Four Opportunities in Three Years: A Strategy for SRI in Rocky Times B ill Shireman November 18, 2010

1. Four Opportunities in Three Years: A Strategy for SRI in Rocky TimesBill ShiremanNovember 18, 2010 INVESTING FOR TRANSFORMATION

2. The first three opportunities CLIMATE: A Price on Carbon WATER: Cut Farm Bill subsidies RESOURCES: Extended Producer Responsibility

3. Two realities: 1. We have ALLIES in places we have never imagined

4. Two realities: 1. We have ALLIES in places we have never imagined 2. We have POWER that we have never used

6. “Cap and Tax … must be swept into the ash heap of history just as Jim Crow was” Niger Innis, CORE (Congress of Racial Equality)

7. CHANGE DRIVES FEAR People look for a cause – anger solidifies into hate CHANGE FEAR ANGER HATE “Them” Democrats Liberals Christians Gays Corporations Republicans

8. The perceived villain is demonized. If they’re not human, it’s OK to destroy them. CHANGE FEAR ANGER HATE

9. POLARIZERS build power through anger and hate. Dividers and Demagogues.

12. A Story ALLIES in unexpected places POWER that we have never used

13. Ally #1: Bill Coors

14. Ally #2: Chuck CollingsCEO Raley’s Superstores

15. POWER: Leverage the Top of the Supply Chain Aluminum Beverage Industry Retailers NGO Coalition Glass Plastic

16. Result: California’s Better Bottle Bill • 250 billion cans and bottles recycled • $5 billion saved • 80% lower cost, 80% recycling rate • Computers, Tires, Motor Oil added • But: Can be simpler and cheaper

17. Story 2: Global Rainforest Protection

18. Unlikely Allies 3 and 4:Tachi Kiuchi and Randy Hayes

19. POWER: Leverage the TOP of the Supply Chain Aluminum Forest Products Buyers Forest Products Glass Plastic + 400 Others

20. “The biggest step forward in North American forest protection in 17 years” Mike Brune, Ex Dir, RAN “The future of forestry” Tom Stephens CEO, MacMillan-Bloedel

21. POWER: Leverage the TOP of the Supply Chain Forest Products Buyers Forest Products NGO Coalition

22. FOUR OPPORTUNITIES in 36 months RESOURCES: Extended Producer Responsibility CLIMATE: A Price on Carbon WATER: Ag Water Savings & Farm Bill Reform

23. FOUR OPPORTUNITIES in 36 months PROPOSED A new coalition: Retail Industry Stakeholder Alliance RESOURCES: Extended Producer Responsibility CLIMATE: A Price on Carbon WATER: Ag Water Savings & Farm Bill Reform

24. Opportunity 1: A Price on Carbon:The Three Key Alliances #1: NGO-SRI #2: Retail-Brand #3: Republican A Unified “Ask” The “WalMart Effect” “Nixon in China”

25. Two Unifying Principles • A PRICE ON CARBON. To be effective, a price on carbon (whether a fee or tax) needs to be direct, upstream, steadily increasing, and calibrated to reduce emissions to levels called for by climate science consensus, with border adjustments or other mechanisms to reflect differences in carbon prices and policies in other nations. • A DIVIDEND OR TAX REDUCTION TO CONSUMERS. The vast majority of revenues are to be returned to consumers, either directly (“dividend”) or via tax reductions (“tax shift”), with a small portion allocated to a single fund for climate purposes such as transition assistance for affected communities, international adaptation/ mitigation/research and development, low-carbon energy research, and targeted cost effective energy investments. *A current example of legislation that embodies this principle is America's Energy Security Trust Fund Act of 2009by Rep. John B. Larson

26. A Potential Alliance “A Top 5 Retailer” “A Non-Coal Energy Leader” “A Top 10 Brand” A unified “ask” by SRI + NGOs “If Congress proposes it, we fight it. If WalMart asks us, we do it.” ‒ CPG executive

27. Congressman Bob Inglis R- South Carolina

28. George Schultz Former Secretary of State Chairman, No on 23

29. America faces too many challenges to meet them one at a time. We need smart policies that achieve multiple goals at once: security AND energy AND jobs AND clean air. • One simple step is the SMART TAX SHIFT. In a single stroke, we can: • ENHANCE NATIONAL SECURITY – cut our strategic dependence on oil from sources that fund our enemies and place our sons and daughters at risk • CUT JOB TAXES – taxes proven to cut wages and destroy jobs, like the payroll tax – our most regressive tax • STOP SUBSIDIZING POLLUTION – put a simple price on pollution, and use it to pay for further tax cuts on jobs and growth • PAY DIVIDENDS TO CONSUMERS – put the dollars raised back in our pockets, not in the pockets of special interests

