CSRHub Blog Research on ESG metrics and comments on sustainability best practice

By: Carol Pierson Holding

Writing recently for the Wall Street Journal, Thomas Barrett, President of Alyeska which owns and manages the Trans-Alaska Pipeline, bemoans the pipeline’s deterioration due to falling oil production and urges that oil drilling sites be opened in Alaskan seas to increase the oil load and save the pipeline.

But first, Barrett celebrates this amazing scientific and engineering feat. Completed in 1977 for over $8 billion, the Trans-Alaska Pipeline runs for 800 miles, carrying oil from its source in the North Slope to the port of Valdez. The complexity is mind-boggling: hot oil, maintained at a steady 140 degrees
through external temperatures as low as 60 degrees below zero, is pushed along by eleven pumping stations through pipe wrapped in 4 inches of fiberglass insulation, about half of it buried and half carried above the tundra on 78,000 support structures. The tundra’s temperature is further stabilized through 124,000 heat releasing pipes.

All this while balancing the demands of the pipeline’s powerful owners, primarily BP and Exxon Mobil.

For years, pipeline managers have claimed the pipeline needs more oil. After peaking in 1988 at over 2 million barrels/day, oil production in the North Slope declined, resulting in lower throughput, which leads to cooling oil, which over time results in build-up of sludge and other substances harmful to the pipeline. Barrett’s recommendation is to increase output by opening new oil drilling sites in the Chuchki and Beaufort seas and Cook Inlet near Valdez.

So far, the Interior Department has refused to sell these off-shore oil Alaskan leases, yet conservative forces and Alyeska managers continue to push.

According to Barrett, the only other option is to shut down the pipeline. The pipeline currently carries just a fourth of its maximum capacity, and its load will continue to decline, reducing revenue while requiring costly repairs. And it’s not just repairs caused by low oil flow. Pipeline President Barrett is still catching up on maintenance long-delayed by former Presidents, all but one drawn from member companies whose primary interest was to minimize costs and giving Alyeska poor ratings for environmental performance by ratings company CSRHub.

In addition, the pipeline is now almost forty years old. Insulation is eroding. Pipe seals are breaking. It seems it might be time to retire it anyway.

Climate activist Bill McKibben would agree. In an article in this month’s New Republic, McKibben argues for a “far more stringent effort” to control climate change than the plans agreed to after last year’s Paris Climate Summit. McKibben points to a state-by-state plan developed by American scientists led by Mark Z. Jacobson at Stanford to transition rapidly to renewable energy from sun, wind and water, at the rate of 80-85% by 2030 and 100% by 2050. In Alaska, that would mean shifting to onshore and offshore wind for 70% of energy requirements and another 20% from hydroelectric.

The pipeline solution seems simple, doesn’t it? Instead of investing in oil pipeline maintenance, allow the North Slope oil to run out and the pipeline to degrade, then shut it down, however much it hurts to abandon that miracle of American know how. Invest instead in wind turbines.

One expensive problem remains. When the pipeline was originally built, the agreement reached with native tribes and environmentalists required that upon shutdown, all hazardous pipe, pumps, support structures, etc. must be removed and the land and vegetation restored along the pipeline as well the roads built to assemble it. The cost of disassembly could exceed the pipeline’s original cost.

What incentive does Alyeska have to make good on its promise? Oil and gas is a major source of tax revenue for Alaska and enforcement is notoriously lax. And how would you establish fines for leaving toxic pipe to erode along a 420 mile swath of tundra whose land value is virtually nil but, without which, an entire society’s source of subsistence is destroyed? Where one-third of the world’s soil-bound carbon is stored, then released whenever permafrost melts, adding to climate change?

In the past, regulators have succeeded in extracting even larger clean-up costs from the oil companies. But public outrage has played a huge part, and it may be harder to rouse activists on behalf of an old pipeline and the tundra below. If Alyeska’s owners cannot be pushed into living up to their agreement to dissemble the pipeline, then the task will fall to some combination of state and Federal agencies, and, eventually, American taxpayers. The biggest question is not how, but when.

