Apple takes a bite out of CO2, BlackRock's ESG gospel, VC funded climate tech isn't enough & remembering John Lewis

The newsletter for people "woke" on carbon and climate

(source: Evening Standard)

Issue No. 37 - July 26, 2020

Welcome to the latest issue of Carbon Creed - a curated newsletter for people “woke” on carbon and climate.

My name is Walter McLeod, and thanks for joining our tribe! We hope to hear from you as we navigate this weekly journey through the good, bad and ugly of carbon and climate. 

First, I want to thank everyone for joining our Friday open threadCarbon Creed (part 1)which introduced our affirmations on carbon and climate. These affirmations are your first glimpse of the values I hope to share in book form soon. I’ll be posting Carbon Creed (part 2) on July 31st and more in the coming weeks, so stay posted!

As most of you know, Congressman John Lewis passed away this week at the age of 80 years old. He was a long-time champion of civil rights and environmental justice in the U.S. House of Representatives. In honor of his memory, we share his timeless words:

“When we take our air, waters and land for granted; when we show a simple lack of respect for nature and our environment, we unmake God’s good creation. Humanity is the most important endangered species under threat from climate change and yet we flood our ecology with poisons and pollution. It is my belief that our country needs better environmental protections and that real protections do not have to come at the expense of jobs or our economy. Whatever we do to the earth, we do to each other.”
- John Lewis

(image: Mark Humphrey/AP)

In this issue, we feature Apple’s carbon neutral pledge, the ESG gospel according to BlackRock, carbon labeling of consumer products and why VC funded climate tech is not enough. As always, I hope you like the menu.

You can ping me anytime at mcleodwl@carboncreed.com.

If you are a subscriber, THANK YOU, and please share this with a friend.

Share Carbon Creed

Now, LET’S GO DEEP!


CORPORATE CITIZEN

(image: Popular Mechanics/Picture Alliance)

Apple takes a bite out of CO2 emissions with 2030 carbon neutral pledge


The corporate carbon pledge is back in vogue! The latest comes from Apple, Inc., with an eye-boggling market capitalization exceeding $1.57 T. Apple is pledging to become carbon neutral across all its business, including its mostly overseas supply chain, within the next 10 years.

The iPhone maker said this week that the new commitment means that by 2030, every Apple device sold will have been produced with no net release of carbon into the atmosphere. The company plans to reduce its emissions by 75% and develop carbon-removal solutions for the remaining 25% of its footprint.

Apple said its global corporate operations are already carbon neutral and that all of its iPhone, iPad, Mac and Apple Watch devices released in the past year are made with some recycled content.

“Climate action can be the foundation for a new era of innovative potential, job creation, and durable economic growth.” Tim Cook, Apple CEO


Almost all of the products that Apple sells world-wide are made in China. The company’s initiative means that it will work to transition its manufacturing suppliers to renewable sources of electricity to power their operations. Chinese manufacturers that hope to continue working with Apple will now need to consider making changes to how they operate to satisfy the company’s environmental-related ambitions.

Apple said that so far, 71 of its manufacturing partners in 17 countries have committed to making its products using 100% renewable energy. The company estimates those renewable-energy projects, once completed, will help avoid more than 14.3 million metric tons of carbon-dioxide emissions into the atmosphere annually.

The commitment comes as companies face pressure from investors, employees and consumers to take action on emissions, according to nonprofits and experts focused on sustainability. Apple said in 2018 that it achieved a decade-old goal of having its facilities world-wide powered exclusively by renewable energy. Lisa Jackson, who served as administrator of the Environmental Protection Agency during the Obama administration, oversees Apple’s environmental initiatives.

With its latest announcement, Apple said it released an environmental progress report detailing its plans, which cover areas such as carbon product design, energy efficiency and emissions. The company also said it is establishing an accelerator program focused on investing in minority-owned businesses that drive positive outcomes in its supply chain and in communities that are disproportionately affected by environmental hazards. Go deeper here LINK

Creed Comments: At first glance, this looks like a solid announcement from Apple. If you are a devoted Apple product user, I suggest you read the 2020 environmental progress report for a detailed look at their sustainability efforts in Cupertino. There is one standout feature in the Apple pledge - their vow to “reuse rare-earth elements in their devices” - to my knowledge no one else is recycling rare earths. This alone is very iCool. (Kudos to Kyle Wiens @ iFixit).

Share


SUSTAINABILITY

(source: Food Futurists)

Why don’t consumer products have a carbon label?


