ACCOUNTABILITY – TRANSPARENCY – OPPORTUNITY
In recent months the huge progress in sustainability standards has continued, alongside new promoters, valid push back, along with incentives and regulations. Want a quick round up of major items? Here we go…
- SEC introduces rules to increase disclosures on climate risk and emissions
- Supreme Court challenges EPA authority, Senate challenges green bills
- Biden responds with multi-billion dollar executive order on climate support
- Major brands increasing climate, carbon neutral, and net zero commitments
- Major pushback in entertainment world around ‘greenwashing’ and private travel
From 2023, thousands of businesses will be mandated to report on their greenhouse gas emissions and the risks of climate. SEC regulated companies (and those that work with them) need to get ready
Climate Risk Disclosure Rule
The Securities and Exchange Commission (SEC) proposed a Climate Risk Disclosure Rule where companies must disclose their environmental impact, and how climate change is affecting their business. The SEC is a governmental agency is responsible for overseeing the market and ensuring fairness and prevention of market manipulation. This proposed rule is expected to standardize climate reporting, hold businesses accountable, and make it easier on consumers to find information on a company’s climate impact.
Transparency is a key component of this rule, as climate risks should be considered when buying a stock just the same as any other risks considered when buying a stock. Since the SEC’s focus is to avoid manipulation in the market, communicating a company’s environmental impact is beneficial to ensure honesty on the producer’s side.
A New York Times article states the SEC’s job is to protect investors, which is exactly the goal of this new disclosure rule. More organized reporting means easier decisions for consumers, and a potential business opportunity.
Beyond the Voluntary
The SEC already has a voluntary reporting system which over 90% of Fortune 500 companies participate in. As a voluntary system, reports are not always entirely inclusive, and items can be left out or missing. The proposed disclosure rule would ensure more regulated and consistent reports, as information about what companies do not do well within sustainability is just as important as what they succeed in. The regulation would allow potential and/or current investors to compare different companies impact on and risk from the climate.
CLIMATE REFORM RESISTENCE AND BIDEN’S RESPONSE
US Supreme Court, Senator Manchin, and President Biden
President Biden’s climate agenda has struggled through the recent Supreme Court decision in West Virginia v Environmental Protection Agency and Senator Manchin’s challenge to the original climate and tax package in a divided Senate. Biden responded to the resistance by releasing an executive order focusing on environmental justice and job creation, to not only aid in addressing climate change but the United States economy as well. Gaining momentum, Manchin’s support was then secured in a new updated proposal, which now goes through a tight congress for voting.
What Happened in West Virginia v EPA?
The US Supreme Court rules against the EPA hindering their ability to regulate greenhouse gas emissions
The Supreme Court recent made a decision that limits the Environmental Protection Agency’s (EPA) ability to regulate greenhouse gas emissions. This means the regulations the EPA wanted to implement to cap the amount of greenhouse gas emissions from power plants is no longer an option. This is a huge blow to what tools the EPA can use to measure and reduce carbon emissions.
Manchin – a central character to US climate policy
West Virginian Senator is deciding vote against a global tax reform bill from the OECD, but changes his mind only weeks later…
West Virginia’s democratic senator Joe Manchin rejected a proposed tax reform bill that would be used to tax global companies on their profits to address effects of climate change. Since the Senate is split 50-50, his vote became a swing vote in the bill’s approval. Manchin also said he would vote against other environmental spending or tax projects in the near future citing current inflation as his concern. However, as Forbes notes, an increase in taxes actually lessens inflation. With an increase in taxes, people have less spending money, less money enters the economy, and growth then slows to a controllable rate.
Only a few weeks later, Manchin flips opinion now saying the bill will reduce inflation. Originally, he wanted to wait until inflationary data was released for July, but those numbers are still a few weeks away from being released, raising questions about his sudden reversal. The reformed bill involves healthcare policies and reducing the cost of prescription drugs, alternate energy sources, methane tax, and a tax aspect which seeks to slow the current inflation issue. Combining healthcare reform with the climate package may have been key to Manchin’s vote flip, in addition to a possible promise of natural gas pipelines which Manchin is personally invested in. If the bill, entitled The Inflation Reduction Act of 2022, passes, it is a massive step forward in the United States government’s climate agenda.
