Monday, March 23, 2015

Five questions for Dr Simon Lord, group director of sustainability at New Britain Palm Oil

Dr Simon Lord
1)    New Britain Palm Oil is known as an ethically minded palm oil business. Where did that ethos come from?

NBPOL’s journey to become more sustainable started in the late 1990’s.

At a seminal strategic meeting with our downstream processors we highlighted the growing European discontent with the way some players were growing oil palm.

NBPOL embarked on providing assurance to the end users of our oil. At this stage there was no RSPO and so we took the strongest environmental certification program available at the time (ISO14001) and used this as a framework to tactically deal with material issues on the ground and to help focus our strategic thinking.

In 2002 the RSPO began to emerge in response to increasing criticism of the palm oil sector. NBPOL began to play an active role using the BMP developed under our research programs to minimise our environmental footprint whilst at the same time looking at how to tackle the social issues inherent in the industry.

Strong governance was required and so NBPOL resourced and created what was to eventually become its sustainability teams and initiatives.

With the development of the RSPO standard NBPOL finally had a benchmark to assist in defining what sustainable palm oil looked like on the upstream and a mechanism to further assure customers downstream that the product they received was both environmentally and socially responsible.

Where NBPOL differed was in not seeing certification as the goal but to fully engage all management in the ‘process” and in the concept of continuous improvement.

This solid foundation and process approach has enabled the company not only to react to changes in demands but to anticipate such demands.

With time this as evolved further so that the group was able to fully integrated sustainable thinking into all aspects of its core business.

As a result we obtained greater visibility and were able to identify those aspects that a responsible company should be engaged in long before the market demanded.

Key focus on social issues creates business value
2)    What can you tell us about the Sime Darby deal?

Sime Darby is the largest sustainably certified plantation company in the world.

NBPOL is acknowledged as a leader and innovator in the sustainable palm oil sector.

Sharing a common purpose and drive has meant that the take over has been a very harmonious process.

We already have identified areas where together, such synergy can help transform the industry.

NBPOL, operating in the Pacific and of medium size did not possess the necessary critical mass.
I therefore think the acquisition is a game changer.

3)    You've been working on social issues on the ground in palm oil for years now. What's your basic advice to other firms on getting started on tackling complex community and livelihood issues?

Start now, don’t put it off. Be courageous. Don’t be afraid to make mistakes. Learn from the mistakes. Above all engage and keep the dialogue open.

There is never just one solution and there never is a one size fits all in the social landscape.

Understand that SIA’s and FPIC are not one off events they themselves are processes.

Learn to accept that social issues are complex and that people view the same process through their own history of experience and expect a polarity of perceptions.  Accept that these issues can take time, often years to fully understand and deal with so maintain the organisations stamina.

4)    In Asia I hear there's a shortage of expertise with regard to the above issues, do you agree with that and what are the potential solutions?

I think farming anywhere in the world is conservative in general, reluctant to change and uncomfortable with the process of change. Yet as a paradox it has generated a plethora of innovating thinking and in technical and physical practises.

The last decade has seen an acceleration of this process in the palm oil sector. There are many able and gifted people working on environmental and best practice issues yet there is still a shortfall in the corporate world of similar people working on social issues.

Most people in the sector know, understand and can point to what is Good Agricultural practice  but very few can do the same for ‘Good Social Practice”.

We are not addressing this and so ‘good’ practitioners will remain in short supply.

£1.1 billion cash deal: Perhaps a sustainability premium?
5)    Tell us about your work with the Palm Oil Innovation Group, and what do you make of the latest RSPO news about member suspensions? 

POIG was created to fill a gap in the currently output of the RSPO.

It anticipated the need for mechanisms to address such issues as deforestation and social inequality.

In the last two years we have seen many single companies deliver charters as a way to highlight their requirements of a supply chain.

Very few have given thought as to how such commitments can be met on the ground. POIG will deliver this.

I see POIG as a means of strengthening RSPO and not as an agent to reduce its effectiveness or purpose. I am committed to RSPO as I have always been and it can only be a positive step to see the standard grow.

I see the disciplining of members who fail in the code of conduct demanded as a necessary step which has been long overdue. I therefore welcome it as RSPO should be encouraging a race to the top and not just working to the lowest common denominator.

www.nbpol.com.pg
www.simedarby.com

Dr Simon Lord will be playing a key role in the debates and discussions at Innovation Forum's upcoming conference below, where 180 key players in forestry and palm oil will meet with leading NGOs.
How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Wal-Mart, Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT, International Paper, Hershey, 3M and many many others. Click here for more details.

