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Social Capital

  • Human Rights & Community Relations
  • Customer Privacy
  • Data Security
  • Access & Affordability
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  • Customer Welfare
  • Selling Practices & Product Labeling

Human Capital

  • Labor Practices
  • Employee Health & Safety
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Business Model & Innovation

General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for:

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Air Quality

Air Quality

Biofuel refineries generate air emissions that may include hazardous air pollutants, criteria air pollutants, and volatile organic compounds. Emissions are generated by grain-handling equipment, boilers, wastewater treatment, and cooling, drying, distillation, and fermentation units. In most regions, such emissions are typically subject to regional and federal regulation that seeks to limit emissions below specific thresholds. As a result, air emissions are often subject to emissions permits and abatement can result in operating costs or require capital expenditures. Companies may also face regulatory compliance costs and penalties, as well as permit restrictions or delays from state and local agencies, if facilities are not compliant with regulations.

Water & Wastewater Management

Water Management in Manufacturing

Biofuel refining is typically water-intensive. Biorefineries require water for feedstock processing, fermentation, distillation, and cooling. Although water use at biorefineries is modest relative to the quantities consumed during feedstock crop production, it is concentrated, and thus may have impacts on local water resources. Facilities may also generate wastewater containing salts, organic compounds, dissolved solids, phosphorus, and other substances, requiring wastewater treatment. Biofuel refineries may also be exposed to the risk of reduced water availability and related cost increases or operational disruption. Extraction of water from certain areas for the purposes of refining, as well as contamination of water supplies due to refining operations, could also create regulatory risk and tensions with local communities. Water efficiency in operations and the proper treatment of effluents are therefore important factors for the performance of biofuels companies.

Product Design & Lifecycle Management

Lifecycle Emissions Balance

The rapid growth in global biofuels production is due in large part to government energy policies that seek to reduce net GHG emissions from transportation fuels and reduce dependence on fossil fuels. Most major renewable-fuel policies worldwide require that biofuels achieve lifecycle GHG emissions reductions relative to a fossil-fuel baseline to qualify for renewable fuel-mandate thresholds. The biofuel lifecycle emission calculation can include indirect and direct emissions from feedstock crop production and land use, fuel refining, fuel and feedstock transport, and vehicle exhaust emissions. Biofuel producers can directly influence net emissions during the refining process through energy management (fuel use), process innovations, and by using feedstocks with lower emissions profiles. Fuel products that achieve a reduction in net emissions can qualify as advanced biofuels, which, based on existing biofuels mandates in the U.S. and Europe, may be subject to increased demand in the future. Biofuel companies that cost-effectively reduce the net carbon emissions of their products may gain a competitive product advantage, leading to revenue growth and increased market share.

Supply Chain Management

Sourcing & Environmental Impacts of Feedstock Production

The Biofuels industry utilizes a variety of plant-based feedstocks as raw materials for production. Most companies purchase feedstocks from agricultural producers and distributors. A growing proportion of the world’s arable land is now occupied by biofuel crops. Unsustainable cultivation practices can have negative environmental externalities, including deforestation and biodiversity loss, soil degradation, and water pollution. These factors could adversely affect feedstock crop yields over the short- and long-term. This, in turn, could influence the price and availability of feedstocks for biofuels producers. Consequently, vetting the sustainability of supply chains, such as through certifications or engagement with suppliers, is an important consideration for biofuels producers.

Management of the Legal & Regulatory Environment

Management of the Legal & Regulatory Environment

The Biofuels industry is highly dependent on government policies and regulations, which create market demand and incentivize supply with tax breaks and other support for feedstock production. The Biofuels industry therefore supports certain regulations and policies related to renewable fuel policy, production tax credits, and feedstock production. While regulatory support can result in positive short-term gains by supporting the biofuels market, the potential long-term adverse environmental impacts from feedstock and biofuels production may result in a reversal of beneficial policies, leading to a more uncertain regulatory environment. Consequently, biofuels companies could benefit from developing a clear strategy for engaging regulators that is aligned with long-term sustainable business outcomes and that accounts for environmental externalities.

Critical Incident Risk Management

Operational Safety, Emergency Preparedness & Response

Biofuel production presents operational safety hazards because of the presence of flammable and explosive substances, high temperatures, and pressurized equipment. Process safety incidents can damage facilities, injure workers, and affect the local environment and communities. While the frequency of occurrence of accidents in the industry is relatively low, when they do take place, the outcomes may be acute, with significant impacts on financial performance. Damaged facilities can be inoperable for extended periods, resulting in lost revenues and large capital expenditures for repairs. Companies perceived to be at a greater risk for process safety incidents may have a higher cost of capital, while workforce injuries could result in regulatory penalties and litigation. Conversely, companies with a strong safety culture and operational safety oversight can more effectively detect and respond to such incidents, mitigating potential financial risks and improving operational efficiency.

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