Page 32 – Sustainability Academy

At the UN Climate Conference in Paris, known as COP21, 196 countries joined together in the Paris Agreement, a universal pact that sets the world on a course to a zero-carbon, resilient, prosperous and fair future. While the Agreement is not enough by itself to solve the problem, it places us clearly on the path to a truly global solution.

The Agreement marks a new type of international cooperation where developed and developing countries are united in a common framework, and all are involved, engaged contributors. It reflects the growing recognition that climate action offers tremendous opportunities and benefits, and that climate impacts can be tackled effectively, with the unity of purpose that has brought us to this moment.

What is the Ambition Mechanism?

However, to fully understand why the Paris Agreement is such an achievement, we must unpack one of its core ingredients, what has become known as the ambition mechanism or cycles of action. This mechanism lays out a process to continue strengthening action in a regular and timely way every five years, starting before 2020. The Ambition Mechanism refers to an ongoing process to increase action by all countries and can be broken down into three main components:

Global Stocktake of implementation and collective progress every five years
Submission of updated nationally determined contributions (NDCs) from each country every five years informed by the Global Stocktake
Expectation of progression and highest possible ambition for each successive contribution.

What will happen after 2020?

After the 2018 assessment, the next moment for all countries to come back and assess implementation and collective progress will be in 2023, referred to in the Paris Agreement as the “Global Stocktake.” This Global Stocktake will then occur every five years and serve as the pivotal collective moment to assess implementation and progress towards achieving long-term Paris Agreement goals.

The Global Stocktake has broad scope and purpose—assessing mitigation action as well as adaptation, means of implementation (including finance, technology transfer and development, and capacity building), and other support. Assessments will be based on equity and informed by the best available science, including the latest Intergovernmental Panel on Climate Change reports. All Parties will be required to prepare and communicate new NDCs for mitigation, informed by the Global Stocktake outcomes.

The world has now embarked on a historic transformation. The regular and ongoing process to review and increase ambition across all elements of the Paris Agreement is what will ensure this is a historic, dynamic and durable outcome capable of driving the needed level of climate action.

The outcome of the U.S. presidential election seems to be the latest step in a longstanding global trend of increasing political and environmental uncertainty. As far as Sustainability is concerned, President Trump’s regulatory freeze that halted four rules designed to promote greater energy efficiency, appears to be just the first salvo in an ongoing plan to roll back environmental protections and slash environmental budgets.

As the economy becomes more sustainable and energy efficient, a new market for clean energy and sustainability jobs is created. This market is large, growing and intrinsically local. Even better, these jobs span across economic sectors, including renewable energy, energy efficiency and other green goods and services, like local and state government, transportation and corporations.

Key trends as sustainability jobs continue to grow

As sustainability jobs continue to grow across the US, there are several key trends that need to be taken into consideration. First of all, sustainability jobs represent a large and growing portion of the U.S. workforce across multiple sectors. Sustainability now collectively represents an estimated 4-4.5 million jobs in the U.S., spanning energy efficiency and renewable energy, to waste reduction and environmental education. Moreover, due to the on-site nature of many renewable and energy efficiency jobs, these jobs cannot be outsourced, and can pay above average wages. Lastly, it is a fact that clean energy and sustainability jobs are present in every state in America, providing 2.2 million jobs across the nation.

How can we continue this momentum?

Investments in clean energy and sustainability pay off in the long run and foster a stronger economy – that equals more jobs and a cleaner future. This is why businesses are increasing their investments in sustainability. All in all, Corporate America understands that prosperity and a low-carbon economy go hand-in-hand, and should continue to support investment in this area. America is transitioning to a clean energy future and we can’t afford to stand in its way!

by Michael Hines

Minimizing a company’s impact to society has long been considered to be at odds with maximizing stakeholder returns. Better informed customers, as well as liability averse investors are now requiring companies to do better. Companies are responding, and a bottom line benefit is emerging.

In the last 50 years sustainability has primarily been seen in Socially Responsible Investing (SRI), which avoids investment in companies with unethical or risky practices. While a positive development for society, this exclusionary practice has generally been associated with at best average investor returns.

Today corporate sustainability has evolved to where it is possible, even advantageous, to operate in a manner that is a win win for an organization, its partners and society. There is strong evidence that companies with their “Triple Bottom Line” – Environmental, Social and Governance (ESG) – ducks in a row are rewarded with a lower cost of capital and frequently outperform. These “best in class” companies are not only reducing their impact on others, but cutting waste and mitigating liabilities in their operations.

