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RMI - Rocky Mountain Institute

COP28: What Worked, What Didn’t, and What Next?

The UN climate conference delivered more progress than many anticipated — on cutting methane, funding loss and damage, and tripling renewable energy — but it also neglected major priorities. RMI experts share their take.

Originally published on Dec. 21, 2023 at RMI.org: https://rmi.org/cop28-what-worked-what-didnt-and-what-next/

The 2023 UN climate summit, which wrapped on December 13, delivered progress across several critical global priorities and defied early prognostications that COP28 — hosted by Dubai, in the United Arab Emirates, one of the world’s largest fossil fuel exporters — would bog down in dissent.

On the conference’s first day came a surprise agreement to operationalize the Loss and Damage Fund, a long contentious issue between low-income, low-emissions countries, and wealthy heavy emitters. Soon thereafter came a spate of deals to rapidly lower the leakage of methane, a super-warming gas, from government, NGO, and corporate players.

And on the event’s final day came a historic, unanimous agreement on “transitioning [the world] away from fossil fuels in energy systems… in a just, orderly and equitable manner.” Complementing that milestone: a commitment to triple the world’s capacity of wind, solar, and other renewable energy by 2030, concurrent with a doubling of the pace of energy efficiency gains.

“COP28 has clarified to everyone that the direction of the transition is clear,” said RMI CEO Jon Creyts. “The energy transition is unstoppable.”

Even as the clean energy shift gathers pace, COP28’s final statement also offered a stark reminder of the urgency for faster action. The “global stocktake,” the UN’s inventory of the world’s progress on reducing greenhouse gas emissions, concluded that we are well off track to limit global warming to 1.5°C by 2100, as agreed to in Paris.

To limit warming to the Paris target, emissions would need to fall by 43 percent by 2030, and 60 percent by 2035, relative to 2019 levels. For now, emissions are on track to fall by just 5 percent come 2030, and only if every country’s commitment is met. Consequently, the world remains on a path to heat by up to 2.8°C by the turn of the century, almost twice the 1.5°C goal.

For RMI’s on-the-ground work, COP28’s complex climate diplomacy nets out as a cause for optimism. As never before, the agreement galvanized global governmental consensus in line with many of our long-standing goals, particularly around speeding the shift to cleaner, safer energy, reducing methane, and the just energy transition. At the same time, the agreement did not resolve pressing areas, such as financing, that will be essential to achieve its goals.

Below, RMI experts weigh in on the implications of the conference’s big advances, as well its less covered wins, along with a few misses.

Multiple methane wins

Over 80 times more potent near term than carbon dioxide (CO2) as a warming agent, methane offers huge potential to quickly cut global greenhouse gas emissions. And to keep 1.5. degrees within reach this decade, oil and gas methane leaks must go to near zero. What’s more, the technical solutions are here now, and the economics are highly favorable, with over half of the fixes yielding a profit or zero net cost. RMI Principal TJ Conway highlights COP28’s methane wins.

Oil and gas commitment. Heading into COP28, methane reductions ranked as a top prospect to deliver major progress on emissions reductions. One of the biggest wins in delivering on this promise came with the Oil and Gas Decarbonization Charter (OGDC). Signatories committed to reaching “near zero” methane leakage and flaring by 2030, an ambitious goal under a tight timeline. Beyond its scale, this multistakeholder effort was notable for the buy-in of global oil giants such as BP, ExxonMobil, and Shell, along with national oil companies (NOCs), many of which are otherwise insulated from pressures to set climate goals. NOCs represented a remarkable 60 percent of participants. The US EPA also released stricter regulations on methane emissions.

Building accountability. The bulk of the methane discussions at COP28 focused on the need to accelerate implementation — namely, how to establish accountability mechanisms and metrics to ensure that companies credibly and rapidly meet their OGDC commitments. In coordination with OGDC — and together with Bloomberg Philanthropies, EDF, the IEA, and UNEP via the International Methane Observatory — RMI unveiled a new initiative that will help advance transparency and enforce accountability around claims of methane emissions reductions.

Financing methane reductions delivered another front of progress. The World Bank’s announcement of a new $255 million trust fund through the revamped Global Flaring and Methane Reduction Partnership was welcomed, especially given that many NOCs need technical and financial support. As funding to reduce methane multiplies, financial institutions need more robust ways to track and validate carbon reductions in their lending portfolios;  stronger standards will unlock more funding for reductions. For a fuller explanation of RMI’s work to establish supporting standards for lenders, see “Carbon on balance sheets may go up before they can go down” below.

Curtailing waste methane. Progress on methane extended past the petroleum patch. The waste sector, including solid waste and wastewater, is the third largest contributor to methane emissions, responsible for almost 20 percent of the global total. And as part of COP28, RMI and Clean Air Task Force, with funding support from The Global Methane Hub and Google.org, unveiled the Methane Assessment Platform (WasteMAP), a new, open, online tool that aggregates and maps reported, modeled, and observed waste methane emissions data to help guide reductions.

Scaling green industry

Perfecting clean technologies — from lower-carbon recipes for steel to sustainable aviation fuels — isn’t enough. Industry must also change how it does business, such as developing better ways to finance, buy, and cultivate long-term demand for low-carbon solutions. RMI’s Charlotte Emerson discusses the major initiatives RMI took part in at COP28 to spur these sorts of market-based advances in strategic industries.

Hydrogen. Given its potential to help other heavy-emitting sectors — such as steel and shipping — decarbonize, green hydrogen is a top priority. The Green Hydrogen Catapult launched the report The Value of Green Hydrogen Trade for Europe, at the event Trading Green Hydrogen to Bolster Energy Security, which focused on the value of renewable hydrogen exports in promoting global energy security. The Green Hydrogen Catapult signed a joint declaration in partnership with UN High-Level Climate Champions on the Responsible Deployment of Renewables-Based Hydrogen, addressing the need for mutual recognition of a broad range of recommendations guiding the deployment of renewables-based hydrogen around the world.

Steel. RMI co-hosted an event with the World Economic Forum’s First Movers Coalition and corporations across the industrial supply chain to speed the decarbonization of heavy industry. A centerpiece of this push, RMI’s Sustainable Steel Buyers Platform, demonstrates how connecting ambitious buyers and suppliers through demand-side measures can accelerate the shift to low-emissions steel. RMI also signed the Steel Standards Principles, an effort to harmonize the methodology and standards to define lower emissions steel.

Shipping. The UN High-Level Climate Champions and RMI’s Green Hydrogen Catapult facilitated the Green Hydrogen and Green Shipping Call to Action, committing 30 shipping sector actors to firm targets to use nearly 11 million tons of renewables-based hydrogen fuel adoption this decade — nearly 10 percent of all fuel consumption. A related event, Clearing the Last Mile: Opportunities for Supplying Zero-Emission Fuels at Ports, unveiled initial findings on the cost and ability of key ports to supply the zero-emission shipping fuels of the future by 2030 from a forthcoming study undertaken by RMI and Global Maritime Forum under the flag of the Zero-Emission Shipping Mission.

Aviation. RMI, together with the Environmental Defense Fund and the Sustainable Aviation Buyers Alliance (SABA) launched the SAFc Registry, a not-for-profit sustainable aviation fuel certificate registry that will transparently and rigorously connect corporate aviation customers to clean fuel deployment, reducing emissions from air travel and air freight.

Aluminum. Financial institutions play an essential behind-the-scenes role in funding investment in greener options. Consider aluminum, which is playing a rising role in the energy transition as a lightweight, highly recyclable material in everything from wind turbine components to solar panel framing. To encourage a shift toward production of low-emissions aluminum, RMI unveiled the Sustainable Aluminum Finance Framework a tool for banks to benchmark their aluminum clients and collaboratively develop decarbonization pathways with industry.

Prioritizing, and funding, a just energy transition

The push to gather funding to compensate poor, low-emitting countries for harm they are experiencing from climate change has been contentious and opposed for 30 years at past COPs by heavy emitters, including the United States. COP28 delivered laudable progress in funding commitments. Above all, improved and expedited access to climate funds will be critical for the most vulnerable countries. For future COPs, the issue persists as one of the most urgent — and delicate — fronts. RMI Senior Principal Laetitia De Marez explains.