During the covid-19 shelter-in-place measures, there has been an unprecedented shift toward online shopping.  The extent of this shift can be seen in the growing market share of the major online retailers.

In response to this global change in behavior is a commensurate need to significantly break the link between economic growth and rising environmental impact of greater consumption - whether in store or online. E-commerce firms in particular have made it easy to purchase more items online, but one large omission has been the lack of carbon labeling associated with each product sold.

What is Carbon Labeling?

Carbon labeling is the amount of carbon that has been emitted to produce a particular item.  As e-commerce delivery operations have become more sophisticated, it is also possible to calculate the amount of carbon emitted to deliver a product from a warehouse to a customer’s doorstep.

Carbon emissions by companies are traditionally calculated based on three scopes: Scope 1 Emissions: all direct emissions under a company’s control (e.g., direct operations of a business); 
Scope 2 Emissions:
indirect emissions under a company’s control (e.g., type of fuel used during operations of a business); 
Scope 3 Emissions: are all other indirect emissions along a company’s value chain.

There could be even greater opportunity for transparency by moving from corporate emissions to product emissions that would meaningfully engage consumer behavior.

In the food and beverage industry, the introduction of nutrition labeling on packages in the United States has had a significant impact in reducing average calorie consumption and shifting consumption of particular foods (for example, per capita vegetable consumption has increased over 13% on average). Such labeling has also penalized high sugar, salt, fat and ultra-processed products that have been driving the obesity crisis.

Given that there is only a fixed amount of carbon that our atmosphere can absorb in the coming years, there is a need for individual consumers to be aware of their own personal carbon consumption patterns.  As more purchases have moved online, it is now feasible to start calculating an individual’s carbon budgets, and reach a critical mass to shift consumer behavior in a meaningful way.

Food and climate change are just the first steps on this journey.  There will eventually need to be greater transparency on all environmental metrics for products, such as water consumption and biodiversity impacts used in the production of certain goods.  With the ever lower costs of sensors, big data analytics, and machine learning of all sorts, what was once thought impossible, should be implementable fairly quickly with the right sort of investment and courageous leadership. Go deeper here LINK

Creed Comments: It is only logical for companies to evolve from corporate emissions tracking to product emissions labelling. In the coming years consumer will drive the decarbonization shift and those companies viewed as leading this engagement will gain a significant customer loyalty advantage. Bottom line: carbon labelling is coming.

Share


LEADERSHIP


(source: As you sow)

BlackRock heats up ESG pressure on boards

BlackRock, the world’s largest asset manager, is taking firm steps to hold corporate governance accountable for failing to address the risks associated with climate change.  These steps will increase the pressure on boards to position environmental concerns for front and center strategic consideration.

BlackRock’s approach on climate issues has been to focus on sectors and companies where climate change poses the greatest material risk to its clients’ investments. It defines “climate risk” to include “a company’s ability to compete in a world that has transitioned to a low-carbon economy (transition risk), for example, or the way climate change could impact its physical assets or the areas where it operates (physical climate risk).” With regard to climate change, BlackRock perceives the economy as ‘on the edge of a fundamental reshaping of finance’.

In a new report, BlackRock announced that it voted against management at 53 companies worldwide (primarily in the energy sector) for “lack of progress” on climate concerns during the 2020 proxy season, and directed another 191 companies to take faster action. Those that do not make significant progress risk BlackRock voting against management in 2021. The report contains case studies of circumstances where BlackRock voted against directors due to significant concerns about climate risk management (e.g., lack of robust disclosures on management of climate risks).

According to the 2020 report, these steps represented a substantial rise from BlackRock’s critical climate risk-based voting in 2019. It was also consistent with the position CEO Laurence Fink took in the January 2020 version of his annual letter to CEOs announcing that the issue of sustainability would be central to the way BlackRock invests, manages risk and executes its stewardship responsibilities.

BlackRock’s position as the world’s largest asset manager guarantees that its voting action will send a message on climate risk not only to the governance of its portfolio companies, but also to that of many other companies world-wide. It is the latest manifestation of the ongoing dialogue on corporate social responsibility, and on the proper role of the corporation’s purpose, as raised by the Business Roundtable in the summer of 2019.

And it is also consistent with views raised by Mr. Fink and others that issues critical to future global prosperity cannot be solved without corporate leadership. Indeed, in the aftermath of Covid -19, Mr. Fink expects stakeholder capitalism to become even more important.

All of these issues come at a time when boards may have less bandwidth than ever to address them, as directors struggle to guide the company through the immediate issues of pandemic response, economic downturn and business resilience. Their willingness—and even their basic capacity—to pivot attention to matters of corporate social responsibility is understandably limited by the extreme pressures and emergencies of the day.