While a new concept for many, ESG is coming on strong. After nearly zero a decade ago, ESG related assets under management at the end of 2015 were over $21 trillion. Morningstar now has ESG sustainability ratings for funds. It’s both carrot and stick – recent financial crises have convinced regulators and investors that more information is needed from companies. And companies have recognized that being a good citizen is a point of positive product differentiation.

Much of the impact of ESG falls on the CFO’s desk. For the Social component – the S in ESG, companies that treat employees and suppliers fairly reap rewards of increased productivity plus less turnover and litigation.

Recent data breaches at companies like Target and Home Depot have shown that companies need to manage supply chain vulnerabilities that can threaten their sustainability. Companies like ThirdPartyTrust have emerged to address the issue as companies scramble to identify and manage this risk. For suppliers, demonstrating data security has become a necessary requirement to win contracts as well as a potential competitive advantage.

Strong corporate governance (the G in ESG) creates transparency and stability, encouraging investment.

Most early adopters are large multinationals, particular those in Europe with regulatory requirements from public exchanges. Companies such as Mitsubishi, Apple, and Cummins are providing ESG disclosure in an annual report like format. Goldman Sachs is a solid example of ESG reporting.

Standards for ESG measurement and reporting are evolving. Unlike standard GAAP financial principles with a well defined one way dissemination of information, ESG measurement is still both an art and a science. Communicating this sometimes hard to measure information is ideally a two way conversation with stakeholders. Just as GAAP represents a standardization of best practices over time, initiatives such as GRI and SASB aim for the same consistency and eventual auditability.

Driving change at an organization begins with measurement and communication of the relevant drivers. Sustainability Academy’s Certificate in ESG Performance for Investors and Sustainability Professionals provides useful knowledge about ESG reporting and the opportunities and challenges of this changing field.

What gets measured, gets managed. Markets and companies becoming more transparent will benefit both the environment and the economy.

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Michael Hines is an executive, consultant and entrepreneur. He is experienced in financial management, operational improvement, sustainability, and strategy. His work includes large and small companies, restructurings, startups and acquisitions.

EU Objectives for 2030

Brexit has made many headlines, both before and after the outcome of the referendum on 23 June 2016. Although there is still a lot of uncertainty with regard to the consequences and exit arrangements, we can already look at the potential impact of environmental, social and governance commitments made by the UK.

In addition to the 2020 objective, the EU has defined its objective for 2030. It boils down to a 40% reduction of greenhouse gasses, a 27% improvement in energy efficiency and a 27% share of renewable energy in the primary energy supply. This objective has been defined including the United Kingdom and revolves around two main axes: the reduction of greenhouse gasses and the share of renewable energy in the energy supply. Indisputably, the United Kingdom’s exit from the EU impacts the commitment made for 2030.

..What about the EU then?

Since the UK is no longer part of the aggregated EU statistics, the EU will be obliged either to lower its commitment or to ask the remaining members to put in more efforts by means of compensation. More specifically, according to HSBC calculations, in order to obtain a 40% reduction of greenhouse gasses, Member States should contribute an additional 7.6% reduction. It may seem relatively easy since it will be divided among 27 states. However, as some large emitters are resisting, it is no easy task.

One other important element to consider is that the UK exit would lead to a redistribution of the voting rights in the European Parliament. Therefore, the climate-skeptic countries would rise. This compromises the commitment to work harder and make more investments in renewable energy.

The UK Environmental Commitments

As far as the UK is concerned, it is quite possible that, even without the EU, the United Kingdom may show a strong commitment to climate change. We should indeed stress that in 2008 the country adopted the Climate Change Act, which remains valid up to now and aims to reduce greenhouse gas emissions by 80% by 2050. Moreover, the UK has achieved impressive results when it comes to the reduction of greenhouse gas emissions and improving energy efficiency. Particularly, between 1990 and 2014, the country’s energy consumption fell by 10% while its GDP increased by 65%.

All in all, despite the fact that the climate is not a priority in the discussions about the exit arrangements, climate change remains a challenge today and requires a global, ambitious and swift response.

The biggest cosmetics brand in the world is on a mission to prove that all businesses can become sustainable without compromising their profitability.

