It’s the 10th anniversary of the Paris Agreement, that lofty climate pledge that has helped push – in some cases reluctantly – countries toward carbon-cutting measures. COP30 organizers are determined to make this year different, shifting from “ambition to implementation,” and they’re making the point with a backdrop of stark inequality.  

“We cannot hide the fact that we are in a world with lots of inequalities and where sustainability and fighting climate change is something that has to get closer to people,” André Aranha Corrêa do Lago, president designate for COP30, said in an interview with the Associated Press. “President Lula wants this to be the COP of truth. He wants people to be told the truth about how climate change will affect their countries,” he added in September.  

Brazil proved to be its own study in contradictions in the lead-up to Belém, which has made headlines for a dearth in accommodations for the influx of thousands of delegates, as well as a controversial new highway cutting through rainforest to facilitate the conference. South America’s largest country, with a population of more than 212 million, Brazil has sought to regain environmental bona fides that were left in tatters under the previous administration of Jair Bolsonaro, when deforestation ran rampant in the Amazon.  

Luiz Inácio “Lula” da Silva, former union leader turned president, assumed his third term in office in 2023 with bold pledges to end deforestation in the Amazon by 2030, boosting the use of satellite monitoring and other mechanisms to guard against illegal logging and mining in the so-called lungs of the earth. He also established a dedicated ministry for Indigenous Peoples as a way to protect their rights, setting out to demarcate their territories. In the lead-up to COP30, Brazil launched a tropical-forest conservation fund that aims to raise US$125 billion. Hosting COP30 was an important show of his government’s environmental commitment. Brazil has pledged to reduce its emissions by 59% and 67% below 2005 levels by 2035. But various activists and organizations have drawn attention to the cracks in Brazil’s narrative, not least for its plan to continue to exploit its oil reserves.  

Lula has pushed for Brazil to drill in the mouth of the Amazon, arguing that the development will help the country complete its energy transition. The Brazilian Institute of Environment and Renewable Natural Resources approved the drilling of an exploratory well in an offshore oil field in the Amazon, a site that had long been in the sights of the national oil company, Petrobras. The petroleum giant had previously been denied rights to explore, in large measure because of doubts over its ability to respond to oil spills or other accidents in the ecologically sensitive area. In its October approval, the environmental watchdog said the company had made various improvements to its emergency response plan, which led to the green light. 

Brazil is also pushing ahead with new mining projects for critical minerals, with as many as 800 mining companies exploring in the Amazon. “There is no energy transition without mining,” Alexandre Silveira, minister of mines and energy, said in early 2024. 

“Brazil cannot lead the world to a cleaner, healthier future by loosening environmental regulations, promoting a fossil fuel build out, and allowing mining projects that violate Indigenous sovereignty and destroy carbon sinks like the Amazon,” Patricia Rodriguez and Jan Morrill wrote in a commentary for Earthworks, an organization that advocates against oil, gas and mining pollution.   

The question of environmental regulations has exposed fault lines within Lula’s administration. Environment and Climate Change Minister Marina Silva, an internationally acclaimed environmentalist, slammed a decision by the Brazilian Senate in May to approve a bill that loosened environmental licensing rules, calling it a “death blow” to important protections in Brazil. Her position in turn drew the ire of industry and other sectors. The legislation was later modified, earning Silva’s support. 

But the showdown underscored the powerful forces that are at play in Brazil, which has taken an even more prominent role on the international stage as President Lula presents one of the clearest voices of opposition to U.S. President Donald Trump and his trade war tactics.  

In opening remarks at COP30 last week, Lula stressed the need for true climate commitments, to “take the scientific warnings seriously” and “face reality.” He closed by thanking people for coming to the Amazon.

“Many people did not believe that it was possible to bring a COP to an Amazonian state, because people are more used to parading around big cities,” he noted. “We wanted people to come here to see what the Amazon really is.”

The post Brazil’s balancing act at COP30 appeared first on Corporate Knights.

“The choices and solutions are not really gonna work unless labour is involved with them,” said Dana Kuhnline, director of Reimagine Appalachia. It works with union leaders and environmental grassroots groups to bring good jobs to coalfield communities that need them. “I think that’s a lesson climate activists really have to take to heart.”

The reality of a warming world was a central concern for UPS, Amazon, and airport workers who demanded, and in many cases won, concessions protecting them from extreme heat. But the biggest gains were made by the 150,000 members of the reinvigorated United Auto Workers, or UAW, who made a just transition a key demand in one of the most high-profile strikes of the year. Though the union’s primary demands concerned wages and sick days, no small amount of negotiating focused on the looming transition to electric vehicles. Workers wanted to ensure the factories that will make that happen for Ford, General Motors, and Stellantis will be union shops, with wages and benefits equal to those provided at traditional auto factories. Forty years of internal organizing brought UAW to a place where it was willing and able to address energy transition, whereas in previous years, its leaders had gotten fidgety at the idea.

Autoworkers were right to be concerned. Many of the sectors making decarbonization happen are not unionized (this is particularly true of Asian and European automakers with factories in the United States). Salaries also run lower on average than those paid by fossil fuel industries, where good pay and benefits were hard won, often with union contracts written in the blood of workers from more contentious times. Yet many workers in those fields remain hesitant about the coming changes — California oil workers, for example, have been far less supportive of policies supporting the energy transition. That’s why many labour experts considered it a big deal when UAW overwhelmingly approved a contract that will deliver higher wages, assure its members a role in the EV transition, and possibly lead toward greater unionization of the auto sector.

“The UAW strike showed the vision a lot of people have been looking for,” said J. Mijin Cha, an environmental studies professor at the University of California, Santa Cruz. “The way you have power is through money or through people. We’ll never have as much money as the fossil fuel industry, so we need people.”

It’s also given a public face to work that’s happened all year in meetings and negotiations between unions, climate activists, public officials, and employers. In many of the nation’s fossil fuel communities, clean energy projects — often buoyed by federal incentives that require employing union workers — have embraced organized labour. In West Virginia, for example, the United Mine Workers and United Steelworkers signed contracts with battery factories. Solar Holler, which will install photovoltaic panels throughout the state, is working with the International Brotherhood of Electrical Workers to create apprenticeship pathways and a measure of long-term job stability.

