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Highlights and Low Points in 2014

February 12, 2015

Strategic corporate environmental management is at a dead end.

Lawyers, certified health and safety practitioners, scientists, and business majors chose career paths in environmental management starting in the late 1960s.  For 25 years they steadily shifted industry towards more ecological behavior.  They did so under relentless prodding of activist non-governmental organizations and newborn national environmental protection agencies. 

The path seemed promising.  Many professionals reached the threshold of the C-suite, and a few even crossed over onto the boards of directors. 

Starting roughly around 1985, the record became patchy.  Political and fiscal counter-pressures slowed progress.  Improvements within corporations became erratic.

Then things went sour.  Companies, operating through their trade associations, learned to fight back.  NGO’s began taking liberties with the facts to sustain their funding base.  Contributing to the trend, the loosely defined term “sustainability” elbowed its way onto the scene.  Sustainability pushed environment protection out of the media spotlight.  It opened up space in corporations to hire and promote public relations agents and communications specialists.  The strategic role once envisioned for environmental professionals faded to greenwash.

Today the situation has come to a virtual standstill.  Two studies in 2014 drawn clear boundaries around the state of affairs for corporate environmentalism.

Independent consultant Peter Soyka mapped the terrain in the US in his third evaluation of this kind. His research finds that corporate reporting has come to a turn in the road.  Not a sharp corner but a gradual curve in the right direction (see U.S. Firms Are Moving Slowly Forward). 

Compared with four years ago, the heading of the largest publicly traded corporations is now toward disclosures of more environmental, social, and governance (ESG) issues.  Soyka says even more dramatic changes have occurred among smaller and medium-sized companies.

Even so, there is little to crow about. “I do not believe that any of the practices or attributes that I have evaluated or advocate in this report involve anything inherently new, controversial, or beyond the capabilities of most large organizations to understand and implement,” Soyka says.

Not everyone is moving forward.  About one-third of the companies listed on the Russell 2000 (665 of 1,987) divulge no information on the topics asked for in Sokya’s system.  A significant fraction (100, or 10% of the total of the Russell 1000) continue to score zero, meaning that they do not disclose any of the 43 individual pieces of information he tracks.

In a separate but related study, progress is less and slower than the expectations set in 2010 by the Ceres coalition of faith-based and social responsibility investors.  The changes are “incremental change but not transformative.” 

The Ceres roadmap of actions set milestones for governance, stakeholder engagement, disclosure, and environmental and social performance.  Compared with 15% in the first survey in 2012, 24% of the 613 of the largest US companies evaluated are engaging investors on sustainability issues.

“But we want to see more action sooner,” concedes Andrea Moffat, vp of corporate programs at Ceres.  For example, only 35% of the corporations (212 of them) have established time-bound targets for greenhouse gas emission reductions.  Investment analysts never ask about sustainability matters during quarterly telephone calls, even if the executive presentation includes a slide on the subject.

Below are some of the high- and low-water marks of 2014 in no particular order as reported by Crosslands Bulletin.  Every step forward during the year seemed to be   accompanied by at least a step backward.

Subscribers can retrieve the full articles by searching for the titles on the home page.

HIGHLIGHTS

Ecolabel Rooted in Integrity, Hoping To Bloom
The Equitable Food Initiative (EFI), a coalition of parties with interests in food and worker safety, certified two farms in an ecolabeling program.  To achieve the EFI standard, farms must gain certification from an independent, third-party auditor.  The standard covers working conditions, pest management, and food safety. 

Though too early to claim success, the program breaks the trend of industry self-labeling schemes proliferating in the US.  Case in point:  Whole Foods Market, the up-scale high-priced organic (to a large extent) grocery, copied the same name ‘Responsibly Grown’ as EFI did for its self-proclaimed ecolabel.  It has nothing to do and nothing in common with EFI’s certification program.  Whole Foods is making up its own rules, and not explaining them very well to shoppers and not at all to journalists.

Drug Take-Back Law Upheld on Appeal

A US federal appeals court ruled against the pharmaceutical industry. The plaintiffs argued that an ordinance in one of California’s 58 counties requiring prescription drug producers to collect and safely dispose of prescription medicines violated the prohibition against barriers to the transaction of business.  The decision opened what had been a locked door for drug takeback laws in other states.

