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Authored by Peyton Fleming, former Ceres senior department director, communications  Given the Trump administration’s hostile stance on climate change and attack on crucial Obama era climate regulations you would be excused for thinking that bipartisan climate action in Washington is a far off fantasy. And yet, quietly, the foundation is being laid for long-term solutions. Last week, 17 Republican members of the House of Representative’s, hailing from Florida, Utah and eight other states, introduced a Republican Climate Change Resolution, declaring their commitment, “ to create and support economically viable, and broadly supported private and public solutions to study and address the causes and effects of measured changes to our global and regional climates.” This is clearly not the party line that we’re hearing from the White House, but it echoes other announcements from Republican groups regarding climate change that are becoming both stronger and more frequent. Recently, the Climate Solutions Caucus, a group in the House created to explore policy options that address climate change, and comprised of equal numbers of Democrats and Republicans, announced their 30th member. Representative Carlos Curbelo (R-FL), co-chair of the caucus, characterized new EPA Administrator Scott Pruitt’s recent remarks on carbon dioxide emissions not being a primary contributor to climate change as “reckless and unacceptable.” Several weeks earlier, a group of well-respected former Republican administration officials pitched a national carbon tax to the White House. Meanwhile, a bipartisan coalition of governors from Kansas, Arkansas and a 18 other states sent a letter to President Trump urging him to promote and expand the development of wind and solar energy. These actions illustrate an encouraging trend that Republicans recognize the problem climate change presents, and understand that if they aren’t at the table on the issue, they’ll eventually pay the price. The facts on the ground are undeniable, and voters want answers and action from their elected officials, as shown in poll after poll. Increasing pressure from both the public and private sector – 1,000 companies took out a full-page ad in Politico last week calling for climate action - is forcing Republicans, especially those in districts seeing the devastating effects of climate change firsthand, to confront the issue. The 17 Republicans who introduced the resolution split dramatically with many members of their party on climate change, and they have shown bold leadership for recognizing the consequences of inaction in this divided political landscape. While we don’t expect immediate action from this group in terms of legislation, it sends the message that building long term support for climate policy is a priority for a significant subset of House Republicans. Seventeen may not sound like much, but, for reference, perhaps the most well know group in the House, the Freedom Caucus, has just 30 members and has the votes to negate the Republican majority.  If the resolution continues to grow, as we expect it will, it presents the possibility of bipartisan resistance to the Trump assault on environmental regulations that will damage local districts just as a warming climate and more volatile weather are already doing. We’ve seen Republicans speak out on climate change, now we expect that they will back those words up with their votes in Congress. That will be the true test of this resolution.

One talking point that emerged from Kraft Heinz's approach for Unilever was the companies' approaches when it comes to corporate responsibility and sustainability. Unilever is seen as being in the vanguard of developing a sustainable business; Kraft Heinz, with its emphasis on cost control and margin improvement, less so. What would a takeover have meant for Unilever's efforts in the field? How sold are investors on such endeavors anyway? In a guest column, Ravi Varghese of US sustainability non-profit Ceres challenges mainstream investor thinking that sustainability is a drag on efficiency. Corporate drama often takes on the flavor of a morality play. Kraft Heinz's approach for Unilever provides a perfect example of this – or, at the very least, is a Rorschach test for different investors' beliefs. One group sees Kraft Heinz as a rapacious corporate raider, seeking to whittle away Unilever's impressive sustainability leadership. Another group sees Unilever as a lumbering behemoth, ripe for the famous efficiency Kraft Heinz and its backers at 3G Capital could bring. As always, the truth lies somewhere in between those extremes. But more importantly, there is no reason why environmental and social leadership, such as that championed by Unilever, cannot coexist with corporate frugality. For one thing, Unilever's actions since the Kraft Heinz approach suggest its management is well aware of some inefficiency and is eager to accelerate change. The Anglo-Dutch group had already vowed to bring its management practices closer to those championed by 3G, in particular, committing to zero-based budgeting, which requires managers to justify costs anew every year, as well as plans to reward senior managers with shares to create a more entrepreneurial culture. Now, it has promised to conduct a comprehensive review of its operations by early April to deliver greater value to shareholders. Meanwhile, Kraft Heinz cannot be dismissed as just another set of greedy asset strippers that would scrap Unilever's efforts to green its energy sources and eliminate deforestation from its supply chain - among its many sustainability initiatives. It is noteworthy 3G's financing partner is Warren Buffett, who has made a fortune with his long-term investing style. In his 2015 letter to Berkshire Hathaway shareholders, Buffett pointedly remarked he and 3G shared "a passion to buy, build and hold large businesses that satisfy basic needs and desires", while conceding they "follow different paths… in pursuing this goal." Sustainability should be synonymous with a lack of waste. And sustainability, in another guise, is what long-term investors crave. Using the word in a different way, management guru Michael Porter described "sustainable" competitive advantage as the path for a firm to create superior value for a consumer or a customer and in turn, superior returns for the firm. Investors naturally assign higher valuations to companies that can grow cash flows and reinvest effectively in the business while increasing customer and supplier loyalty. The question, then, is whether environmental and social leadership can translate into competitive advantage. Unilever appears to believe it does and its dismissal of Kraft Heinz's approach suggests the Ben & Jerry's and Hellmann's maker believes it is can better pursue this as an independent business. This seems reasonable. For example, by committing to source commodities sustainably, Unilever has reduced the operational, regulatory and reputational risk associated with deforestation, supplier exploitation and water scarcity. A 2015 report by Ceres, Feeding Ourselves Thirsty, found Unilever led the packaged food industry in managing its water risks. Notably, Kraft Foods, one of the predecessors to Kraft Heinz, scored near the bottom of its peer group. It also remains to be seen if Kraft Heinz can translate its quest for hyper-efficiency into long-term growth, organic or otherwise. Savvy investors have not always found it easy to nurture iconic brands through tough times. In 2006, Eddie Lampert – once touted as the next Buffett – described his aspiration for Sears Holdings to "become a great company whose greatness is sustainable for generations to come." A decade later, that goal is looking distinctly unlikely. Similarly, cost-cutting offers a one-time boost to earnings, but Kraft Heinz's management will need to invest prudently to shepherd the company's brands through tough times. As Buffett himself famously said: "Only when the tide goes out do you discover who's been swimming naked." With its exceptional long-term orientation, Unilever is unlikely to be caught in a compromising position. Its competitors may not be so lucky. Read the original blog on Just Food

This blog was co-authored by Mindy Lubber, President and CEO, Ceres and Fiona Reynolds, Managing Director, PRI Gabon is one the world’s most biodiverse nations. Its vast tropical forests cover an area larger than the state of Minnesota, house thousands of species and serve as a critical carbon sink, sequestering an estimated one to five gigatonnes of carbon annually. "The majority of companies' deforestation pledges don't go far enough." But Gabon’s forests are rapidly being cleared to make way for palm oil and rubber plantations, harming its rich biodiversity and local communities, while also contributing to global climate change. That’s why Olam International’s recent commitment to suspend all forest clearing for one year in the West African country, while it works out a framework for responsible agricultural development, is so significant. Olam is but one of many global agribusinesses grappling with deforestation in its supply chain. Worldwide, deforestation accounts for 10% of global warming emissions, and much of that is driven by commodities production.  Forest destruction is also associated with myriad other environmental and social impacts, from ecosystem degradation to land rights violations, that create operational and other material risks for companies and their investors. Last year, a leading global integrated palm oil player, IOI Group, lost its certification from the Roundtable on Sustainable Palm Oil after failing to comply with certification requirements. The conglomerate’s share price consequently dropped 7% as 26 customers, including major brands Unilever, Kellogg and Nestlé cut supplies sourced from the IOI Group. Reputational risks are especially a concern, as an increasingly aware consumer base and environmental organisations press companies, like Olam, to adhere to international certifications and standards for the ethical sourcing of their products.   Studies show that one-third of consumers now choose to buy from brands they believe are doing social or environmental good. A sustained campaign led Brazil’s largest grocery chain, Pão de Açúcar, to pledge last year to stop selling beef produced on deforested land in the Amazon rainforest, as well as beef produced by workers living in slave-like conditions and cattle produced on land grabbed from local communities. Similarly, a month after a Greenpeace report revealed that British bank HSBC was providing loans and financial services to palm oil companies destroying Indonesian rainforests, the bank unveiled a new, updated policy for deforestation-free palm oil financing. Now, to receive lending from HSBC, companies must publicly commit to protect high-carbon stock and peat areas, and independently verify these commitments. Expect more such campaigns, as environmental organisations become increasingly sophisticated at tying company supply chains to on-the-ground deforestation. Mighty Earth, for example recently combined satellite imaging with supply chain mapping data to link the traders Cargill and Bunge to deforestation in Bolivia. Regulatory and legal risks are also a concern as companies may be exposed to liabilities for products illegally produced in their supply chains. A 2014 Forest Trends report found that a startling 24% of tropical deforestation was associated with illegal conversion of forests for export markets. With an increased focus on data disclosure and material factors impacting the value of a business, these risks will ultimately be included in analysts’ research to assess a company’s value and its expected stock return and ability to service interests and debt payments. Specifically, the inclusion of deforestation related risks in financial analysis has the potential to dramatically change assumptions related to revenue growth drivers, operational costs, profitability, litigation risks and cash flow generation. "Investors can drive corporate attention to deforestation, beginning by pressing companies to disclose their supply chain emissions and their plans for reducing them." Hundreds of consumer brands have already made pledges to end forest destruction in their supply chains.  