Sustainability in Wine

Jumping back a couple weeks to our discussion about green marketing and organic wines, I came across this article for research in my supply chain class about the perception of organic-labeled wines and their perceived quality.
In the article, Abraben et al show that despite Italian consumers exhibiting a 10-40% increase in willingness to pay for organic products, that does not translate to wine. The study's conclusion is that wine that is organic, but not labeled as such, can command a price premium but the label has no effect on price and actually skews critics' ratings downward.
The author's suggest that if there is no difference in quality and it's just perception, then marketers need to do something to address that gap in consumer preference, but if there is actually a taste problem for higher-end wines, there might need to be a secondary certification that shows winemakers are treating the land well, but not at the expense of the wine's quality.
This actually aligns with primary research I've done for the class through connections at Duckhorn Wine Company, which belongs to the Fish Friendly Farming initiative for its estate grapes but otherwise doesn't believe its customers care about organic labels and just focuses on getting the best grapes it can.

Tesla Factory - Worker Safety

Since we've been talking a lot about Tesla in class, I wanted to bring this into the conversation. Thinking about when we talked about impact investing, and metrics used to invest in a company that is doing the right thing. Tesla is on the forefront of electric-vehicles etc, but looking at other aspects of their business: as someone who works in the labor / worker health and safety field, it is very shocking to see them have injury rates 30% higher than the US automotive industry average. 

Just wanted to share the following report:

"Four Tesla auto workers say the assembly line at what's supposed to be the "factory of the future" is behind the times when it comes to safety. "

http://www.cbsnews.com/news/tesla-workers-safety-in-question/

Greenwashing: The Pandering Panda

Greenwashing is a term to describe when a company or organization makes claims on "green” practices that are either not true or exaggerated in order to improve the image of their company or products (Greenwashing Index). Here we focus on World Wildlife Foundation (WWF), a non-profit widely known for its efforts in protecting wildlife and forests. However, in 2012 a book by Wilfried Huismann called The Silence of the Pandas, he revealed that WWF has accepted millions from businesses with questionable intentions.

Global corporations like Coca-Cola, Shell, Cargill, and BP have all benefited from associating with WWF (The Guardian). In 2010, Shell and BP paid WWF for consultation to identify forests to be cleared for industrial use (The Guardian). It could be said that WWF assisted Shell and BP with their logging endeavors, but it could also be said that WWF assisted Shell and BP to map out land which should be preserved from logging. WWF claims that in order to protect the environment, they need to communicate with extractive and polluting industries (The Guardian). Was WWF acting out of concern for the forests, or desire for monetary compensation?

WWF has also been involved in other suspicious partnerships, including seven timber companies which together logged about 4 million hectares of forest in Africa (Survival International). According to WWF, their partnership with the Rougier was made to advance responsible forest management and trade. Rougier does in fact hold Forest Stewardship Council (FSC) certifications for some sites. Rougier claimed they greatly value sustainability, and are working with WWF to increase their “responsible forest area and volume traded” (WWF). In other words, WWF is helping Rougier expand logging.

WWF also ran into issues working with Danzer. Danzer’s subsidiary, Siforco, was met with protest during a logging project and a security operation carried out to resolve the conflict resulted in the rape of 3 women and 3 minors, and the beatings of 16 men which lead to the death of one (Global Witness). Subsequently, WWF cut off it’s relationship with Siforco but not Danzer. As Siforco still supplies timber to Danzer, this partnership is not appropriate.

WWF may be able to serve as a valuable consultant for companies which honestly want credible assistance in improving their sustainable practices, but should not associate with companies, like Rougier and Danzer, whose business fundamentally contradicts WWF’s mission.

Do we think that most people who donate to WWF, intending to put their money to solid conservation or environmental work, know of these partnerships? Is it greenwashing for WWF to hide their corporate partnerships from their donors and volunteers?

Teni Adewumi-Gunn, Mika Sugawara, Jennifer Tribble, Christina Van

REFERENCES

Greenwashing Index. About Greenwashing. Retrieved May 24, 2017 from http://greenwashingindex.com/about-greenwashing/

Survival International. (2017, May 2). WWF wins Survival’s “Greenwashing of the Year” award. Retrieved May 24, 2017 from http://www.survivalinternational.org/news/11677

World Wildlife Fund. (2015, April 15). WWF France and Rougier to jointly advance responsible forest management and trade. Retrieved May 24, 2017 from http://wwf.panda.org/wwf_news/?245210/WWF-France-and-Rougier-to-jointly-advance-responsible-forest-management-and-trade

John Vidal. (2014, October 4). WWF International accused of 'selling its soul' to corporations.

