Across Canada, cyclists are enjoying new respect. Calgary city officials started closing major roads on weekends to give walkers and cyclists more room to roam. Vancouver banned cars from Stanley Park Drive, the picturesque road through the city’s famous park, and partially closed nearby Beach Avenue to make more room for humans. Toronto is fast-tracking plans for 40 kilometres of new lanes. Montreal announced plans to add 327 kilometres of bicycle paths and pedestrian lanes this summer. Abroad, France is creating 650 kilometres of cycleways and offering €50 per person for bike repairs.

The bicycle’s shining moment may have been in April, when both Toronto and the province of Quebec named bike shops “essential services,” enabling them to stay open during the lockdown.

Vélo Québec, a non-profit that promotes cycling, made a strong case for the exemption. “It’s a way of travelling where you can keep physical distance from each other,” said VQ president Suzanne Lareau. “The number-one reason people don’t ride bikes in the city is because they’re afraid of the cars, but from one day to the next, that problem disappeared. So it’s important to remember that biking is a great form of transport, even in a pandemic.”

Even bike mechanics have become heroes, braving infection risks as they handle other people’s bike parts. “We’re on the front lines because everyone wants their bike [repaired],” one store owner told the Montreal Gazette. “We’re trying to be extra careful, but it’s scary.”

The same bike boom is happening around the world. The number of bicycles crossing New York City’s East River bridges doubled following the COVID shutdown. Bogotá, Colombia, added 76 kilometres of bike lanes to provide additional cycling capacity. Berlin has already widened some roads to make room for cyclists. According to The Guardian, 133 other German cities submitted applications for more “pop-up” bike lanes.

Celebrity urbanist Richard Florida is urging cities to expand bike lanes and encourage bike- and scooter-sharing programs – not just during the lockdown, but for the long haul.

The Netherlands’ reserved bicycle “highways,” and their inner-city bicycle corridors that can be opened to vehicles at the press of a button in case of emergency, demonstrate that North American cities have a long way to go to catch up to Europe’s pedal-powered infrastructure.

For individuals, cycling “means cheaper travel and better health,” says Chris Heaton-Harris, the U.K.’s transport minister. “For business, it means increased productivity and increased footfall in shops. And for society as a whole it means lower congestion, better air quality and vibrant, attractive places and communities.”

A version of this story appeared in the Summer Issue of Corporate Knights.

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“I have instructed the Secretary of Energy,” Trump continued, “to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future.”

At the same time, others were wondering if fossil fuels even have a future. The price of Brent crude had fallen to US$20 a barrel, an 18-year low. Oil-futures prices in Texas, where producers were running out of room to store inventory, dipped into the negative – meaning some producers were paying US$40 a barrel just to get rid of the stuff. With Russia and Saudi Arabia flooding the world oil market while COVID-19 stopped most traffic, industry analysts speculated that an inflection point had been reached.

In a story headlined “Oil Companies Are Collapsing, but Wind and Solar Energy Keep Growing,” The New York Times said renewable energy sources would generate a record 20.7% of electricity in the U.S. this year, up from 18% last year. “While work on some solar and wind projects has been delayed by the [virus] outbreak, industry executives and analysts expect the renewable business to continue growing in 2020 and next year even as oil, gas and coal companies struggle financially or seek bankruptcy protection.”

Though oil prices have rebounded somewhat from their record lows (Brent was back above $40 a barrel this summer), the International Energy Agency recently said 2020 would see the lowest oil demand in 25 years: “Even assuming that travel restrictions are eased in the second half of the year, we expect that global oil demand in 2020 will fall by 9.3 million barrels a day versus 2019, erasing almost a decade of growth.”

The pain came home to roost when oil giant Exxon last week announced a second-quarter loss of US$1.1 billion, with gross revenues of $32.6 billion underperforming analyst forecasts by a hefty $5.5 billion. Exxon shares have fallen 38% so far this year – and oil prices could tumble again.

Recently, the Telegraph noted that “there is mounting evidence that a second wave of COVID-19 could send prices spinning into a nosedive once more.” Earlier this week Stephen Innes, Chief Global Markets Strategist at AxiCorp said, “Most oil market participants expect more downward pressure on oil … with COVID-19 ravaging the landscape and OPEC+ adding more barrels into play.”

Meanwhile, the Times reported that U.S. solar capacity – spurred on by falling prices for solar panels – grew 23% in 2019. “We blew through all of the projections,” said Caton Fenz, CEO of ConnectGen, a Houston-based developer of wind and solar power. “We’re surfing a long-term wave.”

While the COVID crisis stalled most corporate initiatives, including Big Oil’s recent commitment to big renewables, the global shift remains underway. Just last week, BP announced it’s slashing its oil and gas production by 40% and increasing its low-carbon investments tenfold by 2030 (to $5 billion per year), as part of its 2050 net-zero targets.

At Corporate Knights’ Building Back Better roundtable on energy innovation in late May, federal Natural Resources Minister Seamus O’Regan declared that embracing green energy is not a retreat, but an advance.

“Net-zero is not just a plan for our environment. It is a plan for our economic competitiveness. And increasingly, this is where markets are going,” O’Regan said.

Noting that Sweden and Norway’s sovereign funds and institutional investors such as BlackRock are shifting away from fossil fuels, he added, “Ultimately, you follow the money. And the money is increasingly steering us toward net-zero solutions.”

A version of this story appeared in the Summer Issue of Corporate Knights.

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That’s the prediction from PitchBook, a Morningstar company that serves the private-equity (PE) industry. In a recent report, COVID-19’s Influence on the European PE Market, two PitchBook analysts said private investors have now entered “defensive mode,” with a specific emphasis on risk identification and resilience.

