The complex challenge of emissions reduction in the movement of goods

walmart truckThe State of Freight: Understanding greenhouse gas emissions from goods movement in Canada    is a detailed examination of the factors driving the increase of emissions from goods movement, and the complex of federal, provincial, and municipal programs and legislation. The report makes a convincing case for the importance of this issue:  Freight (defined as road, rail, ship and plane), accounted for 10.5 per cent of total emissions in Canada in 2015; freight is the fastest-growing segment of the transportation sector, and the transportation sector is the second highest source of emissions in Canada – and the largest sectoral source of emissions in British Columbia, Manitoba, Ontario, Quebec, New Brunswick, Prince Edward Island, and Newfoundland and Labrador.  And simply put: “Any business with a supply chain depends on freight. And nearly everything we purchase as consumers has to be transported to the purchase or delivery point.”

The report focuses most attention on the movement of goods using heavy-duty trucks, and identifies the main actors in that industry, as well as examples of  international programs to improve efficiency, including the  U.S., California, and the EU.  Good companion reading on that issue is the April 2017 Pembina report, Improving Urban Freight Efficiency: Global best practices in reducing emissions in goods movement , which  provides case studies from New York City, Toronto, Sweden, and London.  A 2014 report by Pembina also focuses on Toronto:  see Greening the Goods: Opportunities for low-carbon goods movement in Toronto  .

The State of Freight  identifies as the key opportunities to reduce emissions:  carbon pricing and the forthcoming federal Clean Fuel Standard; Phase 2 heavy-duty vehicle efficiency regulations ; Continued rollout and adoption of efficiency technologies; Build-out of fuelling infrastructure –  biofuels, natural gas ,  electric and hydrogen; and integration of  goods movement into regional and municipal land use planning.

 

Case studies of Community and human rights impacts of Renewable energy companies, and a ranking of multinationals in Ag/Food, Apparel and Mining

renewable energy investor briefing coverAn April 2017 report from the London-based advocacy group,  Business and Human Rights Resource Centre asks,  “What adverse impacts can renewable energy projects have on communities around the world?”   Renewable Energy investor briefing: Managing risks & responsibilities for impacts on local communities  (April 2017) is directed at financial and investment professionals who are considering investment in renewable energy projects- in this report, comprised of wind and small-to-medium hydro, but excluding solar .  It starts from the premise that Just Transition principles are essential, then explains the international human rights responsibilities of companies.  The report also provides examples of the kinds of questions that should be asked in shareholder meetings and before investment decisions are made, and gives examples of best practice policies – for example, inclusion of community benefits agreements.  One of the main issues it discusses is the right to free, prior and informed consent of Indigenous peoples, which is an ongoing topic monitored by the BHRC.

The report provides case studies, including  six positive examples, including: the Ixtepec community-owned wind project in Mexico; the Jeffreys Bay Wind Farm in South Africa; and  a cluster of wind projects in Jämtland, Sweden, for which OECD guidelines are being used in negotiations between the company and affected Indigenous people.  The full suite of case studies is presented in a searchable database which allows searching by company name, issue, country, and more.  There are no Canadian projects included in the 2017 report, although a profile of Ontario Power Generation  is available as part of the Centre’s ongoing database  of human rights in the energy sector  .

In March 2017, the Centre also launched an updated and expanded  Corporate Human Rights Benchmark website , which ranked 98 of the world’s largest publicly traded companies, from the  Agriculture, Apparel, and Extractive industries. The Benchmark is intended to drive a “race to the top” and is directed at business, government, and “ to empower civil society, workers, communities, customers, and the media with better public information to reward, encourage, and promote human rights advances by companies and make well-informed choices about which companies to engage with.”  A 50 page summary report is here .  There are six thematic measurement categories, including “ Company Performance: Human Rights Practices”  which  includes rankings related to living wage, freedom of association and right to bargain collectively, health and safety, amongst others.

