Add to the above fact that there is currently about $45 trillion of assets under management by 1,314 United Nations Principles for Responsible Investment (UNPRI) signatories – up from only $4 trillion back in 2006. UNPRI signatories commit to integrate six principals covering environmental, social and governance issues into their investment decision making and ownership practices.

Clearly, responsible investing is growing in importance – not only because it is good for our planet’s long-term prosperity but also because there is mounting evidence that it can lead to superior investment returns. For instance by subjecting equities from the high-carbon sectors in a given index to a performance test, related to normalised greenhouse gas emissions, and removing the ones with a below average performance relative to sector peers, it is possible to obtain a portfolio of securities with a lower carbon footprint while achieving superior total returns compared to the original index.

The low carbon U.S.

In the simulated case below, the “Low Carbon US” achieves a 56.7 per cent reduction in normalized greenhouse gas emissions with the bonus of an extra 7.8 per cent in total returns compared to the original index over the time period January 1, 2008 to August 31 2014.

The increased investor appetite for responsible investing has been made possible in part by the remarkable rise in the availability of sustainability data. Over the past decade, the number of corporate sustainability reports – the most common format for corporations to disclose their periodic environmental social and governance performance – has grown to 7,445 in 2013 from a mere 644 in 1999. A combination of heightened investor demand, activism and mostly regulatory intervention, coupled with a move towards greater transparency initiated by leading corporations, have all combined to drive increased sustainability disclosures.

For instance, on October 17, 2014, the Singapore Stock Exchange announced its intention to adopt a comply-or-explain mechanism for sustainability reporting for all of its listed companies. When implemented, this piece of regulation will add to the inventory of close to 170 policies in force around the world that are meant to encourage or mandate corporate sustainability reporting.

More, not better

While the number of sustainability reports has increased substantially, a closer look reveals some important findings. In its latest analysis of sustainability disclosure trends among the world’s stock exchanges, Corporate Knights Capital found that a sizeable chunk of the world’s large listed companies are failing to disclose their performance on the seven basic sustainability metrics – employee turnover, energy, greenhouse gas emissions (GHGs), injury rate, payroll (total employee compensation), waste and water. These seven basic indicators are objective measures of corporate sustainability performance that are broadly relevant for companies in all industries. Moreover, they are generally accepted as being the most widely tracked core sustainability metrics by various stakeholder groups including investors.

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For instance, only 39 per cent of the world’s 4,609 large listed companies disclosed their GHGs for the year 2012. For water, that percentage is 25 per cent. As for employee turnover rate, it is a paltry 12 per cent. While disclosure rates vary by sector, it means that a majority of the world’s large companies are not still not disclosing these seven basic sustainability metrics – in the case of GHGs, arguably the most universally recognized strategic sustainability issue, it has not been reported by more than 61 per cent of the world’s large listed companies. Even more disconcerting is the finding that only 128 (2.8 per cent) of all of the world’s large listed companies disclosed all the seven basic sustainability metrics for the year 2012.

Essentially, the remarkable rise in the number of sustainability reports has not been accompanied by a similar increase in the reporting of the basic sustainability metrics.

Equally troubling is that disclosure rates on the seven basic sustainability indicators appear to be plateauing. As one illustration, the number of large listed companies that disclosed their energy use increased by 88 per cent from 2008 to 2012 but only by 5 per cent from 2011 to 2012. A similar reporting slowdown is occurring on the other six metrics.

Clearly, a majority of companies are still not transparent enough to allow investors to make well-informed decisions over the long-term horizon by integrating foundational sustainability criteria. A point has been reached where virtually all the large companies that would have engaged in the reporting of the basic sustainability metrics have done so already and the remaining large companies likely have little or no intention of doing so under present circumstances.

Investors demand data

This is in stark contrast to investors’ growing interest in building sustainable investment strategies. Despite the notable progress made in corporate sustainability reporting, as shown above, there is still much room for improvement – not only in terms of quantity, but also in terms of consistency and timeliness. While virtually every company has reported on their financial performance six months after their year-end, only 63 per cent of these companies have disclosed their sustainability performance by then.

It is therefore not a surprise that in October 2014, the UNPRI and Ceres’s Investor Network on Climate Risk (INCR) launched an initiative to convey investors demands for more timely comparable and material disclosure of corporate sustainability information to the International Organization of Securities Commissions (IOSCO) in order to inform their investment decisions.

The IOSCO stands in a critical position in this regard through its direct relationship with member stock exchange regulators. Investors of all descriptions are encouraged to demand swift and decisive action from the IOSCO to provide greater clarity around sustainability reporting requirements, ideally to be integrated as part of existing financial disclosures.

The necessary tools are already available. For instance, IOSCO can take inspiration from UNCTAD’s Best Practice Guidance for Policymakers and Stock Exchanges on Sustainability Reporting Initiatives to facilitate a consistent implementation of corporate sustainability reporting requirements among member exchanges. This guidance is a voluntary technical aid to assist stock exchanges and regulators who have responsibility for corporate reporting practice and are contemplating the introduction of a new imitative – or further development of an existing one – to promote corporate sustainability reporting.

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Johannesburg model

The relative success of the Johannesburg Stock Exchange in spurring sustainability disclosure amongst listed companies through the implementation of the listing requirement incorporating the King III Code of Corporate Governance stands as a benchmark for inspiring investors and stock exchanges around the world. Ceres’ Investor Listing Standards Proposal, Recommendations for Stock Exchange Requirements on Corporate Sustainability Reporting, which engages global stock exchanges via the World Federation of Exchanges (WFE) on a possible uniform reporting standard for sustainability reporting by WFE members may also serve as a basis for the implementation of corporate sustainability reporting requirements among member exchanges.

Likewise, governments stand in a pivotal position to influence corporate sustainability reporting and are encouraged to renew their efforts in this direction. Existing policies around the world vary in many respects in terms of whether they are mandatory or voluntary, broad or narrow (i.e., applies to various industries as opposed to only one or a few specific industries) and prescriptive or principles-based (i.e., states which specific items of sustainability performance metrics are to be reported and how).

These wide differences in the type of policies may, in part, explain the differences in disclosure performance by the large listed companies of the seven basic sustainability metrics among the world’s stock exchanges, as shown in Corporate Knights Capital’s latest report on corporate sustainability disclosure trends. However, it was found that there is a strong association between policies that are mandatory, broad and prescriptive and better corporate sustainability disclosure performance. Policy-makers may use this finding as a framework to identify case studies as a framework to identify case studies and benchmarks for implementation in their own jurisdictions.

Disclosure frameworks

The advent of non-governmental standard-setters such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and voluntary disclosure frameworks, such as the CDP and the Climate Change Reporting Framework, have without a doubt, helped to popularize sustainability reporting. However, there exists a proliferation of fragmented and often competing reporting standards and frameworks when it comes to sustainability reporting that may bring confusion to both the reporters and the users.

A rapid and successful conclusion of the work among the participants to the Corporate Reporting Dialogue will bring about much needed clarity and comparability in corporate sustainability reporting, which will encourage more corporations to embrace more coherent and useful disclosures of sustainability performance. The Corporate Reporting Dialogue brings together financial reporting standard-setters and sustainability reporting frameworks to promote greater alignment, consistency and comparability between corporate reporting requirements, standards and frameworks. An endorsement by the major groups of users of corporate disclosures – both financial and non-financial – of the outcome of the work of the Corporate Reporting Dialogue will also help in determining the de facto global standard in corporate reporting.

The explosion in corporate sustainability reporting over the last 10 years or so has certainly helped to fuel the remarkable rise in responsible investing. Responsible investing is a much heralded practice whereby investment decisions consider long-term economic, social and environmental sustainability. However, current corporate sustainability reporting practices are at odds with the needs and level of interest from investors, such that a renewed effort is needed to bring sustainability reporting to the next level. Governments, regulators both public and private, business and non-business organizations, and investors all have an important role to play to make this happen.

The post Empowering responsible investing for long-term prosperity appeared first on Corporate Knights.