Loss and damage. The push to gather funding to compensate poor, low-emitting countries for harm they are experiencing from climate change has been contentious, opposed at past COPs by heavy emitters, including the United States. COP28 delivered laudable progress in funding commitments. Above all, improved and expedited access to climate funds will be critical for the most vulnerable countries. Many were surprised then, to see COP28’s first day deliver an agreement on the loss and damage fund, with funding and an agreement to house it at the World Bank. Pledges quickly stacked up: Over $700 million has been committed initially, including $17.5 million from Washington, a pledge which, while nominal, marks the end of US opposition. The tally remains far short of the $100 billion target requested by developing countries, but the establishment of a vehicle is a critical step to bring in ongoing funding and distribute it.

Reforming multilateral development banks. It’s a big step forward. But the financial gap remains considerable compared to the capital needed to fund a fast, yet just, transition. The reform of the multilateral development banks (MDBs, such as the World Bank, Asian Development Bank, and others) must continue and deepen. They need to transition their portfolios, terms, conditions, and policies away from future fossil deals and fully switch to Paris-aligned investment priorities.

Public-private financial collaboration. The climate funds and the MDBs have a critical role to play in mobilizing international and national private sectors by de-risking and aggregating projects in the regions. The imperative is growing to blend public and private sources of capital — a shift that is underway but must be streamlined and scaled (more on this in the next section on global financiers).

Capacity building: Skills, workforce, regulations. International capacity-building support and technology transfer mechanisms to enable the energy transition remain underfunded and undersized. Transitioning energy systems cannot be achieved without a skilled workforce, trained energy leaders, regulators, innovators, and developers.

Defining a better transition. It remains unclear what a just and equitable transition means for different countries: What are the developmental, resilience, economic, and social progress elements of the just transition? Research and consultations are urgently needed to define and tailor strategies to each country’s circumstances and realities.

For global financiers, impact trumps pledges

Progress on loss and damage funding at COP28 is an important step forward. Yet it also reminds us that the wider scale of transitioning the entire global economy in line with climate goals will require massive capital investment — estimated at roughly $200 trillion to $275 trillion by 2050.

To hit that goal, the private sector must play a bigger role. And while green finance has already gained significant momentum, increasing 100-fold in the past decade, uncertainty still exists around the implementation of “transition finance” to decarbonize high-emitting and/or hard-to-abate sectors. Adapting today’s financial market practices to better accommodate the needs of transition finance can help unlock the flow of climate capital. RMI Managing Director Brian O’Hanlon sees these priorities:

Bridging the public-private financing gap. To deliver full-scale deployment of commercially proven clean energy technologies in Africa and throughout emerging markets, lenders and projects need to move beyond grant-funded demonstration projects, and de-risk portfolios of investments to better meet international financing requirements. These steps can help mobilize international private capital at scale, while ensuring that local project developers do the real work on the ground. With a project pipeline of $464 million in the Pacific, the Climate Finance Access Network (CFAN) offers a practical and actionable solution to developing countries facing capacity constraints in accessing climate finance.

Carbon on balance sheets may go up before they can go down. A key challenge of transition finance includes the risk of financial institutions divesting from high-emitting sectors on paper, but without delivering real reductions. This can happen when financial institutions sell their emitting assets, and can thus show decarbonization progress on their balance sheets. Yet the underlying assets and their related emissions haven’t changed however, only their owner has.

There are ways to overcome these barriers. At COP28, RMI created consensus on how to do so. For investors who have pledged to decarbonize their portfolios, more reliable ways to classify and track underlying emissions reductions is growing as initiatives such as the methane rules and agreements (see above) get traction. Investors need rules of engagement to clarify when financing methane abatement in fossil fuel progress results in overall emissions reductions or simply prolongs the life of emitting assets in ways that are incompatible with preventing disastrous temperature rise.

Climate impact from financial decisions. Shifting from past measures to future forecasts. Historically, investors and lenders have primarily looked at past emissions to assess progress toward climate goals — this method is essentially a look in the rear-view mirror. Now, regulators and climate experts are increasingly demanding forward-looking metrics that offer a more accurate assessment of future results by better modeling how financial decisions made today will affect the future trajectories of decarbonization and resilience of local economies. To support this shift, RMI leads the development of PACTA, a software application that predicts the climate impact of entire financial portfolios of investment and activities, often spanning multiple sectors and geographies.

Challenges ahead

As the world digests the implications of COP28’s agreements — and omissions — priorities for COP29, in Baku, Azerbaijan, are already becoming clear. Three are on our radar:

Renewables and the grid. The world has given itself just seven years to hit the ambitious goals of tripling renewable energy (3xRE) and doubling efficiency gains. This will require a steep ramp up in deployment in both developed and developing markets — including streamlined financing, quicker regulatory approvals, streamlining supply chains, and more rapid grid growth. Over the past decade, the average wait time to connect clean energy projects to the US grid has doubled to four years; in Europe and the United States delays to approve, build, and connect new clean energy projects can stack up to 10 years of more. Unlocking ways to upgrade and improve access to the grid are emerging as some of the toughest barriers to increasing renewables’ market share.

Carbon markets. In Dubai, negotiations around carbon markets (Article 6) collapsed and will need to be rebooted next year. Carbon markets remain a potentially powerful market solution to reduce emissions, yet voluntary markets faced multiple setbacks in 2023. RMI is working on multiple fronts to help mature these markets.

Finance. The New Collective Quantified Goal will take over from the rich world’s long-unfilled commitment to relay $100 billion per year to developing regions. This funding is growing in importance as renewables growth shifts into the Global South. Much of the world’s renewables growth (above) will be centered in the developing world, where most of the world’s economic growth, urbanization, and construction will unfold in coming decades. Many need help both building new clean energy systems, as well as aid in unwinding legacy fossil-fuel-based energy infrastructure. Projects in poorer countries remain more expensive and harder to finance and build, compared to richer regions, given higher risk premiums. Closing this gulf will help unleash faster renewables growth.

GreenBiz

How tenants continue to press for greener commercial buildings, despite COVID-19 | GreenBiz

Manhattan’s once incandescent skyline is still dimmed, its office buildings emptied of workers. And Silicon Valley’s corporate campuses remain islanded, surrounded by seas of empty parking lots, as a nation of commuters continues to log in from home. 

The COVID-19 pandemic has altered office life — and the commercial building sector — in ways few could have dreamt of just a year ago. Yet as companies begin to map out tentative plans for a post-pandemic return to cubicles, the emphasis on greening those buildings hasn’t receded.

If anything, industry leaders say, COVID-19 has intensified the urgency of making buildings more energy efficient and healthy for workers. 

For Workday, with some 12,300 employees worldwide, decisions are still being made of how and when to return to its mix of owned and leased office spaces. But this hasn’t diminished the software company’s plans to add onsite solar panels and battery storage at its headquarters in the Bay Area in California.COVID-19 has intensified the urgency of making buildings more energy efficient and healthy for workers.

“Our focus on sustainability in our office buildings has remained strong. Leadership agreed we should be making this a priority and gave us their full support to make our buildings more environmentally friendly,” said Erik Hansen, Workday’s director of sustainability at a breakout session during GreenBiz Group’s clean economy conference last week, VERGE 20.

Landlords are seeing similar trends. “My tenants are very concerned about the erosion of environmental gains because of COVID,” said Sara Neff, senior vice president of sustainability at Kilroy Realty Corp., a Los Angeles-based landlord and developer with properties in San Diego, Los Angeles, the San Francisco Bay Area and the Pacific Northwest. 

It’s not just renewable energy anymore

Tenant concerns go well beyond energy issues. “Tenants are worried about things like, ‘What happens to our scope 3 emissions when nobody takes public transit? What happens to building energy consumption if we are constantly running the ventilation systems? What happens when our waste diversion numbers tank because we’re throwing away so much PPE and are back to single-use plastics in our kitchens?’” Neff added, referring to recent client conversations. 

“But nobody has backed off,” she added. “We’ve had [tenant] companies make new commitments since COVID began.”

As more companies engage in this process, they’re learning that making green upgrades can be more complicated when they lease, rather than own. Historically, inflexible, standard lease terms can make it difficult for a tenant to influence green building factors such as the kind of energy their landlord taps into, or even accessing detailed data on resource consumption. Workday has found that when setting up offices in multi-tenant buildings, negotiating technical lease terms early offers the best opportunity for success.

