Climate change chaos, migrant worker rights and B corp benefits

Fossil fears

Planned fossil fuel projects in 14 key locations worldwide will set off a “carbon bomb” that will signal defeat in the battle against uncontrollable climate change, Greenpeace says in a report published in January. The projects would result in 20% additional emissions by 2020, rather than in global emissions peaking by 2015, which Greenpeace says must happen if global warming is to be kept below 2C above pre-industrial levels. 

The mega-projects include Chinese plans to expand coal production, extraction of oil from the seabed off Brazil, new production from the Orinoco tar sands in Venezuela, and gas production projects in the Caspian sea. If all of these go ahead, it will be “difficult, if not impossible, to prevent the widespread and catastrophic impacts of climate change,” Greenpeace says. The fossil fuel industry, it added, is showing “total disregard for this unfolding global disaster”.

Migrant exploitation

Major electronics manufacturers including Hitachi, Sharp, Sony and Toshiba are not doing enough to protect the rights of migrant workers in supplier factories in Malaysia, according to a report drawn up by the makeITfair campaign. Workers heading to Malaysia from Bangladesh and Nepal face poor working conditions, contract fraud and debt bondage, the report says. 

Migrants interviewed by makeITfair work at three factories – Omron Malaysia, SMK Electronics and Takahata Precision Moulding – which supply components to several multinationals. Hitachi, Sharp, Sony and Toshiba say they are investigating the allegations, while JVC, Panasonic and Mitsubishi did not respond to the campaign’s questions. None of these companies’ codes of conduct “refer specifically to migrant workers’ rights”, makeITfair says.

All at sea

Questions are being asked about oil drilling in the Arctic after a Shell drilling platform, the Kulluk, was grounded on an Alaskan island in December. Shell says it was towing the platform south to Seattle for maintenance, but US Democrat representative Edward Markey of Massachusetts alleges the real reason for the trip was to avoid an Alaskan tax bill that would have applied if the Kulluk had remained in Alaskan waters after December 31. 

Shell stands accused of moving the rig despite “near hurricane” conditions. The accident did not result in any oil leakage, and the Kulluk was eventually towed to a safe harbour for a damage assessment. But Greenpeace says the incident shows that “Arctic drilling is a risk too far”. Shell says its “priorities continue to be the safety of all personnel and the environment”.

B good

A certification scheme for companies with a conscience is booming, with close to 700 mainly small firms now signed up to the Certified B Corporation scheme, run by US non-profit group B Lab. The scheme is based on laws in a number of US states enabling companies to incorporate as benefit corporations, or companies with a legal obligation to create a benefit for society as well as returns for shareholders. 

Benefit corporations do not have to be certified, but the B Lab scheme provides a stamp of sustainability, showing that they really do take a responsible approach to their employees, communities and the environment. Benefit corporations can currently be incorporated in California, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, South Carolina, Vermont and Virginia. Other states are thinking about it. B corps are “rockstars of the new economy”, according to B Lab.

Trusted partners

Trust is growing, especially in the United States, France and Germany, according to the 2013 Trust Barometer, published by consultancy Edelman. The survey, which pools answers from 31,000 respondents, finds that business is trusted more than government (58% trust rating compared with 48%), but less than NGOs, which are trusted by 63% of people. Government is “out-trusted” by business in particular in South America, especially Mexico, where the gap is 41 points, Brazil (31 points) and Argentina (30 points). The most trusted sector is technology; the least, financial companies. The survey also shows that leadership is a lonely place. Although companies are broadly trusted, only 18% of respondents trust chief executives to tell the truth. The results show the limitations of top-down leadership, compared with the – more trusted – social activist model of bottom-up engagement, Edelman says.

High impact

“Impact investing” – investments designed to generate a social and/or environmental return alongside a financial payback – is on the rise, a survey by JPMorgan Chase and the Global Impact Investing Network has found. Respondents to the survey, mainly North American and European fund managers, pension funds and financial institutions, say that their impact investments in 2012 amounted to $8bn, expected to increase to $9bn in 2013. Most of the money (51%) was directly invested in companies, and there was a wide spread of investment by geographical region and sector, though with some preference for sub-Saharan Africa, and food and agriculture and healthcare. For most investors, pursuing social and environmental benefits did not limit financial returns: 65% say they target market-rate returns, with only a third targeting below market-rate returns.

Big Four on top

Sustainability consulting is dominated by the Big Four accounting firms, a survey carried out by analysts Verdantix has discovered. Verdantix interviewed senior sustainability decision-makers in top firms around the world, finding the highest “brand preference” scores for Ernst & Young, followed by KPMG, Deloitte and PwC. Management consultants such as Accenture and McKinsey trailed in their wake. 

In sustainability assurance, KPMG is the leader, with Ernst & Young relegated into second place. For sustainability software, Microsoft is preferred, ahead of SAP, Oracle and IBM. “The Big Four’s global scale and their willingness to make strategic investments have enabled them to out-muscle management consultancies,” says Verdantix chief executive David Metcalfe.

Drought doubts

Global warming might be to blame for the loss of 2,000 jobs in Plainview, Texas, where food giant Cargill has closed a major slaughterhouse because of drought. The long dry spell has increased feed costs for cattle farmers, and has led to “herd liquidations”, Cargill says, meaning a decline in the supply of the Plainview plant’s raw material. 

Cargill Beef president John Keating says the US cattle herd was at its smallest since 1952. He adds that the industry had been through droughts before, “although this one is longer and more severe than most”. According to the US National Oceanic and Atmospheric Administration, 2012 was the hottest year on record for the US excluding Alaska and Hawaii. Deutsche Bank has estimated that the impact of the drought on farming cut US economic growth in 2012 by one percentage point.



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