The State of Sustainability in the Fashion Industry

In today's fashion landscape, sustainability has become a powerful force, compelling brands to reassess their operations and present an eco-conscious image. As consumer demand for ethically sourced products grows, fashion companies are recognizing the need to adopt concrete measures for responsible practices. From sourcing materials to manufacturing processes, a comprehensive approach to sustainability is emerging, aiming to address the industry's environmental impact. The fashion industry's impact on global carbon dioxide emissions is substantial, accounting for 932 million metric tons, which is up to 10% of the total output. Additionally, it plays a significant role in generating one-fifth of the world's annual plastic production, amounting to 300 million tons. These figures highlight the pressing and immediate requirement to adopt sustainable practices within the industry. To ensure a prosperous and accountable future for fashion, a fundamental transformation towards sustainability becomes imperative. This transformation should encompass environmentally and socially responsible approaches to sourcing materials, manufacturing processes, and ensuring fair working conditions and wages throughout the supply chain. Embracing Sustainability: The Global Surge of Ethical Fashion Amidst the thriving landscape of ethical fashion, the global fashion market is experiencing a notable transformation. As of 2022, sustainable clothing items have claimed a modest share of 4.3% in the market, increasing from 2.83% in 2017. This upward trend indicates a growing awareness and demand for eco-friendly fashion choices. Furthermore, the ethical fashion market has witnessed remarkable growth, achieving a substantial value of nearly USD 7.5 Bn in 2022, driven by a steady compounded annual growth rate (CAGR) of 6.5% since 2017. Looking ahead, projections suggest that the ethical fashion market will continue to expand, with a projected value of USD 11.2 Bn by 2027, growing at a notable rate of 8.1%. Beyond 2027, the journey is expected to maintain its momentum with an estimated CAGR of 8.6%, ultimately reaching an impressive value of USD 16.8 Bn by 2032. [caption id="attachment_10440" align="aligncenter" width="626"] Estimated value of the ethical fashion market worldwide from 2022 to 2027 (in million U.S dollars)[/caption] The market growth is driven by a surge in man-made and regenerated materials, such as Tencel, a fabric made from sustainably sourced wood pulp, and innovative options like Pinatex, which is derived from pineapple fibers. These materials collectively contribute to this expansion with an impressive 50.9% share. Additionally, the organic segment is projected to exhibit high growth at a rate of 16.4% CAGR. Animal cruelty-free brands currently dominate the market, holding a 43.3% share, while eco-friendly brands are expected to grow rapidly at a rate of 10.6% between 2022 and 2027. In terms of regional dynamics, the Asia Pacific region takes the lead in the ethical fashion market, holding a significant 33.0% market share in 2022. Eastern Europe and South America are poised to emerge as the fastest-growing regions, with projected CAGRs of 12.5% and 10.3%, respectively. Driving Forces and Challenges: The Ethical Fashion Market's Journey Towards a Responsible Future The significant growth of the ethical fashion market is driven by several key factors. The rise of emerging markets, increased foreign direct investments, and a growing focus on sustainable fashion by consumers have all played a pivotal role in this expansion. Despite challenges, such as the high costs and the impact of reduced free trade, the global apparel market is increasingly aligning with ethical fashion, converging towards a shared vision of a responsible and eco-conscious future. One of the primary drivers behind this growth is the increasing global population. As the world's population continues to grow, the demand for innovative and sustainable fabrics used in apparel, automobiles, and home furnishings products is on the rise. This presents significant opportunities for companies in the ethical fashion market to capitalize on the growing demand for efficient and durable fabrics. However, the path to sustainability in the fashion industry comes with challenges. Integrating sustainable practices requires substantial investments, posing financial hurdles for businesses. Additionally, the complexities of reduced free trade need to be carefully managed to balance sustainability with global commerce. The war in Ukraine is also significantly influencing the industry, resulting in inflation and disruptions that have compelled companies to suspend or halt operations in the affected regions. Consequently, well-known clothing brands such as H&M and Zara have been compelled to close stores and suspend their activities in Russia, leading to adverse effects on the market's growth. [caption id="attachment_10441" align="aligncenter" width="656"] Challenges faced by fashion executives to improve consumer perceptions of their company's sustainability credentials worldwide in 2022.[/caption] Emerging Trends: Recycling, Upcycling, and Storytelling for a Greener Future Amidst these challenges, there are several noteworthy trends that are shaping the ethical fashion industry. Recycling and upcycling have emerged as crucial practices to reduce waste. By recycling materials and upcycling discarded items, companies can significantly reduce their carbon footprint and minimize waste in the manufacturing process. For example, Rubymoon, a UK-based swimwear and activewear company, creates its products using fishing nets and plastic bottles from the ocean. Similarly, India-based social enterprise EcoKaari upcycles waste plastic into handcrafted fabrics, which are then used to make fashion accessories and utility items. Another trend gaining traction in the market is storytelling and customer education. Brands are increasingly transparent about their production and design processes, highlighting their commitment to ethics and sustainability. By highlighting good practices in sourcing and production, companies can build credibility and trust with consumers who prioritize eco-friendly choices. For example, RSPR, a Doha-based clothing manufacturer, educates consumers on eco-friendly and ethical fashion, emphasizing their use of recycled plastic bottles to create soft, antimicrobial garments. Leading Brands Driving Global Awareness In response to the growing demand for sustainability in the fashion industry, brands worldwide have embraced eco-friendly practices, highlighting the power of global awareness in promoting sustainable development. Companies that prioritize true sustainability are reaping positive results in their communities. Levi's is a prime example of a brand that excels in this area, with its impactful campaign "Buy Better, Wear Longer." This global initiative raised awareness among consumers, urging them to make conscious apparel choices while emphasizing Levi's commitment to producing durable clothing that lasts for generations. By collaborating with influencers like Emma Chamberlain, Levi's successfully engaged with the younger generation and amplified their sustainability message through media reach. Another exemplar of sustainable practices in the industry is Patagonia. Patagonia not only employs sustainable materials in its clothing but also empowers customers to repair their clothes instead of buying new ones. The company gives customers the opportunity to bring clothes that are still in good condition back to the brand for new merchandise credits. The pieces are then cleaned, repaired, and sold on the company’s Worn Wear platform. By encouraging customers to value and maintain their clothing, Patagonia fosters a culture of sustainability and responsible consumption. Conversely, lack of access to data, metrics, and transparency around sustainability initiatives has been the primary barrier hindering change, often leaving retailers uncertain about the cost versus benefits. To embed sustainable practices seamlessly into their value chains, retailers require appropriate tools and measures, making sustainability a standard part of their business operations. As companies prioritize reducing their carbon footprint, they are employing various approaches. Many are opting for recycled/sustainable raw materials and packaging, demonstrating their commitment to environmental responsibility in both upstream and downstream aspects. However, while 56% of companies are using more recycled/sustainable raw materials and 46% are using sustainable packaging, there remains a significant distance to cover before the industry fully embraces these vital elements as an integral part of their operations. The fashion industry is experiencing a profound shift towards sustainability, driven by increasing consumer demand for eco-conscious choices. With the industry's significant environmental impact, urgent and concrete measures are essential for a responsible future. Fortunately, the rise of ethical fashion has been remarkable, displaying a steady growth trend and a promising market value. Recycling, upcycling, and storytelling are emerging as key trends, fostering a greener future. Leading brands, like Levi's and Patagonia, are setting a positive example by prioritizing sustainability and promoting responsible consumption. As we move forward, it is crucial for the fashion industry to embrace sustainable practices wholeheartedly, making them an integral part of their operations and ensuring a thriving, eco-friendly future for all. Author:  Yassine Falk Sources:,USD%209.81%20billion%20by%202027