The L’Oréal Group is the largest and most profitable company in the cosmetics industry, currently valued at $13.69 billion. Nonetheless, between 2005 and 2016 the company was able to reduce its greenhouse gas emissions by an impressive 67% while at the same time it managed to increase its entire production by 29%. This is an amazing accomplishment that demonstrates a true devotion to sustainability. As Alexandra Palt, L’Oréal’s chief sustainability officer recently mentioned to FastCompany magazine “We are really serious about sustainability across all of our products and services”.

Sustainability Can Go Hand-In-Hand With Economic Success

Achieving sustainability in the cosmetics industry is nowhere near as simple as swapping out petroleum-based products for plant-derived alternatives, since the entire industry supply chain from the sourcing of material to the packaging of products can leave a huge environmental footprint. However, L’Oreal’s CSO was able to focus on each stage of product development and achieve an effective sustainability overhaul. Mrs Palt was able to do that through the following steps: Sourcing from renewable raw materials like plants; tightening transit routes and switching to electric vehicles to reduce transport-related emissions; converting manufacturing facilities to run on renewable energy; reducing the amount of water wasted in the production process by installing on-site treatment mechanisms; re-engineering packaging to use less plastic, or biodegradable materials when possible.

The Importance Of Employee Training Programs

Under the leadership of the L’Oreal CSO, the company was able to tackle this daunting task mainly through comprehensive employee training programs (like the sustainability training programs offered by CSE) on various areas of sustainability (CSR). This is extremely important in order to create a strong sustainability department that can guarantee positive results. When the CEO has such a strong vision for how a company can transform, you have to have a way to transform that strategy into action,” Palt says. So, the CSO’s department has been able to accelerate its plans to increase sustainability by linking all L’Oréal brand and country managers’ bonuses to outcomes on environmental targets.

As the largest cosmetics company in the world, L’Oréal is an obvious benchmark in the industry. However, Palt doesn’t want the company’s sustainability efforts to be seen as attempts to teach other businesses a lesson. Instead, these efforts are driven by a sincere desire to effect real change and ensure that future generations will be able to enjoy the same benefits as we do.

Recently we celebrated International Women’s Day, a global celebration which aims to inspire women in countries across the world. The tradition began with the first National Women’s Day, on the 8^th of March in 1909 and its roots are in campaigning for better pay and voting rights.

Nonetheless, reports show that while more and more companies file CSR reports every year, the lack of transparency into workplace gender equality still remains troubling. Nowdays, women outperform men academically and increasingly enter the workforce, but they still do not reach leadership , even though they are qualified to do so. Many governments have stepped in to regulate the matter. For example Norway requires 40% of directors be female while in the U.S., public companies must disclose whether and how their nomination committees considers diversity in selecting directors.

Gender Equality Leads to More Productivity

Closing the gender gap in management and governance positions actually correlates to stronger productivity on both corporate and national levels. However, despite the mounting data proving the benefits of ”a woman’s touch” in corporate governance, almost 85% of Fortune 500 company board positions still belong to men.

Gender Equality in CSR Reporting

CSR reporting recognizes companies with initiatives and efforts that go beyond legal requirements. Including gender in CSR reports allows tracking of gender equality progress by company, industry and nation. The Global Reporting Institute provides guidelines for companies to start tracking and reporting their gender-related initiatives.

The time has come to go further than merely recognizing the value women provide in corporate governance. It is time to take down the glass ceiling, close the gender gap and realize the benefits of gender equality to the private and public sectors.

According to World Health Organization, more than 150 world leaders gathered at United Nations Headquarters in New York to adopt an ambitious new sustainable development agenda at a 3-day summit that commenced Friday 25 September. Agreed by the 193 Member States of the UN, the new agenda “Transforming Our World: 2030 Agenda for Sustainable Development”, consists of a Declaration, 17 Sustainable Development Goals and 169 targets.

Sustainable Development Goals (SDGs)

The Sustainable Development Goals (SDGs) were adopted with a view to end poverty, protect the planet, and ensure prosperity for all. They follow on from the Millennium Development Goals, and articulate an agenda for the next 15 years (to 2030) which requires input from all sectors of society across the globe, including corporate actors who are key in the achievement of the targets.

As mentioned in The Guardian, some companies have already begun integrating the SDGs into their business model – and using them to find ways to expand their offerings. Pearson’s efforts with Syrian refugee children, for example, directly link the SDGs to the publisher’s research and development program. In addition to fulfilling SDG 4, which exhorts companies to ensure “inclusive and quality education for all”, Pearson’s efforts also link to SDG 16, which calls for the promotion of peace, justice and strong institutions.

