The effects of the temporary closure of a troubled Similac supply factory in Michigan in early 2022 continued to be felt late in the year, as the U.S. Food and Drug Administration (FDA) announced a plan to enhance its surveillance of infant formula for a harmful bacteria called Cronobacter.

Experts say the concentration of 90% of the U.S. baby formula market in the hands of just three companies – Abbott, Reckitt Benckiser and now Perrigo (which bought Nestlé’s formula division) – is a major weakness of the industry. But while dairy-based-formula manufacturers and consumers face ongoing supply chain challenges, a novel product is gaining momentum.

Much like lab-grown meat and dairy, cell-cultured human milk is produced in a laboratory without the use of the traditional source, in this case lactating humans. The process for reproducing human milk varies from company to company but generally involves culturing milk-producing mammary epithelial cells obtained from donated breast milk and tissue.

While a lab-grown chicken product was just deemed safe for human consumption by the FDA in late November, cell-cultured human milk has yet to receive regulatory approval anywhere in the world. Regardless, investors and researchers at half a dozen companies are hoping to disrupt the heavily monopolized dairy-based-formula market and say their innovative products have the potential to offer parents another supplementary option when breastfeeding isn’t possible or is not enough.

Michelle Egger, the co-founder and CEO of North Carolina–based Biomilq, says North America’s formula shortage raised a lot of questions about the industry. “It’s a great time, as a disrupter, to be a part of those conversations,” she says.

Biomilq is doing much more than conversing. In 2020, the female-led start-up raised US$3.5 million in series A funding from Bill Gates’s Breakthrough Energy, an investment firm focused on climate solutions. By October 2021, the company closed the funding round with US$21 million from Breakthrough and others, including Europe’s first all-female-led fund, Green Generation Fund.

Curbing the carbon footprint of formula market

Interest from sustainability-minded investors stems from the potential for lab-grown breast milk to “alleviate the climate impacts of bovine-based infant formula,” as Green Generation Fund puts it. Dairy production comes with a hefty environmental footprint. According to the UN Food and Agriculture Organization, milk production alone contributes 2.9% of all human-induced greenhouse gas emissions. One study that focused on the emissions of powdered formula specifically, published in the journal Breastfeeding Medicine, found that in 2016, sales of powdered baby formula were responsible for 70,256 tons of carbon dioxide equivalent (CO2e) in Canada, 435,820 tons in Mexico and 655,956 tons in the U.S. That equates to more than 1.16 million tons of CO2e, which is more than the amount emitted by cars and trucks driving through Manhattan in a year.

“There are so many households and families trying to reduce their carbon footprint and tackling it in any way they can, but there aren’t great options when breastfeeding isn’t working for you,” says Egger.

The company estimates that Biomilq could displace approximately 20 million megatons of CO2e annually by 2028 based on current technological capabilities and assumptions for market capture.

Ultimately, the degree of emissions displaced will depend largely on the efficiency of Biomilq’s commercial manufacturing process, which is still being developed.

Breast is best. Is lab-grown second best?

The sustainability factor of lab-grown breast milk is for Egger “the cherry on top” of a product that she maintains is also nutritionally superior to conventional formula. She notes that while dairy-based infant formulas can provide all the essential macronutrients that an infant needs, “studies show that conventional formulas fall short of providing the full constellation of components that make breast milk so extraordinary.”

Biomilq co-founder Leila Strickland, a cellular biologist who herself struggled with breastfeeding, told The Guardian that compared to dairy-based formula, Biomilq’s product more closely matches breast milk’s proportions of protein, fats and carbohydrates. However, the company doesn’t claim that its product will mimic all the advantages of breast milk, including certain hormones, healthy bacteria and antibodies. “That’s a part of breast milk we won’t be able to replicate,” she said.

For those families looking to soy-based formula as a means to cut their eco-impact, Egger notes that soy, along with dairy, is one of the most common childhood allergies. “Our product will not be soy- or dairy-based, cutting down on allergen exposure while providing another choice, more similar to breast milk, in order to meet infant nutritional needs.”

Global race for winning formula

Across the globe, Israel’s Wilk, a publicly traded company on the Tel Aviv Stock Exchange, is also banking on the sustainability of cell-cultured milk and is developing both human and animal-based products.

In operation since 2020, Wilk holds patents on laboratory production processes “that replicate the milk-producing cells of humans and other mammals to create 100% real milk and milk components in laboratory settings,” according to a statement.

In 2021, Wilk banked US$2 million from Coca-Cola Israel (operating as The Central Bottling Company) to develop lab-cultured milk products. This past November, the company announced that it had developed what it said was the “world’s first yogurt developed with cell-cultured milk fat from cows along with other plant-based components.” The technology will also help the company develop cell-cultured human milk fat for infant formula and replace the vegetable fats in baby formulas.

There are so many families trying to reduce their carbon footprint and tackling it in any way they can, but there aren’t great options when breastfeeding isn’t working for you.

-Michelle Egger, co-founder and CEO, Biomilq

In June, Wilk announced it had successfully produced the breast-milk protein lactoferrin in its lab. “This breakthrough brings us one step closer to our goal of providing all infants with the full range of nutritional benefits that can only be found in breast milk,” Wilk CEO Tomer Aizen said in a press release.

There are at least two other companies attempting to enter the lab-grown breast milk space, including New York–based Helaina, which has raised US$24.6 million in funding to date. Rather than working with donated milk and tissue, Helaina says that it’s programming yeast to ferment into breast milk proteins.

Due date up in the air

The question of when and if cell-based human milk will be available to consumers remains unclear. “We are positioned to be able to be successful and to move forward, but there is a lot out of our control,” Egger says. “We took an incredibly challenging technology basis and applied it to one of the hardest problems we face as human beings; it is unsurprising that it is not for the faint of heart.”

For now, Egger and her team are building consumer trust. “There is a lot of education, discussion and collaboration that has to happen … We know, frankly, that a novel production method for a product that is for infants and toddlers is challenging for a lot of people; our technology sounds a little bit like pigs flying.”

If all goes well, within three to five years, lab-grown breast milk could offer a new option for parents and caregivers looking to avoid dairy-based formulas, whether for environmental, animal welfare or allergy-related reasons. Breast milk will always be best, but for struggling mothers, lab-cultured breast milk might eventually become a close second.

The post Could lab-grown breast milk be the way to decarbonize baby formula? appeared first on Corporate Knights.

The company’s founder, Lo Kwee-seong, started off selling soy milk door-to-door as a low-cost source of protein at a time when the then-British colony was in the grip of food shortages and malnutrition. Today, Vitasoy is leading the charge to take the cow out of the milk business.

“The original intent of the company was to help make protein affordable,” current CEO Roberto Guidetti told Well magazine in May 2021. “Eighty years later, with the rise of climate consciousness, this story is extremely relevant.”

Guidetti, an Italian who previously headed Coca-Cola’s operations in China, has elevated sustainability goals into what he described to Forbes as “core corporate purpose work, as opposed to just adequate compliance to Hong Kong Stock Exchange guidelines.”

Vitasoy has extensive guidelines for suppliers, covering sustainable farming and fair labour practices, among others. One priority has been to cut the inputs that go into making Vitasoy products, reducing water usage by 22% between 2014 and 2021, fuel by 18% and electricity by 12%. Solar energy systems have been installed at Vitasoy plants in Hong Kong, Singapore and Foshan, China.

The company is also piloting the recycling of its Tetra Pak cartons, though Guidetti acknowledges that “there are some gaps to be addressed … as not every market has the full infrastructure for carton recycling and circularity.”

Vitasoy has been named best in class both on sustainable revenue and sustainable investments in the 2023 Corporate Knights Global 100. Annual revenues doubled to 7.52 billion Hong Kong dollars from 2011 to 2021. While China makes up more than four-fifths of its business, the company also has growing operations in Australia (Vitasoy is Australia’s top plant-based milk brand) and exports to several dozen other countries.

Much of Vitasoy’s growth is explained by shifting consumer preferences as plant-based items like tofu, soy and oat milk gain popularity outside Asia. But Guidetti is confident that his sustainability drive has sharpened Vitasoy’s competitive edge.

“We are not obsessed by short-term growth at the expense of long-term results,” he told Well. “We want to grow faster than the market growth rate, but [to] do so sustainably.”

Find out which company we named Zero of our 2023 winter issue.

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Firms such as Cargill, Conagra and Tyson Foods would all make worthy winners of a Zero award. However, we’ll opt this time for the largest of them all, Brazilian-owned JBS, which employs around 250,000 people in more than 20 countries. It’s hard to think of any business with a more eye-popping record of scandal.

