 Code - Source - Pexels and Free Images - Pixabay Welcome to the fifty-sixth edition of my weekly blog. In volume II, I look at what some of the most sustainable companies in the world are doing to be better corporate citizens. Introduction Each week I will analyse three companies from an industry sector to see what policies and procedures they have implemented to make their companies more sustainable. I will also compare these companies’ financial ratios (valuation, growth, yield, leverage etc.) against their industry averages to see if a company can be sustainable and still outperform their industry sub-sector expectations. 1. Dassault Systemes SE Dassault Systemes SE is a leader in designing solutions for a more sustainable world such as smart cities and smart transportation. Solar Impulse is a project whereby Dassault designed an aircraft that can fly at day and night powered by the sun. Dassault has also designed hydro dams and wind systems that are more operationally efficient to run. In Singapore and Rennes, France, Dassault have used their 3D software called ‘3DEXPERIENCity’ to design 3D versions of the cities to help predict and plan the infrastructure requirements for the cities. Dassault Systemes SE’s latest environmental report included the following achievements:
2. Autodesk Inc. Highlights from Autodesk’s Sustainability Report 2015 include:
Autodesk’s Partner Code of Conduct documents 13 areas where suppliers must be in compliance with in order to do business with them:
3. Adobe Systems Adobe’s 2017 Sustainability and Social Impact Report highlights include:
Key Performance Statistics – Company Vs Industry Average Using Morningstar data, we can compare the performance of the three companies against industry averages:  Dassault’s trailing-twelve-month operating margin of 22.5% is consistent with their 2017 level of 22.6%. Operating margin has been consistently at 22% or more for the last three financial years. Dividend per share has grown steadily from €0.42 per share in 2013 to €0.58 per share in 2017. Capital expenditure amounted to €84.5m in 2015 which is 11% of net cash flow from operations. Approximately 41% of headcount are employed in R&D and €577m was spent on R&D in 2017. The company’s net margin of 14% is well ahead of industry averages also, as is its returns on equity and assets. Dassault’s strong financial performance also means that its debt/equity of 0.2 is well below the industry average of 0.4.
Autodesk’s three-year revenue growth is negative. This can be explained by a change to their business model. The company is following industry trends and is moving away from PC licenses to cloud-based subscriptions. The net effect of this change has been a $500m decline in net revenue over this time period. One of Autodesk’s key performance metrics, and especially so, during this time of change is ‘Annualised Recurring Revenue’ (ARR), ARR increased by 25% between 2018 and 2017. Autodesk also recored a year-on-year 80% subscription retention rate. Net margins and returns on equity and assets are also negative because of the transition to cloud-based subscriptions. Adobe, just like Dassault posted strong financials for 2017. GAAP Operating margins have jumped from 19% in 2015 to 30% in 2017. Revenues grew by over 50% during this period with operating expenses rising by 30%. Adobe’s digital cloud offering helped drive the revenue increases. Adobe’s disciplined management of operating expenses has meant that returns on assets and equity are well ahead of the industry average and their debt/equity ratio of 0.2 is very healthy. Summary It easy to see why these companies are leaders in sustainability, they have above average female representation on their boards, they have demonstrated innovation in the areas of smart city and smart transportation design, Cleantech innovation etc. Dassault and Adobe’s financial performance is well ahead of industry averages. Autodesk’s recent performance is behind industry comparatives; however, they are going through a transitionary period where they are pivoting from license driven fee income to cloud-based subscriptions. Next week’s blog will feature three automobile companies, BMW, Daimler, and Renault, and the measures they have taken to be more sustainable. Learn more If you liked this article you might enjoy reading the following information: Week 55 Pharmaceuticals: Johnson & Johnson, Allergan Inc.,and UCB SA Week 54 Insurance: Storebrand ASA, Sun Life Financial Inc.,and Allianz SE Week 53 Electricity & Gas: Enagas SA, Centrica Plc, and Iberdrola SA ACCA: The Sustainable Development Goals: redefining context, risk and opportunity Disclaimer The content of this article is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find in this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.
