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Archive for April, 2010

A Race Toward Sustainability – and Profits: New Report Delivers Powerful Message and Roadmap for Companies

 

Companies must make immediate and meaningful social and environmental improvements if they are to win in the resource-constrained 21st century.

That’s the message of a new Ceres report outlining the urgency, vision and competitive advantages for companies that fully embrace sustainability in their business as energy prices rise, water supplies are increasingly contested and the world’s population grows.

“Sustainability performance is fundamental for business success in the 21st century,” said Mindy S. Lubber, president of the investor coalition Ceres, which published the report, The 21st Century Corporation: The Ceres Roadmap for Sustainability. “If businesses deepen their efforts to solve social and environmental threats, it will position them to innovate and compete in the fast-changing, resource-constrained global economy. It is no longer enough for companies to have special projects or initiatives. Comprehensive sustainability strategies are expected.”

Lubber says companies should view sustainability as a competitive race. “This is about understanding risk – including the risk of not seeing the opportunities your competitors see,” said Lubber. “We need accelerated performance improvements from companies that reflect the true scientific and economic impacts of unchecked carbon pollution, growing water scarcity and billions of people still living and working in poverty.”

Anne Stausboll, chief executive officer of the California Public Employees Retirement System, voiced strong support for the report’s key findings.

“We expect our portfolio companies to do what is necessary to position themselves for a sustainable economy,” said Stausboll, whose office oversees more than $200 billion in assets. “Environmental and social issues are core to business performance in the 21st century. We are looking for companies that are managing these risks and developing opportunities.”

“Integrating sustainability is not just good for business; it is essential if we are to continue to grow economies and create jobs in a world of increasingly constrained resources,” added Hannah Jones, Vice President of Sustainable Business & Innovation at NIKE, Inc.

The report provides a practical roadmap for integrating sustainability into the DNA of business – from the boardroom, to copy rooms, and across entire supply chains. It calls for significant performance improvements from companies by 2020. Among the report’s 20 key expectations for companies:

  • make energy efficiency and renewable energy the foundation for company operations;
  • design and implement closed-loop systems so that air and wastewater emissions are eliminated and zero waste is produced;
  • require 75 percent of top tier suppliers to meet company sustainability performance standards;
  • dedicate 50 percent of R&D investment to developing sustainability solutions;
  • compensate and provide incentives for top executives and other employees to drive sustainability into the business.

The report makes it clear that the global economy has unprecedented challenges, whether from soaring population growth, resource constraints or a changing global climate that will require massive investment in low-carbon technology. Many companies recognize these emerging challenges and are already incorporating them into their planning.

Adding to the shifting landscape for companies is the increasingly globalized nature of the market that has companies producing and selling products in all corners of the world, and laser-fast digital communication where company reputations on sustainability issues can be made – or destroyed – in a matter of hours.

The report outlines more than 200 specific activities companies have undertaken that align with the four key chapters of the Roadmap – governance, stakeholder engagement, disclosure and performance – and the 20 expectations for action. Among the examples included in the Ceres report are: PepsiCo’s Frito Lay potato chip facility in Arizona aiming to have zero emissions; IBM reducing energy and water use bills at one facility by $3 million a year while increasing its output by 33 percent; General Mills helping broccoli farmers switch from furrow to drip irrigation, reducing water use by 50 percent or nearly 1.2 billion gallons a year; and Gap’s efforts to remediate the causes of excessive overtime work for suppliers.

The report also highlights key forward-thinking management actions, such as National Grid tying aggressive carbon emission reduction goals – 45 percent by 2020 – to executive compensation; and Timberland’s transparency on all fronts – through quarterly sustainability reporting and CEO conference calls on key challenges, and labeling their packaging with environmental and social impact information for customers.

Still, the report concludes, these best practices are more the exception rather than the rule; no company is fully integrating sustainability considerations across all aspects of its business, including its governance systems, overall performance and top-to-bottom business strategy. “More must be done to produce the results we need to put our global economy on a sustainable path,” Lubber said. “Incremental progress in tackling global climate change and other sustainability threats is not enough.”

The report roadmap focuses on four key areas, each of which includes key expectations and action steps:

Governance: Companies will embed sustainability from the boardroom to the copy room and will manage their entire value chain from a sustainability perspective. Five areas for elevating sustainability – board oversight, management accountability, executive compensation, corporate policies and management systems, and public policy.

Stakeholder Engagement: Companies will regularly engage in robust dialogue with stakeholders across the whole value chain, and will integrate stakeholder feedback into strategic planning and operational decision-making. Four areas for elevating sustainability – focus engagement activity, substantive stakeholder dialogue, investor engagement, and C-level engagement.

Disclosure: Companies will report regularly on their sustainability strategy and performance. Disclosure will include credible, standardized, independently verified metrics encompassing all material stakeholder concerns, and detail goals and plans for future action vision. Six areas for elevating sustainability – standards for disclosure, disclosure in financial filings, scope and content, vehicles for disclosure, product transparency, and verification and assurance.

