STRAIGHT TALK ON ENVIRONMENTAL TRENDS IN THE NEW ECONOMY

Straight Talk on Environmental Trends in the New Economy

2024.02.16

CLIMATE CHANGE TRENDS

The situation with climate change is becoming increasingly severe. A global sustainable trend research report published by Standard & Poor's on January 15, 2024, identifies critical trends impacting the economy this year, including:

• Plans and resilience for adapting to climate change

• The EU's CSRD, coming into effect in 2024, requires companies to report on the sustainability of their value chains

• A global agreement on reducing plastic pollution is expected by the end of 2024

• The impact of climate change on human health

• Large corporations' dissatisfaction with the quality and transparency of carbon reduction projects

At the national level, plans for adapting to climate change and maintaining resilience after climate disasters are a double pain, requiring trillions of dollars in investment, but if mismanaged, this could severely negatively impact national production. For corporations, CSRD represents a similar challenge; measuring, managing, and reporting the entire value chain sustainability will undoubtedly burden operational costs. However, not investing in value chain management could be fatal due to non-compliance. Although costly to plastic circulation, reducing plastic pollution is necessary to avoid significant, ongoing damage to marine ecosystems. To individuals, the most direct impact of climate change is on health, placing a more substantial burden on the medical system.

As all sectors need to invest in measures to combat climate change, green financing has stalled, with investors reluctant to fund projects with low transparency and poor outcomes.

CLIMATE CHANGE TOPICS ARE COMPLEX

Like all economic issues, environmental concerns are interconnected, requiring shared information and collective action beyond any entity's regulations, self-discipline, or advice. The example of electric batteries illustrates the complication of climate change-related topics:

The Supply Chain Problem with Electric Vehicle Batteries

A recent online forum hosted by MIT Tech Review invited three guests to discuss the sustainability of the supply chain for electric vehicle batteries. As a source of clean energy, batteries seem an environmentally friendly option, but their underlying costs must be addressed. EV batteries require metals like lithium, cobalt, and nickel, especially those designed for heavy vehicles, which necessitate these metals in large quantities. The mining process involves deforestation, extensive water use, and toxic waste, posing significant environmental burdens.

Suppliers of EV batteries must grasp this information and assume corresponding environmental responsibilities.

Governments of advanced economies offering incentives for car owners to swap to electric vehicles need to consider their overall environmental impact in other regions. Currently, the Democratic Republic of the Congo, the largest producer of cobalt, along with Australia, Indonesia, and Russia, faces challenges in balancing export needs with environmental conservation, meriting global attention.

IMPACTS AND SOLUTIONS FOR CORPORATIONS

The primary impact on corporations is the increase in operational costs. To address this challenge, corporations can:

• Enhance energy efficiency by improving the efficiency of facilities and equipment to reduce energy consumption.

• Invest in renewable energy sources to decrease reliance on fossil fuels.

• Ensure sustainability across the supply chain by collaborating with suppliers to minimize environmental impact.

• Invest in innovation and green technologies to reduce carbon footprints.

• Educate employees through regular expert talks, internal discussions, case study analysis, and experience sharing to encourage early warnings of the impact of climate change on the business and suggest appropriate actions and strategies.

IMPACTS AND SOLUTIONS FOR GOVERNMENT

Governments face increased economic costs to plan for resilience and recovery. Governments can:

• Develop strategies for climate change adaptation to improve infrastructure and increase resilience against climate disasters.

• Promote green economic policies through tax incentives and subsidies to encourage environmentally friendly practices.

• Enhance public education and awareness to raise understanding of climate change and encourage eco-friendly behaviors.

• Engage in international cooperation to jointly share resources and technologies to address climate change.

• Ensure transparency by properly publicizing annual reports and consulting on plans.

IMPACTS AND SOLUTIONS TO INDIVIDUALS

For individuals, the primary impact is an increase in health system costs. Individuals can:

• Adopt an environmentally friendly lifestyle by actively participating in carbon reduction and energy-saving activities.

• Embrace minimalism by reflecting on consumption habits, reducing unnecessary purchases, and choosing eco-friendly products.

• Support the sharing economy by using public transportation and participating in the second-hand market.

• Reduce plastic use by minimizing disposable plastics and promoting recycling and reuse.