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 Welcome to the fifty-fifth edition of my weekly blog. In volume II, I look at what some of the most sustainable companies in the world are doing to be better corporate citizens. Introduction Each week I will analyse three companies from an industry sector to see what policies and procedures they have implemented to make their companies more sustainable. I will also compare these companies' financial ratios (valuation, growth, yield, leverage etc.) against their industry averages to see if a company can be sustainable and still outperform their industry sub-sector expectations. 1. Johnson & Johnson Johnson & Johnson (J&J) publishes an annual ‘Health & Humanity Report’, the progress and reporting section of their latest annual report notes the following achievements:
2. Allergan Plc Highlights from Allergan’s 2017 Sustainability Report include:
3. UCB SA UCB SA’s sustainability report 2017 highlights include:
Key Performance Statistics – Company Vs Industry Average Using Morningstar data, we can compare the performance of the three companies against industry averages:  J&J’s lower than industry net margin and returns on assets and equity can be linked to the enactment of the Tax Cuts and Jobs Act (TCJA) in the US. This led to a sharp rise in provisions for taxes on income for J&J, the 2017 provision was $16.4b compared with a 2016 figure of $3.3b and is an initial estimate of what the impact of TCJA will have on the company’s net earnings. In addition to fiscal policy change in the US, J&J are faced with potential tax reform measures in Switzerland and the implementation of the OECD’s Base Erosion Profit Shifting (BEPS) project. The tax provision along with a net loss on disposal of assets ($2.5b) in 2015 help explain the negative 3-year net income growth figure. J&J’s operational performance was strong and outperformed their industry peers as did revenue growth. Gross profit (67% - 69%) and earnings before tax provisions (20 – 27%) relative sales have reasonably consistent since 2012. Allergan’s performance compared with its industry peers is extremely positive. Allergan has increased their gross margin from 78% in 2015 to 87% in 2017. Amortization of intangible assets, along with research & development costs and asset disposals/ impairments ($646m for Aczone) means that they have been running operating losses for the past three years. However, relative to their industry peers their operating margin (loss) is better. Revenue has grown at an impressive rate of 50% over the last three years. From a financial leverage point of view, their current debt/equity of 0.4 is at prudent levels. Allergan appears to be in restructure mode (sold generic business to Teva) as they generated large incomes from discontinued operations in 2016 ($15b) and 2015 ($3.9b). UCB had a strong financial performance in 2017. The company recorded €4.5b revenue and €1.4b of recurring EBITDA. €1.1b was invested in R&D or almost 80% of EBITDA. They outperformed their industry peers against all the key statistical measures in the diagram above and achieved their net/EBITDA target of 1.1 and recurring EBITDA/revenue goal of 30% in the past two years. From a segmental reporting point of view, their top product (Cimzia) accounted for 34% of total revenue with the vast majority of their remaining revenue spread across a further eight products. Geographically the US market accounted for almost half of their revenue with nine key European and Asian markets supplying most of the remaining income. In spite of more than half of their revenue being generated in non-euro currencies, UCB recording a small net fx loss (€44m) in 2017. Net debt/EBITDA have dropped significantly in the last five years as evidenced by a debt/equity ratio of 0.3. Summary When you compare the operational performance of these three pharmaceutical companies with their industry peers all three outperform their industries. This is a positive development as improvements to sustainable performance can be directly linked to operational performance such as the selections of suppliers, sourcing of energy, water usage, employee training, recycling etc. Overseeing the financial performance of a large pharmaceutical’s company involves the proactive management of a multitude of risks. Show leadership in the area of sustainability can help mitigate against but not limited to risks to: staff (health & safety), the environment (fines), reputation (bad publicity), operations (inefficiencies). It will not solve for other market risks such as changes in fiscal policy and foreign exchange fluctuations however it is a step in the right direction and will help strengthen the operational performance and stability of the business. Next week’s blog will feature three software companies, Dassault Systemes SE, Autodesk Inc, and Adobe Systems, and the measures they have taken to be more sustainable. Learn more If you liked this article you might enjoy reading the following information: Week 54 Insurance: Storebrand ASA, Sun Life Financial Inc.,and Allianz SE Week 53 Electricity & Gas: Enagas SA, Centrica Plc, and Iberdrola SA Week 52 SASB: An A - Z of the Sustainability Accounting Standards Board ACCA: The Sustainable Development Goals: redefining context, risk and opportunity Disclaimer The content of this article is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find in this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.  Life Insurance Document - Source - rawpixel and Free Images - Pixabay Welcome to the fifty-fourth edition of my weekly blog. In volume II, I look at what some of the most sustainable companies in the world are doing to be better corporate citizens. Introduction Each week I will analyze three companies from an industry sector to see what policies and procedures they have implemented to make their companies more sustainable. I will also compare these companies’ financial ratios (valuation, growth, yield, leverage etc.) against their industry averages to see if a company can be sustainable and still outperform their industry sub-sector expectations. 1. Storebrand Storebrand publishes various sustainability reports on its website ranging from their carbon footprint to their investing strategies. Key sustainability performance results include:
2. Sun Life Financial Inc. Highlights from Sun Life’s 2017 Sustainability Report include:
3. Allianz SE Allianz’s sustainability report 2017 highlights include:
Key Performance Statistics – Company Vs Industry Average Using Morningstar data, we can compare the performance of the three companies against industry averages:  When you look at measures like Debt/Equity all three are in line with industry expectations. This isn’t really a surprise when you consider how regulated the Insurance industry with global regulations such as Solvency II that ensure Insurance have adequate levels of capital on their balance and are not over-leveraged.
