Accountability for a Just Transition: COP27 must look Beyond Emissions

November 28th, 2022 Margherita Barbieri Leave a comment

In the heat of Sharm El Sheikh, discussions started on 6 November that will determine how, over the next years, we address the defining challenge of our time: climate change. The latest United Nations Climate Change Conference (COP27) brings together political and business leaders, activists, civil society groups, international organizations and others, to set commitments that can quicken the action and adaptation needed to mitigate the impacts of climate change.

The context for COP27 could not be more urgent, as the latest IPCC report sets out in stark terms. Human-induced climate change is causing dangerous and widespread disruption, to the environment and countless people around the world. Increased heatwaves, droughts and floods are already a reality.

These extremes are causing cascading affects that have exposed millions of people to health risks, and acute food and water insecurity, especially in developing and emerging economies. These crises are inter-connected and those affected most are often the least to blame. For example, World Resources Institute analysis shows that, while many parts of Africa are at the forefront of climate change impacts, the continent accounts for only 3% of global CO₂ emissions.

Prioritizing adaptation that protects the most vulnerable

How we address these challenges require holistic thinking, long-term strategies and clear accountability, to prevent and alleviate negative impacts. We cannot achieve that without widespread and comprehensive reporting by organizations on their climate impacts.

As UN Secretary-General António Guterres has set out, greater leadership is needed from governments and businesses, warning that efforts to keep the rise in global temperatures to 1.5 degrees above pre-industrial levels is “on life support”. And so, with good reason, the focus of reporting has been mostly on emissions, with widespread commitments by companies to reach ‘net-zero’ targets.

Yet focus on emissions reductions alone is not enough. If we are to avoid further escalation and consolidation of crises, we urgently need transparency and accountability on how a low-carbon transition, which supports the needs of workers and communities, is being prioritized. Beyond this, organizations need to explain how their strategies and business practices alleviate the impacts of climate change on those around them.

To this end, there are growing demands on companies to help the communities directly affected by their activities to become more resilient against the impacts of climate change.

Clarity on the climate data that matters most

At GRI, we urge all organizations to disclose their impacts on the planet, because transparency – through quality, comparable information – is an essential stage in identifying where responsibilities lie and contributing to global solutions to the climate crisis. Sustainability reporting can be a driver for better environmental performance. However, companies are not always reporting the data that matters most.

That is why, as the most widely adopted standard-setter for sustainability impacts, we convene stakeholders across the board in our standards development, to determine best practice. This is the approach we will again follow as we get ready for a major update of GRI climate-related standards.

A review will launch in 2023 and cover not only commitments and actions to mitigate greenhouse gas emissions, but also how to ensure a holistic view on adaptation and resilience to climate change. This will account for the physical impacts of climate change as well as the low-carbon transition on workers and communities. A key consideration here will be to connect the climate standards review to our current revision program for labor-related reporting.

Demands for more clarity and consistency on the most relevant climate-related impacts of organizations, from the local to the global levels, has been a key learning from our Sector Program – particularly in the Sector Standards for oil and gas (GRI 11) and coal (GRI 12). Alongside steps to mitigate emissions, these standards have extensive focus on achieving a just transition. The new Agriculture, Aquaculture & Fishing Standard (GRI 13), meanwhile, gives attention to how organizations enable adaptation and protect critical sources of food.

Our revision of the Biodiversity Standard (GRI 304) has shone a light on the inter-relations between the climate and biodiversity crises. This process is at an advanced stage – and the exposure draft for the revised Biodiversity Standard is expected to be released for public comment early December (during the UN Biodiversity COP 15). This updated standard will closely intersect with our work on climate standards.

‘Double materiality’ in climate disclosure

As demonstrated by our multi-stakeholder engagement, we believe standard-setting should not happen in isolation. To that end, our review of climate standards will not only build on our wider program to develop the GRI Standards, it will also see collaboration and alignment with the climate standards under development by the International Sustainability Standards Board (ISSB) and the recommendations of the TCFD, as well as new EU standards under the Corporate Sustainability Reporting Directive.

