Disney and Biodiversity Conservation (Part 2 of 2): Nature-Based Climate Solutions

May 11, 2020 by MARK ASPELIN

“Landscapes of great wonder and beauty lie under our feet and all around us. They are discovered in tunnels in the ground, the heart of flowers, the hollows of trees, fresh-water ponds, seaweed jungles between tides, and even drops of water. Life in these hidden worlds is more startling in reality than anything we can imagine. How could this earth of ours, which is only a speck in the heavens, have so much variety of life, so many curious and exciting creatures?”

—Walt Disney (1901-1966)

To continue our look at Disney’s wildlife and biodiversity conservation efforts, today we’ll focus on the company’s “Natural Climate Solutions” strategy. Natural climate solutions refers to the protection of natural areas, such as forests, that provide food, shelter, and income for local communities, provide habitat for wildlife, and reduce the impact of climate change.

These natural climate solutions are part of a three-pronged strategy that the company is using to achieve its greenhouse gas emission reduction goals. This year (2020), Disney’s emission reduction goal is to reduce its net emissions by 50% compared to a 2012 baseline. The first two strategies that Disney pursues include efforts to reduce the use of fuels and to look for lower carbon alternatives. Disney then uses carbon offsets to go the rest of the way to accomplish its goals. These carbon offsets come in the form of forest offsets, with the reasoning that if we can slow the rate of deforestation then we reduce the amount of carbon emissions into the air.

To execute this strategy, Disney invests in scalable, science-based projects that use peer-reviewed protocols and result in verified reductions of emissions. Over the past decade, Disney has invested in 25 projects around the world that meet these criteria. Let’s take a look a one of these projects to better illustrate Disney’s natural climate solutions approach.

Alto Mayo Protected Forest

Disney has provided funding to Conservation International to implement a REDD+ project in nothern Peru. REDD+ is an acronym that stands for a mouthful of words that I can never seem to remember: Reducing Emissions from Deforestation and Forest Degradation ‘plus’ conservation, the sustainable management of forests and enhancement of forest carbon stocks. The project in the San Martin region of northern Peru is called the Alto Mayo Protected Forest (AMPF) project, which has been up and running for nearly a decade.

Alto Mayo Protected Forest is located in the San Martin region of northern Peru

The Alto Mayo Protected Forest project includes 450,000 acres of the Peruvian Amazon, and was designed up front with the goal of supporting both wildlife conservation and the local community.

There are significant deforestation pressures in the AMPF from illegal logging and unsustainable agricultural practices. As a result, the funds from Disney are used to support conservation agreements where the local residents agree not to destroy the forest in exchange for benefits such as technical assistance to improve crop yields, access to medicine, and support to improve school attendance. This approach reduces the community’s reliance on the forest as an economic resource while building local capacity for improved management of the AMPF.

Deforestation in the Alto Mayo Protected Forest

Since 2008, the Alto Mayo Protected Forest project has resulted in conservation agreements and benefits for 235 families, while reducing carbon emissions by over 6.2 million tons, which is equivalent to taking more than 150,000 cars off the road each year. Other benefits from the project include habitat conservation for wildlife as well as improved management of freshwater resources. The forest regulates freshwater sources in the region by acting as a natural filter for more than 240,000 people and the runoff from the forest replenishes local streams and provides irrigation to crops and water to the community.

Farmers have received training on sustainable farming methods and, as a result, have tripled their production yield. They have also seen an improvement in the quality of their products and have started earning more money from their premium, fair-trade, organic coffee, which Disney serves in some of its restaurants.

Deforestation in the areas has declined by 75% since 2008, which is good news for many of the region’s unique species, such as the critically endangered yellow-tailed woolly monkey.

Yellow-tailed woolly monkey (image from Wiley Online Library)

By funding natural climate solutions projects, Disney has contributed to planting over 9 million trees and protecting over 1 million acres of forest, while enabling the company to make good progress towards its greenhouse gas emissions goal. These natural climate solutions projects are good examples of how corporations can make strategic investments that support local communities through economic development and employment, while also protecting wildlife and conserving biodiversity and helping the organization meet its own goals.

Thanks for reading!

Mark

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Disney and Biodiversity Conservation (Part 1 of 2): Disney Conservation Fund

May 4, 2020 by MARK ASPELIN

“Landscapes of great wonder and beauty lie under our feet and all around us. They are discovered in tunnels in the ground, the heart of flowers, the hollows of trees, fresh-water ponds, seaweed jungles between tides, and even drops of water. Life in these hidden worlds is more startling in reality than anything we can imagine. How could this earth of ours, which is only a speck in the heavens, have so much variety of life, so many curious and exciting creatures?”

—Walt Disney (1901-1966)

I recently attended a webinar about the International Crane Foundation’s efforts to protect Siberian Cranes, where I learned that Disney has been a significant partner in their efforts.  Full disclosure: I used to work for the International Crane Foundation (ICF) as an Aviculture Intern at ICF’s captive breeding facility in Baraboo, Wisconsin, I was an ICF Associate for a crane and wetland conservation project in Kenya, and I’m a confirmed “craniac”.   

This partnership with Disney piqued my interest so I decided to take a closer look at what Disney is up to in the world of biodiversity and wildlife conservation.

In reviewing Disney’s website, sustainability reports, and other sources, it’s clear that the company is focusing a lot of its efforts on reducing greenhouse gas emissions, minimizing waste, and conserving water resources. Disney is also pursuing renewable energy sources to support its operations, such as the “Hidden Mickey” solar array (pictured above) that generates enough power to operate two of its four theme parks in Orlando, Florida. However, given my specific interest in biodiversity and wildlife conservation, I’ll be focusing on two other Disney initiatives: The Disney Conservation Fund (today’s post) and “Natural Climate Solutions” (next week’s post).

The Disney Conservation Fund was setup in 1995 to support nonprofit organizations in an effort reverse the decline of wildlife through a combination of research and community engagement. Twenty-five years later, the Disney Conservation Fund has now contributed $100 million to support a wide variety of nonprofit organizations and conservation efforts.

Many companies choose to donate money to worthwhile causes, but Disney has been particularly effective in how they package and promote their philanthropic efforts in the form of the Disney Conservation Fund.

In some cases, the company’s donations are linked to Disney films. For example, while launching Disney’s “The Lion King” movie, the company also launched a “Protect the Pride” global conservation campaign to help protect and restore the lion population across Africa. Disney contributed $3 million to the Wildlife Conservation Network’s Lion Recovery Fund and helped raise awareness about lion conservation issues.

In other cases, Disney’s philanthropic efforts get featured in a weekly blog post series called “Wildlife Wednesday” that is written by Scott Terrell, a veterinarian who serves as Walt Disney Parks & Resorts Director of Animal and Science Operations. For example, here is a link to the “Wildlife Wednesday” post that highlights Disney’s support of Siberian Cranes: “Wildlife Wednesday: Disney Helps Reverse the Decline of Siberian Cranes

Siberian Crane, Grus leucogeranus

Each year, in addition to awarding grants to organizations, Disney also recognizes individual “Conservation Heroes” for their commitment to conservation. Over the years, the list of Conservation Heroes has included famous conservationists such as Dr. Jane Goodall and celebrities such as John Cleese and Isabella Rossellini. However, in more recent years, the heroes tend to be names that you won’t recognize – they are people around the world who are playing an important role to advance conservation in their communities. For example, here is the list of the 2019 Conservation Heroes. Since its inception, Disney has recognized more than 180 Heroes from nearly 50 countries.

In addition to showcasing Conservation Heroes, each year The Disney Conservation Fund awards several million dollars to support a wide variety of non-profit organizations and causes. For example, in October of 2019, The Disney Conservation Fund awarded $6 million in grants to 80 nonprofit organizations around the world. The list of 2019 projects that were supported by the Fund includes an effort by the International Crane Foundation to conserve another one of my pals – the Sarus Crane.

Sarus Crane, Grus antigone

The International Crane Foundation is working to protect two of the last remaining refuges in Cambodia’s Lower Mekong Delta by researching optimal habitat maintenance conditions, enhancing understanding of the value of wetland habitats, and developing sustainable livelihoods that contribute to biodiversity conservation.

The Disney Conservation Fund is an excellent example of how corporate philanthropic efforts can be structured and packaged in a way that is good for biodiversity and wildlife as well as good for business.

Next week, we’ll take a look at Disney’s efforts to support natural climate solutions. I hope you’ll join me then.

Thanks for reading!

Mark

Cisco Systems and Biodiversity Conservation (Part 2 of 2): Preventing Overharvesting Through Technology

April 20, 2020 By Mark Aspelin

“We see massive opportunities for our innovation, expertise, and culture to play a role in finding solutions to some of society’s biggest challenges.”
—Chuck Robbins, Chairman and CEO of Cisco

Last week, we looked at two small-scale, local strategies that Cisco Systems uses to promote biodiversity conservation. Today, we’ll add a third strategy that Cisco is deploying at an international level to tackle the final letter of the HIPPO acronym of biodiversity threats – Overharvesting. In case you need refresher on that acronym, the acronym HIPPO represents the greatest threats, in order, to biodiversity: habitat destruction, invasive species, pollution, human overpopulation, and overharvesting.

“Overharvesting” is a broad term that refers to the harvesting of a renewable resource at a rate that is unsustainable. The term can apply to plants, fish stocks, forests, grazing pastures, and game animals. The motivation behind hunting, fishing, and plant collection may be for food, economic reasons, cultural reasons, or sport. Regardless of the reason, overharvesting implies that changes need to be made to current harvesting practices or else animal and plant populations may not recover. The result can be species extinction at the population or species level, and major ecosystem disturbances due to imbalances in predator–prey relationships.

Corporations have an important role to play in preventing the overharvesting of plants and animals. This applies to all companies—not just the ones in the fishery, pharmaceutical, and herbal-medicine industries that directly source plants and animals. One of the most effective ways that many companies, large and small, attempt to prevent overharvesting is to “green” their supply chain. Greening the supply chain is also an effective strategy for combating other biodiversity threats, such as habitat destruction and pollution.

However, greening the supply chain isn’t the only strategy that corporations pursue when it comes to preventing overharvesting. Some companies are leveraging their technology to help prevent illegal hunting of endangered wildlife.

In the case of Cisco, they are specifically addressing the issue of rhino poaching in South Africa. This might sound strange. After all, what the heck does a technology company in Silicon Valley have to do with hunting rhinos in Africa? In the case of Cisco, the company’s strategy is to showcase its technology by using it to combat a challenging, high-profile wildlife conservation issue.

dimension-data-hero-600x400

Cisco has partnered with Dimension Data, an IT consulting and technical support services company headquartered in Johannesburg, South Africa, on a “Connected Conservation” initiative that tracks rhino poachers at a game reserve in South Africa. Cisco and Dimension Data are using seismic sensors, drone cameras, thermal imaging, biometric scanning, and networking technology to track the movements of all humans who enter the reserve grounds. Park rangers use these new tools in combination with traditional sniffer dogs and trained soldiers on the ground to catch and deter poachers while minimizing disturbances to the endangered rhinos.

The results have been impressive so far. The Connected Conservation initiative has been successful in reducing rhino poaching at the South African reserve by 96%. To learn more about this effort, you can view a video about the Connected Conservation initiative on the Cisco website. Cisco and Dimension Data’s efforts are also included in a documentary called “Save This Rhino” that features proactive efforts in South Africa to save critically endangered rhinos.

This partnership between Cisco and Dimension data is not a one-off project. In fact, the two companies are soon celebrating the 25th anniversary of their strategic business partnership. Together they work to innovate and deliver services and solutions around the world, with projects in nearly 150 countries.

More and more companies are leveraging their products and technologies to develop solutions that directly help in the fight against overharvesting. As for the Connected Conservation initiative, this approach may soon be leveraged to protect other endangered species throughout the world. The main obstacle that prevents the spread of this technological approach is the US$ 1.5 million-per-year cost of the system. However, despite its hefty price tag, it’s an effective proof of concept that will hopefully prove to be effective in protecting other critically endangered species.

Thanks for reading and wishing you a Happy Earth Day this week!

Mark

Cisco Systems and Biodiversity Conservation (Part 1 of 2): Small-Scale, Local Solutions

April 13, 2020 By Mark Aspelin

“We see massive opportunities for our innovation, expertise, and culture to play a role in finding solutions to some of society’s biggest challenges.”
—Chuck Robbins, Chairman and CEO of Cisco

Cisco Systems (#64 on the Fortune 500 list) is a technology conglomerate that is known for its networking hardware, software, and telecommunication equipment. For those of you who work for large organizations, you may be all all too familiar with Cisco subsidiaries such as Webex and Jabber. And for those of you who don’t, you’ve probably heard of a thing called the internet … and it just so happens that 80 percent of the world’s web traffic currently travels securely across Cisco connections. In other words, Cisco Systems, and it’s 75,000 employees, plays a role in the day-to-day life for many of us and we may not even know it.

Another thing that we might not know about Cisco Systems is that the company consistently lands towards the top of the list in the various corporate sustainability rankings. Given the high marks that the company consistently receives from the sustainability community, I thought it would be worth checking out what Cisco is up to in the world of biodiversity conservation.

Like many sustainability leaders, Cisco is doing a lot of work to reduce greenhouse gases, leverage renewable energy sources, and adopt responsible sourcing and manufacturing practices. However, Cisco is also engaged in some interesting (at least to me!) small-scale efforts that have a positive impact on biodiversity and wildlife. In this week’s post, I’ll share two simple strategies that any company or homeowner can embrace. Next week, I’ll share a third biodiversity / wildlife conservation strategy that requires a bit more technology, something that Cisco has in spades.

