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Global investors launch guide to drive engagement on climate risk with the mining sector

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A fortnight before the UN Climate Summit in Paris, and as the OECD deliberates whether to cut subsidies to the coal sector, a global network of more than 270 institutional investors (representing assets worth over €20 trillion) is publishing a guide to drive closer engagement with mining companies around the world about their management of climate risk.

Launching Investor Expectations of Mining Companies – Drilling Deeper into Carbon Asset Risk, Stephanie Pfeifer, Chief Executive at the Institutional Investors Group on Climate Change said today, “As momentum builds towards an international climate deal in Paris, the global investor community is setting out as clearly as possible the expectations it has for mining companies about action required to curb carbon asset risk. The guide has been developed to help investors step up their engagement with the mining sector as part of their ongoing efforts to better manage climate risk across their portfolios.”

Commenting further, Stephanie Maier, Head of Responsible Investment Strategy & Research at Aviva Investors, explains: “With mining companies featuring in many portfolios, investors need to know that these companies are prepared for the likely changing market dynamics arising from policies and actions to curb climate change and the risks they pose to profits.

“To protect their long term interests, investors want assurances that the capital allocation decisions made by the boards of major mining companies give clear consideration to climate change, and to the associated energy transition, in ways that will ensure the future sustainability and profitability of the entire sector.”

The guide is designed to support a constructive dialogue between investors and the mining companies they own about these issues. Bruce Duguid, Associate Director, Hermes EOS, and lead author of the guide added: “Climate change poses clear long-term risks to the current business models of many mining companies, as well as some opportunities. This guide is intended to develop market best practice for investor engagement with mining companies to ensure that decisions are made in the long term interests of shareholders and their beneficiaries”.

North American investors share that concern. Speaking about the guide, Andrew Logan, Director of the Carbon Asset Risk program at Ceres said, ”Going forward, asset owners and fund managers need to know how mining companies – and particularly the boards accountable for overseeing them – see the future of demand, how those views align with the carbon reductions required to deliver binding international agreements reached between governments around the world, and to what extent there may be stranded assets due to those commitments or a shift in demand.”

The guide warns that routine assumptions that underpin many of the demand and price projections used in the mining industry are now open to challenge due to the impact that transition to a low carbon economy (and associated policy changes) will have on patterns of demand, commodity prices, and use of technology.

“Investors recognise that the global economy is now pivoting around the need to limit global warming to two degrees. Diversified mining companies have already begun to shift away from carbon intensive thermal coal and look at the potential for new technologies to achieve net zero carbon operations. The publication of this guide is an important example of the market working to respond to climate change by driving thorough scenario testing, risk analysis and transparency from mining companies,” added Emma Herd, Chief Executive of IGCC Australia and New Zealand.

About the guide

Investor Expectations of Mining Companies – digging deeper into carbon asset risk was developed by the Institutional Investors Group on Climate Change (IIGCC) with support from investor networks in North America (Ceres’ INCR), Australia (IGCC) and South East Asia (AIGCC). It is intended to be used in tandem with Institutional investors’ expectations of corporate climate risk management

The guide is the first in the series of Investor Expectations guides to also have CDP data points linked to the questions to support investor preparation to meetings with companies. Welcoming the guide James Hulse, Head of Investor Initiatives at CDP added:

“CDP is delighted to have worked closely with IIGCC to link the expectations set out in the mining sector guide to the questions in the annual information request we send companies on behalf of 822 investors representing US$95 trillion. This, and our wider analytical tools and reports, support investors working together globally under the Carbon Asset Risk initiative.”

Whilst primarily aimed at diversified mining companies, the guide can equally be applied to any single commodity and therefore be used to inform engagement with companies focused on particular commodity groups such as thermal coal, precious metals, copper or rare earth metals.

The guide sets out investor expectations in reference to six areas of concern:

– Governance – Clearly define board and management governance of climate change risks and implications of energy transition dynamics.

– Operational efficiency (and emissions) – Set long term targets to improve energy efficiency, reduce carbon intensity and curb greenhouse gas emissions from all parts of the business and measure progress

– Strategy implementation – Ensure business model is robust and resilient in the face of a range of energy demand scenarios through appropriate stress testing

– Preparedness for physical impact of climate change – Appraise risks arising from ongoing changes to climate or local weather and put in place plans to preserve productivity and asset values.

– Public policy: Engage with policy makers and other stakeholders in support of cost-effective measures to mitigate climate risks and support low carbon investments. Do not lobby against these positions. Render all lobbying activity / spending on climate and related energy and regulatory issues transparent.

– Transparency and disclosure. Disclose in annual reports and financial filings, the company’s view of and response to each question set out in the guide.

Environment

Build, Buy, Or Retrofit? 3 Green Housing Considerations

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green housing techniques

Green housing is in high demand, but it’s not yet widely available, posing a serious problem: if you want to live an eco-friendly lifestyle, do you invest in building something new and optimize it for sustainability, or do you retrofit a preexisting building?

