Greenbiz

How the climate crisis will crash the economy

Joel Makower — Mon, 14 Sep 2020 09:11:00 +0000

How the climate crisis will crash the economy Joel Makower Mon, 09/14/2020 - 02:11

The chickens are coming home to roost.

Even before the western United States became a regional inferno, even before the Midwest U.S. became a summertime flood zone, even before an annual hurricane season so bad that the government is running out of names to attach to them, even before Colorado saw a 100 degrees Fahrenheit heatwave swan dive into a 12-inch snowstorm within 48 hours.

Even before all that, we’d been watching the real-world risks of climate change looming and growing across the United States and around the world. And the costs, financially and otherwise, are quickly becoming untenable.

Lately, a steady march of searing heat, ruinous floods, horrific wildfires, unbreathable air, devastating hurricanes and other climate-related calamities has been traversing our screens and wreaking havoc to national and local budgets. And we’re only at 1C of increased global temperature rise. Just imagine what 2C or 3C or 4C will look like, and how much it will cost.

We may not have to wait terribly long to find out.

It’s natural to follow the people affected by all this: the local residents, usually in poorer neighborhoods, whose homes and livelihoods are being lost; the farmers and ranchers whose crops and livestock are withering and dying; the stranded travelers and the evacuees seeking shelter amid the chaos. And, of course the heroic responders to all these events, not to mention an entire generation of youth who fear their future is being stolen before their eyes, marching in the streets. So many people and stories.

But lately, I’ve been following the money.

The financial climate, it seems, has been as unforgiving as the atmospheric one. Some of it has been masked by the pandemic and ensuing recession, but for those paying attention, the indicators are hiding in plain sight. And what we’re seeing now are merely the opening acts of what could be a long-running global financial drama. The economic impact on companies is, to date, uncertain and likely incalculable.

The financial climate, it seems, has been as unforgiving as the atmospheric one.

Last week, a subcommittee of the U.S. Commodity Futures Trading Commission (CFTC) issued a report addressing climate risks to the U.S. financial system. That it did so is, in itself, remarkable, given the political climes.

But the report didn’t pussyfoot around the issues: "Climate change poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy," it stated, adding:

Climate change is already impacting or is anticipated to impact nearly every facet of the economy, including infrastructure, agriculture, residential and commercial property, as well as human health and labor productivity. Over time, if significant action is not taken to check rising global average temperatures, climate change impacts could impair the productive capacity of the economy and undermine its ability to generate employment, income and opportunity.

Among the "complex risks for the U.S. financial system," the authors said, are "disorderly price adjustments in various asset classes, with possible spillovers into different parts of the financial system, as well as potential disruption of the proper functioning of financial markets."

In other words: We're heading into uncharted economic territory.

Climate change, said the report’s authors, is expected to affect "multiple sectors, geographies and assets in the United States, sometimes simultaneously and within a relatively short timeframe." Those impacts could "disrupt multiple parts of the financial system simultaneously.” For example: "A sudden revision of market perceptions about climate risk could lead to a disorderly repricing of assets, which could in turn have cascading effects on portfolios and balance sheets and therefore systemic implications for financial stability."

Sub-systemic shocks

And then there are “sub-systemic” shocks, more localized climate-related impacts that "can undermine the financial health of community banks, agricultural banks or local insurance markets, leaving small businesses, farmers and households without access to critical financial services." This, said the authors, is particularly damaging in areas that already are underserved by the financial system, which includes low-to-moderate income communities and historically marginalized communities.

As always, those least able to least afford the impacts may get hit the hardest.

This was hardly the first expression of concern about the potentially devastating economic impacts of climate change on companies, markets, nations and the global economy. For example:

Two years ago, the Fourth National Climate Assessment noted that continued warming "is expected to cause substantial net damage to the U.S. economy throughout this century, especially in the absence of increased adaptation efforts." It placed the price tag at up to 10.5 percent of GDP by 2100.
Last month, scientists at the Potsdam Institute for Climate Impact Research said that while previous research suggested that a 1C hotter year reduces economic output by about 1 percent, "the new analysis points to output losses of up to three times that much in warm regions."
Another report last month, by the Environmental Defense Fund, detailed how the financial impacts of fires, tropical storms, floods, droughts and crop freezes have quadrupled since 1980. "Researchers are only now beginning to anticipate the indirect impacts in the form of lower asset values, weakened future economic growth and uncertainty-induced instability in financial markets," it said.

And if you really want a sleepless night or two, read this story about "The Biblical Flood That Will Drown California," published recently in Mother Jones magazine. Even if you don’t have a home, business or operations in the Golden State, your suppliers and customers likely do, not to mention the provenance of the food on your dinner plate.

Down to business

The CTFC report did not overlook the role of companies in all this. It noted that "disclosure by corporations of information on material, climate-related financial risks is an essential building block to ensure that climate risks are measured and managed effectively," enabling enables financial regulators and market participants to better understand climate change’s impacts on financial markets and institutions.

However, it warned, "The existing disclosure regime has not resulted in disclosures of a scope, breadth and quality to be sufficiently useful to market participants and regulators."

An analysis by the Task Force on Climate-related Financial Disclosure found that large companies are increasingly disclosing some climate-related information, but significant variations remain in the information disclosed by each company, making it difficult for investors and others to fully understand exposure and manage climate risks.

The macroeconomic forecasts, however gloomy, likely seem academic inside boardrooms. And while that may be myopic — after all, the nature of the economy could begin to shift dramatically before the current decade is out, roiling customers and markets — it likely has little to do with profits and productivity over the short time frames within which most companies operate. Nonetheless, companies with a slightly longer view already are considering the viability of their products and services in a warming world.