Legal Milestone for Battery Recycling
Vermont became the first state in the US to adopt an extended producer responsibility law covering primary batteries — otherwise know as single-use batteries — of multiple chemistries, including alkaline, zinc carbon, lithium primary silver oxide, and zinc air.

Launderers Clean Up Their Detergents
Making good on its promise to the US Environmental Protection Agency, the Textile Rental Services Association representing companies that supply laundered uniforms and linens, reported that 85% of its members eliminated the use of detergent containing nonylphenol ethoxylates (NPE).  The other 15% are said to be on schedule to switch away from the substance.

Information Collected on Packaging Recovery
Eleven national and provincial take-back programs for packaging waste got a head-to-toe physical examination in a culmination of two years of research.  The Boston-based Product Stewardship Institute (PSI) led the investigation.  The investigation was to have identified global best practices related to EPR.  The study team didn’t quite reach its intended target. (Again reflecting the one step ahead and one step back.)  Still, the report (not accessible on some browsers) presents qualitative and quantitative data on each program in uniform charts.

Business Risks of Climate Change Can Be Mapped
The lack of resiliency to climate-induced natural disasters was measured in an estimation from the Notre Dame Global Adaptation Index, or ND-GAIN.  The rather complicated methodology — and guesswork — draws on 50 indicators and 17 years of data. An enterprise-quality application of ND-GAIN is available from Four Twenty Seven, a climate consultancy, working in partnership with Climate Earth, a team of consultants who deal with supply chain management.

LOWLIGHTS

Another Carbon Trading Oversupply
In a rerun of every other cap-and-trade program undertaken in the world so far, the allocation of allowance units to power generators and industry in South Korea is too high to reduce carbon emissions during the first three years starting 1 January 2015.

Chevron Was a Victim in Ecuadorian Lawsuit
A nearly 500-page ruling in a federal court in the US finds that Steven Donziger, a lone-ranger type of crusading American lawyer, violated the federal anti-racketeering law, engaged in money laundering and wire fraud, breached the Foreign Corrupt Practices Act, tampered with witnesses, and obstructed justice.  The shocking and deeply disturbing behavior recounted in the court’s decision was carried out in obtaining a judgment against Chevron in an Ecuadorian court and then trying to cover up the illegalities.

Shareholders Peel Profits from Chiquita Deal
Foiled in its attempt to evade US taxes by moving to Ireland, Chiquita Brands Int’l agreed to be taken over for $682 million by Brazilian companies.  Shareholders rejected a merger with Fyffes, a banana kingpin in Dublin.  The $14.50 per share consideration from the Brazilians represents a 33.8% premium for Chiquita’s investors compared with the closing price on 7 March 2014, the last trading day prior to the announcement of the transaction with Fyffes

Nike Muddied Up, Again
NFL player Ray Rice is the latest of Nike promoters to be fired.  The shoe and clothing company has a really bad track record.  Nike cashes in on the endorsements of flawed athletes. Then the company cuts ties with them when they betray the public trust.  It has happened too often to ignore any more.  The Nike promotional program is offensive and indefensible.

Fraud Comes Too Close for Comfort
Fred Buenrostro, the former CEO of the nation’s largest pension fund, the California Public Employees’ Retirement System (Calpers), pled guilty to exchanging favors for cash and other benefits from his close friend.  He has confessed, outright, to taking bribes to influence Calpers to make investments with specific firms. 

Calpers, institutionally, is one of the leading supporters of the Ceres climate campaign.  Calpers joined in a special collaboration with Ceres “to use their collective clout to urge the nation’s largest companies to move more quickly to understand global sustainability risks and develop new business models and solutions.”

California Grabs Climate Proceeds for Pet Projects
Straight out of the “I told you so” annals:  The administration of Gov. Jerry Brown actually has taken millions of dollars from the state’s greenhouse gas cap-and-trade emissions shakedown program to help his constituencies rather than to mitigate climate change.  Cap-and-trade revenues will also be used to prop up Brown’s controversial, embattled bullet train construction project.  Every year, the transportation deal will get 25% of the emissions trading proceeds. 

 

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