Carbon accounting is the process by which a company quantifies the carbon emissions from its business in order to understand its environmental impact. It is a look back at a company’s emissions footprint from the previous fiscal year.

Terminology

It’s important to clarify terms, since technical details can get confusing fast.

Carbon accounting is also known as a carbon inventory or greenhouse inventory.

The word “carbon” is an umbrella term for atmospheric gasses that are driving the climate crisis, also known as “greenhouse gasses.” These two terms are used interchangeably. But  carbon is just easier to say.

In a carbon inventory, seven greenhouse gasses are quantified:

• CO2: Carbon Dioxide
• CH4: Methane
• N2O: Nitrous Oxide
• HFCs: Hydrofluorocarbons
• PFCs: Perfluorocarbons
• SF6: Sulfur hexafluoride
• NF3: Nitrogen trifluoride

Organizational boundaries and emissions scopes

Most carbon inventories follow the accounting framework of the Greenhouse Gas (GHG) Protocol, which separates sources of emissions into three categories: Scopes 1, 2, and 3.

Scope 1: are emissions from owned (or controlled) assets such as company-owned vehicles, trucking fleets, private jets, offices and buildings. These are called “direct” emissions because they are produced from owned assets that combust fossil fuels. 

Scope 2: are emissions from energy purchased from, say, a utility to be consumed by your company in the course of doing business. Think: electricity, heat and cooling systems.  These are “indirect” emissions because the company does not generate the energy itself, but uses it.

Scope 3: are emissions that occur in your company’s value chain, both upstream and downstream. Think: business travel and employee commuting, purchased goods (manufacturing and non-manufacturing) and services (legal, marketing, consulting), delivery of raw materials to be manufactured, as well as distribution of goods to markets to be sold. Every type of activity that occurs in the course of doing business, except for those defined in Scope 1 and 2, falls into this very large bucket. In fact, Scope 3 breaks down further into fifteen of its own categories, as shown in the graphic below.

Motivations, goals and outcomes of conducting a carbon inventory

Completing a carbon inventory is not uniform across all industries or sectors. No two carbon inventories look exactly the same. For example, no company will calculate all 15 categories of Scope 3 emissions; each company will calculate only the Scope 3 categories that are relevant to their business and operations.

The motivations, goals and outcomes of completing a carbon inventory also vary widely.

Common motivations and goals:

• Comply with climate disclosure regulations, including California bills SB 253 and SB 261 in the U.S. and the Corporate Sustainability Reporting Directive (CSRD) in the EU
• Set and pursue net-zero emissions targets (“what get measured gets managed”)
• Identify opportunities to streamline operations, create new revenue streams, and differentiate the company’s brand
• Meet stakeholder expectations and manage reputational risk

Common outputs or outcomes:

• Including emissions data in a company ESG or impact report
• Declaring metrics to reporting agencies such as CDP
• Disclosing data in SEC filings
• Identifying, executing, and monitoring the most impactful emissions reduction initiatives
• Scenario plan pathways for decarbonizing (moving away from fossil fuel use) operations
• Guide the purchase of carbon offset and/or removal credits

Start your carbon inventory with TripleWin

As a Silver Accredited Service Provider for CDP, TripleWin helps companies improve their environmental disclosures and guide their sustainability strategy from start to finish. We perform carbon inventories for companies of all sizes, public and private, across a host of industries, with a focus on U.S. based companies and multinational affiliates. 

Ready to start a conversation about conducting your company’s carbon inventory? Contact us.

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Companies cannot realize business circularity without systems change.

A Circular Manufacturing Supply Chain

Systems change requires a multitude of transformations that include (but is not exhaustive) reverse logistics capabilities, service models for manufacturers, carbon pricing, producer regulations, new commodity markets for materials as well as the more integral aspects of how organizations operate and supply chains flow. Material is at the heart of most sustainable changes. In order to begin the process of thinking like a sustainable company, organizations have to begin asking the questions that are material to their stakeholders – employees, customers, suppliers, investors; uncover their key areas of concern; build a sustainability plan that incorporates those concerns and works towards mitigating them; and be transparent about impacts to their business models and supply chains both perceived, real and probable – even if transparency requires to state both good and ‘need for better’ progress. Material in corporate sustainability asks organizations to ask questions such as:

Material Ideas in Corporate Sustainability

• What is material to disclose?
• What is of material concern to stakeholders?
• What material is used?
• Where is material sourced?
• How much material is flowing through the system?
• In what way is material in products viewed?
• How is material consumed?
• What kinds of material can be revalorized?
  
  

Below you’ll find the eight ‘Material’ terms listed above mapped to their appropriate definitions.  Do they all make sense? Has your company pursued these corporate sustainability initiatives yet?

Work TripleWin Advisory Performs

TripleWin supports organizational work in several Material areas.  Learn more about what we do and how it applies to your sustainable business needs.  Our work is innovative, compelling and data-driven; just like our corporate clients.

TripleWin Advisory develops sustainable business cases and supports strategic decision-making through value-chain mapping and Scope 3 inventories of companies’ greenhouse gas emissions. In so doing, it unlocks opportunities for greater profitability, relevancy, and longevity for businesses. Learn more.

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Employees and customers are your most ardent brand ambassadors. Stay relevant by providing your stakeholders with opportunities to fight climate change.

We’re in a climate bind. Global warming is causing major havoc around the world. Almost every day we face news of floods, droughts, water shortages, and wildfires. These events cause real economic disruption, job productivity loss, health concerns, and threats to human life.

People are not just concerned; they are in despair at the pace of the impacts of climate change on their communities. A majority of Americans see climate change as a huge problem in need of solutions. Simultaneously, most believe “there is little they can do on a personal level to mitigate climate change” themselves. Yet, Millennials are the swelling outliers. A recent Yale report showed that 20- to 30-year-olds prioritize action around global warming. They feel empowered to take action but need the tools to be effective in their sustainability efforts.

And guess what: those millennials are your employees and customers. In sustainability speak, they are your key stakeholders; in marketing speak, they are your most valuable and ardent brand ambassadors. It would serve every organization well to acknowledge their concerns, prioritize them and enable action through educational tool-building. If dismissed, their climate concerns fester, eroding trust and confidence in the companies they work for and purchase from, leading to both short- and long-term reputational repercussions.

Everyone can Mitigate Climate Change

Here’s the good news. Everyone has the power to make changes that support climate change mitigation in meaningful, measurable, and actionable ways. Sustainably committed companies and consciously aware individuals both know that sustainability is not merely about making better consumer choices; it’s about fundamentally reducing our carbon footprint across the breadth of our “span of control.”

What individuals need—and what companies can provide through educational workshops—is a framework for laying out an approach to enacting sustainable measures in their personal and professional lives. From that framework, individuals can build a custom checklist of sustainable strategies. This becomes a daily “to-do” list, whether it is tracked mentally or physically stuck to a refrigerator to chart the progress made and goals completed. Individuals start by understanding the “levers” they can pull and the scale and level of change they are willing to support and acknowledging the drivers that commit them to action.

Calling all sustainably-minded companies! Follow the decision framework below to support your stakeholders—your brand ambassadors—in building their personal sustainability muscle.

Know the Impacts

First, KNOW the impact areas where individuals have significant control over sustainable decision-making.

