THE GALLON ENVIRONMENT LETTER
Canadian
Institute for Business and the Environment
Fisherville,
Ontario, Canada
Tel. 416
410-0432, Fax: 416 362-5231
Vol. 17, No. 10, June 17, 2013
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A GALLONDAILY
ANNIVERSARY DRAW
Regular readers of Gallon Environment Letter
will have heard of, and perhaps visited, GallonDaily.com, our (almost) every
weekday one article version of GallonLetter. What you may not know is that
sometime in the next 5 to 10 days GallonDaily will celebrate its 500th
anniversary – 500 articles!
To mark this special anniversary we will be
awarding the traditional Gallon Environment Letter draw prize – 500 grams of
organic fair trade chocolate.
All you have to do to win is visit
GallonDaily.com on the day that the 500th column is published and answer a
couple of easy questions. Full details on how to win – very simple – will be
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those few that provide solely administrative information, like the one which
announces this contest! So the only way to win the chocolate is to visit
GallonDaily every day for the next few days until you see the contest
announcement.
Draw open only to residents of Canada, the
United States, and the UK. Persons associated with GallonDaily or Gallon
Environment Letter not eligible!
Watch out for the GallonDaily 500th
anniversary draw!
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ABOUT THIS
ISSUE
This issue of GallonLetter looks at the
question of Responsible Capitalism - what is it, is it real, and who is
practising it? We let Unilever's define it for us, then present some possible
examples and some critical views. We review one company's Don't Buy Our Product
campaign, a book on Conscious Capitalism, one of the authors of which is the
co-founder of Whole Foods Market, some work by Milton Friedman, divestment of
investments from fossil energy companies, a way to reduce the environmental
impacts of clothing by reducing the number of colours, the cost of perpetual
care in the waste management field and the corporate subsidies that taxpayers
often provide, one company that seems to be doing waste management better, and a
review of the federal government's Responsible Resource Development
concept.
In all, the topic makes for fun and
interesting reading. It is quite amazing how some corporations and organizations
try to twist popular objectives to their own profit goals.
We wrap up this issue with a brief review of
the tick problem that currently pervades the natural landscaping surrounding our
publishing house.
Our next issue will review a topic that is
currently getting much attention across Canada - Extended Producer
Responsibility. There is a preview of the topic in this issue of GallonLetter.
Whether you are a consumer or a brandowner, an importer, retailer or
manufacturer, governments are pushing the cost of recycling on to you. Is this a
good thing? We'll do our best to answer some of the questions and we will tell
you what we think of the Ontario proposals for changes to EPR in that
province.
As always, we invite readers to submit Letters
to the Editor for possible publication. Send your comments in support, in
disagreement, or in inquiry, to editor@gallonletter.ca . We will pick a selection of the most interesting for
publication.
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THIS ISSUE'S
FEATURE: RESPONSIBLE CAPITALISM
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UNILEVER:
LEADERSHIP FOR RESPONSIBLE CAPITALISM
"Business has a much wider social purpose and
value than making money. In the proper hands it can be a real force for good."
was the theme of Unilever CEO Paul Polman speaking as the third speaker in the
annual Bata Lecture on Responsible Capitalism. He noted the timely nature of the
debate on responsible capitalism, "Indeed, the production of books on capitalism
is one of the few growth industries at the moment. Capitalism in Crisis.;
Capitalism at the crossroads.; Sustainable Capitalism, .What next for
Capitalism, and so on. I was thinking of contributing myself, with '50 shades of
Capitalism'!"
Polman promotes partnerships and high level
collaboration including with UN agencies and groups of business leaders such as
an initiative involving Richard Branson and Jochen Zeitz calling for a Plan B
for Capitalism for social, environmental and economic
benefits.
Challenges of
a VUCA World
After discussing the challenges of a VUCA
World (Volatility, uncertainty, complexity and ambiguity) such as political
systems unable to adapt to rapid changes of an interdependent world, rapid
technology development, increasing lack of trust by citizens of government and
business, financial crises, lost generations of youth unable to find jobs and
environmental crises such as climate change, population growth and resource
depletion, he said that "the only way to guarantee long term prosperity is to
grow our businesses in line with the needs and aspirations of the communities we
serve. There is a huge opportunity for businesses that embrace this new model of
responsible capitalism. But it needs a different approach. This goes well beyond
CSR. It’s about moving to a licence to lead, where:
- business sees itself as part of society not
separate from it;
- the focus is on the long term, not on
quarterly earnings;
- the needs of citizens and communities carry
the same weight as those shareholders."
At Unilever, he said, this is the approach
they are using including abandoning quarterly profit reporting and changing
compensation for long term. He attributes the 2008 financial crisis to short
term profit goals including hyperspeed stock trading. He notes the changes that
social media and technology in general has had on increasing the interdependence
of the world and the need for business leaders to adapt as the world changes.
Leaders have to be authentic and trustworthy, not to be changing their
behaviours depending on expediency or who they are trying to
influence.
The Unilever Sustainable Living Plan calls for
growing the company to double its current size but to do so by reducing the
environmental footprint and adding to social benefit: "It’s a new model,
encompassing all brands, categories and countries, taking co-responsibility for
the total value chain.
The Plan has three big goals by
2020.
- To help a billion people take action to
improve their health and well-being.
- To halve the environmental impact of our
products.
- And to source 100% of our agricultural raw
materials sustainably, protecting the livelihoods of more than 500,000
smallholder farmers.
These are underpinned by 50 timebound
targets.
This approach, we believe, will become the
only growth model acceptable to consumers. We are making progress:
- lowering costs by cutting the use of
resources;
- lowering risks by internalising challenges
like climate change;
- creating stable supply by working directly
with small hold farmers;
- motivating our employees;
- Leveraging our brands as a force for
good.
Indeed the biggest force will come from making
our brands movements for social change."
