TBLI Weekly - August 22nd, 2023


TBLI Weekly - August 22nd, 2023

Your weekly guide to Sustainable Investment


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Fukushima: wastewater from ruined nuclear plant to be released from Thursday, Japan says

By: - The Guardian

Release plans approved by UN nuclear authority have caused outcry in China and concern for the reputation of Japan’s seafood

Japan is to begin releasing wastewater from the wrecked Fukushima Daiichi nuclear power plant from Thursday, in defiance of opposition from fishing communities, China and some scientists. The prime minister, Fumio Kishida, said on Tuesday he had asked the plant’s operator, Tokyo Electric Power (Tepco), “to swiftly prepare for the water discharge” in accordance with plans approved by nuclear regulators, adding that the release would begin on Thursday, “weather and ocean conditions permitting”. Kishida has said that disposing of more than 1m tonnes of water being stored at the site was an essential part of the long and complex process to decommission the plant. The plan has caused controversy because the water contains tritium, a radioactive substance that can’t be removed by the facility’s water filtration technology.

Hong Kong, an important market for Japanese seafood exports, has threatened restrictions. Leader John Lee said on Tuesday he strongly opposed the water plan, adding that he had instructed the city’s government to “immediately activate” import controls on Japanese seafood. South Korea and China banned seafood imports from some areas of Japan after Fukushima Daiichi suffered a triple meltdown in the March 2011 triple disaster along the country’s north-east coast. China remains strongly opposed, accusing Japan of treating the ocean like a “sewer”. The South Korean government recently dropped its objections to the discharge, but opposition parties and many South Koreans are concerned about the impact the discharge will have on food safety.

The decision comes weeks after the UN’s nuclear watchdog, the International Atomic Energy Agency (IAEA), approved the discharge, saying that the radiological impact on people and the environment would be “negligible”. Some experts point out that nuclear plants around the world use a similar process to dispose of wastewater containing low-level concentrations of tritium and other radionuclides. “Tritium has been released [by nuclear power plants] for decades with no evidential detrimental environmental or health effects,” said Tony Hooker, a nuclear expert from the University of Adelaide.

Greenpeace, however, has described the filtration process as flawed, and warned that an “immense” quantity of radioactive material will be dispersed into the sea over the coming decades. Shaun Burnie, senior nuclear specialist at Greenpeace East Asia, said Japan’s government “has opted for a false solution – decades of deliberate radioactive pollution of the marine environment – during a time when the world’s oceans are already facing immense stress and pressures. “This is an outrage that violates the human rights of the people and communities of Fukushima, and other neighbouring prefectures and the wider Asia-Pacific region.” The government and Tepco also face opposition from local fishers, who say pumping water into the Pacific Ocean will destroy their industry.

In a meeting on Monday with Masanobu Sakamoto, the head of the National Federation of Fisheries Cooperative Associations, Kishida attempted to reassure fishing communities that the discharge was safe. Ahead of the meeting, Sakamoto said his group’s opposition to the plan had “not changed one bit”. He said they understood that the water release could be scientifically safe, but still feared reputational damage. Those fears were echoed in a poll published this week by the Asahi Shimbun newspaper, in which 75% of respondents said the government had not done enough to prevent the expected reputational damage to Japanese seafood.

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Global Burning – the economics of climate change

By: Kathleen Brooks - Hargreeves Landown

What are the economic impacts of a changing climate? Here we look at the research on investing sustainably.

Summer 2023 has brought the global effects of rising temperatures into focus. Forest fires from Rhodes to Maui and record-breaking global temperatures have led news headlines in July and August.

While climate change may not be directly to blame for the fires in Hawaii and elsewhere, rising global temperatures and droughts appear to make the situation worse. Looking to the future, this seems to be a pattern and global temperatures have been consistently rising in recent years.

According to scientists at NASA, July was the hottest month they had ever recorded and their records date back to 1880. July was 0.24 degrees hotter than any other July temperature recorded, and it was more than 1.1 degrees warmer than the average July temperature between 1950-1980.

Parts of Northern Africa, North America, South America, and the Antarctic Peninsula were particularly hot, and recorded July temperatures that were some four degrees above average.

How to quantify the economic effects of climate change

Effects of climate change are broader than just meteorological mutations. If warmer temperatures are here to stay, then investors need to consider what this means for their investments and portfolios and the effect on global economies.