Labour leaders and climate organizations are jumping at the possibility that a skilled workforce with a strong training pipeline could bring jobs to struggling fossil fuel communities. Union involvement, they said, will ensure that those jobs remain local, as opposed to going to an out-of-state contractor, and offer competitive wages.

“Our main concern is local hire, and getting the people that have been affected by this economic transition from coal,” said Beau Hawk, who with a labour coalition called Labor at the Table. It strives to represent labour interests and ensure funding from the Inflation Reduction Act and bipartisan infrastructure law is spent in the communities where it’s most needed. He said the organization hopes to build a solid apprenticeship infrastructure and ensure long-term job security that will buoy communities in which the instability of the fossil fuel industry has left wide gaps.

Environmental organizations became vocally supportive of labour this year, with Sierra Club, Greenpeace, and others supporting the UAW’s calls for a just EV transition and vaunting union contracts in the energy transition space as they advocated for climate policy.

“We need both movements to create pressure and we need legislative changes to really capitalize on that,” Cha said.

Unions eye EV campaigns

As the excitement of the year winds down, Cha says, the only way to codify labour’s victories is to increase funding to the National Labour Relations Board and integrate labour standards into the green energy buildout. While the IRA heavily encourages using unionized labour for federally funded infrastructure projects, incentives are not the same as mandates. Michigan has taken some steps in this direction, with Governor Gretchen Whitmer signing a policy package that created an energy transition office and guaranteed union jobs for clean energy workers.

Without such action, Cha said, many trade unions — representing many of the carpenters, welders, electricians, and other labourers who are sorely needed in the race to build the infrastructure of the energy transition — may not trust the renewables industry to provide for them.

Meanwhile, United Auto Workers is setting its organizing sights on 13 automakers that have so far been resistant to union campaigns. Even as the UAW announced its win last month, Toyota factories in Kentucky and Alabama had already raised their base wage to $28 per hour. A nascent union drive has started at Tesla, a notorious union-buster. Hyundai, which operates electric vehicle battery plants in the South, has said it will raise factory pay beginning next year. Solar workers in New Jersey, fed up with unstable, seasonal labour and low pay, asked the UAW for help. “These are the jobs of the future,” the effort’s leaders wrote in an op-ed. They vote on their union this week.

On Monday, UAW president Shawn Fain visited Chattanooga, Tennessee, to support a renewed campaign at Volkswagen, where two failed unionization attempts cast doubt on labour’s chances with foreign automakers in the South. Thirty percent of VW employees have signed on, a move reportedly met with intimidation by the company, and Fain delivered a letter to management indicating it is on notice for illegal union-busting. That’s in line with the tough and ambitious tone the UAW has taken this year.

“We may be foul-mouthed, but we’re strategic,” Fain said in October. “We may get fired up, but we’re disciplined. And we may get rowdy, but we’re organized.”

This article originally appeared in Grist. Read the original story here.

Grist is a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. Learn more at Grist.org

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Deforestation levels are down a dramatic 55.8% from 2022 to 2023, according to the Monitoring of the Andean Amazon Project (MAAP). The largest declines occurred in the Brazilian-controlled part of the jungle, which dropped 59%, and in Colombia, which plunged 67%. Peru’s forest loss dropped 37%. “Compared to the peak year of 2020, forest loss has dropped by over two-thirds, or 67.7%,” MAAP said in a press release.

The political backdrop is impossible to ignore. President Luiz Inácio “Lula” da Silva, Brazil’s left-wing leader, has been rehabilitating the country’s environmental reputation after the tenure of Jair Bolsonaro, who created the conditions for open season on forest districts. Colombia’s president, Gustavo Petro, has also made the energy transition and environmental protection a cornerstone of his mandate.

The eight Amazon nations that gathered for a summit in Belém, Brazil, in August agreed to adopt more aggressive conservation methods, although they fell short of committing to stop deforestation altogether. Brazil has the largest share of the Amazon, with 60% stretching out across its territory.

An estimated 20% of the Amazon has already been cut down, driven largely by aggressive agricultural expansion, illegal mining, logging and fires. A record-setting drought this year has also primed the Amazon for forest fires, in particular in the swaths that have degraded and are in poorer health, which amounts to 40% of its surface.

Agriculture is a particular threat to the preservation of crucial carbon-capturing forest stocks around the world. In Brazil, the area occupied by agriculture grew 50% between 1985 and 2022, according to MapBiomas, gobbling up 95.1 million hectares. Much of that growth occurred in the Amazon. In its latest report card on corporate deforestation, the non-profit Ceres assessed 53 major companies, including Cargill and Procter & Gamble, facing “the greatest risks” from sourcing soy, timber and palm oil. “Most of them lack robust no-deforestation policies, despite recognizing the importance of deforestation action,” Ceres reports. Adidas and Amazon got failing grades.

U.S. food giant Cargill announced in November that it would speed up its promise to eliminate deforestation and land conversion from its supply chain of key crops, including soy, corn, wheat and cotton, in Brazil, Argentina and Uruguay. The company had already pledged to produce deforestation-free commodities and conversion-free soy across South America by 2030 but now says it will do so by 2025 in those three countries.

Mighty Earth, a global environmental advocacy organization, called Cargill’s announcement “important but incomplete,”  noting that it is one of the “top drivers of ecosystem destruction in Latin America.”

“Bolivia experienced a 32% increase in primary forest loss between 2021 and 2022 – four times the rate of Brazil. This is, in part, due to Cargill’s continued willingness to buy from suppliers engaged in deforestation,” Mighty Earth CEO Glenn Hurowitz wrote in November. “We’re calling on Cargill – along with the signatories of the COP27 Agribusiness Roadmap – to agree to a cut off date of 2020 to ensure this incomplete policy does not spark a ‘race to bulldoze’ in biomes such as the Grand Chaco and the Chiquitano ahead of 2025.”

The post Some light in a dark climate year: Amazon deforestation is down 56% appeared first on Corporate Knights.

