New report released claims the world’s largest companies are under-reporting sustainability policies and performance, hindering access to data that could allow investors to play a full role in the transition to a low-carbon economy.
The study, “Measuring sustainability Disclosure: Ranking the World’s Stock Exchanges 2016”, finds that of 4469 large companies analysed, only 47% disclosed GHGs, arguably the most closely tracked sustainability indicator. Furthermore, over the 2010-2014 period, the number of large companies that disclosed GHGs nudged up just 12 points from 33% to 47%, despite a number of high-profile policy initiatives aimed at sustainability disclosure in the last few years.
First commissioned by Aviva Plc in 2012 as part of the Sustainable Stock Exchange Initiative, the report tracks corporate disclosure on seven sustainability indicators – payroll, GHGs, energy, water, waste, injury rate and employee turnover. Written by Corporate Knights, it also suggests how such disclosure can be translated into actionable key performance indicators, which might help investors to distinguish companies that are incorporating sustainability into their value creation story.
Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, said, “we go further than ever in this fifth annual report by looking beyond disclosure and into performance analysis. For each exchange, we assess carbon intensity, fossil fuel reserve intensity and the percentage of listed companies whose businesses involve environmentally-friendly activities, technologies and services versus high-carbon emission activities. This is a significant step forward that will empower investors to increase the integration of sustainability factors into investment decision making.”
The last year has seen significant milestones for sustainability, with the Paris Agreement on climate change and the subsequent Financial Stability Board (FSB) task force on climate-related disclosure, as well as the announcement of the Sustainable Development Goals (3). The task force will recommend climate-related financial risk disclosures later this year. These are encouraging developments, but with the majority of companies failing to provide sufficient transparency, there is a clear need for policymakers, securities regulators, investors and stock exchanges to take a more formal and proactive approach.
The report, which begins with a foreword by Aviva Group Chief Executive Mark Wilson, includes the following recommendations:
· Policymakers and securities regulators in both developed and emerging economies are encouraged to study the possibility of influencing investment returns based on the corporate sustainability of the securities issuer. For instance, dividends of issuers in the same sector could be taxed more highly or lowly depending on sustainability ratings.
· The more highly ranked stock exchanges have at least one mandatory, prescriptive requirement to regulate sustainability disclosure. It is recommended other jurisdictions consider this approach or convert existing voluntary policies into mandatory ones.
· Stock exchanges are encouraged to track and publicly report on listed entities that are engaging in sustainability disclosure and those that are not to put pressure on laggards.
Exchanges rising and falling
Euronext Amsterdam was the world’s best performing exchange when it came to disclosure of sustainability metrics. Over 50% of its large listings disclosed all four environmental metrics – GHGs, energy, water and waste. Stock exchanges in European developed countries dominated the top 10 rankings, with the exception of the Australian Securities Exchange and the Johannesburg Stock Exchange.
The London Stock Exchange, which placed eighth in the ranking, saw 95% of its large companies disclose GHGs. The UK’s 2013 update of the Companies Act made GHG disclosure mandatory for listed UK incorporated companies.
There was a general absence of progress among stock exchanges in the lower half of the ranking. Some 21 stock exchanges have been placed in the bottom half at least three consecutive times and remain there this year. Among emerging economies, The Stock Exchange of Thailand and Bursa Malaysia climbed sharply in the last two years, landing in 13th place and 17th place respectively, compared to 27th and 23rd place in 2014.
The full report is available http://www.corporateknights.com/reports/2016-world-stock-exchanges/
Will Self-Driving Cars Be Better for the Environment?
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.
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 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.
New Zealand to Switch to Fully Renewable Energy by 2035
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.
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