Kerry Adler, CEO of SkyPower Global, suggests another way that the SDGs could be integrated into a company’s business model. SkyPower previously committed to build one gigawatt of solar electricity in Kenya over the next four years. As part of the SDGs, it committed to double that. The company is also getting involved in Kenya’s infrastructure development. As part of its SDG commitment, it agreed to donate 3,600 solar powered LED streetlights for a 3,000km highway that the Kenyan government is planning.

Other companies are doing SDG work in areas that are less directly related to their core business. For example, Tammy Medard, CEO of ANZ Bank (Lao) has decided to focus on SDG 5: gender equality. At the UN event, she pledged that, by 2017, 40% of her bank’s vendor panel will be women-run businesses.

Research by KPMG forecasts that 41% of businesses will embed SDGs into strategy and the way they do business, within five years.

Historically, sustainability practices were not a core component of business strategy. However, increasing customer and societal demands for economic, environmental and social responsibility have brought sustainability issues to the surface. In the present day scenario, an increasing number of organizations identify sustainability as a key differentiator for competitive advantage.

As globalization, shifting demographics and competition for the world’s depleting resources compel transformational change, companies will need enlightened and sustainability-savvy leadership to thrive in this brave new world. HR has a significant role to play to align talent with these emerging realities. In order to succeed in this new global context, current and future leaders will need a host of new skills and competencies — and organizational incentives will need to align with strategic sustainability priorities. HR professionals can influence and enable this strategic shift.

There are many resources to help HR managers become proficient in embedding CSR into the employee lifecycle and experience. If done correctly, HR can support an organization to become future-fit, helping to embed social and environmental factors into:

corporate purpose, vision, mission, values and strategy

employee code of conduct
workforce planning and recruitment
orientation, training and competency development
compensation and performance management
change management and corporate culture
employee involvement and engagement
employee communications
celebrating success

HR managers will also need to play a lead role advising on sustainable pay metrics and bonus-able goals. Organizations have a long way to go getting the right incentives in place. While many companies include social and environmental factors in executive compensation plans, most are compliance-focused and backwards looking and few have actual targets.

A value-added HR professional will support the organization to anticipate and manage these profound labor market and societal shifts to foster business and social success. HR managers must find ways to bring CSR and sustainability into scope when sourcing and optimizing talent. This helps achieve organizational outcomes to realize CSR’s power as a top driver of employee engagement and retention.

By Rosalinda Sanquiche

How long can we make this list?

Improve efficiencies
Increase productivity
Build public appeal
Increase shareholder value
Aid in employee recruitment
Increase employee satisfaction and retention
Promote team building
Improve quality of work
Innovate
Lower business risk
Save labor
Save money
Increase competitive edge
Save time and cost on supervision
Create a marketing advantage
Give back to the community

Want to take a huge step toward sustainability? Improve your workforce? Strengthen a community? Ensure sustainable profits?

Sustainability training such as the foundation course offered by the Sustainability Academy offers these benefits and more. Training is of special interest to professionals who want to improve their skills and update their knowledge in Corporate Social Responsibility with practical information on the business case for sustainability; the importance of stakeholder engagement; the use of standards and guidelines to design and

implement successful sustainability strategies organization-wide. Without training, sustainability is more a vision than a goal. Sustainability is not a vague term – it is a tangible process which can be taught and implemented to improve corporations and communities.

The ROI on training is indisputable:

Increased public appeal helps increase market share. A Nielsen survey in 2015 found that 72% of Millennials “are willing to pay more for products and services that come from companies who are committed to positive social and environmental impact.”

More customers lead to greater shareholder value. The American Society for Training and Development found that an increase of $680 in a company’s training expenditures per employee generates nearly a 6 percent improvement in shareholder return. Researchers found that firms investing the most in training and development yielded a return 45 percent higher than the market average when compared to the S&P 500 for the same period, along with higher profit margins and higher income per employee.

Increasing efficiencies is a profitable and “low-hanging” fruit. After training, an HSBC “Climate Champion” noticed that computers left on overnight were a huge energy drain. The company implemented software to automatically shut down computers along with an awareness program which together saved 4 million kilowatts per year of electricity and about 900 metric tons of carbon dioxide, which shaved $332,000 on energy bills.

