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

By: Carol Pierson Holding

There has been so much good news about business embracing renewable energy that I almost didn’t give it a second thought when a Harvard Business School report called “America’s Unconventional Energy Opportunity” landed on my desk. Subtitled “A Win-Win Plan for the Economy, the Environment, and a Lower-Carbon, Cleaner-Energy Future,” I assumed it was a plan to transform our energy resources to renewables like wind and solar. States are pushing renewables too: New York State just released its roadmap for getting to 50% renewable power by 2030 by focusing on distributed generation and renewable resources.

The lead author of the HBS report is Professor Michael Porter. He is not only a globally-recognized authority on competitive strategy, he’s also works tirelessly on just causes. He created the “Social Progress Index to look beyond GDP at social and environmental factors.” Porter also co-founded FSG-Social Impact Advisors and co-developed its theory of “Shared Value” to help non-profits work with business to create social value. (Full disclosure: I am an HBS graduate and met with Porter and FSG staff.)

So it was disappointing to read that by “unconventional energy” the authors mean “…shale gas and oil resources …accessed and extracted through the process of hydraulic fracturing.”

Porter and his colleagues at HBS and management consulting firm BCG lay out their motivation:

Unconventional gas and oil resources are perhaps the single largest opportunity to improve the trajectory of the U.S. economy, at a time when the prospects for the average American are weaker than we have experienced in generations. America’s new energy abundance can not only help restore U.S. competitiveness but can also create geopolitical advantages for America. These benefits can be achieved while substantially mitigating local environmental impact and speeding up the transition to a cleaner-energy future that is both practical and affordable.

Their solution is to convert coal and oil based energy to natural gas and, when plants come to their natural end-of-life, we’ll replace natural gas with renewables. In the meantime, we’ll restore our economic supremacy by exporting cheap natural gas while reducing our own carbon emissions and energy costs. By 2060, we’d be generating zero carbon emissions from energy generation.

It’s not an easy sell. The first problem is cost. To develop our natural gas resources will require $900 billion in infrastructure investment, including new interstate pipelines, storage facilities, rail, marine and road upgrades, gathering and processing infrastructure, and export terminals. In other words we’d have to spend even more to transition to natural gas as we will spend to convert to renewables, which the report estimates at $750 billion. In the end, with Porter’s plan, we’d be stuck with all that decaying infrastructure and fracking waste. Why not put that money into renewables infrastructure starting now?

The report also calls for spending on training for higher paying jobs in natural gas. Again, why not spend money on renewable energy training instead of having to retrain workers later on? Porter’s argument is economic competitiveness — the GDP increases we would see if we push natural gas production. You can’t generate exports from wind or solar the way you can from natural gas, and ours is by far the cheapest in the world.

Many of the report’s recommendations read like a fossil fuel producers dream: in addition to some positive proposals such as imposing regulations and increasing transparency, it also advocates ending “outdated” restrictions on oil and gas exports and encouraging industry compliance with industry-led self-enforcement, even after some industry players have been seen to be systemically corrupt.

All that said, the plan has several positives that should not be overlooked. First, shifting from coal to natural gas can take about a quarter of the responsibility for the 15% carbon reduction between 2005 and 2013. It may be the only certain path to achieving the EPA’s Clean Power Plan and eliminating coal plants. Producing just half the greenhouse gases (GHG) as coal (methane aside), natural gas is, as Porter et al say, “a crucial asset in making America’s energy transition both feasible and at a competitive cost across a range of carbon reduction scenarios, at least through 2030.” And that transition is way faster than fossil fuel industry thought leaders like Shell.

As I discussed in a blog for CSRHub, Shell’s most recent future scenarios report advocates a transition to renewables by 2100. Porter’s assumes power grid alterations necessary for renewable energy will take 20-30 years, taking us to 2035-45, at which point renewables will be even more cost competitive than natural gas and will be completely phased out of power production before 2060. Working back from Shell’s prediction of 2100, that looks pretty good.

We’re all tempted to point fingers at a policy recommendation that will delay achieving a zero emissions future while bolstering fossil fuel and power businesses. Isn’t this just business as usual? Maybe, but at least this timeline is much faster than the fossil fuel industry’s. Porter’s report acknowledges that if solar and wind prices continue to fall below oil and gas prices as they have in some places like Austin, Texas, business will drive an even faster transition. It’s all about the money, and in this case, that could be a very good thing.

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 15,000+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 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

At the Apple earnings call last week, CEO Tim Cook reported Apple’s latest record-breaking results and the strongest March quarter ever, with 27% revenue growth and 40% earnings growth year over year.

