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What will it cost to save the earth’s oceans?

In 2015, 193 countries agreed on 17 global objectives for ending poverty and protecting the environment by 2030. These Sustainable Development Goals (SDGs) included SDG 14, to “conserve and sustainably use the oceans, seas and marine resources for sustainable development.”

A new study by two former diplomats with the CONOW Competence Centre for International Relations published in the journal Marine Policy estimates that to hit the targets needed to achieve this SDG the world must spend $175 billion per year.

Reducing marine pollution will take more than half the money needed, according to the paper. At over $90 billion, that cost includes programs to clean up ocean trash, better manage waste and improve wastewater treatment plants. It also means investing in research on biodegradable plastics, all while working to limit plastic pollution of any kind in the first place.

About one-fifth of the needed funding, the researchers say, is for protecting and restoring wetland ecosystems, coastal habitats, coral reefs and other environments. For wetlands, that could entail setting aside new areas under the Ramsar Convention, an international treaty that aims to conserve wetland wildlife and ecosystem services.

For seaside ecosystems, it could mean investments in integrated coastal management. This approach brings together scientists, managers, community members and other stakeholders to cooperate on unified oversight and administration of activities in coastal areas, aiming to balance competing interests for sustainable development — all while prioritizing the preservation of biological resources and ecosystems.

Other priorities, the study says, are promoting sustainable fishing, directing resources to low-income island countries, supporting efforts to manage fisheries and fight pollution, and dealing with climate change, which acidifies oceans.

To estimate the price tag for achieving the goal, the researchers drew heavily from a 2012 report by countries involved in the Convention on Biological Diversity, an international conservation treaty. The authors adjusted the report’s marine conservation cost estimates for inflation, while noting the high degree of uncertainty for some of the estimates.

Can we make these big investments? While the data are hazy, the researchers estimated that the money pledged right now for ocean conservation totals just about $25 billion yearly. If that uncertain estimate is correct, it leaves an annual funding gap of around $150 billion.

At the United Nations’ first Ocean Conference in 2017, 44 percent of commitments to take action on SDG 14 came from governments, while 20 percent came from non-governmental organizations. Businesses promised just 8 percent.

The biggest commitment was from the European Investment Bank, which committed $8 billion to help small, developing island nations become less vulnerable to climate change.

To bring the needed funding and urgency to SDG 14, the researchers issue 10 recommendations:

  1. Acknowledge how wasteful lifestyles mar our oceans, then shift our culture and consumption in a more sustainable direction.  “For too long we have taken nature for granted, and this needs to stop,” the study states.
  2. Keep SDG 14 on local and international political agendas. The last few years have seen more attention, which is a good development — if it continues.
  3. Invest in institutions that can implement ocean solutions, particularly in developing countries.
  4. Put effort into developing knowledge and technology that builds the capacity to protect ocean health.
  5. Target spending better. This could be accomplished in part by ending the some $20 billion in harmful subsidies to fisheries. At the same time, decision-makers should bring the SDG 14 targets into more development and environmental policymaking.
  6. Scale up traditional funding. Most of the money spent on biodiversity efforts, the report says, come from national governments and international organizations, which could mean big impact if these states and groups up their contributions even further.
  7. Engage the private sector. Businesses might help do their part by paying for ecosystem services or investing in financial innovations like blue bonds.
  8. Get more money from philanthropists, who the research estimates currently contribute just $1 billion per year to ocean health.
  9. Support trust funds dedicated to ocean conservation.
  10. Coordinate overall financial efforts for SDG 14 by working for sustainable ocean financing.

“Our Ocean is vital for our ecosystem and for our economy,” the researchers write. “It provides us with most of the oxygen that we breathe, water that we drink… and is the foundation for an economic activity estimated at around $3 trillion per year.” Given that reality, the price tag of saving the seas seems worth it.

Source: GreenBiz.com
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What will it cost to save the earth’s oceans?

