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UK will suffer, on balance

UK-based PricewaterhouseCoopers predicts that the downside impacts of a 2C rise in global temperatures would outweigh the upside opportunities by an “order of magnitude”.

A new research paper by the financial services firm identifies five major threats, of which the impact on food security is one of the most important. During the food price spike in 2007-8, for example, 43 developing countries reduced import taxes and 25 banned exports or increased export taxes. The cost of damaged assets in international locations as a result of severe weather represents another major risk, most notably for the UK insurance sector. The average insured loss in the UK from inland flooding, for example, is predicted to increase by 8% to £600m.

On the plus side, PwC identifies areas of opportunity, including the demand for UK healthcare expertise overseas and reduced shipping costs from the opening of the Arctic.

Bonds boom

Global financial markets may still be in the doldrums but there’s one ray of hope: climate-themed bonds. These investment-grade bonds jumped from a market of $174bn in 2011 to $346bn in 2012, according to new findings from HSBC and the Climate Bonds Initiative.

The research reveals 260 financial institutions that are issuing such bonds, which number at least 1,200. China is the largest provider of climate bonds (at $74bn), followed by the UK (at $50bn). The World Bank was the first to introduce the “green bond” concept back in 2007. The multilateral lender has issued $3.3bn climate bonds over the past six years. The IFC, the World Bank’s private sector lending arm, reportedly plans to invest at least $1bn in green bonds this year. The US state of Massachusetts has plans for a similar level of issuance.

Cars blazing a green trail

Carmakers dominate the latest Best Global Green Brands list produced by Interbrand, with five carmakers (Toyota, Ford, Honda, Nissan and Volkswagen) in the top ten. Electronics and technology firms such as Nokia (ninth), Dell (10th), HP (12th) and Samsung (16th) also perform well. The survey assesses the environmental performance of Interbrand’s top 100 brands and compares this to public perceptions of their sustainability records. The gap between these two is then evaluated, demonstrating the alignment between companies’ communications and their performance. McDonald’s (47th) had the largest negative gap (-21.27), indicating that the public thinks it is acting more sustainably than it really is.

Surprisingly, perhaps, two of the top ten green brands – Panasonic (fourth) and Nokia – had high gap scores of +15.15 and +18.50 respectively, indicating that their actual sustainability performance outstrips their perceived performance. The report, now in its third year, found that the environmental performance of all the assessed brands improved by 3.2% compared to 2012. 

Waste-to-energy reaching saturation

Around 45 European incineration plants with a total capacity of 15m tonnes a year are forecast for construction over the next 18 months, a study from German research provider ecoprog finds. However, the study suggests Europe’s waste-to-energy market will slow from 2015 onwards as it reaches saturation point.

The UK is illustrative. Energy providers face delayed construction of an authorised 21.3m tonnes of residual waste processing capacity. Globally, there are almost 2,200 waste incineration plants with a combined disposal capacity of about 255m tonnes of waste per year. By 2017, an additional capacity of 52m tonnes is expected to come on-stream. China is predicted to lead the way, commissioning an estimated 125 plants over the next five years with a capacity of 40m tonnes year.

Circular economy adds up

The idea of the “circular economy” has been looking to burst in from the fringes for a while. A new report by the Environmental Services Association suggests its time could be arriving. The ESA puts the probable value of this closed-loop form of production and consumption at £1.4bn in the UK. The figure is based on the extra recyclate revenues generated from a circular economic system that reuses, dismantles and perpetually recycles all recyclable waste.

ESA’s valuation takes the estimated total amount of UK recyclable waste by 2020 (395m tonnes) and subtracts the volume of waste that is expected to be recycled under existing schemes (255m tonnes). Integrating the remaining 140m tonnes into the circular economy would create an estimated 50,000 jobs in the UK, in addition to the revenue streams predicted.