AI and Environmental Sustainability

In recent years, artificial intelligence (AI) has become a prominent topic of conversation. Advances in other frontier technologies, such as cloud computing, big data, the Internet of Things (IoT), and virtual reality, have led to some major breakthroughs in artificial intelligence. Aside from the financial and societal benefits of AI applications, the technology is also set to revolutionize environmental sustainability. Scientists argue that one of the main challenges to environmental sustainability is understanding how the ecosystem works, given the number and complexity of interactions within it. The amount of information available is simply too large to be analyzed by the human brain or traditional statistical tools. Using advanced tools and technologies can help us understand the impact of the ecosystem on us and vice versa. Sensors enable the collection of large amounts of data, while AI can help analyze this data and build models to help navigate these complexities and make agile decisions in uncertain and volatile conditions. Impact of AI on the ecosystem and environmental management: Technologies such as AI and IoT are expected to drive progress in most areas of ecology and biodiversity research, as well as environmental and ecosystem management. Motion-sensing cameras can collect very large amounts of biodiversity data Motion-detector cameras enable the low-cost and widespread collection of massive amounts of biodiversity data. Analyzing biodiversity images used to be time-consuming, but a recent article in the journal Proceedings of the National Academy of Sciences showed that AI was successful in automating animal identification for 99.3% of the 3.2 million animals, with the same level of accuracy (96.6%) as the crowdsourced groups of human volunteers. The authors of the article state that "the automatic, accurate, and economical collection of data could catalyze the transformation of many disciplines, from ecology, wildlife biology, zoology, conservation, and ethology, into “big data” sciences.   Drones equipped with AI technologies can fight deforestation and poaching  The use of drones equipped with AI technology can help reduce deforestation and poaching. For instance, the World Wide Fund for Nature (WWF) in Kenya received a US$5 million subsidy from Google to use an AI device equipped with drones to track poachers in the Masai.   Impact of AI on Water Management Although AI applications are limited to select cases in the operational water sector, machine learning algorithms are increasingly being used in water science. For instance, the Centre for Water for Sustainable Development and Adaptation to Climate Change, a UNESCO-affiliated organization, has been utilizing AI and statistical modeling to enhance the quality of time-series data in structural and environmental monitoring in Serbia for years. Deep learning, a subset of machine learning, is one of the most crucial methods. Deep learning can be used as a predictive tool to detect patterns, classify and correct remote sensing products, or mitigate risk. An example of a deep learning application for water management is using Echo State Networks (ESN) to provide discharge forecasts and water-level simulations on the Rhine and Danube Rivers in Germany, which provided better results than the existing traditional hydrological model.   Internet of Things, machine learning, and blockchain can be combined to support urban water management  The Internet of Things, machine learning, and blockchain technology can all be used to improve urban water management. Using these three technologies can improve service provision and quality while protecting the sustainability of water resources. Smart water systems, which use an Internet of Things-based approach, are gaining traction in urban water resource management. These smart systems are composed of a network of physical devices (such as the flow meter), a sensor that records data (such as water amount and quality, pictures, etc.), and a communication device that transmits this data in real time to a cloud-based server. Smart water systems improve efficiency and reliability while reducing costs.   Impact of AI on Disaster Risk Reduction  AI to prevent disasters Many concepts and prototypes for catastrophe risk mitigation have previously been tested. Thus far, they have mainly focused on the response and rescue phases. Sendai, Japan, for example, has tested a prototype with private companies for a tsunami alert using AI and Blockchain technology, in which the AI system launched a drone, sent an alert via mobile phones and radios, and used facial recognition software to identify survivors, such as individuals drifted in a vehicle by a tsunami wave.   AI to manage hydrological hazards A variety of innovative modeling systems are being evaluated for their capacity to accurately forecast drought events. Such models are: Artificial Neural Networks (ANN), Adaptive Neural-based Fuzzy Inference Systems (ANFIS), Genetic Programming (GP) and Support Vector Machines. Currently, the downside to using AI for drought management is the lack of “big data” needed to design models that can make reliable predictions.   AI to improve climate change assessment Studying the climate and identifying high-risk areas require large amounts of data, ranging from images to sensor data. Machine learning algorithms can help mitigate and manage climate change effects by improving the accuracy of global climate models and predictions. For instance, extreme weather events such as wildfires and hurricanes can be predicted by analyzing data from satellite images and weather station data in real-time. New research indicates that artificial intelligence and neural networks can also address more complex, smaller-scale meteorological phenomena, such as convective cloud production. As a result, they may be able to mitigate the uncertainties inherent in existing climate models. By enhancing the accuracy of global climate predictions, AI and machine learning algorithms can help mitigate and manage the risk of catastrophic weather events such as tornadoes, hurricanes, and storms, which are anticipated to become more frequent and severe in the future.   Impact of AI on Agriculture AI-based solutions can enhance efficiency in the agricultural sector in practices such as crop yield, irrigation, soil content sensing, crop monitoring, weeding, and crop establishment. AI-based technological solutions can enhance the sector’s resource efficiency by reducing the use of land, water, fertilizers, and pesticides while also enhancing output quality and ensuring a faster time to market for produced commodities.   Smart Farming Using drones, cameras, and sensors along with AI to scan plantations and detect pests, identify areas that are either excessively or poorly irrigated, and intervene more quickly eliminating the need for expensive and fuel-polluting helicopters to monitor the fields. Robots or drones can help with field inspection and early detection of crop diseases, making the process more effective and ensuring future food security. Weed control can also be significantly enhanced using solar-powered robots that can detect weeds and pull them out mechanically (without chemicals). All these developments are providing farmers with the tools to observe, measure, and analyze the needs of their farms, allowing for improved resource management while reducing environmental impact and waste.   The use of artificial intelligence (AI) in environmental sustainability has the potential to significantly improve our understanding of and ability to manage the ecosystem. AI-enabled technologies such as motion-sensing cameras and drones can be used to collect and analyze large amounts of biodiversity data, while machine learning algorithms can be used in water science to improve quality and forecast discharge and water levels. In addition, the combination of the Internet of Things, machine learning, and blockchain technology can improve urban water management. AI can also be used in disaster risk reduction by predicting and mitigating the impact of natural disasters such as earthquakes, hurricanes, and floods. AI can also help enhance the agricultural sector’s resource efficiency and reduce its impact on the environment. With all these advancements in AI applications, it is important to carefully consider the ethical implications of using AI for environmental sustainability and ensure that the technology is used in a responsible and transparent manner. Author: Ismail El bouni Sources: AI - A game changer for Climate Change and the Environment Artificial intelligence for sustainable development: challenges and opportunities for UNESCO’s science and engineering programmes Automatically identifying, counting, and describing wild animals in camera-trap images with deep learning Quel sera l’impact de l’intelligence artificielle sur l’agriculture ? Smart Farming Using Artificial Intelligence, the Internet of Things, and Robotics: A Comprehensive Review Implementation of artificial intelligence in agriculture for optimization of irrigation and application of pesticides and herbicides BI Survey Autonomous Battery Optimization with Machine Learning, Robotics Robots and AI Could Optimize Lithium-Ion Batteries MIT: On the road to cleaner, greener, and faster driving

November 03 2022 | Sustainable Development, Energy
Green hydrogen: Africa as a new hub

After years of being hyped as a possible game-changer and touted as the fuel of the future, green hydrogen is now recognized as a crucial component of any realistic net-zero economy in the long term by both governments and investors. While energy transition plans were slowly taking shape, particularly in Europe, recent events have created a golden opportunity for a more rapid rollout of green hydrogen. The ongoing Ukraine-Russia conflict and its implications for energy dependence have forced European nations to rethink their priorities and sparked a frenetic race to secure new energy alternatives other than Russian-controlled gas supplies. In fact, it didn’t take long for these opportunities to materialize. As part of the RepowerEU strategy, the EU set a target of 10 million mt/year of green hydrogen imports by 2030, in addition to its domestic hydrogen production target of 10 million mt/year. With this massive import opportunity, Africa seems poised to realize its green hydrogen potential. Green hydrogen, fueled by renewable energy, now accounts for 4% of total world hydrogen production. It can be used in several sectors and industries, including refineries, to produce ammonia. Automobile manufacturers have also set their sights on this kind of energy. The market for hydrogen fuel cell electric vehicles is booming, with stiff competition to get enough range for the end user. An overview of Africa Africa stands out as the region with the greatest potential for green hydrogen. Not only is the continent in desperate need of energy infrastructure investment, of which renewables and green hydrogen could represent the lion’s share, but many African countries present unique competitive advantages and environmental characteristics for cheap and reliable energy production. According to H2 Atlas-Africa, wind and solar energy in West Africa could generate up to 165,000 TWh of green hydrogen per year, of which 120,000 can already be produced for less than €2.50. To put this figure into perspective, green hydrogen in Germany currently costs around €7 to €10 per kilogram. Therefore, Africa has been presented with a tremendous opportunity to fulfil its energy needs and requirements, reduce its emissions in line with the current international standards, become a net exporter of energy, and decarbonize its industry, which allows an easier entry into the EU market. Realizing the potential, a few African countries have already started positioning themselves and have taken the lead in establishing a green hydrogen industry powered by their renewable energy capabilities. Egypt, Morocco, and South Africa stand out as great examples of countries taking the opportunity seriously and advancing their plans to transform fiction into reality: Focus on the projects Egypt  Egyptian policymakers have taken green hydrogen more seriously in the last year, holding talks with a number of multinational corporations about developing a local sector that has the potential to become an important component of the country's energy mix. Egypt's first green hydrogen generating plant, with a capacity of 100MW, will be operational in November 2022, making it the world’s largest by a factor of five[1]. The output will be used as a supplemental feedstock by the Egyptian Basic Industries Corporation to generate 90,000 tonnes of green ammonia per year. TAQA Power has also signed a Memorandum of Understanding (MoU) with MAN Energy Solutions, a German business, for a pilot project to produce green hydrogen locally in Egypt to power tourist buses with clean fuel. Siemens Energy and the Egyptian Electricity Holding Company have signed a MoU to collaboratively create a hydrogen-based industry in Egypt with export capabilities. They will co-develop a pilot project with a 100 to 200 MW electrolyzer capacity as a first step, which will help drive early technology deployment, start a partner landscape, establish and test regulatory environment and certification, setup off-take relations, and define logistic concepts. Eni, GE, and ThyssenKrupp have all submitted bids to build hydrogen facilities in Egypt. The proposals, which total $2 billion, are for facilities that would create both green and blue hydrogen. Several proposals from European institutions such as the German development bank KfW, the European Investment Bank, and the International Finance Corporation (IFC) were accompanied by financing offers. South Africa Further South on the continent, South Africa has already had a go at green with The National Hydrogen Fuel Cell Technology (HFCT) Research, Development, and Innovation strategy-also known as the Hydrogen South Africa strategy (HySA). The mining sector has also been leading the way in hydrogen technology within the country. Anglo Platinum, for instance, is setting up a 75 MW solar PV-powered plant with plans to further increase the capacity to 320 MW, with the surplus of electricity generation being directed to produce green hydrogen. In May 2021, the German development bank KfW announced a €200 million scheme to help South Africa establish green hydrogen projects. A feasibility assessment issued by the government and private-sector partners in October 2021 found three green hydrogen hubs in the eastern region that had the potential to develop a hydrogen valley. Sasol and the Industrial Development Corporation (IDC) have agreed to work together to advocate for enabling policy frameworks, develop pilot and commercial-scale hydrogen projects, access local and international financing options, and go after strategic projects that will help the country attain its energy transition and economic development goals. Sasol revealed a few months later that it planned to begin manufacturing green hydrogen as early as 2023. Morocco Considered a leader along with South Africa, Morocco is also working to create its own green hydrogen industry. In 2020, the Moroccan government engaged in a partnership with Germany to build the first standalone green hydrogen plant on the continent. The following year, the government signed an agreement on green hydrogen development with Portugal, laying the groundwork for clean energy collaboration between the different economic actors in both countries. Morocco has also inked a strategic collaboration with Irena in June 2021, with the goal of becoming a major green hydrogen producer and exporter. The two parties will work together to conduct green hydrogen studies and examine policy options for incorporating businesses into the green hydrogen economy on a national scale. A joint venture between Greece's Consolidated Contractors Company (CCC) and Ireland's Fusion Fuel aims to build a green hydrogen-powered ammonia facility in Morocco as of 2022, which will be the country's largest green hydrogen project to date. The plant will have the capacity to produce 31,000 tonnes of renewable hydrogen per year and generate 183,000 tonnes of green ammonia by 2026. Finally, in early December 2021, the country saw the establishment of "Green H2A", a technology platform dedicated to research and innovation in green hydrogen. The first of its kind in Africa, it aspires to play a key role in Morocco's industrial deployment of green hydrogen and its uses. One of Green H2A's first initiatives is a pre-industrial pilot project to produce 4 tonnes of green ammonia per day with a 4MW electrolysis capacity. Given both the advancements on the ground and in legislation, and the intense interest by Germany, one of the leaders in green H2 technology, Morocco, Egypt, and South Africa are poised to become the leaders in the field for the coming decades, developing a "decarbonized fuel" made from renewable energy for export to Europe. In this sense, The Africa Green Hydrogen Alliance was officially launched at the first-ever Green Hydrogen Global Assembly in Spain on May 2022, with the goal of developing a strong green hydrogen ecosystem. Egypt, Kenya, Mauritania, Morocco, Namibia, and South Africa are among the founding partners. The energy ministers of 14 Arab nations, including Morocco, have proposed an ambitious plan to create an Arab Common Market for power, with green hydrogen being an important link in the chain. On July 27, 2020, the final versions of two international treaties connected to this project were completed. It is undeniable that green hydrogen shows strong potential on the continent, with several countries taking the lead due to the foresight and available opportunities. In the coming years, we are likely to witness a marked acceleration in the rollout of hydrogen projects and the concretization of decarbonisation plans. However, despite the winds setting the sails on a clear course in the coming years, many African nations have yet to live up to their potential and geographic resources. Sources: African Business - Green hydrogen – implications and prospects for Africa - June 2022 Africa News – Positioning Africa as a green hydrogen leader African Business - South Africa eyes future as green hydrogen hub– October 2021 Atlas of green hydrogen generation potentials in Africa - H2 Atlas Tool Federal Ministry of Education and Research - West Africa can become the climate-friendly energy powerhouse of the world - May 2021 Arab News - Egypt to open its first green hydrogen plant in November 2022 – December 2021 Recharge - World's largest green hydrogen project – with 100MW electrolyser – set to be built in Egypt – November 2021 Siemens Energy - Siemens Energy supports Egypt to develop Green Hydrogen Industry – August 2021 Enterprise - Big global players eye hydrogen investment in Egypt – November 2021 Cliffe Dekker Hofmeyr - Moving towards a green hydrogen energy future – April 2021 Baker McKenzie - South Africa: Green hydrogen policy - a rapidly growing timeline of important developments – November 2021 South Africa’s Department of Science and Innovation – South Africa hydrogen valley final report – October 2021 African Business - Green light for a green hydrogen economy in Africa – November 2021 Le360 – Hydrogène vert: le Maroc et le Portugal main dans la main pour booster la filière – December 2021 Al Jazeera - Green Hydrogen: The new scramble for North Africa – November 2021 Energy & Utilities - Fusion Fuel and CCC to develop $850m Morocco green hydrogen project – July 2021 Le360 – Hydrogène vert: une plateforme technologique pour développer la filière, une première en Afrique – December 2021 [1] The second one, Air Liquid’s 20MW plant, is in Canada.

