As we welcome the new decade, it’s time again for our experts’ New Year's Sustainability trend outlooks. We are now entering a decade that threatens great uncertainty as the window of opportunity to create a sustainable world, one in which people everywhere can lead fulfilling lives on a healthy planet, seems narrower than ever before. Here, our experts have listed their Top Trends for industry professionals to have a close look at to help their organization be a leader in sustainability.
TREND #1: Global investors adopting green investments
Today's investment community is riding a wave of growing interest in sustainable companies—ones that show progress toward a 1.5C world. As companies’ sustainability journeys continue to evolve, so too do investor interactions. BlackRock’s C.E.O. Larry Fink’s influential annual letter where he said his firm would avoid investments in companies that “present a high sustainability-related risk” is just the most recent indicator of this trend. In December 2019, 631 investors from around the world, representing some $37 trillion in assets, signed a letter calling on governments to step up their efforts against climate change. In addition to investor and consumer pressure to operate sustainably and disclose climate risk, companies now face legislative pressure as well.
TREND #2: Corporates buying renewable energy always and everywhere
Europe continued to advance as an attractive market for corporate PPAs—a trend that will only speed up in 2020. With this, we’re also seeing increased innovation in deal structures coming out from the European market. For example, in 2019 Signify signed the first publicly announced virtual power purchase agreement (VPPA) in Poland and various contract types designed to reduce risk were on offer from developers in multiple markets.
Beyond Europe, 2019 showed a growing interest, but also challenges, in some newer geographies for renewables: India and Brazil have seen an upswing in I-REC purchasing and both countries show greater potential for renewable purchasing in 2020. New and increasingly attractive markets for renewable energy to keep an eye on this year include Vietnam, Taiwan, China, Italy and Germany.With rapidly growing global initiatives such as the RE100 and Science-Based Targets, more companies than ever are now positioning themselves among the league of climate leaders making bold commitments to renewable energy and greenhouse gas reduction.
TREND #3 Carbon zero is the economies’ new imperative
The upswing in carbon neutrality goals was already a big trend in 2019, with almost daily announcements of net zero initiatives from countries, organizations, event organizers or even on a personal, family level. Net zero, carbon neutral or climate neutral claims lack clear, widely accepted definitions and boundaries (e.g. on the question of carbon offsetting). Initiatives differ based on what a company sells, owns or influences. The emissions reduction rate associated to neutrality claims is not always clear and neither is the way that the remaining emissions may be offset.
Additionally, companies like Microsoft now enter the carbon negative space by committing to remove more carbon dioxide from the atmosphere than it emits by 2030. In the meantime, it is safe to say that experts are aligned that the litmus test of carbon credibility are science-based targets (SBT) and any net zero initiative shall start with emission reductions in line with 1.5°C or well below 2°C scenarios
TREND #4 Supply chain action goes mainstream
Many companies have turned their focus to carbon reduction on Scope 3, or indirect emissions in a company’s supply chain. Mainstreaming supply chain carbon reduction will bring a real breakthrough, as impacts could be exponential compared to focusing only on emissions from a company’s own operations. We see many activities in the Scope 3 field, such as fostering science-based target setting for suppliers, engaging supply chain partners on renewable energy procurement or joined R&D initiatives to step away from carbon-intensive technologies. The electrification in glass industry is one example how these activities can force innovation. We strongly recommend our clients to work in tandem with key supply chain partners to reap the benefits of early adopters.
TREND #5 Circular economy - moving from buzz to business
A growing number of businesses have begun identifying viable opportunities in adopting circular business models. Unlike the mainstream linear model, circular models adopt strategies in recycling and product life extension. In the past, such initiatives mainly focused on plastics and packaging reduction and recycling, as the public interest in the ocean plastics crisis had driven both consumers and regulators to seek action.
Nowadays, circular economy programs extend to decouple many economic activities from consumption of finite resources and help to cut GHG emissions. Removing poorly designed and environmentally harmful products from the market is one of the most efficient ways to achieve climate protection. Consequently, the European Green Deal, the EU’s new carbon reduction and growth program, outlines the priority of circularity and is expected to announce measures in a Circular Economy Action Plan.