Small steps for the miners behind electric vehicles and smart phones

Cobalt is a key ingredient in the lithium-ion batteries that power smartphones, laptops and electric cars. 60% of the world’s supply is mined in  Congo, according to “The Cobalt Pipeline” (September 2016),  a Washington Post special report which documented the appalling working conditions of the “artisanal miners”.  Occupational health and safety concerns for  miners was also  expressed in  “The Battery Revolution is exciting, but Remember they Pollute too”, by Carla Lipsig Mumme and Caleb Goods in The Conversation (June 2015).

In a December 20 article,  the Washington Post reports on two new initiatives to curb “the worst forms of child labor” and other abusive workplace practices in the supply chain for cobalt. The first, the Responsible Cobalt Initiative, is being  led by  the Chinese Chamber of Commerce for Metals, Minerals and Chemicals Importers and Exporters, and supported by the Organization for Economic Cooperation and Development (OECD), with members pledging to follow OECD guidelines  which call for companies to trace how cobalt is being extracted, transported, manufactured and sold. Apple, HP, Samsung SDI and Sony have signed on.

The second initiative, the Responsible Raw Materials Initiative (RRMI) has been launched by the Electronic Industry Citizenship Coalition , a nonprofit group sponsored by more than 110  electronics companies, and  “dedicated to improving the social, environmental and ethical conditions of their global supply chains.” The EICC states that it “engages regularly with dozens of non-member organizations including civil society groups, trade unions and other worker’s groups, academia and research institutions, socially responsible investors, and governmental and multilateral institutions.”  Ford Motor Company is a member of the Responsible Raw Materials Initiative, by virtue of being the first auto manufacturer to join the EICC. ( Press release is here (February 2016). Ford has sought to brand itself as a leader in ethical supply chain management   ; see their report,  Going Further towards Supply Chain Leadership . Tesla, the most high-profile electric vehicle manufacturer, is said to be considering membership in the RRMI. According to a report from Energy Mix (June 24, 2016) “Tesla’s Ambitions Demand ‘Unprecedented Quantities’ of Key Minerals” , including lithium, nickel, cobalt, and aluminum to produce vehicle batteries.  As of January 2017, Energy Mix also reported  that  Tesla started mass production at its lithium-ion battery Gigafactory in Nevada, which will be the world’s largest when it is complete in 2018 .

tesla-gigafactory

Tesla Gigafactory, Nevada.  Photo from the Tesla website .

Business and government gather at Climate Week NYC

Many publications and press statements were released to coincide with Climate Week NYC 2016, a gathering of businesses and government officials in New York City from September 19 – 26. A sampling brings some insight into business/climate thinking. For example,  General Motors  was one of several companies joining the energy campaigns of RE100 , a global initiative of companies committed to transitioning to 100% renewable power.  (A sister campaign, EP100, works with businesses committed to doubling their energy productivity) . GM’s stated goal  to  meet 100% of its electricity needs with renewable energy by 2050 includes about 350 facilities in 59 countries, including both manufacturing and non-manufacturing buildings .  The CEO is quoted as saying that GM wants to contribute to cleaner air  “while strengthening our business through lower and more stable energy costs.”  Further, in GM Details its  100% Renewable Goal  : “Renewable energy offers more stable pricing options than traditional energy sources like fossil fuel, reducing the price volatility caused by external threats like government relations and natural disasters. Wind energy is already price competitive with traditional forms of energy and we expect the price of solar power to continue to decrease as demand grows.” Related reading: GM’s 2015 Sustainability Report and its environmental blog, GM Green .

From CDP (formerly Carbon Disclosure Project) , Embedding a carbon price into business strategy  : based on responses from over 5,000 companies, the report states that 1,200 companies either plan to or currently place an internal price on carbon.  Why?  Could be the cost of capital, as signalled in the Forward: “As public pension funds, CalSTRS and AP4 have hundreds of thousands of members and stakeholders relying on the secure retirement future that we are here to provide in perpetuity—it is absolutely critical that we take action to guard against this risk [climate change]…..“As the momentum for full disclosure in this area increases, we will not only be looking at company emissions but also analyzing how climate risk mitigation is embedded within their corporate strategies. Those companies who show investors and owners that they take this issue seriously and have a plan in place to tackle it will enjoy a lower cost of capital in the future against those that don’t.”

