Report finds four-fifths of world trade ‘unsustainable’

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The Wake-up call for ESG difficulties in pursuance is getting more obvious as a report finds four-fifths of world trade ‘unsustainable’.  Here it is.

Wake-up call for ESG as report finds four-fifths of world trade ‘unsustainable’

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The overwhelming majority of global trade contributes negatively to the United Nations’ (UN) Sustainable Development Goals (SDGs), according to new research, which calls for better guidance for banks and corporates around what sustainable trade should look like.

Released this week by trade data and analytics provider Coriolis Technologies in partnership with MEP Saskia Bricmont and the Greens/European Free Alliance in the European Parliament, Measuring sustainability through trade maps countries’ export and import data against the 17 SDGs to identify negative and positive contributions.

It found that, on a scale of -1 to +1 where -1 means that all trade makes negative contributions, zero is neutral and +1 means that all trade makes positive contributions, world trade scores -0.58, with 80% of global trade by value being unsustainable.

A closer look at the numbers reveals some interesting findings. First, if the SDGs are broken down into their environmental, social and governance (ESG) elements, world trade scores -0.73 with regard to its environmental impact, and an almost entirely negative -0.91 for its social impact. However, when it comes to the ‘G’ in ESG – governance – global trade scores a positive 0.43.

“In other words, the world of trade and trade finance, alongside regulators, has put in place the governance structures to minimise economic risks in the form of employment, economic growth and provisions of basic health, but the price for the environment and for social equality and justice is overwhelmingly high,” the report says. It adds that trade policy can do “significantly more” to promote the basic human rights of trade as represented by the commitment to fair and open trade to promote sustainable cities and communities, responsible consumption, and to shore up the institutions of trade that help peace and justice.

Perhaps unsurprisingly, it is the most advanced economies that have the least sustainable trade, with the G20 nations accounting for some US$18.5tn in value terms in negative contributions to responsible consumption and production (SDG 12).

“These are economies where automotives, consumer electronics and machinery and components are routinely among the top five sectors for both imports and exports,” the report says.

However, while the poorest nations in the world score better, this is because imports are often for subsistence purposes rather than being aimed at luxury or consumption-based markets.

“If we are to meet the ambitious targets laid out at Cop26, we cannot afford to ignore the messages here – that the majority of world trade is unsustainable, and where it is not, it is a symptom of under-development,” the report says.

Defining what is and isn’t sustainable in global trade is a topic that policymakers, financiers and exporters alike have long tussled with. Unlike other asset classes, such as bonds, there are currently no standards that allow financial institutions to properly assess the entirety of the sustainability performance of trade finance transactions, leaving the industry open to accusations of greenwashing.

In its research, which it calls “an initial contribution to the process of creating an automated and consistent mechanism for measuring sustainability”, Coriolis Technologies has built on a methodology established by the UN Economic and Social Commission for Asia and the Pacific, which takes HS codes – the internationally standardised system of names and numbers to classify traded products – and compares them against the 17 SDGs.

For example, trade in tobacco negatively contributes to SDG 3 – good health and wellbeing – while trade in medicine would be a positive contributor. Because the methodology uses HS codes at six-digit level, it is able to distinguish between, for example, a diesel car (870332) and an electric car (870380) or, indeed, a hybrid car (870360), each of which have varying impacts on SDG 7 – clean and affordable energy, and SDG 12 – sustainable consumption.

The methodology isn’t without its shortcomings. For example, while specific goods may not in themselves be sustainable, they can often be used for purposes such as sustainable infrastructure. The same also applies in reverse when it comes to the trade of sustainable goods for non-sustainable purposes. What’s more, Coriolis Technologies adds that the scope to distinguish between resource utilisation for the same product in different countries is limited: “For example, a fruit such as a strawberry produced in the Middle East requires more water and energy to produce than in its indigenous environment,” the report says.

However, industry bodies and regulators are in wide agreement that the SDGs are an adequate taxonomy of reference to enable a comprehensive framework for sustainability, including the International Chamber of Commerce (ICC), which refers to them in its recent position paper on defining and setting common standards for sustainable trade and associated financing.

