Sustainability Sparks Growth for Fortune 500 Companies

“We want to be a sustainable business in every sense of the word.”

CEO Paul Polman has made no secret of his core focus at Unilever, the Anglo-Dutch conglomerate which sells a wide range of products used by more than 2 billion people every day.

Unilever is one of many Fortune 500 companies embarking on sustainability initiatives to boost profits while reducing harmful environmental and social impacts.

To achieve its aim of doubling product turnover, Unilever has set out three broad-minded goals for its new campaign:

1. improve the health and well-being of more than a billion people;
2. halve the group’s environmental footprint across the total value chain, including greenhouse gases, water and waste;
3. source all agricultural raw materials sustainably

Polman insists there is “no conflict between sustainable consumption and business growth.”  In fact, he says, it is quite the opposite. “There is a compelling case for sustainable growth – retailers and consumers demand it and it saves us money.”

Part of Unilever’s sustainability push includes an educational campaign to make consumers aware of how their actions can reduce greenhouse gas emissions and save money.  For example, consumer use results in 68% of greenhouse emissions for many Unilever products.  Raw material processes account for 26%, manufacturing and transport together account for 5% and disposal rounds out the total at 1%.

Likewise, Unilever is educating consumers on cost-saving conservation strategies.  For example, did you know that families who cut down their daily showers by as little as 2 minutes can save 21,000 liters of water a year and as much as $150?

Read more posts on water here

German chemical group BASF and sportswear manufacturer Puma are two other examples of companies that have enacted sustainability initiatives to benefit the environment and their bottom line.  Like Unilever, these companies have aligned their business models with the harsh realities at hand.

Our world is facing perilous energy, water, agriculture and resource challenges. Companies that fail to adapt as required may find themselves behind the curve.

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Rising Sea Levels Threaten US Coastal Cities

Coastal metropolitan areas face significant dangers from the “invisible tsunami” of rising sea levels. Nearly 5 million people who live along the Eastern and Western coasts could be affected.  With time, the problem is becoming more severe.

According to recent reports from the non-profit group Climate Central and others published in the journal Environmental Research Letters, rising sea levels can result in more severe and frequent flooding, as well as damaging storm surges.  Weather and climate experts warn that the risk of “once-a-century” flooding has doubled as a result of this increase.

“Sea level rise is like an invisible tsunami, building force while we do almost nothing,” remarked Ben Strauss, expert on ecology and evolutionary biology and COO of Climate Central.  “We have a closing window of time to prevent the worst by preparing for higher seas.”

Scientists say that the effects of global warming are contributing to sea level rise.  Accelerated melting of glaciers and ice sheets causes the expansion of the earth’s ocean waters.  Since 1880, world sea levels have risen by 8 inches.  By the end of this century, forecasts for sea level rise range from 2 to 7 feet, with the majority predicting a rise of 3 to 4 feet taking into consideration a projected 2 to 3 degree F rise in global temperature.

Furthermore, the effects of global warming may increase the likelihood of what is called a “once-in-a-century” flood for low-lying coastal areas.  By 2030, two-thirds of the 55 coastal locations surveyed by Climate Central will face a 55% increased risk.  For the majority, risks of these dangerous flood occurrences may triple.

Watch our video on Water Risks & Opportunities

Severe floods, rising seas and storm surges can result in tremendous damage.  South Florida alone has an estimated $30 billion worth of at-risk property.  Municipal regions in Louisiana, New Jersey, North Carolina, Maryland and Virginia also face vulnerabilities.  According to Climate Central’s research, more than 50% of the population in 285 coastal cities and towns live below the 4-foot mark, placing them at risk of injury or death during a storm surge or flooding event.

Read the full article here…

 

"Moving from Green vs. Gold to Green EQUALS Gold"

Thomas Friedman’s latest column in the New York Times reaffirms our conviction that energy, climate and resource concerns are of primary importance around the world.

Those who are late to the recognize these challenges will be in for a rude awakening…

“The planet is getting flatter and more crowded.  There will be two billion more people here by 2050, and they will all want to live and drive just like us. And when they do, there is going to be one monster traffic jam and pollution cloud, unless we learn how to get more mobility, lighting, heating and cooling from less energy and with less waste – with so many more people.”

When you have a global market, with a burgeoning population, that faces rising scarcity of resources and still so much waste in how we make and consume things, there is a great market opportunity for innovation.  Energy and resource efficiency, Friedman says, will be “the next great global industry.”

The world is “going from green vs. gold to green equals gold.”

Read Friedman’s complete column here

Read our recent Q&A on investment opportunities in Natural Mega Themes

 

Chinese Water, Agriculture at Risk from Climate Change

The Chinese government’s “Second National Assessment Report on Climate Change” warns of significant risks to agriculture and water resources as a result of a changing climate.

Global warming may reduce crop yields, shrink rivers and increase the frequency of damaging droughts and floods, says the 700+ page report, recently released to the public.  Chinese prosperity and economic growth may be hindered as a result.

If global warming trends continue unmitigated, Chinese grain output could fall between 5% and 20% by 2050.  China is already the world’s largest consumer of grains and relies heavily on imports of key commodities.  Any decrease in domestic production would be deeply felt.

Lin Erda, one of the chief authors of the report, remarked:

“Generally, the observed impacts of climate change on agriculture have been both positive and negative, but mainly negative.  But steadily, as the temperatures continue to rise, the negative consequences will be increasingly serious.  For a certain length of time, people will be able to adapt, but costs of adaptation will rise, including for agriculture.”