Minimize impacts to local wildlife during breeding season

Many companies take steps to avoid certain types of operations or construction activities during the breeding season for birds and other animals in the area. This precaution helps prevent the destruction of active nests and reduces noise that can scare away or stress animals during the breeding season. In the case of Cisco Systems, several of the buildings at its San Jose, California headquarters are located near a protected area for American cliff swallows. To help protect American cliff swallow habitat during nesting season, Cisco closes its balconies on those buildings and doesn’t remove the mud nests until nesting season is over.

This image has an empty alt attribute; its file name is Cliff-Swallows-1024x683.jpeg
A pair of Cliff swallows (Petrochelidon pyrrhonota) building a nest on a wooden ledge, in the spring time, San Francisco bay area, California.

Easy right? Yes, this might be a small gesture, but it’s an indicator of the company’s desire to be a good corporate citizen. In the words of famed basketball player and coach John Wooden, “It’s the little details that are vital. Little things make big things happen.”

Wildlife Corridors

Wildlife corridors are often viewed as a useful tool to help maintain and restore biodiversity and wildlife populations on private and public land. A “wildlife corridor” is defined as any space that facilitates the movement of animals between core habitat fragments. The goal of a corridor is to maintain or improve the number and health of species in an area. This assumes that improving the connectivity of separate patches of a suitable habitat will allow isolated populations of animals to interbreed. Corridors may also help alleviate climate-change impacts on animal populations by enabling animals to move to a more suitable habitat as conditions change. From a human perspective, well-designed corridors help us avoid collisions that kill or injure wildlife and cause property damage and injury to humans.

The importance of wildlife corridors is perhaps best illustrated with an example of large carnivores, such as bears or mountain lions, which require large home ranges for food, den sites, and other needs. To maintain a sustainable population of 50 to 70 mountain lions, we need a minimum of 3,120 square miles; to maintain a sustainable population of 200 black bears, we need at least 780 square miles.

These large habitat requirements are significantly larger than most protected areas in the United States, and that’s where corridors can help. Corridors can link large patches of habitat and enable these large carnivores to move from one patch of habitat to another and support a sustainable population of these animals. We could also consider the option of having a smaller population of mountain lions or bears in a certain area, but such small populations of either species are unlikely to be sustainable in the long term.

Corridors come in a wide variety of shapes and sizes. Some corridors take the form of linear patches of land that directly connect two patches of habitat. Other corridors are irregular-shaped stepping stones of land that enable species to move from one patch of habitat to another, even when these stepping stones are not directly connected to the core patches of habitat. Corridors may be man-made, such as underpass tunnels or overpass bridges across a roadway, or they may take the form of natural corridors, such as rivers and mountain ranges.

Some corridors are designed with a regional scale in mind, such as a corridor that facilitates bird and butterfly migration from Canada to Mexico. Other corridors are designed at a local level, perhaps connecting local wetlands to help sustain populations of reptile or amphibian species. That’s where our second Cisco Systems example comes in. Cisco created three turtle tunnels under the highway at its Boxborough, Massachusetts location to provide safe passage for the migration of Blanding’s turtles and eastern box turtles, listed as International Union for Conservation of Nature and Natural Resources (IUCN) Endangered Species and IUCN Vulnerable Species, respectively. Cisco also installed curbing around the site to prevent migrating turtles from entering the roadway and parking areas.

This image has an empty alt attribute; its file name is Blandings-Turtle-1-1024x683.jpeg
The endangered Blanding’s turtle (Emys blandingii or Emydoidea blandingii) is a semi-aquatic turtle named in honor of American naturalist Dr. William Blanding (1773–1857).

We can design corridors that are intended to be used for brief periods to support seasonal migrations or the dispersal of young animals, or we can design corridors that are intended to be used on a permanent basis. Some species of plants, reptiles, and insects may even spend their entire lives in the corridor habitat.

This brings us to an important point. We’ve all heard the saying, “Beauty is in the eye of the beholder”, not to be confused with a similar truth that some of us might have “heard” in college: “Beauty is in the eye of the beer holder”. But I digress. This beauty perception concept also applies to corridors. A corridor that is attractive to one species may be a barrier to another (e.g., a corridor that is appealing to a coyote may not be appealing to a bear, amphibian, otter, or butterfly). It’s important to be clear on the target species that the corridor is intended to help before choosing a corridor design. Cisco focused on creating a corridor that was specific for Blanding’s turtles and eastern box turtles. Similarly, you might think of ways to support specific species in your area to help them move between core habitat fragments.

Next week, we’ll continue this discussion as we look at a third strategy that Cisco uses to protect wildlife and biodiversity. Hope to see you then!

Thanks for reading,

Mark

Walmart and Biodiversity Conservation (Part 2 of 2): Zero Net Deforestation

April 6, 2020 By Mark Aspelin

“Our world is increasingly transparent and we’re out to earn trust. When people shine a light on Walmart and see our decisions – the jobs we create, the activities in our supply chain – we want them to like what they see.”
—Doug McMillon, CEO of Walmart

To continue our discussion from last week’s post about Walmart’s approach to biodiversity conservation, today we’ll focus on Walmart’s goal of Zero Net Deforestation.

To determine how to tackle this goal, Walmart first reviewed studies and learned that certain agricultural commodities, such as palm oil, soy, cattle, and timber, were driving most deforestation in the world, so that’s where the company decided to focus its attention. Walmart then sought to address the major drivers of deforestation in its operation and supply chain for each of these commodities, which we’ll highlight below.

Palm oil. In 2010, Walmart set a goal to sustainably source any palm oil that is used in its global private-brand products. The company also encourages its national-brand suppliers to source palm oil from sustainable sources. By the end of 2015, 100% of Walmart’s private-brand palm oil was sourced sustainably in accordance with the certification standards of the Roundtable on Sustainable Palm Oil (RSPO), which included the use of the following supply chain models: Mass Balance, Segregated, Identity Preserved, and Credits. In 2017, Walmart decided to adopt a more rigorous approach of only using the RSPO criteria of Mass Balance or Segregated supply chain systems, or equivalent standards, by the end of 2020.

What the heck does all of that mean? Here are the RSPO definitions that should help make things a bit clearer:

  • Identity Preserved Supply Chain Model: Sustainable palm oil from a single identifiable certified source is kept separately from ordinary palm oil throughout supply chain.
  • Segregated Supply Chain Model: Sustainable palm oil from different certified sources is kept separate from ordinary palm oil throughout supply chain.
  • Mass Balance Supply Chain Model: Sustainable palm oil from certified sources is mixed with ordinary palm oil throughout supply chain.
  • RSPO Credits / Book & Claim Supply Chain Model: The supply chain is not monitored for the presence of sustainable palm oil. Manufacturers and retailers can buy Credits from RSPO-certified growers, crushers and independent smallholders. RSPO’s traceability system for certified palm products is called PalmTrace.

As reported in its 2019 Environmental, Social & Governance Report, the breakdown of Walmart’s Palm Oil supply chain models is as follows:

  • RSPO Identity Preserved: 0.02%
  • RSPO segregated or equivalent: 12.87%
  • RSPO Mass Balance: 47.38%
  • Palmtrace Credits: 39.72%

In other words, Walmart has some work to do in order to transition away from the use of Palmtrace Credits (~40% of its supply chain methodology in calendar year 2018) in order to accomplish its revised 2017 goal. As result, Walmart is now looking for ways to move towards sources of certified, sustainable palm oil that have been physically verified. The company is also determining how it can best support an industry-wide movement as the industry transitions to 100% traceability for sources of palm oil.

Beef. In 2016, Walmart achieved its goal to only source “sustainable beef” that is not associated with deforestation of the Amazon rainforest by getting 100% of its Brazilian beef suppliers to participate in Walmart’s Beef Risk Monitoring System. To monitor its supply of beef, Walmart created a geospatial monitoring system that tracks suppliers, volumes, and over 75,000 registered farm locations, and the data are combined with maps that show where deforestation is taking place. The tool then analyzes Walmart orders to ensure that no beef comes from deforested areas. Beef suppliers are trained to manage geographical information at their slaughterhouses and input the coordinates of their suppliers’ farms into the system. The company is now working to expand the program to include cow-calf operations to address the risk that cattle might be traded from high-risk ranches to approved ranches, and the risk that ranchers who contribute to deforestation may re-register their operations under different names. As the program expands, other sensitive biomes outside of the Amazon will be included, such as the Cerrado tropical savanna ecoregion of Brazil.

Soy. Walmart is working with its supply chain and the Consumer Goods Forum to acquire soy through deforestation-free channels. Walmart supports an indefinite extension for the Soy Moratorium in the Amazon region of Brazil, which has helped reduce the amount of Brazilian soy that comes from deforested areas from 30% to 1%. The company also supports the expansion of the Soy Moratorium to other parts of Brazil where a similar approach is needed.

Pulp and paper products. To address deforestation through logging for timber, Walmart is working to reduce packaging materials and ensure that pulp and paper products are purchased from sustainable sources. The company set a goal of zero-net deforestation associated with its private brand products and is encouraging its national-brand suppliers to set similar goals. Walmart uses a Sustainability Index to measure and track supplier performance based on the percentage of virgin fiber. For the calendar year 2018, the percentage of private-brand pulp and paper volume certified by the Forest
Stewardship Council, Programme for the Endorsement of Forest
Certification, Sustainable Forestry Initiative, or is using recycled content, was reported to be 91%.

To help promote transparency and traceability across its supply chains, in 2017, Walmart joined the World Resources Institute and 20 other companies to launch Global Forest Watch Pro. Global Forest Watch Pro is an online platform that provides companies, banks and other stakeholders with data and tools for monitoring global forest loss due to the production of key commodities such as palm oil, soy and Brazilian beef. The online platform’s algorithms leverage the use of cutting-edge satellite technology and cloud computing to provide real-time information about where and how forests are changing around the world.

I hope you enjoyed this two-part overview of Walmart’s approach to biodiversity conservation. I’ll be back next week with a new topic or case study that highlights the role of corporations in protecting our planet’s biodiversity.

Thanks for reading!

Mark

Walmart and Biodiversity Conservation (Part 1 of 2): Acres for America


March 30, 2020 BY MARK ASPELIN

“The doubters got on board quickly when they saw that our P & L could benefit while we were doing good work for the environment. A constant theme for us in engaging our associates and stakeholders has been shared value: the need to integrate sustainability into business, not treat it as a separate effort, and to ensure we deliver business value as well as value for the environment and society.”
—Doug McMillon, CEO of Walmart

After taking a break from writing blog posts for awhile, I’ve decided to resume writing once again, although I’ll primarily be posting to my Corporationsforbiodiversity.org site.   

I’ll be deviating a bit from the format of my earlier company profiles. Rather than cover every strategy related to biodiversity for each company, I’ll instead focus on just one or two strategies that have the most direct, tangible benefit to biodiversity / wildlife conservation, or strategies that are relatively unique.  I’m hoping that strategy will enable me to get a new post out each week.  Let’s start things off by looking at Walmart’s approach to biodiversity.

With 275 million weekly customers, it’s a safe bet that most of us have been to Walmart at one time or another. Walmart is the largest company in the world, with over US$ 514 billion in total revenue, and a staggering 2.2 million associates spread across 11,300 stores in 27 countries. The Walmart brand includes Walmart Supercenters, Walmart Neighborhood Markets, Sam’s Club (United States, Mexico, Brazil, and China), ASDA (England), and Seiyu (Japan). This behemoth’s supply chain includes over 100,000 suppliers from around the world … no small task to manage. Walmart clearly posts some jaw dropping figures in terms of it’s scale, but how does Walmart stack up in the world of biodiversity conservation?

Pretty darn good! While Walmart neglects to mention the word “biodiversity” in its 2019 Environmental, Social & Governance Report, the Company is doing a lot a great work the directly and indirectly benefits biodiversity. In fact, Walmart has become a leader in many aspects of corporate sustainability. So much so, that I ended up dedicating a whole chapter to Walmart’s conservation efforts in my book Profitable Conservation: Business Strategies that Boost Your Bottom Line, Protect Wildlife, and Conserve Biodiversity.

In the case of Walmart, it has a variety of robust environmental goals associated with climate change and waste, such as the following:

  • By 2030, work with suppliers to reduce or avoid carbon dioxide equivalent emissions from by 1 gigaton from global value chains.
  • Be powered by 50% renewable sources by 2025.
  • Achieve zero waste to landfill from its own operations in key markets, including the U.S., U.K., Japan and Canada by 2025 in accordance with the Zero Waste International Alliance guidelines.
  • Achieve 100% recyclable, reusable or industrially compostable packaging in all Walmart private-brand products by 2025.

… and the list goes on.

The two goals that I’ll focus on in this post and next week’s post directly aim to address the biodiversity threat of habitat destruction / fragmentation:

  • Conserve 1 acre of land for every acre developed by Walmart stores in the U.S.
  • Achieve zero net deforestation by 2020.

This week’s post will address Walmart’s goal to conserve one acre of land for every acre developed by Walmart stores in the United States. To meet this goal, Walmart has adopted a voluntary compensatory strategy through its Acres for America Program. Here is some background on that Program.

In 2005, Walmart partnered with the National Fish and Wildlife Foundation (NFWF) to establish the Acres for America program “to conserve lands of national significance, protect critical fish and wildlife habitat, and benefit people and local economies.”

Acres for America supports biodiversity and natural-resource conservation through four program priorities:

  1. Conserve critical habitats for birds, fish, plants, and wildlife.
  2. Connect existing protected lands to unify wild places and protect migration routes.
  3. Provide access for people to enjoy the outdoors.
  4. Support local economies that depend on forestry, ranching, and wildlife.

