Category Archives: business sustainability

Energy Policy Now Podcast: How Alberta Overcame Discord to Enact Carbon Tax

Contributed by the Kleinman Center for Energy Policy, via Andy Stone

Carbon policy unexpectedly made headlines last week when a pair of Republican party elders proposed a national carbon tax with a few unique twists. The proposal from Treasury secretaries George Schultz and James Baker actually looks similar to the carbon tax that the Canadian province of Alberta enacted on January 1st with unusually broad buy-in from environmentalists, the energy industry (Canada’s oil sands are in Alberta), indigenous groups and government.

Energy Policy Now, the podcast from Penn’s Kleinman Center for Energy Policy, interviews Alberta’s senior diplomat to the United States on details of the tax and the collaborative process that made it reality.

Gitane De Silva, Senior Representative to the United States, discusses plan details including the rebate checks to the majority of Albertans to offset higher energy costs. De Silva also provides insights into the provincial government’s intended uses for the balance of the C$9.6 billion in tax revenue over the next five years.

Collaboration, Innovation and Sharing: Turning Circular Supply Chain Vision into Reality

By Todd Hoff, VP Marketing and Customer Solutions, CHEP North America

When many of us were young, our parents taught us to share because it is polite and a nice thing to do. Today, as the world faces significant population growth and the environmental challenges that follow, the concept of sharing is a key building block in the long-term strategy to build a better world.

Experts say that the global population is expected to grow from 7.5 billion today to nearly 10 billion by 2050, adding more than two billion consumers to the global economy that will need access to safe, affordable and nutritious food and personal care products.

For decades, the fast-moving consumer goods industry has kept pace with growing population and consumer demands thanks to the development of innovative agricultural, manufacturing and supply chain practices. In recent years, academics, industry leaders, economic and sustainability thought leaders and efficiency experts have been collaborating to develop equally innovative plans for successfully meeting the challenges of the future.

That is where the concept of sharing comes in. Moving beyond the concept of reduce, reuse and recycle, stakeholders in the global economy have developed a vision of a Circular Economy, powered by a Circular Supply Chain that produces zero waste and zero carbon emissions. The fundamental building block of a Circular Supply Chain is shared and reusable assets.

At CHEP, our business model is based on shared and reusable assets. We move consumer goods throughout the world on more than 300 million reusable pallets, containers and crates that are used over-and-over again by our customers. We are committed to the vision of a Circular Supply Chain and bringing it to life through ongoing collaboration with our customers, thought leaders and stakeholders around the globe.

On February 8th, CHEP partnered with the Wharton School’s Initiative for Global Environmental Leadership at the University of Pennsylvania for a thought leadership event entitled,  Connecting the Dots: Sustainability Through a Circular Economy. CHEP teamed up with visionary stakeholders – a major packaging manufacturer; a multinational food, snack and beverage corporation; a grocery retailer and a leading consumer research company. They each discussed their sustainability efforts and collaboration in helping to turn the vision of a Circular Supply Chain into reality.

A recent study by McKinsey & Company shows that the consumer goods supply chain is fertile ground for both efficiency and sustainable savings presently and over the long-term. That is intriguing, because our focus at CHEP is collaborating with our customers to optimize and improve the sustainability of the supply chain.

Through our end-to-end supply chain solutions, we help our customers save money, become more efficient and more sustainable. For instance in the past 12 months, when it comes to sustainability, we have helped customers keep 1.4 million trees on the planet and eliminate 2.3 million tonnes of CO2 from the atmosphere, equivalent to taking more than 485,000 passenger vehicles off US roads. We’ve also removed 1.3 million tonnes of waste from landfills, eliminated 3 million empty truck miles and avoided more than 3,000 tonnes of food from being damaged during transport.

In collaborating with our customers, CHEP and its parent company, Brambles, have been recognized by the leading Circular Economy foundation and a major grocery retailer as a key component of the Circular Supply Chain because of our shared and reusable business model.

We are excited about developing an efficient and sustainable global supply chain that benefits people and the planet for generations to come. We are equally proud to partner with our customers and leading stakeholders to achieve a Circular Economy and a Circular Supply Chain, through sharing our experiences at Connecting the Dots.

Visit www.chep.com for more information or follow us on Twitter @CHEPna and LinkedIn. Please also check out our YouTube channel.

Janice Martin Couture: Sewing Green into Philadelphia’s Boutique Apparel Scene

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The Greenest Gowns!

Janice Martin Couture designs classic custom clothing for women who appreciate quality, fit and fashion… which are all attributes that coincide with a more sustainable “European approach” to dressing.  Working with clients to create clothing which flatters their figure and reflects each personality allows for fabrics which are all natural, lighter in weight, more “breathable” than garments which are made from or lined in polyester/petroleum based textiles.  Because the clothing is made for a specific figure, and because each client’s fabric choices reflect her personality, clients have a love affair with the items designed which influences them to wear the items more consistently over time and the quality of the construction allows each piece to survive multiple cleanings… alterations… design upgrades, etc.  Only fabric needed for the client’s use is ordered, so there is little “over-run” and what is left as scrap is given over to students or quilting groups who make items for the homeless.  For those women who “amortize” the cost of a garment, the everyday suit becomes a great bargain.

Of course there are plenty of women whose experience with couture is only through the purchase of bridal and evening wear.  In that case, a garment custom designed at the local level leaves a smaller carbon footprint, keeps finely trained artisans in business and again, allows for better quality fit, fabrics and future use.  Many of the bridal gowns designed at Janice Martin Couture are designed with future use in mind so that clients can wear their wedding gowns to follow up events at the opera, other weddings, holiday parties, etc.

