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Carbon-Neutral Labels; 12 Days of ESG Christmas
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Welcome back. This week we have news of carbon-neutral product labels, an unsuccessful effort to accelerate the decommissioning of coal mines, and the new climate plan of an e-commerce giant. But first, a familiar musical inventory of festive gifts—with an environmental, social and governance slant, as this is a serious newsletter.
🎼 On the 12 days of ESG Christmas, my true love sent to me...
Twelve drummers drumming... As logistics operators face pressure to cut emissions, shifting to reusable steel drums from single-use packaging could bring cost savings as well as climate benefits. (Sustainability Times)
Eleven pipers piping... Germany's new governing coalition is fighting over Nord Stream 2, the nearly-finished Russia-to-Germany gas pipeline. As energy prices soar, the project is a flashpoint for disagreements over Europe's decarbonization push and its security policy. (Euractiv)
Ten lords a-leaping... As U.K. water suppliers face criticism for dumping sewage in rivers, the House of Lords has been pushing for tougher regulations. (BBC)
Nine ladies dancing... From vegan ballet slippers to recycled leotards, the eco-friendly dancewear industry is booming. (Dance Business Weekly)
Eight maids a-milking... Oatly made a splash by going public this year, but the dairy-free milk company's shares have slumped, along with those of several other vegan brands. (Grocery Gazette)
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Seven swans a-swimming... ESG should become "ESGR," adding resilience to environmental, social and governance criteria, according to the author of "Green Swans," a book that makes the case for investors to prepare for unexpected events. (Responsible Investor)
Six geese a-laying... Among the gazillion companies that set sustainability targets this year was luxury jacket maker Canada Goose, which said it would shift to greener materials and stop using fur. (Forbes)
Five gold rings... As investors pay more attention to the environment, gold miners need to make the case for digging up a metal with few practical uses, BlackRock's Evy Hambro said. (Financial Times)
Four calling birds... An album of the birdsongs of endangered species is riding high in Australia's music charts. (Daily Mail)
Three French hens... Customers will soon be able to buy carbon-neutral eggs from Kroger. (Grocery Dive)
Two turtle doves... Unilever, the maker of Dove soap, is among the companies including carbon-footprint information on consumer products. (WSJ)
And a partridge in a pear tree. Your bird-obsessed true love went the extra mile with this lavish twofer, but he or she may have unwittingly caused ecosystem havoc in the process. The Bradford pear, a familiar sight in the suburbs of the Southern U.S., is now seen as a pest. And some game birds are a threat to local wildlife. Depending on the species involved and the environmental regulations in your area, it may be safest to return this present to sender. (New York Times / Guardian)
Thank you for reading the Sustainable Business newsletter. We will be back in January. Till then, happy holidays, and please get in touch with your feedback.
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Lubanzi Wines, one of the brands certified by Climate Neutral. PHOTO: LUBANZI WINES
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Carbon-neutral labels proliferate. More companies are pitching products as carbon-neutral, a term that generally means the company acquired enough carbon offsets—credits representing emissions averted or removed from the atmosphere—to equal its operational emissions over a given period. But not everybody follows the nuances of climate jargon.
“Most consumers don’t know what the hell carbon-neutral is,” said sustainability marketing expert Suzanne Shelton. She said companies risk accusations of greenwashing. Still, she said certifications that become ubiquitous, such as USDA Organic, are one of the main ways consumers judge whether products are green.
Climate Neutral, a nonprofit certification outfit for products pitched as carbon-neutral, says it has given its seal of approval to 338 brands, some of which use it on labels or packaging, up from just four in 2019. The companies it endorsed include sneaker maker Allbirds and outdoor brand Recreational Equipment Inc. Mars also wants to make carbon neutrality part of the marketing pitch for candy bars and pet food.
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“Being carbon-neutral is better than not being carbon-neutral.”
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—Kevin Rabinovitch, Mars's chief climate officer, said consumers will be on board with the basic idea of climate-related labels, even if they don't grasp the precise meaning.
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Citi, partners abandon fund aiming to close coal mines. Citigroup, commodities trader Trafigura and private-equity firm Resource Capital Funds teamed up this year to launch a fund called Coal to Zero. The plan was to buy mines in the U.S., Australia and South Africa and run them with the promise of shutting them down by 2040. Investors balked at the plan🔒, which has now been shelved, according to people familiar with the matter.
Under pressure to get polluting businesses off their books, some energy and mining companies have sold coal assets—even if the new owners were happy to run them indefinitely. The fixed end date of the Citi fund sought to address that problem by allowing the mines to continue to operate while limiting how much coal could be extracted. But some pension funds and other potential investors didn’t want to face criticism for investing in fossil-fuel projects despite the fund’s goal of accelerating the retirement of coal mines, according to some of the people familiar with the matter.
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Inflation adds to transition costs. Energy companies have to spend more to build solar and wind farms for the first time in years because of cost inflation and supply-chain problems, adding a financial speed bump to the switch from fossil fuels. Clean-energy projects are exposed to inflation in old-school commodity markets🔒by their dependence on materials such as silicon and copper.
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Battery storage soars in U.S. Companies are poised to install record amounts of batteries 🔒 on America’s electric grid this year, as government mandates and a steep decline in costs fuel shake up the power generation sector. The U.S., which had less than a gigawatt of large battery installations in 2020—roughly enough to power 350,000 homes for a handful of hours—is on pace to add six gigawatts this year and another nine gigawatts in 2022, according to S&P Global Market Intelligence.
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📅 Sustainability and Energy Transition. Join us on Feb. 14 for a discussion about corporate energy use and the practicalities of shifting to renewable sources. You can sign up for free here.
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Alibaba Group CEO Daniel Zhang in 2020; the chief executive unveiled new emissions-cutting goals Friday. PHOTO: JASON ALDEN/BLOOMBERG NEWS
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E-commerce giant eyes carbon-neutral operations. Alibaba Group Holding Ltd., one of China's most iconic companies, unveiled new environmental goals, pledging to become carbon-neutral in its operations🔒by 2030.
Alibaba didn’t say how much it plans to spend to achieve its climate targets, which also include cutting “carbon intensity”—a measure of carbon emissions relative to revenue—across its supply chain by half by 2030. The company plans to use more renewable energy for its data centers and work with logistics providers that use electric vehicles, and power Alibaba Cloud's cloud computing entirely with clean energy no later than 2030.
Alibaba also sought to reassure investors about its growth trajectory. A flurry of regulatory actions has clipped its wings over the past year, while its billionaire founder Jack Ma has largely retreated from the spotlight. Growth is slowing, and the company's New York-listed shares have fallen.
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