By providing a quick and simple measurement, Coriolis Technologies has laid bare the enormous amount of work ahead to make global trade more sustainable – but has also provided a call to action for policymakers.

“Since we know the sustainable development goals where the largest negative contributions are likely to be across world trade, we know the levers we should pull,” the report says, adding that too much of world trade contributes negatively to zero hunger, affordable and clean energy, clean water and sustainable cities.

“We also know the sectors which are to blame for the low scores of some countries: automotives, consumer electronics, machinery and components, plastics, iron and steel, and oil and gas. Oil and gas alone contributes some 10% to the value of EU trade, so if we can reduce our dependency on it, we can also reduce the negative contributions to the SDGs,” the report says, adding that the countries that have the worst scores all have automotives in their top five imports and/or exports. As a solution, it puts forward policy incentives towards the use of electric cars and clean energy in order to address the negative role that automotive and fossil fuel trade play at present.

Although Coriolis Technologies admits that the challenge of ensuring trade becomes a positive contributor to sustainable development is not an easy one to address, its development of a model to map out ESG weaknesses in trade should go some way to focusing minds as the trade and trade finance industry attempts to become more sustainable.

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UN sustainable development goals failing to have meaningful impact

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UN sustainable development goals failing to have meaningful impact, our research warns

By Frank Biermann, Professor of Global Sustainability Governance, Utrecht University

The above-featured image is credit to Kiara Worth/IISD/ENB, Author provided

In September 2015, leaders from 193 countries gathered in the UN assembly hall in New York to plan nothing less than “transforming our world”. This was the birth of the sustainable development goals, which aimed to “free the human race from the tyranny of poverty and want and to heal and secure our planet”.

There are 17 sustainable development goals, or SDGs, encompassing 169 more detailed targets and over 200 measures of progress. There is almost nothing that the UN does not seek to improve with these goals, from reducing poverty and hunger to securing better health, education, gender equality, sanitation, energy, economic growth and infrastructure, while reducing social inequality, ensuring sustainable consumption, protecting the climate, ocean, biodiversity and forests, and furthering peace and justice.

To give just a few examples of the 169 targets under these overarching goals, governments agreed, by 2030, to halve the proportion of people in poverty, end hunger, ensure all children complete a quality education for free, raise the income of the poorest 40% of each country’s population at a rate above the national average, and significantly increase funding to conserve and sustainably use biodiversity and ecosystems. The list goes on.

Sustainable development goals are found wherever UN bureaucrats and international diplomats meet. You’ll see the 17 flags of the SDGs in the lush gardens of the UN headquarters in New York. Posters listing the SDGs hang in government offices all around the world. Dozens of international meetings are held to discuss them each year. The UN even announced an international decade of action for achieving the goals. In the Netherlands, where I live, the government has appointed an SDG coordinator whom I once spotted in an electric car painted with the SDG symbols and a suit with the SDGs printed on the inner lining. In short, if you turn over a stone, you may find an SDG.

And yet, it is fair to ask: do these global goals actually change anything? Do they tangibly influence the actions of governments, business leaders, mayors, UN bureaucrats and university presidents? For the last few years, a growing community of social scientists has considered this question. With 61 colleagues from around the world, we analysed more than 3,000 academic studies that scrutinised aspects of the SDGs. Our findings are published in the journal Nature Sustainability, and a more detailed assessment will soon be published as a book. Because we believe it is important to share what we found with everyone, both publications will be free to download and read.

All talk, no action

Unfortunately, our findings are disheartening. The SDGs have infiltrated the things people say, think and write about global sustainability challenges. Governments mention the SDGs in their national reports to the UN, and some have set up coordinating units to implement them. Multinational corporations like to refer to the SDGs as well – especially those goals that are least disruptive to their commercial activities, like SDG 8 which calls on governments to “sustain per capita economic growth in accordance with national circumstances”. And unsurprisingly, UN organisations are all formally supportive of the SDGs.