The results have been impressive. Walmart started with a goal to conserve one acre of wildlife habitat for every acre of land developed by Walmart stores but has achieved closer to a 10:1 ratio of conservation to development.

To provide an example of how Walmart and the NFWF leverage those funds each year, let’s look at how those funds were allocated in 2019. In November of 2019, the Acres for America program awarded $3.6 million in grants, and leveraged an additional $70.2 million in matching contributions, to conserve 70,300 acres in Colorado, New Mexico, New York, Oregon, Washington, Iowa, and Kansas. The funds were allocated to support the following seven projects:

  • The Trust for Public Land and The Nature Conservancy will permanently conserve a 19,200-acre mountain property (Fisher’s Peak Ranch) located south of Trinidad, Colorado, which will become Colorado’s newest State Park. The property links intact habitat between the Eastern Plains of Colorado and the Western Slopes of Colorado and the Rocky Mountains. Grant amount $650,000.
  • The Iowa Department of Natural Resources will protect an 834-acre tract of untilled prairie and oak woodland in the Loess Hills of western Iowa just outside Sioux City. This area will become a State Wildlife Area within a 10,000 acre conservation area, ensuring that the grassland and savanna woodland species are properly managed. Grant amount $270,000.
  • Ranchland Trust of Kansas will partner with the USDA Natural Resources Conservation Service, state and local partners to create a perpetual conservation easement on 9,250 acres of grasslands on the Ballet Ranch in the Red Hills ofKansas. The conservation easement will provide suitable habitat for species of concern, such as cave-dwelling bats, lesser prairie-chicken, plains minnow, longnose snake, and numerous grassland-obligate and migratory birds, while sustaining local economic viability as a working cattle ranch. Grant amount $650,000.
  • In eastern New Mexico, the Trust for Public Land will work with the Bureau of Land Management to acquire an 8,914-acre Cañon Ciruela property as an addition to the Sabinoso Wilderness, while will result in over 30,000 acres of protected wilderness. Grant amount $450,000.
  • In New York, the Nature Conservancy will establish a freshwater preserve at Follensby Pond in Adirondack Park, protecting 14,700 acres that are adjacent to the 275,000 acre High Peaks Wilderness Area. Grant amount $650,000.
  • In Oregon, the Trust for Public Land will work with federal, state and local partners to acquire the 7,500-acre Spence Mountain property on the shore of Upper Klamath Lake, providing critical fish and wildlife habitat. Grant amount $435,000.
  • In Washington, the Columbia Land Trust, in partnership with the Yakama Nation and federal and state agencies, will acquire 9,900 acre Mount Adams-Klickitat Canyon Forest in an effort to protect and restore the Wild & Scenic Klickitat River and its watershed. The canyon will connect federal and tribal protected habitat with thousands of acres of state and private conservation lands, providing critical habitat for 36 federally and state-listed wildlife species. Grant amount $500,000.

Walmart’s Acres for America program should not be confused with a traditional biodiversity offset program. Walmart’s voluntary compensatory action approach differs from a formal biodiversity offset in one important way: there’s no link between the actual biodiversity impacts of the company’s development activities and the biodiversity gains from purchasing land for conservation.

In other words, biodiversity offsets take the Walmart “acres-for-acres” conservation approach a step further by formally requiring no net loss of the biodiversity value of the land. Ideally, the goal is to obtain a positive net gain of biodiversity value from the transaction. The downside of biodiversity offsets is that they are more complex and expensive to implement. The costs and resources required to do a biodiversity offset can make traditional philanthropy and “acres-for-acres” conservation approaches more appealing and a better fit with stakeholder expectations, depending on the company, industry, and location.

In the case of Walmart, it’s very likely that the conservation value of the land purchased through the Acres for America program is greater than the conservation value of the land that Walmart is developing for its stores. As a result, the company chooses not to assess the type, scale, or amount of biodiversity lost and gained from each development project and land-conservation purchase. Instead, Walmart simply looks at the overall footprint of land developed for new stores and ensures that the company protects at least that many acres of high value habitat for conservation.

The results tell a compelling story. As of 2019, the Acres for America program has protected nearly 1.5 million acres, bringing it closer to its goal of conserving 2 million acres by 2025, and it has become the leading public-private land conservation partnership in the United States. It’s an effective approach that many other companies could benefit from imitating.

Well that’s all for today. Next week, we’ll look at another effective strategy that Walmart is putting into place that addresses the biodiversity threat of habitat loss: zero net deforestation.

Thanks for reading!

Mark

Shell Oil Corporation’s Profitable Conservation Strategies for Biodiversity and Wildlife Conservation

August 20, 2018 By Mark Aspelin

Today we’ll look at the profitable conservation strategies for the #5 company on the Fortune Global 500 list – Royal Dutch Shell.  Headquartered in The Hague, Netherlands, Shell has 86,000 employees that are located in over 70 countries around the globe.  These employees support the company’s 43,000 gas stations and 23 oil refineries which produce 3.6 million barrels of oil equivalent for 30 million customers each day.

Shell’s operations are focused on the production, refining, and marketing of oil and natural gas, which is summarized nicely in the graphic below from Shell’s 2017 sustainability report.

Shell CEO, Ben van Beurden, states that if the Company wants to be the best, it must focus on four, equally-important things:

  • Create value for its owners, the shareholders
  • Be the most valuable company in its industry
  • Make its portfolio fit for the future in terms of carbon intensity
  • Create shared value with society

For that last point, create shared value with society, Ben van Beurden elaborated in an interview with the following: “We have to be seen by society as a force for good. This may mean different things to different people.  It may mean we should invest in communities living close to our operations, do social investments.  But it’s not enough.  Create employment, pay taxes, develop local supply chains, help build institutions, and so on.  True, all important, but not enough.  What we need to do on top of all that is to go back to our core mission: to provide more and cleaner energy solutions.  We must be seen as a force for good because we deliver better products that society really needs.  And that’s why I reject the comparisons that people make of oil and tobacco, and oil and weapons.  With those industries you cannot argue that the product drives something intrinsically good.  It doesn’t drive societal prosperity.  It doesn’t drive improvement in life.  Ours does. But we have to demonstrate that it does, while always acting to reduce environmental impact.”

For its 2017 Sustainability Report, Shell used GRI version 4 reporting guidelines.  In selecting content for its Report, Shell engaged with a variety of stakeholder groups to identify which topics to include in the Report, which topics to include on the company’s website at shell.com, and which topics to exclude.  Note that the topic of biodiversity was identified as a topic to include in the Company’s Sustainability Report.  Here’s a diagram that shows the criteria that Shell uses to determine which topics to include and exclude from the company’s Sustainability Report and website.

Now that we have our introductions out of the way, let’s see what profitable conservation activities Shell is engaged in across the world, particularly in the areas of biodiversity and wildlife conservation.  In this post, I’ll focus on the various activities that Shell is pursuing to address the following four major threats to biodiversity and wildlife: habitat destruction, invasive species, pollution, and overharvesting.  Get comfortable, because this is going to be a long post … Shell is engaged a wide variety of activities related to biodiversity and wildlife conservation.

Habitat Destruction

To address the biodiversity threat of habitat destruction, Shell follows the strategies of avoidance, minimization, restoration, and biodiversity offsets.  In the words of the Sustainability Report, “In our projects and operations, our primary aim is to avoid impacts on biodiversity and ecosystem services.  Where avoidance is not possible we aim to minimize our impact.  Where our operations have affected biodiversity and the communities who rely on biodiversity for their livelihoods, we take measures to help restore habitats or ecosystems.  We look for opportunities to make a positive contribution to biodiversity conservation in the communities where we operate.”  Let’s look at some examples of each of these strategies.

Avoidance: Avoidance refers to the strategy of avoiding development or operations in areas with a high-quality habitat for species that are classified as endangered, threatened, or vulnerable to extinction.  An avoidance strategy may also be extended to high-quality habitat for species that are classified as “species of concern,” depending on the health of those populations and the degree and types of potential impacts.  Since 2003, Shell has made the commitment that it will not explore for, or develop, oil and gas resources in natural World Heritage Sites.  In addition, Shell conducts biodiversity assessments for any new major project or large expansions to existing operations, with the aim of avoiding and minimizing impacts on biodiversity and ecosystem services.  

Minimization: Minimization refers to a broad range of strategies that are designed to reduce the duration, intensity, and extent of impacts to habitat for biodiversity and wildlife.  There are a wide variety of different minimization strategies to consider – anything from implementing policies and procedures to creating wildlife corridors, installing green roofs, restoring land, and pursuing biodiversity offsets or other voluntary compensatory actions.  Here are some of the key minimization strategies that Shell has implemented, along with examples.

Policies and procedures: Shell has a variety of policies and procedures in place to minimize impacts to biodiversity, particular in areas that are designated as critical habitat.

Creation of a Biodiversity Standard: In 2001, Shell became the first company in the energy industry to launch a biodiversity standard to guide its operations.  The Company’s biodiversity standards are designed to be aligned with relevant international standards, including those set by the International Finance Corporation.  The standard reads as follows:

“We recognize the importance of biodiversity. We are committed to work with others to maintain ecosystems, to respect the basic concept of protected areas, and to seek partnerships to enable the Group to make a positive contribution towards the conservation of global biodiversity.  Shell companies will conduct environmental assessments, which include the potential impacts on biodiversity, prior to all new activities and significant modifications of existing ones; and bring focused attention to the management of activities in internationally recognized hotspots, including the identification of, and early consultation with, key stakeholders.”

Conduct biodiversity assessments: As we mentioned in the Avoidance section above, Shell performs biodiversity assessments for any new major project or large expansions to existing operations, with the aim of avoiding and minimizing impacts on biodiversity and ecosystem services.  These biodiversity assessments are part of a larger environmental assessment that considers the potential environmental impact of its activities and how local communities may be affected before, during and after operations.

Develop biodiversity action plans: Before Shell begins a project in a sensitive environment, the Company creates a biodiversity action plans to help it identify and minimize impacts during planning, operations, and decommissioning.  Biodiversity action plans include measures that are taken to restore habitats or ecosystems that are located near the Company’s operations.  For example, to minimize the impacts of a new pipeline in Ireland, Shell decided to construct a pipeline tunnel under an estuary to minimize the impact on land and water habitats.  Below is a photo of the landscape in Ireland that the pipeline crosses. 

Publicly report on activities in IUCN Category I-IV protected areas: Shell looks for opportunities to further improve the way it operates in International Union for Conservation of Nature (IUCN) Category I-IV protected areas, and areas of high biodiversity value.  For your reference, here’s a brief summary of the IUCN protected area categories and definitions:

Category Ia: Strict Nature Reserve.  Category 1a protected areas are strictly protected areas set aside to protect biodiversity and geological/geomorphical features, where human visitation, use and impacts are strictly controlled and limited to ensure protection of the conservation values.

Category Ib: Wilderness Area.  Category Ib protected areas are usually large unmodified or slightly modified areas, retaining their natural character and influence without permanent or significant human habitation, which are protected and managed to preserve their natural condition.

Category II: National Park.  Category II protected areas are large natural or near natural areas set aside to protect large-scale ecological processes, along with the complement of species and ecosystems characteristic of the area, which also provide a foundation for environmentally and culturally compatible, spiritual, scientific, educational, recreational, and visitor opportunities.

Category III: Natural Monument or Feature.  Category III protected areas are set aside to protect a specific natural monument, which can be a landform, sea mount, submarine cavern, geological feature such as a cave or even a living feature such as an ancient grove.  They are generally quite small protected areas and often have high visitor value.

Category IV: Habitat/Species Management Area.  Category IV protected areas aim to protect particular species or habitats and management reflects this priority.  Many Category IV protected areas will need regular, active interventions to address the requirements of particular species or to maintain habitats, but this is not a requirement of the category.

Category V: Protected Landscape/ Seascape.  Category V is a protected area where the interaction of people and nature over time has produced an area of distinct character with significant, ecological, biological, cultural and scenic value, and where safeguarding the integrity of this interaction is vital to protecting and sustaining the area and its associated nature conservation and other values.

Category VI: Protected area with sustainable use of natural resources.  Category VI protected areas conserve ecosystems and habitats together with associated cultural values and traditional natural resource management systems.  They are generally large, with most of the area in a natural condition, where a proportion is under sustainable natural resource management and where low-level non-industrial use of natural resources compatible with nature conservation is seen as one of the main aims of the area.

Partner with conservation organizations: Shell has formed active partnerships with conservation organizations such as the International Union for Conservation of Nature (IUCN),  The Nature Conservancy, Wetlands International, Earthwatch, and the National Fish and Wildlife Foundation to better understand how to protect areas that are rich in biodiversity (critical habitats), develop nature-based solutions to address the global climate challenge, and to engage employees in conservation projects.  Shell has been partnering with environmental NGOs for nearly twenty years.  As Shell points out on its website: “Since 1999, Shell U.S. has contributed to 19 key environmental NGOs to protect more than 13 million acres of wetlands, converted old rail lines into hiking trails in state parks, cleaned shoreline with Shell volunteers removing 600,000 pounds of debris, and conserved more than 1.8 million acres of land.”  Here are some examples:

The International Union for Conservation of Nature: Shell has partnered with IUCN on more than 50 initiatives over the past 15 years, with an emphasis on conserving and managing biodiversity in its operations and improving the way that Shell manages protected areas.  For example, Shell and IUCN have been working together since 2004 to minimize the impacts on western gray whales at Shell’s operations in Sakhalin, Russia by taking steps such as rerouting a pipeline away from the feeding grounds of the whales.  Here is a photo of an oil and gas platform off Sakhalin Island.