Cook then commented on the two new data centers Apple is building which will run on 100% renewable energy, risking another conservative investor backlash when he linked them to Apple’s climate change politics: “This is just part of the work we’re doing to protect the environment and leave the world better than we found it.”

This took real chutzpah. Cook took a drubbing last year from conservative finance group NCPPR and its followers for spending on environmental projects not related to profit. Cook snapped back at critical NCPPR representative Justin Danhof, “If you want me to do things only for ROI reasons, you should get out of this stock.”

Tim Cook has become the passionate poster child for green electronics, touting environmental progress even with shareholders groups that may not be cheerleaders. And his operations department is implementing good works, eliminating emissions in new and existing Apple buildings, removing toxins from production and sourcing sustainable forests for packaging.

Just as important, Apple’s brand communications support its environmental efforts. Apple’s web site’s Environmental Responsibility touts both its green philosophy and its concrete actions. Cook intones on an Apple web video called “better” that “Climate change is real and a real problem for the world” and boasts that 94% of its corporate facilities and 100% of its data centers are now powered by renewable energy such as solar power.

Is Apple, now the world’s biggest company by market capitalization, finally leading corporate citizenship too? And doesn’t this just make Apple more vulnerable to environmental critics?

In fact, Apple is more vulnerable. An analysis in Huffington Post of Apple’s own 2014 report on climate change efforts reveals that “manufacturing (mostly in China) accounted for a whopping 73 percent of the company’s 34.2 million metric tons of greenhouse gas emissions.” Only 1 percent of the company's emissions are connected to its solar-powered headquarters and data centers.

Bloomberg’s Adam Minter recently attacked Apple for the same thing, noting that other companies like Boeing and GM already have factories powered by renewables. Apple is a laggard even among technology companies. Working with BSR, HP has developed energy-management action plans for 20 supplier factories in China. IBM now requires its nearly 20,000 suppliers to chart their emissions and energy consumption and develop plans for reducing both. Apple has joined the Electronic Industry Citizenship Coalition but has yet to announce specific targets. This suggests that Apple is engaged in, if not green-washing, then selective reporting.

Apple may be late signing on to corporate citizenship, but it’s just in time. The maker of Macs and iPhones has for years had success using fabulous design and cool chic to ride roughshod over environmental critics and techie complaints about closed systems. Now, the company is entering consumer payment systems (Apple Pay) and health care information (HealthKit), markets where trust is absolutely paramount. These products lock consumers into Apple for their money and their health, and what could be more personal?

Apple is selling to a generation whose purchases are, more than ever, guided by a company’s environmental actions. Six in ten 16- to 20-year-olds (“Generation Z”) say they will go out of their way to buy products and services from businesses they know are helping to create a better world, up from five in ten among Gen Y. And a post-2008 crash McKinsey study noted the widespread perception that financial services have violated their social contract with consumers, leaving space for a trusted source in consumer wallets. Apple needs creds as a corporate citizen to succeed in this new arena. An honest and aggressive commitment is required.

In Apple We Trust? See more on Cynthia Figge's chapter in the book Trust Inc. 

Photo courtesy of Darlo Reyes 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 14,400+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 14,400+ 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 California drought caused hydropower production to plummet by 46 percent. The silver lining?  Solar power increased, making up for 83 percent of the hydropower decline.

I’m a huge supporter of solar energy, which appears to be an inexhaustible and “free” source of energy. But an article in this week’s New Yorker by National Book Award winner Jonathan Franzen points out that solar panels, when not installed in rooftops but laid out in “horizon-reaching solar farms,” can be just as bad, as can all forms of renewable energy. In Franzen’s words:  “We can dam every river and blight every landscape with biofuel agriculture, solar farms, and wind turbines, to buy some extra years of moderated warming.”

Franzen dissing renewable energy? He is a thought-leader in environmentalism. His 2010 novel Freedom features environmentalist Walter Berglund as protagonist, fighting the immoral forces behind strip mining. In 2011, Franzen was included in The Guardian’s top 20 Green Giants for setting the global environmental agenda. He is also a birder and Audubon Society fan. So it’s disturbing that he spends seven pages of beautifully written prose trying to convince us that we can’t do a thing about climate change and shouldn’t ruin our comfortable lives trying.

