Sustainability Newsletter #41
#Figure of the month - minus 80cm
Panama Canal lowers maximum depth limit on ships due to drought
The Panama Canal will impose restrictions on the largest ships passing through the key global trade route due to falling water levels at nearby lakes that form part of the waterway. The restrictions, which will take effect in April, mean so-called neo-Panamex container ships seeking to cross the canal connecting the Atlantic and Pacific Oceans must comply with a maximum depth of 14.4 meters, which is the equivalent of minus 80 cm from the original limit. This new restriction will force container ships to weigh less or otherwise transport fewer goods. The new measures are due to recent drought conditions, the canal authority said, prompting the fifth adjustment of its kind since the start of the year. This is a concrete example of how climate change could strongly impact on global trade in the future, and affect the economic returns of the world’s largest corporations. Officials did not provide an end date to the measure, described for now as temporary, but warn of the possibility of similar restrictions in the future.
Trends and Initiatives
New artificial intelligence tool can accurately identify cancer
Cancer results in about 10 million deaths annually, or nearly one in six deaths, according to the World Health Organization. In many cases, however, the disease can be cured if detected early and treated swiftly. Experts from the Royal Marsden NHS Foundation Trust, the Institute of Cancer Research in London and Imperial College London have developed an AI model capable of accurately identifying cancer, which they believe could speed up diagnosis and treatment of patients. According to the eBioMedicine study, the results of the algorithm are more effective than current methods.
The new technique can extract vital information from medical images that are not easily spotted by the human eye. The AI model may also help doctors make quicker decisions about patients with abnormal growths that are currently deemed medium-risk. In initial tests, the algorithm was able to accurately identify high-risk patients from a sample of 500 individuals. Within this group, the AI tool reportedly identified 18 of the 22 nodules subsequently confirmed as cancerous (82%). However, experts point out that further testing is needed before the model can be introduced into health care systems.
Sources: The Guardian, DailyMail
Campaigners call for EU to tax fishing industry to fund decarbonization
During the last decade, the European fishing fleet emitted over 56 million tons of CO2. According to several studies, the real figure could be even higher as practices such as bottom trawling release as much CO2 as the entire aviation industry. Even so, Europe’s fishing vessels are currently exempt from fuel taxes. On the contrary, during the last decade, the European Union has granted the fishing industry approximately €15.7bn in fossil fuels subsidies. In April, activists gathered to demand a reallocation of these funds to support the decarbonization of the industry.
According to studies, the fuel tax exemptions granted to the fishing sector could pay for the equivalent of the salaries of 20,000 fishermen every year or fund over 6,000 new CO2 reduction projects, such as port electrification or the use of more fuel-efficient fishing gear. "The European fishing sector is facing the dual challenge of climate change and overexploitation of fishery resources," the spokesperson said. "Therefore, any investment aimed at reducing carbon emissions must replace, and not increase, the fishing sector's capacity."
Sources: The Guardian, The Fishing Daily
Chile's lithium nationalization shines light on emerging tech
Chilean President Gabriel Boric's plan to nationalize his country's immense lithium industry is putting the spotlight on an emerging crop of filtration technologies aimed at revolutionizing metal production for the electric vehicle industry. In April, Boric announced a new state-owned company would work to slash the environmental impacts of lithium production by shifting away from evaporation ponds, traditionally used to remove the metal from brine, in favor of direct lithium extraction (DLE). "This is the best chance we have at transitioning to a sustainable and developed economy," said Boric. DLE technologies are designed to extract the metal from salty brines, while benefiting from low footprint compared to other technologies.
While neighboring Bolivia, as well as General Motors Co, Rio Tinto Ltd and other companies, have made their own DLE bets, Boric's move represents the biggest vote of confidence to date in the commercially unproven suite of technologies given plans to deploy it across Chile's vast lithium reserves. If Chile could help one or more DLE technology succeed, it would cement the country's dominant role in the global lithium and EV industries for decades to come.
Bloomberg adds corporate sustainability and climate data from ESG Book
Sustainability data and technology company ESG Book announced in April the availability of its data on corporate sustainability and emissions disclosures to Bloomberg customers through the Bloomberg Terminal and to Data License Subscribers. ESG Book, formerly Arabesque S-Ray, is a digital platform for ESG data management, disclosure, and analytics. The company was established in 2018 and incubated as a subsidiary of Arabesque Group, a group of financial technology companies offering sustainable investment, advisory, and data services. ESG Book’s data includes emissions estimates across Scopes 1-3, and Temperature Scores, which track companies’ alignment with limiting warming to 1.5°C by 2050. The data provided by ESG Book on Bloomberg includes ESG and climate disclosures for almost 10,000 companies worldwide.
Dr Daniel Klier, CEO of ESG Book, said: “Demand for high-quality, granular ESG data is soaring across financial markets, driven by a growing need for investors to fulfil regulatory requirements and meet client demand for greater transparency on non-financial issues. We are delighted to provide ESG Book data to Bloomberg Terminal and Data License subscribers, and enable clients to access high-quality, fully traceable ESG data for better portfolio management and risk analysis.”