By far the biggest “green” wedding gown would be that of the re-designed heirloom gown…. many women have a family gown which may or may not fit or flatter the current bride’s needs… but knowing the right creative team allows the bride to recreate the gown in a myriad of styles that can make it truly her own —while honoring the family tradition.  It is possible sometimes to completely take apart a vintage gown and use the fabrics to design an entirely new style… or sometimes it’s a matter of tweaking what is already there… or rebuilding just the bodice or just the skirt.  It is possible to take a gown from a small size to large, shorter to longer (or vice versa)… add color, matching lace or contrasting trim.  The right imagination and skills can produce an amazing transformation.

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(Before re-design and alterations)

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(After re-design and alterations by Janice Martin)

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Family textiles may also be the result of far-flung travel.  Numerous clients have purchased “souvenir textiles” that have been sitting unused on a shelf for years from which we have designed a variety of separates (African kente and mudcloth), evening and bridal wear (sari fabric), and sportswear from Kashmiri cashmere.

When our clients are out and about in a great style that transcends trends and are still getting compliments on an item designed 25 years ago the return on investment continues to please.  When a bride walks down the aisle in a gown that has connections with mothers, grandmothers, aunts, siblings or even a close friend, the sentimental value and joy are multiplied.  When being “part of the process” allows a gown to “evolve” with input from the client, it produces a gown much more special and flattering than any item found “off the rack”.  All of which contribute to a clothing philosophy of long lasting beauty, joy, utility and value.

Archival / Long Term Storage for Textiles

Storing textiles, fabric, leathers and feathers, etc. in plastic has proven to be a poor choice for the long term health of materials.  Better to store that heirloom gown in a cotton sheet, or the Ty-Bag, an archival garment bag made to measure by Janice Martin Couture.  These garment bags may be used for transporting a gown to/from an event… or for long term storage thus alleviating the need for a space hogging box that is often NOT truly acid free.  As long as the materials are stored in an area that is “not too hot/not too cold, moist, dry, etc” (if you are comfortable, so are your textiles is one way of judging the situation), your garments can be stored and worn safely for years to come.  The Ty-Bag is made from archival muslin or Tyvek, depending upon the client’s preference.  The muslin bag can be washed every few years to remove dust and an inspection of the materials stored therein made… Tyvek is an inert product used by museums for long term storage and needs no cleaning.  That is not to say that Tyvek cannot get wet however.

For the bride marrying in “iffy weather” Janice Martin Couture has designed a bridal rain cape out of Tyvek —it is lightweight, takes up little space, allows for gown protection, can be used as a drop cloth for photo shoots on wet pavement or grass… and can be used after the wedding as a cover for the gown to keep dust off for long terms storage.  For questions or to order, please contact http://www.janicemartin.net

Go Green (All Natural), Wear Green (Redesigned Heirloom Gowns), Save Green (Money)

For the quality conscious woman who knows what looks well on her… who may not like to shop… but does like the creative input allowed by the process of custom clothing… a wardrobe update may be as close as “closet shopping”…a trip to her own closet may produce a number of things which need to be purged, but may also discover favorite items that need a tweak to make them current, wearable and beautiful again.  Among the items clients have brought to Janice Martin Couture are heirloom wedding gowns and evening wear too cherished to give away.  Besides redesigning a vintage wedding gown into one a contemporary bride would wear, we have designed cocktail dresses, sun dresses, christening gowns…. even jackets, bustiers, pillows, baby quilts and clutch purses from family gowns that otherwise may have languished sadly in disuse.  It’s a great way to “lighten the world” by clearing out storage space, bringing to light beautiful textiles and re-utilizing heirlooms that are joyful connection to family history.

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IGEL at the COP22

By Eleanor Mitch, CEO and Founder of EM Strategy Consulting, Wharton alumna

The swift approval and ratification of the Paris Agreement[1] (104 countries of the 197, or 58%, have ratified the agreement!) was nothing short of “miraculous” in CIDCE[2] president Michel Prieur[3]’s words. Never before had an international agreement been so rapidly approved and adopted by so many nations in such a short span of time (approximately 1 year). Indeed, Prieur, one of the “fathers” of the principle of non-regression in environmental law, was instrumental in ensuring the addition of “this momentum is irreversible” in para.4 of the Marrakech Action Proclamation[4]. He has participated in the drafting of many international conventions since the 1970s and sees great hope in the rapid action even though we and future generations will still have to face the grave effects of climate change.

As part of this historic movement of awakening to the realities of the changes climate change must bring about, Wharton IGEL was represented with a presentation in absentia[5] by Eric Orts[6] on the implications for business of the Paris Agreement. Indeed, one of the key sectors that will be facing changes is the business sector. While markets have already chosen more sustainable energy sources in some areas (investments in wind and solar power, and Morocco boasts the world’s largest solar power plant, which just went live in 2016[7]), much more needs to be done, all throughout the supply chain, especially in Operations.

For the first time ever at a United Nations Framework Convention on Climate Change Conference of the Parties (UNFCCC-COP), an event uniting the ITC[8], IFAD[9], WTO[10], UNCTAD[11], UNFCCC[12] and UNFCCC Subsidiary Body for Implementation[13] was held to discuss how to move forward with business and trade on the Paris Agreement. During the event, Wharton IGEL Alumni Eleanor Mitch raised the point of the role of business schools, and especially IGEL’s, in leading the way to new business opportunities and innovation in sustainability. Given that Wharton graduates and those of other business schools will become business leaders, it is important to strengthen ties with the international law-making, enforcing bodies and business schools to prepare graduates to provide services and products for the challenges the world faces: environmentally displaced persons, sea-level rising, sustainable energy and consumption among others. Innovation and creativity-driven prosperity can come hand-in-hand with sustainable development.

