Environment and Community Relations Management: Extractive Sector

CSR, EHS, Sustainability, Community Relations, Governance, Social License… what do these words all mean when commodity prices are falling, such as iron ore? The bulk of world commodities is extracted in countries where transparency and governance is weak and corruption is rampant, where poverty is endemic and the majority do not benefit from their countries’ natural resource wealth. Companies can produce 1000 page ESIAs mainly for due diligence purposes, outline formidable EHSC management plans which include both mitigation and non-mitigation measures, demonstrate how all of this is tied to core business, etc. etc. but at the end of the day, when the financials are weak, theft is rampant and impacts productivity, the first departments whose budgets get slashed are: environment and community relations. Even health & safety get undermined and suddenly lose their value. The safety values of zero harm become secondary to budgetary constraints. CEOs are great at trumping sustainability issues and often include it in their speeches or comments. On the other hand, the operations manager is the one who has the pressure to decrease costs at the detriment of sustainability –regardless of what the CEO states in public.

I know that one day, the sustainaility field will take center stage. It may be more advanced in some sectors as compared to others, but the mounting global changes (access to water, poverty,pollution etc.) coupled with the advent of the Internet and communication, are pushing these issues at the forefront inch by inch. The challenge is heavy.

 

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CHANGE OF BLOG ADDRESS

The blog address has changed to: http://gbarrasso.blogspot.com/

Apologies for the inconvenience. The new blog address will enbable readers to freely subscribe when the blog is updated.

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Grace Barrasso

The YES Men: New twist to environmental liability

On 3 December 2004, an unprecedented news item hit the BBC airwaves where a Dow Chemicals spokesperson claimed that the company will accept full responsibility stemming from the Union Carbide Bhopal catastrophe. At the time, I lived in Brussels and as I stood in my living room, the shock and euphoria hit me at the same time. It was soon revealed that the BBC interview was a hoax. And it wiped $1 billion off of Dow’s stock price.

Who was behind this hoax? The YES MEN of course! They have since played numerous hoaxes on corporations, most recently in Calgary at an oil and gas conference. They have made a movie which has proved to be a hit at the Berlinale.

What kind of a message do you think this sends to the world?

Packaging and the environment — Les emballages et l’environnement

Canada, along with its’ provinces and territories, is passive when it comes to packaging waste as compared to the efforts undertaken in the European Union. The European Directive 94/62/EC on packaging and packaging waste aims to harmonize national measures in order to prevent or reduce the impact of packaging and packaging waste on the environment and to ensure the functioning of the Internal Market.  It contains provisions on the (1) prevention of packaging waste, on the (2) re-use of packaging and on the (3) recovery and (4) recycling of packaging waste. There are specific provisions for all four elements and quantitative targets. I had participated at some of these past stakeholder consultations, where I represented Tetra Pak Europe and Alcoa Europe, and industry throughout the supply chain was ready and willing to take action. There was not much choice because legislation was forthcoming. We are not talking about “voluntary” guidelines: producers putting packaging on the market had to recycle X% amount per year, every year. And we all had to pitch-in. All packaging placed on the market in the Community and all packaging waste, whether it is used or released at industrial, commercial, office, shop, service, household or any other level, regardless of the material used, was affected.

Recovery organisations were established, reporting guidelines implemented, best practice was shared across the supply chain and in packaging trade associations, communication to consumers was enhanced and new opportunities were created. The objective of the Directive is to decrease the amount of final waste going to landfill. And it’s working.

When I mention this objective to my counterparts in North America, particularly in Canada, I usually get one of the following answers: “we have a lot of land in Canada so we can create landfills in remote areas”, or “our population density is not comparable to Europe so we don’t have the same pressing need to recycle and recover packaging waste”, or ” the current market for recycled material has collapsed”, or my favourite “we recycle all our packaging waste in Quebec as we are the greenest province”.  Groundwater contamination, litter, sustainable consumption, etc. are never considered.

I invite all readers to take a look at the Recyc-Québec site and to ask some fundamental questions:  Where are the targets outlined? How much packaging has been placed on the provincial market? And how much of it has been recycled? Landfilled? The often quoted number is 60% recycled. From what? Compared to what year? The numbers and efforts remain fuzzy.