Consider the recommendations of the aforementioned CFTC report, of which there are 20. Among them:

"The United States should establish a price on carbon."
"All relevant federal financial regulatory agencies should incorporate climate-related risks into their mandates and develop a strategy for integrating these risks in their work."
"Regulators should require listed companies to disclose Scope 1 and 2 emissions. As reliable transition risk metrics and consistent methodologies for Scope 3 emissions are developed, financial regulators should require their disclosure, to the extent they are material."
The Financial Stability Oversight Council "should incorporate climate-related financial risks into its existing oversight function, including its annual reports and other reporting to Congress."
"Financial supervisors should require bank and nonbank financial firms to address climate-related financial risks through their existing risk management frameworks in a way that is appropriately governed by corporate management."

None of these things is likely to happen until there’s a new legislature and presidential administration in Washington, D.C., but history has shown that many of these can become de facto regulations if enough private-sector and nongovernmental players can adapt and pressure (or incentivize) companies to adopt and hew to the appropriate frameworks.

Finally, there is collaboration among the leading nongovernmental organizations focusing on sustainability reporting and accountability.

And there’s some news on that front: Last week, five NGOs whose frameworks, standards and platforms guide the majority of sustainability and integrated reporting, announced "a shared vision of what is needed for progress towards comprehensive corporate reporting — and the intent to work together to achieve it."

CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Integrated Reporting Council and the Sustainability Accounting Standards Board have co-published a shared vision of the elements necessary for more comprehensive corporate reporting, and a joint statement of intent to drive towards this goal. They say they will work collaboratively with one another and with the International Organization of Securities Commissions, the International Financial Reporting Standards Foundation, the European Commission and the World Economic Forum’s International Business Council.

Lots of names and acronyms in the above paragraph, but you get the idea: Finally, there is collaboration among the leading nongovernmental organizations focusing on sustainability reporting and accountability. To the extent they manage to harmonize their respective standards and frameworks, and should a future U.S. administration adopt those standards the way previous ones did the Generally Accepted Accounting Principles, we could see a rapid scale-up of corporate reporting on these matters.

Increased reporting won’t by itself mitigate the anticipated macroeconomic challenges, but to the extent it puts climate risks on an equal footing with other corporate risks — along with a meaningful price on carbon that will help companies attach dollar signs to those risks — it will help advance a decarbonized economy.

Slowly — much too slowly — but amid an unstable climate and economy we’ll take whatever progress we can get.

I invite you to follow me on Twitter, subscribe to my Monday morning newsletter, GreenBuzz, and listen to GreenBiz 350, my weekly podcast, co-hosted with Heather Clancy.

Pull Quote

The financial climate, it seems, has been as unforgiving as the atmospheric one.

Finally, there is collaboration among the leading nongovernmental organizations focusing on sustainability reporting and accountability.

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Welcome to Circularity 20

Holly Secon — Fri, 11 Sep 2020 15:41:56 +0000

Welcome to Circularity 20

What will it take to accelerate the circular economy? Welcome to Circularity 20. The opening will set the stage for the virtual event, offer an overview of the program and ground attendees in what circularity means today.

Holly Secon Fri, 09/11/2020 - 08:41

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How to Design for the Future

Holly Secon — Wed, 09 Sep 2020 20:17:00 +0000

How to Design for the Future

How do we design for the future amid the disruptive present?

In this closing plenary session, Lauren Phipps, director and senior analyst for the circular economy at GreenBiz, speaks with Tim Brown, CEO of IDEO, about how to design for the future.

For example, how do you reconcile incremental change and the need to change more quickly to meet needs and goals? The COVID-19 pandemic has showed how quick change can happen. Now and in the future, organizations need to continue working together to develop better systems.

"We need to move toward the future with energy and enthusiasm and not just fear," Brown says during the discussion.

Holly Secon Wed, 09/09/2020 - 13:17

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Circularity 20 Closing: Where do we go from here?

Holly Secon — Mon, 07 Sep 2020 18:42:13 +0000

Circularity 20 Closing: Where do we go from here?

Lauren Phipps, Director & Senior Analyst of the Circular Economy at GreenBiz Group, discusses what's next in her closing thoughts.

Holly Secon Mon, 09/07/2020 - 11:42

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Green groups urge UN to raise climate ambition on global shipping

Cecilia Keating — Tue, 20 Oct 2020 07:15:00 +0000

Green groups urge UN to raise climate ambition on global shipping Cecilia Keating Tue, 10/20/2020 - 00:15

The global shipping industry's decarbonization efforts once again face stormy seas.

Ahead of the latest crucial round of talks this week at the International Maritime Organization (IMO), green groups are warning proposals are "an empty shell" that will have a negligible impact on the sector's emissions. Seasoned observers fear that growing calls for a bolder and more ambitious global policy framework are continuing to founder on the rocks of vested interests and short-term cost concerns.

IMO member states are meeting this week for critical talks to discuss how the carbon-intensive shipping industry can be regulated to meet its 2030 climate target of reducing its carbon emissions intensity by 40 percent compared to 2008 levels. While the target was set two years ago, the latest talks are where the member states are expected to agree on how to enforce it, before the proposals are moved forward to committee stage in November.

A joint proposal from 15 major shipping nations and influential industry group the International Chamber of Shipping is to form the basis of the discussions, yet green groups have slammed the proposals as a "low ambition" plan that could have disastrous implications for the sector's chances of falling into line with the overarching global goals set out in the Paris Agreement.