 

[1] https://unfccc.int/resource/docs/2015/cop21/eng/l09.pdf

[2] http://cidce.org/

[3] http://cidce.org/structures-institutional/

[4] http://unfccc.int/files/meetings/marrakech_nov_2016/application/pdf/marrakech_action_proclamation.pdf

[5] Eleanor Mitch, presented for Eric Orts

[6] http://cidce.org/presentations-cop-22-cop-22-presentations/

[7] http://www.greenprophet.com/2016/02/worlds-largest-solar-power-plant-goes-live-in-morocco/

[8] http://www.intracen.org/

[9] https://www.ifad.org/

[10] https://www.wto.org/

[11] http://unctad.org/en/Pages/Home.aspx

[12] unfccc.int

[13] http://unfccc.int/bodies/body/6406/php/view/reports.php#c

PSR Presents: The Business of Sustainability

By Samantha Freeman

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On Saturday, November 19th, my Management 100 team hosted a conference in John H. Huntsman Hall on behalf of Penn Sustainability Review. This conference, The Business of Sustainability, explored the intersection between business and sustainability. Our keynote speaker was David Cohen, Chairman of the Trustees of the University of Pennsylvania and an Executive Vice President of Comcast Corporation. Our panel included Morgan Berman, CEO and Co-Founder of MilkCrate; Melissa Lee, CEO and Founder of The GREEN Program; Jason Halpern, CEO and Co-Founder of Gridless Power; and Emily Schapira, Campaign Director for the Philadelphia Energy Authority (PEA). Together, these speakers and panelists answered the long-standing question: How can the sustainability efforts of businesses both small and large lead to significant change?

My team, Flight Club, kept two main goals in mind when planning this conference. We wanted to 1) promote the discussion of sustainability issues among the Penn population, and 2) increase name recognition and interest in PSR. With over 130 Penn students in attendance, the conference successfully raised awareness for the academic discourse community PSR has created. Furthermore, the dozens of questions received for the panel and several students’ newfound interest in writing articles post-conference revealed that sustainability is a topic that truly sparks the curiosity of the Penn population. We are so excited to see how PSR will keep bringing this enthusiasm to new heights over the next few years.

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Around 1 pm on Saturday, students began entering F85. They happily stacked their plates with Chipotle burritos and Zesto’s Pizza, then found a seat and waited for introductions from Lori Rosenkopf, Vice Dean of the Wharton Undergraduate Program, and Julianne Goodman, Editor-In-Chief of PSR. Following these introductions, David Cohen spoke for twenty minutes on Comcast’s commitment to sustainability and future of sustainable investments for businesses. Comcast’s LEED-certified buildings were one point of focus. Comcast Center, in downtown Philadelphia, utilizes high-performance glass and sunscreens and water-saving fixtures to reduce expenses and energy consumption. As Comcast builds more structures like these, the corporation remains committed to delivering its services in a manner that lessons its environmental footprint.

Around 1:50 pm, the panel began its discussion, moderated by Penn graduate student Emily Newton. As the panelists shared the stories behind their businesses and how they got involved with sustainability, one thing became clear: All a person needs to start building an idea is a personal commitment to the issue at hand. For Morgan Berman and Melissa Lee especially, an independent goal to live more sustainably blossomed into a plan for a company that would allow others to do the same. Following the initial round of questions, audience members were welcome to ask their own. Several students were interested in hearing the answer to this question: What small things can I do? As they learned from the panelists, regardless of how miniscule the activity may be (for example, carrying a reusable water bottle over a plastic one), anything counts, and every great decision can have an even more substantial impact.

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My team thoroughly enjoyed working with PSR over the course of the semester, and we hope everyone who attended our conference found the experience to be as enjoyable and rewarding as we did. If you are interested in learning more about the featured businesses or want to know what you can do to promote sustainability, please reach out to our panelists, whose contact information is listed below. We’d like to extend a huge thank you to Julianne Goodman, Hersh Solanski, and Elena Rohner for their guidance, and we thank you all for flying with us.

 

Panelists’ Contact Information:

Morgan Berman: Morgan@mymilkcrate.com

Jason Halpern: Halpern@gridless.com

Melissa Lee: Melissa@theGREENprogram.com

Emily Schapira: eschapira@philaenergy.org

Environmental Catastrophes: The Buck Stops in the C-Suite!

By Lawrence B. Cahill, CPEA, Wharton IGEL Alumni Advisory Group

Introduction

Corporate environmental, health and safety (EHS) programs require a substantial commitment on the part of executive management in order to be successful.  Programs, policies, and procedures must be defined and implemented, resources committed, audits assessing performance conducted, deficiencies corrected, and improvements made.  If all goes well, there is a presumption that unwanted surprises and incidents will be rare, resulting in fewer management headaches and no material adverse personal consequences for senior managers.  Truly a win-win for both the company and its executives.

Sadly, it is not always the case that senior corporate executives participate actively in EHS programs.  A passive approach is much more common as EHS compliance and performance is often deemed to be the sole responsibility of EHS and Sustainability Managers in the organization.  This passive approach can be perilous for both the individual executive and the company.  Senior executives should be involved actively and there are ways to test whether this involvement is real or not.  What follows is a discussion of why participation and commitment are important and a way to test whether it is truly happening in a given organization.

Why Commitment is Important to the Executive

Some believe that environmental incidents and catastrophes will have an impact on a company’s reputation but will not directly affect senior corporate executives.  For example, a recent column in the on-line Environmental Leader was entitled “No Reputational Penalty for CEOs on Environmental Lawsuits.”[1]  The column refers to a study published in the Journal of Contemporary Accounting & Economics entitled “Corporate litigation and changes in CEO reputation: Guidance from U.S. Federal Court lawsuits”.[2]  This study, based on almost 10,000 cases filed in U.S. federal court over an eight-year period from 2000-2007, concluded that there was:

“…no evidence of any reputational penalty for CEOs following environmental allegations against their companies,” [University of Adelaide, South Australia] business school lecturer Dr. Chelsea Liu told Environmental Leader. “This means that the executive labor market, driven by the collective actions of corporations in the marketplace, is not inclined to ‘shun’ those CEOs whose firms are accused of environmental violations. This is very different from how the market reacts to allegations of financial fraud —prior research shows that CEOs whose firms are accused of financial fraud do experience significant reputational damage.”