In 2015, 193 countries agreed on 17 global objectives for ending poverty and protecting the environment by 2030. These Sustainable Development Goals (SDGs) included SDG 14, to “conserve and sustainably use the oceans, seas and marine resources for sustainable development.”

A new study by two former diplomats with the CONOW Competence Centre for International Relations published in the journal Marine Policy estimates that to hit the targets needed to achieve this SDG the world must spend $175 billion per year.

Reducing marine pollution will take more than half the money needed, according to the paper. At over $90 billion, that cost includes programs to clean up ocean trash, better manage waste and improve wastewater treatment plants. It also means investing in research on biodegradable plastics, all while working to limit plastic pollution of any kind in the first place.

About one-fifth of the needed funding, the researchers say, is for protecting and restoring wetland ecosystems, coastal habitats, coral reefs and other environments. For wetlands, that could entail setting aside new areas under the Ramsar Convention, an international treaty that aims to conserve wetland wildlife and ecosystem services.

For seaside ecosystems, it could mean investments in integrated coastal management. This approach brings together scientists, managers, community members and other stakeholders to cooperate on unified oversight and administration of activities in coastal areas, aiming to balance competing interests for sustainable development — all while prioritizing the preservation of biological resources and ecosystems.

Other priorities, the study says, are promoting sustainable fishing, directing resources to low-income island countries, supporting efforts to manage fisheries and fight pollution, and dealing with climate change, which acidifies oceans.

To estimate the price tag for achieving the goal, the researchers drew heavily from a 2012 report by countries involved in the Convention on Biological Diversity, an international conservation treaty. The authors adjusted the report’s marine conservation cost estimates for inflation, while noting the high degree of uncertainty for some of the estimates.

Can we make these big investments? While the data are hazy, the researchers estimated that the money pledged right now for ocean conservation totals just about $25 billion yearly. If that uncertain estimate is correct, it leaves an annual funding gap of around $150 billion.

At the United Nations’ first Ocean Conference in 2017, 44 percent of commitments to take action on SDG 14 came from governments, while 20 percent came from non-governmental organizations. Businesses promised just 8 percent.

The biggest commitment was from the European Investment Bank, which committed $8 billion to help small, developing island nations become less vulnerable to climate change.

To bring the needed funding and urgency to SDG 14, the researchers issue 10 recommendations:

  1. Acknowledge how wasteful lifestyles mar our oceans, then shift our culture and consumption in a more sustainable direction.  “For too long we have taken nature for granted, and this needs to stop,” the study states.
  2. Keep SDG 14 on local and international political agendas. The last few years have seen more attention, which is a good development — if it continues.
  3. Invest in institutions that can implement ocean solutions, particularly in developing countries.
  4. Put effort into developing knowledge and technology that builds the capacity to protect ocean health.
  5. Target spending better. This could be accomplished in part by ending the some $20 billion in harmful subsidies to fisheries. At the same time, decision-makers should bring the SDG 14 targets into more development and environmental policymaking.
  6. Scale up traditional funding. Most of the money spent on biodiversity efforts, the report says, come from national governments and international organizations, which could mean big impact if these states and groups up their contributions even further.
  7. Engage the private sector. Businesses might help do their part by paying for ecosystem services or investing in financial innovations like blue bonds.
  8. Get more money from philanthropists, who the research estimates currently contribute just $1 billion per year to ocean health.
  9. Support trust funds dedicated to ocean conservation.
  10. Coordinate overall financial efforts for SDG 14 by working for sustainable ocean financing.

“Our Ocean is vital for our ecosystem and for our economy,” the researchers write. “It provides us with most of the oxygen that we breathe, water that we drink… and is the foundation for an economic activity estimated at around $3 trillion per year.” Given that reality, the price tag of saving the seas seems worth it.

Source: GreenBiz.com
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Mainstreaming blue carbon to finance coastal resilience

Oceans and coastal plant species such as mangroves and seagrasses cover only a small fraction of the earth, but are responsible for sequestering over half of all the carbon captured by living organisms. However, despite being some of the most efficient known carbon sinks, they are also among the ecosystems most threatened by climate change. Threats such as rising sea levels and temperatures, offshore drilling, erosion, and pollution have resulted in the rapid deterioration of coastal and marine areas.

