NEWS BITES
From engineering innovation in Africa to climate, nature and culture-led communications.
A round up of some recent work across our group, shaping how organisations build trust, relevance and impact.
Tag Archives: climate change
Greek Sovereign Wealth Fund
Gong led a consortium to support Greece’s Public Wealth Fund (Growthfund) in embedding ESG into the heart of its portfolio of 17 state-owned enterprises (SOEs).
As part of this mandate, we developed a strategic framework comprising a Strategy on a Page (SOAP), a message house, and a comprehensive communications activation plan. Central to this work was the creation of a series of Expectation Documents: clear, practical guides setting out how SOEs should address the risks and opportunities presented by the just and green transition.
Covering themes such as climate change, accessibility, and the blue economy, these documents provided boards and management teams with concrete direction on disclosure practices, emissions targets, climate scenario analysis and ESG reporting standards. We also designed the documents to be visually impactful and accessible, helping to reinforce Growthfund’s leadership role in driving sustainable transformation.
The Expectation Documents continue to form part of Growthfund’s ESG approach and are referenced across the SOE portfolio. They have been included in subsequent reports and remain a resource to guide portfolio companies in shaping their ESG practices.
AFRICA NET ZERO: SIGGI HUEGEMANN AND DR INNOCENT UWUIJAREN ON AFRICAN HYDROGEN
“One cannot decarbonise the world without hydrogen. And one cannot decarbonise Europe without African hydrogen […]. Africa will automatically play a very strong role [in decarbonising the world] because of the sheer potential, there is no way around it. And what is really needed now is close political cooperation and willingness, to allow the financial markets to invest in those regions of the world.”
In the latest episode of our Africa Net Zero series, we were delighted to sit down with two guests: Siggi Huegemann and Dr Innocent Uwuijaren from the African Hydrogen Partnership. We learned more about the African hydrogen journey so far and discussed what the future might hold as the continent becomes one of the world’s major producers.
Thank you, Innocent and Siegfried, for sharing your insights with us!
Announcing the launch of Wilful
Across the globe we are witnessing an unprecedented push to find solutions to the climate emergency and more sustainable ways of living. Awards such as the recent Earthshot Prize provide a glimpse at some of the ingenious ideas worldwide which will help tackle climate change.
Through our merger with CherishPR, announced on October 19th, we have created Wilful, a new firm that works at the intersection of tech innovation and sustainability. We asked the team what most excited them about Wilful, and this is what they had to say:
GREENWISHING OR GREENWASHING? CAN YOU TELL THE DIFFERENCE?
By Hannah Hughes, Senior Account Director
The Race to Zero is on and with it, a global push to agree corporate financial reporting and transparency rules. With more companies focused on declaring how their business plans are consistent with climate goals, the challenge now becomes how to see through the greenwashing – how to spot it, and how to stop it.
What is greenwashing, and what isn’t?
Greenwashing is defined as “the process of conveying the false impression or providing misleading information about how a company’s products are more environmentally sound”. In the corporate world, this often translates as embellishing business commitments to reaching net zero, with no credible action behind it. Something that alternative milk maker Oatly found out the hard way, when it was targeted by a short seller for overstating its ESG credentials.
The pursuit of net zero and corporate commitments to reduce carbon emissions is still relatively nascent. That means there is an absence of clear and universally adopted reporting guidelines. Work is well underway to improve this (organisations like CDP currently provide the gold standard for the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts), but in the meantime there is too much free rein for interpretation. Or more accurately, misinterpretation.
In a recent journalist briefing, our client Volans, the think tank and advisory firm at the cutting edge of sustainability, opined that while there is certainly no place for greenwashing within business – it is important that ambitious and optimistic targets are recognised and supported. These targets have a part to play in moving the sustainability agenda forward as long as the intentions behind this ‘greenwishing’ are earnest. “Businesses do need to make big, bold claims about going green,” CEO Louise Kjellerup Roper says, “in order to keep up with what is expected of them.” These targets ensure business leaders have to focus on coming up with a plan of action, and while few have all the answers they need to achieve these goals right now, open discussion and identifying challenges are key to make meaningful change at the scale and speed required.
