Engagement with sustainability offers many perks to a company: It improves brand reputation, it helps raise prices, it maintains one’s position in the market long term and it can open doors to better investment packages. Signals are one way that companies communicate that sustainability is vital to their corporate strategy and brand development. Through sustainability signals a company builds confidence in its actions, demonstrates that it is better managed and sets itself apart from the competition.

But what are signals? The concept of market signals and signalling was initially introduced in 1973 by Michael Spence, the famous American economist and recipient of the Nobel Memorial Prize in 2001. Spence developed the signalling model for the job-market industry. Briefly, the model indicates that employees signal their particular talents to prospective employers by obtaining a specific education degree. In order to get the degree there is a certain cost involved, which the employee has to pay.

Signals, when applied in the context of a corporation, are distinctive attributes linked to the quality of corporate strategy. They are actions, which reveal a company’s ‘true nature’ and intentions. Corporate decisions about sustainability are communicated through signals to various stakeholders — including the public.

When it comes to sustainability signals the challenge is to ensure that they do their job effectively. They should clearly communicate specific qualities and intentions. Yet, despite growing emphasis on sustainability, we see differences in how companies choose to signal it. Some signal their engagement more openly; others less so. The companies that use signalling effectively to leverage the benefits of sustainability seem to have three things in common:

1. They understand and define their stakeholders: Sustainability strategy is designed around the perspectives of stakeholders. When stakeholders are diverse, the strategy becomes diverse, too. Signalling sustainability then follows the same divergent pattern. In order to avoid an array of signals, it is vital to understand first who your stakeholders are, and then design a meaningful signalling strategy to which they can respond. Nike’s sustainability portal, for example, reflects a well-thought signalling strategy.


2. They fully incorporate sustainability into their corporate strategy: Building legitimacy around sustainability strategy is essential prior to sending any signals. This means getting deeply involved in solutions or streamlining one’s accreditation systems prior to saying anything at all. An example is the luxury retailer Stella McCartney, as sustainability for them starts from the product offering: They use no leather or exotic skins for any of their products, and this is the first thing they will tell you.


3. They understand that the processes of building up a credible corporate profile, can be slow, difficult and costly: Sustainability is a complex affair, especially for a corporation that has only recently engaged in it. The steps to turn around operations have real time and cost implications. Likewise, signalling sustainability becomes expensive. M&S’ Plan A is an example of a strategy that has kept evolving since its rollout in 2007, as it increased its initial 100 commitments to 180 to be met by 2015.

Signalling sustainability can add value when it is designed and implemented in a strategic manner. Despite the challenging and costly nature of sending effective signals, sustainability simultaneously presents many opportunities. Engagement in sustainability can improve operations, give us new products and open up new markets. “Shouting” about your company’s engagement, through appropriate signals, can endorse the reputational benefits. But, as our research shows, this investment needs to be embedded in corporate strategy, and the signals that are sent out need to be carefully crafted around the needs and knowledge of multiple audiences.

This article is originally published in Sustainable Brands.

A new report released by Ernst & Young presents a disconcerting paradox when it comes to corporate sustainability efforts.

While more companies are concerned about increased risk and proximity of natural resource shortages, corporate risk response appears to be inadequate to address the scope and scale of some of these challenges.

The free report looks at six corporate sustainability trends with a strong focus on the internal influencers of corporate performance (CEOs and boards), as well as external forces ranging from governments to shareholders and investors.

The findings of the study were based primarily on a survey conducted late last year by GreenBiz Group of our roughly 3,600-member GreenBiz Intelligence Panel, consisting of executives and thought leaders in corporate environmental strategy and performance. The report analyzed the results from 282 respondents from 17 sectors employed by companies with annual revenue greater than $1 billion, mostly U.S.-based.

One key finding of the report is how the sustainability focus in a growing number of companies is moving from eco-efficiency efforts to a discussion concerning risk reduction and mitigation. As with other sustainability and CSR issues, language is critical and sustainability executives need to learn how to translate the issues they are tracking into the language of enterprise risk management (ERM).