He lists the various brand initiatives such as
Knorr's Sustainability Partnership for sustainable agriculture.
In a VUCA world, many of the issues are
complex, for example for deforestation which contributes 17% of global
greenhouse gas emissions: "An issue as complex as deforestation requires big
coalitions, extensive resource and big ambition. No one can do it alone." He
gives other examples of partnerships including his being a member of the UN
Secretary Generals High Level Panel on Post- 2015 MDGs. (Millennium Development
Goals) which set targets for eliminating poverty.
He says that: "Companies like Unilever have
extraordinary reach. We are present in more than half of households on the
planet. Every day two billion people across 200 countries use one of our
products. This gives us the opportunity to intervene and improve the lives of
millions by offering them the fundamentals of a decent life - clean drinking
water, basic hygiene and good nutrition. It is an opportunity we must not waste,
not just because it would be immoral to do so, but because providing solutions
to the challenges we face in food security, access to drinking water and poor
sanitation is good for business. It fosters innovation and drives
growth."
Lecture
Series
The Bata Shoe Foundation established the
Thomas J. Bata Lecture Series on Responsible Capitalism in honour of the late
Thomas J. Bata who believed "that business is a public trust which should
contribute to the well-being of the communities where it operates." Every other
year the lecture is delivered in Canada organized by the York University
Schulich School of Business in Toronto and in the Czech Republic organized by
Tomas Bata University.
Polman, Paul CEO Unilever. Bata Lecture on
Responsible Capitalism. February 11, 2013.
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PATAGONIA:
DON'T BUY OUR PRODUCT
Patagonia, the sports clothing and gear
company, attracted a fair bit of attention with its ad on Black Friday (the day
after the US Thanksgiving and one of the biggest shopping days of the year) in
2011 in the New York Times headed "Don't Buy This Jacket". Not many companies
promise to make long lasting products which they commit to repair and at the end
of their lifecycle recycle. Even fewer companies say, don't buy our product
unless you really need to.
In line with Patagonia's goal to become a
responsible company, the ad is part of the company's Common Threads Initiative:
"Businesses need to make fewer things but of higher quality. Customers need to
think twice before they buy."
In the Common Threads Initiative consumers are
asked to take the pledge:
REDUCE
WE make useful gear that lasts a long
time
YOU don’t buy what you don’t need
REPAIR
WE help you repair your Patagonia
gear
YOU pledge to fix what's broken
REUSE
WE help find a home for Patagonia gear you no
longer need
YOU sell or pass it on (eBay is a great place
to start)
RECYCLE
WE will take back your Patagonia gear that is
worn out
YOU pledge to keep your stuff out of the
landfill and incinerator
REIMAGINE
TOGETHER we reimagine a world where we take
only what nature can replace."
Patagonia’s
Clean Water Campaign Targets Oil Sands
Because of the negative effective of textiles
on water quality, Patagonia has supported campaigns for clean water. As part of
its campaign, Patagonia is asking for action on tar sands pipelines providing
links to the various groups calling for opposition to the Keystone XL pipeline
which is seen as threatening freshwater due to spills.
Among the organizations opposing the pipeline
highlighted on the Patagonia web page are:
- 350.org which organized a petition to the US
State Department
- League of Conservation Voters which pointed
to the Canadian oil spill by ExxonMobil in Arkansas, the Enbridge spill in
Michigan and the existing "tar sands pipeline" history of spills.
- Audubon which projects harm to wildlife
habitat and water supplies
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HEROIC SPIRIT
OF BUSINESS: CONSCIOUS CAPITALISM
Four tenets are explored in the book Conscious
Capitalism, described as an antidote to the books about capitalism in crisis.
The four are:
- Higher purpose, described as the
corporation's search for meaning. A company for example like Pedigree doesn't
sell just dog food but love of dogs complete with a manifesto called
Dogma.
- Stakeholder integration includes an
interdependence between loyal, trusting customers, passionate team members,
patient investors, innovative suppliers, an outer circle of stakeholders and
the only voice-less stakeholder, the environment.
- Conscious Leadership
- Conscious Culture and
Management
The wealth created by a Conscious Corporation
includes not only financial but also intellectual, social, emotional, physical
and ecological wealth for the stakeholders. The authors John Mackey, cofounder
of Whole Foods Market and Rajendra Sisodia, cofounder and trustee of the
non-profit Conscious Capitalism, Inc and professor of marketing at Bentley
University. give examples not only from Whole Foods Market but many other
corporations.
There are a number of examples in the book
where GallonLetter think they are a little too inventive in creating their own
world of conscious capitalism. While espousing the importance of stakeholders,
they want no unions and if they have to have one then only one controlled by the
company, something which is against the ISO 26000 Guidance on Social
Responsibility which requires good labour practices to have dialogue with
workers controlled by worker selected representation not controlled by either
government or company. None of the sixty-thousand people working at Whole Foods
are unionized and the argument is that happy team members don't want a
union.
Climate change is barely mentioned although it
is part of a list of "natural phenomena, unintended consequences of rapid
industrial growth and greater prosperity "which includes "freshwater scarcity
and pollution, energy uncertainty, depleted fisheries, rapid deforestation and
climate change". The authors say that climate change gets too much attention
drawing attention away from other environmental challenges. While Mackey hasn't
overtly been identified as a climate sceptic per se, he just avoids the issue of
human-caused climate change. Choosing to avoid addressing climate change which
scientific leaders say is one of the most crucial issue of our times reduces the
book's credibility especially as the food production sector is likely to heavily
affected.