• Home dwelling: Size of structure; heating and cooling systems; roofing and insulation choices; and renovation and deconstruction considerations.
• Private property: Use of land, lawn, and permeable surfaces.
• Food consumption: Purchase of local and organic non-GMO produce free of antibiotics and steroids; reduction of animal protein.
• Material consumption: Sustainable and recycled material in clothing, footwear, furniture, and houseware; hard durables and shopping frequency.
• Energy use: Efficiency and utilization of appliances and personal devices, alternative lighting, and renewable energy sources.
• Water use: Efficiency and reuse, water-wise planting, and xeriscaping.
• Trash/waste: Repair, reuse, recycle, and compost.
• Travel: Mode of transportation and/or vehicle type.
• Local biodiversity: Native plantings, chemical use avoidance, and supporting community supported agriculture (CSA).

Understand Motivating Drivers

Second, UNDERSTAND what motivates individuals to build sustainability measures in their lives to:

• Save money.
• Live a healthier lifestyle.
• Better care for the environment.
• Support a vibrant community/local economy.

Once individuals identify their primary driver(s), sustainability measures can be aggregated and pursued. For example, if saving money is a primary driver of sustainable action, the subset of measures to pursue could include:

• Replacing all light bulbs in their home with LED lighting.
• Installing high-efficiency appliances to manage water and energy reductions.
• Utilizing a heat pump to heat and cool their home.
• Leasing or purchasing an electric vehicle (EV).

A similar set of sustainability measures can be compiled if individuals find that their primary driver is supporting a healthy environment. Consider the following:

• Composting all food waste.
• Using only natural pesticides and fertilizers for lawn and houseplants.
• Purchasing only man-made and/or recycled textiles.
• Growing a garden to cut grocery bill expenses; selling excess produce at farmers market.

Decide Commitment Level

Third, help individuals DECIDE the level of commitment they are ready to make that supports climate change mitigation. Commitments can be small, medium or large or anything within that range. Small measures have less of an impact on reducing carbon emissions than large ones, but both have beneficial effects. Driving a hybrid (small commitment) versus an EV (medium commitment) has less of an impact on carbon emission reductions, but both are more beneficial than blind loyalty to driving a combustion-engine vehicle. The same goes for skipping meat in a meal once a week (small) versus eating no meat (large); both are beneficial, but the latter is has a greater impact on reducing carbon emissions throughout the entire food chain.

Each scale of action requires a change in how individuals approach their daily activities as well as a financial investment in how they source and use resources.

Commit to Change

Fourth, reinforce the message that individuals must COMMIT to necessary changes in how they operate their lives. Measures that support personal resiliency to climate change require individuals to rethink and re-prioritize:

• Habits: How one unconsciously gets tasks done (e.g., 3-minute vs. 15-minute shower).
• Processes: The approach for completing necessary life tasks on a daily, weekly and monthly basis (e.g., commuting by public transportation or by bike).
• Financial commitments: Investment in technological innovations (e.g., LED bulbs, EV batteries, photovoltaic (PV) solar panels) that afford individuals the ability to do more with less, use alternative non-polluting energies, or reduce resource waste.

Sustainable Muscle Built to Last

Climate change mitigation requires individuals to understand all their options, determine personal incentives, identify resources, and map a plan that is clear, actionable and measurable. The framework above helps individuals codify a new system of operating that supports a sustainable way of living that is both unconscious and natural.

Companies that prioritize their stakeholders’ concerns see the results of those efforts. For organizations, this translates into a more committed, engaged, productive, and satisfied workforce that seeks to promote a company brand and its products. Today’s economic environment increasingly emphasizes a social and environmental imperative for brands, no matter what industry they serve. For individuals, sustainable knowledge builds confidence in their ability to take action and get results from the sustainability tools employed across the spectrum of their lives. Investing in your employees’ sustainability journey sends a strong signal to stakeholders that committing to a purpose and living purposefully are one and the same.

Kate Gaertner

Kate Gaertner is the founder & CEO of TripleWin Advisory, a corporate consultancy dedicated to helping companies pursue circular operations and net-neutral carbon goals across their business value chain. She marries her 20 years of experience working in and consulting to Fortune 500 companies with her entrepreneurial acumen running an apparel manufacturing company, to her corporate sustainability work supporting stakeholder engagement, strategic business case development and business transformation initiatives.

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The goal of carbon accounting is for businesses to adopt target reduction goals for their greenhouse gas (GHG) emissions.  We can only track what we measure.  To get to the point of setting carbon reduction goals, companies need to establish an emissions trend line. Makes sense.  A company needs to know whether its GHG emissions are increasing or declining over time. To develop a trend line, at least two points of data need to be available to plot the progression of corporate emissions.

SETTING A BASELINE

Before any GHG reduction targets can be set, a company must set a carbon baseline.  Specifically, a baseline year represents the initial level of greenhouse gas emissions for a company against which all future carbon inventories are compared.  Think of a company’s baseline as business stasis by which future efforts to pursue energy efficiencies, technology upgrades, process changes, and product design innovations are measured.  Ideally, efforts made by a company to decarbonize and resource optimize will reflect declining carbon totals from a baseline year equating to “progress made”. 

Setting a baseline year is arbitrary.  Some public companies and many nations and trading blocs such as the EU-15, use the year 1990, a baseline emissions year established by the Kyoto Protocol in 1997. Most companies set their baselines to a year when either their first carbon inventory was conducted or when the confidence level in the available data was high and the carbon accounting data, complete. 

“STRUCTURAL CHANGE” RECALCULATIONS

Just as baseline years from company to company are non-standard, they can be also relative. Guidance from the GHG Protocol requires baseline recalculations when “structural changes” occur for a company.  Some of the more typical structural changes include a new company acquisition or business unit divestment.  Years in which companies register unusual drops in carbon inventory totals due to an acute economic contraction, such as during the 2007-2009 Great Recession, can arguably be considered exogenous structural changes that warrant baseline recalculations as well.

With Covid-19 we are experiencing a virtual halt in economic activity worldwide.  This crisis will register as a period of significant reductions in GHG emissions worldwide. Business baseline year recalculations are in order.

THE RELEVANCE OF COVID-19

We should acknowledge that the novel coronavirus poses an incredible health threat to human populations.  And, it will inflict lasting damage on national economies.  The number of small business deaths will be shocking.  Individuals will remain fearful of infection until a vaccine is identified and rolled-out en masse.  Understandably, this apprehension will tamp down consumer demand for non-essential goods for several years to come.  A more relaxed version of social distancing will be the de facto norm over the medium-term as individuals pursue activities such as shopping, recreation, and travel in their everyday lives while seeking to avoid contracting the virus.

SERENDIPITY & THE CORONAVIRUS

By most accounts, the “time of Covid-19” is terrible:  uncertain, scary, prolonged, disruptive and isolating.  And we remain squarely in the middle of it with little ability to maneuver forward or wiggle free of the economic malaise.  As Ram Dass might say, we are living this moment, right here, right now.  Without discounting our concentric circles of pain:  job losses, disappearing cash flows, halted economies, and lack of clarity or uniformity for how to re-open communities, there remain spots of good news and useful learnings to be applied. This author’s ask is for businesses to acknowledge the data and synthesize it into their strategic business planning. 