This framework, the analysts said, should particularly benefit investments related to the UN’s environmental, social and governance (ESG) goals. Once professional investors begin to scrutinize market, financial and geopolitical risks, they can hardly ignore the threats of climate crisis and inequality.

“Greater premiums will be placed on business stability and resilience as companies brace themselves for inevitable black swans” (the next existential disasters), says PitchBook. “We think investors will double down on ESG following this crisis, as society becomes more sensitive to companies ‘doing the wrong thing.’”

The study noted, of course, that the COVID crisis has created many challenges for private equity, including the solvency of its hardest-hit portfolio companies. Raising further capital will also probably be more difficult.

But in the meantime, the authors say, “the current market dislocation may present favourable buying opportunities.” Companies focusing on social change have often been considered outliers. Now, according to PitchBook, companies pursuing ESG-related objectives may be more resilient to future shocks.

This new perspective could mean a shot in the arm for companies involved in areas such as energy efficiency, green infrastructure, waste management, water solutions, biotech, health and wellness, and selling to underserved markets. According to PitchBook, European PE investors have a record US$259 billion to invest – even in these tough times. U.S. private equity invests about US$300 billion a year.
“ESG has gained a foothold that will not be set aside this time,” Hilary Wiek, PitchBook’s senior analyst, told Environmental-Finance.com.

“In fact, it can be argued that ESG and impact [investing] have a moment to shine right now.”

The post Post-pandemic focus on risk reduction means good news for ESG investing appeared first on Corporate Knights.

Some have passed the test with flying colours. The Business Roundtable itself formed a CEO COVID-19 Task Force dedicated to the crisis. One member, Salesforce, pledged not to lay off employees for 90 days, and Salesforce’s CEO spent $25 million on 50 million pieces of personal protective equipment for medical staff (with the help of Walmart, FedEx and others).

Many other CEOs have displayed an all-too-rare selflessness. Five senior executives at Comcast, the U.S. telecoms and media giant, including CEO Brian Roberts, said they would donate their entire salaries “for the duration of this situation” to charities supporting COVID-19 relief efforts. Twitter’s CEO, Jack Dorsey, pledged $1 billion (28% of his wealth) to fund global COVID relief efforts.

As of late April, only 6% of the 100 largest American companies had handed out pink slips to their workers, according to JUST Capital’s COVID-19 corporate-response tracker. Many have cut dividends, not only to bolster their cash flows and balance sheets, but also in response to pressure from social and governance activists.

Several companies in Canada and around the world have implemented raises for frontline employees, be they food processors, bank tellers or grocery and retail workers. The Business Council of Canada has been keeping a tally of Canadian members that are stepping up financial and community support or retooling to deliver critical supplies. GM Canada is manufacturing roughly one million masks per month at its Oshawa plant and delivering them at cost to the federal government. Bombardier is delivering 18,000 ventilators and 40,000 visors.

European heavyweights have been rallying, too. Unilever, the consumer-goods giant, has not only donated US$155 million of soap, sanitizer, bleach and food, but also set aside US$775 million for early payments to small suppliers, and to extend credit to small retail customers. “Our strong cash flow and balance sheet mean that we can, and we should, give this support,” CEO Alan Jope said.

Zeroes

Sadly, plenty of bosses have unashamedly put their own interests first during the pandemic. Take Disney, which suspended pay for 100,000 workers at its theme parks but protected executive bonuses. Bob Iger, Disney’s chairman, earned US$47 million in 2019, or 900 times more than the median earnings of the company’s workers, the Financial Times calculated.

Similarly, the board of Denver-based shale oil producer Whiting Petroleum approved US$14.6 million in cash bonuses for top executives in late March, just days before it filed for bankruptcy protection. The CEO collected US$6.4 million, paid immediately.

Even where executives have made sacrifices, “I have a sense boards are doing the minimum necessary to shield themselves from reputational damage,” wrote Andrew Hill, the Financial Times’ management columnist. Examples abound of bosses taking 20% pay cuts, while junior staff have been laid off with nothing more to fall back on than government relief programs.

Some companies deserve a zero not so much for what they have done as how they did it. Bird, a Los Angeles–based start-up in the forefront of the scooter craze, invited staff working from home to log in to a Zoom session, whereupon an unnamed woman told them that more than 400 no longer had jobs. “Like everything we’re experiencing now, this is a suboptimal way to deliver this message,” the bearer of the bad news confessed. She allowed no questions.

Aramark, a big food and uniform services provider and a signatory of last year’s Business Roundtable pledge, is one of numerous companies that have laid off contract workers with no severance pay or rehiring timeline. Marriott, another Business Roundtable member, has told tens of thousands of hotel workers to take unpaid leave.

On another front, it’s hard to feel much sympathy for corporate leaders who have spent their lives telling government to get off their backs, only to pull out the begging bowl when the going gets tough.

Exhibit number one in the COVID-19 era is Sir Richard Branson, founder of the sprawling Virgin empire. Branson has paid no tax in his native U.K. since he moved his principal residence 14 years ago to the British Virgin Islands, where he owns a private island. Yet he has been quick to ask the British government for hundreds of millions of pounds to bail out Virgin Atlantic Airways. Virgin Australia asked a similar favour, but the government turned it down, forcing the airline into bankruptcy in late April. Alas, Virgin’s employees are set to suffer far more hardship than their boss.

The post Heroes and zeros: Covid edition appeared first on Corporate Knights.

Swiss billionaire, conservationist and pharmaceutical company scion André Hoffmann and his wife, Rosalie, chose to give to INSEAD, a graduate school based in France with locations on four continents, not for a new building or program but for an idea: to reimagine business as a force for good, not just profit.

While the future of post-pandemic giving is uncertain, philanthropic support for business schools to incorporate sustainability is a budding phenomenon.

