Giles Gibbons

Good Business - Sustainability | Strategy | Impact

168 articles Following

June 2, 2023

1. Don't let ESG go up in smoke

Environmental, Social, Governance (ESG) investing is now the fastest-growing segment of the asset management industry, but at the same time is under increasing scrutiny, with some questioning its ability to determine what really ‘counts’ as worthy of the label.

All of which makes for interesting context for a slightly unexpected intervention this week.

Enter Philip Morris International (PMI), the maker of Marlboro cigarettes, whose CEO Jacek Olczak gave an interview to the Financial Times on Tuesday, in which he said PMI is on track to becoming an ESG stock as the company retreats from cigarettes and shifts toward vaping. 

This is part of a push to win back investors that have shunned the stock because of tobacco exclusion policies. Olczak argued the company's renewed focus on reduced-risk products like vapes means it's in with a chance. While vaping is not as bad for you as smoking, it's not harmless and regulators are starting to close in. The government announced restrictions on flavoured vapes earlier this week, and Australia has already banned recreational vaping.

Despite the shift to vapes, PMI sold 621 billion cigarettes worldwide last year. Cigarettes are the leading cause of preventable death globally, killing over 8 million people a year. We know the dangers big tobacco companies present in less regulated markets, through our tobacco prevention work in Africa for the Bill & Melinda Gates Foundation, in response to the concerning increase in teenage girls taking up smoking.

Whilst PMI is still yet to make half of its revenue from non-tobacco products, we would be alarmed if Olczak’s claims are true, and investors are considering classifying the company as ESG stock. We need to look beyond a company’s proposed goals, to interrogate if its holistic company practices – from the products it sells to the way it manufactures and sells them - stand up to ESG standards.

This challenge around defining what counts as ESG is compounded by the fact that there is no universal, objective, rigorous framework. We’re seeing ESG’s credibility under the spotlight, and despite further incoming ESG regulations the UK is lagging behind the EU and US.    

At a time when ESG is facing scrutiny on its reliability for assessing how organisations are having a positive impact on the world, PMI’s inclusion would come as a major blow.

Let’s hope Olczak’s claims are smoke without fire. 

2. Collusion disillusion

It’s difficult to overstate how critical collective action is to stopping climate change. Without working together, there’s no way that we will achieve a net zero future and limit global warming to 1.5°C (a threshold we are closer than ever to breaching).

It was particularly disheartening, then, to read this week about the mass exodus of insurance providers from the Net-Zero Insurance Alliance (NZIA). Established two years ago, NZIA is a UN-backed body aimed at reducing the carbon footprint of insurers and mitigating climate change risks. However, allegations of anti-competitive behaviour from US attorneys-general have prompted several major insurers, including Lloyd's of London, AXA, and Allianz, to withdraw from the alliance. Critics argue that efforts to scale back insurance coverage for fossil fuel projects amount to collusion and undermine fair competition.

This is a shame. Rather than fragmentation, collaboration and shared responsibility among insurers and other stakeholders are crucial for tackling climate change. US antitrust laws have been adapted in response to crises before, and there’s no reason these regulations couldn’t be modified to accommodate collective climate action. Such adaptations exemplify the kind of systemic change that is needed if we are to successfully respond to climate change.

Worth considering, also, is whether these anti-trust allegations are the real reason insurers are quitting the alliance. In a political climate increasingly gripped by anti-ESG sentiment, it’s entirely possible that insurers with cold feet were simply looking for a way out of NZIA.

As climate alliances in the financial sector face uncertain times, insurers and other financial institutions should take a moment to consider how they will continue to work together to accelerate the shift to a greener world. Vague statements about remaining committed to acting on climate change are not enough – it's time to ensure we’re insuring our planet’s future.

3. In cinemas now 

If you reach the end of an eco-disaster film, and the world hasn’t been engulfed by flames as a giant ball of hail hurtles towards Leonardo Di Caprio, then you’ve stumbled upon a rarity.

Recent research found that out of 100 climate change films, 66% depict catastrophe. Hollywood’s portrayal of climate change presents it as something dystopic, and dramatic, where varying plots all lead to the same disastrous eventuality. They’re exciting and bring climate change into mainstream conversation. They also simultaneously feel vastly unrealistic and unsettlingly close to home. Which is kind of where we are right now.

But the bleak and apocalyptic tones of such films can paralyse people into inaction. It’s difficult not to feel helpless and small against the weight of a monumental issue, and when you’ve just watched the world come to a catastrophic end, decisions like taking the train instead of flying begin to feel a little inconsequential. There’s also the fact that for those more sceptical of climate change, watching a dramatic disaster film might also work to confirm the idea that climate change is far off, and not under the remit of our concern.

