Report Report: Asset owners, energy innovators, supply-chain resilience

The Report Report is produced by Corporate Eco Forum, a by-invitation membership organization comprised of large, global companies that demonstrate a serious commitment at the senior executive level to sustainability as a business strategy issue.

Absolute Impact: Why Oil Majors’ Climate Ambitions Fall Short of Paris Limits (Carbon Tracker) ranks the climate targets set by nine large oil and gas producers (the seven majors plus Equinor and Repsol). The report ranked Eni the highest, stating that its climate strategy is best positioned to comply with the Paris Agreement.

Asset Owners and Sustainability (Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Investment Management) notes that a majority of asset owners globally are integrating ESG factors into their investment process, according to a survey. Key findings include:

• 80 percent of asset owners adopted sustainable investment practices in 2019, up from 70 percent in 2017.
• 15 percent of respondents are considering adopting sustainable investing.
• 57 percent of asset owners can envision a time when they will allocate to investment managers only with a formal approach to ESG.
• Asset owners are eager to measure and report portfolio impacts, but 31 percent lack adequate tools to assess investments against their ESG goals.
• 86 percent believe that investment managers can play a key role in ESG reporting and education.
• 88 percent of asset owners that make thematic or impact investments seek to address environmental themes.
• Across all approaches, investors find the highest quality sustainable investing strategies in public equities (78 percent) and fixed income (69 percent).
• 45 percent of sustainable investors allocating to fixed income are actively investing in green/sustainability bonds or bond funds.

Clean Energy Innovation (International Energy Agency, or IEA) finds that around 75 percent of the cumulative reductions in carbon emissions needed to achieve international energy and climate goals will come from technologies that have yet to reach full maturity. The report makes the case for significantly accelerating clean energy innovation and analyzes the market readiness of more than 400 clean energy technologies.

ESG and the Earnings Call: Communicating Sustainable Value Creation Quarter by Quarter (NYU Stern Center for Sustainable Business & CEO Investor Forum) discusses the need for companies to place greater emphasis on ESG, resilience and long-term value creation as a means to move away from short-termism, and offers tips for discussing these topics on earnings calls.

Future Forces Disrupting Sustainable Business (GEMI) examines four external drivers of change that could disrupt business models over the next 10 years:

• New Spectrums of Resources: Emerging at incredible speed and creating opportunities to rethink resource use, R&D investments and product development and to lead businesses towards the creation of more sustainable products.
• New Spectrums of Value Creation: Enabling new kinds of sustainable, distributed production systems as the norm.
• New Spectrums of Time: Enabling businesses to innovate and create more sustainable and profitable strategies by using long-term planning as a competitive advantage.
• New Spectrums of Meaning: Pushing sustainability into the forefront of concerns among young people, demanding new approaches to stakeholder engagement.

Global Stimulus Principles: The Economy We Build Should Not Be the Same Economy We Decarbonize (Rocky Mountain Institute) suggests four core principles to guide global pandemic stimulus and recovery efforts:

• Create jobs and grow the economy: Prioritize investments with the greatest job creation and economic growth potential.
• Support public health and reduce air pollution: In light of the current COVID-19 crisis, support industries and technologies with the potential to improve public health.
• Enhance economic, energy and climate resilience: Prioritize the industries, technologies and systems that help people weather or adapt to unexpected shocks or crises.
• Decarbonize: Prioritize investments that will enable the world to achieve the Paris Agreement’s goal of keeping global temperature rise to well below 2.0 degrees Celsius with best efforts to limit warming even further to 1.5 C.

Global Trends in Renewable Energy Investment 2020 (Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance and BloombergNEF) finds that renewable energy capacity investment totaled $282.2 billion in 2019 — a 1 percent increase from 2018 levels. The report also finds that this increase in investment boosted the share of renewables in global generation to 13.4 percent in 2019 — up from 12.4 percent in 2018.

Improving Supply Chain Resilience to Manage Climate Change Risk (The Sustainability Consortium and HSBC) helps companies better understand why climate change risks should be addressed within a supply chain risk management program. The report also provides approaches, such as bridging and buffering strategies, that companies can use to manage supply chain risk and disruption and build resiliency.

Playing it Cool (CDP) assesses the performance of 18 high-impact, publicly listed companies in the cooling sector on product efficiency, emissions disclosure and low-carbon innovation. Key findings include:

• The report gave the highest scores to Trane Technologies, LG Electronics and Mitsubishi Electric.
• Only seven companies have over 50 percent of sales in better regulated markets with financial incentives for energy efficient products, including the U.S., EU and Japan.
• Only 22 percent of cooling sector companies analyzed have 2050 emissions targets (Hitachi, Mitsubishi Electric, Daikin Industries and Electrolux).
• Disclosure quality is high across disclosing companies, with almost 60 percent achieving a CDP score of an A-minus or higher.
• 12 companies have some form of climate-related objectives in incentive schemes for senior executives.