That’s what founding chair Chris Ragan, a professor of economics at McGill University, is counting on. To achieve that high standard, Ragan believes economists are best placed to deliver the message. After all, inaction on environmental issues largely stems from the belief that environmental policy and economic policy stand in direct opposition to each other. We expect environmental groups to say this isn’t true. But have a group of respected economists from across the country debunk this belief and there’s a greater chance someone will listen – and maybe even act.

To give the commission a trans-partisan persona, it enlisted 14 advisors from across the political spectrum, including former Liberal Prime Minister Paul Martin, former Ontario New Democrat Premier Bob Rae, and former Reform Party leader Preston Manning. Steve Williams, chief executive of Suncor Energy, and McKinsey & Co. global managing director Dominic Barton are also part of the advisory board, which includes academics and environmentalists.

Ragan is a former special advisor to the governor of the Bank of Canada, so he knows how government thinks and works. But the challenge he has set up for the commission is complex and daunting. In a nutshell, the goal is to save the environment without increasing the size of government, hurting the vulnerable, undermining the competitiveness of Canadian industries, and triggering the redistribution of resources across provinces.

Corporate Knights recently had the chance to chat with Ragan about the Ecofiscal Commission and how he expects its work over the next few years will unfold and be received:

CK: What is the commission all about?

RAGAN: We are a group of Canadian economists who are very policy savvy, with a great deal of experience in terms of designing and implementing and analyzing real-world policy across the country. We’re backed up by a group of advisors, who really are exceptional Canadians from across business and civil society and the political spectrum. These people all came together, sharing the conviction that a stronger economy and healthier environment are both possible and go together. What lies at the heart of moving forward in both dimensions is a redesign of our fiscal structures across the country.

CK: When was the idea born, and how did it evolve to this point?

RAGAN: I wish I could tell you there was a Eureka moment, but there was not. Over the last few years my head has been thinking about green growth. I have also been thinking about part of the literature that talks about de-growth; literature that I don’t, for the most part, agree with. I’ve also been thinking about environmental policies and how that relates to green growth. All of these things kind of came together leading to this idea that we’re at this impasse in Canada – too many people believe you cannot have a cleaner environment without weakening the economy. I believe this is wrong. So how do you get past that impasse? How about bringing together a bunch of economists who are actually saying a stronger economy and cleaner environment go together? The idea was, that ought to matter. It’s not just the message, but it’s the messengers. This commission is not saying something completely new, but we’ve got a new machine that is assembled to actually do the research and make the arguments. And if we have an advisory board chalk full of exceptional people from across the political spectrum, and from the environment and from business and from civil society, then people will say this is not a venture from a particular part of the political spectrum – it’s not left wing, it’s not right wing – this is something everybody can get behind. So over the past three years we’ve been slowly building that machine.

CK: Are you pleased with how it’s been received publicly so far?

RAGAN: I’m delighted. If you had asked me at the end of October to write down what a successful launch day would look like, I don’t think I would have written down the whole set of things that happened on that day and the day or two following. It has exceeded my expectations, frankly.

CK: Is this a sign that the mood of the public and media is shifting? Is the timing right for this initiative?

RAGAN: A number of people have said to me over the last few days the timing for this couldn’t be better. I wish I could say it was all carefully planned, that somehow we just hit the nerve of the people at the right time, but we’re not that clever. What’s true is that the mood or mindset is starting to change on this. Canadians are starting to wonder about how to do better economically and how to do better environmentally. I think they do see some problems. They are starting to detect that there are environmental costs that are no longer abstract but are real. But they’re looking for a way forward. What the commission is offering or suggesting is there is a way forward, there is a very sensible way forward, but in order to identify this path you need to get a bunch of people who are going to look in detail at the fiscal structures, and you have to engineer those fiscal structures. Most normal people don’t think about the details of the fiscal system, but that’s exactly what these commissioners are good at. So I think there’s hopefulness in the commission that is tapping a nerve. Yes, it has been fortuitous timing.

CK: Is this filling a gap created in spring 2013 after the federal Conservative government shut down the National Roundtable on the Environment and the Economy?

RAGAN: The motivation and thinking for the Ecofiscal Commission long predates that event. But the commission is also quite different. One of the significant things about the Ecofiscal Commission is that it is fully independent. It does not rely on any government for financing or anything else. That’s very important. Independence not only gives us security, but that independence gives us credibility. If there’s a group of economists that are speaking their own minds, and if we can get 12 economists to say here is a particular message on pricing pollution, and here’s a way to do it in a way that’s fair and mindful of the competitive challenges and of jurisdictional realities – that we are fully independent and non-partisan – then people are going to say “Let’s hear what these guys have to say.”

CK: The question is, will government listen to you?

RAGAN: It’s hard to make a blanket statement about governments in this country. There are a lot of governments. Our attention is focused on provinces and cities, because we think that’s where most of the action is, quite frankly. All of the issues we’re going to be addressing are very relevant for provinces and cities, and most of them are only relevant for provinces and cities. At some point we’ll write a report on residential waste and scarce landfill capacity. That’s a very local issue – nobody wants to make the federal case about residential garbage. And if you talk about water access or water pricing in some areas of the country where water scarcity is becoming a real issue, that’s very much a provincial issue and probably a local issue, but not a federal issue. On carbon, frankly, we live in a country where three provinces are already acting on carbon, and there’s actually pretty good reasons for that to happen provincially.

CK: How do you get all those governments on the same page?

RAGAN: What we want to do is identify a principle, a basic principal that is really an Economics 101 principle, which guides our thinking in the design of our fiscal structures. Let’s raise more revenue by taxing pollution, and let’s raise less of our revenue through corporate and income taxes and some of the most growth-retarding taxes we have ever created. You can apply it to residential garbage. You can apply it to road tolls. You can apply it to water. You can apply it to carbon. You can apply it to a whole bunch of things. Our job is just to identify those opportunities. The opportunities that are front-of-mind in Halifax may be different from the ones in Winnipeg, may be different from the ones in Vancouver, and that’s fine.

CK: You’ve got your work cut out for you. What’s your game plan over the coming years?

RAGAN: We certainly do have our work cut out for us. Our plan is to be around for five or six years. I am committed to not making this a retirement project for myself. We plan on issuing a report roughly every fourth months – a series of reports over five or six years on a series of issues, but all of them looking through what we call the ecofiscal lens – that is, looking for policy opportunities that involve the pricing of pollution and the recycling of revenues. If done right, we can identify opportunities where various governments can emerge with better economic outcomes and better environmental outcomes. We’ll be travelling the country talking about the reports we have just released, but also gathering information for the reports in progress. This is a really important part. If we are going to write reports that are useful to city and provincial governments from across the country, then we’ve got to really understand and build in some of those local details. That’s only going to happen by talking to people.

CK: Would the commission frown upon the regulatory approach largely adopted so far?

RAGAN: That’s a good question. The general argument that we make in our first report, which we sometimes call our landscape report, is that in a large number of settings pricing is a more efficient policy approach than direct, prescriptive, qualitative regulations. But there are some exceptions. There are situations where regulations actually are okay, and there’s a large number of situations where pricing, whether through a tax or cap-and-trade or some hybrid, is going to be more efficient. If you’re talking about carbon emissions that have multiple sources and those sources are quite heterogeneous in terms of their abatement costs, that would be a pretty good situation for the use of ecofiscal policies.

The post Delivering hope from the mouths of economists appeared first on Corporate Knights.

Duhigg uses the example of former Alcoa chief executive Paul O’Neill, who took a struggling U.S. aluminum manufacturer and turned it around by being obsessed with one operational indicator: workplace safety.

Not only did O’Neill improve the company’s lost-day injury rate to 0.2 per 100 workers, down from 1.86, he created a culture of safety that has since seen the rate drop to 0.125. Workplace safety statistics are now published publicly on the company’s corporate website, in near real time. On O’Neill’s watch, the decline coincided with a quintupling of Alcoa’s net income and a 15-fold increase in revenue.

An impressive accomplishment, one that got O’Neill handpicked by former U.S. president George W. Bush as America’s 72^nd Secretary of the Treasury. And little did he know that, 13 years after leaving Alcoa, his work at the company would be referenced by the U.S. Occupational Safety and Health Administration (OSHA) to support new disclosure regulation – an expanded “name and shame” rule – that has proven highly unpopular with many American businesses.