People pick through a mountain of waste.

Coordinated action to reduce poverty has not materialised. EPA-EFE/Piyal Adhikary, Author provided

But nothing has changed where it matters. We found few new policies, institutions or budget allocations designed to further specific goals. Did any government change its laws to achieve the many intersecting transformations envisioned by the SDGs? Did any ministry in those governments create new programmes for implementing the SDGs? If so, there is little evidence of it. What we found instead are changes in discourse. Those in power now refer to the SDGs often. Yet the way they govern has not changed.

What should we make of this? Optimists point to the SDG timeline: the SDGs were only agreed upon in 2015 and are to be achieved by 2030. The analysis that we published largely uses research from before 2021. In other words, we have eight more years to go. That governments and corporations talk differently about sustainability and refer to the SDGs more often today can be seen as a sign of hope that this talk will be followed by action.

And yet, mere talk can backfire by conferring legitimacy on unsustainable behaviour, letting corporate leaders wave colourful SDG flags while prizing profits above all else. Simply talking about SDGs can demobilise civil society by creating a false impression of action. Even as promised, transformations remain elusive. Idle talk acts as a smokescreen, hiding the reality of delay and stagnation.

I do not want to belittle the importance of having the SDGs. Our study only provides a snapshot of the present state of implementing them. The SDGs do reflect some wonderfully high-minded global ambitions, not least by focusing on global inequalities (SDG 10), necessary improvements to national and global institutions (SDG 16) and the reduction of harmful consumption patterns in wealthy countries (SDG 12).

But we have to make the goals actually work. Civil society and social movements need to prick the bubble of SDG talk. Government leaders and industry bosses must not be allowed to hide behind SDG flags in their offices, SDG buttons on their lapels and SDG logos on their glossy pamphlets. The SDGs cannot remain a lofty inspiration. We must convert their promise to action.


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Egyptian waste to supply hydrogen to Germany

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Rethink Technology Research in an article by Harry Morgan informs that H2-Industries intend to use Egyptian waste to supply hydrogen to Germany.

 

