This month in ESG: Batteries, melting ice and the cost of carbon

ESG markers in September include research showing the actual cost of carbon is more than four times higher than thought, the Arctic is in trouble and batteries are high on Victoria’s agenda.

Key reports on worsening climate trends emerged during September, including the warming of Arctic by more than four times compared to the rest of the planet. The social cost of carbon was found to be severely underestimated, but in better news Australian electric vehicle take up is on the increase as well as announcement by the state of Queensland and AGL of complete coal exists by 2035.

Again, if I happen to miss some key markers in a particular month. Just drop me some comments, and I will pick them up next month!

*ESG Markers are like biomarkers that tell us how healthy our body may be, ESG markers show us the big movements in the field of ESG in Oceania and globally.

So, here are my Top 10 for September 2022, again in no particular order.

Actual social cost of carbon more than four times estimated value

The social cost of carbon (SCC) is a way to put a value on the societal harm caused by the emission of a ton of carbon. A new study by Resources for the Future, puts the SCC at nearly $200 a ton, almost four times the factor being used by the US government. This is likely to make its way into policy decisions which have long underestimated the negative consequences of rising emissions.

New research suggesting far more people in the US want climate action than perceived public support

Far more people want action on the climate crisis than people suspect, according to new research from the US. When asked to estimate public support for measures such as a carbon tax or a Green New Deal, most respondents put the number between 37 and 43 per cent. In fact, polling suggests that the real number is almost double that, ranging from 66 to 80 per cent.

According to the report, this signals a “spiral of silence”, as people look at the anti-climate noise filling social media and think they are in a minority, curtailing their support for action. Some studies suggest that even couples avoid talking climate as they perceive their partner to be not supportive. They are not, it’s the ‘noise’ that’s the minority. This suggests that conversations are important and that via engagement, people’s confidence that they are not alone needs to be built; that their beliefs are normal; and that change is possible.

The Arctic is warming four times faster than the rest of the planet

New research by the Finnish Meteorological Institute suggests that the Arctic has warmed four times faster than the rest of the world over the past few decades (1979 – 2021), due to a phenomenon called Arctic amplification triggered by rapid loss in sea ice in the Arctic region, which in turn has amplified global warming. Bright white sea ice reflects solar energy back to space, but when it melts, the dark ocean absorbs that heat.

Another identified issue is that climate models, which scientists used to predict long-term change, are not capturing this high rate of warming.

Last year’s annual Arctic Report Card, which was published by the National Oceanic and Atmospheric Administration, also found that the Arctic region is warming faster than the rest of the Earth and is rapidly losing ice cover.

Torres Strait climate claimants win historic human rights fight against the Australian government

The UN’s Human Rights Committee has agreed that the Australian government has breached its human rights obligations to a group of eight Torres Strait Islander people, through inaction on climate change. This win made international legal history.

The committee overall agreed with the complaint, finding that climate change is currently impacting the claimants’ daily lives to the extent that their rights are being violated, and that Australia is failing to take sufficient steps to secure the communities’ safe existence on their islands. The Committee also asked Australia to compensate the claimants for the harm suffered, and to do whatever needed to secure the communities’ safe existence. This climate inaction is resulting in sea level rise and extreme erosion, effectively washing away the ancestral homeland as well as destroying the natural sea and land environments on which they depend.

This was the very first legal action brought by climate-vulnerable inhabitants of low-lying islands against a nation state. It’s also the first time that an international tribunal has found a country has violated human rights law through inadequate climate policy, the first time a nation state has been found responsible for their greenhouse gas emissions under international human rights law, and the first time that Indigenous peoples’ right to culture has been found to be at risk from climate impacts.

Study finds nature-related corporate commitments lagging

Nature’s health, like climate change, is now recognized as an urgent global risk. In purely economic terms, half of all economic activity is moderately or highly dependent on natural capital—the world’s stock of natural assets. Governments and intergovernmental organisations are increasingly calling attention to the nature crisis, while a growing number of businesses are making pledges related to biodiversity or becoming “nature positive.” Industry-led organisations, such as the Taskforce on Nature-related Financial Disclosures (TNFD), are setting the framework for how businesses report and act on nature-related risks and opportunities.

A high-level review of the Fortune Global 500 companies shows that most companies have climate-related targets (83 per cent) or at least acknowledge climate change (an additional 15 per cent).  Across other dimensions of nature, however, targets and acknowledgements are far lower.

For example, while 51 per cent of companies acknowledge biodiversity loss in some way, only 5 per cent have set quantified targets. Among companies that have nature-related targets, most are only considering one dimension of nature, most often climate.