David Michaels, an assistant secretary with the U.S. Department of Labor, revealed the details at a press conference last November with a cheerleading O’Neill by his side. Under the proposed rule, employers with 250 or more employees would have to start electronically reporting to the OSHA all serious workplace injuries soon after they occur. That data – including company name, type of injury, and cause – would be posted online for anyone to see.

Extreme Disclosure

Citing the fact that about three million American workers at private companies got injured or ill on the job in 2012, Michaels said such a rule is necessary to “save lives and limbs.”

“How will this make workplaces safer?” he asked. “Public posting of workplace injury and illness information will nudge employers to better identify and eliminate hazards.” The better public disclosure will allow businesses to compare themselves against their peers, while prospective employees will have a way to find out how companies in a sector rank on work safety, Michaels explained.

O’Neill, when introduced later, praised the initiative. “I hope it’s a step but not the final step.”

Many industry watchers cringed, including Howard Mavity, an Atlanta-based labour lawyer with the law firm Fisher & Phillips.

“It’s possible this information will be misconstrued and used unfairly to sully the reputations of employers,” wrote Mavity in a guest post on Forbes.com earlier this year. He described the data published as “lagging indicators” of events that have already happened. “Anyone in the safety profession knows that putting too much emphasis on lagging indicators fails to increase workplace safety.”

Employers should be encouraged instead to do better at communicating safety to employees, Mavity added. “They shouldn’t have to waste valuable time defending themselves to the media. Taking the time everyday to remind employees to be safe is what works. Not publicly shaming employers.”

Joe Trauger, vice-president of human resources policy for the National Association of Manufacturers, said the proposed rules would make information publicly available without context and create confusion. “The raw data may result in unfair conclusions or judgments about a company or particular industry based on information that is not indicative of the actual safety record.”

The OSHA forged ahead nonetheless. In September it formally announced the new rule, which will come into force on January 1. It requires large businesses, with some exceptions, to continue reporting job-related fatalities but within eight hours of happening. On top of that, worker amputations, eye losses, and hospitalizations from injuries must be reported within 24 hours. The reports will have to be called in or submitted via a web portal, but industries with low injury and illness rates are not subject to the rule.

Michaels, in a statement, called hospitalizations and amputations “sentinel events” that reveal serious hazards in a workplace. “An intervention is warranted to protect the other workers at the establishment.” The idea is that by putting such public pressure on an employer it will be forced to raise its game.

Going too far?

In Canada, detailed reporting to worker compensation boards is required. For more serious injuries and fatalities, each province’s ministry of labour must be notified. But data is only publicly released once it is aggregated. Only when a company is investigated and formally charged for a workplace incident are its name and details of the event publicly accessible.

“When you look at how the OSHA operates in the United States versus provincial and federal structures here, things are publicized in Canada but not like south of the border,” said workplace safety consultant Jeff Thorne. The media may discover and reveal details independently, but news outlets are picky about what they cover. “Unless it involves a young worker or it’s a major fatality at a large corporation, you may never hear about it.”

He said in Ontario there have been limited discussions about creating a better way to register occupational injuries and fatalities, but whether such a database would be accessible to the public is unclear. “It’s hard to tell how far along that discussion is.”

Norm Keith, a lawyer with Toronto-based Fasken Martineau who specializes in workplace health and safety, said there is definitely a need for better data collection and disclosure standards, allowing apples-to-apples comparisons across geographies and within sectors, but he has reservations about the name-and-shame approach.

“I have many clients going to trial to defend not so much that they think they’re perfect, but because they can’t afford a conviction in a press release,” he said. A company’s competitors are more than happy to highlight that information when bidding for business in hopes of winning a contract.

Authorities need to be careful in how far they go, Keith said. “Is there benefit from a deterrence perspective? Ultimately, there has to be some fairness and consistency in the way they do it.” For this reason, he added, naming and shaming should probably continue to be governed by the courts.

Corporate Knights contacted the OSHA’s media relations department to request an interview. We were told to submit some questions in advance, which we did. Among them: How measurably effective has this approach been so far? Nearly three weeks after the original request, and after two follow-up queries that elicited no reply, the agency has been silent.

Absent supporting research, workplace safety experts will be watching closely over the next couple of years to see if the U.S. name-and-shame rules do, in fact, lead to a reduction in workplace fatalities and injuries. From Corporate Knights perspective, improving workplace safety disclosure standards, and requiring companies to self-report this high-level data in quarterly and annual reports, may be a more effective approach than government’s creating shame lists, especially when companies may not ultimately be charged with a workplace violation.

Such an approach would set a baseline standard for all companies, and give industry leaders, such as Alcoa, a chance to demonstrate best practices and rise above their peers.

(This story is the fifth in a series of articles on workplace safety that will appear on corporateknights.com during October, in partnership with and with funding support from the Canadian Society of Safety Engineering and the Center for Safety and Health Sustainability. Visit our Workplace Safety landing page to follow the series.)

The post Can “name and shame” reduce worker injuries? appeared first on Corporate Knights.

Last year students at the University of British Columbia voted 4-to-1 in favour of having their school divest from fossil fuels. Now, nearly 200 university faculty have thrown their support behind the students by signing a petition calling for divestment. “Some are concerned divestment might hurt the income UBC receives from the endowment, but this need not to be the case,” states an open letter. “There are many opportunities in the market for an endowment to make equivalent or better returns, and studies designed to measure the impact of divestment have found little or no impact on returns.” The university’s faculty association is expected to decide on Monday if it will hold a referendum on the matter. Specifically, the open letters calls for immediate suspension of future fossil-fuel investments and divestment of existing holdings within five years.

We need a market for water: Brookings paper

The Brookings Institution has released a discussion paper that argues for more use of market forces to reduce water shortages in the U.S. west, a problem that is worse than most originally thought. Indeed, NASA research recently reported that the Colorado River Basin – which supplies 40 million people in seven states – is getting sucked dry. Population and economic growth and water overuse are all contributing to a problem exacerbated by dry, low-rainfall conditions brought about by climate change. Resilience needs to be brought into the water systems, argues the paper. “Western states can take an immediate step to enable more-flexible use of water resources by allowing simple, short-term water transactions,” it states. “Water policy should allow someone who needs water to pay someone else to forgo her use of water or to invest in water conservation and, in return, to obtain access to the saved water.” It also argues that state and local governments have a responsibility to establish essential market institutions, such as water banks, “that can serve as brokers, clearinghouses, and facilitators of trade.”

Is “pharming” sustainable?

Corporate Knights editor Tyler Hamilton has a feature today on the risks and rewards of genetically modifying plants to produce vaccines and a range of other drugs, such as a recent treatment for Ebola-infected U.S. aid workers that was derived from tobacco plants. The approach is proving simpler and less expensive than traditional methods, which rely on complicated bioreactor vessels that grow bacteria and animal cell cultures. Using plants also speeds up the drug discovery and production process, and products created can be designed to be edible and stored without refrigeration – a big benefit for developing countries. But the long-term risks, such as cross-crop contamination and pollen exposure to humans, animals and insects, remains a big sticking point for environmentalists and food industry groups who urge caution. What do you think?

Europe does it: tightens noose on GHG emissions

The European Union has historically led the world on efforts to reduce greenhouse-gas emissions, but that didn’t stop member country leaders from raising the bar on Friday. The EU did, in the end, agree to a climate change pact that obligates members to collectively cut GHG emissions by at least 40 per cent below 1990 levels by 2030. As of 2012, the EU cut its emissions by about 18 per cent. This means it will have to make similar progress over the next 15 years. It’s an ambitious goal, but some environmental groups were disappointed that specific national targets are not binding. Other targets include renewable energy having 27 per cent market share on a EU-wide basis and energy-efficiency improvements of 27 per cent – the latter optional. Germany and some others were lobbying for a 30 per cent target for both, but countries such as the U.K. and Poland resisted that push.