The concept of forest carbon, or the sequestration and storing of carbon by forests, is well known and utilized by voluntary carbon markets and payments through the global Reducing Emissions from Deforestation and Forest Degradation (REDD+) program. However, the critical contribution of marine and coastal ecosystems in carbon sequestration, or “blue carbon,” has only recently begun to gain traction in market-based ecosystem management discussions. These ecosystems are often biodiversity hotspots, and provide essential services such as food security, water quality, shoreline protection, and the provision of livelihoods to coastal communities. They are therefore ideal ecosystems for conservation efforts worldwide.

However, mobilizing capital investments for conservation remains one of the primary obstacles in managing coastal and marine ecosystems. Therefore, blue carbon could be crucial in facilitating both private and public capital investment in these dynamic ecosystems. The blue carbon market is, at present, still nascent. Governments and international institutions are revising methods of monitoring carbon to include blue carbon and develop structures to encourage private investment in blue carbon offsets. This article explores these efforts to facilitate the generation and trade of blue carbon credits.

How is blue carbon different?

Blue carbon is sequestered and stored in coastal and marine ecosystems that include mangroves, tidal marshes and seagrass meadows. In terrestrial ecosystems, carbon credits reflect the storage and sequestration from forests, grasslands, soil and other sources of biomass. However, the carbon stored in coastal ecosystems differs in that biomass accumulates not only from sources like fallen leaves and twigs, but also from organic matter being washed up by the tide. Additionally, this organic matter is covered in saltwater, which inhibits breakdown of the material.

A 2017 study found that this improved preservation of organic material not only allows coasts to keep up with a certain degree of sea level rise through organic matter build-up, but also means that layers of coastal organic matter can be up to six meters deep or more. Terrestrial soil organic matters typically reaches up to 30 centimeter in depth. Because of these deeper organic horizons, per capita carbon stocks in coastal ecosystems are significantly higher.

According to the Blue Carbon Initiative, ecosystems such as mangroves, tidal marshes and seagrass meadows cover only 2-6 percent of the surface area covered by terrestrial forests, but sequester carbon dioxide (CO2) at much higher rates. In fact, it is estimated that mangroves can store up to 1,030 megagrams (Mg) of CO2 equivalent per hectare, and tidal marshes and seagrass meadows can store 920 and 520 Mg of CO2 equivalent per hectare respectively. The degradation or conversion of these ecosystems has led to a subsequent release of an average of 0.15–1.02 billion tons of CO2 annually.

Jennifer Howard, coordinator of the Blue Carbon Policy Working Group run by Conservation International and the International Union for the Conservation of Nature, explained in an interview that when it comes to blue carbon crediting, managers have to account for a much deeper organic horizon. In terrestrial ecosystems, cutting trees means losing the previously sequestered carbon stock that was stored in the trees.

Emission of stored carbon in the trees only occurs if they are cleared and then burned. In coastal ecosystems, ecosystem degradation through cutting down mangroves or draining wetlands leads not only to the loss of previously sequestered carbon, but also active re-emission of the carbon that was trapped in the soil by the saltwater regardless of how the cleared biomass is utilized or disposed.

“Terrestrially, you lose carbon with degradation,” Howard said. “But on the coast, you lose carbon and then become an active emitter.”

Is there a market?

By virtue of being measurable and standardized, blue carbon has the potential to be adopted into regulatory carbon markets across the world. However, blue carbon is still a relatively new concept. At present, existing methods of measuring and monitoring carbon offsets are geared towards terrestrial ecosystems, and do not account for the carbon stored in coastal, marine or wetland soils and biomass. Current efforts are therefore working towards including wetlands in regulatory and monitoring mechanisms so as to create a framework that allows for better methods to account for and trade blue carbon credits.