The frontrunning proposal, sponsored by France, Germany and Japan, has come under fire due to a recommendation that stringent enforcement of operational efficiency regulations is introduced no earlier than 2029. And despite warnings from climate scientists that the IMO's 2030 carbon-intensity target is insufficient to meet global climate goals — it has been rated by Climate Action Tracker as "critically insufficient" and aligned with a potentially devastating global temperature rise of 4 degrees Celsius — the plan does not recommend the industry aim for sharper emissions reductions.

Faïg Abbasov, head of shipping at campaign group Transport & Environment, told BusinessGreen the proposal was "essentially an empty shell." "To achieve 1.5 degrees [of warming] we need to decarbonize by the mid-2030s," he explained. "To achieve 2 degrees we need to decarbonize by mid-century. This proposal goes nowhere near that level."

To achieve 1.5 degrees [of warming] we need to decarbonize by the mid-2030s. To achieve 2 degrees we need to decarbonize by mid-century. This proposal goes nowhere near that level.

While green groups contend that the proposed plan in fact will undermine the shipping sector's already-weak climate targets, the joint proposal's sponsors argue the agreement represents a major step forward for a historically fractured industry that has spent much of the past decade delaying and diluting more ambitious proposals. BusinessGreen understands that advocates of the plan will argue that it balances the need to act fast to reduce the sector's climate impact and the need to give industry time to adjust as regulators work out how to calculate and regulate operational efficiency, a measurement that is more difficult to define than a ship's technical efficiency due to its being affected by weather conditions.

The dispute is the latest in a long history of quarrels between environmentalists and the IMO, the United Nations agency charged with the regulation of a global shipping industry that operates largely outside and between national jurisdictions. With many nation states choosing to keep international shipping outside their domestic climate targets, the onus falls on the London-based agency to set the pace and direction of decarbonization efforts. But while a growing number of nations and shipping operators have stepped up calls for a more ambitious global policy regime, any attempts to introduce robust new regulations through the IMO have tended to be thwarted by those countries that fear the financial impact on their shipping industry from new emissions standards or carbon pricing regimes. It is a dynamic that has left environmental campaigners increasingly frustrated.

Last week, Transport & Environment's Abbasov warned that the regulatory framework set to be discussed this week could perhaps "bend" growth of carbon emissions in the shipping sector by mid-century but would "not be able to stop it."

Transport & Environment is one of a number of green groups, including Carbon Market Watch, Seas at Risk and Ocean Conservancy, to have written to the Secretary General of the United Nations in early October to warn of the short-term policy measures being cooked up by member states ahead of the meeting. "It is not the job of the United Nations to protect vested fossil fuel interests," they wrote in a letter seen by BusinessGreen. "It is the job of the United Nations to protect people and planet from the ravages of runaway global heating."

The NGOs, united as the Clean Shipping Coalition, warned that if robust enforcement of operational emissions standards is delayed to 2029, the IMO will fail to meet a number of the stated aims contained in its own landmark 2018 greenhouse gas reduction strategy, namely to achieve significant additional CO2 reductions "before 2023," ensure emissions emissions peak "as soon as possible" and deliver a carbon dioxide reduction pathway in line with the Paris goals.

Furthermore, they stressed that civil society organizations had not been invited to the private meetings where member states and the shipping industry had hashed out the plan, and that a separate proposal submitted by green groups earlier this year which set out how the industry could reach a more ambitious 80 percent reduction in carbon intensity emissions by 2030 had been omitted from the document.

Campaigners maintain that stronger ambition is required given that the 2030 target the IMO is working towards — a 40 percent reduction in carbon-intensity emissions — is not aligned with the Paris Agreement in the first place. They argue that, with the existing 2030 commitment already three-quarters met purely through the trend for slower speeds and bigger ships, there is a huge opportunity for the industry to raise its ambition at the informal meetings take place next week.

But industry players counter that the current proposals are plenty robust enough, pointing out that under the proposals new technical efficiency standards for ships will be enforced immediately, as will plans to introduce a new mandatory operational efficiency rating system, where ships are rated on an A to E grading system that should subject poor-efficiency ships to the power of the market.

"The fact that we are so close to a consensus among IMO members states is a huge step in the right direction," Simon Bennett, deputy secretary general at the International Chamber of Shipping, told BusinessGreen.

Bennett also argued the total decarbonization of the shipping sector ultimately would rely on technological innovation. "These measures will be legally binding and an important step towards our goal of full decarbonization of the shipping sector," he said. "We know more can be done and what we do must work in practice as well as in writing. If we're to achieve a truly global solution to the total decarbonization of world shipping, then radical, innovative technological solutions must be found over the next decade."

But Transport & Environment's Abbasov warned that a low-ambition regulatory framework agreed on this week could have negative implications for shipping policy for decades to come. "It will set a wrong precedent that adopting cosmetic measures or low-ambition measures are okay, and anything in the future will probably forward the same path," he stressed. "It will set a domino effect that is extremely, extremely dangerous."

While the final shape of the proposals to be agreed by member states remains to be seen, Abbasov and ICS agreed that it was likely to not stray far from scenarios contained in the draft document. As such, attention is likely to quickly turn to alternative avenues for accelerating the development and adoption of the lower-carbon shipping technologies and practices that remain in the pipeline.

As Abbasov argues, if IMO member states decide to endorse the current proposal and send it to the committee stage, then the onus will fall more than ever on regional national governments to set regulatory standards that catalyse decarbonization progress across shipping sector. With more than one quarter of the global economy committed to achieving net-zero emissions over the coming decades, it follows that the shipping sector will be under increased pressure from governments and private players to clean up its act.

