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Federal State Of Berlin’s Divestment Activities Supported By Oekom Research and Solactive

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berlin by hans-jürgen2013 via flickr

The two organisations have been chosen by the Federal State of Berlin to support its long term divestment for public pension funds management.

Oekom research AG, a leading expert in ESG research and analysis and Solactive AG, the German multi-asset index provider specialized in the creation of customized financial indices will aid the development of a sustainable equity index to aid the disinvestment.

Berlin is one of the latest capitals to join the movement that has seen cities, such as Oslo and Stockholm, commit to divestment as a response to climate change.

In summer 2016, Berlin announced a plan to divest its reserve funds from companies involved in the extraction of fossil fuels (i.e. coal, oil and natural gas), or operating in disputable industries such as nuclear and arms, or that do not comply with the principles promoted by the UN Global Compact. To put the plan into action, a sustainable equity index will be developed in a joint collaboration by Oekom research and Solactive. The index, which will be customized to the State of Berlin’s divesting policies, not only aims to achieve the aforementioned qualitative goals but will also allocate funds to ESG-related investment objectives, while ensuring the ease of tradability of the index constituents.

For this project, Oekom research and Solactive were selected among other contestants by the Senate Department for Finance of Berlin thanks to the compelling index concept which was jointly pitched. Both companies have a long track record of experience in their respective fields and this collaboration brings together the best of both worlds – expertise in ESG rating with an in-depth know-how of index construction – in a combined solution.

“We received numerous excellent applications and concepts which proves that sustainability becomes an increasingly relevant topic for the financial sector”, says Dr. Matthias Kollatz-Ahnen, Senator for Finance of the State of Berlin. “I am convinced that with the decision for oekom research and Solactive, Berlin found very strong partners and will be able to set a new benchmark for sustainable investment strategies for public funds.“

Robert Haßler, CEO Oekom research, adds:

We are very much looking forward to support the Federal State of Berlin with our sustainability research and data about company-related climate risks.

“With our expertise as divestment partner for municipal climate pioneers such as the cities of Stuttgart or Münster as well as the long lasting close cooperation with Solactive in regards to sustainability indexes we surely will be able to make a meaningful contribution to the climate plans of Berlin.“

Steffen Scheuble, Chairman and founder of Solactive, explains: “As index providers, we see a high demand for sustainability indexes. A number of studies have shown that companies that do not follow sustainability strategies might lag in relative performance due to ESG related risks. Therefore, we are very proud to support – together with Oekom research – the State of Berlin with our sustainability index. When defining the index concept, we put a lot of effort in coming up with the best possible combination of sustainability and tradability of the composing shares.”

Oekom research already supports the capital of the German Federal State Baden-Wuerttemberg, Stuttgart, with its carbon services and filters out all the issuers within an investment universe that breach specifically defined exclusion criteria. In addition, the city of Münster, which has become the country’s first local authority to commit to decarbonisation, has tasked the rating agency with analysing its medium- and long-term investments in potentially climate-damaging or non-sustainable companies and projects. With now supporting Berlin, Stuttgart and Münster, Oekom research is partner of the spearhead of Germany´s municipal divestment movement.

Solactive and Oekom research have already been partnering in regards to several projects for sustainable investments. In May 2015, the Solactive Oekom Ethical Low Volatility Index was launched, which was created to track the price movements of low volatility stocks passing the ESG screenings of Oekom research. The lasting success of that project and an increasing demand in sustainability-indices proves that sustainable and responsible investment pays off. It becomes increasingly important to exclude companies from investments that do not comply with the strict sustainability criteria.

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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