The Nature Conservancy (TNC): Shell has partnered with TNC for about 15 years on a variety of efforts.  Here are a few examples:

Natural climate solutions: Shell is working with TNC to better understand how investing in natural climate solutions, such as large-scale reforestation, can help address the global climate challenge.  These projects also provide Shell with carbon credits to offset emissions that it generates elsewhere.

Online tool to monitor migratory species: In 2017, Shell partnered with TNC to launch an online tool to monitor migratory species in the Gulf of Mexico and the Caribbean Sea, both areas where Shell has operations.  This monitoring tool provides information on migration patterns and possible threats to fish, sea turtles, mammals, and birds.   

Reducing the cost and rate of erosion of pipelines:  In the Louisiana, Shell and TNC are working together to develop nature-based approaches to reduce the cost and rate of erosion along pipelines in the Louisiana coastal zone.  To accomplish this, Shell and TNC plant vegetation and build oyster reefs to create living shorelines that restore wetlands, improve coastline resilience, and enhance local biodiversity.

Mapping biodiversity of watersheds in Colombia: In 2015, Shell and TNC completed a pilot project to map critical biodiversity in three watersheds of the central Magdalena River Basin (pictured below) in Colombia in an effort to better understand the potential impacts that Shell’s operations may have on local biodiversity.  

Wetlands International: Shell has partnered with Wetlands International for about 10 years to identify ways to avoid or minimize biodiversity impacts, as well as identify opportunities to make positive contributions to wetland biodiversity and the services it provides to local communities.

Creating a biodiversity monitoring plan for Majnoon: Majnoon is Arabic for “crazy”, and in this case it refers to the large amount of oil in the Majnoon field in southern Iraq.  The field covers nearly 500 miles and is estimated to contain 38 million barrels of oil, making it the third largest oil field in the world.  The Majnoon field also happens to overlap with the Mesopotamian Marshlands (pictured below), the largest and most important wetland area in the Middle East, with more than 200 species of birds and at least 40 species of fish.  Shell partnered with Wetlands International on a project that aims for sustainable oil field development and a positive contribution to marshland restoration, people’s livelihoods, and the institutional strengthening of Iraq.

Earthwatch Institute: For nearly two decades, Shell has partnered with Earthwatch on an employee engagement program called Project Better World.  Through this volunteer program, Shell employees can take part in scientific expeditions at different locations around the world and then share their knowledge with colleagues and generate increased awareness of environmental and sustainability issues.  Over the past 19 years, over 1,000 employees have participated, contributing around 49,000 work hours to environmental research.

The National Fish and Wildlife Foundation, and other conservation organizations in the US:  Over the past 20 years, Shell has funded around 270 projects with various conservation partners in the US, including the National Fish and Wildlife Foundation, to support the protection, restoration and management of habitats in the Gulf of Mexico.  These projects included the use of wetlands, reefs, marshes, and outer island barriers to reduce coastal erosion.  In 2017, Shell joined the Killer Whale Research and Conservation Program, a public-private partnership to help the killer whale population recover in the Pacific Northwest by supporting projects that improve food supply and the quality and management of habitats.

Academic partnerships to protect oceans:  Shell acknowledges that the biodiversity of the world’s oceans is at risk from a range of factors, including overfishing, climate change, and pollution from plastics.  Shell gathers scientific data and knowledge from local communities to better understand the marine ecosystems in which it operates, and trains people in the community to help protect marine mammals in countries where the company operates.  For example, in the Gulf of Mexico of the U.S., Shell collaborates with academic scientists by providing them with Shell’s expertise and technology – such as remotely-operated vehicles – to explore the depths of the ocean.  This has led to sightings of rare species, including the discovery of what is thought to be a new species of octopus.

Green Infrastructure

Creating green infrastructure: As mentioned in the partnerships section with The Nature Conservancy, Shell looks for opportunities to integrate natural systems into the design of its projects.  For example, Shell provided funding for the Coalition to Restore Coastal Louisiana to support an effort to collect hundreds of tons of oyster shells from local restaurants to help rebuild oyster reefs and restore the state’s coastline.  The oysters are clumped together to form reefs which trap sediment and help create shallow marshes and estuaries that serve as nurseries for one of the country’s largest commercial fisheries and a refuge for more than 5 million migratory birds.  Humans benefit from this effort as well, since the reefs help shield homes, businesses, and ports from storms on the Louisiana coast.  Below is a photo of collected oyster shells from the Shell-funded program to help restore Louisiana’s eroded coastline.

Green Building

Site SelectionIn Pennsylvania, Shell decided to build a petrochemicals facility on an existing industrial site that was used for about 100 years for zinc smelting.  Shell  decommissioned the old plant, recycled old equipment and waste products, and covered the site with special industrial liners and caps to protect groundwater, surface water, and construction crews.  When areas of water on-site could not be protected, Shell created wetlands elsewhere that have now grown into healthy habitats for fish and vegetation.  After consulting with local residents and community leaders, Shell also planted native trees along the nearby river to improve the appearance of the site.  Shell is investing $80 million to mitigate the environmental impacts of converting the old zinc smelting site into a plant that will produce polyethylene.

Rehabilitation and Restoration: A third major strategy that Shell uses to address the biodiversity threat of habitat destruction is to rehabilitate and restore habitat.  One of the largest restoration efforts is taking place in Nigeria where Shell Petroleum Development Company of Nigeria and its joint venture facilities are partnering with the Nigerian government and other operators to clean up sites that have been contaminated by illegal activities and operational spills.  In 2011, The UN Environmental Programme report on Ogoniland recommended the creation of a US$ 1 billion Ogoni Restoration Fund to be co-funded by the Nigerian government, Shell Petroleum Development Company of Nigeria and its joint venture facilities, and other operators in the area.  Since 2012, Shell has also worked with the IUCN to protect biodiversity and improve remediation techniques at sites that are affected by oil spills in Shell’s areas of operation in the Niger Delta.  This has led to the creation of new initiatives, such as a Niger Delta biodiversity strategy and toolkit which provides guidance on restoring mangroves that will help strengthen its remediation and rehabilitation efforts.  

Biodiversity Offsets and Voluntary Compensatory Actions: The fourth major strategy that Shell pursues to address the biodiversity threat of habitat destruction is the use of biodiversity offsets to compensate for development impacts.  For example, in Australia, Shell acquired the Valkyrie property in 2015 as a biodiversity offset to compensate for clearing vegetation and habitat while developing gas resources.  The Valkyrie property (pictured below) is located next to the Dipperu National Park in Queensland, and it contains large areas of eucalyptus woodlands, endangered brigalow woodlands, semi-evergreen vine thickets, riparian vegetation, and wetlands.

Invasive Species

There is no mention of any efforts to address invasive species in Shell’s various reports and website.  However, I am aware of the following example:

Invasive species monitoring and eradication in Puget Sound: In 2017, Shell’s Puget Sound Refinery in Washington awarded a US$ 10,000 grant to Northwest Straits Foundation to support efforts to monitor and eradicate local invasive species by the Skagit County Marine Resources Committee and its project partners.  The grant is being used to purchase equipment to monitor European green crabs.  European green crabs are an invasive species that is considered a threat to Puget Sound shellfish fisheries because it feeds on juvenile crabs, oysters, clams, and other shellfish, and it may compete with native fish and birds for food.  The equipment will help “citizen scientists” monitor for green crabs in Padilla Bay and Fidalgo Bay near Shell’s refinery and at other sites in adjacent counties.

Pollution and Climate Change

Not surprisingly, Shell is engaged in a wide variety of pollution prevention and energy saving initiatives.  Since this blog post is already running long, I’ll provide just a few examples to give you a  sense of how Shell is addressing the biodiversity threats of pollution and climate change.

Spill response and prevention in the Niger Delta: The vast majority of oil spills in the Niger Delta are caused by crude oil theft, sabotage of pipelines, and illegal oil refining.  In 2017, nearly 90% of the number of oil spills from Shell Petroleum Development Company of Nigeria joint venture facilities was due to illegal activities.  The remaining 10% were due to operational reasons.  Regardless of whether the oil spills were due to illegal activities or due to operational reasons, Shell takes steps to clean up and remediate areas impacted by spills that come from its facilities.  If the spill is due to an operational issue, Shell also pays compensation to people and communities impacted by the spill.  Shell works with government agencies, NGOs, and communities to prevent and minimize spills from illegal activity.  Shell also conducts air and ground surveillance and installs anti-theft mechanisms on equipment and pipelines to mitigate illegal activities and to ensure that spills are quickly detected and addressed.  Despite these efforts, the number of sabotage-related spills has increased from 48 in 2016 to 62 in 2017.  

Managing water: In water scarce areas, Shell develops water management plans that describe the long-term risks to water availability and define measures to minimize the Company’s use of fresh water or prescribe alternatives to fresh water, such as recycled water, processed sewage water, and desalinated water.  Shell treats its wastewater prior to discharge into the environment and, where appropriate, looks for ways to treat wastewater using natural solutions such as constructed wetlands.  This approach helps Shell reduce the energy use associated with its water management operations.  Shell has a water research laboratory in Bangalore, India that collaborates with NGOs, academic institutions, and technology firms to advance the development of technologies that increase rates of water recycling and reuse.  Shell also advocates for common water management practices in the industry and has published, together with the University of Utrecht, an accounting methodology for water used in oil and gas operations.

Climate change and renewable energy: In 2017, Shell announced its goal to cut the net carbon footprint of the energy products it provides by around half by 2050.  Shell adds that “this is an industry-leading aspiration that may need periodic recalibration in line with the pace of change in broader society and the wider energy system.”  As an interim step, Shell is targeting a 20% reduction by 2035.  These reduction targets include emissions from Shell’s operations, emissions from third parties who supply energy for that production, and its customers’ emissions from their use of the products it sells.  In order to achieve these targets, Shell plans to invest in hydrogen and advanced biofuels for transportation, invest in electric vehicle charging, generate more renewable power, and advance technology to capture CO2 emissions and store them safely underground.  Shell will also use natural solutions, including forests and wetlands, to naturally absorb emissions from uses where alternatives do not yet exist or will take time to reach commercial scale.  Shell plans to produce more natural gas, which is the cleanest-burning hydrocarbon, and focus on reducing leakage of methane from its gas operations.  Roughly half of Shell’s energy supply is derived from natural gas.  To help ensure that greenhouse gas emissions are considered in the Company’s investment decisions, Shell uses a greenhouse gas screening value as part of its project planning and evaluation process.  Finally, Shell plans to encourage countries and industries to switch from coal to lower-carbon natural gas, and shares best practices on how to keep CO2 out of the atmosphere.

Overharvesting

There isn’t much discussion around the topic of overharvesting in Shell’s various reports and website.  Shell’s primary strategy to address overharvesting is to encourage supply chain sustainability through the Company’s General Business Principles.    

Supply Chain Sustainability: Shell works with its 33,505 suppliers to ensure that they follow Shell’s General Business Principles.  These General Business Principles include a commitment to balancing short-term and long-term interests, and integrating economic, environmental and social considerations into business decision-making.

Profitable Conservation

In its sustainability reports and company website, Shell doesn’t provide much in the way of return on investment data.  Instead, the Company provides some data on how much they spent on certain initiatives.  Here are some examples:

Energy efficiency: Between 2009 and 2015, Shell achieved a 6% decrease in the energy intensity (amount of energy consumed for every unit of output) of its refineries through improvements in equipment reliability and operating processes.  Downstream energy savings, combined with changes in the refining energy mix to lower-carbon alternatives, has reduced Shell’s refining CO2 emission footprint by approximately 1.5 million tons each year.  In terms of cost savings, these efforts reduced the total annual energy cost for 13 refineries by $2.5 billion.  Between the years 2009 to 2015, Shell’s energy efficiency efforts reduced costs by approximately $100 million each year.  In 2017, the overall energy intensity for the production of oil and gas increased slightly compared with 2016 data.

Maintain and Monitor an Artificial Reef: In the Gulf of Mexico, Shell decommissioned the Cougar platform, which produced more than 31 million barrels of oil over the last two decades.  In 2017, Shell used a specially-designed vessel to lift the top part of the platform and deck and place it on a barge to be transported to shore for cleaning and recycling or disposal.  The same vessel was then used to move the platform’s 345 foot-tall and 6,000,000 pound support structure across 50 miles of open water to its resting place as an artificial reef.  Shell donated the structure to the Louisiana artificial reef program and made a $619,000 contribution to help maintain and monitor the reef, which will provide habitat for a variety of marine life such as red snapper and amberjack fish.

Community Skills and Enterprise Development: In the Philippines, Shell supports a community-based enterprise development and biodiversity program called Tourism and Business Through Protecting Nature.  This program supports sustainable tourism through community involvement and creating alternative income opportunities that also protect and conserve the biodiversity of Palawan.  In 2017, the program provided 67 local jobs and generated more than $90,000 in revenue from supported enterprises.

Research & Development: Shell spends about $1 billion each year on research and development to turn ideas into commercially viable technologies.  This includes the development of fuels and lubricants that help customers use less energy, and technologies that improve the energy and water efficiency of Shell’s operations.  Since 2009, Shell has invested over $1.1 billion in low-carbon R&D, primarily through investments in companies and technologies that are complementary to Shell’s existing business.  For example, in 2015, Shell invested in GlassPoint for solar technology, Aquion Energy for energy storage (produces saltwater ion batteries that can store solar power for use at night), and Next Step Living – a company that helps homeowners improve energy efficiency and use more renewable energy.  Shell also supports the global Carbon XPRIZE to foster new ideas in the areas of carbon capture and use, and is actively researching new transport solutions that include hydrogen technologies, advanced biofuels, and energy storage for electric vehicles.