The Reserve Bank of San Francisco have tried to quantify the economic effects of climate change. They found that rising temperatures have a short-term effect on productivity and output growth (GDP growth).

Using data from 155 countries to project growth in the future, they found that rising temperatures could reduce global output per person by 3.4% by 2100.

This is a significant dent in global output; however, this forecast assumes that the effects of rising temperatures will be temporary, i.e., at some point temperatures will return to the mean. But if tweaked, the permanent increases in global temperatures could reduce global output per person by a whopping 10% by 2100.

In the analysis, the impact of temperature increases on productivity is forecast to be three times as bad if it’s permanent, rather than temporary.

This is why it is important that more analysis is done by trained climate scientists when it comes to the impact of climate change on the economy. However, it is clear that if temperatures continue to rise then economic growth will be impacted.

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The next pandemic could strike crops, not people

By: Saima Sidik - Grist

Genetic uniformity is central to modern farming. It leaves us vulnerable to plant disease breakouts.

Nobody really knows how the fungus Bipolaris maydis got into the cornfields of the United States. But by summer of 1970, it was there with a vengeance, inflicting a disease called Southern corn leaf blight, which causes stalks to wither and die. The South got hit first, then the disease spread through Tennessee and Kentucky before heading up into Illinois, Missouri, and Iowa — the heart of the corn belt.

The destruction was unprecedented. All told, the corn harvest of 1970 was reduced by about 15 percent. Collectively, farmers lost almost 700 bushels of corn that could have fed livestock and humans, at an economic cost of a billion dollars. More calories were lost than during Ireland’s Great Famine in the 1840s, when disease decimated potato fields.

Really, the problem with Southern corn leaf blight started years before the 1970 outbreak, when scientists in the 1930s developed a strain of corn with a genetic quirk that made it a breeze for seed companies to crank out. Farmers liked the strain’s high yields. By the 1970s, that particular variety formed the genetic basis for up to 90 percent of the corn grown around the country, compared to the thousands of varieties farmers had grown previously.

That particular strain of corn — known as cms-T — proved highly susceptible to Southern corn leaf blight. So, when an unusually warm, wet spring favored the fungus, it had an overabundance of corn plants to burn through.

At the time, scientists hoped a lesson had been learned.

“Never again should a major cultivated species be molded into such uniformity that it is so universally vulnerable to attack by a pathogen,” wrote plant pathologist Arnold John Ullstrup in a review of the matter published in 1972.

And yet, today, genetic uniformity is one of the main features of most large-scale agricultural systems, leading some scientists to warn that conditions are ripe for more major outbreaks of plant disease.

“I think we have all the conditions for a pandemic in agricultural systems to occur,” said agricologist Miguel Altieri, a professor emeritus from the University of California, Berkeley. Hunger and economic hardship would likely ensue.

Climate change adds to the danger — shifting weather patterns are on track to shake up the distributions of pathogens and bring them into contact with new plant species, potentially making crop disease much worse, said Brajesh Singh, an expert in soil science at Western Sydney University in Australia.

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Sustainable finance: it is time for strategy

By: Gregory Schneider-Maunoury - Novethic Essentiel

It's high time for asset management companies to re-appropriate the issue of sustainability, beyond the regulatory clarifications still awaited. For nearly three years now, SRI has been caught in a double bind: growing regulation and new data. Every month, a new regulatory clarification or a new set of data punctuates the SRI teams' agenda. Worse still, every week, a new expert gives his or her interpretation of the triptych: regulation, compliance, data. These interpretations are nice, but they tend to put off management company decisions and, within management companies, SRI teams (both fund management and ESG analysis) feel dispossessed of the subject by lawyers, data analysts, data consultants and compliance and internal control teams.

By reviewing three reasons for this distancing, this article proposes a path for each asset management company to build its own path towards sustainability accepted by all.

1 - The slow definition of sustainable development

This concept began as a compromise drawn up in 1987. It was then fleshed out by the Sustainable Development Goals (SDGs: 17 goals, 230 indicators). Referring to these indicators may seem difficult, as they are primarily macro-economic, defined at state level. However, the numerous studies carried out prior to the SDGs (impact measurement) and since (planetary limits, multidimensional poverty index), make it possible to determine sustainable development indicators that are suitable for companies, provided that an investment strategy has been defined: which SDGs and sub SDGs does the asset management company wish to contribute to? Which SDGs are relevant to the development of the invested companies and projects invested in?