Since 2003, the California-based Skoll Foundation has pledged US$16 million to Oxford University’s Saïd Business School, which has attracted other donors for teaching and research linked to the United Nations’ Sustainable Development Goals (SDGs) for 2030.

In Canada, philanthropists Rob and Cheryl McEwen donated $8 million in 2019 to York University’s Schulich School of Business for an environmentally friendly building with a 27-metre-high solar chimney for passive natural ventilation. Last year, the University of Guelph received a $21 million donation for its now-named Gordon S. Lang School of Business and Economics to deepen its commitment to sustainability and corporate social responsibility. Over the past seven years, Goldcorp Inc. pledged $1.8 million to the University of Victoria’s Gustavson School of Business for its Centre for Social and Sustainable Innovation.

“Businesses are talking more about a broader sense of purpose and a stakeholder view of business, which would require them to think about sustainability more generally,” says Gustavson dean Saul Klein. He cites three factors driving the trend: consumer loyalty to businesses with aligned values, corporate interest in social values that resonate with top talent, and investor pressure on businesses to demonstrate long-run sustainability.

For Hoffmann, an INSEAD alumni, the sustainability-focused gift was rooted in his wish to modernize an outdated view that “business is business,” defined by profit.

The vice-chairman of Roche Holding, which includes the Hoffmann-La Roche pharmaceutical company founded by his great-grandfather, told Corporate Knights, “I felt there needed to be some sort of action to make sure that we come back to a more respectful type of society, in particular to measure the impact that companies are having on the planet.”

With the Hoffmann gift, the largest individual donation in INSEAD’s history, the school established the Hoffmann Global Institute for Business and Society to explore sustainability, broadly defined, including wealth inequality and the role of business in society, as reflected in the UN SDGs.

“What we are trying to do with the institute is to change the norm,” says Hoffmann.

The institute promotes cross-disciplinary innovation in teaching and research and collaborates with businesses and non-profit organizations to encourage progressive practices. “The vision we have is of business that integrates societal progress in their value chain,” says executive director Katell Le Goulven, with progress measured against the UN goals. The Hoffmann gift, she adds, enables the school to take its business and society agenda to “the next level of impact.”

“What we are trying to do with the institute is to change the norm.”

—André Hoffmann

In its catalyst role, the institute piloted a “Master Strategy Day” (now embedded in the core MBA curriculum) for students to apply classroom theory to the real world. Last year, students assisted healthcare clinics in South Africa to scale up services to underserved areas over the next 10 years, with the institute funding students to travel to work directly with the nurse-run clinics.

At Oxford’s Saïd, dean Peter Tufano says mutual interest fuels donor support for sustainability. “On our side, we are bringing intellectual resources, thought leadership and research, and we embed that into our curriculum and executive education,” he says. “On their side, they are seeing us as a channel for change.”

Last year, Tufano announced the Oxford Initiative on AIxSDGs, partly funded by Microsoft, Google and Facebook, to explore the role of artificial intelligence in advancing the UN sustainability goals.

Sometimes, the environmental profile of a building itself attracts top donors.

For example, Schulich’s new graduate study and research building (named for Rob and Cheryl McEwen) is a showcase for low-energy, advanced environmental design.

“Its simplicity is very striking,” says McEwen, the chairman of McEwen Mining who with his wife has donated more than $60 million to healthcare and education causes. “This could be a model for many buildings in the country where we have very large energy loads to survive the winter and sometimes in summer. This building does it easily without the infrastructure of other buildings.”

Finding the right match with a donor is critical, warns Julia Christensen Hughes, dean of Guelph’s business school when Stu Lang chose to honour his late father, Gordon. “We absolutely pledged to look for donors whose values aligned with our own,” she says of her school, which incorporated sustainability into its mission a decade ago. The Lang gift, for example, supports new research chairs and scholarships with sustainability themes.

Christensen Hughes sees potential for growing donor interest but also cautions, “We are still in the early days.”

Jennifer Lewington is an intrepid reporter and writes regularly on many topics, including business school news.

The post Sustainability-minded donors are becoming agents of change appeared first on Corporate Knights.

It’s a similar science that Bataille, an energy economist and economic modeller, has been using for more than 20 years to show the impact of rising greenhouse gas emissions on people and the planet.

While his and other climate models haven’t received near the widespread global attention as pandemic-tracking charts used to urge citizens to help “flatten the curve” of the virus, Bataille is hopeful that information will help people take this type of science more seriously.

“Suddenly modelling is relevant to them, numbers are relevant to them, and the credibility of the experts is relevant,” says Bataille, a Vancouver-based energy policy consultant and researcher at the Institute for Sustainable Development and International Relations, a non-profit research centre headquartered in Paris.

And while it’s an inexact science, Bataille says modelling can provide much-needed direction in times of uncertainty, especially when well communicated to the public.

“People know they need to do something different, so they are looking for direction,” says Bataille, who is also an adjunct professor at Vancouver’s Simon Fraser University (SFU). “What I am seeing is that, if experts communicate what they know and don’t know and provide clear direction given this uncertainty, and are willing to correct themselves, people will listen.”

It’s not just wishful thinking for Bataille, a key figure in the movement to decarbonize heavy industry, in particular steel – a sector whose emissions, together with concrete, are responsible for 14.7% of global CO2 emissions.

Bataille’s work is slowly but steadily helping the steel sector build a path toward a net-zero carbon future.

Bataille, a 47-year-old married father of two young daughters, first became interested in modelling as an economics and political science student at the University of British Columbia in Vancouver. One of his UBC professors was renowned economist John Helliwell, whose letter of recommendation landed Bataille a spot in the master’s program in resource and environmental management at SFU.

