How To Build A Social Good Company From The Start

Green startup
Startup founders face many decisions in the early days – how to price their products and services, who to hire, when to launch. When you’re focused on fundamental choices like these, there’s a good chance that social and environmental responsibility may be the last thing on your mind. But ignoring sustainability in the early days of a company is not only a mistake – it’s a missed opportunity.

Baking social good into your startup gives you a competitive advantage. A recent Nielson study found that 66 percent of consumers are willing to pay more for sustainable brands – up from 55 percent in 2014. And it’s not just your customers. 78 percent of millennials say corporate social responsibility (CSR) directly influences whether they would work at an organization (Cone).

Building a responsible company will help you acquire customers and the best talent – and it doesn’t require a major budget. Here are 9 ways to get started.

1. Focus.

Think about the issues that matter to you and your brand, perhaps because of the nature of your product, the location of your business or the unique issues facing your industry. Decide what you want to focus on and set goals so you can appropriately allocate resources and measure progress.

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2. Involve the team.

No matter how many employees you have, it’s a good idea to talk to your team about social responsibility and get input on what they’re passionate about. The companies with the strongest CSR programs are the ones that give all stakeholders the opportunity to participate. Giving your team the chance to help shape your social good initiatives will lead to higher employee engagement with CSR efforts and support retention.

3. Volunteer your skills.

Having a social good program doesn’t mean you have to write big checks to nonprofits. There’s a good chance that your employees’ skills could be a major help to a local organization, whether that means helping build a website, consulting on a nonprofit’s marketing plan or designing collateral pro-bono. Catchafire is a great resource for finding skills-based volunteer opportunities in your respective community.

4. Make operations eco-friendly.

There are plenty of office and company policies you can instate to help reduce your team’s impact on the environment and promote sustainability. Consider purchasing recycled furniture, ordering snacks in bulk (less packaging), gifting your employees with reusable water bottles, and ensuring your heating, cooling and lighting systems are set up for optimal efficiency. If you manufacture, take a look at your packaging. Are you utilizing the lightest materials? Are they recyclable?

Energy Providers Must Engage Millennials Today Or Risk Losing Them As Customers

Conventional wisdom might suggest there’s no need for energy providers to rush to embrace millennials as a priority demographic. After all, many of them live with their parents who largely pay for the new products and services their household adopts.

However, energy utilities need to take action now to capitalize on millennials who are already flying the nest and becoming energy customers.

In the United States alone, there are about 80 million millennials, spending some $600 billion every year, and this is only set to increase. Millennials will truly come into their own by 2020, when our projections suggest their spending in the U.S. will reach $1.4 trillion annually, representing 30 percent of total retail sales.[i]

It’s apparent, then, that this group is swiftly becoming the largest and most influential U.S. demographic group. For energy providers, ignoring them just as they become energy consumers could mean losing this group to an increasingly complex set of new competitors and market entrants, eagerly waiting in the wings.

Indeed, our recent research showed that these consumers will drive the most future value for energy utilities.

For a start, millennials want to adopt new energy-related products and services, like applications to remotely monitor and control home elements for example, but, not only that, they want to be the first to do so. We found 24 percent were classified as early adopters, significantly more than for other age groups.

Millennials, it seems, also have a strong interest in solar, which is in line with their generation’s focus on the green agenda.  More than half of them are likely to sign up for solar panels in the next five years, double the proportion of baby boomers. Low-carbon energy-sources like solar power are clearly very popular among this generation, and energy providers will need to take note of these preferences.

Flaring In The Eagle Ford Shale And Rule 32

The Eagle Ford shale has provided an economic boom to South Texas. It is the source rock for the storied East Texas Field and also for the Austin Chalk formation, but it wasn’t until 2008 that the industry discovered the viability of producing directly from the Eagle Ford shale using horizontal drilling and hydraulic fracturing techniques.

However, the state of Texas finds itself at an important transition point. The severe downturn in oil and gas development has given regulators and the industry an opportunity to calmly assess whether current development practices in the Eagle Ford shale are appropriate.  One of the most visible and controversial practices has been the flaring of commercially usable and profitable natural gas that could have been efficiently produced but instead was burned off in the rush to bring crude oil to market.

