ESG in Pills August 2022
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Western Political Disconnect
While public concern globally about climate change seems to be increasing, there is astounding political inaction. It seems to me amongst the greatest controversies of our times.
2020 US Survey
Back in 2020, the Pew Research Centre tried to answer the question, “what do US voters want?” The survey covered 10,957 U.S. adults using the online?American Trends Panel . The survey shows that the broad majority of the public – including more than half of Republicans and overwhelming shares of Democrats – would have favoured a range of initiatives to reduce the impacts of climate change. About two-thirds (65%) of Americans felt the federal government was doing too little to mitigate the effects of climate change. And public dissatisfaction with government environmental action is not limited solely to climate: they believed the government was doing too little in other areas, such as protecting air and water quality and wildlife.
Consistent with public concerns over climate and the environment, 79% of Americans said the priority for the country’s energy supply should be developing alternative sources of energy, such as wind and solar. Far fewer (20%) give preference to expanding the production of oil, coal and natural gas. To shift consumption patterns toward renewables, a majority of the public (58%) believed government regulations necessary to encourage businesses and individuals to rely more on renewable energy. Only 39% thought the private marketplace would ensure this change in habits.
To reduce the effects of global climate change, 90% of Americans favoured planting about a trillion trees around the world to absorb carbon emissions in the atmosphere, including large shares of Democrats (92%) and Republicans (88%). Most Americans also would have supported tougher restrictions on power plant emissions (80%), taxing corporations based on the number of carbon emissions they produce (73%) and tougher fuel-efficiency standards for automobiles and trucks (71%). Partisan divides are broader on these three policies, with Democrats much more supportive than Republicans. Still, about half or more Republicans say they would favour these policies, including 64% who back stricter emission standards for power plants.
Politics does play a heavy role in the cause of climate change. It is scientifically proven that the climate is warming for human-induced emissions. If we were looking at natural climate patterns, the Earth should be experiencing a reduction in temperatures. Nonetheless, in the US, partisans remain far apart on several overarching questions about climate change. Much larger shares of Democrats and those who lean toward the Democratic Party than Republicans and Republican leaners said human activity is contributing a great deal to climate change (72% vs 22%) and that it was impacting their own local community (83% to 37%) and that the government was doing too little to reduce the effects of climate change (89% to 35%).
This is also true for climate acceptance. A large majority of Democrats (83%) say climate change was affecting their local community a great deal or some. By contrast, far fewer Republicans (37%) believed climate change to be affecting their local community at least some; most Republicans (62%) said climate change was impacting their local community not too much or at all. Among Republicans and Republican leaners, moderates and liberals (55%) were much more likely than conservatives (27%) to say climate change was impacting their community a great deal or some.?
?Nonetheless, a majority of Americans (63%) said that climate change was affecting their local community a great deal or some. Fewer (37%) said climate change was impacting their community not too much or not at all. The share who saw at least some local impact from climate change was 62%.
?Overall, 79% of Millennial and Gen Z Republicans prioritised the development of alternative energy sources. While Republicans generally are sceptical about the need for government to encourage public reliance on renewable sources, about half of Millennial and Gen Z Republicans (48%) thought government regulations to be necessary. Smaller shares of older Republicans said this. Millennial and younger Republicans were less supportive of expanding the use of offshore oil and gas drilling, coal mining or hydraulic fracturing than Baby Boomer and older Republicans.
Where is US policy today?
Fast forward to 2022. Heatwaves and climate catastrophes are hitting all regions, and we can only expect that climate awareness and first-hand witnessing of climate change have increased.
It seems that the US government has not taken up yet on these desires. A clear example is the 6-3 supreme court decision ?that happened at the end of June. It restricted the ability of the Environmental Protection Agency to regulate carbon emissions will benefit power plants and fossil fuel companies throughout the U.S. and profoundly hobble?the government’s ability to address the worsening climate catastrophe.
As Bloomberg notes, perhaps no one?did more to bring West Virginia?v. Environmental Protection Agency to the Supreme Court than Charles Koch. Koch?has been chairman and CEO of Koch Industries, America's largest private company by revenue, since 1967. Three of the extremist judges who joined the decision — Gorsuch, Barrett, and Kavanaugh — wound up on the Supreme Court primarily because of Koch’s activism and contributions.
Koch has funnelled some of his vast fortunes into a great network of political front groups, lobbying efforts, think tanks, and activist networks that aim to stifle climate action. For decades, the?Kochtopus , as some call his many-tentacled political influence machine, has sought to undermine the environmental regulation in Koch Industries’ path and the science and philosophy of government on which?it is based. Koch’s lobbyists and political operatives helped kill a 2009 bill to tackle climate change through a cap-and-trade system that could have cut into?his companies’ profits. While the mounting findings of climate scientists led other titans of industry to begin adjusting their business plans to lower carbon emissions, Koch-funded groups were among the first climate denialists flatly lying about the well-documented planetary trend of?global warming ?and then schooling lawmakers on an alternate reality they had crafted.?Koch also pioneered the attack on Republicans from the right, pushing the party into its current extremism.