Language analysis
As climate commitments become more widely reported, so too does analysis of the language used to detail them. Claims of being ‘net zero’ are currently under scrutiny by journalists like Jess Shankleman and Akshat Rathi at Bloomberg Green who ask: is it right for businesses that buy carbon offsets to claim ‘net zero’ or should they be called ‘carbon neutral’ or even ‘carbon responsible’ instead? The article goes so far as to state that if “companies really want to cancel out emissions with offsets, they would have to purchase more expensive carbon-removal credits that actually draw down greenhouse gases. Only when companies have achieved all the reductions they possibly can, and balanced the rest with carbon removals, would they achieve ‘carbon-neutrality’ or reach ‘net zero’.”.
The article points to a more deep-rooted problem of clarity in language. Besides false claims, vague wording and use of the passive voice is a strong indicator of lack of action. Phrases like “we are”, “we will” and “we have” are far more encouraging to see than “we believe” and “we expect”. In the table below, we’ve looked at the nuanced changes in language that reflect responsible and accurate communications around climate change commitments.
Looking past the language
The clearest way to identify if a company is greenwashing is to look beyond the language and understand what actions it is taking. BlackRock, for example, notable for CEO Larry Fink’s bold assertions that stakeholder capitalism must prevail, has, in the past, been picked up for not acting in line with his statements. We are now starting to see those words put into action in voting against 255 board directors that failed to act on climate issues.
Louise suggests looking at a company’s lobbying history. Companies that are really committed to putting their words into action are political activists, she notes. That means actively lobbying government and regulators for change and putting themselves forward as part of the solution. Not just getting in the way of progress and lobbying against. That is what the banks involved in Bankers for Net Zero, like Tide, Handelsbanken and Triodos, do. Rather than take the easy option of saying “no” to changes they don’t want to see, they are stepping up to be part of the positive change and ultimately, the solution.
Next steps
As a company focused on helping our clients communicate their positive impact, the correct use of language around climate commitments is high on our agenda. The drive towards greater responsibility and a tighter interpretation of terms will ultimately expel greenwashing and promote a better future for us all.
Let’s hope such scrutiny effects change fast enough to make a lasting difference to our planet. Until then, for our part, we will continue advising clients on responsible use of language and claims around climate and net zero.
A new language of commitment to climate change
ESG: MINIMAL RISK, MAXIMUM REWARD?
Environmental, Social and Governance (ESG)-led investments have been thrust into the limelight over the last year. ESG-focused funds and impact investments delivered strong yields and gained additional investors, despite a broader pandemic-induced sell off. Conscious capitalism has shifted the focus for investment away from shareholders to the wider stakeholder community, reshaping the investment agenda towards one of sustainability and long-term gain.
Is ESG enough?
Progressive policy is fuelling momentum for this trend, encouraging the private sector to Build Back Better and helping set legal precedents. With the race to achieve carbon neutrality at the top of many business agendas, leaders now have a better understanding of the scale of the challenge ahead. More businesses are now stepping up and addressing pressing issues like climate change, but is ESG enough to deliver the changes necessary?
By 2025, a predicted third of global assets under management will have an ESG-led mandate. Should the forecast USD 53 trillion of institutional capital be allocated with ESG considerations, this will represent more than a doubling of such investment in the decade from 2016. Yet based on current investment and global indicators, social inequality is still on the rise – especially in developing markets – while the effects of climate change are worsening.
Throwing more money at these problems isn’t enough on its own – there has to be a more considered approach. Standardising ESG measurements, for example, means capital can be deployed more effectively and efficiently. Innovative financing models, like green and social bonds, are building resilience in emerging markets – often worst hit by the neglect of global capital allocation.
Lessons from Africa
In Africa, every dollar of impact capital has a more profound effect than in the developed world. Access to social goods is limited. Over half of the continent does not have a reliable electricity connection, while around only a fifth of people use the internet and secondary school enrolment is a mere 43 per cent. This lays bare the level of development required, especially at a time when equality between the developed and developing world grows wider as a consequence of Covid-19.
The continent is ahead of the curve when it comes to ESG and impact investing, being rooted in development finance. With adequate funding, it is well positioned to allocate capital to close the divide. Gong client, Old Mutual Alternative Investments (OMAI), is one of the continent’s leaders in this regard. Its investments are guided by the UN’s SDGs and assessed according to 90 separate impact measurements. As such, they are improving access to affordable education and housing, while also addressing gender and racial inequality.
