As a national cap on emissions becomes more likely in the United States, corporations are preparing themselves by improving the efficiency of their operations and engaging in the legislative debate. Several U.S. companies recently joined together to form Business for Innovative Climate & Energy Policy (BICEP), which is lobbying Congress for tough standards on emissions, renewable energy and energy efficiency. During today's OnPoint, Sarah Severn, director of corporate responsibility horizons at Nike, discusses BICEP's goals for energy and climate legislation. She explains how the lack of certainty about emissions regulation is affecting Nike's operations and discusses how BICEP differs from other business coalitions advocating for cap and trade.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Sarah Severn, director of Corporate Responsibility Horizons at Nike. Sarah, great to have you on the show.
Sarah Severn: Thank you for having me.
Monica Trauzzi: Sarah, Nike is part of BICEP, Business for Innovative Climate and Energy Policy, and it was launched last fall to sort of advocate for a national cap-and-trade system to cap emissions. Why has Nike, famous for its sneakers, gotten so deeply involved in the debate on the climate legislation?
Sarah Severn: Well, we've been working on the climate change issue for many years. I mean from as long ago since 1995 we've done a tremendous amount of work in eliminating greenhouse gases from our products. We had a global warming gas in our footwear which we worked extremely hard on and phased out over a period of 10 years and that got us to cast attention on a lot of other areas. So we've done work with our facilities, we've done work with setting goals with our logistics partners and we've moved ahead and are doing work with factory partners as well on pilot projects for energy efficiency. And in all this time we've taken good heed of the science and what the science is telling us and we feel we are now at a point where we really have a climate crisis on our hands. And if you look at the impacts for our business, we have a global business, climate change is going to touch every aspect of our business, our supply chain, our consumers, our athletes, and so we have a responsibility to do something about that.
Monica Trauzzi: And so BICEP was created with some other corporations. Who else is involved and what are some of the more specific goals that you have?
Sarah Severn: We have five current members. We have a number of members that will be joining us and the announcements will be made on that tomorrow, in fact. But we have Starbucks, Timberland, Levi's and Sun Microsystems, of course the founding group. And what we agreed at the very beginning was rather than target specific legislation, we're going to adopt a set of principles that everybody could agree on that we felt needed to be in legislation moving forward on climate change and energy. So, for example, we have quite tough targets around the goals for emissions reduction, 80 percent by 2050, and we're saying at least 25 percent reduction below 1990 levels by 2020, which is more in line with where the European agenda has moved. And we did that because that's really clearly what the science is telling us we need to do. We also have a number of principles relating to energy efficiency, renewable portfolio standards, a strong focus on green jobs and other elements. It's really kind of a portfolio approach to what we believe is necessary.
Monica Trauzzi: So, many of our viewers probably know the U.S. Climate Action Partnership pretty well. That might come to mind when hearing about BICEP. What are the differences between the two groups and your approaches?
Sarah Severn: Well, I think there's a couple of key differences. One is our group was really set up because we felt this was a particular business sector that was underrepresented and we see ourselves very much as representing consumers and the consumer landscape. And if you look at the members of the U.S. camp, which is a good and effective organization we believe there tends to be more of a representation from the emitting sector, utilities, big energy users. And we felt that our voice, the consumer voice really was missing from this picture, so that's why this group was formed. The other significant differences that we have on a number of areas, and in particular on the targets, we differ, we have much more ambitious targets.
Monica Trauzzi: You mentioned that you have many overseas partners at Nike helping you get these products developed. How are you addressing and making sure that these companies, in China and India for example, are falling in line with your goals for sustainability?
Sarah Severn: Well, it's not as challenging as people might think. The reality is that for most businesses there's a huge amount of opportunity for innovation in the space. Particularly in the area of energy efficiency and particularly now when we've seen energy prices fluctuate, high amounts of volatility, oil prices go up, come down again. We know they're going to go up again because oil is a non-renewable resource. And so, in working with our factory partners, we have actually started with the footwear sector and have gone in and helped them assess their energy usage and look at opportunities for savings. And for them it's very much about bottom-line. You know, they can see that it will not only save them money, but they think they'll capture process efficiency/productivity gains as well.
Monica Trauzzi: So inside the Beltway right now there's a big focus on climate and energy legislation and both the House and Senate have said that they'd like to approach energy and climate in the same package. What are your thoughts on that approach? Do you think that's going to be effective or hurt the chances of passage of a final bill?
Sarah Severn: Personally I think it's an interesting approach because I believe that separating them, and particularly when you have separate committees looking at different aspects, you're really talking about some things that ... you need a systems approach to this. The whole issue of climate change, the reason we're in the fix we're in is because we haven't thought in a very systems related manner. And I think the energy, working on energy and energy plans and energy efficiency and renewable portfolio standards, that's going to be critical to solving the climate change agenda as well. So whether or not there are two separate bills or several bills, I think all of them need to be aligned in some way and I think it's an interesting approach to say yes, trying to bring the two together.
Monica Trauzzi: How does the lack of certainty at this point about legislation impact Nike?
Sarah Severn: Well, I think for us and for many of the other companies in BICEP it's limiting, particularly in this country. I mean firstly, the U.S. needs to take leadership on this issue, that's clear. We still have the largest per capita emissions of any of the industrialized countries, let alone the developing countries. And so the rest of the world is looking for leadership. We're a global company. It's very difficult for us to continue to make progress globally without some form of international agreement and that means having the U.S. on board. And then domestically, our efforts to incorporate more renewables into our power usage, there comes a certain point where we've addressed all the low-hanging fruit, we've done the energy efficiency projects, and without more investment and a price on carbon, that's what we really need, is a price on carbon to send a signal to the market so that the renewable energy that is out there and available is priced appropriately against fossil fuels.
Monica Trauzzi: How much of your sustainability efforts are based on what you're hearing from the consumer, from your customers?
Sarah Severn: I think our customers are increasingly ... our customer is a young consumer and we're hearing some very vocal groups in the youth movement I would say around climate change. I mean just this past weekend you have the Power Shift conference here, which I understand there were something like 10,000 young people coming to the capitol to discuss climate change, to talk to legislators, and we pay attention to that. And I think really we're thinking this is an inter-generational issue. It's not our generation that's really going to be challenged by climate change and the impacts of climate change, although it's already starting to happen. It's really very much about the next generation and generations beyond that. So that, for us, is very related to our consumer.
Monica Trauzzi: Final question, are we seeing or are we going to see changes in the products themselves as a result of these sustainability efforts?
Sarah Severn: Well, I think everything that we do in the process of making a product, whether it be the materials that we put into the products, the manufacturing process itself, the way in which we transport those products, as we work on energy efficiency products and low carbon materials that will lower the footprint, the carbon footprint of the product. So, long-term, that is our goal, to really reduce the carbon footprint of our products.
Monica Trauzzi: OK, we'll end it right there. Thank you for coming in.
Sarah Severn: OK, thank you Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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