Workday has found that when setting up offices in multi-tenant buildings, negotiating technical lease terms early offers the best opportunity for success. “It’s best to have a dialogue with the landlord early on — while the lease is being negotiated — so that key language about procuring renewable energy can make it into the contract,” said Hansen.

The more tenants push, the more landlords can begin to drive change. “When a tenant asks about [things such as renewable energy or energy performance data] that’s when landlords start hiring people to run sustainability programs. Investments start getting made,” said Neff. “I can’t emphasize enough the importance of asking these questions and getting key terms into the lease.”

Rising expectations

Sure enough, tenants are beginning to do so. Momentum for change has been building since before COVID-19. “Starting 12 or 18 months ago, we started to see tenants really push us, and to collaborate on environmental projects, which has been great,” said Neff. 

As she sees it, tenants’ expectations have increased as more companies staff up to support their sustainability commitments. “Some of our big tenants are just now starting to hire heads of sustainability, so their sophistication is rising. Tenants who have been on the sidelines are now in the game,” she explained.

With tenants such as Workday and landlords such as Kilroy getting smarter about green building upgrades, gains can compound as trust deepens. “There tends to be more transparency and collaboration with landlord-tenant green building transactions,” said Rob Federighi, vice president of sales at Edison Energy, a global energy advisor based in Newport Beach, California. 

In practice, to make green building investments succeed, landlords need the right tenant, and vice versa. Tenant commitment can help landlords finance the investment necessary for major upgrades, such as solar plus storage. Tenants, meanwhile, need landlord support to achieve the sorts of zero-carbon energy goals more and more are committing to, Federighi added. 

Resources to help you green your lease

For both tenants and landlords exploring greener leases, libraries of standard lease terms have been developed and refined to help avoid common pitfalls. “There’s no need to reinvent the wheel,” said Neff. The panelists recommended these resources: 

And as more players steer into this space, Neff emphasizes that climate urgency dictates pragmatism. For instance, green project developers should not shy away from offsite renewables. There can be a bias towards doing as much onsite efficiency investment as possible, followed by as much onsite renewable as possible, but off-site renewable energy is sometimes regarded as less impactful.

“We have nine years to solve climate change,” Neff said. “Let’s first get fossil fuels off the grid.’”

View the original story at Greenbiz.com here.

Corporate Knights

American Water: How energy shifting earns profits for a water utility | Corporate Knights

If they ever think of water works, most people imagine pipes and pumps – more Victorian age than high tech. After all, in most cities, the big facilities that filter our drinking water and process our waste are out of sight, out of mind. But ask Ron Dizy, president and chief executive of Enbala Power Networks, about North America’s thousands of water works, and he’ll tell you they represent an enormous reservoir of untapped, low-cost energy services potential.

Connected to Enbala’s smart-grid systems, water works is just the first category of big energy consumers that, by rapidly shifting when and how they use electricity, have the ability to help smooth out micro-fluctuations in the grid’s energy flows, displacing the fossil-fuelled generators that now perform this service. What’s more, Enbala’s software could boost renewable energy, too. It provides the kind of grid stabilization needed to help manage the variability of solar and wind energy as these sources make up more of the power mix.

Dizy’s vision is taking shape at a pumping station in Shire Oaks, south of Pittsburgh, Pennsylvania. That’s where American Water, the largest publicly-traded water and wastewater utility in the United States, is collaborating with Toronto-based Enbala. American Water has connected the pumps and compressors at its facility to Enbala’s smart-grid software, which can remotely turn the machines up or down to help keep supply and demand of electricity on the regional grid in constant balance. In the industry, this is called frequency regulation.

“Think of frequency regulation as a cruise control for the electric system,” explains Scott Baker, an analyst at PJM Interconnection, which manages a section of the U.S. grid spanning 13 states, plus the nation’s capital. To go a steady 60 mph, your cruise control imperceptibly adjusts gas and brakes to keep your speed constant. “Regulation services do the same thing, adding or reducing power on the grid to keep its frequency in balance,” says Baker. And like cruise control, which adds only spurts of gas or taps the brakes to control speed, regulation services require relatively small adjustments to do their job, with tiny doses of power added or consumed to stabilize frequency.

Conventionally, grid operators such as PJM have paid specialized generators to provide these balancing services. Because frequency regulation must be supplied in real time, all the time, these plants must be designed to be extra rugged, able to ramp up or down very quickly.

To be clear, regulation services are different from the so-called demand response. “You might call them distant cousins,” says Dizy. Demand response works when big energy consumers agree to switch off big users of power, with advance notice, for a few hours, a few times a year, when demand on the grid is greatest. On the other hand, regulation services are delivered on smaller scales, but are required 24 hours a day, every day, for minutes rather than hours, he explains.

Enbala’s solution turns the conventional approach on its head. Its software eliminates the need to generate electricity to balance the grid. It performs the same trick by managing electricity demand in real time. As such, the process can behave like a battery, Dizy notes. Rather than store energy in chemical form, as in a battery, Enbala describes its approach as “process storage,” where mechanical processes – such as filtering water – can be banked in advance of their use.

When, for instance, PJM needs a tiny increase in power use, Enbala requests that the pumps at American Water’s facility boost the flow of water into a holding tank by a few per cent. Or, if PJM needs power use to fall by a fraction, massive air pumps at the facility used to aerate wastewater treatment can be turned down. The adjustments are small – a few per cent up or down, for only a few minutes.

Enbala’s remote tweaking is designed to have no net effect on the water works’ processes. “At the end of the day, we’re just shifting when we use the power,” says Paul Gagliardo, manager of innovation development at American Water. Yet both companies earn a steady stream of payments from PJM for supplying the frequency regulation service.

The benefits for American Water have tallied up quickly. After less than a year working with Enbala, the water company reports that its total energy bill at the facility has fallen by two to three per cent. Happy with the outcome, it is now rolling out the system to 20 or so of its facilities.

Dizy’s company has identified many other industries that can provide regulation services by turning their processes up or down on the fly. “We’re just beginning to scratch the surface,” PJM’s Baker says.

See the original story here: http://www.corporateknights.com/article/american-water?page=show

GreenBiz

Starbucks’ green scorecard: A few full cups, two half empty | GreenBiz

Starbucks' green scorecard: A few full cups, two half empty

Starbucks’ latest self-assessment of the impact of its operations on the globe — measured in terms of energy, the environment, communities and agriculture — reflects healthy progress, moderated by a dash of frustration on some challenging fronts.

Call it: A few full cups and a couple half empty.

The good news is big gains on renewables, energy efficiency and cup recycling. Water consumption rose, however, and use of reusable cups has barely budged.

At its annual shareholders meeting today, Starbucks released its 11th annual Global Responsibility Report, detailing the coffee giant’s performance in 2011. Check out the report at www.starbucks.com/GRreport. I got an advance look at the report, along with the opportunity to speak with Ben Packard, Starbucks’ vice president of global responsibility.

Here’s my take on what’s full, half full, or half empty in the 2011 report.

Full cups

Front-of-store recycling. Starbucks has been chiseling away at a commitment to boost the recyclability of its cold and hot beverage cups for many years. It has set interlinked goals of developing “comprehensive recycling solutions for our paper and plastic cups by 2012” and implementing “front-of-store recycling in our company owned stores by 2015.” (Starbucks has nearly complete recycling rates for cardboard packaging from its receiving, replenishment and other back-of-store operations.)

The goals are daunting: About 80 percent of the Starbucks’ containers leave its stores and, of the share that can be re-captured on site, recyclers have shown little love for the hard-to-reprocess plastic-lined paper cups. (The chain’s plastic cups, made of No.1 plastic, are proving somewhat easier to sell into recycling flows.)

Boosting recycling of paper cups, in particular, has required near herculean efforts — not just putting out a bin in the front of a store, but ensuring that haulers and recyclers in a given market will take the cups and process them into new materials. The chain has piloted recycling in a variety of cities, including New York in 2010, an effort profiled by Jonathan Bardelline in GreenBiz here.

As one of a series of city-by-city trials, Starbucks has run a pilot in Chicago area stores, for example, to take used cups, and remake them into napkins that come back to the store. To lick this problem, the coffee chain has instigated three industry wide Cup Summits, inviting competitors, peers and service providers to collaborate on recycling solutions.

