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Low-carbon cities

Cities lie at the heart of the world’s low-carbon future, an influential international working group argues. The world’s cities are responsible for an estimated 67%–76% of global energy use and 71–76% of energy-related greenhouse gas emissions. According to the US-based Global Commission on the Economy and Climate, which includes the likes of the London School of Economics and the World Resources Institute among its partners, low-carbon solutions for the world’s largest cities could result in emission reductions of 3.7 gigatonnes of carbon dioxide equivalent by 2030. This is equal to around 15–20% of the total global emission reductions needed for a 2C pathway. The Global Commission is calling for an investment of $1bn for technical assistance, capacity-building and finance to support the greening of 500 cities. If successful, it estimates that the financial savings could be in the order of $16.6tn by 2050. The world’s cities currently generate around 66% of global domestic production.

Global Commission on the Economy and Climate, “Accelerating Low-Carbon Development in the World’s Cities”

Cutting carbon is cost-neutral

Looked at from a purely economic perspective, the costs of a “business as usual” approach to climate change and an “action” response are found to be almost identical. According to a report released by US-based Citibank, failure to take action against global warming will carry a price tag of $192tn over the next 25 years. This is primarily due to the cost of coal ($23tn) and gas ($13.6tn) for power generation (which will cost $74.7tn overall) and oil ($4.8tn) for transport ($47.4tn). Taking action will cost more upfront in energy efficiency investments ($19.4tn), but will result in long-term savings, the result being an estimated cost of $190tn between 2015 and 2040. On a risk-adjusted basis, the study puts the estimated return on investment for climate change mitigation measures at 1-4% in 2021, rising to between 3% and 10% by 2035. The findings challenge the argument that a transition to a low-carbon economy will spell financial doom.

Citi GPS: Energy Darwinism II

Light bulb moment: LEDs and outdoor lighting

Swapping all the world’s outdoor lights to LED alternatives is a “no brainer”, according to a leading environmental charity. A new report by Climate Group estimates that such a shift would save more than $6bn in energy costs and would prevent 40m tonnes of carbon dioxide emissions a year in the US. The savings in the US for street lighting alone would amount to $2.3bn and 15m tonnes of CO2. Globally, outdoor lighting currently consumes about 1.3 quadrillion Btu of electricity every year, at a total cost of about $10bn. The latest generation of LED-based street lighting technologies are 50-70% more energy efficient than conventional lighting, according to the Climate Group. Around 350m streetlights are predicted to be in use by 2025, up from around 304m today. Their number will grow as cities expand. By 2050, around 75% of the world’s population will live in urban areas. The figures are cited in support of the Climate Group’s new campaign, LED = Lower Emissions Delivered, which is also supported by electrical goods manufacturer Philips.

The Climate Group, “The Big Switch”

FTSE 100: targeting carbon

Of the UK’s largest 100 publicly owned firms, 74 now have carbon reduction targets in place and 55 have some form of materiality assessment or assessment of climate change risks to business. More than half report some form of data around their indirect (or Scope 3) carbon impacts, although only nine are providing more than five of the categories cited by the benchmark GHG Protocol for Scope 3 data. One of the areas where companies are progressing is in third-party assessments, with 69 of the 74 reporting firms including an external audit of their data (an increase of 33% on 2011). Nearly two-fifths of the FTSE 100 now buys green electricity, meanwhile, an increase of 34% increase since 2012. The survey by Carbon Clear on reporting trends finds that telecoms firm BT Group is the only company to publish science-based emission reduction targets.

Carbon Clear, Carbon Reporting Performance of the FTSE 100

EU: illegal timber

Three-quarters of European consumers believe it is “very important” that the European Union should implement new laws to prevent illegally sourced wood products being sold in EU markets. A similar proportion thinks that the region’s current law should be applied more consistently and should cover all wood products. The survey, commissioned by the environment group WWF, comes as the EU Timber Regulation comes under review. The law currently excludes a range of products including chairs, books, toys and musical instruments. A separate report by WWF recently found that only 11 EU countries, including the UK, the Netherlands and Belgium, had put in place national legislation considered robust enough to control the legality of timber. The EUTR came into force in March 2013 and applies to all 28 EU member states.

WWF Government Barometer

DJSI trends

Manufacturers of electronic equipment and components have made most progress to improve their sustainability performance over the past year, with their sector rating increasing by 23.5% on the influential Dow Jones Sustainability Indices (DJSI). Other sectors notching up notable improvements include transport and transport infrastructure (up 18%) and homebuilding (up 15.3%). Among those to see their performance decline relative to last year are life sciences tools and services (down 7.7%), personal products (down 6.7%) and oil and gas (down 5.9%). From a thematic perspective, companies across all DJSI rankings performed best on complementing codes of conduct and corporate governance. The worst performing categories were operational eco-efficiency, human capital development and corporate citizenship. High-profile deletions from the index include Cisco Systems, PepsiCo and Royal Bank of Canada.

