CLIMATE CHANGE, SUSTAINABLE DEVELOPMENT, AND ECOSYSTEMS
2008 Annual Report[1]
Sustainable development, ecosystems management, and climate change saw significant development at all levels of government. International, national, regional, state, and local efforts all continued to develop in 2008, with climate change efforts continuing to grow and spread. New in 2008, however, was the increased role of the courts and administrative bodies that began to develop standards and related controls related to climate change efforts, as well as local efforts regarding sustainability, and an increased focus on renewable portfolio standards.
I. Sustainable Development
A. International Activities
1. Governmental Developments
In 2008, European Union (EU) member countries moved forward with sustainable procurement programs taking into account environmental and/or social factors. Initiatives have been pursued by Cyprus (action plan, 2007-09), Malta (guidelines and standards), the Netherlands (goal for 2010), and the UK (action plan, 2007; task force, 2005, goal of being among leaders by 2009). The Tuscan and Umbria regions of Italy established procurement preferences for suppliers with facilities certified under the Social Accountability 8000 standard on workplace labor practices.[2]
Starting in 2009, each of the 55 state-owned companies in Sweden will be required to file an annual sustainability report based on the Global Reporting Initiative’s Sustainability Reporting Guidelines.[3] State-owned enterprises in China are subject to The Guidelines on Fulfilling Social Responsibility by Central Enterprises issued in December 2007.[4] In the UK, each company that is publicly traded will be required to report on its environmental, employee, social, and community issues to the extent needed for an understanding of the business’ development and performance, including information about the effectiveness of the organization’s policies.[5]
2. Pension Funds
Legal counsel retained by the UN Environment Programme-Finance Initiative (UNEP-FI),[6] one of the two groups that developed the principles guiding the Swedish National Pension Funds,[7] concluded that institutional investors, such as pension funds, are not only legally permitted to integrate environmental, social, and governance (ESG) issues into their investment decision-making and ownership practices, but could be breaching their fiduciary duties if they fail to take into account ESG considerations, which can have an impact on the financial performance of an investment.[8] Additionally, the UK undersecretary for the Department of Work & Pensions confirmed that there was no legal reason why ESG factors should not be considered in addition to the usual factors of financial returns, security, and diversification.[9] Elsewhere in Europe, the French law establishing its pension reserve fund requires the fund to invest part of its assets according to social responsibility principles. [10]
3. Voluntary Initiatives
In 2008, the Principles for Responsible Investment (PRI) and Enhanced Analytics – two groups representing over $15 trillion in assets under management – joined under the PRI name to better serve the needs for international investor research on extra financial issues, including those of an environmental and social nature. The UNEP-FI and the Global Reporting Initiative (GRI) led several working groups in developing and testing the GRI Financial Services Sector Supplement, a guidance on sustainability reporting for the financial sector. The CFA Institute, Centre for Financial Market Integrity, published Environmental, Social, and Governance Factors at Listed Companies: A Manual for Investors, while the European Investment Bank (EIB) prepared an Environmental and Social Practices Handbook, and launched a public consultation on the draft of its revised Statement of Environmental and Social Principles and Standards.
The developers of the ISO 26000 Social Responsibility (SR) Guideline Standard voted to move the draft to the Committee Draft stage, meaning the document will be distributed to the participating voting national standards bodies for their comment, and likely their preliminary vote, before April 1, 2009, with finalization in 2010.[11] The draft addresses the integration of social responsibility into the organization meeting ISO standards, and presents a number of general SR principles to be followed.
