Podcast by Mik Aidt on 19 July 2020:
The Sustainable Business Hour
About how quickly the story in the global business community is changing at the moment – and in that regard, from a Geelong perspective: also about why Viva Energy’s and Richard Marles’ ideas about investing money in gas increasingly looks like a very bad idea.
Fossils going down
BP will write down the value of its assets by as much as $17.5 billion in the second quarter of 2020 — some 20 per cent of its market capitalisation, because a number of BP’s assets are simply no longer economic.
Big Oil’s predicament is an extreme example of the challenge facing every corporation as economies move to a low-carbon future, wrote the editorial board of Financial Times:
→ Financial Times – 16 June 2020:
Big Oil faces up to a future beyond petroleum
“The pandemic is set to accelerate the shift away from fossil fuels”
Compare that development with what is happening for the Danish energy company Ørsted. Ten years ago Ørsted was one the most fossil fuel intense energy companies in Europe. Today, the company has cut its emissions by 86 per cent and is ranked the most sustainable energy company in the world. As the graph shows, Ørsted’s share value keep rising, while BP’s is tumbling down.
Ørsted’s communication advisor says he can see no reason why other power companies should not set out on a similar journey.
”What we have tried to do over the past ten years is to radically transform our business. We have gone from being a traditional energy company, which had interest in coal, oil and gas, to become one of the largest renewable energy companies in the world, with 90 per cent of our revenues coming from renewable energy assets”, Devapriyo Das, Senior Communication Advisor for Sustainability at Ørsted, told the audience during an online panel discussion.
Headquartered in Denmark, Ørsted employs 6,500 people. In 2019, the group’s revenue was 9.1 billion euro.
In the United Kingdom, 20 major retailers, including M&S, Next and Boots, have pledged to hit net-zero emissions before the UK target of 2050. This target includes the supply chain, so there will be increased pressure on manufacturers of consumer goods to tackle their carbon footprint.
Germany announced earlier this year that it is now shutting down its coal industry for good. The Germans also have a plan for how they will do that without sacking a single worker.
Meanwhile in Australia, despite committing to the Paris agreement, Australia’s big four banks have loaned $7 billion to 33 new fossil fuel expansions, cancelling out the national emissions reduction target 21 times over. These projects will be adding 9 billion tonnes of CO2 into the atmosphere over their lifetime. And an economic taskforce advising the Morrison government has made recommendations calling on taxpayers to underwrite a massive expansion of the domestic gas industry.
The gas deception
We’ve just had a Black Summer which killed close to 500 Australians. The current heatwave in Siberia is yet another dire warning. Once the melting methane in the Arctic starts filling the atmosphere, it’s game over, say the scientists. The scary 1.5°C threshold could be passed in just four years now. We are frying the planet.
Yet Labor politicians such as Richard Marles tell us they are “in favour of gas”, and all of them saying that “coal will be part of the energy mix for many years to come,” while even the Victorian government, which has talked a lot about addressing the climate crisis, are opening new gas fields and experimenting with how to use coal to produce hydrogen.
Geelong Chamber of Commerce is – sponsored by Viva Energy – spruiking the Geelong Refinery’s new gas project at a zoom event this week. As if gas is not a fossil fuel and just as climate destructive as coal.
The current narrative among politicians, and business people, and media in Australia about gas and coal shows a complete lack of commitment to real solutions. We have to start talking honestly about what is necessary to get our nation on track with what climate scientists say is required now which not only includes not putting any more greenhouse gasses up there, it means using the carbon drawdown methods which exist.
One way a business owner can get properly started on that journey towards zero carbon is by declaring a climate emergency.
In Australia, a lot of architects and architect companies have done that, and now the builders are joining them – there’s now a website where builders can sign up to the campaign, “Australian Builders Declare Climate & Biodiversity Emergency”.
On the website www.businessdeclares.com you can find recourses and a guide book – they call it a ‘playbook’ for businesses that want to declare.
In the UK, there is a network of more than 30 companies that have declared a climate and ecological emergency, there is even an energy company among them.
The writing on the wall
In June, Unilever launched a new Climate Plan to put Carbon Labels on 70,000 of the products they sell. A Carbon Label! Once this become the norm, if you are a business, and you haven’t thought about your carbon emissions, you will miss out on business – it’s as simple as that.