Why corporate sustainability matters

In 1987, the United Nations Brundtland Commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” In the past, sustainability was often only seen as a buzzword in the PR toolkit. However, during the past few years, it has become a concept of the utmost importance. A few key dates The United Nations Global Compact, launched in 2000, is a multi-stakeholder leadership initiative that aims to align business strategies and operations with ten universally accepted principles in multiple areas, including human rights, labor, environment, and anti-corruption, and to drive efforts in support of broader UN goals. In early 2005, Kofi Annan, the former United Nations Secretary-General, invited a 20-person group of the world’s largest institutional investors from 12 countries to participate in the development of the Principles for Responsible Investment (PRI), with the support of a 70-person group of experts in the investment industry, intergovernmental organizations, and civil society. The PRI helped provide a definition of sustainable investment and the actions that ensure that money is invested in a proper and wise way. However, it would take another ten years for these investment criteria to spread further. 2015 was a turning point for business sustainability. The Paris Agreement, a legally binding international treaty on climate change, was adopted by 196 parties at COP 21 in Paris on December 12th, 2015, and entered into force on November 4th, 2016. It is aiming at “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. The Paris Agreement is a landmark in the climate change process since it is the first binding agreement that brought all nations together for a common cause: combatting climate change and adapting to its effects. The year also marked the foundation of the Science Based Targets initiative (SBTi), a partnership between CDP, the United Nations Global Compact, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). Science-based targets show how much and how quickly businesses need to reduce their GHG emissions to prevent the worst impacts of climate change, creating a path towards decarbonization. In 2018, the Intergovernmental Panel on Climate Change (IPCC) warned that global warming must not exceed 1.5°C above pre-industrial temperatures to avoid the catastrophic impacts of climate change. In order to achieve this target, greenhouse gas (GHG) emissions must decrease by about 45% by 2030 (2010 baseline) and reach net zero by 2050. Sustainability criteria and their impact Sustainability is evaluated using environmental, social, and governance (ESG) factors: The Environmental category focuses on the impact a company has on the environment, e.g., Scopes 1-3 GHG emissions, resource and waste management, water use and conservation, the share of renewables in the energy mix, etc. The Social category considers the social impact a company has within society, as well as whether and how it advocates for social good and change. Indicators relate to stances and efforts on social issues including racial and gender diversity and inclusion, employee development, human rights, operational health and safety, stakeholder, and community engagement, etc. The Governance category refers to the ways a company is managed, or “governed”, to address issues and drive positive change. Indicators in this category include quality and diversity of management and the board, executive compensation, corporate ethics, transparency and disclosure, corporate political contributions, etc. These three categories allow companies to create a holistic approach for business strategies, risk mitigation, and reporting. Investors are also increasingly turning to ESG investing, which incorporates these factors into investment decisions, spurred by growing evidence that ESG integration in business decisions has a positive impact: 57 percent of executives and investment professionals in McKinsey’s Global Survey agree that ESG programs create shareholder value, and 83 percent believe that these programs will create even more value by 2025. Respondents also indicated they would be willing to pay a premium to acquire companies with a positive ESG record. In Accenture’s 2020 report titled “Seeking Responsible Leadership”, 2,540 publicly listed companies were examined between 2015 and 2018. Results show that companies that combine high levels of innovation with sustainability and trust outperform their industry peers, with 3.1% higher operating profits and greater returns to shareholders. S&P Global Market Intelligence analyzed 26 ESG exchange-traded funds and mutual funds, with more than $250 million in assets under management, between March 2020 and March 2021. 19 of those funds performed better than the S&P 500. Outperformers rose between 27.3% and 55% over that period, while the S&P increased 27.1%. On the other hand, companies that are seen as not making enough efforts on ESG issues are facing mounting pressure from stakeholders, and operational consequences: Two shareholders in the Commonwealth Bank of Australia (CBA) filed an application in the Federal Court of Australia in August 2021 seeking access to all documents created by the CBA in relation to the bank’s reported involvement in seven specified gas and fossil fuel projects. It is anticipated that the plaintiffs may bring a substantive claim against CBA if the documents produced demonstrate that the projects did not satisfy CBA’s Environmental & Social Policy. In May 2022, both ExxonMobil and Chevron, the two largest US oil companies, suffered shareholder rebellions led by climate activities and disgruntled institutional investors over their failure to set a strategy for a low-carbon future. This comes one year after a court in The Hague ordered Royal Dutch Shell to cut its global carbon emissions by 45% by the end of 2030 (2019 baseline), in a landmark case brought by the environmental organization Friends of the Earth and over 17,000 co-plaintiffs. Also in May 2022, nearly half of Berkshire Hathaway’s independent investors rejected the advice of the board led by chairman and CEO Warren Buffet, instead supporting proposals requesting climate-change-related reports and reporting on Berkshire’s diversity, equity, and inclusion efforts. Collaboration is essential Some companies have gone beyond their own operations and are trying to catalyze ESG efforts not only along the value chain, but also for whole industries. For example, in 2015, Apple launched the Supplier Clean Energy Program, which allows the company to not only share resources and training material on renewables but also to participate in clean energy investments by suppliers. In November 2021, Schneider Electric announced a collaboration in the same field with 10 global pharmaceutical companies, namely AstraZeneca, Biogen, GlaxoSmithKline, Johnson & Johnson, MSD, Novartis, Novo Nordisk, Pfizer, Sanofi, and Takeda. The new program, called Energize, will give suppliers of these companies the opportunity to participate in the market for power purchase agreements. Other companies have partnered with banks to link supply chain financing to ESG assessments. Henkel and Deutsche Bank announced such a partnership in May 2022, creating incentives for suppliers who can lower their costs by improving their ESG rating. Finally, various initiatives, whether sector-specific or not, have been able to gather pledges and commitments towards different targets. RE100, for example, brings together some of the largest companies in the world that are committed to 100% renewable electricity. Race to Zero is the UN-backed global campaign rallying non-state actors to take rigorous and immediate action. As part of the Race to Zero Breakthroughs: Retail Campaign, companies such as Best Buy, H&M Group, Ingka Group (IKEA), Kingfisher Plc, and Walmart have pledged their support to accelerate a movement in the retail industry to drive climate action and encourage other retailers to set out their plans to achieve 1.5 degree aligned carbon reduction targets. By raising awareness and engaging several stakeholders, these efforts—whether through incentives, resource and knowledge sharing, or other means—are important steps on the path to sustainability. In 2021, the first publication from the IPCC’s sixth assessment showed that the world will probably reach or exceed 1.5 °C of warming within just the next two decades. If emissions aren't slashed in the next few years, this will happen even earlier. Whether we limit warming to this level and prevent the most severe climate impacts depends on actions taken now. Jihane Benazzouz Sources:

