Legos are designed to last for decades. That posed a challenge when the toymaker tried to switch to recycled plastics. AP Photo/Shizuo Kambayashi

Lego, the world’s largest toy manufacturer, has built a reputation not only for the durability of its bricks, designed to last for decades, but also for its substantial investment in sustainability. The company has pledged US$1.4 billion to reduce carbon emissions by 2025, despite netting annual profits of just over $2 billion in 2022.

This commitment isn’t just for show. Lego sees its core customers as children and their parents, and sustainability is fundamentally about ensuring that future generations inherit a planet as hospitable as the one we enjoy today.

So it was surprising when the Financial Times reported on Sept. 25, 2023, that Lego had pulled out of its widely publicized “Bottles to Bricks” initiative.

This ambitious project aimed to replace traditional Lego plastic with a new material made from recycled plastic bottles. However, when Lego assessed the project’s environmental impact throughout its supply chain, it found that producing bricks with the recycled plastic would require extra materials and energy to make them durable enough. Because this conversion process would result in higher carbon emissions, the company decided to stick with its current fossil fuel-based materials while continuing to search for more sustainable alternatives.

As experts in global supply chains and sustainability, we believe Lego’s pivot is the beginning of a larger trend toward developing sustainable solutions for entire supply chains in a circular economy. New regulations in the European Union – and expected in California – are about to speed things up.

Examining all the emissions, cradle to grave

Business leaders are increasingly integrating environmental, social and governance factors, commonly known as ESG, into their operational and strategic frameworks. But the pursuit of sustainability requires attention to the entire life cycle of a product, from its materials and manufacturing processes to its use and ultimate disposal.

The results can lead to counterintuitive outcomes, as Lego discovered.

Understanding a company’s entire carbon footprint requires looking at three types of emissions: Scope 1 emissions are generated directly by a company’s internal operations. Scope 2 emissions are caused by generating the electricity, steam, heat or cooling a company consumes. And scope 3 emissions are generated by a company’s supply chain, from upstream suppliers to downstream distributors and end customers.

Lists of examples of sope 1, 2, 3 emissions sources with an illustration of a factory in the center
What scope 1, 2 and 3 emissions involve. Chester Hawkins/Center for American Progress

Currently, fewer than 30% of companies report meaningful scope 3 emissions, in part because these emissions are difficult to track. Yet, companies’ scope 3 emissions are on average 11.4 times greater than their scope 1 emissions, data from corporate disclosures reported to the nonprofit CDP show.

Lego is a case study of this lopsided distribution and the importance of tracking scope 3 emissions. A staggering 98% of Lego’s carbon emissions are categorized as scope 3.

From 2020 to 2021, the company’s total emissions increased by 30%, amid surging demand for Lego sets during the COVID-19 lockdowns – even though the company’s scope 2 emissions related to purchased energy such as electricity decreased by 40%. The increase was almost entirely in its scope 3 emissions.

Lego’s tour of how its toy bricks are made doesn’t address the supply chain, where most of Lego’s greenhouse gas emissions originate.

As more companies follow in Lego’s footsteps and begin reporting scope 3 emissions, they will likely find themselves in the same position, realizing that efforts to reduce carbon emissions often boil down to supply chain and consumer-use emissions. And the results may force them to make some tough choices.

Policy and disclosure: The next frontier

New regulations in the European Union and pending in California are designed to increase corporate emissions transparency by including supply chain emissions.

The EU in June 2023 adopted the first set of European Sustainability Reporting Standards, which will require publicly traded companies in the EU to disclose their scope 3 emissions, starting in their reports for fiscal year 2024.

California’s legislature passed similar legislation requiring companies with revenues of more than $1 billion to disclose their scope 3 emissions. California’s governor has until Oct. 14, 2023, to consider the bill and is expected to sign it.

At the federal level, the U.S. Securities and Exchange Commission released a proposal in March 2022 that, if finalized, would require all public companies to report climate-related risk and emissions data, including scope 3 emissions. After receiving significant pushback, the SEC began reconsidering the scope 3 reporting rule. But SEC Chairman Gary Gensler suggested during a congressional hearing in late September 2023 that California’s move could influence federal regulators’ decision.