While some companies, such as Apple and coastal restoration group Blue Ventures, are investing in voluntary markets for blue carbon, the market for private investment is still new. Carbon accounting frameworks need to be modified to facilitate the widespread uptake of blue carbon into the voluntary offset market. Reports suggest that a majority of voluntary corporate carbon offset buyers look for credits that fit with their broader mission as a company, as well as lead to co-benefits such as greater biodiversity and improved community livelihoods.

This suggests that carbon credit buyers from industries such as tourism, oil and gas, and shipping could benefit from blue carbon projects in coastal and marine ecosystems.

Expanding carbon crediting frameworks

There are a number of mechanisms in place to facilitate investment in terrestrial carbon through regulatory markets which could be adapted to include blue carbon.

Traditionally, a majority of the nationally determined contributions (NDCs) at the core of the Paris Agreement on climate change have been through the REDD+ program, which monitors forest degradation and carbon restoration efforts. The revision of NDCs every few years gives regulatory markets the opportunity to improve their methods of monitoring and accounting for carbon emissions, thereby facilitating the trade of these credits. While these mechanisms have historically been focused on forest standards, a report published by the Nicholas Institute of Environmental Policy Solutions lays out the opportunities for integrating wetlands and mangroves into programs like REDD+ as an extension of forest carbon monitoring, an idea that organizations such as the Blue Carbon Initiative and Conservation International are now working towards implementing.

Another avenue for the integration of blue carbon into the NDCs is through the greenhouse gas inventories that monitor the quantity and sources of emissions from each country. An effort led by Stephen Crooks of the Blue Carbon Initiative is now working with the U.S. Environmental Protection Agency (EPA) to include wetlands into the inventories for the United States. The “once in never out” nature of greenhouse gas inventories means that the inclusion of wetlands will ensure that these emissions will at least be monitored consistently over time, which can provide crucial data for the inclusion of blue carbon into regulatory trading markets.

Aiming to assist with this implementation around the world is the International Partnership for Blue Carbon, a group of countries that have partnered with NGOs and academic institutions to provide technical support to countries looking to integrate blue-carbon ecosystems into national monitoring and trading policies.

Blue Ventures’ efforts, for example, could benefit from the integration of blue carbon accounting and trading methods into national policies in Madagascar. Blue Ventures is exploring the use of blue carbon as a long-term financial mechanism for community-based mangrove management in Madagascar. Since 2011, the project has conducted stakeholder consultations and community-developed coastal ecosystem restoration projects, and estimated carbon stocks that could be credited to finance restoration work. Efforts such as these would benefit from nationally recognized carbon accounting methods that include blue carbon in their methodology and account for the carbon that is stored both above and below ground in coastal ecosystems.

According to Howard, blue carbon’s novel nature makes it challenging for a smooth uptake into the market, as many countries and national agencies do not have sufficient experience with carbon project development in coastal and marine ecosystems and lack regional carbon storage and sequestration data.

While blue carbon is beginning to gain recognition by federal agencies such as the United States Fish and Wildlife Service and the EPA, many other agencies around the world still lack the capacity and expertise required to incorporate blue carbon into federal and state policies and regulations. This is where technical support from organizations such as the Blue Carbon Initiative can help address knowledge gaps and assist with the adoption of blue carbon markets.

Addressing investment risks

One concern about investing in blue carbon is that coastal ecosystems are particularly vulnerable to climate change and may be degrading at higher rates than terrestrial ecosystems due to rising sea levels, varying temperatures and coastal land reclamation. However, blue carbon crediting methods are within the Verra verified carbon standards, and therefore include a 15 percent risk-reduction buffer in the amount of credits calculated for a given ecosystem. This 15 percent typically accounts for credits lost to storms, illegal activities and sea level rise. Of course, this buffer may change as models for climate predictions change, but it ensures that blue carbon projects account for the risks associated with climate change in determining their carbon credit value. So while blue carbon markets are yet to mature, existing frameworks for blue carbon accounting can allow for trading and addressing risk.

