Week 16: “Reality-Check” Is the New Mantra of Business as Usual
Dear all,
I read this several times: 'The world needs a "reality check" on its move from fossil fuels to renewable energy,' JPMorgan has warned, saying it may take 'generations' to hit net-zero targets. I was watching videos from Dubai where, by the end of Tuesday, more than 142mm (5.59 inches) had soaked the city, home to more than three million people. Close to 127mm (5 inches) of rain fell at Dubai International Airport, where about 76mm (3 inches) of rain is normal for an entire year.
At least 20 people were reported to have died in the deluge in Oman, while another person was said to have died in floods in the UAE that closed government offices and schools for days. Following Tuesday's events, questions were raised about whether cloud seeding, a process the UAE frequently conducts, could have caused the heavy rains. Cloud seeding involves implanting chemicals into clouds to increase rainfall in areas where water scarcity is a concern.
The UAE, located in one of the hottest and driest regions on earth, has been leading efforts to seed clouds and increase precipitation. The massive rainfall was likely due to a normal weather system that was exacerbated by climate change, experts say. A low-pressure system in the upper atmosphere, coupled with low pressure at the surface, acted like a pressure 'squeeze' on the air, according to Esraa Alnaqbi, a senior forecaster at the UAE government's National Centre of Meteorology. This squeeze, intensified by the contrast between warmer temperatures at ground level and colder temperatures higher up, created the conditions for the powerful thunderstorm. The 'abnormal phenomenon' was not unexpected in April, as when the season changes, the pressure changes rapidly, she said, adding that climate change also likely contributed to the storm.
Climate scientists say that rising global temperatures, caused by human-led climate change, are leading to more extreme weather events around the world, including intense rainfall. 'Rainfall from thunderstorms, like the ones seen in the UAE in recent days, sees a particularly strong increase with warming. This is because convection, which is the strong updraft in thunderstorms, strengthens in a warmer world,' said Dim Coumou, a professor in climate extremes at Vrije Universiteit Amsterdam.
Then I went on reading another piece on created reality, yet another one in a row of many. In a global energy strategy report sent to clients this week, the US investment bank said efforts to reduce the use of coal, oil, and gas had been set back by higher interest rates, inflation, and wars in Ukraine and the Middle East. 'While the target to net zero is still some time away, we have to face up to the reality that the variables have changed,' Christyan Malek, JPMorgan’s head of global energy strategy and lead author of the report, told the Financial Times. 'Interest rates are much higher. Government debt is significantly greater and the geopolitical landscape is structurally different. The $3tn to $4tn it will cost each year come in a different macro environment.' JPMorgan added that changing the world’s energy system 'is a process that should be measured in decades, or generations, not years'. It noted that investment in renewable energy 'currently offers subpar returns' and that if energy prices rose strongly, there was even a risk of social unrest.
How often have you heard this argument? It means: Do not interfere with our business where we make money and if you do so there will be problems. Be sure of that. The report came after oil companies including Shell and BP trimmed back their climate targets this year and hundreds of other companies, including Microsoft, Unilever, and JBS, failed to set goals that were ambitious enough to be approved by the Science Based Targets initiative, a validation body set up after the UN COP26 climate summit in Glasgow. Malek noted that it was not guaranteed that demand for oil and gas would peak in 2030, as predicted by the International Energy Agency, as the populations of developing countries begin to buy more cars and take more flights. JPMorgan forecasts that the world will need 108mn barrels of oil a day in 2030, and that building more wind, solar, and electric vehicle capacity could add a further 2mn daily barrels to this total. JPMorgan is a leading financier of fossil fuel projects. The bank underwrote $101bn of fossil fuel deals in 2021 and 2022.
Scotland has ditched ambitious climate change targets as being 'out of reach', after the UK’s Climate Change Committee said it would not be able to meet them due to insufficient delivery on reducing emissions. In an embarrassing climbdown from goals branded as world-leading by former first minister Nicola Sturgeon, the government shelved its statutory goal of cutting greenhouse gas emissions by 75 percent by 2030 from 1990 levels. The Scottish goal for 2030 went beyond the rest of the UK’s 68 percent target over the same period. The UK commitment is also one that the Climate Change Committee has said it has 'low confidence' would be met, after UK Prime Minister Rishi Sunak announced a series of U-turns on key green measures. 'In this challenging context of cuts and UK backtracking, we accept the CCC’s recent rearticulation that this parliament’s interim 2030 target is out of reach,' said Mairi McAllan, Scottish minister for wellbeing economy, net zero and energy, on Thursday. The admission of failure on Scotland’s pledge comes after the hottest year on record. Each of the past 10 months has also been the hottest, leaving scientists unnerved by evidence the world is warming faster than expected. When Glasgow hosted the UN COP26 climate summit in 2021, Sturgeon said Scotland could lead the world into a green revolution. 'Scotland is halfway to net zero . . . but the hard work is still to come after years of missed opportunities,' said Mark Ruskell MSP, climate spokesperson for the Scottish National party’s coalition partners, the Scottish Greens. The CCC described the removal of Scotland’s 2030 target as 'deeply disappointing', saying interim targets and plans to deliver on them are what makes any net zero commitment credible.
Unilever Plc plans to abandon or water down a string of environmental and social pledges against the backdrop of a growing backlash from investors, consumers, and politicians against companies pursuing non-financial objectives. The move by Hein Schumacher, Unilever’s chief executive officer, marks a major shift for the £95 billion ($118 billion) consumer group — home to brands ranging from Hellmann’s mayonnaise to Domestos bleach — which has built its business strategy on a bedrock of ESG policies for more than a decade. Seen as the corporate world’s biggest cheerleader for the idea that companies should do good in the world, the downgrading of some commitments will be watched closely by other businesses under shareholder pressure to reduce costs and boost stock market performance. Unilever, one of the world’s biggest users of plastic packaging, had previously committed to halve its use of virgin plastics by 2025. That target will now be one-third by 2026 — the difference accounting for more than 100,000 tons of fresh plastic annually. A commitment to pay all its direct suppliers a living wage by 2030 will be replaced by a promise covering suppliers of half of its spending on goods and services by 2026. A pledge to spend an annual €2 billion ($2.1 billion) with diverse businesses worldwide by 2025 has been dropped along with a commitment that 5% of the workforce will be made up of people with disabilities by the same year.
It was a genuine pleasure to connect with Nawar Alsaadi, CEO and Founder of Kanata Advisors, a sustainable fintech advisory firm based in Toronto, Canada. Prior to founding Kanata, Nawar held several senior ESG-related positions, including Chief Impact Officer at ScopeFour Capital, Senior Portfolio Manager for ESG Investing at Canada Post Pension Plan, and Director of ESG Insights at NEI Investments, among other executive and advisory roles. Nawar is also a published author and has been recognized as a 'Top Corporate Sustainability Voice' on LinkedIn.
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