CLEARER SKIES, CLEANER AIR

One major environmental outcome from the novel coronavirus is clearer skies and better air quality from reduced carbon emissions into the atmosphere.  In Los Angeles where 80% of its air pollution is caused by transportation-related emissions, the air is so clear and smog-free that people are enjoying views of the coastline, long obscured by pollution, anew.  Aclima, a California-based company that studies local air quality, studied greenhouse gas emissions levels in San Francisco for a two week period in March (9^th– 20^th, exempting weekends) as compared to three prior years and noted that total CO₂ levels were down 10% and nitrous oxide (N₂O),emitted from combusting vehicle engines, was down a whopping 56%.  On the other side of the world, NASA reported China’s N₂O levels for March were down 30% from prior years.  More stunningly, a CarbonBrief study concluded that China’s CO₂ levels were cut 25% because of the impact from coronavirus.  The near complete halt on daily commutes and reliance on telecommuting for work has had a dramatic effect on local air particulates that contribute to climate change. 

MAJOR CARBON REDUCTIONS

There is an opportunity to be seized here.  Before the current administration decided to announce the United States’ withdrawal from The Paris Climate Accord (COP21), America had set itself a target to cut emissions at least 26 percent by 2025 and to target 80 percent emissions reductions by 2050.  For China, the largest GHG emitting country in the world contributing 27% of the world’s carbon emissions, having it meet a leveling in its national CO₂ emissions before 2030 would be a welcome achievement.   Significantly, Covid-19 has been a catalyst for measurably impactful climate change mitigation.  Without discounting the individual and economic toll the virus is exacting on thousands of communities nationwide, can we consider adjusting our business sites to a middle-view and incorporate this opportunity to recalibrate our carbon inventory baselines?

As a business community, we can take a proactive stance to set new carbon baselines using early 2020 GHG emissions numbers.  During this economic pause, all kind and manner of scenario planning, business pivots, new product innovations, work process digitalization, and supply chain agility work is occurring.  Businesses are developing strategic plans for how to navigate this quiet time and push the start button when national and state policymakers decide to wave the checkered flag signaling an economic reboot.  None of these plans are a continuation of existing ones, pre-March 2020.  These planning iterations are not to get business back to “normal”, but to set a course forward in consideration of a new normal.

GETTING BACK TO NORMAL

Are we craving for business to “get back to normal”? Yes, we are.  It’s an understandable desire: to fall back on the known, the expected, and to rely on the processes and systems that were in place to guide business decision-making, set strategy, and meet the demands of the marketplace.  There is comfort in talking about ‘business as usual’.  It connotes that the business of business is important, life is productive, and the world as we know it has a relative sense of certainty and order. 

The problem though is that our way of operating, up to this point, has become anachronistic, if not entirely unrealistic. The existence of climate change began the (invisible) march of death for industry’s linear, neo-classical, negative externality-dependent, extractive material throughput, economic production model.  The growing threat of climate change to global supply chains; human-dependent natural resources; and economic and human productivity levels has revealed the mirage we view as success and well-being.   It feels more comfortable to fall back to a known way of operating, than to embrace change, which requires a new way of doing, being, measuring and goal-setting.  And yet, here we are in a moment when the time before now is gone, irrevocably altered. 

A NEW NORMAL

We are operating in unchartered territory.  The acute economic crisis we continue to face with Covid-19 is going to wane in the coming months but not entirely disappear until a vaccine is readily available for human populations.  This is not a “V” curve recovery.  It’s not even a long “U” shaped one, like that of a bathtub where we could expect a drawn-out period of economic silence with a medium-term recovery that is quick and back to pre-coronavirus levels.  No, what the financial analysts at JP Morgan are predicting is more of a “W” shaped curve of recovery.  We should expect iterations of economic productivity alongside retractions that could last a half-decade or more.  The world economies are not going to snap back into action.  The system of global value chains and corporate interdependencies has gone dark.  Similar to a manufacturing facility, rebooting the economy will be a process, often slow, requiring re-calibrations, and process dependent. 

These are not normal times.  In fact, they are extraordinary.  Unprecedented.  For the foreseeable future, the landscape ahead will be new and unchartered. 

This author is asking businesses, in consideration of that reality, to recalibrate their expectations of:

• how they should operate,
• what products and services will be offered,
• how employees will engage, and
• in what ways will consumers be serviced?

A NEW BUSINESS BASELINE

In this new normal can, nay, will businesses set a new baseline for what it means to be market-driven, carbon neutral, purpose-driven, multi-stakeholder serving entities?  Can companies embrace the silver-lining of this acute economic crisis?  That from disruption can rise business transformations that are economically-viable, environmentally-stabilizing, and socially, equity-enhancing?

Here is the opportunity:  to take the “progress” of steep carbon reductions seen across the globe, in Italy, China, the U.S. and other nations, place them in context (that it was simultaneously driven by economic shut-downs (not good) and telecommuting workforces (good)), and map a strategic business plan that uses those GHG totals as a baseline for future carbon emissions reductions for businesses across all industries and sectors.  What business transformations would that new carbon inventory downward trend line require as economies re-open and businesses start producing goods and services for the market?   Applying a rubric to our decision-making may aid our thought-process.

CARBON EMISSIONS REDUCTION RUBRIC

First, identify the carbon benefits (economic, societal, environmental) that have materialized from the continued Covid-19 crisis.  Determine what to keep and to develop further, as business assets or standard processes.  Examples of benefits could be product innovations like digitalized product and service offerings, as well as a predominate telecommuting workforce.

Second, look back to the time before the coronavirus and aggregate the sustainability initiatives that had merit but were deemed hard to implement or for which it was difficult to identify a short-or-medium-run path forward.  One example of this could be sourcing a majority of one’s energy from renewable energy sources.  Think outside the box.  Consider the installation of a solar microgrid or the implementation of a community solar array, where both the investment expense and energy savings are shared across a community.  Another example is to take the leap and conduct a full carbon inventory for your business, to suss out areas of quick energy efficiencies, new technology deployments, and operational process changes that fundamentally make a company smarter and more attractive to investors and consumers alike.       

Third, chart a sustainable path forward, not in parallel to your business goals, but embedded within them.  The embrace of business sustainability imparts competitive advantage.  There are cost savings to be realized, increased access to capital driven by socially- and environmentally-conscious investors, swelling brand ambassadorship by employees, sustained consumer loyalty, and long-lasting product differentiation. 

A TREND LINE OF BUSINESS TRANSFORMATION

Climate change impacts to your business and value chain are material.  Just as 100-year floods are occurring yearly in some parts of the U.S., and wildfires have become year-long “phenomena” in dryer, windier climates; acute economic crises brought on by Covid-19 and extreme weather events driven by global warming, are not one-and-done occurrences.  There lies opportunity in this moment. As we rejigger our businesses to come-out from under coronavirus, simultaneously, we can transform how we operate in support of significant corporate carbon reductions and a sustainable future by:

• driving deep energy efficiencies within our operations,
• sourcing near-100% renewable energy,
• developing processes and standards that reinforce carbon minimization within the value chain,
• dematerializing and revalorizing materials within the supply chain, and
• embracing a circular business model that for product companies means, developing a service-model to manufacturing.

This is a key moment for companies to double-down on their carbon mitigation goals and set a new baseline for business ‘normal’.  This author hopes that’s a trend every business can get behind. 

TripleWin Advisory develops sustainable business cases and supports strategic decision-making through value-chain mapping and Scope 3 inventories of companies’ greenhouse gas emissions. In so doing, it unlocks opportunities for greater profitability, relevancy, and longevity for businesses. Learn more.        

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Sometimes humanity really pulls together and solves problems.  One example is the 1987 Montreal Protocol, an agreement among countries to ban ozone-hole creating refrigerants. The hole in the ozone layer of Earth’s atmosphere is now shrinking. Nations succeeding together! 

