Green Supply Chain

Take this FWIW (For What It is Worth) but I thought it is interesting.

Perceptant: FCMG Companies Face Rising Supply Chain Pressures

Major retailers are under tremendous pressure to go green and reduce their carbon footprint. To achieve this, they first turned to initiatives close at hand, including the reduction of energy consumption at the store level, product packaging resizing and the more efficient construction of new stores.

Some would argue however that their supply chains represent the biggest source of carbon reduction and as close to home initiatives begin to dry up, retailers are now turning their attentions towards suppliers.

FMCG companies for example are being placed under tighter and tighter scrutiny to deliver on-time, with full loads that aren’t rejected. This can have a major impact on sustainability, as full loads mean fewer lorries on our roads, fewer rejections equal less waste and on-time deliveries reduce bottlenecks and returns
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Picture, if you will, a supplier faced with a mandate from a major retailer to reduce its carbon footprint by 25%. That’s not a 25% reduction in its own internal footprint but the footprint it creates in trading with the retailer. Understandably, all eyes turn to logistics and product returns as two major areas that can achieve this. But how and at what cost?

Links for Feb 8, 2010

FT: Market for carbon trading is starting to look rather shaky
Simpler ways of cutting emissions, such as insulation, should be tackled by regulation. And at the other extreme, such as creating an integrated European...

FT: Property investors prepare for a green future
The built environment contributes significantly to carbon emissions; as much as 40 per cent of the total, according to the UK Institutional Investors Group ...

CFP: Disclosing the real risks of climate change
We are not weighing in on the climate debate. We are not opining on whether the world’s climate is changing, at what pace or due to what causes, Securities and Exchange Commission Chairman Mary Shapiro insisted on announcing the SEC’s new “interpretive guidance” on climate change.

Ernst & Young report: Carbon market readiness

This is one of the logical next steps - getting accountants involved so that they can do financial analysis and planning, among others. The report is here

New Ernst & Young LLP report examines greenhouse gas reporting practices as the SEC releases new climate change disclosure guidelines

The new report, Carbon market readiness: accounting, compliance, reporting and tax considerations under state and national carbon emissions programs, concludes that, while the timing and scope of climate change legislation in the US is uncertain, many countries around the globe (and many states) have some type of regulatory program to manage carbon emissions. With the strong likelihood that there will be more regulatory activity in the US, companies should consider carbon emissions requirements as part of their businesses and financial management strategies now, including establishing plans for measurement, monitoring, reporting and accounting.

“Being carbon market ready is logical business,” explains Steve Starbuck, the newly appointed Leader of Americas Climate Change and Sustainability Services for Ernst & Young LLP. Starbuck, a 30-year veteran of the Firm, coordinates climate change and sustainability services in the Americas and is a member of the climate change advisory board of the Global Ernst & Young organization. “The global carbon market is likely to grow significantly in the future. Preparing for and identifying related business risks and opportunities up-front, can better position an organization for growth and provide a competitive edge. Last week’s SEC action further highlights the increasing need for companies to have the systems and processes in place to keep their stakeholders informed,” Starbuck continued.

Ernst & Young’s report reveals that, in a survey of more than 1,000 US public registrants with revenues between $1 billion and $100 billion, just 29 companies disclosed an accounting policy related to emissions credits or allowances in notes to their financial statements. Additionally, far fewer than half of the approximately 1,000 corporate representatives participating in an Ernst & Young webcast on January 12, 2010 –- Climate change and carbon markets: what every business needs to know and why –- claimed to have a strategy in place to deal with carbon emissions regulations or markets.

Following various state and federal reporting frameworks, as well as the evolving accounting standards and tax regulations governing carbon emission management could pose many challenges. To stay ahead of the curve, companies should fully embed carbon-related considerations in their business strategies to address climate change issues effectively. They should review their risk management processes as well as day-to-day business operations, accounting and tax planning.

Business of Climate Change Report

Two reports that I am reading. They are two years old and things have moved forward with Copenhagen etc. but they are some of the best analyses I have read so far.

The Business of Climate Change Challenges and Opportunities (Feb 2007)

Lehman Brothers decided to take a hard look at global warming, starting with the scientific and climatological evidence, then proceeding to the economic consequences and implications for policy; and finally – with significant help from the Firm’s equity analysts – considering potential impacts on major business sectors. The result is this publication: The Business of Climate Change: Challenges and opportunities. It reaches a number of broad conclusions. Global  warming, we judge, is likely to prove one of those tectonic forces that – like globalization or the ageing of populations – gradually but powerfully changes the economic landscape in which our clients operate, and one that causes periodic sharp movements in asset prices.

And, as the title indicates, we consider that climate change poses many challenges but also presents many business opportunities. Firms that recognise the challenge early, and respond imaginatively and constructively, will create opportunities for themselves and thereby prosper. Others, slower to realise what is going on or electing to ignore it, will likely do markedly less well.