SEC Chairman Gary Gensler explains the importance of climate-related risk disclosures.

This increased focus on disclosure of scope 3 emissions will undoubtedly increase pressure on companies.

Because scope 3 emissions are significant, yet often not measured or reported, consumers are rightly concerned that companies that claim to have low emissions may be greenwashing without taking action to reduce emissions in their supply chains to combat climate change.

At the same time, we suspect that as more investors support sustainable investing, they may prefer to invest in companies that are transparent in disclosing all areas of emissions. Ultimately, we believe consumers, investors and governments will demand more than lip service from companies. Instead, they’ll expect companies to take actionable steps to reduce the most significant part of a company’s carbon footprint – scope 3 emissions.

A journey, not a destination

The Lego example serves as a cautionary tale in the complex ESG landscape for which most companies are not well prepared. As more companies come under scrutiny for their entire carbon footprint, we may see more instances where well-intentioned sustainability efforts run into uncomfortable truths.

This calls for a nuanced understanding of sustainability, not as a checklist of good deeds, but as a complex, ongoing process that requires vigilance, transparency and, above all, a commitment to the benefit of future generations.

The Conversation

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

Read more …Lego's ESG dilemma: Why an abandoned plan to use recycled plastic bottles is a wake-up call for...

Crews clear lots of destroyed homes in Fort Myers Beach, Fla., in February 2022, four months after Hurricane Ian. Joe Raedle/Getty Images

Climate change is affecting communities nationwide, but Florida often seems like ground zero. In September 2022, Hurricane Ian devastated southwest Florida, killing at least 156 people and causing an estimated US$113 billion in damages. Then Hurricane Idalia shut down the Florida Panhandle in September 2023, augmented by a blue supermoon that also increased tidal flooding in southeast Florida.

Communities can adapt to some of these effects, or at least buy time, by taking steps such as upgrading stormwater systems and raising roads and sidewalks. But climate disasters and sea-level rise also harm local governments financially by increasing costs and undercutting their property tax bases. Local reliance on property taxes also can discourage cities from steering development out of flood zones, which is essential for reducing long-term risks.

In a newly published study and supporting online StoryMap, we present the first-ever municipal fiscal impact assessment of sea-level rise in Florida and combine it with a statewide survey of coastal planners and managers. We wanted to know how sea-level rise would affect municipal tax revenues and whether coastal planners and managers are accounting for these fiscal impacts.

Our study finds that over half of Florida’s 410 municipalities will be affected by 6.6 feet of sea-level rise. Almost 30% of all local revenues currently generated by these 211 municipalities come from buildings in areas that will become chronically flooded, potentially by the end of the century. Yet, planners and managers remain largely unaware of how much climate change will affect local fiscal health. Some communities with the most at risk are doing the least to prepare.

A year after Hurricane Ian, destruction is still widespread in Fort Myers Beach, Fla.

Property tax and climate change: A Catch-22

Property taxes are critically important for municipal governments. Nationwide, they provide 30% of local revenues. They are one of the few funding sources that local governments control, and climate change directly threatens them.

As climate change warms ocean waters, it fuels hurricanes and increases their reach and intensity. Climate change also is raising sea levels, which increases coastal flooding during both storms and high tides, often referred to as sunny-day flooding. Unlike storms, sea-level rise doesn’t recede, so it threatens to permanently inundate coastal lands over time.

Property tax revenues may decline as insurance companies and property markets downgrade property values to reflect climate impacts, such as increasing flood risks and wildfires. Already, a growing number of insurance companies have decided to stop covering some regions and types of weather events, raise premiums and deductibles and drop existing policies as payouts rise in the wake of natural disasters. Growing costs of insuring or repairing homes may further hurt property values and increase home abandonment.

Climate change also makes it more expensive to provide municipal services like water, sewage and road maintenance. For example, high heat buckles roads, rising water tables wash out their substructure, and heavier rains stress stormwater systems. If cities don’t adapt, increasing damage from climate-driven disasters and sea-level rise will create a vicious fiscal cycle, eroding local tax bases and driving up services costs – which in turn leaves less money for adaptation.

However, if cities reduce development in vulnerable areas, their property taxes and other revenues will take a hit. And if they build more seawalls and homes fortified to withstand hurricanes and storms, they will induce more people to live in harm’s way.