In some quarters, these dynamics already seem to be at work, with oil major Shell calling on the IMO last month to adopt more ambitious climate targets for 2030, 2040 and 2050 as it published its new sustainable shipping strategy.

However, the IMO always has been the subject of fierce lobbying from the shipping and other industry bodies, and it is unclear to what extent corporate net zero commitments are being matched by behind-the-scenes advocacy arguing against more ambitious rules and regulations. Reports from InfluenceMap and Transparency International have explored how some industry groups historically have lobbied to obstruct meaningful climate change action in the shipping sector, and green groups have alleged that vested fossil fuel interests continue to play an oversized role in IMO negotiations.

That said, there is growing evidence that some businesses are looking to provide a counterweight to those lobbyists pushing for a more relaxed regulatory regime. When asked by BusinessGreen about what outcome they would hope to see out of the latest round of talks and whether they would support more ambitious targets from the IMO, representatives from businesses with high profile net-zero commitments emphasized the need to decarbonize their supply chains, even if they largely declined to comment on the agency's specific plans.

If we're to achieve a truly global solution to the total decarbonization of world shipping, then radical, innovative technological solutions must be found over the next decade.

A spokesperson from IKEA stressed that ocean shipping made up 40 percent of the carbon footprint of its supply chain operations and therefore the company's pledge to reduce the carbon footprint of all transport by an average of 70 percent by 2030 compared to 2017 was a "huge ambition." Meanwhile, Apple said it planned to reduce its carbon impact from shipping by leveraging fleet improvements, sustainable fuels and supply chain efficiencies, while explaining that it planned to prioritize shipping over aviation as a low-carbon form of product transport as it worked to meet a net-zero supply chain commitment.

A statement provided by Shell welcomed signs that some form of new regulatory regime was on the way. "Achieving net-zero emissions shipping by 2050 is vitally important — and that means ambitious regulation coming into effect in 2023 will be required," said Grahaeme Henderson, Shell's global head of shipping and maritime. "It is encouraging to see a consolidated proposal on carbon intensity and energy-efficiency measures on the agenda for IMO discussions next week to progress towards that goal."

As the U.K. government gears up to host critical COP26 climate talks in Glasgow in 2021 and repeatedly asserts its world-leading climate reputation as it attempts to steer a green recovery from the coronavirus, it could be argued that the U.K. has a role to play in pushing for the highest possible ambition at this week's talks.

When questioned about what outcome the U.K. would support from the talks, a spokesperson from the Department for Transport emphasized the government was committed to delivering a decarbonized shipping sector. "Shipping emissions require a global solution, and we will work with our international partners through the IMO to achieve a greener, zero emissions future for the shipping sector," they said.

The U.K. government has broadly committed to working with other IMO member states to "raise the ambition" of the IMO's climate targets at a five-year review of the original 2018 IMO GHG strategy planned for 2023. It is also working to introduce net-zero emissions ships in U.K. waters by 2025 as it works to make domestic shipping net-zero by mid-century.

But despite positive noises from the government, Transport & Environment's Abbasov stressed the U.K. was a relatively small player at the IMO. "The DfT has been genuinely helpful — maybe not always vocal — but genuinely helpful behind the scenes in giving the right feedback and at least recognizing that what was being discussed and agreed is nonsense," he reflected. "But we should not overestimate the U.K.'s power in international negotiations. The U.K. is one country out of 190, and secondly it's not even the most powerful shipping nation. Power has really moved to Panama… The U.K. is no match to those countries. Even Malta and Greece are more powerful than the U.K. when it comes to shipping."

Optimists remain confident emerging hydrogen, battery and biofuel technologies coupled with new ship designs could yet deliver a net-zero-emission fleets by 2050. But with vested interests once again locked in a standoff with environmental campaigners and those corporates that want to build a net-zero economy, it looks as if the voyage to deliver a low-emission global fleet is proving to be as tumultuous as ever.

Pull Quote

To achieve 1.5 degrees [of warming] we need to decarbonize by the mid-2030s. To achieve 2 degrees we need to decarbonize by mid-century. This proposal goes nowhere near that level.

If we're to achieve a truly global solution to the total decarbonization of world shipping, then radical, innovative technological solutions must be found over the next decade.

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Sustainable Shipping

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A telework transition won't slash emissions unless we make car-free lifestyles viable

Hannah Budnitz — Tue, 20 Oct 2020 07:02:00 +0000

A telework transition won't slash emissions unless we make car-free lifestyles viable Hannah Budnitz Tue, 10/20/2020 - 00:02

Even before the pandemic, the proportion of people working from home was slowly but steadily increasing. But COVID-19 has put the practice into hyperdrive. Down from an April peak of about 47 percent in the United Kingdom, recent reports suggest that 20 percent of those in employment still work exclusively from home, with many more continuing to do so at least some of the time.

The benefits of reduced office costs — and the realization that staff are actually fairly productive at home — has led to many big tech firms encouraging their employees to keep working from home, perhaps indefinitely. Up to 90 percentof those who have worked from home during the pandemic are reportedly converts to "telecommuting," preferring to continue remote working at least some of the time. These are only some of the bigger signs that many workers may be giving up the real commute for good, while others are expected to commute much less often.

Up to 90% of those who have worked from home during the pandemic are reportedly converts to 'telecommuting,' preferring to continue remote working at least some of the time.

So, is this seismic shift in our work culture good news for the environment? Does less commuting mean less traffic and so, less carbon emissions? Well, despite satellite images revealing rapid reductions in air pollution during lockdowns around the world, more people switching to telecommuting for good does not necessarily equate to lower carbon emissions from transport. Our research revealed that although telecommuters travel to work less frequently, they have a tendency to travel more often for other reasons.