GRI reporting is focused on impact materiality in terms of how the organization impacts on people and planet. We will ensure our updated climate standard(s) complement the financial materiality disclosures in the proposed ISSB standards, reflecting our commitment to a global comprehensive reporting regime in which impact and financial disclosure are on an equal footing.

When it comes to climate reporting, the interrelationship between impact on the organization and impact on the outside world is clear to see. Taken together, this ‘double materiality’ perspective – with both the inside-out and outside-in viewpoints taken into account – will be crucial in driving accountability for climate impacts.

GRI AT COP27

Together with partners, GRI is co-hosting two events at COP27, under the theme Towards a Global Comprehensive Climate Reporting System. The first event (Green Zone, 9 November) explores a vision for regional businesses, while the second event (Blue Zone, 11 November) will see GRI and the IFRS Foundation discuss the challenge from the perspective of financial and business leaders.

GRI is keen to hear from a multitude of stakeholders on their climate reporting needs and expectations. Margherita and Noora will both be in attendance in the second week of COP27, to gain early input on what impact-focused climate standards should look like. If you are traveling to Egypt, reach out and arrange a meeting.

ABOUT THE AUTHORS

Margherita Barbieri is a manager in the GRI Topic Standards Team, where she is leading the project to create climate change standard(s). Before joining GRI, Margherita worked in the food and beverage industry, specializing in marketing and sustainability. She also led the World Economic Forum circular economy initiative, Scale 360°, in Turin. She completed the Executive Program in Corporate Sustainability from Saïd Business School (UK), and holds an MA International Relations from the University of Turin (Italy).

Noora Puro is a manager for the GRI Sector Program, where she has overseen the developments of the GRI Oil and Gas and Coal Standards, and is currently managing the project for a Mining Standard. Prior to GRI, Noora specialized in corporate and sustainability communications, advising and preparing reports for multinational enterprises. She holds a MA Humanities from the University of Helsinki (Finland).

ABOUT GRI

Global Reporting Initiative (GRI) is the independent, international organization that helps businesses and other organizations take responsibility for their impacts, by providing the global common language to report those impacts. The GRI Standards are developed through a multi-stakeholder process and provided as a free public good.

Archives, Global Logistics, Global Trade Daily, Special Reports, Trucking

Reducing emissions requires efficient supply chain solutions

March 14th, 2022 Stephane Poirier Leave a comment

In November 2021, the United States Department of State and the United States Executive Office of the President released a new long-term strategy for reducing CO2 emissions. The report laid out the ambitious goal of achieving net-zero emissions no later than 2050, which will require significant change, adaptation, and transformation across almost every sector, and in particular the manufacturing and transport industries.

These ambitious targets build on last year’s summit, where the US pledged to reduce net greenhouse gas emissions by 50-52% in 2030, in line with the European Council’s requirements. According to experts around the world, these new, increased goals are essential when it comes to meeting objectives set for the middle of the 21st century.

Around the world, the food and beverage sector is responsible for about one third of all greenhouse gas emissions, largely due to their complex supply chains. Without taking significant action to address supply chain emissions, meeting emissions targets will be a challenge. Mitigation efforts will require a significant shift in the way supply chain issues are considered within the sector, particularly when it comes to agriculture and land use.

The largest direct source of greenhouse gas emissions, is the US transportation sector, having overtaken the power sector back in 2015. It is responsible for 29% of all US greenhouse gas emissions, according to an EPA report released in 2021. As part of the drive towards Net Zero, President Joe Biden signed an Executive Order on Strengthening American Leadership in Clean Cars and Trucks in December 2021. This set a target of 50% of cars and light trucks to be zero-emissions by 2030 and directed NHTSA to finalize emissions targets for medium- and heavy-duty vehicles by December 2022.

These strategies, targets, and directives are a clear indication that the US approach to CO2 emissions is hardening, and that decisions are being made that will have significant impacts on those responsible for supply chains.

