As it has done each January for the past 7 years in conjunction with its annual meeting in Davos-Klosters, Switzerland, the World Economic Forum (WEF) has released its annual review of Global Risks. We have enjoyed the previous years’ report and find them incredibly interesting, primarily due to the insights provided about linkages and correlations of risk areas. This year’s report – as did the 2011 report – contains a “microsite” that allows a meaningful interactive user experience in exploring the risk topics/geographies and related linkages. Click on the Data Explorer tab to the right of the Report Viewer window – the controls are highly intuitive. The Report goes well beyond HSE and sustainability matters to be sure, but well worth mentioning here and the time spent reviewing the report.
Read more →Recently, Elm posted a piece discussing comments from Kevin Parker, the CEO of Deutsche Asset Management, an investment firm with three-fourths of US$1 trillion under management. We expanded that original post for EHS Journal, who just published it. The expanded … Continue reading →
Yesterday, the world’s largest retailer and its cadre of sustainability advisors released the 61-page Walmart Supplier GHG Innovation Program: Guidance Document. Elm has read through this document and provides a brief overview of what we think are several important points. What follows is a combination of excerpts from the document combined with Elm comments. Not all of these points are implementation “how-to’s”. Some of our comments reflect potential problems that should be evaluated by suppliers who are impacted by Walmart’s supplier sustainability initiatives. The program will initially focus on the following product categories: Animal feed, apparel, candy, cheese, frozen food, fruit, grains, household detergents, meat, media, milk, motor oil, pharmaceuticals, produce, sanitary paper products, snacks, soap & shampoo, soft drinks & beverages, televisions, and vegetables. GIVING CREDIT WHERE CREDIT IS DUE (TO WALMART) In past articles, Elm discussed our view there is a true business risk – rather than competitive advantage – to first-mover adoption of GHG reduction programs. We had anticipated that such risk would be rooted in regulatory requirements. While that may still be a concern in the longer term, it appears now that the more significant risk relates to Walmart suppliers. The retailer has specified that no
Read more →NYT reports that Washington has abandoned hope of issuing carbon legislation this year, including cap-and-trade. The inaction is also dragging down regional/state programs as well, including the well-hyped RGGI trading program. This shouldn’t come as a real surprise to anyone. But it does continue to increase the business uncertainty surrounding emissions in the US. Tune in again next year. Or the year after….
Read more →Our last entry discussed the concept of “Black Swan” events, a term created by noted author Nassim Nicholas Taleb to describe an event that is (a) so low in probablility that it is unforeseeable and (b) so catastrophic in impact that it changes history. Certainly, risk assessments are predictive in nature and no one can predict the future with complete certainty. But in our view, one of the best tools available for risk assessments is an open mind. This can be a challenge in the EHSS world as we generally have engineering and other technical backgrounds. We have been trained to seek absolutes and eliminate uncertainties. At Elm, we believe that involving external support helps to identify and explore events (and their related exposures) that are relevant but get “technically rationalized” by internal staff. With the BP oil spill and the December 2008 Kingston, Tennessee coal ash pond failure, we began thinking about some of the Black Swan events discussed with clients in the past. Below are a handful of EHSS Black Swan risk events that we have discussed with clients over the past years – and some that are currently on our mind. Radical change in EPA’s regulation of coal
Read more →Bloomberg.com reported that earlier this week, European authorities launched a major investigation of several large companies that are thought to have played a role in a system of fraud and tax evasion that may have impacted 7% of the total CO2 emissions trading market for 2009 in the EU. Prosecutors and tax investigators yesterday searched Deutsche Bank, HVB Group and RWE AG in a raid on 230 offices and homes to investigate 180 million euros ($238 million) of tax evasion. The probe targeted 150 suspects at 50 companies… Yesterday’s raids were the biggest related to a fraud that may have tainted an estimated 7 percent of European Union carbon trades in 2009… About 400 million metric tons of emission trades may have been fraudulent last year, or about 7 percent of the total market, including futures transactions, according to estimates from Bloomberg New Energy Finance. Europe lost about 5 billion euros in revenue for the 18 months ending in 2009 because of value-added tax fraud in the CO2 market, according to Europol, a European law-enforcement agency.
Read more →Last night (April 20, 2010), CNBC aired an hour-long TV segment on the burgeoning industry labeled “carbon hunting”, the practice of finding, aggregating, marketing and selling carbon credits. While the story illustrated successful projects, it also highlighted a myriad of risks in the carbon trading industry. Check your local TV listings for the next airing.
Read more →Sure, there are some business risks that are readily identifiable to conform to the SEC’s Climate Risk Assessment Interpretive Guidance. Things like: Property damage from storms and sea level changes Increased costs related to new pollution controls and fuels Changes in customer procurement requirements. But read about the supply chain constraint that the UK energy company E.ON brought forward in a Reuters report: Lack of investment in the vessels used to build offshore wind farms could hinder Britain’s ambitions to shift to renewable energy, the head of E.ON UK’s Robin Rigg wind project told Reuters at the operations center in Workington, northwest England. Britain aims to install 32 gigawatts (GW) of offshore wind by 2020, enough to meet a quarter of the country’s electricity needs, and although there has been investment in turbines factories and ports, a lack of vessels could curtail targets. “The targets are very ambitious and the supply chain isn’t there for it to materialize. It definitely has to grow,” Ian Johnson, Robin Rigg offshore wind farm project manager said. “Aside from turbines, vessels to install equipment are expensive,” said Johnson adding that a lack of predictability over upcoming wind farm projects in the past had caused
Read more →Reuters has reported that the US Senate anticipates bringing the latest carbon emission bill to the floor next week. Although details are currently sketchy, there are some interesting facets revealed in that article: - The bill’s greenhouse gas (GHG) reduction target is 17% by the year 2020; - The baseline year for this reduction is 2005; - Regional and state-specific GHG cap-and-trade programs would be eliminated and replaced by a federal program. - Cap-and-trade for electric power generators would begin in 2012; for manufacturing, the program would begin in 2016; - Domestic and international off-sets would be allowable - Transportation emissions reductions would be achieved through a motor fuel fee that would hopefully spur various forms of innovation, efficiency and reductions One glaring aspect of these few details is whether/how companies will get “early action credit” for their GHG reduction efforts achieved prior to this bill’s 2005 baseline year. Corporations that made major strides in GHG reductions between 2000 and 2005 may find themselves on the wrong end of the “80/20 rule”. Those who chose to wait for more certainty could be in an improved competitive situation by spending less money to harvest the “low hanging fruit” to hit the
Read more →Last month, McKinsey & Co. published a study titled “How companies manage sustainability”. The survey was conducted in February 2010 and received responses from 1,946 executives representing a wide range of industries. The fact that the topic of sustainability is significant enough for McKinsey to conduct this analysis is notable. The study itself is short and it is easy to distill the major themes presented. Theme 1: “Sustainability” has no defined definition … many [companies] have no clear definition of [sustainability]. Overall, 20 percent of executives say their companies don’t. Among those that do, the definition varies: 55 percent define sustainability as the management of issues related to the environment (for example, greenhouse gas emissions, energy efficiency, waste management, green-product development, and water conservation). In addition, 48 percent say it includes the management of governance issues (such as complying with regulations, maintaining ethical practices, and meeting accepted industry standards), and 41 percent say it includes the management of social issues (for instance, working conditions and labor standards). Fifty-six percent of all the respondents define sustainability in two or more ways. Theme 2: What gets measured gets managed, or vice versa [E]xecutives [of proactive companies] … are more aware than executives
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