Given how much power films hold to spark change, this is an important missed opportunity. How about films that show climate change through a more optimistic and action driven lens, whether through depicting moments of innovation, or telling stories of courage? Films which shed light on the vastly unequal effects of global warming, or which help audiences grapple with the complexity and anxieties relating to our changing planet but also point us all in the direction of what we need to do to address it.

One organisation that totally gets it is Participant, a film company who work with famous filmmakers and NGOs to combine ‘art and activism’ and tell ‘socially conscious’ stories about the issues we face globally – and make them global hits. The more this kind of approach becomes box office mainstream (and they show how it can be) the better.

4. Pedal power

Transport for London (TfL) has launched the Cargo Bike Action Plan in an effort to transform how deliveries are made in the capital. The plan aims to promote cargo bike use and address barriers that may prevent a shift from using vans to using cargo bikes for ‘last mile’ deliveries.

Cargo bikes are specially designed cycles that can carry all types of loads. They’re typically electricity-assisted and offer a clean and efficient alternative to vans by reducing congestion and air pollution – particularly given the continued rise in e-commerce and home deliveries. So, there’s no surprise TfL is turning to cargo-bikes to displace ‘van kilometres’ in the city.

The action plan includes detailed modelling, forecasting that a shift to cargo bikes could potentially reduce van kilometres by as much as 17% by 2030. However, overcoming the barriers to this shift will require a concerted effort from different stakeholders.

Whilst cargo bikes are an affordable, clean and efficient alternative to vans, road infrastructure needs to accommodate them, and parking, charging infrastructure and safe storage areas need to be created. The Cargo Bike Action Plan recognises the need for ‘micromobility hubs’ which could eventually enable more people to use them and allow delivery services to organise and distribute their freight.

The switch to cargo bikes relies on strong policies, schemes and behaviour change that encourages their uptake, and logistics systems in London need to be rethought if ‘last mile’ deliveries are to be greened.

There are several pedal-powered champions already revolutionising last-mile deliveries, cutting emissions and making a positive impact. Read our next story as we celebrate the businesses leading the way in embracing cargo bikes and creating a sustainable delivery ecosystem for a cleaner and brighter London

5. Who's on their bike?

We (and TFL!) aren’t the only fans of electric cargo bikes. There are some great examples out there of forward-thinking businesses already using the bikes to revolutionise what they do while reducing emissions and improving community life.

Some businesses are using a swap from vans to bikes to not only reduce emissions, but improve customer experience. Freddie's Flowers, a London-based bouquet delivery company, found that electric cargo bikes not only make deliveries easier for the courier (no need for parking, easier access to buildings) but quicker. Now couriers work 9-5 instead of starting at 4am to make it through the traffic. Oxwash, a laundry service, similarly uses cargo bikes to make time-critical deliveries quicker than ever. And Grubby, a vegan meal-kit business, uses the electric bikes to ensure their carbon-sensitive customers are delighted with the service provided.

Other businesses are using electric cargo bikes to enable exciting new business models. Baby clothes rental service OR Collective relies on customers needing deliveries of new, bigger clothes on a monthly basis. Using electric cargo bikes ensures that the sustainable benefits of sharing are not undermined by excessive emissions shipping clothes back and forth. Instead, it’s a scalable sharing economy model that lives up to the hype.

Finally, local councils are using electric cargo bikes to give residents access to practical and sustainable local transport, without the emissions and congestion. Lambeth Council is piloting a low cost service to rent electric cargo bikes by the hour. Local businesses are taking part, parking the bikes outside their premises, keeping them safe and, crucially, keeping them charged. No more getting the car out to do the ‘big shop’ or take the kids to the park. Now that’s a turbo-charged solution. 

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Giles Gibbons

Good Business - Sustainability | Strategy | Impact

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168 articlesFollowing

What to expect in this week's Friday 5... 🚭 Philip Morris International's ambitions to become an ESG stock 👋 The mass exodus of Lloyd's, AXA, and Allianz, from the Net Zero Insurance Alliance 📽 Climate change catastrophe in the cinema 🚆 The launch of Transport for London's Cargo Bike Action Plan 🚲 How forward-thinking businesses such as Freddie's Flowers, Oxwash, Grubby and OR Collective are revolutionising the delivery model Subscribe for the week's most interesting sustainability stories every Friday #newsletter #sustainability #climatechange #insurance #london #transport #responsiblebusiness