Unilever, for example, takes a comprehensive approach, collaborating with multiple stakeholders throughout its supply chains, and focusing on high conservation forests and peatlands. The company’s robust performance appeals to consumers and enhances its brand. The majority of companies’ deforestation pledges, however, don’t go far enough. Commitments typically address a small segment of the palm oil market, but very few cover cattle or soy, the leading drivers for deforestation globally. Most companies have yet to set a timeline, or lay out even basic metrics for measuring implementation. Investors can drive corporate attention to deforestation, beginning by pressing companies to disclose their supply chain emissions and their plans for reducing them, in addition to their deforestation policies. Investors should further press companies to adopt more comprehensive policies to end destruction of forest and carbon-rich peat lands across all major commodities, including by setting time-bound, quantifiable goals. Finally, investors can help stop deforestation by investing in public private collaborations aimed at rejuvenating tropical forests. At the World Economic Forum this year, the Norwegian government spearheaded a $400 million fund that aims to leverage investments up to $1.6 billion in deforestation-free agriculture. The Tropical Forest Alliance 2020 is convening similar such collaborations. But investors must move swiftly. Rapidly losing forests affects the Earth’s ability to remove carbon from the atmosphere. The current rate of deforestation threatens our ability to hold temperature rises to 2°C and avoid global warming’s worst impacts. Read the original blog on Environmental Finance

A majority of Americans value strong federal protections for clean air and water, which provide both environmental and economic benefits. But they should be very worried that the basic human expectations of healthy air and safe water will quickly turn cloudy if the new U.S. Environmental Protection Agency (EPA) administrator's pledge to regulate through "cooperative federalism" becomes a reality. Cooperative federalism, at its most benign, is about allowing each state to tailor its own approach to enforcing environmental rules. At its worst, it's about the federal government turning a blind eye to states that shirk the nation's environmental laws or that simply don't have the coffers to pay for monitoring and enforcement. "Process, rule of law and cooperative federalism, that is going to be the heart of how we do business at the EPA," said EPA Administrator Scott Pruitt, who has promised to follow the Trumpadministration's will to slash EPA's budget and soften its rules. To see how cooperative federalism erodes environmental protection, look no further than the 2015 Waters of the United States rule. President Trump issued an executive order last week announcing plans to undo the rule, which clarifies the federal government's authority to limit pollution in bodies of water not explicitly covered by the Clean Water Act. Those smaller bodies of water—typically streams, wetlands and rivers, which account for more than half of the nation's freshwater resources—feed into larger water bodies that provide key drinking water and recreational opportunities for the public, as well as water supplies for business. Keeping them clean is vital for the nation's health and economic prosperity. The executive order, coupled with the administration's penchant for cooperative federalism, send a strong message that if states choose not to protect smaller streams and wetlands, they won't get pushback from the federal government. And as state environmental budgets shrink, many simply don't have the resources to ensure healthy streams and clean drinking water on their own, even if they wanted to. Forty state environmental agencies have reduced staff in recent years, with the biggest cuts being in North Carolina, Florida, Michigan, New York, Illinois and Arizona, according to a fall 2016 report by the Center for Public Integrity.   Pruitt's home state, Oklahoma, for example, spends a paltry $13 million on environmental protection. Compare that to Connecticut, which has an environmental budget twice the size of Oklahoma's but less than one-tenth the land mass or with neighboring Arkansas, with a budget nearly triple the size of Oklahoma's. Water pollution from industrial-sized poultry farms operating in the northeast corner of Oklahoma and in neighboring Arkansas, has been a source of huge controversy, health concerns and lawsuits for more than 25 years. Phosphorus, the primary pollutant in poultry manure, can trigger toxic algae blooms, threatening rivers, lakes and other waterways that feed into the Illinois River. Cooperative federalism gives Oklahoma and Arkansas more opportunity to turn a blind eye to manure runoff and other untreated pollution in waterways covered by the Waters of the United States rule. Similarly, though the U.S. Geological Survey has linked oil and gas hydraulic fracturing drilling to groundwater and surface water pollution, Oklahoma has yet to identify whether its surface waters face pollution threats from fracking activity. J.D. Strong, executive director of the Oklahoma Water Resources Board said that Oklahoma does not have the budget for widespread testing in the state. These same challenges can be found in states across the country. North Carolina has a long history of water pollution from coal ash spills and manure lagoons—a legacy that gained national prominence last fall when Hurricane Matthew triggered massive flooding and pollution overflows from thousands of hog farms. At the same time, contentious political battles in that state have contributed to a dramatic decrease in its environmental budget, from $126 million in 2011 to just $81 million in 2015. Even states with larger environmental budgets may struggle to protect smaller waterways under cooperative federalism because of political fights that play out at the state level. In Kentucky, regulators and utilities are pushing to loosen regulations on the state's coal ash ponds and landfills. Yet over the past six years, arsenic and selenium have been found to be leaching from a coal ash pond at a major power station into groundwater and directly into Herrington Lake. Despite remedial measures taken by Louisville Gas & Electric and Kentucky Utilities, the pollution persists and is poisoning fish in the lake. In Florida, Gov. Rick Scott has gutted the state environmental agency—earning him a scathing "environmental disaster" editorial in the Tampa Bay Tribune. In addition to cutting support for clean water and conservation programs, state-driven enforcement has disappeared nearly altogether—enforcement cases fell by 81 percent from 2010 to 2015. Pruitt's cooperative federalism mantra, where states should see us as "partners, not adversaries," sends us down a perilous path of continued diminishment of precious natural resources across the country. Leaving states on their own to protect the nation's vital water resources, without holding them to minimum standards or supporting them financially, is a slippery slope indeed towards a dirtier America—an America that the vast majority does not want. Read the post at EcoWatch

