IPCC Releases Special Report on Global Warming of 1.5ºC

by Cathrine Steenstrup, Senior Engagement Manager at GES

The Special Report on Global Warming of 1.5ºC, issued by in Incheon, Republic of Korea, by the Intergovernmental Panel on Climate Change on October 8th, is considered by many as the most critical report on climate change action in recent years. It will contribute as key scientific input to the facilitative dialogue on a global stocktake of national commitments, particularly during the upcoming Conference of the Parties (COP24).

The report follows nearly two years of extreme weather events to evaluate the trade-offs of moving beyond a 2.ºC vision/framework.  Ultimately, it poses the question “are we doing enough”, as we are estimated to be reaching the 1ºC mark and significantly falling short of climate objectives under the current trajectory.

The report estimates that global net human-caused emissions of carbon dioxide (CO2) would need to fall by about 45 per cent from 2010 levels by 2030 before reaching net zero around 2050, while the global population continues to grow.  Pathways towards a 1.5°C target with no or limited overshoot would require far-reaching transitions in the land, energy, infrastructure and industrial systems.  Relative to the 2.0°C scenario, estimates for the 1.5°C scenario include a potential 50 per cent reduction in water stress and over 50 per cent reduction in global population exposure to severe heat at least once every five years. There is furthermore a likelihood for a reduction in heavy precipitation events, as well as improvements in crop yield and species diversity that may impact food security.

In societies already undergoing fundamental changes, there will be a need to further cross-sectoral collaboration, with innovation and scaling potentially assuming an expanded role at the policy level.  Industry initiatives may increasingly converge with planning surrounding climate resilient cities and infrastructure, including C40 cities committed to implementing ambitious climate action plans. Investors, debt issuers, ratings- and insurance firms may enhance tools for evaluating climate risk-based costs, while scenario analysis – still at early stages – is likely to become increasingly integrated into enterprise risk management.

With attention turning to the Katowice Climate Change Conference in December, the report indicates a knowledge gap with respect to the effectiveness of 1.5°C mitigation efforts on the sustainable development goals. Climate-related incidents have been known to affect the poorest that are often living in the most exposed areas, a trend that may grow with continued urbanisation and migration.

GES will continue to engage with companies via two-way dialogue and proxy voting, to facilitate the transition to international climate targets.

Link to the report: http://www.ipcc.ch/report/sr15/

Hope from San Francisco

by Charlotte Mansson, Director of Client Relations at GES

Thousands of delegates assembled in San Francisco to attend both the PRI in Person conference and the Global Climate Summit. As discussions around climate change, income inequality, and other pressing ESG issues took place indoors, protesters assembled outside hoping and demanding that the world’s attention turn in their direction. It was a week full of innovation, the sharing of ideas, and in many ways, hope.

With the Global Summit on Climate Change taking place at the same time in the same city, it was inevitable that the PRI conference would predominantly focus on climate change. Al Gore spoke of fiduciary duty and urged investors not to turn a blind eye to the immense financial risks of climate change. Meanwhile, at the Summit, Governor Brown announced the passing of a legislative bill that commits California to a 100 per cent use of zero-carbon electricity by 2045 and he also signed an executive order (B-55-18) committing California to total, economy-wide carbon neutrality by 2045.

It was also announced that thousands of cities around the world – led by former New York mayor Michael Bloomberg – have committed to reducing carbon emissions equivalent to taking all US cars off the road or 1.4bn tonnes of CO2 per year by 2030, as part of the Global Covenant of Mayors for Climate & Energy.

However, although the announcements were both ambitious and far-reaching, they were interrupted by protesters demanding further action. Amongst all the turmoil, Michael Bloomberg commented that only in America do we have climate protesters, protesting at a climate change conference!

There were so many topics and statements to reflect on and digest, but the ambitious goals and commitments of American state legislatures in particular stood out and provided a glimmer of hope. Despite the frequent news of the US administration rolling back climate change fighting initiatives and scrapping EPA regulations put in place to protect vulnerable areas, there is a reason to be optimistic and hopeful about America’s potential role in responsible investing. On a state and city level, there is strong support for living up to the Paris Agreement’s targets and obligations and California, the fifth largest economy in the world, is taking a lead role in this. Other major states, such as Illinois, are also taking a firm stance on integrating ESG factors in their investment portfolios, both by demanding their investment managers live up to clear ESG criteria, but also by investing in impact bonds and funds.