On the other hand, at times they make good
points highlighting important issues. For example, they discuss the growth in
annual economic activity from 1800 when "there were fewer than a billion of us
on the planet, and each individual produced and consumed on average about $640
worth of goods and services a year" to today when "there are seven billion of
us, each producing and consuming an average of $8,000 worth of goods and
services a year (in 1990 international dollars). That is approximately $56
trillion in annual economic activity, compared to about $50 billion in 1800, an
eighty-six-fold increase." They project to the next fifty years with growth of
population to 9. 6 billion people and over $300 trillion a year of economic
activity a year in 1990 dollars and write, "It is impossible to imagine our
planet supporting that much production and consumption if we continue to doing
things the same way we have been doing them." They suggest that a conscious
business seeks to minimize its environmental impacts at the same time as it
lowers the cost of doing business, keeps good relations with its customers,
raises the morale of team members. Energy efficiency is an example which
achieves these multiple goals. John Mackey a number of years ago decided he had
made enough money and received compensation of just one dollar a year with no
stock options or bonuses.
The authors point fingers at critics of
business and capitalism who say corporations are greedy and evil for despoiling
the environment in the name of profit by saying that "Most of the environmental
harm that has occurred on the planet has not been done deliberately." From their
point of view, these environmental damage are unintended consequences of the
higher goals of "creating desired goods and services for customers, providing
jobs for team members, purchasing needed materials from suppliers and so forth."
GallonLetter is sure that this point of view must be very convenient. Just after
pointing fingers at critics of corporate operations, they say it is time to stop
finger pointing.
Sustainable
Food
Whole Foods Market is said to be involved in
more sustainable agriculture such as organic and local products, sustainable
seafood, reducing energy footprint, green buildings and initiatives towards zero
waste in stores. Among the initiatives described in more detail
are:
- promoting the idea of more plant-based diet
by educating customers and team members.
- seeking sources of animals from non-factory
farms especially 100% grass fed beef and lamb and pasture-raised pork and
poultry.
- improving animal welfare which helps
differentiate meat products includes:
- -no
commercial veal from tethered calves, foie gras from force fed ducks, pork
raised using gestation crates and eggs from caged hens
- -a nonprofit Global Animal Partnership which
rates step-based animal welfare standards where Step 1 is the basic no crates,
no cages and Step 5 is animal welfare is well developed; no physical
mutilations, animals spend their
lives on the farm and are slaughtered on
the farm. Suppliers marketing to Whole Foods Market seek to improve their
rating through better animal welfare practices.
- works with the Marine Stewardship Council to
buy certified seafood. Raises awareness of which seafood is unsustainable as
well by labelling all seafood with Monterey Bay Aquarium, Blue Ocean Institute
and Marine Stewardship Council ratings. No red-rated species (those with
serious depletion) are sold.
The authors tend to be on the positive side
when it comes to business ingenuity and innovations which in some cases is a
positive aspect of the book: the idea that once a business is focussed on a
problem, positive changes are more likely, e.g. in regard to sustainable
fisheries: the collapse of the cod fisheries led Whole Foods on a successful
search for a sustainable cod fishery, "As consciousness rises about these
issues, we're going to see more fisheries managed in a sustainable
way."
However, this optimism also leads to poorly
supported conclusions, for example, the idea that higher standard of living
leads to a cleaner environment, "People with higher living standards expect and
demand a cleaner environment, and this is generally accomplished." GallonLetter
notes that both rich and poor people have environmental impacts, but wealthier
societies tend to consume more (e.g. in the EU the measure Direct Material
Consumption is linked to economic wealth. This consumption tends
to increase the environmental footprint of richer people. This is a
much more complex subject than can be subject to the simplistic conclusion
of this book’s single sentence.) Also the United Nations Global Environment
Outlook released at the Rio conference in 2012 doesn't reflect the optimism:
"The currently observed changes to the Earth System are unprecedented in human
history. Efforts to slow the rate or extent of change – including enhanced
resource efficiency and mitigation measures – have resulted in moderate
successes but have not succeeded in reversing adverse environmental changes.
Neither the scope of these nor their speed has abated in the past five
years.
As human pressures on the Earth System
accelerate, several critical global, regional and local thresholds are close or
have been exceeded. Once these have been passed, abrupt and possibly
irreversible changes to the life-support functions of the planet are likely to
occur, with significant adverse implications for human well-being."
The authors say that critics of business are
trading on fear with their message of "environmental Armageddon" but fear
"short-circuits creativity and inhibits innovation and problem-solving." Instead
of fear and guilt, businesses are advised to "operate out of love and care for
the environment." A role for government is to enact scientifically-based
regulations so that conscious and conscientious companies are not put at
disadvantage by unscrupulous operators.
Responding to
Misconceptions about the Conscious Capitalism
Among the author's responses to criticisms
about conscious corporation are:
- Myth: Profits are all that count: Response:
Profits are essential but realizing the higher purpose set by Whole Food
Market (detailed in early sections of the book such as educating people about
healthy eating) ensue because they are the by-product of the higher
purpose.
- Myth: Conscious capitalism works only in good
times Response: Caring and compassion are even more important during rough
times.
- Myth: Conscious capitalism is only for the
high end markets. Response: Many companies provide affordability to a wide
range of customers. Whole Foods is at the higher end but offers high quality
and customer experience; team members are very productive, and the company
does not squander resources.
- Myth: Wall Street will never see value in
Conscious Capitalism. Response: Financial markets are finding value in long
term performance of conscious companies. Some executives making decisions such
as cutting R & D to meet short term goals are undermining the companies'
long term economic health.
GallonLetter really doesn't know what to make
of this book. At times, we found it vaguely creepy. There is a section
complaining about too high taxes, saying that with lower taxes the company would
be able to pay its employees (team members) better, have lower prices for
customers and a higher profits for investors - maybe so but who is to say to
what extent higher profits than the $343 million profits in 2011 would be
directed to lower prices or higher wages of any significance although the
company does have a profit sharing program for workers.
