Breaking Down The BP Settlement: Where Will The Money Go?

Yesterday, the Justice Department announced BP agreed to plead guilty to 14 criminal charges stemming from the 2010 Deepwater Horizon oil spill and agreed to pay $4.5 billion in fines and penalties – the largest single criminal fine and largest total criminal resolution in US history. Attorney General Eric Holder emphasized several times that the announcement is only one piece of the government’s ongoing efforts to hold BP fully accountable for the deaths of 11 men and one of the worst environmental disasters in US history.
Here’s a rundown of what the settlement entailed and what lies ahead.
What were the charges?

• BP plead guilty to 14 counts: 11 felony counts of misconduct for the 11 workers killed at the rig, one misdemeanor count under the Clean Water Act, one misdemeanor count under the Migratory Bird Treaty Act, and one felony count of obstruction of Congress.
• Three BP employees were also charged, two of them with manslaughter.

Where will the money go?
In addition to the size of today’s resolution, the settlement is also historic in its dedication of the majority of funds to the affected Gulf Coast states for environmental restoration.

• $2.4 billion will go to the National Fish and Wildlife Foundation, – an independent, non-profit conservation group chartered by Congress in 1984. The funds will be paid out over a period of five years and be earmarked for environmental restoration and preservation in Gulf states.
• $350 million will go to the National Academy of Sciences for oil spill prevention, education, research, and training – also to be paid out over five years.
• More than $1 billion will go to the Coast Guard’s Oil Spill Liability Trust Fund, overseen by the U.S. Coast Guard to be available to pay for future oil spill cleanup.
• BP will also pay $525 million to resolve claims with the Securities and Exchange Commission for misleading its investors regarding the size of the Deepwater Horizon spill.

What additional aspects of BP’s liability have not been resolved? Yesterday’s settlement was just one step toward determining full liability for the catastrophe, with the largest potential penalties still remaining.

• Civil penalties under the Clean Water Act are the largest potential fine, as the company will be charged up to $4,300 per barrel of oil spilled.  Holder indicated that the government will pursue the maximum penalty, which could result in a fine as large as $21 billion.
• Federal and state Natural Resource Damages claims also remain outstanding. Historically, these have taken the longest to resolve. In the case of the Exxon Valdez spill, they took more than a decade to settle.
• State economic loss or private civil claims that aren’t covered by the $7.8 billion settlement announced in March.

Re-posted article by Kiley Kroh, at the Center for American Progress.

Newsweek Green Rankings Published

It’s that time of year again! The fourth annual Newsweek Green Rankings list has arrived, rating the largest publicly traded companies in the United States and across the globe on their environmental performance. Newsweek collaborated with Trucost and Sustainalytics to compile companies’ overall Green Score from three component scores: Environmental Impact, Environmental Management and Environmental Disclosure, weighted at 45%, 45% and 10% respectively.

The top 5 U.S. Companies are:

1. IBM
2. Hewlett-Packard
3. Sprint Nextel
4. Dell
5. CA Technologies

To read more about the top 15 U.S. companies and see their scores, please click here.

The top 5 global companies are:

1. Santander Brasil
2. Wipro
3. Bradesco
4. IBM
5. National Australia Bank

To read more about the top 15 global companies and see their scores, please click here.

Companies are also ranked according to industry, including Consumer Goods, Healthcare, Energy, Professional Services and Utilities (20 total). There are even lists such as Least Green Companies (BlackRock), Most Transparent Companies (UPS) and Reputation and Reality Winners list (IBM).

Scores were calculated using the same methodology as 2011 for comparability, in order to create a baseline for these companies and provide an environmental benchmarking tool to them and other stakeholders. To see the full lists please click here.

What do you think? Any surprises from the 2011 rankings? Do you agree or disagree with the top ranked companies? Least green companies? Let us know!