OMAI’s approach acknowledges the nuances of the investment environment, while shaping how best to generate social impact returns as well as above-market financial performance. This is evident in the infrastructure arm of OMAI’s business – African Infrastructure Investment Managers (AIIM). The resilience of its portfolio, including renewable energy, has been proven through the Covid-19 pandemic.
Renewable energy plants stood strong and digital infrastructure remained robust as demand for their services increased. According to the UNDP, for every dollar spent on resilience-building infrastructure, like renewable energy, the economic return is fourfold. So where the conversation of Building Back Better in Europe and America is centred on climate change, in Africa it is equally about development.
The developed world’s perspective
Across the world, the coronavirus pandemic has realigned investing priorities and funds are allocating a larger proportion of their portfolios to generating impact. Over a fifth of retail investors in the UK plan to dedicate capital to impact generation. That proportion is even larger among people under 35, as they are more willing to trade financial returns for social ones.
Meanwhile, we have witnessed the formation of multiple financial alliances across the institutional investment space over the last five years, driven by the same goal: to achieve carbon neutrality. Our infographic demonstrates how this movement – which most recently has been given additional fuel by the UN-backed Race to Zero campaign – has gained momentum over time.
In the UK, we continue to see the trend for institutional investment being deployed responsibly among pension funds. The Make My Money Matter campaign, which asks pension funds to halve the emissions of portfolios by 2030, has united over 50 employers, including Gong, in tackling the climate crisis.
ESG really is starting to make a difference. Growing awareness, a generational shift and mounting investor pressure combined with more systematic carbon reporting is accelerating the move to improved global sustainability. As we move away from greenwashing and ESG as window-dressing, the demonstrable benefits of a concerted commitment to sustainability are reasons for optimism.
Carbon briefing 101
As a sustainability-focused business, we are often reminded that ours is an industry heavily laden with acronyms and terminology.
With now just four months to go until the start of COP26, we have created an introductory guide to all things carbon, including a glossary of terms, a brief history to COP26, an introduction to some of the major players, interesting climate change facts, and some small challenges that we can all take on in the fight against climate change.
Navigating Financial Net Zero Alliances
Building a global zero emissions economy to cut back greenhouse gas emissions is going to mean upending how countless businesses operate and cost trillions of dollars – a daunting task. Fortunately, financial firms are clearly taking the matter seriously, banding together into alliances to better address the problem. Financial net zero alliances hit the headlines again in April this year as former Bank of England governor Mark Carney – now the UK Finance Advisor for COP26 and the UN Special Envoy for Climate Action and Finance – launched the Glasgow Financial Alliance for Net Zero (or GFANZ).
Corralling the mighty weight of over 160 firms, GFANZ is doing essential work in the race towards carbon neutrality. Yet it is not alone – delve deeper into its connections and we learn that it was co-founded by the Net Zero Banking Alliance (NZBA). This in turn joins three further initiatives – and as we looked further, we became embroiled in an intertwined web of alliances.
Although initially appearing to be a Sisyphean task, navigating the web of financial net zero alliances gives a very real sense of the scale of the movement – how many financial companies have set net zero targets, for example. It also increasingly makes the Race to Zero look like an achievable goal.
Below is our timeline infographic of the evolution of Financial Net Zero Alliances. Please feel free to share it (tagging @GongComms) – we welcome collaboration and input to improve our work. We are aware this is an ever-growing universe; if you have additional financial alliances that you think ought to be represented in the network, please feel free to email us on NetZero@gongcommunications.com.
What does it mean to be a Net Zero company?
In short, being a Net Zero company means meeting the goal of net zero carbon emissions – or becoming carbon neutral – by 2050, in order to limit the global temperature increase to 1.5 degrees Celsius (in line with the Paris Agreement). While there is no standardised definition or criteria for use, society is becoming increasingly wary of greenwashing. All of the financial alliances for net zero listed in this article require their signatories to be transparent about their goals and to set science-based targets. The Collective Commitment to Climate Action (CCCA) has published a set of guidelines for climate targets setting for banks that underpin the NZBA (and can be downloaded here).
Is there an overview of all of the financial net zero alliances?