The stakes of the matter are clearly spelled out in a 113-point document, dubbed the Belém Declaration for the Brazilian city in which it was signed by the countries that form the Amazon Cooperation Treaty Organization (ACTO): Bolivia, Brazil, Colombia, Ecuador, Guyana, Peru, Suriname and Venezuela.  

The group, meeting for the first time in 14 years at a gathering called the Amazon Summit, agreed to “advance a new common agenda” in the world’s largest rainforest, a vault of biodiversity.  

“Cooperation, integrated vision and collective action are fundamental to address political, social, economic and environmental challenges in the Amazon region,” the document states, pointing to mounting biodiversity loss, water and soil pollution, wildfires and poverty as key issues. 

ACTO has pledged to set up an Amazon Alliance to Fight Deforestation, which will include “conservation units” focused on “stopping the Amazon region from reaching the point of no return” while respecting the rights of Indigenous Peoples and local communities. The leaders also vowed to initiate dialogue on an integrated air traffic control system that could boost surveillance of illegal activity, including drug trafficking and unauthorized mining and logging, along with deepening scientific research in the region.  

“It has never been so urgent to resume and to expand on this cooperation. The challenges of our era and the opportunities that are before us demand joint action,” Brazilian President Luiz Inácio “Lula” da Silva said at the summit.  

But for all its important pronouncements, the agreement falls short of getting the eight nations to agree to stop cutting the rainforest down. The most they could muster was expressing “the urgency of agreeing on common goals by 2030 to fight deforestation, halt the advance of illegal natural resources extraction activities, and promote the approaches to land-use planning and transition to sustainable models with the ideal of reaching zero deforestation in the Region.” 

At a time when climate calamity is gripping the globe, environmental activists say the measures announced are far too little.  

It has never been so urgent to resume and to expand on this cooperation.

 

– Brazilian President Luiz Inácio “Lula” da Silva

“The planet is melting, we are breaking temperature records every day. It is not possible that, in a scenario like this, eight Amazonian countries cannot put in a statement, in bold letters, that deforestation needs to be zero and that exploring for oil in the middle of the forest is not a good idea,” said Marcio Astrini, executive secretary of the Climate Observatory, a Brazil-based environmental organization. 

The outcome was widely considered a political defeat for Brazil’s president, who has been lobbying for months to convince his neighbours to commit to ending deforestation by 2030.  

Indeed, Lula has been marshalling an about-face on Brazil’s environmental reputation, which took a beating under the presidency of Jair Bolsonaro. Bolsonaro relaxed deforestation and environmental policies, leading to a dramatic increase in logging and driving the rainforest, known as the “lungs of the earth,” to belch out more carbon dioxide than it absorbs. In the last month of Bolsonaro’s presidency alone, some 218 square kilometres of Brazilian rainforest were decimated, an increase of 150%. The Lula reversal is already in motion, with deforestation dropping by 34% in the first six months of his presidency.  

According to Reuters, Bolivia, which is still seeing deforestation increase, refused to agree to the 2030 deadline, while CNN reported that Guyana and Suriname also balked at the commitment.  

Bolivia and Venezuela are the only Amazon countries, among a global list of more than 100, that did not sign on to a 2021 agreement made at COP26 to halt deforestation by 2030, Reuters reported. 

But the politics of the region were on display in other ways, as Colombia’s president, Gustavo Petro, gave an impassioned speech urging his neighbours to stop drilling for oil and gas in the Amazon, something he called “total nonsense” given the state of the world. He also proposed creating an Amazon NATO that would start to apply coordinated military muscle to protect the rainforest, along with a special court “to prosecute crimes against the Amazon, recognizing that it has rights.” None of the ideas were adopted.  

The solution is to abandon coal, oil and gas.

 

– Colombian President Gustavo Petro

Colombia, for its part, has backed an Indigenous-led plan to protect 80% of the Amazon from logging by 2025. But Petro suggested that even zero deforestation won’t be enough to turn the clock back. “The solution is to abandon coal, oil and gas,” he said. His proposal for a moratorium on fossil fuel extraction in the Amazon was rebuffed by other nations, according to Climate Observatory, among them Brazil, which is the biggest oil producer in the region. 

Petro had pointed words for his progressive allies and the seeming reluctance to take more forceful climate action.  

“The right wing has an easy escape, which is to deny the science,” he said. “For progressives, it is very difficult, because it creates another form of denial, which is to postpone decisions.” 

“Politics can’t escape from the economic interests that stem from the aptly named fossil capital,” he added. “That’s why the COPs fail, as the clock ticks closer to extinction.” 

Lula had told the summit that Brazil is committed to the green energy transition and plans to be a leader in the production of solar, biomass, ethanol and green hydrogen. Oil production, which is slated to expand in Brazil, is a fraught political topic in the country, with a state-owned oil company vying for drilling rights at the mouth of the Amazon river.

In comments made following the meeting, Brazil’s minister of foreign affairs, Mauro Vieira, maintained that Colombia’s position on oil is not out of step with its neighbours. “I insist on this: we do not have a different position; it is convergent, and each country will have the pace that is within its reach,” he said.  

The Amazon Summit culminated with the formation of a new tropical rainforest bloc that adds the voices of the two Congos, Indonesia, and Saint Vincent and the Grenadines to the Amazon nations, to advance their concerns at the UN’s next climate conference, in November. Among their asks: that the rich nations of the world follow through on their promise to allocated $600 –billion to climate finance by 2025.

Lula told industrialized nations that it’s time to make amends for the destruction caused by their rampant pollution. “It’s nature that needs money,” he said.  

The post Can Amazon nations save the rainforest if we keep cutting it down? appeared first on Corporate Knights.

While ramping up sales of electric passenger vehicles is important and inevitable, last-mile freight delivery offers the lowest-hanging fruit for rapid reduction of carbon emissions. As of today, Natural Resources Canada data show that transportation-related emissions account for 20% of all Canada’s emissions, and freight-related sources represent 42% of that. A 2020 World Economic Forum report predicted that growing demand for e-commerce could bring 36% more delivery vehicles into inner cities by 2030 and increase traffic congestion and emissions by more than 30% in the world’s top 100 cities – problems exacerbated by increased demand for same-day delivery, which more often sees half-empty trucks making rounds. If nothing is done to change the course, the Calgary-headquartered Pembina Institute warns, emissions from last-mile freight delivery will outpace those of passenger vehicles by the end of the decade.