Photo courtesy of Arthur Chapman via Flickr CC.

Carol Pierson Holding is President and Founder, Holding Associates. Carol serves as Guest Blogger for CSRHub. Her firm has focused on the intersection of brand and social responsibility, working with Cisco Systems, Wilmington Trust, Bankrate.com, the US EPA, Yale University’s School of Environmental Sciences, and various non-profits. Before founding Holding Associates, Carol worked in executive management positions at Siegel & Gale, McCann Erickson, and Citibank. She is a Board Member of AMREF (African Medical and Research Foundation). Carol received her AB from Smith College and her MBA from Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and rankings information on 16,495+ companies from 135 industries in 133 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By: Carol Pierson Holding

How will damage from the Gold King Mine spill of Silverton Colorado be valued? The lawsuits against the EPA for dislodging the toxic yellow sludge into the Animas River and beyond haven’t yet been filed, but injured parties are lining up.

Recognizing imminent danger accident, the EPA tried to allocate Federal funds earmarked for cleaning Superfund sites.  before the accident, the EPA tried to allocate Federal funds earmarked for cleaning Superfund sites. But Silverton is a town that subsists on tourist dollars. And it gets its water from another site. Concerns about upstream water weren’t enough to warrant the tourism-destroying Superfund label.

So the EPA had to do more inspecting to bolster its argument for Superfund designation and accidentally breeched a secret dam built inside the mine to hold back accumulated snowmelt, unleashing three million gallons of poisonous sludge.

Sure enough, as in the BP Deepwater Horizon spill, the tourism industry is the first to call for monetary damages.

Then come livestock owners whose animals might be poisoned. And the vegetable farmers whose produce could be ruined unless they find an alternative source of water.

Then there’s the cost of the clean-up itself.

But even those billions of dollars don’t account for the loss of gorgeous, irreplaceable natural habitat along the now three hundred miles of fouled rivers.

In our monetized, quantified world, we are driven to assign a value to this resource. And economists have a mechanism.  Called “contingent valuation,” the tool is a survey in which subjects are asked their willingness to pay to protect nature.

Intuitively, we know this is not remotely adequate. Economists and policy makers agree. And so scientists have set about trying to develop a better metric.

A study on the neuroeconomics of valuation was just published in the journal PLOS One and summarized in a New York Times article by study authors Paul Glicher and Michael A. Livermore. Previous MRI’s of the brain structures responsible for valuation showed great similarity across a wide variety of decisions, from consumer goods to entertainment to daily activities. But as the authors put it, “The brain did not respond to contingent (environmental) valuation studies the way it did to all other known classes of economic behavior.”

In other words, when subjects tried to “value” nature, their MRIs showed different areas of the brain at work than those areas used to value other decisions.

Could nature be on a different spectrum altogether? Maybe our brains process nature’s value in ways unrelated to money.

Those of us who walk in nature would agree.

As it turns out, many economists agree too.

One of them is Nobel Prize winner Joseph Stiglitz. A 2009 report by the Stiglitz Commission on the Measurement of Economic Performance and Social Progress looked at how economic statistics such as GDP fall short of measuring true economic performance:

“For example, traffic jams may increase GDP as a result of the increased use of gasoline, but obviously not the quality of life. Moreover, if citizens are concerned about the quality of air, and air pollution is increasing, then statistical measures which ignore air pollution will provide an inaccurate estimate of what is happening to citizens’ well-being.”

The Stiglitz Commission goes further, insisting that “The assessment of (environmental) sustainability is complementary to the question of current well-being, and must be examined separately. …Both pieces of information are critical and distinct.”

Another way of saying that even rising public policy metrics such as Gross National Happiness in Bhutan or Subjective Well Being in the UK don’t adequately address the value of the environment.

Nature brings solace and sanity. If you haven’t experienced the succor of nature personally, science has proved its benefits, most recently in a National Academy of Sciences study whose results suggest that “accessible natural areas may be vital for mental health in our rapidly urbanizing world.” Or to put it another way, nature’s true value is priceless.