Take Smaller Bytes=>Slim Environmental Impact=>Be More Sustainable

Diet ads frequently promote that by taking smaller bites during meals, people will be more likely to slim down.  Well, businesses should listen to this advice too.  By taking smaller “bytes,” or using technology more efficiently, businesses can slim down their costs and impacts on the environment.  When used effectively, technology is also an excellent tool for companies to launch sustainability projects.  In the recent Software Advice article, Data Collection + Business Intelligence= Successful Sustainability Initiatives, ERP Analyst Michael Koploy describes how improving data collection systems and analytics operations will enhance companies’ sustainability initiatives.  In addition, companies with sustainability teams that are data-minded and accountable will be more successful.

BrownFlynn agrees with Koploy’s findings.  We believe that technology can be a valuable resource for companies to measure their environmental impacts and track their progress.  However, the data compiled by technology sources can only go so far.  Facts and figures have little significance until they are interpreted, analyzed, and organized.  The analysis process requires not only data, but also strategic thinking that technology cannot provide.  For strategic thinking to occur, business leaders must utilize the data to set goals, determine parameters, find connections, prioritize actions, and make decisions.  In a sustainability context, companies follow this strategic thinking pattern and are often able to report their results.  For example, SAP, the world’s third largest independent software manufacturer and a leader in enterprise applications, reviewed internal data to determine the best metric of employment progress to include in their sustainability report.  When given employment statistics, SAP decided to focus on their employee retention rate rather than their turnover rate.  The employee retention rate was a more representative metric of their employment goals; “not just managing measuring turnover, but actively managing the retention of talent.”  As demonstrated in SAP’s case, technology can provide data that help businesses make decisions, but it is just one element of the sustainable business process.

According to BrownFlynn’s definition of the sustainable business process, technology helps companies complete the Monitor step.  The complete process is outlined below:

• Prepare….by creating a leadership team and brainstorming goals.
• Connect….with stakeholders and determine where they think your company can improve its sustainability initiatives.
• Define…. problem areas and how you will approach them.
• Monitor….your impacts and your progress.
• Report….your findings, goals, and progress to your stakeholders.
  

The diagram above demonstrates that each step in the sustainable business process can be ongoing and influenced by other steps that occur.

The strategy element of the process is where BrownFlynn serves as a resource, to help businesses utilize available information, create sustainability strategies, and communicate to stakeholders.  We recognize the value of technology in initiating this process.  Our support for technology as a sustainable business tool is demonstrated by our recent collaboration with SAP.  Together with SAP, BrownFlynn will be hosting Global Reporting Initiative (GRI) training sessions July 31-August 1 in Philadelphia, PA and September 25-26 in Palo Alto, CA.  The GRI-certified program provides attendees with a comprehensive overview of reporting their environmental, social and economic policies- a practice which often establishes or enhances a company’s sustainability strategy.  SAP will inform attendees about methods to efficiently collect and organize data, and BrownFlynn will review best practices in the GRI reporting process.  Click here for information about the GRI training sessions and how to register.

With effective use of technology and a well-developed strategy, businesses will see vast improvements in their sustainability efforts.  So, we, as businesspeople, should listen to diet ads and take smaller “bytes.”  As a result, we will slim down our costs and reduce our footprint.  Ultimately, we will be happy with our lower weight on the environmental impact scale.

 

By Brittany VanderBeek, Intern

Cleveland Indians lead the way in waste management initiatives

The Cleveland Indians, in partnership with the Natural Resources Defense Council, have taken on the challenge of managing their high volume waste and are succeeding in a significant way. Since its inaugural year in 1994, Progressive Field (then Jacobs Field) has provided recycling receptacles for plastic, cardboard and aluminum. When the facility’s waste hauling contract expired in late 2007, the operations team stepped up their waste management efforts to establish the ballpark as an industry leader.

In 2008, Brad Mohr, assistant director of ballpark operations, forged new partnerships with local waste management companies and arranged for the separation of waste from recyclables on-site. To do this the team purchased two balers that create 1200-pound cubes of cardboard and 500-pound ready-for-sale cubes of plastic or aluminum. With the money they saved from these machines they were able to pay off the $30,000 cost within six months.

In three years the team was able to cut their annual waste in half, which subsequently reduced the number of trash compactor pickups, saving the team $50,000 in those three years. Mohr is confident the ballpark will continue to save at least $50,000 or more each year with its improved waste management program. Not only has this program reduced the ballpark’s environmental impact, it has also created local jobs; extra custodial staff are hired for each game to help pick up recyclables around the ballpark.