We couldn’t find one, which formed the basis of our own research. By way of overview: beyond GFANZ, the Net Zero Banking Alliance (NZBA) is a collection of 43 of the world’s biggest banks (including Bank of America, BNP Paribas, Barclays, HSBC, Santander and UBS) – which in turn joins three existing initiatives, namely the Net-Zero Asset Owner Alliance (AOA), the Net Zero Asset Managers Initiative and the Paris Aligned Investor Initiative. It incorporates the insurance industry (with the soon-to-be-launched Net Zero Insurance Alliance (NZIA), the internationally-led Asia Investor Group on Climate Change (AIGCC) and the Investor Group on Climate Change (Australia and New Zealand). In turn, both of these are part of Climate Action 100+, an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.
One of the original financial net zero alliances, Bankers for Net Zero is run in partnership with Volans, which has recently published a must-read white paper on aligning finance to a net zero economy.
How many financial companies have set net zero targets?
The good news is that the number of financial companies that have set new zero targets is increasing almost too quickly to assign a meaningful number. In September 2020, the United Nations Framework Convention on Climate Change (UNFCCC) reported that the number of net-zero commitments from local governments and businesses had more or less doubled in less than a year, mainly from members of the UN Race to Zero campaign.
Our research into the financial alliances for net zero indicates nearly a thousand large financial institutions are now part of one or more alliance, with thousands more signatories to the UN’s Principles for Responsible Investment.
The economic potential of Nature-based Solutions
Vinesh Parmar, Account Executive
While the world continues to struggle with the devastating effects of the coronavirus pandemic, climate change issues remain critically important. Protecting and restoring nature are key to tackling climate change, yet taking stock of the impact of human-inflicted damage on biodiversity reveals an array of frightening statistics: an average of 60 per cent of vertebrates have been lost since 1970, 75 per cent of the earth’s land surface has been significantly altered by human action and two thirds of the ocean is reeling from human interference. Deforestation has caused the loss of a third of our forests and with it the earth’s capacity to absorb carbon dioxide.
‘Building Back Better’ with Nature-based Solutions
There is increasing momentum to use the global recovery from Covid-19 to support climate change mitigation. As United Nations Secretary-General António Guterres has said, “We have a responsibility to recover better” than after the 2008 global financial crisis. Nature-based Solutions (NbS), – defined by the International Union for Conservation of Nature as “actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits” – offer an opportunity to avoid accelerated deforestation and biodiversity loss in short-term recovery plans.
Nature-based Solutions can include:
- Forest protection, management, and restoration
- “Regenerative” agriculture approaches
- Urban architecture innovations, like artificial wetlands to reduce flooding
- Providing clean water by managing watersheds
- Mangrove restoration to mitigate storm damage and save an estimated $80 billion per year in avoided losses
Protecting and growing these natural solutions could provide 37 per cent of the cost-effective CO2 mitigation we require to keep global warming under 2°C over the next decade. But crucially they could also minimize the social and economic impact of Covid-19 by creating employment and economic opportunities.
Profiling Nature-based Solutions
Green shoots of optimism are sprouting with the help of innovation. The Mesoamerican reef in the Yucatan Peninsula, the largest coral reef in the western hemisphere, is an important attraction to driving the USD9bn tourism economy in Quintana Roo, Mexico. Of equal significance is its role in absorbing wave energy, which protects beachfront settlements. Global Parametrics led the renewal of the landmark Mexican Reef Protection Program – a USD1.9m parametric protection solution that enables immediate financial support to restore key parts of the reef, essential in safeguarding the livelihoods of the coastal communities and drawing in tourists, which over 150,000 jobs rely on.
Meanwhile, the Coastal Resources Group is helping countries all over the world to restore their mangroves and create carbon ‘sinks’ – for example, the world’s mangroves sequester about 24 million metric tons of carbon in soil per year – and Malawi has invested 1.5 per cent of its domestic budget to its Youth Forest Restoration Program, employing thousands of young people to grow trees across 50,000 hectares of land (and protecting the livelihoods of its farmers).
Closer to home, the United Kingdom government announced that future flood defense efforts would focus on nature-based approaches, including grassland restoration and allowing rivers to flow more freely across the landscape.
Next steps
Nature-based solutions have a significant socio-economic role to play in a global recovery from Covid-19. A potential USD10tn in additional business revenue could be generated by moving towards a nature-positive economy and could contribute 395 million new roles to the global job market by 2030. As the world rebuilds in the wake of the pandemic, reassessing its priorities, we don’t need to look beyond what’s already around us to catalyse this transition. Instead, we need to invest in decisions that move us towards a sustainable, nature-friendly approach to economic growth and development.