In Florida, we found that these theoretical dynamics are already occurring.

Florida’s local revenues at risk

Our analysis shows that sea-level rise could flood properties that have a combined assessed value of US$619 billion and currently generate $2.36 billion in annual property taxes. Five million Floridians live in towns where at least 10% of local revenues comes from properties at risk of chronic and permanent flooding. For 64 municipalities, 50% of their revenues come from these risk zones.

Actual fiscal effects would likely be worse after accounting for other lost revenues, rising expenditures and the impacts of multiple climate hazards, such as hotter weather and more intense hurricanes.

These impacts are not evenly distributed. Municipalities with the greatest fiscal risks are geographically and demographically smaller, denser, wealthier and whiter. Lower-risk municipalities tend to be more populous, more diverse, lower-income and have larger land areas.

For instance, the 6,800 residents of the city of Treasure Island in southwest Florida are 95% white and have a median household income of $75,000. The town occupies 3 square miles of land on a barrier island. In our model, its potential lost revenues due to sea-level rise equal its entire municipal revenue stream.

In contrast, St. Petersburg, the nearest big city, has a population of 246,000 residents that is 69% white and a median household income of $53,800. It covers 72 square miles, with only 12% of its property tax revenues at risk from flooding.

Heads in the sand

We see our findings as a wake-up call for state and local governments. Without urgent action to adapt to climate change, dozens of municipalities could end up fiscally underwater.

Instead, many Florida cities are pursuing continued growth through infrastructure expansion. Even after devastating events like Hurricane Ian, administrative boundaries, service obligations and budgetary responsibilities make it hard for municipal leaders to make room for water or retreat onto higher ground.

Treasure Island, for instance, is allocating property taxes to upgrade the town’s causeway bridge. This protects against modest climate impacts in the short term but will eventually be overwhelmed by bigger storm surges, rising water tables and accelerating sea-level rise.

These dynamics can worsen displacement and gentrification. In Miami, developers are already buying and consolidating properties in longtime Black and lower-income neighborhoods like Little Haiti, Overtown and Liberty City that are slightly more elevated than areas along the shore.

If this pattern continues, we expect that inland and upland areas of cities like St. Petersburg, Tampa and Miami will attract more resilient, high-end development, while displaced low-income and minority residents are forced to move either out of the region or to coastal zones with declining resources.

Wealthy people in Miami are moving inland to avoid flooding, displacing lower-income residents and people of color.

Charting a different future

We don’t see this outcome as inevitable, in Florida or elsewhere. There are ways for municipalities to manage and govern land that promote fiscally sound, equitable and sustainable ways of adapting to climate change. The key is recognizing and addressing the property tax Catch-22.

As a first step, governments could assess how climate change will affect their fiscal health. Second, state governments could enact legislation that expands local revenue sources, such as sales or consumption taxes, vacancy taxes, stormwater impact fees and resilience bonds or fees.

Regional sharing of land and taxes is another way for small, cash-strapped communities to reduce development in vulnerable places while maintaining services for their residents. For example, New Hampshire passed a bill in 2019 to allow coastal municipalities to merge in response to sea-level rise.

Finally, state governments could pass legislation to help low-income neighborhoods gain more control over land and housing. Tested tools include limited equity cooperatives, where residents buy an affordable share in a development and later resell at below-market prices to maintain affordability; community land trusts, where a nonprofit buys and holds land title to keep land costs down; and resident-owned mobile home parks, where residents jointly buy the land. All of these strategies help communities keep housing affordable and avoid displacement.

Shifting away from a business-as-usual development model won’t be easy. But our study shows that Florida, with its flat topography and thousands of miles of coastline, faces cascading fiscal impacts if it continues down its current path.

The Conversation

Linda Shi receives funding from the National Oceanographic and Atmospheric Administration.

Tisha Joseph Holmes received funding from the Florida Department of Environmental Protection, the Robert Wood Johnson Foundation and the Center for Disease Control and Provention. She is affiliated with REfire Culinary.

William Butler received funding from the Florida Department of Environmental Protection in support of this research.

Read more …Climate change is a fiscal disaster for local governments − our study shows how it's testing...