Politics & Global Warming (Yale Program on Climate Change Communication and George Mason University Center for Climate Change Communication) analyzes survey responses from around 1,000 Democratic, Independent and Republican registered voters in the U.S. to better understand how they view global warming, climate and energy policies, and personal and collective action. Key findings include:

• A majority of registered voters (61 percent) believe global warming is “caused mostly by human activities.”
• 43 percent stated that a candidate’s position on global warming will be “very important” when deciding who they will vote for in the 2020 presidential election.
• More than 85 percent of registered voters support policies that boost funding for research into renewable energy sources and increase renewable power generation on public land in the United States.
• 77 percent support U.S. participation in the Paris Climate Agreement.
• 72 percent believe that corporations and industry should do more to address global warming.
• Only 2 percent say they are participating in a campaign to convince elected officials to take action on global warming. However, 8 percent say they “definitely would” participate in such a campaign, and 24 percent say they “probably would.”

Responsible Business Tracker 2019/20 Insights Report (The Prince’s Responsible Business Network) provides insight into how 94 businesses across 24 sectors are supporting their employees, supply chains and the communities where they operate. Key findings include:

• 59 percent of participants identify risks and opportunities related to their carbon reduction strategy and 47 percent set objectives, targets and KPIs to monitor and evaluate the effectiveness of their strategy. However, only 41 percent of respondents govern the issue at the highest level of the organization, and just 32 percent consider their entire value chain when identifying risks and opportunities.
• 29 percent have developed science-based, net-zero or carbon-restorative targets.
• While 44 percent of respondents identify risks and opportunities related to circular economy, only 19 percent include the full value chain in this exercise.
• 77 percent of respondents say they understand their dependency on natural resources and are taking action to sustain these for the future. However, only 18 percent set objectives, targets and KPIs to monitor and evaluate the effectiveness of their strategy, actions and investments on healthy ecosystems.
• 38 percent of businesses define the direct business impact of their health and well-being strategy and only 13 percent define societal impact.
• Nearly 80 percent of people in the U.S. and U.K. would be willing to make lifestyle changes, similar to those made during the pandemic, to stop climate change, according to a Futerra and OnePulse survey. The top three lifestyle changes people are willing to make are “wasting less,” “avoiding plastic” and “switching to green energy.”

State and Trends of Carbon Pricing 2020 (World Bank Group) finds that 61 carbon pricing initiatives are in place or scheduled for implementation, covering about 22 percent of global GHG emissions — up from 20 percent of global GHG emissions in 2019. The report also finds that governments raised more than $45 billion from carbon pricing in 2019, with nearly half of the revenues dedicated to environmental or broader development projects, and more than 40 percent allocated to the general budget. 

Tracking Clean Energy Progress (International Energy Agency) finds that only six out of 46 critical energy technologies and sectors — solar PV, bioenergy power generation, electric vehicles, rail transport, lighting and data centers — are “on track” with the IEA’s Sustainable Development Scenario, which maps out a pathway to achieve the goals of the Paris Agreement, deliver universal energy access and significantly reduce air pollution. The report also finds that 24 technologies and sectors showed some progress, and 16 are “off track.”

Transparent 2020: Mapping Corporate Action on Plastic Waste (WWF) examines the plastic footprints of five global companies — Keurig Dr Pepper, McDonald’s, Procter & Gamble, Starbucks and The Coca-Cola Company. The report also provides insight into the most impactful opportunities for companies to take effective action on the global plastic waste crisis.

Uniting Business in the Decade of Action (UN Global Compact and DNV GL) assesses the progress businesses have made in embedding the Ten Principles of the UN Global Compact into their strategies and operations. Key findings include:

• More than 90 percent of companies participating in the UN Global Compact have embedded the Ten Principles and have policies and practices in place. 73 percent of companies state that upholding the Ten Principles is how they take action to deliver the Sustainable Development Goals (SDGs).
• 84 percent report taking specific action to advance the SDGs, and 61 percent are developing products and services that contribute to them.
• 46 percent are embedding the SDGs into their core business, and 37 percent are designing business models that contribute to the SDGs.
• 45 percent are tracking progress on SDG actions, up from 40 percent in 2019.
• 62 percent say they conduct environmental impact assessments. However, only 18 percent conduct impact assessments for human rights, 25 percent conduct them for anti-corruption and 29 percent conduct them for labor rights.
• 39 percent say they have targets they believe are sufficiently ambitious, science-based and/or align with societal needs.
• 35 percent say they publicly advocate the importance of action on the SDGs.

U.S. Stimulus Strategy: Recommendations for a Zero-Carbon Economic Recovery (Rocky Mountain Institute) suggests four core programs to guide future pandemic stimulus and recovery efforts in the United States:

• Build Back Better Buildings: A building retrofit program to catalyze residential and commercial building improvements at an unprecedented scale.
• Enhance Access and Electrify Mobility: Investment to prioritize pedestrians, cyclists and public transit over the automobile, while also supporting the growth of the electric vehicle market.
• Debt Forgiveness for a Sustainable Recovery: A financial incentive program to provide companies with debt relief based on verifiable emissions reductions.
• Economic Recovery Facility for Financing Low- and Zero-Carbon Activities: A federal entity dedicated to facilitating the financing of clean energy and infrastructure projects.