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We’re thankful for…companies setting climate goals!

Animal Rights & Environment, Environmental Defense

By Elizabeth Sturcken

Target has joined other retailers on the right path to developing a robust science-based policy for tackling greenhouse gas emissions in its operations and supply chain, creating more momentum toward action on climate by leading companies.

At COP23 in Bonn, Germany, we heard leaders at some of the world’s largest companies share their commitments to step forward on climate issues. This year we’ve also seen American companies like Mars Inc., Walmart, Hewlett Packard Enterprise and Amazon set ambitious goals during a time when our government is stepping back. At EDF+Business, we see time and time again why our world needs healthy environments and healthy businesses in order to truly prosper.

For example, recently Target announced a new climate policy and goals with the following highlights:

  • Reducing its Scope 1 and 2 greenhouse gas emissions by 25 percent below 2015 levels by 2025;
  • Sourcing 100 percent renewable energy in its domestic operations;
  • Avoiding 2 million metric tons of annual Scope 3 emissions by 2022 by focusing efforts on supplier factories producing Target-owned brands; and,
  • Developing an additional Scope 3 goal for its supply chain within a year.

Brian Cornell, Target’s chairman and CEO, links the recent announcement to long-term goals for the company and its vision for a sustainable future:

“Target has long been committed to making our business more sustainable, which leads to a stronger, cleaner supply chain and operations, and a healthier environment for our team members and guests,” stated Cornell. “That’s why we’re setting goals to reduce our greenhouse gas footprint, and working with our industry partners, policymakers and other stakeholders to accelerate the transition to a low-carbon economy.”

Elizabeth Sturcken, Managing Director, EDF+Business

Target’s announcement follows a trend we saw in a recent report by the CDP – the world’s largest annual tracker of company responses to climate change – indicating that Target is far from alone in its commitments. CDP’s sample of companies, which together represent 12 percent of global emissions, showed that almost 90 percent have already set some kind of carbon reduction target. Better yet, the number of companies with a renewable energy production target rose 36 percent, to 75 companies, from last year.

For companies looking to make these commitments, EDF and organizations like the Science-Based Target initiative (SBTi) encourage companies to develop a detailed inventory of emissions, including Scope 3 emissions from their supply chains, and then set a “science-based” target in line with the goals of the Paris Climate Agreement.

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Target’s policy follows this guidance and is another critical step in the path of retail leadership on climate. They are following in the footsteps of Walmart, who set a science-based commitment a year ago. Let’s pause and acknowledge what a big deal it is that retailers are committing to reduce their own emissions directly and are taking responsibility for reducing emissions from their products and supply chains. This is a sea change from 10 years ago.

In addition to the action by Target and Walmart, CVS has committed to setting science-based goals for Scope 1, 2 and 3 emissions in line with what the science tells us needs to be done to address climate change. These leaders are putting a stake in the ground for forward-progress. At EDF, we are especially excited to hear Target CEO Brian Cornell’s commitment to working on policy to drive a low-carbon economy. This is especially needed right now when U.S. leadership in Washington is trying to take us backwards.

While EDF would like to see more specifics about the projects and programs that Target is expecting to implement to achieve their goals – especially in their supply chain – we are pleased to hear that they are working with WWF to define this.

Having worked closely over the past 25 years with companies on their sustainability strategies, EDF has found that focusing on a few key areas along the supply chain can make the greatest impact. From greening the agricultural supply chain to helping suppliers reduce factory energy use, we are working with retailers to stock their shelves with more sustainable products.

Lastly, EDF encourages Target to continue being a leader in transparency through public disclosure of its progress towards its climate goals and to work collaboratively with key stakeholders to develop and use common reporting frameworks to track product sustainability through partnerships such as The Sustainability Consortium.

All of these efforts are needed to ensure growth and resilience of business and contribute to making products safer and more sustainable – for everyone.

To learn more about how companies can green their supply chain, visit EDF’s Supply Chain Solutions Center. Be sure to look out for our “Trends in Sustainability Leadership” blog series where we interview corporate leaders, such as Stewart Leeth, vice president of regulatory affairs and chief sustainability officer for Smithfield Foods, Inc. and Linda Fisher, former DuPont chief sustainability officer who can speak to the business benefits of sustainability initiatives.