Beware fake awards

As a public service to Corporate Knights’ readers, many of them representatives of corporations and startups in the social innovation space, we would like to alert you to an e-mail going around promoting an event called the “2015 Social Innovation Awards.” The e-mail, sent by a person named Sarah Khara, who is identified as a director of the awards organization, outlines nine categories to which organizations can submit applications – with each submission costing $450. Corporate Knights does not know for sure if this award or organization is legitimate, but what we can say is that a Google search reveals no background information about the awards or Sarah Khara. The website supplied in the e-mail – www.socinnovationawards.com – looks well designed, but lacks crucial information about the contest, its history, Khara and other staff, who the judges are, and the judging process. Furthermore, the URL for the website was only created on October 20, and the New York City address given at the bottom of the promotional e-mail appears to not exist. For this reason, we urge all readers who receive this e-mail to proceed with caution. We e-mailed Khara requesting an explanation. We have not yet received a reply.

The post October 24, 2014 appeared first on Corporate Knights.

“I would feel really sad, and that’s just not me,” she said. “I felt like the joy was out of my life. I still haven’t recaptured it.”

What Isman is experiencing is one of the little-recognized consequences of climate change, the mental anguish experienced by survivors in the aftermath of extreme and sometimes violent weather and other natural disasters. The emotional toll of global warming is expected to become a crisis that many mental health experts warn could prove far more serious than its physical and environmental effects.

“When you have an environmental insult, the burden of mental health disease is far greater than the physical,” said Steven Shapiro, a Baltimore psychologist who directs the program on climate change, sustainability and psychology for the nonprofit Psychologists for Social Responsibility (PsySR). “It has a much larger effect on the psyche. Survivors can have all sorts of issues: post-traumatic stress disorder, depression, anxiety, relationship issues, and academic issues among kids.”

A report released in 2012 by the National Wildlife Federation’s Climate Education Program and the Robert Wood Johnson Foundation predicted a steep rise in mental and social disorders resulting from climate change-related events in the coming years, including depression and anxiety, post-traumatic stress disorder, substance abuse, suicide and widespread outbreaks of violence. Moreover, it estimated that more than 200 million North Americans will be exposed to serious psychological distress from climate-related events in the coming years, and that counsellors, trauma specialists and first responders currently are ill-equipped to cope.

“The physical toll has been studied, but the psychological impacts of climate change have not been addressed,” said Lise Van Susteren, a forensic psychiatrist and one of the report’s authors. “We must not forget that people who are physically affected by climate change will also be suffering from the emotional fallout of what has happened to them. Others suffer emotionally from a distance, especially those who are most keenly aware of the perils we face, or, as in the case of children, those who feel especially vulnerable. And the psychological damage is not only over what is happening now, but what is likely going to happen in the future.

“This kind of anticipatory anxiety is especially crippling and is increasingly being seen among climate activists – in some cases rising to the level of a kind of ‘pre-traumatic’ stress disorder,” she added.

Evolution undone

Moreover, society can expect to experience a collective sense of sadness, anger and defeat as it confronts the inevitable, and possibly irreversible, long-term environmental effects of global warming, and the failure to prevent them, according to Van Susteren.

“We are undoing millions of years of evolution, and the situation is a catastrophe,” she said. “Climate activists on the front lines are desperate to convey this to the public, but are told to be wary of paralyzing people with fear. Compounding the issue is that people often generally are not good at knowing they are anxious, or, if they do, often don’t know why.

“Because of the magnitude of the problem, and the fact that our leaders are not responding commensurate with the threat, feelings of vulnerability are repressed and cause unseen psychological damage.”

The report emphasized that certain populations face greater risk than others, including the elderly, the poor, members of the military, people with pre-existing mental health disorders, and especially children.

The report compared what children may be feeling today to the distress suffered by American and Russian children over the threat of the nuclear bomb in the 1950s during the Cold War era, saying that climate change could have the same destructive impact. “Some children are already anxious about global warming and begin to obsess, understandably, about the future, unmoved by the small reassurances adults may attempt to put forth,” the report said.

It recommended that the federal government draft a plan to enact a large-scale response to the mental health effects of global warming, including public education campaigns, increased training for mental health professionals, and developing mental health incident response teams.

Despite the nation’s experiences with previous natural disasters, “the scientific data show that what lies ahead will be bigger, more frequent, and more extreme than we have ever known,” prompting potentially dire mental health impacts, the report warned.

“Many people will experience an inordinate risk and their minds will be changed because of it,” Shapiro said. “Although some people may come out of it stronger, experiencing a trauma can totally change the way you function.”

Learning to adapt

Isman certainly would agree. “Initially, I was numb, running on adrenaline,” she said. “There was a delayed reaction. I didn’t realize what was going on with me emotionally.” Yet, as bad as it was for Isman, it was far worse for others. Nearly 300 people died because of Hurricane Sandy, and many lost their homes permanently.

It’s not just about extreme weather and disasters. Ashlee Cunsolo Willox, assistant professor of community health at Cape Breton University in Sydney, Nova Scotia, has found that rising temperatures linked to climate change in Canada’s north and its impact on ice conditions and snow levels is causing emotional distress for residents of aboriginal communities.

The Inuit of Newfoundland and Labrador’s Nunatsiavut region, for example, usually get around by snowmobile, but more prolonged periods of unusually thin ice is making it increasingly difficult to hunt and make trips for supplies. Feeling trapped and detached from the surrounding natural environment, more are experiencing anxiety and depression, according to Willox’s research.

Members of PsySR worry that continued inaction on climate change will only bring more of the same. The group recently wrote to U.S. Congress, urging lawmakers to address climate change to avoid a mental health catastrophe.

“Without such action, the impact of heat waves, extreme storms and floods, droughts and water shortages, food production problems, lessened air quality, sea level rise, and displacement from homes and communities is likely to pose significant mental health challenges to millions of Americans and billions of others worldwide,” the psychologists wrote in their letter.

The resulting stress and rise in mental illness likely will “harm interpersonal relationships, make people less able to work constructively or do well in school, and ultimately injure the day-to-day functioning of our society and our economy,” the group told Congress. “Hurricane Katrina demonstrated all of these outcomes in microcosm to the American people, and an ample body of research strongly predicts such severe psychological and social consequences.”

Meanwhile, if the world’s nations do not contend aggressively with the dangers posed by a warming planet, “we will have to deal with the reality that we are living in unpredictable, unstable and volatile times when it comes to climate change,” said Laurie Nadel, a psychotherapist who started a support group after Hurricane Sandy.

“When I talk to people in other countries who’ve been living with natural disasters their whole lives, they don’t expect the phones to always work, and they understand that people may not show up on time because a tree might have fallen on the road. They accept that emergencies are part of life and out of their control.

“Their social rhythms have adapted, and that’s what we’re going to have to do,” Nadel added. “We will have to shift our mindset to accepting uncertainty and unpredictability, and develop a different belief system about what we’ll have to contend with when the order of things changes.”

The post Climate anxiety appeared first on Corporate Knights.

It started with law firms, the most anally retentive of the bunch. Then public relations firms. Now government agencies and non-governmental organizations are starting to pile on.

So far, no operators of Nigerian e-mail scams or marketers of miracle weight loss pills have requested my consent.

The current barrage of what I consider legitimate contacts, however, has me tuning out. I’m not opting in, and not necessarily because I don’t want to receive these messages. It’s because I don’t have time to properly weigh so many requests that, at the moment of asking, are lower than low priority.

It’s a shame, as businesses will see their contact lists decimated. No wonder many legal experts are calling it one of the world’s most draconian – and ill-conceived – electronic messaging laws in existence.

More interesting is that the e-tsunami I’m experiencing is just a fraction of what, technically, I should be receiving. According to a member survey recently conducted by the Canadian Federation of Independent Business (CFIB), just 15 per cent of small business owners are “fully aware” of the new law, and 62 per cent have taken absolutely no steps to comply.

This inaction isn’t because of ignorance. It’s the result of bewilderment, uncertainty, and in some circumstances a lack of resources. Sure, large businesses are taking action because they have legal departments pushing them and they have the financial resources to attempt compliance, but even there, there is mass confusion.

The Canadian Radio-television and Telecommunications Commission has issued guidance, but it emphasizes this is “not intended to serve as legal advice.” It advises companies to obtain independent legal opinion, which would be great if the legal community had certainty itself. It doesn’t.