Egyptian waste to supply hydrogen to Germany, says H2-Industries

Hydrogen produced from waste could soon be flowing from Egypt to Germany, with US-based H2-Industries signing deals this week that could see its ‘carbon-negative’ supplying the market with the lowest cost of hydrogen yet. 
This week, the company announced plans to produce 300,000 tons of hydrogen per year in Egypt, out of 4 million tons of organic waste and non-recyclable plastic.   
The announcement comes just days after talks at the MEFED energy conference in Jordan, where Germany climate minister Robert Habeck agreed to collaborate with H2-Industries to find German off-takers for the hydrogen produced in the MENA region, as part of the country’s new strategy to ramp up hydrogen imports to replace Russian gas.
The company has also recently signed MoUs for the design, delivery, installation, and operation of hydrogen production plants in Egypt and Oman. In late April, it unveiled plans to develop a $1.4 billion waste-to-hydrogen plant in conjunction with 300 MW of solar power plants and baseload capacity in Oman. It claims that it is in discussion for subsequent projects in “30 countries from South America, Europe, the Middle East to all areas in Africa.” In total, the company’s projects in the MENA region will aim to produce up to two million tons of clean hydrogen per year from 2030.
Further agreements are also being negotiated to see the hydrogen produced stored using the company’s liquid organic hydrogen carrier (LOHC) technology, which will then be transported to Germany for industrial off-takers.
H2 Industries hydrogen production uses a process called thermolysis, which unlike combustion, uses a high-temperature conversion process to produce hydrogen without oxygen. In thermolysis units – which take a similar form to pre-assembled and scalable shipping container frames – waste is decomposed through steam-reforming at a temperature of around 900 degrees Celsius. The product from this reaction is a hydrogen-rich gas mixture, from which hydrogen can be extracted and purified, as well as some additional waste, which can be discarded, or sometimes used in fertilizers.
The system can use a range of waste materials as its feedstock, including non-recyclable plastic waste such as hydrocarbons like polyethylene, biogenic residues from agriculture, forestry, food waste, and sewage sludge.
Through preventing any emissions from this process, such production of hydrogen can essentially be labelled as ‘carbon negative.’ On a global scale, the vast majority of municipal waste goes into open dumps (33%) and landfills without gas collection (28.9%). With a high biomass content in this situation, waste can be a major source of methane – with an 84-times greater impact on the climate than CO2, over a 20-year period. By processing waste for green hydrogen, the methane emitted from waste can theoretically be eliminated. As could the emissions of toxic gases like dioxins, furans, mercury and polychlorinated biphenyls which occur when waste is incinerated.
The other issue that the technology addresses is the current capacity to source green hydrogen solely from renewables. Using alternative technologies, wind and solar can be left dedicated to electricity production. To reach suggested targets of 24% of the world’s energy mix by 2050, green hydrogen production would demand 31,320 TWh of electricity – more than the 26,000 TWh of global power generation from all sources, and far more than the 3,000 TWh of wind and solar power generation used for electricity today.
Another key advantage is that the costs of this type of hydrogen could be offset significantly by the ‘gate-fees’ that local authorities typically require for treating waste, as well as the carbon credits for avoiding landfill methane emissions. In California, for example, municipalities must pay in excess of $100 per ton to have their waste processed.
By competing with these gate fees, H2 Industries believes that the cost of hydrogen it produces will be around half of the existing green hydrogen production technologies, and lower than the $1.50 per kilogram benchmark cost of grey hydrogen.
One thing that must be considered, however – and is often neglected due to some sneaky accounting – is the significant energy needed to dry to waste before it can be turned into hydrogen.
The Suez Canal project will be the first of its kind at this scale, although there are several others focused on producing hydrogen using waste feedstocks.Boson Energy – a Luxembourg based company – has developed a plasma-assisted gasification process that uses extremely high temperatures to break waste down into hydrogen, carbon dioxide and a molten slurry that solidifies into a glassy rock that can be sold for profit and used in cement, concrete or road building. The company claims that the income from this could offset the cost of hydrogen production, and allow the hydrogen to be produced at zero or even sub-zero costs.

Ways2H, similarly, is looking to use a processed feedstock of Municipal Solid Waste, mixed with ceramic beads that have been heated to around 1,000°C. At this heat, the bulk of the waste is converted to methane, hydrogen, carbon monoxide and CO2, while a portion is left as solid char – which can be identified as ‘stored carbon.’ This char is recovered and burned as the supply of heat for the ceramic beads.

The mixture of gases then undergoes steam reforming, to produce hydrogen and CO2 from the methane – improving hydrogen yield by 50%. Depending on the initial feedstock, Ways2H claims that one ton of dry waste can produce up to 120 kilograms of hydrogen – although typical yields sit between 40 and 50 kilograms. This depends on the water content of the feedstock – which inherently boosts hydrogen content – with the 120 kg figure coming from Ways2H’s pilot in South America, which uses sewage sludge as its feedstock.

Last week, the UK also approved its second waste plastic to hydrogen plant, with the £20 million West Dunbartonshire facility using Powerhouse Energy’s technology aiming to produce 13,500 tons of hydrogen per year.

The above-featured image is of H2-Industries (Photo Credit: Shutterstock/ Alexander Kirch

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We won’t get anywhere without placing the SDGs in local contexts

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We won’t get anywhere without placing the SDGs in local contexts

By Su Li Chong, Universiti Teknologi Petronas (UTP) in Times Higher Education (THE) says :
Applying the SDGs looks vastly different in a Western city and a rural Asian village. Su Li Chong explains how universities can help us get past a one-size-fits-all approach

Never in human history has the world been more focused on a singular aim: to rescue and resuscitate planet earth. Systematically broken down the 17 Sustainable Development Goals (SDGs), this is the only masterplan to which all world leaders have signed up, and this aim sees all nations, big and small, rich and poor, tasked with achieving the SDGs and ensuring control of consumption that will lead to a net zero carbon future.