Photo courtesy of Fishermansdaughter via Flickr CC

Carol Pierson Holding is President and Founder, Holding Associates. Carol serves as Guest Blogger for CSRHub. Her firm has focused on the intersection of brand and social responsibility, working with Cisco Systems, Wilmington Trust, Bankrate.com, the US EPA, Yale University’s School of Environmental Sciences, and various non-profits. Before founding Holding Associates, Carol worked in executive management positions at Siegel & Gale, McCann Erickson, and Citibank. She is a Board Member of AMREF (African Medical and Research Foundation). Carol received her AB from Smith College and her MBA from Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 15,000+ companies from 135 industries in 130 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By: Carol Pierson-Holding

The Seattle Times ran an article whose headline was so unsurprising I almost didn’t read on: “Oil industry not buying Gov. Jay Inslee’s cap-and-trade plan.” No surprise right?

Big Oil’s actions tell us it not only wants to kill carbon pricing but still actively promotes climate-denial, a fact most recently reinforced by the cash-for-climate-denial scandal of Harvard-Smithsonian physicist Wei-Hock Soon, whose papers are the go-to reference for impugning climate change. Big Oil withdrew from direct supporting Soon and now funnels “donations” through Donors Trust charity, which in turn donates to climate denial organizations.

And hadn’t I just been sent a link to Biggreenradicals.com, a site funded by the DC-based Environmental Policy Alliance (which goes by the ultra-cynical acronym “EPA”)? Its stated function is to “educate the public about the real agenda of well-funded environmental activist groups” and its investigations point to the Kremlin as a major funder of the US EPA.

Russia funds the EPA to destabilize the U.S.? Really? Still, whatever “EPA” is spending on its whacky research is a pittance compared to $213 million the fossil fuel industry spent last year on lobbying and the $900 million a year given to organizational supporters of climate denial.

That Seattle Times headline seemed to be restating the obvious, that oil companies will always oppose carbon pricing. But the text of the article presents a totally different picture: “…(chief executive of Royal Dutch Shell) Ben van Beurden warned that the industry faces a credibility problem ‘if you undermine calls for an effective carbon price; and if you always descend into the ‘jobs versus environment’ argument in the public debate’.”

Shell is not the only oil giant to endorse carbon pricing — BP also says it favors a global carbon price, and that national or regional carbon policies are “a good first step.” The industry knows it’s coming. 73 countries including China and Russia have or are creating a form of carbon pricing, either carbon tax or cap and trade. A successful cap and trade system has been operating since 2008 across nine states in the northeastern U.S.

But here in Washington State, where the legislature is currently debating cap and trade legislation, the oil industry is opposing carbon pricing with everything it’s got.

It’s a brilliant play:

Big Oil CEOs say they support carbon pricing.

Washington’s governor proposes legislation would set a price on carbon emissions.

Big Oil refuses to negotiate.

The oil and gas sector has spent $415,000 in donations directly to legislative candidates. Couldn’t they have stalemated without the expensive price tag?

Sure, but they’ve got something else up their sleeve:

Last week, the GOP-controlled Senate passed a new $15-billion transportation plan that includes increases in the gas tax (nearly 12 cents phased in over three years) to pay for road infrastructure.

…But the Senate bill also contains a so-called ‘poison pill’ that cuts transit funding if the governor imposes stricter emission standards on fuels, vehicles or fuel distributors, or limits carbon emissions. That would be true for the life of the plan, or about 16 years.

How diabolically clever. Going flat out against any limit on emissions, much less cap and trade, would backfire in a pro-environment state like Washington, where 71% of the population supports the measure. With its Republican friends in the Senate, Big Oil devised a run-around that improves the odds that cap and trade will not become law and holds public transit ransom if anyone objects.

Improving Washington State’s roads could alleviate the terrible traffic jams in Western Washington’s cities. But they’d also make Washington State’s major polluters, private passenger cars, more attractive, and thereby assure that the switch from fossil fuels to renewables is extended. Carbon pricing seems inevitable, even to Big Oil, yet they’re using every trick to delay it, spending a bundle in this relatively tiny market to do so.