Franzen’s article bemoans the Audubon Society’s web site and its new focus on climate change, “the greatest threat” to American birds. Franzen references a writer at the Minneapolis Star Tribune, Jim Williams, who blogged that fighting a local stadium project whose glass walls would kill thousands of birds is insignificant in the context of climate change, which could wipe out nearly half of North American bird species by 2080. Franzen’s counter is chilling: “…can we settle for a shorter life of higher quality, protecting the areas where wild animals and plants are hanging on, at the cost of slightly hastening the human catastrophe? One advantage of the latter approach is that, if a miracle cure like fusion energy should come along, there might still be some intact ecosystems for it to save.”

In other words, save the birds and forget taking action to mitigate climate change because “… it makes no difference to the climate whether any individual, myself included, drives to work or rides a bike. …if I calculate the average annual quota required to limit global warming to two degrees, I find that simply maintaining a typical American single-family home exceeds it in two weeks.”

Instead, Franzen advocates for conservation projects in Peru’s Manu National Park and Coast Rica’s Guanacaste, smaller, local efforts conducted by natives who safeguard biodiversity, while failing to note that the preservation of forests — and in the case of Costa Rica, tree planting as well — also serves to combat climate change and is, in fact, what some believe is the most practical place to start.

I hope there aren’t a lot of smart, talented people like Franzen who think like he does. Especially in California, where Governor Jerry Brown is asking for citizens to combat the drought by voluntarily cut their water consumption by 25%. He’s not asking farmers yet, but counting on citizens to pitch in first. Of course we’ll need a monumental breakthrough on the scale of Franzen’s “cold-fusion” to save ourselves from extinction, but if (or when) that happens, we’ll all have to be living dramatically altered lives with less water and a smaller carbon footprint.

Whether we’re tree-planting conservationists like those Franzen visited in Costa Rica or climate change activists riding bikes to work, we’re all engaged in activism for both at the same time. Our whole way of living has to change, to both honor species and at the same time, reduce our energy consumption. So Mr. Franzen, put your considerable talent to work again and this time, persuade your readers to think of both species conservation and climate change with every action. Changing human behavior has worked in the past and can work now. As for Mr. Franzen? Who’s to say he won’t love riding his bike to work. He’ll certainly be fitter. And possibly happier too.

Photo courtesy of Joel Kramer 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 14,400+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 14,400+ 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 most recent column on “groundbreaking innovation” Co-Exist from Fast  Company was titled “If Your Neighbor Gets a Solar Panel, You’re Going to Want One Too: Whether  your neighbor has a solar installation is more likely to influence your decision than politics or income level.”

The articles’ author Ben Schiller cites studies which mapped 3,843 solar units installed in Connecticut between 2005 and September 2013. What they found was “‘considerable clustering of adoptions’ in ‘wave-like centrifugal’ patterns. When they looked at the dates of the installs, they found one decision in a neighborhood tended to lead to another.”

Pretty cool, but isn’t this old news? Back in 2005, a study in San Diego compared the influence on energy consumption between potential money savings vs concern for the environment vs peer pressure. The results clearly supported social influence, which reduced consumption by 10 percent.” Influence guru Robert B. Cialdini weighed in on the remarkably effective tactic of adding a smiley face to bills for energy reduction, which further reduced energy use: “People don’t just want to conserve energy, they want to be acknowledged for conserving energy.”

Electric Vehicle (EV) adoption also spread in clusters. Not surprisingly, EV and hybrid purchases have been most concentrated in affluent communities with early-adopter characteristics. But far more interesting and perhaps even more relevant, 50.5%  of all registrations are clustered in just three suburbs, Atherton and Los Altos (in Silicon Valley), and Santa Monica in Southern California. California has created an infrastructure for EV/Hubrids and is first in ownership, but if affluence was the defining attribute, wouldn’t EV/Hybrids be spread evenly across California’s many wealthy communities?

Now that many low- and mid-priced vehicles are offered in hybrid varieties (i.e., Toyota Camry, Honda Civic, and Ford Fusion), green social influence is moving from novelty for the affluent to smart money for the mainstream. It happened before with residential solar:  the highest concentration of Connecticut solar installations clustered in middle income, Republican-voting areas of the state.

Peer influence is also having an impact in the corporate world, where renewable energy  is replacing fossil fuels in industry clusters. Benchmarking in industries and companies – comparing your sustainability performance against your peers - leads to greater adoption of renewable energy.

