Strategic CSR - Methane

Among the many reasons to be frustrated with the corporate conversation around ESG (and sustainability, in general) is the disproportionate attention focused on carbon, rather than other greenhouse gasses, such methane, which is so much more damaging in the short term (e.g., see Strategic CSR – Methane). This narrow focus can result in less pressure to set targets and less oversight of performance, even when targets are set:

"The United States' booming fossil-fuel industry continues to emit more and more planet-warming methane into the atmosphere, new research showed, despite a U.S.-led effort to encourage other countries to cut emissions globally."

This is particularly ironic, given the leading role the U.S. played in setting global limits on the emissions of this gas:

"Methane is among the most potent greenhouse gases, and 'one of the worst performers in our study is the U.S., even though it was an instigator of the Global Methane Pledge,' said Antoine Halff, the co-founder of Kayrros, the environmental data company issuing the report."

One reason could be where methane (relative to carbon) is emitted in the supply chain:

"Unlike carbon dioxide, methane emissions don't derive from consumption, but rather from production and transportation of the gas, which is the main component of what is commonly known as natural gas. Methane can leak from storage facilities, pipelines and tankers, and is also often deliberately released. Methane is also released from livestock and landfills, and occurs naturally in wetlands."

The lack of oversight has produced predictable results:

"The concentration of methane in the atmosphere is now more than two-and-a-half times as much as preindustrial levels, and more than half of the world's methane emissions are man-made."

Why methane has remained overlooked, however, is less important than the consequences of it having been so:

"Its presence in the atmosphere dissipates in roughly 12 years, a relatively short span of time, but numerous studies point to its heat-trapping effects as being as much as 80 or more times stronger than carbon dioxide's. That means it can have more immediate consequences for the climate."

What is consistent in the debate (as with most sustainability issues), though, is the degree to which everyone says they are willing to act, but then fails to do so meaningfully:

"In 2021, the United States was among the first signers and promoters of the Global Methane Pledge, which set a target of reducing global, man-made methane emissions by 30 percent from 2020 levels within a decade. The pledge has been signed by 158 countries. '2030 is rapidly approaching, though, and emissions are still being released in huge amounts,' said Mr. Halff. 'This seems in large part because oil and gas production is surging both in the U.S. and elsewhere.'"

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e  

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Despite a Global Pledge of Reduction, U.S. Emissions of Methane Keep Climbing

By Max Bearak

September 20, 2024

The New York Times

Late Edition – Final

A18

https://www.nytimes.com/2024/09/19/climate/us-methane-greenhouse-gas.html

 

Strategic CSR - Trees

The other day, I was looking through some old newspaper cuttings and ran across a quote in the Financial Times that was attributed to "an African proverb," which I thought you would all enjoy:

"The best time to plant a tree is 20 years ago. The second-best time is now."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

 

Strategic CSR - Three Mile Island

The article in the url below, covering the revival of Three Mile Island (the site of the worst nuclear accident in the U.S.), is interesting for a few reasons. First is that it can be revived at all – I had no idea it was only one reactor that failed – a second one is perfectly usable and had been operating up until a few years ago:

"Three Mile Island's undamaged Unit 1 reactor sits next to Unit 2, which was shut down after a partial core meltdown in 1979 led to five days of panic. The incident heightened awareness of nuclear plants' potential safety problems and contributed to a loss of enthusiasm for the industry that lasted decades. But the 835-megawatt Unit 1 continued operating and closed only under economic pressure five years ago."

 

The issue appears to have been the growing competitive pricing of renewable energy sources:

 

"Years of flat U.S. power demand had created a bruising battle for market share. Nuclear plants had a tough time competing against renewable energy and natural-gas-fired plants that tapped into a cheap source of fuel from the U.S. shale boom."

The second reason is Microsoft's creative decision to fund this revival in the form of an exclusive energy supply:

"Constellation expects to spend around $1.6 billion to restart the reactor by early 2028. Microsoft has signed a 20-year power-purchase agreement with Constellation, the companies said Friday. The deal would help Microsoft pair its 24-7 electricity use with a matching source of nearby clean power generation."

As a related story in Bloomberg noted:

"Microsoft has agreed to purchase the energy for two decades and declined to disclose financial terms. This is the first time Microsoft has secured a dedicated, 100% nuclear facility for its use."