Tailings: Over the past ten years in Canada, Shell has invested $355 million to develop technologies that speed up the drying process for fluid fine tailings that are generated when separating bitumen from sand.  These tailings are stored in ponds, where the sand is allowed to settle at the bottom so that the water can be recycled and the solids can be used for reclamation.  These processes are carefully managed to prevent contamination of local surface water and groundwater.

Charitable Giving and Local Investment: In 2017, Shell spent $189 million on social investments worldwide.  Of that amount, 41% was required by government regulations or contractual agreements.  Shell spent $111 million on voluntary social investments: $57 million of that amount was invested in initiatives that are aligned with Shell’s global themes of enterprise development, road safety, and energy access; $54 million was spent on local programs for community development, disaster relief, education, health, and biodiversity.   The Company also established the Shell Foundation, an independent charity that applies a business approach to the global development challenges of access to energy and sustainable mobility.  Since 2000, the Shell Foundation has given $279 million in grants to early-stage businesses and new market builders operating in Africa, Asia, and Latin America.

Local Procurement: In 2017, Shell spent $42.2 billion on goods and services from 33,505 suppliers worldwide, with $4.9 billion spent in countries that have a gross domestic product of less than $15,000 a year per person, and 80% of that money going to local companies.  In 2015, Shell purchased $56.3 billion of goods and services from 52,000 suppliers worldwide: $37 billion (65%) of this amount was spent in Canada, the Netherlands, Nigeria, the UK and the USA and $5.9 billion (10%) was spent in countries that have a gross domestic product of less than $15,000 a year per person.

Training: In 2015, Shell spent $335 million (600,000 training days) on training and development for employees and joint-venture partners.  This training focused on developing leadership capability, improving skills in technical, safety, and commercial areas, and improving expertise in specialist areas such as cultural heritage and indigenous peoples.

Biodiversity & Wildlife Conservation Performance Assessment

Shell is clearly doing a lot of work to minimize its impacts to biodiversity and it does a good job in sharing this information in the pages of its sustainability report and website.  There are several areas where I think Shell can improve how its addressing the major threats to biodiversity.

First, Shell could set and communicate clear performance targets related to land use and biodiversity conservation.  Shell’s key environmental goals are focused on reducing oil spills, reducing flaring in its upstream business, improving energy-efficiency, and reducing greenhouse gas emissions.  In addition to these goals, Shell should set a target or goal to conserve a certain number of acres of wildlife habitat for every acre of land developed, or adopt a policy of no net loss (or even a positive gain) of biodiversity through its development activities and operations.

Second, Shell should share information about its efforts to address the #2 threat to biodiversity: invasive species.  This is a common gap for most companies.

Finally, Shell could share more information about how it is greening its supply chain.  This could be through the use of supplier scorecards and audits, or other approaches to help ensure that biodiversity impacts are being considered in purchasing decisions and supplier operations.  The supply chain section of its sustainability report is very broad and does not mention how supplier environmental performance is being monitored and measured.

Despite its current focus on tangible cost saving initiatives such as energy efficiency, I was happy to see that Shell is also engaged in a wide variety of less tangible cost saving initiatives, such as the protection of biodiversity and oceans.  It was refreshing to see that Shell has implemented a biodiversity standard to help guide its operations and operational decisions.  However, I didn’t see any tangible goals associated with its biodiversity standard, other than the need to conduct a biodiversity assessment when certain conditions are met.  To be fair, the sustainability report mentions that the goals presented in the report are just a selection of global metrics that are tracked within the company, so Shell could very well have quantifiable metrics and targets related to biodiversity and wildlife conservation.  I will contact Shell to see if I can learn more about these metrics and will update this post with any relevant details.

As Shell expands its exploration and production activities in the coming years, there will likely be a significant amount of conflict between areas that are considered important for biodiversity conservation and areas that have significant amounts of hydrocarbon resources.  It will be interesting to see how Shell resolves these conflicts, and whether or not the Company will factor in the economic value of nature’s services (natural capital) in order to give biodiversity sufficient weight in its operational decision making.  Based on the company’s report and website, it’s good to know that biodiversity and natural resource conservation are considered significant factors in the Company’s operations and decision making.

Coming Attractions

For my next five posts, I’ve been asked by the E.O. Wilson Biodiversity Foundation to highlight the role of business in making “Half-Earth” a reality.  Half-Earth is the bold goal to protect half the land and sea to safeguard the bulk of biodiversity.  To learn more about the Half-Earth Project, visit www.half-earthproject.org

Thanks for reading!

Mark

China National Petroleum Corporation’s Profitable Conservation Strategies for Biodiversity and Wildlife Conservation

July 9, 2018 By Mark Aspelin

Today we’ll explore the profitable conservation strategies of the fourth largest company in the world, the China National Petroleum Corporation, or CNPC for short.  CNPC is a Chinese state-owned corporation with 1.46 million employees and oil and gas assets that are scattered across 38 countries in Africa, Central Asia-Russia, America, the Middle East, Asia-Pacific, and other regions.  The Company’s operations include petroleum exploration and production, natural gas and pipelines, refining and marketing, oilfield services, engineering construction, petroleum equipment manufacturing, new energy development, capital management, finance, and insurance services.

CNPC’s tagline is “Caring for Energy, Caring for You”, with a mission to “strive for harmonious relationships between operations and safety, energy and the environment, corporate and community interests, and employers and employees”.  The Company has also stated its commitment to “protecting the environment and saving resources, promoting the research, development and application of environmentally friendly products, fulfilling our responsibilities to society and promoting development that benefits all.”

With such an environmentally-friendly mission statement I was very interested to learn more about what CNPC is doing in the areas of biodiversity and wildlife conservation.  CNPC’s sustainability report and website mention a broad range of initiatives that directly or indirectly have an impact on biodiversity and wildlife, although climate change, energy efficiency, and pollution prevention are the key areas of focus.

In this post, I’ll provide an overview of the various activities that CNPC is engaged in to address the following four major threats to biodiversity and wildlife: habitat destruction, invasive species, pollution, and overharvesting.

Habitat Destruction

Avoidance: Avoidance refers to the strategy of avoiding development or operations in areas with a high-quality habitat for species that are classified as endangered, threatened, or vulnerable to extinction.  Here are two examples of how CNPC puts an avoidance strategy into practice.

  • Protecting Euphrates Poplars in China: In the Tuha Oilfield of China, the most desirable site for new wells was located within a Euphrates poplar forest.  However, given that Euphrates poplars (pictured below) are considered rare in the area, the Tuha Oilfield Company took steps to minimize the impact on the trees by relocating well sites, detouring roads, and reducing the size of station yards.  For example, in 2007, the Company relocated 10 well sites and used extended reach drilling, which increased project costs by over US$ 3 million.  To avoid poplars, CNPC also spent an additional US$ 500,000 to re-rout a nine-mile section of gas pipeline, which extended the pipeline length by over a mile and extended the length of a parallel road by over two miles.  The number of gathering stations in new exploration areas was reduced from nine to six, and over 322,000 square feet of land remained undisturbed. Throughout the process of developing the oilfield, no single Euphrates poplar was damaged in the area’s 13,000 acres of Euphrates poplar forests.
  • West-East Gas Pipeline and the Alkin Wild Camel Nature Reserve: During the construction of the nearly 2,500-mile West-East Gas pipeline, CNPC made the decision to spend an additional US$ 30.8 million to avoid cutting across the buffer zone of the Alkin Wild Camel Nature Reserve, which is home to a variety of rare animals such as wild camel, wild yak, antelope, and black-necked crane.

Minimization: Minimization refers to a broad range of strategies that are designed to reduce the duration, intensity, and extent of impacts to habitat for biodiversity and wildlife.  Corporate minimization strategies include the creation of wildlife corridors, installing green roofs, rehabilitating or restoring land, and purchasing biodiversity offsets or other voluntary compensatory actions.  While it doesn’t appear that CNPC is engaged in the creation of wildlife corridors, installing green roofs, or pursuing biodiversity offsets, the Company has implemented a variety of policies and procedures to modify its operations near environmentally-sensitive areas to protect wildlife and biodiversity.  CNPC is also engaged in a variety of land rehabilitation and restoration strategies.  Restoration of an ecosystem refers to an attempt to return it to its original landscape, while rehabilitation focuses on repairing ecosystems processes, services, and productivity, but not to the pre-existing, historical condition.  Here are some examples of CNPC’s minimization strategies:

Policies and procedures near environmentally-sensitive areas

  • Wetland conservation at the Liaohe Oilfield: CNPC’s Liaohe Oilfield is located in the Liaohe delta wetland (pictured below), a national nature reserve that is considered to be one of China’s largest and best-preserved wetlands that provide habitat for 236 bird species such as the Saunder’s Gull (Vulnerable) and Red-Crowned Crane (Endangered).  Rather than use vertical wells, CNPC uses horizontal and cluster wells to help protect wildlife habitat and the natural landscape.  Thirty years ago, the total area of reed marsh in the Liaohe Delta was approximately 200,000 acres.  Today, through joint efforts of the Liaohe Oilfield and the local government, the total area of the marsh has reached nearly 250,000 acres, making it one of the world’s largest reed marshes.  The area also serves as China’s biggest heavy oil and super-heavy oil production base.
  • Reduced footprint for the Russia-China Oil Pipeline: When constructing the Mohe-Daqing Section of the Russia-China Oil Pipeline, CNPC reduced the width of its operational area from 92 feet to 59 – 66 feet, which decreased its footprint in the virgin forest by 1,352 acres.  The Company also implemented “extremely high requirements” to protect soil, vegetation, and wildlife during construction.
  • Reduced land use at the Changqing Oilfield: In 2016, the Changqing Oilfield was able to save 15,000 acres of land by using cluster wells and horizontal wells, optimizing the arrangement of well patterns, and through the integrative planning of stations.
  • Wetland conservation practices in Iran: In Iran, CNPC’s environmentally-sensitive road construction practices and efforts to maintain the wetland water flow for its North Azadegan project resulted in the Company becoming the first foreign enterprise to win an award for environmental protection.
  • “Giving Way to Animals” in Kenya: During the construction of an oil pipeline in Kenya, CNPC adopted a construction principle of “giving way to animals”.  This included “Rules on Protecting Wild Animals during Construction” within National Parks of Nairobi and Nakuru to confirm that no wild animals were present before operating in the area, and to ensure that construction equipment moved at a slow pace to minimize noise.
  • Operational Changes to protect wildlife: During the contraction of the Mohe-Daqing Section of the Russia-China Oil Pipeline, CNPC reduced its operations at night and avoided construction during the breeding season to help protect wildlife.
  • 3-D seismic exploration technology to reduce tropical rainforest impacts in Ecuador: In the tropical rainforests of Ecuador, CNPC used 3-D seismic exploration technology to avoid damage to rainforest vegetation, and drilled new wells in old well sites to minimize operational land use in order to protect biodiversity.  CNPC chose to adopt European or US environmental protection standards, rather than less stringent local regulations, to minimize its waste discharges from power generation, oil refining, and water treatment.

Restoration and rehabilitation of land

  • Wetland restoration and bird conservation: In 2012, the Yingtai Oil Production Plant of Jilin Oilfield in China planted sedge and grasses to improve wetland habitat within the oil recovery zones of the Jilin Momoge National Nature Reserve.  The Nature Reserve serves as habitat for the greatest variety of cranes in China, including the endangered red-crowned crane and critically endangered white crane (aka Siberian crane).  By the end of 2012, the Yingtai Oil Production Plant had invested more than US$ 4.6 million in six phases of comprehensive treatment projects, restored 6.6 million square feet of wetland vegetation, and created nearly 1.4 million square feet of woodland.  Over the past five years, the number of waterfowl increased by 15%-20%, the population of Siberian cranes increased from about 500 to 3,000, and the number of bird species increased from 296 to over 320.
  • Ecological restoration for the Western Pipeline project: CNPC pursued an ecological restoration effort as part of the Western Pipeline project in China.  As soon as the new pipes were laid down and buried, CNPC planted vegetation in an attempt to restore the original landscape.  As part of this effort, CNPC adopted a higher design grade, increased the pipeline burial depth, enhanced the anti-corrosion grade of the pipes, and installed cut-off valves to prevent oil leakage in the event of any accidents.  Since the project was launched in 2004, CNPC has followed up with monitoring and remediation measures on an annual basis to ensure that the restoration effort is a success.
  • Soil remediation and restoration of freshwater fish: As part of the project to implement the Mohe-Daqing Section of the Russia-China Oil Pipeline, which runs across several nature reserves and environmentally sensitive rivers, CNPC invested US$ 15.4 million on soil and water conservation efforts.  These efforts included remediating over 2,000 acres of arable land and over 24 million cubic feet of soil covering, and building a 2,784 acre green area.  CNPC also spent US$ 2.9 million to build fish breeding stations, conduct research on the artificial reproduction of burbots (freshwater fish, pictured below), and monitor water quality and aquatic life along the pipeline.  Through these fish breeding efforts, 200,000 – 500,000 cold-water fish are released into the river each year.
  • Southwest Oil and Gas Field remediation: From 2011, to 2016, the Southwest Oil and Gas Field in China reclaimed a total of 7,419 acres of land and turned it into grassland or forest.
  • Soil restoration research: CNPC is engaged in soil restoration research, exploring the use of “microorganism repair technology” for polluted soil.  Research trials in the treatment of solid waste were conducted at two old wells, and the study was successful in rehabilitating over 21,500 square feet of land that was once used as a solid waste pool.  The new technology transforms harmful substances in wastes into carbon dioxide and water, and makes the soil cultivable again with the metabolites from microbial growth.  The Company plans to continue to develop and improve this technology and promote its wide application.
  • Marine and fisheries restoration: After completing the Shenzhen-Hong Kong subsea pipeline, CNPC launched a marine environment and fishery resources restoration project to return two million young black seabream to the sea in the effort to improve the marine ecological environment.