JBS faces frequent accusations that it sources cattle and poultry from illegally deforested land in the Amazon and the Cerrado, a vast swathe of grasslands in the east and south of Brazil. In 2022, the company admitted it had bought almost 9,000 cattle from farms belonging to notorious businessman Chaules Volban Pozzebon, who prosecutors have described as “one of the biggest deforesters in Brazil” and who is serving a prison sentence for conspiracy, extortion and illegal logging.

The company claimed it was the victim of a cattle laundering fraud and said it has since fired several of the executives responsible for this purchase, but the episode was just the latest in a string of reports linking the company to deforestation. A 2022 investigation by Repórter Brasil, a human-rights group, and Ecostorm, a U.K.-based investigative agency, concluded that JBS chickens fed with corn and soybeans grown on deforested land have ended up in British supermarkets.

And the shenanigans don’t end there. In September 2022, JBS agreed to pay US$20 million to settle a U.S. lawsuit alleging that it conspired with other meat producers to inflate pork prices. (Several of the other companies faced similar charges.)

JBS claims to be the first global meat company to commit to net-zero greenhouse gas emissions by 2040. However, it might be challenging for it to reach its climate goals, particularly after the company announced last fall that it’s pulling out of the plant-based market in the United States. And a study released by environmental groups last spring found that the company’s carbon emissions increased by 50% in the previous five years.

“We care about our role in the world and our responsibility as a global food company,” the company’s latest sustainability report proclaims.

True or not, JBS has much work to do to prove it means what it says.

Find out which company we crowned as the Hero of our 2023 winter issue. 

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Depending on how you play with the statistics, buildings contribute between a quarter and half of the global greenhouse gas emissions threatening the survival of our species. And most of those emissions come from the world’s biggest cities. In New York City, heating, cooling, cooking, water heating and clothes drying in buildings create about 70% of atmospheric carbon and methane.

We’re beginning to do better with the electrification of vehicles and the ramping up of renewable energy. Adoption of these has already passed the tipping point. Greening these sectors together with solving our buildings predicament would put us on a path to ending about 75% of global emissions.

Unprecedented heat, fires, floods and storms are forcing politicians to declare a climate emergency, and more are turning to the building sector for solutions. U.S. President Joe Biden’s pivotal Inflation Reduction Act is pouring billions into tax incentives for building retrofits. Officials all over North America are announcing bans on natural gas hookups in new buildings. In place of gas-burning furnaces, politicians are talking up electric heat pumps.

In the midst of it all, Benedict and her team are in the spotlight, having partnered with New York State, the city and RiseBoro Community Partnership over many years to refine climate solutions, most recently installing heat pumps and other green technology in nine multi-family buildings in Brooklyn. “Suddenly, I’ve been getting a lot more calls about affordable retrofits, creating lower-carbon, healthy spaces,” Benedict says. “This RiseBoro group alone has another 100 buildings. We’re starting on some more projects of theirs right after these nine, plus a 13-storey seniors’ tower.”

Like Benedict, architects, engineers and builders everywhere are now being asked to decarbonize larger buildings than ever before, with well-proven green technology that much of the public assumes is new. Green building professionals have survived decades-long struggles against industry acceptance, regulatory frameworks, tight budgets, supply chains and, above all, fear of change.

Now that public support for the energy transition is growing, can we take emissions from all buildings to near zero? Can we ramp it up fast, and scale it up large? Absolutely yes, say these experts. Corporate Knights reached out to the teams working on more than half a dozen of the most exciting green architectural achievements in North America to learn more about how they’re doing just that.

There may not be enough of them, but many buildings are already greener than we think, and sustainable features are already operating at large scale. Read on to find out just how large and how today’s green building heroes are trying to save our planet.

Affordable housing retrofits in Brooklyn

The first Earth Day took place on April 22, 1970, and on that mucky spring morning, a young Benedict donned her rubber boots and went out into the woodlands and parks of Connecticut with a community team to pick up litter. She was shocked to discover that, by summer’s end, people had thoughtlessly spread trash in the exact same places.

Now an architect, Benedict is still trying to clean up the neighbourhood. But she’s using Casa Pasiva, a 146-unit project in Bushwick, as a model for healthy, cost-effective, deep energy retrofits to occupied buildings that are mostly affordable rental units. Her team is refining an innovative methodology to reach Passive House certification from Phius (Passive House Institute U.S.). “With retrofits you become inventive,” says Benedict. “We were able to get a zoning change approved so we could put eight inches of insulation on the outside of buildings. We all need to take action and take responsibility for climate change.”

The insulation, along with new windows, heat pumps, induction cooktops and energy recovery systems, will reduce energy usage by 60% to 80%, significantly lowering operational expenses and emissions. Tenants usually grumble about having to move out for a couple of weeks during renovation, but, Benedict says, “when they hear they will be able to control their air conditioning, they’re more motivated.”

It’s relatively easy to erect a few new low-carbon single-family homes or multi-unit structures. Benedict has worked on a number of them. But buildings last for up to 100 years and are typically replaced at a rate of about 3% annually. Most of New York City’s fossil-fuel-heated edifices will still be standing in 2040. Benedict is one of the few people anywhere successfully tackling this massive retrofit challenge – and the impacts are longer-lasting than picking up litter.

Extreme-weather-resilient subdivisions in Florida and Texas

In 2022, Hurricane Ian hit Florida with a huge storm surge and 150-mile-per-hour winds. It killed more than 100 people and left billions of dollars in damages, mostly around Fort Myers. It bashed the area for nine hours, but a town called Babcock Ranch almost completely withstood the pounding. Built among forest trails, lakes and wetlands by former NFL player Syd Kitson, the town of 2,000 homes features extensive ecosystem-based flood and wind defences, plus solar panels, home batteries and electric vehicle chargers.

“When I was a child, my father and I witnessed the incredible power of a hurricane slamming the New Jersey coast,” Kitson says. “The outdoors are in my soul. I wanted to create a place that respected nature and could stand up to hurricanes.”

Babcock civil engineer Amy Wicks agrees. “Nature was always smarter than us. It has survived for thousands of years. We need to work with it, not against it.”

Some of the country’s largest builders are partners at Babcock Ranch, as well as at Whisper Valley, one of several expansive sustainable subdivisions in the Austin area in Texas. The latter will soon reach 3,000 low-energy homes, all cooled and heated with geothermal. The low-carbon system uses artificial intelligence to save about 60% on energy through networking, sharing and optimization.

Whisper Valley is as resilient as Babcock Ranch. The subdivision emerged unscathed from the deadly Texas cold snap of 2021, which killed more than 200 people with lower-quality homes and heating equipment not designed for freezing temperatures.

Geothermal for Toronto condos

For 13 years, Tim Weber tried to sell geothermal cooling and heating systems to Ontario condo developers with little success. Why add to capital budgets with scary technology? Weber hit on an idea: what if, like the gas companies, he became a utility?

He found a deep-pocketed investment partner in Quebec, created an entity to handle condo owner billing and maintenance, then in 2015 he went back to developers with the message that he could now own and maintain those systems, reducing both their capital budgets and technology problems. They started listening. There are now dozens of increasingly large condo projects in Ontario with geothermal fields under them.

One of Weber’s early partners was Stanley Reitsma, who as a teenager planted hundreds of trees on his family farm in Ontario and later studied geology and earth sciences. Reitsma went to work in the Alberta oil sands, drilling deep holes in the ground. “But I was always an environmentalist,” he says. In 2004, he headed back east and started GeoSource Energy.

Today it’s one of the most successful geothermal drillers in North America, bringing geothermal heating and cooling to condos, affordable multi-family homes, and university and government facilities on both sides of the border. The projects are big and the company will soon scale larger, too. Always a little ahead of the curve, Reitsma is now working with some international construction conglomerates interested in creating models that can respond to the current dramatic increase in green construction.

Passive and massive in Boston

Thanks to double pane Sotawall Thermo-3 windows, a howling wind outside was barely audible on the 32nd floor of Boston’s Winthrop Center in January while Brad Mahoney talked about architectural details and energy loss: “This is not just a blip. This is the way that projects will be built.”

Millennium Partners, the developer behind the Winthrop Center, claims that at 53 storeys, the massive 1.8-million-square-foot residential, office and retail complex is “the world’s largest Passive House office building.” More than half of it, the 812,000-square-foot office section, is LEED (Leadership in Energy and Environmental Design) Platinum, WELL Gold, and Passive House certified by PHI. The entire building will emit about 150% less carbon than a typical Class A (modern high-rise) structure and 60% less than LEED Platinum. (LEED was one of the earliest building energy certifications. Passive House is more rigorous, and results-focused. WELL emphasizes health and wellness by managing air quality, water, light and fitness enhancement.)