Has July Brought a Glimpse of Hope?
In a breakthrough that surprised much of Washington, Senate Majority Leader Chuck Schumer and Senator Joe Manchin just announced that they agreed on a plan that includes a record $370 billion spending to fight climate change. According to analysts, the deal would cut greenhouse gas emissions by about 40% by the end of the decade. That helps put the US on track to meet President Joe Biden’s goal of cutting emissions by as much as 52% from 2005 levels by the end of the decade.?
The spending package includes a bevvy of hard-fought wins for greens, from a slew of tax credits for clean energy sources to the first-ever fee on methane emissions and $3 billion for the US Postal Service to buy emission-free mail trucks. But the bill is no climate panacea. It includes mandates for more oil and gas leasing and other measures loathed by environmentalists. It also provides generous incentives for carbon capture that greens say could prolong the life of old coal-fired power plants. Here’s a look at what’s in the deal.
The legislation that emerged by surprise Wednesday from negotiations among Senate Democrats, if passed into law,?would potentially revive what once looked left for dead: President Joe Biden’s commitments to curb US emissions under the Paris Agreement.?
?Chart of the Month
Environment
Tackling Food Waste
The UK supermarket chain Marks & Spencer aims to halve food waste from its products by 2030 compared with 2018, and it wants to redistribute 100% of edible surplus food by 2025. Achieving those targets would align with the UK’s commitment to meet the United Nations goal of?halving food waste by 2030 ?compared with 2007 and helping consumers save hundreds of millions of pounds annually on feeding the bin. To do so, M&S plans to remove “best before” labels from 300 varieties of fruit and vegetables in its stores to cut food waste. The measure will affect 85% of the supermarket’s fresh produce offering. Wrap estimates that 45% of global greenhouse gas emissions can only be tackled by changing how we make and consume products and food. It said that removing dates on fresh fruit and veg can save the equivalent of 7m shopping baskets of food a year. Tesco, the UK’s largest supermarket chain, had already?announced the end of best before dates ?on its own-brand fruit and vegetables as far back as 2018, while the German supermarket Lidl also says it does not include best before information to reduce food waste. Morrisons in January ditched use-by dates, instead asking customers?to deploy the time-honoured “sniff test” ?to check whether cow’s milk is still drinkable.
?Banks Warned, Again
During the start of the month, the European Central Bank published results from its first local weather stress. The results show Eurozone banks are poorly geared to measure the dangers of world warming on their mortgage books and underestimate the losses they are prone to. The ECB stated a determination of €70bn of casualties from the short-term impression of upper carbon emission costs and excessive climate occasions, put collectively by 41 of the most important banks within the foreign money bloc, “significantly understates the actual climate-related risk”. The central financial institution stated lots of these concerns within the take a look at lacked knowledge, had inadequate inner fashions, and the train solely lined a 3rd of their whole steadiness sheet exposures. The ECB stated that a fifth of all 104 banks it exclusively assessed took account of local weather change in their credit score threat fashions, two-thirds didn’t have “robust climate risk stress-testing frameworks”, and most “lack relevant data”. Two-thirds of the 104 banks scored poorly on their capabilities for assessing the danger of world warming. The ECB stated that almost two-thirds of banks’ earnings from company clients came from greenhouse gas-intensive industries. In many instances, exposures had been concentrated in a small variety of corporations. Campaigners criticised the central financial institution for not being robust and sufficient. Some flagged that the stress checks didn’t take note of the upper price of vitality triggered by the conflict in Ukraine. “It all seems a bit anachronistic as the energy shock they are simulating is happening already,” stated Stan Jourdan, head of strain group Positive Money Europe.
ESG Wants No Compromise
European countries, including Germany and Italy, are considering bringing back coal due to the Ukraine crisis, which has cut Russian gas flows. Some companies, such as German speciality chemicals maker Lanxess, have also said they may consume more coal. Despite an energy crisis following sanctions on Russia, major European investors say they will not relax their investment principles of reaching net zero targets on greenhouse gas emissions by 2050 or earlier. Investors increasingly use ESG ratings, developed by companies such as MSCI or Sustainalytics, to judge firms' merits. Burning coal, which puts out more carbon dioxide than alternatives like oil and gas, gives companies a black mark. Companies forced by cost pressures or national policy to use the fuel could make up ground by finding other ways to burnish their environmental credentials or by focusing on the S and G in ESG, industry sources added. Nonetheless, corporations can find other ways to change scores. "When your emissions go up, all other things being equal, you are in more trouble from a rating perspective," said Sylvain Vanston, executive director of climate change investment research at MSCI. "If you come up with a fantastic new commitment, that could counterbalance it." Fortunately, investors insist they are similarly committed. AXA Investment Managers, Allianz Global Investors and Zurich Insurance, which manage $1.8 trillion in assets, all said they were keeping to their plans to cut back on coal despite the war in Ukraine.