Yet, actual notable cases in recent history would appear to contradict the study’s conclusions.  There are any number of instances where very senior executives, including several CEOs, have had their reputations permanently sullied and some have even been sentenced to prison for negligence with respect to EHS mismanagement.  These include the following five cases:

  • Union Carbide Corporation (UCC). Warren Anderson, the then CEO of UCC, and seven other employees were sentenced to 2 years in prison in June 2010 for negligence (the maximum allowed by Indian Law) as a result to the December 1984 Methyl Isocyanate release in Bhopal, India, which killed an estimated 4,000 people and injured another 500,000.  Anderson died in Florida in 2014 at the age of 92 and served no prison time in India as he was not extradited.  Interestingly, “Bhopal protestors” picket the Dow Chemical Headquarters in Midland, MI every year at the annual shareholders meeting.  Dow purchased the assets of UCC in 2001, a full 17 years after the incident.  Should the Dow/DuPont merger announced in December 2015 go through one wonders if the protesters will picket in Wilmington, DE as well, the historical headquarters of DuPont.  Not something that executives in either company presumably relish.
  • BP. After a 28-year career with BP, Tony Hayward, the now ex-CEO, was forced to resign on October 1, 2010 as a result of the April 20, 2010 Deepwater Horizon oil spill in the Gulf of Mexico.  Ironically, Mr. Hayward had replaced Lord John Browne as CEO in 2007 who resigned partly as a result of the BP Texas City Refinery fire that killed 15 people in 2005.
  • Massey Energy. Don Blankenship, the now ex-CEO of Massey Energy, was forced to resign on December 3, 2010 after the April 5, 2010 explosion at the Upper Big Branch Mine in West Virginia, which killed 29 miners.  On April 6, 2016, Mr. Blankenship was sentenced to one year in prison for “conspiracy to willfully violate mine health and safety standards.”
  • Tokyo Electric Power Company (TEPCO). Three former TEPCO executives were indicted for negligence on February 29, 2016 as a result of the Fukushima nuclear power plant meltdown caused by a March 2011 tsunami.  In March 2015, a Japanese National Police Agency report confirmed 15,894 deaths, 6,152 injuries and 2,562 people missing as a result of the tsunami.
  • Volkswagen. The now ex-CEO of Volkswagen, Martin Winterkorn, was forced to resign on September 23, 2015 as a result of the 2015 “Clean Diesel Scandal” in the U.S.  Winterkorn accepted responsibility for the scandal while asserting that he was “not aware of any wrongdoing on my part.”  Volkswagen and its executives face possible criminal enforcement action from the U.S. Department of Justice and over 25 State Attorneys General.

It is pretty clear then that there are indeed personal consequences for senior executives when significant EHS incidents occur.  Any individual sitting in one of the chairs in the C-Suite would do themselves a favor by becoming more involved in the company’s EHS management.  And in fact, senior management reviews are a mandatory requirement of ISO 9000 (Quality), ISO 14000 (Environment) and OSHA 18000 (Health and Safety) management system standards often adopted by organizations to better govern operations.  For example, ISO 14000 requires the following: “Top management shall review the organization’s environmental management system, at planned intervals, to ensure its continuing suitability, adequacy and effectiveness.”[3]  And indeed, there are companies, such as Occidental Petroleum, where members of the Audit Committee of the Board of Directors regularly review actual site EHS audit reports.  Although this particular activity should not be relied upon exclusively for assurance purposes, it does provide valuable information on both leading and lagging EHS compliance and performance indicators.

Evaluating Executives’ Commitment

How then does one test whether key executives have an understanding of the implementation and results (and potential consequences) of the company’s EHS management and programs?  One way is to interview these key executives as part of an annual review of EHS program performance.  This annual review can be conducted internally or through a third party.  The evaluation should involve a detailed review of policies and procedures, interviews with a sample of executives at various levels of the organization, and testing the implementation of the EHS program at the site level through assessments or audits at a sample of operating facilities.

The interviewing of key executives is, then, a key component of an EHS program evaluation. In conducting these interviews any interviewer must be diligent, thorough but also respectful of the executive’s time. They are very busy people.  The questions provided below in Table 1 can be used to address and test an individual executive’s involvement and commitment.  It’s important to note that each executive must tailor his or her involvement to best support the organization as effectively as possible.  So, the interviewer should not assume that any given executive should be involved in all the aspects suggested by the questions.  For example, one executive might be involved in the setting of corporate EHS policy and sustainability goals, while another might be responsible for implementing programs within his or her division to achieve those goals, while still others might actually visit plants in their business units periodically to assess site-level performance and gather feedback on the challenges the site management experiences in meeting the goals.

Based on actual experience the questions can be covered in 30-45 minutes. Face-to-face interviews are preferred but a phone interview or video conference can be used as well with comparable results.  Note that the questions are designed to elicit more than a yes/no response.  The interviewer might also discover that the executive will request to see the questions in advance.  That is perfectly acceptable and might actually produce a more productive session as there is a good chance that the executive will have given the questions considerable thought in advance.  In some cases, they will have actually written-out their answers which can enhance the face-to-face discussion.

TABLE 1: Ten Questions to Test an Executive’s Involvement in a Corporate EHS Program

Area of Inquiry Question
1. Personal Involvement What has been your involvement with the corporate EHS program to date?
2. Program Objectives Do you understand the objectives of the program? What are they? Do you believe the objectives are being met? Why or why not?
3. Program Effectiveness Do you believe the program is effective, adequately resourced, and adds value? Specifically, why or why not?
4. Organizational Setting Do you believe that the program is positioned within the organization so as to achieve the appropriate independence and authority? If not, what could or should be done?
5. Stakeholder Involvement Are the concerns of all stakeholders’ (e.g., management, employees, stockholders, regulators, NGO’s, communities) being considered appropriately? Any stakeholders’ interests that are under-represented?
6. Management of Change Is management of change a key component of the program?  If so, how do you know?  If not, why not?
7. Risk Identification Does the program adequately identify and define the key EHS risks faced by the company?  In your estimation, what are the top three risks?
8. Program Outputs Do you see what you need to see with regards to the outputs of the program? If not, what would you like to see that you don’t see now?
9. Corrective Actions Is there sufficient management attention given to correcting identified program deficiencies and needed improvements in a timely fashion? How do you know?
10. Improvements What is the EHS program doing well and should continue to do? If you could change or add one thing to the program to make it better what would that be?