Before 2016, Millennium was not focused on sustainability. But Mahoney had always been environmentally conscious, having acquired his LEED AP (for “accredited professional”) designation about 20 years ago. He persuaded Millennium’s president that green buildings were the way forward. The two began building a digital library on all things related to low-carbon construction. They partnered with a Massachusetts Institute of Technology professor and visited the Passivhaus Institut in Darmstadt, Germany. They hired New York’s Handel Architects and Steven Winter Associates for the Winthrop Center request for proposal. They won the contract.

Last year, the project won a 2022 Passive House Trailblazer award from the U.S. Passive House Network, and tenants start moving into the tower in early 2023. “This is the space to be in, because there is now so much momentum,” says Mahoney. “We’re never going back to the old way.”

Harlem: ‘Sendero verde’ means ‘green path’

In October 2019, at a low-key technical event at the Scarborough campus of the University of Toronto, the keynote presentation was given by building engineer Lois Arena from Steven Winter Associates and architect Deborah Moelis from Handel Architects. The presentation’s content reverberated across the North American construction world.

The duo was instantly famous, revealing that they had designed the 709-unit Sendero Verde project in New York City within the confines of an affordable housing budget. They reported that their companies had also collaborated on The House, a 26-storey modular Passive House–certified student residence for Cornell University’s tech school on NYC’s Roosevelt Island, and were working on the 53-storey Winthrop Center in Boston. Oh, and by the way, the Passive House–certified residence for U of T Scarborough coming in 2023 is theirs too.

Sendero Verde is perhaps the big daddy of them all. The two-building housing complex in Harlem has double pane windows, a well-sealed envelope at least five times tighter and better insulated than typical buildings, and is heated and cooled by a commercial-scale heat pump system.

Arena and Moelis’s presentation was a shock for many, because it helped answer some of the questions that a significant portion of the construction industry and the rest of the world is only now beginning to ask: Are green buildings a theory, a bunch of pilot projects, or a real thing? Can they be built quickly? Can we afford to build them?

“We’ve got the data now, and all our projects are already at least 50% lower emissions,” says Dylan Martello, Passive House consultant on Sendero Verde. “With New York, Massachusetts and many other governments making changes, I’m optimistic that things are going in the right direction, but I’m not sure if it’s fast enough. I worry because I want to have kids one day.”

Today at building conferences around the globe, the question being asked by Martello and a growing legion of allies is no longer “Can we afford to build green buildings?” It’s “With our planet in crisis, can we afford not to?”

BF Nagy is the author of The Clean Energy Age and numerous magazine features. He also produces videos on climate solutions.

The post How today’s green building heroes are scaling up to save our planet appeared first on Corporate Knights.

In the Yucatán Peninsula in Mexico, I snorkelled with giant sea turtles alongside bleached coral reefs and explored parts of a 180-kilometre semicircle of cenotes, majestic underground caves filled with azure water that the Maya believed was a gateway to the underworld.

The cenotes formed around the impact zone of a colossal 10-kilometre-wide asteroid that crashed into Earth 66 million years ago. The impact set off mega-tsunamis and ignited fires that blazed through an estimated 70% of the world’s forests. All told, scientists reckon it killed off 75% of all life on Earth.

In the Red Sea off the coast of Sharm el-Sheikh, Egypt, where the recent UN global climate talks were held, I was blown away by the vibrant pink, orange and turquoise colours of the coral reefs. They were teeming with schools of majestic heart-shaped neon-yellow and -green fish, as well as one turtle, which had a Michael Phelps–like stroke, quickly leaving me in its wake. So much for the myth about turtles being slow – at least not when they are in their element.

Which made me wonder if the same might be true about humans and our race to a low-carbon economy.

Just as turtles are slow on land but can turn on their jets when they’re wet, humans tend to make a dash when cash is involved. But we are plodding along on climate action. The difference between what corporations and governments say and do (or the “say–do” gap) looms stubbornly large despite spiralling climate-commitment inflation. The first thing we need to do to close the gap is cut out the poison that is at the heart of our climate breakdown.

That means finally cutting out the annual US$6 trillion in subsidies to fossil fuels, which account for two-thirds of global greenhouse gas emissions.

It also means cutting off financing for new fossil fuel projects, which HSBC (one of the largest banks in the world) and Lloyds (the largest domestic bank in the U.K.) have done for new oil and gas fields – with some caveats. We will know that the rest of the US$130-trillion GFANZ (Glasgow Financial Alliance for Net Zero) coalition is serious when they follow suit.

And it means stopping all finance for activities that are killing our forests – a mistake the Mayans made that we are now repeating. Deforestation accounts for 11% of global greenhouse gas emissions, more than comes out of the tailpipes of all 1.4 billion cars on the world’s roads. If we went a step further than putting a stop to ripping out our forests and mangroves and started to restore them, we could get almost 40% of the way to our Paris Agreement goals by 2030.

But as former Bank of England (and Canada) governor Mark Carney has made clear, “the biggest threat to achieving 1.5 degrees is the speed at which we invest, not divest. We need at least $4 in clean energy investment for every $1 maintaining fossil fuels until we can phase them out by the end of this decade.”

The good news is that over the past decade, the flow of money into clean energy and efficiency infrastructure has tripled to about US$1 trillion annually.

This decade we need to move faster, quadrupling current levels of investment to the US$4 trillion annually (4% of global GDP) that is required, according to the International Energy Agency.

Finance ministers hold the keys to unlocking climate action. Fortunately, a new group, called the Coalition of Finance Ministers for Climate Action, from more than 80 countries, is looking to shift the view of climate action from a cost to a unique growth and investment opportunity. These finance ministers recognize that the current energy crisis and growing incidence of climate hazards are an opportunity for more, not less, action. And a rapid switch to renewable energy presents an opportunity for countries to deliver clean, cheap, secure energy and new employment at the same time.

Finance ministers globally manage huge annual budgets that collectively add up to around 30% of GDP. Mobilizing 4% of global GDP for climate action is not going to happen without backing from heads of state, most critically those from the G20 countries. It is a tall task but one with precedent. It wasn’t that long ago that governments mobilized trillions of dollars to keep businesses and workers afloat during the early days of the COVID-19 pandemic.

In 1962, spurred on by the Soviet Union making Yuri Gagarin the first man to orbit Earth, John F. Kennedy gave his moonshot speech at Rice University in Houston.

“We choose to go to the moon in this decade and do the other things not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.”

That bold invocation was then backed by billions of dollars.

Eight years later, on July 20, 1969, two American astronauts walked on the moon’s surface.

History doesn’t repeat itself, but it rhymes. Money was an accelerant for the mission to the moon.

Today’s moonshot is addressing the climate crisis, and what gets funded, gets done.

Time for our heads of state and finance ministers to take the plunge and turn on the jets – just like our shelled friends in the sea.

The post Editor’s note: The world needs a climate moonshot appeared first on Corporate Knights.

But in the blistering summer of 2018, there was nothing celebratory about the Rhine. As Germany faced the hottest and driest weather since measurement began in 1881, the Rhine’s riverbed was reduced to a desiccated landscape of mudflats and dead fish. German industry, which uses the Rhine as a transportation lifeline, also suffered. The shrivelled Rhine of 2018 became a harbinger of the devastating impact that climate change will have on the backbone of the German economy.

Chemical giant BASF, whose headquarters and integrated chemical complex – the largest in the world – sit on the shores of the Rhine in Ludwigshafen, was hit particularly hard. Historically, some 40% of the raw materials entering the site do so by freight ships. In the summer of 2018, these were scraping bottom; cargo traffic was reduced to a trickle, and ships could be only partially laden. The river’s water was too warm to effectively cool BASF’s reactors. In total, production and delivery shortfalls caused by the 2018 heat wave cost BASF some €250 million (US$280 million), while its profits in the last quarter of the year were down nearly 60%.

Low water levels continue to plague BASF – and all the other major German chemical players that are concentrated along the Rhine. As they shift to shallower barges that carry only a fraction of the freight and less efficient rail and truck transport, they see their costs rise and their deliveries slow.

You’d expect a company so directly affected by climate change to be jumping on the decarbonization bandwagon. On the face of it, it is. To its iconic tagline, “We create chemistry,” BASF now adds “for a sustainable future.” But behind the scenes, Germany’s chemical industry – and BASF in particular – is proving to be exceptionally obstructive.

The British think tank InfluenceMap, which tracks corporate lobbying activity on climate policy, recently ranked BASF the third most “negative and influential” corporation in the world, following American oil giants Chevron and ExxonMobil in the first and second spots.