Looking at Storebrand’s key financial figures for 2017 tells us that their solvency margin (172%), return on equity (11%), total assets (NKK569 Bn), equity (NKK 31 Bn), profit (NKK 2.9 Bn), earning per share (EPS) (5.28), and dividend per share (DPS) (2.10) are all stronger than their 2016, and 2015 comparators. Two of their three valuation metrics are more favourable than their industry peers according to latest Morningstar data. Revenue growth and net margin are slightly behind their industry, however, Storebrand publishes a list of companies it does not invest in. The Quarter 1 2018 list includes 191 companies, including 22 companies in the highly profitable tobacco industry. According to latest data published by Aswath Damodaran at NYU Stern, the average return on equity for the Tobacco industry is 89%, this compares with a total market average of 11%. Total Shareholder Return (TSR) is a simple measure that captures your total investment return (capital and dividend) from a share investment in a publicly listed company. TSR = (Current Price – Purchase Price +Dividends)/Purchase Price. E.g. If you bought one share in a company for $100, the share is now worth $110 and since you purchased the share you have received a $5 dividend your TSR is (110-100+5)/5 or 15%. Sun Life’s 2017 financial highlights include a 5-year TSR of 138% exceeding comparative TSRs for the S&P 500 (108%), TSX composite (94%), and TSX Financial Sector (51%). Sun Life’s current return on equity is a healthy 10.2 and their medium-term objective is to increase this to 12% - 14%. Morningstar only provides industry comparatives for valuations and Sun Life is broadly in line with industry performance for these metrics. Allianz SE’s 2017 return on equity (ROE) was 11.8%, its current ROE is 11.3% and above that of its industry average of 9.0%. Other financial highlights from the company’s 2017 annual results include revenue (5%) and operating profit (0.4%) growth. Both EPS (15.24) and diluted EPS (15.23) were more or less in line with 2016. Overall Allianz’s key statistics are favourable when compared with latest industry comparators published by Morningstar. Summary Insurance companies who are demonstrating leadership in the area of sustainability are choosing investment strategies that identify suitable companies to invest in and also ones that exclude unsuitable companies such as those in the Tobacco, Oil and Gas, and weapons industry. From a supply chain point of view, they actively manage their procurement practices through supplier risk assessments and select suppliers who share their sustainability goals. Within their own operations, they have reduced the use of paper by embracing advances in digital technology. Documents have been updated with plain language which helps make customers more aware of what they are signing up for when they buy one of their products. Next week’s blog will feature three pharmaceuticals companies, Johnson & Johnson Inc., Allergan Plc., and UCB SA, and the measures they have taken to be more sustainable. Learn more If you liked this article you might enjoy reading the following information: Week 53 Sustainability: Electricity & Gas, Enagas SA, Centrica Plc, and Iberdrola SA Week 52 SASB: An A - Z of the Sustainability Accounting Standards Board Week 51 United Nations Sustainable Development Goals: Brief overview of the goals ACCA: The Sustainable Development Goals: redefining context, risk and opportunity World Benchmarking Alliance: Corporate Sustainability Performance Disclaimer The content of this article is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find in this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.  Ohm’s Law Calculator - Source - Bluebudgie and Free Images - Pixabay Welcome to the fifty-third edition of my weekly blog. In volume II, I look at what some of the most sustainable companies in the world are doing to be better corporate citizens. Introduction Each week I will analyse three companies from an industry sector to see what policies and procedures they have implemented to make their companies more sustainable. I will also compare these companies’ financial ratios (valuation, growth, yield, leverage etc.) against their industry averages to see if a company can be sustainable and still outperform industry expectations. 1. Enagas SA Looking at Enagas’ ‘Our commitment to society’ report and its key sustainability figures the following sustainability data is revealed:
2. Centrica Plc Highlights from Centrica’s 2016 responsibility performance report include:
3. Iberdrola SA Iberdrola’s sustainability report 2017 tells us the following about their corporate structure and performance:
Key Performance Statistics – Company Vs Industry Average Using Morningstar data, we can compare key performance statistics of the three companies against industry averages:  As you can see in the ‘Advantage by Statistic’ section of the table all three companies are outperforming industry averages with an aggregate score of 22 – 8.
Enagas’ Price/Sales TTM (trailing twelve month), Net Income growth and Debt/Equity levels are below industry averages for gas companies. Although average net income growth for the last three years is well below industry levels, Engas’ net income grew by 17.6% in 2017. Its operating and net margins are well above industry comparators. In 2017 Enagas reduced its net debt by €725m through improvements in working capital collections and less than expected capital expenditure. Enagas expects to be debt free by 2023, its current cost of net debt is 2.7%. Centrica is behind industry averages for price-to-book, operating and net margin and debt/ equity. This can be explained in the most part by the weaker performance of their energy supply businesses in the UK and US on the back of regulatory and political uncertainty, including plans in the UK to put a cap customer energy bills by the end of 2018. Centrica’s proposed full-year dividend of 12.0p per share is on par with 2016 in spite of weaker financial performance. The 2018 – 2020 outlook is for dividend levels to remain at current levels. The company also plans to continue with its cost reduction initiatives. Iberdrola’s operating margin of 8.7% is below the industry average of 17.2%, however, its net margin of 9% easily exceeds the industry figure of 5.6%. With the exception of operating margin, the other nine key statistics are ahead of the industry. What could help explain its favourable rating relative to its industry and in particular against all three valuation measures (price/ earnings, price-to-book, price/sales TTM) is the fact that capital expenditure exceeded cash from operations in 2017. An additional €32Bn will be invested in grid, renewables, and generation projects by the end of 2022. Summary The three companies have higher than average female representation on their board of directors. Interestingly Iberdrola who has the highest % of female board members performed best compared with industry averages followed by Enagas who had the 2nd highest. The three companies measure their health and safety performance against the highest standards and treat it as a high priority objective at all times. They invest in their people and assess their supplier’s sustainability performance. All of this is achieved without their financial performance suffering when compared with industry averages for their respective industries. Next week’s blog will feature insurance industry companies, and the measures they have taken to be more sustainable. Learn more If you liked this article you might enjoy reading the following information: Week 52 SASB: An A - Z of the Sustainability Accounting Standards Board Week 51 United Nations Sustainable Development Goals: Brief overview of the goals ACCA: The Sustainable Development Goals: redefining context, risk and opportunity World Benchmarking Alliance: Corporate Sustainability Performance Disclaimer The content of this article is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find in this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.  Wood cube - Source - Blickpixel and Free Images - Pixabay
