[Ed. note: This will be our last blog until January 3 when we will back with our regular blogs and other postings. We wish everyone a safe and Happy New Year!]
I gave a fair amount of thought about what to write for the end of 2022 – our inaugural calendar year. I decided to keep the holiday spirit (kind of) going while blending in something of a summary of issues we covered that are still relevant going into 2023.
Now that Santa has returned to the North Pole, hung up his red suit and pushed the sleigh back into the barn for the next 363 days, I thought about ESG challenges he faces in delivering his presents to children all over the world. This certainly isn’t a complete list, but it might at least be thought provoking.
With so much secrecy surrounding the location, infrastructure and operational details of Santa’s workshop, I had to make some assumptions concerning GHG emissions sources:
- Manufacturing: The general consensus is that Santa doesn’t outsource any gift manufacturing, so his Scope 1 emissions are likely quite significant. Unfortunately, chemicals are necessary in the making of many gifts – paints, thinners, cleaners, metal plating, etc – that generate a range of air emissions and create wastes that must be managed.
- Energy sources: The Workshop is completely off-the-grid and uses a tremendous amount of power for operations, utilities and employee (elves) living quarters. With the permanent frozen conditions, hydroelectric power is not available and the icy conditions/extreme temperatures rule out wind power. There is almost no daylight during the North Pole winters, so solar power isn’t a plausible source for about half the year. On the other hand, summers experience more than 20 hours/day of daylight which may generate power for operations during peak manufacturing periods. Yet more power is needed and I believe I have an answer – but not what most of us would hope. It is well documented that Santa brings lumps of coal to children on the naughty list – meaning he has ready access to a significant coal supply. I theorize Santa’s Workshop actually uses coal as its main energy source. The carbon emissions from making gifts for the world’s children would be staggering. World experts and policymakers should look into this matter in more detail.
- Air travel: The reindeer have minimal emissions during Santa’s 24-hour flight, although they do generate emissions from feeding throughout the year. Other employee travel such as business trips and commuting seems to be non-existent or minimal, but there is extremely limited data on this.
Anecdotal evidence indicates an unusually high level of employee satisfaction, although questions of working hours, living wages, forced labor and freedom of association could rightly be raised. To my knowledge, the Workshop has never undergone a social (or other kind) of audit and even if it had, the results would not be public information.
Employee benefits do include unlimited free candy canes, hot chocolate and apple cider, free living quarters and company-supplied clothing and shoes. In past years, potentially credible evidence indicated that employee diversity, equity and inclusion were not widespread in the Workshop employee community, but more recent information coming to light indicates this is changing.
If little is known about the Workshop operations themselves, essentially no information exists about Santa’s raw material sourcing practices or material origins. Local sourcing doesn’t seem plausible given the barren, remote and extremely frigid location and the infrastructure needed to process ores into metal, trees into lumber and cotton into clothes. This remains an area devoid of data, evidence or even reasonable theory.
Even today, Santa’s Workshop is shrouded in extreme secrecy. No ESG, CSR or other public reports/disclosures are made. To the extent that Santa has income and makes investments, we have no information about what ESG policies he follows. Where he leaves gifts of money, he provides no guidance or instructions about how to invest it in accordance with ESG goals. Santa does frequently send letters or notes to children directly but no mention is made of issues mentioned above. His reputation for doing good and being ethical is sterling and goes back hundreds of years, but all we have to go on is the reputation. Nothing is known about his governance structure and what kinds of oversight/controls are in place to prevent problems – unintentional or otherwise.