Performance: Companies will routinely and systematically improve sustainability performance across their entire operations, extending from the initiation, design and delivery of products and services to the management of employees and the supply chain. Five areas for improving sustainability performance – operations, supply chains, transportation and logistics, products and services, and employees.

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Electricity Deregulation

Below are some common questions and answers related to deregulated states across the country. Although rules and regulations vary by state, many are consistent on a national level.

Q. What has stayed the same in electric service?

A. Your current Transmission and Distribution Utility, or “local wires company,” continues to deliver electricity to your business. Your local wires company still responds to service interruptions and continues to maintain the poles and wires. You will continue to receive the same reliable service you are used to with your local wires company, regardless of which Retail Electric Provider you receive service from

Q. What has changed in electric service?

A. You can choose to buy your electricity from a different electric provider than the original incumbent provider for your area. These companies are commonly referred to as Retail Electric Providers (REP’s) or Electric Service Providers (ESP’s). Additionally, your bill now looks different than bills you have received in the past, but each REP or ESP provides the same standard information. Transmission and Distribution charges are passed through without markup to the consumer by your REP or ESP.

Depending upon the state in which your business resides, you may receive one bill including both supply and delivery charges, or separate bills from both your energy provider as well as your local transmission and distribution company.

Q. Do all companies have the ability to choose their electric provider in a deregulated state?

A. No. Each state has different rules and regulations. In some states, city-owned utilities and member-owned electric cooperatives have the option of giving their customers a choice of providers, or keeping their grid closed to outside competition. To see if competition is active in your area, please contact a representative at Servant Energy.

Q. What are the benefits of Electric Choice?

A. Competition in other industries has often brought lower prices and innovative, new products and services. Having more control over your buying decision should make it easier to determine what matters most to you, whether it’s price, renewable energy, customer service, or simply a name you know.

Electric competition also should help the environment because energy providers must offer some energy from renewable energy sources. Renewable energy – such as wind, solar, hydroelectric and biomass (gas released from landfills) – produce less air pollution than sources that rely on burning coal or natural gas.

Q. How does Electric Choice affect electric rates?

A. Energy commodity rates fluctuate based upon supply, demand, weather and generation resources within each region. Typically, eastern states have more traditional coal based generation sources, while many southern states such as Texas, are more heavily fueled by natural gas fired plants. Regardless of where your company resides, electric deregulation has resulted in extreme volatility since electricity cannot be stored like other traded commodities.

Electricity is the most volatile of all traded commodities, and, as a result requires more in depth risk management strategies. As many companies in the airline industry have recently experienced, minimal or improper hedging strategies can result in extreme variances in energy costs from one year to the next.

Q. With competition, will the reliability of my electric service change?

A. No. No matter which energy provider you choose, your electricity will continue to be delivered safely and reliably by the local wires company, a company regulated by the PUC within each state.

Q. Do I have to switch from my current electric utility?

A. No. If you decide not to choose a new energy provider, your service will be provided by the incumbent or default provider at what is known as the default or standard offer rate as defined by each state’s rules and regulations. The incumbent or default provider is the electric provider that was part of the original electric company that generated and sold electricity in your area, that now only sells electricity and provides customer service.

In most cases, the default or standard offer rate is set higher than competitive market rates to encourage competition. Although, based upon market movement in each region, there are situations in which the default or standard offer rate will be lower than current market rates. Your Servant Energy representative can help guide you through the process comparing various price options and terms to the default and standard offer rates in your area.

Q. Should I choose an index based or fixed price energy contract?

A. Contact your Servant Energy representative to discuss the pros and cons of index-based versus fixed rate pricing. Each customer has different needs and levels of risk tolerance. A well-informed account manager can help you to determine the product option that is best for you.

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Buy Green

Organizations are finding it easy to green their facilities through the procurement of environmental products. These products include Renewable Energy Certificates, Green Power and Emissions Allowances and Credits. Three Easy Ways to be Green 

  1. Renewable Energy Certificates (RECs) represent the environmental, social or other positive attributes of power generated by renewable resources like sun, wind, moving water, geothermal, or other natural sources. For example, RECs represent the reduced emissions of renewable generation compared with those of conventional generation. RECs are purchased separately from, and in addition to, your conventional commodity energy supply. 1 MWh of power generated from renewable resources = 1 REC.
  2. Green Power is conventionally-produced energy bundled with RECs. Green power can be purchased from power suppliers as a single premium product.
  3. Emissions Allowances and Credits can be purchased to offset your facility’s carbon footprint or reach other environmental goals such as acid rain or smog mitigation. Emissions Allowances represent rights to emit carbon dioxide (CO2), sulfur dioxide (SO2), nitrogen oxide (NOx) or other pollutants. Emissions Credits represent reductions in these emissions relative to an established baseline. Examples are carbon credits, SO2 allowances and NOx allowances.

