Greenflation: Are Commodity Prices Actually Rising?

• Date: 01 May 2022
• Author: Michael Curley, Urvashi Kaul, Sara K. Orr, Doug Vine

52022 ENVIRONMENTAL LAW REPORTER 52 ELR 10345

DIALOGUE

GREENFLATION: ARE COMMODITY

PRICES ACTUALLY RISING?

SUMMARY

What impact does inflation have on environmental sectors? Economists have recently raised concerns about

“greenflation,” a term coined to describe rising commodity prices associated with going green, due to a

higher demand for sustainable materials. The implementation of more carbon-neutral regulation and increas-

ing environmental, social, and governance (ESG) practices may contribute to these rising costs. On January

26, 2022, the Environmental Law Institute hosted leading experts for an in-depth economic discussion about

greenflation, regulations, and ESG practices. Below we present a transcrip t of that discussion, which has been

edited for style, clarity, and space considerations.

Michael Cu rley (moderator) is a Visiting Scholar at the

Environmental Law Institute.

Urvashi Kau l is an Adjunct Assista nt Professor in the

School of International and Public Aairs, C enter for

Environmental Research and Conservation, Columbia

Climate School.

Doug Vine is Director of Energy Ana lysis at the Center for

Climate a nd Energy Solutions.

Sara K. Orr is a Partner at Kirkland & El lis LLP.

Michael Cu rley: Welcome to this discussion on an

increasingly important topic: how money is going to aect

people’s eorts on climate change and other elements of

environmental sustainability. We have three fabulous pan-

elists today.

Urvashi Kaul works in non-credit risk advisory at Capi-

tal One. Prior to this, Urvashi was an assistant director for

economic research and analysis at the New York City Eco-

nomic Development Corporation. Urvashi also served as

the standing advisor to the New York City Labor Market

Information Service at the Center for Urban Research at

the City University of New York.

Doug Vine is the director of energy analysis at t he Cen-

ter for Climate and Energy Solutions (C2ES). Doug leads

the center’s work on energy decarbonization policies and

technology analysis. He is currently researching pathways

toward decarbonizing power and industrial-sector emis-

sions, including widespread electrication and the use of

low-carbon fuels like hydrogen.

Sara Orr is a partner in the Chicago law oce of Kirk-

land & Ellis. Sara advises clients around the world on

environmental, social, and governance (ESG) issues. She

has almost two dec ades of experience working with pri-

vate equity, corporate, and nancial institutional clients on

thousands of transactions. Her practice specically focu ses

on corporate susta inabil ity progr ams, public company

environmental and social governance reporting, environ-

mental and social governance litigation risk analysis, and

shareholder activism, corporate governanc e, ESG due d ili-

gence, and supply chain and human rights.

Urvashi Kau l: If you told me that I was going to be talking

about prices. ination, commodities prices, and logistics

on a ursday afternoon, I might not have been excited.

However, when you throw ESG into the mix, it increases

the interest level tremendously.

ESG has evolved. It means dierent things to dierent

people. Sometimes it’s been used as an acronym for socially

responsible investing and corporate social responsibility,

impact investing, triple bottom line, and so on. Simply

put, ESG criteria are a set of standards for asse ssing the

impact of sustainability a nd business practices of a com-

pany, the impact on its nancial performance, as well as

its oper ations.

I’ll attempt to provide a bit of color to each of the ESG

criteria. When I say environmental, I mean the company’s

impact because of its use of natural resources that has a n

impact on the environment. at’s what the environmental

criteria try to measure—whether it’s pollution, waste, the

use of natural resources, energy eciency, etc.

When I say social, I am referring to t he company’s

interactions with communities. Whether it’s human rights

issues in its logistics and supply chain, whether there is a

positive or a negative community impact, or whether the

impact is because of the inherent nature of what the com-

pany produces, or its policies and practices. Work force

and product safety, privacy, and such issues are within the

realm of social criteria.

Lastly, governance refers to the internal decisionmak ing

and legal compliance of a company. It deals with board

quality, independence, and diversity; it deals with share-

holders’ rights, how much the highest paid employee or

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