Google searches for ‘telecommuting’ in the UK, 2016-2020

How travel patterns compare

We analyzed just under 1 million trips using all modes of transport recorded in travel logs filled in by over 50,000 working people in England between 2009 and 2016, as part of the government’s annual National Travel Survey. We found that those who said they usually worked from home at least once a week made 19 trips per week on average — just one fewer than regular commuters.

Instead of going to work, they were more likely to take the children to school, give lifts to friends or family, do the shopping and run other errands. They also used the time saved from commuting to enjoy leisure activities more often than their regularly commuting counterparts, perhaps going to a café or a yoga class. These trips weren’t necessarily all by car, but most were.

Studies found that those who work from home tend to live further away from their employer, and so clock up more mileage when they do travel to work.

Previous studies have found that those who work from home also tend to live further away from their employer, and so clock up more mileage when they do travel to work. Regular telecommuters are more likely to live in smaller towns and suburbs, rather than city centers. In the U.K., such places are often car-dependent, lacking local public transport services and basic amenities within walking or cycling distance.

Some of these towns and suburbs have train lines into the city, and pre-pandemic, some part-time telecommuters were likely to use the train when they did venture into work. Our research found that working remotely and commuting by train were the only two means of accessing work that were increasing in England outside of London.

But most commuters still drive, and COVID-19 has meant that a fear of long stints on public transport prevent this changing any time soon.

The 15-minute suburb

The pandemic has accelerated not just the transition to telecommuting, but also the rush to buy homes with gardens outside of dense, urban areas and further from the head office. While the lifestyle benefits may be clear, the places people are moving to also will be further from the range of shops and services in city centers. It’s no wonder that people in the hospitality and retail sector, whose business models depend on office workers, are concerned.

The '15-minute city' plan, where people can meet their basic needs without walking more than 15 minutes from home, also could work for towns and suburbs.

High streets in smaller towns, cities and suburbs are reported to be performing rather better. Is it because they’re being visited by all the additional people working from home? If so, are there enough of these places, and are they located so that people can walk there? Do they have all the amenities that people need?

Perhaps the "15-minute city" plan, championed by Paris Mayor Anne Hidalgo, where people can meet their basic needs without walking more than 15 minutes from home, also could work for towns and suburbs.

Reorienting life around local amenities could help permanently reduce transport emissions. Clem Onojeghuo/Unsplash, CC BY-SA

If increased telecommuting and reduced transport emissions is to be a silver lining of the pandemic, then our research shows that transport and land use planners need to focus more on ensuring schools, shops, parks and community and leisure centers are accessible by foot or bike for locals.

Telecommuters, especially those working exclusively from home, may not have to worry about switching to a car-free commute, but if anything, they will need even more help in building a car-free lifestyle.

Pull Quote

Up to 90% of those who have worked from home during the pandemic are reportedly converts to 'telecommuting,' preferring to continue remote working at least some of the time.

Studies found that those who work from home tend to live further away from their employer, and so clock up more mileage when they do travel to work.

The '15-minute city' plan, where people can meet their basic needs without walking more than 15 minutes from home, also could work for towns and suburbs.

Contributors

Emmanouil Tranos

Lee Chapman

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Transportation & Mobility

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Is working from home sustainable?

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Why Gen Z voices matter in making business sustainable

Isabel LoDuca — Mon, 19 Oct 2020 08:00:00 +0000

Why Gen Z voices matter in making business sustainable Isabel LoDuca Mon, 10/19/2020 - 01:00

Generation Z, those born between 1996 and 2015, are current consumers, future business leaders and the future of this world. Yet, Gen Z is unlike any other generation to date.

With buying power of more than $140 billion, Gen Z is the fastest-growing consumer segment with unique purchasing values in mind and the willingness to act upon them. Gen Z wants companies to use their scale to push for environmental progress, human rights, inclusion and honesty and transparency.

Environment. There are just seven short years left before the damage from climate change is irreversible. As found in a recent UNiDAYS survey, 93 percent of Gen Z believes brands have an obligation to take a stand on environmental issues. From developing company-wide environmental policies to making smart climate-related investments, Gen Z wants to see actionable plans and measurable progress.

With buying power of more than $140 billion, Gen Z is the fastest-growing consumer segment with unique purchasing values in mind and the willingness to act upon them.

Human rights. Strong ethics are critical to a brand’s success in forming a relationship with Gen Z. Supply chain workers' health and safety, combined with ethical working conditions and practices, and taking into consideration environmental impacts are needed to ensure brand trust and build brand loyalty with consumers. Ethics are important to young people now more than ever.

Diversity, equity, inclusion. Diversity, equity and inclusion (DEI) is a core belief. Black Lives Matter. Equal pay matters. LGBTQ+ acceptance matters. Gen Z expects diversity, equity and inclusion to be embraced by brands. Promoting DEI in the workplace is a critical aspect of a successful company. Based on actionable initiatives, Gen Z wants companies to have diverse voices in leadership, equal pay and fair opportunities for all.

Honesty and transparency. Gen Z is done with fake news. According to a recent study conducted by the Consumer Goods Forum and Futerra, 90 percent of Millennials and Gen Z personally care if they receive honest information about products. Transparency in a digital age sets great companies apart from all others. In an age of skepticism and misinformation, transparency at all operation levels is crucial for building brand loyalty and trust with the Gen Z market segment. Gen Z is the Honest Generation.

