Corporate sustainability news you may have missed: Part 7
Scroll down to see the ‘Feeling Hopeful’ section because it ain't always bad news!!
FREAKING OUT
Poor climate-related financial disclosures from the 50 largest companies make it hard to make informed investment decisions
The Climate Disclosure Standards Board (CDSB) recently released a report indicating that 78% of the largest 50 companies are failing to report climate-related risks. This is the second year that the CDSB has analysed this data as a way to support companies in complying to the EU’s Non-Financial Reporting Directive (NFRD) and disclosing “decision-useful” information.
Although 90% disclosed at least one climate or environmental risk, these were the risks that their business activities posed on the natural environment rather than the risks that climate change posed on their business.
It is very important for businesses to disclose how they are vulnerable to climate change or even to the decarbonisation planned. Without identifying and understanding these risks, businesses cannot incorporate them into their policies and processes, which is necessary for their financial resilience over the long-term. In reality, by understanding how climate change could fundamentally hurt a business, it could be reasonably expected that the company would then minimise its own impact as to avoid those risks actualising.
It is also important for these companies to disclose those risks so that investors can make informed decisions about which businesses they should allocate their capital to. In relation to that, another shortcoming identified in the report was that there was little comparability and reliability between the companies’ disclosures, making it even more difficult for investors to weigh the pros and cons between companies.
Finally, the report provides some recommendations for businesses and for EU policymakers. This includes revising the NFRD so that companies are obliged to disclose information that allows for more effective remediation activities and more informed investment.
BlackRock not walking the talk
BlackRock — the world’s largest asset manager — has been accused of hypocrisy after it refused to back “landmark environmental resolutions” at two large Australian oil companies. This is particularly strange considering BlackRock has stated that climate change represents a huge risk to markets, with its CEO Larry Fink writing a letter about purpose-driven business being key and stating it would exit investments with high environmental risks like coal (although, coal is waning anyway, aside from in Asia, so that’s a pretty modest step).
In terms of this particular issue, BlackRock is being accused of double standards because in spite of all it’s big talk, it voted against resolutions calling for Woodside Energy and Santos (the Australian oil companies) to set targets in line with the Paris agreement. What’s really frustrating, besides the fact that BlackRock is not walking the talk, is that 43% of the other investors supported the resolution for Santos and more than 50% backed a similar motion at Woodside. This support comes as a result of the Australian bushfires, which have caused increased scrutiny over how big investors hold companies to account for their climate change impacts.
BlackRock claims that its refusal to back these resolutions was based on the fact that the oil companies were not responsive enough to investor concerns and that the scope 3 element (customer emissions) was too complex to have defined and implementable targets… hmm.
Either way, it’s disheartening for those of us who have read Larry Fink’s letters filled with promises to then read that BlackRock rarely acts on environmental issues, with votes displaying a “distinct lack of awareness.”
Lack of recycling and the plummeting of oil prices is disrupting supply chains
With less overall recycling due to government actions, including lockdowns and suspended economic activities, there are fewer recyclables in the supply chain to make products. For instance, toilet paper manufacturers lost access to cheap recycled office paper for their toilet rolls and had to switch to virgin pulp sourced directly from trees.
Other industries, like food, packaging and e-commerce, all rely on recycled inputs for their products to save money and energy. (Did you know that around 40% of the world’s raw-material needs are now met via recycling?)
Although there is certainly the option of using household recycling, the problem still stands that such recycling facilities have diminished in capacity, plus the goods from home recycling bins are dirtier than those sorted in offices, retailers and businesses. Also, they are more expensive to collect, requiring trucks to stop at several households versus a few businesses, and more expensive to sort into commodity-grade packages.
Another problem is that with the significant drop in oil prices, the value of recycled materials has diminished in relation to new virgin plastics. As such, using oil as a feedstock is far cheaper and thus more attractive to businesses.
We’re hopeful that processes will return to normal soon and that businesses will not be tempted to replace their recycled inputs with virgin ones.