In the oil-rich portions of the Eagle Ford, the formation produces enormous amounts of associated gas along with the liquid-rich crude oil. But pipeline construction was not able to keep pace with the number of wells completed before the downturn.  Statewide, the Texas Railroad Commission reported that Texas flared or vented more than 47.7 billion cubic feet (bcf) of associated gas in 2012. According to the commission, this was the largest volume of gas flared in the state since 1972. In 2012, based on the amount of flaring nationwide, the United States had the dubious distinction of being one of the most prodigious countries for flaring in the world.

This downturn, therefore, represents an appropriate time for the Railroad Commission to reassess its existing regulations on flaring.  The industry should know the rules of the game before significant new capital is invested.

Under existing Rule 32, the Railroad Commission accepts that flaring commercially profitable associated gas is “a necessity” any time an oil well is capable of producing crude oil in paying quantities and there is no immediately available pipeline or other marketing facility for the natural gas. Rule 32 doesn’t require weighing the relative benefit of producing the crude oil more quickly versus the economic loss caused by the flaring of the natural gas, nor does it require any factual showing that crude oil would ultimately be lost if it were not produced immediately.

Instead, the only evidence needed to flare an oil well for as long as 180 days is proof that a pipeline is not immediately available. An application does not need to contain a statement that correlative rights are at risk or that the operator is in danger of suffering either drainage or the permanent loss of oil. Instead, the operator need only show that crude oil production would be delayed (not lost, but delayed) if the requested flaring exception were not granted.

In the past, flaring exceptions were requested and granted even though gas pipeline connections were within three miles of the new well and connections were expected to be completed within a matter of a few months. Exceptions were also routinely granted for flaring profitable associated gas even when the operator only needed a few months to remove excessive hydrogen sulfide from the gas.  What is more, Rule 32 allows the commission to provide a flaring exception after the 180-day period as part of an administrative hearing and via the issuance of a final order signed by the Railroad Commission.

Dig Deeply To Find The Distressed Opportunities In Coal

Photo Credit: Mining GlobalEnergy continues to be a major area of focus for those of us who are interested in distressed investing. Although the oil and gas industries garner most of the attention, there are also opportunities in coal for those interested in challenging conventional thinking.

The coal producers, much like their counterparts in the oil and gas space, have been under stress, but to an even greater degree. Virtually every major coal producer in the U.S.—Arch Coal, Peabody Energy, Patriot Coal, Alpha Natural Resources, Walter Energy, and more—is now in bankruptcy.

There are two primary types of coal, based on their usage: thermal and metallurgical, and a couple of factors worked in tandem to bring the prices for both kinds to a peak in 2011.

Thermal coal is used for generating electricity and is a competitive fuel to natural gas. Both thermal coal and natural gas are used by utilities as fuel for generating electricity.  As the price of natural gas has come down, so has the price of thermal coal. However, not all electric utilities have the ability to switch between coal and natural gas and the cost of building new natural gas-fired plants is extraordinary.

Metallurgical coal is used to make steel.  A few years ago, there was what seemed like an insatiable demand for steel from China, which caused producers around the world to try to ramp up production. New metallurgical coal mines were dug in Australia, and American producers looked to expand by buying smaller mining operations.  Theyended up paying top-of-the-market prices for their acquisitions.

Then came the slowdown in the Chinese economy and a worldwide glut of excess steel. China set a goal of reducing its steel production by 45 million tons this year and coal capacity by 250 million tons, although by mid-August they had achieved less than half that goal. Local officials there have been reluctant to embrace the cuts, for fear of slowing growth even further and of unemployment.  Either way, commodity steel prices have dropped and so have metallurgical coal prices.