The only thing that is clear is that lawyers are going to make a lot of money, already overburdened small businesses will have to spend what to them is a lot of money, and the penalties for non-compliance are shockingly huge: Up to $1 million for a violation by an individual and up to $10 million for a business.

For comparison, the first time you get convicted for drinking over the limit while driving in Ontario you will get fined $1,000. If you steal someone’s car, expose genitals to a minor or get caught trafficking in LSD, the maximum fine is $5,000 on summary conviction.

Mind you, jail time is always a possibility on those examples, but you get the point. The potential of you being fined $1 million and your company $10 million for sending an unwanted e-mail – even one that allows for easy future opt-out – is like using a Tomahawk missile to kill that raccoon hunting for grubs in your lawn.

Here’s what some legal experts are saying about the new law:

· David Fraser, an Internet and privacy lawyer at McInnes Cooper, has called the law “onerous, complicated and cumbersome.” In an interview with the CBC he said a child e-mailing neighbours about plans to open a lemonade stand for charity would be considered a spammer under the law.

· Tim Murphy, chief marketing partner for law firm MacMillan and chief of staff to former prime minister Paul Martin, has called the law “bureaucratically ridiculous” and flagged it as a nightmare for business.

· Technology lawyer David Canton describes the law as overkill. “The significant amount of time, effort, and money that it will take for legitimate businesses and not-for-profits to comply with the act will come nowhere close to justifying any meagre benefit,” Canton wrote this week in his blog.

In other words, the law is supposed to go after sharks but what it’s mostly going to net are dolphins. Time and time again courts have struck down laws that are too broadly designed, particularly when they restrict constitutional freedoms – i.e. freedom of expression, commercial or otherwise.

This one appears on a path to failure.

Perhaps many businesses are counting on it. Why, after all, go through the time and effort and cost of becoming compliant with a law that’s destined to be challenged and will ultimately crumble under the weight of popular and court opinion?

The new law requires businesses to get consent to send e-mails of a commercial nature, broadly defined. On top of that, the business must keep detailed records of that consent and have a system in place allowing people to opt out in the future. The CFIB, citing feedback it has received from members, said the cost of compliance ranges between $30,000 and $50,000 for small businesses.

And it’s not just e-mail under the microscope. Text messages, instant messages, Facebook and Twitter messages – all sorts of social media communication are captured by the law. How to comply here is a mystery to me.

There are exemptions and distinctions – law professor Michael Geist, one of the few I can find who supports the law, has a good summary here – but all of it adds up to unnecessary complexity and excessive vagueness. The law is both overly specific and frustratingly broad. Figure that one out.

It defines spam as the “sending of unsolicited commercial electronic messages.” It doesn’t seem to matter that the commercial message in question is being sent to one, 10, 1,000 or 1 million recipients. If you don’t have that recipient’s consent, it is deemed spam in the eyes of the law.

Even if that message allows the recipient to automatically unsubscribe, it is still considered spam if there is no prior implicit or explicit consent.

The Oxford Dictionary defines spam as “irrelevant or unsolicited messages sent over the Internet, typically to large numbers of users, for the purposes of advertising, phishing, spreading malware, etc.”

In this regard, Canada’s Anti-Spam Law isn’t really a law designed to attack spam. It’s a law designed, intentionally or not, to scare and attack business.

To hell with that kid selling lemonade.

The post Anti-spam law needs to go away appeared first on Corporate Knights.

Sorry about that, Bob.

Inglis is busy these days, forcing him to multitask when and where he can. A congressman for 12 of the last 20 years, he was dumped from office in 2010 because of his support for meaningful action on climate change – a death wish for any Republican trying to get elected during tough economic times, let alone in a southern state where anti-science views seem to help politicians win votes. But instead of being silenced, Inglis decided to pump up the volume on his climate message.

In July 2012 he founded and launched the Energy and Enterprise Initiative, a grassroots organization that believes America faces big risks in a changing climate and that conservative energy policy – based on the principles of free enterprise and limited government, both proposed and supported by Republicans – is what’s needed to mitigate those risks.

Is the message being heard? There are signs. Coral Davenport, a correspondent for the weekly newsmagazine National Journal, which is targeted at Washington insiders, wrote in May that a “deep internal conflict” within the GOP is brewing. “A concerted push has begun within the party – in conservative think tanks and grassroots groups, and even in backroom, off-the-record conversations on Capital Hill – to persuade Republicans to acknowledge and address climate change in their own terms.”

With global atmospheric carbon concentrations now above the 400 parts-per-million mark – an unfortunate milestone reached in May – it’s about time. Traditionally conservative international bodies are beginning to worry. The International Energy Agency, World Bank and European Investment Bank have all issued stern warnings, and the latter two have committed to stop investments in coal power. There’s a mass movement growing to get cities, universities and churches to divest from fossil fuels. U.S. President Barack Obama, meanwhile, has been forced to place strict emissions on existing coal-fired power plants in the face of Republican resistance to carbon pricing.

Yet the Republican-controlled House of Representatives continues efforts to gut funding for the Environmental Protection Agency and Department of Energy spending on initiatives that support clean energy, including the Advanced Research Projects Agency for Energy.

Inglis, while still congressman, took a risk in May 2009 by tabling his Raise Wages, Cut Carbon Act, which would have required carbon polluters to pay a rising carbon tax over 30 years while payroll taxes were lowered. It fell with a thud.

Timing is everything.

Below are excerpts from Inglis’ drive-by interview with Corporate Knights. On the topic of timing, Inglis assured us that he did make it for his student talk. “After a stop to buy bubbles for my negative externality illustration, I walked into the auditorium as the clock was striking 10 a.m. – my speaking time!”

CK: When did it occur to you that climate change was a serious problem that has to be tackled with some urgency?

INGLIS: When I was in Congress for my first six years – between 1993 and 1999 – I thought this was all in Al Gore’s imagination. Total nonsense. And this was ignorance on my part. I didn’t know anything about it. All I knew is Al Gore was for it so I was against it.

CK: So what caused the shift in thinking?

INGLIS: Our eldest, our son Robert, was voting for the first time when I ran again in 2004. He came to me and said, “Dad, I’ll vote for you, but you’ve got to clean up your act on the environment.” A lot of folks, particularly on radio, told me that listening to my kids was my first mistake. They should be listening to you; not you listening to them, I was told. But I’m the father trying to be like my son. He’s good looking. Smart. Funny. I’m trying to grow up to be like Robert. So that had an impact on me. Also, when I got back to Congress I got on the science committee. I went to Antarctica (in 2006) and saw the evidence in the ice core drillings – CO2 levels that coincide with the industrial revolution. That made sense to me. On another trip to Antarctica, in a stopover at the Great Barrier Reef, I saw the effects of coral bleaching. Those events made it so that I decided to act on energy and climate.

CK: In 2009 you introduced the Raise Wages, Cut Carbon Act, but it didn’t get any traction with Congress, or voters for that matter. Why not?

INGLIS: Note to self – it’s probably not a good idea to talk about that (a carbon tax) in a great recession. What happened is my constituents said to me, “We’re worried about this month’s paycheck. It sounds like you’re worried about something decades away.” So they said get out of here. They booted me out. I knew we were running a great risk the whole time, but I guess I was hoping the moment would come when people would realize the value of solutions over scapegoats. That moment did not come during the 2010 race, but I think it’s going to come. Eventually, our country will return to looking for people who have solutions, rather than people who hunt for scapegoats.

CK: Forced to generalize, how would you describe the Republican position on the issue of climate change?

INGLIS: There are a lot of Republicans – elected Republicans – who reflect the majority of Republicans in the electorate who want a solution to climate change. But the most animated voices are the ones that are able to say “It’s not so,” because they don’t want it to be so. George Mason University had a recent poll with some interesting results. Only 35 per cent of Republicans and Republican-leaning independents agree with the party platform on climate change. Some would say, rightly, that there’s no way anyone would know what the Republican platform says about anything. But do you think those people surveyed might have confused this (platform) for Al Gore? Not likely.

CK: Do you see that position shifting or does it remain firmly entrenched?