30. 10-12 GOP Senators are Prospects • SCOTT BROWN (MA, Class I) – Opposed cap and trade due to the cost to American families but did support MA joining RGGI in 2008. Very anti-tax, but might support a tax with dividend back to consumers. MA has huge potential for offshore wind power. • SUSAN COLLINS (ME, Class II) – Moderate, already wrote CLEAR Bill. Would most likely support tax and dividend approach. • BOB CORKER (Tenn, Class I) – Supports tax and dividend: “I want to tell you that I wish we would just talk about a carbon tax, 100 percent of which would be returned to the American people.” • LINDSEY GRAHAM (SC, Class II) – Author of cap and trade bill until pullout in April. Supports price on carbon and federal climate legislation. • KAY BAILEY HUTCHISON (TX, Class I) – In an oil state, but could support a dividend that is similar to Alaska. Leverage: Conoco and Exxon—both supporters of climate policy. • RICHARD LUGAR (IN, Class I) – Proposed energy bill in June called the “Practical Energy and Climate Plan” which aims to increase energy efficiency in lieu of a climate bill. • JOHN MCCAIN (AZ, Class III) – Although McCain didn’t support cap and trade, he is a moderate and not a skeptic. Also, he is in his last term and could be swayed for legacy reasons. • LISA MURKOWSKI – To win, she needs to appeal to the center (independents, moderates), she is staunchly against EPA regulation and thinks federal climate policy is a better path. • OLYMPIA SNOWE (ME, Class I) – Moderate. Supports climate policy.

31. Timeline: A Unified “Ask” by SRIs & NGOs Build coalition Secure collateral victories Congressional Action 2011 2011-2012 2013

32. Opportunity 2:Extended Producer Responsibility • EPR Shifts waste & recycling costs • from households to producers • Government sets targets • Producers finance and manage, via Producer Responsibility Organizations (PROs) • Pays municipalities, haulers, and/or recyclers a negotiated or calculated cost

33. EPR: A 44% Climate Solution? Internalize eco-costs of up to 44% of the economy Building HVACand Lighting 21% Provisionof Goods 37% Products andPackaging 44% Provisionof Food 12% *Use of Appliances and Devices 7% Non-LocalPassenger Transport 9% Infrastructure 1% Local Passenger Transport 13% Source: Product Policy Institute based on EPA 2009

34. Odd Bedfellows: If these stakeholders agree … RFK Jr. and NRDC Major Funder Alliances Grassroots and EPR Food and Beverage Any 1-2 Top Retail or CPG Funders Network for Sustainable Production and Consumption

35. Unifying Principles for EPR Generally supported by all the key stakeholders: corporate, NGO, and funders: • Internalize Costs — When pollution and waste costs are externalized, pollution and waste increases. But when the costs are internalized, businesses and consumers are provided the most cost-effective means of achieving the desired outcomes. • Producer Financing— Because producers set front-end design specifications, they are best positioned to pay the external costs, and have the best opportunity and incentive to reduce them.  • Producer Management— Government may set the performance standards of EPR, but producers are best positioned to design and manage the program to achieve those goals, so they can accrue the cost savings from reducing waste.

36. Timeline: A Unified “Ask” by SRIs & NGOs Build coalition Advance a model in 2 states Secure passage of multi-state model 2011 2011-2012 2011-2013

37. Opportunity 3:CutFarm Bill Water Subsidies

38. An historic near term opportunity: • Recession + • Fiscal restraints + • Political realignments • Supply chain actions to save water • + Political support to divert 10% of Farm Bill subsidies

39. + An historic near term opportunity: • Recession + • Fiscal restraints + • Political realignments • Supply chain actions to save water • + Political support to divert 10% of Farm Bill subsidies NGO, SRI, funders Retailers and Brands Ag Sector 2011 2011-2012 2011-2012

40. Opportunity 4:A Retail Industry Stakeholder Alliance RILA: The top retailer and consumer brand association 9 of the 10 top retailers Solution oriented

41. Opportunity 4:A Retail Industry Stakeholder Alliance RILA: The top retailer and consumer brand association 9 of the 10 top retailers Solution oriented PROPOSED: A new coalition Retail Industry Stakeholder Alliance

42. Opportunity 4:A Retail Industry Stakeholder Alliance RISA Retail Industry Stakeholders Alliance RILA Retail Industry Leaders Association The Global Supply Chain Collaboration on an annual Unified “Ask” Collaboration to achieve an Annual Sustainability Goal

43. Strange Bedfellows

44. INTEGRATERS The leaders who last. Uniters – Reconcilers – Engagers • “Malice toward none, charity for all.” • “I have a dream.” • “Truth and reconciliation.” “Tear down this wall!”

45. Extra credit opportunity #5: Buy and shift US coal – under $50B Peabody Energy Corp, $11.3 CONSOL Energy Inc, 8.9 Alpha Natural Resources Inc, 5.1 Yanzhou Coal Mining Co Ltd (ADR), 5.0 Arch Coal Inc, 4.0 Walter Energy Inc, 3.9 Massey Energy Co, 3.6 • TOTAL $41.8 billion • Source: http://learnminingnews.com/coal-mining-stocks/ on 11-7-10

46. The Symbol for Crisis Opportunity Danger

47. The WorldNeeds the SolutionOnly You Can Bring

48. The Future 500 People Sustainability Economy Environment