Showcasing sustainability around the world
President Biden’s virtual Climate Summit this week has seen important international negotiations on climate and sustainability, and the year ahead promises yet more. Although rescheduled once because of the Covid 19 pandemic, the UN Climate Change Conference COP26 is due to be held in Glasgow in November, with international leaders coming together to add detail to their pledges.
Arguably, rescheduling last year’s event may not have been a bad thing. As a result of the pandemic, we learnt the positive power of cutting emissions (albeit imposed on us) – with the biggest annual fall in CO2 emissions since World War II according to one study – not to mention our capability in responding to existential threats. Meanwhile, the past year has seen some of the strongest climate commitments ever made by governments and business leaders – the EU Green Deal, a greener-than-expected Brexit deal, net zero pledges by China, South Korea and Japan, Joe Biden’s election as US President, rejoining of the Paris Agreement and hosting of this week’s virtual Climate Summit, which has seen yet more ambitious pledges from international leaders. Climate action is becoming institutionalised.
We all wait in hope that November will bring further ambitious international carbon pledges, and more importantly, the necessary action to complete them. The narrative for COP26 includes the assertion that ‘each of us has a part to play’ and in the run up to the summit, the conversation is mounting around how businesses, society groups, schools and individuals are taking action to tackle climate change and encourage sustainability – working #TogetherForOurPlanet.
A cursory glance at some of the sustainability stories around the globe shows that this can mean different things in different regions, but all are making strides towards a better future. Here are some of those stories we find most inspirational:
The importance of carbon removal in reaching Net Zero
The growth in net zero pledges over the last year – including asset managers BlackRock and Vanguard in March 2021 – has created unprecedented interest in carbon removal strategies and carbon markets. And rightly so. This article by our Finland-based client Puro.earth explains the difference between carbon offsetting and carbon removal, and why the latter is so integral to reaching our net zero targets. Microsoft is on board – it has pledged to be carbon negative by 2030, partnering with Climeworks and Puro.earth (including using the latter’s suppliers Carbofex, ECHO2 and Carbon Cycle to remove carbon dioxide from the atmosphere through production of biochar, allowing carbon to be stored in soil for centuries) to reach its goal.
Powering-up for a greener, brighter future
The European Union has committed 550 billion euros to climate protection and clean technologies over the next seven years, and these plans hinge on batteries to store renewable energy and to power electric vehicles. Analysts say the next generation of batteries must last longer, charge faster and be safer and greener than those on the market now, allowing for innovation. International technology firm Systems Sunlight, has announced a new R&D centre, at which the company will develop innovative lithium battery technologies for the industrial energy storage sector, focusing on new technologies that will usher in a clean energy future.
Chilling out for a cooler climate
Unreasonable Group-backed company Sure Chill has developed a unique cooling technology that allows cooling equipment to maintain a constant temperature without constant power. Rather like a rechargeable battery, the tech is entirely natural and can be linked with solar – perfect for areas of the world with intermittent power. Sure Chill is also working with some of the world’s largest brands to develop solutions within home refrigeration, food and drink, and logistics —all of which contributed to the government of Dubai’s decision to choose Sure Chill as “one of the technologies most likely to change the world in the next 20 years”.
Protecting East African heritage against the threat of climate change
Established in 2016, the British Council’s Cultural Protection Fund, in partnership with the UK Government’s Department for Digital, Culture, Media and Sport, offers financial backing for projects that tackle the threat from climate change to cultural heritage in Ethiopia, Kenya, Tanzania and Uganda. In November last year, the Fund awarded five global heritage projects including the development of disaster risk management strategies for preserving Kenyan and Tanzanian coastal heritage at risk due to rising sea levels, and protection against the impact of flood threats to communities and monuments in Uganda.
Constructing a more sustainable future
With cement production responsible for 8 - 12 per cent of the world’s CO2 emissions, the race is on to find a sustainable alternative for the construction industry. As part of our African Net Zero series, we spoke to Wolfram Schmidt from Bundesanstalt für Materialforschung und -prüfung (BAM) about his research into alternative materials like cassava and other agricultural residues as a source of ‘green’ African-made cement for future sustainable construction on the Continent. You can watch the full video here.