Note that the very last question is extremely important. So, the interviewer has to be careful to manage the interview process so that there will be time for it to be asked and answered.  Executives are very smart and savvy people.  Asking them to identify one thing they might change or add to the EHS program to make it better will often elicit some sage advice and maybe even some “out of the box” thinking.

Closure

Executive participation in and commitment to EHS performance is one key to assuring company-wide compliance and potentially avoiding catastrophes. Experience shows that there is no guarantee that executive participation will be a ‘fail-safe” measure but rigorous management support throughout the organization can be extremely valuable.  Involving executives in an active way can help bolster the program and provide the support necessary to accomplish goals, achieve compliance and minimize (but sadly not eliminate) the potential for disasters.

[1] Hardcastle, Jessica Lyons, “No Reputational Penalty for CEOs on Environmental Lawsuits,” Environmental Leader, March 7, 2016

[2] Liu, Chelsea, et.al., “Corporate litigation and changes in CEO reputation: Guidance from U.S. Federal Court lawsuits,” Journal of Contemporary Accounting & Economics, Volume 12, Issue 1, April 2016, Pages 15–34.

[3] International Organization for Standardization (ISO), “Environmental management systems – Requirements for guidance and use,” ISO14001:2015, Third Edition, Section 9.3, September 15, 2015

After Fossil Fuels: The Next Economy

By Eric W. Orts, Guardsmark Professor of Legal Studies and Business Ethics, The Wharton School, University of Pennsylvania; Faculty Director, Initiative for Global Environmental Leadership

October 10, 2016

David Orr asked me to serve as a rapporteur for the conference that he organized (with a little help from his friends) at Oberlin College and was held from October 5-7, 2016, and I happily agreed. Wharton’s Initiative for Global Environmental Leadership was one of the first of a number of other organizations to agree to co-sponsor this conference, but the work of attracting a remarkable group of leading experts fell mostly to David and his staff. And what an impressive group they assembled! I have gone to conferences relating to the topic of climate change for more than twenty years, and this was by far the most impressive group of its kind. Headline keynotes were given by celebrity “top influencers” including Bill McKibben, Arnold Schwarzenegger, and Tom Steyer. In addition, the top executives of organizations including the Sierra Club ad CERES attended, as well as such other well-known names as Gar Alperovitz, Robert Kuttner, Hunter Lovins, and Bill Ritter.

My charge here is to attempt to review the overall course of the conference and to distill some of the major themes. My apologies in advance to anyone at the conference who may feel that I give them short shrift. Inevitably, my own intellectual bias will intrude in selecting the most important themes, but I hope to be as objective as possible in my reporting role. I will also try to be brief.

The conference divided roughly into three parts which were addressed on each day. Of course, different speakers crossed over into different areas, but in general there was an attempt to follow an agenda of organization that would lead to cumulative learning and engagement. Day 1 was devoted to a series of presentations on “theory.” Day 2 focused on elements of the post-carbon “next economy.” Day 3 considered “politics.” This report will follow this division, with transitional keynotes discussed as bridges between the categories.

Day 1: Theory

Elements of the theory needed to make progress on addressing the very large problem of global climate change were addressed by various presentations. These elements included the following.

Vision of sustainability. One must have a working definition of the goal one seeks to accomplish, and perhaps the best reference one can give here is to David Orr’s most recent book, Dangerous Years: Climate Change, the Long Emergency, and the Way Forward (2016). Both economics and politics are necessary to engage, as well as the science providing a background understanding of the challenge. A social transformation is needed to wean human civilization from the destructive use of fossil fuels—namely, coal, oil, and natural gas—and to replace them with renewable energy—such as solar, thermal, wind, and others. Making progress in greater efficiency and conservation in the use of energy is another imperative.

Systems approach. The study of interactions between the natural environment and social behavior and organizations requires a theoretical orientation appreciative of systems, rather than a reductive focus on linear processes. The “next economy” requires innovative new design and reform at both micro (local) and macro (global) levels.

Ethics and values. A general theoretical challenge is to incorporate a new sense of sustainable values and ethics into the social processes of business, work, capital markets, politics, and government. Views of business and markets as concerned strictly with “profit maximization” are inconsistent with this moral requirement. Seeing government as only a game used by people to gain power and influence is similarly impoverished.

Optimistic narratives and stories.   We know from studies in psychology that “optimism is functional” (see Martin Seligman’s work), and a general prescription from the conference seems to be that an optimistic attitude is best even when dealing with the very hard facts of current and impending climate change, including the relentless rise in global concentrations of greenhouse gases, and the fact that average global temperatures continue to set new records. Several presenters noted that 2014, 2015, and 2016 have been progressively the warmest years on record. Fourteen of the last fifteen years have been the hottest ever recorded. Nevertheless, theoretical attitudes toward solving the problem cannot succeed if they fall victim to pessimistic despondency and inaction. New language, metaphors, and concepts are needed. My own view, for example, is that rethinking the purpose and design of business firms is needed as one part of the larger solution (see Orts, Business Persons (2015)). Various presenters focused also on a need to rethink traditional concepts such as “capital” and “eco-system services.” The meanings of “sustainability” itself and somewhat newer ideas of “resilience” are also evolving.