Hydrogen to decarbonize Road Transportation

Energy use and CO2 emissions from transportation The transportation sector accounts for around 30% of global final energy consumption. Given that most of our energy is still derived from fossil fuels, despite the growing share of renewable energy generation and the announced carbon neutrality ambitions by 2050, transportation is already at the top of a list of sectors to decarbonize. What’s more, transport has the highest level of reliance on fossil fuels of any other sector. According to the International Energy Agency, road transportation alone accounts for approximately 15% of global energy-related GHG emissions. During the last few years, the public debate on reducing road transport emissions has been dominated by battery electric vehicles (BEVs), which represent a promising path towards decarbonizing the sector. However, despite significant advances in cost and economic competitiveness—EVs are already competitive with internal combustion engine (ICE) vehicles on a total cost of ownership (TCO)1 basis—a few challenges have hampered market development, most notably in terms of practicality, limited autonomy2, and long refueling times of BEVs. The Hydrogen Fuel Case The use of hydrogen as a fuel, particularly green (hydrogen produced from water electrolysis3) or blue hydrogen (produced from natural gas and supported by CCS4), could be the key to decarbonizing road transportation. This is because not only can fuel cell electric vehicles (FCEVs) already, similar to conventional ICE vehicles, refuel in less than 4 minutes and have a driving range of over 450km5 but also, just like BEVs, they produce no harmful tailpipe emissions. From a cost perspective, because the level and type of performance required vary from one vehicle segment to another, it’s important to make a distinction between light and heavy-duty vehicles. For the sake of illustration, we consider the 3 main vehicle segments: passenger cars, HDT, and off-road, and compare the FCEV options to the BEV and ICE versions by the total cost of ownership (TCO). Passenger Cars: Based on a TCO analysis by energy consultancy Element Energy, FCEVs are quite a long way from being cost competitive with electric and conventional passenger cars, especially for first-time owners. And although the TCO of FCEVs in the segment is expected to drop significantly over the next decade due to falling fuel cell costs, BEVs are expected to remain a much more attractive option in comparison, except for larger passenger cars, SUVs, and vans with longer-range requirements and heavier use cycles (e.g., for taxis and ride-sharing) where FCEVs become a reasonable alternative. Heavy-Duty Vehicles/Trucking (HDT): According to a report by the Hydrogen Council and McKinsey, on-demand HDT FCEV is expected to become the cheapest option in terms of TCO by 2030, assuming a hydrogen price at the dispenser of about $4/kg in 2030. The analysis suggests that HDT FCEV should achieve break-even with BEVs by around 2025 and with ICE HDTs by 2028, driven primarily by a drop in hydrogen fuel costs and equipment costs. It’s worth noting that, in a context where targeted subsidies such as Switzerland’s toll exemption policy or other support mechanisms exist, the described timeline could be even shorter. Off-Road Equipment/Vehicles: Due to the specific performance requirements of off-road equipment, fuel cell powertrains are potentially the only alternative to GHG-emitting equipment. In the context of achieving net zero targets, decarbonizing the off-road vehicle segment is of particular importance. That’s because mining rare earth metals is critical for green technology manufacturing (including fuel cells), and off-road equipment (such as excavators and wheel loaders) is heavily used in mining operations. Regarding the cost, the latest estimates from the US DoE and the Journal of Hydrogen suggest that fuel cells are already the lower-cost option for compact tractors/wheel loaders and standard/full excavators. Developing the hydrogen sector Hydrogen-fueled cars have been commercially available for almost a decade. Despite that, due to the lack of infrastructure, their sales remain dwarfed by those of BEVs. Mindful of the sector’s potential, governments have started over the past few years drafting strategies and creating policies in support of hydrogen, including investment incentives for the construction of hydrogen production and refueling facilities to enable the deployment of FCEVs. Below are some examples: Japan: In 2017, the Japanese government issued the Basic Hydrogen Strategy and became the first to adopt a national hydrogen framework. Through a series of legislation and plans, it aims to expand its hydrogen economy and production to 20 million tonnes by 2050. United States: At the federal level: the Emergency Economic Stabilization Act of 2008 introduced incentives in the form of tax credits to help minimize the cost of hydrogen and fuel cell projects. Since then, the tax credit policy has been extended and its scope enlarged to include refueling equipment and energy storage system facilities. A wealth of other incentives has been introduced, most notably through the Biden Administration’s Build Back Better Act. At the state level: energy authorities have taken similar steps. In 2020, the California Energy Commission (CEC) committed to investing up to $115 million to significantly increase the number of Hydrogen Refueling Stations (HRSs) in the state. California is on track to achieve its target of deploying 200 HRSs by 2025. Germany: In June 2020, Germany presented its National Hydrogen Strategy. The strategy document identified several goals that need to be achieved for green hydrogen to become an effective tool in reaching emissions neutrality by 2050, including the scale-up of H2 production and transport capacity, as well as the introduction of support schemes and public funding. Germany committed to providing public funding amounting to €7 billion for the market ramp-up of hydrogen technology in the country. Chile: In addition to their National Electromobility Strategy published in 2017, which includes goals on green hydrogen and fuel cells applications, Chile announced its National Green Hydrogen Strategy in 2020, and the goal to be carbon neutral by 2050.   Figure 1: HRS by region, 2021 [caption id="attachment_8368" align="aligncenter" width="486"] source: IEA, 2022[/caption]   On the private sector front, energy companies are already competing for market shares of Hydrogen Refueling Stations (HRSs). Today, the fast-growing HRS market is dominated by a few Oil & Gas and hydrogen companies, namely Air Products, Linde, Air Liquid, and Nel. To enter the market, some companies chose to combine their investment efforts through JVs, such as the German H2 Mobility JV, which operates a global network of 200+ HRS. Concerning car manufacturing, major OEMs are offering a limited but growing number of FCEVs to the public in certain markets, in line with what the developing infrastructure can support. It is estimated that around 52 thousand FCEVs are currently in circulation, with the majority of them concentrated in the United States (38%) and Korea (24%).   Figure 2: FCEVs by region, 2021 [caption id="attachment_8369" align="aligncenter" width="458"] source: IEA, 2022[/caption]   The net zero emissions by 2050 scenario requires transport sector emissions to fall by 20% by 2030. To achieve this goal, new sales of PHEVs, BEVs, and FCEVs need to represent 64% and 30% of total passenger car sales and HDT sales, respectively, by 2030. The TCO data summarized in this article shows that, rather than competing against BEVs, hydrogen-fueled vehicles can help achieve this objective by taking up the baton where BEV technology fails to deliver, in particular in the HDT segment. Notes: 1: The total cost of ownership includes both purchase cost and running cost, i.e., fuel and maintenance costs, over the lifetime of the vehicle. 2: Based on EPA data, the median range for 2021 model EVs was 234 miles (source) 3: Water electrolysis uses an electrical current to separate the hydrogen from the oxygen in water. If this electricity is obtained from renewable sources, hydrogen will therefore be produced without emitting carbon dioxide into the atmosphere. 4: CCS stands for Carbon Capture and Storage. In the case of blue hydrogen production, the CO2 generated during the manufacturing process is captured and stored permanently underground. The result is low-carbon hydrogen that produces no CO2 5: 300 miles based on US DoE estimates –converted to km and rounded for the sake of convenience (Source)   Oussama El Baz Sources: IEA, Key World Energy Statistics 2021 IEA, World Energy Outlook, 2021 IRENA, Green hydrogen cost reduction, 2020 IEA, Global EV Outlook 2022 US DoE Alternative Fuels Data Center European Parliament – What if hydrogen could help decarbonize transport? European Commission, Biofuels in the European Union, A vision for 2030 and beyond Element Limited, Electric Cars: Calculating the Total Cost of Ownership for Consumers, 2021 US Department of Energy, Hydrogen and Fuel Cell Technologies Office, 2022 Hydrogen Council, A perspective on hydrogen investment, market development and cost competitiveness, 2021 Cleantech Group, Decarbonizing off-road vehicles, 2022 US DoE, Hydrogen Fuel Cell Technologies Office, 2022 Journal of Hydrogen, Performance, and cost of fuel cells for off-road heavy-duty vehicles, 2022 International Partnership for Hydrogen and Fuel Cells in the Economy Marca Chile, Electromobility: Chile is leading the way in Latin America with ambitious goals, 2021 Watson Farley & Williams, The German Hydrogen Strategy, 2021 Baker McKenzie, How Proposed New US Hydrogen Tax Incentives Should Spur Investment, 2021 US DOE, Financial Incentives for Hydrogen and Fuel Cell Projects JD Supra, Clean Energy Tax Proposals in Biden’s New “Build Back Better” Framework, 2021 California Energy Commission, 2020 Exxon Mobil – What is blue Hydrogen Iberdrola – Green hydrogen: an alternative that reduces emissions and cares for our planet  