The recent Climate Change Conference (COP26) was abuzz with deep debates over what counts as consumption, sustainability and responsibility. Meanwhile, there is vast discordance on how concepts such as “consumption” and “emissions” are defined by developing and developed nations.

So, how can we really understand and apply the SDGs if definitions are, at best, not easily agreed upon? If we are to take up the clarion call to observe and comply with internationally agreed measures, it stands to reason that this must be done with respect to local cultures.

Japan can give us a lesson in this regard. The reintroduction of the “circular economy” into the 21st century’s popular imagination may mislead some into thinking this is a modern idea, but it is not new by any stretch of the imagination. Although known by a different name, this cyclical practice of using, designing and reappropriating materiality was already commonplace in Japan’s Edo community more than 300 years ago.

To a degree, this explains Japan’s enviable and extraordinary recycling culture today. So, how have they been successful? Among other factors, Japan’s education system – which prizes values and cultural awareness – has been credited for its success. Particularly, Japan’s ongoing efforts in Education for Sustainable Development that involve institutions, educators, youth and local communities ensure that generations of Japanese citizens are educated to understand their individual roles in creating a shared, sustainable future.

After all, counting carbon emissions is really about human behaviour. And human behaviour is teachable. This suggests that, to sustain planet earth, the most fundamental change must take place within the engine of education. But how does education relate to the SDGs, especially if it is itself one of the goals?

The key is to become interconnected. Interconnectedness is understood to be about cultural awareness, biodiversity and sustainability. Thus, initiatives pertaining to sustainability must be located within a country’s historical, cultural and ecological landscape.

So, with interconnectedness at its foundation and education at its heart, this is how we should understand and really apply the SDGs:

  1. Interpret a particular SDG through the local lens

How is the goal worded when translated into local languages? Does the goal have an equivalent or even different meaning? For example, SDG 4, quality education, is among the oldest of the 17 SDGs, and central to this aim is the eradication of illiteracy. In the Western world, the idea of reading has been broadened to cover more than word-based recognition. However, in the Malay language for example, illiteracy is translated as “letter blindness” (buta huruf). This indicates that for a Malay-speaking community, the understanding of quality education and literacy is still narrowly defined as being about letter recognition when, in fact, it should be about the ability to make meaning from multiple sign systems.

For example, a child who spends a lot of time outdoors will eventually be literate in nature’s sign systems, such as weather changes or plant ecology. Using this broad perspective, innovative pedagogies can be introduced into literacy lessons that could apply multiliteracies in environmental themes. This should encourage creative ideas that will champion local versions of good practice that can sustain a balanced biodiversity.

How universities can help: provide a pool of authentic experts who have relevant and long-running experience with the practical problems of local communities so that these experts can become the bridge to connect high-level innovations with day-to-day living.

  1. Appropriate a particular SDG to the strengths of the community

For example, SDG 13 on climate action sets a complex requirement to combat climate change, with one of its aims being to reduce carbon emissions. Carbon emissions will have no immediate relevance to a child in rural Asia, but the child’s carbon-free walk or bicycle ride to school can be lauded as being an important contribution to saving the planet. Further to this, SDG 13 can be appropriated around rewarding those who continue to walk or cycle to school. The goal needs to be applied to the local context so that not just an environmental awareness but a cultural one can be raised, because the culture of net zero is fundamentally about our everyday behaviour.

How universities can help: be the voice that champions and celebrates the strengths of local communities by partnering with local schools and providing mentorship to school students. This will allow young people to know that their actions, even if apparently small, are highly valued and respected.

  1. Be prepared to tackle big, complex questions and issues

The application of any of the SDGs requires individual nations to be courageous in confronting difficult questions, especially relating to core issues such as education and livelihoods. SDG 1, end poverty in all its forms, is another goal that underpins all the others. And indeed, developing nations may have to consider poverty eradication above the other goals. Overconsumption is not relevant in a context where basic needs such as food, equitable education and safe shelter are not met. An understanding of a community’s historical trajectory as far as poverty patterns and injustice towards minority groups are concerned, while difficult to address, is key to mobilising the rest of the goals.