B. National Activities
1. United States Department of Agriculture (USDA) Draft National Standards
On July 28, 2008, the Secretariat of the SCS-001 Draft Standard on Sustainable Agriculture, Leonardo Academy, published the list of members of the Standards Committee.[12] Industry interests complained that the Standards Committee excluded applicants from the agricultural chemical industry, including fertilizer. The USDA, found both the standard and its proponents to be biased toward organic methods, which is not consistent with the definition of sustainable agriculture in the 1990 Farm Bill. The rules for Standards Committee selection gives 25% of the seats on committees to “environmentalists,” which the USDA suggested created built-in bias.[13]
After Leonardo wrote USDA citing the “precautionary approach” to biotech crops as grounds for excluding biotech interests from a sustainable agriculture standard, the USDA, in August, challenged American National Standards Institute’s (ANSI) accreditation of Leonardo as a standard-setter. A hearing was scheduled for December 17, 2008. Organic interests that fear a dilution of the well-known “certified organic” brand causing consumer confusion filed legal objections. Finally, mainstream agricultural interests objected to the organic-only approach they saw in the SCS-001 Standard as too narrow and restrictive in an era when high yields, and certain inputs, are required for feed and fuel. In late September 2008, at the first meeting of the SCS-001 Standards Committee, it voted to set aside the SCS-001 standard and treat it only as a “reference” document, along with other relevant standards and initiatives.[14]
2. EPA Accounting for Greenhouse Gas Emissions (GHG) in Renewable Fuels
Industry and agricultural trade groups want the EPA to delay the GHG accounting[15] mandated by the 2007 Energy Bill for those emissions from indirect land use changes caused by use of biofuels, while environmental groups recommended such analysis be included.[16] Former EPA Administrator, and nominated White House Coordinator of Energy and Climate Policy, Carol Browner recommended on November 12 that the Obama administration develop a proposal that accounts for the GHG impacts of indirect land use changes if the Bush administration does not.[17]
3. Renewable Portfolio Standards (RPS)
By 2008,[18] twenty-five states adopted mandatory RPS,[19] five states adopted voluntary RPS,[20] and fourteen states had adopted no form of RPS.[21] In 2008, South Dakota enacted House Bill 1123,[22] establishing a voluntary Renewable Portfolio objective of 10% by 2015; Utah enacted Senate Bill 202,[23] establishing a voluntary Renewable Portfolio goal of 20% by 2025, but requiring utilities to participate based on cost effectiveness; Maryland enacted Senate Bill 209,[24] accelerating existing RPS to require renewable energy to account for 20% by 2022, and retaining the 2007 two percent solar carve out; Ohio enacted Senate Bill 221,[25] establishing an alternative energy portfolio standard requiring renewable energy to account for 25% by 2025; Florida enacted House Bill 7135,[26] requiring the Public Service Commission to develop an RPS by February 1, 2009, and building on Executive Order 07-127 requiring utilities to produce at least 20% of their electricity from renewable resources; Massachusetts enacted Senate Bill 2768,[27] requiring renewable energy to account for 25% by 2030; and Missouri adopted, by ballot initiative, the Missouri Clean Energy Initiative, requiring investor-owned utilities to increase renewable electricity generation to 15 % by 2021, accelerating the 2007 goals of 11% by 2021.[28]
C. State and Local Activities
Cities are increasingly writing “green” requirements into building codes, with California leading the way.[29] San Francisco’s ordinance applies to “most buildings in the city,”[30] while Los Angeles’ new ordinance provides accelerated planning review for projects achieving LEED silver standards or higher.[31] The California Building Standards Commission adopted a green building code for certain state construction, and suggested that these were minimum standards not intended to limit California counties and cities from adopting more rigorous local standards .[32] In addition, Assembly Bill (AB) 811 allows municipalities to provide low-interest financing for the initial costs of energy efficient devices for local residents, such as solar panels.[33] This law was approved as urgency legislation, and signed into law on July 21, 2008.[34] In December 2008, Marin County, and the cities within the county, approved a new “Joint Powers Authority” with the express purpose of providing alternative-sourced energy to county residents at a price competitive with that of energy provided by the local utility, Pacific Gas & Electric Co.[35]
The U.S. Green Building Council and the ICLEI-Local Governments for Sustainability issued a standard for judging cities and regions against a recognized benchmark – the “Star Communities Index.”[36] Borrowing the “tiers” in the LEED® Green Building Rating System™, SCI will “establish[ ] shared measures and processes” for communities and regions that are seeking sustainability.[37]
II. Ecosystems
A. International
In November 2008, the United Nations Environment Programme (UNEP) met with stakeholders in Kuala Lumpur to consider launching an intergovernmental platform on biodiversity and ecosystem services (IPBES).[38] The new entity would operate at the interface of science and policy to ensure the credibility and legitimacy of emerging scientific findings and recommendations. “The proposed IPBES would provide scientific support to multilateral environmental agreements, national governments and other decision-makers concerned with consequences of biodiversity loss and ecosystem change.”[39] A key role envisioned for the IPBES would be to assist national-level agencies with translating the biodiversity science into environmental policy recommendations using an ecosystem services framework.[40] As proposed, the panel would function much like the IPCC, and is intended to elevate ecosystem issues on the international political agenda.[41]
B. National
1. Environmental Protection Agency (EPA)
