The above picture is for illustration and is of Arab News.
The topic of ESG (environmental, social and governance) principles is back on the agenda as the world witnesses catastrophic flooding and fires not seen in decades, with “climate change” due to environmental mismanagement the seeming culprit.
While sustainability is now a hot topic due to the increasing awareness of climate change and global inequality, at the same time there is a debate that an application of ethical-based investment decisions by society at large can lead to a more sustainable economic and social basis, leading to questions about whether ethical investment and sustainability derived from ESG application are interlinked or separate issues.
There is still no universal definition of sustainability, but many note the seminal UN 1987 Brundtland Report that calls for sustainable development, which, in principle, meets our needs today without compromising the needs of those in the future. Others argue that religion has advocated similar principles, with Islam specifically stating that humans are mere guardians of nature’s wealth and not its owners and should act accordingly in this guardianship role to pass it on to future generations. Thus, the idea of meeting our needs without sacrificing the needs of our future generations is the basis of what the majority of mankind can agree as meeting a definition of “sustainability.”
The definition by default focuses on our planet’s capacity to meet our economic needs, as without a healthy planet, society will be unable to meet sustainable needs for food, shelter, clean air, water and other basic necessities of life. This, however, assumes that all societies accept the same “sustainability” definitions and goals, but in reality there are different opinions as these touch on politics and the degree of economic growth and resource consumption by different countries.
The debate is stark and will not easily go away with simple slogans as it involves those “who have” versus those that “have not,” a “North” vs. “South” debate, or more crudely, stopping a poorer “South” from “having their place in the sun” and in turn asking the “North” to sacrifice more for the sake of global sustainability and equality.
There is growing evidence that companies that take their environmental and social responsibilities more seriously perform better financially, making their shareholders happy and feeling righteous too.
Dr. Mohamed Ramady
The poorer “South” will argue that the “North’s” high-income earners are far more likely to be contributing disproportionately to climate change, while those who live in less affluent parts of the world are more likely to suffer the consequences. They watch in awe and disbelief as multibillionaires spend a few minutes joyriding in outer space at a cost enough to provide whole villages with proper sanitation, health, education and safer transportation, let alone feed hungry mouths.
In practice ESG today refers to the environmental, social and governance information about a firm and there is growing evidence that companies that take their environmental and social responsibilities more seriously perform better financially, making their shareholders happy and feeling righteous too. The bottom line for all is that ESG is good for business. The UN-Global Compact value driver model uses key business matrices common to all industries to determine the return on investments of corporate sustainability activities. These can be best summarized under: Growth (revenue growth from sustainable products); productivity (cost savings from sustainability related innovation); and risk management, all leading to a higher return on equity.
Have these matrices made an impact on corporate performance in reality? In essence companies that follow enhanced ethical and economic sustainability management characteristics have the potential to perform better over time, but the question is where? It would seem that improvements in environmental performance achieved with better technology, leading to cost savings and process efficiency, is one way, resulting in high sustainability companies outperforming their counterparts over the long term, through stock market and accounting performance. Analysis of some ESG-related stock market indices such as the MSCI KLD 400 Social Index, and MSCI Emerging Market ESG Index, seems to support this argument. So, what is missing to implement ESG?
In forthcoming articles, we shall examine the role of sustainability accounting, corporate stakeholders interaction and the need to educate both capital market borrowers and lenders on ESG policies, and on how international ESG regulators have faced this.
• Dr. Mohamed Ramady is a former senior banker and Professor of Finance and Economics, King Fahd University of Petroleum and Minerals, Dhahran.
Bibhu Mishra of Humboldt University, Berlin elaborates on Transitioning towards sustainable economy: Role of financial institutions such as Central Banks and financial systems in The Times of India.
Transitioning towards sustainable economy: Role of Central Banks and financial systems
“For peace to reign on Earth, humans must evolve into new beings who have learned to see the whole first”, said Kant.
Climate change is real; it affects and will affect everyone. Mother Nature sends its signals regularly, and most recently through the flash floods in western Germany. These signals are an urgent reminder that we need to take action now. The action must be collective, significant, timely, and futuristic because, in the long term, the risks outweigh the costs.
