Business Strategies to Address Climate Change

Guest post by C2ES
Climate Solutions & Business Leadership
Originally published on C2ES website, (n.d.)

Leading companies are taking action both inside and outside their fence lines to reduce their own emissions and become more resilient to inevitable climate impacts. C2ES has found that, internally, companies are seeking a deeper understanding of the risks and opportunities of a changing climate, and are taking steps to reduce their carbon footprints (the emissions from producing their products) and their handprints (emissions from the sales and use of their products). Externally, they are engaging suppliers, customers, key stakeholders and policymakers, and are publicly reporting emissions and energy-usage data, climate-related risks and management strategies. Companies are also demonstrating their commitment to climate action by partnering with other companies and stakeholders on solutions and by publicly supporting policies like the Paris Agreement.

Climate Action Plans

 The first step for many companies is to develop climate action plans across the company and for individual business units. The components of a climate action plan depend on the type of company and the goals it wants to achieve, but every company faces a few general decisions, such as:

• whether the plan is designed through a “top-down” or “bottom-up” process

• whether to establish one or more targets – and if so, of what type and how

• how targets fit in with other environmental management activities

• to what extent the plan features market mechanisms such as internal carbon price and/or and external carbon offsets

• how to use research and development resources and other means to drive innovation.

Once targets are established, they can drive innovation within the company, spurring internal programs and products that can help the company meet its goals. Sometimes the mere existence of emissions or energy use data generates interest and ideas for improvements that turn out to be profitable on their own.

Goals and Targets

A growing number of companies have voluntarily adopted climate-related targets. The type of target an individual company chooses depends on its products and production methods, policy environment, and business models. Some targets focus on reducing greenhouse gases, and others on energy use. Some serve as absolute limits, and others are relative to production levels and revenues. Goals and targets can also apply to supply chain purchases or use of company products.

Nearly 300 companies have set a greenhouse gas emission reduction target “in line with climate science.” More than 100 have set goals to be powered by 100 percent renewable energy. Other companies, such as Microsoft, are adopting operational carbon neutrality goals.  Some companies purchase carbon offsets from projects such as reduced deforestation to help achieve their emission goals more cost-effectively.

Companies have found that addressing climate also makes good business sense. Greenhouse gas targets have helped them save money, generally through improvements in energy and operational efficiency. They have also seen reduced production costs and enhanced product sales, making them more competitive.

Companies have also found these internal policies help prepare them for future regulation by investing in emissions reductions now. They’ve also protected and enhanced their reputation with customers and shareholders.

Internal Carbon Pricing

One business strategy gaining traction among leading businesses is internal carbon pricing, which assigns a price to carbon emissions attributable to the business. More than 1,200 companies worldwide are either pursuing internal carbon pricing or preparing to do so in the coming two years—up 23 percent from 2015.

Companies that establish a corporate carbon price assign a monetary value to CO2 emissions associated with a business activity. This price signal is factored into investment decisions, providing an incentive for the company to move from emissions-intensive programs and products to low-carbon, climate-resilient alternatives.

Nearly 300 companies have set a greenhouse gas emission reduction target in line with climate science. More than 100 have set goals to be powered by 100 percent renewable energy.

Energy Efficiency

Improved energy efficiency has emerged as a key component of corporate climate change strategies. Companies participating in the global EP 100 initiative pledge to double their energy productivity (dollar of output per unit of energy), which has the potential to save more than $2 trillion globally by 2030.

Leading firms that give greater attention to energy efficiency report billions of dollars in savings and millions of tons of avoided greenhouse gas emissions. Efficiency strategies can encompass internal operations, supply chains, products and services, and cross-cutting issues.

Companies that take on carbon footprinting and reduction strategies quickly come to see their energy use in a whole new light. When companies calculate their carbon footprint, they typically find that their energy consumption accounts for the great majority of their directly measurable emissions impact. Suddenly, energy shifts from perhaps a small cost item to the biggest piece of their carbon footprint. Viewed from this perspective, energy efficiency becomes a sustainability imperative.

Corporate energy efficiency strategies are most effective when:

• Efficiency is an integral part of corporate strategic planning and risk assessment;

• leadership and organizational support are real and sustained;

• the company has SMART (specific, measurable, accountable, realistic, and time-bound) energy efficiency goals;

• the strategy relies on a robust tracking and measurement system;

• the organization puts substantial resources into efficiency;

• the energy efficiency strategy shows results; and

• the company effectively communicates efficiency results internally and externally.