I have written over the years about how the sustainability executive’s job is to be the chief translation officer. Nowhere will this be more important than in helping the chief risk officer and CFO understand the importance of sustainability issues when it comes to long-term resiliency planning. Conversely, risk officers will need to help sustainability executives understand their tools and approaches.

According to the report, the survey found 79 percent of respondents said that sustainability risks are incorporated into their enterprise risk management framework, but only three in 10 companies said they had run scenario analyses and 36 percent said they had no plans to do so. This is revealing when considering that slightly more than half (51 percent) of those surveyed anticipate their company’s core business objectives to be affected by natural resource shortages (such as water, energy, forest products and rare earth minerals/metals) in the next three to five years.

CEO and board support highlighted, others not so much

It might not be front page news that there is much greater alignment in risk identification and disclosure when a company’s CEO and board are significantly involved.

For example, companies that have a greater level of engagement from the CEO and board have much closer alignment between what they voluntarily disclose (such as CDP and DJSI) and what they are mandated to disclose (such as 10-K filings). When the CEO and board are actively engaged, 36 percent of those surveyed indicated total alignment of voluntary and mandatory disclosure.

As CEOs and boards gain a greater understanding of the risks posed by resource shortages and other sustainability issues, they will look to their chief risk officers and CFOs to help them plan for this future. According to the report, this may be a lonely place for corporates-to-be: Most survey respondents view governments and multilateral institutions as not playing a key role in corporate sustainability agendas. For many of the world’s largest corporations, this is a source of endless frustration.

When asked which groups have a positive impact on advancing sustainability on a global basis, 68 percent of those surveyed identified large corporations as having significant influence, followed by consumers (61 percent) and non-governmental organizations (NGOs, at 55 percent). NGOs occupy a unique place, however: Only 5 percent of respondents said they drive a company’s approach to sustainability while 28 percent said business customers and supply chain partners were the biggest influence on a company’s sustainability efforts.

There’s much more to be discovered in the report’s six trends. Perhaps most encouraging is how the conversation inside companies is increasingly more sophisticated. This is critical as companies strive to become more resilient in the face of greater environmental, social and business stresses. As the report notes, companies are getting better at connecting the dots between risk management and corporate sustainability. That, as it turns out, is making sustainability issues more prominent on company agendas.

This article is originally published in GreenBiz.com.

MEPs voted in April against ‘backloading’ carbon allowances

The UK and eight other European countries, including France and Germany, have joined together to call for urgent action to rescue the EU’s flagship scheme for cutting carbon emissions.

In a joint statement today, nine European Ministers including Britain’s Climate Change and Energy Secretary Ed Davey, said they wanted to see clear action this year to reform the beleaguered EU Emissions Trading System (ETS), including a decision on ‘backloading’ as a way of shoring up the price of carbon in the short term. They said the ETS remained the best way to stimulate investment in low carbon technologies and delaying action on the trading scheme could lead to “greater costs in the long-term to meet EU 2050 climate change goals”.

The statement was released as MEPs met to discuss ‘backloading’ in the European Parliament’s Environment Committee today. Last month, MEPs voted against backloading, an intervention that aimed to reverse the sharp drop in the price of carbon by buying up surplus permits in the ETS market. The EU ETS is over-allocated on carbon permits up to 2020 mainly due to the impact of the Europe’s economic troubles on emissions. Carbon market analysts had warned that inaction could mean the price of carbon in Europe “inching ever closer to zero”, while green groups condemned last month’s vote on backloading as a “monumental failure” on the part of policy-makers.

“We remain deeply concerned that the ETS as currently designed cannot provide the price signals needed to stimulate the low carbon investment needed now because the supply of allowances substantially outstrips demand, leading to a very low carbon price. This also threatens the credibility of carbon markets as the most flexible, cost-effective way to achieve emissions reductions,” today’s statement by Ministers reads. “We are convinced that only through proper structural reform and by giving investors a clear signal on Europe’s low carbon ambition beyond 2020 can the EU ETS be restored to its original purpose of driving down carbon emissions and stimulating low carbon investments.”