Follow Elizabeth on Twitter, @esturcken.

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Too little, too late: Why SNURs alone are not a sufficient alternative to consent orders for new chemicals

Animal Rights & Environment, Environmental Defense

By Richard Denison

Richard Denison, Ph.D., is a Lead Senior Scientist.

The Environmental Protection Agency (EPA) is in the process of making some major changes to its policies and practices governing new chemical reviews.  This post discusses one of the most troubling ones.  

The SNUR-only approach EPA is now deploying differs dramatically from and provides far less risk protection than would result from it simply doing what the law requires:  using orders, with SNURs as backup.

As I have previously described, last year’s Lautenberg Act made extensive changes to section 5 of the Toxic Substances Control Act (TSCA), which governs the review of new chemicals prior to their manufacture and use.  Among these changes is a requirement that EPA must evaluate potential risks, and mitigate potential unreasonable risks, of a new chemical under its “conditions of use,” which the new law defines to include “reasonably foreseen” circumstances of production, processing, distribution, use or disposal, as well as those intended by the company submitting notice of the new chemical to EPA.  If EPA identifies potential risk or significant exposure or lacks sufficient information on a new chemical, it must issue an order prohibiting or limiting the conditions of use of the chemical in order to mitigate any unreasonable risk.

After passage of the Lautenberg Act until recently, and in keeping with the new law, if EPA’s review identified risk concerns relating to conditions of use beyond those strictly identified by a company submitting a new chemical notice to EPA, the agency made a “may present an unreasonable risk” finding and pursued development of a consent order with the company sufficient to ameliorate those concerns.  (While EPA has authority to issue unilateral orders, it typically negotiates with the company to arrive at a consent order that both parties sign.)

Now EPA is indicating it will instead make a “not likely to present an unreasonable risk” finding for the intended conditions of use, and says it can address any concerns over reasonably foreseen uses without issuing an order by developing only a significant new use rule (SNUR).  This “SNUR-only approach” is inconsistent with the law, a matter I won’t discuss further here.  However, it also raises a host of policy concerns, some of which I lay out in this post.

The SNUR-only approach EPA is now deploying differs dramatically from and provides far less risk protection than would result from it simply doing what the law requires:  using orders, with SNURs as backup.

There are ample reasons why Congress called on EPA to use orders to address concerns and then use SNURs as backup:  Orders (including consent orders) and SNURs are not created equal.  This post discusses 12 key differences, with respect to:

(Spoiler alert:  Deep dive ahead. Let me apologize to and warn readers in advance that this post gets rather into the weeds, as the issues are complicated and the details are important.)  

Legal requirements available in a consent order vs. a SNUR

  1. A consent order imposes legally binding conditions on the company that signs it. Where EPA identifies potential risk or a lack of sufficient information, TSCA requires that it impose binding conditions that must regulate the chemical “to the extent necessary to protect against an unreasonable risk of injury to health or the environment.”  Even where a SNUR defines a significant new use to be any activity outside of those same conditions, the conditions are not binding and the only requirement on a company is to notify EPA prior to engaging in that significant new use (by filing what is called a Significant New Use Notification, or SNUN).  The SNUN then undergoes a review similar to that for a premanufacture notification (PMN).  Only if that review leads to a risk finding, an exposure-based finding, or an insufficient information finding can EPA impose binding conditions – which would likely be done through a consent order applicable to the SNUN submitter.  (Note also that the provisions in a PMN are not legally binding on the submitter; only if codified in a consent order would they be binding.)
  2. Consent orders are readily enforceable because the party subject to a consent order is known and has consented to abide by the conditions of it. A consent order must also be posted visibly within any workplace where activities subject to the consent order are taking place.  In contrast, EPA has very limited means to know if companies are complying with the conditions of a SNUR or should have, but did not, file a SNUN.
  3. Testing requirements cannot be imposed through SNURs, but can be through consent orders. Section 5 of TSCA requires EPA to issue an order whenever “the information available to the Administrator is insufficient to permit a reasoned evaluation of the health and environmental effects of a chemical substance,” without limitation to a company’s intended uses, and section 5 orders provide a critical direct mechanism for EPA to address the data gaps that characterize the great majority of PMNs.