With these four values in mind, Devishi Jha and I, both Gen Z students, created Voyagers to fill the gap we see between sustainable businesses and youth consumers. Launching Oct. 21, Voyagers is working to foster relationships between sustainable businesses and youth voices. Through an industry panel with sustainability leaders from IKEA and Clif Bar and climate activist Ziad Ahmed, Voyagers’ launch will be the beginning of forcible youth-led change in the world of business sustainability.

Developed by youth for youth, Voyagers provides a platform of youth voices for sustainable businesses to hold campaigns to rally supporters, share and promote their sustainability journey stories and gain irreplaceable Gen Z consumer insights.

The Gen Z consumer segment is growing fast. By 2023, Gen Z will be the largest generational segment in the economy. We invite you to join us.

Pull Quote

With buying power of more than $140 billion, Gen Z is the fastest-growing consumer segment with unique purchasing values in mind and the willingness to act upon them.

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Episode 241: Thinking long-term with three sustainability think tanks

Heather Clancy — Fri, 16 Oct 2020 09:00:00 +0000

Episode 241: Thinking long-term with three sustainability think tanks Heather Clancy Fri, 10/16/2020 - 02:00

Week in Review

Stories discussed this week (4:08).

Features

Building the B Corp movement (16:40)

While some large multinationals including Danone and Natura have embraced the B Corp certification, others have been slower to move. That was a catalyst for the new B Movement Builders initiative, launched in September. Marcelo Behar, vice president for sustainability and group affairs for Natura & Co., chats about why his organization became a mentor.

ERM wants to help institutionalize sustainability (26:44)

This week, global consultancy ERM launched the SustainAbility Insitute, created to define, institutionalize and scale sustainability performance. Keryn James, ERM's group chief executive, and Mark Lee, head of the new organization, drop by to chat about the mission.

Can we use disruption to create true transformation? (35:20)

The past month has seen the publication of dozens of reports highlighting paths to action for corporate sustainability as the world looks forward to life after the COVID-19 pandemic. This week, the Forum for the Future added to that body of work with its map of the multiple pathways ahead of us, "From System Shock to System Change — Time to Transform." We spoke with the forum's CEO, Sally Uren, about what's ahead, and why decisions of the next six to 18 months are critical.

A collaborative approach to "Drawdown" (44:45)

This week also marks the launch of Drawdown Labs, formed to help companies test how to use their resources, partners, employees and customers to reduce carbon emissions, not just avoid it. Some early participants: Allbirds; Google; Grove Collaborative; IDEO; Impossible Foods; Intuit; Lime; and Trane Technologies. Jaime Alexander, director of Drawdown Labs, weighs in on how they're leading.

*Music in this episode by Lee Rosevere: "Curiosity," "Keeping Stuff Together," "Night Caves," "How I Used to See the Stars," "Southside," "As I Was Saying" and "Sad Marimba Planet"

*This episode was sponsored by IHG

Resources galore

Lessons in resilience from the produce industry. Subject matter experts from Kwik Lok, Walmart and Second Harvest Food Bank join us at 1 p.m. EST Nov. 10 to discuss responding to disruption and how to balance food safety and security to minimize food waste.

Do we have a newsletter for you! We produce six weekly newsletters: GreenBuzz by Executive Editor Joel Makower (Monday); Transport Weekly by Senior Writer and Analyst Katie Fehrenbacher (Tuesday); VERGE Weekly by Executive Director Shana Rappaport and Editorial Director Heather Clancy (Wednesday); Energy Weekly by Senior Energy Analyst Sarah Golden (Thursday); Food Weekly by Carbon and Food Analyst Jim Giles (Thursday); and Circular Weekly by Director and Senior Analyst Lauren Phipps (Friday). You must subscribe to each newsletter in order to receive it. Please visit this page to choose which you want to receive.

The GreenBiz Intelligence Panel is the survey body we poll regularly throughout the year on key trends and developments in sustainability. To become part of the panel, click here. Enrolling is free and should take two minutes.

Stay connected

To make sure you don't miss the newest episodes of GreenBiz 350, subscribe on iTunes. Have a question or suggestion for a future segment? E-mail us at 350@greenbiz.com.

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A vote for clean energy

Sarah Golden — Fri, 16 Oct 2020 08:45:00 +0000

A vote for clean energy Sarah Golden Fri, 10/16/2020 - 01:45

I recently joined the most impressive group of clean energy leaders I’ve known, and it happens to have come together in support of Joe Biden for president. The network: Clean Energy for Biden (CE4B).

It includes more than 9,500 clean energy professionals in the public, private and nonprofit sectors. There are entrepreneurs, engineers, policymakers, technicians and investors. There are thought leaders I’ve long admired and business leaders that have made clean energy more accessible to all people.

Clean energy professionals as a voting bloc

CE4B is evidence that the clean energy sector is, perhaps for the first time, a significant voting bloc in the United States.

Before the start of the COVID crisis, the clean energy sector employed nearly 3.4 million Americans in all 50 states. In 42 states, more people are included in clean energy than in the fossil fuel industry. If mobilized, these millions of Americans could have a major impact in this and future elections.

CE4B shows that support for clean energy as a voting issue is already widespread. The self-organizing, all-volunteer effort has more than 25 active state teams and organized more than 100 grassroots events, which collectively have raised more than $2.6 million on behalf of the Biden campaign.

The executive council is more than 50 industry leaders, including household names (for energy nerds) and representation from major companies, including Kate Brandt of Google, Jigar Shah of Generate Capital, long-time climate and energy policy advisor Kate Gordon and Jon Wellinghoff, former chair of the Federal Energy Regulatory Commission.

Why get political now?