The efforts are showing progress. In 2011, Starbucks saw a big gain in the share of its stores with front-of-store recycling, to 18 percent of company-owned stores in US and Canada, up from 5 percent in 2010. The number of sites where you can drop your white and green cup into a recycling bin now exceeds 1,000.

The fastest progress, Packard said, has been in “big markets where conditions were right in terms of hauling, recycling infrastructure and demand for end products.” These include most of Canada, Chicago, and parts of Southern California.

Energy per store and LEED. After resetting its energy efficiency targets in 2010, the chain made big gains over the past year. Working towards a goal of cutting its energy intensity by 25 percent by 2015 against a 2008 baseline, the coffee giant’s progress is gaining momentum.

It notched an improvement of 7.5 percent, bringing down to 6.29 kwh the average electricity used per square foot per store per month in company-owned stores in the U.S. and Canada. In 2008, that figure started out at 6.8 kwh

The biggest slice of those gains, Packard explained, came from replacing in-store lighting with LEDs.

.The next frontier of efficiency, he explained is wiring up stores to enable real time remote monitoring and control of HVACs, ice makers and other big energy users.

In a related development, Starbucks reported that three quarters of its newly built company-owned stores (121 of 161) have achieved LEED certification. That share is constrained, Packard explained, in part because Starbucks has limited control over the environment of some its buildings it leases space in.“

Renewable energy. Towards a 2015 goal of buying all of its electric power from renewable sources, the coffee chain reported a big increase in the total volume of green power it bought in 2011: 873 megawatt hours (mwh), up from 580 mwh last year.

Yet despite that big uptick, the share of renewables of total power the company reported appears to have retreated to 50 percent, from 58 percent last year.

What gives? Previous data covered U.S. and Canada only, while for 2011 the coffee chain tallied up its global purchase of renewables — a good move.

Half full

Water. In past years, Starbucks has made laudable gains cutting the volume of water used in its outlets by, for example, by shutting off the all-day flow of water through “dippers,” used to rinse kitchenware.

From 2008 through 2010, those efforts cut water use by nearly a fifth, to less than 20 gallons per square foot of retail space per month.

But in 2011, that figure edged back up by 5 percent. While some of the culprit was higher sales of beverages, the main culprit, Packard told me, are revisions to the way pitchers are cleaned.

That’s under close scrutiny for next year. Plus, “We’re working with equipment vendors to see what we can squeeze out there — from water filtration, to ice makers, it all adds up,” said Packard.

Half empty

Re-useable cups. One of the biggest steps Starbucks could take to lower the impact of its operations would be to get its customers to switch to reusable tumblers. Even though its cups are made of 10 percent recycled pulp, the billions of hot beverages it serves annually translate into virgin trees being cut, pulped, cooked and formed into paper — a very energy intensive process.

Yet breaking customer’s cup-to-go habit remains one of the most stubborn tasks on Starbuck’s eco-punch list. GreenBiz first highlighted the slow progress in 2010.

The chain served just 1.9 percent of total beverage sales in reusable containers last year. That figure has barely budged since 2009, when it debuted at 1.5 percent. That same year, the chain set out a goal of serving 25 percent of beverages in “reusable serverware or tumblers” by 2015.

With this report, Starbucks has revised that target: To serve 5 percent of beverages in “personal tumblers” by 2015.

Packard explained that the goal has proven elusive for a number of reasons. Given that about a fifth of sales are consumed on the premises, “We thought we could effectively boost the use of in-store ceramics,” he said, to make up the bulk of that 25 percent goal. Yet that’s proven challenging: Shrinkage from breakage and theft of the mugs is another barrier.

Spurring the use of tumblers isn’t much easier. Starbucks trialed some behavioral incentives to boost tumbler use in Seattle test sites, but found the response lower than it hoped for. Starbucks currently offers customers a dime discount if they bring their own mug.

For 2012, Packard said, the chain is rebooting efforts to encourage the use of ceramic-ware in store. The latest store designs position reusable mugs in plain sight behind baristas, cuing customers to opt for ceramic and accelerating order processing.

Increasing the value of the 10-cent cup discount isn’t something Starbucks is likely to tinker with. “I don’t think it’s the amount, necessarily” said Packard, “Charging 5 cents for plastic bags wasn’t what triggered the big switch there. It was part of a larger behavioral shift.”

Fair point. But I’m not sure Starbucks should let go of that lever. In the case of plastic bag fees, the value of that nickel charge was probably less important than the repetition of the message that the bag comes at a cost.

Makes me wonder: Perhaps a similar tact could drive greater change at Starbucks? Rather than only reward the virtuous behavior of bringing in a tumbler, why not also identify more clearly the cost of each paper cup in an order.

Without changing prices, the chain could, for instance, simply break out a nickel “cup cost” charge on every receipt. It’d be critical to communicate to consumers that this isn’t an extra fee, but an existing cost they can avoid — and then some — by bringing in a tumbler. It’s worth a shot, or two.

~

I’ve focused mostly on resource use and recycling here. Starbucks has also reported progress in its coffee farming and processing program, labor and community issues. Here’s the company’s summary of its work:

Youth Action Grants: Starbucks exceeded its 2015 community goal to engage 50,000 young people in community activities by engaging more than 50,000 in 2011.

Coffee Purchasing: Increased purchases of coffee sourced under C.A.F.E. Practices from 84 percent to 86 percent in 2011.

Farmer Support: Starbucks provided $14.7 million to organizations that make loans to coffee farmers, working toward a goal of $20 million by 2015.

Forest Carbon Programs: Continued work in coffee-growing communities in Chiapas, Mexico, and Sumatra, Indonesia, through Starbucks partnership with Conservation International, demonstrating how coffee farmers can adapt to and address climate change while increasing their income.

Community Service: Starbucks put a special focus on community service for its 40th anniversary celebration. In 2011, Starbucks more than doubled the number of hours from the year before with 442,000 hours contributed. Starbucks is working toward its goal of generating one million hours annually by 2015.
Photo of a latte via Shutterstock.com. Infographics courtesy of Starbucks.

GreenBiz

Amory Lovins on ‘Reinventing Fire’ with convergence and innovation | GreenBiz

Amory Lovins on 'Reinventing Fire' with convergence and innovationFor energy visionary Amory Lovins, the antidote for America’s century-long addiction to fossil fuels is convergence on the grandest of scales.

His recipe: We must cease engaging the nation’s energy challenges one by one, as we have long tried. Rather, companies, planners and experts must devise hybrid solutions that solve parallel problems facing the U.S.’s most energy-intensive sectors — buildings, electricity, industry and transportation.

Speaking with Joel Makower on stage yesterday at GreenBiz’s VERGE conference in Washington D.C., Lovins reviewed some of the ways this can be done, as laid out in his latest book, “Reinventing Fire: Bold Business Solutions for the New Energy Era.” The culmination of four decades of work by Lovins and theRocky Mountain Institute — the think tank he founded and chairs — Reinventing Fire maps out an radically ambitious vision to expand the U.S. economy by roughly 2.5-times by mid-century, without using coal, oil or nuclear energy.

Cutting the fossil fuel use is only part of the benefit. By combining efficiency gains — and reducing energy use — Reinventing Fire foresees a much larger economy while saving some $5 trillion in net present value costs, compared with business as usual.

And this can all be done with no new technologies, no acts of Congress, with administrative decisions and led by business, for profit. Lovins explained: “None of these strategies required an Act of Congress. They could all be done administratively or at a state level.”

An example: The majority of states still reward utilities for selling more power, rather than cutting the bill. Reversing this is critical to enlisting utilities in the push to improve efficiency. Altering rules to encourage fair interconnection and open competition on the grid is controlled by FERC (Federal Energy Regulatory Commission), and needs no legislative overhauls.

Lovins has been thinking very big for a long time. Getting to these goals, he argues, is about scaling up our thinking — a tough challenge for policy makers and technicians trained to think incrementally. “If a problem cannot be solved, enlarge it,” said Lovins, quoting a line attributed to Eisenhower. “Sometimes a problem can’t be solved not because it’s too big, but rather because the values were drawn so narrowly that it didn’t encompass enough options, degrees of freedom and synergies to make it solvable.”