Another risk when it comes to investing in blue carbon is that in some cases, the cost of conservation and restoration of coastal ecosystems can be higher than the potential income that can be generated from the credits they provide. Blue carbon ecosystems are mostly found close to coastlines and therefore it is hard to reach a scale cost-effective for conservation or restoration projects.

Additionally, if the income from alternative land uses, such as tourism, is higher than the projected income from selling blue carbon credits, the credits by themselves will not be sufficient to justify conservation.

In these cases, blended finance steps in as one potential solution for addressing the risks of participating in blue carbon credit markets. In a project run by Apple and Conservation International in Colombia, for example, credits generated from blue carbon ecosystems are added to a centralized fund, according to Howard. The fund includes contributions from government-allocated funds for development or conservation in the area, as well as other financial streams.

“We’re still figuring out what those [additional streams] are,” Howard said. “They could be from ecotourism and/or fisheries, depending on what industry they want to build around there. So, for instance, that could be a dollar added to every night at the hotel and that dollar then is allocated to the fund.”

The way forward

In May 2019, the Blended Finance Task Force’s investor roundtable agreed that blue carbon could be a crucial pathway for increasing private investment in coastal and marine conservation projects, as it provides a standardized and measurable tool. To make these investments viable, blue carbon revenue streams could be combined with projects such as sustainable fisheries, ecotourism and coastal infrastructure.

While mitigating risk is still a big challenge for coastal projects, collaborations such as the Blue Carbon Initiative, Blue Carbon Policy Working Group, and the International Partnership for Blue Carbon, among others, are working to make this market scalable and expand blue carbon investments beyond their current niche.

Source: GreenBiz.com
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2019 was the year that…

It is always difficult to encapsulate a 12-month period, let alone the 365 turbocharged 24-hour news cycles that seem to have become the new normal. So much happens in the course of a year — from governments, companies, activists and many others — that it all becomes a blur.

That certainly is true in the world of sustainability. From the launch of Loop, the circular economy wunderkind, in January to the colossal failure of COP25 in December, from the burning Arctic and Amazon to the dizzyingly weird weather, it’s another year of ups and downs, reasons for both optimism and despair.

As I have done each year for the past decade, I’ve recently plumbed the more than 1,200 stories, columns and analyses we published on GreenBiz.com since the clock struck 2019, accentuating the positive, seeking signs of progress and hope.

It represents my humble (and possibly futile) attempt to put a happy spin on an otherwise troubling year, and to remind us that whatever forces are stacked against progress in sustainability, there’s a wellspring of encouraging, even exciting developments spearheaded by purposeful, persevering and passionate professionals.

That’s you, dear readers.

Here, in no particular order, are five storylines (and some others) that exemplified the promise and progress of sustainable business during 2019. (All links are to stories published on GreenBiz during the year.)

Ocean health spurred a new wave of activity

Concern over the 71 percent of Earth that’s covered by saltwater crested in 2019. A United Nations report published in September found that the planet’s oceans, snow and ice are in dire trouble, and the damage is causing harm to the people who depend on them.

The issues are many, from the scourge of microplastics and other marine debris to the impacts of oceangoing vessels to the decline of fisheries — not to mention Sustainable Development Goal 14, which calls for conserving and sustainably using ocean resources at all levels.

The value of oceans in mitigating the impacts of climate change may be garnering the most attention, and for good reason. One study pegged the value of coral reefs in providing flood production along the U.S. coast at $1.8 billion a year. A research team at Louisiana State University found that “blue” carbon ecosystems — the area above water at low tide and underwater at high tide — along the world’s coastlines sequester 3 billion metric tons of carbon, more than the planet’s tropical forests.

Oceans also represent a growing business opportunity — the blue economy, as it’s been dubbed — from which fish, seafood, minerals, plants, energy and other goods are being harvested. Whether it’s done sustainably is an open question, but there’s nonetheless a swell of activity. Already, aquaculture is nearly a quarter-trillion-dollar annual industry that employs 20 million people worldwide and feeds nearly half the global population. There’s oceans more where that came from.

