ESG Notes, Vol. 13

By Blaine Townsend CIMA© CIMC©
June 26th, 2012

Nelson CapitalEnvironmental Forum readers, here is the latest version of our ESG (Environmental, Social, Governance) Notes compiled each week by Adam Berkowitz. If you have any questions or comments about Nelson Capital’s ESG notes, please leave them for Adam below or visit our website.

Another reason to check the label

The How2Recycle label, created by nonprofit GreenBlue’s Sustainable Packaging Coalition (SPC), will pop up on 10 companies’ products throughout the summer and into 2013. It’s already being used on two Seventh Generation products.

The label explains the recyclability of each component of the package, clearly stating the material each part is made from and adding special instructions if needed. The standard recycling symbol means a material is widely recycled, while the symbol with a slash through it means the material isn’t recycled. The addition of the phrase “check locally” means the material is recycled in limited areas. The label with the phrase “store drop-off” is for plastic bags, wraps or films that are accepted at many grocery and retail stores.

Other SPC member companies including Microsoft, General Mills, and Costco will begin introducing the label on some of their products. The label is partially based on the On-Pack Recycling Label in the United Kingdom, which also breaks down each packaging component and declares how commonly it’s recycled.

California Clean Tech leads the pack

Clean Edge, a research and advisory firm devoted to the clean-tech sector, has published its third annual State Clean Energy Index, in which the 50 states are ranked according to their adoption of clean energy initiatives. The clean energy indicators tracked by Clean Edge include total electricity produced by clean-energy sources, the number of hybrid and electric vehicles on the road, clean-energy venture and patent activity, and policy regulations and incentives.

For the third consecutive year, California is the top-ranked state. “During 2011, California led the nation in almost every measure of market expansion including new wind and solar capacity, deployment of hybrid and all-electric vehicles, and registration of new green buildings,” according to the report. “California’s most commanding example of leadership is its attraction of venture capital—California-based clean-energy startups brought in nearly $9 billion in investments over the last three years, enough to surpass the sum of activity in all 49 other states.”

The other states in the top five were Oregon, Massachusetts, Washington, and Colorado.

Retrofitted for sustainability

According to a press release by the Empire State Building Company, the Empire State Building has exceeded its year one energy-efficiency guarantee by five percent, saving $2.4 million.  The project establishes a commercial real estate model for reducing costs, maximizing return on investment, increasing real estate value, and protecting the environment. 

Once all tenant spaces are upgraded, the building will save $4.4 million a year, a 38 percent reduction of energy use that will cut carbon emissions by 105,000 metric tons over the next 15 years. The retrofit project focused on eight innovative improvement measures addressing core building infrastructure, common spaces and tenant suites. Improvement measures performed by Johnson Controls and Jones Lang LaSalle included the refurbishment of all 6,500 windows, a chiller plant retrofit, new building controls, and a web-based tenant energy management system.

The project partners developed a detailed engineering design and Johnson Controls guaranteed the energy savings through a $20 million performance contract. With performance contracting, savings in energy consumption from facility upgrades pay for the project over the term of the contract. If the savings are not realized, Johnson Controls pays the difference between the value of the measured and verified consumption and the guaranteed consumption under the contract.

The project has attracted new tenants including LinkedIn, Skanska, LF USA, Coty Inc., and the FDIC.

In the land of the rising sun, Prius sales on the rise

Prius, a niche oddity when it went on sale 15 years ago, jumped to the world’s third best-selling car line in the first quarter as U.S. demand and incentives in Japan turned the hybrid into a mainstream hit. Prius sales more than doubled as Toyota extended the name to a four-model “family” of vehicles at the same time that rebates and tax breaks in Japan are saving buyers the equivalent of $2,500 or more.

The company reported last week that since the start of Prius sales in Japan in 1997, Toyota has sold 4 million hybrid-electric vehicles worldwide, including 1.5 million in the United States. In the United States, typically Toyota’s top market for Prius, sales jumped 42 percent in the first quarter, and 56 percent through April to a record 86,027. U.S. sales of the model since its 2000 introduction, including the new variations, total 1.18 million vehicles, according to data compiled by Bloomberg.

California adopts new building energy efficiency standards

The California Energy Commission voted 4-0 on May 31st, to adopt new energy efficiency standards for residential and commercial buildings in California. This move will update the existing 2013 California Building Energy Efficiency Standards, also known as Title 24. As a result, new construction buildings in California as well as major alterations and additions to existing buildings will be amongst the most energy efficient in the nation when the new rules take effect on January 1, 2014.

According to the CEC estimates, Californians can expect energy savings of 25 percent for homes, 30 percent for commercial buildings, and 14 percent for low rise multifamily buildings. In addition to the building energy code improvements, the commission has been simultaneously working hard to make sure the appliances and gadgets we bring into our home and businesses are energy efficient as well.