That’s what Unilever can see coming now: “We are clearly seeing that consumers want to know how the products they buy contribute to their own carbon footprint,” says Marc Engel, Unilever’s global head of supply chain.
This is the writing on the wall. Keeping your head in the sand or thinking that climate and carbon is something somebody else will have to look after is a recipe for collapse. The longer you leave it, the less likely that you’ll make it.
“Unilever NV is releasing a new set of climate goals that make it the most ambitious of any consumer goods company tackling carbon emissions. The maker of Dove skincare, Colman’s mustard, and Q-tips cotton swabs now aims to zero out all emissions from its own operations and those of its suppliers by 2039. More than that, it’s going to show its work: each of the company’s 70,000 products will show on their labels how much greenhouse gas was emitted in the process of manufacturing and shipping them to consumers. The company, which emits about 100 million metric tons of carbon dioxide annually, is also committing to invest €1 billion ($1.1 billion) in climate-friendly initiatives over the next decade.”
→ Bloomberg – 15 June 2020:
Unilever’s New Climate Plan Puts Carbon Labels on 70,000 Products
“The consumer giant is committing to reduce a large portion of its emissions to zero by 2039.”
“When people look at the environment, look at the world, and say “Oh, everything is fine,” it makes me think of a friend of mine. He was a heroin addict and an alcoholic. And he was a pretty happy heroin addict and alcoholic. One day he got into his car. He had been shooting up and he had been drinking… He got into his car, he had some friends in the car, and he was driving… No one was wearing their seat bealt. I think you see where this is going. And if you would ask him and his friends, as they were in this car, listening to music, going 100 miles an hour on the freeway, how they felt, they’d be like: “We feel great. Everything is fine.”
Ask them three seconds later when they were in a huge accident. He lost his legs and two of his friends died.
And how do I convince you that you are that heroin addict alcoholic in the car, driving without a seatbelt? Because right now you think things are fine, I think things are fine. But I can guarantee you: they are not!”
~ Moby, musician, in the documentary film ‘Endgame 2050’, May 2020
→ Climate Action – 16 July 2020:
Rising to the Net-Zero Challenge
“As we emerge from lockdown following the global health crisis, can leaders from across all sectors rise to the challenge of greening the recovery? On 16 July, Shell UK, Greenpeace and the Green Alliance shared the virtual stage to debate how industries can still rise to the challenge of greening the recovery. Whilst these three organisations have not always shared the same vision, are their strategies now more aligned than they once were?”
“Let’s be clear: we are heading towards disaster.”
~ John Sauven, Executive Director, Greenpeace UK
“We are crystal clear: the first thing we have to do is to avoid emissions.”
~ Sinead Lynch, UK Country Chair, Shell UK
→ Energy Magazine – 20 April 2020:
Shell announces net zero target by 2050
“Oil-giant Royal Dutch Shell has announced its commitment to becoming a net-zero company by 2050. Shell will aim to reduce the net carbon footprint of its energy products by around 65 percent by 2050, and by 30 percent by 2035.”
→ The Guardian – 13 February 2020:
BP sets net zero carbon target for 2050
“New CEO Bernard Looney reveals plan to invest more in low-carbon businesses.”
Listen to Keeyong Chung, Director General for Climate Change, Energy, Environment and Scientific Affairs at the Ministry of Foreign Affairs, Republic of Korea, in this in WRI zoominar. He starts at 36 min.
“We can make wiser decisions,” says Zac Goldsmith, Minister for the Environment for the United Kingdom, as he talks about how his government is responding to both the Covid-19 crisis and the climate emergency. He starts at 12 min.
Damilola Ogunbiyi, CEO of Sustainable Energy for All, Special Representative of the UN Secretary General and Co-Chair of UN-Energy, gives a good overview about the current situation for renewable energy – at 42 min.
The WRI Clean Resilient Recovery zoominar took place on 7 July 2020 under the title “Building a Clean and Resilient Recovery from the COVID-19 Crisis”.
→ The Guardian – 8 July 2020:
Australian banks ‘undermining Paris agreement’ with $7bn in fossil fuel loans
“Exclusive: Australia’s big four banks have loaned $7bn to 33 new or expansionary fossil fuel projects between 2016 and 2019, analysis finds.”