Carbontech became a business

Can we make money from thin air while we solve the climate crisis? The notion that technologies can remove and sequester greenhouse gases (GHGs) from the atmosphere is certainly compelling. At least, that’s the premise behind carbontech, a range of products, services and fuels made from captured GHGs.

During 2019, the companies and markets for these products emerged from the conceptual to the commercial. GreenBiz Group launched VERGE Carbon, the first conference on the business of carbon removal, bringing together many of the players of what is expected to become a trillion-dollar market opportunity.

Those markets are still nascent, but we’re beginning to see their potential — everything from soap made from carbon dioxide captured from heating systems to a shipping container that sucks in CO2 and water vapor and turns it into useful hydrocarbons, including gasoline and diesel.

And then there’s the business of carbon farming, where farmers use methods that push more carbon dioxide underground, where it enhances soil while making the soil more productive and resilient. One entrepreneur sees the potential for soil to absorb a trillion tons of GHGs in soil. Another expert suggested planting 1 trillion trees to absorb climate gases.

As you can see, when it comes to carbontech, trillion is the new billion.

Sustainability food systems found a growing appetite

Sustainability in food and agriculture is nothing new, but the topic seems to be setting deep roots thanks to a growing global population, a rise in income leading to people to eat higher on the food chain, the recognition that hundreds of millions working at the ends of agricultural supply chains live below the poverty line, and growing concerns about the impact of climate change on ag — and of ag on the climate.

In 2019, these issues presented themselves in the form of new startups, a shift in farming techniques and new commitments by Big Food companies.

The year saw a new crop of sustainable food production commitments and initiatives from some of the world’s largest food companies. Tyson Foods announced an initiative to accelerate sustainable food production and make its recent climate and land stewardship goals a reality, in part through the large-scale deployment of what’s come to be known as agtech.

Tyson wasn’t alone. Molson Coors, Stonyfield, Campbell Soup and Kellogg are among leading food companies experimenting with different models for motivating growers to adopt new sustainable farming practices. Danone is among a group of 19 multinational food companies planting the seeds for a global push to protect and promote biodiversity. Smithfield Foods, the world’s largest pork producer, is turning pig manure into biogas and renewable natural gas. Indeed, scores of tech companies are seeking to help farmers use data to increase yields and reduce emissions.

There’s good reason for all this. An analysis by the Food and Land use Coalition found up to $4.5 trillion a year in economic benefits by 2030 available to companies that can translate the hidden environmental costs of current systems into new markets and purpose-driven strategies.

Farmers are increasingly dug in, too. In Iowa — a leading global producer of corn, soy, pork, beef, eggs, ethanol, biodiesel, biochemicals and agricultural technology — they are actively working to reduce agricultural inputs while increasing outputs by seeding narrow strips with native prairie plants in and around corn and soybean fields. Their customers — Big Food companies — are advancing changes in a hard-to-change field, leveraging both new technologies and old techniques to help growers preserve biodiversity, protect land and increase climate resilience in an increasingly unstable world.

And then there’s plant-based protein, which hit the mass market in 2019, with alt-meat burgers making their way into fast-food chains and other venues. Part of the interest comes from millennials, a generation that appears more willing than their elders to embrace such innovations.

Again, technology is playing a role — both the synthetic biology enabling plant-based burgers as well as the mainstreaming of hydroponics that can grow food at scale indoors. The initial public offering in May of Beyond Meat, a leading contender, helped build the momentum, as did its stock: By year-end, it roughly had tripled, something investors could sink their teeth into.

Risk and liability became a climate hotspot

Companies and their financial partners appeared in 2019 to more fully embrace the risk to companies from the climate crisis. A small library of reports, surveys and white papers measured and tracked this growing interest, which was accelerated by at least one major corporate casualty.