And the third reason is what is driving the demand from Microsoft:

"A deal between Constellation Energy and Microsoft will restart Pennsylvania's Three Mile Island, the site of the country's worst nuclear power accident, to help power the tech giant's growing artificial intelligence ambitions. Under the agreement, Constellation would revive the plant's undamaged reactor, which was too costly to run and closed in 2019, and sell the power to Microsoft. The plan signals the gargantuan amount of power needed for data centers for AI, along with the tech industry's thirst for a carbon-free, round-the-clock electricity source needed to meet climate goals."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e  

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Three Mile Island's Rebirth: Microsoft AI power Source

By Jennifer Hiller

September 21-22, 2024

The Wall Street Journal

Late Edition – Final

A1, A9

https://www.wsj.com/business/energy-oil/three-mile-islands-nuclear-plant-to-reopen-help-power-microsofts-ai-centers-aebfb3c8

 

Strategic CSR - Clean tech

The graphic and quotes below were embedded in the April 11, 2024 issue of the Bloomberg Green newsletter, arguing that China's dominance of core technology in the sustainability space is increasing, with rapid investment having "pushed China's share of global production capacity above 80% in 11 clean technology value chain segments." The graphic accompanying the point, generated by BloomberNEF) is compelling:

It is important to note that this is data presented on a selected set of 11 technologies, so is certainly not everything. Nevertheless, the technologies on the list all seem central to any attempt by other countries around the world to develop a more sustainable economy, and with whom many of which China has strained relations (e.g., Strategic CSR – Geopolitics).

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Strategic CSR - Sweatshops

Ever since we have had greater awareness of the global supply chain, and the low wages that drive it (and underpin the cheap prices we pay in the West for much of our clothing), there has been pressure on fashion firms to pay their contracted workers more. An important point along the way was the Nike sweatshop scandal of the 1990s, but nothing much has changed since, as noted in the article in the url below. What never ceases to amaze me, however, is the scale of the operation required to sustain the mass market fast fashion industry:

"In Bangladesh, the nearly 600,000 people making clothes for Swedish giant H&M—one of the biggest retailers in this space to start talking about paying living wages—earned an average of $119 a month in the first half of 2023, excluding overtime, the latest available data shows. That is well below the $194 living-wage figure for the suburbs of Dhaka, the capital, where clothing factories are clustered, according to the Global Living Wage Coalition, a research and advocacy group whose benchmarks are widely used in the industry."

The implications of these pay levels?

"At those income levels, workers say they have no savings. Often, they borrow from relatives to cover medical expenses or meet unforeseen emergencies. Some months, they even buy food on credit. Frustration over low wages boiled over in October when workers in Bangladesh set factories ablaze and smashed machines in protest."

The article makes the case that firms would like to change that, but are not sure how best to do that:

"[Western fashion companies] generally don't own the factories where their products are made and don't determine pay for workers. They say they don't want to go down the road of imposing specific wage levels on supplier factories. Instead, they have tried other solutions. H&M, for instance, brought Swedish study circles to Bangladesh to train workers in negotiation, experimented with model factories and pushed for more transparent pay structures for workers."

What is required, argue advocates, is exactly the coercive methods the companies are saying they want to avoid:

"What will work … is setting a higher wage level supplier factories must meet and a clear schedule for phasing in those higher wages."

The companies instead advocate for self-sufficiency:

"H&M said it agrees wages are too low in many sourcing markets, but that setting wage levels for suppliers is a 'shortsighted tactic that undermines the role of workers, unions, employers' organizations and governments.' They, and others like Zara-owner Inditex, stress the importance of workers negotiating higher pay for themselves via collective-bargaining agreements, where labor unions hammer out higher wages with employers."

The problem is whether the infrastructure for such agency exists (let alone the training to know how best to self-advocate):

"… in many of the places Western brands buy from, such as China, Vietnam and Bangladesh, independent unions are either banned or repressed. A review of Inditex disclosures shows just 3% of its supplier factories in Asia have collective-bargaining agreements."

The key barrier to progress, of course, is whether the higher costs that lead to higher prices will be supported by customers in the West. In other words, are they willing to pay more for their clothes, so that the workers who made them can be paid something close to what Western consumers say they want them to be paid?

"Part of the problem is low wages are core to fast fashion. It is no coincidence that Bangladesh, the world's second-largest exporter of clothes, is also the place where workers who make clothes earn among the lowest wages of industrial workers anywhere. To sell shorts and shirts cheaply—and increasingly, compete with so-called ultrafast fashion brands like China-founded Shein, known for their rock-bottom prices—clothing giants pressure their suppliers to keep costs down."

The key point:

"Insisting on higher wages would mean paying more for the clothes and potentially putting themselves at a competitive disadvantage if other companies aren't making similar moves."

Which is another way of saying that the companies do not have faith their consumers are willing to pay (even slightly) higher prices to support the working conditions they say they want for these workers:

"German shoemaker Puma said in its 2022 annual report that its factories in Pakistan and Bangladesh—accounting for roughly an eighth of its total products—don't pay a living wage. Even California-based Patagonia, known for its progressive ethos, says that of the 29 factories it bought clothing from, only 10 paid a living wage in 2022."

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (6e)

© Sage Publications, 2023

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler6e 

Strategic CSR Simulation: http://www.strategiccsrsim.com/

The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/

Fashion Firms Still Wrestle with How to Pay Workers a Living Wage

By Jon Emont

January 4, 2024

The Wall Street Journal

Late Edition – Final

B2

https://www.wsj.com/business/big-fashion-still-hasnt-figured-out-how-to-pay-a-living-wage-3675153f