LONDON — Sustainability is increasingly in the news and on the minds of corporate decision makers – and it applies not only to a company’s products, but to its entire manufacturing, supply and distribution chain. And customers and shareholders want reassurance that their investment is supporting environmentally friendly policies and practices – or, perhaps more importantly, that it isn’t supporting destructive ones.
Help is available for companies wanting to ‘go green’. The corporate sustainability service sector offers assistance with increasing energy efficiency, implementing sustainable procurement and complying with legislation. In a recent REW feature (see Vol. 14, No. 6, pages 47-50) we explored the rise of the ‘energy executive’ within existing organisations: new roles being created for sustainability managers, engineers and investment professionals in response to a growing awareness that – no matter how ‘green’ its products – every aspect of the way a company functions may eventually come under scrutiny.
The role of the sustainability executive includes both inward-facing and outward-facing responsibilities. It can be crucial not only to implement sustainable business practices – to ‘be green’ – but also to let the public know that you’ve done so – to ‘be seen to be green’. In many cases this is merely a matter of getting the correct information into the hands of customers and shareholders, but in some cases a company’s desire to be seen to be green has resulted in accusations of the dreaded ‘greenwash’.
The term, modelled on the older ‘whitewash’ (meaning to gloss over or cover-up scandal), is defined by Greenpeace as ‘the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service’. And greenwash is a media issue. For example, from 2007-2010 UK newspaper The Guardian famously ran a series of articles on greenwash, for which it invited readers to email examples of ‘exaggeration, absurd claims or downright lies that big business makes about its green credentials’. From the oil and gas and pharmaceutical industries to politicians, municipalities and national governments, no one was safe. The EU was the final entity to be tarred with the newspaper’s greenwash brush, in a 2010 story on its implementation of an eco-label in the form of a flower, designed to indicate environmentally friendly products. The Guardian reported that two of these EU-labelled products, both popular brands of copy paper, were actually made in part from wood pulp logged from a rapidly disappearing Indonesian rainforest.
But We’re Already Green!
Renewable energy companies might think they have less to worry about than other industries in terms of greenwash: after all, if the basis of your business is green energy, you’re already way ahead in your green credentials. However, there have been cases such as PV panel manufacturer Jinko Solar’s 2011 suspension of operations after local protesters called attention to high numbers of dead fish in a brook near one of its factories. In a televised interview, Jinko Solar said that rainstorms had caused containers of solid waste containing fluoride to spill over into the brook. The company apologised and temporarily suspended operations while fixing the problem, but the irony of a renewable energy company causing environmental damage was not lost on the international media.
When Viking Energy, an SSE subsidiary, proposed building a 550 MW wind farm in 2009 on the Shetlands’ main island as part of the UK’s plan to meet EU 2020 emissions targets, The Guardian pointed out that the proposed site, located on 187 km<sup>2</sup> of peat bog, was a natural carbon repository that, if disturbed on a large scale, could release more than 5000 tonnes per hectare of CO2 into the air, substantially offsetting any carbon reduction represented by the wind farm. Peat slides are a common risk in boggy areas, resulting in the oxidation of large amounts of peat, and the construction of roads, drainage areas and the turbines themselves could easily cause such slides, according to environmental experts consulted by the newspaper. Viking Energy’s own environmental assessment, however, stated that the risk of peat slides was ‘zero’. Due to this negative media coverage Viking Energy’s efforts to engage the local community with the project were widely viewed as greenwash. Although the project finally received planning permission in April, the community has formed a campaign group, Sustainable Shetland, that has vowed to ‘fight on’ against development of the wind farm.
In the bioenergy sector, public protest over the environmental impact of biofuel production and its contribution to the worldwide food crisis almost derailed the US industry in 2011. And global biofuel producers, especially Malaysian and Indonesian palm oil producers, have been dogged by reports of mass-scale rainforest destruction in order to make room for oil palm plantations. The Malaysian government has been criticised for its conversion of more than 1 million hectares of forest land into oil palm plantations; critics say this threatens to create enough carbon emissions to offset the carbon reductions represented by the use of waste from palm oil production in renewable energy projects (and by the government’s own carbon reduction programme). The Malaysian Palm Oil Council’s series of television advertisements, with the tagline ‘Sustainably Produced Since 1917’, was widely condemned as greenwash.
What Companies Can Do
These days, any corporate communication regarding a company’s carbon emissions or ‘green’ business practices may be viewed with a frisson of suspicion. One reason is that, while many companies issue mandatory and, increasingly, voluntary statements about their commitment to sustainability, most consumers have no way to verify these claims – opening the companies to charges of greenwash.
One option available to companies wishing to present their green credentials is external verification. For example, risk assessment firm DNV offers verification of sustainability reporting which, the company says, can help with inward-facing tasks by ensuring appropriate reporting processes are in place, and can address outward-facing issues by enhancing the credibility of a company’s sustainability report.
Green certification is another option. In the US, non-profit groups such as the American Consumer Council (ACC) offer their stamp of approval, and detailed reports for publication, to companies which meet sustainability criteria. But many smaller municipal and for-profit green certification agencies also exist, resulting in a bewildering field of options. The ACC recommends that businesses choose a certification programme that has itself been independently certified.