Welcome to the fifty-second edition of my weekly blog. In volume II (Week 51 onwards) I look at what some of the most sustainable companies in the world are doing to be better corporate citizens. Introduction This week I take a look at the Sustainability Accounting Standards Board (SASB), the SASB Foundation, and the work they are doing to measure and promote better reporting of sustainability performance by publicly listed companies through the publication of sustainability accounting standards. What better way to do this than by using a simple A – Z guide to SASB: An A – Z of SASB A Accounting Standards Board, according to their website, The SASB Foundation “is responsible for the financing, oversight, administration and appointment of the SASB”. SASB is “an independent standards board that is accountable for the due process, outcomes, and ratification of the SASB standards, including any changes to the standards going forward”. B Board of Directors, the 19 strong board of SASB includes Bloomberg founder and former Mayor of New York Michael Bloomberg, he is chair of the board. Former chair of the US Securities and Exchange Commission (SEC) Mary Schapiro and CEO of Perella Weinberg Partners Robert Stell are the co-vice chairs of the board. C Conceptual Framework, just like any other accounting standard’s conceptual framework, SASB’s framework provides an overarching structure that guides the standard-setting process from formulation of objectives to the standardized presentation of topics (criteria) and metrics (principles). D Disclosure Topics, SASB uses a standard set of principles when evaluating each topic for potential inclusion in their standards:
E Exposure Drafts, the exposure drafts are proposed changes to the provisional standards devised by SASB for 79 industries between 2012 and 2016. The exposure drafts were put forward for public comment between October 2017 and 31 January 2018. F Fundamentals of Sustainability Accounting (FSA) credential, the FSA credential is earned after a candidate successfully passes two levels of examination. The credential links the materiality of sustainability factors with company performance. G Governance Documents, SASB has two key governance documents, being the conceptual framework (see above) and the rules of procedure (see below). H Highlights, highlights of what can be accessed through the navigator tool (see below) are company disclosures by topic and peer comparison. The disclosure topics include greenhouse gas emissions and air quality performance. I Investor Advisory Group (IAG), SASB’s IAG is made up of 29 asset owners and asset managers who support and promote the need for consistent and material reporting of ESG information by listed companies in order to enhance decision making. J Jarislowsky Fraser, Dan Hanson from Jarislowsky Fraser is one of the founding members of the IAG. Jarislowsky Fraser are headquartered in Montreal and last month it was announced that Scotiabank acquired this respected investment house for CAD $950 million. K KKR, New York headquartered Investment firm KKR is one SASB’s 37 Alliance Organizational Members (see below). L Library, SASB has a library on its website containing guides, insights and corporate communications relating to sustainability accounting and the standards. M Materiality Map, SASB has created a materiality map that assesses how likely an issue is to an industry from a sustainability perspective. 30 issues are covered across five headings:
N Navigator tool, the tool grants you access to sustainability information on 79 industries, and over 400 sustainability topics, 4,000 corporate public filings, 9,000 pieces of evidence, and 275,000 excerpts from public filings. O Organizational Members, The organizational members of the SASB alliance share best practice and insights on the disclosure of sustainability information. They also champion the integration of sustainability into capital markets. P Provisional Standards, the provisional standards were designed for 79 industries between 2012 and 2016. The standards consist of disclosure guidance and accounting standards on sustainability topics used by US and Non-US public companies who file annual returns with the SEC in the US. The exposure drafts (see above) have proposed changes to the provisional standards. Final standards will be released in mid-2018. Q Questions, if you have any queries about SASB or The SASB Foundation you can find contact details here. R Rules of Procedure (ROP), ROP forms part of SASB’s governance documents. ROP “establishes the processes and practices followed by the SASB in its standards-setting activities, and in its governance and oversight of related processes and practices undertaken by its staff”. It describes SASB’s organizational structure and provides an overview of the standard-setting process. S San Francisco, SASB is headquartered in San Francisco, California. T Technical, SASB’s library includes technical publications on:
U UL EHS Sustainability, UL EHS Sustainability are one of five companies who have designed tools that capture and report company performance against the SASB standards. V Value, Potential to affect corporate value is one of the principles used when assessing disclosure topics (see above) for inclusion in the SASB standards W Webinars, SASB has published all past webinars it has delivered on sustainability accounting and the standards on its website. X Xesturgy (polishing), SASB is currently working through all the feedback received when the exposure drafts were open to public comment. The provisional standards will then be updated and polished with final standards published in mid-2018. Y Yardstick, SASB’s standards, data sets, materiality map and navigator tools provide companies with a strong yardstick to aid them in benchmarking their sustainability accounting performance against industry peers. Z Zero emissions, using SASB’s standards can help companies meet zero emissions and carbon neutral goals. Next week’s blog will feature three gas & electricity sector companies and the measures they have taken to be more sustainable. Learn more If you liked this article you might enjoy reading the following information: Week 51 United Nations Sustainable Development Goals: Brief overview of the goals United Nations Development Programme: Sustainable Development Goals ACCA: The Sustainable Development Goals: redefining context, risk and opportunity World Benchmarking Alliance: Corporate Sustainability Performance 3/18/2018 Week 51 United Nations Sustainable Development Goals: Brief overview of the goalsRead Now  UN Sustainability Development Goals - Source - Welcome to the United Nations