Agricultural Innovation in a Water-Scarce World

Katie Jackson is the Vice President of Sustainability and External Affairs for Jackson Family Wines. In her role, Jackson co-manages the Government Relations and Regulatory Affairs Department and leads the company’s innovative sustainability program. Jackson directs the development and management of projects related to water and energy management, greenhouse gas reduction, and social equity. Jackson is the family’s principal voice in promoting Third-Party Certified Sustainable Agriculture programs as a means to incentivize responsible management practices and achieve regulatory certainty.  Under her leadership, Jackson Family Wines launched its first-ever Family Social Responsibility report in 2016 to highlight the family’s decades-long sustainability journey and to establish ambitious goals for 2021.


Christopher P. Skroupa: What are the biggest challenges facing the California wine industry with regard to water? How is Jackson Family Wines turning those challenges into opportunities?

Katie Jackson: In California, most people would agree that water is one of the defining issues of our time. It is certainly the defining issue for agriculture. At my family’s wine company, Jackson Family Wines (JFW), we have always operated with the belief that a stressed vine produces the highest quality grape. Because of this, we have historically limited our water use to achieve our quality goals. However, that approach does not negate the need to think about what else we can do to increase our overall efficiency.

With an eye toward the future, and in an effort to protect competing resources, including human demands, my family embarked upon an ambitious program beginning in the 1990s to build rain capture reservoirs on as many of our vineyard properties as possible. The goal is to capture water in times of plenty, so we can leave water in the streams to protect aquatic resources—including endangered fish populations—when stream flows are not plentiful. These reservoirs contribute to water quality issues as well, reducing the potential for flooding and sediment delivery into streams. Our reservoirs have made us more resilient as we faced the last four years of drought. For example, as we entered the growing season last year, most of our reservoirs were full enough to take us through another year and a half. This was due to the provisions that were captured during the 2-3 big atmospheric events during the winter.

Exxon’s Forecast Becomes a Legal Target

The effort by New York Attorney General Eric Schneiderman to bring Exxon to account for failing to value its assets properly in its long-range projections given the risk to its business from climate change is a stunning display of ignorance, both of history and economics.  He believes the company’s (and industry’s) financial situation will be severely damaged due to a combination of climate change policies and advances in electric vehicle technology, and that this might constitute financial fraud.  This is predicated on a belief that the company’s long-term forecasts have some value to investors.

If only he had talked to someone with experience in forecasting oil markets, he would realize that this was a futile effort.  For one thing, the end of oil supply has been repeatedly predicted since 1861.  Years later, oil man John Archbold said he would “drink every barrel found west of the Mississippi” and in the years after World War I, predictions that production would soon peak were promoted by Scientific American, fears that only relaxed after the massive discoveries in the Middle East in the 1930s and 1940s.

Of course, many of those predictions were made at a time when geological knowledge was in its infancy and the myopia might thus be excused.  But in the 1970s, after the first Oil Crisis, those who described the problem as due to short-term production restrictions among major producers were derided, while President Jimmy Carter explained, J]ust to stay even we need the production of a new Texas every year, an Alaskan North Slope every nine months, or a new Saudi Arabia every three years. Obviously, this cannot continue.”  His Secretary of Energy, James Schlesinger, argued in 1979 that world production had peaked.  The 1986 oil price collapse occurred as most pundits were insisting that prices were too low and would need to rise.

The industry displayed no greater comprehension.  The CEO of Mobil insisted that oil companies needed to diversify away from oil or “go the way of the buggy-whip makers.”  The CEO of Exxon was convinced that, despite the tripling of prices in 1979/80, they would continue rising, making an enormous, high-cost strip mine to process kerogen into oil profitable.  More recently, the CEO of ARCO declared in 1989 that “the age of oil is over” and oil magnate T. Boone Pickens told Playboy magazine in 2007 that “We’re currently getting 85 mb/d, we won’t be getting any more.”

All of these bad forecasts lead many to think that forecasting oil markets simply can’t be done, but that is like Mark Twain’s cat that, having once jumped on a hot stove, would never jump on a hot stove again, but neither would it jump on a cold stove.  In reality, the forecasts relied on bad theory, including a tendency towards neo-Malthusian bias or resource pessimism.  Most implicitly adopted an extremely conservative view of the resource base, discussing what is currently economic to produce and ignoring the ability of geologists and engineers to drive down costs and improve recovery.  While the peak oil advocates claim that the recoverable amount of conventional oil is approximately 2.5 trillion barrels, nearly half already consumed, the total resource is more than 10 trillion, with perhaps 25 trillion more in unconventional deposits like oil sands, shale oil and kerogen (oil shale).  Gradual improvements in recovery constantly increase the economically recoverable amount.