BASF resists the characterization, pointing to its track record – since 1990, the company has reduced its greenhouse gas emissions by 50% – and its objective to achieve net-zero by 2050 (five years later than the German national target of 2045). It has publicly endorsed the Paris Agreement on climate change as well as the EU’s target of being net-zero by 2050. And its product carbon footprint program, launched in 2020, allows customers to calculate the emissions generated “from cradle to gate” – through extraction, manufacturing and production – for all BASF products.

There is no question that the company is making moves in the right direction. In 2021, BASF purchased a major share of the world’s largest wind farm – Hollandse Kust Zuid – which is currently under construction in the North Sea, some 50 kilometres off the Dutch coast. The green electricity generated there will help power BASF’s European production sites, including Ludwigshafen.

Furthermore, the €10-billion engineering plastics plant BASF is now building in Zhanjiang, China, is slated to run entirely on renewable energy; the company is billing the facility – its third-largest globally – as a “role model of sustainable production both in China and around the world.”

But InfluenceMap looks beyond mainstream indicators to more subtle metrics: not only what companies present publicly in their annual reports, social media and public relations, but also the kind of research they sponsor, how they engage with regulators and elected officials and, importantly, the “indirect” lobbying they do through the industry associations they belong to. Taken together, InfluenceMap refers to this activity as a company’s “carbon policy footprint,” a kind of Scope 4 emissions.

Their analysis shows how common it is for a company’s outward claims to be at odds with its inner convictions. Eighty percent of the 25 companies deemed by InfluenceMap to have the most negative policy footprints look good on paper; like BASF, they have made net-zero commitments, and many, including BASF, scored A- or higher on Carbon Disclosure Project’s 2021 climate change disclosure scores, widely considered the gold standard of environmental reporting.

In exposing the gap between words and actions, InfluenceMap is not just looking to name and shame. The hope is that greater transparency will ultimately lead to a closer alignment between industry on the one hand and science-based policy benchmarks, like those articulated by the Intergovernmental Panel on Climate Change, on the other. And for the most part, that’s what’s happening.

According to Will Aitchison, EU strategy manager for InfluenceMap, some sectors of the German economy – even its automotive industry – have started to genuinely reconcile themselves with Paris targets and support legislation in that direction. But the chemical industry is a standout, and for good reason. The largest industrial consumer of energy of all sectors, in Germany it has relied on an ample supply of cheap Russian gas. BASF’s facility in Ludwigshafen represents 4% of Germany’s total gas consumption: roughly as much energy as a city of one million people. Half of that gas is used as feedstock – a raw material – in the production of chemicals. The other half is used to generate electricity.

“The chemical sector is anchored in fossil fuels,” says Aitchison. “And its lobbying reflects that.”

The industry has a lot to lose from a rapid transition away from fossil fuels, and BASF more than most, thanks to its 67% stake in Wintershall Dea, the oil and gas producer that it co-owns with the Russian company LetterOne. Wintershall Dea is one of the five co-funders of Gazprom’s Nord Stream 2 pipeline – whose certification Germany halted following the Russian invasion of Ukraine – and remains invested in several Russian gas fields, producers and network operators.

It’s no wonder that BASF is the most “engaged of European chemical companies” in its climate lobbying, according to Aitchison. And BASF, the largest chemical company in the world, with €78.6 billion in sales in 2021 and 110,000 employees worldwide, has a lot of weight to throw around.

Taking a run at climate regulations

So how does it do that? For one, it quibbles with climate-related regulations. Take, for instance, Europe’s proposed carbon border adjustment mechanism. The measure, a central plank of the European Green Deal, will impose tariffs on carbon-intensive imports into the European Union as a way of preventing “carbon leakage” – the relocation of production to less climate-ambitious jurisdictions – while also encouraging non-EU countries to introduce carbon pricing.

Looking at its own product palette, BASF sees primarily the downsides to the mechanism. It uses its roughly €3.5-million annual lobbying budget in Brussels to repeatedly ask the European Commission to exempt ammonia, nitric acid and the products along its value chain: essential components of the polyamide, polyurethanes and amines that BASF feeds to the textile, automotive, agriculture and pharmaceutical industries. Fearing its own products will no longer be cost-competitive on global markets, BASF reminds the European Commission that its commitment is not only to climate neutrality but also to economic growth.

Likewise, BASF opposes the legislation of energy savings targets, arguing instead for greater energy efficiency and a transition to renewables. The position is reinforced by the Federation of German Industries (Bundesverband der Deutschen Industrie, or BDI), the umbrella organization that represents some 100,000 companies – including BASF – and acts as the loudest mouthpiece for German industry. It advocates for energy reduction regulations only as a “last resort” and calls the EU’s proposed 1.5% energy savings target “unrealistic.”

Hiding behind industry groups

Companies frequently “get their industry associations to do the dirty work,” as InfluenceMap spokesperson Simon Cullen puts it. While most customers will recognize the name BASF, fewer will be following the BDI, or Cefic (the European Chemical Industry Council) or VCI (Verband der Chemischen Industrie) – all groups BASF belongs to and in which its executives play leading roles.

The relative anonymity of industry associations makes it much easier for them to push for policies that reflect their own vested interests. BDI, for instance, opposes the 2035 zero-emissions vehicle standard proposed by the European Commission and is lobbying the German federal government, in light of Russian gas shortages, to extend the use of coal and to facilitate a transition from gas back to oil.

Likewise, VCI is pushing for the EU to water down its taxonomy of sustainable finance to include economic activity involving gas. Currently, only 11% of BASF’s revenue is considered eligible for consideration under the EU Taxonomy. VCI and Cefic are both advocating against key elements of the proposed carbon border adjustment mechanism and in favour of a continuation of emissions allowances, which effectively forgive emissions for some producers.

This is the line that BASF walks: endorsing climate policy, unless or until it affects its own economic performance. “We are convinced that climate neutrality and sustainable resource use are not possible without a competitive chemical industry,” writes BASF spokesman Philipp Rosskopf in an email.

The implication is clear: BASF will be part of the solution, providing that its bottom line doesn’t suffer.

Investor pushback

Investors are paying attention. Since the asset management division of French banking group BNP Paribas began looking more closely at climate-related lobbying in 2018, it has seen “a rapid uptick in engagement on this issue by institutional investors,” according to spokesperson Claire Schiff. Together with a group of investor networks and other asset managers, BNP Paribas has established a global standard of responsible climate lobbying: a compendium of 14 indicators that can be used to assess how consistent a company’s advocacy work is with Paris targets.

“If there is misalignment, we expect corrective actions to be taken,” says Charlotta Sydstrand, spokesperson for Swedish public pension fund AP7, one of the instigators of the global standard. In 2018, AP7 asked BASF to review its own climate lobbying and publish a list of its memberships in industry associations. It obliged. The disclosure that BASF provided was given a failing grade by InfluenceMap. But the process at least created greater transparency and the beginnings of what people in the field refer to as “engagement” – the gentle tug of war between the forces of corporate self-interest and global responsibility.

A close look at BASF’s books suggests that these two objectives may not be so far apart after all. BASF distinguishes between what it calls accelerator sales – from products that are biodegradable, energy-saving or emissions-reducing, that make a “substantial sustainable contribution” – and the rest of its revenue. By BASF’s own calculations, revenues from its accelerator sales have grown at 69% over the last three years, as compared to 18% for the rest of its portfolio. And accelerator sales, currently 31% of the total, constitute an ever-growing share of BASF’s business.

The tide also seems to be turning at fellow chemical giant Bayer, which in the last year has endorsed the climate provisions in the U.S. Inflation Reduction Act and is pushing Germany to accelerate its expansion of renewables, rather than reboot fossil fuels, in the wake of Russian gas shortages.

With this kind of momentum, BASF shouldn’t feel the need to practise double-talk much longer. And the sooner it stops, the better.

The chemical sector is anchored in fossil fuels. And its lobbying reflects that.

-Will Aitchison, EU strategy manager for InfluenceMap

“If what you are saying to your investors does not line up with how you lobby, you have a big problem,” says Peter Damgaard Jensen, who for 19 years was CEO of one of Denmark’s largest pension funds and has served as chair of the Institutional Investors Group on Climate Change (IIGCC), a European body whose members – mainly pension funds and asset managers – collectively manage more than €51 trillion in assets.

Damgaard Jensen has listened to many companies distance themselves from their industry associations or claim that they have no choice but to go along. He has no time for such excuses. Membership in associations is rarely mandatory, and companies like BASF have considerable sway over the ones to which they belong. It behooves them to lead, not to follow. And investor coalitions like the IIGCC are only getting more assertive.

“They won’t change us,” Damgaard Jensen says. “It’s us that will change them.”