INGLIS: I think it is. I hope so. I don’t know so. As the great recession wears off, we will look back and say of this popular rejectionism that it was the vibe of the times. We’re disappointed. We’re upset. We’re angry. It’s rejectionist. It rejects the science; the idea we can come together and take action together. It comes down to not having trust. Eventually that will wear off, and it correlates directly with the pain from the great recession. As the pain subsides that populist rejection will subside, and we’ll get back to solutions.

CK: What in your mind is the solution?

INGLIS: It’s a true cost comparison between competing fuels, where all subsidies are removed and all costs are in. That combination of things would enable the free enterprise system to deliver solutions – innovations that would change the energy mix and clean up the air and improve national security. I’m talking an upstream application of a carbon tax. We would pay out that tax with a dollar-for-dollar reduction in existing taxes. So it’s revenue-neutral, but it would also be government-shrinking. It would give rise to appealing some cumbersome regulations. That’s our plan.

CK: What’s your view of the regulatory path that President Obama is taking?

INGLIS: We think the regulatory approach is precisely the worst way to act. Because, what will happen there is they’ll issue the regulations and they’ll immediately be sued. There will be a slog through domestic courts. Then, at the end of it, if they’re successful, we will impose a cost on carbon in America but nowhere else. We’ll be double losers. We’ll lose employment because production lines will move to places that don’t price carbon, and we will increase global emissions. The movement will be to more energy-intensive locations – China and India, for example. I’d say it would be a triple loser because of the complexity of (complying with) those regulations. It’s the least desirable path. The alternative path, which is completely game changing, is to price carbon here by a tax that is border-adjustable. That is, it’s removed on exports and applied on imports. We think that can be done in a WTO (World Trade Organization)-compliant kind of way. It would be protested by China and India. But if we can get through it, at the end of it China and India would enact a similar price on carbon in their own economies. The result is that you don’t get an increase in global emissions or have the exporting of manufacturing capacity out of the United States. But it has to be revenue-neutral.

CK: What are your thoughts on China moving to price carbon, starting with cap-and-trade?

INGLIS: That, I think, is a very positive sign. I want to trust them, to trust that they have the same self need because even repressive communist dictators have a child that wants to go out and play soccer and not choke on pollution.

CK: Why is it important for conservatives to step up to the challenge of carbon pricing?

INGLIS: The only thing keeping us from a disastrous regulatory approach here is the creativity of conservatives who would come forward with something that would be the alternative that works. That’s what we must deliver. The country is waiting for us. The world is waiting for us conservatives to deliver this thing. We have failed to do that this far on energy and climate. We just want to stick with climate denial.

The post Green elephants appeared first on Corporate Knights.

Although her charm goes a long way, Lee-Brewster also has a compelling pitch. Open an account, she tells them, and have a chance to win a big cash prize. The concept is called prize-linked savings, and it’s capturing the attention of more financial institutions.

With prize-linked savings, a lottery layer is added to a savings product. In the case of Lee-Brewster at Michigan’s Communicating Arts Credit Union, that product is an account with the Save to Win program. The minimum monthly deposit is $25.

Members of the program are awarded the equivalent of a lottery ticket for every $25 deposited, including entry into an annual jackpot of $100,000. Members are free to make one withdrawal every year after the first. “That’s my selling point. You’re not losing anything. You can win just by saving,” says Lee-Brewster, the credit union’s top seller of the unique accounts.

Save to Win is a four-year-old program, unique to North America. Yet it builds on a centuries-long, international line of prize-linked savings products. The combined track record of these products and the research indicate they’re an efficient way to encourage personal savings – especially among those least likely to put money away for a rainy day, but who are most in need of doing so. Despite the historical and academic evidence, and the need in North America for savings innovation, regulatory barriers have prevented testing the concept’s full potential in the U.S. and Canada.

Before taking a closer look at prize-linked savings’ past, it’s important to consider two current financial trends. First, both Americans and Canadians are big into lotteries. In fiscal 2010, according to the Rockefeller Institute, the 43 state lotteries in the U.S. were the main source of state gambling revenue, bringing in about $18 billion. Surveys by the Consumer Federation of America and the Financial Planning Association released in 2006 found nearly 40 per cent of Americans with incomes below $25,000, about a fifth of the general population, thought winning the lottery was the most practical way for them to accumulate hundreds of thousands of dollars.

North of the border, the 2010-2011 Gambling Digest published by the Canadian Partnership for Responsible Gambling reported that the four largest provinces – Ontario, Quebec, British Columbia and Alberta – had all taken in nine-digit net lottery revenues in the previous fiscal year. Ontario led the pack, raking in over $900 million. According to the digest, lotteries were the most popular form of gambling in almost every province.

While money has flowed into lotteries in the U.S. and Canada, savings rates in both countries have dried up. In their Assets & Opportunity Scorecard for 2013, the Corporation for Enterprise Development found nearly a third of American households had no savings account. A survey released in May this year by the Financial Industry Regulatory Authority (FINRA) found 40 per cent of respondents would probably or certainly not be able to come up with $2,000 in case of an emergency. Meanwhile, in Canada, at around the time FINRA released its data, Certified General Accountants Association of Canada noted Canadian household savings rates had dropped from a peak of about 20 per cent of disposable income in the early 1980s to less than 4 per cent by the end of 2012.

What more people do have today is ballooning levels of personal debt, and servicing that debt makes it difficult for individuals to save money. Canadian economist Mark Anielski makes the link to sustainability, equating rising debt levels and the “chronic societal stress” it creates to cancer cells that “grow out of control until they finally consume or destroy their host.” Debt can become the antithesis of wellbeing. Personal savings, to stick with Anielski’s analogy, can be viewed as antioxidants that boost household resilience.

Enter prize-linked savings, which turns the consumer’s weakness for lotteries into saving strength. “That’s precisely what appealed to me about these products when I first heard about them, when I studied them in England and South Africa, and ultimately tested them in the U.S.,” says Peter Tufano.

Currently dean of the Saïd Business School at the University of Oxford, Tufano is a prolific researcher and founder of the Doorways to Dreams (D2D) Fund, a non-profit that supports savings innovations for low-income consumers. In 2009, D2D helped the Michigan Credit Union League launch Save to Win. A year later, 87-year-old Billie June Smith won the first $100,000 grand prize thanks to a $75 deposit.

In order for its credit unions to offer customers such as Smith a Save to Win account, Michigan first had to create a legislative loophole. Without one, the product would have been an illegal lottery. Nebraska and North Carolina followed suit, and this spring Washington became the fourth and latest state to join the Save to Win program after passing its own amendment. Initial results are promising. In April, the D2D Fund reported that the number of credit unions offering Save to Win had increased from eight to 62, serving over 40,000 account holders – mostly with low or moderate incomes – who had saved more than $70 million from 2009 to 2012.

Save to Win’s success comes as no surprise to Tufano. “This is a product that goes back to the 1700s and has succeeded in country after country after country since then,” he says. They include England, South Africa, Sweden, Japan, Indonesia and several countries in South America.

With regards to the U.K., Tufano points to Premium Bonds offered by National Savings and Investments (NS&I), the British government’s savings arm. In 2006, NS&I celebrated 50 years of offering the bonds, which at the time were held by over a third of the population. The first national prize-linked savings program in the U.K. – the Million Adventure – was launched more than 250 years before Premium Bonds as a strategy for coping with debt from the Nine Years’ War.

South Africa is another prize-linked savings success story, albeit one that only lasted three years. Starting in January 2005, the private First National Bank of South Africa (FNB) began offering what was called the Million a Month Account (MaMA). The account included a chance at winning monthly lotteries of up to one million rand, or around $100,000 at today’s rate. Nearly three quarters of South Africans were unbanked at the program’s outset. In mid-March 2008, FNB had opened over a million MaMAs and executives estimated the program stood for just over 7 per cent of all banked South Africans. By the end of that March, however, MaMA was no more. The South African lottery board sued to have the program closed as an illegal lottery, and won.

Unlike the active opposition faced in South Africa, the main obstacle for prize-linked savings in the U.S. has been regulation, or as Tufano puts it, “a history of inertia.” Decades-old legislation intended to protect state lottery franchises and to inhibit banks from taking part in gambling stand in the way. As Tufano has pointed out, these laws were never intended to stop banks and credit unions from offering products such as Save to Win accounts.