The Paris climate accord is one such step in the right direction. A holistic and stakeholder-driven approach would be required to achieve the target of maintaining temperature rise by 1.5 degrees Celsius. One of the most significant stakeholders in such efforts is the global financial system. The financial system’s role is pivotal because they provide finance and steer economic growth. Their actions have a significant impact on ESG, i.e., Environment, Society, and Governance.
There is a tremendous surge in investments which keeps ESG at the core of investment decisions. According to Bloomberg, ‘ESG assets may hit $53 trillion by 2025, a third of global AUM’. Despite a phenomenal rise in ESG assets in the past decade, the financial system still faces challenges like ‘short-termism’ and ‘greenwashing.’
Therefore, the role of Central Banks is vital. They look at the financial system of a country as a whole. Former Governor of the Bank of England, Mark Carney coined the concept ‘Tragedy of the Horizon’ to explain this. He argued, “the catastrophic impacts of climate change will be felt beyond the traditional horizons of most banks, investors and financial policymakers, imposing costs on future generations that the current one has no direct incentives to fix.” It is a tricky paradox where the current system has little or no benefits but to save the planet in its current state or better for the coming generations.
Realizing the importance of its role, eight central banks and supervisors created (In December 2017) a ‘Network of Central Banks and Supervisors for Greening the Financial System (NGFS).’The NGFS is aimed to make coordinated efforts to combat climate change. As of June 30, 2021, the NGFS has grown to a network of 95 members and 15 observers. The Network’s purpose, in their own words; “to help strengthen the global response required to meet the Paris agreement’s goals and enhance the role of the financial system to manage risks and mobilize capital for green and low-carbon investments in the broader context of environmentally sustainable development.”
The NGFS is a significant step towards bringing central banks of different countries together and ensuring that central banks take the leadership role in fighting against the climate crisis. In its first comprehensive report (Pub 2019), It came up with the following six suggestions and floated the idea of global collective leadership.
Integrating climate-related risks into financial stability monitoring and micro-supervision
Integrating sustainability factors into own-portfolio management
Bridging the data gaps
Building awareness and intellectual capacity and encouraging technical assistance and knowledge sharing
Achieving robust and internationally consistent climate and environment-related disclosure
Supporting the development of a taxonomy of economic activities
Additionally, the steps taken by the Central Banks of England (Bank of England) and France (Banque de France) are noteworthy and worth a mention.
Recently, the [Central] Bank of England launched a stress test for banks and insurers to understand the ability of the UK Financial system to cope with climate change. The test is aimed to examine the resilience of the UK’s 19 biggest banks and insurers. The stress test can also be looked at as an acknowledgement that Climate Change poses significant financial risks to the existing financial system. Therefore, early planning of a transition is necessary.
Moreover, ‘Banque de France,’ the central bank of France, took several initiatives to transition the financial industry into zero carbon. In June 2021, the French ACPR (Autorité de contrôle prudential et de résolution, English translation: French Prudential Supervision and Resolution Authority) published the first climate pilot exercise report an overall ‘moderate’ exposure to climate risks.
Let’s understand the risk through an example. Investing in fossil fuels may generate returns in the short term,’ but it will accelerate climate change and, hence, negatively impact the ESG. The negative impact on climate could cause erratic rains or severe drought, leading to an adverse effect on investments made in agriculture and allied sectors. One sector’s gain can be the loss of another sector, posing a significant risk before the overall financial system.
To ensure a smooth transition of the financial system towards sustainability and make it resilient from other systemic risks, early and coordinated action is needed. Central Banks and financial systems have a significant role to play in our journey towards sustainability.
Bibhu Mishra is a German Chancellor Fellow at Alexander von Humboldt Foundation and a researcher with Institute of Asian and African Studies, Humboldt University, Berlin.
Emerging Economies Must Leapfrog to Renewables – and They Already Are per Roya Sabri in this TRIPLEPUNDIT’s article.