It won’t happen overnight. Damgaard Jensen calls the process a “long dialogue” in which European companies tend to be moving faster than American ones, with BASF a notable exception. He acknowledges that the transition away from fossil fuels poses a particular challenge for the chemical industry; demand for its products continues to grow, while its most critical input is under threat.

But companies won’t meet the challenge by dodging it, or lobbying themselves into a corner, surrounded by their own stranded assets. They must exercise model corporate behaviour: basing today’s decisions on where they see themselves 20 years down the road and talking to everyone – government, shareholders and their peers – out of one and the same side of their mouths.

The post The Climate Blockers: BASF quietly lobbies against strong climate policy while talking a big game appeared first on Corporate Knights.

In August of that same year, reinsurance company Munich Re published a report on the devastating impacts of recent floods, warning of the risks of climate change. The document called for more study of global warming, “as a result of which glaciers and the polar caps recede, surfaces of lakes are reduced and ocean temperatures rise.”

It took Munich Re almost 50 years since publishing the document, but the corporation, which is the largest reinsurance company in the world, is now taking steps to detach itself not just from new coal projects, but from oil and gas, too. The company announced in October that it will no longer insure new oil and gas projects as of April 2023.

The corporation is one of a growing number of insurance and reinsurance (which is essentially insurance for insurance) companies that have decided that covering fossil fuel projects is not in their future. A recent report by the Insure Our Future campaign found that in the last five years, 41 insurance companies, representing 62% of the reinsurance market and 39% of the primary insurance market, have either completely or partially sworn off coverage for new coal projects.

Munich Re’s announcement followed a commitment last spring by the world’s second-largest reinsurance company, Swiss Re, to stop providing reinsurance for or investing in new oil- and gas-fields projects starting in 2023. And German multinational Allianz announced it would exclude coverage of most new oil and gas projects as of January.

“We’re seeing a shift in both investment and underwriting away from carbon extraction, especially for coal,” says Craig Stewart, vice-president of climate change and federal issues at the Insurance Bureau of Canada. “It’s the result of rapidly increasing underwriting losses to climate-driven events that insurers and reinsurers are seeing worldwide.”

Observers say momentum has been building in this area in recent years, as the risks and costs of the climate crisis have become too much for the insurance industry to ignore. As society’s risk managers, insurance companies have long been attuned to the perils of climate change. And as the damage (and costs) from its catastrophic effects piles up, there are clear signs that the sector now wants to avoid the risks that come with propping up the very companies responsible for global warming.

Litigation looms

One worry for insurers is that they will be on the hook to cover the costs of mounting climate lawsuits that are being brought against fossil fuel companies by local governments and activists across the world. Insurance companies often offer policies that cover directors’ and officers’ liability insurance for corporations, in the event they get sued for negligence.

Last year, AIG’s National Union Fire Insurance Company refused to cover the costs of climate litigation brought against Aloha Petroleum (a subsidiary of Sunoco) by municipalities in Hawaii. Aloha then sued the insurer, claiming it should be on the hook for more than US$880,000 the company had spent defending the lawsuit. This followed a similar dispute in Massachusetts last summer between insurer Everest and Gulf Oil.

“We’re going to see more and more lawsuits that directors and officers are being negligent in the fossil fuel sector … and I know insurers are going to be wary about that,” says Jason Thistlethwaite, a professor at the University of Waterloo’s School of Environment, Enterprise and Development. “They just don’t know yet how they are going to be exposed.”

Insured losses adding up

Last fall, Hurricane Ian devastated parts of Florida, killing more than 100 people and causing an estimated US$67 billion in private market insured losses, according to RMS, a risk management company. The cost of damage from severe weather events in the United States was expected to top US$100 billion in 2022.

In 2021, one of the costliest years on record in the U.S., weather and climate disasters caused around US$150 billion in damages. In Canada, that year saw $2.1 billion in insured damage caused by severe weather, according to the Insurance Bureau of Canada, and US$355 billion globally. As the costs add up, Thistlethwaite says, the insurance industry is also realizing that climate change is leading to a set of correlated risks.

The frequency and severity of floods, wildfires and storms have led to insurance companies either raising their rates or flat-out denying coverage in areas they have assessed as being at greater climate risk. But this is not a sustainable strategy in the long run, says Thistlethwaite.

“You’re going to get to a certain point where insurance is a luxury item for the very rich, and that isn’t good for insurers because they want to be able to diversify their risk transfer over a wide population that faces a diverse range of risk as opposed to being very concentrated,” he says.

And continuing to jack up rates and pull coverage could also cause more reputational risk for the sector and increase the likelihood that regulators will intervene. So instead, many large global insurance companies are looking to get out ahead of the coming storm and do their part to address the main source of the problem: fossil fuels.

Divest now for tomorrow

For insurance companies that are big institutional investors, that has also meant divesting their holdings in oil, gas and coal projects. In 2015, France’s AXA became the first insurance company to start divesting from coal. While AXA has committed to stop underwriting new coal projects, advocates say its pledges on oil and gas haven’t gone far enough. In 2021, the company announced it would adopt new restrictions on new oil and gas that comes from fracking, arctic drilling and tar sands. However, Reclaim Finance, a Paris-based climate-finance think tank, calculated this would mean that AXA could continue underwriting more than 56% of planned oil and gas expansion.

Canadian insurance companies have been slow to decouple themselves from fossil fuels. Last fall, Canada’s National Observer reported that life insurance giants Sun Life and Manulife, despite making commitments to be net-zero by 2050, still had US$15.9 billion and US$9.9 billion, respectively, invested in fossil fuels as of June. Peter Bosshard, the global coordinator of the Insure Our Future campaign, says that insurance companies based in Canada and the United States tend to lag behind their European peers when it comes to divesting from and insuring fossil fuels.

“In the U.S., there is still the concept of shareholder capitalism, that a company’s only purpose is to maximize profits, that’s more prevalent and with that kind of an avoidance of social responsibility,” says Bosshard, whose campaign launched in 2017 to put pressure on insurance companies to stop insuring fossil fuels.

We’re going to see more and more lawsuits that directors and officers are being negligent in the fossil fuel sector … and I know insurers are going to be wary about that.

—Jason Thistlethwaite, professor, University of Waterloo School of Environment, Enterprise and Development

In the latest Insure Our Future scorecard, which ranks global insurers and reinsurers based on whether they have policies that exclude fossil fuel projects, the best companies when it came to coal-exit policies were Allianz, AXA and Axis Capital. Aviva, Hannover Re and Munich Re received the best scores for their oil and gas policies. Among the laggards listed in the report were Starr, Everest Re and Berkshire Hathaway, none of which have any exclusions for fossil fuels (and none of which responded to requests for comment).

The next step for environmentalists when it comes to the insurance sector will be pushing more companies to shed their coverage of existing coal projects as well as all oil and gas. As an agreement to phase out fossil fuels didn’t materialize at COP27, the role of insurance companies in thwarting the expansion of new oil, gas and coal could be vital. Especially considering that a recent analysis by the non-profit Urgewald found that almost all oil and gas companies are still planning new fossil fuel production that would result in a further 115 billion tonnes of carbon dioxide emissions – the equivalent of 30 years of greenhouse gas emissions for the entire EU.

Without insurance, new projects won’t receive loans, or the necessary government permits in some places. “Nothing happens without insurance for a new project in many countries,” says Bosshard.

He adds that “insurance is not the silver bullet. I don’t think we can phase out fossil fuels through an insurance campaign alone, but the goal needs to be to make it increasingly difficult and expensive to insure fossil fuels so that we can tilt the balance ever more towards renewable energy. That’s a gradual process. We’re working to make it happen as soon as possible.”

The post Is the insurance industry walking away from fossil fuels? appeared first on Corporate Knights.

To Waller, a governor of the Federal Reserve that sets U.S. monetary policy, glacial growth is proof that the Fed’s efforts to tame inflation are working. “Our goal is to rein in demand,” he said, noting that the Fed’s higher interest rates had already dampened consumer spending, slowed home sales and shaken up the tight job market. By mid-2022, the labour shortage had driven annual wage growth above 10% for the first time in 40 years.

Canada has shown similar steel as the annual inflation rate jumped from 1% in early 2021 to 8% by mid-2022. The Bank of Canada hiked interest rates seven times last year: a harsh reality for anyone who recently took out a mortgage with a variable interest rate. Yes, high rates halted the red-hot housing market, but with mortgage costs doubling, fewer Canadians can now afford to own their own homes.

