ESG In Pills - June 2023
Top story
Climate Transition Yes, Lifestyle Changes No: What Should Governments Do?
The seven-country YouGov survey, published by Bloomberg, sheds light on the attitude in the EU toward lifestyle changes in achieving a just transition. While acknowledging public concern about climate change, the attitude towards regulation falls short when lifestyle changes impact daily routines. Responses from the UK, France, Germany,?Denmark, Sweden, Spain and Italy suggested that many people were happy with measures that would not significantly affect how they lead their lives. Still, more radical steps were unpopular.
Most surveyed countries express deep concern about climate change and its consequences. This heightened awareness highlights a growing recognition of the urgent need for action to address this global challenge. High percentages, around 80%, also said the climate was changing because of human activity, with fewer than 20% of respondents in most countries saying climate change was not due to human activity and a maximum of 5% denying it was even happening.
The results also showcased strong support for the belief that global collaboration is vital for effectively combating climate change. Individuals understand that addressing this issue requires collective responsibility and concerted efforts. This recognition sets the stage for collaborative action on a global scale, with the solid support of between 76% and 85% for collective climate action.
Measures entailing no great lifestyle sacrifice were widespread, with between 45% (Germany) and 72% (Spain) backing government tree-planting programmes saying they would grow more plants themselves or were doing so already. Respondents also noted they would happily never buy products made of single-use plastic again, and most would support a government ban.
The survey data highlights moderate support for limiting meat and dairy consumption and transitioning to electric vehicles. Between 24% in the UK and 48% in Italy would back government legislation to support limiting meat and dairy intake to a couple of times a week. Unsurprisingly, government subsidies to make homes more energy efficient were wildly popular, with support ranging from 86% in Spain to 67% in Germany, while covering the costs by citizens personally was somewhat less so (19% in Germany to 40% in Spain). There was broad support for frequent flyer levies, with a majority in five out of the seven countries in favour, but much less for buying only secondhand clothes.
Instead, more radical proposals, such as voluntarily eating no more meat and dairy, and having fewer children than you would like, received limited support. Asked whether they would be willing to switch to an electric car, an average of just under a third of respondents across the seven countries surveyed answered positively. When asked what they thought of banning fossil fuel cars, only Spain and Italy were more happy with the idea than opposed to it.
Individual contributions, when combined, can have a tangible impact on mitigating climate change. We must always remember that changing lifestyle habits signal to the market that consumer preferences are shifting, and companies must transform businesses. The survey results indicate a growing concern for climate change and a recognition of the need for collaborative efforts. Analysing the findings, it becomes apparent that governments are critical in driving transformative change to combat climate change.
The survey findings underscore the need for governments to be courageous in taking bold steps towards climate action. Overcoming the lack of desire for change among citizens requires effective communication, incentivisation, and collaborative decision-making. By translating public sentiment into actionable policies, governments can drive transformative change, encourage citizens to change their lifestyle and thus signal the market consumer preferences have changed.
Achieving sustainability necessitates a collective effort that addresses the interconnected nature of environmental, social, and economic aspects. Fostering a sense of collective responsibility and promoting sustainable practices should begin with our governments. The right policies can create a positive ripple effect that transforms societies and paves the way for a sustainable future.
Chart of the month
Environment
Brazilian deforestation drops 65%
Deforestation in Brazil's Amazon rainforest fell 68% in April from the previous year, preliminary government data showed this month, a positive reading for President Luiz Inacio Lula da Silva as it represents the first significant drop under his watch. This interruption arrives after two consecutive months of higher deforestation, with land clearing so far this year now down 40.4% to 1,173 square km. The previous president, Bolsonaro, had slashed environmental protection efforts, cutting funding and staff at crucial agencies as he called for more farming and mining on protected lands. Experts say it is still too early to confirm a downward trend, as the annual peak in deforestation from July to September lies ahead, but see it as a positive signal after rainforest destruction rocketed in late 2022. Lula has said it is urgent for Brazil to show its government is not only talking about protecting the environment but that it is on its way to fulfilling a commitment to end deforestation by 2030. Earlier this month, he reaffirmed that pledge when securing an 80 million-pound contribution from Britain?to the Amazon fund, an initiative aimed at fighting deforestation also backed by Norway, Germany and the United States. Previously he had also resumed recognising Indigenous lands, reversing a Bolsonaro policy, while announcing new job openings at the environment ministry and indigenous agency Funai.
EU In Defense of Consumers
In a bold move last month, lawmakers in the European Union introduced a ban on environmental claims based on carbon offsetting schemes, such as ‘CO2 neutral’ or ‘carbon neutral’, which mislead consumers. This is “a significant victory for consumers and the environment,” said the European Environmental Bureau (EEB), a green organisation. For EU Justice Commissioner Didier Reynders, this proposal aims to strengthen the fight against greenwashing by banning practices that mislead consumers about the real sustainability of products. “By doing so, consumers can choose products that are generally better for the environment. This will encourage competition towards more environmentally sustainable products,” he said. The draft directive bans generic environmental claims such as 'environmentally friendly', 'natural', 'biodegradable' or 'eco' if companies do not support claims with evidence. Making green claims about the whole product when only one part is sustainable will also be forbidden. The EU Parliament also voted against early obsolescence by banning the introduction of design features that limit a product’s life or lead to goods malfunctioning prematurely. To encourage companies to prioritise durability, MEPs also suggested introducing a new guarantee label that indicates the mandatory guarantee lengths and any potential extensions manufacturers offer.