Innovative Finance

Companies are also employing a wide range of innovative financial tools to achieve their climate and energy goals:

• Energy producers and utilities often offer their customers on-bill financing, which allows a homeowner or commercial building owner to invest in energy efficiency improvements, with payments added on to their utility bills. This removes the high upfront costs of efficiency improvements, and encourages building owners to work directly with utilities on efficiency projects.

• Large energy buyers also participate in green pricing programs (also known as green tariffs). U.S. utilities that offer these programs allow eligible customers to buy energy at a premium from a renewable project directly operated by the utility, or by issuing a renewable energy certificate (REC) from a renewable project. This allows businesses to use sources like wind, solar, low-impact hydro, biomass, landfill gas, and geothermal.

• Some companies and banks are tapping into the rise in investor demand to finance environmentally sound projects by issuing green bonds or sustainability bonds. Green bonds act as a vehicle for institutional investors seeking to put their capital in projects that address climate change, and help drive innovation and development of low-carbon products. Like conventional bonds, green bonds can be issued by a corporate, bank, or government entity. The debt insurance by investors means that the companies do not need to tap into their limited credit lines or cash reserves to fund renewable or energy efficiency projects. While green bonds help support projects with a positive environmental impact, sustainability bonds work like green bonds, but also focus on the social impact.

Originally published on C2ES (n.d.). You can read more here.

USCIB Member Companies Rally to Combat COVID-19

Guest post by Stephen J. Ubl
President & CEO, PhRMA
Originally published on PhRMA website in February, 2020

As public officials scramble to construct a comprehensive plan to contain the novel coronavirus (COVID-19), some USCIB members are taking necessary action through public-private partnerships or employing company resources to contain the outbreak.

PhRMA members, which include USCIB members Bayer, Gilead Sciences, Johnson & Johnson and Pfizer, have dedicated the following programs and initiatives to combat COVID-19:

• Bayer donated financial and medical resources to support those affected by the outbreak in China. Donations have been made to the Chinese Red Cross, which works directly with Chinese health authorities to aid with the crisis.

• Gilead Sciences is working directly with government organizations and public health officers to support clinical trials to diagnosed patients . Gilead is also accelerating its process in developing a novel antiviral drug, Remdesivir, which has gained recognition for treating Ebola and Marbug.

• Johnson & Johnson launched an investigational vaccine developmental program through collaborations with Biomedical Advanced Research and Development Authority (BARDA), Office of the Assistant Secretary for Preparedness and Response (ASPR), and the U.S. Department of Health & Human Services. J&J is also analyzing previously tested medicines that can reduce the severity of COVID-19 symptoms and lower fatality rates.

• Pfizer has completed its preliminary assessment of antiviral compounds similar to that of cultured cells found in COVID-19 cases. The company is now working with a third party to speed the screening process and is expecting results in late March. Depending on toxicology results, Pfizer hopes to move to clinical development by no later than the end of 2020.

While many of these initiatives are in direct response to an evolving public health crisis, they also meet one of the “means of implementation” criteria within UN Sustainable Development Goal 3: Ensure Healthy Lives. Most notably, these initiatives meet “means of implementation 3.d: strengthening the capacity of all countries…for early warning, risk reduction and management of national and global health risks.”

Originally published on PhRMA (February, 2020). You can read more here.

How companies can align their materials strategy to the SDGs

Guest post by Liesl Truscott
Director, European & Materials Strategy
Textile Exchange
Originally published on GreenBiz website in January, 2020

The way we produce, (re)use and dispose of or recycle our materials has an impact on nearly every one of the United Nations Sustainable Development Goals (SDGs), a collection of 17 global 2030 goals introduced by the United Nations in 2015. Also known as the Global Goals, the SDGs were designed to be universal (for both developed and developing countries), holistic (people-centered and planet-sensitive) and measurable. They include 169 targets and aim to end poverty, protect the planet and ensure prosperity for all.