However, reducing emissions is not solely linked to vehicles, and clean technologies and lower-emission cars and trucks cannot be the only solution, even in the transportation sector. A huge part of achieving these ambitious goals will come from significant improvement in efficiency throughout the entire logistics process, including, of course, the decisive areas of warehouse and transport management. Warehouse management solutions (WMS) and transport management solutions (TMS) have become key elements that not only improve general efficiency, but are also essential to creating a more effective and seamless supply chain process, optimizing transportation and, in turn, reducing emissions.

Warehouse management solutions

The warehouse is the heart of the entire logistics system, and its management has a direct impact on the rest of the links in the supply chain including, unsurprisingly, on transportation. An effective WMS not only guarantees more efficient use of physical warehouse space but also optimizes the movement of goods and materials inside the warehouse, ensuring cost savings and reduction of emissions right from the outset. But a WMS is not just about managing what goes on in the warehouse itself. It improves the organization of transportation and creates significant improvements in this area by synchronizing warehouse operations with arrivals and departures of carriers, transferring the newfound efficiency of the warehouse to transport, and onwards to the entire supply chain.

Transportation Management Solutions

Increased focus on emissions and environmental improvements reinforces the strategic value of TMS tools as well. According to analysis by Gartner and Supply Chain Digest, among others, TMS tools can offer immediate savings of anywhere between 15% (for the annual transport costs) and 30% (for personnel and management). Greater efficiency also undoubtedly has an effect on the reduction of emissions throughout the entire logistics chain. The two-pronged benefits of using technology to improve your supply chain operations is a decisive element for companies in the immediate future.

Transportation and Climate Initiative

Many leading companies looking to take proactive and practical steps towards decarbonization participate in the Transportation and Climate Initiative (TCI), a scheme similar to the European Lean & Green platform. The TCI is a regional collaboration of 13 Northeast and Mid-Atlantic states and the District of Columbia that seeks to improve transportation, develop the clean energy economy, and reduce carbon emissions from the transportation sector.

As with the Lean & Green initiative in Europe, many companies who operate under the jurisdiction of the TCI take advantage of Generix’s WMS and TMS solutions to achieve greater efficiencies in warehouse and transportation management; solutions without which it would be extremely difficult to reduce and ameliorate the energy costs of transport.

In short, logistics is in the process of a significant transformation to meet the demands of an increasingly demanding market, as well as to address environmental targets and requirements. There are a number of technological tools already standard in the world of logistics that have completely changed the productivity of the sector, and which will be essential to be able to take the next steps towards productivity, efficiency, and decarbonization.

For the manufacturing and transport industries, the path to Net Zero does not have to be a painful one. The tools and processes that are vital for reducing emissions also come with significant benefits and improvements for productivity and efficiency.

Supply chains are central to the fight against climate change. Decarbonization and emission reduction efforts also help improve sustainability, as well as making supply chains more resilient for the future.

If you want to reduce your carbon footprint through our solutions, contact us!

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.

Archives, Global Trade Daily, Special Reports

Accepting Gas as Sustainable Will Hurt Korea’s Green Finance Credentials

November 5th, 2021 Christina Ng Leave a comment

After six months of resisting industry calls to add liquefied natural gas (LNG) to its green taxonomy, the South Korean government this week finally succumbed to gas lobbyists.

This is surprising as, only 2 weeks ago, President Moon Jae-in made a well-received, new emissions pledge—cutting the country’s greenhouse gas emissions to 40% by 2030.

The obvious dichotomy here is that recognizing gas and LNG as an environmentally sustainable “transition” fuel will likely lock South Korea into a high-emitting future, which directly contradicts the policy and market incentives created by President Moon’s new emissions reduction targets.

Released last week, the draft green taxonomy, known locally as the K-Taxonomy, prescribes an end-use emission technical screening criteria of 320g of carbon dioxide (CO2) per kilowatt-hour (kWh). A life-cycle emission standard is also expected, but it will only apply from 2025.

This means that new unabated LNG-power projects, of which around 10 gigawatts are expected to flood South Korea’s energy market by 2025, would qualify for green bond and loan financing if the draft K-Taxonomy is finalized without changes.

Emissions-wary ESG investors should be on alert

South Korean green debt amounted to US$42.8 billion on 30 September 2021, according to Bloomberg New Energy Finance. A third of it, around US$14.22 billion, funded power and energy companies.