Sunday, March 15, 2015

Forest governance and big natural resource companies. Q&A with Charles Barber at WRI

Five (ish!) questions for Charles Barber, director, forest legality alliance and government relations, forests program, World Resources Institute

1) First of all, what is forest governance all about?

Chip Barber
Governance in the forest context is usually taken to mean strengthening the rule of law (e.g., to eradicate illegal logging), decentralizing forest governance, clarifying land tenure, land use planning and allocation, improving the regulatory environment for investment in sustainable forest management, and improving the rules and conditions for people’s participation in forest decision-making and in community-based forest management.

It is much broader than “forest governance”, since many drivers of deforestation lie outside the forest or the forestry sector.

2) I keep hearing about landscape management taking over from conversations about HCV or HCS. How does that fit with forest governance? 

As noted above, the thing is that the fate of forests is largely controlled by forces outside of forest areas or the forest management sector itself.

And, forest fragmentation is a key problem for biodiversity and forest-based ecosystem services.

So a landscape approach takes into account both drivers external to the forest  (e.g., agriculture, infrastructure, mining, urban sprawl), and the need to ensure connectivity amongst forest areas through various kinds of biological “corridors”.

Connectivity becomes doubly important as climate changes, forcing species to adjust their ranges (e.g. moving north or south, or uphill).

3) Which companies do you see as those taking the most progressive, pro-active interest in forest or landscape governance? 

Not naming names but usually larger companies with the clout to influence their suppliers, and who have environmentally sensitive markets and shareholders, as in North America, Europe and Australia.
The importance of strident environmental advocacy, name-and-shame campaigns, and the tangible economic harm that these can bring is usually underestimated.

There is no such thing as “compassionate capitalism”, any more than there are “compassionate” grizzly bears or laptops, but  there are certainly compassionate capitalists operating on enlightened self-interest and/or their own moral and ethical compass.

We should applaud them – while holding them accountable for keeping true to their  commitments.

We need many more of them. They are not always large firms, though, there are plenty of small businesses driven by the ethical vision and environmental concern of their founders.

We need more of those too.

4) At our last deforestation conference in London in October, the big problem everyone agreed on is that of forest governance. How important in all this is the role of institutions such as functioning courts, effective policy and prosecutions and fair judges etc? What are the other key elements? 

Free press, freedom of speech, freedom of assembly, the right to petition the government with grievances, equal protection before the law, transparency concerning information, restrictions on big money dominating political decision-making, personal liability of officials for wrong-doing in office, certainty of punishment for wrong-doing, fair and sufficient use of taxation power to finance government, decent public education, security against violence by the state or elites - it is a pretty well-established list.

Many companies have shown great leadership, but there are many things only states can do.

5) What’s the role of companies in helping improve governance via better institutions and government engagement, where is this headed? Doesn’t it blur boundaries between business and the role of the state? 

Companies can lead with standards higher than what the law requires, “raising the bar”, and can help implement higher standards in places where government institutions are weak.

Companies cannot ensure the things I listed under #4, States must do this.

The current focus on big companies’ commitments on deforestation is a bit over the top, not that those commitments are not welcome.

Companies need to  pressure governments to make such commitments legal obligations for ALL companies, including themselves.

If company X can sleep better at night (and get NGOs off its back) by greening its supply chain by not cutting down forests in Sumatra or the Amazon, that is good, but it in no way solves my problem, which is to ensure that no one cuts those forests down.

The role of business and the role of the state is so blurred that I think one just has to work with it. Legislatures and executives are studies in elite capture throughout the world, in both developed and developing countries.

---

FYI readers: I wrote a study on MNCs and insitutional capacity building about ten years ago. It’s at: http://www.slideshare.net/Tobiaswebb/corporations-institutions-and-better-governance

Charles Barber will be playing a key role in the debates and discussions at Innovation Forum's upcoming conference below, where 180 key players in forestry and palm oil will meet with leading NGOs.

How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Wal-Mart, Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT, International Paper, Hershey, 3M and many many others. Click here for more details.

Lecture nine - sustainable and responsible investing, past, present and future, a brief presentation

The last in the series of my current lectures is here. This week sustainable and responsible investing, past, present and future.

(The date says March 18th as I am giving the lecture on Wednesday to my Kings College students)




How Business Can Tackle Deforestation - 
14th-15th April 2015
 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT and many others. Click here for more details.