Meanwhile, Canada has committed to reducing its greenhouse gas emissions by 40% to 45% below 2005 levels by 2030 and to being net-zero by 2050. Reversing the emissions trajectory of last-mile deliveries is key to keeping Canada and the world on track for meeting emissions targets.

Government investment

The first step is targeted investment. The federal government’s spring budget announced funding for a number of measures that would help accelerate the EV transition, including $56 million over five years to implement standards for ZEV (zero-emission vehicle) charging and fuelling stations. There’s also $46 million allocated to advancing Canada’s critical battery mineral supply chain and a tax break of 50% for corporations and small businesses that manufacture zero-emission technologies.

There’s less in the way of funding for individual businesses looking to convert their fleets. The federal Incentives for Zero-Emission Vehicles (iZEV) program allows businesses to write off 100% of the purchase costs of eligible zero-emission passenger vehicles up to $55,000. Quebec offers businesses the same incentive as consumers, meaning that zero-emission vehicles with sticker prices of $60,000 or less qualify for a rebate of $8,000. British Columbia’s fleet program is the most robust in Canada: companies can recoup up to one-third of the purchase price of medium- and heavy-duty zero-emission vehicles, or two-thirds for tourism and hospitality businesses, up to a cap of $100,000 per vehicle through the Specialty Use Vehicle Incentive.

Governments can also lead by example. American President Joe Biden announced in January that the U.S. government’s 650,000-unit fleet (most of which are postal vehicles), will be replaced with electric models. To date no similar commitment has been made by the Government of Canada.

Automakers retooling

Each of the Detroit Three automakers has committed at least $1 billion to retool vehicle assembly plants in Southern Ontario to EV production. The most pertinent development for fleet operators is General Motors’ commitment to convert its CAMI assembly facility in Ingersoll, Ontario, to produce battery electric delivery vehicles, making it the first large-scale production plant in Canada to do so.

FedEx Express has signed on to be the first customer for BrightDrop, the GM subsidiary with products to be assembled at CAMI in Ingersoll. The first of an undisclosed number of FedEx BrightDrop vehicles are expected to be operational by the end of 2021. The entire FedEx parcel pick-up and delivery fleet will be zero-emission by 2040, with 50% of all new vehicle purchases to be electric by 2025 and 100% by 2030.

Ford Canada announced in May that more than 450 commercial customers have stated intentions to purchase its Ford E-Transit, which benefits from battery development shared with the Mustang Mach-E BEV.

“A leadership position would require committing to an all-electric fleet by 2030 or soon thereafter. They would have to be all-electric starting now.”

–Ralph Torrie, director of research, Corporate Knights

Total cost of ownership

According to a December 2020 study by Canadian fleet-tracking firm Geotab, nearly two-thirds of North American fleets would reduce their operating costs by swapping to EVs today. As with passenger vehicles, the up-front purchase cost of a battery electric delivery vehicle is higher, but the reduced operational costs lead to a break-even point after which the cost of running the EV is demonstrably lower over time.

Lion Electric, a medium- and heavy-duty EV manufacturer based in Saint-Jérôme, Quebec, offers battery electric Class 6 cargo, Class 8 cargo, Class 8 refuse and Class C, D and A school bus products. Although up-front costs for vehicles and charging stations can vary depending on the size of the fleet and existing infrastructure, the benefits already outweigh the drawbacks in today’s economics, and the situation only stands to improve, says Gary Lalonde, vice-president of truck sales for Lion Electric.

Lalonde says that fleet operators can expect to spend 80% to 90% less on electricity than on diesel fuel, depending on their location within Canada. Electric motors are also more reliable and require less upkeep, which he says means EVs have reduced maintenance costs thanks to the lack of oil changes, diesel exhaust fluid costs and overall downtime (time that trucks are not out doing deliveries because they’re having maintenance performed on them).

In comparing a Lion6 to a diesel-powered Class 6 truck, Lion Electric data shows a current total cost of ownership for the Lion6 that is 18% lower and begins to pay back over 7.7 years of ownership, while cost projections for 2024 see those figures improve to 41% and 3.3 years, respectively, as prices come down. This is based on an estimated useful life for each truck of 10 years, 52,000 miles driven annually and fuel consumption figures of 1.18 kWh per mile and maintenance costs of $0.16 for the Lion6 versus 7 miles per gallon, $0.40 per mile in the diesel equivalent.

More players accelerating EV uptake

Amazon, which is expected to account for 40% of the U.S.’s e-commerce sales by year-end, has contracted to receive 2,500 of Lion’s battery electric trucks by 2030. This is in addition to the 100,000 Rivian battery-electric delivery vans Amazon will receive beginning in 2021, most of which will be on the road by 2024. The shift to ZEVs is part of Amazon’s broader commitment to being carbon-neutral by 2040.

IKEA Canada is, indirectly, a Lion Electric customer. The home furnishing retailer has partnered with last-mile delivery provider Second Closet, which has ordered 15 Lion6 trucks. IKEA Canada announced in April its commitment to fulfilling 100% of its deliveries with zero emissions by 2025.

Purolator currently operates 323 hybrid-electric vehicles and has committed $1 billion toward reaching net-zero by 2050. The company says that residential deliveries have increased 50% during the pandemic and that it is piloting zero-emission low-speed electric delivery trucks and electric cargo bikes in Toronto and Montreal to help green last-mile deliveries. Those electric delivery vehicles are based on Ford’s F-59 platform and electrified by Motiv Power Systems.

This deployment marks California-based Motiv’s first collaboration with a company in Canada.

Ralph Torrie, director of research at Corporate Knights, says the time is now to convert all corporate fleets to zero-emission vehicles. “A company that is claiming it will have an all-electric fleet by 2050 is saying that they will be followers, not leaders, in the transition. A leadership position would require committing to being all-electric by 2030 or soon thereafter. To be nearly all-electric in 2030, they would have to be buying all-electric starting now.”