Thankfully, we’ve got a governor willing to throw his political clout behind it, and the support of environmentalists, labor unions, health organizations, low-income groups and native tribes. And shouldn’t that be enough?

Photo courtesy of Keith Tyler via Flickr CC

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council’s Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 10,000+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 13,736+ companies from 135 industries in 127 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By Carol Pierson Holding

The evening after Thanksgiving, I turned on NBC Nightly News with the avuncular Brian Williams, expecting frothy stories about turkey dinners and children’s dreams coming true. Instead, I got a line-up that started with Ray Rice’s exoneration by the NFL, complete with clips of him beating his wife-to-be, then one on shoppers fighting over merchandise at a Black Friday event, followed by protests against Ferguson’s grand jury decision not to prosecute police officer Darren Wilson.

I am struck this holiday season by the seemingly endless stream of news about apparent injustice without recourse. In addition to Ferguson and Ray Rice, there’s the Rolling Stone article “A Rape on Campus: A Brutal Assault and Struggle for Justice at UVA.” This morning, The New York Times Magazine cover story chronicled lack of justice for military rape victims. And then there’s Bill Cosby…

I went to college in 1972, the year that Title IX was passed banning gender discrimination in schools. I watched the tail end of the civil rights demonstrations and celebrated with protestors, especially at the end of the Vietnam War, when the draft was shut down, and with it, the most direct injustice to males in my cohort. In 1970, Earth Day encouraged us to treat our environment with respect if not reverence.

Stories of institutional bias against victims, both codified and cultural, again seem to dominate the news, along with demonstrations against it. I hope this cycle of protest has more complete and lasting solutions. But how can we really and truly put an end to egregious injustice?

Naomi Klein offers one idea. Klein is my hero for introducing me in 1999 to the potential for brands to change the world. At that time, government and religious leaders had lost people’s trust and brands had become the only institutional voices that consumers listened to. In that role, Klein wrote, brands, through social responsibility programs, could lead us out of society’s injustices. The many colors of Benetton would cure racism. Body Shop would end animal testing. Liz Claiborne would create awareness of domestic abuse. The Gap’s Red campaign would raise money for the poor in Africa.

In fact, these campaigns were mostly promotion, doing little to address the issues while succeeding in selling more stuff, and, in so doing, creating even more injustice. An enormous amount of energy is needed to produce, transport and store our stuff. That energy comes mostly from fossil fuels, and those mining it perpetrate injustice around the world. Texaco, now owned by Chevron, created the “Amazon Chernobyl.” Ecuadorian natives have been in court for 11 years so far seeking damages for their society’s complete destruction. The BP spill in the Gulf of Mexico killed 11 workers, sickened local residents, and decimated tens of thousands of birds, turtles and sea life, the most vulnerable of all. Within a single month last spring, Casper Wyoming-based Belle Fourche Pipeline operations suffered three oil spills in Wyoming totaling more than 100,000 gallons, with no fines or penalties. Oil extraction in North Dakota is destroying the land with minimal punishment, with one company, Continental Resources, getting off scot-free until its 11^th blow-out.

Still, Klein remains a hero to me for trying. And she has tried again in her latest book, This Changes Everything. In her words, “Climate change is our chance to right those festering wrongs at last—the unfinished business of liberation.”

Klein’s thesis compares the climate crisis to World War II and the massive solution required to rebuild Europe prescribed by the Marshall Plan. In 1947, George Marshall described the aim of his Marshall Plan as a fight “against hunger, poverty, desperation and chaos.” In current dollars, the U.S. invested $160 billion to prevent a European collapse that would have hurt us too. Much as Europe had to rebuild itself then, we have to rebuild ourselves now.

Along the way, we just might cure our addiction to spending and much of the depression and insecurity that goes with it. Why not invest in a new society that’s safer and fairer, that reduces the threats posed by hunger, poverty, desperation and chaos?