Bataille worked and studied with Mark Jaccard, a professor with a specialty in developing energy-economy models that assess the effectiveness of sustainable energy and climate policies. Jaccard ran (and still runs) an energy material modelling group at SFU, which also houses the Canadian Energy and Emissions Data Centre.

Bataille says the team built models of the Canadian economy, showing the potential for reducing emissions. “It was a hotbed of energy and economy modelling, and still is,” he says. “A lot of the people who do this in Canada now all came from this group and this school.”

Bataille became the executive director of MK Jaccard & Associates, a spin-off of his work with the professor at SFU from 2006 to 2011, before co-founding Navius Research Inc., where he worked for four years before going out on his own, with a focus on modelling for heavy industry, in particular steel and cement.

Jaccard describes Bataille as “very talented as a modeller” and a “quick study” who has become “a high international roller” when it comes to energy modelling for policy analysis. “He’s a very good, hard-nosed critical thinker,” says Jaccard, adding that Bataille is also skilled at bridging the nexus between academia, government and non-governmental organizations.

Shahrzad Rahbar, president of the Ottawa-based Industrial Gas Users Association, tasked Bataille with four different projects in different roles she’s held over the past couple of decades. She describes him as an “honest researcher” with a “fiercely analytical” mind.

Rahbar hopes Bataille’s work will inspire industry and policy-makers in Canada to put a greater emphasis on decarbonization moving forward.

“I think Canada’s missed opportunity is an international leadership role in the industrial piece of the puzzle when it comes to carbon reduction,” she says.

“As Chris’s work gets more international recognition, I hope that there will be more of a Canadian appetite for looking at the industrial piece in the same manner [as they do internationally] and attempts to craft a viable transition plan.”

If Bataille could set Canada’s strategy for decarbonizing steel during this time of once-in-a-generation public investment, he would get the federal government (and high-carbon manufacturers) to commit to using greener steel and build supply through accelerated research and development, piloting, commercialization and guaranteed lead markets at higher prices for set amounts of greener steel. For a few billion dollars spread over a decade or so, he says, we could make hydrogen-reduced ore in northern Quebec and ship the reduced iron to electric-arc furnaces in Ontario, where it could be made into steel.

Bataille says it was the initial work with Rahbar that enabled him to go out on his own to pursue his “obsession” with industrial decarbonization. That led to his various research papers, talks, policy influence work and work with the Intergovernmental Panel on Climate Change (IPCC).

Some of his work includes being lead editor of a special issue of Climate Policy on the Deep Decarbonization Pathways Project (DDPP) in 2015/16 and a two-year project to review technology and policy options for net-zero emission decarbonization of heavy industry, including detailed physical and policy transition plans for the Canadian steel, chemicals, mining and forest products sectors. Bataille says the policy package written for the 2014/15 DDPP helped inform Alberta’s climate plan under then-Premier Rachel Notley, which helped them form the template of the federal climate plan.

He’s also a lead author for the industry chapter of the sixth cycle of the IPCC Assessment Report (2019 to 2021).

Bataille sees his mission as normalizing conversations about industrial decarbonization, making it part of forecasts such as the one announced in March by the Canadian Steel Producers Association to achieve net-zero emissions by 2050.

“The net-zero commitment from the federal government on down is a necessary beginning. It [requires] a huge jump in technology, and we aren’t going to incrementally bumble our way there,” he says.

It’s his ability to work on different sides of the debate, including industry and academics, that Bataille believes enables him to break through barriers.

“I’m a hybrid academic and corporate person,” he says. “On one hand, I get what it means to run a business, to have things go really well, then south when you’ve got people on payroll . . . Then, on a deep level, I’m a researcher. I’m a person always trying to look forward and explore the world ahead of us . . . [Having experience with both] allows me to realize what policies are likely to have traction and not have traction because of the stickiness of reality.”

Despite pilot projects like the Swedish HYBRIT (Hydrogen Breakthrough Ironmaking Technology), described as “the world’s first fossil-free steelmaking technology,” overall progress on decarbonization has been slow. Nonetheless, Bataille believes his work is helping drive change long-term.

“I would like to see HYBRIT’s hydrogen DRI iron ore reduction technology, or something like it, become the new standard for making steel in my lifetime.”

It’s that hope that inspires him to press on.

“People need a purpose in their lives, and for me it’s an endless font of purpose. It’s not going to be solved when I’m done working, but it’s work worth doing.”

Brenda Bouw is a freelance writer  and editor based in Vancouver.

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What’s different is that McCormick stayed long after the waters receded, expanding its efforts to support vanilla farmers in Madagascar, one of the world’s poorest countries. Besides rebuilding primary schools and funding vanilla processing centres in remote communities, it helped create a farmer-owned cooperative, giving farmers more control over their crops. McCormick also teamed up with WWF to make sure vanilla is sustainably farmed, restoring riverbanks and training farmers on water conservation. In addition, the company provides interest-free loans and healthcare insurance to vanilla growers, in concert with the German foreign aid agency and Biovanilla, a local supplier.

All this is good for farmers, who have to make a living in good times and bad, and for the environment that sustains them. It’s good for McCormick, too, helping to assure the company of a long-term supply of vanilla, one of the world’s most popular flavours.

“Improving farmer livelihoods is a major priority,” says Lawrence Kurzius, McCormick’s chairman, president and CEO, who has broadened and deepened the company’s commitment to social and environmental responsibility since becoming its top executive in 2016.

Based in Hunt Valley, Maryland, a suburb of Baltimore, McCormick employs 12,000 people, booked US$5.3 billion in sales last year and sourced agricultural products from more than 80 countries. While other food companies like Ben & Jerry’s and Clif Bar may be better known for their work on sustainability, McCormick’s efforts are serious and wide-ranging, Kurzius explains during an interview over lunch at McCormick headquarters. Prepared by a corporate chef, the menu includes vegetarian “scallops” and a pan-seared North African–spiced rockfish, all of it well seasoned, of course.