Looking ahead to this year’s UN Biodiversity Conference (COP 15), governments will agree to a new set of goals for nature to ensure that “the shared vision of living in harmony with nature is fulfilled.” This, alongside the Taskforce for Nature related Financial Disclosure guidance is likely to see more corporate disclosure.

Patagonia founder gives up company in fight against climate change

Patagonia founder and billionaire Yvon Chouinard has given his company away to a “set of trusts and non-profit organizations” that will ensure the company’s profits are used to “combat climate change and protect undeveloped land around the globe”.

Patagonia will continue to operate as a private, for-profit corporation, but it will no longer be owned by its original founder.  In August, the Chouinards transferred the company’s voting stock to what’s known as the Patagonia Purpose Trust. The family will pay about $17.5 million in taxes on the transfer.  The remaining common shares — equivalent to about 98 per cent of the company — were then donated to non-profit Holdfast Collective, which will now receive all of Patagonia’s profits and use them to fight climate change.

United in science: we are heading in the wrong direction

The world is “heading in the wrong direction” when it comes to climate change, according to a new report from the United Nations. The report found that:

• Weather-related disasters have increased fivefold over the last 50 years and are killing 115 people per day on average – and the fallout is poised to worsen
• Greenhouse gas concentrations continue to rise to record highs
• Fossil fuel emission rates are now above pre-pandemic levels after a temporary drop due to lockdowns
• The past seven years were the Earth’s warmest on record. There’s a 93 per cent chance that one year in the next five will see record heat
• There is a 48 per cent chance that, during at least one year in the next five years, the annual mean temperature will temporarily be 1.5 degrees Celsius higher than the 1850 to 1900 average.

As global warming increases, tipping points in the climate system cannot be ruled out, the report also warned. The study said the slow but irreversible collapse of the Greenland and West Antarctic ice sheets, more immediate loss of tropical coral reefs around the globe and thawing of high northern permafrost that releases massive amounts of greenhouse gases trapped in now frozen land are four significant tipping points that could be triggered at 1.5 degrees Celsius of warming.

Demand for electric vehicles is up, motivated by financial as well as climate concerns, according to the Global EY 2022 Mobility Consumer Index.

The EY 2022 Mobility Consumer Index (MCI) investigated how mobility trends are unfolding – and why – and what this will mean for original equipment manufacturers (OEMs) and their suppliers and dealers, as well as transport authorities and policymakers. The MCI surveyed nearly 13,000 consumers across 18 countries, including 1,000 in Australia, to determine how consumer mobility patterns and buying intentions have evolved since the pandemic began in 2020.

The latest Index found the following:

• Australian consumers are travelling less than in pre-COVID-19 times, but their preference for personal cars, especially electric vehicles, is growing.
• According to the latest EY 2022 Mobility Consumer Index, 38 per cent of Australians planning to buy a car will choose an electric or hybrid vehicle. Comparatively, consumer confidence in EVs is rising fast, with more than half of global consumers that intend to buy a car in the next 24 months saying they will choose an EV or hybrid vehicle.
• Consumers continue to avoid public transport when they can, with usage remaining below 2020 levels.

More coal exists announced in Australia

This month saw Queensland announce that it will end its reliance on coal-fired power generation by 2035 – up to a decade earlier than planned – as part of its new energy plan to have 80 per cent renewable energy by 2035. AGL, one of the country’s largest electricity generators and retailers, also announced it would close Victoria’s Loy Yang A power plant in 2035 and pump $20 billion into clean energy to meet shareholder demand for urgent climate action, alongside a plan to shut down all coal-fired generation by the end of fiscal year 2035, with annual greenhouse gas emissions reducing from 40 million tonnes to net zero.

Victoria bulking up storage

In Victoria, the Victorian government has promised to set the most ambitious renewable energy-storage targets in Australia, saying it would be capable of powering about half of the state’s current homes at their peak energy use.  Premier Daniel Andrews announced a $157 million package, which will include $119 million for a 125-megawatt battery in the state’s north-west to stabilise the ageing electricity grid and allow for a smoother transition to clean energy.  The targets would see 2.6 gigawatts of renewable energy storage built in Victoria by 2030, scaled up to an increased target of 6.3 gigawatts by 2035.  Victoria is already home to the largest battery in the Southern Hemisphere – the so-called “Victorian Big Battery”, a 300-megawatt battery just outside Geelong. The number of smaller, community batteries has also increased.