Invasive Species

There is no mention of any efforts to address invasive species in CPNC’s various reports and website.

Pollution

Pollution Prevention: CNPC is engaged in a wide variety of pollution prevention and energy saving initiatives.  Here are some of the more unusual examples:

  • Shelter-Forest project to protect highway from sand: In an interesting example of a green infrastructure project, CNPC partnered with the Chinese Academy of Sciences to complete a Shelter-Forest project for the Tarim Desert Highway (pictured below), which serves as an important road to access oil and gas resources in the area.  The Tarim Desert Highway was constructed in 1995, however the original mechanical sand-defense system (a sand-catching checkerboard mesh of straw) to protect the road from encroaching desert and sand dunes had become obsolete.  The three-year Shelter-Forest project created a green corridor that was 236 – 256 feet wide along 270 miles of the 349-mile highway that travels across the Taklimakan Desert.  The US$ 33.5 million project involved covering a total area of 7,729 acres with 20.74 million drought-resistant plants such as Chinese tamarisk, saxaul (Haloxylon ammodendron), and Calligonum.  Pilot tests uncovered a way to successfully (80% survival rate) irrigate the plants with high salinity groundwater in the desert, and research found that wind speed and sediment transport in the shelter-forest decreased by 64% – 99%.  This approach may be deployed in future large-scale projects to protect desert highways from sand.
  • Creating artificial islands to minimize impacts: To minimize the environmental impact caused by drilling and oil production on the surrounding waters of the Dagang Oilfield located in Huanghua Shoals of the Bohai Bay, CNPC built three artificial islands and used an “onshore production of offshore oil” approach.  The artificial islands include oil pollution treatment facilities and sewage treatment systems that operate in a closed-loop system.  Wellhead-slot wastewater and summer rainwater are collected and recycled, reusable drilling fluid is used in place of oil-based mud, and all industrial and domestic waste is collected for centralized processing.
  • Wastewater pool is transformed into a reed pond in Sudan: In Sudan, CNPC invested US$ 13.8 million to build biodegrading pools, and adopt advanced biodegradation technology to treat water produced from oilfields.  The treated water contains no oil, has a pH value of 8.90-8.97, and a dissolved oxygen level of 0.5-0.6 mg/L.  The 1.9 square mile wastewater pool has become a reed pond that provides habitat for 68 species of birds and fish.
  • Creation of the CNPC Pollution Sources Online Monitoring System: This system can accurately monitor, calculate, and analyze the emission data of each monitoring point in real time; monitor emissions from key sources in real time; assess the operating results of environmental protection facilities; and collect and analyze the alarm data.  By the end of 2015, data networking was completed for 298 key monitoring points.
  • Energy Conservation: In 2015, CNPC implemented 54 energy-saving projects, and developed 148 optimization programs that reduced energy consumption by 1.16 million tons of standard coal.  Compared with 2010 data, the emission intensity per unit of crude oil production for four major pollutants, chemical oxygen demand, ammonia nitrogen, sulfur dioxide and NOx, decreased by 31.5%, 23.1%, 33.6% and 28.3% respectively, and the emission intensity per unit of crude oil processing decreased by 27.8%, 28.8%, 54.8% and 32.0% respectively.  The Company continued to make progress in 2016 by reducing energy consumption by 950,000 tons of standard coal.  Overall energy consumption was reduced by 1.42% year-on-year.
  • Water Resource Conservation: CNPC has implemented a variety of water use efficiency initiatives in its production and operation activities. For example, it has reduced freshwater consumption through the adoption of wastewater treatment and reclaimed water reuse technologies.  The company also launched an online management system for energy and water conservation.  This helps standardize processes that save water and enables the company to collect and analyze data associated with its water management activities.  In 2015, water use efficiency initiatives have saved 20.61 million cubic meters of water.  In 2016, the Company saved an additional 13.39 million cubic meters of water throughout the year.

Climate Change: Climate change is a primary focus of CNPC’s environmental efforts and the Company is committed to green and low-carbon development, accelerating the upgrading of oil products, promoting the utilization of natural gas to meet the need for clean energy.  The Company also invests heavily in R&D for low-carbon technologies and increased carbon sequestration to minimize GHG emissions and mitigate global warming.  In 2016, CNPC joined the Oil and Gas Climate Initiative and signed the Joint Collaborative Declaration on low-carbon development.  CNPC has also set development goals and emission reduction measures, with a primary focus on carbon footprint verification, carbon emission reduction, and the construction of near-zero carbon emission demonstration projects.  Here are some examples of CNPC’s efforts to address climate change.

  • Forestry Carbon Sequestration: One of the measures that CNPC has taken in response to climate change is to plant a large number of trees to help reduce and control greenhouse gas emissions.  To support China’s carbon-sequestration forest construction and forestation activities in 2015, CNPC invested US$ 22.9 million in public-welfare forestation funds and planted over one-million trees.  The Company encourages voluntary tree planting programs and some facilities have enthusiastically embraced the cause.  CNPC describes a project in the Changqing Oilfield where “we joined hands with the local government to carry out the construction of Qingyang carbon sequestration forestry base in Gansu province, and have completed over 100,000 mu of carbon sequestration forestry since 2008.”  In 2012, employees from the Changging Oilfield planted more than 600,000 trees and shrubs.  In the Karamay Oilfield of Xinjiang oil province, CNPC has a 10-year plan to create a 65,977 acre forest for carbon sequestration and emission reduction, and along the northwestern boundary of the Junggar Basin, the Company will create another 164,819 acre forest.  These forests will serve as green carbon pools for COsequestration.  In addition, in cooperation with the State Forestry Administration, CNPC planted 8,229 acres of an experimental oil crop called yellowhorn (Xanthoceras sorbifolium), which is adaptive to the climate in Xinjiang.  One million units of this crop can yield 3,307 pounds of fruit, with an oil yield rate of 30%.  Important medical ingredients can first be extracted from the squeezed oil, and 93% of the remainder can be converted into biodiesel fuel.
  • Natural Gas: CNPC has increased the development and utilization of natural gas.  In 2015, natural gas accounted for 40.6% of its total domestic oil and gas equivalent production, compared to 35.9% in 2011.
  • Geothermal and Renewable Energy: CNPC mentions that it’s exploring the development and utilization of geothermal and other renewable energy, although it sounds like this is in the early stages.
  • Aviation Biofuel: CNPC is also actively engaged in research and development activities for aviation biofuel.  Research suggests that aviation biofuel emits 50% – 90% less greenhouse gas during its life cycle compared with traditional aviation kerosene.

Overharvesting

Supply Chain Sustainability: CNPC doesn’t specifically address the biodiversity threat of overharvesting in its website or reports.  However, CNPC does promote the sustainable development of its supply chain through the establishment of a contractor management group led by CNPC’s top executive and attended by heads of related departments and specialized subsidiaries.  The Company has created a supplier quality management process which covers quality approval, inspection, supervision and spot-checking, and on-site supervision of the manufacturing of major products.  CNPC has also implemented clear supplier requirements related to business ethics, human rights, health, safety, environment, quality standards, and public responsibility, in an effort to build a responsible supply chain in the petrochemical industry.

Profitable Conservation

CNPC’s website and reports provide a lot of environmental investment data in terms of how much money was spent for various initiatives, but it’s difficult to calculate an overall return on investment.  Similar to my previous blog post about the State Grid Corporation of China, the best I can do is highlight some of the investments that CPNC is making in areas that are related to environmental conservation.  I have already highlighted many of these dollar amounts throughout this post.  Most of the efforts shared in this blog post are likely to yield a high financial return on investment as these activities enable CNPC to access lucrative oil reserves.

One area that I haven’t yet covered in this post, is how the CNPC allocates its spending for charitable giving.  CNPC invested more than RMB 1.3 billion (~US$ 200 million) in public welfare undertakings globally.  Approximately RMB 76 million (~US$ 11.7 million) of this money was spent on projects in China, which has benefitted 100 million people across 8 provinces.  The breakdown of charitable giving is as follows:

  • Poverty Alleviation: RMB 341 million (~US$ 52 million)
  • Disaster-relief: RMB 6 million (~US$ 920,000)
  • Education: RMB 238 million (~US$ 37 million)
  • Charity donations: RMB 632 million (~US$ 97 million)
  • Environmental charity: RMB 149 million (~US$ 23 million). This money was primarily directed towards forestry carbon sequestration efforts.

Biodiversity & Wildlife Conservation Performance Assessment

I originally wrote an article about CNPC’s profitable conservation efforts back in early 2016.  However, after researching CNPC’s activities since that time, I ended up deleting my original article because I found that the Company is now sharing a lot more information about its biodiversity conservation efforts on its website.  So that’s a positive sign.

Most of CNPC’s efforts related to biodiversity and wildlife conservation are focused on climate change and pollution prevention.  This makes sense since climate change is a major initiative for China, and pollution prevention efforts often yield win-win outcomes from both an economic and environmental perspective.  Many of the other practices that I shared in this post, such as altering operating policies and procedures in areas of high conservation value, likely generate very high financial returns on investment, but the jury is out in terms of the costs and benefits for biodiversity and wildlife.  While CNPC does provide us with some success stories, such as expanding the size of the Liaohe Delta from 200,000 acres to 250,000 acres, and increasing the number of bird species from 296 to 320 at the Jilin Momoge National Nature Reserve, we obviously need more before-and-after data to asses the overall impact (positive or negative) to local biodiversity and wildlife.

Some locations are so valuable from a biodiversity and wildlife perspective that is raises the obvious question of whether CNPC should be drilling and operating there in the first place, no matter what kind of mitigation measures are put in place.  However, since the various Government agencies have given CNPC permission to drill and operate in these areas, the Company is obviously going to pursue it.  From that perspective, I am glad that CNPC is spending the extra millions of dollars to implement measures that minimize harm to biodiversity and wildlife in exchange for access to new oil sources.

In terms of possible improvement opportunities, CNPC could benefit from setting and communicating clear performance targets.  To its credit, CNPC is in the process of setting development goals and emissions reduction measures, however, I hope that the Company also considers setting goals related to land use and biodiversity conservation.  This could come in the form of voluntary compensatory actions such as conserving a certain number of acres of wildlife habitat for every acre of land developed, similar to Walmart’s Acres for America program.  These land purchases may  serve a dual purpose of conserving biodiversity and wildlife while also supporting CNPC’s forestry carbon sequestration efforts.

Another possible improvement opportunity is to discuss efforts to combat invasive species on CNPC land.  CNPC’s thousands of miles of pipelines and roads create pathways for the spread of invasive species.  With all of the remediation, restoration, and rehabilitation work that CNPC is engaged in, it seems like invasive species would be an important topic of conversation.

Overall, CNPC is to be commended for being an early adopter of CSRs, publishing its first CSR in 2006, and for taking steps to share more information about biodiversity and wildlife conservation efforts on its website.  I look forward to learning about the company’s new goals and reading more about the company’s efforts in the area of biodiversity and wildlife conservation in the coming years.

Coming Attractions

For our next post, I have a special announcement that I look forward to sharing with you.

Thanks for reading!

Mark

Sinopec’s Profitable Conservation Strategies for Biodiversity and Wildlife Conservation

June 25, 2018 By Mark Aspelin

Today we’ll look at the profitable conservation strategies for the #3 company on the Fortune Global 500 list – Sinopec Group, the state-owned Chinese oil and gas company formerly known as the China Petroleum and Chemical Corporation.  Headquartered in Beijing, Sinopec‘s 446,225 employees are scattered across the company’s operations in 43 countries.  As of the end of 2017, Sinopec has 30,633 service stations, with its main oil and gas assets located in China, Kazakhstan, Russia, Colombia, and Angola.  The Company engages in the following activities:

  • Oil & gas exploration, production, transportation and marketing
  • Refining and marketing of petroleum products
  • Manufacturing and sales of chemicals, petrochemicals, coal chemicals
  • Petroleum and petrochemical engineering services
  • Technology research

Sinopec’s Mission statement is “Powering Better Life”.  The Company strives to “achieve green growth and contribute to clear waters, green land and a blue sky” and is guided by a principle of “Making Every Drop Count”. 

Sinopec has focused its recent efforts on promoting growth and efficiency, while fulfilling its social responsibility mission.  To help prioritize where to focus its CSR and sustainability efforts, Sinopec sends a survey to internal and external stakeholders that includes representatives from government, investors, employees, consumers, NGOs, and the media.  The results help the Company identify the highest priority issues in terms of their significance to stakeholders and their impact on Sinopec’s sustainability.  The prioritized survey results from the 2015 CSR are summarized in the graph below.

sinopec-graph

As you can see from the list above, Sinopec ranked biodiversity protection and ecosystem remediation as number 14 (out of 25) on its list of priorities.  However, it also ranked Clean Energy Supply as number 11, Climate Change efforts as #12, and Water Management as #13, all of which play a role in biodiversity and conservation.

In the 2017 CSR, Sinopec went through a similar exercise, but also aligned its business operations with 17 Goals (SDGs) in the 2030 Agenda for Sustainable Development (The UN 2030 Agenda) and referred to the Recommendations Report issued by Task Force on Climate-related Financial Disclosures.  From this analysis, Sinopec outlined 13 material issues to include in its report, which included climate change, energy conservation and emission reduction, and biodiversity.

With that brief introduction, let’s take a look to see what profitable conservation activities Sinopec is undertaking in the areas of biodiversity and wildlife conservation.  We’ll focus on the steps that Sinopec is taking to address four of the biggest threats to biodiversity: habitat destruction, invasive species, pollution, and overharvesting.  Even though climate change is a major contributor to habitat destruction, we’ll cover that topic in the pollution section, since the actions that companies take to address climate change are similar to other pollution prevention initiatives.