As reported in the solar industry’s third annual Solar Means Business, solar installations cluster by industry, with retail leading the pack. Walmart remains the top solar user overall, spurring its leading competitor Target to move from 16th to 8^th ranking with the addition of 15 new solar systems. Retailers’ large flat store roofs are well-suited to roof-top solar apps and their razor-thin margins make energy cost reduction perhaps a higher priority, but other industries are following suit. Apple, which once eschewed environmental concerns, is now fourth in solar installations. Their acknowledgement? Apple appeared first alongside Google and Facebook (their data farms run on wind power) in the Greenbiz article “Apple, Facebook, Google score in Greenpeace data center ratings.”

Peer influence, whether in a corporate or a residential setting, modifies environmental behavior. Can peer shaming work too? Freakonomics economist Steven Levitt, would argue yes. In his words: “…society actually likes it when other people get shamed. … it’s actually a really incredibly efficient mechanism for punishing people who do things we don’t like.”

Another experiment tests peer shaming empirically. San Francisco and Berkeley have both passed legislation requiring that as of March 1, 2015, gas station owners must put climate change warning labels on all gas pump nozzles. The labels say how much carbon dioxide is emitted for every tank of gas burned, saying explicitly how using gas as fuel is contributing to climate change.

Reflecting in The Guardian on a University of Minnesota study that again showed the power of social influence, Adam Corner of the University of Cardiff says, “We may currently compete through demonstrations of conspicuous material consumption, but material goods are simply a marker for social status. It's the social status that's important – and the markers we use to signify it can easily change.”

“Image courtesy of Lauren Wellicome via Flickr cc”

By Carol Pierson Holding

The idea of branding climate change seems like another exercise in navel-gazing until you consider the effectiveness of the opposition. They’ve got branding down, relentlessly repeating the mantra, “science is inconclusive and solutions are exorbitant and unproven.” On the other hand, environmentalists repeat vague Cassandra-like warnings of “climate change” and “global warming,” supporting dire predictions with confusing statistics, hard-pressed to come up with simple, relevant messages.

Even relatively green media like the New York Times end up reinforcing the fossil fuel messages, especially in their business sections. In an unfortunately common example, Friday’s Huffington Post called out the New York Times for “overhyping the benefits of fracking…(claiming that it was) changing the economic calculus for old industries and downtrodden cities alike.” Fracking equals jobs and a better economy, the article claimed. But Huffington Post reporter Mark Gongloff quoted Dean Baker, co-director of the Center For Economic And Policy Research, who found that in fact fracking communities had a worse record for factory jobs than the U.S. as a whole. Still, when it’s reported in the New York Times…

Climate deniers are brilliant at setting up simple, memorable and scary financial calculations that brand climate change activists as prioritizing the environment against the economy. They pit environmental health against jobs. They equate renewable energy with sky-high utility bills. They warn electric cars have no range and will leave you stranded and solar panels will burn your house down. And my favorite, heard quite a bit in the halls of Congress: why should the U.S. pay to clean up the atmosphere when China now emits more greenhouse gas than we do?

Again, even environmentally-friendly media reinforce this trope. The latest is last week’s Rolling Stone article titled “China, the Climate and the Fate of the Planet.” The article is rife with fodder for climate solution obstructionists, starting with author Jeff Goodell’s front page called-out quote:  “If the world’s biggest polluter doesn’t radically reduce the amount of coal it burns within the next decade, nothing anyone does to stabilize the climate will matter.”

True, China’s contribution to atmospheric CO2 is now over 10 billion metric tons a year, and 25 years of climate negotiations have failed utterly. But Goodell’s article did not have to lead with the negative. He could have highlighted that China is now the largest consumer of solar power and that this year, 60 percent of its new energy production was from renewable energy sources, even higher than the U.S. at 53.8 percent. That it’s making every effort to close coal plants. Or that even in the face of beatings or worse, its citizens are still rioting in the streets against fossil fuel production.

Iconic graphic designer Milton Glaser, creator of the “I Love New York” logo, developed a climate change branding campaign with buttons and billboards that feature a black circle fading to a small green strip at its bottom edge over the slogan “IT’S NOT WARMING. IT’S DYING.” Position this message against one of the current denier billboards that proclaims “’Green’ Climate Policies: Probably unnecessary. Certainly ineffectual. Ruinously expensive.” Which one sounds more rationale? More persuasive? Easier to adopt? Commenting for Fast Company, Adele Peters questions Glazer’s negative approach but remains hopeful that he’s tackled the challenge. Her closing thought is absolutely correct: “We need more brilliant designers and marketers tackling the messaging about climate change in different ways--especially in the U.S., which leads the world in climate denial.”

Photo courtesy of DaiLuo 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 9,100+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,100+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 339 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.