Given that only about 10-15% of PMN submissions include chemical toxicity and/or fate data as part of the submission, EPA is typically making determinations based on insufficient data about the PMN substance, often relying exclusively on analogs.  There is no current ability to quantitatively evaluate how predictive an analog is of the PMN substance’s properties; at best EPA can make a qualitative determination.  Relying on a SNUR instead of a consent order provides no opportunity either to generate new information or to use that information to reassess EPA’s initial evaluation based on limited information.

  1. Consent orders can be reopened and revised based on new information (including results of required testing). If testing shows a chemical is more toxic than initially thought, EPA can tighten conditions in the order.  No such option exists with a SNUR:  If companies are engaging in activities that do not trigger notification under a SNUR but later those activities are found to present potential or actual risk, those activities cannot be brought under the original SNUR or addressed by a new SNUR, because they are now ongoing uses.  EPA’s only option at that point would be to pursue action under section 6 of TSCA: designate the substance as high-priority and undertake a risk evaluation.

In contrast, a consent order includes both actual restrictions to protect against the unreasonable risk and a “reopener” provision:  If testing indicates that EPA underestimated the magnitude of the unreasonable risk, then the terms of the consent order allow EPA to modify it to require new restrictions to protect against the unreasonable risk.  In the SNUR-only scenario, because there is no testing requirement, EPA will not even be able to learn whether its initial estimate of the risks was accurate.

Scope of risk review under a consent order vs. a SNUR

  1. Under the reforms made by the Lautenberg Act, Congress required that EPA subject new chemicals to risk reviews and risk determinations that extend to reasonably foreseen as well as intended conditions of use. The law requires an order to be issued following a risk finding, an exposure-based finding, or an insufficient-information finding for either category of conditions of use.

In contrast, a SNUR-only approach at best defers or evades altogether the risk or related finding requirement with respect to reasonably foreseen uses.  This is because a risk or related finding is not required to be made in order for EPA to issue a SNUR, only consideration of certain factors delineated in TSCA section 5(a)(2).  A SNUN submitted in response to a SNUR undergoes a review similar to that for a PMN.  If EPA chooses to similarly limit that review only to the new intended use(s) identified by the submitter of the SNUN, it may yet again not make a risk finding, an exposure-based finding, or an insufficient information finding, and hence again not issue a consent order imposing binding conditions on that company.

To summarize and bring together the points made above:  Under the Lautenberg Act, EPA’s review of a new chemical requires a risk review and risk determination, whereas EPA may issue a SNUR without such a review or determination.  Similarly, the terms of an order issued under section 5 of TSCA must meet a specific, protective risk standard:  EPA must issue an order that regulates the chemical “to the extent necessary to protect against an unreasonable risk of injury to health or the environment, … including an unreasonable risk to a potentially exposed or susceptible subpopulation.”  In contrast, the terms of a SNUR, standing alone, do not need to meet any specific risk standard.

  1. Congress gave EPA a mandate under the law to consider both intended and reasonably foreseen uses of a new chemical in deciding whether conditions, to be imposed through an order, are warranted. It did not intend for EPA to pursue a more piecemeal approach under which EPA evaluates only intended uses initially and promulgates a SNUR to address any concerns over reasonably foreseen uses.

In addition, under its SNUR-only approach, it appears EPA is warping the concepts of intended vs. reasonably foreseen uses.  When a PMN is submitted and EPA finds potential risks based on the scenarios in the PMN, EPA apparently now typically works with the company to identify additional conditions to include in the PMN to protect against the risks.  In its SNUR-only approach, EPA is de facto redefining the intended uses to be inclusive of the additional PMN conditions, and redefining the intended uses without those additional conditions (i.e., what the submitter originally intended and was in the original PMN) as the reasonably foreseen uses.  As previously noted, however, the provisions in a PMN are not legally binding on the submitter; only if codified in a consent order would they be binding.

