Initiatives, Partners and Friends – July/August 2020
A drop in travel helps the planet. But there’s a catch.
With global travel largely on pause during the Covid-19 pandemic, some cities and companies see an opportunity to rethink tourism with the planet’s health in mind.
Click Here to see the 4-minute video on reimagining tourism.
Bloomberg Green Newsletter
In climate news today…
- There’s a lesson for the energy transition in California’s blackouts.
- Tiffany will soon reveal where your diamond has come from.
- Crabs may help prevent flooding in the Philippines.
Sustainability reporting is quickly going mainstream. While companies aren’t always required by regulators to report their greenhouse gas emissions, human rights records and wastewater management, investors are pushing them for this information at a faster clip.
Part of the issue is that global investors are under pressure from governments and asset owners themselves to report their impact on people and the planet. Sustainability information companies provided up until now has rarely been comparable, timely or consistent year-to-year. There’s been a focus on gloss over substance. Big companies, such as Tesla, Amazon and UnitedHealth, are still relatively young sustainability reporters.
Investors who find such information critical to understanding future business prospects can make educated guesses or hire analysts, but what they really want is information from the companies themselves. That was the thinking behind the pre-pandemic push by BlackRock Chairman Larry Fink to specifically ask companies to use Sustainability Accounting Standards Board (SASB) metrics.
“For a long time, companies weren’t really convinced investors wanted this information and weren’t convinced investors were using it. It’s a significant investment for companies to report high-quality sustainability information,” said Janine Guillot, chief executive of the SASB, which created industry-specific sustainability standards that she said matter most to investors.
It turns out that Fink’s letter in January may have changed some minds.
So far this year, SASB said 279 companies are reporting in line with its standards, up from 118 in all of 2019. SASB has been helping those companies new to the reporting concept. This is especially needed by those firms that operate in multiple industries, which requires finding metrics that best reflect their business models.
SASB said it also has 150 investors using its metrics in their investment process. (Bloomberg LP founder and majority owner Michael Bloomberg is chairman emeritus of the SASB.)
Now that more companies and investors are using SASB standards, the real test will be whether transparency and market competition pushes companies to improve their ESG performance. Will energy companies get out of coal faster? Will they feel like they have to diversify their workforces as quickly as competitors? Will they compete on how much water they use or the amount of waste they generate?
“Companies already benchmark their financial performance against their peers,” Guillot said. “If you have comparable, consistent information, companies should start to compete on those metrics.”
Resilience Isn’t a Project – It’s a Mindset for Better Plants Partners
Better Buildings Beat Blog | August 25, 2020
2020 has been the year of “the pivot” – of looking critically at every part of operations and thinking creatively about new approaches to doing business.
Changes that businesses would never have dreamed of a few months ago have become commonplace. News of British shirt factories now producing masks and hospital gowns, or an award-winning distillery ditching gin for hand sanitizer, is a new normal. While some companies have had to make significant cultural changes to adapt their output, creative and innovative thinking has driven the success of Better Plants partners for years.
Better Plants partners have cumulatively saved more than $6.7 billion and 1.3 quadrillion BTUs of energy – all built on principles of innovation, creative thinking, and challenging the status quo.
For GM, that meant looking at their plants in a whole new way.
To start, the auto manufacturer needed to turn their facilities into oh-so-efficient sleeping giants. Energy managers throughout the company tracked the performance of each plant, competing to see who could reduce energy-use the most during the shutdown, maximizing the company’s savings to weather the storm. Leading plants reduced their energy use during periods of plant shutdown by 95 percent.
Meanwhile, plants started looking for new ways to put their facilities to work. Ideas came from the plant employees themselves. Clean rooms typically used to build transmissions became facilities for producing masks and gowns, with workers who specialize in interior trim for vehicles now sewing protective equipment for healthcare professionals. An employee with expertise in 3D printing developed frames for face shields. Just four weeks after shifting its product mix, GM delivered one million face masks and had shared production plans with GM suppliers, the Original Equipment Suppliers Association, and the Michigan Manufacturers Association to help other manufacturers ramp up their own production efforts.
The auto manufacturer has also established a partnership with medical device company Ventec Life Systems to produce 30,000 ventilators by August 2020, relying on GM’s manufacturing expertise and global supply chain.
The operational changes are dramatic, but those closest to the action tend to downplay the transition. “When you have the technology to build a vehicle, there’s not much you can’t do,” explains Al Hildreth, GM’s global energy manager who has spent his career transforming GM into one of the most energy-efficient vehicle manufacturers on the planet using exactly the same creative thinking that has seen the company through 2020’s challenges.
The attitude is similar at L’Oréal, where lines that typically produce cosmetics have cranked out more than 40 million units of hand sanitizer, globally.
“We are great at making products – that’s not the issue,” said Jay Harf, L’Oréal’s vice president of environment, health, safety and sustainability. “The most important thing is getting people’s minds around this transition. An agile mindset, combined with extensive launch experience, gave us the ability to adapt our lines to produce hand sanitizer, leverage onsite technology to build intubation boxes and face masks, and react to sudden shifts in consumer demand.”
For L’Oréal, finding and cultivating that agile mindset starts right before new employees have even signed on the dotted line. Roles at L’Oréal plants are explained to job applicants as a pursuit of four principles: excellence, safety, environmental stewardship and innovation.
“We look for candidates who demonstrate logic, reasoning and problem-solving skills, and we test them with questions that put them in the position of a decision-maker,” explained Harf.
L’Oréal also gives young talent perspective on the entire business through their GROW program – an internal program that helps employees prepare for future management positions by introducing them to sourcing, packaging, manufacturing and e-commerce partners like Amazon.
The agility of L’Oréal’s team allowed them to pivot to hand sanitizer production in under two weeks, including formula development, manufacturing, packaging and distribution.
That work has been accomplished without losing site of the company’s larger goals. In May, the company announced the L’Oréal for the Future program, introducing new goals for 2030 to addresses critical environmental and societal issues, including plans for all global sites to achieve carbon neutrality by 2025. GM has set similar goals, aiming to reduce absolute carbon emissions from their operations by 31% by 2030.
That’s not to say more change is always better. “It’s critical that change come from established need,” Harf cautions. “You can adapt too often. Our culture is built on a clear understanding of why there is need for change. Always seek to serve and to care about your employees and your customers. Never lose sight of your goals and objectives. Evolve to a better version of your company, product, and process. And don’t shake the foundation each week to be the cool guy on the block.”
Sound advice. After all, the coolest person on the block isn’t the one who reinvents themselves over and over again, it’s the person who can try something new and make it look natural – but that’s a topic for another time.