Last week I was a guest on an “inspection” trip of the Colorado River Aqueduct, the engineering marvel that delivers up to 1 billion gallons (3.8billion liters) of water daily to Southern California from the Colorado River hundreds of miles to the east. Organized by the Metropolitan Water District (MWD) of Southern California, these inspections are a relic of an old piece of administrative code. Today they’ve become a well-choreographed public relations effort – right down to the framed MWD mission statement on the walls of the bedrooms provided to guests. All of the history and statistics thrown at us over the two-day trip tell an incredible story of the aqueduct as the backbone of Los Angeles’ and Southern California’s tremendous growth. Without it, Southern California would not be the population hub and economic center that it is today. But the story is also about a 1930s engineering feat that pumps water from the intake at Lake Havasu 242 miles (390km) west to Lake Mathews, up a total elevation of 1,617ft (493m) to approximately 19 million urban customers. And it’s a story that’s been ripe with controversy since the project’s inception in 1927.   When I placed my hand on the aqueduct and felt the vibration of the water rushing at 1,605 cubic ft (45 cubic meters) per second beside me, the magnitude of this engineering accomplishment sank in. But a short stop with the Palo Verde Irrigation District (PVID) near Blythe, California, was what really captured my attention, because the challenges I saw there are a microcosm of our state’s larger water woes. An agricultural region of 131,000 acres (53,000 hectares) growing alfalfa, wheat and cotton, PVID has a “number one priority” Colorado River water right for 104,500 acres (42,300 hectares). That means PVID can take as much Colorado River water as it wants before holders of lesser rights such as MWD can have their “share.” And it pays nothing for this water. Some growers in the district utilize flood irrigation practices, and water-intensive alfalfa, grown as feed for cattle, is the most prevalent crop. Needless to say, Palo Verde landowners don’t have much, if any, incentive to conserve water because their taps will continue to flow – drought or no drought. That also means that PVID, although most have never heard of it, has become a big player in California’s water debate. In 2004, MWD entered into a 35-year agreement with PVID to develop a land-fallowing program. Fallowing land allows farmers to transfer water to MWD for a payment; close to 30 percent of the acreage in the valley is currently fallowed. In addition, MWD purchased approximately 30 percent of the land in the valley to obtain the water rights and is now the majority landowner. MWDcan direct the fallowing of some of this land and also work with tenant farmers to reduce consumptive water use. Others also have their sights on PVID’s coveted senior water rights. In 2016, a Saudi Arabian dairy paid $31.8 million for 1,790 acres (720 hectares) of land near Blythe to grow alfalfa to ship back for feed for its cattle. With an ironclad water right that allows for limitless water use, how can we encourage water efficiencies so that enough remains for the environment and other beneficial uses such as drinking water for MWD customers? One way is for the food companies that source from the Palo Verde Valley and other water-stressed areas to engage more directly with their suppliers to strengthen farming practices that conserve water and protect watersheds. In 2015 Ceres released a report, “Feeding Ourselves Thirsty,” which ranked 37 major food companies on the quality of their corporate water management. The report found that some are taking wide-ranging actions to manage water risks across their operations and supply chains, but most have a long way to go. Notably, meat, dairy and agricultural product companies – those most likely to source crops such as alfalfa – scored most poorly. An update of the report will be released later this year. Food companies ought to be working on water efficiency with farmers in their supply chains because as water supplies tighten in California and other major growing regions across the world, traditional approaches to managing commodity shortages and high crop prices – such as price hedging and geographic diversification – will become less effective. Key strategies that food companies could employ include setting sustainable agriculture policies and time-bound sourcing goals, and collecting data from farmers on their practices while providing assistance and incentives for improvement. In addition, companies can engage in water policy discussions to ensure California’s rules and regulations promote maximizing the water we already have. That’s why Ceres formed Connect the Drops, a 28-member business-led coalition that includes companies such as General Mills and WhiteWave, which have operations and supply chains in California. The group works with our state’s decision-makers on water policy reforms to ensure a sustainable supply. This year may be a “bumper crop year,” according to MWD, thanks to all the rain we’ve received. While that’s welcome news for the region, many believe that a Colorado River shortage declaration is inevitable in the very near future for the states that form the Colorado River Compact. Such a declaration could eventually curtail California’s water allotment, which is why we must figure out how to live under a scenario with less Colorado River water. Companies engaging directly with farmers – whether in the Palo Verde Valley or elsewhere in the Colorado River Basin – are central in helping us achieve a sustainable water future. Image courtesy of Kirsten James Read the post at Water Deeply