Another “success story in the making” has been emerging over the last decade.  Again, it comes from the refrigeration world.  The industry is showing great promise with retail store and warehouse refrigeration systems that work with natural refrigerants.  At the February 2020 AHR Expo, North America’s biggest heating, cooling and refrigeration industry event, the top innovation award went to a new carbon dioxide-based system from Danfross.

BROAD DEPLOYMENT BY LARGE PLAYERS

The world’s biggest retailers and food and beverage manufacturers have been testing natural refrigerants since the early 2000s, and since approximately 2010 they have moved beyond pilot projects, undertaking mass rollouts of successful natural refrigerant systems.

Three trends have taken hold in retail settings:

• R290 propane based standalone refrigeration cases

• Carbon dioxide (C0₂) – based transcritical systems for supermarket rack refrigeration

• Energy recovery, also for rack refrigeration.

COCA-COLA, PEPSI & UNILEVER

During the UN climate Summit in New York in September 2019, Thomas Lingard, Global Sustainability Leader from Unilever updated delegates on his company’s longstanding alliance with Pepsi and Coke and their widespread global use of plug and play cabinets that use natural R290 propane refrigerant. Target and Walmart have also begun using them.

In 2016 Guillaume Grolier, a commercial director for AHT Cooling Systems in France said, “We’re recording better energy efficiency results than with HFCs.” His comment was based on the installation of about 10,000 R290 cabinets each year in Europe, with a total, at that time, of about 70,000 in France alone.

MACDONALD’S, STARBUCKS & RED BULL

Writing on r744.com in 2019 Pega Hrnjak president of Creative Thermal Solutions, and research professor at the University of Illinois said; “Hydrocarbons, notably R290, have also become…adopted by chains like McDonald’s and Starbucks, as well as brands like PepsiCo, Red Bull (using isobutane) and Coca-Cola.”

TARGET & WHOLE FOODS

Target has deployed such cases in more than 1,000 of its 1,800 U.S. stores, while Whole Foods has them in 500 stores, according to the Energy Information Administration of the US Department of Energy. They are self-contained display cases at the checkout or in spot merchandising locations, with a maximum charge of 150 grams.

“More recently, some U.S. supermarkets have begun installing R290 cases in partial or whole-store configurations, creating an alternative to centralized rack systems. One example is Hannaford, a Maine-based grocer, which is testing R290 in complete frozen-food lineups in some new stores, with heat removed by a glycol loop.”

H.E. Butt Grocery, is a Texas chain that became an early US adopter of R290 cases in 2013. Hannaford and H.E. Butt are using R290 cases from Hussmann, which recently unveiled a new line of R290 self-contained, glycol-cooled cases called MicroDS. Hannaford also began using transcritical CO₂ rack refrigeration from Quebec’s Carnot, in July 2013.

NESTLE

Vincent Grass, Global Refrigeration Leader for Nestlé, told the attendees at the 2019 ATMOsphere Europe Conference in Poland that becoming “fully transferred to natural refrigerants” ties into the company’s plans to become net-zero. At the end of 2018, the firm’s emissions were down by 22%.

Nestlé is known for its food and beverage products, but it also operates 21 supermarkets in Switzerland. Since 2016, the company has only used hydrocarbons in its ice cream freezers, (Propane R-290, Isobutane R-600a, and Propylene R-1270),and it started employing transcritical CO₂ for refrigeration in its supermarkets six to seven years ago, according to Grass.

WALMART

Walmart opened its first store in the USA using C02 refrigeration in 2009 and has been adding stores since. In 2013 the Environmental Investigation Agency said Walmart was using a secondary loop refrigeration system that combines either carbon dioxide or glycol and HFCs in about 125 stores. In 2016 Walmart built a store in Guelph, Ontario and installed a C02 refrigeration system, heat reclaim and geothermal heating and cooling. It saves about $130,000 on energy each year compared to comparable Walmart stores.

Around the same time, Walmart built a 450,000 square foot refrigerated distribution center near Calgary with a modern ammonia refrigeration system and a handful of other clean energy technologies. It saves about a million dollars on energy each year.

ALDI

The ALDI U.S. supermarket chain operates more than 320 stores using transcritical CO2 refrigeration.  ALDI’s main transcritical system supplier has been Conyers, Ga.-based Hillphoenix, which has been a leading provider of CO2 technology to U.S. food retailers.

WHOLE FOODS & PIGGLY WIGGLY

Whole Foods, Albertsons and Raley’s are also operating successful ammonia/ C02 systems. Whole Foods has at least 20 installations.

In 2015 Piggly Wiggly opened a 36,000-square-foot store in Columbus, Georgia using an ammonia/C02 refrigeration system. It employed an ultra-low 53 pounds ammonia charge and a CO2 charge of 1,400 lbs. It also saves about 25% on energy. As long ago as 2009 Tesco in the UK and Metro in Germany each had five grocery stores using C02 refrigeration.

HEAT RECOVERY

Some of the earliest Transcritical CO₂ refrigeration systems in North America were installed in approximately 2008, in the Sobeys supermarket chain. Sobeys now has an estimated 140 stores equipped with the technology, many supplied by Carnot or Lesage-LMP Inc. Other Canadian chains, like Loblaw and Longo’s, have followed suit.

One of the key features of these systems is that they recapture heat from the refrigeration system and use it for space heating in the store. In many regions including some cold places in Canada, the result is an abundance of heat available, and no other heating system is needed.

INDUSTRIAL SYSTEMS

As mentioned, Walmart’s modern ammonia system at its 450,000 square foot refrigerated distribution center near Calgary saves about one million dollars on energy each year, compared to similar facilities using conventional refrigeration.

For warehouses and production facilities, Nestlé also utilizes ammonia and ammonia/ CO₂ for refrigeration. For large and medium-sized systems, and for processing, the go-to solution is ammonia/CO₂; the latest example of this is being built for a large factory in Mexico.

Most of the Nestlé factories have now transitioned from HFCs to natural refrigerants. “Not many” are left to convert, according to Vincent Grass, Global Refrigeration Leader.

OEMs like Evapco, Azane and NXTCOLD (marketed by Hillphoenix), among others, have unveiled low-charge packaged systems and contractors like CIMCO and Stellar have begun installing them. Low-charge central systems have also emerged in the last few years.

KEY BENEFITS OF C02/LOW CHARGE AMMONIA

Here are some excerpts from a piece in Manfacturing.net by Chuck Taylor and Todd Allsup on the reasons this technology is emerging as a top solution:

The CO2, used on the low stage, is distributed to the evaporators throughout the facility. Ammonia, used on the high stage, is completely contained in the machine room. This configuration facilitates the use of two of the most energy-efficient refrigerants on the market while minimizing the risk of distributing large charges of ammonia throughout the facility. For industrial applications, this is an excellent solution.

SAFETY, OPERATING COST, SMALLER EQUIPMENT

The real advantage of using CO2 is mitigating risk. For example, a typical 200,000-square-foot refrigerated warehouse using a conventional central station ammonia system will have a refrigerant charge in the neighborhood of 40,000 lbs of ammonia. The same facility using CO2 on the low stage and ammonia on the high stage will have a refrigerant charge of less than 7,000 lbs. This level of charge is below the threshold limit that triggers requirements with OSHA for compliance to Process Safety Management (PSM) and with the Department of Homeland Security for compliance with the Chemical Facility Anti-Terrorism Standards (CFATS) program.