McCormick’s approach to sustainability, which the company calls “purpose-led performance,” is embedded throughout the business, Kurzius says, and shapes its dealings with farmers, workers and the planet. “It’s not a program or a project,” he says. “It is a principle that underlies everything that we do.”

Under Kurzius’s leadership, McCormick named Michael Okoroafor as its first full-time vice-president of sustainability, set the company’s first science-based greenhouse gas reduction targets, made a major commitment to renewable energy, and transformed a telephone-company office building into a US$170 million LEED Gold–certified corporate headquarters.

All of this has helped McCormick to land a spot on Corporate Knights’ Global 100 Sustainability Index in each of the last four years and to be ranked first in the food products category for the fourth year in a row, ahead of such better-known companies as Unilever and Campbell Soup.

McCormick shareholders have also done very well. In the last five years, the company’s share price has more than doubled, while the S&P 500 Index has grown by about 35%, as of May 5, 2020. McCormick’s brands include Frank’s RedHot, French’s, Lawry’s, Old Bay, Thai Kitchen, Club House and Zatarain’s, as well as McCormick herbs and spices. Sales to consumers bring in about 60% of revenues. The remainder comes from sales to food and drink companies and restaurants; PepsiCo is its biggest customer, the company says.

Okoroafor is the face of the firm’s sustainability program. The youngest of four children, he was raised in a village in Nigeria, where his mother was a subsistence farmer and his father was a railroad worker. “My mom would farm from morning until night,” he recalls. She encouraged him to work hard, and Okoroafor earned scholarships to a Catholic boarding school, to the University of Nigeria and, eventually, to Michigan State, where he earned a PhD in polymer chemistry. His wife, Ngozi Okoroafor, also holds a PhD in chemistry.

Before arriving at McCormick, Okoroafor worked at Bausch & Lomb, PPG Industries, Coca-Cola and Heinz, accumulating more than 40 patents and helping to develop such innovations as the Coca-Cola PlantBottle, a recyclable PET bottle made partially from plants. His initial focus at McCormick was packaging – the company is seeking to ensure that 100% of its plastic packaging can be reused, recycled or repurposed – but he eagerly accepted the opportunity to work with farmers as well, which reconnected him to his own childhood. “Making an impact is what drives me,” he says.

“We need an enduring supply chain. If we don’t have anything to sell, we don’t make money.”

—Michael Okoroafor

McCormick’s work with farmers focuses on what it calls its five iconic ingredients: vanilla, red pepper, black pepper, oregano and cinnamon. Vanilla is by far the most complex, both in its flavour profile and in the process of cultivating and processing vanilla pods, which come from vine-like plants that wrap themselves around small trees. It’s labour-intensive work that requires patience and good timing: new vanilla vines take several years to mature and have to be pollinated, by hand, during the early-morning hours on the first day that the delicate orchid flowers bloom. Once harvested, bean pods are soaked in hot water at night and dried during the day for as long as a month. “The curing of vanilla is a fusion of art and science,” says Okoroafor. Madagascar produces about 80% of the world’s crop, because climatic and soil conditions are right, labour is cheap, and growing vanilla has become part of the culture.

In the wake of the 2017 cyclone, which hit during a worldwide vanilla shortage, the crops became so valuable that theft was rampant. Farmers also faced exploitation by middlemen, known as collectors, who offered them high-interest loans during the so-called lean season and underpaid them for what they grew. “The net effect is that the farmer is impoverished and the collector is driving a Mercedes,” Okoroafor says. Middlemen also mixed different grades of vanilla or bought premature vanilla to increase their profits, thereby degrading quality.

The risks to McCormick were clear. “We need an enduring supply chain,” Okoroafor says. “If we don’t have anything to sell, we don’t make money.”

With matching funds from USAID, McCormick and the National Cooperative Business Association’s international arm, NCBA CLUSA, organized a co-op of vanilla farmers in the Sava region of Madagascar. Farmers run the co-op and sell a substantial portion of their crop to McCormick. “You’re getting the buyer coming directly to the farmer,” says Jonathan White, director of private sector partnerships at NCBA CLUSA. “When that happens, more opportunities can flow down to the farmer.” Farmers get a fair price, advice about growing and harvesting, and the opportunity to certify their product as organic or fair trade if they choose.

McCormick can count on a steady supply of high-quality vanilla.

Even so, it does not want to become dependent on Madagascar, so it has tried to develop alternative sources of vanilla in Indonesia and East Timor, again working with NCBA CLUSA. Farmers at a well-established cooperative in East Timor called CCT have thrived by growing coffee, which they have sold to Starbucks since the 1990s, but they have begun to grow vanilla and cloves as well, to diversify their sources of income.

Other notable sustainability efforts at McCormick include a partnership with CARE, studying women’s contributions to spice farming. McCormick commissioned the development non-profit to do village-level surveys designed to find ways to improve the status of women producing vanilla in Madagascar, black pepper in Vietnam, red pepper in India and oregano in Turkey. The ultimate goal, the company says, is to recognize the contributions of women and empower them in tangible ways. Rahul Chandran, managing director of CARE consulting, says, “These are really complex issues. They are trailblazing for their sector.”

Internally, the company is also well on its way to meeting goals for diversity and inclusion. Women hold 49% of middle management jobs and 40% of senior management jobs, the company says in its sustainability report. It aims to get those percentages up to 50% by 2025.

