Voting, Pensions, GHG assurance, Fossil Fuel Treaty & Melinda French Gates

Giles Gibbons

Good Business - Sustainability | Strategy | Impact

March 4, 2024

1. The hidden power of the climate conscious voter

In a scramble to win votes ahead of the next general election both #RishiSunak and #KeirStarmer have announced major U-turns in their climate commitments. But have systematic underestimates of support for climate action led both party leaders to make the wrong calculations?

A recent study in Nature Climate Change, surveying nearly 130,000 individuals across 125 countries, revealed a discrepancy between perceived and actual support for climate action. Respondents believed less than half their fellow citizens would be willing to contribute to tackling climate issues. However, the study found 89% of respondents believed they should help fight climate change, with over 80% of the UK respondents urging the government to intensify climate efforts. The study also identified a correlation between demand for increased political action and demand for specific climate policies such as a carbon tax or funding renewable energy research, suggesting strong climate-related policies could play a pivotal role in influencing voting behaviour.

So why do we have such little faith in our neighbours and why should the green vote not be overlooked? The authors believe the focus by the media and public discussion on the small number of climate sceptics is partly responsible. High media coverage of protests against controversial climate policies, such as expanding the ULEZ zone to Uxbridge and the European Commission’s sustainable Farm to Fork strategy can give outsize voice to what remains a minority view. This could in turn discourage governments from incorporating climate policies into their campaigns. However, humans are conditional operators, meaning we are more likely to contribute to a public good if we believe others contribute as well. Therefore, the hope is that as findings like these let the climate conscious cat out the bag, change will come.

Ultimately this study highlights the world’s willingness to fight climate change and governments should take note. There may be more votes in commitment to progress that they think.

2. Pensions make good (business) sense

In a world beset by economic uncertainties, the haunting question of whether employees can afford a dignified retired life echoes through the corporate corridors. A recent Financial Times article delves into this quandary, highlighting the alarming gap between what individuals’ need in retirement and what they actually have.

The article underscores the stark reality that many, despite years of work, find themselves ill-prepared for retirement as pension plans erode and social security systems strain. In response, IBMhas reopened its long-closed pension benefit plan to new participants, and other American companies are considering following suit. This change is in part the result of the way the increase in interest rates has sharply reduced the estimated cost of providing future payments, leaving many plans with a surplus. Given this can only be used for pension benefits, it makes sense to open the plans to new participants.

The article ends with the following thought: “Providing better retirement options makes good business sense.” We couldn’t agree more. While it would be nice to think that this change was driven by this belief, rather than (or perhaps alongside) the unexpected upturn associated with interest rate fluctuation, the sentiment still holds.  As ever, it’s the most fundamental aspects of employee remuneration and support that matter most, and this serves as a reminder that the commitment to employee well-being extends beyond the confines of the workplace. It's an acknowledgment that success is not solely measured in profit margins but in the quality of life afforded to those who contribute to that success.

It is a depressing reality that at the moment, a comfortable retirement feels like a distant dream, and not just in the States but elsewhere too.  Businesses can, and in our view should, take responsibility for changing that.

3. Rest assured

The world of corporate GHG emissions accounting and target setting has come on leaps and bounds in the last few years. And with more data out there, we can start to get a better understanding of progress on emissions reductions and the key drivers for the transition to net zero.

A new piece of research this week added an interesting insight into the mix: that companies that had their emissions data assured showed greater emissions reductions than those that didn’t, as well as reporting higher absolute emissions. In fact, having emissions assured had nearly as much impact on emissions reductions as having science-based targets.

There are plenty of factors that influence emissions reductions, so it’s difficult to say exactly how or why reductions are influenced. And it’s important to note that the research only looks at companies’ direct (scope 1) emissions, which typically only represent a small proportion of emissions – when you include electricity (scope 2) emissions, setting targets has a bigger impact on emissions performance, for example.

But the most interesting part is the impact of having emissions data assured. The study found that companies who had emissions data assured reported 8% higher emissions intensity than their unassured peers, suggesting that there’s likely underreporting elsewhere, and prompting the authors to call for mandatory emissions assurance.

With emissions being intangible and complex, their measurement isn’t straightforward, and the practice is in its relative infancy. With the guidance being limited, there is a need for second opinions, collaboration and knowledge sharing, which assurance plays an important role in. We’re proud to be a part of the Carbon Accounting Alliance to help accelerate the development of emissions accounting.

4. Farewell Fuel-lishness

Following in the footsteps of France, Spain, and the Netherlands, the UK is calling it quits on the Energy Charter Treaty (ECT), the most litigated investment agreement in the world. In case you haven’t heard of it, the ECT granted investors in fossil fuel companies the ability to take legal action against governments regarding climate policies. After a series of unsuccessful attempts to align the treaty with the UK's net-zero emissions plans, it was time to part ways.

Established in the 1990s, the ECT provided a way for investors to seek compensation for lost profits arising from net zero policies under clauses initially intended to protect investors in former Soviet economies. Graham Stuart, the UK's energy security and net-zero minister, stated that the treaty hinders the transition to cleaner energy and may penalize efforts towards achieving net-zero emissions.

Protection under the ECT for new energy investments will cease a year after the withdrawal and it remains uncertain how this decision will impact ongoing cases. The treaty's exit is seen as a positive step by many, as concern had been raised about “climate-wrecking lawsuits" with the treaty described by some as a “straitjacket” to a just transition. More than 54 countries are still listed as ECT signatories on the treaty organisation’s website, but as talks of modernisation have failed, many plan to walk away. The European Union is considering a mass departure from the treaty, citing misalignment with energy and climate goals.

While on the face of it, this is good news for the climate, the ECT also protects the rights of investors in clean energy projects, and there are concerns that withdrawing from the treaty may make the UK a less appealing market for investment in renewables as a result. And the original aims of the treaty were to promote energy security and diversity by reducing legal and political risks associated with energy investment, and those remain as pressing concerns as ever. Arguably, remaining as a signatory to the treaty and arguing for radical and ambitious change would have had better outcomes than abandoning it; as it is, we hope that a new, more robust, and future proof treaty will emerge from the wreckage of the ECT in due course.

The Goods: Melinda’s Health Code: Breaking Gender Barriers

Imagine having a conversation with a younger version of yourself. What wisdom would you share?

Melinda French Gates, the renowned philanthropist, computer scientist, and author, reflected on this very question during her recent appearance on Kirsty Young's podcast, "Young Again." As one half of the world’s biggest private Foundation- and previously one half of the world’s most famous power couple- Melinda has garnered many invaluable insights. Particularly, about the importance of gender equality in enhancing global health.

Melinda talks about the evolution of her perspectives through her work with the Bill & Melinda Gates Foundation. A pivotal realisation for her was understanding that addressing gender disparities is fundamental to improving global health outcomes. This insight led the Foundation to look at gender differences in the world and deliver targeted interventions that lift women up. By creating the enabling environment for women to access essential services such as banking, mobile connectivity, and healthcare, we can bridge the gap for women’s economic freedom and better health for them and their families.

This philosophy is actively applied in SKY Girls, our behaviour change programme for teenage girls in Africa, funded by the Gates Foundation. SKY Girls aims to tackle various health and social issues, including financial inclusion, to enhance the life prospects of young women and girls.

As you unwind for the weekend, why not give the full interview a listen here?