Look no further than the pioneering TV efficiency standards recently set by the commission, which will reduce new TV energy use by up to 50 percent and save consumers more than a billion dollars annually in the form of lower electric bills.

Investors want more disclosure on “fracking”

At a press conference held last week, an international coalition of institutional investors with $1 trillion in assets under management called for the adoption of best practices by corporations engaged in hydraulic fracturing.

The coalition of 55 investment organizations is led by the Interfaith Center on Corporate Responsibility (ICCR) and the Investor Environmental Health Network (IEHN). Citing an Investor Guide published late last year by ICCR and IEHN, the investors identified the risks to companies engaged in the practice, which include moratoria and outright bans on fracking, the absence of systematic reporting on risk management, and growing investor unrest over the inability to fully evaluate the practices of companies.

Richard Liroff of IEHN told at the time of the Investor Guide’s publication, “There’s a moratorium in the Delaware River Basin, there’s been a moratorium in New York State, there’s a moratorium in the Province of Quebec. There is a ban in France, there is a moratorium in South Africa, and there is a moratorium in the New South Wales state in Australia.”

Sustainable investors and other concerned shareowners were quick to begin addressing the environmental and social risks of fracking, and by the time of last year’s proxy season shareowner resolutions addressing the practice were already gaining an average 40% support.

Sustainable seafood

Whole Foods recently became the first major North American retailer to stop selling unsustainable, or red-listed, seafood. The red listing, as determined by the Monterey Bay Aquarium and the Blue Ocean Institute, indicates that the fish species is being overfished or that current fishing methods harm non-target marine life or habitats. Fish that’ll no longer be available include: gray sole, skate, Atlantic cod (trawl-caught), Atlantic halibut, octopus, sturgeon, tautog, turbot, imported wild shrimp, and several species of tuna.

This information is essential to making an informed, sustainable choice, yet there are so many points along the chain of custody for things to get lost in translation or, worse yet, for fish to be marketed fraudulently. A recent report by Oceana uncovered significant mislabeling in fish sold in the Los Angeles area. Here are some of its key findings:

  • 55 percent of the samples collected (65 of 119) were mislabeled.
  • 87 percent of sushi samples were mislabeled, while 45 percent of those from restaurants and 31 percent from groceries were labeled incorrectly.
  • None of the 34 fish samples sold as “snapper” were actually snapper species as defined by the U.S. Food and Drug Administration, which lists 47 species that are permitted to be labeled as snapper.
  • Eight out of nine sushi samples labeled as “white tuna” were actually escolar, a snake mackerel species that carries a health warning for its “purgative” effects.

Washington D.C. lights the way for the LED

Lighting Science Group, one of the world’s leading LED lighting companies, today joined Washington, D.C. Mayor Vincent C. Gray and officials from the District Department of Transportation (DDOT) and the District Department of the Environment (DDOE) to celebrate the completion of the first phase of the relighting project that will save the city tens of thousands of dollars each year in energy costs.

Part of the Mayor’s larger vision for a Sustainable D.C., Lighting Science Group’s energy-efficient, long-lasting street lights have replaced old, inefficient lights and will cut the District’s annual carbon dioxide emissions by 719 tons.

The DDOE supported and funded the LED lighting project, under the U.S. Department of Energy’s Energy Efficiency and Conservation Block Grant program (EECBG). Eventually DDOT plans to install energy-efficient light fixtures throughout D.C., including all of its alleys, streets, bridges, tunnels and underpasses, pedestrian walkways, bike and running trails.

Nelson Capital Management disclaimer

Nelson Capital Management is a registered investment adviser and a non-bank affiliate of Wells Fargo & Company. The information in this report was prepared by Nelson Capital Management and expresses the opinions of its investment team unless otherwise noted.

This material is for general information only, is not suitable for all investors, and is not soliciting any action from any particular investor.

Information and opinions presented have been obtained or derived from sources we believe reliable, but we cannot guarantee their accuracy or completeness. Opinions represent NCM’s judgment as of the date of the report and are subject to change without notice.

Affiliates of Nelson Capital may issue reports or have opinions, which are inconsistent with, and reach different conclusions from, this report.

Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

Nelson Capital Management and/or its affiliates do not provide tax or legal advice. Please consult appropriate tax or legal advisors to determine how this information may apply to your own situation.

Additional information is available upon request.

This presentation is not an offer to buy or sell, or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this presentation may be unsuitable for some investors depending on their specific investment objectives and financial position.

Blaine Townsend CIMA© CIMC©

Blaine Townsend CIMA© CIMC©

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