UN Climate Change Conference in Warsaw Opens

Location of most events and pavilions of parties and exhibits

Location of most events and pavilions of parties and exhibits

Philippines representative at COP19 speaking at opening

Philippines representative at COP19 speaking at opening

Party representatives and observers from IGOs and NGOs at opening session of COP19

Party representatives and observers from IGOs and NGOs at opening session of COP19

The UN Climate Change Conference (known as COP19/CMP9) has opened.

Here are some reflections/updates, roughly 2-and-a-half days into the 13-day event:

(1) the most powerful moment so far was the speech of the representative of the Philippines at the opening session, at which he described his brother who is gathering bodies of the dead in the wake of Supertyphoon Haiyan.

(2) some things that I was told or read prior to the opening come with qualifiers (or the reality depends on who you ask) – among veterans of COP meetings, some say that NGOs and the business community have less access than in prior COP meetings, some say the level is about the same, some say they are being engaged more.

(3) what is being confirmed by veterans of COP meetings (so far) is that the level of sub-national governmental engagement may be greater than in the past – see my previous blog post explaining why this is significant.

(4) apparently, learning-on-the-fly is normal for a first-time observer/participant/adviser.

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UN Climate Change Conference in Warsaw to Engage with Stakeholders & Cities & Promote Replicable Best Practices & Measurement

According to several sources, the UN Climate Summit (November 11-22) in Warsaw, Poland (know as COP19/CMP9) will be noteworthy for a few reasons:

(1)    A Range of Stakeholders Will Have Their Voices Heard.  Polish Environment Minister and President of the COP19 Conference Marcin Korolec has already held preparatory meetings with, among others, business leaders – the summary of take-aways from these consultations is available online.  NGOs and other stakeholders also have been and continue to be consulted and are having a voice during the eleven days of meetings.

(2)    Cities and Subnational Governments Will be Included as Focal Points of Consultation and Action.  Representatives of cities and other subnational levels of government will be meeting repeatedly to discuss actions that they have been taking and their ideas for what should be done with regard to mitigation of the ongoing and worsening climate crisis.  Their conclusions and suggestions will be finalized and communicated on November 20 and 21.

(3)    Best Practices Will Be Considered and Promoted.  Specifically, the two days of subnational governmental conversations will consider best practices in terms of mitigation and adaptation that can be replicated.

(4)    “We Can Manage What We Measure” Will Be a Theme.  This is a truism in all areas of human activity, and obvious to anyone who has tried to manage anything.  Even if no goals are established for emissions reductions, the very act of measuring and publishing environmental impact data has been shown to work in various contexts related to pollution and waste.  Regardless of when or what goals are eventually set, the measurement and tracking of emissions is an essential first step toward achieving them.  So propagating the practice of measurement and reporting is vital, and will be highlighted in, among other venues, the dialogue on best practices of cities.

The City of Warsaw provides a perfect illustration of why the themes above make sense.  The City recently published its 2013 Integrated Sustainability Report (press releases and the report are available in English and Polish).

95% of the world’s largest 250 corporations over 4,000 organizations already publish data on their environmental, societal, and economic impacts, but Warsaw is at the vanguard of cities to do so (and the first of any entity to adopt the latest GRI standard).

If cities embraced measuring and publishing environmental impact data on a widespread basis, it could be a critical step toward curbing costly, needless, and destructive environmental negative side effects of how we conduct our daily affairs – including those that are contributing to climate change.  This statement is supported by five facts:

(1) a majority of the planet’s +7 billion (soon to be 9 billion) people  now lives in cities (a recent epochal tipping point);

(2) we enjoy a greater degree of access to – and control over – local government (compared to national government);

(3) many energy, water, sewage, waste, transportation, and other infrastructures are managed by municipalities (or other sub-national levels);

(4) inasmuch as public infrastructure functions are often outsourced, reporting can involve (and thereby put appropriate constructive pressure on) for-profit infrastructure service companies.  In other words, cities can demand that partner companies and organizations start measuring, reporting, and reducing negative impacts;

(4) the long-predicted impacts of climate change are being acutely felt in the world’s cities – especially in major coastal metropolises providing an impetus for immediate constructive change and adaptation; and

(5) ambitious goals have been set and significant tangible steps taken by cities.

