Environmental Factors Flashcards
planetary boundaries- processes that regulate the stability and resilience of the earth system
4/9 planetary boundaries have been crossed as a result of human activity:
- climate change
- loss of biosphere integrity
- land-system change
- altered biogeochemical cycles
environmental issues:
a. climate change
b. pressure on natural resources
c. pollution, waste and a circular economy
Climate change
one of the most complex issue facing us today and involves many different dimension, including:
- science
- economics
- society
- politics
- moral and ethical questions
main man-driver: rising emission of greenhouse gases
IPCC intergovernmental panel on climate change in 2018 estimated human activities caused approx. 2C of global warming above pre-industrial levels
global warming is likely to reach 1.5c between 2030-2052.
limiting warming to 1.5 instead of 2 by the end of this century could reduce ‘climate-related risks to health, livelihoods, food security, water supply, human security and economic growth’
dismal 惨淡theorem - martin weitzman
std cost-benefit analysis is inadequate to deal with the potential downside losses from climate change.
Economist Nicholas Stern argued that moral considerations warrant the use of low discount rate when assess future climate damages
thrust of stem and weitzaman arguments is that
the issue of how much society should invest today in order to safeguard a livable climate in the future requires a different- mathematical and ethical - treatment to std economic problems like “would you prefer to receive 10 today or 100 in one year”.
responding to climate change in 2 main approaches:
- reducing and stabilizing the levels of heat-trapping GHGs in the atmosphere
- climate change mitigation - adapting to the climate change already taking place and increasing climate change resilience
(climate change adaptation)
climate change mitigation
human intervention that involves reducing the sources of GHG emission or enhancing the sinks that store these gases.
Goal:
- avoid significant human interference with the climate system
- stabilize GHG levels in a time frame sufficient to allow ecosystems to adapt naturally to climate change
- to ensure that food production is not threatened
- enable economic development to proceed in a sustainable manner
aim of the international Paris Agreement on climate change:
to hold the increase in the global average temperature to well below 2C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5C above pre-industrial levels by the end of the century.
examples of mitigation strategies - adaption and policies to promote sustainability across diff. areas such as:
- Energy deploying renewable energy sources
- Buildings
retrofitting buildings to become more energy efficient and using building materials and equipment that reduce buildings’ carbon footprint
-Transport
adopting more sustainable transportation and infrastructure, particularly in cities, but also decarbonizing shipping, road and air transport.
- land use and forestry
- agriculture
- carbon pricing - implementing carbon reduction policies which penalize heavy emitters and promote GHG emission reductions in the form of either a carbon tax or cap-and-trade mechanism
- industry and manufacturing
the higher the ambition of mitigation policies, the higher the required upfront investment.
2020 UN emission gap report: 3.2c warnmer by the end of this century, even with full implementation of unconditional nationally determined contributions (NDCs) under the paris agreement.
COVID-19 pandemic led to the largest recorded drop in yearly CO2 emission - of circa~ 7%
green pandemic recovery could shave up to 25% off the emissions we would expect to see in 2030 with implementation of uncontaionql NDCs - bring the world close to 2c pathway
Climate change adaptation and resilience
the faster the climate changes, the more challenging it is to adapt.
wold bank aptly 恰如其分 describes adaptation and resilience as ‘two sides of the same coin’.
examples of adaptation strategies include a variety of development plans on how to deal with:
- protecting coastlines and adapting to sea-level rise
- building flood defense
- managing land use and forestry practices
- planning more efficiently for scarce water resources
- developing drought resilient crops 抗干旱的农作物
- protecting energy and public infruasturcture
- developing clean cooling systems
some of the most effective climate policies contribute to both adaptation and mitigation simultaneously
close to half of the global production of iron ore and zinc is estimated to be in areas facing high flood risk
representing 80% of global GDP, cites are heavily exposed to climate change risks in the forms of:
- sea level rise
- extreme weather events, such as flooding and drought
- increase in the spread of tropical diseases
useful best practices of various cities’ climate adaptation strategies include:
- incorporating flood risk into building design and planning for enhanced water absorption rates into city infrastructure
- modeling the impact of natural disasters on energy supply
- analyzing the resiliency to disruption of food supply systems
potential benefits: the Global Commission on Adaptation in 2019 estimated that circa US$2tn of investment in adaption measures would result in an over US$7tn return in avoided costs and other benefits.
