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Private wealth climbing

The rich are getting richer. Global private financial wealth grew by nearly 8% in 2014 to reach a total of $156tn, a new report by consultancy firm BCG finds. The world’s wealthiest individuals continued to be found in North America, home to $51tn in private wealth. Close behind is western Europe at $40tn and Asia-Pacific (excluding Japan) at $33tn.

Over the next five years, total private wealth globally is projected to grow at a compound annual rate of 6%, reaching $210tn in 2019. The market performance of existing assets is responsible for 56% of private wealth growth, compared with 44% generated by newly created wealth. Among the very rich (defined as households with assets of more than $100m), private wealth grew by 11% in 2014.

Those in this ultra rich category are expected to see their wealth increase by 21% a year, to £20tn by 2019. From a regional perspective, the US still has the highest number of millionaire households (at 7m), followed by China (2m) and Japan (1m). The highest density of millionaires is in Switzerland, where 135 out of every 1,000 households have private wealth of more than $1m.

Poor nations left behind in clean energy finance

Decentralised energy projects in low-income nations are being overlooked in favour of large-scale energy projects in wealthy countries, a report by the International Institute for Environment and Development (IIED) finds. From 2003 to 2015, a total of $14.1bn was approved by governments for climate finance deals, but only 3.5% of this was allocated for the kind of small-scale solar, biogas and other off-grid systems that benefit the poor most.

Calling on world leaders to “go further, faster”, the IIED says 1 billion people still lack access to electricity and 3 billion still cook using smoky fuels such as wood, kerosene and dung. According to the International Energy Agency, around $23bn a year is needed to make “affordable, reliable” energy available through decentralised energy by 2030 (as pledged under the sustainable development goals).

Providing everyone in the world with electricity and clean cooking facilities, meanwhile, is expected to cost anything from $40bn to $100bn. Over the past decade, only 0.06% of climate finance ($8.4m) has been earmarked for clean cooking.

Corporate leaders positive about SDGs

Chief executives of the world’s largest companies see the UN Sustainable Development Goals as an “essential opportunity” to rethink their approach to sustainability. Meanwhile, 49% of the more than 1,000 chief executives interviewed say corporations will be the most important actor in delivering the 2030 targets.

The findings, revealed in a report by consultancy firm Accenture, suggest that the 17 SDGs are an opportunity to “reshape the global economy” in the coming years. And that reshaping will not require up-ending companies, the report states. Around eight in 10 of the chief executives surveyed believe they can contribute to the global goals through their existing core business. A similar proportion sees contribution to the delivery of the SDGs as an opportunity to differentiate their business. They are helped by digital technologies, which most business leaders (75%) perceive as a vital enabler of more sustainable business models.

Among the critical steps towards accelerating the delivery of the SDGs is the development of standardized metrics to track company performance against the 2030 targets, say 86% of the chief executives. Cross-sector partnerships (85%) and local collaboration with national governments on SDG Action Plans (84%) are also seen as vital.

Meanwhile, a separate Accenture report commissioned by the Global e-Sustainability Initiative claims that “innovative smart solutions” from the digital tech sector can potentially shave one-fifth off global carbon emissions. Other benefits credited to internet-enabled services include 1.5 billion people gaining better access to affordable medical services through e-healthcare. Manufacturing and logistics are also set to be enhanced by $1tn come 2030 thanks to robotics and the so-called internet of things.

Solar industry set to grow

The global solar power industry is expected to reach a capacity of more than 271GW by 2025, a threefold increase on current levels, according to analyst firm GlobalData. Impressive though the trajectory is, compound annual growth will be closer to 13% than the current level of 51%. Growth is stimulated by falling prices. Leading the pack by 2025 will be China, followed by the likes of India, Japan, US, Canada, Chile, Germany, UK, France and South Africa, GlobalData predicts.

Climate bonds on the up

The total value of investments in the global bond market that are linked to climate mitigation or adaptation projects now stands at $694bn, an increase of $96bn (16%) from 2015, the Climate Bonds Initiative’s latest State of the Market report reveals. More than 3,590 products were issued from January 2005 to May 2016 from 780 individual issuers. The bonds are directed towards the transport, energy, buildings and industry, water, waste and pollution, and agriculture and forestry sectors primarily. Of these, low carbon transport is the largest single sector, accounting for $464bn (67%) of the total climate-aligned universe. This is followed by clean energy at $130bn (19%).