Spain Pleads for EU Aid Amidst Drought
Spain's Agriculture Minister, Luis Planas, wrote to the European Commissioner for Agriculture, Janusz Wojciechowski, to plead for aid for his country's 890,000 farm workers. "We are facing an exceptional situation", after five consecutive years of drought in some regions, that requires a "rapid response from the European Commission," Planas said at the end of the Council of Ministers. Around 27% of Spain is experiencing shortages classified as ‘emergency’ or ‘alert’, according to the Ecological Transition ministry, and water reserves are at 50% of capacity nationally. The lack of water has forced many farmers to forego spring planting, especially cereals and oilseeds. The situation is far worse in Spain's most important agricultural region, Andalusia. The Guadalquivir River Basin is at 24.8% of its capacity, and farmers in the area have had their water allowance for irrigation cut by up to 90% in some cases. Spain's state weather agency has predicted temperatures will rise across the Mediterranean nation towards the end of the week. Spain is the world's biggest exporter of olive oil and an essential producer of fruits and vegetables. The adverse effects of climate change, including prolonged droughts and water shortages in Spain's agricultural regions, are likely to lead to higher prices for essential food items, negatively impacting consumers, especially those with low and middle incomes. The drought has already driven up Spanish olive oil prices to record levels. These repercussions transcend borders as import-export activities in the global market will also be affected, emphasizing the far-reaching consequences of climate change on the affordability and availability of basic necessities.
Social
Nestlé Caught In Action
In a previous ESG in Pills article, it was revealed that most of Nestlé's popular foods and beverages cannot be classified as "healthy" according to recognized definitions. At the time the article was published, the company had acknowledged that over 60% of its mainstream food and drinks products are not sustainable. Despite Nestlé's claims of making improvements to its product portfolio, the evidence suggests a significant misalignment between Nestlé's brand image and the actual health and sustainability of its products. The recent scandal involving Nestlé's sponsorship of the European Congress on Obesity ECO2023 highlights the company's disconnect with health-related issues. Nestlé's association with the event through its brand of weight-loss products, PronoKal, drew significant backlash on social media and led to protests and an open letter published in the British Medical Journal by experts from various countries. The letter argued that Nestlé, with its core business of unhealthy ultra-processed foods and infant formula milk, cannot be seen as part of the solution to the obesity problem. The conference organizers also faced criticism for claiming ignorance about PronoKal being a Nestlé brand. The ECO2023 incident serves as an example of a broader issue concerning the influence of corporate sponsorships on the integrity and objectivity of scientific meetings and emphasizes the need for greater scrutiny in selecting sponsors that align with the goals of promoting health and sustainability. The open letter in the British Medical Journal advocates for avoiding support from pharmaceutical companies, which is prevalent in such events.
Football For Climate
FC Barcelona's male players caught the train for the first time to play a game in Madrid as a way to reduce travel emissions. It is a sign that climate action is starting to take root in professional sports. "We decided to make this trip to state that the club wants to be a solution to climate change and not a problem," the club's sustainability directory Jordi Portabella said. Professional football remains a laggard in taking basic steps to address its climate impacts, such as systematically calculating its direct greenhouse gas emissions and those of fans travelling to see matches. But over the past few months, dozens of symbolic initiatives have emerged,?from clubs serving?vegan food?in stadiums to?players biking?to training grounds and wearing?climate stripes, a popular data visualisation of global warming, on their kits. Together, these efforts point to a growing awareness by clubs and players that climate change is impacting the sport and that they, in turn, need to do something to reduce their contribution to heating the planet. Bar?a’s choice of transportation shows some more progress. Over the past year, Bar?a has been switching to LED lights and sourcing its power from renewables as part of a renewed sustainability push. And the club said their deal with Spain’s national railway company Renfe included a request that the trip be powered by renewable energy.?This season, the club started calculating its emissions for the first time, a necessary step toward reducing its carbon footprint. Other clubs are taking action, too, such as Real Betis in Seville or Germany's Bundesliga clubs. Sofie Junge Pedersen, a Danish defensive midfielder with Juventus FC, highlighted how football players face increasingly harsh conditions as the planet warms, from playing in extreme heat to dealing with flooded pitches. Climate change is a threat to football as it is for everything else. As she said, “If we don’t have a good climate, it won’t be possible to play like we do today.”?