Climate bonds Initiative published the 1st Climate Resilience Principles in late 2019
- provide a framework for developing location-specific climate resilience measures and financing them in the green bond market
a frame and principles for climate resilience metrics in financing operations
which provide guidance on how to create effective climate resilience projects and how to measure direct outcomes and wider system impacts
Pressures on natural resources
relationship b/w businesses and natural resources is becoming increasing important due to dramatically accelerating biodiversity loss and less secure access to nature resources.
Natural resources cover:
fresh water
biodiversity loss
land use
forestry and marine resources
gov’t and business are having to deal with increased pressure on natural resources, caused by:
- population growth
- health improvements leading to people living longer
- economic growth
- the accompanying increased consumption in developed and emerging economics
leading to risk of resource scarcity
Depletion消耗 of natural resources
tech innovating and moving from a linear to a circular economy has the potential to reduce the need for virgin resources.
Jevons paradox
relative improvements in efficiency may be offset by increased consumption of a given product.
clean energy technologies generally require more minerals than fossil fuel-based couterparts.
EV uses 5 times as much mineals as a conventional car and an onshore wind plant requires 8 times as much minerals as a gas-fire plant of the same capacity.
water
70% of the planet is cover
only 2.5% of fresh water
water scarcity is the lack of fresh water resources to meet water demand.
Biodiversity loss 生物多样性
variability among living organisms from all sources including, among other things, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of the ecosystems.
landmark report Biodiversity and Ecosystem services IPEBES
- human have impacted over 75% of earth’s land areas and 66% of the oceans.
caused by a combined result of land and sea use change, direct exploitation, climate change and pollution.
major driver of decline to wild life population loss 68% since 1970 -
loss of habitat linked to overexploitation
econsystem services provided by bodiversity:
food clean water genetic resources flood protection nutrient cycling climate regulation, amongst among others
Natural capital
the world’s stocks of natural assets which include geology, soil, air, water and all living things.
It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.
intrinsic value of biodiversity
the ideas that the beauty of nature is worth preserving and that mankind and other species should strive for a harmonious co-existence have been a mainstay of many cultures, religions and belief systems.
land-use change resulting from agricultural expansion, logging, infrastructure development and other human activities is the most common driver of infectious disease emergence
conserving nature and improving the sustainable use of nature resources is possible, but can only be achieved through transformative changes across economic, social, political and technological factors.
land use and forestry - agriculture, forestry and other land use (AFOLU)
this sector is responsible for 23% of total net anthropogenic emissions, mainly from deforestation, and agricultural emissions from livestock, soil and nutrient management.
key driver of deforestation - production of commodities
responsible for up to 2/3
companies with exposure to deforestation in their supply chains may face materialfinancial 物质金融risks:
supply disruption
cost volatility
reputational damage
shifting business practice to adopt more sustainable land management approaches contributes to:
- agricultural and economic development, both locally and globally
- the health and stability of forests and ecosystems, and the continued provision of ecosystem services at an increasing scale
- the reduction of GHG emissions from deforestation and degradation
sustainably managed land resources and protection,
positively affect biodiversity, ecosystems and all the natural resources that underpin economic growth and human flourishing.
Marin resources
ocean absob 50 times more CO2 than atmosphere
largest carbon sink
Blue economy
oceans’ resources are a source of economic growth and are also known as the blue economy
sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.
Planet tracker estimates that the typical seafood processor can double its EBIT margin, currently low at 3%
mainly due to lower recall, product waster and legal costs.
pollution, waster and a circular economy air pollution
increased air pollution:
- adversely affects the environment
- has a negative impact on human health
- destroys ecosystems
- impoverishes biodiversity
- reduces crop harvests as a result of soil acidification
indoor and outdoor air pollution are responsible for more than 1/10 of all deaths globally each year, according to World Health Organization (WHO)
90% of world’s population live in areas with levels of air pollution that exceed WHO guidelines
pollution is the largest environmental cause of disease and premature death in the world today
16% of all deaths worldwide
15 times more than all wars/violence
3 times more than AIDs
Water pollution
most serious environmental threats faced
global commitment by companies led by Ellen MacArthur Foundation and the UN environment programme UNEP has set a benchmark for ‘best practices’ to address the plastic waste and pollution system
the international criminal police organization INTERPOL has also started tracking criminal trends in the global plastic waste market
Circular economy
economic model that aims to avoid waste and to preserve the value of resources for as long as possible. based on 3 principles: - design out waste and pollution - keep products and materials in use - regenerate natural systems
apply strategies in just five key areas cement aluminum steel plastics food can eliminate almost half of these remaining emissions
gov’t of Netherlands has developed a programme for a circular economy, aimed at:
preventing waste by making products and materials more efficiently and reusing them
If new raw materials are needed, they must be obtained sustainably so that the natural and human environment is not damaged.
