Welcome to our two weekly review of energy and environmental events and developments from both here in New Zealand and around the world. As always, we hope you find our collection of articles to be of interest in what continues to be a rapidly evolving area.
So now that we are well into 2016, it is time to cast our eyes forward to April 2017 (official start date of COP21) by ensuring December’s COP21 Agreement is adopted by the New Zealand government, and then, if enough countries adopt it (requires at least 55 parties representing at least 55% of total global greenhouse gases), to implement it. We note however, that there was no reference to COP21 in this Tuesday’s opening statement by the Prime Minister when outlining their priorities for the year ahead. Hmmmm, oversight or wilful omission?
Our next article casts a thoughtful eye over the risks that face our civilization. These include those presented by global warming as well as others, such as 25% of the planets youth neither working or in study – a lost generation with too much time on their hands and possibly a growing sense of hopelessness. Other less obvious risks are things like too many antibiotics in our food chain, a global food crisis, loss of ocean biodiversity, etc. At least these risks are now being acknowledged and that is the first stage of leading to their management and in time, hopefully their reversal. And managing risks is an integral element of sustainability reporting. Both Integrated Reporting and GRI G4 Reporting are based on the concept of Materiality, i.e. what is Material to an organisation. Things like customer and staff retention and reducing risks throughout the business are things that are Material. We look at sustainability reporting as another way of managing risks and an exemplar of sound business practices.
The perception of what might be Material or a risk are often driven by sets of values, with these varying from person to person and organisation to organisation. Our article ‘The power of purpose in branding’ discusses how “purpose driven companies” drive far greater value than those not driven by purpose. This is mainly attributable to consumers and employees buying into and wanting to be associated with the values that those companies espouse. Not just talk about, but what they actually do.
And following those values can also be extremely profitable. For example, a number of so called green giants like Tesla, Ikea, Nike and Whole Foods have made sustainability profitable. There are now at least nine companies that generate a billion dollars or more in annual revenue from products or services that have sustainability or social good at their core.
It is not just their core operations that are influenced by these sets of values. It extends into their supply chains as well. Our next couple of articles discuss the scope for driving changes in mindset and efficiencies from supply chains that in most cases, are responsible for the greatest source of greenhouse gas emissions. There is a growing awareness that purchasing organisations can influence supply chains and that suppliers need to do their bit in reducing their greenhouse gas emissions. Not only can this result in improved efficiencies, it can also deliver a more robust supply chain and lower costs.
Another changing trend is that organisations are increasingly linking executive remuneration to
sustainability performance. The title of the article unhelpfully labelled ‘Why most companies don’t link ESG Performance to Executive Pay’ discusses that whilst the levels of organisations linking this are still low, the numbers are growing as the awareness that sustainability factors have a material impact, direct or indirect on the company’s prosperity over the long-term, is increasing. Of the list of Global 100 Most Sustainable Corporations, 87% provide a monetary bonus to executives who achieved sustainability targets.
We discussed above how managing risks is a fundamental component of sustainability reporting. Our next article ‘Which are the world’s most controversial companies?’ contains a list of organisations that have for one reason or another, chosen to NOT manage their risks. This list contains the likes of Uber (claims of sexual assaults on women), Ruihai International Logistics (massive explosion in China), Volkswagen (intentional emissions testing avoidance software) and FIFA (scandals over the FIFA Executive, and claims of vote rigging and corruption). And no, none of the companies in this list find themselves on the list of Global 100 Most Sustainable Corporations.
Some articles looking at a number of options, when considering a sustainable and
efficient future, follow.
Businesses seem to be taking the move towards
sustainability more seriously, and are better at managing
risks, than central governments. Some are minimising their
carbon emissions by digitising and streamlining their processes. It could be in using data analytics,
real-time management of various transportation systems, or
using asset management systems to minimise water use and
We finish with two articles that take a look at recent developments in New Zealand.
First, the ETS (Emission Trading Scheme), and how the cost of carbon is increasing. Now carbon offset credits must be units of New Zealand origin, not cheap international credits. In other words, action needs to occur on NZ soil. The cost of carbon is currently about $10 per tonne, but needs to be closer to $20 to encourage more planting of forests, and more investment in lower carbon solutions. As the price had previously dropped to a low of $1.55, with the cost trending up it can only lead to organisations taking positive action in this area.
Finally the refinery at Marsden Point has taken on board one of our messages from the last SnippETS – minimise waste by collaboration with other businesses. BOC have set up a plant next door to the refinery to utilise the waste gas stream coming from the plant – they clean up the CO2 emitted and use it to supply other industries, including food and beverage, dairy and horticulture. A win-win for all, and we hope other businesses start thinking this way.
Thanks for taking the time to read this issue and we look forward to catching up with you again. If you have any items of interest you would like to submit, then please feel free to forward them.