For the textile industry, "SDG 12: Responsible Consumption and Production" is a gateway to many of the other SDGs. More sustainable cultivation of cotton, wool, wood and other natural raw materials aligns with the "Zero Hunger" and "Life on Land" goals. Converting to renewable energy and deploying cleaner technologies in the fiber processing stages have a positive effect on the "Clean Water and Sanitation," "Industries, Innovation and Infrastructure" and "Climate Action" goals. And designing out waste, keeping materials in use longer and regenerating farmland plays an important role in reducing carbon emissions, a major target of the "Climate Action" goal. The textile industry has a powerful opportunity to shift the needle in both producer and consumer contexts.

The Global Goals have been widely adopted by governments, NGOs and businesses. In some cases, companies have a stronger lever to pull than governments do. By aligning their business and sustainability strategies to the Global Goals — or more radically, reshaping their business models — companies are able to position themselves as global leaders, rather than merely business leaders, and reframe their achievements as wins for the world. Not only does business hold the key to long-term SDG success but the SDGs will help shape business transformation. 

How can companies level up their Global Goals alignment?

Every year, Textile Exchange publishes a Material Change Index that tracks the fashion industry’s progress toward more sustainable materials sourcing, as well as alignment with global efforts such as the SDGs and the transition to a circular economy. There are some key activities that top performers in the SDGs category have in common. These should serve as inspiration for companies that are looking to push their alignment to the next level. Textile Exchange also will be sharing a more detailed analysis of findings later in 2020.

1. Embed into business 

To ensure long-term benefits for all, companies should integrate the SDGs into business models and strategies. To do this successfully requires getting key stakeholders (including employees, suppliers and investors) on board and on the same page. Through materiality assessment or plain, old-fashioned conversations, the top performers make sure to factor perspectives from across the business into the development of their strategies for positive SDG action.

Material change in action: Gap Inc. aligned its sustainability framework with the U.N.’s Sustainable Development agenda soon after it was released. The company first identified the issues most material to its business and reviewed how these aligned with the SDGs, finding that its efforts align most closely with the goals on quality education, gender equality, clean water and sanitation, decent work and economic growth, responsible consumption and production and climate action.

Gap Inc. formally incorporated these six SDGs into its sustainability strategy in 2016. By 2018, all of its brands (including Gap, Banana Republic, Old Navy and Athleta) had established executive sustainability steering committees, defined their own priorities and led sustainability strategy workshops with cross-functional teams.

"The best advice we could give is to work closely with partners across the company to understand how their work is affected by the Sustainable Development Goals and lay a foundation for working together," said Diana Rosenberg, product sustainability manager at Gap Inc. "Then, it is critical to set jointly-held company goals and develop internal metrics that we can use to promote progress and hold ourselves accountable."

2. Leveraging spheres of influence

While each SDG is important, it is likely that some SDGs will resonate more strongly with a company’s business competencies and priorities. Leading companies double-down on their priority SDGs and partner with other organizations to deliver on them.

Diversity brings different perspectives to the table, and leading brands see the advantage of partnering within their own supply chain, particularly when tackling complex sustainability challenges in sourcing regions They also keep in mind that the 17 goals are interconnected, and a holistic approach is important to ensure that progress towards certain SDGs has a positive, not detrimental, effect on the others.

3. Partner for change

The SDGs are shared goals, so forming collaborations within and between sectors and industries is essential if we are to achieve them. Engaging others with your efforts will raise visibility for the Global Goals and inspire others to take action against them. Companies leading the charge not only partner with others, but also initiate the kinds of working groups, coalitions and platforms that inspire collective engagement and can scale impact.

Material change in action: Sports brand PUMA began efforts to combat the effects of climate change over a decade ago. When it was approached by U.N. Climate to engage in an initiative for the fashion industry, it naturally chose to get involved. PUMA since has worked with multiple stakeholders to develop the Fashion Industry Charter for Climate Action, a framework that helps brands jointly address the climate challenge by preparing and executing their sustainability strategies in line with other players.

"Industry collaborations are catalysts for systemic change," said Stefan Seidel, head of corporate sustainability at PUMA. "When we talk about sustainability, brands often have similar goals but to a certain extent, limited resources and limited reach in shared supply chains. Sharing commitments and resources, brands have more chances to make a positive impact. We are only a small company compared to the size of the overall industry, that is why we know how important it is to work together on sustainability."

Originally published on GreenBiz (January, 2020). You can read more here.