Consultants EY and the UN Global Compact published a report, The State of Sustainable Supply Chains,    based on interviews with 70 companies.  From the introduction: “Over the past few years, sustainability has been added to the procurement and sourcing criteria for many companies. Workforce health and safety incidents, labor disputes, geopolitical conflicts, raw materials shortages, environmental disasters and new legislation in areas such as conflict minerals and modern slavery have contributed to the growing awareness of supply chain risks among customers, consumers, investors, employees and local communities.”…. Overall, the results of the study show that by improving environmental, social and governance (ESG) performance throughout their supply chains, companies can enhance processes, save costs, increase labor productivity, uncover product innovation, achieve market differentiation and have a significant impact on society.”   This report is complemented by the website:  UN Global Compact Sustainable Supply Chains: Resources and Practices .  

In October, CDP North America released a report discussing the “paradigm shift” in the importance attributed to the “total cost of ownership”, or life cycle of products.  With examples from the U.S. military and the IT industry, it concludes that “It has become a business necessity because it saves money, smooths operations, diminishes risk in supply chains and opens new business opportunities.”  See: A paradigm shift in total cost of ownership From procurement to product innovation:How companies are hardwiring sustainability across the value chain to future-proof their business.

 

Food Products Industry and their Supply Chains

In the latest report of the Oxfam Behind the Brands campaign about the international food products industry, the Big 10 food and beverage companies are said to have made significant new commitments over the past three years to improve social and environmental standards in their supply chains, with progress most evident in the areas of protecting land rights, reducing greenhouse gas emissions and tackling gender inequality. However, The Journey to Sustainable Food   states that companies “must go much further and fundamentally re-write the business models in their supply chains to ensure that much more power and much more of the value their products generate reaches the farmers and workers who produce their ingredients.” Companies monitored are: Associated British Foods (ABF), Coca-Cola, Danone, General Mills, Kellogg, Mars, Mondelēz International, Nestlé, PepsiCo and Unilever.

A March 2016 study by Greenpeace International assesses 14 companies that committed to “no deforestation” to understand the impact of palm oil production on the plantations of Indonesia. The companies reviewed in Cutting deforestation out of the palm oil supply chain – Company Scorecard    are:  Colgate-Palmolive, Danone, Ferrero, General Mills, Ikea, Johnson & Johnson, Kellogg, Mars, Mondelēz International, Nestlé, Orkla, PepsiCo, Procter & Gamble, Unilever.

Labour Practices and Sustainability in the Seafood Industry

In early March, the Conservation Alliance for Seafood Solutions  released the first update since 2008 to its Common Vision for Sustainable Seafood ,  a widely-used best-practices guide used by the North American food industry.  New in the 2016 edition are strong prescriptions for labour rights and traceability of the supply chain.  From the preamble:  “…socially responsible seafood ensures that sourcing does not impact the food security of vulnerable communities, provides a living wage for workers in seafood supply chains, and supports the sustainable livelihoods and cultural heritage of communities.”  Specific steps are outlined, including: “ Establish effective grievance mechanisms for labor abuses and worker safety that meet the minimum standards set forth in the United Nations Guiding Principles on Business and Human Rights and include a meaningful role for workers themselves in the monitoring of workplace conditions and resolving disputes. • Develop corrective action plans with suppliers found to violate human or labor rights.• Include requirements in purchasing agreements and contracts that suppliers will respect fundamental labor rights, including freedom of association and right to collective bargaining, and will pay workers a living wage.”  The Association website also includes a Social Resource Centre   , with links to all the major organizations and documents relating to sustainability and  core labour standards in the fisheries industry.