?Social
?Formula 1 and Climate Change
The four-time Formula One world champion?Sebastian Vettel drives for Aston Martin and made his F1 debut in 2007. He became the sport’s youngest world champion when he took his first title at 23 years and 134 days old and has amassed 53 wins. Vettel?has announced he will retire at the end of this season. The 35-year-old admitted that his concerns over the climate emergency and F1’s role as a contributor to the problem played a part in his decision-making process and that he was “scared” of what the future might hold for him. Vettel has been increasingly outspoken on environmental and social issues in recent years. He has expressed his ambivalence at competing in F1, a sport with an enormous carbon footprint because of the air travel involved. “Travelling the world, racing cars and burning resources, literally, are things that I cannot look away from,” he said. “Once I think you see these things and you are aware, I don’t think you can really unsee it. Regarding the climate crisis, there is no way that F1 or any sport or business can avoid it because it impacts all of us. Maybe it’ll be pushed back or quieter, but it’s only a matter of time – we don’t have.”
?What Carbon Footprint Matters
Yard is a sustainability-driven digital marketing agency. This year it calculated the carbon footprint of celebrities globally based on their use of private jets. Carbon footprint is the CO2 they emit based on a person’s lifestyle. In this case, celebrities were assessed based exclusively on their flying emissions. Numbers are striking. Yard found that, so far, through their private jet usage, the average celebrity has created 3376.64?tonnes of CO2 emissions. To put that into perspective, that is over 482.37 times more than the regular person who averages just seven tonnes per year flying commercially. Taylor Swift is the highest emitter. Racking up a total of 170 flights on her private jet?since January, Taylor has amassed a vast?22,923 minutes?in the air or?15.9 days. Considering that she is not currently touring, this is a considerable amount.?Taylor’s flight time is?80 minutes, an average of 139.36 miles?per flight. Second place for boxer Floyd Mayweather. He has amassed more flights than any other celebrity on this list,?taking 177 this year, which averages out to be 25 flights per month or one per day. Floyd also has the shortest flight time on the list, which was a pitiful 10 minutes. Third place for Jay-Z, who has?emitted?6,981.3 tonnes of CO2?on his private jet, which is?997.3 times more?than the average person’s yearly emissions. Just like Taylor Swift, he is currently not on tour.?Who knows what impeding issues Jay-Z has had to take 136 flights this year and spend nearly two weeks in the air. Overall, the top 10 emitters produce over 100k tonnes of carbon a year on their private jets. Regardless of everything else they do. As Alexis Eyre notes, emissions from an average person from the UK are 12.7 tonnes per year, “which is still ridiculously high in comparison to the rest of the world, with some countries emitting as little as 0.5 tonnes per person per year.” And as MIT confirms, celebrities influence 80% of the world's entire population. She concludes, “these people are responsible for defining much of today's culture, whether that's travel, what we eat, and how we dress.”
?Plant-based is the New Black
Burger King Austria asks its customers if they want “regular or meat-based” Whoppers as part of an innovative campaign that makes plant-based meat the norm.?The chain recently ran a campaign titled “Meat Option” based around the idea that plant-based meat is the norm while animal-derived meat is not—flipping the standard narrative on its head. As part of the campaign last week, customers at Burger King Austria who ordered burgers were given a choice of “regular or meat-based?”?Burger King introduced a plant-based burger, the?Impossible Whopper, to its menus in the United States back in 2019. Since then, the fast-food chain has greatly expanded its plant-based options globally, particularly through its partnership with The Vegetarian Butcher—a Unilever-owned company that supplies its plant-based meats across Europe, including Austria and other regions.?Today, fom plant-based meat buns in Japan to vegan bacon-topped Whoppers in France to?high-tech vegan chicken in Chile, the fast-food giant has a plant-based option in just about every region it operates. And in some countries, it’s going one step further. In the United Kingdom,?Burger King?has made some significant commitments to revolutionise its menu to become 50 per cent plant-based by 2030. And these veggie items are performing well in many areas, including in Belgium, where earlier this month, Burger King revealed that one-third of all Whoppers sold were meatless.?“The limited-edition menu is a direct result of our focus on vegan and plant-based innovation and goes hand in hand with our target of a 50-percent meat-free menu by 2030, as well as our commitment to sustainability and responsible business,” Burger King UK Chief Marketing Officer Katie Evans said in a statement at the time.