There is a lot of talk about trust and
openness yet Mackey spent seven years messaging anonymously on the Yahoo
financial site including some criticisms of competitor Wild Oats which was later
bought out by Whole Foods. He predicted that Wild Oats would crash and he was
making money shorting it. Some of the remarks are just silly at one time saying
he wasn't a Mackey groupie but he admired various things Mackey accomplished but
other anonymous comments were roundly criticized such his saying he was
genetically disposed to making money and those who didn't like it that he was a
wealthy man were just envious because "So many people are stuck on a zero-sum
paradigm of the world.". In the book, he says it was all in fun and not taken
seriously by the readers of the message board but it must have undermined trust
when he was exposed.. When his comments that Obamacare was fascist generated a
call for a boycott of Whole Foods, some Tea Party members instituted a
buycott.
However, despite the idiosyncratic approach
and quasi-libertarian belief system, the book highlights that there are many
ways in which a successful business is more than just the bottom line. We don't
know whether the Whole Foods culture is really about love and care as the
authors represent but it is true as the authors write that although the saying
is what gets measured gets managed, that there are also many aspects of the
corporate culture that aren't amenable to measurement but are critical to the
success nevertheless. Because Mackey has actually built a prosperous business in
the highly competitive food retail sector, the discussions on these "soft"
elements are more likely to be considered by business leaders than if presented
by other commentators.
In the fall of 2012, Whole Foods Market based
in Austin, Texas operated 335 supermarkets: 322 stores in 39 U.S. states and the
District of Columbia; 7 stores in Canada; and 6 stores in the United Kingdom.
The company's SEC 10K filing says it is the largest retailer of organic and
natural foods (defined as "foods that are minimally processed, largely or
completely free of artificial ingredients, preservatives and other non-naturally
occurring chemicals and as near to their whole, natural state as possible) and
11th largest food retailer in the US. Organic is defined by the U.S. Department
of Agriculture’s (“USDA”) Organic Rule. Sales have steadily increased from $7.95
billion in 2008 to $11.7 billion in 2012. The filing gives extensive description
of the types of initiatives discussed in the book and a range of risk factors
including the potential harm of unions, relying heavily on a particular supplier
(United Natural Foods, Inc., supplies almost a third of products) and other
retailers picking up more of the same type of products.
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FRIEDMAN:
BUSINESS SOCIAL RESPONSIBILITY IS SUBVERSIVE AND MOSTLY
FRAUD
Milton Friedman, Professor at the University
of Chicago, won the Nobel Prize in 1976 for his work on the role of money in
inflation and other ideas such as how longer term income affects consumption and
prices. He suggested there were complexities related to stabilizing business and
economic cycles. His major work A monetary history of the United States
1967-1960 and work on how policies of the US Federal Reserve System sparked the
1929 crisis were considered very influential.
But for many Friedman's most significant work
is an article he wrote in the New York Times, not an academic article but
extracted somewhat from his book Capitalism and Freedom. Friedman positions his
argument against social responsibility for business yet provides some conditions
which are not frivolous and often not mentioned such as the need for a
competitive playing field and legal and even moral compliance. It isn't clear
whether Friedman ever did any of the studies or academic research for this
theory as compared to that for which he won the Nobel Prize. Certainly his
article was of an era when humanity didn't expect, with the help of the captains
of industry, to have the capacity to destroy a great deal of life on earth
through environmental impact (acid rain, ozone depletion, long range transport
of hazardous air pollutants, climate change). Or, as brilliant as he was, he
could be wrong. As he said in his banquet speech for the Nobel prize: "Delighted
as I am with the award, I must confess that the past eight weeks have impressed
on me that not only is there no free lunch, there is no free prize. It is a
tribute to the world-wide repute of the Nobel awards that the announcement of an
award converts its recipient into an instant expert on all and sundry, and
unleashes hordes of ravenous newsmen and photographers from journals and T.V.
stations around the world. I myself have been asked my opinion on everything
from a cure for the common cold to the market value of a letter signed by John
F. Kennedy. Needless to say, the attention is flattering, but also corrupting.
Somehow, we badly need an antidote for both the inflated attention granted a
Nobel Laureate in areas outside his competence and the inflated ego each of us
is in so much danger of acquiring. My own field suggests one obvious antidote:
competition through the establishment of many more such awards. But a product
that has been so successful is not easy to displace. Hence, I suspect that our
inflated egos are safe for a good long time to come."
In the article he wrote that only people have
responsibilities and corporations are artificial persons which might have
artificial responsibilities but cannot as a whole have human responsibilities.
He accuses "Businessmen who talk this way are unwitting puppets of the
intellectual forces that have been undermining the basis of a free society these
past decades."
Among his comments are:
- a corporate executive has the responsibility
to "conduct the business in accordance with their desires, which generally
will be to make as much money as possible while conforming to the basic rules
of the society, both those embodied in law and those embodied in ethical
custom."
- while it is hypocritical window dressing when
a company devotes resources to improve the amenities of the community or takes
similar action to attract desirable employees, Friedman withholds admiration
for these companies reserving his kudos for those who "disdain such tactics as
approaching fraud."
- "there is one and only one social
responsibility of business - to use its resources and engage in activities
designed to increase its profits so long as it stays within the rules of the
game, which is to say, engages in open and free competition without deception
or fraud."
The only trouble is the complexity of defining
what the rules of the game are, how and whether there is open and free
competition and what role an individual company has to ensure it operates within
such a system and what constitutes compliance, deception or fraud.
Ivey School of
Business Dean: Companies and Societies Intrinsically
Connected
Dean of the Ivey Business School at Western
University (London, Ontario) since 2003, Carol Stephenson wrote in the Ivey
Business Journal in 2008 about Friedman's article but said that "In our
increasingly inter-connected world, where the forces of globalization and
technological innovation are bringing massive change, I believe the linkages
between business and society will grow stronger, tighter and even more vital to
both corporate success and social prosperity." She discussed how social
responsibility initiatives by such companies as Nestle have improved quality of
life in communities and in turn improved markets for the companies. She
concludes, "I have no doubt that the debate surrounding the role of business in
society will continue for years to come. Is it fair to hold corporations to
account for their contributions to society? Can companies advance social
progress and make a profit at the same time? Should corporate social
responsibility be an essential part of a company’s business strategy? I firmly
believe so. Business and society are inseparable and interdependent. The best
business leaders know this is true. And they act with vision, courage and
passion to create real and lasting social value. These are the leaders we are
educating at Ivey today."