Meantime, its climate footprint is shrinking. McCormick has been buying small amounts of solar energy since 2006 but stepped up its commitment last year by making a deal with Constellation, an electricity provider, to purchase solar energy to power its corporate headquarters, four manufacturing plants and distribution centres in Maryland and New Jersey. The initiative will help McCormick achieve its goal of cutting absolute carbon emissions from its own facilities from 2017 levels by 20% by 2025.

Kurzius says all of these efforts are good for business in multiple ways. “Sustainability is increasingly important to investors,” he says, particularly long-term institutional investors such as pension funds and insurance companies.

Corporate customers such as PepsiCo and Walmart also reward the company for its environmental practices. As well, those practices help attract and engage staff. “The best employees want to work for the good guy,” he says.

For Kurzius, there are personal rewards, too. He has been interested in the environment since growing up in Huntsville, Alabama, where he was president of his high school ecology club. An early Tesla buyer, he notes that the parking lot outside company headquarters is equipped with electric-car charging stations.

“I’d like to think this will be one of my legacies,” he says.

Marc Gunther is a veteran journalist, speaker, and writer whose focus is business and sustainability.

The post How McCormick is making sustainability its secret spice appeared first on Corporate Knights.

To design new buildings that truly move the needle in terms of reducing heat loss (a chronic problem in Canada’s older buildings in particular), architects have developed exterior walls with as many as 13 layers of insulating material. While these measures drive down energy consumption, carbon emissions and utility bills, they also come with a problematic backstory. After all, most state-of-the-art insulating foams, wraps and panels are made from petrochemicals. “We don’t understand the chemistry of what’s in the walls,” Doran says.

“To wrap a building in fossil fuels is crazy,” he adds. “What the hell are we doing?”

The principal with MASS Design Group in Boston has spent the past many months reading the riot act to colleagues, structural engineers and constructors. He points out that the building industry’s embrace of measures meant to reduce a project’s operating emissions has almost completely overshadowed the other side of the coin – decreasing the “embodied carbon” in buildings (i.e., the carbon that goes into making materials like pipes and beams).

The best-known culprits are concrete, steel and aluminum, but materials like PVC pipes and most types of insulation are also implicated. “The sole focus on energy efficiency has blinded us all to the other unintended consequences,” says Doran, who is active in Architecture 2030, an international network of designers founded by Edward Mazria that advocates for ways to cut embodied carbon.

Buildings are responsible for 40% of global greenhouse gas (GHG) emissions, with concrete and steel accounting for almost 15% of CO2 emissions. But with governments pushing for significant GHG reductions in the next decade, the focus has begun to go beyond energy consumption and shift to the building materials themselves. What are the life-cycle carbon costs of excavating gravel and sand used to make cement and concrete, transporting manufactured components such as windows and drywall, or finally disposing of building debris at the other end of a structure’s usable life?

“This is a revolution that’s happening very quickly. If architects aren’t conversant, they’ll be left behind.”

— Kelly Alvarez Doran, senior principal, MASS Design Group

 

Broader concepts like “life cycle analysis” (LCA) have been around for years. And over the past decade or so, building material producers have had to come up with so-called environmental product declarations (EPDs) to comply with various ISO standards. In essence, EPDs are much like nutrition labels on food products, disclosing quantifiable environmental impacts for a given material on a per-unit basis.

Much more recently, though, various organizations, such as HomeFree and the Carbon Leadership Forum, have created online tools – “embodied carbon in construction calculators” (aka EC3) – that allow architects and construction firms to estimate the footprints of their projects by plugging in the type and quantity of materials they intend to use. “That’s a great starting point,” says Anthony Pak, a principal of Priopta, a Vancouver LCA consulting firm, and the founder of the Embodied Carbon Network’s Vancouver chapter. “There’s a lot of interest in EC3.”

These cloud-based calculators allow architects and structural engineers to make comparisons as they put together a building’s specs: mass timber versus concrete, or PVC pipes compared to copper. Pak notes that one of the founding partners behind the EC3 project, the Swedish development giant Skanska, showed in a recent project that it could cut embodied carbon by 30% simply by asking for lower embodied carbon products, such as lower-carbon concrete mixes. Doran also points to alternative insulating materials like wood fibre, straw bales and even wool, all of which sequester carbon instead of consuming it and are commercially available.

Building industry supply chains, which can extend from steel manufacturers in China to construction projects in downtown Vancouver, are also key, given the carbon required to ship building components like steel or rebar from as far afield as China or India. What’s needed, says Toronto architect Drew Sinclair, principal at SvN, is “a dramatic rethink of our material supply chains, reorienting towards local sources and local capabilities. [That] could have an immediate and dramatic impact on the embodied carbon within our local construction industry.”

The key element, adds Ted Kesik, a University of Toronto building sciences expert, is that architects and structural engineers should have the ability to measure and compare. “Until we do it, it’s very difficult to say, ‘How do we change things?’”

Yet the existence and simplicity of these data tools poses the old horse-to-water problem. As Kesik points out, influential players in the construction materials industry are dead set against the disclosure of their products’ footprints.

All of which raises the question of how regulation can figure in this story. It’s true that many governments, including municipalities, have set ambitious carbon reduction targets, but they tend to be more about operational emissions (i.e., from reduced heating, cooling and lighting). Even the more aggressive building codes focus on energy-efficiency-oriented design.

“To wrap a building in fossil fuels is crazy — What the hell are we doing?”

— Kelly Alvarez Doran

Pak points to the City of Vancouver as a jurisdiction that is leading the way in terms of using regulation to reduce embodied carbon. The municipality, in its climate emergency declaration, set a goal of 40% embodied carbon reduction by 2030 – a target far more ambitious than that of any other city in the world, Doran adds. (LEED certification doesn’t require embodied carbon reductions but provides optional credits for moves such as disclosing a project’s lifecycle carbon performance.) In 2017, Vancouver also mandated that developers seeking a rezoning must prepare and submit a life-cycle analysis early in the application process, meaning they are forced to undertake the analysis. Other jurisdictions, like Toronto, continue to focus their green-buildings policies on operational carbon.