A group of prominent conservative political and thought leaders, under the newly-formed Climate Leadership Council (CLC), recently released a proposal for a carbon fee and dividend model for the U.S. economy that seeks to set the stage for future conservative and bipartisan discussions on tackling climate change. The authors of this proposal are highly respected Republicans, and it is clear that they are taking this initiative seriously. Calling for a “limited government, free market approach” to reduce carbon pollution that is causing climate warming, the group is led by former Secretary of State James Baker, former Treasury Secretary Hank Paulson and former Secretary of State George Shultz. They have already met with White House officials on the proposal and it also got an endorsement yesterday from Exxon’s new CEO. Their idea of a carbon tax is not new, nor is it particularly partisan. For experts concerned about ensuring ample pollution reductions, however, its plan to eliminate some or all of EPA’s authority to regulate greenhouse gas pollution is highly concerning, and is likely a non-starter for environmental advocates and many others who value regulatory stability. On its face, the proposal is simple: a carbon pollution tax levied on upstream carbon sources that would increase over time (a standard, but crucial, design mechanism). The revenue raised from the tax would be evenly distributed back to the American people. However, the proposal only applies to carbon pollution – not to other greenhouse gas pollutants such as common refrigerants. At the same time, some or all of the federal regulatory authority to deal with carbon pollution (not other greenhouse gases) would be phased out in an unspecified fashion. In recognition of the need to achieve actual carbon pollution reductions and in a nod to the need to bring environmentalists along, the level of the tax must be strong enough to generate more pollution reductions than all Obama-era regulations would have produced.  The CLC calculates that starting at $40 a ton is sufficient (for reference, that is quite similar to the Obama administration’s calculation of the social cost of carbon, though it’s still far lower than figures proposed by many leading economists). Reaction to this new proposal has ranged from enthusiastic to tempered support. Democratic U.S. Senators and climate advocates Sheldon Whitehouse (Rhode Island) and Brian Schatz (Hawaii) both released statements praising the overall intent of the proposal without commenting on specific details (they have introduced legislation with many similarities). The Natural Resources Defense Council’s reaction was quite simple: “carbon tax-yes, removing EPA authority-no.” Most conservative think tanks, such as the Heritage Foundation, which generally question the science behind climate change, have come out in strong opposition to the proposal, but libertarian think tanks R Street Institute and the Niskanen Center have put forward decidedly more favorable and nuanced perspectives. For the past year, Ceres has been working with our company partners in Business for Innovative Climate and Energy Policy, our investor partners in the Investor Network on Climate Risk and Sustainability, and others to understand and evaluate various carbon pricing proposals. Whether it is support for carbon pricing or the EPA’s Clean Power Plan (which – despite being a regulatory mechanism – is structured as a market-based solution), we have seen sustained and broad private sector interest in market-based solutions for climate change. Companies and investors also want solutions that provide long-term regulatory certainty and sufficient ambition to effectively reduce pollution at levels needed to avoid potentially catastrophic climate warming. Despite the current political landscape, business and investor interest in carbon pricing is not flagging – if anything, it’s growing stronger. As for our take, we are encouraged to see prominent and respected conservative voices taking the threat of climate change seriously and putting forth a thoughtful proposal to address the problem and ensure that America is a leader in creating and capitalizing on innovative, effective global solutions. But we also have concerns that trading a carbon price for EPA authority on carbon pollution is likely to have significant unintended consequences. For example, what if such a trade occurred, but then the carbon price that was used was insufficient for reducing pollution at levels needed? Or, even worse, what if a future Congress decided to repeal the carbon fee altogether? And what about the greenhouse gases that would not be addressed by the proposal? Without some sort of “snapback” EPA authority or environmental integrity mechanism for sectors of the economy that don’t respond well to a carbon tax (such as transportation or agriculture), it will be increasingly difficult to build political consensus and support for such a trade. In addition, even with a strong carbon price in place, there will continue to be a critical need for complementary policies that can help reinforce the effect of the carbon price and continue to spur innovation and emissions reductions across the economy – especially, as the need for broad national deep decarbonization becomes ever more apparent and urgent. The authority to regulate carbon pollution is an essential backstop to ensure that a carbon tax achieves its intended results over time. That is why we appreciate that this proposal is not discussing removing all of the EPA’s regulatory authority over greenhouse gases. We are hopeful this proposal will generate more discussion among conservative policymakers about the urgent need to address climate change. Hundreds of American companies and investors who are already committed to tackling the climate threat will surely need to be part of these conversations, too.