A farmer spreads fertilizer in a wheat field outside Amritsar, India. Narinder Nanu/AFP via Getty Images

Feeding a growing world population has been a serious concern for decades, but today there are new causes for alarm. Floods, heat waves and other weather extremes are making agriculture increasingly precarious, especially in the Global South.

The war in Ukraine is also a factor. Russia is blockading Ukrainian grain exports, and fertilizer prices have surged because of trade sanctions on Russia, the world’s leading fertilizer exporter.

Amid these challenges, some organizations are renewing calls for a second Green Revolution, echoing the introduction in the 1960s and 1970s of supposedly high-yielding varieties of wheat and rice into developing countries, along with synthetic fertilizers and pesticides. Those efforts centered on India and other Asian countries; today, advocates focus on sub-Saharan Africa, where the original Green Revolution regime never took hold.

In this Oct. 25, 2000, episode of the television drama ‘The West Wing,’ president Josiah Bartlet invokes the standard account of Green Revolution seeds saving millions from starvation.

But anyone concerned with food production should be careful what they wish for. In recent years, a wave of new analysis has spurred a critical rethinking of what Green Revolution-style farming really means for food supplies and self-sufficiency.

As I explain in my book, “The Agricultural Dilemma: How Not to Feed the World,” the Green Revolution does hold lessons for food production today – but not the ones that are commonly heard. Events in India show why.

A triumphal narrative

There was a consensus in the 1960s among development officials and the public that an overpopulated Earth was heading toward catastrophe. Paul Ehrlich’s 1968 bestseller, “The Population Bomb,” famously predicted that nothing could stop “hundreds of millions” from starving in the 1970s.

India was the global poster child for this looming Malthusian disaster: Its population was booming, drought was ravaging its countryside and its imports of American wheat were climbing to levels that alarmed government officials in India and the U.S.

Then, in 1967, India began distributing new wheat varieties bred by Rockefeller Foundation plant biologist Norman Borlaug, along with high doses of chemical fertilizer. After famine failed to materialize, observers credited the new farming strategy with enabling India to feed itself.

Borlaug received the 1970 Nobel Peace Prize and is still widely credited with “saving a billion lives.” Indian agricultural scientist M.S. Swaminathan, who worked with Borlaug to promote the Green Revolution, received the inaugural World Food Prize in 1987. Tributes to Swaminathan, who died on Sept. 28, 2023, at age 98, have reiterated the claim that his efforts brought India “self-sufficiency in food production” and independence from Western powers.

A man in a suit at a podium, speaking and gesturing.
Plant scientist M.S. Swaminathan, often called the father of India’s Green Revolution, speaks at a world summit on food security in Rome on Sept. 10, 2009. Alberto Pizzoli/AFP via Getty Images

Debunking the legend

The standard legend of India’s Green Revolution centers on two propositions. First, India faced a food crisis, with farms mired in tradition and unable to feed an exploding population; and second, Borlaug’s wheat seeds led to record harvests from 1968 on, replacing import dependence with food self-sufficiency.

Recent research shows that both claims are false.

India was importing wheat in the 1960s because of policy decisions, not overpopulation. After the nation achieved independence in 1947, Prime Minister Jawaharlal Nehru prioritized developing heavy industry. U.S. advisers encouraged this strategy and offered to provide India with surplus grain, which India accepted as cheap food for urban workers.

Meanwhile, the government urged Indian farmers to grow nonfood export crops to earn foreign currency. They switched millions of acres from rice to jute production, and by the mid-1960s India was exporting agricultural products.

Borlaug’s miracle seeds were not inherently more productive than many Indian wheat varieties. Rather, they just responded more effectively to high doses of chemical fertilizer. But while India had abundant manure from its cows, it produced almost no chemical fertilizer. It had to start spending heavily to import and subsidize fertilizer.

India did see a wheat boom after 1967, but there is evidence that this expensive new input-intensive approach was not the main cause. Rather, the Indian government established a new policy of paying higher prices for wheat. Unsurprisingly, Indian farmers planted more wheat and less of other crops.

Once India’s 1965-67 drought ended and the Green Revolution began, wheat production sped up, while production trends in other crops like rice, maize and pulses slowed down. Net food grain production, which was much more crucial than wheat production alone, actually resumed at the same growth rate as before.