In early 2006, Coca-Cola bottlers wanted to withdraw the deposit fee on some of their packaging in Quebec. It was barely noticed in the media and the government reached a deal with the company to continue the programme. The deposit fee on most packaging in Quebec is .05 cents. This is very low compared to other jurisdictions and, although it provides some incentives to consumers to return their aluminum can, the credibility and viability of the system is now at stake. In the Montreal area, we have these green open boxes which will be replaced because, due to weather conditions, most of the used packaging winds up on the street. I usually add my empty wine bottles in the bin, including those with a deposit fee (some wine bottles have it, others don’t…?) because I know it will be collected by the homeless on the street. I don’t think this logic applies to suburban areas. The government-owned liquor store SAQ, which has ceased to distribute plastic bags to consumers since the start of the year, does not have a recycling program in place for its used wine and beer bottles. And this is government owned! Maybe it would be more effective if it were privatized?

The Canadian Council of Ministers of the Environment (CCME) is having a stakeholder consultation on packaging (comments can be submitted until 29 May 2009). The Packaging Association of Canada (PAC) does not mention how much packaging waste is recycled in Canada nor in the individual provinces. The environment section on their site does not have one mention of what the impact of packaging waste is on the environment nor how their member companies are working on new packages that are “designed for the environment” nor any mention of LCA or packaging waste studies. The most depressing aspect is that many companies, such as Nestlé, Coca-Cola, Unilever, P&G, Tetra Pak, Heineken, Danone, etc. are undertaking significant efforts as regards packaging waste in Europe but are silent on this side of the Atlantic because of the lack of regulations in Canada. In such a case, how would Corporate Responsibility be measured?

What are our home grown companies, such as Liberté, doing as regards packaging waste? In this case, the biggest environmental impact is the packaging content itself (i.e.: yogurt – dairy production) hence the packaging waste side of the equation should be easy to deal with so why are efforts to recycle and recover more of its packaging not done? One can applaud the efforts being done by Rona as regards its eco/ green products. But they too missed the boat on the recycling and recovery side. Their efforts are applauded when it comes to FSC and other initiatives. The challenge is to put those efforts in numbers, such as via yearly measurable and verifiable targets.

The market potentials are huge and the environment gains are even bigger. It’s time to show some leadership.

For more info:

Grace Barrasso

Green Buildings in Canada: new frontier — Bâtiments Verts au Canada: nouvelles frontières

As mentioned in a previous blog, commercial (i.e.: office buildings, shopping centers) and residential buildings (i.e.: single family dwellings, apartment buildings) have significant environmental impacts. In the U.S., it is estimated that commercial and residential buildings consume approximately 65 percent of all electricity generated, 12 percent of fresh water supplies and 40 percent of all raw materials, as well as contributing about one-third of all greenhouse gas emissions.

In Canada, buildings generate approximately 30 percent of total greenhouse gas emissions. The Human Development Report notes that “with 0.5 percent of the world’s population, Canada accounts for 2.2% of global emissions – an average of 20.0 tonnes of CO2 per person. These emission levels are above those of High-income OECD countries. If all countries in the world were to emit CO2 at levels similar to Canada’s, we would exceed our sustainable carbon budget by approximately 799 percent”.

The potential for efficiency gains via Green Buildings is therefore huge as it reduces or eliminates the negative impact on both the environment and the occupants. Despite numerous environmental, economic and social benefits, green building represents only a small fraction of new construction.

Challenges of the current marketplace: what are the barriers?

The “2030 Challenge”, which sets targets adopted by the Royal Architecture Institute of Canada and American Institute of Architects, aim to have  all new buildings be carbon neutral by 2030. Although this is technically feasible, important barriers exists which pose challenges to the targets.

Public policy at all levels of government is an important barrier but one where the most gains can me made through, for example, integrated use of building codes, zoning regulations, tax-based incentives, tax shifting, preferential treatment for green developers (such as fast-track permitting), demand-offset programs, preferred purchasing and government-supported research and development and educational programs.