The Circular Advantage Business Forum 8-9 June 2015 (London)

Strategy for integrating circular business advantage with: Royal DSM, Accenture, Kingfisher, Suez, Coca-Cola Company, HP, and many others. Email Boris.Petrovic@innovation-forum.co.uk for details or go here: http://innovation-forum.co.uk/circular-economy.php


The Measurement and (e)valuation of Corporate Sustainability, does it all add up? June 29-30 (London)

A cold hard look at how companies put numbers against progress, and what those numbers mean for investors, internal and external stakeholders. With: Rio Tinto, Tullow Oil, Walgreens Boots Alliance, JP Morgan, Oxfam, Aberdeen Asset Management, Trucost, First State, Marks & Spencer and many more. Email: Natasha.Bodnar@innovation-forum.co.uk for details

Analysis on all the above topics can be found at: http://innovation-forum.co.uk

Friday, March 13, 2015

Greenpeace UK boss John Sauven on campaign priorities, deforestation, India, China, Shell, April and big banks

Sauven at work
Here's an interview I just taped with John Sauven, executive director, Greenpeace UK.

In the interview we discuss Greenpeace's campaigning priorities, funding, Shell and the Arctic, emerging markets such as China and India, and the growing pressure on NGOs

We also discuss deforestation in general, and specifically companies such as APRIL, Asia Pulp & Paper, Santander, Credit Suisse, ABN AMRO, HSBC and NGOs such as the Rainforest Alliance and their work with APP.

Finally we discuss what overall credible corporate progress on sustainable business looks like for Greenpeace.










Upcoming Innovation Forum conferences:

Sustainable and ethical cotton sourcing - 16th - 17th March 2015 (London)

Learn how leading companies managing sourcing risk and engage the supply chain with: Kering, M&S, Ikea, CottonConnect, Marks Work Wearhouse, Lindex, Gina Tricot, BCI and many more.
Click here for more details.


How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT and many others. Click here for more details.


The Circular Advantage Business Forum 8-9 June 2015 (London)

Strategy for integrating circular business advantage with: Royal DSM, Accenture, Kingfisher, Suez, Coca-Cola Company, HP, and many others. Email Boris.Petrovic@innovation-forum.co.uk for details or go here: http://innovation-forum.co.uk/circular-economy.php


The Measurement and (e)valuation of Corporate Sustainability, does it all add up? June 29-30 (London)

A cold hard look at how companies put numbers against progress, and what those numbers mean for investors, internal and external stakeholders. With: Rio Tinto, Tullow Oil, Walgreens Boots Alliance, JP Morgan, Oxfam, Aberdeen Asset Management, Trucost, First State, Marks & Spencer and many more. Email: Natasha.Bodnar@innovation-forum.co.uk for details

Analysis on all the above topics can be found at: http://innovation-forum.co.uk

Circular economy on a roll

From the Innovation Forum weekly eBrief. Sign up and read More on all this is here.

The limits to what the circular economy could deliver seem endless – but there may be a danger in focusing on circularity for circularity’s sake 

The circular economy bandwagon is starting to roll at speed, judging from a continuing flood of studies on the concept.

Most recently, the Aldersgate Group, which promotes business sustainability, published a new report that sets out what needs to be done to unlock the circular economy’s benefits.
The Aldersgate report specifically tags a more circular economy as the way forward for developed economies.

Europe in particular imports most of its resources, either in raw form or already incorporated into products. This means, the report notes, that rich countries are vulnerable to “resource price shocks as well as societal and environmental ‘externality’ costs”.

Efficient by design
The circular economy is centred on resource efficiency. Rather than dumping old mobile phones, for example, their elements – including gold, silver and copper among others – can be recovered and reused.

Some companies – such as Belgium’s Umicore, which used to have a smelter in the Congo – have already built global businesses out of such recycling.

But the circular economy concept goes further: it is really about design. Mobile phones should be made in the first place so at the end of their useful lives their constituent materials can be easily reclaimed and smoothly reabsorbed into the production of new phones.

Systems that sell 
The design aspect of the circular economy extends to design of systems, which are arguably of equal importance to design of products for avoiding waste. Efficient collection and recycling systems are needed for a host of waste streams, and systems need to be designed in such a way to make it easy for the consumer to participate.

Recent experimentation with such ideas has so far mainly been small scale. Dutch company Mud Jeans – the Netherlands is a circular economy hotbed – leases rather than sells its products. After one year, the customer can opt to keep the jeans, swap them for a new pair, or return them to the company. In the latter case, the fabric is reused in new garments.

