduce emissions from these plants 30% by 2030 in comparison to 2005 levels. The good news is that we’ve made a great deal of progress on this goal to date before this regulation was announced. Since 2005 emissions in the US have been decreasing largely due to the natural gas boom, increased renewables use and the recession. According to Time magazine, we’re down 16% since 2005, more than halfway there.

The impacts on human health and safety are perhaps the most impressive. It is estimated that this legislation will prevent some 2,700 to 6,600 deaths related to air pollution and prevent 140,000 to 150,000 asthma attacks amongst children in the United States. On the other hand, the GOP claims that this legislation will cost 800,000 jobs and $50 billion/year. If this were to be the case, which seems unlikely, it would still be money well spent, helping to mitigate the effects of climate change.

Ultimately this is the first step to a reduced carbon economy, but it cannot be the last. Reducing emissions just means that we’re putting LESS carbon in the atmosphere every year, but the CO2 concentrations will continue to rise. Having recently passed 400ppm of CO2 in the atmosphere, we’re not even close to lowering that number. Regulations and incentives will be a major player when it comes to innovative technology both in terms of energy production, climate adaptation and mitigation. Now that the first step has been taken, we must continue this journey for the future of our planet.

 

**Nathan is a recent graduate of the Master of Environmental Studies program at the University of Pennsylvania and the current IGEL Coordinator.

Investing in a Secure Water Infrastructure

By: Nathan Sell

The American Society of Civil Engineers’ (ASCE) 2013 report card gives America’s drinking water infrastructure a D. For those of us who’ve fretted over GPA points for much of our lives, a D is the source of nightmares and leaves us knocking on our professor’s office door begging for an explanation. The reason we find, is that we’ve hidden our precious water infrastructure out of sight where its degradation can be easily ignored. The result? More than $1 trillion needs to be invested in our failing system over the next 25 years.

Our water systems have been historically underfunded, mostly because they require a vision that extends past most terms in office. These infrastructure projects are rarely seen or understood and do not gain many votes, yet as we go about our morning routines, the thought never crosses our mind as to whether or not water will come out of the faucet as we prepare to brush our teeth or brew coffee.

Currently, most municipalities only invest in water infrastructure when it needs to be repaired. Rather than maintenance, we rely only upon “Band-Aids” to keep our systems going. With approximately 240,000 water main breaks per year, we’re fighting a losing battle. Our ancient water infrastructure still contains pipes laid over a hundred years ago, some even constructed from wood or clay. Losing water from treatment facilities to the home represents 16% of our nation’s daily water use, wasting 2.1 trillion gallons a year. This represents not only water loss, but the energy and costs associated with treating this water, only to be wasted. In no other industry is this type of loss acceptable. As we begin to address water scarcity, energy use and climate change on a national level, it is clear that it is time to re-examine how we maintain our water infrastructure.

Rather than wallowing in our seemingly insurmountable water infrastructure woes, companies like United Water are finding the opportunities that are available in rehabilitating these systems and finding the rare win-win-win scenario. At the recent IGEL/United Water conference, “Investing in America’s Public Water Systems: Making Private-Public Partnerships Work” James Kennedy, the former governor of Rahway spoke to the benefits a Public-Private Partnership can generate, not only rehabilitating infrastructure but promoting the town’s growth through infrastructure investment. By bringing in private equity to invest in water infrastructure through PPP’s, debt can be repaid, and a safer, more efficient water system designed for future needs can prevent the reactionary maintenance ethic of the past.

Public-Private Partnerships are not the only way to invest $1 trillion into our water infrastructure but they are quickly proving their worth. The foresight involved in the long-term planning as well as investment of private capital make these partnerships beneficial to the municipalities in which they work, the people they serve as well as the investors who can see the value in this much needed resource. By valuing the resource many consider a human right, we can ensure the longevity of America’s public water systems.