From a pure theoretical standpoint, CO2 is slightly less efficient than ammonia, but this difference decreases as the evaporator temperature drops. But because CO2 is a very dense gas, the size of the equipment needed to provide the same refrigeration effect is significantly smaller.

A compressor running with a -40 °F saturated suction temperature (SST) on CO2 is almost 10 times smaller than the same compressor for ammonia. This facilitates the use of reciprocating compressors, which have a better part load efficiency than standard screw compressors—and they’re cheaper.

Since most refrigeration systems operate in some form of part loading over the year, the CO2 system’s efficiencies are very competitive with ammonia systems and in some cases even more efficient, especially at lower temperatures.

From an initial cost standpoint, CO2/NH3 cascade systems have historically cost 10 to 15 percent more than conventional two-stage ammonia systems. However, as manufacturers have started bringing a complete line of standard products for CO2 to market and as more engineers and contractors become comfortable with providing these systems, the cost is becoming very competitive with a typical ammonia system. And for applications where the evaporator temperatures are below -40 °F, the systems are becoming less expensive.

A comprehensive peer-reviewed report was published by accelerate24news.com and Shecco in 2019, aimed at identifying the underlying trends for low-charge ammonia technology in different parts of the world.

THE PAYOFF: INVESTING IN NATURAL REFRIGERANTS

According to Freor.com R290 propane systems offer 30% operating savings compared with now obsolete HFC systems. For rack refrigeration C02/Ammonia systems have a higher up front cost than HFC systems, but they also have lower operating costs resulting in a 3-5 year payback on the investment.

Jim Knudson of the North American Sustainable Refrigeration Council prepared the following notes in 2016, which is already dated information in the context of the quickly changing natural refrigerants landscape. The trend since then has been continuously more efficient natural refrigeration systems at competitive costs, including up front cost.

Investment

Some physical properties of CO2, such as high working pressures and relative performance through the heat rejection and expansion process, pose inherent challenges to its efficiency as a refrigerant, but these disadvantages can be mitigated through system design.

Other properties of CO2 contribute to its efficiency in food retail applications, including excellent volumetric efficiency (more than six times the cooling effect per volume as R22); low compression ratio (the ratio between inlet and outlet pressures at the compressor); and low viscosity (making it easier to pump).

Saving Energy: High-efficiency HFC vs. High-efficiency CO2

Certain technologies typically used on CO2 systems, such as electronic expansion valves with case controllers, variable speed drives, and heat reclamation, can also be applied with great effect…Several new CO2-specific technologies squeeze even more efficiency into a CO2 system’s design.

As the table below illustrates, transcritical CO2 technology is being developed to be deployed in nearly any climate and can provide substantial environmental and financial benefits. So why invest more upfront for CO2? Simply put, not only are the environmental benefits significantly greater with CO2; over time, the energy savings achieved with CO2 make it the better choice.

SEA FOOD PLANTS, BREWERIES, INNOVATION

Colin James, Service Manager and technician for Mayekawa, a Japanese compressor manufacturer says more innovative designs are emerging as technicians become familiar with natural refrigerants. He describes an installation in a northeast seafood plant that uses a large volume of hot water in its operations. There is no gas service in the region, so the plant was using very expensive oil-fired water heaters.

“It already had a regular ammonia system for making solid ice blocks. We took the gas from that system before it is rejected outside and increased it to 450 pounds pressure, using a heat exchanger and ammonia and two 125 horsepower electric compressors. Now they have plenty of far less expensive hot water at 158^oF without fossil fuels.”

James has been working on the large systems for 24 years and says his company and others are creating big systems, including one at a brewery, with much lower ammonia charges and with heat exchangers and secondary loops of C02, brine or food grade glycol.

“The ammonia doesn’t have to come in contact with the building or the product, but the added heat exchanger does increase the system cost.” This also means the ammonia charge is small, which seems to be the current trend. I haven’t been seeing brand new systems with massive ammonia charges.”

The bottom line on natural refrigerants is that they have come of age, and there is no longer any reason to use HFCs and blends, most of which will soon be banned all over the world and cost more. Some natural refrigerant systems still have higher up front costs, but this is changing quickly. In addition they all offer significantly lower operating costs with payback periods now compressed to a few short years. Efficiencies and safety concerns have been addressed and natural refrigerant systems are now in widespread use.

TripleWin Advisory develops sustainable business cases and supports strategic decision-making through value-chain mapping and Scope 3 inventories of companies’ greenhouse gas emissions. In so doing, it unlocks opportunities for greater profitability, relevancy, and longevity for businesses. Learn more.        

The post The Up-and-Up on Natural Refrigerants appeared first on Triple Win Advisory.

There’s no consensus yet on whether chemical recycling is the silver bullet for the growing plastic pollution problem. What is clear, however, is that a solution needs to be found — and fast.

Plastic and the use of plastic are not going away anytime soon. This quintessential representation of environmental pollution is readily available and highly valued in product packaging.

Despite consumer calls for bans on single-use plastic and statewide legislation addressing these demands, plastic in all its forms has a large global market. Current demand for PET/PETE plastic and polyester fiber alone is nearly $130 billion with global production expected to grow 3-4% annually through 2022.

For the foreseeable future, companies will remain bound to plastics in their production cycles. This article will look at how industry can reduce the environmental impact of plastic, reuse material already circulating in the economic value stream, and create a circular recycling mechanism is at the heart and promise of chemical recycling.

How Plastics Are Recycled Today

Historically, the U.S. used two mechanisms for managing plastics recycling efforts: shipping plastic waste to China and Southeast Asia to recycle and discard; and mechanically recycling a small portion domestically.

In 2018, China stopped accepting plastic imports and other Southeast Asian countries like Thailand and Vietnam swiftly followed suit. Now, municipalities across the U.S. are collecting the full spectrum of “recyclable” plastics and promptly routing them directly to landfills or incineration sites.

Commonly used PET/PETE (#1) and HDPE (#2) plastics are still mechanically recycled in the U.S. but at varying levels of effectiveness due to the expense and energy required. Batch contamination from mixing incompatible plastic types (e.g., PET/PETE with PVC) remains an ongoing recycling challenge, too.

The most significant limitation to mechanical recycling is its ability to only downcycle plastic or to produce lesser-value plastic items. The result is that less than 10% of all plastic gets recycled in the U.S. today.

What Is Chemical Recycling?

Chemical recycling takes plastic back to the source. Plastics are polymers made by fusing two kinds of oil via chemical reaction. In the chemical recycling process, plastic is decomposed or separated into its essential parts: crude oil and natural gas. After the depolymerization process, contaminants like food or coloring are removed so that the material can be repolymerized and recycled into good-as-new plastic.

Chemical recycling offers several advantages to traditional mechanical recycling. First, plastic batch contamination is not a roadblock. Most low-value and waste plastic can be deconstructed, decontaminated, purified and repolymerized into recycled plastic resin.

Second, chemically recycled plastic can be recycled a near infinite number of times with minimal material loss. Third, it can be upcycled into products of same or increased value from its original use. Fourth, the “gold standard” in chemical recycling does not involve the use of external heat or pressure, which significantly reduces the energy intensity of operations.