Another unique element of RMI’s strategy is how Lovins and his team approach the process of innovation. Rather than focus on technology and policy, Lovins said his team factors in design — with deep understanding of process technologies, such as how carbon fiber can be used to radically cut vehicle weight, and business strategy. By getting competitive rewards right, he explained, there is scant need to regulate many of these transformations.

The triumvirate of buildings, cars and the grid offer an example of the synergies has RMI identified. Buildings consume three-fourths of our power, yet neither buildings nor the grid have meaningful ability to store energy. Vehicles meanwhile are electrifying, with the development of hybrid and battery-powered cars. By converging electrified vehicles with buildings and the grid, Lovins explained, the car’s battery pack can provide both transportation and back-up abilities: The grid can feed renewables to it and buildings can draw from it. “It’s much easier to solve the automotive and electricity problems together than separately,” Lovins said.

Indeed, remaking the grid from its original centralized design, Lovins explained, represents one of the greatest challenges ahead, but that comes with enormous rewards.

“Networked island-able microgrids” is a mouthful, but describes Lovins’ vision where energy is generated locally from solar, wind and other resources and used by hyper-efficient buildings. When each building, or neighborhood, is generating its own power, with links to other “islands” of power, the security of the entire network is vastly improves.

As our grid becomes increasingly vulnerable to faults from equipment failure, willful attack or even sunspot activity, the risk of a cataclysmic national scale grid failure is rising. In the face of hundreds of blackouts in 2005, Lovins said, Cuba reorganized its power transmission into networked island-able microgrids and cut the frequency of blackouts to zero within two years — limiting damage even in the face of two hurricanes. (Check out this case study for more on Cuba’s efforts.)

Perhaps best of all, and given the location of this discussion in the nation’s politically polarized capital, Lovins’ approach is nonpartisan.

“It doesn’t matter whether you care most about profits, jobs and growth, or about national security, or about health and environmental stewardship,” he said. The best solution for any of these individual problems is the same. So whether or not one believes in climate change, the imperative to boost economic growth justifies the same approach. By focusing on outcomes, rather than motives, Lovins said, disagreements should disappear.

For more on this work, check out Lovins’ recent Q&A with Joel Makower: Amory Lovins’ Burning Quest to ‘Reinvent Fire’

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View the original article here: http://www.greenbiz.com/blog/2012/03/16/amory-lovins-reinventing-fire-convergence-and-innovation

GreenBiz

HOW GREENER cities are leading the way | GreenBiz

Convergence is often be intangible. The technologies of data, communications, buildings and transportation are rapidly merging, steadily enhancing one another in subtle ways. But convergence can also be tangibly real. For instance, humanity is inexorably concentrating in cities, enabled by many of those invisible technologies.

Discussions of the interplay of these trends — invisible technology and visible cities — took center stage Wednesday at GreenBiz’s VERGE conference in Washington, D.C. Private and public sector leaders mapped out the scale of these dynamics, offering examples of how technologies are evolving to serve the ongoing conglomeration of we humans.

Starting a few years ago, homo sapiens officially become an urban species. Home to over half the world’s population, cities are scaling so fast that by 2050, roughly 70 percent of the global head count will live in urban areas. Compared with the developed West, where most of the population is already urbanized, practically all the growth in the coming decade will happen in the developing world, especially in China and Africa, explained Manish Bapna, Interim President of the World Resources Institute.

Bigger cities are only half the story, though. Urbanization is inextricably linked to income growth, Bapna explained. So while there are roughly 1.8 billion people in the middle class worldwide today, another three billion will join their ranks in the next 20 years. “The pressure this places on resources — water, electricity, food, fuel, and so on — will be unprecedented,” he said.

The scale of these needs, as well as the size of urban markets, are driving corporate strategy to focus new services and products offerings on cities, explained Daryl Dulaney, President and CEO of Siemens Industry. Last March, to tap this potential, Siemens reorganized key operations, totaling $23 billion in revenues, into a new unit called Infrastructure & Cities.

Cities are dense ecosystems that foster innovation and connectedness, and do so with great efficiency, Dulaney said. Pointing to ambitious urban sustainability programs in Philadelphia, New York and Chicago, he said, “I like working with cities. Mayors are focused on getting things done. Politics comes second.”

It’s a similar story in China. Despite Beijing’s reputation for powerful central leadership, WRI found that city mayors were more responsive to efforts to upgrade energy and environmental practices. “The demographic pressure is front and center. Plus, mayors have a lot of authority in China, and they care about seeing their cities succeed,” said Bapna.

By that measure, the mayors of Tsingtao, China, and Philadelphia have much in common. Both see greening their cities as a competitive imperative. Tsingtao’s mayor wants the city to be the most economically attractive in China, and he knows that means he has to attract the best. To do so, he wants to be the greenest city possible.

Philadelphia is rebounding from an era when the City of Brotherly Love had a larger population than today. That’s left the city with amble infrastructure, but a challenge to maintain and optimize it. Green programs can do so, while also making the city more livable, said Alex Dews, Policy and Program Manager in the Mayor’s Office of Sustainability of the City of Philadelphia.

Public-private partnerships are playing a crucial roll in the effort, Dews explained. The city is working with The Dow Chemical Co. on an initiative to test the advantages of installing white roofs on homes.

During hot summer months, bright white roofs are substantially cooler that conventional black tar roofs. The Coolest Block program is re-coating roofs using Dow products and tracking the long-term performance of the converted homes to tally up the benefit. “We look for solutions that are beneficial to government, the public and business,” said Dews.

In another example, Philadelphia has seen recycling rates more than triple in neighborhoods where it rolled out Recycling Rewards, a collaboration with RecycleBank. Philadelphia’s program tracks household recycling by weight, using a system of barcoded bins.

Households earn rewards based on the overall performance of their neighborhoods — the more everyone in a neighborhood recycles, the more each house in that area is awarded at an online account. Credits can be redeemed through RecycleBanks’s network of affiliated brands, ranging from T-Mobile to Subway.

Getting the messaging right took time, Dews explained. Initially there was an epidemic of bin theft. Residents believed that credit was being awarded house-by-house, rather than as a neighborhood average. The city benefits by lowering the volume of waste it sends to dumps.

Looking ahead, cities will remain hotbeds of sustainability innovation. Rising affluence and growing populations will only boost the need for greener ways to house, feed, and care for urban populations.

For cities that are pioneering green programs, the challenge is maturing green efforts, Dews said. The next priority is to deepen pilot environmental programs so that they are institutionalized in city policy.

While much of Philadelphia’s sustainability work has been linked to Mayor Michael Nutter, said Dews, the next step is to make those shifts permanent, so that practices carry over to future administrations, as well as other cities.

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View the original article here: http://www.greenbiz.com/blog/2012/03/15/why-cities-are-leading-way-green-efforts

Global CCS Institute

Lessons form California’s daunting carbon challenge | Global CCS Institute

Among US states, California is leading the race to explore and implement ways to lower its greenhouse gas output. Its goal: to cut emissions to one-fifth of 1990 levels by mid century. As such, other states and nations are closely watching the Golden State’s practices for inspiration and technical guidance.

What then, if a deep, hard look at California’s ambitious plans to lower its greenhouse gas emissions revealed that – even by pursuing an all-out, no-holds-barred mix of today’s technologies and aggressive efficiency measures – the state was only likely to get about halfway towards its goal?

That, roughly, is the conclusion that Jane C. S. Long comes to in a commentary published in the journal Nature last October. Titled Piecemeal cuts won’t add up to radical reductions, her note maps out, with remarkable clarity, the mountainous challenge ahead for California to achieve its climate goal. The bracing conclusion: California can’t just spend or deploy its way to an 80 per cent reduction or beyond – and neither can anywhere else.

Jane’s expertise stems from her role as co-leader of a team of energy analysts who wrote California’s Energy Future: The View to 2050 published in May 2011. By day, she’s principal associate director at Lawrence Livermore National Laboratory, a global leader in research on energy technologies and policy.

One of the important implications that surfaces in Jane’s broader analysis is the central role of carbon capture and sequestration (CCS). This is somewhat surprising given that California’s grid is all but coal-free.

California is different from most states, she observes, with 40 per cent of total energy used for transportation, versus 25 per cent nationally. Thus CCS must come into play less so for grid power than to help generate low-carbon vehicle fuels and other applications where neither electricity nor biofuels can substitute for existing fossil fuels.

