Companies have crucial role in meeting climate change target

Companies have a crucial role in meeting the main target set in the Paris climate change agreement to limit the temperature increase from global warming to 1.5°C, according to a recent report from the Carbon Trust.

The report is based on a series of events hosted by the Carbon Trust working alongside the communications company BT – which recently announced its intention to reduce its carbon emissions by 87% by 2030 – to gain a deeper understanding of how businesses will be able to support the move towards a 1.5°C world.

The Carbon Trust said that to achieve the 1.5°C ambition would require global greenhouse gas emissions to peak in the near future, followed by an aggressive approach that would lead to no carbon emissions being generated by around the middle of this century. Beyond this point, the Trust said that there should be action to actively remove carbon dioxide from the atmosphere.

Businesses would have a key role to play in this transition, the Carbon Trust said, through reducing the emissions associated with their operations and supply chains. They would also be able to access new commercial opportunities through delivering products and services that are compatible with a prosperous, zero-carbon future, as well as developing and deploying the negative emissions solutions that will be required later this century.

If an action was not taken to reduce carbon emissions the Trust said companies would be negatively affected by the direct consequences of climate change, including damage to buildings and infrastructure, the disruption of logistics and supply chains, impacts on water availability and diminished agricultural productivity. They would also be affected by indirect consequences, such as regulatory and policy change, the development of disruptive technologies and business models, or shifts in customer behaviour.

Investors should be more engaged with UN Sustainable Development Goals 

The Principles for Responsible Investment (PRI) and PwC have published a report arguing that the investment community should become more engaged with UN Sustainable Development Goals (SDGs).

The SDG Investment Case, highlights five factors, from being a critical part of their fiduciary duty to the use of SDGs as a capital allocation guide, and focuses on the capacity for the investment community to engage and achieve real-world impact as a result. The report also explains why there is an expectation that investors will contribute to them and why investors should want to contribute to them.

climate change target

Investors need to engage more with UN SDGs

The report argues that the SDGs represent the world’s most pressing environmental, social and economic issues and as such serve as a list of the material ESG factors that should be considered as part of an investor’s fiduciary duty and that large institutional investors can boost their long-term financial performance by encouraging sustainable economies and markets. With their portfolios exposed to growing and widespread economic risks, their investment returns depend on the continuing good health of the overall economy, the report suggests.

The report also suggests that those investors that believe providing solutions to sustainability challenges offers attractive investment opportunities can implement strategies that target SDG themes and sectors, with opportunities available in most asset classes. While many investors are implicitly taking sustainability factors into account already, the SDGs give a common language with which to shape and articulate such investment strategies, the report argues.

Still work to do by major UK companies on modern slavery reporting

While a few FTSE 100 companies are providing robust reporting on the action they are taking to ensure modern slavery does not take place in their operations and supply chains most are not providing sufficient disclosure as required by the UK’s Modern Slavery Act, according to analysis by the Business & Human Rights Resource Centre (BHRRC).

Marks & Spencers, Sainsbury’s and Unilever were among those that the BHRRC believed were providing good disclosure and demonstrating that they were taking action to combat modern slavery. The report built on a similar one published last year, scoring the companies on the extent of their disclosure under the 2015 Act and the level of action taken to eliminate slavery from their operations and supply chains. Companies were sorted into 10 tiers (tier 10 the best performing, one the worst performing). Over half the companies appear in the bottom four tiers. The worst-performing companies were named as Hargreaves Lansdown, Paddy Power, Pearson, and WorldPay. However, Pearson provided the BHRCC with an updated statement on its approach to modern slavery following the report’s publication.

Phil Bloomer, Executive Director for BHRRC said: “It’s disappointing that after the first full year of reporting under the Act, so many of the FTSE 100 companies are still taking a ‘tick box’ approach. Those that are leading the way prove there has been enough time to act decisively to eliminate slavery from their operations and supply chains.

 The EPA in the US repeals clean power plan while UK launches clean growth strategy

The different approach being taken by governments to climate change has been illustrated recently by the UK government’s clean growth strategy, published as part of its obligations under the climate change act. This was after the Environmental Protection Agency (EPA)  in the US promised to roll back the requirements of the country’s clean power plan introduced under President Obama.

EPA administrator Scott Pruitt said the clean power plan would be appealed as the regulation exceeded the ’s statutory authority. He said that repealing the plan would also facilitate the development of US energy resources and reduce unnecessary regulatory burdens associated with the development of those resources. Trump signed an Executive Order in March which the administration said established a national policy in favour of energy independence, economic growth, and the rule of law.

Following Pruitt’s announcement, the US pressure group Ceres said that the Trump administration was out of step with the US business and investment community. Ceres said that 365 companies and investors voiced their support for the Clean Power Plan in 2015, declaring that their position was “grounded in economic reality.” These companies and investors understand the enormous threat that climate changes pose to the health of our economy and to our planet. Additionally, while Trump has said the US was withdrawing from the Paris Agreement more than 1,700 of the country’s companies and investors have signed the We Are Still In statement, making public their commitment to uphold it.

Anne Kelly, senior director of policy at Ceres, said: “More and more major companies are already choosing to rely on cost-cutting renewable energy to power their operations. States, too, continue to lead and to take bold actions to cut greenhouse gas emissions from power plants. Many have demonstrated that they can reduce their carbon footprint, without compromising job growth or threatening economic prosperity.”

Meanwhile, the UK’s Clean Growth Strategy, launched earlier this month by Claire Perry,  minister for climate change and industry, outlined the benefits for the UK of responding to the challenge of climate change which it said was driving technological innovation. The strategy said that as a result of this innovation, new high-value jobs, industries and companies had been created, which is driving a high growth and high value ‘low carbon’ sector of the UK economy. According to the government, there are now more than 430,000 jobs in low carbon businesses and their supply chains, employed across the UK.

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