Governance
Court Win in the UK
Friends of the Earth, ClientEarth and the Good Law Project had all taken legal action over the government’s flagship climate change strategy, arguing it had illegally failed to include the policies it needed to deliver the promised emissions cuts. This month, the UK court ordered the UK government to explain how net zero policies will reach targets. In a judgment handed down late on Monday, Mr Justice Holgate said the strategy lacked any explanation or quantification of how the government’s plans would achieve the emissions target and, as such, had failed to meet its obligations under the Climate Change Act (CCA) 2008. The net-zero strategy, published in October, included commitments to end the sales of new fossil fuel cars by 2030 and gas boilers by 2035. But it did not specify how the strategy would be delivered or specify the cuts in emissions to be achieved in each sector. Environmental campaigners called the ruling, which came as the UK faced record-breaking temperatures, a “landmark” and “a breakthrough moment”, claiming it showed the net zero strategies was in breach of the CCA. “We’re proud to have worked on this historic case,” said Katie de Kauwe, a Friends of the Earth lawyer. “This landmark ruling is a huge victory for climate justice and government transparency. “It shows that the Climate Change Act is a piece of legislation which has teeth, and can, if necessary, be enforced through our court system if the government does not comply with its legal duties.” In the meantime, Denmark has raised the bar with a corporate carbon tax at 1,125 Danish crowns ($159) per tonne by 2030 for companies subject to the EU Emissions Trading System (ETS) and will consist of a 375 crowns fee on top of the projected 2030 price of EU carbon permits of 750 crowns. It is the highest in Europe, and the government has said it will target companies both in and outside the EU's carbon quota system. Could the UK draw inspiration?
领英推荐
?The Uber Files
Thousands of leaked files to the Guardian have exposed how Uber courted top politicians and how far it went to avoid justice. Information spanning 2013 to 2017 reveals, for the first time, how a $90m-a-year lobbying and public relations effort recruited friendly politicians to help in its campaign to disrupt Europe's taxi industry. While French taxi drivers sometimes staged violent protests in the streets against Uber, Mr Macron - now president - was on first-name terms with Uber's controversial boss Travis Kalanick and told him he would reform laws in the firm's favour. Ex-EU digital commissioner Neelie Kroes, one of Brussels' top officials, was in talks to join Uber before her term ended - and then secretly lobbied for the firm, in potential breach of EU ethics rules. At the time, Uber was not just one of the world's fastest-growing companies - it was one of the most controversial, dogged by court cases, allegations of sexual harassment, and data breach scandals. If the police came knocking, Uber had a second line of defence - the "kill switch", which made it impossible for visiting law enforcement to access the company's computers. This would restrict officers' access to sensitive company data, such as lists of drivers, which the company believed would harm its growth.
Eventually, shareholders had enough, and Kalanick was forced out in 2017. Uber says his replacement, Dara Khosrowshahi, was "tasked with transforming every aspect of how Uber operates" and has "installed the rigorous controls and compliance necessary to operate as a public company". The Uber Files reveal the systemic proximity between corporate and political power and the embarrassing inadequacy of our legal and political culture to address the undue corporate influence exercised over political power.
Monitoring Blackrock
Reuters has provided updates on Blackrock’s shareholder resolutions about climate change. The leading asset management reported a sharp drop in its support for environmental and social-related shareholder resolutions. In the 12 months to the end of June, BlackRock said in a report that it had supported 71 of the 321 environmental or social (E&S) shareholder resolutions filed globally, excluding Japan, or 22% of the total. Average market-wide support was 26%, it said. In the previous year, BlackRock had supported 81 of the 172 E&S resolutions filed or 47%. It argued many were too prescriptive, while its backing for directors and executive pay held steady. Some were ?“unduly constraining on management or were overly prescriptive as to the information sought or timeframes.” In contrast, others “failed to recognise the progress made such that companies had largely met the ask of the proposal." Such news doesn’t come as a surprise. BlackRock had warned in May that it would back fewer shareholder resolutions because many were too constraining, requiring banks, for example, to stop funding energy companies or directing their climate lobbying activities.
On the issue of directors seeking election or re-election to the board, which together make up the bulk of all votes globally, BlackRock said it had backed 90% of directors, unchanged from the prior year. BlackRock committed to pay-related resolutions instead. It supported 80% of the 14,995 votes held globally. In the Americas, though, it was down from 92% a year earlier to 89% in the Americas. All agenda items were supported by 57% of companies, unchanged year-on-year.
?Events
Annual Conference
September 5-7
Zurich
?PRI in Person
Sept-20-22, 2022
Barcelona/Virtual
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World Standard-setters Conference
Sept. 26-27, 2022
London
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Climate Group?
Sept. 19-25
New York?
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Economist Impact?
Oct. 3-6
London & Online?
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Environmental Finance?
Oct. 17?
London
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European Union?
Oct. 28?
Online
Reuters?
Nov. 22-23?
London