Chemical Recycling Is Not a One-Size-Fits-All Cure

Chemical recycling is an umbrella term that conveys the different technologies for deconstructing and repurposing various plastic types to be used as raw material inputs for new products. The more than 60 global technology providers at various levels of commercialization fall into three main technology buckets:

Purification: a process that dissolves plastic in a solvent to separate and purify the plastic mixture and does not break down the polymer into separate monomers.

Decomposition: a depolymerization process that uses thermal, chemical or biological starter components to break plastic polymers into base monomers and purify the plastic waste for reuse.

Conversion: a process similar to decomposition with outputs of liquid or gaseous hydrocarbons to be used in intermediate materials and monomers to make new plastics.

Systemic Hurdles to Scaling Chemical Recycling

For chemical recycling technologies to meet the demands of plastic-use growth and create a circular system of upcycled plastics, several challenges need to be resolved in the coming decade.

1. The cost of recycled materials needs to be on par or less than the cost of virgin plastics. Today, there is little market incentive for companies to pay a premium for plastic material inputs. Crude oil prices hover below $60 per barrel, propping up our dependency on virgin plastics. The break-even cost for recycled plastics is closer to $100 per barrel.

2. Processing capacity for chemically recycled plastics must increase exponentially. Global market demand for polyethylene alone in 2017 was 80 million tons. Only a few chemical recyclers, such as Loop Industries and Carbios, are commercial and actively processing plastics, albeit at low-volume levels — around 10,000-15,000 metric tons of plastic per plant per year. Agilyx, with its Tigard, Oregon, facility, processes less than 4,000 metric tons of polystyrene annually.

3. Production scale is wholly reliant on facilities that exist and are operational. All major chemical recycling companies are planning new facilities or retrofitting existing plants between now and 2025.

4. Proving to the public that chemical recycling is more environmentally friendly than virgin plastics production and mechanical recycling. Doing so would go a long way toward making a value-added sustainability business case for pursuing these technologies.

Steps Industry Can Take to Adopt Chemical Recycling

Coca-Cola, Unilever and Nestle have pledged to source recycled plastic for their food and beverage and consumer product goods. Industry players in textiles, agriculture, construction and consumer electronics must quickly follow suit. Here are three ways companies can pair desire with action:

1. Build an internal business case for executive leadership that emphasizes the medium-to-long-term value of investing in chemical recycling technologies. Quantify how chemically revalorized plastics will optimize and streamline a company’s product design processes, material sourcing strategy, and value chain GHG emissions.

2. Partner with the right chemical recycler for your business needs. Focus on your company’s product waste streams and the regions in which they occur. Research the technology that best supports your company’s needs and engage the innovators that offer the capacity and willingness to partner with you.

3. Plan to co-locate manufacturing facilities close to municipal recycling waste streams and chemical recycling facilities. Without a clear strategy to maximize waste feedstocks into the system and minimize travel for processing, chemical recycling will not be market competitive anytime soon.

Chemical recycling can tackle the three Rs of sustainability: reducing material throughput of virgin plastic resin by creating a system of near-infinite plastic, and reuse within a circular plastic material system that prizes recycled content over virgin. With a focus on overcoming the systemic hurdles the process currently faces, a path to widespread implementation will open.

TripleWin Advisory develops sustainable business cases and supports strategic decision-making through value-chain mapping and Scope 3 inventories of companies’ greenhouse gas emissions. In so doing, it unlocks opportunities for greater profitability, relevancy, and longevity for businesses. Learn more.        

The post Achieving the promise of reduce, reuse, recycle with chemical recycling appeared first on Triple Win Advisory.

The sustainability world places a heavy reliance on the use of acronyms. And the field of acronyms seems to grow by the year. In order to keep our heads straight around the standards, frameworks, guidelines, disclosures and indices that encompass sustainability and the organizations they represent, we’ve made a list below (in alphabetical order) of each and their meaning, intended purpose and the value they bring to bear on corporate sustainability efforts. We promise not to quiz you. Let us know if we missed an acronym that absolutely should be included in our tally. Sustainability acronyms are sneaky that way: as the business imperative increases and greater opportunities are uncovered around climate change mitigation, the universe grows.

Here’s the list:

BIA = B Impact Assessment.
It is the sustainability reporting tool of B Labs, a certifying body that publicly rates a company’s sustainability performance across various impact areas. Although it would make sense to have the “B” stand for “Business”, it doesn’t. Instead, it serves as a brand amplifier of the organization’s name. B Lab is a non-profit that supports adoption of a broader set of values to guide for-profit companies. These values equate to sustainability goals that support not just profit-making but also societal well-being and environmental stewardship. The BIA tool allows B Lab to make companies’ sustainability measures more transparent in the marketplace. The value of BIA is that is forces registered organizations to go through the process of making transparent their sustainability efforts and to improve on those measures over time.

CDP = Carbon Disclosure Project.
This organization used to be known by its full name but currently is known by its acronym. CDP is an international sustainability disclosure body for companies as well as other entities such as investors, cities, states and regions. The CDP is focused on persuading entities to disclose their sustainability goals, particularly around greenhouse gas (GHG) emissions reduction efforts in support of global climate change mitigation. The value of CDP is in its disclosure policy: it seeks for companies to set meaningful GHG emissions reduction targets and then compiles that data across regions and sectors to report on trends toward that goal.

DJSI = Dow Jones Sustainability Indices.
The various indices are a collaboration with S&P Dow Jones and RobecoSAM. It is a set of global best-in-class financial benchmarks that rate, group and class companies that have submitted to their rigorous questionnaire process. The companies that are picked to be included in the DJSI are recognized for their commitment to business sustainability, goals in support of climate change mitigation, and sustained long-term value creation for their shareholders, and rewarded with like-minded investors and capital investments. The DJSI is part of a family of financial benchmark indices including the S&P 500 ESG Index, the S&P Fossil Fuel Free Index and the ESG Factor Indices. The DJSI provides value only for publicly-traded companies by increasing their access to sustainable capital while serving to promote the companies chosen as true exemplars in their particular industries. 

GRI = Global Reporting Initiative.
GRI is the global standard for sustainability reporting by companies, mostly public but increasingly, for companies of all sizes and types. The GRI standard allows reporting companies to standardize their disclosures and approach to reporting within industry and across sectors to allow for in- and out- of industry sustainability comparison, transparency, and ease of data accessibility for key stakeholders. 

ISO 26000: 2010 = International Organization for Standardization Guidance on Social Responsibility.
ISO is an independent, non-governmental international membership body consisting of “national standards” or standard organizations within nation-states. There can be only one standard body from each country as a member. No individual or company can be a member. ISO 26000 provides guidance for all types and sizes of organizations and is intended to persuade companies to go beyond any legal compliance around social responsibility and to take a more proactive stance toward creating social good within their daily operations.  ISO 26000 supports the following UN SDGs: 1-16.

ISO 14001: 2015 = International Organization for Standardization Environmental Management Systems.
ISO 140001 specifies the requirements of a company’s environmental management system, which helps perform, track, and report life cycle assessments of product impacts on the environment through the value chain. ISA 14001 is usually adopted by multi-national product manufacturers that operate a global supply chain, which are subject to a diverse set of regulations around labor, the environment and manufacturing practices. 

SASB = Sustainability Accounting Standards Board.
SASB was initially created to sit alongside FASB (Financial Accounting Standards Board) that establishes and updates the GAAP principles for public-company financial disclosures to the market. SASB was intended to create “sustainability standards” for market disclosure of material (relevant and business affecting) ESG (environmental, social and governance) impacts that would be included with corporate filings to the SEC.  SASB’s Materiality Map matrix is the truly valuable gem. Companies that are just beginning their sustainability reporting would be wise to consult SASB’s Materiality Map, which identifies by industry and sector, what issues are likely to be considered important under five broad reporting categories including:  Environment, Social Capital, Human Capital, Business Model & Innovation and Leadership & Governance.    