  

Benefits of Environmental StewardshipBuying green can help an organization meet environmental, financial, and stakeholder relations objectives by: 

  • Demonstrating civic leadership, generating positive publicity, improving employee morale, differentiating products, services and brands, and attracting new customers and employees.
  • Providing a hedge against risks posed by electricity price instability, fuel supply disruptions and environmental regulation.

  

Confidence and Reliability 

Servant Energy ensures your organization’s goals and objectives are matched to the correct green product. We can facilitate the purchase of the correct certified product and arrange for third-party verification of purchases which meet specific market standardsDespite advances in pollution controls over the last 30 years, conventional power generation is still the nation’s single largest source of industrial air pollution. By buying green power instead of conventional power, customers can reduce the environmental impact caused by their use of electricity and fossil fuel.For example, every kilowatt-hour (kWh) of renewable power avoids emissions of nearly 2 lbs of carbon dioxide, a greenhouse gas linked to global warming. An average house can use up to 1,000 kWh of electricity per month, and buying 100% green power could remove over 20,000 lbs of CO2 per year, according to the EPA. That’s the equivalent of taking nearly 2 cars off the road per year, or planting 239 trees. Since nearly 80% of greenhouse gas emissions are from carbon dioxide created by burning fossil fuels, every bit of green power bought means you’re helping to reduce the effects of global climate change.Buying green power also reduces harmful pollutants like nitrogen oxides and sulfur dioxide. Conventional power generation accounts for 66% of the nation’s sulfur dioxide emissions, which causes acid rain and respiratory illnesses. About 25% of nitrogen oxide emissions come from electricity generation.Buying green energy is also good for the economy and helps the U.S. become less dependent on foreign energy sources. In fact, the Union of Concerned Scientists has estimated that if 10% of the nation’s supply was from renewable electricity, a net of 91,000 new jobs would be created. A 10% green power share would also create economic development of $41.5 billion in new capital investment, $5.7 billion in income to farmers, ranchers, and rural landowners, and $2.8 billion in new local tax revenues, while reducing global warming pollution equal to taking up to 32 million cars off the road, plus less haze, smog, acid rain, mercury contamination, and water use.

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Carbon Footprint

Virtually every business activity, from powering a fleet of vehicles to manufacturing products to flying employees to meetings, emits greenhouse gases (GHG), including CO2 which are negatively impacting the environment. The environmental impact of an organization is referred to as its carbon footprint, which measures the total GHG emitted directly and indirectly by that organization.

Direct emissions result from activities that the organization controls, like operating a facility and producing a product, and from using electricity for things like lighting, heating, and powering equipment. Indirect emissions are those that the organization is responsible for but does not control, like the carbon emitted by suppliers who deliver raw materials for the manufacturing operations.

Servant Energy can help you calculate your organization’s carbon footprint and develop ways to reduce and/or offset it. Once you know the impact of your activities, there are two things you can do. First, you can reduce direct emissions by improving efficiency of lighting and equipment, opting for videoconferencing over flying to meetings, or switching your vehicle fleet to hybrid models.

You can also reduce indirect emissions by selecting partners and suppliers who have committed to reducing their own carbon footprints. These changes help, but it’s nearly impossible to reduce your emissions to zero. Another option is to purchase carbon offsets to reduce the remainder of your organization’s environmental footprint.

Offsets, or credits, are created when a project or an organization emits less carbon relative to a baseline, with that baseline established using a standardized methodology. The offset creator may then sell to someone who wants to reduce their carbon footprint but may not have cost effective options in-house. Typically, offset sales are used to finance carbon-reduction initiatives like methane capture, renewable energy and reforestation projects.

Servant Energy is in the process of solidifying relationships so that our clients can help reduce their organization’s environmental impact through purchase of carbon credit or carbon outputs.

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Green Resources

Like you, Servant Energy is concerned about the environment. The cleanest form of electricity is “green power” – energy that is produced by natural renewable resources. Green power is derived from sources such as solar (sun), wind, biomass, and hydro (water) – which are natural, renewable, and don’t contribute to global warming.

Green power is 100% free of carbon dioxide, sulfur dioxide, and nitrogen oxides – the primary cause of smog, acid rain, greenhouse gases, and contributors to asthma and lung cancer respiratory illnesses. When you choose green power for your business or home, you’re supporting the development and adoption of alternative, renewable energy. It’s easy to do, and future generations will thank you.

Servant Energy has “green power” options available in selected areas by our Retail Electric Provider partners. In these areas, electricity is typically generated by hydro (water) power from dams or is wind generated electricity.

Our green energy options support the environment and the economy. Green energy options available also include the ability to have a portion of your monthly electric supply cost going to support the development and adoption of renewable energy. It’s an easy way to become part of the energy solution.

What do you think?

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