How universities can help: encourage honest research that is inclusive of both the humanities and the sciences so that problems connecting society and its innovations can be scrutinised and critiqued. Provide safe spaces for “hard talk” to be had, so the university community sees critical questioning as a necessary part of genuine scholarship, which is not to be avoided.

In sum, our journey may be one, but our paths are many. There is danger in reducing an internationally set structure into a singular narrative, but there is hope in being inclusive and respectful of local perspectives for the greater good of the global community.

Su Li Chong is senior lecturer in the Institute of Self-Sustainable Building, Department of Management and Humanities, at Universiti Teknologi Petronas, Malaysia. She is also head of university social responsibility (education pillar).

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Sustainability actions speak louder, says Oracle study

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TECHWIRE ASIA looks like yet another media to confirm that Sustainability actions speak louder, all per an Oracle study.

When it comes to sustainability, how much action is actually taken, given the efforts announced today? While organizations continue to make sustainability announcements and find ways to reduce their carbon emissions, the reality is, that people are fed up with the lack of progress society is making toward sustainability and social initiatives.

According to the No Planet B study by Oracle and Pamela Rucker, CIO Advisor and Instructor for Harvard Professional Development, people want businesses to turn talk into action, and believe technology can help businesses succeed where people have failed. The study involved more than 11,000 consumers and business leaders across 15 countries, including  500 from Singapore.  

The statistics from Singapore show an increasing demand for businesses to step up sustainability and social efforts. In fact, 97% believe sustainability and social factors are more important than ever with 95% also believing that society has not made enough progress.

About half of the respondents attribute the lack of progress to people being too busy with other priorities with 39% believing people are just too lazy or selfish to help save the planet. 53% also believe businesses can make more meaningful changes on sustainability and social factors than individuals or governments alone.

Interestingly, 92% believe businesses would make more progress towards sustainability and social goals with the help of AI, and 62% even believe bots will succeed where humans have failed. For business leaders, they are aware that sustainability efforts are critical to corporate success and even trust bots over humans alone to drive sustainability and social efforts.

As such, 97% of business leaders would trust a bot over a human to make sustainability and social decisions. They believe bots are better at predicting future outcomes based on metrics/past performance, collecting different types of data without error, and making rational, unbiased decisions.

At the same time, business leaders also believe people are still essential to the success of sustainability and social initiatives and believe people are better at educating others on the information needed to make decisions, implementing changes based on feedback from stakeholders, and making context-informed strategic decisions.

Sustainability actions lauded

Another interesting highlight from the survey showed that people will cut ties with businesses that don’t take action on sustainability and social initiatives. Simply put, businesses need to prioritize sustainability and social issues and rethink how they use technology to make an impact, or risk facing major consequences.

The report also showed that if organizations can clearly demonstrate the progress they are making on environmental and social issues, people would be more willing to pay a premium for their products and services, work for them, and invest in their companies. Business leaders understand the importance and urgency with 95% believing sustainability and societal metrics should be used to inform traditional business metrics. 93% also want to increase their investment in sustainability.

For Pamela Rucker, CIO Advisor and Instructor for Harvard Professional Development, the events of the past two years have put sustainability and social initiatives under the microscope and people are demanding material change. While there are challenges to tackling these issues, Rucker pointed out that businesses have an immense opportunity to change the world for the better.

“The results show that people are more likely to do business with and work for organizations that act responsibly toward our society and the environment. This is an opportune moment. While thinking has evolved, technology has as well, and it can play a key role in overcoming many of the obstacles that have held progress back,” added Rucker.

Juergen Lindner, senior vice president, and CMO, Global Marketing SaaS at Oracle also commented that while business leaders understand the importance, they often have the erroneous assumption that they need to prioritize either profits or sustainability.

“The truth is this is not a zero-sum game. The technology that can eliminate all the obstacles to ESG efforts is now available, and organizations that get this right can not only support their communities and the environment, but also realize significant revenue gains, cost savings, and other benefits that impact the bottom line,” said Linder.