Dow Jones Sustainability Indices

CEO pay

Pay rises for chief executives of the UK’s largest companies have slowed, with more than a third (36%) receiving no salary increase during 2015. Four out of five chief executives were also awarded less than half their maximum bonus, which averaged £1.12m. Don’t feel too sorry for them, though. The median base salary of FTSE 100 bosses still rose by 3% to £891,000 in 2015, and their overall median remuneration leapt by 6.8% to £4.28m, according to financial services firm PwC.

PwC’s “Taking stock – Review of 2015 AGM season”

CDP: carbon pricing

Of the more than 5,500 companies that report emissions information to the influential non-profit data collector CDP, 437 say they now price their greenhouse gas emissions. This is up from 150 last year. Asia has seen the largest growth, with 93 companies now undertaking such calculations, compared with just eight in 2014. A further 583 companies state they plan to use an internal carbon price within the next two years. The figures suggest that internal pricing of carbon, whereby a financial price is applied to each tonne of CO2 produced, is becoming a more integral tool in businesses’ efforts to reduce their carbon footprints. Prices among CDP’s sample ranged from $1 per tonne to $357 per tonne. CDP represents 822 investors that manage $95tn in assets.

Carbon Pricing in the Corporate World

Institutional insights

SDG commitments

For every 10 poor people that get connected to the internet, one is lifted out of poverty. The statistic was cited by Mark Zuckerberg, chief executive of Facebook, during a meeting to mark the adoption of the United Nations’ new Sustainable Development Goals. Thirty-six corporations and other organisations affiliated to the UN Private Sector Forum, which gathers leading business people, announced commitments in support of the UN’s Sustainable Development Goals (SDGs). Examples include London-listed mining firm Anglo American’s pledge to help support up to 15,000 new jobs a year between now and 2030 in the communities where it operates; Italian energy utility Enel’s commitment to provide electricity to 3 million people in Africa, Asia and Latin America by 2020; and UK pharmaceutical giant GSK’s aim to improve access to healthcare for 20 million underserved people by 2020. The SDGs comprise 17 overarching aims. They come into force in January 2016.

UN Private Sector Forum

60m displaced people

The number of forcibly displaced people is now more than 60 million worldwide, the highest number since the Second World War, according to the UNHCR. The list of refugee countries is topped by Syria (3.9 million) and Afghanistan (2.6 million). Of the top 10 most affected countries, only Pakistan and Vietnam do not feature in the World Bank’s list of fragile states. Most displaced people remain in countries close to their home nations. The Middle East and North Africa hold 7.7 million asylum seekers, and Sub-Saharan Africa has about 3.6 million, according to World Bank figures. This compares with about 3 million in Europe.

UNHCR Statistics and Operational Data

World Bank: Fragile States

China’s $3.1bn carbon financing

The Chinese government is to invest $3.1bn to help developing countries cut their carbon emissions and adapt to climate change. The carbon finance commitment builds on an announcement in November 2014 in which China pledged to increase its share of non-fossil fuel energy to around 20% by 2030. According to data provider Statista, China is the world’s biggest emitter of energy-related carbon dioxide emissions, producing 23.4% of the global total. The US (14.7%) and India (5.7%) rank second and third, respectively.


Company Snapshots

Nestlé uncovers child labour
Research commissioned by the Swiss food giant Nestlé into working practices on 260 cocoa-growing farms in Ivory Coast revealed 56 cases of under-age working. In response to the research, which was carried out by the Fair Labor Association late last year, Nestlé says it has a remediation system in place to help these so-called “family workers” get into school. Separate research by Nestlé has identified 3,933 children working on family farms in Ivory Coast.

BHP Billiton: social spend
Australian mining company BHP Billiton made voluntary community contributions worth $225m during the last financial year, according to its latest sustainability report. The donations figure is dwarfed by its bill to governments in the form of taxes and royalties, which amounted to $7.3bn. The mining giant also spent 42% of its procurement budget on local suppliers.


Merck: maternal health
Over the past three years, Merck has improved access to quality maternal healthcare and family planning services for an estimated 3.5 million women around the world. The support is derived from a $500m, 10-year programme initiated by the US pharmaceutical firm. The MSD for Mothers programme involves 75 implementing partners in 30 countries. Among recent highlights is the scale-up of a $50m family planning partnership with the Bill & Melinda Gates Foundation in Senegal, which has helped 2.6m women gain improved access to family planning methods.

Merck’s 2014 Corporate Responsibility Report  

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