The bulk of opportunities rests on the existing building stock.

Another significant policy opportunity in the United States (which can filter through to Canada) rests in the Kyoto mechanism of cap and trade. Already in the U.S. a number of public utilities are required to purchase certain amounts of renewable energy (which promotes the uptake of Renewable Energy Certificates – RECs).

Large corporations are taking notice. One of the leaders is Honeywell, which has developed a number of energy-saving technologies, helps building owners offset the purchasing price of these new technologies by the energy savings the owner will generate. This is an example of a successful flexible mechanism.

The Canada Green Building Council (CaGBC) also is aware of the huge opportunities. For example, the Leadership in Energy Efficiency and Design (LEED), and more specifically the third generation of LEED 2009, focuses on carbon markets. Although there are many critics of the LEED rating system and the U.S.GBC is working on improving the methodology, it remains a powerful tool. A more integrated strategy to get real estate developers/ owners, building/civil engineers, financial community, governments, etc., to switch-over would have to be developed. Once a strategy is developed, the next step would be to register the project(s), compile the various subsidies available, consolidate the information, and get an aggregator/player that will buy all of the small credits and sell them as one chunk to an institutional investor. The Building Owners and Managers Association (BOMA) also has a number of comprehensive programmes and the two competing but complimentary organizations should develop methods to broaden and enhance cooperation.

There would also be potential huge gains for the Montreal Stock Exchange to have “buildings” identified as one of the 17 sectors under the Clean Air Act.

The banking and financial community have a tremendous role to play as regards green mortgages, green retrofit requirements and the creation of a host of other incentives to drive the market for green buildings while pursing profitability goals.

The Bank of America has entered an agreement on carbon trading with the Chicago Climate Exchange (CCX). As an indirect emitter, the bank has entered into a voluntary but legally binding cap and trade program in order to offset its emissions from buildings (as a large building owner) and employee business travel. The objective for the bank is to buy allowances on the free market in order to be carbon neutral. A reduction schedule was established, using 2000 as a baseline, and 4 percent reduction was achieved in its first phase (2003-06). The incentive to embark on this initiative was the then-pending Lieberman-Warner bill (now dead), early action credit in a federal scheme (which was and continues to be accredited and audited), and a mindset of not if there will be a regulation but when. As a CCX manager commented during a telephone discussion: “making reductions today is cheaper than any future federal scheme”.

A carbon market minimizes the societal cost of cutting emissions by allowing entrepreneurs to find the cheapest way to curb greenhouse gas emissions.

The aggregation and quality of off-sets are important and these techniques can be more aptly deployed on the municipal level. Some key areas include direct emissions reductions, credits for transport benefits, fuel switching and proven renewable technologies usage, boiler efficiency and cooling upgrades, and finally, material substitution and improvement of building materials, including local regional materials. Private equity should be linked with construction equipment and engineering firms which will provide a better balance as regards risk management.

Many banks lack the understanding of overall benefits although some in Canada are ahead of the game, such as Vancity Bank in Vancouver and TD Bank.

The advantages for the greater uptake of green buildings can positively affect numerous industrial sectors, including cement, forestry, aluminum, and utilities (in the latter, many need to overcome their protectionist attitude).

A more hemispheric and holistic approach is required as opposed to regional standards and variations which can further erode an already fragmented carbon market. The essential elements for an effective policy and regulation as concerns the building sector would have to be determined. With the right vision, the potential rewards would be enormous.

Grace Barrasso

Ducks and Environmental “Crime”

In April 2008, the world’s image of a pristine Canadian environment –and Canadian migratory ducks in particular –was shattered when approximately 500 ducks landed and perished in a toxic tailings pond belonging to oilsands company Syncrude Ltd. Today Syncrude has been charged over the deaths of the ducks and, although the fine is low compared to company earnings, the company will be charged for breaking environmental laws. The more looming question is that Canada, and in this case the province of Alberta, continues to approve the discharge of toxic byproducts in a tailings pond. The extraction procedures produce large volumes of slurry wastes contaminated with naphthenic acids (NAs). Because of a “zero discharge” policy the oil sands companies do not release any extraction wastes from their leases and hence deposit them in these vast tailing ponds which were mistaken by the ducks to be regular ponds. The huge tailings containment area must ultimately be reclaimed, and this is of major concern to the oil sands industry. Toxic tailing ponds are industrial problems where no solutions exist. From a legacy point of view, a few questions come to mind, such as has the company put monies aside to grapple with this problem in the future? What if the acid/substances seep in the groundwater and pollute nearby lakes and streams?