The result is that EPA will typically make a “may present” finding for intended uses only if there is no feasible way for the company to add conditions to its PMN sufficient to protect against the risk.  In other words, EPA and the submitter iterate the process – with EPA effectively serving as a free consultant or coach to the PMN submitter.  The process effectively keeps moving the goal posts until a “not likely” finding can be made that avoids EPA ever having to make the initial “may present” finding and issue an order, clearly not what Congress intended.  And crucially, even these additional conditions added to the PMN are not binding on the PMN submitter in the absence of an order.

EPA appears intent on further warping Congressional intent by asserting as a new operating principle that it is redefining “reasonably foreseen” to mean “probable,” thereby setting a higher evidentiary bar EPA would have to meet than Congress intended in order to include in its review ways in which a new chemical could reasonably be used after it enters commerce.

  1. Relying on a SNUR instead of a consent order may result in EPA only analyzing the specific intended use(s) of the new chemical in isolation and never analyzing the chemical substance comprehensively, whereas section 5 of TSCA contemplates that a new chemical substance will receive a comprehensive analysis based on sufficient information, to the extent practicable. That is, deferring the review of potential risks arising from reasonably foreseen uses to a setting that is removed in time and divorced from the risk review of intended uses provides no assurance that EPA will ever conduct a robust review of potential risk under all of the new chemical’s conditions of use.

In addition, the specific proposed use in the PMN only reflects the knowledge that the PMN submitter has of its market and downstream users at the time of PMN submission, which may be quite limited and not reflect the full range of potential uses and users.  If EPA only looks narrowly at the conditions of use in the PMN to make its determination, its review and determination may well not reflect or be representative of the actual conditions of use once the chemical enters commerce.  Congress clearly intended for EPA to take a more expansive and prospective approach when reviewing new chemicals under reformed TSCA.

  1. EPA proposes to relegate its consideration of any potential risk beyond that specifically presented by a PMN to a SNUR instead of protecting against those risks in an order. To even begin to achieve a sufficient level of protection, EPA would need to write a SNUR in a way that does not allow any activity that could present additional potential risk beyond the activities specified in the company’s PMN to occur without prior notification.  Otherwise, EPA’s proposed approach will not provide a pathway to achieving protection comparable to that provided by an order (coupled with a SNUR) addressing reasonably foreseen conditions of use.  This is because EPA will be allowing risks to occur (with no consequence) that extend beyond those it deemed acceptable when it determined that the PMN was not likely to present unreasonable risk.  Consider, for example:

A PMN specifies a company will require its workers to use a respirator with an air protection factor (APF) of 1000. Unless the SNUR triggers notification if a company does not require its workers to use a respirator with the same level of protection, a “risk gap” will result.

A PMN specifies a company will produce 50,000 pounds of a chemical annually. If the SNUR does not set a volume trigger or sets a volume trigger that would allow more than 50,000 pounds of the chemical to be produced annually when aggregated across what could be multiple producers that are each in compliance with the SNUR, a “risk gap” will result.

In such cases, the SNUR-only approach would allow risk in excess of that EPA deemed “not likely” in reviewing the PMN.  That excess risk – even though it by definition does not meet the “not likely” bar – will never be reviewed, let alone subjected to conditions, because the SNUR notification requirement will not be triggered.

The only way the SNUR-only approach could seek to prevent any “risk gap” would be to have the SNUR notification triggers so tightly aligned with the PMN specifications as to effectively lock in the conditions specified in the PMN, with any deviation whatsoever triggering notification.  Otherwise, EPA will have conducted a new chemical review with an outcome insufficient to address the risks of the chemical’s reasonably foreseen uses, in clear violation of the law.

Requirements for issuing a consent order vs. promulgating a SNUR

  1. While orders can simply be issued, SNURs must be promulgated through an involved process of rulemaking. This raises numerous uncertainties:

EPA’s designation of what constitutes a significant new use applies upon proposal of a SNUR.  However, even upon proposal, that significant new use can be engaged in until the SNUR is finalized (assuming it is in fact finalized), at which point such activity must cease, either altogether or pending the outcome of EPA’s review of a subsequently-filed SNUN.