The European PV CYCLE programme is a voluntary take back and recycle scheme for PV modules (Source: PV CYCLE)
For companies that use wind energy in their organisations or production, there is the new WindMade consumer label, backed by a group of non-profit groups, trade associations and companies including WWF, AWEA, Bloomberg New Energy Finance and Vestas. WindMade offers two types of labelling for companies and organisations. The first identifies companies that use 100% wind energy, while the second labels those that use a mix of energy sources. The right to use the WindMade label is based on a company’s certified electricity use for the past year of operations. The standard is now available, while the first WindMade labels for products will be issued this year, the group says. The European Wind Energy Association’s (EWEA) annual gathering in April was the first event to be awarded the WindMade label.
In March, the US Solar Energy Industries Association (SEIA) released its Solar Industry Commitment to Environmental and Social Responsibility, a document that promotes the implementation of sustainability standards throughout the solar industry. Adoption of the document’s principles is voluntary, and includes compliance with company and supplier requirements in the areas of labour, ethics, health and safety, environmental responsibility, human rights and management systems. Participants on record include Suntech, SunPower, Dow Solar, Trina Solar, and Yingli Solar.
The European Photovoltaic Industry Association (EPIA) has a Sustainable Development Working Group, which aims to increase understanding of the PV sector’s role in positively contributing to sustainable development. The Working Group has produced fact sheets on the carbon footprint of PV systems and their energy payback time; a background document responding to common misconceptions about the availability of raw materials; and fact sheets on land use and biodiversity, water consumption, and external costs (forthcoming).
That’s What Gets Results
These strategies appear to work. Sustainability has been linked to shareholder value, and with building a brand as part of a long-term profit strategy, a good thing to have in these days of shakeouts and looming consolidation in high-profile renewable energy sectors.
In the UK, a survey in advance of the government’s Carbon Reduction Commitment (CRC) scheme revealed that 60% of respondents believed that participation in the scheme would give them a competitive advantage over other companies. ‘Our experience is that companies want to perform better than their competition in the public league tables when they are published,’ stated Bobby Collinson, managing director at energy procurement and carbon strategy consultancy Power Efficiency, which conducted the survey. ‘Nobody wants to appear behind a competitor, but the jury is still out on how this information will be perceived by customers. Of course, competitive advantage will be gained through improved recycling payments from the scheme and lower carbon usage, which reduces the costs to a company.’
A research report from the Economist Intelligence Unit (EIU) revealed that global companies that showed strong share price growth over a three-year period were more proactive on corporate sustainability issues than companies whose share prices stagnated or declined. And 57% of executives surveyed believed the benefits of implementing sustainable business practices outweighed the costs, although eight out of 10 expected any direct profit increase to be negligible. But, cautioned the EIU, sustainable practices do reduce costs, particularly the costs associated with energy expenditure. Sustainable practices can also open up new markets and improve a company’s reputation as part of a long-term brand-building strategy.
The survey also found that communication is key. Choosing from a list of 10 sustainability objectives, 61% of respondents rated communicating their company’s environmental performance to investors and stakeholders as a ‘leading’ or ‘major’ priority.
In a recent conversation, Jan Jacob Boom-Wichers, Benelux managing director at Norway-based REC Solar, discussed a life-cycle analysis which assessed the environmental impact of REC’s products, from manufacturing to recycling. The Energy Research Centre of the Netherlands (ECN) conducted the analysis and identified energy consumption as the most important footprint of a c-Si module. In response, REC developed its Fluidised Bed Reactor (FBR) technology, which uses granular polysilicon and, the company says, reduces energy consumption to less than 10 kWh/kg, compared with the 65-150 kWh/kg used in traditional production processes.
For REC, sustainability has paid off. ‘Our partners buy REC modules because of our commitment to the environment. That is very clear,’ said Boom-Wichers. ‘They want high-quality modules with the highest performance ratio, but in addition they want environmental values. Also with companies who want to improve their image of being a green company, [REC’s environmental stance] is definitely something they can relate to.’
A Greener Green Business Model
The ‘greener’ your business, the less you can afford not to ‘be seen to be green’. The renewable energy sector has risen to this challenge with some notable ‘greener green’ projects.
In the solar industry, the Europe-wide PV CYCLE initiative was designed to make photovoltaics ‘double green’. It was founded in 2007 as a voluntary return and recycling programme for end-of-life-modules, and to take responsibility for PV modules throughout their entire value chain. Its list of more than 200 members reads like a ‘who’s who’ of solar companies around the globe.
The recycling of wind turbine blades at the end of their life cycle was explored in 2005 by a consortium including energy consultancy KEMA, the Polish Industrial Chemistry Research Institue (ICRI) and HEBO Engineering, funded by the European Commission. The group built and tested a shredder that could handle 2.5 tonnes per hour, and make the materials in turbine blades reusable. But demand for the recycled material was low due to its reduced strength. While many believe that the EU will ultimately legislate the recycling of wind turbine blades, in the interim the industry is still actively seeking solutions to the problem.
While a global focus on sustainability means more business for renewable energy companies, it’s important for the sector to show that, in terms of environmental responsibility, renewable energy companies mean business. Addressing supply chain, manufacturing, product end-of-life and environmental impact issues before they become problematic is crucial for a ‘green’ business model. The initiatives underway are a great start, but as global sustainability competition accelerates, the roles of sustainability managers, planners and engineers will be vital to ensure that a company’s activities are not perceived as greenwash, but as truly green.