In the United States, activist group Accountable.US has labelled the inflation battle a war on workers. “Apparently, millions of Americans likely losing their jobs under further rate hikes is a sacrifice the Fed is willing to make,” noted Accountable.US spokesperson Liz Zelnick in November. The former policy analyst for the Massachusetts Treasurer’s Office blames runaway inflation on companies taking advantage of COVID and supply chain chaos to hike prices way beyond normal levels. Indeed, by mid-2022, U.S. companies’ gross profit margins rose to 15.5%, a 72-year high.

“The Fed’s ill-advised policy only draws attention from the real culprit behind out-of-control costs: corporate greed,” said Zelnick. “Highly profitable corporations have kept raising prices on working families while rewarding wealthy investors with billions in new handouts.”

It’s not just activist groups saying so. In September, a number of speakers took turns accusing businesses of price gouging at a congressional hearing on “corporate influence on inflation.” The best known was former U.S. labour secretary Robert Reich, who said wages have lagged inflation for more than a decade. Reich said businesses are “raising their prices above increases in their costs.”

And those prices stick, he said, because most businesses “face so little competition. Since the 1980s, two-thirds of all American industries have become more concentrated.”

Reich urged Congress to adopt a windfall profits tax – and beef up antitrust enforcement to discourage unnecessary price increases, concluding that “the major effect of interest-rate hikes is to depress wages and eliminate jobs.”

Apparently, millions of Americans likely losing their jobs under further rate hikes is a sacrifice the Fed is willing to make.

-Liz ZelnickAccountable.US spokesperson

Canadians face similar pressures, but the inflation-relief debate is mostly missing. At the Conference Board of Canada, a leading economic policy think tank, chief economist Pedro Antunes says he supports the Bank of Canada’s anti-inflation medicine. He says the central bank reacted too slowly when inflation began creeping above its 2% inflation target in early 2021. “Inflation was eating away at our purchasing power, because there wasn’t enough production to meet demand.” With the central banks using a fiscal firehose to cool things down, Antunes believes the hard part is now over. The Conference Board now forecasts inflation will hit 3.8% in 2023 before settling around 2.2% in 2024.

Antunes is loath to address business profiteering. He says corporate profits are usually a percentage of sales – meaning that if prices are on the rise, you can expect higher profits than normal.

Not so sanguine is Sheila Block, senior economist with the Canadian Centre for Policy Alternatives. She agrees the inflation wave had many drivers – from COVID to Russia’s invasion of Ukraine – but insists that wage costs have not been to blame. She also notes that corporate profits rose from 12.5% of GDP in 2019 to 16.8% in mid-2022 – near their historic highs. She says Canada’s inflation problem stems not from excess consumer demand, but from a “perfect storm” of international issues and business opportunism.

“I don’t think the Bank of Canada is operating on any ill will,” she says, “but its policies are compounding the negative impacts of inflation.”

The post Is corporate price gouging to blame for inflation? appeared first on Corporate Knights.

2023 Global 100/Winter 2023

100 most sustainable companies of 2023 still flourishing in tumultuous times

Meet the latest Global 100 companies driving the transition to a low-carbon, circular economy

 

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• BY Mike Scott

• January 18, 2023

With Russia’s war in Ukraine driving energy prices up to record levels and the world experiencing unprecedented climate disasters, it has never been more important for companies to cut their emissions and double down on sustainability.

This year’s Global 100 ranking of the world’s most sustainable companies, now in its 19th year, reveals that the transition is gathering momentum – and that businesses that take sustainability seriously are flourishing financially.

While the Global 100 is light on oil and gas companies, whose profits have soared because of rising energy prices (Finland’s Neste being the only oil company on the ranking), it still managed to outperform its blue-chip benchmark, MSCI ACWI (All Country World Index), and other ESG indices. While both the Global 100 and ACWI fell somewhat in 2022, since its inception on February 1, 2005, the Global 100 Index has generated a total investment return of 270.7% compared to 222.1% for ACWI.

Ralph Torrie, Corporate Knights’ research director, says rising oil prices have stimulated growth in renewables, smart buildings, electric vehicles and other climate solutions, including circular economy measures. Indeed, the top-ranked company, Schnitzer Steel, is a metals recycler. “Global 100 companies are providing the products and services that are needed for the sustainability transition and that will form the basis of the emerging 21st-century economy,” says Torrie. “They’ve outperformed the market through these last few tumultuous years.