However, Lin points out that improved crop choice and more efficient use of irrigation and fertilizer could help the situation, suggesting that agri-science and new technologies will be crucial for China going forward.

The impact of climate change on China’s water resources may be sizable.  Experts fear “severe imbalances in China’s water resources,” concentrated precipitation in the summer and autumn rainy seasons, and “increasingly frequent” floods and droughts.

“Without effective measures in response, by the latter part of the 21st century, climate change could still constitute a threat to our country’s food security.”

The report warns that 8 of mainland China’s provinces could face severe water shortages by 2050 (less than 500 cubic meters per resident), and 10 others could face lesser shortages.  The continual retreat of glaciers in Tibet which feed many important rivers is also cause for concern, as is rising sea levels that could impact coastal cities like Shanghai.

Through it all, Chinese carbon emissions continue to rise.  Rising by a predicted 10.4% a year, China’s emissions could grow to 9 or 9.5 billion tons by 2020.  Achieving the Chinese government’s stated goal of a 40-45% reduction in economic carbon intensity by 2020 (the level of carbon pollution for each unit of growth) will be an expensive endeavor. China’s efforts to reduce carbon emissions will likely require 10 trillion yuan (USD $1.6 trillion) of investment, with half designated for energy-saving technology and clean energy.

The report emphasizes the importance of prompt action, noting that “many cost-effective and mature technologies for energy saving and new and renewable energy have already been widely applied.  In the future, controlling greenhouse gas emissions will require more costly and less mature technologies.”

Read the full article here

 

Europe Prepares for New Opportunities in Shale Gas

Unconventional gas resources, such as shale gas, may prove crucial to Europe as it strives to become self-sufficient and reduce dependence on gas imports from Russia and the Middle East.

A recent report from the U.S. Energy Information Administration (EIA) estimates that Europe possesses greater than expected shale gas reserves which if developed have the potential to re-shape the continent’s energy dynamic.  The EIA estimates nearly 624 trillion cubic feet (tcf) of technically recoverable shale gas reserves exist in Europe, particularly in parts of Germany and Poland.

Shale gas resources has peaked the interest of many investors eager to begin drilling operations in Europe.  Some of the world’s largest oil and gas majors have already acquired land and leasing rights, such as Chevron, which will initiate its first drilling well in Poland, and ExxonMobil, which has already completed six shale wells in north-west Germany.

The European Centre for Energy and Resource Security (EUCERS) says, “In theory… Europe’s unconventional gas resources might be able to cover European gas demand for at least another 60 years.”

The highly effective, yet controversial, drilling practice known as hydraulic fracturing or “fracking” presents both an opportunity and an obstacle for the fledgling industry.

Fracking has revolutionized the natural gas industry in the United States, helping to shift the U.S. from a net importer to a net exporter of gas, but has been criticized as unsafe.  Indeed, fears of water contamination from fracking has led France to recently ban the practice.

Greater population density in Europe than the U.S. means that “environmental concerns must be addressed” first and foremost as the industry develops, says EUCERS.

Read more posts on natural gas

 

Inaugural Transaction on China's New Carbon Trading Platform

China’s self-directed “Panda Standard” for carbon trading facilitated its first transaction yesterday, marking a new direction for the world’s largest emitter of carbon dioxide.

China has long been a supplier of carbon credits to the global market under the Kyoto Protocol, but thus far it has been rare for a developing nation to purchase carbon credits on exchanges.

With this new “Panda Standard”, China is entering the global carbon trade with its own exchange, which the nation ultimately hopes will help encourage the reduction of overall emissions.  The “Panda Standard” aims to direct money from carbon polluters towards new agricultural and ecological projects in rural areas being affected by climate change.

The Chinese government has been targeting a reduction in the energy intensity of its economy as measured as tons of carbon dioxide emitted per unit of GDP.

Click here to watch a video on China’s new carbon trading program

 

Global Energy Markets on Roller Coaster Ride Due to Middle East, Japan

The unforeseen events of this month have been challenging for the global energy and resources markets, as investors struggle to make sense of ongoing political tension in the Middle East, and now the natural disasters in Japan.

As a result of political unrest in the Middle East and supply disruption in Libya, West Texas Intermediate (WTI) and other crude oil spots have risen nearly $15 per barrel according to data from the Energy Information Administration (EIA).  This jump has brought crude prices to their highest points since 2008, prompting the EIA to raise its price forecast for 2011 up to $105 per barrel, a full $14 dollars higher than previous estimates.

Energy markets have also been impacted by the recent crisis in Japan.   With nearly 20% of Japan’s power capacity shut off, analysts are expecting a drop in demand for crude oil coupled with a potential spike in demand for refined products. Many foresee an uptick in demand for liquefied natural gas (LNG) and fuel oil as replacements for lost nuclear power generation.  Shell recently confirmed it had begun diverting shipments of LNG to Tokyo in the wake of the explosions.  As a result, this may lead to higher prices in Europe.

“Japan will change mid-term world energy scenarios,” acknowledged the United Nation’s top climate official, Christina Figueres in a response to the situation in Japan.

Certainly the risks surrounding  nuclear power generation have been magnified on the world stage, potentially derailing investment into new plants.  As a result, wind power and natural gas may become more attractive power sources. We will be closely watching as supply and demand patterns adapt to the current situation and as events continue to unfold throughout the globe.