Environmental Costs Outweigh Corporate Profits

The 2015 State of Green Business report was just released, detailing the environmental performance of large companies around the world. The report, produced by GreenBiz and TruCost, illustrates the true costs of pollution, ecosystem depletion, and health impacts of unsustainable natural capital consumption by corporations and the alarming rate at which they are growing.

2010dirtyenergyAccording to the report, environmental costs, like greenhouse gas emissions and water abstraction (removing freshwater from the natural water cycle, and thus preventing its future use), would render most businesses unprofitable if they were responsible for paying for the impacts. The report found that environmental costs tallied up to $1 trillion (or 6.2% of GDP) for companies in the US, and $3 trillion worldwide.

The authors state, “Over the past five years, the proportion of company profit at risk consistently exceeds 100 percent of their profit… This means that, on average, companies would be unprofitable if they had to pay the actual costs associated with the commodities they consume and pollution they generate.”

It’s not all bad news, however. The report finds that the level of sustainable investment has been growing considerably in recent years. According the 2014 Trends Report published last November by US SIF: The Forum for Sustainable and Responsible Investment, cited in GreenBiz’s report, sustainable assets totaling $6.57 trillion represented almost 18% of the $36.8 trillion in total assets under management, a 76% increase over 2012.

Social investors, joined by non-profits and growing consumer concern, are changing the ways that companies value natural resources. As a result, more companies are adopting the concept of ‘natural capital,’ which refers to “the stock of resources and ecosystem services on which all companies depend for their success.” Fresh water for industrial processes, and energy produced from fossil fuels (and its connected value to the clean air it pollutes) are the two largest forms of natural capital discussed in the report. Most companies are using these forms of capital at unsustainable levels. Due to rising shareholder and consumer concerns, companies are increasingly examining their businesses along their entire supply chain, where most natural capital expenditure occurs.

Additionally, science-based emissions reduction goals are becoming much more commonplace. Now, to really address the problems of overusing natural capital, corporations need to take a leadership role in reducing their imapcts. It is up to businesses to address their overall sustainability by assuming liability for their stranded assets (including certain fossil fuel reserves), adopting open and distributed sustainability systems, providing transparency along supply chains, and most importantly, supporting policies that advocate for sustainable business practices across the board.

EPA Speaks Out on Keystone Pipeline  

The Keystone XL Pipeline, which would carry roughly 830,000 barrels of tar sands crude oil from Alberta, Canada to the Gulf Coast in the US, has been one of the most polarizing issues in American politics over the past few years. Environmentalists recognize that the pipeline will do little more than encourage continued tar sands extraction, one of the most carbon-intensive oil production methods on the planet. Supporters of heavy industry see the pipeline as a crucial piece of infrastructure that will create a more robust economy including jobs and increased energy security (although the Keystone would produce very few permanent jobs). President Obama has stated that the future of the pipeline project depends on whether or not it will contribute further to climate change.

Protestors oppose the Keystone Pipeline at a Rally
Protestors oppose the Keystone Pipeline at a Rally in Washington, DC

This week, the EPA weighed in on the State Department’s environmental impact statement, using authority granted by the Clean Air Act (CAA) and the National Environmental Policy Act (NEPA). The letter sent to the State Department from the EPA outlines their findings that the pipeline would indeed contribute to climate change. The production, transport, and refining processes, and the burning of the final product would result in an additional 1.3 -27.4 million metric tons of CO2 each year. On the high end, that’s equivalent to the GHG emissions from 5.7 million passenger vehicles or 7.8 coal-fired power plants. With oil prices currently lower than most economists expected, construction of the pipeline would make it cheaper to transport tar sands oil than the current method of shipping it by rail, and would most likely result in increased tar sands production.

Although Congress has voted many times in attempt to pass the pipeline without presidential authority, the project remains to be approved. The President has vowed to veto any attempt to force the pipeline into construction before environmental assessments were turned in and considered. The EPA’s comments all but confirm that the pipeline will contribute to climate change, in the face of massive skepticism and denial from supporters of the project. The letter may give the president the confidence he needs to stand up to fossil fuel interests and knock down further attempts at its passage. To learn more about the effort to block the construction of the pipeline, click here, here, and here. You can also take action with Green America, urging President Obama to veto the pipeline

CEVBs at the Congressional Renewable Energy Expo

This July, Green America attended the Congressional Renewable Energy Expo on Capitol Hill to tell policy makers and clean energy industry leaders all about the Clean Energy Victory Bonds Act of 2014. The bill, which has been introduced to the House of Representatives by Zoe Lofgren (D-CA), seeks to provide new financing for clean energy projects including wind, solar, and geothermal, as well as home and commercial energy efficiency technologies. The Environmental and Energy Study Institute (EESI) stopped by our booth to ask us a few questions about CEVBs. Watch their interview below, read more about the bill here, and contact your Representative and urge him or her to support clean energy in the US.

