Report Report: Toxic air, ride sharing, carbon removal and rating the raters
A wrap-up of recent research on sustainable business and the clean economy.
The Report Report is a periodic article 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.
2019 Corporate Human Rights Benchmark (APG, Aviva Investors, Business & Human Rights Resource Centre, Eiris Foundation, Institute for Human Rights and Business, Nordea and VBDO) analyzes 200 companies from the agricultural products, apparel, extractives and ICT manufacturing industries and ranks them based on their human rights performance. Top performers included Unilever, Marks & Spencer, Adidas, Rio Tinto, BHP Billiton, Freeport McMoRan and Repsol.
A Future for the World’s Children? (World Health Organization, UNICEF and The Lancet) features a new global index that ranks 180 countries based on their performance across three measures: child flourishing; sustainability; and equity. The report gave the highest scores on child flourishing to Norway, the Republic of Korea and the Netherlands.
Banking on Climate Change 2020 (Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance and the Sierra Club) finds that 35 global banks have provided more than $2.7 trillion to fossil fuel companies since the adoption of the Paris climate accord at the end of 2015. The top five biggest global bankers of fossil fuels since 2016:
- JPMorgan Chase ($268.6 billion)
- Wells Fargo ($197.9 billion)
- Citi ($187.7 billion)
- Bank of America ($156.9 billion)
- RBC ($140.7 billion)
COVID-19: Facts and Insights (McKinsey & Co.) provides business leaders with a perspective on the evolving COVID-19 situation and implications for their companies. The report also includes example measures that organizations have deployed to protect their employees and stabilize their supply chain.
Doubling Down: Europe's Low-Carbon Investment Opportunity (CDP) finds that 882 companies — representing about 76 percent of Europe’s market capitalization — reported $136 billion in new low-carbon investments in 2019. However, the report finds that low-carbon capital investment must double to put the European corporate sector on track for net-zero emissions by 2050.
The Drawdown Review (Project Drawdown) provides an update to Project Drawdown’s assessment of climate solutions, which aim to move the world toward "Drawdown" — the future point in time when levels of greenhouse gases in the atmosphere stop climbing and start to steadily decline. The Review also includes 10 key insights to help make Project Drawdown’s essential messages of work clear, direct and easy for others to communicate.
Forest 500 (Global Canopy) finds that 40 percent of the most influential companies in forest-risk supply chains and 68 percent of the financial institutions analyzed have not made public commitments to prevent deforestation in their supply chains or in the companies they finance. The report also finds that only 25 percent of companies and 19 percent of the financial institutions analyzed have deforestation commitments related to all the commodities they produce, source or finance.
Rate the Raters 2020 (SustainAbility) offers insight into how investors use corporate ESG data to inform their decision-making and which ratings investors find most useful when gathering ESG data. Key findings include:
- The ratings most favored by investors were MSCI and Sustainalytics, primarily because of their broad coverage. CDP and Institutional Shareholder Services (ISS) also were frequently mentioned for quality and usefulness.
- Nearly all investors interviewed described sophisticated approaches to ESG analysis, where ratings inform rather than drive investment decision-making. Several have developed their own KPIs, tools, processes and scores to fully evaluate corporate ESG performance.
- The top four most useful sources of corporate ESG information were: corporate ESG ratings; direct engagement with companies; corporate sustainability reports; and in-house research.
Ride-Hailing’s Climate Risks: Steering a Growing Industry toward a Clean Transportation Future (Union of Concerned Scientists) estimates that a non-pooled ride-hailing trip is 47 percent more polluting than a private car ride. However, the report finds that a pooled ride-hailing trip in an electric vehicle can cut emissions by 68 percent compared with a private vehicle trip in the average car.
State of Transition Report 2020 (Transition Pathway Initiative) assesses the state of the transition of 238 of the world’s highest-emitting, publicly listed companies towards a low-carbon economy. Key findings include:
- More than 80 percent of the highest-emitting listed companies remain off track for a 2 degrees Celsius world.
- 29 percent of companies have improved their governance of climate-related risks, but 9 percent have regressed in the past year.
- Across all sectors, average emissions intensity is falling by 1.9 percent annually.
- 56 percent of companies disclose support for international climate efforts such as the Paris Agreement, but only 40 percent have incorporated climate change risks and opportunities in their strategy.
- 31 percent of companies disclose an internal carbon price.
- 26 percent disclose climate scenario planning, as recommended by Task Force on Climate-related Financial Disclosures (TCFD).
- 36 percent of European companies are aligned with 2 degrees C or below, compared with 16 percent of North American companies, 10 percent of Japanese companies, 5 percent of Chinese companies and 0 percent of Russian or African companies.
Sustainable Development Goals: A Misunderstood Market Opportunity? (Trucost) finds that the United Nations Sustainable Development Goal (SDG) actions reported by S&P 500 companies are not aligned with the goals that are most material to their business. The report finds that S&P 500 companies have the highest risk exposure to SDG 17: Partnership for the Goals, SDG 15: Life on Land, SDG 6: Clean Water and Sanitation and SDG 13: Climate Action. The top four SDGs in company reporting are SDG 3: Good Health and Well-Being; SDG 8: Decent Work and Economic Growth; SDG 12: Responsible Consumption and Production; and SDG 13: Climate Action.
Sustainable Energy in America Factbook 2020 (Bloomberg New Energy Finance and the Business Council for Sustainable Energy) finds that renewable energy generation increased by 77 percent and renewable power-generating capacity more than doubled in the United States since 2010. The report also finds that domestic natural gas production increased by more than 50 percent since 2010, making the U.S. the world’s top oil and gas producer.
Tackling Climate Change: The Role of Banking Regulation and Supervision (Mazars and Official Monetary and Financial Institutions Forum) finds that 70 percent of the 33 central banks and regulatory authorities surveyed consider climate change a "major threat" to financial stability. The report also finds that 55 percent of central banks are monitoring climate risks.
Toxic Air: The Price of Fossil Fuels (Greenpeace) estimates that air pollution from fossil fuels causes about 4.5 million deaths annually around the world and accounts for $2.9 trillion (3.3 percent of global GDP) in global economic losses each year. The report finds that the China Mainland ($900 billion), the United States ($600 billion) and India ($150 billion) face the highest economic impacts from air pollution annually.
The Women Changing California Boardrooms: A Look at the Early Impact of California’s Board Diversity Mandate (KPMG) finds that only 4 percent of public companies headquartered in California had all-male boards at the end of 2019, compared to 29 percent in June 2018. The report also finds that a majority of the female directors would not be considered "overboarded," with 69 percent serving on only one board.