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DIVESTMENT OF
FOSSIL FUEL INVESTMENTS
A 2013 paper with authors from the Climate
Justice project of the Canadian Centre for Policy Alternatives covers a number
of ways in which, according to the authors, institutional investors can help
move Canada towards a lower carbon future. The authors of the paper are Marc
Lee, Senior Economist at the BC Office of the Canadian Centre for Policy
Alternatives and Co-Director of the Climate Justice Project, and Brock Ellis
with a Masters of Public Policy from Simon Fraser University and research
assistant for the Climate Justice Project. Climate Justice is a five year
research project by the CCPA-BC and the University of British
Columbia.
While Canada's Prime Minister said
environmental groups using foreign money were hijacking public consultations on
oil sands and other resource extraction projects, the authors say oil sands are
Canada's top destination for private investments with foreign capital. Among the
forces that could lead "to a bursting carbon bubble" are various forces
including divestment campaigns in various jurisdictions. While those supporting
the oil sands say that divestment of fossil fuel stocks threaten pension plans
and future payouts, these authors say that previous collapses such as the 2008
housing bubble and the earlier high tech bubble could be examples of similar
risks in the form of a carbon bubble. Pension funds review risk related to
inflation, currency, regulations, political instability, economic conditions but
tend not to account for climate risk. While some observers say that accounting
for environmental risk will reduce financial performance, the authors say that
failing to consider climate risk exposes a pension fund to vulnerability from
the carbon bubble. The long term viability of the fund to pay out to
now-still-young workers is threatened.
Among the suggestions are:
- financial markets need to make a commitment
to climate action so as to encourage Canada to adopt a national carbon budget
designed to wind down carbon emissions. The budget should contain specifics on
unburnable carbon which are reserves which cannot be exploited.
- governments should adopt carbon pricing,
develop framework policies for clean energy, remove fossil fuel subsidies, and
ensure public investments are directed towards clean energy.
- national green bond programs can be
investment channels for pension plans for public infrastructure for climate
adaptation. Carbon taxes will over time ramp up to pay for the costs of the
green bonds.
- the government of Canada should direct the
Canada Pension Plan Investment Board to divest from fossil fuel
companies.
- university endowments as well as investments
by municipalities and Crown corporations should divest from fossil fuels and
RRSPs and tax free savings accounts should be granted preferential tax
treatment only if the funds meet specific green economy criteria
- screening and rating agencies should provide
reports on climate risk and unburnable carbon
As long as governments are unwilling to take
this type of action, others can divest: campuses, churches, credit unions and
other community based organizations can take similar divestment actions as were
taken to pressure South Africa to get rid of apartheid.
Fossil fuel divestment is being promoted by
Bill McKibben of 350.org with four campuses divesting and campaigns at 300
others. In Canada, Fossil Free Canada, is promoting campaigns of university
endowment funds.
While some funds such as Ethical Funds screen
for military and tobacco they tend not to divest of fossil fuel companies
although Ethical Funds announced in January 2013 it was divesting of Enbridge
but that was related to Enbridge Northern Gateway project for which First
Nations opposition was viewed as a human rights issue rather than an
environmental one. Ethical Funds, which had sent a resolution to Enbridge's AGM
in 2012 which failed, said "Ethical Funds has divested of all holdings of
Enbridge Inc. in its funds. Enbridge Inc. will not be eligible for re-investment
in any of the Ethical Funds until such time as it meets the environmental,
governance and social (ESG) requirements for inclusion. Enbridge exhibits signs
that it is revisiting its current position on the impact of the Gateway Project.
Divestment is considered a last resort once all avenues of the engagement
process have been exhausted."
Caisse de dépôt et placement du Québec has a
policy on responsible investment with consideration of environmental. social and
governance reporting ESG and the Ontario Teacher's Pension Plan is considering
ESG policies but overall these types of initiatives are marginal. Some global
investors have also articulated positions in support of taking climate risk into
account.
On divestment the authors conclude, "We have
articulated a case that implies divestment is a rational choice, not just for
moral reasons, but due to the core financial problem of unburnable carbon. As we
noted above, a major drop in asset values for fossil fuel stocks could drive an
economic downturn in Canada, and is a systemic concern given the large volume of
funds workers have invested through private pension funds. Other private savings
vehicles, such as RRSPs, and public investments through the Canada Pension Plan,
are also in need of a “managed retreat” from fossil fuel investments. Ideally,
long-term savings vehicles in the Canadian economy would be strongly aligned
with the need for climate action and low-carbon economic
transition."
****************************************************
ADIDAS: DYEING
TO REDUCE ENVIRONMENTAL IMPACTS
Reducing the colour range is one of the
targets for the footwear and apparel company, Adidas. In designing for the
environment, Adidas has set a target of reducing its colour palette by 50%
(excluding the production of products for clubs or for products outside of their
design control). Over the last two years, they have reduced the colour palette
by 19%. GallonLetter notes that among the benefits of fewer colours are fewer
containers, fewer chemicals and materials for cleanout of dyeing equipment
between colour runs, and waste among other impacts. A common strategy in Design
for the Environment is to reduce the number and types of materials
used.