Photo: GETTY IMAGES
FEELING HOPEFUL
L’Oréal launches €150m social and environmental fund to support coronavirus response, restore ecosystems and promote the circular economy
In response to Covid-19, L’Oréal has launched a €150m social and environmental fund as a “solidarity programme”. The programme, called L’Oréal for the Future, will have €50m going to support women that are disproportionately affected by the crisis — including job loss and risk of domestic and sexual abuse. L’Oréal has chosen to ameliorate the major problems that (mainly) women are facing during lockdown (a 20% increase in domestic violence) — an important show of solidarity from the beauty company.
The remaining €100m of the fund will go to regenerating the natural environment. Half will go to financing marine and forest ecosystem restoration projects and the other half will go to promoting and developing solutions around the circular economy. The more general environmental fund will restore one million hectares of degraded ecosystems and will be creating new social and economic development, as well as capturing 15 to 20 million tonnes of CO2 by 2030. The circular economy side of the fund is interesting because it will help L’Oréal, along with other businesses, integrate more circular business models.
This L’Oréal for the Future fund is interesting insofar as it supports the company’s main customer base: women. In terms of the environment, it restores global marine and forest ecosystems — which is important considering the volume of natural resources the company requires to produce its goods. Finally, by supporting the circular economy, the fund develops the company’s own circular capacity, as well as the general economy’s. This multi-faceted approach is a show of strength from a company that already exceeds its large competitors’ sustainability efforts; it is one of the few companies that has been awarded three “A”s by the CDP.
Oatly is electrifying its transport and distribution in Sweden
Just when you thought that it was impossible (financially and technically) to green a company’s fleet, Oatly has proved us wrong. The oat drink company has announced a partnership with EV start-up Einride in Sweden, in which Oatly will be distributing its drinks with electric trucks. This is predicted to reduce the carbon footprint generated between Oatly’s factory and intermediary destinations by 87%. This partnership will make Oatly “one of the first companies to electrify transportation on commercial routes.” Amazing!!!
Other companies will hopefully be following suit in the coming years, especially considering the €60bn worth of investment to produce EVs and batteries that Europe got last year as a result of stricter CO2 targets. Ideally, this investment will also help make the production of EV’s, the type of energy used to charge them and the cobalt dangerously extracted in the Congo — dubbed as the “blood diamond of batteries”, more sustainable.
Finally, just a last note on Oatly: we love them for the delicious drinks they produce, but also for their continuous efforts to innovate and reduce their environmental impact. As Simon Broadbent, Oatly’s supply chain director, states, “sustainability is at the core of everything we do.” We also love the fact that the company is always very attentive to their consumers’ needs and demands. For instance, you can read our insta post about how they remediated their vegan consumers’ qualms about the residue oat fibres they were sending to local pig farms as feed.
Finally a bioplastic we can actually praise and that is backed by big companies.
“All-plant” bottles are on their way! Carlsberg, Coca-Cola, Danone and other large companies are backing a Dutch biochemical company called Avantium which makes bioplastics. This isn’t your average bioplastic though!
Firstly, the bioplastic, called PEF, is 100% plant-based, and (this is where it gets interesting) 100% recyclable. The recyclability element is really important since other non-recyclable bioplastics contaminate the plastic recycling stream and harm recycling infrastructure. Another awesome part about it being recyclable is that people are more likely to recycle and to have access to recycling facilities, rather than compost. The latter would need to be industrially composted, which is challenging as there are very few existing facilities and processes in place to support this. Of course, it’s also important to mention that the bioplastic can decompose in a composter after 1 year or will take a few years longer to decompose in the natural environment.
Secondly, it’s important to question how the plant materials used in creating the plastic were sourced. A problem for bioplastics is that they use food crops — an issue for food security — or intensively grown crops. These crops are sometimes worse than virgin/petroleum-based plastics considering the land-use change needed and polluting fertilisers used in farming. Instead, Avantium is able to unlock the glucose needed for bioplastics with non-food agricultural and forestry residues such as wood chips, wheat straw or corn stover.
Hopefully we’ll soon be able to sip some Carlsberg pilsner in a cardboard bottle lined with Avantium’s plant plastic. One step closer to getting our guilt-free drank on!
Photo: Avantium