Society and Planet
Copper shortage threatens green transition
Metal markets seem to think copper is the new lithium and a lack of new mining activity has added to worries that there won’t be enough of the red metal for the energy transition. Copper is used in wiring and construction as well as electric vehicles, solar panels and other green technologies. Electrification is expected to increase annual copper demand to 36.6 million metric tons by 2031, with supply forecast to be around 30.1 million tons, creating a 6.5 million tons shortfall at the start of the next decade, according to consulting firm McKinsey.
Copper miners have been at the center of a recent spurt of deal making. Glencore PLC recently offered $23 billion for Canadian miner Teck Resources Ltd., potentially creating the third-largest copper producer in the world. Teck rejected the offer. BHP Group Ltd. also gained court approval in April for the takeover of OZ Minerals Ltd., a deal valued at $6.34 billion. The market overall is tight as copper is the only metal whose demand growth is stalled due to resource issues. Some experts estimate that prices would need to reach $15,000 per metric ton to attract investment in new mines.
Changes in technology should ease some copper demand pressures. Experts point to changes in battery have already helped to cut copper usage in electric vehicles. The slowdown in Chinese demand should also help to offset the growth in green demand.
Sources: Wall Street Journal, Le Nouvel Economiste
Climate change compounding inequalities faced by women in agriculture
Overall, the world produces around 11bn tonnes of food annually, and about 4 billion people live in households that depend on this sector for their livelihood. Such systems are constantly changing and are impacted by economic, social and environmental factors, including – increasingly – climate change. However, women face inequalities that constrain their full participation in the sector, it warns. Women working in agriculture “tend to do so under highly unfavourable conditions” – often in the face of “climate-induced weather shocks and in situations of conflict”, a new report from the UN Food and Agriculture Organization (FAO) concludes. Moreover, women also often carry out unpaid activities, such as subsistence farming to feed their families.
At least 939 million women aged 15 or older experienced moderate to severe food insecurity in 2021, compared with 813 million men, the report says. Despite this, only few national policies have specific targets to address women’s inequalities in agrifood systems. And while national climate pledges under the Paris Agreement have seen a “modest improvement” on gender equality over the past decade, inclusion of these issues is “often superficial”.
Sources: Carbon Brief, FAO
Holcim launches circular construction platform
- Company : HOLCIM AG
- Sector : STEEL, CONSTRUCTION MATERIALS, OTHER METALS AND MINING
- Clover rating : 0/10
Holcim, a leading building materials company, announced in April the launch of ECOCycle, a new circular technology platform to recycle construction and demolition materials into new building solutions. The company said it would roll out the technology across its range of materials solutions to increase circular construction and reduce the use of natural resources. Construction materials are a major source of environmental and climate impact. Cement production, for example, accounts for around 8% of global carbon dioxide emissions. The company said the technology will allow concrete, cement and aggregates to contain between 10% and 100% recycled demolition materials, reducing the environmental footprint without compromising performance. The launch is also accompanied by Holcim's acquisition of UK-based Sivyer Logistics, which specialises in the recycling of construction and demolition waste. The acquisition is expected to enable the Zug-based group to reach its target of recycling around 10 million tons of construction and demolition waste by 2025, one of the goals of its 2025 strategy.
Sources : Zone Bourse, ESG Today
Apple to use only recycled cobalt in batteries by 2025
- Company : APPLE INC
- Sector : INFRASTRUCTURE & PLATFORM ENABLERS
- Clover rating : 8/10
With a deadline of 2025, Apple has set a fresh goal to speed up the usage of recycled materials in its products. All batteries made by Apple will be made wholly of reused cobalt. This is a part of Apple’s ongoing efforts, which it began last year, to reuse gold, tungsten, cobalt, and other materials in its products. For several years, Apple ensures ethical primary mineral sourcing across its supply chain. For its battery supply chain, it was the first electronics brand to disclose a list of cobalt and lithium refiners. All known tin, tungsten, tantalum, and gold smelters and refiners have taken part in independent audits since 2015.
By avoiding using newfound minerals, Apple is aiding mining–dependent regions and cutting its reliance on new minerals. In locations like the African Great Lakes, it has deals with groups like the Fund for Global Human Rights to support environmental and human rights activists. This is to assist local people in moving away from mining. The company now also invests in programmes for vocational education.
Sources: Reuters, The Economic Times
Over 500,000 signatures against Rio Tinto’s proposed lithium mine in Serbia
- Company : RIO TINTO
- Sector : STEEL, CONSTRUCTION MATERIALS, OTHER METALS AND MINING
- Clover rating : 2/10
Environmental organizations have sent a clear message to Rio Tinto’s shareholders: the company’s insistence to carry on with the formally canceled project will only strengthen the opposition to it and the possibility of social unrest, carrying with it financial and political risk.