→ Financial Review – 7 July 2020:
Big banks accused of climate hypocrisy
“The big four banks are being accused of hypocrisy for continuing to lend billions of dollars to fossil fuel companies while pledging their support to the Paris Agreement. Since 2016, Commonwealth Bank, Westpac, NAB and ANZ collectively lent $35.5 billion to coal, oil and gas projects, according to analysis by Friends of the Earth affiliate Market Forces.”
→ Michael West Media – 3 July 2020:
A Savage Call: energy tsar calls time on Australia’s gas cartel
“The Government and its Covid Commission are pushing a $6 billion gas pipeline while new energy regulator, Clare Savage, calls into question the future of the gas networks. Meanwhile Australians still pay more for gas than customers overseas pay for Australian gas.”
→ The Australian – 9 July 2020:
We need coal to fire up the economy
“The fight isn’t about renewables or fossil fuels, it’s about renewables and fossil fuels.”
→ ABC News | Foreign Correspondent – 18 February 2020:
Germany is shutting down its coal industry for good, so far without sacking a single worker
“Germany has struck a deal to retire its remaining brown coal mines and power plants.”
THE GUARDIAN – 18 JUNE 2020:
“The world has only six months in which to change the course of the climate crisis and prevent a post-lockdown rebound in greenhouse gas emissions that would overwhelm efforts to stave off climate catastrophe, one of the world’s foremost energy experts has warned.
“This year is the last time we have, if we are not to see a carbon rebound,” said Fatih Birol, executive director of the International Energy Agency.
Governments are planning to spend $9 trillion globally in the next few months on rescuing their economies from the coronavirus crisis, the IEA has calculated. The stimulus packages created this year will determine the shape of the global economy for the next three years, according to Birol, and within that time emissions must start to fall sharply and permanently, or climate targets will be out of reach.
“The next three years will determine the course of the next 30 years and beyond,” Birol told the Guardian. “If we do not [take action] we will surely see a rebound in emissions. If emissions rebound, it is very difficult to see how they will be brought down in future. This is why we are urging governments to have sustainable recovery packages.”
A report published by the IEA – the world’s gold standard for energy analysis – set out the first global blueprint for a green recovery, focusing on reforms to energy generation and consumption. Wind and solar power should be a top focus, the report advised, alongside energy efficiency improvements to buildings and industries, and the modernisation of electricity grids.
Creating jobs must be the priority for countries where millions have been thrown into unemployment by the impacts of the Covid-19 pandemic and ensuing lockdowns. The IEA’s analysis shows that targeting green jobs – such as retrofitting buildings to make them more energy efficient, putting up solar panels and constructing wind farms – is more effective than pouring money into the high-carbon economy.”
→ Read the full article in The Guardian
Globally, getting rid of fossil fuels and building back in a green, net-zero compiant way is gaining momentum, with some of the biggest players in the business world taking the lead:
→ World Economic Forum:
The Great Reset
→ McKinsey & Company:
Climate Change — Our Insights
“The socioeconomic effects of a changing climate will be large and often unpredictable. Governments, businesses, and other organizations will have to address the crisis in different and often collaborative ways. This shared crisis demands a shared response. Leaders and their organizations will have to try to mitigate the effects of climate change even as they adapt to the new reality it imposes on our physical world. To do so, leaders must understand the new climate reality and its potential impact on their organizations in different locales around the world.”
~ McKinsey & Company, global management consulting firm with 34,000 employees, advising leading businesses, governments, and institutions in 120 countries.
→ McKinsey & Company – 15 May 2020:
Confronting climate risk
“The changing climate is poised to create a wide array of economic, business, and social risks over the next three decades. Leaders should start integrating climate risk into their decision making now.”
→ Vice – 17 June 2020:
COVID-19 Broke the Economy. What If We Don’t Fix It?
“Instead of reopening society for the sake of the economy, what if we continued to work less, buy less, make less—for the sake of the planet?”
With over 50 Governors of central banks, finance ministers for climate change and CEOs from some of the largest finance organisations, it’s the first time that all three key entities have joined together and highlighted that climate risks need to be addressed through finance.
In the 15-minute presentation Steve Waygood highlights some of the key goals for the platform, including the need to ensure a company’s cost of capital genuinely reflects their impact on climate and society. Click here to access the presentation – and discover whether your company could help support this platform.
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