Looming Inflation Expected to Persist throughout 2022

In recent times, inflation has been a topic of discussion for economists, politicians, and citizens alike. The pandemic has brought an end to a period that was marked with low-to-moderate inflation rates with even deflation plaguing countries such Thailand, Qatar, and Malaysia before the COVID outbreak. There has been a noticeable spike in the number of advanced economies with an inflation rate of above 5%. The number of emerging markets seeing higher inflation has also increased with 78 out of 109 Emerging market & Developing countries having an inflation rate of 5% or more. This leap is the first of its kind in a 20-year period. [caption id="attachment_8040" align="aligncenter" width="541"] Source: Project-Syndicate[/caption] Pandemic-related factors brought the annual inflation rate in the US to 7% in the last month of 2021, a fresh high since June of 1982. The U.K. and Canada had a whopping 30-year high inflation rate reaching 5.4% and 4.8% respectively. [caption id="attachment_8042" align="aligncenter" width="459"] Source:[/caption] One of the major problems with inflation is that the lower social classes are the ones hit the hardest. According to the IMF, inflation has particularly negative consequences for households in low-income countries, where about 40% of consumer spending is on food. The reason inflation does not affect higher-income individuals and households is because they can afford to spend more money on basic goods contrary to their lower-income counterparts. A study conducted by Ipsos of 20,000 people from 30 different countries found that over 50% of participants reported an increase in the prices of clothing and shoes, housing, healthcare, and entertainment. Over 40% expect these costs to keep rising for several months to come. The UN noted that the FAO, Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, reached a 10-year high in 2021, despite a small December decline. [caption id="attachment_8043" align="aligncenter" width="457"] Source:[/caption] Reasons for the increase       Many reasons contributed to prices rising at a substantial rate. Most of these reasons relate to the COVID-19 pandemic including supply constraints, economies reopening, fiscal stimulation, increased liquidity, higher energy prices, lower inflation in past years, higher unemployment, conflict between countries, and labor shortage.   Supply constraints The fast spread of the virus in 2020 caused the shutdown of many industries around the world and with that, consumer demand also dampened, which in turn reduced industrial activity. After vaccines became widely available and many countries deemed their vaccination campaigns successful, economies reopened and suddenly, supply chains were faced with tremendous pressure. The supply of goods, once systematic and free-flowing pre-pandemic, was forced to a halt post-pandemic which damaged all the systems that were in place originally. Supply chain systems are not easy to implement as it requires coordination between a multitude of different parties. The surge in demand necessitated these systems to switch on and be fully functional in a short period, which is not feasible. [caption id="attachment_8044" align="aligncenter" width="454"] Source: BEA, BLS[/caption] A major culprit in price increases coming from the supply constraints is the semiconductor industry. Chips are increasingly present in most of the products we use, ranging from cars to remote controls to smart lights and a variety of different items that are used today.   High Energy Prices [caption id="attachment_8045" align="aligncenter" width="443"] Source: U.S. Bureau of Labor Statistics[/caption] Oil prices have reached their highest level since 2008. Brent Crude, which represents the global oil benchmark, has increased to $130 per barrel. The spike has been driven primarily by fears of supply-side disruptions. The attack by Yemen’s Houthis on fuel trucks in Abu Dhabi, in which three people were killed played a part but the main reason has to do with the tensions between Russia, the world’s second-largest oil producer, and Ukraine. Energy prices in households are rising dramatically and their effects are directly being felt by consumers. Further, the key oil-producing countries have kept supply on a gradually increasing schedule despite the sharp increase in global crude prices. The OPEC countries decided to increase overall daily production by only 400,000 barrels in February, even though its own prediction is for demand to rise by 4.15 million barrels per day in 2022.   2022 Outlook According to the World Bank, Global inflation is expected to remain elevated throughout 2022. Supply bottlenecks and labor shortages are assumed to gradually dissipate through 2022, while inflation and commodity prices are assumed to gradually decline in the second half of the year. In the U.S. the central bank is under pressure to raise interest and tighten the economy further to combat inflation. However, the country is at a crossroads where raising rates might trigger a fresh global debt crisis, as its emerged poor-country repayments to creditors are already running at their highest level in two decades. The IMF warned that a quantitative tightening from the U.S. Federal Reserve could have a ripple effect on emerging markets by leading to capital outflows and currency depreciation. Emerging markets that borrowed most from the U.S. dollars are going to be hit the hardest by an increase in Interest Rates leading to potential country defaults. In the MENA region, the Economist Intelligence Unit has pointed out that the CPI is expected to remain high in 2021-2022 at an annual average of 14% due to the rise in international food and energy prices. Inflation will continue to be aggravated with Supply Chain bottlenecks and the post-pandemic increased demand in Middle Eastern countries. [caption id="attachment_8046" align="aligncenter" width="471"] Source: The Economist Intelligence Unit[/caption] There are also expectations that inflation will greatly impact low-income non-oil exporting countries within the MENA region such as North African countries. The effects of higher inflation will be less impactful in wealthier GCC and Asia-Pacific Economies. Regarding food, shortages might arise in low-income non-oil exporting countries due to dry spells and lower crop yields. Sharply depreciating currencies in countries such as Lebanon will further aggravate inflation in 2021/22, driving up the cost of imported goods. In a more distant future, inflation is expected to slow down toward the end of 2022 and the beginning of 2023, as Supply chain disruptions start to dissipate and the labor markets around the world are back to their healthy state.   Conclusion Inflation seems to be quite a persistent rather than a transitory threat. The escalation of the conflict between Russia and Ukraine will most definitely not help ease inflation but rather further aggravate the matter since Russia is one of the biggest producers of raw materials such as oil, wheat, and a variety of different metals. Gasoline prices will further increase with the cost for food and goods such as smartphones most likely to follow suit. However, with supply chains recovering to their original efficiency, inflation will eventually slow down to settle at a fair rate.   Author: Othmane Zidane   Sources,to%20shortages%20of%20key%20inputs.,global%20GDP%20growth%20in%202022.

How smartphones are contributing to climate change

With the world becoming increasingly virtual by the day and almost 84% of the world’s population using a smartphone, it has become increasingly difficult to ignore the facts and figures regarding the detrimental effects of smartphones on nature and the environment. Smartphones are making a substantial contribution to the problem of climate change with significant figures being highlighted in various studies and research.  Extensive research has been conducted in recent years to identify and draw attention to the negative impact of smartphones on the environment, but the topic is still insufficiently appreciated and addressed, by users and manufacturers, respectively. While advocating for the environment and promoting recycling and sustainability on social media via our smartphones, we often neglect the impact on the environment imposed by the smartphone itself. From the extraction of raw materials to assembly, distribution, transport, use, and end-of-life treatment, smartphones contributed to the creation of a staggering 580 million tons of CO2 emissions in 2020.  The ICT sector — including personal computers, laptops, smartphones, tablets — as well as its digital infrastructures such as data centers and communication networks, is expected to contribute to the global carbon footprint by 14% in 2040, representing more than half of the contribution made by the transportation sector worldwide.  While the role of technology in promoting environmental awareness and fighting climate change is indeed significant, the business of smartphones is one that is very much focused on profit, with minimal attention paid to the environmental impact of their production and disposal.    Device Statistics  In the past five years, global smartphone usage has almost doubled. In 2016, the number of smartphone users amounted to just over 3.6 billion users, while by 2021 that figure had reached an estimated 6.3 billion users worldwide, with the number expected to reach over 7.5 billion by 2026.  While this demonstrates an expected increase at a decreasing rate compared to the past 5 years, that figure would constitute almost 90% of the world’s population, according to world population projections.    [caption id="attachment_7964" align="aligncenter" width="600"] Note(s): Worldwide, Africa, North America, Europe, China, Central and South America, MENA; 2018 to 2021 Further information regarding this statistic can be found on page 8. Source(s): Gartner; ID 755388 [/caption]   Impact Breakdown A smartphone contributes to global warming and climate change throughout the entirety of its life cycle, from production to disposal. The raw materials needed to produce a smartphone, including gold, cobalt, lithium, and other heavy metals, require energy-intensive mining, and their extraction often causes significant environmental pollution.  [caption id="attachment_7949" align="aligncenter" width="615"] Bruno Martin, OpenMind BVA[/caption] The mass production of smartphones in mega factories, of course, also greatly contributes to climate change with 85%-95% of a smartphone’s overall carbon footprint produced during the production process. The batteries, integrated circuits, speakers, and screens used to manufacture smartphones — along with every other single component that goes into their manufacture — are themselves mass-produced, creating carbon footprints, heat emissions, and environmental pollution of their own.  The environmental impact associated with smartphones, however, does not end with their hardware production and the smartphone’s physical components. The networking and data centers needed for the software development of the operating systems used in smartphones, such as IOS and Android among others, can also be energy-intensive, with significant carbon and heat emissions. According to the International Energy Agency, for instance, data centers consume approximately 200 terawatt-hours (TWh) of electricity, or nearly 1% of global electricity demand, contributing to 0.3% of all global CO2 emissions  The actual usage of smartphones also produces an environmental impact. Research on the annual carbon emissions from smartphone usage provides an estimate of an average of 63 kilograms of CO2 emissions produced, from only one hour of smartphone usage per day, for a year, and up to 90 kilograms of CO2 emissions produced for 10 hours of usage per day, for a year. Although this demonstrates that the impact of the production process is much higher than that of the smartphone’s use, CO2 emissions from usage continue to increase as more people are becoming smartphone-dependent.  The practice of frequently upgrading our smartphones when new versions are released creates an enormous amount of physical e-waste. In 2019 that figure was estimated to weigh more than 50 million tonnes, constituting approximately 10% of global e-waste. Finally, the telecom sector on which our phones rely produces its own carbon footprint, heat emissions, and e-waste.    [caption id="attachment_7950" align="aligncenter" width="701"] Ericsson Mobility Report 2021[/caption] Smartphone Manufacturers Launching new smartphone models every 2-3 years is a profit mechanism used by market players who rely on brand loyal customers with a hunger for new features, better quality, and brand image. This strategy encourages the discarding of smartphones more quickly, a situation made worse by the lack of transparency on the part of most market players regarding the recyclability of disposed smartphones. Another strategy used to elicit more profit is the creation of components that are difficult or costly to replace, such as batteries or screens, essentially incentivizing consumers who suffer broken phones to simply replace the phone entirely.  Some efforts, however, have been made by various manufacturers to operate more efficiently. A case in point is that of Apple, who announced in 2018, that its global facilities - including retail stores, data centers, and other facilities in 43 countries - had completed a transition to 100% clean energy.  Not all market players have made similar commitments to transition to renewable energy for their operations and manufacturing, and the majority continue to lack transparency as to the sustainability of their production processes and the recyclability of their products. Indeed, the same players have made sustainability-minded investments in other areas, while refraining from doing the same with their smartphone production process. [caption id="attachment_7951" align="aligncenter" width="618"] Apple Datacenters in Denmark, PV Magazine,[/caption]   Does the problem end with smartphones? The path of digital transformation of communications, manufacturing, and banking, among others, of which we believe ourselves to be in dire need, does not come at no cost to the environment, labor market, and societal well-being  Many of the other technologies that are currently trending have been found to have a significant impact on the environment. Digital currencies are one such example, with Bitcoin and Ethereum, in particular, being so damaging to the environment that they threaten to reverse any gains achieved through the transition to electric vehicles and the reduction in fossil fuels use. Much of this impact resides in the energy and processing intensive mining of these digital currencies, and the proofs of work that underpin their production. According to the Cambridge Bitcoin Electricity Consumption Index, for instance, Bitcoin already consumes more energy than the whole of Argentina, and the total carbon footprint left by Bitcoin currently exceeds the total reduction in emissions made by electric vehicles. Training models and deep machine learning for Artificial Intelligence systems are also energy and data processing intensive, with their own significant power consumption levels and, accordingly, their own emissions.  As we continue to transition to a more digitalized world, careful consideration will be needed to determine what trade-offs we will find acceptable, and exactly how we can collectively manage the costs and benefits of such a transition.     Mariam AbdEl-Aziz   References: James Mckinven,  

Hydrogen in the GCC: The new Oil Economy?