Adidas
DryDye
The Adidas report says to dye one of their
t-shirt uses 25 litres of water (and GallonLetter notes that the water is
contaminated with the dye stuff). For some of its apparel, the company is
applying DryDye technology which is for polyester fabric using no water, 50%
fewer chemicals and 50% less energy than conventional fabric dyeing. The method
also improves how well the dye is held in the fabric. GallonLetter notes with
appreciation that the claim is based on a lifecycle assessment (by the supplier
of the technology, Netherlands-based DyeCoo Textile Systems BV) (1)
****************************************************
THE COSTS OF
PERPETUAL CARE
One of the problems of the ideal of a free
competitive market is that the capitalists aren't the ones paying both the
financial and non-financial costs, costs which may continue to accumulate years
after the capitalists and corporations are gone.
Recently Walmart in the US was found guilty of
mishandling disposal of hazardous materials from their stores over a number of
years. Even though the penalties are tens of millions of dollars, one regulator
commented that the company gained competitive advantage at the time. Walmart
sent 2 million pounds of material to a company which lacked the necessary
registration for recycling certain pesticides and also lacked the capacity to
handle certain products. Some chemicals ended up in sewers and dumpsters. With a
$466 billion annual sales (2013 fiscal), the penalty is insignificant or as
Walmart says "not material" but people who drink the water in which the
pesticides and other products returned or damaged was dumped may pay in more
than cash over time.
Quite a few practices involve future
generations paying in perpetuity for contamination and waste caused in the past
and ongoing. While some businesses will make money and their activities measure
as positive towards Gross Domestic Product, the costs mean many more socially
beneficial services won't be affordable and harm to health and the environment
is done. Attention-grabbing examples include
the abandoned Giant Mine Site, north of Yellowknife, for which costs to deal
with such chemical wastes as arsenic are rising to close to a billion dollars to
be paid for by taxpayer funds. The remediated site will cost several millions a
year to maintain in perpetuity. Declaring bankruptcy is a legal strategy which
can also absolve the company from environmental liabilities. Nuclear waste and
other hazardous waste sites also have huge costs as storage sites must be
maintained for 1000 years or more.
Unless Extended Producer Responsibility
Programs (see separate article) result in eliminating waste going to landfill,
an unlikely scenario, municipalities have responsibility for perpetual care of
closed landfills. For example, the 2013 waste management report for
Northumberland County, Ontario says the County has three active disposal sites
(2 landfills and 1 transfer stations) but seven closed landfills for which it
has responsibility and which have an annual cost of $3.6 million for perpetual
care. Because of tipping fees, the active landfills/transfer station make an
annual profit (at least until they are closed) of $226,325 making the net annual
cost of closed and active landfills $3.4 million for just one county in Ontario
with a small population (around 80,000).
****************************************************
NEWALTA:
PRODUCT RECOVERY
Newalta's 2013 Sustainability report
highlights its role in technology and material recovery, "providing engineered
environmental solutions. Our skilled team serves customers directly at their
operations and through a network of facilities in Canada and the U.S. Each year,
we recover approximately $400 million worth of products from industrial wastes."
Overall in 2012, the report says, "we recovered 2.1 million barrels of crude
oil, 65 thousand tonnes of lead and 23 million litres of base oil and
lubricants, about the same in total as 2011, but slightly less than the five
percent increase we targeted. In 2013, we will continue our efforts to increase
product recovery volumes."
Newalta created a new structure in 2012 with
three divisions:
- New Markets: serving oil and gas customers in
Western Canada's heavy oil region and oil and gas in the US. Focus is on drill
sites, oilfield waste processing and expanding mature fine tailings processing
in the oil sands.
- Oilfield division: oil and gas other than
heavy oil including recycling oilfield waste and recovering oil.
- Industrial: lube oil re-refinery in North
Vancouver, lead recycling in Ville Ste-Catherine, Quebec, and non-hazardous
waste landfill in Stoney Creek, Ontario as well as facilities and onsite
operations across Canada. For 2013, projects include a new processing facility
in Sarnia Ontario and expansion of the North Vancouver re-refining
facility.
The focus of these divisions is said to be to
commercialize new technologies e.g. in 2012, technology was demonstrated for
recovering hydrocarbons, water and solids for contaminated drilling
wastes.
With increasing pressure on oil and gas
companies to address environmental concerns, Newalta identifies its role as
working with its customers to develop operations in a responsible way while also
reducing operating costs, for example in the shale gas operations of Statoil in
North Dakota. Newalta and Statoil have built a mobile waste treatment plant
which recovers oil as well as reducing costs of transporting and other handling
of wastes. This removes 130 trucks a month from North Dakota highways and
prevents waste from filling up landfills.
Life-cycle
Assessment
The company says it has completed life cycle
assessment on its key recovery processes. It is using the LCAs for such
initiatives as reducing CO2 emissions and improving recycling processes. The
2012 target to improve net carbon impact by 20% over 2011 was achieved with
8.000 tonnes less CO2 released in 2012.
Water
Water consumption increased from 273,950 cubic
metres in 2011 to 370,784 cubic metres mostly due to increased demand for
processing and new operations. An example of water conservation practices
includes use of recycled site surface water instead of fresh water in used oil
"de-ashing" process. This reuses water five times for a saving of 20 cubic
metres of fresh water per month.
Research at
UWO
Newalta scholarships for graduate students at
the Faculty of Engineering, University of Western Ontario in London, Ontario for
five years is funding environmental research and development of clean
technologies in wastewater treatment, recovery and recycling.
****************************************************
CANADA’S
RESPONSIBLE RESOURCE DEVELOPMENT - TARGET SETTING WEAK TO
NON-EXISTENT
The federal government calls Responsible
Resource Development part of its Economic Action Plan but the section lacks what
most people would consider a plan e.g. what is the base line and where are we
going from there, measurable targets (results), timelines, who is responsible
for what, etc.