Emerging Economies Must Leapfrog to Renewables – and They Already Are
20 July 2021
Renewables like solar and wind are quickly becoming more affordable and accessible. The International Renewable Energy Agency (IRENA) reports that the cost of electricity coming from utility-scale solar power fell 82 percent between 2010 and 2019, and clean power technologies such as solar and wind are undercutting even the cheapest coal-fired power plants. Further, a 2020 analysis from BloombergNEF found that wind and solar have overtaken fossil fuels as the most cost-effective form of new sources of electricity in most of the world.
This trend has made “energy leapfrogging” – i.e., the ability to reap a nation’s power needs from renewables such as solar, wind and geothermal at a rapid pace, bypassing heavy investments in fossil fuels and the infrastructure needed for them – ever more possible in emerging markets.
Economies, including several examples in Africa and Latin America, have been transitioning straight from what for many of their communities had been traditional sources of energy like wood, charcoal, agricultural waste and animal dung; these countries are also able to shift rapidly toward renewables as they have not invested in massive infrastructure that supports a national power grid, as was the case with what more industrialized nations in Europe and North America had done during the 20th century.
The result is that more communities within these emerging markets are forgoing conventional energy sources like fossil fuels; the same goes for other forms of energy like nuclear, biofuels and even natural gas.
A recent report from the think tank Carbon Tracker and India’s Council on Energy, Environment and Water (CEEW) highlights progress emerging nations are making in embracing renewables. The report also comes with a warning: If more nations do not leapfrog to these cleaner sources of energy, a worldwide low-carbon economy will not occur.
As the demand for energy grows, leapfrogging to renewables becomes necessary
The International Energy Agency estimates a surge in power generation in emerging nations will boom over the next decade, accounting for the majority of electricity demand by 2030. Thus, a world aiming to reduce greenhouse gas emissions has an incentive to ensure countries like India and China continue their developing infrastructure that is more conducive for renewables.
The authors of this Carbon Tracker and CEEW study find that emerging markets are already stepping away from fossil fuels. “Given the continued rapid growth rate of solar and wind, it is highly likely that emerging markets ex-China have already plateaued or reached peak demand for fossil fuels for electricity. China is likely to peak before 2025,” they write. China may still be a major coal consumer, but its solar sector is growing fast. Countries like Morocco, Nicaragua and Kenya have already made great leaps toward increased reliance on renewables.
Some nations are already leapfrogging to renewables
The Climate Reality Project details how Morocco, Nicaragua and Kenya have been able to turn their power generation sectors into ones that are more sustainable and resilient. Morocco, for one, has set a target of 42 percent renewable energy production by 2021 and 52 percent by 2030. It has stayed on track by building up its solar and wind power infrastructure. The North Africa country, in fact, now hosts one of the largest solar farms in the world.
After experiencing rolling blackouts due to energy insecurity a decade ago, Nicaragua is now on its way to sourcing 80 percent of its electricity from sources of renewables. By late 2020, Nicaragua’s burgeoning geothermal industry had brought the nation to 72 percent reliance on renewable energy sources.
Energy accessibility has been expanding in Kenya as decentralized solar has spread across the nation. The country is also making use of its geothermal power, which may reach 50 percent of its energy mix by 2040.
Clean energy can support a more resilient and healthy economy
These cases show that a dramatic shift to renewable energy can increase energy accessibility and stability. The economic case is significant. IRENA reported in 2016 that a doubling of renewables by 2030 could mean global GDP increases by over one percent, boosts social welfare investments by almost four percent and can add more than 24 million jobs.
While some nations have proved leapfrogging possible and beneficial, the authors of the Carbon Tracker and CEEW study note that there are serious barriers to building renewable energy reliance. Such hurdles include the intermittency of renewable sources, system costs, policies and deeply vested interests — but international actors can make a difference. The report recommends that international policymakers should focus their attention on countries currently dependent on fossil fuel imports that also have governments more amenable to policy solutions.
Finally, the authors contend that such nations are more receptive to a transition than countries that are more politically fragile. They are also in a stronger position than countries with economies largely driven by coal and gas exports. The result is that these countries that have found success with energy leapfrogging can become examples for their neighbors and help to bring more emerging nations closer toward a clean energy future.