The broader idea is that instead of buying a product, the customer buys the function of the product, with the material ultimately going back into the production chain.

Caution! 
But here’s a note of caution: better collection systems and resource efficiency do not necessarily translate into broader sustainability.

Recycling of materials can take as much energy and water, or generate as many emissions, as extraction of raw materials. Circular economy approaches might boost resource efficiency in some sectors, but others will face technical challenges, even if they are able to set up efficient collection and recycling schemes.

Tyres for example, are banned from landfill in the European Union. Old tyres are collected and processed into crumb or powder, but this material is not of good enough quality to be reincorporated into new tyres. Instead it is used as a fuel in cement kilns, mixed with bitumen in road surfaces or made into rubber mats.

Virgin rubber therefore still has to be produced for new tyres, and though recycled material is used efficiently, it is not evident that it offers major environmental benefits.

The real challenge for the circular economy, if it is to be a step change in sustainability, could prove to be less the redesign of systems and products, and more the overcoming of technical limitations so that production and consumption loops really can be closed.

And while governments have done well to push recycling to the consumer level, they need to continually review policy frameworks so that they also support the further development of circularity.

If you've any comments, do get in touch businessbrief@innovation-forum.co.uk

Upcoming Innovation Forum conferences:

Sustainable and ethical cotton sourcing - 16th - 17th March 2015 (London)

Learn how leading companies managing sourcing risk and engage the supply chain with: Kering, M&S, Ikea, CottonConnect, Marks Work Wearhouse, Lindex, Gina Tricot, BCI and many more.
Click here for more details.


How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT and many others. Click here for more details.


The Circular Advantage Business Forum 8-9 June 2015 (London)

Strategy for integrating circular business advantage with: Royal DSM, Accenture, Kingfisher, Suez, Coca-Cola Company, HP, and many others. Email Boris.Petrovic@innovation-forum.co.uk for details or go here: http://innovation-forum.co.uk/circular-economy.php


The Measurement and (e)valuation of Corporate Sustainability, does it all add up? June 29-30 (London)

A cold hard look at how companies put numbers against progress, and what those numbers mean for investors, internal and external stakeholders. With: Rio Tinto, Tullow Oil, Walgreens Boots Alliance, JP Morgan, Oxfam, Aberdeen Asset Management, Trucost, First State, Marks & Spencer and many more. Email: Natasha.Bodnar@innovation-forum.co.uk for details

Analysis on all the above topics can be found at: http://innovation-forum.co.uk

Thursday, March 12, 2015

Stakeholder engagement and sustainable forestry at International Paper

Q&A with Sofie Beckham, Manager Forest Stewardship and Sustainability at International Paper

Sofie Beckham
1) Many of our readers won’t know your latest targets and objectives relating to sustainable forestry, can you give us an overview?

First and foremost, as the largest procurer of fiber in the world, IP supports close to 30 million acres of productive forestland globally by sourcing our fiber responsibly. We are deeply committed to sustaining working forests through our own procurement systems, through forest certification, and by collaborating with environmental organizations who share our goals with respect to sustainable forestry. In 2014, approximately 33% of our total fiber purchases globally were certified to Forest Stewardship Council (FSC), Programme for the Endorsement of Forest Certification (PEFC), or a national forest certification scheme such as the North American Sustainable Forestry Initiative (SFI).

2) Unlike many firms reliant on emerging market fibre with all the problems that comes with, you source a lot from N American forests. What are the main issues you deal with in sustainable sourcing of fibre in N America?

Our challenge and our opportunity in North America is supporting small forestland owners to keep their forests ‘working’ in order to maintain the social, environmental and economic benefits that healthy forests can provide. More than 90% of our fiber comes from privately owned forests in the US- many of those in the US Southeast- and those forests owners maintain their forestland for many different reasons. IP aims to support forestland owners to manage their forests for the long term, recognizing that they have many options when it comes to the future of their forests. In 2012, we began facilitating group FSC certification for landowners in the southeast United States. This initiative has enabled a group of small, non-industrial landowners to certify their collective holdings under a single FSC certificate- an opportunity that may not have otherwise been realized, because many of the participants are small, private landowners, and securing an individual certification for their property is not a financially viable option.

3) All large forestry based businesses have been criticised by campaigning NGOs in the past. What have you learned about open dialogue and ways of maintaining that in the last five/ten years?