SBTi = Science-based Targets Initiative.
The organization in collaboration with CDP, the UN Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF), seeks to set a business practice standard for defining corporate carbon footprint goals that are in-line with the climate change targets of the Paris Climate Accord. The SBTi educates companies on how to set a science-based target (2^oC or less), verifies and approves corporate GHG emissions reductions targets. The value of SBTi is it compels companies to set GHG performance targets that are aligned with the Paris Climate Accord’s goal of climate change mitigation. 

TCFD = Task Force on Climate-Related Financial Disclosures.
Yes, it’s a mouthful and increasingly, relevant to corporate reporting of sustainability performance goals. TCFD asks companies to consider the physical, liability and transition risks associated with climate change to their business and stakeholders and then to make financial disclosures of those risks. TCFD formed an alliance with CDP in 2018.  In so doing, part of CDP’s criteria for rating disclosing companies’ efforts to mitigate their GHG emissions in their operations is to have those businesses report on how they are addressing climate change risks and embedding risk mitigation as well as scenario planning into their strategic business decision-making. The growing value of TCFD’s framework is that it allows companies to articulate their long-term business goals framed by climate change impacts foreseen and anticipated. 

UN SDGs = United Nations Sustainable Development Goals.
The UN SDGs (a.k.a. the UN Global Compact) are 17 goals that all 193 member states of the United Nations adopted in support of eliminating/eradicating poverty, inequality and injustice, and tackling climate change. These goals define a roadmap, of sorts, for businesses and nations to achieve “sustainable development” by the year 2030. The 17 SDGs are listed below:

The UN Global Compact asks companies to operate sustainably AND to pursue additional opportunities, as laid out in the SDGs, to solve societal challenges through business innovation and collaboration.

Business Takeaway 

Which tool is best to employ for your organization?
The answer depends on your company’s strategic sustainability objectives. Below is a graphical representation of the ‘sustainable toolkit’ universe organizations can employ in their corporate sustainability efforts. Each sustainability ‘tool’ is mapped on an X/Y axis that delineates commitment to sustainability against the level of transparency and integration of measures into a company’s strategic goals. Commitment to sustainability necessarily entails taking a multi-stakeholder approach to value creation which is highly correlated with increasing levels of transparency of an organization’s business practices, which in turn, further drives strategic decision-making for the benefit of those stakeholders a company seeks to serve.

TripleWin Advisory develops sustainable business cases and supports strategic decision-making through value-chain mapping and Scope 3 inventories of companies’ greenhouse gas emissions. In so doing, it unlocks opportunities for greater profitability, relevancy, and longevity for businesses. Learn more.        

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The True Business of Business

I want to make an overly obvious (some will say, ambitious) statement:  “We are all in the business of saving our planet” whether we know it or believe it to be true.  Our very existence depends on it.  Asking others – scientists, policymakers, activists – to do the work we are all tasked to do and responsible for completing is a failure of conscious, a waste of capabilities, and a rejection of leadership. 

Corporate sustainability requires big, heavy, systemic change.  It can be both complicated and challenging to implement.  The hardest part is often in deciphering how to answer, “Where to begin?”  Some companies eager to begin, fail to identify where the finish line resides.  Complicating matters more, no one-size-fits-all solution exists within and across industries. 

Looked at from a particular angle, that should be a relief.  Independent thinking and creating solution-setting remain valuable traits toward this endeavor. 

Corporate Sustainability’s Need, Value and Imperative

What companies do need to understand is where they are presently and what they need to journey towards.  Call that the path-forward.  There are many frameworks and tools available to help organizations understand how to walk that path; to take the first foray into their sustainability journey.  For many, it starts with writing a corporate sustainability report.  For others, the push is to report their greenhouse gas (GHG) emissions.  It’s worth stepping back for a moment though, to understand and put into context the need, value, and imperative of corporate sustainability.

The Need:  to affect a fundamental transformation in how business is conducted to neutralize its impact on the planet’s eco-system in support of human communities.

The Value:  these are numerous and include operational savings and efficiencies, cost reductions, new revenue models, distinct product differentiation, competitive advantage, and a host of beneficial employee and supplier productivity, longevity, and loyalty metrics to be realized.   

The Imperative: to support a livable and healthful planet.

Within corporate sustainability’s Need, Value and Imperative matrix, we can explore four value-creation paradigms that are separate yet intertwined; each reinforcing the other to pull companies toward becoming proactively and implicitly inclusive, civil-minded, and eco-system restorative.  Realize that most every organization will explore each of these journeys in time, at individual paces, and through unique mechanisms and means.

The Process of Sustainability Journeys

Let’s not forget the oft-quoted adage of Peter Drucker “what gets measured, gets improved.”  As you walk through these value-creating mindsets, remember how corporate (sustainability) journeys are built:

1. Assessment of the current state
2. Definition of business goals
3. Measurement of business risks & opportunities
4. Prioritization of the doable, the impactful, and the business critical
5. Development of an action plan
6. Quantification of progress
7. Review, analysis, and refinement of goals, performance metrics and action plans
8. Iteration to reach the next level

Four Value-Creation Paradigms for Corporate Sustainability

I will discuss each of four value-creation paradigms separately.  Ultimately, they fit together like four pieces of a puzzle.  See them as four quadrants of a two-dimensional XY axes. By identifying where your organization is today within each quadrant, a 2-dimensional map can be drawn among them to understand where sustainability efforts are lagging or require additional attention.  Note:  each of these value sets often follow in tandem with the others.  That is:  if stakeholder engagement is low, an organization can likely find that there is low organizational embeddedness of material issues and organizational sustainability implementation is stubbornly stuck below non-strategic levels. 

Paradigm 1:  Level of Corporate Responsibility

Assessing where a company is in its corporate sustainability journey is the appropriate right step before defining priority goals, stakeholder engagement and material issue embeddedness.  Four corporate responsibility levels exist.  The first and most rudimentary is Compliant.  A company pursues corporate responsibility measures where it has to; where it must abide by the rules and regulations governing areas of operation.  Think here:  Environmental Health and Safety (EHS) compliance, Labor rights, Air Quality safety, and Health Insurance Portability and Accountability Act of 1996 (HIPAA) in Health Care.  Compliant-level companies are pursuing bare-minimum corporate sustainability measures. 

Managerial-level corporate sustainability implementation considers and engages the company’s stakeholders; making transparent their issues of concern within reporting documents, such as in a sustainability report.  Strategic-minded companies proactively engage their key stakeholders, identify their key concerns, prioritize those into strategic business decision-making and actively address them through process modifications (e.g., non-dyeing and stone-washing with lasers in apparel making), product changes (e.g., substituting corn syrup with cane sugar in sodas), and/or policy, procedure and mission overhauls (e.g., change in women-athlete pregnancy policy).  At the civil implementation level, companies have fully embedded a sustainability mindset internally, have met with success, and work as external change agents for their stakeholders – partners, suppliers, customers – persuading them to pursue the same or similar levels of sustainability within their business operations. 

When you look at this quadrant, ask yourself: 

“How does my company approach corporate sustainability today?”