2 - The transformation of data

European financial regulations are transforming sustainability data. Based on the observation that ESG scores were inadequate to meet the challenges of sustainable development, the European Commission first sought to transform the definition of corporate CSR. Through the taxonomy, the regulations require corporate CSR to answer the questions "what objective? (what?)" and "when?", rather than the traditional "yes or no?" and "how?". This conceptual revolution in CSR means a total upheaval for rating agencies, and downstream for their customers, since the questions asked, and therefore the answers, are different.

This regulatory change means that more account is taken of raw data, and of any data that can be used to assess a company's achievement of an environmental objective (called a substantial contribution in the green taxonomy) or a minimum threshold (called DNSH in the green taxonomy). This structuring and sorting of data clarifies the double question of the previous section: What are the environmental and social objectives of this fund's management? What are the minimum levels that this fund aims to achieve in other environmental and social dimensions? What data are needed to assess this?

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Plant diversity in urban green spaces led to sevenfold increase in insect species, Australian study finds

By: - The Guardian

Scientists find ‘substantial ecological changes’ after greening initiative by major road in Melbourne

The benefits of urban greening initiatives are increasingly well documented: they can help mitigate the effects of urban heating, and improve physical health and mental wellbeing. And even small greening actions in cities can significantly improve local biodiversity, new research suggests. Increasing the diversity of native plants in a single urban green space resulted in a sevenfold increase in the number of insect species after three years, Australian researchers have found.

According to the study’s authors, there had previously been “little empirical evidence of how specific greening actions may mitigate the detrimental effects of urbanisation”. Existing research largely involved observational studies where urban greening had already taken place and “scientists come after the fact to see what’s happened”, said the study’s lead author, Dr Luis Mata of the University of Melbourne and a lead research scientist at Cesar Australia. The greening initiative was conducted on a small 195 sq m plot of land in Melbourne, on a site adjacent to a major road. “It was conducted in a very densely urbanised area, completely surrounded by streets and relatively tall buildings, and with limited access to surrounding green space,” Mata said. Even so, the team found “substantial ecological changes”, he said. “I think we found a really strong signal given the disadvantages of the site itself.”

Researchers measured baseline insect numbers the year before greening began, when 12 indigenous plant species were introduced to the space, and subsequently conducted insect surveys for the following three years. They identified 94 insect species in total, 91 indigenous to the Australian state of Victoria. The researchers estimated that by the final year of the study there were about 7.3 times more insect species than originally present, even though only nine plant species remained. The team also found substantial increases in the number of predator and parasitoid insect species, which help to regulate populations of pest insects.

“These are two key groups that provide a really good ecological signal that the trophic network and all the proper interactions are happening at the site,” Mata said.

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Social impact investing is 'critical' to addressing pressing societal challenges

By: Ima Jackson-Obot - FT

Investing in social impact is critical to addressing some of the most pressing challenges facing our world today, according to Stephen Bryd, head of sustainability research at Morgan Stanley.

These challenges include inequality, poverty, lack of access to health care and education, and the repercussions of climate change.

And while, historically, it has been easy for investors to dismiss social impact investing, Mike Camfield, head of EMEA sustainability research at Morgan Stanley, said realisation was dawning on investors that the profound changes underway in society and the climate will drive the need for innovative, socially focused solutions in a number of sectors.

These include healthcare, finance and infrastructure, as well as significant challenges to resilience and adaptation for industries around the world.

Camfield said: "Increasingly, we do find investors recognize the vast and intractable social problems we face, whether that's structural shifts in workforces with countries like Korea, Japan and large parts of Europe projecting working age population decline by double digit percentage in the next 15 to 20 years, significant growth in urbanization or growing middle class populations in countries around the world."

Investors also increasingly understand the interconnectivity of stakeholders across society, whether that is supranational organizations or governments or the corporate world, or even citizens themselves.

"With huge shifts in demographics coming whether through urbanization or migration, aging populations in some countries or declining fertility rates, the investing landscape is set to change dramatically across sectors," Camfield added during a recent podcast he hosted with Byrd, called Social Investing: The Future of Sustainability.

"[The change will manifest] in anything from shifting consumer preferences to education access and outcomes to greater need for assistive technologies, to substantial food production issues, to financial system access and inclusion, or even simply addressing rapidly increasing demand for basic services and clean energy."

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