Last December, after two years of thoughtful debate, Michigan lawmakers passed a bipartisan energy package that will foster a clean energy future for businesses and ratepayers across the state. As the new legislative session gets underway, businesses continue the call for clean energy and thank lawmakers for their leadership last year. This week, a dozen businesses and trade associations sent a letter to Michigan lawmakers thanking them for increasing the state’s Renewable Portfolio Standard and strengthening the Energy Optimization Standard. “Strengthening Michigan’s Renewable Portfolio Standard ensures energy is generated in Michigan — encouraging new investments, innovation, and jobs here at home,” wrote the businesses, including Nestlé, JLL, Eileen Fisher, Worthen Industries, Veolia, and Brewery Vivant. Lawmakers will work to implement these improved standards in the coming months, creating additional economic development opportunities for the state. Last year’s energy package increases Michigan’s renewable energy standard from 10 percent in 2015 to 15 percent in 2021. It also strengthens the state’s commitment to energy waste reduction by removing artificial caps on efficiency investments – ultimately helping utilities do more to help customers and businesses save money on their electricity bills. As the legislature begins a new two-year session, lawmakers should heed the advice of the business community and protect the improved standards. Earlier this month, the Michigan Public Service Commission reported that electricity providers met or exceeded their 10 percent renewable energy target for 2015. The standards have been successful in holding utilities accountable and ensuring they invest in a diversified energy portfolio. Another benefit: for every dollar spent on energy waste reduction, customers are expected to see $4.35 in benefits. Conservative groups and businesses supported the energy package for one simple reason: energy standards ensure policy certainty for companies and investors. Renewable energy is now cost-competitive with coal. The Michigan Public Service Commission also reports that wind energy is now the cheapest form of new energygeneration. By strengthening Michigan’s clean energy standards, the state will be better prepared to compete in today’s global economy and attract future investment. For all of these reasons, we hope lawmakers will continue to stand up for clean energy standards, for businesses and ratepayers alike. Photo by Pat Kight / Creative Commons Read the post at Midwest Energy News

Information moves markets, but bad information hurts investors and companies alike. Investors need companies to disclose accurate information about today’s challenges, among the biggest being global climate change. The trick is that financial reporting has to evolve. Issues that have a financial impact on companies aren’t static. They must reflect the fast-changing real world that companies are doing business in. That’s why the work of the Task Force on Climate-related Financial Disclosures (TCFD), chaired by Michael Bloomberg, is so vital. The international task force was created by the Financial Stability Board at the request of the G20 nations to fill an urgent need—to adapt financial disclosures to an economy being shaped by climate change, policy responses and a low-carbon energy transition. In December, the group released recommendations—for public comment—designed to help companies and investors figure out which climate risks have a financially material impact on their business so they can disclose those impacts in public financial filings. The task force also found that in most G20 countries today, companies already have “a legal obligation to disclose material risks in their financial reports—which includes material, climate- related risks.” The recommendations are a big step forward. Among the reasons why is that they were crafted by the business community, which gives task force member companies a key role in improving their climate disclosures and encouraging their peers to do the same.  As the task force noted, “the success of these recommendations depends on near-term, widespread adoption by organizations in the financial and non-financial sectors.” The TCFD has laid out a five-year path for full implementation, an ambitious scenario that will depend on leading companies to start implementing the recommendations this year. We have worked closely with the task force over the past year and are impressed by the TCFD’s general and sector specific recommendations. Based on our work on climate and water risks in the most affected sectors, we provided the task force with these additional recommendations in response to their request for public comments: 1. Improving scenario analysis The cornerstone of the task force’s recommendations is requesting scenario analysis by companies in all industries, a huge step forward by any measure. Building on the Paris Climate Agreement’s goal to keep global temperatures from rising no more than 2°C, the report advises businesses to assess the potential impact of a 2 degree warming economic scenario on their long-term strategies. Put simply, substantial greenhouse gas reductions will be needed to achieve a 2-degree world and all businesses, especially in energy-intensive sectors, will be profoundly affected. In our feedback to the task force, we emphasize two issues: first, the positive effects of companies developing their own scenarios, as long as they report how and why their scenarios diverge from publicly available scenarios, which will add to investor and public understanding of pricing risks and opportunities from the energy transition.  Second, companies should disclose key inputs and assumptions of their scenario analyses, so investors can fully understand the process and limitations of the assessment.  We also suggest that the task force consider recommending to companies Ceres’ Framework for 2 Degrees Scenario Analysis, which includes key components for any 2 degree scenario and guidelines companies can use to develop scenarios. 