This study is far from the last word: indeed, we see it as just the starting point for adialogue with our investing and corporate clients. As the discussions with our clients and policy experts progress, we will take this work further.

Dr John Llewellyn
Senior Economic Policy Advisor
Lehman Brothers

There was followup to the previous report The Business of Climate Change II Policy is accelerating, with major implications for companies and investors (Sep 2007)

There is, in our view, a particular sense in this. Until recently, many – and in some countries most – climate change policy proposals have originated mainly outside government. Today, however, governments themselves are increasingly becoming directly involved in policy  proposal and design. Thus far, in most national administrations, responsibility has come in as far as ministries of environment, technology, energy, and industry. However, we judge that ultimately the nexus of responsibility, at least for key climate change policies, will move inwards still further – into treasuries and ministries of finance. And when these ministries take over responsibility, policymaking will acquire a harder edge: the objective of policy design will be not only to reduce greenhouse gas emissions, but to reduce them at the lowest possible cost.

Thus economic considerations are poised to assume their greatest weight yet in policy debate and design. A year or two from now, of course, the debate will have moved on: client concern will likely be with analysing the consequences of actual policies, or at least of more concrete policy proposals. But that is for tomorrow.

We trust that this volume will be a constructive sequel to The Business of Climate Change: Challenges and Opportunities, for clients and others who seek clues about how policy may look, a year or two from now, and about what some of the implications may be for business.

Business of Climate Change Conference 2009

A recent conference held in canada.

Business of Climate Change Conference 2009

Businesses all over the world are looking to transition to a low carbon economy in order to manage increasing regulatory, investor, physical and reputational risks. Unlike previous recessions where the environment was put on the back burner, governments around the globe are forging ahead with green stimulus investments and carbon constraining legislation.

At this year's conference you'll hear from public policy experts on the probable domestic and international regulatory context, short and medium term scenarios and implications for Canadian business. Learn from leading corporate executives about their strategies, successes and challenges in analyzing climate change across business units, reducing risks, increasing value and realizing positive bottom line results.

The most interesting (and only publicly available) presentation was by Jeff Rubin who is author of Why Your World is About to get Smaller: Oil and the End of Globalization . He is an economist and makes arguments are familiar to those of us following peak oil discussions. His basic thesis is that globization will reverse itself for low value goods. The margins, he says, are too small to withstand triple digit oil. I am looking forward to reading his book on the specifics. Intuitively it makes sense but numbers are always good.

Hidden Costs of Energy

This is a very conservative study that puts the price at 120B$ mostly derived from health costs associated with air pollutants (particulate matter, sulphur, nitrogen oxide). This will help develop new ways to measure true cost of energy similar to the new FBCF (Fully Burdened Cost of Fuel) methodology for energy use in military.

Hidden Costs of Energy:
Unpriced Consequences of Energy Production and Use





There is a podcast as well. Snippets from the summary:

Based on the results of external-cost studies published in the 1990s, we focused especially on air pollution. In particular, we evaluated effects related to emissions of particulate matter (PM), sulfur dioxide (SO2), and oxides of nitrogen (NOx), which form criteria air pollutants.1 We monetized effects of those pollutants on human health, grain crop and timber yields, building materials, recreation, and visibility of outdoor vistas. Health damages, which include premature mortality and morbidity (such as chronic bronchitis and asthma), constituted the vast majority of monetized damages, with premature mortality being the single largest health-damage category.

...

The damage estimates presented in this report for various external effects are substantial. Just the damages from external effects the committee was able to quantify add up to more than $120 billion for the year 2005.15 Although large uncertainties are associated with the committee’s estimates, there is little doubt that this aggregate total substantially underestimates the damages, because it does not include many other kinds of damages that could not be quantified for reasons explained in the report, such as damages related to some pollutants, climate change, ecosystems, infrastructure and security. In many cases we have identified those omissions, within the chapters of this report, with the hope that they will be evaluated in future studies.

Washpost: SEC to require disclosure of climate change risks

Yet another technical hurdle has been crossed with this SEC resolution. It will make climate change consideration a norm, a concern for the shareholders, and reduction a responsibility of the management.

Washpost: SEC to require disclosure of climate change risks

The commission, in a 3 to 2 vote, decided to require that companies disclose in their public filings the impact of climate change on their businesses -- from new regulations or legislation they may face domestically or abroad to potential changes in economic trends or physical risks to a company.

Schapiro said companies already must disclose anything that can have a significant effect on their bottom lines. But she said the SEC's action on Wednesday was intended to provide more guidance on what might be taken into account. "The commission is not making any kind of statement regarding the facts as they relate to the topic of climate change or global warming," Schapiro said.

A number of large institutional investors had been urging the SEC to put more pressure on companies to disclose more details about the effects of climate change on their businesses.