Carbon emissions to reach record levels in 2023 as stimulus spending fails to match net-zero ambition says IEA executive director Fatih Birol. Would the man nevertheless be heard at the oncoming COP 26 of Glasgow?
The financial resources allocated by governments globally to clean-energy measures in response to the Covid-19 crisis currently represent only 2% of the $16-trillion in total fiscal support set aside for economic stimulus, the International Energy Agency’s (IEA’s) new Sustainable Recovery Tracker shows.
The $380-billion announced to support clean-energy actions as of the end of the second quarter of 2021 is set to be supplemented by an additional $350-billion a year between 2021 and 2023.
The IEA warns that such spending will fall well short of what is required to meet global climate goals and is expected to result in a surge in carbon dioxide (CO2) emissions.
The IEA calculates these allocations to represent only 35% of what is required to meet the Sustainable Recovery Plan outlined in its recent special report, titled ‘Net Zero by 2050: A Roadmap for the Global Energy Sector’.
The economic recovery measures announced to date would also result in CO2 emissions climbing to record levels in 2023 and continuing to rise thereafter.
While the CO2 trajectory is 800-million tonnes lower in 2023 than it would have been without any sustainable recovery efforts, it is still 3 500-million tonnes above the pathway set out in the Net Zero by 2050 report, which recommended $1-trillion of spending globally on clean-energy measures in recovery plans.
“Since the Covid-19 crisis erupted, many governments may have talked about the importance of building back better for a cleaner future, but many of them are yet to put their money where their mouth is,” IEA executive director Fatih Birol said in a statement.
“Not only is clean energy investment still far from what’s needed to put the world on a path to reaching net-zero emissions by mid-century, it’s not even enough to prevent global emissions from surging to a new record,” he warned.
The IEA found that governments have mobilised $16-trillion in fiscal support throughout the Covid-19 pandemic, most of it focused on emergency financial relief for households and firms.
Based on an analysis of over 800 policy measures across more than 50 countries, the tracker shows that government spending for energy-related sustainable recovery measures has been channelled mostly through programmes that already exist, such as energy efficiency grants, public procurement, utility plans and support for electric transport options.
In addition, most of this spending is in G20 economies, with recovery measures announced to date in advanced economies expected to meet 60% of the investment needs set out for these economies in the Sustainable Recovery Plan.
In emerging and developing economies this share falls to 20%, where many countries have focussed their more limited fiscal leeway primarily on emergency health and economic measures.
The tracker shows that, while advanced economies have earmarked about $76-billion a year in government spending from 2021 to 2023 for clean energy, emerging and developing economy governments have earmarked only $8-billion yearly over the same period.
A report published in March by the Global Recovery Observatory, an initiative of Oxford University’s Economic Recovery Project and the United Nations Environment Programme, also concluded that recovery spending was falling short of nations’ commitments to a sustainable recovery.
The analysis concluded that only 18% of recovery spending announced to the end of February could be considered ‘green’ and that this spending was mostly accounted for by a small group of high-income countries.
It also concluded that global green spending, to date, had been incommensurate with the scale of the ongoing environmental crises of climate change, nature loss and pollution.
Posted by Zeena Saifi, CNN on 18 July 2021, is the story of Qatar’s Ras Abu Aboud stadium that is the first built-in World Cup history meant to be torn down after the games. Would the same authorities, at this conjecture, have second thoughts?
Qatar’s Ras Abu Aboud stadium is the first built in World Cup history that was meant to be torn down after the games
It was once a quiet waterfront, only enjoying the occasional sounds from the nearby Gulf shores. Now, it’s a dizzying burst of color and life — soon to be filled with up to 40,000 screaming fans.
It is Qatar’s Ras Abu Aboud stadium — the first built in World Cup history that was meant to be torn down.
Molded out of 974 shipping containers atop Doha’s port, the Ras Abu Aboud will host seven matches up to the quarterfinals of the 2022 World Cup.
All the containers are made from recycled steel, and the number — 974 — symbolizes Qatar’s dialing code.
It’s both a symbol of the country’s sustainability pledge and a reflection of its identity.
After the tournament is over, many parts of the arena — including all the removable seats, containers and even the roof — will be dismantled and repurposed for use in other sporting or non-sporting events, either inside or outside of Qatar.