As Klein puts it, “Climate change, if treated as a true planetary emergency (could) become a galvanizing force for humanity, leaving us all not just safer from extreme weather, but with societies that are safer and fairer in all kinds of other ways as well.” Regardless of how workable her solutions are, her thesis seems worth considering.
Photo courtesy of Jesus Leon via Flickr CC.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council’s Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 10,000+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 10,000+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 365 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

By Carol Pierson Holding

The Climate Policy Initiative (CPI) just released an analysis of the “Financial Impact of the Coming Low-Carbon Transition,” which computed the potential value lost to stranded assets, or what fossil fuel companies will have to leave in the ground in oil, gas and coal. The CPI estimated the lost value at $1.1 trillion, plus another $1.8 to $4.2 trillion for the transport sector (think oil trains.) This total of $2.9-$5.3 trillion represents up to one quarter of total U.S. stock market value.

While the CPI report was meant to be positive – operating savings (think of the expense of solar panels vs. a coal plant) would offset stranded assets, creating a net positive of $1.8 trillion—it still sounded terrifying. And while the report claims the worst impact will be on Governments, which own 50-70 percent of fossil fuel companies and generate substantial revenue through taxes and royalties, I felt distracted from my central concern about climate change. Could we absorb the coming disruption?

The oil companies offer a painless alternative. Yes, we have to transition to renewable energy, but who better to lead that transition than the energy giants? Their leadership campaign is three-pronged:

First, acknowledge the need to transition away from fossil fuels.

This tactic was first used by Shell Oil. In its 2013 New Lens Scenario, Shell acknowledged that such a transition was necessary and offered a non-disruptive way to achieve 100% renewable energy by 2100: to minimize economic disruption, transition first to natural gas. Even liberals like Amory Lovins endorsed the strategy.

Now, 1½ years later, the entire fossil fuel industry has followed suit. Even the arch-conservative organization Heartland Institute has dropped its terror tactics (recall their 2012 billboard headlined “(The Unibomber) Still Believes in Global Warming. Do You?”). and gone so far as create the Climate Change Awards, which in July 2014 granted up to $50,000 each to ten scientists, economists and activists who support a “free-market approach to climate change” and “speak out against global warming alarmists.”

Second, address consumers directly with messages of safety and continuity.

Oil companies are running network television advertising not that different from the “Morning in America” calm, optimistic commercials that put Ronald Reagan in the White House.

You do get a sense of peace watching BP’s “Committed to America” spot.

Exxon/Mobil’s “Fuel Connections” ad offers gas that “cleans intake valves, helping engines run smoother and reducing emissions” providing “better fuel economy.” Amazing.

Chevron’s “We Agree” campaign advocates natural gas, with the admonition “We’ve got to be smart about this.”

Third, and this might be a fortuitously-timed accident: they lowered gas prices.

According to Thomas Friedman writing in the New York Times, U.S. and Iraqi oil companies have lowered their price per barrel in order to “bankrupt” Russia and Iran. Putting aside whether it’s a smart strategy to destabilize unfriendly, combative countries, the drop in oil prices could also change the economics of electric cars. Low gas prices coupled with messages about gas that gives “better fuel economy” cast doubt on the e-vehicle and hybrid claims are a better value.

And as oil companies align themselves with the U.S. government’s foreign policy, they’ll have better leverage in their quest to open our East Coast to drilling.

Finally, let’s not forget the threat of major economic dislocation. For stockholders, stranded assets add uncertainty to a stock market that’s already roiling. Another reason not to rock the boat by demanding a transition to renewables that’s too fast and disruptive.

Safety is beginning to look pretty good, even to me. You just have to ignore the reality of a dying planet, which over the last week, has been easier to do. Ebola and ISIS dominate the news. An admittedly small sample of media shows a disturbing lack of climate change news. Even the Huffington Post’s reliable “Green” alerts have seemed stretched away from real climate news to include Ebola coverage, like the nurse’s dog story, and lots of news about the climbers who died in Nepal.

It’s a shame how easy it is to distract us.

Photo courtesy of sporst via Flickr CC.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 9,300+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,300+ companies from 135 industries in 106 countries. By aggregating and normalizing the information from 343 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.