    The world is currently shifting its energy system away from hydrocarbons and towards low-carbon energy sources, with a view to eventually transitioning to a net-zero energy system. As a result, governments and energy companies alike are placing large wagers on hydrogen, in an effort to lower emissions. The GCC countries have long been concerned about the sustainability of their hydrocarbon revenues and have taken early steps to develop national hydrogen strategies. Saudi Arabia and the United Arab Emirates lead the way in this regard and have positioned themselves to become major hydrogen exporters.  Japan, China, and South Korea, on the other hand, currently some of the top destinations for Saudi and Emirati crude oil, are set to emerge as major importers of hydrogen. The recent export by the Emirates’ state-owned oil company ADNOC, of its first blue hydrogen cargo to Japan, marks the first step toward solidifying this emerging relationship.   Hydrogen Steadily Gaining Ground in the GCC The UAE joined the Global Hydrogen Council in July 2021, and developed its National Clean Energy Strategy 2050, under which ADNOC will produce 300,000 metric tonnes of hydrogen annually. In Saudi Arabia, a green hydrogen project is scheduled for completion by 2025, with a capacity of 650 metric tonnes of hydrogen, and 1.2 million tonnes of green ammonia, making it one of the largest such projects in the world. In Kuwait, meanwhile, the National Petroleum Company (KNPC) has completed work on a hydrocracker unit at a cost of $16 billion, that can produce 454,000 tonnes of clean fuel. Oman Oil Company, for its part, is implementing a project to produce 1.8 million tonnes of green hydrogen at a cost of $30 billion, using solar and wind energy.   Factors favoring the production of Blue Hydrogen* in the GCC  (*Hydrogen produced using carbon capture and storage technology to store the CO2 created as a byproduct of the process)   The GCC is one of the largest and lowest-cost producers of natural gas globally, accounting for 20% of the world’s gas reserves. Qatar is the third-largest worldwide, with 24.7 trillion cubic meters (TCM) of proven natural gas reserves, while Saudi Arabia (6 TCM) and the UAE (5.9 TCM) hold the ninth and tenth spots, respectively. The availability of existing facilities in the GCC involved in the production of ammonia, fertilizers, methanol, steel, and hydrogen. These facilities are often already concentrated in clusters along with power and desalination plants, making ideal centers to expand the use of the carbon capture, use, and storage (CCUS) needed to create blue hydrogen. Examples include the facilities of SABIC in Saudi Arabia, FERTIL in the UAE, QAFCO in Qatar, PIC16 in Kuwait, OMIFCO in Oman, and Bahrain’s SULB. GCC hydrocarbon producers have significant CO2 storage capacity. Carbon capture, utilization, and storage (CCUS) enable the production of low-carbon hydrogen, and the voided spaces in oil and gas fields alone, within the GCC, accounting for a storage capacity of 33.4 GtCO2e, allowing for ample reservoirs for hydrogen producers.  GCC producers have well-developed existing infrastructure, such as their natural gas grids, which could be modified for transporting hydrogen inland for domestic purposes.    Factors favoring the production of Green Hydrogen* in the GCC:  (*Hydrogen produced using electricity generated from renewables, such as wind or solar)   The GCC is a high-potential region for renewables benefitting from some of the highest solar radiation levels in the world, as well as strong and regular winds in some areas. This makes the GCC region potentially one of the most cost-competitive for hydrogen production, with long-term costs potentially reaching USD 1.5 - 2 per kg, compared to USD 3.0 - 4+ per kg in Europe and parts of Asia. GCC countries enjoy sufficient funding availability for investment in hydrogen, having created significant financial reserves from their oil & gas economies. These reserves allow them to cover the cost of producing green hydrogen, which is high compared to that of producing blue hydrogen.  The GCC already has a highly qualified workforce in the oil & gas sector. This represents a major opportunity for the development of the hydrogen economy in the region, due to the high transferability of their skills. GCC countries have advanced export infrastructure. The UAE’s Jebel Ali and Saudi Arabia's Jeddah ports, for instance, were among the top 40 ports in the world in 2019, according to the World Shipping Council. GCC countries are centrally located relative to energy demand markets, situated as they are between the potentially large European and East Asian markets.   Potential Hydrogen Imports from High Demand Regions EU hydrogen imports from the GCC could reach 100 mMT by 2050, according to a recent report published by Dii & Roland Berger. In East Asia, meanwhile, imports from the GCC could reach approximately 85 mMT of ammonia by the same year, leaving GCC countries in a prime position to become major players in the hydrogen industry.   Source: Vision Port of Rotterdam, Germany's National Hydrogen Strategy, EU Hydrogen Strategy, METI, Hydrogen Korea Team, Roland Berger, Dii Desert Energy.     Potential Revenues from Hydrogen Exports Global hydrogen demand is expected to reach approximately 580 mMT by 2050. All indicators point to the potential for the GCC to replace its position as a global oil giant, with that of a global hydrogen hub, with potential green hydrogen revenues alone expected to reach USD 70-200 billion by 2050.  Looking Forward The GCC is in an excellent position to become a leading green and blue hydrogen producer, which would allow the region to occupy an important place in the nascent hydrogen industry. By seizing this opportunity, GCC countries can ensure their continued prominence in the global energy market, all the while moving towards a decarbonized world.   Author: Dina Amer   References: MEI@75, Warming to a Multi-Colored Hydrogen Future? The GCC and Asia Pacific, 2021 Gulf News, Gulf economies are ready to take on clean energy and hydrogen projects, 2021 Qamar Energy, Hydrogen in the GCC, a report for the regional business development team Gulf Region, 2020 Dii Desert Energy & Roland Berger, The Potential for Green Hydrogen in the GCC region, 2021  Brookings, Economic diversification in the Gulf: Time to redouble efforts, 2021  The IEA, The Future of Hydrogen; Seizing today’s opportunities, 2019  The IEA, The Role of CO2 Storage, 2019  KAPSARC, Opportunities for Natural Gas Trade and Infrastructure in the GCC, 2020

The Continuing Impact of COVID-19 on the Global Supply Chain

Over the past two years, just about anything that could go wrong with global supply chains has done just that. The COVID-19 pandemic has led to volatile swings in demand, widespread factory shutdowns, and every type of supply chain disruption in between. But which industries were most affected by these stresses to their supply chains? How were companies able to adapt their supply chain management?  And what are countries doing to make sure that future shutdowns don't affect their supply chains so drastically?   [caption id="attachment_7875" align="aligncenter" width="621"] Click the image to access the report![/caption]   Which industries experienced significant stress on their supply chains? The COVID-19 pandemic brought to light long-standing vulnerabilities in global supply chains. Lockdowns slowed or stopped the flow of raw materials and disrupted manufacturing in several industries, putting supply chains under significant stress. Factory shutdowns caused a shortage of semiconductors, already in short supply amid sustained demand from a growing EV market, and the increased demand for electronic goods from consumers confined to homes by lockdowns.  Major automakers bore the brunt of this shortage, made worse by the concentration of the world’s semiconductors manufacturing among just a handful of producers—Taiwan’s Semiconductor Manufacturing Co.(TSMC), for instance, along with South Korea’s Samsung, manufacture a combined 70% of the world’s semiconductor supply. The automotive industry was also hit hard by the supply chain issues affecting both battery manufacturers, and the mining industry that extracts the rare-earth elements needed for those batteries. Automakers’ over-reliance on the Asia-Pacific region for these critical components was made clear when major battery manufacturers such as BYD and CATL announced extended production delays, forcing automakers to slash production.  The textile and fashion industries are two more to have been extremely hard hit by the global supply chain crisis. With China being a critical global supplier of textile inputs, pandemic-related production disruptions there reverberated throughout the rest of the textile and fashion industries. These industries were further affected when the global transportation system came to a halt, preventing or delaying the transport of components to manufacturers, and finished products to consumers.     How were companies able to adapt their supply chain management?  With COVID-19 related shortages exposing vulnerabilities in the global supply chain, companies across different industries have taken action to determine how best to deal with the disruption and mitigate the effects of future supply chain shocks.   China plus one strategy One way to address the risks associated with over-reliance on a single supply source, is to use sources in locations not vulnerable to the same risks. This is the core idea behind the ‘China plus one’ strategy currently in use by several major companies. It emphasizes diversification by establishing a factory in one other developing Southeast Asian country – such as Thailand or Vietnam – in addition to existing facilities in China, to minimize the risks of geographic concentration.   Strengthening local supply networks Some companies are strengthening their supply networks by investing in local suppliers. Samsung, for instance, has invested a combined $238 million in nine midsize companies since the summer of 2020, to develop a network of chip equipment and materials suppliers inside South Korea and reduce its reliance on overseas suppliers. Similarly, Tesla is creating a domestic US lithium supply chain by sourcing the lithium ore necessary for lithium-battery fabrication within the US, thereby reducing its reliance on traditional lithium-producing countries.   Innovative workarounds Major companies have been forced to find innovative solutions to their supply chain problems. Tesla, for instance, has dealt with the chip shortage by rewriting vehicles’ software to support alternative chips.  Cardinal Health, a leading US healthcare services company, has turned to the use of tracking software to track shipments of their products between manufacturing plants and Cardinal's distribution centers. This allows for the making of predictive decisions to adjust supply plans and production schedules.   How are countries making sure that future shutdowns don't affect their supply chain? Global supply chain problems have made clear to governments the need to take action to strengthen and support their domestic supply chains, and many have taken important first steps towards doing just that, in preparation for future crises.   USA President Biden signed an executive order in February 2021, for a comprehensive review of critical US supply chains, with the associated White House report being released in June. Among other recommendations, the review determined that a solid supply chain must include a small and medium-sized business manufacturing base and highlighted the US’s need to diversify its international suppliers to reduce the risks associated with geographic concentration.    Japan The Japanese government has focused its efforts on subsidizing local businesses to strengthen domestic supply chains. It has distributed 146 subsidies totaling 247.8 billion yen ($2.4 billion) with the goal of encouraging an increase in domestic manufacturing, to reduce the country’s dependence on Chinese supply. Japan is also investing in overseas rare earth minerals projects, particularly in Australia and India to reduce its reliance on China’s supply from 58% registered in 2019, down to 50% by 2025.    Outlook: The Global Supply Chain Looking Forward As lockdowns have lifted and a global economic recovery has gathered pace, consumer demand has increased sharply. Supply chains that were disrupted during the crisis continue to face significant challenges and are struggling to bounce back, much less meet increased demand. While companies and governments alike have taken substantial action in response to the supply chain crises, these will not be sufficient to solve supply chain woes in the near term. Months of shipping backlogs and continuing labor shortages have caused bottlenecks that are proving difficult to resolve, and most analysts agree that supply chain problems will only get worse before they get better, with some estimates warning that the crisis could last another two years.   Author: Mohamed SAIDI Sources

January 10 2022 | Sustainable Development
COP26: A New Reality for Business?