Measurement and accountability. Scientific assessment of progress at all levels is needed as part of the theoretical background. Progress cannot be assumed, and the Paris Agreement opens the door toward better international accounting and verification of greenhouse gas emissions and various mitigation or adaptation strategies adopted by and within nation-states. Other large institutions, such as business corporations and nonprofits, should also install reliable internal accounting standards and practices, following the well-known mantra that “you manage what you measure.” Questions were raised about whether older measures of economic progress such as gross domestic product (GDP) continue to be useful—or whether it would be better to develop and follow new measures of well-being, sustainability, happiness, and freedom from hunger and homelessness.

Fairness and justice. Other key principles—emphasized, for example, by Nikki Silvestri—are fairness and justice, including especially racial justice. The phenomenon of Trump indicates also that many poor and working class whites in the United States have been hurt by current status quo policies. Everyone should be considered when making proposals for change, reform, and reinvention. Progress on climate change will not occur unless all citizens and consumers are respected and included.

McKibben Keynote

Bill McKibben provided a keynote in Finney Chapel at the end of the first day, and as a leading environmental activist (and indeed perhaps the best known activist who led the fight that shut down the Keystone Pipeline) his discussion focused on the need for a citizens’ movement to counteract the inertia and special interests supporting the status quo. McKibben struck three main themes.

Time.   First, climate change is unlike other social problems because incremental, slow progress will not be enough. Adverse effects from global warming are occurring faster than had been predicted twenty years ago. Arctic ice has melted. Ocean have acidified. Very soon, vast amounts of methane may release into the atmosphere from northern tundra landscapes. “If we do not solve [the problem] fast,” said McKibben, “we will not solve it.”

Stop fossil fuels now. According to one recent report, coal, oil, and natural gas companies own reserves that amount to four to five times the amount of carbon that can be safely emitted without blowing through the two degree Celsius average global temperature ceiling agreed as a target in the recent Paris Agreement. Another more recent report has found that current resources already being tapped by these companies will be enough to push the world past two degrees. For McKibben, and for some other environmentalists at the conference, such as the Sierra Club, this means that all expansions of fossil fuel production and distribution should be opposed and, if possible, immediately halted.

Force the change. McKibben sees the status quo, as represented by big fossil fuel companies such as ExxonMobil and their political influence, as the primary obstacle to positive change. Citizens coming together in a broad-based movement is the only way to counter the political influence of big oil and other large energy companies. A “Keystone-ization” needs to spread to other controversies, such as the current standoff at the Standing Rock Sioux Reservation to block the Dakota Access pipeline. There has been a long string of recent victories, and McKibben makes a strong argument that these should continue. Politics at the national level also matters, and McKibben opposes Trump on grounds that his campaign denies climate science and threatens to withdraw from the Paris Agreement.

Day 2: The Next Economy

                  Day 2 was devoted mostly to what the “next economy” in a post-carbon world would look like. Some participants, such as Gar Alperovitz, focused on the need for new local initiatives that break with the standard model of capitalist financing and management. Many examples of creative grassroots economic development were given, and a key lesson from many presentations is that good jobs are necessary for any environmental reform to succeed. The next economy must provide for secure and well-paid new jobs, because otherwise there will be no political will to make the change from business-as-usual. At the same time, other participants, such as Hunter Lovins, argued that big companies must become part of the solution too. Unilever and Walmart were discussed as positive examples, though a general consensus appeared to support the view that most large corporations were clueless, too casual, or actively dissembling (greenwashing). This widespread lack of true engagement by most businesses in finding climate solutions needs to change.

The financial markets play a large role in the problem as well. Mindy Lubber, the CEO of Ceres, examined various success stories of institutional investors pressuring public companies to disclose risk and performance measures regarding greenhouse gas emissions and climate change. In the U.S., the Securities and Exchange Commission has an important task to set “materiality” disclosure standards relating to climate change. Although the size of social impact investing may not yet have had a huge influence, it seems to be growing, and interest on college and university campuses regarding investment policies for endowments (including divestment) has been increasing too.

Mark Campanale of Carbon Tracker provided a well-received analysis of the “carbon bubble” that he and his colleagues have found in the disclosures of fossil fuel companies. A large percentage of assets currently owned by these firms “can’t be burned” if the two degree limit is to be respected. As a result, many of these companies may be financially overvalued—on the optimistic assumption that the political will is forthcoming to curtail this business model. At the moment, however, major investors do not seem perturbed—and they appear to be betting, then, that the two degree limit will be exceeded.

As for solutions, Campanale and other pointed out that the scale of the problem requires massive government (as well as private) investment. Historical low interest rates should be used to finance as much as $70 trillion in global investment in the repair and enhancement of infrastructure, including new smart grids and the development of renewable energy sources. (This very large number compares with $60 trillion as the approximate value of all publicly traded companies in the world.) A number of presenters spoke of the need for a scale of investment to address climate change similar to the expenditures made in fighting World War II. (And one questioner usefully asked: What will be the equivalent of a “Pearl Harbor moment” to provide sufficient motivation for this scale of investment?)

The need to engage with all people, especially those who feel disenfranchised or ignored by globalization, was emphasized, including urban black and white rural populations. Religious groups provide an essential organizational nexus for transformation at the local level. And leaders such as Pope Francis can have large influence at the global level. The role of cities, which account for 72 percent of greenhouse gas emissions globally, is also key. Joan Fitzgerald noted that the average greenhouse gas emissions in large cities were commonly much less that the average emissions of their countries as a whole. For example, average per capita emissions in New York and San Francisco are less than a third of average emissions of the United States as a whole.

New paradigms were also discussed, such as a need to move toward an objective of “plenitude,” as advocated by Juliet Schor, instead of economic growth. An attitude of plenitude adopts a view that natural resources should be enjoyed rather than exploited. And climate change policies need to fit into a larger strategic template that include other large-scale problems, according to Mark Mykleby and Patrick Doherty. Sustainability should go hand-in-hand with policies promoting economic prosperity and national security.