For decades, IP owned forestland and could show forest stewardship through our investments in on-the-ground forest best practices. Today we don’t own land and depend deeply on the relationships we have with our suppliers. To address concerns from the ENGO community, we have built relationships that allow for practical solutions developed in collaboration. We’ve sought, and will continue to seek, common ground on tough issues that matter for different stakeholders. Our participation in the WWF Global Forest and Trade Network and our work with organizations including the Dogwood Alliance in the US Southeast have helped raise our awareness about the importance of an open dialogue as a platform for exploring different viewpoints. Collaborating with stakeholders is key to being able to advance sustainability in the forest product sector and to credibly talk about what we are doing. 

4) Most companies say there is a big gap between their work and what larger investors ask about when it comes to sustainability. Does that reflect your experience?

Our investors primarily ask about business performance and how that impacts current and future financial results. Our discussions largely focus on our free cash flow generation, earnings runway, and capital allocation strategy. While we don’t discuss sustainability at a granular level, I believe it is understood via our company messaging that our commitment to sustainability is part of who we are.

5) What will you be discussing at our forum in DC in April and what do you hope to get out of the event?

I am looking forward to exploring the changing landscape of corporate commitments to zero deforestation policies, how those are being implemented, and whether we have the right tools to achieve the intentions behind the commitments. We all know that forest and supply chain certification are a part of the forest sustainability solution, but do those multiple attribute systems deliver on the zero deforestation goals? I look forward to being an engaged participant in the energy and momentum on this topic with other conference attendees who all have a stake in this important issue.

Sofie will be speaking at the How Business Can Tackle Deforestation conference in Washington, D.C. on 14th-15th April 2015. Check out the agenda here 


Advertisements. Upcoming Innovation Forum conferences:

Sustainable and ethical cotton sourcing - 16th - 17th March 2015 (London)

Learn how leading companies managing sourcing risk and engage the supply chain with: Kering, M&S, Ikea, CottonConnect, Marks Work Wearhouse, Lindex, Gina Tricot, BCI and many more.
Click here for more details.


How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT and many others. Click here for more details.


The Circular Advantage Business Forum 8-9 June 2015 (London)

Strategy for integrating circular business advantage with: Royal DSM, Accenture, Kingfisher, Suez, Coca-Cola Company, HP, and many others. Email Boris.Petrovic@innovation-forum.co.uk for details or go here: http://innovation-forum.co.uk/circular-economy.php


The Measurement and (e)valuation of Corporate Sustainability, does it all add up? June 29-30 (London)

A cold hard look at how companies put numbers against progress, and what those numbers mean for investors, internal and external stakeholders. With: Rio Tinto, Tullow Oil, Walgreens Boots Alliance, JP Morgan, Oxfam, Aberdeen Asset Management, Trucost, First State, Marks & Spencer and many more. Email: Natasha.Bodnar@innovation-forum.co.uk for details

Analysis on all the above topics can be found at: http://innovation-forum.co.uk

Dirty, ugly mining has lessons for hi-tech on CSR and sustainability

Guest post by Wayne Dunn.


And Hi Tech should pay attention or it could feel the pain that mining felt when it started getting slammed by a rising tidal wave of social performance expectations.

The mining industry has become relatively good at figuring out how to organize itself to create local benefits and value as a by-product of its core business operations. 

In general mining goes beyond simply meeting regulatory requirements on environment, labour, safety, etc. and is actually creating additional value for local communities through targeted development programs and efforts.

From working with local agricultural producers, to supporting alternative economic opportunities for women to general education and health programming and across a wide-range of other social value areas, the mining industry is reaching out to support people and families in the communities near its operations.

Of course, it is far from perfect and one doesn’t have to look far to find where it has come up short.  But, what is important here is that there are many places where it is succeeding and having meaningful impacts on people, families and communities.

What does this have to do with hi tech?  Lots.

In general the hi tech industry has been paying increasing attention to its supply chain.  To materials sourcing and to the labour, environmental and human rights practices in its supply chain.

This isn’t easy with supply chains spread throughout developed and developing economies and across a range of national regulatory frameworks. 

In many countries the national regulations governing environment, labour standards, health, safety and human rights are below what the hi tech industry’s consumers would consider appropriate.

Many companies have acted to set their own standards in these areas to guide their employees, contractors, sub-contractors and others in their supply chain, essentially establishing a private regulatory framework.

Managing compliance throughout this diffuse network and across its linguistic, cultural and economic diversity is challenging to say the least.  Often the marketplace expectations that drive this private regulatory framework are totally foreign to the people and organizations being asked to apply them.

And now, in the midst of this challenge, more is coming!