The model Jane and her team developed strives to avoid what she calls ‘sleights of hand’ where it can be difficult to fully account for the secondary or tertiary impacts induced by switching to new energy forms. For example, rather than simply count solar panels as clean generation, Jane’s model more fully enumerates the impact of electric power generation at night and other times when solar panels are off line.

The analysis reveals that to achieve a 60 per cent reduction – well short of the 80 per cent goal California and many nations are looking to – would require all manner of tough-to-imagine steps:

[The state would have to] replace or retrofit every building to very high efficiency standards. Electricity would have to replace natural gas for home and commercial heating. All buses and trains, virtually all cars, and some trucks would be electric or hybrid. And the state’s entire electricity-generation capacity would have to be doubled, while simultaneously being replaced with emissions-free generation. Low-emissions fuels would have to be made from California’s waste biomass plus some fuel crops grown on marginal lands without irrigation or fertilizer.

Given that California represents a best-case scenario for the rest of the US, Long’s assessment is a compelling case to accelerate the speed and scope of carbon-reduction efforts.

I’ll refrain from diving into the broader implications of her report here – better to check it out in whole. Instead, for the Global CCS Institute’s community, I wrote to Jane to tease out a bit more of her vision of CCS in California’s future. An edited version of our exchange follows.

Adam: You’ve said that CCS has a critical role in helping California achieve its goal of cutting emissions to 20 per cent of their 1990 levels by mid century. How so?

Jane: I would guess that CCS will not play much of a role in meeting the AB32 goals of 20 per cent reductions, but it may play an important role in meeting the longer-term goal of 80 per cent reductions by 2050. Natural gas generation is a large part of California’s electricity portfolio. If this is to continue and meet the emission reductions, CCS would have to be used whether or not that generation was within state or say, by wire from Wyoming.

In the long term, CCS may play a critical role in solving the fuel problem. We are unlikely to have enough biofuel to meet all of our demands for fuel even if we are successful in cutting demand in half through efficiency measures and electrifying everything we can. CCS could be part of a hydrogen scenario where we get hydrogen from methane and sequester the CO2 generated in this process. Or we might use biomass to make electricity and sequester the emissions to create a negative emission credit to counter the continued use of fossil fuels.

Adam: Yet CCS technologies remain immature and under-commercialized. Starting in what years would CCS need to begin entering into California’s energy mix to play this kind of role? And are we already behind that pace?

Jane: If we start now with demonstration projects, it could be possible to have all new fossil generation be using CCS within a few decades. We need that amount of time to be sure the demonstrations are working.

Adam: What lessons does California’s CCS case have for the transportation challenge in other countries?

Jane: The transportation problem in the developing world is really interesting because it’s not clear that countries like India, for example, should electrify automobiles as a first strategy. If their electricity is made with coal without CCS, electrification is not a clear benefit. If they move to de-carbonize electricity, then electrification of transportation and heat makes much more sense.

Adam: I’ve assumed that developing countries such as China and India ought to leapfrog to electric fleets ahead, and skip the oil-burning stage, to whatever degree possible. You’re suggesting that might not be the best bet for the climate?

Jane: The distance countries like China and India have to go to provide enough electricity at low emissions is huge. If having to run cars on electricity means they add twice as much coal-fired electricity without CCS it would be a disaster. As well, the biomass for biofuel problem is likely to be more acute in these countries as they face serious challenges with food supplies. In the same 2050 period that we are looking to more than double energy supply, we are looking to double food supply. As it takes some time to roll over the fleet of automobiles to electric vehicles, it probably makes sense to move forward with electric transportation at some level as this is what we need in the long term, recognizing it will make the need to decarbonize electricity even more acute.

Adam: Writing for the Institute, the Natural Resource Defense Council’s CCS expert, George Peridas, recently summarized California’s progress as “not a whole lot of progress on the CCS front to showcase since last year, but developments are expected soon”. How could the state reorder its CCS priorities to pick up the pace of technology development?

Jane: The state could get behind a demonstration project for a combined cycle gas plant. There are a lot of people skeptical about CCS. We need to have a concrete example that it works. A big issue in CCS is integrating all the complex industrial processes: electricity generation, capture, and storage. We need experience in actually doing what we theoretically ‘know’ how to do.

For an exploration of the broader report, along with further details on the technicalities of the model used in Jane’s analysis, check out Andy Revkin’s interview with Jane at his Dot Earth blog at the New York Times.

GreenBiz

Are green buildings safer? | GreenBiz

Are green buildings safer? Everyone knows that green buildings use less energy to operate. And studies show they’re healthier for occupants, which makes for happier residents and more productive workers.

But safer and more durable? Seems so. A study released this week suggests that greener construction can advance building resiliency.

To me, this link seems intuitive: green buildings are generally designed and built more carefully, with better materials and tighter finishes. It turns out that efficiency-focused features may also help green buildings and their occupants ride out long-term climate shifts — such as droughts or heat waves – and even give an edge in short-term disasters, by staying dry in floods and well sealed during high winds.

The report, produced jointly by the U.S. Green Building Council (USGBC) and the University of Michigan’s Taubman College of Architecture and Urban Planning, outlines ways to extend the inherent resiliency of green buildings. Titled “Green Building and Climate Resilience: Understanding Impacts and Preparing for Changing Conditions,” it sets out adaptive strategies that green building pros can deploy. It follows that, like higher efficiency and health benefits, improved durability could boost the market appeal of green structures.

The enhanced quality of a newly built green home or office can be a visceral experience. Doors and windows shut tightly, with an audible “thunk,” like an insulated fridge door. These tight seals are a huge plus for energy insulation: little heat leaks out during the winter, while cool stays in during the summer.

Better sealed, less drafty buildings are a big plus in wind storms too. When tornadoes or hurricanes rake a community, some of the most costly, serious damage is done when wind and water infiltrate a building, sending water deep into hidden cavities. A small opening — whether a missing shingle or a poorly sealed window –can set off a domino effect of damage.

This analysis reminded me of how devastating the impacts of poorly sealed, shoddy construction can be. In 1993, The Miami Herald won a Pulitzer Prize for a Hurricane Andrew-related investigative series, which revealed that some homebuilders had systematically ignored building code to save money. On roofs, for instance, a builder used fewer nails than required by code to attach shingles to plywood or to connect roof beams to walls. The cheat saved pennies but cost billions. During Hurricane Andrew, the builders’ homes were disproportionately devastated when the roofs gave way, leaking disastrously or lifting off completely.

Water is another realm where green design can both protect buildings and enhance the environment. Permeable surfaces that let rain water soak into urban surfaces can dramatically lower the incidence of flash flooding, or overflowing from the storm water system when heavy rains overwhelm sewer systems. In drought-stricken areas, green buildings can capture rainfall, conserve fresh water and reuse grey water.

“In the wake of last year’s disaster activity, with tornadoes across the southwest, flooding from Hurricane Irene and even an earthquake on the East Coast, it is important that we develop and enforce safe and sustainable building codes to make our communities more resilient, and to protect lives and property in times of disaster,” Craig Fugate, administrator of the Federal Emergency Management Agency, said at the National Leadership Speaker Series on resiliency and national security this week.

He called on leaders from major corporations, government, academia, the scientific community and civil society to help advance green building as a complementary strategy to address pre- and post-emergency-management situations, ultimately forging more resilient communities, he said at the event.

Today’s building codes are designed to meet specific regional weather conditions, including the hottest summer days, the coldest winter nights, the highest wind speeds and the risk of floods. “Climate change has the potential to undermine some of these assumptions and potentially increase risks to people and property,” Chris Pyke, vice president at USBGC said in a statement. “There are practical steps we can take to understand and prepare for the consequences of changing environmental conditions and reduce potential impacts.”

You can download a free copy of the report at USGBC. The main body of analysis is only about 40 pages long; the report also includes another 200 pages of reference work on the impacts of climate change in different US region.

Image courtesy of Iakov Kalinin via Shutterstock.