Cities and other sub-national units of organization therefore (1) are vital foci for change, (2) deserve to have their voices heard, and (3) should have their readily replicable best practices – including efforts related to measurement – highlighted and propagated.

The 2013 UN Climate Change Conference hopefully will be remembered and applauded for acknowledging and acting upon these realities.

More details about goals and aspirations for the Warsaw COP19 Climate Summit may be found here.

The author helped the Warsaw Department of Infrastructure prepare the City’s 2013 Integrated Sustainability Report and is scheduled to speak about the importance of measuring environmental impacts at the COP19/CMP9 UN Climate Change Conference.  He is a tenured associate professor of business law and sustainability at University of Massachusetts Dartmouth and since 2006 has also taught courses and seminars in other countries, including in Poland at the Warsaw University of Life Sciences.  He has authored over 30 publications, focusing primarily on sustainability reporting.

Adam J. Sulkowski

Associate Professor of Business Law and Sustainability

University of Massachusetts Dartmouth

Visiting Professor at Warsaw University of Life Sciences

Email: asulkowski@umassd.edu

Twitter:  @adam_sulkowski

Articles: ssrn.com/author=482263

Google+: gplus.to/AdamSulkowski

Linked In: linkedin.com/in/adamsulkowski

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Warsaw 2013 Integrated Sustainability Report – and why cities are vital focal points for measurement and action

The City of Warsaw recently published its 2013 Integrated Sustainability Report (press releases and the report are available in English and Polish). 

95% of the world’s largest 250 corporations over 4,000 organizations already publish data on their environmental, societal, and economic impacts, but Warsaw is at the vanguard of cities to do so (and the first of any entity to adopt the latest GRI standard).

If cities embraced measuring and publishing environmental impact data on a widespread basis, it could be a critical step toward curbing costly, needless, and destructive environmental negative side effects of how we conduct our daily affairs – including those that are contributing to climate change.  This statement is supported by five facts:

(1) a majority of the planet’s +7 billion (soon to be 9 billion) people  now lives in cities (a recent epochal tipping point);

(2) we enjoy a greater degree of access to – and control over – local government (compared to national government);

(3) many energy, water, sewage, waste, transportation, and other infrastructures are managed by municipalities (or other sub-national levels);

(4) inasmuch as public infrastructure functions are often outsourced, reporting can involve (and thereby put appropriate constructive pressure on) for-profit infrastructure service companies.  In other words, cities can demand that companies and other organizations start measuring, reporting, and reducing negative impacts;

(4) the long-predicted impacts of climate change are being acutely felt in the world’s cities – especially in major coastal metropolises providing an impetus for immediate constructive change and adaptation; and

(5) ambitious goals have been set and significant tangible steps taken by cities.

Cities and other sub-national units of organization therefore (1) are vital foci for change, (2) deserve to have their voices heard, and (3) should have their readily replicable best practices – including efforts related to measurement – highlighted and propagated.

The author helped the Warsaw Department of Infrastructure prepare the City’s 2013 Integrated Sustainability Report and is scheduled to speak about the importance of measuring environmental impacts at the COP19/CMP9 UN Climate Change Conference.

 

 

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Question: What’s cybersecurity got to do with sustainability? Answer: Materiality.

A student once asked me what an article on Duties and Risks Related to Cyber-Extortion has in common with the other things I research. Previously, my answer was (paraphrasing the Brundtland Commission definition): “sustainability means thriving today in a way that lets us thrive in the future; anything that prevents that is unsustainable, so cybersecurity issues are relevant.” Today’s 1-word answer: materiality. Here’s what I mean and why this matters:

I was just catching-up on the SEC‘s guidance on materiality (what a reasonable investor would want to know before making a decision, which is the standard for deciding what publicly-traded companies must disclose), and came across commentary in the Washington Post by Senator Jay Rockefeller and Michael Chertoff supporting the SEC Division of Corporation Finance‘s views that risks and incidents related to cybersecurity should be disclosed.