If there is a time gap between a PMN submitter’s commencement of manufacture (which puts the new chemical on the Inventory) and EPA’s proposal of a SNUR for that chemical, it runs the risk that a company (including the PMN submitter) could engage in the significant new use activity about which EPA is concerned.  The company would then be able to argue that its activity negated EPA’s ability to propose the SNUR because that use would then be ongoing.

While EPA can try to promulgate a SNUR as a direct final rule, if anyone files, or notifies EPA of their intent to file, an adverse comment, EPA must withdraw the rule and propose it for public comment.

Once a SNUR is final, it can be judicially challenged, with any final resolution significantly delayed and subject to significant uncertainty.

While some EPA staff have informally suggested they will seek to finalize a SNUR before making a “not likely” finding that allows the PMN submitter to commence manufacture, EPA has not made any public commitment to this approach nor identified any means to ensure this will happen.  Nor has it addressed the scenario of what happens in the event of an adverse comment being filing on a direct final SNUR or a judicial challenge to the final SNUR.

In contrast to the SNUR-only approach, a consent order includes provisions that bind the PMN submitter, and indirectly its downstream users, to the conditions of the order throughout the interval until a SNUR is promulgated.

  1. Seeking to address a new chemical’s risks through rulemakings rather than orders has several additional downsides.

While, under an informal agreement with EPA, OIRA does not currently call in SNURs for regulatory review, that agreement could be changed at any point.  OIRA has considerable discretion to determine what constitutes a significant regulatory action and is subject to an OIRA-managed interagency review.

The extent to which Trump’s regulatory executive orders apply to SNURs is highly uncertain.  Certain aspects apply to all rules, and the EOs give OIRA considerable discretion in deciding which provisions apply to which rules.

Administrator Pruitt has included SNURs among the potential regulatory actions at EPA that must be logged into his new EPA regulatory database upon initiation, signaling that SNURs may be subject to greater scrutiny under this Administration.

Finally, the anti-regulatory climate that prevails at present will likely mean that all new proposals to promulgate rules will be closely scrutinized.

Incentives and disincentives under a consent order vs. a SNUR

  1. If EPA fails to ensure that a final SNUR is in place before it provides a PMN submitter with a “not likely to present an unreasonable risk” finding, and EPA instead makes that finding in advance of a finalized SNUR and allows the submitter to proceed to commence manufacture, that company might have a strong incentive to oppose, seek to delay or weaken, or even judicially challenge a SNUR applicable to its chemical. This is because that SNUR would apply to the submitter and could constrain its future ability to expand use of its new chemical.  And because the company would not be subject to a consent order, it would not already be constrained.

Companies have long complained that SNURs “stigmatize” their chemicals, which would also add incentives for the PMN submitter to resist promulgation of a SNUR.  The company would have a number of means by which it could seek to prevent, delay or weaken the SNUR, including:

-preventing its issuance as a direct final rule by notifying EPA of its intent to file adverse comments;

-filing adverse comments;

-seeking to have OIRA subject the SNUR to interagency review;

-using its political influence with EPA management, the White House and Congress; and

-challenging the SNUR in court.

In contrast, a PMN submitter subject to a consent order would have significant incentive to support EPA’s promulgation of an accompanying SNUR, in order to “level the playing field” with its competitors who are not subject to the order.

Only through such a SNUR would its competitors likely be held to most of the same conditions that the submitter is already subject to through the consent order.

The Lautenberg Act contemplates that such SNURs would likely be promulgated, by requiring EPA, within 90 days of issuance of an order, to either initiate development of the SNUR or publish a statement indicating why one is not necessary [see TSCA section 5(f)(4)].

 

In conclusion, I hope this post makes abundantly clear how different the SNUR-only approach EPA is now proposing differs dramatically from and provides far less risk protection than would result from it simply doing what the law requires:  using orders, with SNURs as backup.

