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The case for closing the loop

The consumer goods industry could achieve cost savings of $700bn a year if it followed “closed-loop” production principles. So finds a new report by the Ellen MacArthur Foundation, which is working to promote the re-use of raw materials in industrial processes.

Beer manufacturers, for instance, could reduce their packaging expenditure by one fifth were they to switch from disposable to reusable glass bottles. Closed-loop systems also offer new income streams, the report states.

The authors predict that, should biogas-based power generation take off, then household food waste could become a £1.5bn annual industry. At present, an estimated 80% of products bought by OECD citizens end up in incinerators, landfill or waste water, according to the Ellen MacArthur Foundation. That equates to a per capita average of around 640kg of food and drink, 96kg of packaging, and 16kg of new clothing and shoes.

Waste not, want not

Wasting food is culturally looked down upon in most corners of the world, yet that doesn’t seem to stop us doing it. As much as 2bn tonnes of food goes to waste every year, roughly half of total food production, research by the Institution of Mechanical Engineers finds.

A demarcation exists between developed countries, where consumers often throw away food due to poor storage, strict sell-by dates or simple fussiness. A high percentage of vegetables also remain unharvested because they fail to meet retailers’ standards. Globally, 1.6m tonnes of food are wasted every year in this way.

In the developing world, the reasons for food waste (or, more accurately, food losses) tend to lie more in bad transport logistics, inadequate engineering and suboptimal agricultural practices. The report chimes with a new campaign on food waste by the UN Environment Programme and the Food and Agriculture Organisation.

Tax rate of FTSE 100 drops for fourth year

For all the headlines about international companies such as Amazon, Google and Starbucks engaging in tax avoidance over recent months, UK domestic FTSE 100 companies are paying less than ever to the UK Treasury.

Research from accountancy firm UHY Hacker Young shows that the UK’s 100 largest companies typically pay a tax rate of around 24.5%. Four years ago, the figure was closer to 35.8%.

Hacker Young credits the reduction to the generation of profits to overseas markets, where tax rates are lower. The research report also notes that the UK corporate tax rate fell from 28% to 26% in 2010 and then down to 24% in 2012. It is scheduled to drop further, to 21%, in 2014.

Even so, more than 20 companies left the UK for tax reasons between 2007 and 2011, including advertising giant WPP and pharmaceutical manufacturer Shire. Those that stayed, however, are not blind to the public anger that corporate tax minimisation tactics are causing. A recent poll by head-hunter firm Korn/Ferry Whitehead Mann found that half of FTSE 100 chairmen think such rancour is justified.

Computers rival airlines for emissions

The internet, video, voice and cloud services produce more than 830m tonnes of carbon dioxide per year, amounting to about 2% of global CO2 emissions. The findings, which put the ICT industry’s carbon footprint on a level with that of the aviation industry, emerge from research by the University of Melbourne’s Centre for Energy-Efficient Telecommunications (CEET).

The figures take into account the data traffic, energy use and CO2 production in networks and other elements of the ICT industry. CEET predicts that ICT’s proportion of global emissions could double by 2020 due to rising demand.

Investors increasingly attentive to non-financials

Ethical, social and governance (ESG) issues increasingly carry a cost in financial markets. So maintains a recent empirical review by accountancy firm Deloitte.

Integration of ESG criteria into investment strategy has reached an estimated $10.7tn in assets under management, the reports find. That may only equate to about 7% of the total global market, but it’s not to be sniffed at.

And it’s rising. Numerous research studies now show the correlation between share price slippages and corporate criminal activities, labour law violations, product recalls and the like. Public protests on worker and consumer issues, for instance, can cause a 1% drop in stock prices in the immediate days around the event.

Every decade since the 1980s, investors have shown themselves more likely to act on negative environmental news too. What cost companies a 0.4% drop in stock returns in 1980-1989 set them back 1.1% in 2000-2009.