Habitat Destruction

Avoidance and Minimization: Avoidance refers to the strategy of avoiding development or operations in areas with a high-quality habitat for species that are classified as endangered, threatened, or vulnerable to extinction.  Minimization refers to a broad range of strategies that are designed to reduce the duration, intensity, and extent of impacts to habitat for biodiversity and wildlife. Sinopec is putting avoidance and minimization strategies into practice through the following means:

  • Taking steps to avoid environmentally fragile areas and ecological conservation zones.
  • Integrating biological diversity protection in the assessment, decision making, production, and operation of project construction.
  • Evaluating the impact of proposed projects by assessing ecological reserves, forests, wetlands, fauna, and flora, and formulating measures to mitigate or eliminate the impacts during the preliminary project appraisal process, construction, and operation.
  • Focusing on the requirements of biodiversity conservation in the working areas, taking various measures to protect local ecosystems.
  • Strengthening the identification and analysis of environmentally sensitive areas and environmental risks.
  • Promoting clean production.
  • Restoring and rehabilitating habitat around abandoned oil and gas wells and along oil and gas pipelines to reduce the environmental impact of the Company’s production and operations.

Here are a few examples of how Sinopec puts avoidance and minimization strategies into practice.

  • YASREF protects local mangroves:   The Yanbu Aramco Sinopec Refining Company Ltd. (YASREF) is a joint venture between Saudi Aramco and Sinopec in Yanbu, Saudi Arabia.  YASREF spent additional time and money to modify the direction and construction of pipes and other infrastructure to avoid harming local mangroves in natural reserves that are located near its production area along the Red Sea.  The Red Sea mangrove image below is from Saudi Aramco’s 2014 Facts and Figures document.
  • Soil remediation and land restoration: Sinopec and its subsidiaries create ecological impact prevention and treatment plans which may include a variety of soil remediation and land restoration efforts.  For example, Sinopec’s Fuling Shale Gas Company used a pad drilling design that reduces the amount of occupied land by 30% compared with normal operations.  After completing platform construction, the Company implemented a variety of plantation restoration, water and soil maintenance, and soil restoration initiatives that resulted in a land conservation rate of 57%.
  • Quingning Gas Transmission Pipeline project: When Sinopec’s natural gas branch deployed a 553-kilometer gas transmission pipeline connecting Shandong
    and Jiangsu province, they analyzed fauna and flora in national reserves, nine city and county-level reserves, seven water conservation districts, and 51 ecologically vulnerable rivers, Ecological Red Line Areas, and areas within 500 meters of the project. The Company then assessed pipeline routes and widths to identify the approach that would have the least adverse impact on local plants and wildlife.

Invasive Species

There is no mention of any efforts to address invasive species in CPNC’s various reports and website.

Pollution

In 2013, Sinopec launched its Clear Water and Blue Sky Campaign, which focused primarily on the control of air pollution, water contamination, and solid waste.  In 2014, the campaign won the “Care for Climate and Environmental Protection Best Practice” from the China Network of United Nations Global Compact.  The Clear Water and Blue Sky Campaign is no longer mentioned in the Company’s 2017 CSR so it appears to have come to an end, but Sinopec is still actively pursuing a variety of pollution prevention and energy saving initiatives.  Here are a few examples:

  • Pollution prevention: Sinopec pollution prevention efforts include implementing de-sulfur, de-NOx, and dust removal projects for boilers, improving the recycling of drilling fluid and reduced solid drilling waste by 31,000 m3, installing vapor recovery projects for 265 oil tanks and 17,600 service stations, and significantly reducing the sulfur content of Sinopec gasoline from < 800ppm in January 2003 to a target of < 10ppm in December 2016.  The Company is also engaged in research of development of cutting-edge technologies that support its green development goals.
  • Chemical product design: Sinopec’s Chemicals segment is actively developing products that focus on high-end, eco-friendly materials.  Here are a few product development examples from 2017:
    • Green propylene and butene copolymer products.
    • Eco-friendly, high-crystallized and high-impact polypropylene products.
    • Non-dyed fibers to alleviate textile dyeing pollution at the source and reduce wastewater discharge.
    • Performance improvement for non-heavy metal polyester catalysts.
    • Increased production and sales of eco-friendly polyester and the development of high-performance fiber.
  • Saving energy and reducing emissions and carbon intensity: Sinopec has created clean production processes that save energy, reduce emissions, and decrease carbon intensity.  For example, in 2014, Sinopec launched its “Doubling Energy Efficiency” Program which commits the Company to doubling its energy efficiency by 2025.  The program is expected to save 42 million tons of coal equivalent (equal to planting 900 million trees) and reduce 81 million tons of CO2 emission (equal to the annual emission of 20 million economy cars).  In 2015, Sinopec implemented 484 projects under the “Doubling Energy Efficiency” initiative, which saved 980,000 tons of coal equivalent, and the Company also launched efforts to encourage energy efficiency among its subsidiaries.  In 2017, a total of 452 programs were implemented with an expected annual energy savings that are expected to equal to 949,000 tons of standard coal.  In addition, Sinopec’s oilfield and refining & chemical subsidiaries captured 270,000 tons of carbon dioxide, of which 190,000 tons were used by oilfield subsidiaries for flooding.
  • Recycling and Reusing Resources: The Company looks for opportunities to recycle and reuse resources such as waste heat and pressure, slurry, refinery gas, flare gas, hydrogen, used catalysts, and oilfield gas.  In 2015, these efforts enabled Sinopec to recover 200 million cubic meters of methane, equivalent to cutting 3 million tons of CO2 emission, and recover 70 tons of noble metal.  In 2017, Sinopec reduced methane emission in pipeline storage and transportation by 4.26 million cubic meters.  The Company’s oilfield subsidiaries implemented recovery measures for natural gas during production and testing processes, casing gas and oil tank gas when necessary and possible.  This resulted in the recovery of 220 million cubic meters of methane, which is equal to a reduction of 3.3 million tons of carbon dioxide emissions.
  • Renewable energy: Sinopec is exploring and experimenting with the industrial application of solar power.  In 2017, the Company completing three distributional photovoltaic
    power generation projects. Sinopec is also making progress on developing non-grain bio-fuels as it strives to become a leader in the bio-fuel industry in China.
  • Protecting Water: Sinopec has improved its water use efficiency by strictly enforcing practices that reduce water use and avoid water loss and waste during production and auxiliary production processes.  From 2010 – 2015, Sinopec reduced its industrial water consumption by an average of 1.22%, with a 1% drop in water use year-on-year in 2015.  In 2017, Sinopec’s industrial water intake declined by 1.27 % from 2016 levels, saving an additional 12 million cubic meters of water.  In one success story, Tianjin Petrochemical has been using desalinated sea water as supplement to circulating water, using 10 million tons of desalinated water since the program started in 2010.  By the end of 2015, the total value of enterprise output increased nearly four times, while the overall fresh water consumption was reduced by 50%.  In addition, the company takes a number of different measures to protect groundwater during drilling.  For example, Sinopec took the following steps in one project that involved the exploration and development of shale gas:
    • Before constructing the drilling platform, Sinopec conducted hydrologic explorations of subterranean rivers and caves 100 meters below the earth’s surface so that well locations could be optimized, and contamination could be avoided.
    • Storage tanks of sewage and other wastes were built according to the local conditions. Environmental protection utilities, including diversion ditches and intercepting ditches, were put into use after penetration tests and pressure tests.
    • Casing pipes for cementing were of high quality, and cement was paved up to the ground, effectively isolating the boreholes from natural waters and shallow rocks.
  • Technological innovation in pollution treatment: Sinopec was one of the first companies in China’s petrochemical industry to recycle industrial sewage.  For example, Sinopic Zhenhai has constructed three sewage recycling units, with a total capacity of 31,200 cubic meters per day.  As of the end of the 2017, the site recycled over 76 million cubic meters of discharged sewage.  Sinopic Zhenhai has been awarded eight national invention patents related to its pollution treatment efforts.

Climate Change: Sinopec is committed to taking proactive steps to tackle climate change through the following means:

  • Energy conservation and efficiency: The Company has determined that energy conservation and efficiency improvement are the most important carbon reduction measures given the nature of its operations.  Sinopec measures the consumption of comprehensive energy per RMB 10,000 of production value and looks for opportunities to reduce that amount.  The company reduces greenhouse gas emissions by reducing flaring emissions and through carbon dioxide capture and methane recovery in its oilfield, refining, and chemical subsidiaries.
  • Carbon Accounting and Trade: Sinopec has been involved in carbon accounting and verification activities for five consecutive years, and it has become the leading company in China for carbon asset management.  Over the past 5 years, Sinopec has completed full carbon accounting for over 100 oil field gathering and transportation stations, 2,000 petrochemical facilities, and 30,000 service stations under 89 subsidiaries.  In December of 2017, China announced the launch of a national carbon market, and the power generation industry was selected as the first industry to participate.  In the future, its expected that the trading system will be expanded to include the refining and chemical industries, which will encompass all of Sinopec’s refining and petrochemical subsidiaries.  Sinopec is taking steps to prepare for this by implementing a carbon assets information system, completing carbon accounting and verification for subsidiary equipment, measuring carbon emissions data, and identifying which enterprises to include in the market.  In 2017, some of Sinopec’s subsidiaries participated in a pilot carbon trading program.  Each of these subsidiaries completed the carbon quota in time, with a carbon trading volume of 1.35 million tons, and a carbon trading turnover of RMB 19 million.

Overharvesting

Sinopec doesn’t specifically address the biodiversity threat of overharvesting in its website or reports.

Profitable Conservation

While Sinopec’s CSRs focus primarily on providing data related to the level of investment in specific activities, the Company does provide some return on investment figures as well.  To help put these investment figures in perspective, Sinopec reported total sales revenue of RMB 2,047.3 billion in 2015 and RMB 2,360.2 billion in 2017.

  • Employee Feedback: Under the guiding principle that “every single piece of advice from employees counts”, Sinopec actively engages and motivates employees to provide operations and management improvement suggestions.  This approach has worked well for the organization, with Sinopec employees providing 36,475 pieces of advice in 2015.  The company adopted 26,217 of the suggestions, which resulted in a cost reduction and profit increase of approximately RMB 605 million.  The CSR does not specify what portion (if any) of these suggestions were related to environmental issues.
  • Environmental Protection Investments: In CY2015, Sinopec invested RMB 6.8 billion in environmental protection efforts.  From CY2013 – CY2015, Sinopec implemented 809 “Clear Water and Blue Sky” projects, with a total investment of RMB 21.47 billion.  As an example, Sinopec Yangzi Petrochemical successfully installed a wastewater reuse unit (850 tons per hour) that operates with an annual treatment capacity of 7 million tons, making it the “largest enterprise of high-purity reuse of waste water home and abroad.”  In 2017, Sinopec implemented new standards, completed the treatment of sewage and flue gas, and conducted the comprehensive treatment of VOCs, with a total expenditure of environmental protection of RMB 7.85 billion.
  • Energy Efficiency Technologies: In 2015, Sinopec implemented 128 energy-saving projects in its subsidiaries, which saved 270,000 tons of coal equivalent annually, reduced CO2 emissions by 660,000 tons, and generated RMB 360 million in economic benefits.
  • Diesel Vehicle Exhaust Treatment Liquid: Sinopec created a “Yuetaihailong” Diesel vehicle exhaust treatment liquid for heavy-duty diesel vehicles that reduces NOx and PM emissions for BH-IV standard diesel vehicles and has a good economic return.  Third party inspection data shows that NOx and PM emissions of GB-IV standard diesel vehicles are 41.7% and 89.7% lower respectively than GB-III standard diesel vehicles.  The current price for 10 kg of this exhaust treatment liquid is 50 yuan, which can be used to treat 2000 liters of diesel at a blending ratio of 5%. This translates to an additional average cost of only 0.02 yuan per liter, with the benefits of reducing diesel consumption by 6% as well as significantly reducing exhaust emissions.  Sinopec provided 800,000 barrels of the liquid, free of charge, for heavy-duty diesel vehicles operating within its system.
  • Remediating exhaust emission treatment and electronic data accounting: In April 2017, the Ministry of Environmental Protection detected problems with Sinopec Yanshan’s exhaust emission treatment and electronic data accounting.  An investigation was conducted to determine the root cause, and the employees responsible for the issues were dismissed from their positions.  To remediate the issues, Sinopec invested RMB 600 million to complete VOC treatment projects, which included the construction of 46 automatic VOC monitoring sites.  In addition, Yanshan constructed an 80,000 square meter wetland park in the Niukouyu Ecological Center where the site operations were located.  The park is open to the public for free.
  • Charitable Giving: In 2017, Sinopec’s total “Social Contributions” was RMB 457.4 billion with RMB 151.88 million in donations.  In 2015, Sinopec’s total donations of “charity activities and poverty-lifting work” was RMB 200 million, with a significant part of this amount focused on the Company’s “Lifeline Express” charity project.  The “Lifeline Express” is a unique mobile hospital that was built on a train, traveling to three different impoverished regions within China each year to treat cataract patients, free of charge.  By the end of 2015, Sinopec Lifeline Express had traveled to 29 cities/counties in 18 provinces with a total of 32 stopovers.  In 2015, the program cured 3,286 patients, bringing the total to 34,798 cataract patients cured since its inception in 2004, at a total cost of RMB 127 million.  By the end of 2017, the program had cured over 40,000 cataract patients.
  • Improving local living conditions and building livable communities: In 2015, Sinopec spent RMB 1.7 billion on renovating old communities and shanty towns, relocating remote residential communities, and providing better access to basic necessities and community services.  In 2017, Sinopec invested RMB 128 million in targeted poverty alleviation focusing on infrastructure construction, industrial assistance, educational support, and the provision of healthcare.