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Why businesses and state governments aren’t waiting for federal action on chemicals transparency

Animal Rights & Environment, Environmental Defense

By Alissa Sasso

As a Trump Administration appointee tries to dismantle EPA’s credibility as a guardian of public health and the environment, other actors have been stepping up. We recently examined retailers leading the way on removing chemicals of concern from the marketplace – but there has also been significant activity from state governments and companies to increase transparency about the chemicals we are exposed to every day and to empower consumers to make informed decisions about their product purchases.

Regulatory steps in the right direction

Government activity has recently focused on cleaning products, for good reason as the contents of these products are typically the biggest mystery for consumers.

Recent developments include:

  • In April, Governor Cuomo of New York State announced the Household Cleaning Product Information Program; the guidance is expected to be finalized soon and will require cleaning product manufacturers to disclose ingredients on their websites.
  • And, on October 15th, Governor Brown of California signed a first of its kind act into law: SB-258-The Cleaning Product Right to Know Act, which was crafted through a successful NGO-industry negotiation.

Alissa Sasso, Project Manager, Supply Chain, EDF + Business

SB-258 stipulates requirements for disclosing cleaning product ingredients online and on the product label, including for designated chemicals of concern and certain fragrances and contaminants. There are threshold limits for the reporting of designated fragrances and contaminants, as well as some exemption provisions for ingredients claimed to be trade secret, but all in all the bill is a noteworthy step forward. The law goes into effect in 2020 for online disclosure and 2021 for on pack disclosure, giving companies the opportunity to prepare for these requirements and to consider removing chemicals of concern before updating their labels.

Why did industry come to the table on what has historically been a combative issue? Consumer demand for transparency has grown greatly, and several major retailers and product manufacturers have gained a competitive advantage by enhancing their own ingredient disclosure.

Companies seeing ingredient disclosure as a competitive benefit

For a long time, consumers could rely only on “green” companies like Seventh Generation and Method to demonstrate ingredient transparency as a core value. For example, Seventh Generation has listed all cleaning product ingredients on pack since 2008; they’ve listed this information and ingredient function online for even longer. Meanwhile, Method started listing ingredient information (names, function, and safety information) online in 2009 and followed this with on pack disclosure in 2012. But recently, larger companies have realized the competitive advantages of gaining consumer trust through transparency.

SC Johnson originally launched the “What’s Inside?” website in 2009; currently for individual products the site lists non-fragrance ingredients and the function in the product. They also disclose fragrance ingredients at or above 0.09% in a product formula, or the top 10 fragrance ingredients by volume, whichever method discloses more information. Last year, SC Johnson launched an air freshener collection with complete fragrance transparency. In May, SC Johnson published a list of over 368 potential skin allergens – well beyond the European Union (EU) fragrance allergen list – on its website. SC Johnson is already working to identify these allergens at the product level and plans to complete this by 2018.

Unilever announced plans in July to provide fragrance ingredient information online for all products across its portfolio. Fragrance components present in products above 0.01% will be disclosed through SmartLabel™ by the end of 2018. Smartlabel™ allows access to ingredient information for products and food through an app, computer, or telephone. Unilever will also label EU fragrance allergens on pack in the US for their full personal care portfolio. Unilever developed a US version of their ingredient website to provide product information including product ingredients, ingredient selection process and ingredient functions.

Transparency is the new black when it comes to chemical ingredients via @EDFBiz
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Walmart’s 2013 Sustainable Chemistry policy called for suppliers of formulated products to disclose ingredients online by 2015, and all priority chemicals on product packaging by 2018. Walmart updated their policy in September, expanding their full transparency commitment globally and adding the EU fragrance allergens to the ingredients that will be disclosed on pack. It’s important to note that since the policy covers cleaning products its deadline occurs before that of the new California law.

Procter & Gamble (P&G) P&G launched a site earlier this year that discloses preservatives in their products. In August, P&G announced that they have started to reveal all fragrance ingredients used above 0.01% across their product portfolio online and will complete this work by the end of 2019. Clorox shares ingredient name and function for non-fragrances online at the product level and provides a fragrance palette for its entire portfolio. Clorox also labels any EU fragrance allergens if its concentration in a product is greater than 0.01%.