Soon companies will be held accountable for a broader social performance expectation.  In addition to meeting global expectations on materials sourcing, health, safety, labour standards, environment and human rights companies will be expected to create social value in the communities in which their supply chain activities take place.

This is where mining has lessons that can be helpful.  Those companies that want to lead, rather than be driven to meet these emerging social value creation expectations should take a close look at what happened in the mining industry. 

The mining industry’s movement to support social value and development was often driven by painful pressures from NGOs, communities and the global public.

As society became more focused on social and environmental performance (starting roughly in the 1990s) the mining industry was an early and relatively easy target.  It had:

•    Large, highly visible and concentrated environmental footprint
•    Legacy of less than stellar environmental performance (some would say terrible)
•    Legacy of social disruption

And the industry wasn’t really prepared to handle the pressure for increased social performance. 

Some balked and resisted.  Many of those lost market cap and even valuable projects as that elusive ‘social license’ evaporated when they were unable to effectively deal with growing social demands on their projects and activities.

But some have thrived.  Some adapted well and have learned to integrate local value creation into their projects and activities.

Today leading mining companies are routinely involved in a wide-ranging suite of social, economic and environmental activities aimed at making life better in the communities in which they operate.

These activities go far beyond mining and encompass a range of health, education, economic/poverty alleviation, agriculture, environment, gender and other activities. 

The major themes of the mining industry’s social value added activities are nearly perfectly aligned with the global development community’s focus areas as defined by the Millennium Development Goals and the Sustainable Development Goals.

Hi tech companies have two choices in the face of the emerging expectations to create social value as a result of its supply chain activities.

They can sit back and wait for the pressures to develop further and respond later as pressures build.

Or, they can be proactive and get out ahead of the curve.

For those wanting to get out ahead of the curve the lessons learned in the mining industry can be valuable.

Wayne Dunn is President & Founder, CSR Training Institute and Professor of Practice in CSR at McGill University.
 
Advertisements. Upcoming Innovation Forum conferences:

Sustainable and ethical cotton sourcing - 16th - 17th March 2015 (London)

Learn how leading companies managing sourcing risk and engage the supply chain with: Kering, M&S, Ikea, CottonConnect, Marks Work Wearhouse, Lindex, Gina Tricot, BCI and many more.
Click here for more details.


How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT and many others. Click here for more details.


The Circular Advantage Business Forum 8-9 June 2015 (London)

Strategy for integrating circular business advantage with: Royal DSM, Accenture, Kingfisher, Suez, Coca-Cola Company, HP, and many others. Email Boris.Petrovic@innovation-forum.co.uk for details or go here: http://innovation-forum.co.uk/circular-economy.php


The Measurement and (e)valuation of Corporate Sustainability, does it all add up? June 29-30 (London)

A cold hard look at how companies put numbers against progress, and what those numbers mean for investors, internal and external stakeholders. With: Rio Tinto, Tullow Oil, Walgreens Boots Alliance, JP Morgan, Oxfam, Aberdeen Asset Management, Trucost, First State, Marks & Spencer and many more. Email: Natasha.Bodnar@innovation-forum.co.uk for details

Analysis on all the above topics can be found at: http://innovation-forum.co.uk

Friday, March 06, 2015

Green bonds are on the rise

Blooming bonds

With little price premium over conventional products and a history of low risk, the growth of green bonds seems set to continue 

From the latest weekly Innovation Forum eBrief. View it on the web here, and sign up here

Green bonds are doing well. According to the Climate Bonds Initiative, issuance reached its highest-ever level of $36.6bn in 2014, three times the 2013 level.

Crucially, investors who opt for green bonds currently pay little or no price premium over non-green bonds – the “greenness” of the bonds is, in effect, a bonus that investors get for free.

While the price differential remains flat, green bonds do seem a good choice for investors – like any other bond, they will likely be favoured by those looking for a more predictable, long-term return compared to the stock market. And other characteristics of green bonds make them additionally attractive.

Bank of America Merrill Lynch started a green bond index in November 2014 and noted that the bonds on the index have lower credit risk and lower volatility of returns than the average bond.

Investor reassurance 

In addition, investors are comfortable with the format because green bonds are the same as other bonds – except the proceeds are used for green projects, such as renewable energy, energy efficiency or environmental infrastructure.

Standards, such as the Green Bond Principles and the Ceres Investor Network on Climate Risk Statement of Investor Expectations, have been developed so that investors can be confident that the green bonds they buy really are green.