The Canadian legal waters for prize-linked savings are largely uncharted. As Toronto-based gaming lawyer Michael Lipton explains, a lottery has three defining legal features: prize, risk and consideration. To not be seen as a lottery in the eyes of the law, at least one of these must be eliminated. In terms of prize-linked savings, this would be consideration, according to Lipton. “If you’re losing nothing by participating in the activity, then that would go a long way to establish there is no consideration,” he says. However, court decisions from opposite ends of Canada suggest a legal battle over prize-linked savings could go either way.

Whereas the legality of prize-linked savings in North America is somewhat untested, the concept’s incentive power has recently reached new empirical heights. Results from the first two lab studies of prize-linked savings accounts were both published in the last year. The independent Institute for the Study of Labor (IZA) in Germany published the first in October 2012, and found the availability of a prize-linked savings account led to a significant savings increase across demographics. The average increase was 12 per cent, with demand coming mainly from reductions in lottery play and general consumption, but also some from traditional saving. The highest rate of increased saving occurred in the low-income bracket. Results from the second lab study, published in the U.S. in June by the National Bureau of Economic Research, were similarly positive.

The high appeal of prize-linked savings to low-income consumers demonstrated by research, as well as Save to Win and other applications of the concept, is an important point. These are the people who stand to benefit the most, dollar for dollar, from saving more and wasting less. Unfortunately, they are also those with the lowest levels of financial literacy and political influence. In other words, they are in no position to demand, say, that the Save to Win program be expanded in the U.S. or an equivalent product be offered in Canada. Rather, this group makes up a disproportionate number of participants in large lotteries, which are informally known as a tax on the poor.

“Savings by low-income families is inherently difficult, receives relatively little government incentives, and is – at best – tolerated by the financial sector,” wrote Tufano and Princeton University professor Daniel Schneider in 2007. They noted that economists often speak of “diminishing marginal returns” and that from the perspective of big banks the poor are beyond the profitable edge of these returns. However, from a wider, societal perspective, Tufano and Schneider wrote, “We may have the margin completely backwards.” Adding $100 or $1,000 in savings to a low-income family, they argued, “will surely have a bigger impact on their lives – and on society – than adding the same amount to a wealthy family’s balance sheet.”

Despite the challenges, prize-linked savings is making headway in the U.S. In June, Connecticut created a legal opening for credit unions to offer Save to Win accounts. Maryland, Rhode Island and Maine had already done the same. “You can’t lose,” Lee-Brewster tells her clients in Michigan. “It’s not as if you’re throwing money away. You will have the money at the end of the day.”

In short, for both consumers and policy makers, giving prize-linked savings a chance is not much of a gamble.

The post The savings jackpot appeared first on Corporate Knights.

Currently, the vast majority of North American cities are failing on environmental performance. Across the continent we see vast sprawling suburbs that lock in automobile dependency and thus fossil fuel consumption with its climate change and smog emissions.

The health and environmental impacts that result from sprawl are well known. Obesity and high blood pressure, for example, are correlated with sprawl. On average, people in sprawling areas are six pounds heavier. Sprawl is also responsible for the loss of Class 1 farmland. Less discussed but equally alarming are the economic and productivity effects of sprawl. The traffic congestion resulting from sprawl inflates shipping costs and reduces overall economic productivity.

At the same time, local economies are held back by a lack of vigorous and vibrant core business areas. Such areas provide greater choice for workers and firms, raising employment and productivity. Urban density fosters innovation-boosting knowledge spillovers, and allows businesses and households to reap savings from greater sharing of servicing costs. Yet for every such area enjoying these “economies of agglomeration,” there are dozens of hollowed-out “donut” cities with stagnant economies based on suburban discount retail.

Finally, city governments are taking on major financial liabilities with every new subdivision approval. Infrastructure is built out to service new sprawling areas, often using grants from higher orders of government. The financial burden of maintaining and eventually rehabilitating that infrastructure, however, will fall to cities. Those costs will be enormous, and many cities will prove incapable of meeting them.

Not surprisingly, given the costs of sprawl, cities are increasingly establishing goals of reducing further sprawl and building denser urban areas. This can be accomplished with well-designed public policy.

The key to choosing the right policy instruments is to focus on the causes. Suburban sprawl is taking place because prices encourage it. Businesses are setting up outside of cities because the costs are cheaper than in urban areas. Homebuyers continue to “drive until they qualify.”

Yes, zoning regulations and municipal development plans allow for sprawling subdivisions to be built. But they don’t create demand for sprawl. Prices do that.

Of course, prices are not the simple result of producer supply and consumer demand, as markets don’t exist in a vacuum. In the real world, prices and markets are strongly influenced by government policies, taxes and subsidies. The market for new suburban development is no different. It enjoys significant subsidies, while residents and businesses in established areas pick up the bills.

Impact fees (sometimes termed development charges) are intended to recover some of the municipal costs of new developments. However, they are often levied at a flat rate that fails to reflect the higher capital cost of distant subdivisions, let alone their future costs of infrastructure maintenance or renewal. Similarly, water and wastewater utility fees are often set at a flat rate, despite significantly higher pumping costs to and from far-flung suburbs. Public spending on free-to-use roads provides a subsidy to motoring that makes sprawl possible. The failure to charge for using the atmosphere as an emissions dump also artificially reduces the costs of automobile use.

In this context, well-designed policy focuses squarely on prices. The aim is to eliminate the subsidies and turn the prices around until they pull in the direction of a city’s urban density goals. Prices are powerful influences on decisions; with the right pricing, developers will fall over each other to build dense, livable communities, and home buyers will flock to them.

There are a number of ways that municipal and other governments can reduce the subsidies to sprawl. Impact fees and utility fees can be adjusted to reflect the higher costs of infrastructure needed for low-density fringe developments, or to encourage developments that reduce automobile trips – as Portland, Oregon, has done.

Property tax rates can be adjusted to reduce the costs of infill housing and industrial and commercial redevelopment. Spending on new roads can be reduced, with emphasis turning to repair and maintenance of existing roads. Fuel taxes in North America – currently a fraction of those in the rest of the developed world – can be raised to more competitive levels. Annual road user fees can be established; Austin, Texas, for example, provides an exemption for people who don’t drive.

The new revenues generated from using such pricing instruments can bolster municipal fiscal health. They can be used to provide improved transit services as well as social programs to support lower income people. At the same time, the greater density they bring about will help firms take advantage of economies of agglomeration – the knowledge spillovers that boost economic growth.

With well-designed pricing policies, cities can secure and improve existing levels of environmental, fiscal and economic performance while also generating a social return. Will it be easy? Nothing worth striving for has ever been easy. But the rewards are large and well worth the effort. Getting the prices right will unleash a wave of creativity that puts those rewards within reach.

The post Donut filling appeared first on Corporate Knights.

Canada has a rich mix of cultures, and as citizens it is important to have a good understanding of Aboriginal perspectives and rights dating back from pre-colonial history up until today. There are over 600 First Nations in the country, each with unique cultures and histories and undergoing varying stages of development. This variety of contexts and cultures means there cannot be a single solution to working with Aboriginal communities.

Regardless of where a community is on the development continuum, for many Aboriginal people the ability to use their traditional land is tied to the survival of their people and culture. Environmental management is important to Aboriginal communities as their culture is grounded in long-term perspectives. Extractives projects that seem to threaten the ability of communities to use their land or that fail to consider what happens beyond mine closure have the most potential to cause conflict. In all communities, Aboriginal or not, it is increasingly imperative for companies in the extractives industry to obtain a social licence to operate, which is effectively the wider social acceptance and support of a project. Without a social licence, a company risks conflict, delays, denial of permits, bad publicity and loss of reputation, among other things.

It is not surprising that the perspectives and objectives of the extractives industry and Aboriginal communities can differ. In Canada and abroad, the publicized conflict between Aboriginal communities and the extractives industry has been increasing in both intensity and occurrence. This panel, which focused on the mining sector, represented a variety of perspectives, including industry (mining and oil), Aboriginal local government and Aboriginal consultancy. The panel provided some context to the potential effects of mining projects on nearby communities: health and safety; cultural and community lifestyle; social infrastructure; security and violence; and other indirect economic impacts. The panel was generally in agreement on two major points: that there is no one-off solution appropriate for these challenges, as the variety of cultures and contexts is too diverse; and that legal frameworks matter when it comes to approaching and solving Aboriginal-industry conflict.