My advice to Syncrude and other industrial players in the area would be to, first, prepare and conduct a full-scale biodiversity map of the surroundings in order to monitor and track/ remedy changes over time. This is part of any large-scale industrial due diligence process and Syncrude should have anticipated the migratory birds.

Small price to pay for a huge environmental disaster.

Air pollution and wood burning: the case of Montreal

The debate in Montreal on whether to use wood-burning stoves or not continues. The fact of the matter is that wood-burning stoves not only contributes to smog alerts in the city, it is hazardous to health and the environment. Forget about the romantic feel of wood burning in the fire; burning wood releases a cocktail of toxins in particular one called polycyclic aromatic hydrocarbons (PAHs), a known carcinogen. In industry, PAH emissions are highly regulated due to their known cancer risk, and therefore environment, health and safety standards are strictly applied. It is easy for governments to regulate a specific point source, such as iron and steel foundaries, but less easy to regulate a whole city and individual citizens. Action is required if the City of Montreal is serious about reducing smog alert days. Industry is taking action and therefore citizens should be doing the same.

Environmental liability – La responsabilité environnementale et la réparation des dommages environnementaux

I read with dismay the article in the Globe and Mail regarding how the people in the town of Shannon, Quebec contracted high levels of cancer due to the contamination of the water supply with the chemical solvent trichloroethylene (TCE) a “probable carcinogen”. The town is located near the Valcartier military base and a class-action suit has been launched by as many as 2,000 people. Who is reponsible? Answer: the federal government. The federal government, and more specifically the Department of Defense, knew about the TCE contamination as far back as 1978 but did not take any remedial action. SNC Technologies, who has also been named in the class-action suit, dumped daily 45-gallon drums of TCE over many years in large manufactured lagoons that eventually contaminated the nearby soil and underground water supply.

This is an environment and health disaster more so as the perpetrator is our government, the people who are supposed to protect the interests of their citizens and nation. Canada has a poor history of using the precautionary principle which can be described as follows:

“The precautionay principle is  a culturally framed concept that takes its cue from changing social conceptions about the appropriate roles of science, economics, ethics, politics and the law in a pro-active environmental protection and management”.

O’Riordan and Cameron further note the following on the precautionary principle:

“…it is a rather shambolic concept, muddled in policy advice and subject to whims of international diplomacy and the unpredictable mood over the true cost of sustainable living”. A few sentences later, the authors note: “Precaution continues to evolve because of the peculiar requirements of adjusting to global environmental stresses and strains”.

Due to the continuing and relentess destruction of our natural and physical environment (toxification of ecosystems, huge gamble with future climate, soil erosion, etc.), global environmental change stimulates the precautionary in three ways, according to O’Riordan and Cameron: (1) the requirement of collective action, (2) the requirement of burden sharing, and (3) the rise of global citizenship.

An example of this outcome is found in the judgement of the Supreme Court of Canada over St. Lawrence Cement Inc. in November 2008. In this case, St Lawrence Cement was ordered to pay a $15 million in damages to a Quebec City neighborhood (Beauport) even though the company was in environmental compliance.  The class action lawsuit concerned dust and noise pollution which, according to the company, met all EHS standards and regulations but nonetheless caused the neighboring resident’s proprty values to decrease. This confirms that a no-fault liability regime does exist in Quebec –as it exists in the European Union through the Directive on  Environmental Liability.

Under the EU Directive, all installations listed under Annex III and are subject to the Integrated Pollution Prevention and Control Directive (IPPC) are liable for environmental damage. In Canada, this is equivalent to those companies and installations listed in the National Pollutant Release Inventory (NPRI). Although Canada does not have an Environmental Liability Directive, the Supreme Court’s judgment has paved the way for the establishment of a similar regime.