How do current claims of the industry’s threats (if not demise) hold up?  First, electric vehicles are not close to posing a threat to the dominance of the internal combustion engine.  Battery powered vehicles remain much more expensive and deliver much poorer performance than internal combustion engines, prospering only as luxury purchases or where heavily subsidized.  Battery technology has improved from the 1990s, when everyone from the California Air Resources Board to William Weld, governor of Massachusetts, insisted their time had come, but it remains decidedly inferior to petroleum as a power supply.

Climate change is a more serious threat to the fossil fuel industry, but not as much to petroleum.  For one thing, displacement of coal by natural gas, the biggest recent contributor to reducing CO2 emissions, will benefit oil companies who are the primary gas producers.  Secondly, the notion that all fossil fuel consumption must be ended is fallacious, essentially a “magic bullet” approach which ignores the need for many different approaches.  Both carbon sequestration and geoengineering could play a role in offsetting industrial/consumer emissions, as could the reduction of non-anthropomorphic greenhouse gases, most notable methane, half of which comes from animals and landfills, leaving room for some hydrocarbon consumption.

Tesla wins US antitrust approval to buy SolarCity

Elon Musk, co-founder and CEO of Tesla Motors, speaks at the 2015 Automotive News World Congress January 13, 2015 in Detroit, Michigan.

Elon Musk, co-founder and CEO of Tesla Motors, speaks at the 2015 Automotive News World Congress January 13, 2015 in Detroit, Michigan.

Tesla Motors has won U.S. antitrust approval to buy solar panel installerSolarCity, moving closer to its goal of creating a carbon-free energy and transportation company.

The Federal Trade Commission said on Thursday that the deal was approved. It was on a list of proposed transactions that were granted quickly because the merging partners have few or no overlaps.

Tesla said in July after it made its first offer that by acquiring SolarCity the two companies would form a one-stop shop for clean energy, offering consumers solar panels, home battery storage and electric cars under a single brand. The $2.6 billion deal was announced on Aug. 1.

Tesla shares closed down 0.7 percent at $220.96 and SolarCity shares ended 0.6 percent lower at $22.36 on Thursday.

SolarCity has come under pressure from rivals offering low-cost solar energy through large, utility-scale installations, and because some state governments have reined in subsidies that encouraged rooftop solar.

A SolarCity spokeswoman said the company hopes to close the deal by the end of the year.

Tesla has yet to file a merger-related form to be reviewed by the U.S. Securities and Exchange Commission, after which it will set a date for shareholders to vote.

One major factor could put a cap on the rebound in oil prices

Highway traffic

This month’s moderate rebound in the oil price is likely to cool next year, according to analysts at Bank of America Merrill Lynch, who predict demand from developed nations to contract in 2017.

“Petroleum demand in OECD (Organization for Economic Co-operation and Development) countries will likely remain a drag on global oil markets next year,” a global commodity research team, headed Francisco Blanch, said in a note Friday.

The bank expects demand from the OECD, a group of 35 developed nations, will grow by 200,000 barrels a day (b/d) this year but project a 120,000 b/d contraction next year.

While a big part of 2016’s demand is down to Americans driving over 3 billion miles this year, BofAML expects demand to fall off, in part due to big gas-guzzlers being replaced by more efficient vehicles.

OECD demand to fall

“OECD buyers still favor larger vehicles but fuel efficiency gains loom … Other OECD regions will likely move back to structural declines. Fuel efficiencies in Europe are already offsetting miles driven, and the ongoing return of nuclear plants in Japan should bring down oil demand,” BofAML said in the note.

The world is expected to consume less oil next year and the BofAML outlook tallies with many predictions from other organizations. Forecasts by the International Energy Agency (IEA) estimate global oil demand growth will slow from 1.4 millions of barrels a day in 2016, to 1.2 millions of barrels a day in 2017. OPEC see 2017 demand growth at 1.15 million barrels a day, after an expected average of 1.22 million barrels a day this year.