The Guardian. Retrieved May 24, 2017 from https://www.theguardian.com/environment/2014/oct/04/wwf-international-selling-its-soul-corporations

Global Witness. (2011, January 25) Pandering to the loggers. Retrieved May 24, 2017 from https://www.globalwitness.org/en/archive/panderingtotheloggers/

Programme for the Endorsement of Forest Certification (PEFC). (2014, October 10). WWF at Risk? WWF Accused of Being Used for Greenwashing. Retrieved May 24, 2017 from https://www.pefc.org/news-a-media/general-sfm-news/1674-wwf-at-risk-wwf-accused-of-being-used-for-greenwashing

Europe Builds Its Own Gigafactories

For the past 5-10 years, the major prohibitive factor to electric car adoption has been the cost of the battery.

Tesla has attempted to contain the cost of batteries by manufacturing at scale with their "Gigafactories". I am linking to an article here that shows how European car manufacturers and utilities are starting their own Gigafactories.

It is clear that these groups are responding to the competitive threat from Tesla.

This is good news for people who care about climate change. As more Gigafactories pop-up over the globe, battery expertise will increase and the availability of cheaper batteries will increase, furthering the adoption of electric vehicles. In turn, other automakers and utility groups will feel pressure to build their own Gigafactories, starting what looks like a positive feedback mechanism.

However, we must also acknowledge that there are some downsides to electric car adoption. Electric cars main differentiator – the electric battery – utilizes lithium sourced from environmentally damaging mines. These mines damage the environment in two ways – both contamination of the ground and water sources as well as the release of extra emissions. For example, when mining lithium only 0.2% of mined material is used while the other 99.8% is dumped back after being contaminated during toxic treatment processes. Finally, the rock-crushing required for lithium mining uses an incredible amount of energy that often comes from coal-fired plants, an environmental factor that is not accounted for when comparing the environmental emissions per mile of electric vs conventional vehicles.

All in all--we think this helps illustrates how positive private sector activity can be such an impactful force for good.

-David Shapiro, Marcus Barton, Michael Clifford, Jason Besecky

Tesla and SolarCity

Tesla's Acquisition of SolarCity Should Be Revisited In Light of the Solar Roof Developments and How That Plays to Tesla’s Strengths

Tesla is perhaps best known for their innovative, safe, and ridiculously quick electric vehicles. Because of this, when Tesla and solar-panel producer/installer SolarCity jointly announced that Tesla was acquiring SolarCity on August 1, 2016, it was met with confusion by many, even leading to Tesla shareholders filing a suit against Tesla for the move. Nevertheless, the acquisition was approved and completed in mid-November, 2016. With some of the dust settled on the 6-month-old acquisition, and recent announcements on details of the Solar Roof, was Tesla’s acquisition of Solar City sound, and does it complement and differentiate their suite of products in the market?

An argument for the complementary nature of the products - storage meets generation - is enticing enough for further investigation. Much of the coverage has been bearish, however, from its first rumoring (e.g. Tesla, Solarcity Looks Like A Bad Fit) and continues (e.g. Solar Shifts Could Fry Tesla Earnings) up to just before Tesla’s most recent quarterly earnings report. On a short-term basis, it does look like Solar City is a bad acquisition - bankruptcy potentially looming, large cash losses, slowing panel growth - but this is not a short-term business, and their strengths are not tied to a certain industry, such as personal transport, but to electrification of existing markets. It is true that Tesla first benefitted in their application of electricity storage and electric drivetrains for their vehicles, but they are not reliant on vehicle knowledge. Tesla did not produce a compelling electric vehicle - they produced a compelling vehicle, that happened to be electric.

Tesla continued this with their PowerWall and PowerPack electricity storage solutions for residential and commercial applications, respectively. These were not just good batteries for buildings - they are good and cost-effective power solutions for buildings, competing against generators as well as battery systems. Tesla is now applying this to electricity generation. Tesla has realized they are not competing against other solar panels, they need to make the best roof possible, and that just so happens to generate electricity. The Solar Roof looks like a normal roof, is cheaper in the long-run, and has an infinity warranty, all while being far “greener” than what is on the market today.

While Tesla acquiring SolarCity may seem a vertical integration play, the longer-term benefit is bringing the Tesla special sauce - designing broadly appealing, best-in-class products that happen to be electric - in order to support the environmentally differentiating strategy that defines Tesla, encapsulated in their mission statement: Tesla’s mission is to accelerate the world’s transition to sustainable energy. It will be interesting to see what other staid markets Tesla brings into its focus for improvement for sustainability via electrification.

By Falgun Patel, Andrew Sharp, Toru Terai, & Pedro Vazquez

Tesla’s Solar Roof is designed to appear like a normal roof (tesla.com/solarroof)

Solar City solar panels are easily discernable on a roof (solarcity.com/residential)