In this month's issue of The Sustainable Business Review we also look at Europe's answer to the Inflation Reduction Act, momentum behind making ecocide an international crime, the UNFCCC's Global Stocktake, Europe's crackdown on the chemicals industry, 'nature-positive mining', and why taxing the super-rich is necessary to avoid social breakdown
News last month that Danone is being taken to court by Client Earth and two other environmental groups over its global plastic pollution will have caused a collective shudder in board rooms far beyond the consumer goods giant’s native France.
Danone, producer of Evian, Volvic and Activia, prides itself on being a sustainability leader in many spheres of its operations, and packaging is no exception: according to the Ellen MacArthur Foundation, Danone has done more than Coca-Cola, PepsiCo and Mars to decrease virgin plastic use in the past two years (only Unilever has outperformed it).
But under France’s 2017 duty of vigilance law, large companies are obliged to map out the environmental and social impact of their global activities and set out measures to mitigate and prevent damage on an annual basis, something a growing number of non-governmental organisations have seized on to take French companies to court.
Client Earth and its partners Surfrider Foundation Europe and Zero Waste France are not opening criminal proceedings, but they say the company is failing to comply with the duty of vigilance law in its plan to reduce its plastics impact because its main strategy is to increase the recyclability of its products, though only 9% of plastics ever made have been recycled.
To be compliant, they argue, the company should provide a complete assessment of its plastic footprint, not just in packaging but plastics in the products it sells, as well as logistics and promotions, and map its social and environmental impacts from production to end of life.
Danone said it was "very surprised by this accusation, which we firmly refute”. But it joins the growing list of companies that are finding themselves being taken to court as environmental NGOs widen their nets from the usual suspects of mining and oil and gas companies, and the banks that fund them.
Another sustainability leader facing legal action is Swiss cement giant Holcim, whose transparency in reporting on its Scope 3 emissions, those from the use of its products and in its value chain, is being used against it.
Early this month residents of an Indonesian island, Pulau Pari, filed a case in Zug, Holcim’s headquarters, seeking proportionate compensation for damage to their livelihoods due to repeated flooding as global warming has driven up sea levels.
The complainants cited a study by the Climate Accountability Institute, which used Holcim’s emissions reporting to CDP to calculate that it was responsible for 0.477% of global industrial emissions from 1950 to 2021.
Holcim had its net-zero emissions plans approved by the Science Based Targets initiative last year, but the NGOs backing the islanders’ action say the company is not doing enough to cut its emissions.
A spokesman for Holcim said climate change was “top priority for Holcim” and added: “We do not believe that court cases focused on single companies are an effective mechanism to tackle the global complexity of climate action”.
The risk of NGOs going after the tall poppies, like Holcim and Danone, is that companies trying to do the right thing and voluntarily being transparent about their emissions will be punished, while the vast majority of companies carry on business as usual, under the radar.
In Europe at least, the Sustainable Finance Disclosure Regulation, which comes into force later this year, and the Corporate Sustainability Reporting Directive, which comes into force in 2024, will level the playing field in forcing greater transparency and making Scope 3 reporting mandatory across the board.
As Mark Hillsdon reports in his Society Watch column this month, a new front in the legal battle against climate change could be closer with growing numbers of countries considering making ecocide, defined as severe damage to the environment and people, a crime. Ten countries, including France and Ecuador have already done so, while another 27 are said to be "actively considering" criminalising ecocide.
The NGO Stop Ecocide International is also leading a global campaign to recognise ecocide at the International Criminal Court, which would mean that individuals can be prosecuted for the ecological damage caused by the organisations they head up.
One sector where such a development might give top executives sleepless nights is in the chemicals industry.
As Oliver Balch reports in his Brand Watch column, the chemicals industry is responsible for 5.8% of global CO2 emissions, with its products finding their way into almost every segment of the consumer goods market. Regulators are cracking down, and no more so than in Europe, where the European Commission last month published a transition pathway for the industry to shift to lower-carbon chemicals.
More help to decarbonise could be on offer to Europe’s chemicals industry after the European Commission president, Ursula von der Leyen, set out a “Green Deal industrial plan for the net-zero age” earlier this month.
As Angeli Mehta reports in her Policy Watch column, Europe is having to sharpen up net zero in response to the $360 billion in subsidies in President Biden’s Inflation Reduction Act. Ilham Kadri, chief executive of one of Europe’s oldest chemical companies, Solvay, told the World Economic Forum in Davos that the IRA was the “best thing to happen to Europe”.
Another event concentrating minds is the “global stocktake”, the UNFCCC’s review of progress since the Paris Agreement, which will be published just before the COP28 climate conference in Dubai later this year. As Mike Scott points out in his ESG Watch column, next month’s Synthesis Report from the U.N. will confirm that the world is lagging perilously behind in cutting CO2 emissions.
With a new report from CDP finding that only 81 of the 18,600 plus organisations that answered its climate change questionnaire last year having credible climate transition plans, investors will be putting greater pressure on them to radically pick up the pace.
One industry that has long been in investors’ sights is mining, due to its elevated human rights and environmental risks. But massive expansion of the sector will be critical to provide the materials to power the energy transition. January saw the launch of the Global Investor Commission on Mining 2030, an initiative exploring the systemic changes that will be needed to ensure mining companies can ramp up extraction without causing harm to people, communities and the environment. This month Oliver Balch interviews Rohitesh “Ro” Dhawan, chief executive of the International Council of Mining and Metals, about how nature-positive mining could become more than a pipe dream.
Finally Sandrine Dixson-Declève, co-president of the Club of Rome, takes aim at fossil fuel companies, which have just announced record profits at a time when extreme poverty has increased for the first time in 25 years.
“This growing inequality is a threat to democracy the world over,” she says. “Either we tax the very rich properly or sit back and watch society fall apart at the seams.”
That’s it for now. Next month, in The Ethical Corporation Magazine, we’ll be taking an in-depth look at the just transition agenda, but the Sustainable Business Review will be back in April.
Danone Holcim environmental litigation chemicals industry Inflation Reduction Act global stocktake mining fair tax