Biden’s Response to the Resistance in Climate Change Reform
Biden allocates FEMA money over Congress’s head by executive order to aid in job creation, cooling systems, climate change resistant infrastructure, and disadvantaged communities
$ 2.3 billion dollars are going to be used from the Federal Emergency Management Agency (FEMA) to address effects of the climate crisis. By utilizing money from an emergency agency, the funding conveys the severe and urgent nature of the climate change problem. This money will provide cooling systems for homes and communities in areas disproportionately affected by extreme heat, for low-income Americans, as well as marginalized communities. This emergency funding will be devoted to an issue of ‘environmental justice’: where certain groups and areas are affected more than others by the consequences of climate change.
Job opportunities will arise through an expansion of the wind energy sector. Projects in this expansion include determining the potential for wind power infrastructure in the Gulf of Mexico as well as expanding wind farms in the ocean by several Southeastern states. New workplace standards will be set to protect employees from extreme heat and funds will be dedicated to creating infrastructure (buildings, roads, and other structures) that can handle extreme weather patterns and changing climate.
The next few weeks will see crucial votes and either success or failure through congress on this bill; Veritrove will report back with the latest news later in the Summer.
How a Twitter account is calling out celebrities for their unsustainable private jet usage and the difference between taking a commercial flight for vacation versus a private jet for shopping
A Twitter account entitled, “Celebrity Jets” dives into the world of celebrity transportation, and the concerning pattern of short few minute flights. Major celebrities spanning from Kylie Jenner to Taylor Swift, Drake to Mark Wahlberg, participate in a trend of short flights which is becoming increasingly common among owners of private jets. Carbon emissions add up quicker from short private jet flights rather than a less emissive mode of transportation like car, bus, or train.
Private Flights Put into Perspective
To put the severity of this uptick of private flights into perspective, one of Mark Wahlberg’s flights, lasting only 40 minutes, emitted 4 tons of carbon emissions, equivalent to one person’s carbon footprint for an entire year. The impact from private flights is skewed comparative to commercial flights or other modes of transportation, due to the small number of passengers carried and therefore higher ratios of emissions per individual. One commercial flight which usually take a few hours and carries several hundred passengers produces less emissions per person compared to a private jet with only a few passengers traveling very short distances. With a greater number of celebrities participating, the impact of private jet emissions continues to grow.
FIFA WORLD CUP IN QATAR
The 2022 World Cup claims to be the first carbon neutral event of its history, but the numbers are under challenge from some quarters as misleading.
The 2022 World Cup held in Qatar claims it will be the first carbon neutral World Cup. Any steps towards creating a carbon neutral event are noteworthy. However, FIFA’s claim to a net zero carbon event is now under renewed scrutiny over the reach and definitions of the commitments.
Though much of the stadium in-use impact will be offset (emissions decided only by the time the stadium will be in use), the flights taken by attendees and teams and the emissions produced by the building and maintenance of stadiums is not entirely accounted for leading some commenters to push the organizers for greater action and others calling the ‘carbon neutral’ claim outright misleading.
This is quite the case study of the risks, rewards and importance of setting climate plans and pledges.
CHALLENGES WITH ESG AND CLIMATE PLAN TRENDS
Actual ESG Plans vs Performative, Who is Participating and How To Get it Right
What is the Current Problem with Generic ESG Goals?
ESG, or Environmental, Social, and Governance, is a term used often in sustainability strategies and plans to denote a broad set of goals, priorities and actions (beyond profit) for an organization. The problem with many ESG goals is that many are not specific enough and are subject to scrutiny.
What is Greenwashing, and How to Avoid it
More than “700 large public companies around the world” now have targets to reach net zero emissions; in fact since last year there has been a 68% increase in carbon neutrality goals, but many “aren’t strong enough yet to actually address climate change” and so have been labelled by some dissenters as ‘greenwashing’. Greenwashing occurs when a company puts more effort into appearing sustainable rather than trying to actually be sustainable. Many companies have made broad claims to be carbon neutral by the recommended point of 2050 but often do not have a structured plan of action.
Sustainability is a versatile and changing sector. Plenty of innovation occurs in this realm and it can be difficult to navigate. What Veritrove aims to do is assist businesses with their ESG goals based on their wants and needs. We work with your company to make sustainability plans work for you.
The Importance of Acting Now
Creating a comprehensive and custom sustainability plan can unlock a massive opportunity to win consumers and revenue and protect your brand on greenwashing. These plans can make a company thrive and increase its appeal in an already competitive and innovative economy. Consumers trends and employee preferences are being followed not only by regulations and increasing expectations, but also grants and subsidies to help certain organizations along the way.
Having a sustainability approach that is set by your business and moving ahead of the curve is the best way to lead.