Demand is high right now – Sean Kidney, CEO of the Climate Bonds Initiative, says that every green bond is two or three times oversubscribed. Nevertheless, in relative terms, green bond issuance remains tiny.

Kidney says he would like the market to hit a trillion dollars by 2020 – about 20 times the current size – but even that would be only 1% of the $100tn total bond market.

No slow down

There are many reasons to believe, however, that the exponential growth of green bond issuance will continue. BofA Merrill Lynch says issuance could break the $100bn mark in 2015.

The fundamental consideration is that the need for green projects is so enormous. The world must rapidly wean itself off fossil fuels to avoid dangerous levels of global warming.

One option that will be floated at the United Nations Paris climate conference in December 2015 is that worldwide net zero carbon emissions should be achieved by 2050. Adoption of such an ambitious target is perhaps unlikely, but it indicates the scale of the work ahead.

Ways will have to be found of financing the necessary investments in renewables, energy savings and other areas that are prime green bond territory. The sums are eye-watering. BofA Merrill Lynch says that $53tn in energy investments will have to be made by 2035, comprising “$39tn to shift away from fossil fuels and $14tn for energy efficiency”.

Price matters 

There is thus massive expansion potential for green bonds – as long as the price differential with non-green bonds remains more or less flat, or indeed if green bonds demonstrably outperform non-green alternatives. This is where governments, where necessary, could play a role, by creating the conditions to give investors the right incentives.

Governments’ persuasive power could cover regulation, subsidies and feed-in tariffs, credit enhancement, tax benefits and other financial instruments.

Sean Kidney says that, in principle, green bonds could make up perhaps half of the total bond market by 2050. While they won’t solve the problem on their own, green bonds could therefore be a major part of the global decarbonisation effort.


If you've any comments, do get in touch businessbrief@innovation-forum.co.ukbusinessbrief@innovation-forum.co.uk


Advertisements. Upcoming Innovation Forum conferences:

Sustainable and ethical cotton sourcing - 16th - 17th March 2015 (London)

Learn how leading companies managing sourcing risk and engage the supply chain with: Kering, M&S, Ikea, CottonConnect, Marks Work Wearhouse, Lindex, Gina Tricot, BCI and many more.
Click here for more details.


How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT and many others. Click here for more details.


The Circular Advantage Business Forum 8-9 June 2015 (London)

Strategy for integrating circular business advantage with: Royal DSM, Accenture, Kingfisher, Suez, Coca-Cola Company, HP, and many others. Email Boris.Petrovic@innovation-forum.co.uk for details or go here: http://innovation-forum.co.uk/circular-economy.php


The Measurement and (e)valuation of Corporate Sustainability, does it all add up? June 29-30 (London)

A cold hard look at how companies put numbers against progress, and what those numbers mean for investors, internal and external stakeholders. With: Rio Tinto, Tullow Oil, Walgreens Boots Alliance, JP Morgan, Oxfam, Aberdeen Asset Management, Trucost, First State, Marks & Spencer and many more. Email: Natasha.Bodnar@innovation-forum.co.uk for details


Analysis on all the above topics can be found at: http://innovation-forum.co.uk

Wednesday, March 04, 2015

Can the law solve global business and human rights challenges?

Guest post by Colleen Theron

Colleen Theron
I am in the midst of getting my head around the Consultation on the UK Modern Slavery Bill. And it took me straight back to the blog that Larissa recently posted on our website.

I think the question it poses is critical in an era where more transparency is being demanded, and yet, very little sensible legislation is being passed to tackle slavery or human trafficking as part of the governance structure of a MNC or other corporates.

The proposals in the UK Modern Slavery Bill highlights this point.

Whilst the UN Guiding Principles on Business and Human Rights have created a global standard of conduct for companies and it is fast becoming 'hard law' through its application in contracts, joint venture agreements and some host agreements with states, there remains scant legal protection for human rights abuses from corporations.

And so what can the law do? Do debates as referred to below help?

Our blog: I recently attended a talk by Professor Horatio Muir Watt at King’s University, who are running a series of events around Transnational Law.

It’s funny how quickly you forget after leaving university what it’s like to listen to a highly academic discussion on research of an equally high academic nature. In fact, the beginning of the discussion took me even further back to my International Baccalaureate “Theory of Knowledge” days.

I won’t deny that it took a few minutes for my brain to settle, but through the thick of shifting paradigms, the identification of the global function of the law, and adjusting legal method to new world visions, there were some very important practical points being touched on.