Increasing productivity through better morale, professional development and team building makes for more satisfied employees. Research has found that a 2-percent increase in productivity can net a 100 percent return on investment in training (CompTIA and Prometric). For every dollar spent on training, Motorola found nearly a 30 percent gain in productivity over three years. Motorola training also reduced costs by over $3 billion and increased profits by 47 percent.

Training also leads to better retention as Louis Harris and Associates found, showing that 41% of employees without training opportunities plan to leave in one year versus only 12% of those who felt they had excellent training opportunities. An AON survey found that employees rank “opportunities for personal growth” ahead of salary!

According to Krista Badiane at the National Environmental Education Foundation, a program of the EPA, “There seems to be a huge growth of interest among companies to not just keep the environmental initiatives within a subset of employees, but to make it a pervasive part of the corporate culture.” Companies are looking for ways to bring this training in-house to their employees and out into the community as part of their social commitment and philanthropy.

The Sustainability Academy offers an online option that is affordable and efficient. Many companies want to educate local communities beyond their staff. With the Sustainability Academy, companies can co-brand the trainings to meet organizational needs, increasing public appeal and improving lives for the long-term. They can tailor the offering specific to their needs, for example, providing education on sustainability in Supply Chains to key suppliers. The ROI from sustainability education provided by the Sustainability Academy is tangible. After the certified foundation course, participants receive a diploma as a sustainability practitioner which enhances their professional development.

Whether as a philanthropic effort or company enhancement, there needs to be a critical mass of those who understand sustainability and all its components. Only then can we all benefit from increased productivity, increased morale and improving our carbon footprint. The Sustainability Academy has set the ambitious goal of generating this critical mass by training 100,000 sustainability practitioners by 2020!

Sponsor a Sustainability Academy cohort and let’s join forces for our common good!!

Contact:

Sustainability Academy

www.sustainability-academy.org

sustainability@cse-net.org

Assessing the environmental impact on mining companies in Canada

Mining impacts the environment in unnatural ways, which not only disrupts its natural decaying process, but also does more damage long-term than natural erosion processes.

Since 1990, mining companies had to comply with increasingly stringent domestic regulations and may adopt voluntary practices that exceed regulations. In the past two decades developing countries have become more aware of environmental issues, and have taken steps to regulate and to protect their environment. Many voluntary measures have also been implemented by mining companies to achieve and maintain their social license to operate.

For instance, Canadian mining companies in the Mining Association of Canada are required to participate in the Towards Sustainable Mining (TSM). Towards Sustainable Mining (TSM) is an initiative that helps mining companies evaluate and manage their environmental and social responsibilities. It is a set of tools and indicators to drive performance and ensure that key mining risks are managed responsibly at participating mining and metallurgical facilities.

Established in 2004 by the Mining Association of Canada (MAC), TSM’s main objective is to enable mining companies to meet society’s needs for minerals, metals and energy products in the most socially, economically and environmentally responsible way.

At its core, TSM is:

Accountability: Participation in TSM is mandatory for all MAC members, and the Mining Association of British Columbia and the Québec Mining Association are currently implementing TSM for their members.

Transparency: Mining companies publicly report their facilities’ performance against 23 indicators in the annual TSM Progress Report. Results are externally verified every three years.

Credibility: TSM is overseen by an independent Community of Interest (COI) Advisory Panel. This multi-stakeholder group helps mining companies and communities of interest foster dialogue, improve the industry’s performance and shape the TSM initiative for continual advancement.

The TSM includes guiding principles and standards for tailings management, greenhouse gas and energy management, aboriginal and community outreach, crisis management, water and mining, biodiversity conservation, and mine closure.

Companies must report on TSM progress each year and these reports are subject to external verification. Canadian mining companies are also involved in environmental initiatives such as the Mine Environment Neutral Drain (MEND) program and the National Orphaned and Abandoned Mines Initiative (NOAMI).

Furthermore, mining companies are also being asked to demonstrate to their stakeholders and financial institutions that they are managing environmental risks. Investors recognize that managing environmental risk is necessary for maintaining long-term market value, and frameworks such as TSM can help companies to identify and manage these risks.

While mining has historically affected its surrounding environment, advances in technology and changes in management techniques mean that many negative impacts are now avoidable. Increasingly, mining companies are making efforts to reduce the environmental impact of mining and minimize the footprint of their activities throughout the mining cycle. By systematically examining environmental impacts and adopting measures to mitigate these impacts, it is possible to make mining less destructive for the environment.