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Google’s Plan for 24/7 Carbon-Free Energy Ran Into Headwinds in 2021
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Welcome back. Google already procures enough renewable power through power-purchasing agreements and other deals to cover its energy consumption. In practice, that entails using electricity from fossil fuels when renewable-energy supplies are low, and compensating by buying surplus electricity when they are abundant.
In 2020 the company set a more ambitious goal: By 2030, it wants to match the electricity consumption of its power-hungry data centers constantly to the local supply of carbon-free energy.
Google edged further away from the target last year as supply-chain disruptions and connection delays held up clean-energy projects. Google said it ran on carbon-free energy 66% of the time on an hourly basis, down from 67% in 2020 but still higher than the 2019 share of 61%.
WSJ’s Dieter Holger spoke with Michael Terrell, Google’s senior director for climate, on how the company is working to step up its access to carbon-free power. The plan involves supporting the development of new technologies, calling for policies that make it easier to add new supply to the grid, and adapting Google’s own power consumption to fit the availability of clean energy. Click here to read the interview.
This week: Proxy season roundup; how getting rid of plastic led to steak theft at one retailer; SEC proposals get pushback.
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Content from our Sponsor: DELOITTE
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Answers to 5 Key Questions on Proposed Climate Disclosure Regulations
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An analysis comparing proposed climate and sustainability reporting standards from the SEC, the EU, and global regulators can help companies prepare for a changing climate disclosure landscape. Read More ›
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Investors balk at tough climate proposals. Shareholders of U.S. companies have voted on a record 274 sustainability-related proposals this year, up 41% from last year, with dozens more votes expected by the end of the year. But average support fell to 27% from 32%. The drop partly stemmed from the greater ambition of climate-related proposals, said Heidi Welsh, executive director of the Sustainable Investments Institute, which collected the data.
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Proposals are increasingly asking companies to hit sustainability goals in specific ways, rather than merely calling for targets or disclosures. For instance, nine first-time votes calling on major U.S. banks and insurers to stop financing fossil fuels earned an average of 12% support, and none passed. Investors shouldn't dictate how goals should be achieved, and that proposal “crossed the line,” said Peter Reali, managing director at Nuveen, a fund manager.
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Some companies seen as laggards on sustainability issues were rebuked by shareholders. In March, a proposal asking fast-food chain Jack in the Box to follow McDonald's and Burger King by setting goals to reduce packaging waste drew 95% approval. Experts said that was a record for an environmental or social proposal that was opposed by management. Meanwhile, there were more votes on proposals asking companies to report on how they were tackling racial justice, and levels of support also rose.
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What happened when a U.K. grocer revamped its packaging. Executives at Iceland Foods, a frozen-food-focused supermarket chain, encountered unexpected challenges as they tried to deliver the company's target of eliminating single-use plastic for store-brand products by the end of next year.
🥩 Iceland started selling steak in recyclable paper trays. Shoplifters bent the trays in half and stuffed them down their trousers.
🍌Bananas rotted more quickly or snapped off when they came wrapped in paper bands instead of plastic bags.
🍞 When bread came in opaque paper bags, sales fell as shoppers declined to buy something they couldn’t see.
Many grocers have focused on making packaging recyclable or rolling out refill programs. Iceland instead decided to eliminate plastic from its own products, partly because poor sorting infrastructure, dirty material and a lack of buyers mean little food packaging actually gets recycled into new packaging.
The company created working groups focused on different types of packaging, wrote to suppliers asking for help and tried to shift shopper attitudes with advertising campaigns. Still, executives say they may not hit the target in time.
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“If the plastics industry got its way and took a purely carbon approach we’d wrap the planet in cling film.”
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— In some cases, using alternative materials such as paper can increase carbon emissions. Stuart Lendrum, Iceland Foods’ head of packaging, said focusing on carbon doesn't reflect the full environmental impact of plastic.