Japan’s solar industry shines bright

Solar panel manufacturers look to be the beneficiaries of the tsunami that hit Japan’s east coast back in March 2011, causing the Fukushima nuclear crisis. In the wake of the disaster, the government introduced generous incentives to solar developers. As a result, between 6.9 and 9.4 gigawatts of generating capacity are scheduled for installation during 2013, according to market information provider Bloomberg.

This will lead Japan to outstrip Germany, the world’s largest solar market at present. The central European state installed 7.6GW of solar capacity in 2012. Japan’s solar tariff is currently 37.8 yen (38 US cents) per kilowatt-hour for 20 years, more than twice the tariffs of China and Germany. China is predicted to install between 6.3GW and 9.3GW this year, and the US is set to increase its solar capacity by 3.7-4.3GW.

Malnourishment carries economic costs

Children who are malnourished go on to earn 20% less as adults than children who are well nourished, according to a new study by Save the Children. Estimates suggest that the impact of malnutrition in low- and middle-income countries could decrease GDP by between 2% and 11%. The lower productivity of those who are malnourished as children is a result of their stunted physical and cognitive development.

UN figures suggest that in 2012, 47% of children under five in southern Asia and 39% of under-fives in sub-Saharan Africa failed to grow to their full height as a result of inadequate nutrition.

Organisation snapshots  

Carbon pricing set to grow

More than 40 national and 20 sub-national jurisdictions have either implemented or are considering carbon-pricing mechanisms, according to a new report  from the World Bank. The authors claim that new pricing initiatives are developing faster than ever despite the virtual collapse of Europe’s flagship carbon trading scheme. Countries with implemented and scheduled carbon pricing mechanisms emit about 10 gigatonnes of carbon dioxide equivalent a year, equal to 21% of global emissions (the same as the EU and the US put together).

Were China, Brazil, Chile and the other emerging economies considering such mechanisms to act, that figure could jump to 24GtCO2e per year. Given current government action, emissions are predicted to reach 52-57GtCO2e in 2020. The report follows the first successful deal under the new Shenzhen Carbon Exchange trading scheme, which involves 635 local companies that account for 38% of Shenzhen’s CO2 emissions.

Child workers in homes

An estimated 10.5 million children worldwide are working in people’s homes in hazardous and often slavery-like conditions, according to a report by the International Labour Organisation. Of these, 6.5 million are aged between five and 14 and 71% are girls.

Water pressures to become everyday reality

Within two generations, the majority of the world’s expected population of 9 billion people will live with severe pressure on fresh water. The predicted rise in water scarcity is due to climate change, pollution and overuse of natural water resources, according to 500 leading scientists gathered at the recent Global Water System Project conference in Bonn, Germany. About 4.5 billion people globally already live within 50km of an “impaired” water resource: ie one that is running dry, or polluted.

Company insights  

Ford’s carbon record

US car manufacturer Ford has cut carbon emissions in its global facilities by 37% (on a per vehicle basis) since 2000. It plans a further 30% reduction by 2025, based on 2010 levels, its 14th annual sustainability report reveals. Meanwhile, vehicle tailpipe emissions on a per vehicle basis have dropped 16% since 2007.

This is largely due to more efficient vehicles coming on stream, such as the Ford Max Hybrid and the Ford C-Max Energi plug-in hybrid. Other highlights include a reduction in waste-to-landfill by 19% per vehicle between 2011 and 2012, and reduction in global water use by 1.95m cubic metres over the same period (part of a 62% drop in water use since 2000).

ArcelorMittal: human rights

Steel producer ArcelorMittal reports that 85% of its 244,890 employees have completed formal human rights training. The company’s latest sustainability report also reveals an increase in its investment in community projects, which rose from £588m in 2012 to £725m in 2013. On the downside, CO2 emissions per tonne of steel produced increased from 2.09 tonnes to 2.13 tonnes over the same period.


Corporate Responsibility Research  CR Cheat Sheet  CR Stats  CSR Cheat Sheet  Oliver Balch 

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