Brune Keynote

Michael Brune, the executive director of the Sierra Club, gave a transitional keynote speech that echoed McKibben’s call to oppose the expansion of the fossil fuel industry as a primary target. He first noted an impressive record of success for environmentalists, particularly in the Beyond Coal campaign. Of 200 coal plants proposed fourteen years ago, for example, 90 percent were stopped by coordinated activism and litigation. Six years ago, there were 523 coal plants in the United States, and today more than half of them have been retired. The well-known example of stopping the Keystone Pipeline has been replicated by a string of recent environmentalist victories against similar pipelines and projects. Finally and perhaps most importantly, the overall cost of solar and wind technologies has become very competitive with, and often cheaper than, traditional coal, oil, natural gas, and nuclear alternatives.

Brune then drew several lessons from his experience that provided a bridge to discussion about politics in the final day of the conference.

Keep winning. Recent environmentalist victories against the expansion of fossil fuel facilities should continue and, if possible, accelerate.

Reach out to Republicans and Independents as allies. Brune was the first to tag this theme which was later repeated by others. Many of the Sierra Club “wins” have occurred in very politically conservative areas of the country. Climate change cannot remain a cause only of one major party in the United States. Polls show majorities of Republicans believe in climate science and support transitional strategies (despite the rhetoric to the contrary expressed at the top national level). Supermajorities of the American public support policies to counter climate change as well, including many business leaders.

Get active.   People must organize and vote in order for change to happen. Solutions also must work for everyone (a repeated theme throughout the conference). Businesses that embrace climate friendly policies should be welcomed. And “what victory looks like” must include new well-paying jobs, including for unemployed coal miners and persistently marginalized populations.

Moss and Steyer Keynotes

A tag-team keynote session with Otis Moss and Tom Steyer highlighted themes of religion, race, and generational engagement as important. Moss reflected on his own effort to explain and translate environmental issues such as climate change to his religious constituents in order to make change “by any greens necessary.” Environmental justice links with racial justice in the United States, and Moss also emphasized the essential task of engaging younger people.

Tom Steyer agreed with the need to engage youth and described his efforts with NextGen Climate which, for example, has a presence now on fifty college campuses in Ohio. Steyer cited polls that indicated extremely high levels of support for clean energy solutions (around 80% of younger voters) and a transition to a 100% clean energy economy (91% of Millennials according to one poll).

Religious leaders are important as well, and the recent encyclical by Pope Francis carries great weight. Historically conservative icons such as leaders in the military provide another fulcrum from which change may be leveraged.

Day 3: Politics

It is fair to say that the outsized Arnold Schwarzenegger stole the show on the last day of the conference. The former Republican Governor of California made an impassioned case for both parties to tackle the challenge of climate change in a bipartisan manner. His catchphrase, riffing on a famous speech by Obama, was that “there is no Democratic water and Republican water; no Democratic air and Republican air.” He embodied pleas by other participants that Republicans had to come to the table, and he was hard to miss or ignore.

Sharing the stage with Tom Steyer, a Democrat who is known for bankrolling politicians who embrace climate friendly positions, the former Governor elevated California as an example that the rest of the United States could follow. Simply “copy us,” said Schwarzenegger, and I “guarantee” economic growth as well as climate progress. He compared California’s economic and environmental success to Germany’s.

In addition, Schwarzenegger emphasized that the fossil fuel companies (which he described as mostly coming from Texas) had to be opposed. He claimed, with respect to their attempts to lobby against reform, that “we terminated them.” (At the same time, he recognized the ability to work with them on climate-friendly projects such the introduction of hydrogen fuel by Chevron in California.) He reiterated a theme heard throughout the conference that policies to address climate change had to provide good jobs too. In his view, California provides an example for other states (including Ohio and Texas) that green policies can lead to economic prosperity. Interestingly, Schwarzenegger found that some of the biggest opponents of environmental policies or initiatives were in fact environmentalists. For example, proposals to build new solar plants in deserts were opposed and delayed on grounds of threats to endangered species such as tortoises.

Steyer largely agreed with Schwarzenegger on the main points. Both argued for economic growth (which was a contested idea for other participants who see a conflict emerging between growth and sustainability). Both emphasized the importance of jobs. Both made the case of a shift toward bipartisan engagement at the national level.

Earlier in the day, Robert Kuttner provided an incisive commentary on the current political situation. White working class people hurt by governmental policies for several decades appear to have become a wild card supporting the likes of Trump and his anti-establishment, anti-globalization, and anti-science rhetoric. Commenting on “the presence of prophetic voices” at the conference, such as McKibben, Kuttner argued that the deeper roots of Trumpism had to be recognized and countered in order to establish a political consensus to address climate change.   He argued against the “liberal elitism” that embraced climate change as a major issue and yet ignored large losses in wealth and well-being of large swaths of the population. A “possible politics” to remedy the situation could focus on reducing levels of material consumption and reversing the incentives that encourage what he called “predatory capitalism.” He also echoed calls by others at the conference for a massive investment in infrastructure, taking advantage of historically low interest rates. Climate change is a challenge “such as we’ve never faced,” he said, and we are “groping for analogies (but not in Trump’s sense of groping).” Kuttner concluded with one memorable quote from the conference, reflecting on the need to take our grandchildren’s perspective into account: “We need not just to be right; we need to win.”

Conclusion

Many others paid tribute to David Orr at the conference, and his inspiration informed many contributions. I will do so here as well, and mention again that these reflections are sifted through my own particular lenses. I would urge interested readers to consult sources provided at the conference for further avenues of self-edification and engagement. I will leave the last word to Orr, though, and quote the following from his new book, which I believe embraces the spirit of the conference overall:

I do not believe that we are fated to destroy the Earth by fire, heat, or technology run amok. But if there is a happier future it will come down to this: to act with compassion and energy, our hearts must be in it; to act intelligently, we must understand that we are but one part of an interrelated global system; to act effectively and justly, we must be governed by accountable, transparent, and robust democratic institutions; and to act sustainably, we must live and work within the limits of our natural system over the longterm. (Dangerous Years, p. xi)

If we are as a civilization in some measure successful in addressing the massive challenge of climate change, the Oberlin conference on “After Fossil Fuels: The Next Economy” will have had some role in inspiring and informing this future success. It was a privilege to be there for the experience, for the education, and for the inspiration.