Namely how can the legal discipline and its range of tools be adapted to effectively address the challenges presented by an increasingly globalised world? It was noted that our traditional notion of how the law solves problems isn’t working and is generating a gap, where, for example, global wrongs are happening and remaining unaddressed.

Nonetheless, Watt mentioned that our current way of thinking continues to seek judicial solutions to the challenges that are arising.

To illustrate her points, Watt raised the example of the Alien Tort Act and how that has over time been reinterpreted to address modern issues. In particular, she focused on a recent decision by a Court of Appeal in California, Doe v Nestle Inc.

As a bit of background the Alien Tort Statute has been engaged to target corporate misconduct outside US territory. Following the decision in Filártiga v. Peña-Irala in 1980 , US courts started holding US companies responsible for alleged human rights abuses even where:

• involvement was indirect, and
• the incident in question took place outside the jurisdiction

However, in 2011 the US Supreme Court declated that it would hear an appeal in the Alien Tort Claims Act lawsuit Kiobel v. Royal Dutch Petroleum, Co. (Shell) . It was the first time this court reviewed a human rights claim against a corporation under this statute. We have previously covered in this blog how this decision was seen to massively reduce the potential for successfully engaging the Alien Tort Claims Act in cases involving allegations of abuse outside the United States.

Nonetheless, in September 2014 the majority in the US Court of Appeals for the Ninth District in California took a different view. The Court found in the class action case Doe v Nestle Inc that the defendants (several multinationals representing a range of household chocolate brands) aided and abetted child slavery on cocoa farms in the Ivory Coast.

The Court held that the defendants profited from the use of child slavery in the region and inferred from their failure to act that “they intended to keep that system in place”.

It was held that jointly the defendants had sufficient leverage over the production chain and the Ivorian cocoa market to stop or inhibit child slavery. The fact that the accused companies had lobbied against U.S. federal legislation requiring the certification of chocolate as “slave free” served to “corroborate the inference of purpose.”

It was pointed out that in some way the court relied on traditional reasoning, for example, by turning to a discussion around mens rea (in other words, the existence of intent). However, the court was also flexible –by looking to different precedents from international criminal law as highly persuasive, countering the presumption against extraterritoriality and, arguably, entering into the remits of foreign policy.

To what extent will the reasoning adopted by the Court hold in future cases? This isn’t entirely certain, particularly given the position expressed by the Supreme Court in Kiobel.

Some members of the audience expressed frustration because while academics, governments, and judiciaries alike are figuring out how best to use the law and its tools to address international crimes and inculcate non-state actors, those crimes continue to happen on an increasing scale.

Nonetheless, the decision in Doe has important implications for business: where a crime as heinous as child slavery is being committed, there is potential for Courts to start taking more proactive responses to rectify global wrongs, and that includes looking at production chains as a whole and assigning responsibility where there is awareness and leverage.

Colleen Theron is an experienced Environmental lawyer, Sustainability consultant and Director of CLT envirolaw

Lecture eight - Sustainability, Corporate Responsibility and Innovation

Here's lecture eight from my current series at Birkbeck and Kings College. This week, innovation.



Advertisements. Upcoming Innovation Forum conferences:

Sustainable and ethical cotton sourcing - 16th - 17th March 2015 (London)

Learn how leading companies managing sourcing risk and engage the supply chain with: Kering, M&S, Ikea, CottonConnect, Marks Work Wearhouse, Lindex, Gina Tricot, BCI and many more.
Click here for more details.


How Business Can Tackle Deforestation - 14th-15th April 2015 (Washington D.C.)

All the major brand players meet with the leading NGOs to debate progress. With: Staples, PepsiCo, Disney, Asia Pulp & Paper, Friends of the Earth, Greenpeace, WWF, Domtar, Sime Darby, Canopy, TFT and many others. Click here for more details.


The Circular Advantage Business Forum 8-9 June 2015 (London)

Strategy for integrating circular business advantage with: Royal DSM, Accenture, Kingfisher, Suez, Coca-Cola Company, HP, and many others. Email Boris.Petrovic@innovation-forum.co.uk for details


The Measurement and (e)valuation of Corporate Sustainability, does it all add up? June 29-30 (London)

A cold hard look at how companies put numbers against progress, and what those numbers mean for investors, internal and external stakeholders. With: Rio Tinto, Tullow Oil, Walgreens Boots Alliance, JP Morgan, Oxfam, Aberdeen Asset Management, Trucost, First State, Marks & Spencer and many more. Email: Natasha.Bodnar@innovation-forum.co.uk for details

Analysis on all the above topics can be found at: http://innovation-forum.co.uk