We don’t write about politics much at GreenBiz (although I’m sure regular Energy Weeklyians have a sense of my personal politics).

Much about this presidential contest is outside of the purview of my job as an energy analyst. But when it comes to accelerating the adoption of clean energy, I would be remiss to not call attention to what may be the starkest difference in energy platforms in American history.

If I may simplify the two men’s stances, Donald Trump’s energy policy looks backward to the energy that powered our past, and Biden is looking forward to the fuels of the future.

I’m not going to dive into either candidate’s specific platform; others already have written much on the topic. Rather, I'm here to highlight that candidates who support clean energy policy are also supporting economic, climate and social justice policies.

Clean energy policy is economic policy

As the economic fallout of the COVID pandemic is coming into focus and the job creation is leveling off, the clean energy transition represents an opportunity to put Americans back to work.

First, clean energy is more jobs-rich than fossil fuels, meaning more people are employed per unit of energy created. A 2010 study found that for every $1 million invested, oil and gas would create roughly five jobs, while wind and solar would create 13 or 14 jobs.

Second, clean energy jobs are distributed. While dirty energy is usually centralized — think coal miners in West Virginia or roughnecks in North Dakota — clean energy manufacturers, technicians and installers are needed in every community, and provide options at every skill level. According to E2, all but two of America’s 3,007 counties are home to clean energy jobs.

Third, prioritizing clean energy gives America a chance to be a global leaders in advanced energy technologies. Getting ahead of the innovation curve means the country could be exporting technologies as other nations race to meet climate goals. Which I find a lot more exciting than trying to prop up dinosaur industries.

My two cents: if you are worried about the economy, supporting candidates that understand the jobs potential in the clean energy sector is a smart move.

Clean energy policy is climate policy

Scientists agree that the next decade will be critical to addressing climate change and avoiding the worst of its economic impacts and human toll.

So it makes sense that voters are beginning to see climate as a voting issue. A recent poll from Pew Research shows that 68 percent of likely voters rank climate as "very" or "somewhat" important, up from 44 percent in 2009.

Luckily, the same policies that will create clean energy jobs will curb energy-related emissions. While energy is not the only source of climate-changing emissions, it is a sector that has carbon-free solutions today, meaning it must rapidly decarbonize to give us a chance at a safe climate future.

We’re already seeing the economic impacts of extreme weather across the country and world. Politicians that work to curb the worst impacts of climate change are working to curb the human and economic tolls.

Clean energy policy is social justice policy

Like so many other issues, those most affected by pollution from dirty energy are low-income communities and communities of color.

If you’re Black in America, you have higher rates of lung cancer and asthma, and are more likely to have (and die from) heart disease, all linked to living with dirty air. Nearly one in two Latinx people in the U.S. live in counties where the air doesn’t meet EPA smog standards. People of color are more likely to live near highways, airports, power plants and refineries.

That all takes a toll on health, economic potential and quality of life. Supporting a just energy transition is synonymous with supporting marginalized communities to become more resilient, prosperous and healthy.

Clean energy technologies — the same that uplift the economy and address climate change — can help all communities thrive. Politicians who understand that are taking the realities of environmental racism seriously.

Vote

Clean energy is a rare issue that is win-win-win: it uplifts the economy, creates jobs and helps curb climate change. The only downside is incumbent energy powers need to get out of the way.

Of course, the sector isn’t perfect. Clean energy advocates are working hard to not replicate the same inequities or unintended consequences as the old, dirty energy sources. But I, for one, am ready for political debates about how to best create energy systems for the future, rather than debate if we should stay in the past.

And, no matter what your political ideology is, if you're a U.S. reader, vote in whatever way you can. It’s what being American is all about.

This essay first appeared in GreenBiz's newsletter Energy Weekly, running Thursdays. Subscribe here.

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Policy & Politics

Social Justice

Clean Energy

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Luxury in the new normal: Leadership and innovation in 2020 and beyond

Elisa Niemtzow — Fri, 16 Oct 2020 08:00:00 +0000

Luxury in the new normal: Leadership and innovation in 2020 and beyond Elisa Niemtzow Fri, 10/16/2020 - 01:00

Business as usual for the luxury industry is over. 2020 brings with it the end of a positive growth cycle, as analysts expect global luxury sales to contract 25-45 percent in 2020, with a recovery that could take up to three years.

And yet, the coronavirus pandemic, for all the havoc it has wrought on the industry, has pushed the sustainable business agenda even further, forcing business leaders to reevaluate their role in society and better articulate their value, not just in terms of money, but also in terms of corporate purpose and the way they contribute to the world.

Recent months have revealed several fragilities and also several strengths as the luxury industry navigates its future. Companies demonstrated the depth of their commitment and a certain financial resilience by shifting production lines to manufacture hand sanitizer and masks or forgoing government aid to demonstrate social solidarity. Brands have reimagined design and distribution of products in a context of lower sales volumes and digital acceleration. The crisis also has multiplied the insecurity of some workers and left some precious material supply chains, such as cashmere and exotic skins, even more vulnerable.

As luxury fashion brands adapt and survive in the "new normal," they can drive a renewed vision of the luxury business that demonstrates how to decouple volume growth from value growth. They can seize opportunities to strengthen resilience and further set the example when it comes to long-term value creation, business transformation and progressive leadership.

To drive innovation and demonstrate leadership in the years ahead, luxury leaders should consider these three opportunities:

1. Deepen luxury’s value proposition

Luxury brands can deepen their value proposition by further embedding efficiency, sustainability and inclusion into business models and practices, building on the new approaches that the pandemic accelerated. Designers are streamlining collections, focusing on evergreen best sellers and incorporating upcycling, regenerative materials and use of dead stock (French) in collections.