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Miners' caution threatens energy transition. Project spending by 10 large mining companies, including Rio Tinto, BHP Group and Glencore, is expected to stay at roughly $40 billion this year and next year, according to figures compiled by Bank of America, well below a 2012 peak close to $80 billion. The caution of mining executives—which stems from rising costs, higher interest rates and challenges developing deposits in emerging markets—could hamper the shift to renewables, which is driving rising demand for raw materials such as copper and zinc.
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Auto makers such as General Motors and Tesla are forming partnerships with producers to secure battery metals, but many industry executives say existing agreements won’t be enough to meet their needs.
Miners’ reluctance to spend isn't the only roadblock. For one crucial material—lithium, which is used in EV batteries—the lack of an active futures market makes it harder to gauge prices and dulls the incentive for producers to bring on extra supplies, Stephen Wilmot writes for Heard on the Street.
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SEC proposals get pushback from companies. Companies said the Securities and Exchange Commission's proposal to impose mandatory climate-change disclosure requirements poses heightened legal liability, hefty costs and reporting burdens, responses sent to the agency in a recent public comment period show.
Chemical maker Dow said the proposal would require businesses to maintain two separate sets of records on greenhouse-gas emissions. That’s because the company would have to provide emissions data separate from the figures it calculates in accordance with widely used standards from the Greenhouse Gas Protocol.
Clothing retailer Gap said the SEC’s proposal didn’t provide enough clarity about how it defines what is material to shareholders. It also questioned the proposed timing for disclosing Scope 3 emissions, saying it doesn’t receive emissions data from suppliers in time to include that information in its annual filing.
Comment letters from small business groups had a tone closer to existential dread about the compliance burden. Large public companies could end up asking their small suppliers to provide emissions information as they catalog their supply-chain emissions, even though the small companies don't fall under the SEC's purview.
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3,400+
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Feedback letters received by the SEC about its climate-disclosure plan, significantly more than its proposals generally attract.
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How Low Spending by Mining Firms Could Change Car Makers' ESG Profiles
A report by Bank of America earlier this month shows that capital expenditure in large mining companies, including Rio Tinto, BHP Group and Glencore, is too low to support the world's net zero by 2050 pledge. Low supply could push companies such as auto makers toward more vertical integration to secure supply. A more integrated supply chain could alter which environmental, social and governance factors are considered financially material for the auto industry, adding another layer of complexity to auto companies' business models and ESG profiles. ESG investors are likely to keep paying attention to metal prices and capital expenditures in the mining industry, as well as prepare for dynamic materiality in the auto industry.
This is a sample of exclusive analysis of sustainability news from the Journal’s environment, social and governance (ESG) research analysts, whose work is primarily published by Dow Jones Newswires to help institutional investors and wealth managers integrate ESG factors into portfolio models, risk management programs and financial advice. The commentary by our research analysts is independent of the news coverage by reporters at the Journal. For more information about Dow Jones Newswires, click here.
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Elon Musk said the constrained supply of raw materials is the biggest brake on Tesla's growth. (Bloomberg)
Quantumscape, a startup backed by Volkswagen and Bill Gates, is working on a solid-state battery that could make the current generation of lithium-ion technology look outmoded. (Predict)
Here are 15 companies working to recycle wind turbines, solar panels and batteries. (Canary)
Miners BHP and Glencore said there may be no way to capture methane from some coal mines. (Financial Times)
A Greenpeace activist who rushed the stage at the Cannes Lions advertising confab to protest fossil-fuel advertising was a former award-winner at the event. (The Drum)
Canada’s Brookfield Asset Management raised $15 billion for a fund focused on the global transition to a low-carbon economy. (Globe & Mail)
The European Union’s executive arm put forward legally binding targets for all member states to restore wildlife and limit chemical pesticides. (Guardian)
China accounted for 80% of all new offshore wind capacity last year. (Nikkei)
A big investor group said an overhaul of global carbon pricing policies is necessary to hit international climate targets. (Reuters)
Mobile, floating, nuclear-powered desalination plants could help solve water shortages. (BBC)
A study published in the journal Nature found that different experts’ emissions scenarios broadly agree on how the U.S. could halve its emissions by 2030. (Wired)
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