Welcome to the fiftieth-first edition of my weekly blog. In volume II (Week 51 onwards)I look at what some of the most sustainable companies in the world are doing to be better corporate citizens. Introduction Before I focus on the sustainable performance of leading companies by industry sector, I first want to set the scene at a macro level by looking at the United Nations (UN) Sustainable Development Goals (SDG) this week and the Sustainability Accounting Standards Board (SASB) next week. The UN published 17 SDGs in January 2016 with accompanying targets for each goal to be achieved by 2030. It is an extensive piece of work supported by 169 targets and a common framework approach called MAPS (mainstreaming, acceleration and policy support). This blog will provide a brief overview of the goals and what drove this goal-setting exercise. The MSCI World Index has done a good job categorizing the 17 UN SDGs across five headings: basic needs, empowerment, climate change, neutral capital, and governance. I will also use these headings while providing an overview of the SDG goals: 1. Basic Needs 1 No Poverty & 2 Zero Hunger Roughly 800 million people live in extreme poverty and are undernourished as a consequence of this. The vast majority of this neglected group live in Africa or Southern Asia. The UN wants to see the number of people living in poverty halved by 2030 and for hunger to be completely eradicated. 3 Good Health and Well-Being More than six million children under the age of five die each year. Close to 6 million children die from preventable diseases like measles and TB. The UN wants to bring an end to epidemics such as AIDS, TB, measles, and malaria by 2030. 6 Clean Water and Sanitation Over 1.8 billion people use a water source that is contaminated and over 2 billion people do not have access to basic sanitary services such as a toilet. SDG 6 targets include access to safe and affordable water and basic sanitation for all by 2030. 11 Sustainable Cities and Communities Over half of the world’s population live in urban centres. This puts demands on cities with respect to affordable housing and designing their infrastructure in line with population growth. A key target by 2030 is that all urban dwellers will be living in affordable housing and free slum conditions. 2. Empowerment 4 Quality Education Over 100 million youths across the world do not possess basic literacy skills. Over 50% of children who do not attend primary schools reside in war-torn regions. A key target of SDG 4 is for all children to receive free access to primary and secondary level education by 2030. 5 Gender Equality In Sub-Saharan Africa, Oceania and Western Asia girls still find it difficult to gain access to primary and secondary level education. One of the key goals against this SDG is simple: ‘end all forms of discrimination against women and girls everywhere’. In Iceland, it is now illegal to pay women less than men for the same job. 8 Decent Work and Economic Growth Over two billion people live below the $2 poverty line and an additional 470 million people will enter the job market by 2030. The UN wants to see per capita economic growth sustained and at least 7% GDP growth in developing countries. The UN also advocates for the promotion of job creation by supporting entrepreneurs set-up micro, small and medium-sized enterprises. 9 Industry, Innovation and Infrastructure As mentioned in SDGs 6 and 7 if you live in a developing country it is highly likely that you struggle to gain access to safe drinking water, basic sanitation, and modern electricity. In addition to this over a billion people are unable to avail of reliable telephony services. One of the SDG 9 targets champions cross-border infrastructure projects which is an interesting way of accelerating the solution. 10 Reduced Inequalities The World’s richest 10% now earn roughly 40% of total global income, whereas the poorest 10% earn as little as 2% of global income. One of the key goals of SDG 10 is for the income growth of the poorest 40% to be above the national average by 2030. 3. Climate Change 7 Affordable and Clean Energy One in five people don’t have access to modern electricity supply. Energy consumption accounts for roughly 60% of greenhouse gases (GhG) emissions. Some of the targets to address these concerns include doubling the rate of improvement in energy efficiency and making modern electricity supply available to all by 2030. 13 Climate Action Since 1990 CO2 emissions have increased by 50% and the rate of emissions growth between 2000 and 2010 was higher than in the 1970s, 1980s or 1990s. SDG 13 targets include the implementation of commitments made by developed economies to the United Nations Framework Convention on Climate Change (UNFCCC) e.g. Paris Agreement targets. 4. Natural Capital 12 Responsible Consumption and Production Roughly one-third of all food produced (1.3 billion tonnes) is sent to landfill sites. Almost 30% of global energy is consumed by households and over 20% of CO2 emissions come from this consumption. One of the targets of this goal is for ‘the sustainable management and efficient use of natural resources by 2030’. 14 Life Below Water Over 3 billion people depend on the marine and coastal ecosystems for their employment. On average 13,000 pieces of plastic litter dumped from the land are found in every square kilometre of ocean. The UN wants to see a significant reduction in the pollution of oceans from land sources by 2025. 15 Life On Land Approximately 12 million hectares of land are lost to droughts and desertification each year. That is equivalent to losing 20 million tonnes of grain per annum. By 2030 the UN has set a target for the amount of restored land to at least match the area of land lost to droughts and desertification. 5. Governance 16 Peace Justice and Institutions Corruption costs developing economies approximately $1.3 trillion per annum, the EU market is worth about twice that figure. If this problem was solved that amount of money would be able to rectify SDG 1 ‘No poverty ‘ for about six years. 17 Partnerships for the goals Developing countries now receive over $130 billion in aid and approximately 3.6 billion people in these countries do not use the internet. Some of SDG 17’s targets include assisting developing countries with the collection of taxes, stabilising their debt levels and improving the technological infrastructure. Summary The 17 UN Sustainable Development Goals are well balanced and thought out, they address basic rights and aspirations that everyone person should be entitled to regardless of their background or current living conditions. The 169 targets that support the goals are ambitious and rightfully so, it remains to be seen how many of the targets will be met by 2030. However, as the saying goes ‘shoot for the stars you might reach the chimney tops’. Next week’s blog will feature the Sustainability Accounting Standards Board (SASB) and the work the organisation is doing to promote better reporting of sustainability performance by large companies. Learn more If you liked this article you might enjoy reading the following information: United Nations Development Programme: Sustainable Development Goals ACCA: The Sustainable Development Goals: redefining context, risk and opportunity World Benchmarking Alliance: Corporate Sustainability Performance 3/4/2018 Week 50 Sequestration: How 5 CCUS projects can store the CO2 emissions of up to 4 millions carsRead Now  Pipe - Photo Credit - hpgruesen & Free Images - Pixabay