Encouraging developments, but there’s still room for improvement

The new law in California will certainly impact how companies provide ingredient information everywhere in the U.S. But federal action in the US is still lagging. In the meantime, we look to companies to lead on meaningful disclosure practices.

Being ahead of the curve on transparency is good for business. Strong disclosure builds consumer trust in your products and processes and makes regulatory compliance an easier venture.

[Check out EDF’s Rules of Online Disclosure]

Follow Alissa on Twitter, @Alissa_Sasso 

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Why the world’s largest pork producer is breaking new sustainability barriers

Animal Rights & Environment, Environmental Defense

By Tom Murray

At Environmental Defense Fund, we believe that environmental progress and economic growth can and must go hand in hand. EDF+Business works with leading companies and investors to raise the bar for corporate sustainability leadership by setting aggressive, science-based goals; collaborating for scale across industries and global supply chains; and publicly supporting smart environmental safeguards.

This is the second in a series of interviews exploring trends in sustainability leadership as part of our effort to pave the way to a thriving economy and a healthy environment.

As head of the Smithfield Foods’ sustainability program, Stewart Leeth focuses on animal welfare, employee relations, environmental stewardship, food safety and quality, and community development.

EDF has been collaborating with Smithfield for several years now to help farmers optimize fertilizer applications to grow grain for animal feed – and I’m inspired to see the progress that has been made in this arena. But I think this past year was likely the busiest ever for Stewart and his team at Smithfield after they made an industry-leading commitment to reduce greenhouse gas emissions.

This commitment is great news for the environment and for Smithfield’s business. Of course, there’s still a lot of work ahead for the company to fully implement the pledge and work with others in the animal agriculture industry to improve environmental performance. That’s why EDF is calling upon other food and animal agriculture companies to follow Smithfield’s lead and set their own commitments to improve the environmental impacts of agriculture while generating benefits for communities, customers, and businesses themselves.

I got the chance to chat with Stewart before we team up for a more in-depth discussion about raising the bar on corporate sustainability leadership at the Companies vs Climate event in Miami. Here’s an edited excerpt of our discussion.

Last year Smithfield announced a groundbreaking goal to cut your greenhouse gas (GHG) emissions 25% by 2025. That’s 4 million metric tons, or the equivalent of taking nearly 900,000 passenger vehicles off the road. What inspired Smithfield to set the goal and how did you go about putting it in place?

Stewart Leeth, vice president of regulatory affairs and chief sustainability officer for Smithfield Foods, Inc.

Smithfield has taken a leadership position in many areas over the years, from getting all of our facilities and farms across the country under the ISO certified environmental management system to providing group housing systems for pregnant sows on company-owned farms.

To continue leading the way in sustainability, we needed to take a strong position on greenhouse gas emissions. And our relationship with EDF has been growing over the years, particularly on fertilizer optimization to help farmers reduce emissions on their farms. So when EDF’s Maggie Monast and Senior Director of Smithfield Renewables, Kraig Westerbeek,  started the conversation about the next big step, we took a hard look at it.

We took a look at the GHG goal from a lot of different perspectives and conceptualized our carbon footprint in the form of a pie chart. We began looking at the business case for different parts of that pie, and we found that looking at it in pieces really helped to show what could be accomplished. We then briefed our president and CEO Ken Sullivan, and he was really enthusiastic about moving forward.

For example, a part of the pie is the carbon footprint from our corn supply. We buy literally trainloads of corn to feed our animals. We saw this as an opportunity to work with our suppliers to buy local grain as opposed to importing it from other places, improving the relationships we have with them along the way.

Was there anything else that you learned as you worked on the carbon footprint pie chart analysis?

We tried to identify opportunities for grain producers. For example, we developed a toolkit as well as nutrient management plans for them — which are things we use every day on our own hog farms for manure management. We tried to apply some of those same principles to row crop farming – to help the farmers grow more crop per drop of fertilizer.

