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Sustainability Chiefs Are Suddenly Everywhere, But Often Lack Clout
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Welcome back. Companies appointed roughly as many chief sustainability officers in 2020 and 2021 as they did in the previous eight years combined, according to a global survey by PwC. The priorities for this rapidly proliferating breed of corporate executive, the consulting firm found, are ensuring that companies' senior executives and boards are paying attention to environmental, social and governance issues, and embedding the relevant knowledge and expertise across the organization.
PwC observed that CSOs who succeed in that mission could undermine the case for their own existence as other executives and teams take on more responsibility for dealing with ESG challenges. "This will alter the role of the central ESG team and of the CSO, and may even make some parts of their tasks redundant," PwC said.
But this isn't likely to become a widespread dilemma any time soon. "Our research revealed that a significant number of companies have CSOs whose sustainability mandate is limited," PwC said. "Roughly half of all CSOs are two or more hierarchy levels below the C-suite and therefore lack the influence to shape the sustainability transformation."
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The data gives an idea of where CSOs tend to fit in the corporate hierarchy. Executives promoted internally, for example, are typically more senior than external recruits. And while companies in Europe are the most likely to have hired a sustainability chief, those executives are also more likely than their North American peers to be what PwC calls a "CSO light," with a limited mandate and little clout.
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This week: Solar power; farming with microbes; John Doerr's donation.
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Content from our Sponsor: DELOITTE
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Are Companies Ready for Enhanced Climate Disclosures?
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To prepare for the SEC’s proposed climate disclosure requirements and rising demands for other ESG information, over 90% of surveyed leaders say they need to invest in data and reporting technology. Read More ›
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First Solar's recycling facility in Perrysburg, Ohio. The company says it can recover close to 95% of a panel’s materials by weight for use in new products. PHOTO: FIRST SOLAR INC.
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Millions of tons of junk panels. It isn’t yet profitable to harvest the glass, aluminum, copper, silicon, silver and lead from old solar panels, but the industry's breakneck expansion could change that. The global volume of solar-panel waste will rise from 30,000 metric tons in 2021 to more than 1 million tons in 2035 and exceed 10 million tons in 2050, according to BloombergNEF. The International Renewable Energy Agency estimates that the recovered materials could be worth $450 million by 2030 and $15 billion by 2050. Some companies are making preparations.
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First Solar's factories are already set up to recycle solar panels, but the U.S. solar equipment maker is considering building standalone recycling centers as more panels are retired. Iberdrola, one of the largest renewable-energy suppliers, has formed partnerships with waste managers to prepare for an increase in waste. “We have to work today if we don’t want to have a problem in the future,” said Agustín Delgado, Iberdrola's sustainability and innovation chief.
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The most-hated solar company in America. Auxin Solar, a tiny, struggling maker of solar panels, has thrown the entire American renewable-energy industry into chaos. A petition Auxin filed with the Commerce Department accusing Chinese companies of circumventing tariffs spurred a U.S. probe in March that has effectively halted most solar-panel imports and delayed solar projects all over the country. Facing speculation over Auxin's motivation and funding, CEO Mamun Rashid said the company is funding the petition itself, seeking to stop unfair trade practices that have hurt American manufacturers.
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“Somebody called me a couple days ago and said our name is very toxic in the industry”
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— Auxin CEO Mamun Rashid
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$1.1 Billion
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The amount venture capitalist John Doerr and his wife, Ann Doerr, are giving Stanford University to fund a school focused on tackling climate change and sustainability issues.
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Iowa farmer Dan Hansen said Pivot Bio’s microbial products are currently cheaper than nitrogen fertilizer and have increased his corn crop yields. PHOTO: DAN BROUILLETTE FOR WSJ
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An opening for novel fertilizers. Prices of conventional nitrogen, potash and phosphorous fertilizers have soared this year due to supply-chain constraints and Russia’s war on Ukraine. Companies such as Pivot Bio, Kula Bio and Anuvia that have developed what they pitch as more-environmentally-friendly ways of nourishing the soil are racing to seize the opportunity.🔒
“The biggest challenge is to convince people that now it’s possible” to profitably use alternatives to conventional fertilizers, said Karsten Temme, CEO of Berkeley, Calif.-based Pivot Bio. Some farmers remain reluctant to gamble their harvests on unfamiliar products. Traditional fertilizer makers say that microbe-based alternatives are promising—some have made investments in the field—but that they can’t fully replace existing products.
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The case for dropping the 'G' from ESG. Governance matters shouldn't be bracketed alongside environmental and social considerations when assessing a company's commitment to values beyond shareholder returns, write David F. Larcker and Brian Tayan🔒 of Stanford University Graduate School of Business in The Wall Street Journal. They say ESG scores that combine the three categories "incorrectly [imply] these measures point in the same direction," and call for the G to be left out of efforts to measure companies' impact on stakeholders and society.
The environmental and social components of ESG aim to measure outcomes—companies' impact on the world. Governance is a different kind of concept, Messrs. Larcker and Tayan write: "A company can embrace environmental or social causes and have good governance, or it can embrace them and have bad governance. Similarly, a corporation that chooses to focus on profits above all else can have good or bad governance."
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Anglo's Chile Mining Expansion Plans Denied on Environmental Grounds
Chilean regulators rejected Anglo American's application for an environmental permit required for the expansion of its operations at its Los Bronces copper mine, in a sign of tightening environmental regulations in the world's top copper producer following the election of President Gabriel Boric at the tail end of 2021. The rejection could bring into focus Anglo's community-relations practices, with the social license to operate for major metals and mining companies in South America coming under increasing scrutiny in recent months amid a spate of protests against mining projects across the continent. Anglo American said it expects to continue following the regulatory process in Chile, which includes potential
to request a review of the decision.
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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Soaring demand for carbon credits means boom time for brokers. (Unearthed)
Shein company has become a fast-fashion juggernaut, but its ultralow prices hide high social and environmental costs. (Wired)
India's lethal heat wave is pushing up power demand and causing a rush for coal by utility companies already under financial strain. (Economic Times)
The unprecedented scale of planned wind and solar projects in China's deserts put the country's renewable-energy sector on a far faster growth trajectory than what is implied by its climate commitments. (Carbon Brief)
Japan, a major ship-owning nation, told shipping regulators it would back a carbon tax to raise more than $50 billlion a year. (Financial Times)
Research by supply-chain data company Resilinc and the University of Maryland maps the places in the U.S., China and Taiwan most exposed to climate impacts. (Harvard Business Review)
Three-fifths of Mexican, Chinese and Peruvian consumers said they would cut back on meat to curb their climate impact. Japan and Canada were at the opposite end of the spectrum, at just 29%. (Ipsos)
Research published by two nonprofit groups found that $15.5 billion of investment in water-intensive companies has been stranded or is at risk due to factors such as tightening regulations. (CDP/Planet Tracker)
The largest grouping in the European Parliament is threatening to scupper planned reforms of Europe's carbon market. (EurActiv)
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