“The 40,000-seater venue can be dismantled in full and transported to be built again in a different country; or you could build two 20,000-seater venues,” Mohammed Al Atwan, project manager for Ras Abu Aboud told CNN.
“Really, all parts can be donated to countries in need of sporting infrastructure. This is the beauty of the stadium — the legacy opportunities are endless.”
Along with the opportunities he says it offers, Qatar is hoping the stadium will be a trailblazer for future football tournaments.
A FIFA report in June estimated the 2022 World Cup to produce up to 3.6 million tonnes of carbon dioxide, that’s 1.5 million tonnes of CO2 more than the 2018 tournament in Russia created.
Nonetheless, the Gulf state is committed to delivering a carbon-neutral World Cup through offsetting emissions — before, during and after the event.
Organizers have promised sustainable building methods during the construction of the tournament’s infrastructure, such as the Ras Abu Abboud stadium, adding that they have procured “building materials that maximize resource efficiency and reduce emissions, waste and impacts on biodiversity.”
The SC says it is committed to keeping sustainability a main focus throughout the tournament — an example of this is planting trees and plants around the World Cup’s infrastructure to mitigate greenhouse gas emissions.
The onus, however, isn’t just on the organizers. Qatar says it will give recommendations to attendees and participants of the tournament on how they can reduce their own greenhouse gas emissions, including from travel, accommodation and food and beverage.
Once the spectacle is over, Qatar says it will offset any emissions generated during the tournament through building two mega solar power plants over the following 10-15 years, and by proactively supporting sustainable and low-carbon events in Qatar and the region
The reusability of the stadium’s parts is a reflection of that effort.
“Sustainability and legacy have always been at the forefront of Qatar’s planning and preparations for the World Cup,’ said Al Atwan.
When coming up with the stadium’s design, Al Atwan said movability was the main consideration for choosing shipping containers as the building blocks.
Containers are designed to be transported, either by air or sea, but when joined together to form a whole, they transform into a sturdy structure.
That ended up reducing the waste created on site during construction, says Al Atwan, adding that the Ras Abu Aboud Stadium has set a benchmark for sustainable and green mega-sporting event infrastructure.
Unlike the other seven Qatar 2022 venues, Ras Abu Aboud’s temporary nature meant that fewer building materials were required, keeping construction costs down and shortening the time needed to complete it.
Construction on the 4.8 million square feet (450,000 square meters) site commenced in late 2017 and is scheduled for completion by the end of this year, according to organizers.
Cooling sea breeze
When a fan steps outside Ras Abu Aboud, they’re met by Doha’s West Bay skyline. So when the sun goes down, a symphony of color — exchanged between the shimmering skyscrapers on one side and the stadium on the other — reflects off the shores and lights up the city.
And that proximity to the water doesn’t only offer attractive views.
All of Qatar’s World Cup stadiums are equipped with highly efficient cooling systems that maintain a comfortable atmosphere regardless of the hot temperatures outside.
But Ras Abu Aboud doesn’t need one because it gets a natural cool breeze from the sea nearby.
“Post-2022, the redevelopment of the site could take many forms and its legacy plans are still being finalized. It could be redeveloped into a public green space or used for a mix of commercial and residential projects,” said Al Atwan.
“It’s prime location means it’s suited to many projects and has an exciting future,” he added.
That future is not only physical, Al Atawan tells CNN. “Mega-sporting events like the FIFA World Cup have the power to inspire, prompt innovation and push existing boundaries to achieve new levels of success.”
Originally posted on Gharamophone: In May 2020, I posted Sariza Cohen’s stunning recording of “أَشْكُوا الْغَـرَامَ”(Ashku al-gharam), released on Polydor in 1938. This is the other side of that record. It is no less remarkable. Here the pianist and vocalist from Oran performs a composition by Algerian Jewish impresario Edmond Nathan Yafil. The title of…
It’s a truism that Europe is unstable if its North African neighbours are unstable. That being so, it should be of some concern to EU leaders that, on the bloc’s south Mediterranean border, Tunisia’s 10-year-old democracy appears to be on life support.
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