Window dressing vs reduced business risks and impacts – which to choose?

Companies have impacts – on people, on the environment – some positive, some negative. Sometimes the negative impacts become very obvious and very negative – for example when a textile factory in Bangladesh collapses. Sometimes the impacts are less visible, displacement of people from their land, discharge of toxic chemicals, or exploitation of fossil fuels.

There are many way of addressing these impacts, including direct legislation, standards & labelling. One approach that sounds promising at first sight – but is yet to really deliver – is company reporting:

• Every year companies must produce financial accounts – so why shouldn’t they also disclose their social and environmental impacts, and what policies they have to reduce them?
• Won’t this encourage them to reduce these impacts, and encourage investors to penalise those companies that aren’t managing these risks?

This is the theory – unfortunately the practice is rather different. There are a profusion of different reporting standards, and these standards are generally too vague to lead to informative, comparable reports. This has been described as ‘fuzzy reporting’ by a former chair of one of these standards, the Global Reporting Initiative.

The EU to the rescue?

There has been a discussion on company reporting around the EU for some years, which has culminated in a legislative proposal (draft law) from the European Commission, published on 16th April 2013.

The legislative proposal is an important start, but as European Coalition for Corporate Justice (ECCJ) said at its launch, “The proposal would allow companies too much discretion about how to report and what on, it lacks concrete indicators and does not include sanctions to ensure companies actually comply with the requirement“

Friends of the Earth Europe (who are members of ECCJ) worked with ECCJ to put on a conference in the European Parliament on 14th May to discuss the new proposal – the Parliament is very important in this process, as the law will have to be agreed by both Parliament & EU Member States (see this page for a brief intro to the process).

The conference was well attended, with speakers from the European Commission, Parliament, Aviva Investors, Oxfam, Marks & Spencers, WRAP, International Trades Union Congress – and from ECCJ & Friends of the Earth.

ECCJ will produce a write up in the near future, and there is a brief report on the Friends of the Earth Europe site, but a few things that stood out for me were:

• There was a lot of support for strengthening the law, including the need for clearer requirements and guidance on reporting, to avoid ‘window dressing’ reports that can’t be compared (“mandatory window dressing” as one participant put it). You need some flexibility, but not too much.
• A lot of the requirements of company reporting are actually served by the company doing proper due diligence, for example knowing what the likely risks of a mine could be, and acting to avoid them.
• There are massive opportunities for companies to increase their resource efficiency, and company reporting (“what’s measured gets managed“) is a way to achieve this;  my presentation is here.

The proposal will now be examined in detail by the European Parliament, and by all EU governments. Any part of it can be amended, and the law will either be finalised just before next year’s European Parliament Elections in May 2014, or by the new Parliament in 2015.

You can track the progress of this proposal on its page at the Parliament’s legislative observatory.

Friends of the Earth Europe are now working with ECCJ & others to make this a more effective proposal – for investors, people, the environment & for companies themselves.

For more information:

• ECCJ have produced a detailed briefing for policymakers on the proposal, available here.
• Friends of the Earth Europe also produced a briefing in October 2012, looking particularly at company reporting & resource use.

We need to change – but to what? and how fast?

“cognitive dissonance: the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioural decisions and attitude change.”

We are living in a time of cognitive dissonance – on the one hand, many people (particularly in business) now realise that the economy can’t go on the way it is – with increasing climate changing emissions, pressure on resources and biodiversity – while at the same time taking the view that it’s not politically practical to do anything about it.

The most glaring example of this at the moment is the ‘carbon bubble’ – the markets are valuing companies based on large oil, gas, coal reserves, yet any sensible person knows that these reserves can’t be burnt without devastating our climate – for more read this in the Guardian, covering work by Carbon Tracker.

The parallels with the start of the financial crisis are very strong – people were going around selling sub-prime mortgages to poor Americans, when it was obvious that they were not going to be able to pay them back. This seemed to be working – until the (obvious!) failures of this approach came out of the woodwork.

It’s clear that we need to make a transition to a resource efficient, low carbon society – but this is not straightforward…

It’s not only quite challenging to work out how to make this transition (what tools, policies etc), but there will also be considerable opposition to any substantial changes.

Change is always going to worry those who are doing well out of the current situation – it may  worry even more those who aren’t doing so well, thinking that it could get worse (just look at Europe’s unemployment statistics). These concerns can be alleviated, for example though government support for training & new businesses – but this requires action from Governments, European Commission – and maybe  other businesses too.

The complexity of these issues – and the need to create solutions that are widely supported – led the European Commission to create the European Resource Efficiency Platform (EREP) – web site here – which brings together people from a wide range of backgrounds, including business, government ministers, Unions and environmental NGOs like Friends of the Earth.

The panel members are ‘high level’, including the CEO of Unilever, the Danish & German Environment Ministers, the EU Commissioners for Environment, Climate & Industry and the Secretary General of the European Trade Union Confederation. It’s chaired by John Bruton, former Irish Prime Minister.