Bank of America Merrill Lynch’s global oil demand projection is the same as the IEA at 1.2 million barrels and sees Brent prices averaging $61 a barrel next year and touching $70 a barrel by the end of the second quarter of 2017.

Saudi Arabia tempers freeze

Oil Drills, in California

The price of WTI sank lower Friday and traded at $47.16 a barrel by 11:00 a.m. London time. This was on the back of comments by Saudi Arabia’s energy minister who tempered any chances of a production freeze by OPEC at its next meeting.

However, further comments on Friday morning gave investors a lot more to chew on. Asked about the possibility of an agreement on freezing production levels, OPEC Secretary-General Mohammed Barkindo said “nothing is impossible in the current situation,” according to Reuters who cited the London-based newspaper Al-Hayat.

Elsewhere, Iran’s Oil Minister Bijan Namdar Zanganeh was quoted saying the country would help other oil producers stabilize the world market so long as fellow OPEC members recognize its right to regain lost market share, according to Reuters who credited the news agency SHANA.

Car sales in EMs

Oil prices are up around 23 percent year-to-date after a dramatic plunge since the middle of 2014. OPEC’s reluctance to cut output has been seen as a key reason behind the fall, as well as weak global demand, a strong dollar and booming U.S. oil production.

With weaker demand in developed nations, emerging markets are likely to pick up the slack. Bank of America Merrill Lynch see emerging market (EM) oil demand expanding by 1.3 million barrels a day in 2017, slightly above the 20-year average.

“In our view, a combination of lower funding costs in local currency and in external debt should feed into faster credit creation and economic activity in the emerging world,” the team said in the note.

“In fact, the negative interest rate environment in Europe and Japan, coupled with a dovish (Federal Reserve), could even translate into a secular growth story for EM oil demand. At present, car sales continue to expand across key EM countries, with India and China posting year-on-year growth figures of 12 and 10 percent respectively.”

Oil prices fall as Saudi Arabia dampens prospects of output freeze

Oil fell on Friday and was set for its largest weekly decline in a month after the Saudi energy minister watered down expectations that the world’s largest producers might agree next month to limit their output.

Brent crude oil futures were down 32 cents at $49.35 per barrel by 7:44 am ET, while U.S. West Texas Intermediate (WTI) crude was down 22 cents at $47.11 a barrel.

Oil OPEC

OPEC output freeze won’t rock the boat: JBC Energy  

Saudi Arabian Energy Minister Khalid Al-Falih told Reuters late on Thursday: “We don’t believe any significant intervention in the market is necessary other than to allow the forces of supply and demand to do the work for us.”

He said the “market is moving in the right direction” already.

Members of the Organization of the Petroleum Exporting Countries will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria Sept. 26-28.

The Saudi minister’s comments dampened expectations of a meaningful intervention into the market, which has been dogged by oversupply for more than two years.

The price of crude oil has fallen by more than 3 percent so far this week, putting it on course for its largest one-week slide in a month.

“This week has clearly been a tug of war between fundamentals and this continued ‘verbal intervention’ that we’ve seen from various OPEC members,” Saxo Bank Senior Manager Ole Hansen said.

“All in all, it’s left the market relatively close to the $50 mark, which in my opinion, is probably as much as OPEC can ask for at this point.”

Crude could hit $70: Technician

Crude could hit $70:Technician  

Iran said on Friday that it would cooperate with other producers to stabilize oil markets, but added that it expected others to respect its individual rights.

Many observers, however, interpreted that as Tehran saying it would continue to try to regain market share by raising output after the lifting of sanctions against it last January.

“I do not expect the OPEC meeting in September to agree any freeze or affect the oil market in any significant way. This is because it appears key OPEC members remain more concerned about market share,” said Oystein Berentsen, managing director for crude at oil trading firm Strong Petroleum in Singapore.

Regarding the current oversupply weighing on oil prices, he said that he saw oil stocks globally “falling too slowly to sustain a higher price above $50 per barrel”.