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View the original story here: http://www.greenbiz.com/blog/2012/03/02/green-buildings-could-be-safer-regular-buildings

NRDC OnEarth

Meet the Change Makers: PUMA’s Sustainable Track Record | OnEarth

The sportswear giant is first out of the starting block with an aggressive effort to track environmental performance

PUMA has a long history of winning in dramatic style. At Beijing’s 2008 Olympic Games, Jamaica’s Usain Bolt savored his world record-setting victories in two sprints by holding up his golden PUMA track shoes in a victorious archer’s pose. In 1970, Brazilian soccer legend Pele drew TV close-ups when he interrupted the opening whistle of the World Cup to bend down and tie his PUMA soccer shoes. For the exposure, PUMA reportedly paid $120,000. Decades earlier, some of the first-ever spiked track shoes helped Jesse Owens sprint to quadruple gold-medal success at the 1936 Berlin Olympics. The shoes came from PUMA’s forerunner, founded in Germany in 1924. All along, PUMA has remained a formidable contender in the devilishly competitive business of sporting gear. While continuing a tradition of high-profile athletic endorsements, a steady stream of alliances with leading designers — including Jill Sander, Philippe Starck and Alexander McQueen — has helped the German company resurrect its brand in the U.S.

The man credited for its resurgence, and for driving sales to $3.6 billion last year, is Jochen Zeitz. Appointed to run PUMA in 1993 at age 30 — at the time, this made him the youngest-ever chairman of a listed German company — Zeitz, a German native, has also distinguished the company as a sustainability pioneer, especially in the self-assessment and publication of its environmental impact. In 2008, he established a foundation to support innovative, sustainable solutions that balance conservation, community, culture and commerce. Last year, 48-year-old Zeitz worked with Anselm Grün, a Benedectine monk, to co-author Prayer, Profit & Principles – Monk and Manager, a book about how to confront pressing social and environmental issues.

Earlier this year, PUMA published the results of the first ever “environmental profit and loss” statement (EP&L) released by a major corporation. Building on the convention of corporate sustainability reporting, triple-bottom-line assessments, and more recently initiativesto report greenhouse gas (GHG) emissions, PUMA’s EP&L attempts to put a dollar value on environmental damage not typically captured by standard financial measures. For the exercise, PUMA assessed the cascade of impacts caused by producing shoes and sportswear: from raw material production, such as cotton farming and oil drilling, to raw material processing, involving leather tanneries, the chemical industry and oil refineries.

Working with accounting giantPricewaterhouseCoopers and data firmTrucost, in May PUMA pegged the ecological costs of its operations for GHG emissions and water use at $124 million for 2010. Of the total, $9.5 million is due to PUMA’s direct actions, and the remaining $115 million are incurred in the chain of suppliers that deliver finished goods to the company. The approach is controversial. Critics have argued the system is too abstract to trigger meaningful change. But by putting a dollar value on the environmental impact of its production process, Zeitz contends PUMA is playing a “catalytic role” in helping to shift the way companies measure and record their costs, and ultimately reduce them. OnEarthcontributor Adam Aston recently spoke with Zeitz, who now serves as chief sustainability officer of PUMA’s parent company, PPR Group, as CEO of its Sport & Lifestyle Group, as well Chairman of the Board of PUMA about how the EP&L can help improve sustainability.

The corporate sustainability report is, for most companies, the most detailed assessment of their environmental impact. At PUMA, you took the process considerably further. What’s the benefit?

We’re moving away from the traditional sustainability report. Such reports are fine for senior management to chart broad efforts. But from the perspective of designers or buyers trying to understand the impact of their decisions on the environment, that approach isn’t specific enough.

That’s where the EP&L comes in. Used across the entire supply chain, it offers a better tool to look at product development and design decisions, to understand the impact of what raw materials we use, how the materials are processed, where our products are made, how they’re shipped, how we package, stock and sell them, and how we dispose of or recycle them.

What variables did you measure in your first EP&L?

The first two we focused on were carbon and water. In the next phase, to be announced shortly, we aim to add other environmental indicators, such as the precursors of smog and acid rain, waste reduction and land use impacts. Eventually, our goal is to track about 90 percent of our environmental impact. Beyond that, the final 10 percent, I think, will just get too complicated.

In phase two, we plan to assess the social impacts in sustainability, such as changes in standard of living, security and health of the communities where we and our contractors have impact.

Finally, in phase three, we want to broaden the scope to look, holistically, at the economic positives of business. If we’re truly comprehensive in this effort, we shouldn’t just look at negative things. The fact is that companies also do good things — creating jobs, paying taxes, fuelling economic growth, increasing wealth and improving quality of life. That’s also something that we want to start valuing.

What surprised you in your evaluation?

The real eye opener was how much of our impact happens so early in the supply chain. That’s when most of the carbon emissions are created and most of the water is consumed.

We estimate that over half of our carbon emissions happen in the production and processing of raw materials, in the raising of cattle for leather and treating that leather, for example.

That means that the second you decide what raw materials to use in your product, you’ve set in stone the bulk of that products’ environmental impact, no matter what happens later.

How are you using the EP&L findings to alter the way you do business?

These numbers show you where you can start to turn your product development in a better direction, by looking for alternative materials, investigating how they’re made, where and by whom. So the findings are influencing product design and development day-to-day, as well as manufacturing, sourcing, even marketing to a point. We’ve begun to share these findings with our suppliers, to help them understand why we’re strict about certain materials or processes.

Are consumers starting to see these changes?

In some cases, yes. For example, to cut the amount of cardboard in our shoe boxes, we worked with Yves Behar to create Clever Little Bag. It’s a design that cleverly combines a reusable bag with a cardboard frame. The approach does away with about two-thirds of the paper used in regular boxes — this saves trees, of course, but also huge volumes of electricity and water, given how paper is made. And since it has a built in handle, the design also eliminates the need for an extra bag at checkout. That makes it more convenient for the consumer. The process of designing this required that we coordinate with our suppliers in Asia to ensure the new approach didn’t cause troubles with how our shoes are packaged at the plant, then shipped and distributed.

Given that you don’t own most of the factories that supply PUMA sportswear, is it a challenge to push through these kinds of sustainable design decisions?

While we don’t own the factories or suppliers, we are deciding who our manufacturers will be, who our raw material suppliers are, where we buy our raw materials from, and so on. We have the ability to tell a factory: “Stop buying from that supplier.”

But, of course, there are cost implications. The full costs that we identified in our EP&L exercise are borne by all of the participants in our supply chain. Though we’re at the end of that chain, PUMA doesn’t pay the full cost of that EP&L.

That’s a reason we’re working to educate our suppliers. If we identify that the footprint of cushioning in our shoes, for example, is predominantly with the chemical industry, we can say to that industry and its suppliers: “Okay, guys, what can you do to shrink your footprint?” It’s got to be a joint initiative.

Do you worry that these efforts will drive up prices, and that higher price tags could turn off consumers?

Look, very little that we buy today is truly sustainable, but this effort has to start somewhere. I believe that brands have significant power to change consumer behavior. Consumers are starting to understand that, ultimately, we’re living on one planet and we have to look after it. There’s a natural survival mode that kicks in, where we are starting to realize that things are broken and we’ve got to change it.

For PUMA, the key is that we don’t over promise, and are very transparent and true to what we do, with honest communication about what we’ve accomplished and what we haven’t. Communicating these efforts is important: we don’t want to lose our customers’ trust by getting it wrong. Nor do we want to sell a greener product that is ignored.

We’re trying to sell a solution that is desirable in many ways­ besides its environmental impact — its design, materials, and its style. This effort has to include the consumer. Otherwise it’s not going to change things.

What have been the greatest challenges in deploying this method?

It’s not totally black and white, for sure. Data collection is a challenge, given how many suppliers feed materials into our products. But it can be done if the rules are set, and everybody plays along.

Then, of course, is the question of valuation. For example, there is not just one method of measuring the value of water or the cost of carbon.

For us, this meant being on the cautious side when it came to valuing environmental costs, generally opting for the higher cost estimate. So, for carbon, we take its social cost, around $90 per metric ton, many times the cost of a ton of carbon offsets in EU markets. The higher social cost of carbon reflects estimates of the future costs of climate change. [For background on how this value is calculated, check PUMA’s Greenhouse Gas Emissions Valuation Model.]

Are you open to sharing these methods with your peers, to help them spread?

Yes, absolutely. For those that are serious and want to associate themselves with what we are doing in an open manner, we will also be open with them. We have already had a number of requests from the automotive, chemical and beverage industries, as well as from one of our competitors.

