BSR at Cancun: What We’re Watching at the Climate Talks

The sixteenth annual UN climate treaty negotiations are underway in Cancun, Mexico, where my colleague Joyce Wong and I are looking for insights on how business can take the lead ahead of slow-moving governments.  We’re also investigating topics like how companies can best adapt to climate change and motivate people for more climate sustainable consumption.

We’ve been saying for some time that, while the international negotiations don’t directly impact companies, they have a huge indirect effect in that they guide countries’ national and local policies for energy, transportation, and land use. The overall impact of more effective climate policies should be overwhelmingly positive, because it will bring about more regulatory certainty and transparency that enable companies to productively invest in new technologies (not to mention avert potentially dangerous global change). But because climate policy is all encompassing, even positive developments will be disruptive, so it pays to pay attention.

At this point in the talks, there are clear unresolved issues, which include: (1) Finding agreed-upon principles and steps that will guide mitigation efforts following 2012, (2) Determining accountability for implementation of near-term mitigation targets and actions by the more than 70 countries making commitments in the Copenhagen Accord, and (3) Mobilizing the US$30 billion of long-term finance that countries have pledged.

However, as UN’s new climate chief, Christiana Figueras, has warned us, Cancun won’t have a “big bang” result. Decisions that are essential to the process—such as transparency protocols, a “shared vision” of collective emissions goals, and an agreement’s legal details—are likely a year or two off.

Here is what we’ll see if things go as expected over the next few weeks:

  • Country pledges in the Copenhagen Accord will be confirmed, with enhanced detail on key pieces of the spirit of the agreement and how countries will follow through, particularly on the funding pledge
  • An agriculture package launched, building on recent advances in forest protection mechanism and the already finished concise text for the agricultural sector
  • More agreement on handling of green-technology transfers
  • More clarity on the future of the climate negotiations through the UN; that is, whether and how the traditional, 200-country consensus approach, the recent movement with the Copenhagen Accord to focus on a small number of major emitters, and/or the private sector will create the most effective environments for global climate action going forward

What does this mean for business? I’ll cover that in detail in my next post. But I’ll give you a hint—it’s similar to what we said a year ago: For real results, look beyond Copenhagen Cancun.

First posted at BSR.

FTC’s New Anti-Greenwashing, Good-for-Business Green Guides

The U.S. Federal Trade Commission (FTC) has released its long-awaited draft guidance on environmental marketing. The so-called “Green Guides” tell companies how to prevent misleading customers—and avoid FTC actions against them.
Why now? The FTC says consumers are confused about environmental claims such as “sustainable” or “offset,” which lack consistent rules for usage. In response, the FTC’s proposed guidance does three things:
  1. Requires claims to be substantiated. Companies should communicate on specific issues for which they provide competent and reliable scientific evidence and avoid ambiguous umbrella terms like “green” or “eco-friendly.”
  2. Prescribes action on targeted issues. While the FTC leaves methodology mostly to companies, it advises on a few issues where deception is rife and solutions are particularly obvious. For example, the guides say that if companies generate renewable energy onsite and then sell their environmental attributes separately, they shouldn’t also say that they use that renewable energy themselves. Categories of specific advice include: certifications and seals, degradability, compostability, ozone-safe/ozone-friendly, recyclability, free-of/non-toxic, renewable materials, renewable energy, and carbon offsets. See the FTC’s cheat sheet.
  3. Defines where to tread carefully. The FTC acknowledges that some issues are difficult to provide blanket guidance on. For example, life-cycle assessments and ecolabeling are complex and require context, while the determination of carbon offset quality may be better handled by agencies with more expertise. In cases where the FTC “lacks sufficient information on which to base guidance,” it promises to analyze claims on a case-by-case basis.
What does this direction mean for business? I asked three individuals. Kevin Myette, director of product integrity at outdoor retailer REI, told me: “Guidance on green marketing claims has been extremely loose for years, and as a result, industry and marketers have operated virtually unchecked for too long. The FTC’s action to further define the rules is not a bad thing as they are only asking for the truth.”
Stanford Graduate School of Business Professor Erica Plambeck was similarly hopeful. She told me that the guidance “will increase incentives for retailers like Walmart to invest in the measurement of environmental performance and to provide detailed information about environmental performance to consumers. Transparency will lead to improvement.”
Finally, Dara O’Rourke, founder of the Good Guide—a product-rating initiative—said that more FTC involvement isn’t only good for consumers, but also for business. That’s because “the more there is transparency, the more the leading firms will do well in the marketplace. It’s a win for smart, thoughtful, progressive companies. This is basic ‘Econ 101’.”

What to do next: In the near term, leave any suggestions you have for finalizing the Green Guides below (with your name and affiliation) or contact me, and we’ll aggregate and submit your suggestions to the FTC before the comment period closes on December 10.

First posted at BSR.