The main benefit from our perspective is that it strengthened our overall relationship with farmers in that part of the supply chain. Local grain is more economical, and we are seeing some real benefits from this effort.

On our processing side, we have more than 40 facilities across the U.S. that operate every day – we can see that energy efficiencies will reduce the cost and the overall energy consumption at those locations.

What kind of response have you heard from stakeholders after you set your GHG goal?

From the standpoint of the big companies that buy millions of pounds of our products every year like retailers, restaurant chains, food service companies— it’s been very positive.

Our announcement also coincided with a very large effort by Walmart, one of our biggest customers, to reduce GHGs in their own supply chain. Our goal isn’t specifically tied to that, but it certainly was good timing and our announcement caught their attention as well as the attention of many other customers and consumers.

Some of our suppliers have also asked us if there are any ways that they can help us reach our goal. And our employees are excited, too. Everybody wants to work for and with a company that is responsible.

Earlier this fall, Smithfield announced a new initiative called Smithfield Renewables to support your emissions reduction goal and accelerate your ability to achieve it. How do you think this platform will change how you operate and help meet your climate goals?

We announced the Smithfield Renewables at the COMMIT! Forum in Washington, D.C.  We formed this business unit to help drive innovations to meet our goal and accelerate renewable energy efforts.

Our CEO wanted to make sure we had someone working on the GHG reduction goal every day – thinking about and working towards achieving it.  Kraig Westerbeek will be heading up Smithfield Renewables to vet what kind of projects, vendors, and other partners can help us make it happen.

As an example, we have partnered with a company in Missouri called Roeslein Energy to cover lagoons at our farms in that part of the country. They’re capturing methane, compressing it, and putting it in natural gas pipelines.

According to some estimates, animal agriculture is the second largest contributor to man-made GHG emissions after fossil fuels. As a global business operating in a world that’s more focused on climate change but also demanding more of your product, how are you thinking about that across your operations?

I think the importance of sustainability leadership is growing every day because more consumers are considering these issues when they’re buying goods, including food. And more and more investors are looking for responsible companies to invest in, and they’re quick to punish companies perceived as bad actors.

We all need to take responsibility for our footprint and things that we are doing. I think many companies recognize this, and I think it will drive innovation and technology development to help deal with these issues going forward.

Where is @SmithfieldFoods now, 1 year after their industry-leading commitment to reduce GHG…
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Your Hong Kong-based parent company WH Group just signed a strategic partnership with JD.com, China’s largest retailer, which will become the exclusive online sales platform for Smithfield’s pork products in China. What implications does this development have for your sustainability goals?

From the very beginning of our relationship, WH Group has been very supportive of our sustainability program. In fact, WH Group as a publicly traded company began reporting on sustainability as well.

Regardless of where consumers are located, they are still interested in whether food is safe and affordable, and produced in a responsible way. I think there is nothing but good in terms of expanding the sustainability footprint for companies like ours.

Can you tell me how and why you got involved in the clean energy policy discussion in North Carolina?

We have a large presence in North Carolina with more than 10,000 employees, many farms, and we contract with family farms to grow animals for us. We also have seven processing facilities throughout the state.

We have done a lot of work on pilot projects focusing on renewables in North Carolina.  The state has some great incentives to encourage renewables. They’ve also created a statutory set-aside for power generation from animal agriculture sources, such as poultry and pork.

Those are some of the reasons we’ve supported clean energy policies in the state for a long time, and in other states as well.

How the world’s largest pork producer @SmithfieldFoods is raising the bar on corporate…
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What do you want to be known for accomplishing at Smithfield under your leadership?

We have a tagline of “Good food. Responsibly.” That’s how I want the company to be thought of: an ethical and responsible company that produces good food.

Last but not least, what Smithfield products were on your Thanksgiving table this year?

For breakfast, we certainly had a lot of bacon to go with our eggs. For dinner, we included some country ham, salt-cured with brown sugar on top. It’s highly recommended! We’ll have it again at Christmas for sure.

Follow Tom on Twitter, @tpmurray

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