Tag: sustainability

A Brave New Economy: Sustainability as the “New Normal”

Posted on by Kacey Katzenmeyer

Faced with threats to business continuity from Covid-19, we have seen companies think critically about how to respond to risks from the natural world and prevent exposure to them in the future. During this challenging moment, there is opportunity. With businesses primed to think critically about their interaction with the environment, forward-thinking companies are well positioned to double down on sustainable practices such as supply chain transparency, transitioning to clean energy, and implementing circular economy principles.

Integration of these sustainability fundamentals can help reduce risk and ensure resilience in a future defined by yet another major global crisis: climate change, which is poised to create shock waves that catapult the world into yet another “new normal.” Sustainably informed business models, demanded by investors and required for long-term success will define this “new normal.” The pace and scale at which most companies are currently committing to action will not be enough.

Like Covid-19, climate change will have dramatic impacts on global markets, supply chains, and human welfare.  Its impacts can already be felt across the globe. Companies that use this moment of reflection to pursue sustainable change can help ensure business continuity and growth in the face of climate-caused global shifts and market disruptions.

Anticipating the “New Normal”

Corporate sustainability commitments to address climate change are increasingly common and ambitious.  In 2019, approximately 25% of Fortune Global 500 companies had a public commitment that by 2030 or sooner they will be carbon neutral, purchasing 100 percent renewable power, or meeting a science-based emissions reduction target. This represents a fourfold increase in commitments since the Paris Agreement was signed in 2015.

Corporate buyers have dramatically driven demand for renewable energy, catalyzing 9.33 GW of new generation in the United States in 2019. In 2020, 63% of Fortune 100 companies had some level of commitment to renewable energy. An emerging group of companies are even committing to invest in, deploy, and otherwise support carbon-negative technologies that actively remove carbon from the atmosphere (e.g. Microsoft, Amazon, Stripe, Delta).

Despite this growth in corporate climate action, sustainability practices need to go both further and faster to limit warming to 1.5 or 2°C in the coming decades. The level of commitment most companies exhibit is not enough to ensure resilience, capitalize on future market opportunities, or curb the climate crisis.

Slow and Steady is a Risky Strategy

Adopting sustainable best practices and business models is becoming a non-negotiable prerequisite for companies to maintain a social license to operate among the common consumer.  The World Economic Forum’s most recent Global Shapers Survey found that “climate change” and “destruction of nature” remained the top concerns for people under 30 years old (who represent approximately 50% of the world’s population) for the third year in a row.

Investors concerned about climate risk are also increasingly considering the sustainability of their investments. Earlier this year, the CEO of the world’s largest asset manager, BlackRock, warned “climate risk is compelling investors to reassess core assumptions about modern finance.” In the European Union, asset managers will soon be required to disclose the sustainability of their holdings, including metrics such as carbon emissions and deforestation.

A recent study from HSBC bank found that as the pandemic wreaked havoc on global markets, “shares of companies focused on climate change or ESG issues…outperformed as the virus spread.” Even without a global crisis, there is increasing evidence that sustainability funds outperform the market. According to Morningstar, the number of assets flowing into sustainable funds in 2019 set a record four times higher than 2018 levels.

Companies that move quickly to capitalize on these global shifts will be better positioned to succeed. Those that cannot adapt may find themselves poorly equipped to deal with the world’s “new normal.”

Getting Started

As companies explore the potential for risk mitigation and growth through sustainability and climate action, three core areas of focus can act as helpful guideposts: 1) gaining transparency into the supply chain, 2) transitioning to clean energy, and 3) implementing circular economy principles.

Transparency in the supply chain: Emissions associated with the supply chain are often significantly larger than emissions from owned and operated assets. Gaining greater transparency into the supply chain can help identify sustainability “hot spots” (areas that need improvement), and low-hanging fruit (areas ripe for action). Collaboration with supply chain partners is also often essential to reducing Scope 3 emissions, a requirement for many companies committing to reduction targets through the Science Based Targets Initiative (SBTi). Industry-specific coalitions and tools, such as the Sustainable Apparel Coalition in the fashion sector, can be incredibly valuable for engaging supply chain partners.

Transitioning to clean energy: Reducing fossil fuel consumption is a great way to communicate values to stakeholders, reduce emissions, and, in many cases, save money.  Many companies procuring low-carbon energy are working towards a public commitment goal (e.g. RE100, SBTi), however, there are multiple pathways for procuring clean energy and the best fit will be unique for every company. Despite the recent economic down-turn, the renewable energy industry expects continued activity through 2020 due to long-term commercial and industrial demand.  Companies like Google are even embracing next-generation procurement commitments, striving to achieve 24/7 consumption of zero-carbon electricity.