Resources are said to include energy, mining,
forestry and various trades but isn't clear what the definitions are and because
the government has proven itself rather too dedicated to claiming all good
things about the oil sands, the claim of employment in these sectors need to be
well-supported. Statistics Canada in its overview of Canada’s System of National
Economic accounts describes the importance of defining sectors and the related
accounts saying, "Because these accounts all use a common set of definitions,
concepts and classifications, and are explicitly related to each other, they
form an integrated system. As a result, the economic stories assembled from the
CSNEA data are coherent and credible." Credibility is important because the
dominant claim is the economic benefit and job creation, 1.6 million jobs direct
and indirect.
Graphics Fail
to Illustrate Environmental Responsibility
Even if one could confident the government
wasn’t overstating the economics, one has difficulty finding out about the
environmental responsibility part. Pictures are supposed to be worth a thousand
words but most of the pictures illustrate big: big machines, big piles of
material in a big building, big pipes, a big stack of stack lumber. There's an
artistic shot of the sun in a bunch of trees, not terribly illuminating of
responsibility and only a small fraction of photos could be said to be
illustrating any kind of responsibility: a view of someone planting a tree and a
couple of shots of what could be monitoring equipment. If the photos speak, they
say there is little understanding of what responsible resource development has
to do with protecting the environment.
GallonLetter knows there are many examples of
photos and graphics that would illustrate commitment to environmental
protection, even artistic ones. For example, the Canadian Standards Association
sustainable forestry certification has photos of three pairs of arms around a
tree far too big to reach around, a young couple building a home with
sustainable lumber and a child reading at the base of an old growth tree but the
idea of treehugger would probably be anathema to most of the federal cabinet
including Natural Resource Minister Joe Oliver. His 2012 open letter about
foreign funding and "environmental and other radical groups". as well as
political involvement in initiating auditing of environmental groups by the
Canadian tax agency didn't raise nearly the scandal that perhaps it should have.
Certainly similar politically-motivated actions of US IRS in dealing more
stringently with critics of the White House were subject to loud objections by
members of the Tea Party and others. Although the so-called EthicalOil which
claims support from "Canadian" oil companies said it was a really good read and
the most honest letter ever written by a senior Canadian politician, some
observers think that many Canadians were at least somewhat alienated by the
inclusion of such groups as the much respected David Suzuki Foundation in
accusations of extremism, and fiscal fraud of the tax system. Foreign money
doesn't seem to be a problem for the gander as the Harper government was
recently reported to have increased its advertising budget to promote the
Keystone XL in the US from $9 million last year to $16 million this
year.
Money
Commitments
There are some statements in the EAP such as
$13.4 million over two years to strengthen pipeline safety including doubling
the number of annual comprehensive audits but one doesn't know what this money
will achieve or indeed who is getting the money. Ditto for the "$35.7 million
over two years is being provided to strengthen Canada’s tanker safety
regime."
Enforcement
Commitments
Claims in this section of the EAP include that
there is generally more enforcement as in Environment Minister Kent's "better
enforcement of responsible resource development in the oil sands and elsewhere"
do not show up on Environment Canada's enforcement web site. With such strong
lobbying of the US government by the Canadian federal government, enforcement is
likely to be political rather than consistent. GallonLetter notes that just as
in the financial field where auditors and rating agencies were giving passing
and even triple A ratings on fraud, leading to near financial collapse, charges
of corruption associated with Canadian engineering companies in relation to
major infrastructure projects also undermine enforcement as it is often
engineering firms who verify that environmental conditions of major projects
have been met.
There is a commitment "Financial penalties of
up to $400,000 are being introduced for companies that do not meet environmental
assessment requirements". Of course that "up to" means that fines could be
considerably lower or depending on interpretation perhaps higher if penalties
can accumulate. But if that is really the size of the fine for failing to meet
the conditions of environmental assessment projects then it is too small for the
large projects in the oil sands: one of the tires on a big truck operating in
the oil sands costs over $60,000 and all four tires are changed once a year so
that penalty is operationally not material for the very large companies.
According to the Environmental Law Centre in
Alberta, proposed changes to regulations will further remove more projects from
environmental assessment. Except for projects individually designated by the
Minister, the only projects subject to federal environmental assessment are on
the list in Regulations Designating Physical Activities (RDPA). Proposed changes
will add some projects but more will be removed including heavy oil and oil
sands processing facilities and groundwater extraction facilities. According to
the Energy Resources Conservation Board (Alberta), about 80% of the oils sands
oil is too deep to mine so must be extracted by drilling wells using specialized
techniques which require a large amount of water. So most of the operations of
the oil sands will no longer be subject to federal environmental assessment. A
recent US Congressional Research Report discusses in what way the environmental
impacts of these in-situ oil sands are greater than commonly
presented.
RDD Not in
Draft Federal SD Strategy
In reviewing the draft Federal Sustainable
Development Strategy, the interim Commissioner of the Environment and
Sustainable Development Neil Maxwell, at a hearing of the House of Commons
Standing Committee on the Environment and Sustainable Development on June 4
said, "Some key initiatives are missing, such as government's responsible
resource development agenda and plans to monitor water, land, and biodiversity
in the oil sands regions." As well as questioning what funding is to be
allocated to achieving targets, the CESD highlights lack of clarity in the
targets which makes it difficult to assess progress e.g. lacking the extent of
reductions such as in air pollution and lacking a time frame.
Bull's
Eye
GallonLetter thinks that the omission of
Responsible Resource Development from the federal SD strategy fits into our
reading of this RDD as more a story than a plan. Unfortunately it might be all
too similar to a story in a children's book called More True Lies: 18 Tales for
You to Judge told by George Shannon. In one of the stories, a neighbour stares
at a barn in which every arrow is on the target. He asks the child, "Did you
shoot all those arrows?" Yes, says the child. The neighbour is impressed. The
reader is asked "What's the truth, the whole truth and where's the lie." The
whole truth: The boy shot all the arrows and then painted the targets
afterwards. The federal government seems to be doing a lot of painting as
well.
EthicalOil.org. Resource Minister calls out
“radical” foreign saboteurs EthicalOil.org. .January 10,
2012.