2. The dual role of insurance companies as underwriters and investors The task force offered important new recommendations for insurance companies to assess and disclose their climate risks and opportunities. Because insurers play a dual role—underwriting hundreds of billions of dollars of risk and investing the money that clients pay to them—we suggest that the recommendations specifically spell out that insurance companies should provide disclosure on both sides of their businesses. This recommendation also applies to scenario analysis. Both sides of insurers’ businesses should use the 2C warming scenario as a model for analyzing and integrating climate risks and opportunities. This would help investors get a more complete picture of insurers’ relative competitive positioning on wide-ranging climate trends. For instance, an insurance company that underwrites a significant amount of oil and gas business and also has extensive oil and gas investments could find its revenues under pressure if global oil and gas demand and prices drop, or if severe storms impact coastal oil and gas infrastructure. 3. Decision-useful reporting on water risks We appreciate the task force’s discussion of companies in sectors facing climate-related water risks like droughts, heavy rainfall, flooding and water scarcity.  In our response to the TCFD consultation, we suggest the task force provide clear guidance to companies on how they can disclose water issues. In order to be meaningful, water data cannot be reported only on a global basis, but must be contextualized against specific risks or stresses. Company data points that are not broken down to the asset or geographical level, nor contextualized against risk and stress exposures, are short-changing investors. 4. Reporting on land use change from deforestation Better land use management is needed to limit climate warming, protect water quality and maintain crucial water resources—all critical business issues. For the agriculture and forestry sectors, we suggest that the task force recommend additional indicators to encourage better reporting. While we agree with the task force on the importance of tracking emissions triggered by land use, emissions tracking methodologies for agriculture are still evolving. We suggest that the TCFD recommend additional, concrete metrics that are already available, so companies can give investors insights about their supply chain risks and risk management practices. For instance, businesses could report on the volume of commodities, such as soy, beef, palm oil and timber, that they use or produce that are linked to deforestation, and report what percentage of crops are grown in regions with high deforestation risks. Moving to adoption Added together, we are big champions of the breakthrough work the task force is doing on climate disclosure, but the next steps will be crucial. Getting these recommendations adopted by companies and investors, and endorsed by countries, will depend on leadership from the G20 and financial groups. And countries must move quickly to improve climate risk disclosure by publicly traded companies in financial filings, as the U.S. Securities and Exchange Commission has done with its 2010 climate disclosure guidance.  Without such requirements, investors will not get the comparable, quantified reporting that they need to support investment decisions. The task force recommendations deserve widespread adoption precisely because that will help markets thrive. With full disclosure of both climate risks and opportunities, economies can continue to prosper as they transition to a much-needed low carbon future.

The president and congressional leaders are fixated on demolishing public health, safety and environmental regulations, but these efforts make little practical — or economic — sense. Of particular concern is, first, the president’s "two-for-one" executive order requiring two federal regulations to be deleted for every one issued. The second is efforts by Congress to pass regulatory reform legislation that substantially would curb consideration of how the public would benefit under proposed rules. There are many reasons to criticize this double-barrel regulatory assault. The biggest is broad economic harm to the American public and local communities because of weaker clean air, water and public health protections. Rules on coal-mining runoff and methane and power plant pollution already are on the chopping block. The effort also will be harmful to substantial swaths of the U.S. business community who are clamoring for regulatory certainty on key issues such as climate change and clean energy policy. "The cost of doing business without a national carbon mitigation strategy subjects companies to undesirable risks," wrote candy giant Mars Inc. and software firm Adobe, in a legal brief filed last year supporting the Environmental Protection Agency’s Clean Power Plan, aimed at cutting carbon pollution from U.S. power plants. Mars and Adobe are among dozens of major U.S. companies that have committed to using 100 percent renewable energy to power all their operations. Rather than dealing with state-by-state patchwork quilt energy policies, they would prefer a holistic national solution for tackling climate change and securing the green power they need for their facilities across the country. The president likes to say that environmental regulations stifle economic growth and kill jobs. The truth is the opposite. While no regulations are perfect, federal environmental protections have, time and time again, provided enormous benefits for the American public and the broader economy. Consider the example of the EPA and the Clean Air Act — two of the administration’s favorite punching bags. Federal environmental laws have helped restore areas from Cleveland to Boston, enabling commerce and recreation to thrive in places that had been previously unhealthy and polluted. Look no further than Boston’s Charles River, once famous for the song "Love that Dirty Water," which is now being used to make Harpoon Brewery beer. Public health and quality of life also have improved. Measures taken by the EPA under the Clean Air Act have prevented hundreds of thousands of premature deaths. No doubt, such measures have been a rock-solid economic investment. The nonpartisan federal Office of Management and Budget has calculated that rules adopted by the EPA over the decade ending in 2012 yielded economic benefits 10 times their costs — a ratio better than all of the other federal agencies they reviewed. Despite these findings, the Trump administration and Congress insist on