While responding to climate risk is perhaps the most immediate focus of accommodation for many companies, there will be other areas in the future. Indeed, BlackRock anticipates engaging in the future on a much broader range of issues related to sustainability, including topics central to many companies’ “social license to operate,” such as human capital management and diversity and inclusion.

Yes, we are in the early stages of an epoch transition on this planet. A transition where not only are our governments and financial institutions at risk, but our very existence as a species. Homo sapiens, time to get it together folks. Go deeper at LINK

Creed Comments: BlackRock is trying to ignite a fire that transforms corporate values. Larry Fink clearly understands the need for corporate leadership to reorient governance structures to address environment and social risk, alongside traditional financial risk. The question to ask is, “Can they get it done in time?”

Share


GOVERNMENT + CLEAN TECH

(source: Mercury Times)

Venture capital funded climate tech is not enough - government must step in.

Last week, the International Energy Agency (IEA) issued a new report essentially concluding that clean energy tech development is moving too slowly and that reaching Paris climate goals while balancing global energy demands is pretty much all but impossible. Depressing, yes, and there are more dark climate data points where that came from — but regardless, we can do much better.

We know that innovative coupled with a can-do team spirit can achieve great things. Consider companies involved in the colossal production of ventilators this spring, which was emergency funded by the U.S. government in March and required multiple disparate companies to find a way to make the production happen. Amazingly, they succeeded. One of the executives explained that most of the participants involved would have previously said the task was impossible. But what made the difference is that they were all working towards the same mission.

Like the pandemic, climate change is a threat to humans, but if we can steer collective engineering brainpower to solving the climate crisis, we still have a chance of averting disaster. But waiting for the private sector to solve this issue is not going to work. Of course, Silicon Valley offers bright minds and non-stop innovation, but companies are not charities; they are structured to design technology that drives revenue. Corporate collaboration on pressing societal issues only appears to work well when there is a massive imminent crisis hanging over society, such as a war or pandemic.

Government’s hand in your smartphone

Most people, surprisingly many of those working in the tech sector, forget the origin of technology as we know it today was funded by the U.S. government. After World War II, the government initiated and funded massive amounts of R&D, recruiting some of the smartest engineering talent available to make much needed advancements in energy, telecom, aeronautics, and semiconductor (now consumer electronics) technologies.

That same concept helped propel Austin, Texas to become one of the country’s fastest growing and most prosperous cities. The Sematech government-backed endeavor started in Austin in 1986 and brought together 14 private semiconductor companies to collaborate on improving manufacturing technologies that society is still reaping the benefits from today.

But now, government-sponsored consortia and research labs are a fragment of what they used to be. Today’s federal R&D spending is roughly half of what it was in the mid-1980s. Instead, we have legislators and the public frustrated with the technology sector’s ethics in product design and privacy — but what else should we expect if corporations’ focus is on growing their market share? When we have macro societal issues to tackle, the government needs to bring companies together and drive a unified effort.

Reinstituting a united force

If we’ve learned anything from the pandemic, it’s that nature rules. But we know from history that human ingenuity continuously improves our species’ position in the world by advancing our tools (now called technology).

When people unite behind a common cause, big things happen. As odd as it sounds, we need the government to step in and increase the speed of innovation around climate technology. Otherwise, technology companies will continue to focus on their own market growth, and engineering competence will continue to be deflected rather than focused on critical areas where it’s needed most.

Despite the grim reality of a pandemic hanging over our heads and a climate threat lurking behind it, humans can engineer miraculous solutions to avert climate change. Engineers thrive on adversity, and their minds have a hard time shutting down until a problem is solved.

Now is the time to drive government-funded R&D with the private sector to unite collective expertise and resources to solve the urgent climate challenge ahead of us. The private sector can’t possibly do it alone, no matter how many VC-funded climate startups or climate tech or energy incubators crop up. We need a government-backed driving force to unite the brightest minds to solve humanity’s most pressing problem to- date: maintaining our existence. Go deeper here LINK

Creed Comments: Well said by VentureBeat guest writer Carol Hanko. I really do believe we can overcome the carbon and climate crisis. But we need effective leadership and everyone coming together as one.

Share


Thanks for sharing your time with us!

If you enjoyed this newsletter but aren’t yet subscribed, sign up for a free subscription below.

If you are a subscriber, THANK YOU AGAIN, and please forward this to a friend.

Share

👋 Questions, comments, advice?  Send an email to mcleodwl@carboncreed.com