Institutional Insights

Urban air pollution pervasive

Four-fifths (80%) of city residents around the world are breathing air that fails to meet quality standards set by the World Health Organisation. According to the latest World Energy Outlook from the International Energy Agency, outdoor air pollution is projected to lead to 4.5m premature deaths a year by 2040 (up from around 3m today). The worst affected area is expected to be Asia. Meanwhile, premature deaths from household air pollution is projected to decline from 3.5m at present to 3m over the same period. Poor air quality is now the fourth largest threat to human health, after high blood pressure, poor diet, and smoking. The majority (85%) of particulate matter and almost all of the sulphur oxides and nitrogen oxides in the air are the result of energy production and use – mostly from unregulated, poorly regulated or inefficient fuel combustion. According to the International Energy Agency, a 7% increase in total energy investment between now and 2040 would be enough to reduce premature deaths from outdoor and indoor air pollution to 1.7m and 1.6m, respectively.

Latin America: danger of slipping back into poverty

According to a new report by the United Nations Development Programme, 20-30 million people in Latin America risk falling back into poverty. This is primarily due to four policy weaknesses: poor social protection, inadequate care systems (particularly for children and older people), low labour skills, and a lack of a physical and financial assets (such as home ownership, savings or bank accounts that act as cushions when crises hit). Many of those at risk – who represent more than one third of those to have emerged out of poverty since 2003 – are young people and women with precarious employment in the service sector. Latin America has more than 220m people (38% of the population) who are defined as “vulnerable”. This means they live on more than $4 a day (the poverty line) but less than $10 a day (above which the middle class begins).

The Multidimensional Progress report notes that the factors threatening Latin America’s most vulnerable are not the same as those that help people out of poverty: namely, effective labour markets and education. More than half of the 300 million workers in Latin America and the Caribbean work either in micro-enterprises with fewer than five employees, or as self-employed unskilled workers or earning no income (apprenticeship programmes, for example). Of the more than 50m small and medium-sized enterprises, meanwhile, 70% are informal.

Company snapshots

SABMiller: driving enterprise

London-headquartered brewer SAB Miller has supported 175,000 small enterprises to grow their businesses, its latest annual sustainability report maintains. In Latin America, for example, 20,000 small retailers participate in the company’s 4e Path to Progress programme, which provides business and leadership training. Participants report a 13% average sales growth in the year post-training. In Africa, meanwhile, nearly 43,000 farmers have taken part in the company’s Go Farming local sourcing strategy. In Uganda, the initiative has seen SABMiller purchase locally-sourced sorghum (an alternative to barley), supporting more than 20,000 smallholder farmers in the process. The brewer has a 2020 target of helping more than 500,000 small enterprises to enhance their business growth and family livelihoods. SABMiller, which counts more than 200 beer brands across 80 countries, buys from or sells directly to an estimated 1.5m small businesses. Globally, small and medium-sized enterprises account for nearly 70% of all jobs in the formal sector.

Dow: resets renewable ambitions

Dow Chemical has set itself a revised 2025 target for meeting its power demand from renewable energy sources after achieving its 400MW goal just one year after setting it. The successful completion was achieved after the signing of long-term agreements to purchase a combined 350 MW of wind power from two wind farms in Texas. The wind farms encompass over 50,000 acres of land and annually generate the equivalent amount of electricity needed to power nearly 50,000 homes. The power will be used for Dow’s integrated chemical manufacturing complex in Freeport, Texas, the largest of its kind in the western hemisphere. The agreements take the company’s renewable power capacity up to 545 MW, which equates to 8% of its total steam and electricity consumption. Dow’s latest annual sustainability report reveals that its previous 10-year sustainability goals (from 2005-2015) resulted in $5bn in safety, waste, water and energy savings after a $1bn investment.

Unilever: Oxfam updates on Vietnam factories

Wages of a typical semi-skilled worker in Unilever’s main factory in Vietnam increased by 48% between 2011 and 2015, a study by anti-poverty charity Oxfam reveals. The study, which follows a previous assessment in 2013, also finds that more people have become directly employed by Unilever in the factory, which is in Cu Chi, near Ho Chi Minh City. On the downside, lower skilled workers with dependents are still struggling to make ends meet. The proportion of direct female employees, meanwhile, dropped from 19% in 2011 to 13% in 2015. This contrasts strongly with Unilever’s third party supplier (which pays lower wages and offers lower benefits), where 67% of employees are women.

Royal Mail: £10.8bn contribution to UK economy

The recently privatised Royal Mail in the UK contributed £10.8bn to the UK economy during 2015-16. The headline figure includes taxes, salaries, pre-tax profits and procurement. The mail delivery and logistics firm employs one in every 175 working adults in the UK. According to its 14th annual sustainability report, Royal Mail contributed £6.72m to charity, while its 139,000 employees contributed an additional £3.12m.



cheat sheet  CSR  private wealth  clean energy  finance  climate  SDGs  Global e-Sustainability  sustainability  solar power  air pollution  poverty  economy 

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