Women in Mining
Metals and mining have long been male-dominated industries, and women have struggled to make inroads. However, executives and analysts commenting on this story see genuine efforts toward change, and they hope the incremental gains made in the last 18 months are a sign of progress. Diverse leadership is critical to tackling the industry's long-term problems, such as supplying the demands of an energy transition, adapting to climate change, managing tailings dams and more, said Barbara Dischinger, director of the UK-based nonprofit International Women in Mining. To help address widespread data and knowledge gaps, the Women and the Mine of the Future: Global Report uncovers the gender-disaggregated employment profile for large-scale mining in 12 nations, focusing on women and their occupations in the sector. Women fill about 12.1% of the C-suite positions across a universe of more than 2,000 global publicly traded mining companies analysed by Commodity Insights, up 1.6 percentage points since an October 2021 data analysis from S&P Global. Women comprise 14% of all executive positions, up 1.7 percentage points from 2021, and increased their share of board roles by 4.3 percentage points to 12.3%. In the Middle East and Africa, women hold more than double any other region or the global average of executive position, standing at 30.9%. Comparatively, women have 11.2% of executive roles in Latin American and Caribbean companies, the smallest share among the five areas in the analysis.
Governance
ShareAction’s Point of No Return
The third part of?ShareAction's report series ranking 77 of the world’s largest asset managers on responsible investment is out. Globally, companies fail to protect human and labour rights comprehensively and avoid damaging public health. Asset managers direct vast global wealth and are stewards of many influential corporations. Their investment policies and practices impact workers and communities worldwide regarding unsafe working conditions, widening inequalities, and weapons proliferation. The report focuses on asset managers' human rights, labour rights, and public health approaches. Findings show that most asset managers fail beyond basic social-related investment exclusions, such as controversial weapons and tobacco. Only 6% exclude investments in human rights-abusing companies across every fund in their portfolio, and under half exclude investments in these companies for their ESG funds only. Furthermore, only ten asset managers have investment commitments that incorporate the UN principle of Free, Prior and Informed Consent, giving indigenous people and local communities a say on projects directly affecting them or their territories. While often blaming a lack of adequate or sufficient data for inaction on social issues, many asset managers aren't taking the most obvious steps to address ESG challenges. For example, 40% admitted not asking companies to release data about their social impacts.
领英推荐
Global Plastics Treaty In The Making
Following an international consensus to negotiate a?legally binding?Global Plastic Pollution Treaty by the end of 2024, the second of five rounds of the Intergovernmental Negotiating Committee (INC-2) took place in Paris.?The resolution requires an international instrument that ‘addresses the full lifecycle of plastic, including its production, design and disposal’. Discussions on plastics found coordinated resistance – notably from Brazil, China, Russia and Saudi Arabia – which preferred to argue for consensus voting only against the requirement for a two-thirds majority hurdle. Many corporates also were slowing negotiations, relying on either Member States or industry organisations to represent their interests. For example, the American Chemistry Council (ACC), which lobbies on behalf of the chemical and petrochemical industry, argues for an increase in the 'reuse and recycling of plastics'. However, some consumer companies, notably Nestlé, PepsiCo and Unilever, are asking for a standard set of rules to address the entire lifecycle of plastics. In the meantime, the plastic value chain is trading at?the lowest equity risk premium?compared to any time in the last decade (i.e., perceived risk has fallen). Investors appear focused on the plastic growth story. Such actions seem to go against proper risk management since the plastic industry has one of the most important risk registers of any sector. Sources of risk include toxic releases, harmful additives, CO2?emissions, marine and terrestrial pollution, microplastics, unrecyclable waste, and, of course, upcoming regulations. Relative to other material sectors, equity markets continue to place the plastic sector on the?lowest?equity risk premium when compared to other products sectors. UN Member States will decide on the final treaty contents at the end of 2024 if it runs to schedule.
Court Cases in the US Steadily Moving Ahead
In an essential win for climate accountability in the United States, the US Supreme Court decided that lawsuits filed in Colorado, Maryland, California, Hawai'i, and Rhode Island against fossil fuel companies, including ExxonMobil, Chevron, Shell, Suncor, and others, will remain in state courts. The cases brought against the oil and gas giants for their decades of disinformation and other contributions to the climate crisis can finally advance. The US Supreme Court decision—technically, a denial of certiorari—comes after 20 appellate judges from six circuit courts and the US Solicitor General have rejected fossil fuel industry arguments that sought to prevent these cases from advancing in state courts where they were filed. One thing to note about these lawsuits is that they are not simply about climate change. Instead, plaintiffs in these cases are pursuing a variety of legal theories, including public nuisance, trespass, and fraud. By suing fossil fuel companies for damages, states and local governments hope to recover some of the costs associated with climate change, including adaptation and infrastructure costs necessary to protect them from the damage already caused. In Boulder, Colorado, three years after the city and county filed suit, the?Marshall Fire?underscored the urgency of the case, destroying more than 1,000 homes in Boulder County and costing approximately?$2 billion in damage.
Events
Reuters?
June 6-7
London
June 7
London
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International Sustainability Standards Board
June 12?
Frankfurt
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PEI Events?
June 13-14
London
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GreenBiz
June 26-28
Boston
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Reuters
Sept. 6-7
London
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June 2023, issue XXVIII. Previous editions can be found on LinkedIn or the Oxford Business Review website. All information in this article is personal and does not represent the viewpoint of any company.
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