Natural resource shortages, new Equator Principles and carbon pricing in Australia
Resource risks
Just over half of companies expect their core businesses to be affected by natural resource shortages in the next three to five years, especially constraints on water, energy, forest products and rare earth minerals and metals, a survey of large, mainly US, corporations has found. More than three-quarters of companies expect water shortages. However, despite expectations of problems, companies are slow to tackle the implications: 52% either have no plan to run scenario analyses considering the availability of key resources or “don’t know” if they will do so. The findings are contained in the 2013 Six Growing Trends in Corporate Sustainability report, published by Ernst & Young and GreenBiz Group.
Principles perfected
The Equator Principles, a code used by financial institutions when assessing the environmental and social impacts of large-scale project finance deals, has been formally updated. The new EP III guidelines extend the principles to more types of project finance, strengthen provisions on climate change and human rights, and impose greater public disclosure requirements. The principles are followed by 78 major banks, including Barclays, Bank of America and Credit Suisse. “EP III will mean many more projects will be captured under the EP framework,” said Leonie Schreve, chair of the Equator Principles steering committee. “It is good news for the environment, and for communities around the world, as economic development continues to bring both benefits and challenges.”
Prices down down under
The low price of carbon permits in the European Union’s emissions trading system is having a knock-on effect on the other side of the world because of planned links between the EU and Australian cap-and-trade schemes. The Australian government in May slashed its carbon price forecast for the first years of full carbon trading, which starts in Australia in July 2015. The government now expects a price of A$12.10 (£7.75) per tonne of carbon dioxide, compared with the previously forecast A$29 (£18.50), and compared with the current fixed price of A$23 (£14.70), which is in place pending the start of full trading. The EU emissions trading system currently has a surplus of 2bn allowances, and a rock bottom carbon price of less than €4 (£3.35) per tonne. Under the proposed link, EU and Australian carbon permits will be interchangeable.
Solar first
A university-led consortium in Australia has claimed a first by developing a printer that can print an A3 size solar cell every two seconds. The device prints onto plastic or steel sheets using “semiconducting inks” and the resulting solar cells are capable of producing 10-50 watts of power per square metre. That is less than silicon solar panels, but the group, the Victorian Organic Solar Cell Consortium, expects to achieve greater efficiency. Vicosc says that the first applications of the cells could be for portable electronics, such as laptop computers, but that eventually there will be many other uses. “We see these being laminated to windows that line skyscrapers. By printing directly to materials like steel, we’ll also be able to embed cells onto roofing materials,” says David Jones, the project co-ordinator and University of Melbourne researcher.
Human rights standard
Discussions are under way on a new responsibility standard that companies would be able to use to declare that they are operating in line with the United Nations Guiding Principles on Business and Human Rights – the so-called Ruggie Principles. Business and human rights centre Shift and Indonesian auditors Mazars have published a first paper outlining the standard. Comments can be submitted until July 1. The standard would be accompanied by a further benchmark that independent external human-rights assurance providers can use to provide validation of companies’ human rights claims. Shift’s president, Caroline Rees, says the standards would plug a gap. “There isn’t yet a widely accepted process for [companies] to demonstrate whether their policies and processes are actually aligned with the Guiding Principles in reality,” she says.
Financial fabrication
Cooking the books is rife in companies under pressure to deliver strong financial performance in tough economic times, a study by accountants Ernst & Young has found. The Europe, Middle East, India and Africa Fraud Survey 2013 discovered that 42% of senior managers believed that their companies were massaging their financial performance, through measures such as under-reporting of costs, or recording of revenues earlier than they should, to meet short-term targets. Meanwhile, 48% of company staff felt that offering gifts or cash to win business was acceptable, especially in a downturn. Nigerian, Slovenian, Russian and Spanish companies most often misrepresent their financial performance, according to the study. In the UK, 27% of respondents said their companies were involved in some form of book-cooking.
Students oppose Shell partnership
Oxford University Student Union has voted to oppose a partnership between the university’s earth sciences department and oil giant Shell, which has given £5.9m to establish the Shell Geoscience Laboratory. The lab will carry out research into “sedimentary basins” in which conventional and unconventional fossil fuels are found. Students said that the focus should instead be on leaving fossil fuels in the ground in order to prevent runaway global warming. Meanwhile, in the US, students are increasingly persuading their colleges to end their investments in oil and coal companies. The divestment campaign has spread to cities including San Francisco and Seattle, which have said they will no longer use their pension funds to back fossil fuel firms.
Carbon data gaps
Companies still have work to do to ensure that their disclosures on greenhouse gas emissions are comprehensive and credible, an analysis by climate and finance thinktank the Environmental Investment Organisation has found. Of the world’s 800 largest companies, only chemicals giant BASF fully reports emissions from its entire value chain, says EIO. A further 266 companies partially report their Scope 3, or indirect, emissions, but overall 63% of companies report incomplete data or no data at all, and only one in five companies provides externally verified data. The lowest ranked companies, providing no public data on their emissions, are US power firms First Energy and Edison, and Australia’s Origin Energy. EIO chief executive Sam Gill says: “Since the majority of total corporate emissions often come from Scope 3 sources, large quantities of emissions are not being accounted for.”
CSR news Stephen Gardner Sustainability news