Goldman Sachs Takes Big Gamble on Growth of Carbon Offset Market

The carbon offset market took a big jump today with the alliance between E+Co and Goldman Sachs (GS). Goldman has agreed to purchase the majority of E+Co’s carbon offset portfolio and help promote E+Co’s goal of providing investment capital and support services to small, clean energy business ventures in developing countries.

E+Co is a 15-year-old nonprofit investment company started as a result of a Rockefeller Foundation study on opportunities for developing clean energy businesses in developing nations. It provides business support services and capital to clean energy businesses in Africa, Asia, Europe and Latin America and the United States.

E+Co also assists clean energy businesses with the aggregation, validation, verification and creation of high quality GHG offsets, including those that will be sold to Goldman Sachs. The carbon financing provides the enterprises with additional capital that supports, sustains and helps clean energy ventures grow.

Goldman has made a big bet on the growth of the U.S. carbon offset market and on the continuing pressure to do something about climate change issues. Small-scale clean energy projects, while supporting important social and environmental benefits, can struggle to attract sufficient capital to assure success. The financial backing and business development services provided by E+Co assists small businesses in those developing nations to supply clean and affordable energy to those regions, efforts that simultaneously increase employment opportunities and reduce greenhouse gas (GHG) emissions.

Goldman’s move is just another subtle reminder that smart companies are preparing now for the advent of a U.S. carbon trading market. Even though companies must exercise prudence in order to survive this market correction, executives must be mindful that failure to address both current and future market shifts will put your organization at a competitive disadvantage.

We anticipate the mounting wave of clean energy activity will generate greater pressure for companies of all sizes to measure and monitor their GHG emissions and acquire those carbon credits Goldman Sachs will help E+Co create.

1 comment November 12th, 2008

Cost Cutting Benefits Driving Compliance with GRI Sustainability Guidelines

While reading CSR reports recently, I noticed a huge shift in both the kind of sustainability reporting that is done and the manner in which it is done. All of this bodes well for green initiatives, even in a down economy. This trend is further evidence that the sooner you implement an integrated platform for collecting and reporting data across the enterprise, the more money you can save.

First of all, there is now a widely-accepted framework for sustainability reports created by the Global Reporting Initiative (GRI) that enables the reader, or investor, to compare common data. GRI guidelines call for measurement and monitoring. Now in its third generation, companies have had a chance to get comfortable with them and stakeholder input has made the process much more user-friendly.

Nearly 200 leading global organizations comply with GRI guidelines, and that number is expected to grow rapidly. GRI compliance is “voluntary,” but it’s really not. You get the drift. Your company’s investor relations and corporate communications people already know that investors and customers are closely examining these reports…or the lack thereof.

The important takeaway about GRI guidelines is that it drives companies to watch what they’re doing in relation to their footprint, collect data about it and make that data transparent. Exactly how does a particular company emit greenhouse gasses? Through its product? Through its manufacturing process? Can that process be changed? Can equipment be retrofitted, or new equipment purchased that is more energy efficient? Answers to those questions are now available for public examination.

I’m going to guess that many corporate executives were only summarily aware of their unsustainable operating processes or the non-sustainable ingredients in their products, before that information became accessible for public viewing. It’s possible that decision makers at the head of the enterprise were not getting accurate, adequate and actionable data from their facilities. Furthermore, the data, and its implications, were difficult to comprehend. Once executives became aware of the implications of the data, they demanded appropriate action, as did their stakeholders.

In every report I’ve read, companies have reduced emissions and waste since they starting measuring. Almost all of them have set goals to continue on a more sustainable path. Some of them have established BHAGs (big, hairy audacious goals) like WalMart’s goal of zero waste, and equally ambitious target dates and accountability for executing them.

But here is something more important. Companies that execute on their sustainability goals are also reducing their operating costs. This is crucial because in business, at the end of the day, the goal is to reduce costs and make profits. Sustainability goals are not just nice, feel-good items; they’re necessary. Cutting costs, especially in these tough times, is a must.

Add comment November 10th, 2008

EHS Technology Can Cut Utility Costs, Improve Energy Efficiency

Remember the Chinese curse, ‘may you live in interesting times’? That adage definitely applies to corporate managers who are under mounting pressure to cut operational costs. As corporate revenues spiral downward, cost cutting pressures accelerate.

Increased demand for water and electricity is driving plans for expanded power generation and treatment plants, which are likely to drive higher utility costs. However, what alternatives are available if there’s no money to build new power plants or water desalinization facilities? It’s time for the enterprise to harness its collective ingenuity to develop improved resource management practices.

As a result, a growing number of companies are looking to save money by minimizing use of water and electric utilities. I got this idea from an article in Scientific American that shows how water and energy management are interconnected. Communities need water to produce electricity, which is needed to treat water.

The article says communities need to solve both of these problems at the same time. More businesses are contributing to the solution by developing programs that emphasize better resource stewardship.

Investing in EHS technology can empower your company to improve energy efficiency by cutting waste. EHS software can pay for itself in lower energy costs and lower compliance costs and risks. Companies would reap immediate ROI, improve environmental performance plus help defer the need for new utility plants, pushing potential cost increases further into the future.

Which leads me to another timely adage: You can’t manage what you can’t measure. Companies can’t efficiently manage their resources unless they have accurate and actionable information from an EHS software platform.

Add comment November 4th, 2008

Regulations Pose Potential Risks to the Enterprise

We have provided our customers with important updates to help them stay on top of key regulatory activities that could impact their operations. It’s worth noting that there has been increased activity recently, focused on GHG management, and not all of those proposals are coming from environmental regulators. Here are three examples, courtesy of Jeff Ladner, Director of ESS’ Climate Change Solution Practices:

Binding requirement to disclose climate risk for energy company

• “Under a first-ever binding and enforceable agreement with New York’s Attorney General Andrew M. Cuomo, Xcel Energy will have to disclose the financial risks that climate change poses to its investors in its annual SEC filings.” The deal also commits Xcel to a broad array of climate change disclosures including: projected increase in CO2 emissions from planned coal-fired power plants; strategies for reducing emissions; and corporate governance actions related to climate change.
• Important tip for you: This agreement is expected to set a precedent for climate risk disclosure requirements from the SEC.
• On a related note, 70 institutional investors are following up on earlier petitions to the SEC. The institutional investors are driving the requirement to disclose climate change risk for all public companies.

FASB proposing new standard for disclosing loss contingencies, including environmental liabilities

• The proposed accounting standard seeks to modify the rules currently governing loss contingencies [financial reserves]. The new amendment reflects the growing pressure that large investors are placing on FASB to force companies to come clean about their liabilities in the name of increasing transparency.
• If the rule remains unchanged, it will become effective for annual financial statements issued for fiscal years ending after December 15, 2008.

Climate related shareholder proxies

• You can now track climate/environmental related proxies demanding improved disclosure and transparency. Numerous companies with whom we are actively engaged are involved in addressing shareholder issues THIS YEAR. The file for the proxies is available for download.

Although we’ve been talking about these issues for many years, they seem to be accelerating, and the regulatory environment is changing daily. That’s why we continue to remind decisions makers that integrated information technology is an essential tool for companies that want to successfully navigate through today’s complicated regulatory environment.

Add comment September 12th, 2008