due to difficulty in valuing and measuring natural resources
detrimental impacts不利影响 have not been fully pried into the costs of doing business
if such costs were to be fully internalized by businesses or their investors, there could be significant market disruptions.
physical risk to financial system
-may lead to full-scale bankruptcy
lower property/corp asset value
lower household wealth
market losses
credit losses
steeming from more frequent/severe weather events such as flooding, droughts and storms
costs are rising: inflation-adjusted losses from extreme weather events have increased fivefold 5times in recent decades.
significant macroeconomic effects:
knock-on effect on overall spending in the economy
transitional risks as world shifts towards a low-carbon ecnomy
policy, tech, consumer preference
lower corp. profits more litigation
lower growth and productivity affecting financial conditions
underwriting losses
operational risk
economy face big shifts in asset values or higher costs of doing businesses
including:
- policy risks
increased emissions regulation and environmental standards - legal risks
lawsuits claiming damages from equities believed to be liable for their contribution to climate change - technology risks
low carbon innovations distrupting established industries
GRI global reporting initiative
global sustainability reporting framework, explains the causes of direct and indirect impacts and dependencies of businesses on biodiversity resources
direct impact:
- degraded land is converted for the benefit of production activities
- surface water is used for irrigation purposes
- toxic materials are released
- local species are disturbed through the noise and light produced at a processing site.
indirect impact:
caused by supply chain, triggered from operation
difficult to predict and manage
impact can be negative or positive
negative: degrading the quality or quantity of biodiversity
positive - creating a net contribution to the quality or quantity of biodiversity
negatively affect biodiversity secotors:
- agriculture, aquaculture, fisheries, food production
- extractives, infrastructure and activities or projects involving large scale construction work
- fast-moving consumer goods companies
- forestry
- pharmaceutical
- tourism and hospitality
- utilities, including those involved in hydropower or open-cycle power plants generating significant thermal discharges
supply, operational and resource management issues
environmental impacts from direct operations can include:
- toxic waste
- water pollution
- loss of biodiversity
- deforestation
- LT damage to ecosystems
- Water scarcity
- hazardous air emissions and high GHG emissions
- Energy use
UK Gov Environmental reporting guidelines in March 2019 emphasises
the use of environment key performance indicators (KPI) to capture the link between environmental and financial performance
March 2019 EU commission adopted Circular Economy Action Plan
to address the challenges of climate change and pressures on natural resources as well as ecosystems.
Non-financial reporting directive introduced the concept of ‘double materiality’
asking company’s activities on climate change and the environment, stipulating that companies should consider their whole value chain, both upstream in the supply-chain and downstream.
Supply chain transparency and traceability可追溯性
traceability is a useful practice to identify and trace the history, distribution, location and application of products, parts and materials.
complex and/or high-risk supply chain:
- oil and gas
- mining
- beef
- cocoa
- cotton
- fisheries
- leather
- palm oil
- agriculture
- forestry
main environmental risks in the supply chain include:
material toxicity and chemicals raw material use recyclability and end-of-life product GHG emissions energy use water use and wastewater treatment air pollution biodiversity deforestation
think-tank, planet tracker, est. the deforestation risks a
are rising in ETFs, according to 2020 report exchange traded deforestation.
investors should access whether a company in their portfolio has policies and systems in place which:
- clearly explain the environmental/social requirements that suppliers are expected to meet via a procurement 采购policy
- enable it to assess environmental/social risks throughout its supply chain and discuss whether it has a mechanism in place to improve poor practices
Sustainability consortium 财团 TSC
build a set of performance indicators and a reporting system that highlights sustainability hotspots for more than 100 consumer-product categories, covering 80-90% of the impact of consumer products
WWF offer more than 50 perf. indicators
for measuring the supply-chain risks associated with the production of a range of commodities, as well as the probabilty and severity of those risks