undoing environmental protections that the public, businesses and investors strongly support. Two weeks ago, for example, the House voted to nix a rule requiring oil and gas producers to limit methane pollution — an especially potent greenhouse gas — on all federal and tribal lands. The methane rule has strong public support, especially in Western communities where methane flaring (where natural gas from wells is simply burned off into the atmosphere) is an all-too-common byproduct of widespread hydraulic fracturing operations. More than 200,000 individuals and 80 local officials commented in support of the rule during the public comment period. Investors owning shares in oil and gas companies also support the rule, including major pension funds such as the California and New York City retirement funds who have voiced concern about energy companies losing billions of dollars worth of natural gas every year due to unnecessary flaring and well leaks. Other regulatory rollback efforts will have profoundly negative impacts on consumers. Tougher fuel economy standards for vehicles, which the administration is threatening to weaken, are saving American drivers billions of dollars in reduced gasoline costs. Billions more will be saved under new energy efficiency standards for air conditioners and other building appliances — another item in the administration’s cross-hairs. Other clean air efforts, such as the Clean Power Plan and broader U.S. support for the historic Paris Climate Agreement, also make good business sense. While the president has tried to cast doubt on these efforts, more than 760 companies and investors, many of them iconic Fortune 500 firms, are supporting them publicly because they recognize that climate change is an urgent priority that can be addressed with low-carbon policies that accelerate deployment of ever-cheaper cleaner energy. "We want the U.S. economy to be energy efficient and powered by low-carbon energy," wrote the businesses in a statement last month to President Trump and Congress. Supporters include industry giants such as General Mills, Nestle, Nike, Unilever and VF Corporation, all of whom are concerned about climate change and have ambitious goals for lowering their carbon footprints and using more renewable energy. I hear this logic all the time from CEOs. Companies are eager to tackle important societal issues such as climate change, and they are happy to work with common-sense regulations that address them. What they don’t like is changing the rules of the road or dropping them all together — especially when there is no legitimate basis for doing so. This anti-regulation agenda is neither grounded in science or economics, and the implications to our economy and public health call for reconsideration. Abandoning regulations such as the methane rule and the Clean Power Plan will hurt — rather than help — our economy and our way of life. Image sourced from Shutterstock/OFC Pictures Read the post at GreenBiz.com

For the energy industry and its investors, the past 18 months have brought fundamental and disruptive changes. Saudi Arabia is charting a path away from oil. Solar power is now cheaper than coal in much of the world. Shell’s CFO is warning that global demand for oil could peak in as little as five years. And in late 2016, the historic Paris Climate Agreement was entered into force, including detailed national commitments to reduce greenhouse gas emissions and a first-ever global commitment to limit climate warming to below two-degrees Celsius. For all of the above reasons, global investors are pushing energy companies to forsake ‘business as usual’ and plan for the coming low-carbon transition through the use of scenario analysis. This effort gained enormous momentum last year when investors in the U.S. and Europe worked together to call on oil companies through shareholder resolutions to assess and disclose the resilience of their portfolios in a future in which the two-degree target is achieved. These resolutions achieved the broadest mainstream shareholder support ever for U.S. climate risk resolutions, garnering a 49 percent vote at Occidental Petroleum, 41 percent at Chevron and 38 percent at ExxonMobil. Wall Street icons such as Northern Trust, State Street, HSBC, Charles Schwab, TIAA and MFS were among the supporters. Fast forward to today. At the request of G20 nations through the Financial Stability Board, an industry-led task force led by Michael Bloomberg has created a critical risk management tool for energy companies and companies in any industry where 2-degree scenario planning matters. The “Task Force on Climate-Related Financial Disclosures (TCFD)” has released specific recommendations that highlight the “potential impacts of climate-related risks and opportunities on an organization’s businesses, strategies and financial planning under different potential future states (scenarios), including a two-degrees Celsius scenario.” Although many companies already use scenario planning, questions still remain on how to conduct a two-degree scenario analysis. That’s why the TCFD and Ceres have both developed tools to help companies conduct scenario analysis and meet increasing calls for robust climate risk disclosure. The TCFD released a Technical Supplement report to help companies better understand the need for disclosure, while Ceres teamed up with global energy expert Amy Myers Jaffe of University of California, Davis, to release a two-degree scenario framework geared specifically for oil and gas companies and investors. Key requirements for conducting a two-degree scenario analysis include: Analyzing the range of potential exposures to a climate-related transition, physical risks and opportunities; Evaluating the effect on the company’s strategic and financial position; Identifying options for managing the risks and opportunities to adjust strategic and financial plans; Disclosing key inputs, assumptions and methodologies to investors. As investors, analysts and other industry actors bring unprecedented pressure on companies to assess and disclose material climate risks, their efforts are sure to be bolstered by these two tools. Future market conditions may be uncertain, but energy companies now have the tools they need to evaluate risks and opportunities and create strategies for transitioning to a decarbonized world.