Navigant Research Blog

In a “Daytona 500” Rally for Climate Pledges, 2018’s Race Is on from Davos to Denver

— April 5, 2018

At the World Economic Forum (WEF) in Davos, Anand Mahindra, chairman of the Mahindra Group, challenged 500 businesses to set a science-based target (SBT) aligned with the Paris Agreement ahead of September 2018’s Global Climate Action Summit in California (dubbed the Mahindra Challenge). Today, there are 369 companies committed to the SBT Initiative.

Racing Forward

On March 1, 2018, companies raced forward with pledges at the 2018 Climate Leadership Conference (CLC) in Denver. VISA committed to 100% renewable energy by 2019 and L’Oréal intends to reach carbon neutrality across all its US-based facilities after a deal to procure renewable landfill gas. After being bestowed CLC awards, 15 other companies also put points on the scoreboard.

At WEF New York on March 20, McDonald’s put forward its Scale for Good climate commitment as the first restaurant company to adopt a SBT, including:

  • Partnering with franchisees to reduce restaurant and office emissions offices 36% by 2030 below a 2015 base year.
  • Collaborating with suppliers and producers, McDonald’s committed to a 31% reduction in emissions intensity per metric ton of food and packaging across the supply chain by 2030 below 2015 levels.

McDonald’s expects to prevent 150 million metric tons of CO2 equivalent from being released to the atmosphere by 2030.

On March 27, MIT hosted the XLI Global Change Forum with the title, Science-Based Targets: Rationale and Challenge. The opening panel was led by Navigant and highlighted the practice of setting targets with two pharma titans, Novartis and Biogen, and perspectives from the UN Framework Convention on Climate Change (UNFCCC).

Officials and Race Organizers

The SBT Initiative defines and promotes best practices in target setting and offers guidance to reduce barriers, and independently assesses and approves companies’ targets. It also maintains an online site that lists all companies setting SBTs.

We Mean Business (WMB) is a global coalition of the most influential businesses acting on climate change. It catalyzes businesses to drive policy and accelerate the transition to a low carbon economy. WMB maintains an online site that recognizes companies taking action.

We Are Still In is a national coalition of more than 2,700 cities, states, businesses, and universities demonstrating an American commitment to tackling climate change, a clean energy future, and upholding the Paris Agreement. To date, We Are Still In is the largest US coalition in support of climate action.

SBT setting is already a part of the yearly CDP climate questionnaire and scoring process, and the data is used regularly by institutional investors.

Publicize a Pledge

Companies have sights set on four events: the Global Climate Action Summit, Climate Week NYC, UNFCCC COP24, and WEF 2019 Davos. At these events, and at the BSR and Net Impact conferences, new climate pledges will be publicized. 

Why Is 2018 a Special Year?

Public awareness focuses on five things as 2018 serves as a pivot point:

  1. The June 2017 White House announcement threatening the Paris Agreement
  2. As global stock takes dates, 2020 and 2030 loom closer on the calendar
  3. Climate impacts are getting more intense
  4. Investors and other stakeholders are demanding plans (e.g., Black Rock)
  5. Governor Brown hosting the Global Climate Action Summit in California

Tuning Up Strategies

Like Daytona, engines in the race to tackle climate change need tuning. From diagnostics to data management to testing the efficacy of abatement measures, Navigant improves strategies, gets them approved and recognized, and identifies the best places for amplification on a global stage. Now is the time to join the 2018 race. Start your engines!

 

2018: A Year for Action and Implementation for Circular Economy

— March 15, 2018

In the last few years, circular economy has gained momentum in various parts of the world: corporates, governments, non-profit organizations, industry associations—everybody has been trying to unpack, decode, and understand what circular economy is. What does it mean for them? What is the effect of circular economy economically, environmentally, socially?

Groundwork Is in Place

Multiple reports have been building the evidence and the business case for circular economy. Ecofys, a Navigant company, contributed to the movement with its thought leadership on groundbreaking calculations and research with its white paper, Implementing Circular Economy Globally Makes Paris Targets Achievable, which was used by the Government of Netherlands in its vision and strategy for making Netherlands a circular country by 2050. As a part of Navigant, Ecofys’ report, Circular Economy and Environmental Priorities for Business, was used extensively by the private sector to understand their concrete potential for circularity based on sector.