Paradigm 2:  Organizational Sustainability Implementation

Existing companies run the gamut from operating Unsustainably to pursuing environmentally Restorative business goals. An organization that orients around having a Neutral Impact is one that is pursuing net zero carbon emissions goals across its value chain.  Often, that type of goal is articulated as a RE100 goal:   sourcing and utilizing 100% renewable energy by a certain timeframe (say, by 2030) across a company’s chain of business through a diverse strategy of say, on-site generation of solar or wind energy, carbon offsets and the purchase of renewable energy certificates.  More and more Fortune 1000 businesses have declared this their organizations’ sustainability goal.  Companies goal-orienting around “Restorative”, is to have organizations committed to pursuing net-positive carbon emission goals.  Said another way:  a company determines to capture and sequester carbon in their business operations, which entails going beyond achieving zero carbon emissions and seeking negative carbon emissions goals in its operations and in the products it manufactures.

When you look at this quadrant, ask yourself:

“What should my company’s sustainability goal(s) be?”

Paradigm 3:  Responsiveness to Stakeholders

Corporate Sustainability and “Stakeholder Engagement” go hand-in-hand.  Sustainable projects can be pursued.  Sustainable reports can be written.  Sustainable priorities can exist.  But if a company has not gone out and conducted the work of identifying its key stakeholders, engaging them in communication feedback and soliciting their concerns as it relates to the organization’s operations, then a company has yet to truly understand the meaning of what corporate sustainability is. A company exists because of its stakeholders (the market of buyers), for its stakeholders (the suppliers and employees who keep operations running, investors), and in support of its stakeholders (productive workforce, healthy environment, strong economy). 

So here goes:  if an organization fails to consider its key stakeholders in the course of business, that company operates Reactively and unwittingly, in an extremely high-risk environment.  Think:  Volvo’s diesel-gate scandal, Facebook’s privacy scandal involving Cambridge Analytica, child labor scandals that have affected some of the largest apparel makers in the U.S. including The Gap and Nike, and of course, the Enron financial and accounting scandal of breath-taking proportion.  All of these companies at the time their particular scandals hit, were operating with a Reactive Stakeholder mindset:  they did not/were not/had not considered the issues of concern for their stakeholders and by doing so, breached their trust, caused considerable damage to their brands and reputations, lost a fair amount of value in their businesses, and in one case, ceased to exist.   

Reactive companies once called-out, move quickly to Defensive-mode.  Philip Morris (now Altria) has operated with this mindset from its very inception.  It has long known that its products kill but the profits from those products are too enticing to give-up.  Oil & Gas is an industry made up of Defensive companies.  Exxon Mobil, Shell and the like absolutely know they directly contribute to accelerating global climate change.  And while they offer modest, conciliatory overtures to pursue “clean” fuels, their corporate interests solidly lie in keeping their stakeholders on the cheap-train of fossil fuel use. 

Companies that accommodate their stakeholders’ concerns have provided some channels of communication for interaction and accept feedback.  The downside of an Accommodative approach is that lines of communication are not deliberate and stakeholder concerns fail to be incorporated into the strategic business decision-making of organizations.  A Proactive stakeholder engagement strategy is an active, ongoing and deliberate action plan for identifying and communicating with stakeholders, understanding their concerns and issues, and taking the next step of embedding them into the sustainability decision-tree of a company.

When you look at this quadrant, ask yourself these questions:

“Does my company know who its key stakeholders are?”

Hint:  The Environment should be one.

“Has my company identified what its stakeholders’ priority concerns are?”

Hint:  Each stakeholder group will have a unique set of concerns.

Paradigm 4:  Maturity of Materiality Embeddedness

This quadrant seeks to push companies to move away from making decisions from an Institutional mindset where only direct business impacts of the company are prioritized by its operating leaders with no accommodation of non-financial stakeholder viewpoints, to a Latent one, where decision-making is collaboratively identified, shared, and executed upon through a corporate system that has prioritized sustainability measures, enlisted the consent of its stakeholders, set-down clear rules of engagement that define sustainability work and progress, and where standards become habits that build a collective consciousness.  Uber operates with an institutional mindset with its “We employee zero automobile drivers” declaration.  The company seeks to protect solely its own self-interests. Decisions are made to the exclusion of its stakeholders.  Uber’s direct competitor Lyft operates with a Consolidating mindset.  The company absolutely knows that its drivers mostly drive combustion-engine cars that emit millions of tons of carbon dioxide into the atmosphere, directly contributing to global warming.  So, it takes a Consolidating view:  where it can it will support neutralizing its drivers’ carbon emissions through the purchase of one-to-one carbon offsets.  Most companies are not going to that length to neutralize their climate carbon contributions.  Just as importantly, buying carbon offsets is an acceptable way to build sustainability into one’s operations (albeit, without fundamentally changing one’s way of conducting business).

An Emerging company is one that is taking its sustainability commitments and goals to the next level:  not everyone knows about the efforts and presently, only a rare few are pursuing these types of sustainability goals.  Think:  Interface, the carpet manufacturer.  Its “Climate Take Back” sustainability initiative seeks to go beyond having a zero carbon impact on the world and to take-back or sequester carbon already in the atmosphere, through its operations and the carpet tiles it sells and installs.   Emerging materiality companies are seeking to solve the world’s most challenging problems.

A Latent-operating company is taking its traditional business model and transforming it to fit the needs of the market while solving for a universal imperative.  Signify (formerly Philips Lighting) is one such company.  It has committed itself to achieving carbon neutrality by 2020 (end of next year), transitioning to selling only sustainable products (i.e., LED lighting systems), sourcing 100% renewable energy, and achieving full circularity in its manufacturing operations, where waste and materials have revolving value.  So too, Signify has committed to solving some of the world’s biggest challenges from regenerative agriculture to solar electrification in support of the UN’s Sustainable Development Goals (SDGs).  Latent mindset companies are actively pursuing business transformation; acting as leaders to showcase how it’s done and the over-arching value deeply-embedded sustainability provides.

When you look at this quadrant, ask yourself these questions: 

“How transformative are my company’s sustainability goals?” 

“How are our pursuits changing the paradigm of how businesses’ operate, manufacture, produce, recycle and support climate change mitigation?”

The Sustainable Value-Creation Matrix

Here’s where we take each of the individual paradigms and coalesce them into a unified matrix on corporate sustainability value-creation.

Map your company’s present mind-set on the four concentric circles within the XY axes.  Ideally, you should map its existing sustainability expression as well as the future state to be achieved.  The goal is to move outward in each of the four quadrant realms:  pursuing higher levels of value creation through 1) increasingly proactive stakeholder engagement, 2) greater materiality inclusion into prioritized business goals, 3) sustainability goals that emphasize no or a net-positive impact on the planet and 4) a globally-minded corporate responsibility that is strategically-embedded in business decisions. 

At TripleWin Advisory, we help companies execute Stakeholder Interviews and we map organizational value chains to identify prime areas of opportunity to implement sustainability measures that have quick and measurable financial pay-backs.  If you are looking for tools to support your company’s Stakeholder engagement work, call or email us to receive a deck with useful frameworks to start the process.

TripleWin Advisory develops sustainable business cases and supports strategic decision-making through value-chain mapping and Scope 3 inventories of companies’ greenhouse gas emissions. In so doing, it unlocks opportunities for greater profitability, relevancy, and longevity for businesses. Learn more.        

The post The Onward Journey of Corporate Sustainability appeared first on Triple Win Advisory.