He adds that a commitment to electrifying sooner than later has another critical advantage: “It hedges against the real possibility that fossil fuel vehicles purchased now will indeed be stranded assets before they are fully depreciated, because of rising carbon prices that render their continued operation more expensive than their replacement with EVs.”

As more companies look at reducing emissions by converting their delivery fleets to electric, the lineup of product offerings is expanding in lockstep. For last-mile deliveries and all other vehicles, Torrie says, EVs are a clear winner: “It’s a bit like comparing a car to a horse.”

Stephanie Wallcraft is a multiple-award-winning automotive journalist based in Toronto and is the president of the Automobile Journalists Association of Canada.

This story appears in Corporate Knights’ upcoming Summer Issue.

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“In Canada, Amazon’s plastic footprint is disproportionately large, generating an estimated 21.3 million kilograms of plastic waste in 2019 – 1.2 times more than in India, and more than Japan, Brazil, Spain and Mexico combined.”

Oceana Canada is calling on Amazon to offer plastic-free options.

It’s also petitioning the federal government to expand its proposed single-use plastic ban list to include additional problematic plastic items, resins and material types. “The six single-use items identified in the proposed ban list do not significantly contribute to the 3.3 million tonnes of plastic waste that is thrown away every year in Canada. As stated by the Minister, the ban covers less than one per cent of Canada’s current plastic use –less than 47,000 metric tonnes.”

Considering Canada’s plastic use is expected to increase by 30% by 2030 and Amazon continues to experience record-breaking sales, environmental advocates want action to be taken immediately.

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The COVID-19 pandemic is pushing every industry into the future, and the investment industry is no exception. Canadian investors are increasingly embracing the shift away from more expensive mutual funds and into lower-cost exchange-traded funds (ETFs). According to a report from the Investment Funds Institute of Canada, more than $18 billion has flowed into ETFs so far in 2020, compared to only $4 billion into mutual funds. As the stock market crashed and recovered in March, ETF investors stayed the course by investing $3 billion, while mutual fund investors panicked and sold more than $14 billion.

A big part of the growth in ETF assets has come from so-called robo advisors like Wealthsimple, which automate the process and make it very easy for people to start investing in ETFs. These robo advisors have only increased in popularity during the pandemic: Wealthsimple, for example, saw twice as many sign-ups in March of this year compared to March of last year. Not every robo advisor offers a socially responsible portfolio, but for those that do, approximately one third of new investors opt in. Up until now, most of the offerings were similar and offered a very loose definition of “socially responsible,” so I’m very happy to see Wealthsimple raising the bar.

I wasn’t impressed when Wealthsimple launched its first socially responsible portfolio in March 2016. The portfolio consisted of a mishmash of exchange-traded funds (ETFs), all with different and often conflicting definitions of social responsibility. Wealthsimple itself admits that the original methodology left a lot to be desired. Thankfully, the company updated the portfolio in June by launching its own socially responsible ETFs, with lower management fees and a unique methodology.

With more than $5 billion of assets under management, it’s worth examining Wealthsimple’s new socially responsible portfolio to see whether it really lets people “invest in a better world” – or is just clever marketing. Wealthsimple’s updated socially responsible portfolio is chiefly made up of two new ETFs: the Wealthsimple North America Socially Responsible ETF (ticker: WSRI) that includes Canadian and U.S. companies, and the Wealthsimple Developed Markets ex-NA Socially Responsible ETF (ticker: WSRD) that includes companies from Europe, Japan and Australia. Both ETFs trade on the Toronto Stock Exchange and use the same screening methodology to determine which companies are allowed in. WSRI charges an annual management fee of 0.2%, while WSRD costs 0.25%.

Contrary to some of the ETFs in Wealthsimple’s old socially responsible portfolio, the new ETFs explicitly exclude weapons manufacturing, defence contracting, tobacco, alcohol, adult entertainment and any company found to be in violation of the UN Global Compact (principles covering human rights, child labour and corruption). The new funds also exclude companies related to oil, gas and coal, making them fossil-fuel free. Additionally, the top 25% of carbon emitters in each industry are scrapped, as are companies with fewer than three women or less than 25% female representation on their boards of directors. According to a 2019 report from Osler, a leading business law firm, just 39% of TSX-listed companies have more than one female director on their board. That means Wealthsimple’s gender screen excludes roughly 60% of Canadian stocks.

Even with all those screens, Wealthsimple’s new ETFs still include a number of companies that would raise eyebrows among many ethical investors. Its North American ETF includes Amazon, which is being sued by Canadian delivery drivers claiming unfair treatment, and Facebook, which is facing a growing boycott from advertisers unhappy with the social media’s hands-off approach to hate speech.

The fundamental problem with the “one-size fits all” approach to ethical investing that robo advisors and funds offer is that the methodology never goes far enough for some investors – and goes way too far for others. Wealthsimple has stated that the new funds will continue to improve and evolve, so we could see something like a racial equality screen introduced (pretty please). But there are currently only 233 companies in both ETFs combined, and I would expect additional ethical screens to keep reducing diversification.

Does the new portfolio, as advertised, let people “invest in a better world”? Well, not quite. It does a good job of excluding problematic companies, and it does include a handful of stalwarts on Corporate Knights’ list of the Global 100 Most Sustainable Corporations in the World, including McCormick. But the portfolio has lacklustre exposure to companies whose main business is providing sustainable solutions such as renewable energy, electric cars, green buildings and energy efficiency – all themes that are outperforming with good long-term growth prospects. For example, in the Wealthsimple Developed Markets ex-NA Socially Responsible ETF (WSRD) fund, just 20% of the companies have a significant line of green or sustainable products or services, according to the Corporate Knights Green Flag Database.

For the time being, investors who want to invest in sustainable solutions will need to incorporate additional products like green ETFs or community bonds if they want their investment to have a positive impact.

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing. This article was provided by Corporate Knights magazine.

The post How sustainable are Wealthsimple’s new socially responsible funds? appeared first on Corporate Knights.