The EPA's Ecological Research Program (ERP) is implementing a five-year plan to create a national system for monitoring and collecting ecosystem services data. The program’s premise is that an ecosystem services approach better fits the government's cost-benefit framework for budgeting and regulatory decisions.[42] EPA science advisors, however, questioned ERP's ability to achieve its ambitious goals, including mapping, evaluating, and modeling ecosystem services at several pilot sites around the country.[43] The EPA’s budget for ecosystems programs has fallen from $120 million in 1995 to $72.2 million in FY08.[44] In December 2008, the EPA re-launched ERP as the Ecosystem Services Research Program (ESRP), and is seeking partners for a National Ecosystem Services Research Partnership. The Partnership goals are to: i) establish ecosystem service standards, indicators, and measurement protocols that support environmental accounting systems and markets; ii) advance ecosystem service valuation techniques; iii) create institutional capacity for investments in natural capital that provides sustainable flows of ecosystems services; and iv) improve the ability to perform ecosystem service assessments across institutional, spatial, and temporal scales.[45] Meanwhile, the EPA moved quickly to establish a portfolio of partnerships on ecosystem services, announcing in 2008 new initiatives with the World Resources Institute and National Geographic.[46]
2. Department of Agriculture (USDA)
The 2008 Farm Bill directs the Secretary of USDA to “establish technical guidelines that outline science-based methods to measure the environmental services benefits from conservation and land management activities. . . . in order to facilitate the participation of farmers, ranchers, and forest landowners in emerging environmental services markets.”[47] The Secretary is directed to establish procedures for measuring environmental services benefits, a reporting protocol, as well as a registry, with requirements for third party verification.[48] In response, on December 15, 2008, the Secretary established the new Office of Ecosystem Services and Markets.[49] This Office, and its guidelines, can be expected to facilitate the creation and use of multi-credit trading regimes to provide additional financing for conservation practices.[50]
III. Climate Change
A. International Activities
1. Bali Roadmap and Related
Conference of the Parties (COP)-14 identified an ambitious international negotiating agenda leading up to Copenhagen in December 2009.[51] The parties agreed to submit proposals on how to implement the Bali Action Plan by February 2009 to the United Nations Framework Convention on Climate Change (UNFCCC) secretariat, and that a negotiating text will be circulated by June of 2009 that will become the basis for negotiations at COP-15 in mid-December 2009.[52]
An Adaptation Fund, financed by a 2% share of Clean Development Mechanism (CDM) proceeds plus voluntary contributions, was established under the Kyoto Protocol to fund adaptation projects and programs in developing countries. A governing board of the Adaptation Fund was created in Bali to reform how the fund had been previously managed. However, after Bali, the fund encountered legal problems in distributing funds directly to developing countries. COP-14 resolved the legal issues by giving the Adaptation Board the authority to enter into contracts that would allow fund distribution.[53]
Also at Poznań, a consensus was reached on a 2009 program of work on methodological issues needed to set baselines and measure carbon stored in forests. Little additional progress was made on the architecture of the Reducing Emissions from Deforestation in Developing Countries and to Stimulate Action (REDD) program, and numerous implementation issues remain unresolved.
A decision on a proposal to allow organizations to earn credits for carbon capture and storage through CDM was postponed. While a majority of representatives supported the proposal, Brazil and several other countries blocked approval, meaning it will likely not be included in the climate change treaty scheduled for 2009.[54] Finally, COP-14 endorsed the Global Environment Facility’s Poznań Strategic Programme on Technology Transfer, allowing the Global Environmental Facility to leverage private sector funds to scale up commitments on adaptation and mitigation in developing countries.
2. Japan
In August 2008, Japan announced its plan for government oversight of voluntary carbon footprint labels on food packaging and other products.[55] “The labels will show how much CO2 is emitted during the manufacture, distribution, and disposal of each product,” mirroring elements of a British program.[56] In the UK, up to 70,000 products will be subject to this purely voluntary labeling, although the UK system has not sought an official imprimatur or approval.[57] Other carbon offset credits in the UK are certified by non-governmental organizations with global brand recognition.[58]
3. Canada
On October 20, 2008, the Federal Court of Canada dismissed three applications brought by Friends of the Earth (FOTE) in connection with alleged breaches by the federal Cabinet and Minister of the Environment of duties that were said to arise under the Kyoto Protocol Implementation Act (KPIA).[59] KPIA requires the Minister of the Environment to prepare an annual Climate Change Plan (CCP) that outlines how Canada will meet its obligations under the Kyoto Protocol, including its commitment to reduce the country’s GHG emissions by 6% below 1990 levels between 2008-2012.[60] The CCP subsequently published by the Minister reaffirmed the government’s position that meeting this commitment was not feasible, leading FOTE to allege that the government had failed to comply with the duties imposed by the KPIA. The Canadian Federal Court held that although the KPIA creates a system of public and Parliamentary accountability, the KPIA does not impose upon the government a duty to regulate. According to the Court, the substantive issues raised in FOTE’s applications were not intended by Parliament to be justiciable, and therefore the Court could not review the reasonableness of the government’s response to the KPIA. Although FOTE has given the Canadian government notice that it will appeal the decision, the Federal Court’s ruling is an early indication of the reluctance of Canadian courts to decide what remains a politically contested issue.