    Between October 31 and November 12, more than 130 heads of state along with many more business and industry leaders, gathered in Glasgow for the United Nations Climate Change Conference, or COP26, with the aim of accelerating action towards the goals of the 2015 Paris Agreement and the 1992 UN Framework Convention on Climate Change.  Going into the conference, scientists and experts had warned that nations must make an immediate and decisive turn away from fossil fuel energy, with many describing it as the last chance for countries to reach consensus on two goals: reaching net zero emissions by 2050 and limiting global warming to 1.5C above preindustrial levels. The commitment to aim for 1.5C is important because every fraction of a degree above that figure is expected to result in the loss of many more lives and livelihoods, due to the resultant climate-related consequences.  The talks ultimately led to various important and significant pledges from nations and companies to commit to new targets for cutting emissions, and otherwise act to avert severe climate change. In this article, we examine some of the more significant such agreements reached at the conference, as well as the implications they are likely to hold for businesses.     Agreements Reached at COP26 The agreements reached at the conference can be divided into five broad categories of change:  Phasing out Coal More than 40 countries agreed to phase out their use of coal-generated power while 23 countries signed the Coal to Clean Power Transition Agreement, committing themselves for the first time to halt the issuance of new permits for unabated coal-fired power generation projects.  Notable hold-outs to the agreement include Australia, India, Russia, and the US. China, which was responsible for 54% of global coal consumption last year, was also absent from the agreement Major international banks and lenders like HSBC, Fidelity International and Ethos, also made landmark coal-related commitments at COP26. HSBC, for instance, has pledged to phase out financing of coal-fired power and thermal coal mining by 2030 in the EU & OECD, and worldwide by 2040.  Cutting Methane  The Global Methane Pledge was signed by more than 100 countries, representing 70% of the global economy and nearly half of its methane emissions. These signatories committed to a collective goal of reducing global methane emissions by at least 30% from 2020 levels, by 2030. The top three emitters of methane globally – China, Russia, and India – did not sign up to this pledge.  Ending Deforestation  The Glasgow Leaders’ Declaration on Forests and Land Use was signed by more than 140 leaders, representing over 90% of the world’s forests. Signatories committed to halting and reversing deforestation and land degradation by 2030, with $19.2bn already committed to the facilitation of these goals. New Net-Zero Pledges One of the main objectives of COP26 was to secure governmental and company commitments to reach net-zero emissions by 2050. Countries answered the call in Glasgow, with 29 making such commitments at the conference, bringing the total count to 74.   India’s Prime Minister Narendra Modi added his country to the list, to the surprise of many, albeit with a deadline of 2070. His pledge included a promise to secure 50% of India’s energy from renewable resources by 2030. More than 450 banks, insurers, and other firms with more than 130$ trillion under collective management acted similarly, committing to the use of their funds to reach net-zero emissions by 2050. China-US Climate Cooperation The US and China – the two largest emitters of CO2 – signed an unexpected joint declaration promising to boost climate cooperation over the next decade, with the specific aims of reducing methane emissions, tackling deforestation, and regulating decarbonization.  As outlined in the text of the declaration, the two powers are slated to share policy and technology development, announce new national targets for 2035 by the year 2025 and revive a working group to ‘meet regularly to address the climate crisis and advance the multilateral process’. Although the commitment has been welcomed by many, it lacks concrete steps to meet the 1.5C Paris Agreement goal. U.S. special climate envoy John Kerry has acknowledged as much but nevertheless defended the agreement, pointing to its expected contribution to enabling mutual accountability and action.   How will COP26 Impact Companies and businesses? Implications for companies and businesses can be divided into 4 main categories:   Carbon Offset Market The Paris Agreement laid down a framework for a carbon offset market, wherein states and private entities could generate and trade carbon offset credits. After five years of unsuccessful deliberations, negotiations at COP26 reached a breakthrough on the rulebook for this market.   For businesses, this agreement provides an opportunity to strengthen their green credentials, ensures offsets, and gives them the opportunity to reduce the cost of reaching their emissions targets.  Heightened ESG Standards and Expectations The set of deals made and agreements reached, at COP26, mean that businesses will have to reconsider their carbon footprints and business strategies if they hope to continue generating profits. This is due mainly to the imperative of these agreements on investors and industry leaders to bring in check the emissions associated with their businesses. Of the many deals announced, one includes plans to establish a standards organization that will inspect corporate climate disclosures and challenge boardrooms on the basis of its findings.  Companies that do not align their strategies with COP26’s carbon level targets’ regulations are likely to suffer in terms of ESG-based credit ratings, attracting investment, and their ability to attract and retain talent.    A Turning Point for Companies’ Sustainable Business Practices According to a March 2021 global survey conducted by IBM on the topic of sustainability, 73% of respondents said that addressing climate change was very or extremely important to them. In the wake of COP26, this consumer pressure will only continue to mount. Sustainability will also be increasingly important from an investment perspective, owing to the agreements reached and the resultant pressure on investors. According to a study at the Chicago Booth University, causal evidence suggests that investors, market-wide, already strongly value sustainability, to the extent that sustainability is viewed as positively predicting future performance. With the ratcheting up of pressure brought on by COP26 agreements, companies can expect investors to be even more reluctant to invest in companies that don’t make net zero an organizing principle of their business. Finally, by focusing on reducing their carbon footprint, businesses may be able to take advantage of opportunities arising from the regulatory changes governments are expected to make in accordance with their new COP26 commitments. There will be Winners and Losers Countries’ climate goals and their road maps for achieving those goals will pave the way for public spending plans that will boost green stocks. Given the domestic nature of these goals, many of the changes felt by companies will vary on a country-by-country basis. Companies’ fortunes will also vary by sector, as a result of agreements reached at COP26. Many stocks are set to benefit from decarbonization trends, including those of sectors such as renewables, hydrogen power, green mobility, and carbon capture, utilization and storage (CCUS). High-carbon sectors, on the other hand, like power generation, steel, cement, mining, airlines and shipping, can expect to face significant challenges.    Looking Beyond COP26 The COP26 pledges announced on methane, coal, transport, and deforestation are expected to nudge the world only 9% closer to a pathway that keeps heating to 1.5C, according to Climate Action Tracker, one of the world’s most respected climate analysis coalitions. As such, the achievements of the conference, taken alone, appear to be insufficient with respect to the goal of limiting global warming to the extent needed to avert severe climate consequences. The conference was, nevertheless, an unprecedented step in the fight against global climate change and has ushered in agreements that will have broad-ranging effects, and be widely felt by consumers companies, and governments alike.  Companies, in particular, will be forced to make significant changes to the way they do business and would be well advised to keep ESG-related consumer and investor sentiment at the forefront of all strategy considerations. Moreover, they can expect to face serious challenges if they fail to adjust their strategies in accordance with the new reality emerging in the wake of COP26.  As the U.N. High-level Climate Action Champion, Nigel Topping, puts it "If you haven't got a net-zero target now, you're looking like you don't care about the next generation, and you're not paying attention to regulations coming down the pipe."    Author: Ayoub Rahmouni Sources: Carbon Relief UNFCCC IPCC Independent The Guardian Climate Action Tracker Al Jazeera Statista Energy & Climate Intelligence Unit Bloomberg Reuters SSE Energy Solutions Barron’s UNFCCC NPR Clean Energy Wire Chicago Booth study IBM study Food & Land Use Coalition Gov.UK HSBC World Resource Institute