Implementing circular economy principles: A circular economy decouples economic growth from the consumption of finite natural resources. In practice, this means reducing waste, increasing efficiency, ensuring long-lived products, and imagining business models around closed-looped systems (e.g. refurbishment, re-commence, recycling, etc.). In addition to being good for the planet and brand image, implementing circular economy principles can help reduce emissions, costs, and climate risks. As part of its recently announced goal to be carbon negative by 2030, Spin, a scooter rental company, predicted extending the life of its scooters to 24 months could reduce the company’s carbon footprint by 40%.

The Covid-19 crisis should be a wakeup call for any company not actively prioritizing resilience and sustainability. The pandemic has been a humbling reminder that markets are fundamentally tied to and limited by natural boundaries. It has shattered the comfortable business-as-usual paradigm. As we pick up the pieces, lets capitalize on this moment to ensure a brighter, healthier, and more sustainable future.

Written by Kacey Katzenmeyer, Senior Manager at Green Strategies and DC 2020 Fellow at the Clean Energy Leadership Institute. 

Burning Garbage Is No Part of a Cleaner Future

Posted on by Kacey Katzenmeyer

The burning of municipal waste seems to be included as a qualifying source of “clean energy” in a recent House proposal to transition the United States to a sustainable, low carbon future.

A key plank of the CLEAN Future Act proposal, introduced in January by House Democrats, is achieving “net-zero emissions from the electricity sector” through the use of a Clean Energy Standard (CES), which Democrats will likely pass this year ahead of the election.

The CES would require retail electricity suppliers to obtain 100% of their electricity from “clean energy sources” by 2050. That is the right way to go.

However, according to the Environmental Protection Agency, burning municipal solid waste (MSW) emits nearly as much CO2 per unit of energy as coal—and almost twice as much as burning natural gas. This is not the way to get to net-zero.

EU Policy Excludes Waste Burning

The European Commission announced in December 2019 a new classification system to guide the growing number of private and public capital investors who want to put capital to work in ways that will not only generate strong returns, but will also have a positive environmental impact.

Democrats in the House understand that the Europeans are on to something: reducing waste and investing in low carbon development is both an ecological imperative and a roadmap for economic growth. But these lawmakers may be overlooking one important plank in the European sustainable growth plan: don’t burn garbage to make electricity.

The EU classification system tells investors what types of projects and activities should be considered “green.” To put it mildly, burning municipal solid waste (MSW) to make electricity did not make the list.

Waste incineration is included in the commission’s list of activities that could cause “significant harm to environmental objectives.” (Article 12). Two of those environmental objectives are climate change mitigation and the promotion of a “circular” economy.

The commission was likely well aware of European analyses finding that waste incineration for energy production is almost twice as carbon intensive as the EU grid average and thus works against the goal of a zero carbon grid. In Article 9, the commission lists “minimising incineration” of waste as among the activities that can make a “[s]ubstantial contribution to the circular economy.”

Burning Garbage Hurts Recycling Sector

Incentivizing the burning of our garbage also undercuts incentives for waste reduction and hurts the recycling sector—and at a very bad time. The U.S. recycling industry is in crisis. At the end of 2017, China severely restricted the import of U.S. recyclables.

Prior to that, we were exporting about a third of waste plastic for recycling to China; in 2018 that number was less than 5%. Hundreds of towns and cities across the United States have either shut down or greatly reduced their recycling programs.

The language in the House Clean Energy Standard appears to suggest that the eligible waste incineration facilities should be limited to those that use “postrecycled” waste. Given the collapsing of our recycling industry, waste truly void of recyclable materials may only exist in theory.

Even before China’s import restrictions, half of the carbon dioxide emissions from waste incineration came from plastic; today even less is being diverted. While not yet in the legislative text of the CLEAN Future Act, the authors note that other issues to be addressed include “recycling and waste management.” But any additional—and badly needed—policies to promote recycling will be hindered by the voracious appetite for fuel posed by waste-to-energy facilities.

A more sustainable and lower carbon economy means a more resilient, efficient, and equitable economy that can grow and create more wealth by mitigating the headwinds of climate change and resource constraints that are otherwise a drag on economic growth.

We need lower carbon energy; we need to reduce waste; and we need to create clean economy jobs. We do not need to burn our trash for energy.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Roger Ballentine is the president of Green Strategies Inc. He served as chairman of the White House Climate Change Task Force under President Bill Clinton.

 

Originally published in Bloomberg Environment. 

Ingersoll Rand announces bold new 2030 goals

Posted on by Green Strategies

On the same evening that Ingersoll Rand was recognized by the World Environment Center for their exemplary international sustainability leadership, the company announced its new set of ambitious 2030 Sustainability Commitments. We applaud our long-time friends and clients on this momentous next chapter and look forward to sharing in their progress.

Highlights include the following achievements by 2030:

  • Carbon-neutral operations
  • 1 gigaton (1 billion metric tons) reduction in customer carbon footprint
  • 10% absolute reduction in energy consumption
  • Zero waste to landfill
  • Net-positive water
  • Increased access to sustainable cooling and fresh food
  • Gender parity in leadership
  • Investment in STEM education
  • Seed grants for critical mobility needs

 

IR2030 Final Fact Sheet