Even with better regulation, Doran points out that some of the obstacles are cultural and professional, from the deeply ingrained habit of always constructing basements in new homes (he says those concrete tubs can account for as much as two-thirds of a building’s embodied carbon) to the routine choices made by a contractor’s procurement managers. Architecture faculties, he says, should be allocating as much effort to LCA as they are to energy efficiency.

Kesik, who has spent 30 years researching how to make better-performing buildings, says the growing acceptance of mass timber as an alternative to concrete and steel may well be the development that forces builders, regulators and architects to become more mindful about embodied carbon. “Disruptive technology,” he says, “will force change faster than regulatory reform.”

“Business-as-usual is far from sufficient to reach the 2030 targets,” Pak adds.

Doran, however, is hopeful that his profession is finally waking up to the embodied carbon imperative. “This is a revolution that’s happening very quickly. If architects aren’t conversant, they’ll be left behind.”

John Lorinc is a Toronto-based journalist and author specializing in urban issues, business and culture.

The post The blind spot of low-carbon buildings appeared first on Corporate Knights.

The gunshot that started the race to reach net-zero by 2050 was really a 2018 Intergovernmental Panel on Climate Change (IPCC) special report. The report sent a powerful message: 1.5 degrees Celsius is the maximum warming we can accept. The IPCC was clear that this target for a “safer” world (compared with even more warming) is within reach but requires global carbon (CO2) emissions to decline by 45% from 2010 levels by 2030 and hit net-zero by mid-century. When nations convened a year later for COP25, the annual UN climate conference, the target was cemented: 73 countries, 398 cities, 768 businesses and 16 investors announced that they were working to achieve this goal.

Canada is one nation on the growing list of countries that promised to achieve net-zero emissions by 2050. While the federal government is critical in setting the pace, we cannot get to net-zero without leadership from industry and corporations.

The “what” is fairly straightforward: we’ll get to net-zero when we achieve a global balance between emissions produced by humans and emissions taken out of the atmosphere. How we get there is, perhaps surprisingly, more important than the final destination. We need a flattening of the carbon curve, which will be particularly difficult for such carbon-heavy sectors as cement, steel, freight, aviation, chemical manufacturing, and oil and gas. Encouragingly, Canada’s Economic Strategy Table on clean energy indicates that by 2030, a $26 trillion low-carbon economy will create 65 million jobs worldwide.

As the corporate world plans for net-zero, a few principles should guide our collective thinking.

Delayed action on reaching net-zero increases our risk of carbon overshoot
and necessitates costlier action later.

The power of carbon budgets

Limiting global temperature rise to 1.5C isn’t possible without public policy and corporate strategy informed by a carbon budget. As with any other budget, it helps measure progress and lets you know exactly where you stand relative to your goal. That’s why the federal government’s commitment to set legally binding, sectoral milestones that fairly and equitably achieve net-zero by 2050 is absolutely essential.

The concept of shrinking carbon budgets should guide corporations across all sectors. Energy companies producing only fossil fuels face a particular challenge: how do you offer a cost-competitive, low-carbon product while demand decreases as industrialized economies strive to decarbonize? Governments, corporations and civil society together need to plan pathways to reach these targets in such a way that we all can innovate and diversify to ensure Canadians have steady, in-demand employment as we transition to this decarbonized economy.

Not every pathway to net-zero is equal. One approach might be to stick to “business-as-usual” without reducing emissions and instead rely on CO2 removal measures to get to net-zero by mid-century. A second, safer approach is more transformative. It sees a company immediately creating and implementing an emissions-reduction plan that achieves substantial and sustained greenhouse gas (GHG) decreases to reach net-zero earlier.

Both approaches hit net-zero in 2050, but if every company adopts the first approach, we will blow through our carbon budget and fail at limiting warming to 1.5C. Why? It’s all about steadily decreasing annual emissions between now and 2050 so cumulative emissions stay below the global carbon budget to maintain that safer world. Delayed action not only spends our limited budget earlier (increasing the risk of overshoot), but also necessitates more stringent and costlier actions later to rapidly make up the difference.

Prioritize early mitigation

Carbon emissions are still growing in Canada, according to the latest national inventory report. Those emissions need to peak as soon as possible and decline rapidly before they reach net-zero. For businesses, that means now is the time to seize opportunities to reduce emissions across their supply chains. That might mean embracing new products, services and business models.

A key indicator for success will be early and deep mitigation, an approach that tackles carbon in all areas of the supply chain, with strict timelines and public reporting.
High-end outdoor gear company Arc’teryx is one example of a Canadian company that recently pledged to go net-zero by 2050. It has publicly committed to reduce emissions associated with its headquarters, Canadian production facility, and retail stores by 65% by 2030 (compared to 2018), which includes curbing the footprint of its fabrics, products, factories, mills, shipping and distribution centres.

For fossil fuel companies, the route to decarbonization is far more challenging, given that the bulk of emissions come from the end use of the products they create. Shell is planning to reach net-zero on scope 1 and 2 emissions involved in the creation of its products. It’s also committed to a 65% reduction on scope 3 emissions (those GHGs associated with the use of their products, namely burning Shell products in cars or furnaces). To achieve all these reductions, Shell has announced it plans to diversify beyond oil and gas, with a fresh business model that includes selling low- or zero-carbon energy products, including hydrogen, low-carbon biofuels, solar and wind power.

Critically, Shell has set annual targets to reduce its net-carbon footprint, covering a three- or five-year period, and it has wisely linked executive pay to reaching these targets. It also plans to use carbon removal measures, including carbon capture and storage and nature-based solutions like reforestation.