Each of the ‘high level’ members of the panel is backed up by a sherpa (‘sherpas prepare the summit‘) – and I’m the Friends of the Earth Europe Sherpa, with Magda Stoczkiewicz, Director of Friends of the Earth Europe, as the panel member.

The panel has already produced a short ‘Manifesto‘ in December, and now we are preparing a declaration which will be finalised at a meeting of the panel on 17th June.

We sherpas are doing the background technical work, and it’s constantly challenging, trying to establish what we can call for, what will have sufficient impact, where is there sufficient agreement?

Coming back to the cognitive dissonance point – as the Manifesto acknowledges:

“In a world with growing pressures on resources and the environment, the EU has no choice but to go for the transition to a resource-efficient and ultimately regenerative circular economy“

So we all agree on what the outcome needs to be… but can we get our recommendations to be consistent with the scale of this task?

The declaration on Monday 17th of June will be the first test of this – so stay tuned to:

• my twitter account – @mwarhurst
• the Resource Efficiency Platform twitter account – @ec_orep

A more democratic EU? Stop government secrecy!

In UK Prime Minister David Cameron’s EU speech this week he talked of the need to increase the EU’s “democratic accountability”.

One little known fact is that the most secretive and undemocratic piece of the EU is actually ‘Council’, EU Governments (Member States) – including the UK – getting together to decide their view on EU laws.

Council is one of the two decision making bodies of the EU, see this page for a quick explanation, the other being the European Parliament – the European Commission only proposes legislation.

For example, look at this document on the Council’s web site, where the main content of the document is:

“DELETED FROM THIS POINT UNTIL THE END OF PAGE 5 “

And this is not some obscure piece of legislation. This is the negotiations on a new law that would force European mining companies to disclose what they are paying governments around the world, part of a global campaign on transparency – see the “Publish What You Pay” campaign site for more details.

There are thousands of censored documents on the Council web site, many saying useful things like “one Member State said” “Several Member States said”. Governments around Europe are hiding what they are doing at EU level.

So, the electorate is not permitted to see what governments are up to. Sometimes complete documents – or rumours – leak out, but it is a closed, secretive process. These leaks probably also go more often to industry interests than to civil society ones.

Contrast this with the elected EU parliament, where you can see who tables which amendments, and where votes are open & often available in full (‘roll call votes’). This detailed information enables people like VoteWatch and environmental groups to monitor exactly what each MEP is up to. VoteWatch also tries to analyse government voting patterns, but its only data is the formal votes that happen at the end of a process, not the real debate on what governments will or won’t accept.

So is David Cameron’s ‘reform’ plan going to include openness for council?

Will the UK take a unilateral decision to open up all of its negotiation documents?

Let’s wait and see…

Europe must transform itself into a resource efficient economy – and 2013 is the year to work out how

On Friday I attended the second meeting of the high level “European Resource Efficiency Platform” (EREP). I’m Friends of the Earth Europe’s ‘Sherpa‘ in this process, assisting Friends of the Earth Europe’s Director, Magda Stoczkiewicz, who is currently on maternity leave.

EREP was set up by the European Commission in summer 2012, and is made up of a diverse range of organisations organisations including the German and Danish Environment Ministers, Siemens, Unilever, the European Trades Unions Congress and UNEP.

The meeting on Friday agreed a “Manifesto for a Resource Efficient Europe“, which concludes that Europe must transform itself into a “resource-efficient and ultimately regenerative circular economy”. The manifesto also emphasises the importance of setting targets to reduce Europe’s resource use.

In my view the manifesto is an important start, and now we need to see real, specific, policy proposals emerging in 2013. The platform has already identified a good set of priorities, for these policy proposals, and it’s due to come out with specific proposals in a report in June 2013.

Targets are particularly important in my view, as there is massive evidence that targets are an effective way of creating change. In addition, there are a lot of easy wins around, notably in waste policy where there are also very substantial gains to be made by stopping burying and burning of any waste that could be recycled or composted.

We’re going to have a busy first half of 2013 trying to agree some substantive and effective policy proposals….

For more information on Friends of the Earth Europe’s work on Resource Efficiency, see:

http://www.foeeurope.org/resources

Measuring to manage: Commission launches consultation on measuring our use of resources

Ever thought it was strange that we measure – and try to reduce – our climate changing emissions, yet we don’t do the same with our resource use? In fact, there isn’t even general agreement on how to measure our use of resources.

This could be about to change though, as the European Commission’s Environment department have launched a consultation on “Options for resource efficiency indicators” - it’s available here. This is part of the Commission’s wider focus on resource efficiency, led by Environment Commissioner Janez Potočnik.

I warmly welcome this consultation, as we identified this as important issue some years ago, and at Friends of the Earth Europe we’ve been working to solve this problem. The four indicators of resource use that we identified in this work are now proposed by the Commission in this consultation, which is a very positive step:

• Overall material use – how much material do we use, from wherever in the world it originates
• Land footprint – how much land we use, again from wherever it comes from in the world (e.g. the land used to grow soy in Paraguay to feed to chickens in Europe)
• Water footprint – the water used to make products
• Carbon footprint – the greenhouse gases released.