The argument (essentially) is that it’s both in our collective self-interest and the best interest of investors for companies to publicly report on risks and incidents related to cybersecurity (for example, when the information system of a company is hacked and private information of clients is stolen). While the authors don’t explicitly elaborate, the reasoning is that companies manage more carefully issues about which they need to publicly report. That is the same argument that many have been making about risks and data related to societal and environmental issues. Several thousand organizations engage in sustainability reporting, including 95% of the Global Fortune 250. An important question, however, is whether more encouragement from governments (through laws, regulations, or guidance) of disclosure of societal and environmental impacts would be constructive.

The next time this topic comes up, let’s remember that the SEC and its divisions do encourage disclosures of non-financial data such as, in this instance, the security of information systems. Is it any less relevant, from a public policy perspective or to the self-interested investor, when a company amplifies or mitigates risks, costs, and harms related to issues ranging from use of coerced labor to the collapse of planetary life support systems? If we generally support government encouragement of disclosure in analogous situations (security of information systems), shouldn’t we also support more explicit government encouragement disclosing a broader array of societal and environmental risks and data?

Some of the themes of my upcoming articles will be (1) whether existing materiality standards already behoove disclosure of a wider range of societal and environmental impacts and (2) would more explicit and specific guidance from regulators be helpful and (3) that cooperation between regulated companies (most of whom already have expertise in disclosure of societal and environmental impacts) and regulators would both be the most efficient reaction on the part of executives and yield the best results.

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Congrats students, Net Impact, Fall River & Town of Dartmouth: 3 world firsts, 2 national firsts!

Congrats students, Net Impact, Fall River & Town of Dartmouth: 3 world firsts, 2 national firsts!.

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Congrats students, Net Impact, Fall River & Town of Dartmouth: 3 world firsts, 2 national firsts!

Not every student project gets a press conference with a mayor!  Our students’ hard work with the City of Fall River, MA, got noticed by CSR WireEnvironmental Leader, the Standard Times, and Fall River Herald, as well as EBI ConsultingTriple Pundit (twice), and ISOS Group. A similar project for the Town of Dartmouth, MA, also was covered by the Standard Times.

So what’s the hubbub about?  Why was this noticed in Amsterdam?

The students prepared, on behalf of Fall River, the first sustainability report by a city in USA consistent with the world’s most widely used standard for such reports (G3.1 of the GRI) – it’s also the first city report in the world to meet the A application level, meaning that the students found and published over 62 measures of economic, societal, and environmental impact. A few weeks later, the Town of Dartmouth voted to publish the draft report we prepared for them. Dartmouth will therefore be the first town in the USA to have a GRI-guided report, and looks like it also will score a world first as well, in that no other town appears to have published over 62 measures of progress. Dartmouth town leaders even discussed and decided to use the data in the report on an ongoing basis to evaluate decisions and make plans for the future.

Finally, an independent accountant confirmed the sources that students cited in preparing the most recent iteration of the annual sustainability report of UMass Dartmouth (in 2011, it was the first in the world by a university to meet the criteria of the A application level of the GRI’s G3.1 standard), making our report the first in the world to meet the criteria to be called an A+ GRI-guided sustainability report. I’m delighted to be sharing our best practices at Verdexchange 2013 as an invited speaker.

4,000 organizations, including 95% of the Global Fortune 250, publish reports of their impacts on the economy, society, and environment. The reasons include attracting, retaining, and inspiring talent, as well as winning trust of financial backers, branding, and simply managing better. Universities and the public sector face the same challenges. So why not adopt the same practice?  Better yet, why not make it a class project and learn some employable skills?

Below: after a lengthy editing session with his staff, we briefed Mayor Flanagan and took a moment to document the day he decided to make the announcement about Fall River adopting sustainability reporting. Left to right: Perry Long, Robert Muller (UMass Dartmouth MBA), Mayor William Flanagan, Shawn Cadime, Adam Sulkowski).

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Blue States = Better for Business? Or the HQs of Better Businesses? Surprise! U.S. Businesses Elect Ultra-Blue States as Best HQ Locations, 7:1 (vs. Ultra-Red States)

Are blue states or red states better for business?  Where would you locate the headquarters (HQ) of your company?  Are businesses in Democratic vs. Republican-leaning states more sustainable?  More responsible?  More ethical & transparent?  What do the numbers tell us?

