Cement companies across the world need to up their sustainability game according to a new report. The report, which analyses the world’s largest cement companies, finds that the industry’s worst performers face a possible earnings hit of 114% (before interest and tax). The report suggests a great deal of innovation is needed to improve the efficiency of the industry.
The report from CDP – voted no. 1 climate change research provider in 2015 by institutional investors – finds that the majority of the companies’ forward-looking emissions reductions targets are set to expire within the next few years. With the Paris Agreement driving towards net zero emissions in mid-century, cement companies have a historic opportunity to set targets that can future-proof their business. The cement industry is responsible for 5% of global emissions, so will need to deploy highly innovative product and process technologies, and new business models, in order to meet the Paris Agreement objectives.
Tarek Soliman, Senior Analyst, Investor Research at CDP said: “This is the first piece of major research to break down how major players in the cement industry are meeting the challenge of reducing emissions in line with the science called for by the Paris Agreement. Cement will be a crucial building block as the Paris Agreement is put into effect, as it accounts for 5% of the world’s man-made emissions. The results couldn’t be clearer for companies and investors: a tipping point for cement companies is not far away.
“As carbon-related regulatory measures inevitably tighten and the carbon price signal strengthens, investors will expect both strategic and rapid changes from cement companies, including better use of currently available options as well as investment in longer–term ones, whether this be in areas such as low-carbon product development or the deployment of carbon capture, use and storage.”
Other findings from the report include:
- The report recommends that in order to be consistent with the Paris Agreement cement companies must increase their use of alternative fuel sources, implement thermal energy efficiency measures and use decarbonized substitute materials to a much greater degree.
- Only three companies in the report have outlined plans for reducing their emissions in line with global carbon budgets (science-based targets) and other companies’ plans are not ambitious enough. The industry is required to take more aggressive action post-2025 and company targets need to reflect this.
- More than 50% of cement facilities are currently located in areas of water stress and the report finds water scarcity to be a potential issue for the sector. In particular, it poses a significant risk to two Indian cement companies, Ultratech and Shree Cement, as well as other companies operating in the country where water shortages exacerbated by climate change may restrict growth.
- The worst performers tend to be those not supportive of climate legislation, and tightening regulation is likely to drive industry change. For example, a strengthening of the EU emissions trading system (EU ETS) is currently being negotiated which affects at least eight of the cement companies in this report. Even if free allowances remain and benefit the industry in the short-term, a stronger price signal is clearly likely in the mid-term, as well as deeper emissions reductions from the sector. Those who remain behind the curve will face significant financial impacts.
- Recent industry consolidation has the potential to improve company carbon performance, with CDP’s league table leaders merging (LafargeHolcim) with more potential to invest in industry leading performance improvements as a result. 2016 will see Heidelberg Cement acquire laggard Italcementi, meaning the latter could benefit from the former’s more carbon efficient practices.
- Anhui Conch Cement (China), Siam Cement (Thailand), Dangote Cement (Nigeria) and Vulcan Materials (USA), which collectively represent over US$60 billion in market capitalization, did not respond to CDP’s 2015 climate change questionnaire and are therefore not included in this report. Investors should ask these companies why they are not providing sufficient transparency on their carbon emissions.
Bernard Mathieu, Head of Sustainable Development at LafargeHolcim, said:“LafargeHolcim is proud to hold the lead position in CDP’s league table, which underlines our responsibility to influence carbon performance in our sector. Our low carbon strategy, as outlined in the LafargeHolcim 2030 Plan, is aligned with the decisions made in Paris at COP 21. We are committed to continue to innovate in our products and processes and to remain the most CO2-efficient global business in our sector.”
View the executive summary of the report here.
Build, Buy, Or Retrofit? 3 Green Housing Considerations
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.
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.
How the Auto Industry is Lowering Emissions
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.
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.
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.
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.
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.