So what is a company to do? From a risk management point of view, my advice would be to include the following:

– integrate sustainability at the core of the business

– re-examine EHS policies and procedures and look at ways to go beyond the current regulatory requirements

– biodiversity mapping around the operating facilities

– expand community relations and stakeholder engagement

– change the corporate mindset from a “need to do” to a “want to do”, especially for management

– employee education and training on environment across the company (incorporate this particularly within HR)

– outreach with customers and suppliers regarding products being used in the supply chain (substitute those hazardous and toxic substances as required under REACH)

As I write this post, “The Chemical Company” Dow comes to mind . A word of caution to Dow Agro Sciences where the company is seeking seeking a $2-million settlement from Canada over Quebec’s ban of the company’s weed killer 2,4-D (see Montreal Gazette article). In a recent e-mail exchange with Megan Durnford who released a film regarding the pesticide ban, she wrote that “Dow AgroSciences is concerned about its investment rights. What about Canadian childrens’ right to grow up in a safe environment? If Dow has its way, there will be a big chill on anti-pesticide activism across Canada”.

Forget about the Love Canal tragedy. Citizen action being undertaken today pale in comparison. Canadian industry should not ignore these tell-tale signs and start to live up to their obligations.

Watch this space…

A few comments to Mr. Flaherty on the green economy

The federal budget was released on January 27. Will this drive economic growth? Not clear. Stimulus? Not really, although it will just keep existing jobs in place. The Finance Minister forgot to mention how this will make Canada the most competitive country in the world. Or was that not an objective?

A bigger issue is that fewer than half of Canadians who are unemployed do not even meet the Unemployment Insurance criteria and therefore are not eligible for the new extending benefits to the program. Why hasn’t the government addressed this barrier to the UI program? But this is not what I wanted to talk about.

I will direct my comments to the environment component of the budget and, for starters, it is surprising that only $1 billion has been set aside (compared to spending in other areas, such as the tar sands subsidy for R&D in carbon capture and storage technology). Many are saying that it is a start but compared to Obama’s position where, as reported in The Globe and Mail on 1/27, page 1, the President “has launched a revolutionary reversal of America’s environmental and energy policy, demanding cleaner cars and committing tens of billions of dollars to encourage energy sovereignty for the United States”.  Energy and environment are at the core of Obama’s domestic agenda. Given that the President will be visiting Canada on February 19, what do the Conservatives have to offer in light of the US government’s agenda and talk of a North American emissions agreement?

Transformation to a Green Economy?

A quick read through the Budget 2009 has picked-up the following environment issues. As these issues may not be exhaustive, further comments/additions are welcome:

– Canada has committed to a 20 percent reduction of greenhouse gases by 2020. This is particularly the case for technologies that capture carbon dioxide at the point of production in industrial facilities and safely store it underground.  Budget 2009 will provide $1 billion over five years to support clean energy technologies.

Is this the same 20 percent reduction compared to the 2006 baseline where pollution was at its highest? Did Harper forget that Kyoto calls for a 1990 baseline? As well, are these absolute or intensity-based reduction targets? Let me guess… Furthermore, it appears that the Government is extending, once again, a helping hand to the oil and gas sector as regards developing CCS technology. The Canadian tar sands remains one of the most contentious environmental issue on a global scale and instead of addressing the problem, the Government has chosen to increase subsidizing the sector. Given Obama’s energy policy, the fact that the U.S. is currently our biggest market (which may change in the future), and that the oil sands project is widely unpopular both in Canada and the U.S. (see New York Times article),  the Government should have demonstrated other initiatives in the budget, such as increasing R&D in renewable energies and technologies (i.e.: wind), or establishing national targets for the recycling and recovery of metals (and thus creating a viable recycling industry in Canada which would mean less mining and saving more energy).

Are these measures sufficient to achieve a 20 percent reduction?

– Budget 2009 will provide $10 million in 2009-10 to sustain the Government’s annual reporting on environmental indicators.