If the current draft of the K-Taxonomy proceeds as is, ESG investors may find themselves inadvertently backing gas.

Gas is a fossil fuel that contributes carbon and methane to the atmosphere through its combustion, with lifecycle emissions that are dangerous and significant. Moreover, methane from gas has a warming effect up to 80 or 90 times more powerful than carbon over a 20-year period, making gas worse for the climate than coal in the short term.

The tension around the limited role for gas in energy transition is evident in the taxonomy work playing out in all global markets.

After much controversy, the European Union (EU) accepted gas-powered generation as a ‘transitional’ asset class under its Sustainable Finance Taxonomy, provided that a project’s lifecycle carbon emissions are limited to 100g CO2 per kWh.

At this specification, gas-powered projects in the EU will likely require the use of carbon capture technology (CCS), which is yet to be proven economically or technically viable at scale anywhere in the world. Under these conditions, gas is unlikely to be funded in the short to medium, or even the long term, under the EU’s taxonomy.

The K-Taxonomy is expected to be finalized by the end of 2021, and with its current draft not consistent with the gold-standard EU Taxonomy, investors are right to be wary.

The Moon administration risks missing out on new pools of global capital

With the inclusion of gas in the K-Taxonomy, Korean policymakers have effectively signaled they aren’t up to the task of leading market development with a green taxonomy.

Instead, they are showing a preference for remaining in lock-step with emerging market Southeast Asian counterparts who have flagged their intention to recognize gas-powered generation as “green”.

This puts South Korea at risk of deterring serious ESG investors who typically prefer “dark green” assets—solar, wind and geothermal for example.

The United Kingdom’s (UK) inaugural sovereign green bond issued in September 2021 demonstrated that risk when it provided a mixed portfolio of green and controversial assets like “blue hydrogen”, which uses methane gas in its production. Several leading debt investors immediately expressed criticism over the sovereign’s opportunistic ‘green’ bond and avoided it entirely.

China is working with the EU to harmonize their respective taxonomies

By contrast, China—the largest green debt market in the region—took a different and much more strategic approach, learning from market trends and adapting.

Its first green taxonomy in 2015 categorized “clean coal” as a green project that qualified for the issuance of green bonds, drawing widespread criticism, particularly from foreign investors.

Recognizing the significance of a truly green taxonomy, in mid-2021, China removed fossil fuel-related projects and the new Green Bond Endorsed Project Catalogue—its equivalent green taxonomy—now excludes gas, LNG and coal-fired power activities.

Like South Korea, China relies on burning fossil fuels to power the country. However, President Xi Jinping’s pledge to accelerate the country’s transformation to a green and low carbon economy, and to achieve carbon neutrality before 2060, has opened the door to a much more strategic view on how China’s green finance market should develop, and which technologies should be incentivized.

China is also working with the EU to harmonize their respective taxonomies by the end of 2021. This is a positive initiative between jurisdictions in response to investor requests for a common standard on green or sustainable projects. The move also indicates that the Asian giant is ready to compete for global green capital.

China understands that ESG-focussed investors have become more forensic in their research and decision-making on what the different taxonomies recognize.

More notably, China’s mindset for justifying green energy activities appears to be unfazed, at least for now, by its need to finance new coal and gas-related projects, said to be required to see them through the energy transition phase—reasoning that its Asian counterparts, including South Korea, have defended and used to classify their own gas-powered projects as green.

But fossil fuel projects have a long history of being successfully financed. The existence of a green or sustainable finance taxonomy does not prevent assets or projects that the taxonomy excludes from being funded through conventional sources of finance. As in the past, fossil fuel power projects will continue to raise funds through traditional non-labeled debt market instruments.

Investors want green taxonomies

Meanwhile, investors around the world are urging governments to step up and commit to clear, strong and investable policies that will unlock the capital needed to transition to a net-zero economy.

Despite its now hollow new emissions pledge, the Moon administration appears unprepared to rise to the occasion. It risks missing out on new pools of global capital if it does not get the policy settings right, and instead chooses to pander to the fossil fuel industry.