Biodiversity & Wildlife Conservation Performance Assessment

Sinopec has come a long way since 2004 when it used dynamite and heavy machinery for exploration and road construction in Loango National Park in Gabon.  Today, Sinopec is committed to using more environmentally friendly methods in its operations and being a leader in China in adopting sustainability best practices.

To strengthen its efforts around biodiversity and wildlife conservation, Sinopec may want to set quantifiable land use and biodiversity conservation goals, address the biodiversity threats of invasive species, and consider voluntary compensatory actions such as conserving a certain number of acres of wildlife habitat for every acre of land developed.  To address the biodiversity threat of overharvesting, Sinopec may have opportunities to green its supply chain through the use of supplier scorecards and audits that include biodiversity as part of the assessment criteria.

Sinopec deserves praise for its efforts to be transparent in sharing its environmental performance information, in the form of CSRs and other media, for the past eleven consecutive years.  I look forward to reading about Sinopec’s continued progress in biodiversity and wildlife conservation in the years to come.

Coming Attractions

For our next post, we’ll still be in Beijing where we’ll take a look at the profitable conservation strategies for the #4 company on the Fortune Global 500 List – The China National Petroleum Corporation.

Thanks for reading!
Mark

State Grid Corporation of China’s Profitable Conservation Strategies for Biodiversity and Wildlife Conservation

June 11, 2018 By Mark Aspelin

As you can imagine, the State Grid Corporation of China (SGCC) is huge. After all, the company’s 1.72 million employees construct and operate power grids that supply energy to over 1.1 billion people, covering 88% of China. SGCC also owns and operates grids in outside of China, in countries such as the Philippines, Brazil, Portugal, Australia, and Italy. Not surprisingly, this makes SGCC the largest electric utility in the world, and places the company at #2 on the 2018 Fortune Global 500 list.

In reading through SGCC’s 2015 and 2016 Corporate Social Responsibility Reports (the 2017 CSR Report was published in February 2018 but is not available on the SGCC website) and “White Paper on Green Development”, it quickly becomes clear that SGCC’s primary focus from an environmental perspective is on Global Energy Interconnection (GEI), which includes the use of ultra-high-voltage (UHV) electricity transmission, smart grid technologies, and the conversion to clean energy. The reasons for this approach are both practical and strategic. China’s energy resources are located far from the major population centers. For example, most of China’s abundant coal resources are located in the northwest, and its hydropower resources are located in the west, but most of the demand is in eastern and southern China. Ultra-high-voltage electricity transmission enables SGCC to reduce transmission losses to an acceptable level as the electricity is delivered to where it’s needed.

UHV grids also enable SGCC to build new, cleaner, more-efficient power generation plants that are based on wind, solar, and nuclear energy, and then deliver that electricity across long distances to major population centers. And when SGCC says “global energy interconnection” they aren’t kidding. SGCC intends to connect large energy bases and distributed generation at the North Pole (wind) and the Equator (solar) and deliver the energy to customers across the world. As SGCC Chairman Liu Zhenya puts it, “Global energy interconnection can connect power grids in different continents with time zone and seasonal differences to solve energy and environmental problems that have been bothering human development for a long time, ensuring safe, clean and sustainable energy supply. Life will be better as the world is turning into a bright, peaceful and harmonious global village with sufficient energy, green land and blue sky.”

With the help of Global Energy Interconnection, SGCC anticipates that global clean electricity generation will account for 80% of total primary energy by 2050, reaching 66,000TWh, which represents a nearly ten-fold increase from 2010.  This will replace 24 billion tons of standard coal every year, reducing CO2 emissions by 67 billion tons and SO2 by 580 million tons.

When it comes to biodiversity and wildlife conservation,  SGCC focuses on the link between climate change and biodiversity with the following quote from the Intergovernmental Panel on Climate Change, along with a photo of a polar bear: “If global temperature rises by 1.5 ~ 2.5 ℃, 20% ~ 30% of the assessed species could face extinction. If the temperature rises by over 3.5 ℃, 40% ~ 70% of the assessed species may become extinct. (“IPCC Second Assessment”, 1995).”  SGCC also points out that a large number of species are facing extinction risk due to the slow rise of sea levels that can be attributed to the receding and melting of glaciers and permafrost.

Let’s take a quick tour of the SGCC’s efforts to address the following four major threats to biodiversity: habitat destruction, invasive species, pollution, and overharvesting.  Even though climate change poses a major threat to habitats, I generally put corporate climate change activities under the Pollution section, since the actions that companies take usually come in the form of pollution prevention initiatives.

Habitat Destruction

Reduce Land Use: SGCC has a goal to reduce land use by 10% and to reduce construction areas by 20%. To accomplish this, SGCC uses several different strategies, which are illustrated by the following success stories.

  • In North China Grid Company’s ”11th Five-year Plan”, 50,225,100 square meters of land has been spared by applying compact lines and multi-circuits on the same tower, 533,600 square meters of land were saved by utilizing GIS and HGIS, and 3335 square meters of land was saved by promoting large capacity transformer technology.
  • SGCC implemented an “Electricity Caravan” concept to minimize environmental impacts in a fragile plateau environment in the area of Sanjiangyuan National Nature Reserve (pictured below), known as “the water tower of China”. This project between Golog and the main grid of Qinghai needed to adhere to strict environmental and water protection requirements. To do this, workers from SGCC Qinghai Electric Power Company didn’t build any roads or bridges, but used horse caravans known as “Electricity Caravan” to transport the material and facilities needed for the project.
Sanjiangyuan National Nature Reserve

  • The Fujian Baihua-Bili 220kV Transmission Project includes 2-circuit 220kV and 4-circuit 110kV lines. “The project performs remarkably with less land occupation and less consumption of materials and resources, reducing the crossover of 25 civil buildings, 114,724 square meters of land occupation, over 120m of corridor width, and 13% of steel consumption, on the other hand, increasing the unit corridor transmission capacity by 235%, thus bringing down the total investment of RMB 5.32 million.”
  • SGCC estimates that it reduces the amount of land needed by 25% – 50% by using EHV AC lines rather than transporting coal by railroad and sea.

Charitable Giving and Volunteer Efforts: In 2015, SGCC gave 128 Million RMB (~$19 Million US Dollars) in public donations, provided 15 Million RMB (~2.2 Million US Dollars) via the State Grid Foundation for Public Welfare, and staff provided 2 million hours of volunteer work to support various efforts, such as poverty alleviation and scholarship funds. In addition, 2.8 million employees have participated in 1,365 tree planting activities, resulting in the planting of 677,811 trees over a period of 5 years.

Invasive Species

There is no mention of any efforts to address invasive species in SGCC’s various reports and website.

Pollution

Climate Change and Renewable Energy: The primary effort that SGCC is focused on from a biodiversity and wildlife conservation perspective is to reduce its contribution to climate change through the development of a strong and smart grid.  SGCC is actively pursuing the use of clean energy alternatives to fossil fuels, such as wind, hydropower, solar, and nuclear energy. In addition SGCC has actively supported the development of electric automobiles by building 1,537 charging stations, 29,600 charging piles, and a quick charge network that covers 81 cities and 11,000 kilometers of highways. In rural parts of China, SGCC is also partners with the government to implement projects that substitute electricity for coal, oil, and firewood.

Pollution Control: SGCC’s primary pollution control efforts come through its reduction of greenhouse gases. For example, one of its pollution control strategies is focused on recollecting sulfur hexafluoride (SF6). SGCC established SF6 gas recollection and treatment center at a provincial level to strengthen the regulation on the recollection, treatment, and recycling of air, which contributes to the reduction in the emission of greenhouse gases. In 2015, these provincial centers recollected and treated 47.1 tons of SF6 gas, which is equivalent to a reduction of 1.126 million tons of CO2 emissions.

Training: SGCC organizes a variety of environmental protection training activities. “In 2015, the company organized 112 training courses on environmental protection with 4,550 participants, and organized more than 180 activities concerning the development of grid, energy conservation, and emission reduction.”

Overharvesting

Overharvesting and overhunting threats to biodiversity are not addressed in SGCC’s website or reports.

Profitable Conservation

The CSRs and White Paper do not provide much in the way of return on investment data for the company’s environmental efforts. Nearly all of the RMB figures in the two reports specify how much the company has invested, rather than return on investment. For example, SGCC reports the following environmental investments:

  • Total investment in environmental protection: RMB 5.72 billion
  • Investment in environmental protection for construction projects: RMB 5.32 billion
  • Investment in environmental protection during grid operation: RMB 230 million
  • Investment in environmental research and special areas: RMB 170 million
  • Investment in environmental protection management: RMB 120 million
  • Investment in environmental protection governance: RMB 93 million
  • Cost of environmental protection facilities’ operation and maintenance: RMB 15 million

We can compare SGCC’s clean energy capacity figures with the company’s overall revenues, as summarized below, to give us a rough idea of what priorities SGCC is focused on in the world of clean energy, with the assumption that these efforts must be profitable in some way or else SGCC would not pursue these options.

Energy Source (Integrated Capacity in GW)

  • Nuclear Power: 6.4 GW in 2011, 17.02 GW in 2015
  • Hydropower: 156.17 GW in 2011, 207.82 GW in 2015
  • Solar (Photovoltaic) Power: 2,320 GW in 2011, 44,465 GW in 2015
  • Wind Power: 35,190 GW in 2011, 116,640 GW in 2015

Total Revenues (Billion RMB)

  • Total Revenues 2011: 1675.4
  • Total Revenues 2015: 2075.0

SGCC does provide some return on investment data for the following efforts:

  • Jinyun, Zhejiang In Jianchuan County, Xinjian Town, implement pilot projects of distributed PV (solar) generation for 60 low-income families. These projects earned over 2,000 RMB per household every year, and most of the farmers were able to get out of poverty.
  • The Fujian Baihua – Bili 220kV Transmission Project includes 2-circuit 220 kV and 4-circuit 110kV lines. The project performs remarkably with less land occupation and less consumption of materials and resources, reducing the crossover of 25 civil buildings, 114,724 square meters of land occupation, over 120m of corridor width, and 13% of steel consumption, on the other hand, increasing the unit corridor transmission capacity by 235%, thus bringing down the total investment of RMB 5.32 million.

Biodiversity & Wildlife Conservation Performance Assessment

SGCC has adopted climate change as its key issue of concern.  This shouldn’t come as a big surprise given that SGCC is in the electric power industry, coupled with the fact that China has an abundance of dirty coal and a shortage of electricity.  China needs to look at alternative energy options in order to make progress on its commitment to achieve a 40-45% reduction in CO2 emissions per unit of gross domestic product from by 2020, using the year 2005 as a baseline.  To its credit, SGCC is aggressively pursuing alternative energy and smart grid technologies to help achieve that objective.

I was also happy to see SGCC’s goal to reduce land use by 10% and to reduce construction areas by 20%.  However, SGCC’s CSRs and White Paper are relatively weak when it comes to discussing the company’s direct impact on biodiversity and wildlife. With 889,900 km of transmission lines in China alone, SGCC’s operations certainly have a significant, direct impact on biodiversity and wildlife.  As the U.S. Fish & Wildlife Service points out on its website:

“Transmission lines and other linear developments like pipelines, roads and trails, can increase human access into natural areas, displace wildlife from their habitat, act as barriers to wildlife movement and affect migration routes. They have the potential to impact sensitive ecosystems such as wetlands, impact high quality fishery resources when waterways are crossed, and create pathways for the spread of invasive species.  Operation and maintenance of transmission line right-of-ways (ROWs) may also result in environmental impacts. ROW maintenance often involves the chemical or mechanical control of vegetation that can contribute to the loss of native plant species diversity.  Cleared ROWs may be a continuous source of sedimentation into waterways.  In addition to these potential impacts, transmission lines can pose collision and electrocution risks to migratory birds.”  

In addition to transmission line corridors, the utilities industry also has the potential for significant biodiversity and wildlife impacts through extensive water use and the siting of new infrastructure.  Any company with such a large ecological footprint and direct impact on wildlife should have more to say on the topics of biodiversity and wildlife conservation.  This is an opportunity for SGCC to consider in future CSRs.

However, based on SGCC’s stakeholder and customer analyses, where the company plots environmental topics on a graph with a value creation dimension (relevance, importance, and feasibility) on the x axis and a social concern dimension on the y axis, biodiversity is not even on the list of contenders.  The top environmental issues that were identified include governing air pollution, combatting climate change, constructing electric vehicle (EV) charging facilities, and improving energy efficiency.  In addition, a major reporting standard, the Sustainability Accounting Standards Board (SASB), considers biodiversity to be “not likely a material issue” for companies in the utilities industry, although SGCC uses the GRI reporting standard for its CSR.  These factors may explain why SGCC chooses not to cover biodiversity and wildlife conservation in more detail in its various communications.

SGCC was the first state-owned enterprise in China to issue a Corporate Social Responsibility Report (in March of 2006), and I applaud SGCC’s efforts to share its environmental performance in its CSRs and White Paper.  I hope to read more about SGCC’s progress in its efforts to protect wildlife and biodiversity in the years to come.

Coming Attractions

For our next company, we won’t have to journey far.  We’re just headed down the street in Beijing to learn about Sinopec, #3 on the list of the Global 500.  We’ll explore what Sinopec is doing in the areas of biodiversity and wildlife conservation.  Zàijiàn!

Thanks for reading!
Mark