By Ira Srivastava
1. The International Energy Agency publishes the 2023 World Energy Outlook. This year’s annual World Energy Outlook report includes a number of fascinating insights. Fuel prices have dropped from the previous year, but persistent inflation and a looming recession do not bode well for the world’s economy. Our planet has already warmed an average of 1.2 degrees C. However, renewable energy investments have increased 40% in the last three years and 20% of vehicles sold this year were electric, up from 4% in 2020. While global environmental policy measures are working and the “shift to clean energy is unstoppable”, it is not happening quickly enough to prevent the worst impacts of a warming planet. The agency’s modelling has found that current emission trends will result in a warming of 2.4 degrees C by the end of the century. The most impactful solutions are tripling renewable energy production, improving energy efficiency by 4% annually, focusing on electrifying the grid and cutting methane emissions from oil and gas exploration.
2. Biodiversity gains ground in ESG investing. As board members and business leaders around the world are becoming more aware of the biodiversity crisis and its relation to climate change, biodiversity investments have picked up steam. From September 2022 to 2023, investment in funds focusing on biodiversity in Europe quadrupled. Investors are looking to direct their capital to nature and biodiversity solutions, with coalitions such as Finance for Biodiversity pushing institutions to take biodiversity into account when making investment decisions. While most companies do not have concrete biodiversity targets, biodiversity credits that function similarly to carbon credits are increasingly being explored. However, nature and biodiversity are much more complex to tackle than climate change which can be simplified to emission reductions. Biodiversity solutions are more difficult to implement because they involve entire ecosystems. For example, planting saplings of a single tree species is not an adequate replacement for cutting down a biodiverse old growth forest.
3. Scientists urge WHO to call a health emergency due to the warming climate. 200 medical journals released a joint editorial urging the World Health Organization to classify climate change and biodiversity loss as a global health emergency rather than two separate crises. They emphasised that if left unchecked they will cause “catastrophic harm” to our health and safety. A warming climate will increase the spread of diseases that were formerly only found in the tropics such as malaria. Air pollution is already responsible for millions of deaths, and that number will only increase if emissions are not reduced. Extreme weather such as heat waves, hurricanes, and storms put our communities at risk while exacerbating water scarcity problems. The editorial was published ahead of COP28 in Dubai with the hopes that it will bring health concerns related to the climate and biodiversity crisis to the forefront of negotiations.
4. Value of water is priced at almost US$60 trillion as the world faces a scarcity crisis. For the first time, aquatic ecosystems and water have been given a dollar valuation — US$58 trillion every year, or about 60% of the world’s GDP. Despite being one of the most important natural resources on our planet, water conservation is an often overlooked aspect of the E in ESG. Water bodies around the world are drying up as we face extreme droughts, depletion of groundwater, and communities losing access to clean and safe drinking water. Agriculture and livestock, fashion, oil and gas, and the mining industries are the largest consumers of water. Reversing freshwater ecosystem degradation is the key to preserving our planet’s water resources. Companies can both focus their investments on water conservation projects and audit their own supply chains to determine where they can reduce water consumption.
5. Can AI foster a human-centred company culture? In a world of increased digital work where artificial intelligence technology is developing at lightning speed, organisations must maintain a people-first mindset. While AI can be used to boost efficiency within the company, workplaces are made up of complex human interactions and challenges that cannot be solved with a few keystrokes. According to the EY 2023 Work Reimagined Survey, 84% of companies plan to implement generative AI in the next year, but this AI rollout does not mean that employees will be replaced. AI should support employees in their tasks rather than replacing them by managing menial tasks that do not require creative problem solving. Strong AI governance principles need to be put in place before any large scale implementation, with a thorough discussion on AI risks and opportunities. Employee engagement is vital to make sure that any AI concerns are being heard and addressed by leadership, and additional training in AI usage may be necessary.
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Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.