But grain production became more erratic, forcing India to resume importing food by the mid-1970s. India also became dramatically more dependent on chemical fertilizer.

Graph showing grain production in India from 1952-1982 and intensifying fertilizer use.
India’s Green Revolution wheat boom came at the expense of other crops; the growth rate of overall food grain production did not increase at all. It is doubtful that the ‘revolution’ produced any more food than would have been produced anyway. What increased dramatically was dependence on imported fertilizer. Glenn Davis Stone; data from India Directorate of Economics and Statistics and Fertiliser Association of India, CC BY-ND

According to data from Indian economic and agricultural organizations, on the eve of the Green Revolution in 1965, Indian farmers needed 17 pounds (8 kilograms) of fertilizer to grow an average ton of food. By 1980, it took 96 pounds (44 kilograms). So, India replaced imports of wheat, which were virtually free food aid, with imports of fossil fuel-based fertilizer, paid for with precious international currency.

Today, India remains the world’s second-highest fertilizer importer, spending US$17.3 billion in 2022. Perversely, Green Revolution boosters call this extreme and expensive dependence “self-sufficiency.”

The toll of ‘green’ pollution

Recent research shows that the environmental costs of the Green Revolution are as severe as its economic impacts. One reason is that fertilizer use is astonishingly wasteful. Globally, only 17% of what is applied is taken up by plants and ultimately consumed as food. Most of the rest washes into waterways, where it creates algae blooms and dead zones that smother aquatic life. Producing and using fertilizer also generates copious greenhouse gases that contribute to climate change.

Excess nutrients are creating dead zones in water bodies worldwide. Synthetic fertilizer is a major source.

In Punjab, India’s top Green Revolution state, heavy use of fertilizers and pesticides has contaminated water, soil and food and endangered human health.

In my view, African countries where the Green Revolution has not made inroads should consider themselves lucky. Ethiopia offers a cautionary case. In recent years, the Ethiopian government has forced farmers to plant increasing amounts of fertilizer-intensive wheat, claiming this will achieve “self-sufficiency” and even allow it to export wheat worth $105 million this year. Some African officials hail this strategy as an example for the continent.

But Ethiopia has no fertilizer factories, so it has to import it – at a cost of $1 billion just in the past year. Even so, many farmers face severe fertilizer shortages.

The Green Revolution still has many boosters today, especially among biotech companies that are eager to draw parallels between genetically engineered crops and Borlaug’s seeds. I agree that it offers important lessons about how to move forward with food production, but actual data tells a distinctly different story from the standard narrative. In my view, there are many ways to pursue less input-intensive agriculture that will be more sustainable in a world with an increasingly erratic climate.

The Conversation

Glenn Davis Stone receives funding from the National Science Foundation and the John Simon Guggenheim Memorial Foundation.

Read more …The Green Revolution is a warning, not a blueprint for feeding a hungry planet

Each year, the federal government purchases about 50,000 new vehicles. Until recently, almost all of them ran on diesel or gasoline, contributing to U.S. demand for fossil fuels and encouraging automakers to continue focusing on fossil-fueled vehicles.

That’s starting to change, and a new directive that the Biden Administration quietly issued in September 2023 will accelerate the shift.

The administration directed U.S. agencies to begin considering the social cost of greenhouse gases when making purchase decisions and implementing their budgets.

That one move has vast implications that go far beyond vehicles. It could affect decisions across the government on everything from agriculture grants to fossil fuel drilling on public lands to construction projects. Ultimately, it could shift demand enough to change what industries produce, not just for the government but for the entire country.

What’s the social cost of greenhouse gas?

The social cost of greenhouse gases represents the damage created by emitting 1 metric ton of carbon dioxide, methane and other greenhouse gases into the atmosphere.

These greenhouse gases, largely from fossil fuels, trap heat in the atmosphere, warming the planet and fueling climate change. The result is worsening storms, heat waves, droughts and other disasters that harm humans, infrastructure and economies around the world. The estimate is intended to include changes in agricultural productivity, human health, property damage from increased flood risk, and the value of ecosystem services.

By directing agencies to consider those costs when making purchases and implementing budgets, the administration is making it more likely that agencies will purchase products and make investments that are more energy efficient and less likely to fuel climate change.

