Welcome to another fortnightly 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 stories to be of interest in what continues to be a rapidly evolving area.
It’s tough to stop a fast moving train, but you can lay down a set of rails to guide its direction. And that’s exactly what investors across the world are doing as they exert their influence on organisations by incorporating environmental, social, and governance (ESG) criteria into their investment criteria. Divestment campaigns, integrated environmental and financial accounting protocols; these are just a few examples how conscious individuals and investment funds are using the global locomotive of finance to steer the globe down a more sustainable pathway.
A train needs an engine; and it turns out, when it comes to the choo-choo of corporate cash making, the greener the fuel, the sweeter the sound. A recent report indicates that the annualized stock returns of the ‘cleanest’ 200 companies actually outperformed the ‘dirtiest’ by a factor of 3. Companies like Toyota, Vestas, and Panasonic were the leaders of the clean pack, rewarding their investors handsomely. Who said being green was a poor business decision?
Perhaps the biggest climate change mitigation decision is deciding who to listen to when it comes to guidance on setting targets to address climate change. Politicians? Businesses? Economists? Your neighbour John? In a reassuring sign, organisations are increasingly relying upon scientific consensus to guide their target setting and goal orienting. Our understanding of climate change, after all, is the product of scientific disciplines; would you take weight loss advice from a candy salesperson?
Of course, an integrated understanding of diet’s influence on weight gain would help you filter out information and make good long term decisions. This is similar to the type of integrated mind-sets which many companies are incorporating into their reporting practices. Research shows that companies which have high levels of ESG reporting performance often receive a higher valuation in the financial markets, leading one to believe that investors view these integrated firms as having more growth potential.
But reporting costs time and money – resources in tight supply for the small and medium size enterprises (SMEs) which produce the bulk of the raw materials, parts, and supplies used by large consumer manufacturers and retailers. Faced with increasing demands from their upstream partners, SMEs are struggling to meet the workloads associated with filling out questionnaires, scorecards, and other information gathering attempts. Can sustainability strategies truly filter down from the top, and change the supply chain? Or does the chain need to determine for itself how to strengthen its own links?
Next we look at sustainable development goals (SDG’s). Is the old GDP growth model broken? Should SDG’s become the benchmark for how a nations prosperity and productivity is measured? The emerging view is that economic activity reflects the interaction of people with each other and with their natural environment, resulting in positive or negative social and environmental outcomes. The article examines a number of clearly defined alternate approaches, the green economy approach, which results in improved wellbeing and significantly reduces environmental risk. The blue economy which, through systemic design based on the laws of nature, link different productive processes with no waste. This is an alternative to the make-use-dispose economic growth perspective, so which one will it be!
Next we look at one man’s action to reduce his impact on the world we live in. He can see the writing on the wall, ‘the world can cope with 7 or even 10 billion people. But only if we stop eating meat.’
This may seem an extreme measure, but is backed up with some cold hard facts. An analysis by the farmer and scholar Simon Fairlie suggests that Britain could easily feed itself within its own borders. But while a diet containing a moderate amount of meat, dairy and eggs would require the use of 11m hectares of land (4m of which would be arable), a vegan diet would demand a total of just 3m. Although based on analysis in Britain, it’s easy to see the same comparisons made in any country, New Zealand included.
George Monbiot has demonstrated that each of us can be a conscious and informed consumer if we choose. It appears it is going to get a lot easier for consumers to be able to do this, with the advent of the smart label. Within the next three-years, smart labels will allow consumers to know where a product was produced, it’s embedded GHG and how it can be recycled or passed along. This increased transparency is very welcomed.
An example of a company being able to transparently report on what their products are all about, is the New Zealand skin and hair company Ethique. According to their web-site, their products are made entirely from natural ingredients like cocoa butter, coconut oil and lavender, come as a solid bar and without any plastic packaging. So not only does it save on water, it also saves on petrochemicals and their associated GHG emissions to make the plastic, as well as avoiding the potential for the spent plastic containers to pollute the environment. Little wonder they are struggling to keep up with demand!
A different example where things could be far more transparent is in the cement industry. There is currently nothing to stop the industry adopting a more transparent way of measuring and reporting on the amount of emissions embedded in their product. Whilst there are many ways the production of cement could be made more efficient, the industry has been slow to adopt these. A dose of transparency and a fair value on the price of Greenhouse gas emissions may be just what is required to shake this sector up.
Another, example is in the computer industry, which has the opportunity to improve efficiencies by 30% through more efficient chips and smarter CPU power management. Traditionally the IT industry has focussed on making its chips faster in terms of processing speed and performance and not energy efficiency. Interestingly, whilst energy efficiency standards such as Energy Star has been issued for refrigerators, washing machines and all manner of home appliances – even televisions, they don’t exist for computers and monitors. Perhaps it is time for a little bit of transparency here too?
Finally, the extreme stances against climate change in the US are unfortunately resulting in legislation. Wyoming State has, through legislation passed in 2012, claimed they own the wind in their state. Not only this, but they have proceeded to tax for use of this wind. The move has been criticised as a political move against renewable energy as Wyoming State has a large coal industry. As you can imagine the tax has worked in their favour, no new wind projects have been commissioned since 2012. It is worth asking though, if the state owns the wind, can consumers of the wind sue for lack of supply on calm days?