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Christina Ng is a Research and Stakeholder Engagement Leader – Fixed Income, Institute for Energy Economics and Financial Analysis (IEEFA).

Archives, Global Logistics, Global Trade Daily, Ocean Ports

Does Your Sustainability Plan Include Propane? Here Are 3 Reasons It Should.

April 29th, 2021 Matt McDonald Leave a comment

Clean Air Month, celebrated in May, brings heightened awareness to an important issue for ports and port communities.

Ports traffic a high number of ships, vessels, barges, and boats on a daily basis and, because many are powered by dirty, high-carbon bunker fuel, air quality issues are a particular concern in and around port communities. As the momentum to reduce emissions and improve air quality continues to grow across the international port industry, many port authorities are seeking cleaner energy alternatives to use on-site.

According to the Environmental Protection Agency (EPA), switching to cleaner fuel is one of the most effective strategies for emissions reduction. That means clean, low-emissions energy sources—like propane—can offer considerable environmental and economic advantages for various port applications.

1. Propane-powered equipment reduces emissions

Diesel engines are the current workhorse of the American economy, and although they can be reliable and efficient, older diesel engines can emit significant amounts of air pollution, including particulate matter, NOx, and carbon dioxide, according to the EPA. And while many port authorities think the solution to lower emissions is to electrify their equipment, they’re likely unaware that propane has a cleaner and more transparent emissions profile when lifecycle emissions are taken into consideration. This includes site-to-source emissions produced in the creation and transmission of electric forklift batteries.

Sometimes data can speak louder than words and the Propane Education & Research Council has valuable data to support the claim that this is the cleanest energy source for port operations. Most notably, using propane produces 43 percent fewer greenhouse gas emissions than using an equivalent amount of electricity generated from the U.S. grid, according to data from PERC. And thanks to propane’s energy versatility, crews can reduce emissions across a port with propane-powered forklifts, port and terminal tractors, light- and medium-duty vehicles, shuttles, power generation, and even small marine vessels.

For smaller material handling needs on-site, propane forklifts reduce emissions compared with their diesel and electric counterparts. Compared with electric, propane can reduce SOx emissions by 76 percent, and compared with diesel forklift engines, propane forklift engines can produce up to 97 percent fewer hydrocarbon and nitrogen oxide (NOx) emissions—without any drop-off in payload or power.

Propane can bring emissions reductions to a port’s vehicle fleet, too. Terminal tractors powered by propane autogas produce 12 percent fewer lifecycle greenhouse gas emissions than gasoline-fueled terminal tractors, according to data from the Argonne National Laboratory. And propane autogas vehicles reduce NOx emissions by up to 36 percent compared to diesel vehicles, greenhouse gas emissions by up to 22 percent compared to gasoline vehicles, and up to 45 percent less particulate matter than electric vehicles throughout the full fuel cycle.

2. Propane is environmentally friendly

When ships come in and out of ports day in and day out, not only do they release harmful emissions into the atmosphere, but they can also have a negative impact on water resources, ecosystems, and marine life. Powering land- and sea-side port equipment with propane can introduce a more environmentally-friendly solution. It is an approved clean alternative fuel under the Clean Air Act. Additionally, the energy source is non-toxic and, if leaked, it vaporizes and dissipates into the air, eliminating contamination to air, land, and water resources. Spilled gasoline or diesel, on the other hand, can quickly contaminate these resources.

3. Propane is only getting cleaner

The energy source itself is seeing innovation and in the near future, more propane will be made from renewable sources. Renewable propane is a byproduct of the renewable diesel and jet fuel production process, which converts plant and vegetable oils, waste greases, and animal fat into energy. Because it’s produced from renewable, raw materials, renewable propane is even cleaner than conventional propane—and far cleaner than other energy sources. And considering its chemical structure and physical properties are the same as traditional propane, renewable propane can be used for all the same applications.

To learn more about the environmental benefits and versatility of propane for port operations, visit Propane.com/Ports.

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Matt McDonald is the director of off-road business development for the Propane Education & Research Council. He can be reached at matt.mcdonald@propane.com.