Rodrigo Garcia, Deputy State Treasurer and CIO of Illinois, addressed the sceptics in the room and outlined several state and city-level initiatives aimed at combatting economic inequality and fighting climate change. The Treasurer of Chicago, Kurt Summers, spoke of being a young boy walking through impoverished city areas and not understanding why his neighbourhood was being neglected by public funds. Standing on the podium, he vowed to allocate funds to sustainable infrastructure projects, affordable housing, and green bonds.

As the week wrapped up and the programme wound down, the international investor community left with a hope that San Francisco could be remembered as the time and place where the US joined the fight against climate change and launched widespread initiatives to integrate ESG factors into their public and private investments.

Why 23 August 1791 is still relevant today

by Stina Nilsson, Senior Engagement Manager at GES

On the night of the 22nd August 1791, men and women, torn from Africa and sold into slavery, began a revolt against the slave system to obtain freedom and independence for Haiti. It took years, but in 1804 their struggle paid off and Haiti became an independent nation. To remember this incredibly important achievement, the 23rd August marks the International Day for the Remembrance of the Slave Trade and its Abolition. Exactly 227 years later, while paying tribute to those who fought for freedom and justice, let us also reflect on the current situation, empowered by their determination and strength.

First step – We need to acknowledge the harsh reality. An estimated 40.3 million people are in modern slavery today, almost equivalent to the population of Spain! Out of those, 24.9 million are involved in forced labour and 15.4 million in forced marriage. 1 in 4 victims of modern slavery are children. These numbers themselves are calling for action. It is clear that slave labour is not something we can excuse as a historical event. It is also not something happening far away and disconnected from us. For example, in recent years, many reports have highlighted the existence of forced labour in tomato cultivations, in Europe and in the US. Migrant workers in vulnerable situations with limited local knowledge, rights and language skills have no option but to work under precarious labour conditions. These are vegetables that end up on our plates, harvested by fellow human beings, practically next door. Agriculture is also one of the sectors with the highest prevalence of slave labour globally. The list of products with elevated risks of being harvested by forced labour or child labour is a long one, and most of them can be found in a supermarket near you.

Second step – We need to increase our own knowledge. If you are looking to gain a deeper understanding of slave labour (to subsequently engage companies to address such issues), there are many resources to have a closer look at, for example Innovation Forum’s podcast How to boost smallholder livelihoods, and modern slavery risks trends to watch or Assent’s webinar Assessing, preventing and mitigating risks of Human Trafficking and Slavery in Your Supply Chain. Oxfam also recently released the report, Ripe for Change drawing the picture of inequality in food retail supply chains and advocating for a living income for smallholders and agricultural workers.

Third step – We need to take action. We can certainly work to change the situation and investors have a unique position to do so. This is not only important from a human rights perspective, but also makes business sense. Food companies rely heavily on farmers and plantation workers for their long-term supply. Such rural populations are decreasing in many places, spurred by poor living and working conditions. From a business point of view this is a real threat to a stable long-term supply and returns for companies. Investors may want to ask themselves if such risks are factored into their investment decisions. I would encourage investors to have a look at their portfolios. Where are the most elevated risks? In what sectors and what companies? These were also some of the questions we asked ourselves when recently conducting the pre-study Mapping labour rights issues in the food supply chain, together with the Seventh Swedish National Pension Fund (AP7). Subsequent to the study, we have started engaging the food, beverage and food retail sectors to proactively avoid the risk of involvement in forced labour and child labour. This 3-year GES Stewardship & Risk engagement is open for additional investors to join and if you want to know more, I would be happy to elaborate on our engagement plan and objectives.

There is no lack of stakeholders, experts and initiatives to work against slave labour and structural poverty. Let us take action so that one day we can instead celebrate the day when slavery became a horrendous practice of the past. Imagine that day.