Concept Breakdown, Issue 10: Urban Heat Island Effect, ESG

Concept Breakdown is a weekly newsletter by The Analysis (TA), explaining technical concepts that are in the news. The newsletter tries to educate readers on these key terms to avoid misinformation and promote informed discussions.

What is the Urban Heat Island Effect?

Have you ever noticed that cities tend to be hotter than the surrounding countryside? This phenomenon is known as the Urban Heat Island (UHI) effect. Here’s a simple breakdown:

Urbanization: Cities are full of buildings, roads, and other structures made from materials like concrete and asphalt. These materials absorb and retain heat from the sun more than natural landscapes do.

Temperature Difference: As a result, urban areas can be several degrees warmer than nearby rural areas, especially at night. This temperature difference is what we call the UHI effect.

Contributing Factors:

Lack of Vegetation: Trees and plants help cool the air by providing shade and releasing moisture. In cities, there’s less greenery to perform this function.

Heat from Human Activities: Air conditioners (The need for air conditioning (A/C) increases in warmer cities, straining the electrical grid during hot weather), vehicles, and industrial processes release heat, adding to the warmth.

Building Density: Tall buildings and narrow streets trap heat, reducing airflow and cooling.

Impact:

Health Risks: Higher temperatures can exacerbate health issues, such as heatstroke and respiratory problems.

Energy Consumption: More energy is needed to cool buildings, leading to higher electricity use and costs.

Environmental Effects: Increased temperatures can contribute to the formation of ground-level ozone, a harmful pollutant.

Environmental, Social and Governance (ESG)

It is a framework used to evaluate how businesses and organizations operate with respect to three key areas:

Environmental:

Sustainability: How does a company manage its impact on the environment? This includes reducing carbon footprints, managing waste, and conserving natural resources.

Climate Change: Companies are assessed on how they contribute to or mitigate climate change. Are they investing in renewable energy? Are they reducing greenhouse gas emissions?

Social:

Labor Practices: This involves the treatment of employees, including fair wages, safe working conditions, and diversity and inclusion.

Community Engagement: How does the company contribute to the community? This can include philanthropy, community development, and ensuring that business practices benefit society.

Governance:

Corporate Governance: This includes the structures and processes for decision-making within the company. Are there transparent practices? Are there checks and balances?

Ethical Conduct: Companies are evaluated on their commitment to ethical behavior, including preventing corruption and ensuring compliance with laws and regulations.

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