In April, environmental activists from Arizona, Madagascar, Serbia and the United Kingdom protested in London against Rio Tinto’s Jadar project in Serbia during the company’s annual general meeting. They also submitted over half a million signatures gathered in Serbian and European petitions against the company’s plan to mine and process lithium in the Balkan country. The representative of Serbian activists, Nebojša Petrović, took the opportunity to ask the company’s officials why it hasn’t left Serbia after the spatial plan for a lithium mine and processing plant was annulled in 2022, and why it keeps buying land from private owners. No press release has been issued by the company since the protestations.
Sources : BankTrack, Balkan Green Energy News
Over 70% of businesses view ESG as a revenue enabler
The argument that ESG harms profitability is “more than a myth—it’s misinformation that leads to poor business decision-making,” according to a new study released by IBM, which found that more than 70% of executives view ESG as a revenue enabler, and that consumers increasingly focus on companies’ sustainability performance when making purchasing and employment decisions. For the new study, The ESG ultimatum: Profit or perish, IBM’s Institute for Business Value (IBV) analyzed results from a survey of more than 20,000 consumers about their attitudes toward sustainability and social responsibility, as well as a survey of 2,500 executives across 22 industries and 34 countries regarding their ESG strategy. The study also segmented businesses according to ESG maturity to compare relative performance.
The executive survey indicated that ESG is a top priority for businesses, with 76% of respondents reporting that it is central to their business strategy, 72% approaching ESG as a revenue enabler rather than as a cost center, and 45% expecting ESG efforts to result in improved profitability.
From consumer’s side, the study reveals that more than 70% said that they would be more willing to apply for a job with a company that they consider environmentally sustainable or socially responsible, with over 40% willing to accept a lower salary to work for such a company.
While ESG remains a priority for executives and consumers, both groups highlighted data-related challenges as a key obstacle to achieving sustainability-related goals. 41% of executives surveyed identified inadequate data as their organization’s biggest challenge to advancing its ESG agenda, followed by regulatory barriers at 39%.
Heat pumps: an expanded market in Europe
Annual heat pump sales in Europe, 2013-2022 (in m-€)
Heat pumps are widely seen as the most important technology when it comes to decarbonising heating. Organisations including the International Energy Agency and McKinsey see heat pumps providing most of our heating needs in the future, on the path to improve carbon emissions. Until recently, heat pump sales had been struggling to take off, but this is changing rapidly. Since then, Russia’s invasion of Ukraine, the resulting energy crisis and related policy interventions have boosted installations in Europe even further, to unprecedented new highs. For the first time in 2022, heat pump sales in Europe reached 3m, up 0.8m (38%) from a year earlier and doubling since 2019.
One main driver is cost: gas and oil prices skyrocketed in 2022. Hence, these prices have changed the economics of heat pumps, often making them cheaper to run than gas- or oil-fired heating. Several countries have announced phaseout dates for fossil fuel heating, although it remains to be seen how exactly this will be implemented. The European Commission has also mentioned a possible phaseout date for the sale of fossil fuel heating systems by 2029 and, if adopted, this could trigger an even bigger shift to heat pumps in EU member states. Novel policy instruments such as clean heat standards, that may require a specific quantity of clean heating systems to be installed, are currently being discussed in the US and the UK.
Sources: Mc Kinsey, Carbon Brief
Do not hesitate to contact your dedicated Relationship Manager should you need any more requirements.
This material was produced by BNP Paribas (Suisse) SA. The information and opinions expressed in this document are entirely those of the author hereof, but are not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient, and are subject to change without notice. No representation or warranty, express or implied, is made that such information, opinions and projections are accurate or complete and they should not be relied upon as such. Neither BNP Paribas (Suisse) SA nor any person connected with it accepts any liability whatsoever for any direct or consequential loss arising from any use of material contained in this document. This document does not constitute or form part of an offer document or any offer or invitation to finance. This material shall not constitute an offer or solicitation in any state or jurisdiction in which such an offer or solicitation is not authorized or to any other person to whom it is unlawful to make such offer, solicitation or sale. It is not, and under no circumstances is it to be construed as, a prospectus or advertisement, and the information contained in this material is not, and under no circumstances is it to be construed as, a public offering of any type. In making an investment decision, individuals must rely on their own examination of the terms of any potential financing proposal, including the merits and risks involved.
The Bank or the group to which it belongs, or its employees/directors may hold or have held positions or an interest in the products mentioned, or have acted as a “market maker” for these products and may be connected with the companies involved and/or their directors and furnish them with various services.
No representations or warranties of any kind are intended or should be inferred with respect to the economic return from any investment in any, financial product and/or services described herein. Nothing contained herein should be construed as constituting legal, tax or any financial advice. Individuals should consult their own professional advisors as to the legal, tax, financial or other matters relevant to the suitability of any of the financial products and services described herein.