Meanwhile, protests have erupted across the world calling for racial equality and police reform. Although these protests have had little impact on the market, they’ve raised a good question: can investors support companies that promote minority empowerment while earning market-rate financial returns?

The NAACP Minority Empowerment ETF (ticker: NACP) is an exchange-traded fund (ETF) from Dallas-based Impact Shares, which specializes in socially conscious ETFs. According to its fact sheet, the NAACP ETF “is designed to provide exposure to U.S. companies with strong racial- and ethnic-diversity policies in place, empowering employees irrespective of their race or nationality.”

While the fund is not sponsored or endorsed by the National Association for the Advancement of Colored People, it holds shares of companies screened according to 10 racial-equity metrics inspired by the NAACP’s opportunity and diversity report cards: criteria such as board diversity, freedom-of-association policies and conflict-mineral programs. To be included in the fund, companies must report on at least five of the 10 criteria and be free of major controversies. Research is performed by Sustainalytics (recently acquired by Morningstar), and the in-depth methodology can be found by downloading the “playbook” from the Morningstar site.

Incorporating social-equity criteria into the decision-making process is important work, but investors will question whether this requires a sacrifice in financial performance.

Since its inception in July 2018, the NAACP Minority Empowerment ETF has closely tracked and actually outperformed the S&P 500 by about 4%. I doubt that the outperformance is due solely to better social-equality scores (the fund skews toward bigger companies with more momentum), and we don’t know whether the outperformance will continue. But fund investors have been happy to earn higher-than-market-rate returns so far.
Investors considering the NAACP Minority Empowerment ETF should think of it as a replacement for a traditional U.S. equity fund in their portfolios. Despite the strong financial performance and social-equity lens, there are some negative trade-offs to consider. The fund currently contains only 172 companies – well below the 500 companies in the S&P 500 – which makes it less diversified. And with only about US$4 million in assets under management, liquidity issues could arise.

In addition, the fund has a high management-expense ratio (MER) of 0.75%, well above the 0.09% investors pay to own the Vanguard S&P 500 Index ETF. Although this might seem like a money grab, Impact Shares is a non-profit organization that donates any net proceeds from the ETF to the NAACP. Unfortunately, these fees come out of investment performance, and investors don’t get a charitable receipt. There is an argument to be made that investors would be better off paying a lower management fee and making their own donations to charities, non-profits or crowdfunding campaigns.

The NAACP Minority Empowerment ETF is clearly a big step toward investing in racially diverse companies, but does it go far enough? A quick look at its list of holdings reveals some big head-scratchers, such as Amazon. The methodology lets the e-commerce giant through because it publishes workforce race and gender data. What’s telling is that African Americans represent 26.5% of Amazon’s workforce but just 8.3% of management and 10% of the board of directors.

Amazon is also dealing with labour disputes inside its warehouses, as employees voice concerns over minimal protections against COVID-19. The company is notoriously anti-union and has fired workers who have attempted to organize employees – including Christian Smalls, a Black employee who led a walkout in March asking for better sanitation in Amazon’s Staten Island, New York, warehouse.

Amazon’s inclusion in the NAACP Minority Empowerment ETF speaks to the challenge of supporting corporate-diversity champions while earning market-rate returns. Ultimately, conscientious investors will need to decide for themselves whether the ETF’s methodology goes far enough, and whether they would be willing to sacrifice the financial returns from Amazon’s growth.

Whether it goes far enough or not, I’m happy there’s an option for investors to support companies that are leading on diversity policies and minority empowerment. The NAACP Minority Empowerment ETF might not be perfect, but it is a clear step in the right direction. I’m hopeful that data will continue to improve as investors ask tough questions about how companies are addressing racial inequality.

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing.

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It’s too early to predict how COVID-19 will reshape the future. The travel, entertainment, hospitality and personal-services sectors have already been devastated. A Canadian Federation of Independent Business survey found that 32% of owners who had shut down their businesses in March were unsure if they would ever reopen.

The media has also identified the first winners of this global reckoning. Setting aside for a moment the immeasurable personal tragedies caused by the virus, here are some preliminary results:

• Greater concern for the environment could be COVID’s legacy, wrote columnist Gwynne Dyer. “The clean air over China’s cities in the past month, thanks to an almost total shutdown of the big sources of pollution, has saved 20 times as many Chinese lives as COVID-19 has taken . . . People will remember this when the filthy air comes back and want something done about it.”

• Movements for social change may be empowered by governments’ rapid moves to restrict behaviour and unleash financial support. At TheConversation.com, U.K. economist Simon Mair said the virus “is expanding the economic imagination. As governments and citizens take steps that three months ago seemed impossible, our ideas about how the world works could change rapidly.”

• Retail and food workers are finally getting some respect, with companies such as Maple Leaf Foods, Loblaw, Sobeys, Metro and Walmart granting raises to frontline staff, introducing the concept of “hero pay.” Though Corporate Knights asks whether $2 extra an hour is enough for the grocery employees putting their lives on the line. Canadian banks are giving frontline employees an extra $50 a day and additional paid time off; TD Bank Group is giving bonuses of up to $1,000.

• Tycoons such as Bill Gates, Mark Zuckerberg, Jack Ma and Elon Musk, in most cases, polished their reputations by funding hospitals, medical supplies and research. But the Canadian billionaire community, wrote the Toronto Star’s David Olive, “has hardly been heard from on arguably the greatest crisis Canada has ever faced.”

• Manufacturers of everything from hockey skates to gin began retooling to deliver personal protective equipment to those who need it most. Heavyweights that have stepped up include H&M, Ford, GM, Dyson and Gucci’s parent company, Kering. Several companies have been saluted for establishing COVID relief funds, including Facebook, which set up a US$100 million relief fund for businesses in 30 countries, and meal-delivery companies, whose services helped thousands of restaurants stay open. Facebook also set up an additional US$100 million fund to support news media. Sony, Netflix and Amazon created their own US$100 million global relief funds — though striking Amazon employees say not enough is being done to keep them safe.