Introducing the Young Environmental Professionals Network of Philadelphia

By Bert Barnes, IGEL Graduate Coordinator & second-year MES student

The Philadelphia area is characterized by a wide variety of industries, including medicine, education, financial services, telecommunications, and manufacturing. Over time, numerous institutions have sprung up to aid the development of the professionals working in these industries. Unfortunately, the same cannot be said for environmental services, an integral but often-overlooked part of the area’s economic and social fabric.

As an environmental professional who has worked for years in the Philadelphia area, I’m familiar with numerous professional organizations, from the Greater Philadelphia Chamber of Commerce to the smaller, specialized organizations. Only one cultivates relationships across functions within the environmental services industry and related fields: Society for Women Environmental Professionals, which is restricted to women. As the environmental dimension of law, insurance, and other disciplines continues to grow in importance (and as Philadelphia emerges as a leader in sustainability), one must wonder why the professional landscape lacks an organization that unites young professionals within these roles.

We are launching the Young Environmental Professionals Network of Philadelphia (YEPN) in response to this void. YEPN will be a place for young professionals working in environmental fields to connect, learn, and develop. Professionals from all of Philadelphia’s industries will be represented within the organization. Already, we have received interest from people in consulting, law, energy, insurance, and engineering. If you’re interesting in learning more, check out our LinkedIn and Facebook groups. Feel free to contact me with questions, as well.

The first YEPN happy hour is taking place from 6 to 8pm on Tuesday, September 27 at Crow and The Pitcher, just south of Rittenhouse Square on 19th Street. Chris Crockett, Chief Environmental Officer of Aqua America, will be speaking at the event. If you have found yourself pondering the questions mentioned above, or if you’re just interested in learning more about your fellow environmental professional and the opportunities in the Philadelphia area, I would encourage you to attend!

Wharton Has Been Walking on the Circular Economy for Years

By David Mazzocco, LEED AP
Associate Director of Sustainability and Projects, Wharton Operations

 

Interface Logo

 

In anticipation of IGEL’s 10th anniversary, Wharton Operations would like to showcase an IGEL founding sponsor, Interface carpet.  When I joined the Wharton community, I was pleased to hear Wharton Operations used Interface carpet for the majority of our projects.  Early in my career as a young professional making the case for ‘green building’, I found company founder and chairman Ray Anderson’s 1998 book Mid-Course Correction very influential.  It demonstrated how the vision of a single leader can challenge us to make real, sustainable change and, in his words, “become restorative through the power of influence.” Interface’s bold, pioneering vision to create a sustainable company and measure success beyond the bottom line steered the company away from the typical take-make-waste business model toward one that’s “renewable, cyclical, and benign.”  This mission not only defines a circular economy, it has also revitalized an industry.

Each year, the United States dumps approximately 4 billion pounds of carpet into our landfills; roughly 800 million square yards or equal to covering the floor area of Wharton’s Huntsman Hall 22,000 times over.  According to the Carpet & Rug Institute, 70% of all carpet is replaced each year for reasons other than wear, such as it’s the wrong color, a dated look or a change in tenant.  Carpet manufacturing is also a resource intensive process, consuming billions of pounds of petro-chemical and other non-renewable natural capital to provide the energy and base ingredients in the final product.  Take.  Make.  Waste.  This cannot go on indefinitely.

In 1994, Ray Anderson had his awakening when he realized his company was part of the problem and not part of the solution.  He challenged his company to “make history rather than just making carpet.” With Interface’s “Mission Zero” promise, a new focus emerged: to radically redesign processes and products and to pioneer new technologies and systems to eliminate any negative impact the company has on the environment by 2020.  Their innovative, holistic approach where everything is examined is an example every company should emulate.

In support of Penn’s Climate Action Plan, the Wharton Operations Green Campus program works to minimize solid waste and pursue sustainable building practices.   We must also uphold a level of quality within our facilities that one has come to associate with Wharton.  An effective carpet management strategy is part of that plan.  In 2012, Operations leadership visited Interface and were impressed with their manufacturing process, waste reclamation program and sustainability goals. Working with our vendor Metropolitan Flooring, we began using Interface carpeting almost exclusively.  Through Metropolitan and the Carpet America Recovery Effort (CARE), all carpet removed from Wharton buildings is either returned to Interface to make new product or recovered for other industrial uses.  No carpet enters a landfill.

From a design standpoint, our projects group appreciate Interface’s aesthetic and high quality products that wear extremely well.  Of course from a sustainability perspective, their products meet our requirements to contain high recycled content, natural fiber options and adhere to strict indoor environmental quality standards; critically important for building occupants with chemical and allergen sensitivities.  Stemming from the company’s origins, Interface products are also a modular carpet tile rather than a roll product.  From an operations standpoint, the modularity provides flexibility in patterning, installation and maintenance.  If a tile is stained or damaged beyond repair, just that tile is replaced rather than the entire carpeted area minimizing waste, cost and down time to the affected area.  The damaged tile is then returned to the manufacturer to make new product, completing the cycle.

Other carpet companies have since started following the Interface model to varying degrees.  They provide great products and are used regularly across Penn’s campus.  Interface will always be the standard bearer, however, by taking a leadership role to demonstrate that the principles of sustainability and financial success can co-exist within business.  It created a new level of success that includes cultural dividends.  Innovation and leadership.  Values Wharton knows well.

So, on your next visit to Wharton, look down.  Know that the carpet you are walking on is doing more than covering the floor.  It is part of the solution.

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.