Sidebar – Truth Squad: A more environmental balance sheet

Why would a public company such as PUMA bother to report costs it isn’t required to? After all, tracking down water-use and carbon-emissions data for far-flung factories manufacturing countless products is a costly, complex effort, demanding time from top management at PUMA and its partners.

The goal is to turn transparency into a competitive advantage. In fact, while PUMA’s particular EP&L methodology is unique, it’s one of an emerging set of related standards for corporations to recognize, measure and report the non-financial impact of their activities. “Call it triple bottom line or sustainability accounting or CSR [for corporate sustainability reporting], dozens of standards are being developed that attempt to capture elements of companies’ environmental impact,” says Alisa Valderrama, a finance policy analyst at NRDC’s Center for Market Innovation. Some of the leading players in these efforts include Global Reporting Initiative (GRI), the Carbon Disclosure Project and CERES.

PUMA’s first effort, recording water and carbon costs on a profit and loss statement, may sound like a trivial bookkeeping shift, but the company is going a step further than most: Puma is not only disclosing impacts, but working to integrate what they learn into their bottom line. This means going beyond getting management to trim disproportionately high environmental costs. In the long term, such efforts can also help reduce the “material” risks to financial performance that companies are required to report. Energy shortages or toxic spills at a sub-contractor are examples of risks that could dent the annual returns of a company like PUMA. Lastly, share price could eventually benefit since some studies suggest that fuller disclosure of non-financial factors correlates with better investment returns.

“PUMA’s efforts sophisticated, a really holistic example,” Valderamma says. “This is costly, hard stuff: assessing your toll on the environment is not as easy as counting widgets coming of the assembly line.”

Yet she is frustrated with the broader state of reporting, because until such voluntary standards are incorporated into mainstream accounting and financial practices, their impact will be limited. “You want to get to the point where this is no longer rare and voluntary, but commonplace and expected, where Wall Street analysts are asking about EP&L in quarterly calls,” she says. “That will be the bellwether of real market change.” — Adam Aston

NRDC OnEarth

Green Pinstripes: Wharton School of Business Dean Thomas Robertson Talks About Sustainability | OnEarth

Stroll through practically any business school in the country — or any of the fast-multiplying U.S.-style B-schools overseas — and there can be little doubt that an MBA remains a hot commodity. With the start of classes now upon us, business schools are prepping for another near-record year. During this recession, as in past downturns, applications have surged, with candidates looking to use the slowdown to upgrade their credentials.

Just a couple of years ago, this bumper crop might have seemed unlikely. In 2009 the financial meltdown exposed the outsize role played by financial MBAs and math-whiz PhDs in crafting the house-of-cards investment vehicles that all but crashed Wall Street.

Critics pointed to another, deeper cause: a culture of profit at all cost that had been incubated in business schools. “The really grim news for the MBA…is about more than short-term trends,” wrote Matthew Stewart in Slate back in March 2009. “The economic crisis has exposed long-standing flaws…in the very idea of business education.”

If the recession hasn’t dimmed the prospects of B-schools, the crisis of confidence has spurred a flurry of curriculum makeovers at top institutions. Ethics, of course, have come into greater focus. In parallel, there’s been a rising appetite on the part of students and faculty alike to study more sustainable approaches to business. The number of programs emphasizing social, environmental, and ethical issues has been rising steadily in recent years, according to Beyond Grey Pinstripes, an independent, biennial survey of business schools managed by the Aspen Institute.

For a look at how sustainability and post-crash ethics are evolving at an elite business school, there’s no better laboratory than the University of Pennsylvania’s Wharton School of Business, one of the nation’s oldest and largest B-schools and an important nursery for Wall Street talent.

Thomas Robertson took over as dean of the school in August 2007. As the dust from the financial crisis has settled, he has worked to boost the profile of sustainability in Wharton’s curriculum and among its staff. To be sure, Wharton remains strongly focused on finance, even as highly ranked competitors such as Michigan’s Ross School or Berkeley’s Haas School have made sustainability a core commitment. Notably, none of the nation’s top three B-schools — Chicago’s Booth, Harvard Business School, and Wharton, according to Bloomberg Businessweek’s latest rankings — appear in Beyond Grey Pinstripes.

Robertson says Wharton is hoping to change this. Adam Aston, a freelance writer and former energy and environment editor for BusinessWeek, spoke recently with him about sustainability and the greening of Wharton at his office on the school’s leafy campus near downtown Philadelphia.

Sustainability as a business strategy is still the exception, and there haven’t been many successful, mass-market “green” brands. Why do you think that is?

Green business is still quite young. Yet even in that fairly short time, there are some serious questions about whether you can brand green any longer, because the public is so suspicious. To some extent it has reason to be. It’s easier to recall fallen green champions who have failed terribly than it is to come up with green success stories. BP is a poster child for this. The company emphasized for years how green it was, even as the environmental concerns about its operations were mounting, and then the problem spiraled out of control with the Gulf oil spill. Companies have to be careful. They should first ask, do green claims really differentiate our product, and should we be emphasizing that? If so, are those claims credible? Will consumers believe us? There’s a lot that can go wrong, so it’s no surprise that companies remain shy.

Are you hesitant to brand Wharton as a greener business school? You don’t appear in the Beyond Grey Pinstripes rankings, for example.

Wharton has had a funny love/hate relationship with rankings in general. A predecessor of mine, along with the deans at Harvard and a few other institutions, decided some years ago to stop participating. But the ranking services rate us regardless, using information from outside sources. Beyond Grey Pinstripes is among the most demanding, because it requires that we survey the content of individual courses to identify which ones have green content. However now we’re cooperating again for the first time in a long while, and we have full-time people substantially dedicated to answering these requests. The Aspen Institute is probably the most reputable place out there ranking green initiatives in schools. It’s a good place for us to be, whether someday we come in first or thirtieth.

Did you pick up any shift toward greener goals since the financial crisis?

The aftermath of the crisis has reinforced one of the longest-standing strategic pillars of the curriculum at Wharton: social impact. From environment to labor and other social dimensions of business, there’s very much a belief here that business schools must be a force for good in the world. Even so, this is the biggest school in the country. We have 4,900 graduate students plus a few hundred undergrads. And some of our alumni do still go astray.

Do you have any star faculty members working on green issues?

One is our vice dean of social impact, Len Lodish, who also leads Wharton’s Global Consulting Practicum. Among other things, this sends groups of MBAs overseas to apply business skills to solving social and environmental problems. One team recently went to Botswana, for example, to help develop a sustainable funding model for a health partnership. I’d also mention Eric Orts, the director of Wharton’s Initiative for Global Environmental Leadership. Eric is a lawyer and tends to come at these issues from that perspective. He argues that business as usual is quite likely to lead to major environmental catastrophes, and he’s pushing for Wharton to get ahead of the curve on these issues. It’s clear that sustainability is here to stay. I think it has come into its own as a business priority. We all realize that we’re going to destroy the planet if we don’t get on board.

In many business schools, the interest in sustainability is coming from the bottom up, from the students.

It’s true. A lot of student efforts are bubbling up here. Emily Schiller graduated with an MBA from Wharton in 2009 and chose to stay here to become the school’s first associate director of sustainability and environmental leadership.That role grew out of her involvement, when she was a student, as co-chair of Net Impact’s North America Conference, one of the nation’s largest nonprofit events focused on sustainability. She also works with our Student Sustainability Advisory Board, which takes student suggestions and so far has turned them into real savings of more than $100,000. One of their ideas now is to switch to natural cooling of our data center in winter, rather than using air-conditioning. If it’s cold outside, why not take advantage of that?

Sidebar: NRDC FOCUS — Peter Malik, Director of NRDC’s Center for Market Innovation

If business schools could choose one thing to enhance their focus on sustainability, what would it be?
Mortgages. The housing market has to be one of the drivers of economic recovery, but it’s still under severe pressure. Unsound lending practices were partly responsible for the mess, and we need to scale down the role of government-sponsored enterprises like Fannie Mae and Freddie Mac in underwriting private-borrower risk. Banks should also incorporate sustainability criteria into mortgage scoring and pricing. Live in a mansion and drive a Hummer, and you’ll pay more. Live in an energy-efficient apartment and walk to work, and you’ll pay less.

Learn more about Location Efficient Mortgages.