The January bankruptcy filing by California utility Pacific Gas & Electric started the year. The utility giant’s service area already had suffered devastating wildfires that were deemed to be caused by PG&E’s faulty equipment. The company immediately was called the first corporate climate casualty.

But likely not the last. Indeed, banks, insurers, shareholders and others have begun wondering whether more companies will be held liable for damage caused by the climate crisis. And the impact that might have on the global economy stretches the imagination: Globally, countries and companies face economic damages of $54 trillion if the world gets 1.5 degrees Celsius warmer between now and 2040, according to the U.N.’s IPCC report.

That shaky risk profile is getting the attention of banks and insurance companies. At least one large U.S. insurer declared it no longer will back new coal plants. Others are offering new kinds of policies or loans that reflect a world where historical data is less reliable than it once was.

Still, there are blind spots among financial institutions, some stemming from their shortsightedness or lack of understanding about the risks their corporate customers face to their supply chains, operations, reputation or physical infrastructure — not to mention the risk of litigation from long-ago routine business decisions now seen as contributing to the climate crisis.

So, capitalism is stepping in, doing what it does best: aligning markets and prices with risks and opportunities. How it will change the fortunes of companies across geographies and sectors will be a key story to watch in the new decade.

Investors (finally) woke to climate change

The aforementioned risks and uncertainties are starting to have an unsettling effect on some of the world’s largest investors, too, who are variously rewarding or punishing companies for their vulnerabilities to climate change and its impacts. During 2019, we saw growing efforts by mainstream asset owners and managers to better understand and assess companies’ environmental, social and governance (ESG) performance.

For years, the conversation has centered around the benefits to investors for placing their money in companies with high ESG scores. What’s changing is the understanding by companies of the direct benefits to them, too.

For example, about half of European companies are incentivizing executives to deliver wide-ranging climate strategies and to better understand their climate and cleantech transition risks. In North America and elsewhere, financial institutions are offering ESG-linked loans, providing capital to companies to improve their environmental or social impacts. For companies, ESG- or sustainability-linked loans, also known as positive-incentive loans, provide a lower lending rate or other benefits for a company’s sustainability leadership.

Banks and investors have good reason to reward proactive companies. Screening investments using ESG criteria positively can affect investment returns and stock market performance, according to an analysis by one of Europe’s largest asset managers. The study found ESG screening does not affect all stocks but tends to affect the best-in-class and worst-in-class assets.

As a result, the organizations that rate ESG metrics are ramping up their efforts to provide better information to investors. For example, S&P Global Ratings said it now includes ESG sections within corporate credit rating reports.

But those efforts aren’t foolproof. PG&E, the bankrupt California utility, had been a star of the ESG world, receiving high marks from several leading ratings and rankings organizations. This suggests that the world of ESG has a way to go before it truly can help investors make risk-based asset-allocation decisions.

And most corporate directors aren’t yet on board. Nearly four in 10 corporate board members responding to a survey by advisory firm PwC said that climate change shouldn’t be taken into account when forming corporate strategy; roughly 30 percent think shareholders pay too much attention to this topic.

Still, there’s progress, and the year ahead will be interesting to watch on this front. The stakes for sustainable business activity couldn’t be greater. When being an environmental leader results in a lower cost of capital: game on.

There’s more…

Those weren’t the only 2019 stories of note on the sustainable business front. There’s also the growing interest in sustainable aviation … the growth of electric vehicles among corporate fleet owners … the expanding interest in the early stages of the circular economy … and, not least of all, the explosion of energy created by the climate youth movement.

Finally, here (in alphabetical order by company) are 19 other hopeful headlines of 2019:

True, there is no shortage of stories and trend lines that are distressing, to say the least. But let’s not dwell on those for the moment.

Instead, let’s stop and celebrate these largely under-covered stories of progress in the clean economy and sustainable business, and all of the committed and largely unsung professionals who made them happen. Against considerable odds, with minimal resources, insufficient political leadership and precious little fanfare, companies continue to move forward.

Source: GreenBiz.com
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