Reports from Davos: Climate Change, Circular Economy, Ethical Supply Chains

The annual  World Economic Forum in Davos, Switzerland, brings together the corporate and political elites  – this year’s theme from January 20 – 23rd is “The Fourth Industrial Revolution”. Yet climate change ranks high on the agenda and several reports relevant to climate change and labour have been released. Notably, the Global Challenge Initiative on Environment and Natural Resource Security project  produced The Global Risks Report 2016  , which ranks global risks, in terms of likelihood as : 1. Large-scale Involuntary migration; 2. Extreme weather events   3. Failure of climate change mitigation and adaptation. A project about the Circular Economy released a report commissioned by the Ellen MacArthur Foundation and conducted by McKinsey & Company: The New Plastics Economy: Rethinking the future of Plastics . ( press release here ). The new report addresses the problems identified in a 2014 report from the UNEP Plastics Disclosure Project, Valuing Plastic: The Business Case for Measuring, Managing and Disclosing Plastic Use in the Consumer Goods Industry , which projected that, “ in a business-as-usual scenario, by 2050 oceans are expected to contain more plastics than fish (by weight), and the entire plastics industry will consume 20% of total oil production, and 15% of the annual carbon budget. ”

Regarding supply chains, a report by an Accenture consulting firm, Beyond Supply Chain: Empowering Responsible Value Chains   discusses the “triple advantage” of ethical supply chains which include environmental goals. The Accenture report paints a favourable picture of corporate behaviour, in contrast to Scandal: Inside the Global Supply Chains of 50 Top Global Companies, a hard-hitting report from the International Trade Union Confederation (ITUC). The ITUC focuses mainly on working conditions and wages, as well as health and safety of workers. Bringing it all together and released in advance of Davos, research from the University of Sheffield concludes that “ Audits are ineffective tools for detecting, reporting, or correcting environmental and labour problems in supply chains. They reinforce existing business models and preserve the global production status quo…. The growth of the audit regime is carving out an ever greater role for corporations in global corporate governance and enforcing an ever smaller role for states.”  A summary of the Sheffield research appeared in The Guardian  on January 14; the full report is Ethical Audits and Supply Chains of Global Corporations  (registration required to download). A related article, focusing on the coffee industry, appeared in The Conversation (December 1): “Why corporate sustainability won’t solve climate change ” .

The Business Case for a Circular Economy: Reduce, Reuse and Recycle as a Solution to Coming Shortages of Raw Materials

On January 24 at the the World Economic Forum, the Ellen MacArthur Foundation launched Project Mainstream, a collaborative project involving large enterprises capable of bringing the circular economy from small-scale pilot projects to the mainstream of business. The press release states: “With commodity prices almost tripling in the last 10 years, businesses and governments are now recognizing this as an opportunity to manage input cost volatility, as this approach decouples economic growth from finite supplies of primary resources.” Towards the Circular Economy, the report which accompanied the launch, finds that “over US$1 trillion a year could be generated by 2025 for the global economy and 100,000 new jobs created for the next five years if companies focused on encouraging the build-up of circular supply chains to increase the rate of recycling, reuse and remcircular economy v 3anufacture.” As an article in The Guardian points out, this initiative intends to tackle the scale and complexity of global supply chains-as well as a crucial stumbling block in recycling – the toxic contents of some products. Canadian readers will be familiar with these concepts from the 2013 report, Closing the Loop: Reducing Greenhouse Gas Emissions Through Zero Waste in BC, which focused on the benefits to consumers and the environment. The Ellen MacArthur Foundation has published reports on the Circular Economy since 2010.

LINKS:

Towards the Circular Economy Vol.3: Accelerating the Scale-up Across Global Supply Chains is available from a link at: http://www.ellenmacarthurfoundation.org/business/reports/ce2014, and previous reports are available at: http://www.ellenmacarthurfoundation.org/business/reports

“Circular Economy offers Business Transformation and $1tn of Savings” (Jan. 24) in The Guardian at: http://www.theguardian.com/sustainable-business/circular-economy-business-transformation-one-trillion-savings

Closing the Loop: Reducing Greenhouse Gas Emissions Through Zero Waste in BC, published by the Canadian Centre for Policy Alternatives Climate Justice Project (March 2013) is available at: http://www.policyalternatives.ca/publications/reports/closing-loop