Solar panels outside a military airplane hangar.
The Department of Defense has been taking steps to reduce emissions for several years. Many of its military bases have solar panels, which can produce renewable energy for a few buildings or larger installations. U.S. Navy

While only a fraction of the roughly $6 trillion that the U.S. government spends each year would likely be considered under the new directive, that fraction could have far-reaching impacts on the U.S. economy by reducing demand for fossil fuels and lowering emissions across sectors.

Estimating the cost

The Obama administration introduced the first federal social cost of carbon to incorporate climate risk in regulatory decisions. It’s calculated using models of the global economy and climate and weighs the value of spending money today for future benefits.

When the Trump administration arrived, it cut the estimated cost from around $50 per metric ton to less than $5, which justified rolling back several environmental regulations, including on power plant emissions and fuel efficiency. The Biden administration restored an interim price to about $51, with plans to raise it.

Recent research suggests that the actual social cost of carbon is closer to $185 per metric ton. But carbon dioxide is just one greenhouse gas. The new directive takes other greenhouse gases into consideration, too – in particular, methane, which has about 80 times the warming power of carbon dioxide over 20 years.

Estimates of the social cost of methane, which comes from livestock and leaks from pipelines and other natural gas equipment, range from $933 per metric ton to $4,000 per metric ton.

Photo of a rusted oil pump in an overgrown field in Texas. Rusted parts are piled beside it.
Oil and gas wells and pipelines are a common source of methane emissions, including what the Environmental Protection Agency estimates to be more than 3 million abandoned wells across the U.S. AP Photo/Eric Gay

Without directives like these, decision-makers implicitly set the cost of greenhouse gas emissions to zero in their benefit-cost analyses. The new directives allow agencies to instead compare the expected climate damages, in dollars, when making decisions about vehicle purchases, building infrastructure and permitting, among other choices.

The vehicle fleet as an example

The federal vehicle fleet is a good example of how the social costs of greenhouse gases add up.

Let’s compare the costs of driving an electric Ford Focus and an equivalent conventional-fuel Ford Focus.

Assume each vehicle drives an average of 10,000 miles (about 16,000 kilometers) per year – that’s less than the U.S. average per driver, but it’s a simple number to work with. The damages from emissions in dollars from driving a conventional Ford Focus 10,000 miles are between $133 and $484, depending on whether you use a social cost of carbon of $51 per metric ton or $185 per metric ton.

The climate harm from driving an equivalent electric Ford Focus 10,000 miles, based on the average carbon dioxide emissions intensity from the U.S. electricity grid, would be between $59 and $212, using the same social costs.

Scale that to 50,000 new vehicle purchases, and that’s a cost difference of about $4 million to $13.5 million per year for emissions from operating the vehicles. While producing an EV’s battery adds to the vehicle’s emissions up front, that’s soon outweighed by operational savings. These are real savings to society.

The U.S. government is also a major consumer of energy. If agencies begin to consider the climate damages associated with fossil energy consumption, they will likely trend toward renewable energy, further lowering their own emissions while boosting the burgeoning industry.

How the government can shift demand

These types of comparisons under the new directive could help shift purchases toward a wide range of less carbon-intensive products.

Much of the U.S. government’s spending goes toward carbon-intensive goods and services, such as transportation and infrastructure development. Directing agencies to consider and compare the social cost of purchases in each of these sectors will send similar signals to different segments of the market: The demand for less carbon-intensive goods is rising.

Because this new directive expands to other greenhouse gases, it could have broad implications for new permitting for oil and gas development and agricultural production, as these are the two largest sources of methane in the U.S.

While this decision is not a tax on carbon or a subsidy for less carbon-intensive goods, it will likely send similar market signals. With respect to purchases, this policy is akin to tax rebates for energy efficient products, like electric vehicle incentives in the Inflation Reduction Act, which boost demand for EVs.

Ultimately, if one of the largest segments of demand, the U.S. government, transitions to less carbon-intensive products, supply will follow.

The Conversation

Jesse Burkhardt receives funding from the USDA and Department of the Interior.

Lauren Gifford does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Read more …Climate change is about to play a big role in government purchases – with vast implications for...

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