Consumer trends and the demand for sustainable products

  Sustainability Concerns Continue to Rise Issues of sustainable production and consumption have, over the last ten years, become increasingly important in the eyes of consumers around the world. Companies have had to make changes to meet these new expectations and can expect to do more of the same, in the future, in line with the continuation of this trend.  According to a 2015 study by NielsenIQ, 66% of global consumers surveyed responded they would be willing to pay more for sustainable brands, up from the 50% who said they would do so in 2013. Almost half responded they would pay more to environmentally friendly companies and those demonstrating a strong commitment to social values. In recent years, pressure on companies to pay attention to issues of sustainability has only continued to mount.  In a 2018 survey conducted across 5,000 consumers in Europe, for instance, nearly 40% of respondents said their top priority was that food and drink be produced in a way that doesn’t harm the environment, while almost a third prioritized paying workers a fair wage and ensuring that animals were not harmed during production. Almost three-quarters of all respondents wanted to know how their food is produced and a similar number wanted food companies to say where the ingredients in their products come from. Further, 61% reported looking for information about how food companies protect workers’ human rights.  Respondents placed even greater emphasis on the need for companies to act on global challenges. Protection of the environment was cited as important by 88 % of those surveyed, with 85% and 84%, respectively, responding similarly with regards to tackling climate change and global poverty.   Sustainability: The Global Nature of the Change in Consumer Preference  The European findings are echoed in a 2018 Accenture study of 35,000 people in 35 countries, which revealed that two-thirds of consumers make decisions about what to buy based on a company’s transparency, while 62% wanted companies to have ethical values and demonstrate authenticity.  A BCG survey conducted in July 2020 found that in the six-member states of the Gulf Cooperation Council, more than 80% of consumers said they were willing to live more sustainability. Moreover, 56% of respondents said they felt strongly about the need to adopt a sustainable lifestyle The 2021 Voice of the Consumer: Lifestyles Survey, published by Euromonitor International, further demonstrates the extent to which changing consumer preferences are global, and not restricted to Western or developed markets. It found, for instance, that almost 35% of those polled in emerging or developing markets reported that they buy sustainably produced goods. (Figure 1.) [caption id="attachment_7865" align="aligncenter" width="450"] Figure 1. Euromonitor International, 20-Aug-21, Ethical Claim Potential Index Identifies Top Market. Source: Voice of the Consumer: Lifestyles Survey, 2020 n=26,321; 2021 n=26,222[/caption] The Sustainable Market Share Index report, published by the NYU Stern School of Business in 2021, showed that the same shift in consumer preferences could also be seen among US consumers. The annual share of sustainability-marketed products there, for example, grew from 13.7% in 2015, to 16.8% in 2020. (Figure 2.) [caption id="attachment_7862" align="aligncenter" width="450"] Figure 2. NYU Stern, 1-Mar-21, Sustainable Market Share Index 2021[/caption]   Covid-19’s Impact on the Shift Towards Sustainability Several surveys conducted in the wake of the pandemic have found that people are more concerned about environmental challenges because of the pandemic and are more committed to changing their own behavior to contribute to sustainability. Consumers are, as a result, reducing their household energy consumption, increasing recycling and composting, and buying more local goods. In a recent BCG survey, 90% of consumers said they were equally or more concerned about environmental issues after the COVID-19 outbreak, while 87% of respondents felt companies should better integrate environmental concerns into their products, services, and operations. In May 2020, research firm Kantar found that COVID-19 had led to a global surge in localism, with 65% of consumers responding that they preferred to buy goods locally (local products do not have to be shipped over long distances and therefore require fewer resources to bring to market, producing fewer carbon emissions in the process). November 2020 Data collected by data analytics firm GlobalData shows similarly that consumer perceptions have changed during the pandemic, with over 50% of respondents interviewed during lockdown claiming they found locally sourced ingredients more important than before the outbreak Perhaps most interestingly, the COVID-19 pandemic has changed consumer perceptions and priorities with regard to sustainability. Prior to the outbreak, the term was used as a synonym for environmentalism. Now, however, consumers report expanding their definition of sustainability to include how companies treat employees and interact with their local community.    Company Reactions  Companies have had to make changes in line with changing consumer sentiments and have done so in ways that can be broadly categorized into four areas of action.   1- Addition of Sustainable/Ethical Labels Leading food companies and retailers are growing their share of assortment with sustainable claims. Nestlé, for instance, has been purchasing more local and healthier food labels to offset declines in some of its mass-market brands.  Another example is Dutch supermarket Coop’s switch entirely to Fairtrade bananas. German retailer Lidl’s has done the same across several European countries, and Nespresso has also expanded its sourcing of Fairtrade goods.    2-ESG Commitments Companies are increasing or shoring up their commitments to ESG policies and plans. Unilever, for instance, had already established sustainability goals that included net-zero emissions from its products by 2039, and investments of $1.1 billion in ESG-friendly initiatives over the next ten years. It recently added to these goals by announcing plans to label all its products with information on how much greenhouse gases they generate throughout the entire value chain of their production.  Further examples include Zara’s 2020 pledge to use 100% sustainable fabrics by 2025, H&M’s recently stated commitment to achieving the same goal by 2030, and Adidas’ commitment to phasing out virgin polyester by 2024. Finnish grocer Kesko serves as another example, with its aim to become carbon neutral by 2025 and achieve net zero by 2030. 3-Sustainable Packaging Other companies are increasing their focus on sustainable packaging, to reduce their use of plastics. Giro Pack, for instance, has developed compostable bags that are produced using plant-based or organic materials.  In April of 2021, P&G announced that Old Spice and Secret deodorants would appear in plastic-free packaging in certain stores, as part of a 2030 goal to reach 100% recyclable or reusable. Nestlé has also reported strong progress on its commitment to make 100% of its packaging recyclable or reusable by 2025, and to reduce its use of virgin plastics by one-third, by that year.  4-Social Impact Initiatives Other companies have chosen to prioritize initiatives that aim to produce positive social impact. Germany’s REWE, for instance, along with Portugal’s Jerónimo Martins, launched initiatives to better integrate migrants into the labor market and promote intercultural cooperation. Similarly, Swedish furniture giant IKEA recently broadened its social impact by committing to employ refugees at production centers in Jordan — part of the company’s stated long-term goal to employ some 200,000 disadvantaged people around the world.   Outlook Going forward, increased, and rising awareness, the influence of social media, and regulatory initiatives with regards to sustainability are expected to drive the market. While no company can expect to be immune from these influences, the pressure to act will be felt most keenly by companies operating in certain consumer goods sectors, such as food and beverage, and fashion.  According to the Ethical Food Global Market Report 2021, the global ethical food market is expected to grow from $542 billion in 2020 to $574.42 billion in 2021, before reaching a projected $727 billion in 2025. The global ethical fashion market is expected to show even greater rates of growth, going from $6,345.3 million in 2019 to $8,246 million in 2023, before growing further to $9,808 million in 2025 and $15,173 million in 2030.  Smaller though significant increases in market size should also be expected across almost all categories of sustainably produced consumer goods, and if the shifts that have taken place over the past decade are any indication of the decade to come, the importance to consumers of sustainability will only continue to grow.   Consumers have shown that they have become far more attuned to how brands speak and more importantly, how they behave. With consumers focusing more on sustainable, socially, and environmentally responsible consumption, companies will need to demonstrate that they’ve changed with the times. Only companies that can prove they meet the new, more ethical consumer standards will be able to thrive in a more sustainability-conscious world.   Author: Omar Elkayal   Sources:  Mi3, 12-Oct-21, As Australia re-opens, brands truly delivering social good, localism and sustainability will roar ahead Euromonitor International, 20-Aug-21, Ethical Claim Potential Index Identifies Top Market Boston Consulting Group, 11-Aug-21, Sustainability Matters Now More Than Ever for Consumer Companies, 1-Aug-21, Global Ethical Food Market - 2021-2028 ThinkwithGoogle, 1-Aug-21, How localism is driving brand engagement with consumers across the globe Euromonitor International, 1-Jul-21, Where to Play and How to Win? Mapping the Opportunity of Sustainability in Packaged Food Mckinsey, 14-Jun-21, The path forward for sustainability in European grocery retail Blend, 22-Mar-21, The Newest Fashion: Sustainability and Ecommerce Localization NYU Stern, 1-Mar-21, Sustainable Market Share Index 2021 Mckinsey, 12-Feb-21, The ESG premium: New perspectives on value and performance  Mckinsey, 26-Jan-21, NEF Spotlight: The path forward for retail’s sustainable future Businesswire, 11-Jan-21, Global Ethical Fashion Market Report 2020: Opportunities, Strategies, COVID-19 Impacts, Growth and Change, 2019-2030 Boston Consulting Group, 1-Jan-21, Are Consumers in the Gulf States Ready to Go Green? GlobalData, 17-Nov-20, Localism will show high relevancy after COVID-19 pandemic has subsided Boston Consulting Group, 14-Jul-20, The Pandemic Is Heightening Environmental Awareness McKinsey, 1-Jun-20, The State of Fashion 2020 Fair Trade International, 10-May-19, Shoppers are demanding sustainable options – are companies getting on board? NielsenIQ, 10-Jan-19, A natural rise in sustainability around the world ATKearney, 1-Sep-18, Competing in an Age of Multi-Localism

Expo 2020 and Environmental Sustainability

  Expo 2020 Dubai, the region's first of its kind, has been a long-awaited event. With its “Connecting Minds, Creating the Future” theme, Expo 2020 is focusing on three main elements: sustainability, mobility, and opportunity. Aiming to become the most sustainable expo so far, Expo 2020 Dubai has taken diverse measures from installing renewable energy systems to reducing water usage and segregating waste. Expo 2020’s sustainability efforts are supported by its partners that have been undertaking various sustainability initiatives of their own besides helping realize the expo's sustainability vision.   Expo 2020 partners and environmental sustainability efforts   GHG emissions Expo 2020 partners are taking climate action by setting ambitious GHG emissions reduction goals. For example, Accenture is targeting net-zero carbon emissions by 2025, with specific goals to reduce absolute GHG emissions by 11% and its scope 1&2 emissions by 65% from its 2016 baseline. Cisco has also promised to have net-zero emissions by 2040, with near-term goals of reaching net-zero for global scope 1&2 emissions by 2025 and reducing scope 3 emissions by 30% by 2030 from its 2019 baseline.   Water consumption Expo 2020 partners are also working on reducing their water consumption. For example, PepsiCo has reduced its consumption by 21% from 2018 to 2020. The company has also pledged to improve its water use efficiency by 15% in agriculture, and by 25% in operations from its 2015 baseline. It is also hoping to replenish the water consumed in manufacturing by 100%.   Renewable energy Expo 2020 partners are conscious of the impact of their operations on the environment and thus have been switching to clean energy sources. For instance, both SAP and Mastercard are fully relying on renewable energy, with 100% of their electricity being generated from renewables in 2020.   Waste recycling Waste recycling initiatives are also key for the Expo 2020 partners. Among the partners, Nissan is a leader, with 96% of its wastes either recycled or diverted in 2020. It is followed by Siemens, with 93% of its wastes recycled or diverted in the same year. Some partners have set other waste recycling goals such as Accenture, which pledged to repurpose or recycle 100% of its e-waste by 2025.   Partners’ contribution to a more sustainable Expo 2020   Siemens As the Expo 2020 Infrastructure Digitalization Partner, Siemens is helping the expo achieve its sustainability targets by integrating its smart building technology across the expo structures, providing transparency into their energy and water consumption.   PepsiCo In preparation for the event, PepsiCo has launched Expo 2020 Dubai co-branded Aquafina cans and glass bottles, as well as limited-edition Pepsi cans, which are all fully recyclable. PepsiCo is also collaborating closely with Dulsco, the official waste management partner for Expo 2020, to ensure waste is collected and recycled, supporting the Expo’s waste diversion targets.   Mastercard Mastercard, Expo 2020's official payment technology partner, has created an add-on feature to Expo 2020 tickets, which allows visitors to donate to Mastercard's Priceless Planet Coalition. Expo 2020 highlights the urgent need to embrace sustainability, which can be observed through the efforts made by the organizers and partners to change their practices to create a more sustainable future. Partner companies have come a long way to achieving their goals in terms of reducing greenhouse emissions, curbing their water consumption, using renewable energies, and recycling their waste. Some had more noticeable successes than others, such as SAP, Accenture, and Cisco, while others are still on the way. Expo 2020 partners, including Siemens, Emirates, PepsiCo, MasterCard, and DP World have also contributed to a more sustainable expo, emphasizing the significance of sustainability to all Expo visitors.   Khawla Khrifi - Business Research Analyst Sources: Expo 2020 and Environmental Sustainability

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