House Republicans Follow Senate’s Direction on Keystone XL Pipeline

On December 2, 2011, two days after the introduction of a Senate bill to fast-track decision-making on the Keystone XL pipeline, House Republicans released their plans to expedite the pipeline permitting process — and also to take the decision away from the State Department and to grant it to the Federal Energy Regulatory Commission. The House bill is sponsored by Rep. Terry Lee (R-NE).

Pressure from Big Oil and the Chamber of Commerce should not be allowed to override thorough consideration of the dangerous consequences of the KXL pipeline. Green America opposes construction of the pipeline due to the perils it presents for human health, the environment and climate change, as well as the tremendous setback the pipeline would mean for development of our domestic, renewable energy sector.

Rep. Lee has stated that Republicans aim to attach the bill to legislation that Democrats seek on extending unemployment insurance and payroll tax cuts.

Some in Congress are trying to use our country’s dire need for job creation as an excuse to build this pipeline. Data on job creation commissioned by the oil industry, while still in circulation, has been grossly inflated. We will generate more good quality, lasting jobs through investment in clean energy. A report from the Political Economy Research Institute (PERI) finds that clean energy jobs will provide more career opportunities than the fossil fuel sector does “across all levels of skill and education” and “a high proportion of the jobs generated by clean-energy investments should offer good opportunities for advancement through training programs.” While estimates vary, PERI finds that investment in clean energy generates approximately 3-4 times as many jobs as investments in fossil fuel industries.

So what are we waiting for? We are dangerously late in shifting to clean energy options and haven’t a moment to spare in making renewable energy our primary source of power.

Bill Would Require Large Companies to Disclose Supply Chain Efforts

A new bill, introduced in the House of Representatives by a New York congresswoman, would require companies with more than $100 million in earnings to publicly disclose their efforts to keep child labor, forced labor, and human trafficking out of their supply chains.

 “It’s virtually impossible to get dressed, drive to work, talk on the phone, or eat a meal without touching products tainted by forced labor,” said Rep. Carolyn Maloney (D) of Queens, when she introduced the bill.

According to the Christian Science Monitor:

The bill would require any company earning more than $100 million worldwide to document its efforts in two places: its annual Securities and Exchange Commissions (SEC) filing, and the company’s website. These disclosures would detail the companies’ policies to prevent illegal labor and their methods for certifying that suppliers abide by them. …

“The Congresswoman was very intelligent about the way she’s put this together,” says E. Benjamin Skinner [author of the book, “A Crime So Monstrous: Face-to-Face with Modern-Day Slavery]. “[The disclosure] has to be in an SEC filing. If you lie as a CEO in an SEC filing, you go to jail.”

Republicans and Democrats Working Together

While it might seem rare these days for Republicans and Democrats cooperatively to work together on anything, two Republican members of the US House of Representatives recently joined with one of their Democratic colleagues to introduce an important new piece of renewable energy legislation.

On July 20, Rep. Nan Hayward (R, NY), Rep. Dan Lungren (R, CA), and Rep. Mike Thompson (D, CA), proposed a bill designed to protect local communities’ ability to adopt an innovative clean-energy financing strategy that itself has attracted bi-partisan support from coast to coast – and with good reason. This financing strategy, known as “property assessed clean energy,” or PACE, allows homeowners finance the up-front costs of installing residential clean-energy systems through city partnerships that spread out the payments as an add-on to their property taxes for as long as 20 years.

As a way to encourage homeowners to invest in cleaner energy without a high up-front cost, PACE programs have proven popular with cities working hard to stimulate their local economies and create green jobs. Since 2008, legislatures in 27 states have enabled cities to set up PACE assessments, no matter which party controlled the state house – Republicans in Virginia, Missouri, and Texas; or Democrats in Oregon, Minnesota, and New Hampshire.

Read this editorial »