Kyle Potvin (JD/MPP, UMass Dartmouth, 2013) and Amie Tailor (MBA, UMass Dartmouth, 2013) just finished checking and sorting the HQs of the 1,686 U.S. companies in CSRHub’s database (the world’s largest collection of ratings and information related to corporate responsibility – including 93% of the Fortune 1000 and more than 95% of the S&P 500) among states (ranging from ultra-blue to ultra-red, depending on the number and margin of victories of Democratic vs. Republican nominees in the past four presidential election cycles).  Results & possible interpretations below.

Clarification: this is NOT intended to be partisan – Kyle & Amie chose this project and my intent is to post a surprising observation to provoke further thought & conversation, not to advocate for a candidate or party.

(1) By a margin of about 7:1, companies favor having their HQ in Ultra-blue v. Ultra-red states. Median # of company HQs per state variety (states by category are listed at the bottom of this post): Ultra-blue 47, Blue 36, Purple 30, Red 7.5, Ultra-red 7.

 

(2) The pattern persists when we compare lists of most popular business HQ locations: 

 

Top 5 Blue State HQ Locations: CA (252 company HQs), NY (159), IL (101), PA (84), MA (73).

Top 5 Red State HQ Locations: TX (176 company HQs), GA (49), VA (45), NC (37), TN (27).

Next 5 Top Blue State HQ Locations: MN (50), CT (47), MI (41), WA (31), MD (28).

Next 5 Top Red State HQ Locations: OK (17), AR (15), LA (14), KY (12), AZ (10).

So what?  There are four possible interpretations:

(1) Since the sample includes 93% of the Fortune 1000 and more than 95% of the S&P 500, one could interpret these patterns to simply mean that, by a large margin, U.S. companies perceive the best locations for running a business to be in bluer states.  As none other than Jack Welch (former GE CEO and University of Massachusetts alumnus) said during a visit to our campus in 2005, he’d favor locating a business where there’s an educated workforce and good transportation infrastructure.  Public investments in education and infrastructure tend to be favored more in blue vs. red states, so this “election result” shouldn’t surprise us.

(2) Inasmuch as the 1,686 companies in the CSRHub database tend to be publicly-traded companies about whom there is more information (either good or bad, related to environmental, societal, and economic impacts) the implication could be that companies that are comparatively more transparent tend to favor bluer states.  Depending on how follow-up regression tests turn-out, we may see a headline like this one: “Companies That Are More Transparent Tend to Locate HQs in Ultra-Blue States.”

(3) Considering that about 95% of the Global Fortune 250 now actively report on environmental, societal, and economic impacts, we ought to also test the following interpretation: “Do Companies That Engage in Sustainability Reporting Tend to Locate in Ultra-Blue States?”

(4) Presuming further that we can also test and discover that there is a connection between being transparent and/or reporting and actually being more responsible, we may see a headline that “Companies That Are More Responsible Tend to Locate HQs in Blue States.”  On a somewhat related note, Co-Founder and CEO of CSRHub Bahar Gidwani recently published an analysis of whether better performing companies tend to be located in more sustainable cities.

Regardless of which interpretation(s) one favors, the raw numbers above should provoke some substantive debate about which political, cultural, regulatory, and tax climates really are “pro-business” – it would seem that the answer is contrary to a lot of unquestioned assumptions.

We welcome comments and critiques and hope to test (soon) for causality between variables.  In case you are wondering, below is the sorting of the states based on outcomes of the most recent four presidential elections (blue states being those that tend to favor Democrats and red states being those that lean Republican, and “ultra-blue” and “ultra-red” being states with consistently greater margins of victory for the dominant party, and purple designating swing states):

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Trafigura: let’s see where we go from here?

Trafigura, the $122 billion commodities trading company, is growing fast.

With that growth has come tough choices – often under immense pressure, but where is the company going in the future?

