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Are these the world’s ‘most’ sustainable companies?

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Shell, Adidas, Statoil, Monsanto: are these companies among the most sustainable in the world? According to a recent ranking they are.

Devised by Canada-based firm Corporate Knights, the Global 100 – as the list is called – is described as “the world’s pre-eminent sustainability equity index”. Using 12 key performance indicators (KPIs) – including energy, carbon, waste and water productivity, as well as pension fund status, CEO to average worker pay and innovation capacity – companies are given a sustainability score out of 100.

Corporate Knights says by doing this, it is “unpackaging” corporate sustainability into its component parts, and focusing solely on the numbers.

The list of 100 includes some interesting – and, some would say, unexpected – names. As well as the four already mentioned – energy giants Shell and Statoil, sports brand Adidas and chemicals firm Monsanto – there is Coca-Cola, BSkyB and a further eight energy companies.

Topping the 2014 edition is Australian bank Westpac (currently involved in dispute with the country’s Finance Sector Union over ‘unreasonable’ increases in sales targets), followed closely by US biotechnology firm Biogen Idec and Finnish metal and mineral processer Outotec. Norwegian oil and gas multinational Statoil is fourth.

At this point, many an eyebrow will be raised – and justifiably so. The 10 energy firms in the list, for example, extract fossil fuels – oil, gas, and coal – and burn them to create electricity and energy. This process pumps harmful greenhouse gases into the atmosphere, warming the Earth’s surface and oceans and causing harmful impacts on the environment and communities.

Oil and gas companies represent a significant percentage of global pension funds and a precipitate collapse of those share prices – the so-called ‘carbon bubble’ –would lead to a lot of impoverished pensioners and an even worse global depression. Their unsustainable continued activity will similarly crash our global ecology, upon which our economy depends.

The question then becomes whether we praise them for taking baby steps in the right direction (the Corporate Knights approach), or damn them for going too slow (the environmentalist approach).

The purist ethical, responsible or sustainable economy is still tiny and most of its champions are small to midcap ventures. Just as a bigger and more rapid difference is made by encouraging wealthy people to invest sustainably, we will save the planet by persuading wealthy companies to behave sustainably, responsibly and ethically.

The actual process of compiling a ranking like Corporate Knights’ is tricky. The firm is the first to acknowledge the difficulties in defining exactly what constitutes a sustainable business. It’s not a black and white issue, and my sustainable, responsible or ethical might not be the same as yours.

Many have tried in the past with similar rankings, and many have been legitimately challenged. Another annual list, the World’s Most Ethical Companies, has some similarly dubious inclusions – Starbucks and General Electric to name just two.

What we are trying to do with the Global 100 is figure out which companies perform best against their global same-sector peers on those sustainability indicators that are financially relevant and that can be objectively measured”,  says Doug Morrow, managing director of Corporate Knights.

The toolkit that we use to deconstruct sustainability is not perfect but we think it’s one of the most transparent, credible and fundamentally useful approaches out there.”

The thinktank SustainAbility has drawn plaudits for its Rate the Raters project, in which rankings like Corporate Knights’ are put under the microscope and rated on their transparency and quality. What started off as a simple idea in 2010 has developed into a complex and comprehensive analysis of the leading sustainability ratings in the world.

This kind of scrutiny is helpful, and there are legitimate questions over the sustainability credentials of some of the Global 100 inclusions. But using the example of the 10 energy firms – whose business models will be viewed as entirely unsustainable by many in the green world – it’s interesting to see which firms appear and which don’t.

A study from November last year said just 90 companies were responsible for two-thirds of manmade greenhouse gas emissions. BP, Shell, Chevron, Exxon Mobil and Gazprom were said to be among the worst offenders. Of those five, only Shell appears in the Global 100 of sustainable companies.

A similar situation is evident in ethical investment. Because tobacco, alcohol, pornography, gambling, nuclear power and weapons have historically been the six most avoided industries for ethical investors, energy firms still often appear in the top holdings of funds that negatively screen their investments. Energy giants like Shell, BP, Texaco and Exxon generally don’t appear, but instead smaller fossil fuel firms like BG Group, Tullow Oil and Statoil – ones, perhaps, with a less bad environmental footprint. Fund managers often explain their investments in these companies by saying they actively engage with them in order to help them become more sustainable.

SustainAbility’s Rate the Raters project asked sustainability experts for their views and usage of corporate sustainability rankings. The top three in terms of credibility were the CDP Leadership Index (65%), FTSE4Good Index Series (54%), Dow Jones Sustainability Index (53%).

Meanwhile, among mainstream asset manager analysts and portfolio managers, the top three were Bloomberg ESG Data (53.6%), Dow Jones Sustainability Index (44.1%) and MSCI ESG Research and Indices (25.3%). The experts’ favourite CDP – formerly the Carbon Disclosure Project – was used by 18.3%.

Corporate Knights’ Global 100 ranking may not be a whiter-than-white list of saints; there isn’t a company on the ranking whose inclusion couldn’t be questioned for one thing or another. Instead, it represents a collection of businesses that are, in its view, leading the way in sustainability.

It would be unwise to think that the impacts of massive, global issues like pollution, climate change, resource depletion, deforestation, ocean acidification and population growth can be avoided or at least mitigated without the help of corporate giants.

The 100 businesses in the Corporate Knights ranking should be praised for their inclusion and scrutinised thoroughly to make sure their commitment to sustainability isn’t just greenwash. The ones who haven’t made it should be encouraged to do much better indeed.

Further reading:

Will Day, PwC: the companies that deserve to succeed call sustainability ‘common sense’

Leo Johnson and the power of people

What gets measured gets managed: sustainability in 21st century business

Why businesses must ‘shape and innovate’

Do ethical funds and fossil fuels mix?

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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