Environmental Law Centre (Alberta). More
Changes to Federal Environmental Assessment Laws on the Horizon. May 2,
2013.|
Office of the Auditor General. Opening
Statement to the Standing Committee on Environment and Sustainable Development.
Draft Federal Sustainable Development Strategy. Neil Maxwell, Interim
Commissioner of the Environment and Sustainable Development
Strategy.
****************************************************
EPR IN CANADA:
DUNCAN BURY SAYS THE TRAIN HAS LEFT THE STATION
In a special feature on Extended Producer
Responsibility in the Journal of Industrial Ecology, Duncan Bury, now with his
own company Duncan Bury Consulting (Ottawa, Ontario) and formerly with EPR
responsibility at Environment Canada, predicts that while EPR will continue to
grow in Canada, more will be expected from governments and producers "to ensure
that EPR delivers, not just on cost shifting, but also on clearer and more
rigorously measured environmental objectives in an increasingly national
context. "
Some of his other observations
include:
- The EPR Canada (a non-profit) report card
released July 2012 rated British Columbia with the highest mark A-, Manitoba,
Quebec and Nova Scotia with a B-, all the other provinces with various forms
of Cs and the federal government with the only failing grade: F.
- The provincial, territorial and federal
government signed up to the Canada-wide action plan for EPR of the Canadian
Council of Ministers of the Environment in 2009. A number of programs for
product categories are to be phased in for 2015 and 2017.
- More than 80 product specific EPR programs
operate in Canada, mostly regulated at the provincial level but some
voluntary.
One of the issues he discusses is the use of
the Environmental Handling Fee. If a fee is paid by the consumer, he suggest the
program isn’t really a producer responsibility program. Quebec has banned the
use of visible EHFs although producers can add the cost of the program to the
product and tell consumers that it is there in advertisement, product pricing
and at the till; however, the price has to be inclusive of the fee.
Another issue is one of national management of
programs e.g. used oil and container programs have one administration and one
web site. The Electronics Products Recycling Association EPRA is also moving in
the same direction.
****************************************************
UPTAKE ON
TICKS: CLIMATE AND OTHER CHANGES
"Explosion of ticks biting pets and people:
Public health officials wonder if dog ticks are a bellwether for Lyme
disease-carrying cousins' arrival" was the front page story of our nearest big
city paper, The Hamilton Spectator June 5, 2013. People in the area around
Hamilton have been sending samples of ticks, which are small spider-like
bloodsuckers, to the public health authorities. All those from the Hamilton area
were identified as dog ticks rather than black-legged ticks (deer ticks) which
are the ones that carry Lyme disease.
Although it is treatable, Lyme disease, if
left untreated, can include nervous system disorders, arthritis, skin rashes,
extreme fatigue and other nasties. The reasons the Public Health Agency of
Canada identifies for the expansion of the dog ticks: warmer winters, conversion
of wildlife areas to suburbs bringing animals (birds, squirrels, small rodents)
closer to people, growing deer population and fewer insecticides used may set
the stage for expansion of deer ticks as well although that may not be
inevitable.
PHAC has information about ticks identifying
areas where deer ticks have been long established (the longer the ticks have
been in an area, the more likely that they will be infected with the bacteria
which causes Lyme disease). Some provinces not on the list such as Alberta are
allocating funds to conduct tick surveillance for the first time because of the
possible emergence of lyme-disease carrying ticks.
Here in Fisherville for the first time we are
picking dog ticks off ourselves after a trip to the composter. It has affected
our social life as we have to find alternative locations to get together with
families with younger kids who would otherwise have to be constrained to stay on
the deck. Our yard is perfect tick habitat as it is naturalized and full of
trees and shrubs (ticks like wood edges apparently) with many nesting birds but
despite never using insecticides, we haven’t had any ticks for the last 15 years
until this year. One noticeable short-term change is that in the last two years
after first never seeing a squirrel and then only seeing one or two when the
hazelnuts ripened, squirrels are now raising young here due in part to more food
from the maturing of nut trees and shrubs.
Our public health has identified the ticks as
dog ticks as well with no specific risk of disease. Although it is off-putting
one tends to find them either scurrying across the skin or even if already
attached for bloodsucking before they are too embedded but the nymphs of the
deer tick are very small, some as tiny as a poppy seed so it is unlikely one
would be able to find them never mind getting rid of them. Permanent slathering
ourselves with insecticide or bug repellent seems also to present
risks.
****************************************************
READING
GALLONDAILY
If you enjoy Gallon Environment Letter or find
it useful for your work or interests, may we recommend the GallonDaily report.
Found at http://www.gallondaily.com , GallonDaily provides short articles and reports on
topics of particular interest to green businesses. One article appears almost
every day Monday to Friday - we recommend visiting at least once a week. Our
real enthusiasts can also sign up for email notification as new articles are
posted.
Recent topics include:
- Parkbus – a great way to go wilderness
camping
- A Gallondaily anniversary draw
- International Energy Agency proposes
immediate climate change measures
- CO2 targets met by outsourcing are not really
met
- Payment for ecosystem services
- Steps towards a more sustainable food future
- Is washing of cars good for the environment?
- Scotland confiscates property for
environmental offence
- CP Rail wreck: is hiding the facts an ethical
approach?
- Electric vehicle batteries: steps to
environmental improvement
- SFI certification under attack from
ForestEthics & Greenpeace
- Iconic Montreal Biosphere may close
- A timely article from the Union of Concerned
Scientists
- Bees, pesticides, and public opinion
- Metal Recycling: Opportunities, Limits,
Infrastructure
- Recycling opportunities can prolong
utilization of some metals in short supply
- A intelligent campaign launched by a 9-year
old environmentalist
- The lowly outhouse probably contributes to
groundwater pollution
- Energy reporting and disclosure for buildings
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