This July in Mongolia, Pierre Lorinet, Trafigura’s CFO, commented on what would make for the most intriguing educational case studies related to the company’s recent history and future plans. Here is a sampling of ideas:

(1) “how we responded” – the company has taken a beating for not only (alleged and/or real) wrongdoing, but its reaction to negative press and protests. In MBA curricula we still sometimes refer to “Shell and Ken Saro-Wiwa’s court-sanctioned murder in Nigeria” or use as shorthand “Shell in Nigeria” and “Shell and the Brent Spar incident” to allude to the nasty issue of (real or perceived or ambiguous) corporate culpability in ecological and/or human tragedies. Trafigura’s experience (before, during, and after the crisis in Côte d’Ivoire) could be even more interesting to study from the point-of-view of senior management, in that they had less time and power to identify and prevent problems before they escalated. Wouldn’t it be interesting to role play what we would do in a similar situation, and read the accounts of how people “in real life” reasoned-through their options in Trafigura’s case?

(2) “trade financing” – this is not at the tip of everyone’s tongue when we talk about critical issues to the world’s economy or well-being of our planet’s +7 billion people. What is the future of trade finance and the role of commodity-trading companies in our lives?

(3) “how we learned about sustainability in commodities trading” – in this context, I think it will be most interesting to see how Trafigura implements sustainability reporting in the coming years. Apparently this is in the works. To their credit, they don’t (according to Mr. Lorinet) want to come forward with a report that is not verifiable or is perceived in any way to be lacking. “The report needs to demonstrate the strength of our systems and processes – we will not report for the sake of it,” Lorinet said. We discussed this, and the merits of the argument that “something is better than nothing-at-all.” Mr. Lorinet said that Trafigura has already adopted better procedures and approaches to stakeholder engagement but he was also clear that there is more to be done. 

On a final note: Pierre Lorinet established his credibility with me long before we got to discussing any of these topics – early in our interactions, he described how and why he urged his sister-in-law (a quarto-lingual Mongolian) to pursue sustainability studies at an Ivy League university that she will be attending this fall. I can’t speak to the veracity of any of the accounts (positive or negative) concerning any of the news stories related to Trafigura in recent years, but, based on our interactions, my impression is that at least some of the senior management of the company have sustainability issues on their mind. As with any story, the past is prelude and the most fascinating pages are the ones yet to be written.

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Russian Green Building: Potemkin village or nascent phase?

July 3, 2012, early pm, Moscow, Russia: as I write this, I am at a building supply company in the middle of a meeting of players in the green building industry including Guy Eames, CEO and Co-Founder of the Russian Green Building Council (RuGBC – http://www.rugbc.org/en ).  As of 4pm, I’m now in a conference room of about 90 attendees at business summit in a tsarist palace, and once again, the theme of ecologically-friendly building and green standards is at least getting lip service. 

How substantive and sustainable is the green building movement here?  RuGBC revenue doubled from its first to its second full year of operations (from 2010 to 2011).  While AIG originally suggested the formation of RuGBC (apparently as a way to enhance the long-term value of its real estate investments here) and the impetus for adopting green building is to some extent based on the corporate policies of foreign companies and investors, there is clearly some nascent, local demand for progress in building standards.  Notwithstanding widespread perceptions that interests in the oil and gas and mining industries will never tolerate progress in the arena of sustainability, those with whom I’ve spoken today state that there is both market demand and government support for adopting greener construction standards.  Though the terms green building and sustainability may not be used a lot (or perhaps at all, or with a smirk in some circles in which I’ve broached the topic), the term “energy efficiency technology” has currency and credibility.  If I had not reviewed and discussed the finances and annual activities report of RuGBC and seen the products of the building supply company (including solar panels, a windmill, skylights, and appliance control technologies) I might be more skeptical and cynical about the words I’m hearing.  After today, I’m looking forward to seeing how the green building movement develops here: will it amount to the modern equivalent of a Potemkin village or a substantive shift in standards?  Image

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June 6, 2012: Sustainability Seminar at RBS Global Operations Hub in Warsaw, Poland

June 6, 2012, Warsaw, Poland: I had the pleasure of delivering a seminar on sustainable business at the Global Operations Hub of Royal Bank of Scotland (RBS).  Beyond covering major trends, key concepts and illustrative examples, we also discussed the reasons why certain banks excelled in recent “green rankings” – and what are the best practices at their competitors that are worthy of emulation.

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