• CONTINUE READING

2023 Global 100 ranking table

2023 G100 Rank	2022 G100 Rank	Company	HQ Location	Carbon Productivity	% Non-Male Board Directors	% Sustainable Revenue	% Sustainable Investment	Final Grade	Climate Commitments
1	15	Schnitzer Steel Industries Inc	Portland, U.S.	$15,928	50%	100%	100%	A+
2	1	Vestas Wind Systems A/S	Aarhus, Denmark	$222,113	42%	100%	100%	A	1.5°C, SBTi
3	10	Brambles Ltd	Sydney, Australia	$156,386	40%	100%	100%	A	1.5°C, SBTi
4		Brookfield Renewable Partners LP	Hamilton, Bermuda	$21,806	33%	99%	100%	A
5	3	Autodesk Inc	San Francisco, U.S.	$456,489	45%	93%	43%	A	1.5°C, SBTi
6	19	Evoqua Water Technologies Corp	Pittsburgh, U.S.	$25,868	33%	100%	100%	A	SBTi
7*	17	Stantec Inc	Edmonton, Canada	$95,950	33%	53%	94%	A-	1.5°C, SBTi
7*	4	Schneider Electric SE	Rueil-Malmaison, France	$142,877	50%	71%	68%	A-
8		Siemens Gamesa Renewable Energy SA	Zamudio, Spain	$514,578	30%	100%	100%	A-	1.5°C, SBTi
9		Taiwan High Speed Rail Corp	Taipei, Taiwan	$7,051	23%	100%	100%	A-
10	9	Dassault Systèmes SE	Vélizy-Villacoublay, France	$498,736	50%	68%	40%	A-	1.5°C, SBTi
12	42	Xinyi Solar Holdings Ltd	Wuhu, China	$843	11%	100%	100%	A-
13	7	Ørsted A/S	Fredericia, Denmark	$5,301	50%	66%	99%	A-	1.5°C, SBTi
14	11	Sims Ltd	Mascot, Australia	$45,238	50%	100%	100%	A-
15	21	Banco do Brasil SA	Brasília, Brazil	$623,504	38%	24%		A-	1.5°C, SBTi
16		Rockwool A/S	Hedehusene, Denmark	$2,350	50%	85%	70%	A-	SBTi
17	12	Johnson Controls International PLC	Cork, Ireland	$35,632	27%	54%	61%	A-	1.5°C, SBTi
18	2	Chr Hansen Holding A/S	Hørsholm, Denmark	$43,041	50%	20%	97%	B+	1.5°C, SBTi
19		Kone Oyj	Espoo, Finland	$734,717	38%	67%	7%	B+	SBTi
20	18	Cascades Inc	Kingsey Falls, Canada	$4,198	50%	92%	80%	B+	SBTi
21	8	Atlantica Sustainable Infrastructure PLC	Brentford, U.K.	$596	25%	84%	91%	B+	SBTi
22	14	McCormick & Company Inc	Hunt Valley, U.S.	$65,393	36%	49%	7%	B+	1.5°C, SBTi
23	35	Novozymes A/S	Bagsvaerd, Denmark	$8,853	27%	53%	11%	B+	1.5°C, SBTi
24	25	Iberdrola SA	Bilbao, Spain	$3,712	43%	72%	85%	B+	1.5°C, SBTi
25	84	BT Group PLC	London, U.K.	$41,583	42%	57%	38%	B+	1.5°C, SBTi
26	36	Alphabet Inc	Mountain View, U.S.	$38,910	27%	89%	6%	B+	SBTi
27	45	Vitasoy International Holdings Ltd	Hong Kong, China	$8,863	18%	91%	100%	B+
28	5	City Developments Ltd	Singapore, Singapore	$19,968	22%	73%	76%	B+	1.5°C, SBTi
29	24	Neste Oyj	Espoo, Finland	$9,381	33%	39%	71%	B+
30	33	Ecolab Inc	Saint Paul, U.S.	$30,832	42%	71%	53%	B+	1.5°C, SBTi
31	12	Kering SA	Paris, France	$978,971	57%	39%	25%	B	1.5°C, SBTi, FCCA
32	20	Beijing Enterprises Water Group Ltd	Hong Kong, China	$4,526	7%	74%	100%	B
33		ASM International NV	Almere, Netherlands	$98,187	33%	98%	63%	B	1.5°C, SBTi
34	72	StarHub Ltd	Singapore, Singapore	$41,945	23%	47%	0%	B
35	39	SunPower Corp	Richmond, U.S.		22%	100%	100%	B	SBTi
36	26	Xerox Holdings Corp	Norwalk, U.S.	$51,747	25%	75%	3%	B	1.5°C, SBTi
37	49	Telus Corp	Vancouver, Canada	$54,239	40%	62%	12%	B	1.5°C, SBTi
38	78	Unilever PLC	London, U.K.	$107,250	42%	30%	6%	B	1.5°C, SBTi
39	50	HP Inc	Palo Alto, U.S.	$398,038	46%	61%	29%	B	1.5°C, SBTi
40		VMware Inc	Palo Alto, U.S.	$184,723	30%	75%	0%	B	SBTi
41	55	SAP SE	Walldorf, Germany	$194,558	50%	25%	0%	B	1.5°C, SBTi
42		BCE Inc	Verdun, Canada	$68,365	38%	48%	96%	B	1.5°C, SBTi
43	83	Coloplast A/S	Humlebaek, Denmark	$55,646	33%	46%	3%	B	1.5°C, SBTi
44	13	Koninklijke KPN NV	Rotterdam, Netherlands	$38,857	43%	55%	100%	B	1.5°C, SBTi
45	81	Cogeco Communications Inc	Montreal, Canada	$95,151	56%	47%	39%	B	1.5°C, SBTi
46		First Solar Inc	Tempe, U.S.	$5,218	33%	100%	100%	B-	1.5°C, SBTi
47	77	Puma SE	Herzogenaurach, Germany	$270,328	33%	29%	0%	B-	SBTi, FCCA
48	28	Cisco Systems Inc	San Jose, U.S.	$82,189	36%	58%	0%	B-	1.5°C, SBTi
49	51	Atea ASA	Oslo, Norway	$652,546	38%	67%	3%	B-	SBTi
50	53	Konica Minolta Inc	Chiyoda-ku, Japan	$28,739	11%	52%	1%	B-	SBTi
51		Giant Manufacturing Co Ltd	Taichung, Taiwan		9%	100%	100%	B-
52		Essity AB	Stockholm, Sweden	$5,115	42%	48%	39%	B-	1.5°C, SBTi
53	32	Eisai Co Ltd	Bunkyo-ku, Japan	$103,312	9%	33%	24%	B-	1.5°C, SBTi
54		ERG SpA	Genoa, Italy	$1,941	42%	64%	96%	B-	1.5°C, SBTi
55	43	Sprouts Farmers Market Inc	Phoenix, U.S.		25%	28%	14%	B-	SBTi
56	75	CapitaLand Investment Ltd	Singapore, Singapore	$10,348	27%	38%	41%	B-	SBTi
57		Sino Land Co Ltd	Hong Kong, China	$13,753	0%	49%	1%	B-	1.5°C, SBTi
58		Severn Trent PLC	Coventry, U.K.	$5,357	56%	39%	72%	B-	1.5°C, SBTi
59	90	Intesa Sanpaolo SpA	Turin, Italy	$375,162	37%	12%		B-	1.5°C, SBTi, NZBA
60	79	Gildan Activewear Inc	Montreal, Canada	$7,843	30%	39%	1%	B-	SBTi
61	67	Sanofi SA	Paris, France	$86,211	38%	20%	13%	B-	1.5°C, SBTi
62		Swatch Group AG	Biel, Switzerland	$66,638	33%	50%	49%	B-
63	46	Samsung SDI Co Ltd	Yongin, South Korea	$10,422	14%	81%	57%	C+
64		Yadea Group Holdings Ltd	Wuxi, China	$282,774	13%	100%	100%	C+
65	95	Telefonaktiebolaget LM Ericsson	Stockholm, Sweden	$151,002	23%	34%	100%	C+	1.5°C, SBTi
66	82	Adidas AG	Herzogenaurach, Germany	$257,999	38%	35%	0%	C+	SBTi, FCCA
67	54	Hewlett Packard Enterprise Co	Spring, U.S.	$170,695	36%	50%	20%	C+	1.5°C, SBTi
68		KB Financial Group Inc	Seoul, South Korea	$132,305	22%	5%		C+	SBTi, NZBA
69		Maxeon Solar Technologies Ltd	Singapore, Singapore	$5,227	11%	100%	100%	C+
70		Orkla ASA	Oslo, Norway	$42,247	36%	22%	0%	C+	1.5°C, SBTi
71	76	BNP Paribas SA	Paris, France	$267,081	47%	21%		C+	SBTi, NZAM, NZAO, NZBA
72		Svenska Handelsbanken AB	Stockholm, Sweden	$1,448,025	54%	2%		C+	NZBA, SBTi
73	48	Apple Inc	Cupertino, U.S.	$6,309,148	33%	71%	0%	C+	1.5°C, SBTi
74	69	Kesko Oyj	Helsinki, Finland	$174,412	29%	3%	11%	C+	1.5°C, SBTi
75	62	Quadient SA	Bagneux, France	$156,273	33%	23%	0%	C+
76		Investec Ltd	Sandton, South Africa	$125,606	36%	5%		C+	NZBA
77	55	Sun Life Financial Inc	Toronto, Canada	$622,072	56%	4%		C+	NZAM
78	74	Teck Resources Ltd	Vancouver, Canada	$3,689	29%	7%	23%	C+
79		NIO Inc	Shanghai, China	$160,817	17%	96%	100%	C+
80		Ricoh Co Ltd	Ota-ku, Japan	$70,664	10%	21%	42%	C+	1.5°C, SBTi
81	63	Henkel AG & Co KgaA	Düsseldorf, Germany	$61,401	44%	20%	1%	C+	1.5°C, SBTi, NZAM
82	55	Storebrand ASA	Lysaker, Norway	$89,785,901	50%	5%		C+	1.5°C, SBTi, NZAM, NZAO
83		Gilead Sciences Inc	Foster City, U.S.		33%	44%	0%	C+	SBTi
84	22	Sekisui Chemical Co Ltd	Osaka, Japan	$16,577	24%	10%	41%	C+	1.5°C, SBTi
85	60	Commerzbank AG	Frankfurt, Germany	$353,063	45%	6%		C+	SBTi, NZAM, NZBA
86	52	Tesla Inc	Austin, U.S.	$91,536	25%	100%	100%	C	1.5°C, SBTi
87		Beazley PLC	London, U.K.	$3,601,492	45%	14%		C	NZIA
88	80	Bank of Montreal	Toronto, Canada	$224,613	50%	4%		C	NZAM, NZAO
89	57	Arçelik AS	Istanbul, Turkey	$226,657	17%	5%	3%	C	1.5°C, SBTi
90	98	Canadian Tire Corporation Ltd	Toronto, Canada	$169,655	19%	2%	1%	C
91	71	National Australia Bank Ltd	Melbourne, Australia	$130,528	33%	5%		C	NZBA
92	41	IGM Financial Inc	Winnipeg, Canada	$68,785,497	33%	7%		C
93		Pfizer Inc	New York City, U.S.	$69,800	33%	17%	0%	C	1.5°C, SBTi
94	70	Nordea Bank Abp	Helsinki, Finland	$3,537,626	40%	3%		C	NZAM, NZAO, NZBA
95		Merck KGaA	Darmstadt, Germany		43%	32%	20%	C-	SBTi
96		Société Générale SA	Paris, France	$276,944	40%	3%		C-	NZBA, SBTi
97	91	AstraZeneca PLC	Cambridge, U.K.	$140,130	38%	8%	0%	C-	1.5°C, SBTi
98	56	Koninklijke Philips NV	Eindhoven, Netherlands	$122,236	40%	16%	0%	C-	SBTi
99		Danaher Corp	Washington, D.C., U.S.	$79,075	29%	16%	0%	D+
100		Novavax Inc	Gaithersburg, U.S.		29%	12%	87%	D+

*Indicates a tie as a result of a data correction

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Sustainable revenue now makes up half of gross revenue for the Global 100 compared to just 5% for the wider benchmark, while sustainable investment shows a similar trend. For every tonne of carbon they produce, Global 100 companies earn 33 times more revenue than ACWI firms.

But while improved productivity scores for carbon, energy, water and other environmental performance indicators are often collateral benefits of underlying megatrends, such as increasing electrification, energy efficiency and digitization, the improvement in sustainable revenues and investments is generally the result of much more deliberate corporate investment policies and strategic decisions, Torrie says. “Very often, there is visionary leadership from the CEO, and the company has a clear view of the way the world is headed and how to get ahead of it.”

That doesn’t mean that corporate sustainability leaders don’t have their challenges, though. In the face of Europe’s energy crisis, the Danish government ordered 2020’s top G100 company, wind giant Ørsted, to postpone the shutdown of three of its power station units that use oil and coal as fuel. “We still believe that we, as a society, must phase out the use of gas, oil, and coal as soon as possible, but we’re in the middle of a European energy crisis, and we will, of course, contribute to ensuring the electricity supply to the best of our ability,” Ørsted said in a statement.