This is an important step forward, as the resources debate has been dominated by an academic argument between those who want to just measure the tonnes of stuff we use – maybe even just within Europe – and those who want everything to be translated into environmental impact. The former is too narrowly focussed, the latter is probably largely unachievable at an economy-scale, for example:

• What is the environmental impact of a tonne of wood? Is that wood from a plantation, or rainforest? What species? How much of the forest is left?

We believe that the four indicators above, taken together, give a vital tool to measure and manage our resource use – at product level, company level or at national or EU level. Many companies are already looking at their carbon footprint and water footprint – and identifying substantial reductions in resource use & economic savings. We believe that this approach can assist in making Europe more resource efficient – something that is economically very important in these troubled times.

The proposals in the consultation aren’t perfect – it’s unclear what the Commission proposes to do by when, and whether they will go with the data that is already available (e.g. see this presentation of mine), or delay considering the implications of our resource use until they have gathered ‘perfect’ statistical data.

The Consultation was launched on 26th July & closes on 22nd October – Friends of the Earth Europe will be producing a consultation response towards the end of the consultation period. For more information on our work on resource use, see this page on the Friends of the Earth Europe site.

Land – so important, yet so ignored….

People have been talking about resource use for years – we use too much, we don’t distribute it equitably, things are getting more expensive, running out, etc etc etc.

The thing that puzzles me is that these conversations tend to be about materials – in general, or specific materials (oil, metals, rare earths etc) – and most of the time a key natural resource is ignored – land.

It’s blindingly obvious that land is a limited resource – as Mark Twain said “Buy Land, they’re not making it anymore”. Across the world the pressure on land is increasing – from increasing demand for food (particularly meat & dairy), from the increasing use of biofuel and biomass as an energy source, and from growing urbanisation.

Land is obviously crucial to biodiversity – but it is also intimately  linked to people’s rights, history and incomes. The growing demand for land – combined with financial speculation – is creating a massive increase in land disputes, as companies and governments try to gain control of land.

This is leading to deaths and imprisonments of local people, for instance 17 people were killed in June 2012 during a police-led eviction of peasant farmers in Paraguay. This was followed by the arrest of a local person who was working with Friends of the Earth, though he was later released following international pressure  (see Friends of the Earth International news story)

And yet, land just doesn’t seem to be front of mind when many people talk about resource use. For example, the UK Environment Ministry DEFRA has just launched a consultation on “Guidance for Business on Key Environmental Performance Indicators“. As you might expect, this includes measuring climate emissions, waste, material use, even water – but what about land?

Well, land use change gets a mention in the section on biodiversity, but not beyond this, in spite of the fact that scale of land use is so important as companies make decisions on bio-based materials and feedstocks – or even what to food to serve. Yet measuring impacts on biodiversity is much more difficult than measuring scale of land use.

There is a straightforward way to measure and manage the amount of land required by a company, an economy, or to produce an individual product – it’s called Land Footprint. This is a really straightforward measurement of  the real area of land required, in hectares. It doesn’t tell you everything, but it does work very well as a top-level metric, which facilitates further analysis (e.g. looking at where the land is, why we are using that land etc). If you want to know the land footprint of EU countries, see our report on “Europe’s land import dependency”.

For more about land footprint, see this talk I gave to a conference organised by the European Commission on soil sealing in May 2012.

We’ll be asking DEFRA – and indeed the European Commission – to make sure that future policies on environmental reporting & resource use do include land. We’d welcome the same message coming from other people and organisations too!!

 

Resource Efficiency for Engineers

This morning I gave a presentation on “Resource Efficiency policy for Europe” as part of a ‘sandpit’ on “Engineering Solutions for Resource Efficiency” organised by the UK’s Engineering & Physical Research Council (EPSRC).

The EPSRC  is working to generate innovative ideas for research on resource efficiency, and they issued a call for people interested in getting funding to participate in a 1 week ‘sandpit’ to generate research ideas. The ‘sandpit’ is happening this week – starting with opening up the discussions through external speakers (including myself), and then developing specific proposals by the end of the week, with initial decisions made on funding.

From my brief experience it looks like a good process, encouraging new thinking & innovation – hopefully there will be some good ideas by the end of the week!

My presentation focussed on the work we are doing to standardise resource use measurement at EU level (focussing on land footprint, carbon footprint, water footprint & overall material use) & then encourage policies that reduce resource use (like phasing out residual waste, not setting biofuels targets etc). It generated an interesting discussion, particularly on land footprint, which emphasised the way in which this indicator in particular starts people thinking in more depth about the crucial land issue & its complexities.

My talk also highlighted a few key questions for engineers who are proposing new ideas:

• Is what you are proposing solving a problem, or just displacing it?
• Is your approach part of a long term vision of a sustainable society?
• Is it just an intermediate ‘solution’? If so, how will it be phased out?
• Are you being realistic about how your approach will be used?
• Is the solution new technology or better systems? (e.g. separate collection vs separation plants for recycling)
• Does your approach help in creating greater equity, as well as resource efficiency?