And then there are the hidden heroes: the workers delivering essential services across dozens of sectors, as well as anyone who is stepping up to support aging relatives during the crisis, check up on their neighbours, shop for the quarantined, donate money or haul canned goods to food banks. We’re banging on our pots and pans in thanks for you, too.

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One option under the microscope: plastics that come from the earth and – the hope is – return to the earth. Seafood shells, sawdust, cornstarch, algae, tree bark, chicken feathers – pretty much any natural substance you can think of is being converted to plastic. Compostable plant-based plastics in particular have been officially pinned to the vision board of a new circular economy. In August, Molson Coors became the latest of 125 corporations (including L’Oréal, Mars, PepsiCo, The Coca-Cola Company and Unilever) to join the Ellen MacArthur Foundation pledge to phase out unnecessary plastic packaging and work toward “100% reusable, recyclable, or compostable plastic packaging by 2025.”

Behind the scenes, chemical giants, packaged good firms, university labs and start-ups are hustling to find workable plant-based options. Even oil companies are getting in on the action: a joint venture led by global French oil major Total is lobbying to have its sugarcane-based PLA bioplastic replace conventional cups, plates and the like in airports, food courts and restaurants across India, as the country brings in a national single-use plastic ban in October.

Some analysts suggest that, with aggressive growth, bioplastics have the potential to replace up to 49% of conventional plastics by 2050, which Project Drawdown, founded by environmentalist Paul Hawken, estimates could save a whopping 4.3 gigatonnes of carbon (equivalent to taking 1 billion cars off the road for one full year) by 2050, particularly if we make those plastics out of waste. So why are plant-based plastics facing pushback from critics and a barrage of bad press? Unless some thoughtful solutions are cooked up before the coming wave of revamped packaged goods hits stores, bioplastics may be wasting their big break.

The promise

At this point in the game, plant-based bioplastics are still a drop in the bucket: just 1% of the 330 million tonnes of plastics churned out globally. But that market is growing quickly. A potential boom in bioplastics could be a boon for Canada, too, where the conventional plastics-manufacturing industry now rakes in $35 billion annually. A third of that manufacturing is for packaging, which MSCI – a global provider of stock market indexes – warned in August could end up as stranded assets if the global trend of restrictions on single-use plastics continues.

Today in Canada, there are coffee lids being developed from shrimp shell waste in Vancouver, cling wrap from canola stalks in Alberta and Guelph, and water bottles from sawdust in Sarnia. At one Toronto start-up, hungry bacteria are turning food-waste slop from green bins into plastic packaging. And researchers in BC and Toronto are even working on capturing waste greenhouse gases and converting that to fuels and plastic.

It’s all quite innovative and exciting in that start-up kind of way. These second-generation waste-based materials in development should avoid many of the shortcomings of first-generation bioplastics: the corn- and sugarcane-based plastics that currently dominate the market have been slammed for diverting arable land from food crops, using resource intensive industrial agriculture, clearing rain forests (which increases greenhouse gas emissions) and other environmental woes.

And the compostable plastic varieties among them should have an extra green edge. While recyclables are often shipped halfway around the planet and are increasingly rejected and shipped back home, you can’t haul rotting food long distances. That means composting facilities are usually within 200 kilometres (and often under 50 km) of your kitchen green bin. Except that for a host of practical reasons, the majority of those bioplastics are currently condemned to  landfill (where even 40-year-old hot dogs have been found perfectly preserved). What gives? It turns out solving the plastic crisis isn’t as clear as, well, a Ziploc bag.

What do you mean, “bioplastic”? Regulating plant-based plastics

For businesses looking for feel-better packaging options, bioplastics seem like a win-win: you’re replacing petroleum with plants and they’re supposed to be biodegradable. Right? The thing is the term bioplastic is a loose catchall for a wide range of plastics made of biological materials. They can be as little as 25% plant-based. And the lion’s share – 80% of bioplastic – isn’t designed to biodegrade at all. In fact, most are designed to last – like the bioPET now being used by Hasbro in some of its toy packaging and Coca-Cola/Dasani in their PlantBottles. Once manufactured, they’re molecularly identical to regular PET pop-bottle plastic – it’s just that the ethanol they’re made with is partly derived from sugarcane. And they’re designed to be recycled, not green binned – or tossed in an ocean for that matter.

A plastic bag after being submerged in sea water for three years. Courtesy of University of Plymouth.

After three years in seawater or soil, even a bioplastic bag labelled “biodegradable” was found very much intact and able to hold groceries, in a recent study by the University of Plymouth in England. A thin bag labelled “compostable” did dissolve after three months in seawater, but it’s a crapshoot, since certified compostable plastics are designed to break down in the 55 to 60 C heat of industrial composting facilities. New “marine biodegradable” labels for bioplastics are coming out of Europe, though certified plastics could take anywhere from 28 days to a year to fully break down in the ocean.

Confusion about what bioplastics are and do led California and now Washington State to ban the sale of plastic products that call themselves “biodegradable” or “compostable” – unless they’ve been certified compostable to a specific standard. Last summer, Amazon coughed up $1.5 million in settlements after two dozen California district attorneys went after the retailing giant for carrying pseudo-compostables.

The big hitch is that – except for some green bin liners in certain cities – even products that are certified to the highest compostability standards aren’t accepted by the vast majority of curbside green bin programs in Canada. That’s partly because people dump all kinds of plastics into their green bins, and neither green bin nor blue bin processing facilities can tell the difference between a genuinely compostable coffee cup from a regular plastic one, let alone a quasi-biodegradable one that doesn’t really break down.

As Emily Alfred, Toronto Environmental Alliance’s waste campaigner, puts it, “It basically ends up being an expensive trip to the landfill.”

In September, a British parliamentary committee warned that without proper industrial composting infrastructure in place to make sure this type of packaging breaks down correctly, compostable bioplastics were confusing consumers, possibly encouraging littering and contributing to ocean plastic in the British Isles. “Fundamentally, substitution [with bioplastics] is not the answer,” concluded the committee’s chair, MP Neil Parish.

This after Oregon’s composting facilities penned an open letter to America’s largest compostables certifier, the Biodegradable Products Institute, in April explaining that they no longer accept compostable packaging, partly because “not all ‘certified’ compostable items will actually compost as fully or quickly as we need them to.”