Welcome to the fiftieth edition of my weekly blog where I take a closer look at the policies adopted by individual countries in their efforts to meet the requirements of the Paris Agreement. Particular attention is paid to the role that Carbon Capture, Utilisation, and Storage (CCUS) research and technologies are playing in the drive to meet these requirements. Introduction Over the past year, this blog has predominantly focused on the efforts individual countries are making to reduce their CO2 emissions in line with the Paris Agreement and how CCUS research and technologies have supported this. We also looked at various ways carbon can be used to enhance other processes from accelerating the cultivation of algae to enhancing geothermal energy. This week’s blog will look at how advances in technology are being used by large industrial companies to sequester (isolate or hide away) carbon. Sequestration The Oxford dictionary defines the word sequester as to ‘isolate or hide away’. Carbon sequestration is defined as ‘ the action of chemically sequestering a substance’. Carbon Capture and Storage (CCS) is the permanent storage of carbon in the ground up to 2km beneath the surface in rock formations. In Canada there are four large-scale CCS projects in operation: Shell Quest, SaskPower’s Boundary Dam, Cenovus Apache’s Weyburn-Midale and Enhance Energy’s Alberta Carbon Trunk Line. Further afield China Resources Power has an integrated Carbon Capture and Sequestration Demonstration facility. Shell Quest When I featured Canada in this blog, I briefly touched on the Shell Quest and Cenovus Weyburn-Midale CCS facilities. I was fortunate enough to visit Shell Quest’s plant in Scotford Alberta, an hour North of Edmonton, as part of a CCUS field trip in February 2017. As you can expect from a large organisation such as Shell, the facility is impressive and the staff spoke with great passion about what they had achieved to date. A big highlight of the Quest project for them was their ability to complete construction of the project at 20% below the pre-construction budget. In its first two years in operation, the facility has stored 2 million tonnes of carbon. Alberta Carbon Trunk Line The Alberta Carbon Trunk Line operated by Enhance Energy is “ the World’s largest carbon capture and storage project”. Carbon is captured by Enhance Energy at North West Redwater Partnership Sturgeon refinery and Agrium’s fertiliser plant and transported to Enhance Energy’s existing oilfield in Clive, Alberta where is it used to enhance oil recovery. The North West Redwater Partnership is located about one hour north of Edmonton. I visited the refinery in Sturgeon last year, shortly after it was opened, it was the first refinery to be built in Alberta in about 30 years. It has impressive facilities to receive large visiting groups and employs about 400 staff. At the Clive facility, the carbon is injected 2 km underground to enhance the recovery of the oil from rock seams and permanently store the carbon in its place. Any CO2 that is recovered with the oil is separated at the surface and injected back into the ground with the CO2 coming from North West Redwater and thus ensuring a closed looped process preventing the escape of CO2 into the atmosphere. At present, about 1.8 million tonnes of CO2 are being injected into the Clive site per annum. The site will be able to manage up to 14.6 million tonnes of CO2 a year at full capacity. The CO2 will be monitored on an ongoing basis by Enhance Energy to ensure its safe storage underground. Weyburn-Midale Calgary headquartered Cenovus Energy has a CCS plant in Weyburn-Midale on the North Dakota border in South Eastern Saskatchewan. Cenovus has injected 30 million tonnes of CO2 underground since 2000 or on average about 1.5million tonnes per annum. Boundary Dam SaskPower’s Boundary Dam plant was first mentioned when China was featured in this blog. Boundary Dam is also situated in South Eastern Saskatchewan in a place called Estevan, which is about 50 km south of the Weyburn-Midale plant. Boundary Dam is an integrated carbon capture and storage demonstration project and the largest project of its kind in the world. It is a coal-fuelled power station and is reducing CO2 emissions by 1 million tonnes per annum. Boundary Dam receives delegations from China on almost a weekly basis, and the knowledge gained from these trips should assist China with the reduction of CO2 emissions from its over-reliance on coal-fuelled power stations as a source of energy. Integrated Carbon Capture and Sequestration Demonstration China Resources Power has deployed an integrated Carbon Capture and Sequestration Demonstration facility at the Haifeng power plant in the Guandong province of South Eastern China. It is expected that this site will be able to store up to 1 million tonnes of CO2 p.a. when operational in the next 3 – 5 years. Summary Countries dependent on fossil fuels to both drive and fuel their economies are taking the opportunities that Carbon sequestration presents to them seriously. Canada is a leader in this area with four-large scale facilities and China is also investing in this space. Five CCS projects alone can capture between 5 million and 18.5 million tonnes of CO2 per annum. That is the equivalent to the annual CO2 emissions of up to 4 million cars. Projects of this magnitude can help significantly reduce the impact to the environment caused by large industrial companies in the energy, concrete and fertiliser industries. Next week’s blog and future blogs will see a change from the existing format and subject matter content. From week 51 onwards I will write about sustainability starting with the UN Sustainability Development Goals. Learn more If you liked this article you might enjoy reading some recent articles in the series: Week 49 Italy: Long-legged Italy back heeled some CO2 into Federico II Week 48 Belgium: Umicore centrally placed to take advantage of the drive towards electric vehicles Week 47 Enhanced Coal Bed Methane: Fire ice can help store carbon and power SpaceX's rocket engines  Sorrento, Italy - Photo Credit - kirk&mimi & Free Images - Pixabay