The statement goes on to say: “Although we are clear that market interference should be kept to a minimum, a one-off and targeted intervention now would minimise market uncertainty and distortions, and also promote investment in low carbon technologies. A delay could lead to greater costs in the long-term to meet EU 2050 objectives.

Backloading: “short term fix”

“We note the European Parliament’s vote on April 16 on the ‘backloading’ proposal and are disappointed by the result. Backloading is one way to provide a short term fix pending structural reform of the EU ETS. Backloaded allowances will be taken from Member State auctioning pots and will thus not affect measures to prevent carbon leakage. The main driver behind energy costs remains global fossil fuel prices and action to reduce emissions will reduce exposure to fossil fuel price volatility.

“We therefore call on both the Council and Parliament take the urgent steps necessary, working constructively together, to come to a swift resolution of the backloading proposal by July of this year at the latest.”

The statement was signed by Davey, Peter Altmaier
, 
Germany’s Minister for the Environment, Delphine Batho
, France’ Minister of Ecology, Wilma Mansveld, the Dutch 
Minister for the Environment, Lena Ek, 
Minister for the Environment
 in Sweden, Martin Lidegaard, 
Minister for Climate, Energy and Building, Denmark, Assunção Cristas 
Minister for Environment, Portugal, Ville Niinistö, 
Minister for the Environment, Finland, and Dejan Åidan, 
Minister for Agriculture and the Environment
, Slovenia.

This article is originally published in Green Wise.

Students in Minneapolis, seeking steps to cut atmospheric carbon levels to 350 parts per million, known as the safe level.

If uncertainty runs rampant in the global-warming debate, it is in part because scientific data is often too complex to be well understood by anyone but climate scientists.

This month, however, the world is likely to reach a scientific milestone that appears impressively scary even to those with only a cursory knowledge of climate science.

For the first time in human history, atmospheric carbon dioxide levels will surpass 400 parts per million, according Scripps Institution of Oceanography, which has been measuring carbon dioxide in the atmosphere at the Mauna Loa volcano in Hawaii since 1958.

“The 400-ppm threshold is a sobering milestone, and should serve as a wake-up call for all of us to support clean energy technology and reduce emissions of greenhouse gases, before it’s too late for our children and grandchildren,” said Tim Lueker of the Scripps Institution in a statement.

The level of carbon dioxide in the atmosphere is closely linked to global warming. The more carbon dioxide, the higher global average temperatures have climbed, according to climate science. (This graphic shows how global temperature and atmospheric carbon dioxide levels have been linked in the past 400,000 years)

When atmospheric carbon dioxide levels were first measured, they were in at 316 parts per million, according to a report in the scientific journal Nature. Pre-industrial revolution pollution levels were thought to be about 280 parts per million.

“Our addiction to fossil fuels has taken us over yet another scary indicator, to a place we’ve never been before in the human history,” said Kaisa Kosonen, a climate policy adviser with Greenpeace.

While the milestone is arbitrary (why is hitting 400 parts per million more alarming than a measurement of 399?), scientists say it’s an important reminder of how the levels continue to rise.

Even if the landmark 400 is reached this month, it’s unlikely stay there. As Ralph Keeling of the Scripps Institution points out, the levels of carbon dioxide and other greenhouse gases in our atmosphere fluctuates throughout the year, with springtime usually representing the highpoint of the cycle. Trees and other plants absorb carbon dioxide during the warmer months in the Northern Hemisphere, lowering the level.

“If CO2 levels don’t top 400 p.p.m. in May 2013, they almost certainly will next year,” the release quoted Dr. Keeling as saying, but in either case it will take several years before the atmospheric carbon dioxide levels remain above 400 parts per million year-round.

Carbon dioxide levels have become part of the broader discussion about global warming, in part because it’s a tangible signpost of change.