The groundwork of the past few years has landed the world in the moment of action and implementation for circular economy. In 2018 there will finally be momentum to implement circular economy globally. The year started with World Economic Forum placing circular economy front and center in its agenda. As proud members of the World Business Council for Sustainable Development (WBCSD) and of its new circular economy program, Factor10 platform, Navigant Consulting, Inc.’s CEO Julie Howard and Navigant’s global Energy practice leader Jan Vrins met other senior leaders from the industry at World Economic Forum in Davos to show commitment and kickstart action for circular economy.

Navigant joined forces with 30 other leading companies across 16 sectors to implement the circular economy through WBCSD’s Factor10 initiative. Collectively responsible for USD $1.3 trillion in annual revenue, the companies in Factor10 represent a powerful business effort to scale-up momentum for circular economy solutions.

“We need to focus on implementation now,” said Jan Vrins, “It’s important for both the public and private sector to move out of the ‘concept-phase’ of circular economy and into the ‘implementation-phase.’”

Three-Pronged Approach to the Circular Economy

As part of Navigant’s focus on circular economy for 2018, the team has a three-pronged approach for this year. First, the team will continue to focus on thought leadership and contribute toward case studies, business case, scientific evidence, and research to support circular economy implementation. Second, with WBCSD as its partner, Navigant plans to focus on mapping out the global policy landscape of circular economy so that companies can understand existing policies and prepare for upcoming ones in the field of circular economy based on their sector and regions/countries of operation. Third, the team will continue to support governments and companies in their transition toward circular economy through the following key offerings:

  • Navigant recognizes that each company, agency, or organization is unique and a one-size-fits all approach will not work. To support the transition, the team translated the concept of circular economy to develop tangible and implementable steps that organizations can take.
  • Navigant looked at the key levers of energy, material, waste, and more to develop building blocks and steps to move toward a circular economy. In doing so the team focuses on reducing costs, improving efficiencies, and transforming business models for competitive advantage.
  • Navigant is currently working across companies, sectoral organizations, and governments to develop and implement circular economy policies, strategies, and projects. Navigant brings together more than 30 years of experience and expertise in the field of climate change and sustainability in close cooperation with corporate companies, policymakers, and nongovernmental organizations.
  • Navigant plans on contributing to the upward momentum of circular economy in 2018 to drive positive environmental, economic, and social impact and look forward to working with governments, companies, and organizations move to a circular and sustainable future.
 

Is BlackRock’s Climate Change Announcement a Spark or a Sleeper?

— March 13, 2018

BlackRock, the world’s largest asset manager, has taken on long-term investing, and this will have some cascading impacts throughout the investment community. According to CEO Larry Fink, “To sustain [long-term] performance, however, you must also understand the societal impact of your business as well as the ways that broad, structural trends—from slow wage growth to rising automation to climate change—affect your potential for growth.”

This is a clear statement that climate change is a relevant and crucial factor when examining long-term performance. Climate change can be evaluated with respect to direct impacts on a portfolio or a business (e.g., sea level rise, increased storms, and natural disasters), or climate change impacts can be evaluated indirectly (e.g., how a portfolio or a business can respond [positively or negatively] to regulatory shifts or consumer trends).

But what does BlackRock’s pronouncement mean for the corporate community at large? Certainly corporations pay attention when big players act. For example, Walmart’s sustainability programs are maturing and focusing on its supply chain, and Coca Cola now regularly reports on its sustainability progress. This is leadership in action. But for the long tail of smaller businesses (even in the Fortune 1000), what BlackRock’s announcement will trigger is uncertain. Below are some possibilities.

BlackRock Triggers the Avalanche

It is possible that BlackRock’s approach will influence decision makers in the board room and in the investment houses to take immediate action with respect to their operations and portfolios. Recent announcements by Amazon, JPMorgan, Chase, and Berkshire Hathaway to create their own healthcare system in light of rising costs and government stagnation shows how the big players in corporate America are taking charge of initiatives funded by governments in other countries. We Are Still In is another such effort.