Welcome to the forty-ninth edition of my weekly blog where I take a closer look at the policies adopted by individual countries in their efforts to meet the requirements of the Paris Agreement. Particular attention is paid to the role that Carbon Capture, Utilisation, and Storage (CCUS) research and technologies are playing in the drive to meet these requirements. Introduction Italy ranks sixteenth highest in Yale University’s newly published Environmental Performance Index (EPI) for 2018. This is a slight improvement on its EPI baseline ranking of 17th place. The baseline ranking is typically calculated by applying the same set of metrics to the country’s historic performance data from 10 years ago. Italy has significantly improved its ‘Climate and Energy’ sub-category ranking during this time from its baseline of 73rd versus its current ranking of 28th. Further analysis tells us that improvements in its N2O (nitrous oxide) emissions intensity rating has driven this change. Last week, in my article on Belgium, I highlighted that typically N2O emissions come from agricultural biomass burning, industrial production, and livestock management. Paris Agreement Targets As part of Italy’s Paris Agreement targets, the country has agreed to reduce its Greenhouse Gas (GhG) emissions by at least 33% of 1990 levels, by 2030. This was agreed as part of the EU’s overall target to reduce emissions by 40% of 1990 levels by 2030. The EU Climate Leaderboard produced by Carbon Market Watch and Transport & Environment ranks Italy 20th out of the EU countries for its position towards negotiating the EU’s Effort Sharing Regulation (ESR). Unlike Belgium which was featured last week, Italy is one of the EU countries advocating for a 2020/ 2021 emissions reduction starting point, as opposed to the EU commission’s proposal to use the average of 2016 – 2018 levels. This would result in lower overall emissions reductions targets. Critics of this strategy, such as the EU Climate Leaderboard, worry that using a 2020/2021 starting point would mean EU countries who failed to meet their 2020 emissions reduction targets would not be penalised. Also, this proposed starting point would not mirror actual emissions, in contrast to the starting point recommended by the commission (average 2016 – 2018). Electricity Generation According to latest energy statistics published by Istat, 33% of electricity generated in Italy in 2015 was from renewable energy sources. This represents a 4% decline compared with a peak of 37% of the electricity mix in 2014, largely due to a significant decrease in hydroelectricity generation year-on-year. Despite this decline in recent years, overall the renewables share of the electricity generation mix has grown considerably compared with a 2007 proportion of 13% of the total share. When Italy is compared to its fellow EU member states, on average 27% of electricity generated is from renewable sources. Italy’s close neighbour Malta, on the other hand, is dragging its heels at the bottom of the list with a paltry 3% of its domestic mix being renewable. Italy is an exporter of electricity and has recently started supplying half of Malta’s electricity needs via an interconnector. This has given Malta a leg up in reducing Co2 emissions from their ‘dirty’ electricity power stations by 50%. CCUS From a CCUS perspective, Enel, a large Italian electricity and gas company, conducted a CCUS pilot project at its power plant (Federico II) in Brindisi between September 2010 and March 2012. Brindisi is a port town on the heel of Italy in the South East of the country. This pilot, conducted at a coal-fired plant, was used to accumulate CCUS experience and had a C02 capture capacity of 60 tonnes per day. The capture type was post-combustion and the method used was amine solvent based absorption. More recently, it was announced in December 2017 that Enel has been awarded $2.1m in grants from the Massachusetts Clean Energy Center to help the development of green storage in the US. $850,000 will be used in partnership with the University of Massachusetts Boston to develop a micro-grid that will integrate a lithium-ion energy storage system with a solar photovoltaic facility on campus. The remainder $1.25m was rewarded to Enel to support the construction of a 2 MW/4 MWh lithium-ion energy storage system at the Acton Boxborough Regional School District. Summary Italy could do more to support the EU’S ESR targets to 2030. On an individual country level, Italy is above average for generation of electricity from renewables and is selling excess supply to Malta, one of the EU’s most carbon-intensive electricity generations. This has helped to considerably reduce Maltese CO2 emissions from its energy sector. Enel has explored the possibilities of carbon capture at its Brindisi plant in the past and is now developing its micro-grid and electricity storage capabilities in the US. Next week’s blog will take a look at how companies are capturing CO2 and sequestering it underground. Learn more If you liked this article you might enjoy reading some recent articles in the series: Week 48 Belgium: Umicore centrally placed to take advantage of the drive towards electric vehicles Week 47 Enhanced Coal Bed Methane: Fire ice can help store carbon and power SpaceX's rocket engines Week 46 Greece: Move to Renewables is a marathon, not a sprint 2/19/2018 Week 48 Belgium: Umicore centrally placed to take advantage of the drive towards electric vehicles.Read Now  Bruges, Belgium - Photo Credit - hpgruesen & Free Images - Pixabay
Welcome to the forty-eighth edition of my weekly blog where I take a closer look at the policies adopted by individual countries in their efforts to meet the requirements of the Paris Agreement. Particular attention is paid to the role that Carbon Capture, Utilisation, and Storage (CCUS) research and technologies are playing in the drive to meet these requirements. Introduction Having examined the role of enhanced coal bed methane in reducing CO2 emissions last week, I’m returning to my country-by-country analysis and this week I’m focusing on Belgium. Belgium ranks fifteenth highest in Yale University’s newly published Environmental Performance Index (EPI) for 2018. This is a drop of eight positions compared with its EPI baseline ranking of 7th place. The baseline ranking is typically calculated by applying the same set of metrics to the country’s historic performance data from 10 years ago. One of the main areas driving the fall in the overall ranking is ‘climate and energy’. Belgium’s current ranking for this sub-category is 34th versus a baseline of 25th.The ’ Climate and energy’ sub-category measures emissions intensity for CO2, methane, nitrous oxide (N2O), black carbon etc. N2O emissions intensity are the weakest performing sub-category with a ranking of 113th globally. N2O emissions typically come from agricultural biomass burning, industrial production, and livestock management. The Belgian agricultural sector is responsible for roughly 33% of its N2O emissions. Paris Agreement Targets As part of Belgium’s Paris Agreement targets, the country has agreed to reduce its Greenhouse Gas (GhG) emissions by at least 35% of 1990 levels, by 2030. This was agreed as part of the EU’s overall target to reduce emissions by 40% of 1990 levels by 2030. The EU Climate Leaderboard produced by Carbon Market Watch and Transport & Environment ranks Belgium 13th out of the EU countries for its position towards negotiating the EU’s Effort Sharing Regulation (ESR). Belgium is showing commitment by favouring the EU’s proposal to aim towards emissions reductions being measured against 2016 – 2018 levels v’s Commission 2020 – 2021 levels (i.e. a higher reduction overall as the 2021 starting point would be lower than using the 2020 target). Belgium’s support of the EU’s emissions reduction and effort sharing regulation (ESR) targets is unsurprising since the commission’s headquarters is located in Brussels, but encouraging nonetheless. Electricity Generation According to a 2016 review of Belgian energy policies by the International Energy Agency (IEA), nuclear fuel (47%) was the primary source of electricity generation in 2014 followed by natural gas (27%) and renewables (19%). Renewables have grown considerably from a modest base of 2.4% of the overall total in 2004. Biofuels and waste, wind, and solar are the main drivers of renewable energy in Belgium. Solar energy generation grew by over 120% between 2004 and 2014 with the aid of subsidies. Umicore €892m equity placement On 8th February 2018, Belgian materials technology company Umicore raised €892m through the issue of new stock. This equity issuance will be used to help fund the construction of a greenfield facility in China and a first cathode material facility in Europe. Cathode materials are used in Lithium-ion rechargeable batteries. As mentioned in previous weeks of this blog several European countries, including Sweden, Denmark, France, Switzerland, and Norway plan to be fossil free or at least ban the use of petrol and diesel engine cars over the coming 20 -30 years. With this goal, innovative companies such as Umicore will be well positioned to take advantage of how countries are moving towards electric cars. Summary Belgium fully supports the EU’s ESR targets and takes its own commitments seriously. Its electricity generation is well diversified and not dependent on fossil fuels. Nuclear fuel has been the key source of electricity generation since the early ‘80s, however, renewable energy production has grown steadily over the last decade. Belgian companies such as Umicore who make rechargeable electric batteries for automobiles are taking advantage of the move towards low-carbon and carbon-free technology in place of fossil fuel powered alternatives. Next week’s blog will profile Italy and their efforts to meet their CO2 emissions reduction targets. Learn more If you liked this article you might enjoy reading some recent articles in the series: Week 47 Enhanced Coal Bed Methane: Fire ice can help store carbon and power SpaceX's rocket engines Week 46 Greece: Move to Renewables is a marathon, not a sprint Week 45 Luxembourg: Green bonds and blue electricity 2/11/2018 Week 47 Enhanced Coal Bed Methane: fire ice can help store carbon and power SpaceX’s rocket enginesRead Now  Raptor Engine Test Fire - Photo Credit - www.spacex.com
Welcome to the forty-seventh edition of my weekly blog where I take a closer look at the policies adopted by individual countries in their efforts to meet the requirements of the Paris Agreement. Particular attention is paid to the role that Carbon Capture, Utilisation, and Storage (CCUS) research and technologies are playing in the drive to meet these requirements. Introduction This week I take a look at how advances in carbon capture and utilization technologies are being exploited to extract methane from coal beds. Methane Methane or CH4 (one atom of carbon and four atoms of hydrogen) is a hydrocarbon fuel in the form of dry gas that can be used to generate electricity. Methane, when released into the atmosphere, e.g. through oil and gas production can cause great damage to the environment, about 30 times the impact of CO2. Interestingly, despite the deleterious effects of methane release, using methane as a fuel is far cleaner than other fossil fuels, emitting roughly half the amount of CO2 into the atmosphere that coal does when used to generate electricity. Methane hydrate (frozen methane or better known as ‘fire ice’) is a fossil fuel found in hydrate deposits of 300m – 6oom thick under the sea floor or under the artic. According to the British Geological Survey "estimates suggest that there is about the same amount of carbon in methane hydrates as there is in every other organic carbon store on the planet,". Simply put, more energy could be generated from methane hydrates than the world’s oil, coal, and gas reserves combined. Enhanced Coal Bed Methane The Pembina Institute describes the process of enhanced coal bed methane as: “CO2 is injected into partially depleted coal seams, where it's absorbed by coal, in turn displacing methane to the surface for it to be captured and consumed as fuel”. The institute highlighted the benefits of this process as the replacement of more carbon-intensive fuels with methane and also the permanent storage of CO2 in the coal bed. It did note however that this process poses some challenges including the high cost of transporting CO2 (given that extreme care must be taken to avoid its release into the environment), the low price for methane, as well as the potential for the coal to expand following the injection of CO2 and thus block the extraction of methane. Rocket Fuel The methane gas extracted following the injection and storage of CO2 into the coal bed can be used as fuel to power rocket engines. Elon Musk and SpaceX used liquid oxygen and methane when testing its raptor engines in September 2016. The raptor engines have three times the thrust of the merlin engines used to launch Falcon Heavy on the 6th of February 2018. The rocket used to launch Falcon Heavy had 27 merlin engines, whereas future rocket launches will be powered by 42 reusable raptor engines. Musk cited energy cost savings as a benefit of using methane with liquid oxygen instead of kerosene to fuel his future rocket engines. Musk plans to offer commercial flights to Mars by 2024 – these flights are likely to be fuelled at least in part by methane. Summary Storing CO2 in coal beds and enhancing the extraction of methane from the coal beds at the same time has great potential to reduce CO2 levels and for providing alternative fuel sources. Like other sources of energy generation it has its downsides such as heightened environmental risks and although methane is cleaner than coal and oil, it still is an emitter of CO2. On the plus side, methane is a far more dynamic fuel than other fossil fuels, being truly a ‘rocket fuel’ that may power future commercial trips to space. Next week’s blog will profile Belgium and their efforts to meet their CO2 emissions reduction targets. If you liked this article you might enjoy reading some recent articles in the series: Week 46 Greece: Move to Renewables is a marathon, not a sprint Week 45 Luxembourg: Green bonds and blue electricity Week 44 Geothermal: Supercritical CO2 brings us heat from beneath our feet Week 43 Ireland: Dear Leo, by the time you read this letter we’ll all be gone |
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