Add to that recent headline-grabbing studies finding that fibre-based compostable packaging at big food chains like Chipotle was grease-proofed with persistent perfluorinated alkyl substances (PFAS) and you get a taste of the controversy dogging compostable plastics.

Banning PFAS from food packaging, as Denmark did this September, would help. So would having national rules and regulations around compostable packaging, which is exactly what the Compost Council of Canada, Recycle BC and others have been lobbying the feds to take on.

If compostable plastics are to be rescued from the “good ideas gone wrong” trash heap, the right regulation will be key.

Good things grow in Ontario?

Back in June, Ontario’s Ministry of the Environment, Conservation and Parks (MOECP) set up a Compostable Products Technical Working Group to set clear rules for compostable packaging and “ensure these materials are accepted by existing and emerging green bin programs across the province.” The group has been holding multi-stakeholder consultations all summer trying to hammer out solutions.

By all accounts, finding common ground between composters and packagers has been tricky. “Half the room was from the composting industry, half the room was from the packaging sector, and the two of us don’t see eye to eye on this at all,” says Paul Taylor of Bio-En Power, which runs one of the largest organic waste processing facilities  in Canada. “Some of the packaging guys don’t understand why we’re so negative and unwilling to get on board.”

Taylor warns that compostable plastics are going to face more systemic hurdles since Canada’s composting sector has been steadily moving away from old-school open-air aerobic composting sites – the kind that were capable of processing genuinely compostable plastics. Instead, more and more regions, like Durham and Peel, are shifting to less odorous (read: less complaint-prone) airless anaerobic digestion (AD) facilities. At this point, AD plants, like the city of Toronto’s, can’t handle compostable plastics, and all the weird stuff people put in green bins – plastics, glass, ceramics, trailer hitches – get fished out on the first day and sent to the dump.

So now what?

Put a stripe on it

First things first: if Ontario and Canada opt to regulate compostable plastics, advocates suggest they follow in Washington State’s footsteps. While outlawing non-certified compostables, it also forced manufacturers to stop making certified compostable packaging that looked like regular plastic. It must now be easily identifiable, through labels and high-visibility markings like green stripes. Some in Europe are experimenting with adding digital watermarks to items like compostable yogurt cups and such so that optical sensors can easily ID them as compostable, just as they do other plastics.

Putting clearly identified compostable packaging in blue bins (instead of green bins) where it could be sifted, sorted and sent to industry-funded composting facilities might be one answer for cities like Toronto.

Making brands pay for composting compostables

Getting industry to fork out the costs of composting its waste is something the Compost Council of Canada’s Susan Antler has been advocating for years. “We’ve watched blue box funding from industry climb every year, and recyclables make up just 15 to 20% of the waste stream. Meanwhile organics [green-bin-type waste] makes up 40 to 50% of the waste stream and we’ve never had any industry funding.” Adds Antler, “There’s a huge opportunity to work together.”

Alan Blake of the Packaging Consortium (PAC) is on board with making producers of compostable packaging pay into extended producer responsibility (EPR) models like BC’s and soon Ontario’s, where packaging producers are responsible for paying the full costs of managing their packaging at the end of its life. Says Blake, “If Canada is serious about a zero-plastic-waste economy, boy, we’ve got to step up pretty quickly to incentivize the industry to deal with [bioplastics] rather than send it to landfill or burn it.”

Reps from Ontario’s Ministry of the Environment told Corporate Knights that the province is looking at how EPR should be applied to “all paper and packaging in Ontario, including compostable products and packaging.”

Not that simply having EPR will solve all of bioplastic’s woes. In BC, compostable packaging like clear corn-based PLA cups found in blue bins, along with other non-recyclable plastics, are typically turned into engineered fuel to be used as a replacement for coal in industrial processes. If found in Vancouver’s green bins, compostables are currently sent to landfill. It’s not quite a circular economy dream come true. But Recycle BC’s David Lefebvre says they’re working on it. “[We’re] trying to solve the riddle everyone is trying to solve.”

Propping up the single-use economy?

Even if that composting riddle is solved, Sarah King, Greenpeace Canada’s plastic campaigner, is concerned that bio-based packaging is a distraction. Like the British MPs, she wants to see a fundamental shift away from single-use packaging altogether and worries that switching to disposable bioplastics will only delay the transition to a genuinely circular economy that has reuse/refill models at its centre. But, King adds, “if some compostable alternatives were going to work, they would need to be derived from existing [bio]waste and be made from post-consumer content.”

Setting high recycled-content targets (for both bioplastics and regular plastics) will be essential. As Marcelo Lu, CEO of chemical company BASF Canada (which makes certified compostable green bin liners and now produce bags), tells Corporate Knights, “There will be no need for new plastic in the future.” Particularly if national standards also restrict unnecessary and hard-to-recycle packaging and

set firm targets for reuse models – like the reusable $4-deposit takeout containers just introduced at Farm’r Eatery and Catering on Toronto’s Esplanade or the $5-deposit rentable cups in 200 Montreal cafes.

The future for bioplastics

New research tells us the Plastic Age is already etching itself into the earth’s fossil record. While it’s still early days, bioplastics that truly return to the earth without doing more harm may have a role in rectifying that. For the time being,  businesses looking to serve up compostable plant-based plastic will have to bypass residential green bins altogether. Some sporting arenas, festivals, concerts and facilities like the National Arts Centre in Ottawa (which started diverting 500,000 food and drink containers to composters in May) have made certified compostable servingware work since they can control what products are used on the premises and they’ve contracted willing composting facilities to process that waste directly.

“Compostable plastics may not be ready for prime time yet,” says Michael Okoroafor, one of the minds behind Coke’s PlantBottle and VP of global sustainability at McCormick Foods, which has signed on to the global pledge to go 100% recyclable, reusable or compostable by 2025. But he adds, “Here’s the good news: We now have a rallying cry that is galvanizing industry to drive forward with the circular economy.”

A version of this Corporate Knights story appeared in The Toronto Star.

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