A group called 350.org has taken as its name what some scientists consider a safe level of carbon dioxide in the atmosphere. The group created a very visible campaign to urge American colleges and universities divest their holdings of stock in fossil fuel companies.

On its Web site, 350.org compares the planet’s plight and the high level of atmospheric carbon dioxide with an overweight patient with dangerously high levels of cholesterol.

“He doesn’t die immediately — but until he changes his lifestyle and gets back down to the safe zone, he’s at more risk for heart attack or stroke,” the Web site says.

As Andrew C. Revkin wrote last week, the Scripps Institution started a Twitter feed to publicize carbon dioxide measurements.

According to one of Scripps’ recent Twitter posts, atmospheric carbon dioxide is still at 399, but the milestone could be reached any day.

“There will be no balloons or noisemakers to celebrate the event. Researchers who monitor greenhouse gases will regard it more as a disturbing marker of humanity’s power to alter the chemistry of the atmosphere and by extension, the climate of the planet,” wrote Richard Monastersky in Nature last week.

This article is originally published in IHT Rendezvous.

C40 Risk Assessment Framework will help cities prioritize investment in climate actions

Source: http://climate.uu-uno.org/articles/view/160346/

The C40 Cities Climate Leadership Group (C40) today announced a new Clinton Global Initiative (CGI) Commitment to Action that will help cities better prepare for natural disasters and severe weather incidents. The new C40 Risk Assessment Framework will create a common approach for cities to assess climate risk and provide a process to help cities prioritize risk before investing in climate actions.

“In the wake of Hurricane Sandy and the recent floods in Jakarta and Sao Paulo, it is clear we need to empower cities to take the necessary actions to protect their citizens, infrastructure and economies from the devastating impacts of natural disasters,” said C40 Chair, New York City Mayor Michael R. Bloomberg. “While a growing number of cities have efforts underway to measure climate risk, there is a high degree of uncertainty and variability in their methodologies and approaches. The C40 Risk Assessment Framework, by creating a common approach to this challenge, will become the global standard by which all cities measure and manage climate risk.”

Today’s announcement builds on President Bill Clinton’s decades of leadership – most recently through the Clinton Foundation – to enhance the resiliency of U.S. infrastructure and communities.

Drawing on C40’s successful efforts to develop a common global standard for measuring community-scale greenhouse gas emissions (GPC), the C40 is launching an effort to develop an adaptation risk assessment framework to create a common approach to measuring risk that could be used by all cities to help them quantify the impact and manage their climate risks.

By strengthening climate risk assessment efforts via the Risk Assessment Framework, cities will be able to invest in the implementation of the most needed climate change actions over time. The development of a global standard for community-scale adaptation risk assessment would:

• Enable cities to assess local climate risks with confidence


• Allow for local prioritizing of investments to mitigate those risks


• Achieve comparability between cities


• Enable banks to better structure lending for resilient infrastructure, and the develop standards for accessing adaptation-linked finance


• Enable insurance companies to value risk in a uniform way, ensuring continued investment in urban infrastructure

At today’s CGI Mid-Year Meeting, President Clinton, Secretary Hillary Clinton, Chelsea Clinton, Rio de Janeiro Mayor Eduardo Paes, and C40 Chair Bloomberg participated in a roundtable of C40 Mayors and select leaders from the private sector – including executives from the banking, insurance, and engineering community – that expounded on finding a common language to measure and manage climate risk. Participants explored opportunities for investing in adaptation to climate change, building resilient urban infrastructure, and mitigating risk. The discussion also centered around how public and private sectors can join together in identifying solutions to helping cities be better prepared for natural disasters and severe weather incidents in the long term.

The development of the Risk Assessment Framework will be guided by the newly-launched Climate Risk Assessment Network, which will bring together C40 Cities and outside partners such as lending institutions, technical experts, and the insurance industry. The first convening of the Climate Risk Assessment Network will take place in Rotterdam on June 5-6, 2013 to lay the groundwork and next steps for growing the framework.

This article is originally published in heraldonline.com.