The big problem when it comes to choosing between these two options is that building a new home creates more waste than retrofitting specific features of an existing home, but it may be more efficient in the long-run. For those concerned with waste and their environmental footprint, the short term and long term impacts of housing are in close competition with each other.

New Construction Options

One reason that new construction is so desired among green living enthusiasts is that it can be built to reflect our highest priorities. Worried about the environmental costs of heating your home? New construction can be built using passive solar design, a strategy that uses natural light and shade to heat or cool the home. Builders can add optimal insulation, build with all sustainable materials, and build exactly to the scale you need.

In fact, scale is a serious concern for new home buyers and builders alike. Individuals interested in green housing will actively avoid building more home than they need – scaling to the square foot matter because that’s more space you need to heat or cool – and this is harder to do when buying. You’re stuck with someone else’s design. In this vein, Missouri S&T’s Nest Home design, which uses recycled shipping containers, combines the tiny home trend with reuse and sustainability.

The Simple Retrofit

From an environmental perspective, there’s an obvious problem with building a new home: it’s an activity of mass consumption. There are already 120 million single-family homes and duplexes in the United States; do we really need more?

Extensive development alone is a good enough reason to intelligently retrofit an existing home rather than building new green structures, but the key is to do so with as little waste as possible. One option for retrofitting older homes is to install new smart home technology that can automate home regulation to reduce energy use.

Real estate agent Roxanne DeBerry sees clients struggle with issues of efficiency on a regular basis. That’s why she recommends tools like the Nest Thermostat, which develops a responsive heating and cooling schedule for the home and can be remotely adjusted via smartphone. Other smart tools for home efficiency include choosing Energy Star appliances and installing water-saving faucets and low-pressure toilets. These small changes add up.

Big Innovations

Ultimately, the most effective approach to green housing is likely to be aggressive retrofitting of everything from period homes to more recent construction. This will reduce material use where possible and prevent further aggressive land use. And finally, designers, activists, and engineers are coming together to develop such structures.

In the UK, for example, designers are interested in finding ways to adapt period houses for greater sustainability without compromising their aesthetics. Many have added solar panels, increased their insulation levels, and recently they even developed imitation sash triple glazed windows. As some have pointed out, the high cost of heating these homes without such changes will push these homes out of relevance without these changes. This is a way of saving existing structures.

Harvard is also working on retrofitting homes for sustainability. Their HouseZero project is designed for near-zero energy use and zero carbon emissions using geothermal heating and temperature radiant surfaces. The buildings bridge the gap between starting over and putting up with unmanageable heating and cooling bills.

It will take a long time to transition the majority of individuals to energy efficient, green housing but we’re headed in the right direction. What will your next home be like? As long as the answer is sustainable, you’re part of the solution to our chronic overuse – of land, energy, water, and more.

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Environment

How the Auto Industry is Lowering Emissions

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auto industry to clean air pollution

Currently, the automotive industry is undergoing an enormous change in a bid to lower carbon emissions. This has been pushed by the Government and their clean air plans, where they have outlined a plan to ban the sale of petrol and diesel cars by 2040.

Public Health Crisis

It is said that the levels of air pollution lead to 40,000 early deaths in the UK, with London being somewhere that is particularly bad. This has led to the new T-Charge, where heavy polluting cars will pay a new charge on top of the existing congestion charge. Other cities have taken action too, with Oxford recently announcing that they will be banning petrol and diesel cars from the city centre by 2020.

Eco-Friendly Vehicles

It is clear that the Government is taking action, but what about the auto industry? With the sale of petrol and diesel plummeting and a sharp rise in alternatively fuelled vehicles, it is clear that the industry is taking note and switching focus to green cars. There are now all kinds of fantastic eco-friendly cars available and a type to suit every motorist whether it is a small city car or an SUV.

Used Cars

Of course, it is the cars that are currently on the road that are causing the problem. The used car market is enormous and filled with polluting automobiles, but there are steps that you can take to avoid dangerous automobiles. It is now more important than ever to get vehicle checks carried out through HPI, as these can reveal important information about the automobile’s past and they find that 1 in 3 cars has a hidden secret of some kind. Additionally, they can now perform recall checks to see if the manufacturer has recalled that particular automobile. This allows people to shop confidently and find vehicles that are not doing as much damage to the environment as others.

Public Perception

With the rise in sales of alternatively fuelled vehicles, it is now becoming increasingly more common to see them on UK roads. Public perception has changed drastically in the last few years and this is because of the air pollution crisis, as well as the fact that there are now so many different reasons to switch to electric cars, such as Government grants and no road tax. A similar change in public opinion has happened in the United States, with electric car sales up by 47% in 2017.

Progress

The US is leading the way for lowering emissions as they have declined by 758 million metric tons since 2005, which is the largest amount by far with the UK in second with a decline of 170 million metric tons. Whilst it is clear that these two nations are doing a good job, there is still a lot of work that needs to be done in order to improve the air quality and stop so many premature deaths as a result of pollution.

With the Government’s plans, incentives to make the change and a change in public perception, it seems that the electric car revolution is fully underway.

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