Meanwhile, digitization is accelerating efficiency and agility. Design teams are working together online and using virtual sampling. Showrooms and fashion weeks have gone digital. And brands are hurrying to transfer business to online outlets.

Supply chain experts argue companies can make less product and increase margins as they reduce waste (via better inventory management), better connect supply and demand (via strengthened omni-channel programs) and optimize understanding of client needs and trends (via enhanced client data). For an industry on the receiving end of considerable finger-pointing for its destruction of unsold merchandise, the win-win of increased embedded efficiency and sustainability is substantial — less environmental impact, more financial resilience and, potentially, redistribution of investment across the supply chain to benefit primary raw material producers and workers upstream.

For an industry on the receiving end of considerable finger-pointing for its destruction of unsold merchandise, the win-win of increased embedded efficiency and sustainability is substantial.

Optimized distribution of value creation is important in a context where the pandemic has rendered raw material and manufacturing workers more vulnerable. For example, the Sustainable Fibre Alliance raised the alarm of COVID-19’s considerable consequences for the economic security and well-being of cashmere goat herding families. In the case of exotic leather, a controversial material prior to the pandemic according to animal rights activists, conservationists recently have raised their voice about the necessity of protecting the benefits to species, people and ecosystems generated by this trade.

At the moment, luxury brands are still struggling to develop the business cases and financially support all of these actors. One promising mechanism to explore is a "reverse-sourcing" approach whereby value chain actors for a specific raw material pilot interventions to drive positive change and then connect the dots to create a traceable, sustainable supply chain.

In one example, this approach allowed vulnerable suppliers who committed to improved environmental and social practices to broker a long-term contract with a global beauty company at a premium — enabling investment in long-term sustainability while the beauty brand achieved the security of a traceable, sustainable supply chain.

Additionally, luxury brands can leverage sustainable finance mechanisms and growing investor interest in ESG to partner on long-term value creation. Following on the heels of Prada, Burberry, Moncler and other players outside the sector, Chanel made its first public offering on the Luxembourg Stock Exchange in September. Its sustainability bond will support business transformation including raw material extraction, regenerative agriculture and innovation across its supply chain. This announcement is notable as it signals the emergence of a deeper value proposition and the importance of communicating this value to key stakeholders.

2. Build on luxury’s predisposition for circular and regenerative practices

Over the last several years, the industry has adopted several circular economy initiatives, such as the CEDRE recycling platform (French) initiated by LVMH, support for innovation via Fashion for Good and training designers on circular economy principles.

Yet huge barriers still exist to scaling an efficient luxury fashion circular ecosystem — whether it’s closing the loop on certain product categories such as luxury leisurewear and sneakers, which have shorter lives than typical luxury items; acquiring sustainable, regenerative materials in sufficient quality and quantity (such as leather); or fully embracing the idea of producing fewer new items, including encouraging the multiple lives of products and brand-controlled secondhand markets (as Gucci has just done with The RealReal).

Further, as luxury companies make their way in the "new normal," there is a strong rationale to focus on the third leg in the circular economy stool: regenerating the natural and agricultural systems they rely on for their high-quality natural materials.

With 60 percent of species and ecosystem functionality lost, the clock continues to tick. In 2021, the Convention on Biological Diversity will launch a new 10-year strategic plan with the Business for Nature coalition driving business support for policy changes and new targets. Additionally, late last month, an informal working group, Task Force on Nature-related Disclosure, was launched. The work will take several months but signals an expectation of increasing accountability for companies and investors related to their impacts on nature. Luxury brands are well-poised to demonstrate leadership on this and other aspects of the circular economy.

Luxury brands also can explore two newer areas: first, assessing their performance against a comprehensive set of circularity indicators to focus on circular economy practices across entire operations and increase robustness of efforts. Second, brands can explore how to take a people-centered approach to circular fashion systems which ensure that as new infrastructure and business models are created, they are inclusive and fair for people from the outset.

3. Demonstrate socially progressive leadership

As described above, in the urgency of initial responses to the coronavirus, luxury companies relied on their financial resources and business infrastructure to contribute to their workforce and local communities. Against the profound upheaval transforming our world, luxury leaders have significant opportunity to continue using this power to drive positive change. Doing so will help to preserve the social acceptance of luxury and create the stable operating environment needed by all businesses.

Earlier this year, BSR published a report discussing five principles for business action to contribute towards creating a 21st century social contract that supports economic prosperity and social mobility. While the luxury industry can contribute to all principles, it is well-placed to focus on contributions to developing stakeholder capitalism, an approach to business strategy focused on long-term value creation and based on a multi-stakeholder model.

Specific actions luxury companies can take include: ensure that corporate governance structures, including board and executive leadership, are inclusive and consider the interests and perspectives of all; pay their fair share of taxes; and align policy advocacy, participation in industry associations and monetary contributions with environmental and social objectives.

What’s next

Given luxury’s outsize influence on society, luxury brands and their leaders have significant opportunity to build on their efforts and demonstrate the behaviors we need to drive resilient and thriving societies.

When will we see every luxury CEO’s bonus dependent on achieving Scope 3 climate targets, paying a living wage in supply chains and achieving zero product destruction? Thriving in the "new normal" will take nothing less than bold leadership such as this.

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For an industry on the receiving end of considerable finger-pointing for its destruction of unsold merchandise, the win-win of increased embedded efficiency and sustainability is substantial.

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LVMH's partnership with CEDRE centers on finding second-life uses for its products.