Though it’s too early to know if these company approaches to reaching net-zero will deliver, as they try to manage the material risks of climate change these businesses are positioning themselves as leaders in a low-carbon economy.

Improved building design could reduce overall demand for cement by 34%.
—Energy Transitions Commission’s Mission Possible report

Use every tool at hand

Mitigation (efforts to reduce or prevent emissions) should be the first and most important step for all companies in tackling this global crisis. That means such measures as adopting low- and zero-emission vehicles to replace combustion-engine fleets, switching to zero- or low-carbon fuels like green or blue hydrogen for high-temperature processes, dramatically improving energy efficiency in buildings, exploring alternative delivery logistics, and committing to renewable energy use.

The IPCC pathways to a 1.5C world all use carbon removal measures to some extent (both natural and technological). Shifting toward a circular economy model will also be important. This means using materials more sustainably, by recycling, reusing and designing less resource-intensive products. Design also plays a role: improved building design, for one, could reduce overall demand for cement by 34%, according to the Energy Transitions Commission’s Mission Possible report.

Turn up the heat on climate policy

Net-zero is only as credible a target as the set of policies that will be introduced to get us there. Corporate leaders have a unique place at the table to inform the development of these policies and champion implementation that results in stable, good-paying jobs, strong communities and sustainable development that delivers on decarbonization and climate resilience. They’re already doing so through initiatives like the Catalyst Business Coalition, an alliance of dozens of Canadian companies ranging from a craft brewery to the Insurance Bureau of Canada, together calling for increased climate action. Among other things, the coalition calls on the federal government to prioritize stimulus funding for employment opportunities resilient to future economic shocks as the world limits warming to 1.5C.

On the transportation front, the Urban Delivery Solutions initiative – a national network of businesses including Canada Post and UPS – is asking government for policies to support low-carbon urban freight operations in Canada.

To safely achieve our goal of limiting warming to 1.5 degrees Celsius, Canada’s approach to carbon removal needs to move beyond business as usual. It’s time we embrace a transformative scenario. Working with companies to rebuild our economy and society to be carbon neutral by mid-century won’t be easy, but it is within reach.

Isabelle Turcotte is the federal policy director at the Pembina Institute and is based in Ottawa.

Related:

Report: Building Back Better with a Bold Green Recovery

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Two of Uncle David’s axioms replay in my head on a regular basis:

“It’s a losing battle, but then those are the only ones worth fighting.”

“Never underestimate the ability of powerful people to justify their actions.”

When we look at the past 50 years, from the Vietnam War to our upside-down tax system (where those who have the most often pay the least in terms of their effective rates), it’s hard to argue, on the whole, that he was wrong.

But it’s also fair to say we are no longer living in usual times. The COVID crisis is a reminder of the power of civilization to rapidly address existential challenges when we flex our collective muscle.

The pandemic pause has allowed room to reflect on the kind of society we want. Do we want to continue our zombie-like march toward torching the only home we have? Is it really inevitable that we must continue to prop up the mighty with tax giveaways and handouts while we undervalue the vulnerable people and planet that we need the most?

By 2030, Canada could create more than five million quality job-years of employment by greening the power grid, electrifying transport and upgrading our homes and workplaces to be more comfortable, flood resilient and cheaper to run, saving Canadians $39 billion per year at the pumps and on heating and power bills by 2030 (in today’s dollars). We could also help protect the livelihoods of many others, including by supporting farmers to adopt practices and technologies for restoring the soil while paying them fairly for the ecosystem services they provide, paying young people fairly to plant billions of trees, and supporting Indigenous communities as sustainable economy leaders.

By 2030, we could own large parts of the clean-economy podium. We have all the ingredients to create Canadian champions in fast-growing industries of the future, including lightweight bitumen-based carbon fibres, renewable jet fuels, green hydrogen, batteries and electric vehicles (see our green economy vision board on p. 34).

In the wake of the COVID crisis, this is all within reach if we choose to build back better by making these job-rich themes a priority in the federal government’s stimulus and recovery packages.

The people who control the budgets will ask, how can we afford it? An equally valid question is how can we afford not to do it?

A big part of the explanation is traceable to Uncle David’s two axioms. We cannot afford to listen to the voices that say we just need to get back to doing what we were doing.

There is no going back. Now is the time to move forward.

That, at least, is my hope, but what happens will not be up to me.

It will come down to the human condition and how it responds to the current crisis. Will we be guided by fear or hope?

On this question, I am reminded of Uncle David again. Two of his sons played roles in the 1963 movie Lord of the Flies, based on the dystopian William Golding novel that reveals the rot of fear that dominates the human condition.

Lord of the Flies was fiction. In real life, it was a different story. In 1965, six restless boys set sail from the South Pacific island of Tonga, were hit by a storm and ended up shipwrecked on a desert island for 15 months. When they were finally found, rather than the dystopian situation Golding envisioned, the boys were getting along just fine, having set up a commune with a food garden, gym, a badminton court, chicken pens and a permanent communally tended fire.

It will also take a community to overcome the forces of the status quo.

Some have been dismissive of the idea of a just green recovery.

But they may be missing the point. The just part of a green recovery is not an add-on, but an essential condition for creating the big-tent coalition required to dislodge the forces of inertia. As a practical matter, it’s hard to see how the current “shecession” (women are bearing the brunt of the recession) gets addressed without some radical improvements in supports for affordable childcare, greatly improved eldercare and a living wage.

The best chance we have for the forces of hope to prevail is by marrying the green and just fires that burn bright in all our bellies, from which hope springs eternal.

Toby Heaps is the editor-in-chief and co-founder of Corporate Knights. 

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