The panel went on to discuss the importance of rights and standards, which is reflective of many of the current conversations being held about Aboriginal-industry issues. The legal landscape has changed in the past 15 years, in Canada and abroad. It was striking how much time the panelists spent ensuring the audience was up to speed on the issues, an indication they felt that most do not understand how things have changed in recent years.

Although many of the policies from industry associations are good starting points, most of them are voluntary (like the International Council on Mining and Metals) and therefore provide uncertainty to Aboriginal communities and companies alike. These voluntary policies provide the framework under which an Aboriginal community can say “yes” to a project, but they do not offer a strong mechanism by which a community can say “no.” To the great relief of many Aboriginal communities, the legal landscape is changing to provide them with mechanisms to effectively say “no”, or at least “not now” and “not like this.” Canadian Aboriginal communities are continuously increasing their demands that legal rights be recognized and upheld. Once a stakeholder group that was under-represented, Canada’s Aboriginals are standing up and being supported by increasing numbers of professionals – of Aboriginal descent and otherwise – and they mean business. The regulatory landscape has changed, but more importantly, so has the audience that is interpreting and operationalizing this regulatory landscape.

Increased legal leverage for aboriginal peoples

In Canada, the Haida decision has changed the game for the extractives sector doing business in large parts of the country where Aboriginal treaties have not yet been concluded. In 2004, the Supreme Court of Canada made a historical ruling that recognized it is the legal duty of the Crown to “consult and accommodate” Aboriginal communities with regard to proposed projects that may significantly impact their traditional territories (Blake, Cassels and Graydon LLP). The court recognized that the Crown’s duty to Aboriginal peoples finds its roots in Canadian history and in the Canadian Constitution (Section 35A). It flows from the historical relationship between Aboriginal peoples and the Crown, whereby Aboriginal peoples did not concede the rights and title to their land. While the onus is not legally on industry to consult and accommodate, by convention the government has been delegating this responsibility and its associated costs to companies seeking permits. Moreover, the Government of Canada fulfils its legal duty by simply withholding permits until the affected communities have been appropriately consulted and accommodated. With approximately 200 First Nations in B.C. alone – most of which have not signed treaties – it is virtually impossible to do any major projects without engaging with Aboriginal communities. Another mechanism available to Aboriginal communities that can further slow the permit application process if they are unhappy about how a company has approached them is the ability to initiate a judicial review and/or a rights and title application. These can delay the permit application process by several years, representing an unacceptable delay to companies and their shareholders, but is a risk that companies knowingly take when they do not consult properly.

In 2007, after years in the making, the UN Declaration on the Rights of Indigenous Peoples was finalized and has added significant leverage to stakeholder complaints against mining companies, especially in developing countries where national governance is weak. The declaration has had diverse legal effects and is being used to inform the creation of national laws in many developing countries. The declaration emphasizes rights already found in human rights treaties and also reflects what is known as customary international law, which encompasses legal standards that have become obligatory on states through their widespread use. The declaration is also being relied upon by domestic and regional courts, as well as other bodies within regional human rights systems in Africa and the Americas.

Free, prior and informed consent (FPIC), in relation to mining activities taking place on Indigenous or Aboriginal lands, refers to a process whereby affected Indigenous peoples freely have the choice, based on sufficient information concerning the benefits and disadvantages of the project, of whether and how these activities occur, according to their systems of customary decision making. FPIC has been mandated or recommended in a number of international and national legal and policy documents, including the UN Declaration on the Rights of Indigenous Peoples. It finds its origins in the International Labour Organization’s (ILO) Convention on Indigenous and Tribal Peoples in Independent Countries (Convention 169), which was first ratified in 1989, initially by most Latin American countries and now by many European countries. FPIC is both controversial and evolving, and one of the panelists noted that industry associations are currently conducting their own research into FPIC and its applicability, as well as what it means for different organizations. FPIC is challenging to implement in practice as it is still a voluntary standard and has no legal bearing in most jurisdictions. It also stands in opposition to some regulatory frameworks, as its application can work to challenge existing national laws regarding stakeholder consultation and the awarding of various permits. Furthermore, communities can’t actually draw on it to say “no”, unless it has previously been incorporated into national laws in that particular jurisdiction.

The panelists asked the audience to think about how the extractives industry is responding to these changes, if at all. It was noted that there is no coordinated effort by industry or even individual companies to adopt these internationally recognized standards. Canada has a strong legal framework and constitutionally recognized rights for Indigenous/Aboriginal peoples; however, the panelists addressed the fact that this is simply not the case in many developing countries. The conversation turned to highlight the perception that Canadian companies are not applying the same ethical standards abroad as they do in Canada. Goldcorp’s challenges at its Marlin mine in Guatemala was raised as an example – this mine has become somewhat of a lightening rod or scapegoat through which the ethical issues that plague the wider mining industry are frequently aired.

Continuing on the theme of rights and standards, Impact-Benefit Agreements (IBA) were touched upon to highlight how they, too, have evolved in recent years. One often-referenced case that was brought up is New Gold’s New Afton mine near Kamloops, B.C. There was consensus that New Gold had approached stakeholder relations in a positive way and that the mine is a success story for IBAs and consultation. Contained within the IBA are two features that underscore the positive relationship between New Gold and the surrounding Aboriginal communities: the use of a Participation Agreement and a Joint Implementation Committee. The Participation Agreement allowed communities to be involved before the project got approval and enabled their involvement in the design, construction and operation of the mine. It also involves them in the creation of environmental policies and ongoing environmental management. The Joint Implementation Committee was jokingly said to resemble a marriage, as it sets the framework to work together and move through the good times and bad. It was created out of the recognition that it is very difficult to actually make IBAs work on the ground and that, unsurprisingly, the key is the implementation.

Key messages

Good relationships occur when there is meaningful engagement from the very start. The behaviour of mining representatives in the first years at a potential mine site will largely determine whether the surrounding community will become distrustful and antagonistic towards mining companies, or, if they feel listened to and optimistic about a potential mine. From an Aboriginal perspective this means learning about each other’s culture and history; establishing trust through consistently respectful interactions; industry taking a genuine interest in learning about the communities’ fears and aspirations; and most importantly, making visible efforts to address these. When the permit application process is approached solely within a judicial, regulatory and risk management context it doesn’t establish trust because communities recognize that they are only seen as a risk, and therefore, only represent another obstacle for the project. There must be clear and authentic intent to develop a mutually beneficial relationship, or conflict will arise.

To obtain and maintain a sturdy social licence to operate, anyone associated with a mine or potential mine must build trust-based relationships, founded on mutual respect that goes beyond appeasement, and that is actually built on interests and needs. However, the mining industry is cyclical and the economic environment can change quite quickly and intensely. As a result, most companies have difficulty seeing beyond the next quarter. A long-term perspective on building relationships and satisfying interests is absolutely necessary in order to develop a robust social licence to operate.

Based on recent reports in national and international newspapers, it is clear to see the mining industry is in crisis. Slowed economic growth has led to deflated commodity prices and even industry darling, gold, has taken a 30% tumble since the end of 2011. Rising costs, an aging workforce and renewed resource nationalism are causing serious problems for the industry and have led to a significant loss of investor value and confidence. Amid the industry’s economic struggles is a lack of respect for laws, cultures, internationally recognized rights, and deeply entrenched and widely held societal values. This has no doubt contributed to the loss of investor confidence in those who are at the helm of mining companies. Continuous “bad news” stories are hurting the industry more than it realizes and it is in its collective interest, and those of the shareholders it represents, to pull up its socks and do better. While some of the bigger companies are taking steps in the right direction, there are many laggards that are ultimately undermining the industry’s progress and image.

The future growth of the mining industry hinges on success in establishing and managing a social licence with communities, Aboriginal and otherwise. Companies need to understand that community conflict is likely – and costly – and the tools to avoid and resolve these problems need to be made part of the business model.

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