All the while, companies outside the Global 100 are starting to catch up. While the average gender diversity of Global 100 boards inched upward slightly to 34%, that figure shot up from 23% to 32% for the broader universe of more than 6,000 companies analyzed for the Global 100. In racial diversity, there has been little improvement on company boards of directors, but there was a slight improvement in executive teams. The Global 100 and ACWI firms are neck and neck on the ratio of taxes paid, and ACWI firms have a slightly smaller gap between CEO to average worker pay.

A fifth of Global 100 companies are U.S.-based, making it the leading country for members of the index, followed by Canada with 11%. However, as a region, Europe still leads the way with 44%, while Asia Pacific hosts 22% of the ranking’s companies.

The leading sectors remain information technology (20%) and financial services (15%). Among the standout results of the rankings, Italian bank Intesa Sanpaolo saw a huge 234% increase in its sustainable revenue ratio thanks to a combination of increased exposure to sustainable social and environmental loans and better disclosure.

In the wake of the COVID-19 pandemic, new entrants to the index included a number of pharmaceuticals groups, such as Merck, Pfizer, Novavax and Gilead Sciences. Chinese electric vehicle maker NIO and its compatriot Yadea, which produces electric bicycles, were also notable entrants, along with two companies from Taiwan: bicycle maker Giant and the Taiwan High Speed Rail Corp. Torrie says the addition of these corporations reflects the improved reporting on environmental, social and governance (ESG) factors from companies in the region.

As Corporate Knights has added new companies to the index, it has dropped others for a range of reasons. U.S. chipmaker Analog Devices, for example, fell out of the Global 100 because it has shown a steady worsening of its energy, carbon, water and waste productivity, and the disparity between its CEO’s pay and that of the average employee has doubled since 2020.

 

 

By contrast, battery and electric vehicle maker BYD fell out of the index even though it improved its overall performance because the car and truck manufacturing sector has become increasingly competitive. In fact, it is harder than ever to make it into the Global 100 because Corporate Knights now has a much bigger data pool to draw from.

 

As ever, the G100 methodology was refined this year in a number of areas, including executive pay. But the narrative of the G100 remains the same as it has been since the index was started in 2005: more sustainable companies are not just better for people and the planet. Even in the most challenging times, they are a better bet financially, too.

 

CLIMATE COMMITMENTS	1.5˚C Business Ambition for 1.5˚C	SBTi Science Based Targets Initiative	FCCA Fashion Charter for Climate Action	NZAM Net-Zero Asset Managers Initiative	NZAO Net-Zero Asset Owners Alliance	NZBA Net-Zero Banking Alliance

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Methodology

Corporate Knights’ 2023 ranking of the world’s 100 most sustainable corporations is based on a rigorous assessment of more than 6,000 public companies with revenue over US$1 billion. All companies are scored on applicable metrics relative to their peers, with 50% of the weight assigned to sustainable revenue and sustainable investment. Nine of the indicators have fixed weights; the rest are assigned weights according to each industry’s relative impact in relation to the overall economy. After quantitatively analyzing data for 25 key performance indicators, using the Corporate Knights methodology, this year’s overall scores were converted to letter grades.

Awarded to the top company​

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2022 GLOBAL 100

2021 GLOBAL 100

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The post The 100 most sustainable companies are still outperforming in tumultuous times appeared first on Corporate Knights.

Steel is one of the world’s most carbon-intensive products (accounting for roughly 7% of human-produced CO2 emissions, the International Energy Agency’s Iron and Steel Technology Roadmap says), so having a corporation that makes steel products top Corporate Knights’ Global 100 ranking of the world’s most sustainable companies may seem surprising.

However, during its long history, Schnitzer Steel has developed into a global leader in the collection, processing and sale of the world’s most recycled product: steel. The company generates most of its revenues from recycling steel and other metals. And about a third comes from forging recycled scrap steel into finished products in electric arc furnaces that are powered by hydropower, making the metal extremely low carbon.

It’s only the second recycling company and the first steelmaking company to earn the top spot in the Global 100 since its inception in 2005, highlighting the growing importance of both the circular economy and low-carbon metals in creating a more sustainable future.

The company’s rise to the top of the ranking has been rapid. Last year was the first time it appeared in the index, when it placed 15th. While Schnitzer’s business model leaves it well placed to embrace sustainability, the spark for its current performance came almost a decade ago when the company launched what it called a sustainability framework.

“We’ve been recycling for about a century,” says Tamara Lundgren, Schnitzer’s CEO, chair and president. “But how do we incorporate that into a framework that our employees, suppliers, investors and communities can identify with? Weaving the bigger picture together with the specific targets into everything we do is what has allowed us to garner this honour.”

In 2019, the company set about bolstering its framework by adopting specific goals and metrics to track progress. These included reducing Scope 1 and 2 greenhouse gas emissions from recycling operations by 25% from 2019 levels by 2025, and reaching net-zero GHG emissions for all operations (steel manufacturing, metals recycling and auto dismantling) by 2050.

“For an ‘old economy’ company to be recognized as a sustainability leader is a great example of how sustainability principles can be successfully applied to an industrial company.”

—Tamara Lundgren, CEO, Schnitzer Steel

Schnitzer has not set specific Scope 3 emissions targets yet because it’s working through how best to account for and verify the emissions inventory data of the various external operations in its supply chain, Lundgren explains. “Once we have our arms around that information, we can confidently set and publish science-based Scope 3 targets. In the meantime, we are still pursuing Scope 3 emissions-reduction initiatives that provide low- and net-zero-carbon solutions for our customers. Our GRN Steel product offering is a good example of such an initiative.”

This year, Schnitzer’s emissions were 24% lower than in 2019, its baseline year when it started tracking its GHGs. This reduction has come from the introduction of measures such as investments in best-available-technology emission control systems that, at the company’s Oakland, California, facility, reduce its Scope 1 emissions by around 3,500 metric tons of carbon dioxide equivalent a year. Other measures include improved energy efficiency, the use of alternative fuels and resource-conservation projects.

For all its sustainability credentials, the company’s operations aren’t without environmental impact. Recycling metals, while essential to the circular economy, can be a hazardous business. Its Pick-n-Pull car recycling subsidiary paid US$2.5 million in 2022 to settle allegations from 14 district attorneys in California that the company had illegally disposed of toxic materials and had stormwater pollution issues. “When contacted by prosecutors, Pick-n-Pull promptly implemented improved procedures and practices relating to their hazardous waste disposal,” said Contra Costa County District Attorney Diana Becton.

A few years ago, Schnitzer Steel was also involved in a legal dispute with the Oakland Athletics baseball team over the presence of a metals shredding plant near the team’s proposed new ballpark on the waterfront. An appeals court ultimately sided with the company.

Reduce, reuse, recycle

Schnitzer’s approach to sustainability has ultimately paid off, with the company returning a top-quartile performance on a range of Global 100 indicators. It saw a 74% increase in energy productivity over last year and made significant improvements in water (69%) and carbon (55%) productivity. It also scored well for its proportion of non-male board members (five out of nine are women) and racially diverse executives, while it also saw a significant drop in its worker injury rate. The company’s ranking also received a boost by its linking of its CEO’s pay to the achievement of sustainability targets (11% of variable compensation is tied to reaching these goals) and its policy of offering paid sick leave.

As for the profit side of things, last year was the second-best year in the company’s history. “Our people and planet goals are clearly not coming at the expense of profit,” Lundgren says.

“For a company that is 116 years old and that many consider to be ‘old economy’ to be recognized as a leading force in sustainability is a great example of how sustainability principles can be successfully applied to an industrial company.”

Schnitzer’s ascension to the top of the Global 100 is also quite timely, given the recent focus on how to decarbonize hard-to-abate industries, including steelmaking, and the importance of metals in the energy transition. Lundgren points out that technologies of the future like electric vehicles, wind turbines and battery storage are more metals-intensive than their fossil-fuel-powered predecessors.

Yet there is still a widespread ignorance of the importance of recycling steel, copper, aluminum and nickel – all of which Schnitzer recycles using its advanced metal recovery systems – in the energy transition, Lundgren adds.

“There has been underinvestment in metals and mining for years, and there are shortages of some critical ferrous and non-ferrous metals, which we recover and recycle,” she says.

“We can’t eliminate these shortages, but we can alleviate them. Metals recycling is one of the foundational pillars for global decarbonization.”

The post How a one-man scrap metal recycler became the world’s most sustainable corporation appeared first on Corporate Knights.