The Tellus Institute launched a report last week entitled “More Jobs, Less Pollution” at an event hosted by the Indians at Progressive Field. This event took place alongside a number of events across the country on National Recycling Day, which was November 16. The event was also a showcase of the great initiatives the team has implemented to reduce and reuse waste.

To read the full article please click here.

BrownFlynn at SRI in the Rockies!

Hello from SRI in Rockies!  As a sponsor of this conference, BrownFlynn is pleased to be here with more than 500 other people who are passionate about directing the flow of investment capital in transformative ways and drive a shift to a more sustainable economy.  Most encouraging to note is that 200 of these people are first-time attendees at this conference, further reinforcing the increased interest in making companies and the world more sustainable. 

I arrived yesterday afternoon to join up with Barb Brown and John Barrett from our team, and we’ve already met some great people and heard some interesting speakers.  A couple of key takeaways:

1) 75% of a company’s value is now based on qualitative analysis–the intangibles–which is up from 25% twenty years ago.  The intangibles have also evolved over this timeframe and are now referred to as the “new intangibles”, which include: governance, environmental impact, transparency, community involvement, product safety, employee relations (specifically fairness and diversity), human rights, and reputation.

2) There are 3 “Myth Busters” when it comes to socially responsible investing–and Craig Metrick, Principal & U.S. Head of Responsible Investment for Mercer, shared his feelings about these myths, which include:

a) SRI funds have a limited investment universe–as Craig said, “Busted!” (Not true!)

b) Performance of SRI funds is not competitive with other funds–“Busted!” (Not true!)

c) The scope of SRI is insignificant–“Busted!”–(Not true!)  In fact, SRI funds topped $3 trillion dollars in 2010.

There are more great sessions still to come…looking forward to learning more and meeting many new colleagues over the coming few days!

–Margie Flynn

Surge in Socially Responsible Investing Builds Business Case for Sustainability

Many companies are taking note of the recent surge in socially responsible investing (SRI), which is swiftly making the business case for corporate responsibility and sustainability.  Essentially, socially responsible investors recognize that companies’ impacts on the environment, society and the economy are all valid components of investment decisions.

Demonstrating the power of SRI:

Chevron Corp. recently became the first major U.S. oil company to announce that it would track and report on the carbon content of its products.  As a result of the decision, The Sisters of St. Dominic of Caldwell, N.J., a faith-based institutional investor, withdrew its greenhouse gas emissions shareholder resolution against the company, in addition to praising Chevron’s efforts to reduce its carbon footprint.

The Sisters of St. Dominic consists of a group of 16 investors and is a member of the Interfaith Center on Corporate Responsibility (a coalition of nearly 300 institutional investors representing over $100 billion in invested capital). The Sisters of St. Dominic filed a proposal on the carbon content of Chevron’s products earlier in 2009.

Chevron’s competitor, Exxon Mobil Corp., may now be under more pressure to reduce its own carbon footprint.  The investors group criticized Exxon directors for asking their shareholders to vote against a similar proposal.

A growing market:

The SRI market currently comprises an estimated $2.71 trillion out of $25.1 trillion in the U.S. investment marketplace today.  In order to capture the growing SRI market, Dow Jones, NASDAQ and S&P (among others) have all launched Sustainability Indices to show how companies compare in terms of sustainable practices.

SRI works to the financial benefit of companies that consider and address their environmental, social and economic impacts, while delivering more long-term returns to shareholders that understand the link between sustainable corporate practices and the ‘sustainability’ (read: longevity) of the companies themselves.

Patricia Kelley, an investment consultant of UBS Financial Services, Inc., stated, “We believe a solution to the current credit crunch is a greater focus on sustainability.”  She explained the current credit crunch as a catalyst of the cultural paradigm shift towards sustainability and corporate responsibility.

She continued, “The fact that a burgeoning number of investors care about corporate responsibility builds the business case for companies to deepen their focus on integrating sustainability into the core of their operations.”