Disclosure on emissions keeps opening further

The Carbon Disclosure Project is going from strength to strength, indicating the growing trend towards transparency on climate change-related risks. More than four-fifths of Global 500 companies took the time to fill in the CDP request for information in 2012. Significantly, 51% of the corporate respondents said climate related risks were already affecting their operations or were likely to do so within five years.

As for investors, they seem to be getting the message too. A record 722 separate institutions supported the annual data request, up one tenth on the previous year. CDP is now backed by $87tn of assets under management – equivalent to about a third of the world’s invested capital.

Coinciding with the CDP report is a separate study by the Investor Responsibility Research Centre Institute and Ernst & Young that shows an increase in environment-related shareholder resolutions from 30% to 40% between 2005 and 2011.

Favourable wind for turbines

Against the economic odds, the wind power industry clocked an especially good year in 2012, with its total installed capacity growing by one fifth to a record 282GW. China and the US are setting the pace in net generation terms, each posting 13GW of new capacity last year, according to new figures from the Global Wind Energy Council.

Germany, India and the UK continue to grow their domestic wind supply too, with increments of 2GW in all three markets. The growth pattern reflects the course of investment over recent years. China leads the way, with a total installed capacity of wind power of 77GW. The only near contender is the US at 60GW. Europe’s top players occupy a second rank, with Germany (31GW), Spain (23GW) and the UK (8.5GW) comprising the region’s leaders.

The figures come against a backdrop of reduced investment in renewable energies more generally, which fell from $302.3bn in 2011 to $268.7bn in 2012, according to a study by Bloomberg New Energy Finance. The 11% drop is put down to a mix of regulatory uncertainty and policy changes in big renewables markets such as the US, Spain, Italy and India.

Fuel cell futures in UK

The UK could be positioned to become a leader in hydrogen-powered vehicles, with annual sales projections reaching more than 300,000 units by 2030, the UK government maintains. In a joint study with the motor industry, the government finds that one in 10 new car customers would be receptive to hydrogen fuel cell vehicles.

Much depends on falling costs once the vehicles come into production and on infrastructure investment. The report anticipates an initial rollout of 65 charging stations, with 1,150 charge sites in place by 2030. If the estimates prove correct, the benefits to the environment will clock in at 3m tonnes less carbon dioxide than at present.

Organisation snapshots  

Africa’s environmental outlook

Low combustion efficiency of solid fuels used for cooking and heating in rural Africa and poor ventilation are resulting in air pollution levels often 10 to 30 times higher than World Health Organisation limits. This is just one of the alarming findings of the United Nations Environment Programme’s African Environmental Outlook-3 report.

The report also highlights Africa’s lack of capacity to deal with the growing effects of climate change, especially in the areas of water access and hygiene. Only about three-fifths of people living in sub-Saharan Africa have access to safe water, for example. The Fourth Assessment of the Inter-Governmental Panel on Climate Change found that temperatures in Africa could increase by as much as 3-4C average this century.

S&P 500 up disclosure, GRI finds

The number of S&P 500 companies producing sustainability reports stands at 53%, up from 19% in 2010, according to new research by the G&A Institute, the US data partner of the Global Reporting Initiative.

Of these, 63% are using the GRI framework, with an additional 5% referencing it. On average, GRI reporting companies obtained an average ranking of 208.04 points (compared with top performers scoring 150) on Newsweek’s Green Ranking index, while non-reporters averaged 271.85.

21m trapped in forced labour

A new report by the International Labour Organisation highlights the need for tougher measures to combat forced labour. According to the ILO, forced labour claims an estimated 21 million victims worldwide. State-imposed forced labour accounts for around one tenth of this total.

Company insight

Novo Nordisk is currently reaching an estimated 23 million people with injectable diabetes care products, its ninth integrated annual report reveals. However, increases in production volumes at the Danish pharmaceutical company saw its energy and water consumption jump by 11% and 16% respectively, compared with 2011.

The UK’s Royal Mail has raised £45m through payroll giving since 1989, helping a record 975 charities, according to its new corporate responsibility report. The report puts the UK mail operator’s 2012 procurement and wage bill at £2.4bn and £5.3bn respectively.

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

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