As mentioned in a previous blog regarding sustainability indicators (see blog on January 12), it is a positive move to start reporting but targets need to be attached to the indicators, i.e.: targets to improve the state of the environment. Otherwise what’s the point of reporting for reporting sake?

– Nuclear technology is a proven and reliable source of clean energy. In Canada and around the world, energy authorities are investing in nuclear power to meet energy security and climate change goals. Budget 2009 provides $351 million on a cash basis to Atomic Energy of Canada Limited (AECL) in 2009-10 for its operations, including the development of the Advanced CANDU Reactor, and to maintain safe and reliable operations at the Chalk River Laboratories.

This is a divided issue and it is a pity that the Harper government believes that nuclear technology is a proven and reliable source of clean energy. A simple life-cycle assessment would demonstrate otherwise due to the immense radioactive waste produced by the nuclear industry (Blinky the three-eyed fish from The Simpsons comes to mind). Where and how is this waste currently being handled? USTs?  And is the investigation over the spill contamination of Chalk River, as was debated in the House of Commons in December 2008, over? Why is more money being pumped in these contentious industrial installations?

– Budget 2009 provides $37.6 million in 2009-10 to departments and agencies in support of environmental assessments, regulatory coordination, science, and Aboriginal consultations related to the Mackenzie Gas Project.

“Those who do not remeber the past are condemned to repeat it”.  See the Berger Inquiry for more details.

– Budget 2009 will provide up to $7.8 billion of funding through tax credits, grants, and loans as well as funding to provinces and territories to help stimulate the housing sector. Budget 2009 provides an additional $300 million over two years to the ecoENERGY Retrofit program to support an estimated 200,000 additional home retrofits.

How will this be monitored? How about giving tax credits to LEED certified new buildings?

There are many questions and, overall, the green component of the budget could have been stronger. Is this a missed opportunity for Canada? That remains to be seen…

Economics and quality of life: beyond ideology

We live in a market economy where spending is an essential feature of our lives and buying “stuff” is an economic indicator which measures progress. But it does not take into account happiness, respect, environmental degradation and poor air quality –just to name a few examples. As such, a team of experts in the United States and France are now working to examine how to expand the GDP concept to calculate these other important indicators. A few months, the International Herald Tribune published an article on this issue. A similar article also appeared in The Times of India. The European Commission, in partnership with its’ Directortate-General of the Environment and Statistics, have launched an initiative called Beyond GDP. Having worked in Europe for over ten years, it is obvious that the European continent is light years ahead of North America, and Canada in particular, when it comes to environmental well-being.

If we examine this closer and ask why this is the case, the answer is that in Europe, climate change and environmental issues are not divided along ideology. In North America, climate change is an ideological issue where the right believe that environmental protection equates to increased regulation and government intervention.  Furthermore, it is their belief that these concepts are being pushed by the Left/ liberals and therefore have launched a series of campaigns to confuse people on climate change. This is starting to change as people are not only understanding more and more the science, but are also actually seeing the changes occurring in their physical environment. As a result, 85% of Americans now agree  that global warming is a problem.

In Europe, the right (Conservatives in the UK, Christian Democrats in Germany) recognize that these are issues to tackle and the sooner, the better. Angela Merkl, the German Chancellor, has  aPhD in theoretical physics (therefore understands the science behind climate change) and works closely with the Potsdam Institute for Climate Impact Research to put in place targets for reducing GHG emissions. The Hadley Centre for Climate Prediction and Research was created by Margaret Thatcher’s Conservatives.

Back in Canada, there is a feeling that the Conservatives want to use climate change more as a political and military instrument. The rise of Arctic sovereignty issues, as seen during 2007, was a result of the Russians planting a flag on the Arctic seabed. The Danes and the Americans are also getting excited over the Arctic because there is no legal agreement on who owns this territory and hence the natural gas and oil resources which can become more accessible as glaciers and ice melts.

Canada is going about this issue the wrong way. We need to move away from our dependence on fossil fuels and we need to tackle climate change by addressing the causes and putting a plan together to reduce this dependence.