Companies Will Want to Be First to Be Third

Other large financial and investment companies may follow BlackRock’s approach. But the majority of corporates may wait until more Fortune 1000 companies start turning these announcements into action before they act. This could come in the form of seeing who signs up for science-based targets (only 342 as of this witting) or reports their emissions to CDP. The second wave of “light green” companies will follow, triggering the race to be “first to be third”—or to be relevant—before climate impacts become table stakes.

Silence

It is possible that not much will happen in corporate America. While the benefits of long-term planning are becoming clearer in Europe—especially accounting for climate impacts and carbon accounting—that is a different market. The concepts of the circular economy, direct climate change impacts, and carbon accounting are still unknown to most businesses in the US. They may be paying attention more and more, but until climate and sustainability action is clearly a stick or a carrot, they could be slow to act.

So, what does this mean? Which scenario will play out? It is too early to tell, but this is a newly fast-moving environment. Navigant will be watching this space closely.

 

Indoor Farming: Land of Opportunity

— February 20, 2018

Plenty, a vertical farming startup, has generated lots of media buzz. So far it has raised $226 million and is associated with big names like Alphabet’s Eric Schmidt and Amazon’s Jeff Bezos. Plenty promises to grow crops efficiently while shortening supply chains and catering to customer preferences. However, there is more than just hype behind Plenty’s big names and big numbers. There are important political and environmental drivers that are pushing market incumbents into urban farming, signaling that indoor farming is not just a passing fad.

Enter China

National self-interest is driving China to invest in agtech solutions like indoor farming. The state-run Agricultural Development Bank of China has pledged $437 billion in loans to finance agricultural projects through 2020. This is $31 billion more than the value of the US’ entire agricultural production last year. Currently, China faces food security issues stemming from pollution, uncertain trade relations with foreign countries, a history of food safety crises, and a growing middle class. Pairing China’s food security issues with a well-funded farming startup like Plenty is a no brainer.

Securing Food In-House          

However, China isn’t the only player with skin in the game. Other countries facing food security issues are interested as well. Qatar, for example, relies heavily on expensive agricultural imports due to water scarcity and unproductive farming land, leaving the region vulnerable to supply shortages and price spikes. Saudi Arabia faces its own food security issues, which the country is attempting to alleviate through investments in foreign countries such as Sudan, Pakistan, and Ukraine. However, as indoor farming becomes more affordable, it will likely attract investors away from foreign agro-investments and toward local indoor solutions, which would strengthen resilience to issues stemming from food insecurities.

In addition to national self-interest, environmental issues are also prompting greater interest in indoor farming. As climate change threatens to disrupt weather patterns, indoor farming allows farmers to control the weather—and a number of other variables—allowing companies like Plenty to produce greater crop yields and higher quality food than traditional farmers. Indoor farming consumes less water, which will surely be on the minds of farmers and policymakers as climate change threatens to exacerbate drought around the globe. These farms also allow food to be grown safely away from pollution and contamination, which are becoming increasingly problematic as farmers overuse pesticides and fertilizers and as developing countries are faced with mounting pollution.

Headed to Greener Pastures?

Despite its wide-ranging benefits, LED technology for indoor farming is relatively new and is not yet economically viable on a large scale. In fact, a 2017 Agrilyst report found that only 51% of indoor farms in the US are profitable. This is the case for most young farms, as older facilities averaging 7 years or more have had time to realize greater returns from energy efficiency and operational savings. In order to gain traction, urban farmers should focus on crops that are in local demand and that will always be in demand, like salad crops, in order to establish their business. Once farmers begin generating a profit, they can then devote more resources to experimenting with other possibilities.

Tech innovation is on its way, helping to make indoor agricultural operations more efficient through enhanced applications like LED and data analytics. The problem is funding these investments. Hopefully, there are more Jeff Bezos of the world to support the indoor farming movement and help make the world a greener, more sustainable place. For more information on horticulture lighting, watch for our forthcoming report, LED Lighting for Horticultural Applications.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Climate Change","path":"\/tag\/climate-change","date":"4\/21\/2018"}