Climate change has made UK chips ‘an inch smaller’ on average

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Sometimes the complexity of global warming and impacts on local weather patterns must be packaged as stories that people can relate to or can experience first-hand in thier lives. 

Today the UK news is full of reports that during 2018, extreme and unpredictable weather patterns driven by climate change (a heatwave and drought) had a significant impact on potato harvests, reducing potato yields by 20% (from a report by the Climate Coalition of environmental and social groups) and resulted in smaller and misshapen potatoes – hence our chips have been 1 inch smaller this year! 

Shock horror … but a story that neatly fits into the saying that ‘today’s news is tomorrow’s fish and chip papers”.

Last year’s weather with its enjoyable but extreme summer – which the UK Met Office said was made 30 times more likely by climate change – also hit other UK crops (carrots, brassicas, onions, etc) with growers reporting yields down 25-40%. The dry weather also caused forage problems for many livestock farmers.  The prediction is that future yields of UK fruit and vegetables, from the humble potato to expectations that the UK will become the next great champagne region of the world, could increasingly be hit by extreme weather patterns such as longer-lasting and more intense heatwaves, downpours and flooding.

Through events such as these, future impacts of climate change on food supplies and supply chains are starting to make their impression on growers and marketers, not as extreme events but as a business reality. More than half of UK farmers now say they have been affected by severe flooding or storms in the past decade, with future cyclonic rainfall patters likely to bring further records in rainfall.  Few growers have started to consider the investments or changes in agricultual practice required to mitigate these changes in thier businesses, as the events and the scenarios they represent are too unpredictable – do you switch crops, invest in a new farm reservoir or upgrade flood defences when the occurrence and scale of risk cannot be quantified easily in monetary terms.  A lot of growers and farmers will also have come through 2017 with reduced incomes and are thus badly positioned to take immediate action.  What happens if the next two to three years follow similar weather patterns? Will they be financially able to adapt to the weather and calls by their own National Farmers Union to become net zero in greenhouse gas emissions by 2040?

By 2050, climate projections indicate that 75% of UK land used in potato cropping will have declined in productivity, many of these on black peaty soils which are at risk of being lost through heavy agricultural production.  Raising the risk that chips will lose their position as the cheap, staple food so beloved on Friday and Saturday nights and become a delicacy!

Developing climate change adaption strategies for agriculture is in all our interests, as we need now to consider in depth the benefits of home-grown seasonal foods, the adverse carbon footprint of crop production and the considerable carbon mileage of UK and imported crops to market.  Can we continue to fly green beans halfway across the world only for 30% of it to be wasted or thrown away? 

Farmers cannot face this challenge alone as it will need significant changes in UK agriculture policy, its financing and management. Ultimately we all have a vested interest in achieving a successful outcome, it cannot be left to the marketplace alone to muddle through, it is a partnership between the agricultural industry, food manufacturers, retailers and the public.

Donald Trump take note, Thomas Jefferson had “potatoes served in the French manner” during his time in the White House in 1802.  Will the climate change revolution finally gain unstoppable momentum in the US when your heartland voters in Ohio, Arkansas and Oklahoma finally link climate change reality to the size of their French fries during a visit to McDonald’s, Burger King, Wendy’s or Arby’s. 

Will they be joined by other nations concerned about the reduction in size of their pommes frites (French), “frieten” (Dutch), slab chips (RSA), Salchippas (Peru), Chipsi mayai (Tanzania) and 炸/马铃薯条 in China.  I hope so.

Sometimes it takes simple stories to help us change our cultural perceptions and start to consider the global picture. To make progress on this issue are any other nation measuring the average length of their fried potato – could I suggest the Leading Green Chip Index as a future global sustainability marker!  

At Leading Green, our approach to sustainability in business consulting encourages our clients to look closely at their own internal leadership strengths and goals.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.

Getting Green Done ……

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I was amazed as a young environmental colleague lamented the lack of success, she had had recently in presenting her CEO with a new sustainability initiative.

‘He threw out most of my proposal and gave me only 30% of what I wanted!’

The initiative was wrecked, she was down-heartened, she had embarrassed herself, and her enthusiasm was now at a low ebb through disappointment.  It had been a bold initiative, it had matched her vision for what the company could achieve, had aligned with their new sustainability policy and could have delivered real business value.  The whole initiative reflected well on her and the career training she had received to date. 

‘Wow! I was thinking, 30% – that’s just great as a first step I mused, but in her disappointment, I sensed the frustration that many graduates today in the sustainability field feel when entering the workplace.  They leave their institutes with high expectations and run full tilt into the operational realities and encounters that are so common in organisational bearpits.  What was once so clear and rational in the classroom becomes murky and complex when it must be delivered through workplace colleagues.  Organisations just don’t act as rationally as sympathetic classmates with shared worldviews on sustainable development. ‘We must do this’ becomes quickly challenged by ‘Why must we do this?’, ‘But….’, ‘Perhaps when we have the time and money!’ or even a stonewalling ‘No!’. 

It took time to explain to her that I was impressed and pleased for her, that 30% success is not failure but success when you are trail blazing!  For after two decades in corporate environmental risk management and sustainability you learn that any advance or step forward is a good win. 

In sustainability, we are first and foremost business change managers, our role is to ratchet up organisational performance, to deliver value outcomes and to continually progress ‘getting green done’ within organisations.  There are very few ‘Look at Me!’ and ‘Aren’t I Great!’ moments for many environmental professionals within organisations. 

Personally, my greatest inner satisfaction comes from watching others adopt sustainability thinking into their work because it now makes strategic sense to them, aligns with new business direction or reinforces a strong organisational culture with a new worldview.  That is my reward. We all like success and the recognition of high performance by our peers, but when your leadership is enacted via changes in the behaviours of others don’t be surprised if it is overlooked.  Remember that people rarely own up to changing thier past opinions. 

It was clear that her CEO had been supportive and had giving her a chance to progress her initiative but had yet to be totally convinced enough to give her the whole package.  She had first to deliver on this element before any further funding or support was granted – a clear pragmatic leadership decision.

We all need mentors in our professional lives, colleagues who can guide us through the organisational minefield, suggest alternative ways forward and pick us up when we are downhearted or discouraged.  It took time to show my colleague that her disappointment in the meetings outcome was unjustified and had in fact been a win.  She had set her heart on 100% success, her CEO in supporting her had granted 30%.

So now we have started work on ensuring that she does successfully deliver on the 30% she has been entrusted with.  In doing so, we are working out what her strategy will be and how she will bering on other colleagues to gain the next 30%, and the 30% after that, and the 30% after that ……until she wins over the CEO and gets his full backing for her vision. 

So, don’t expect 100% success overnight, building a sustainability foundation within an organisational culture involves a slow but continuous ratcheting up of performance over time.  It is a marathon, not a sprint and that ultimately success is in…just Getting Green Done!

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Note: I have happily borrowed the phrase ‘Getting Green Done’ from the book of the same name by Auden Schendler, Vice President of Sustainability at Aspen Skiing Company. It is a useful read for sustainability professionals enetering any work sector.

CLIMATE CHANGE – FACT OR FEELIE-FACT

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Fact or Feelie-Fact!

I was addressing a small group of SME business owners this week and we started to discuss the issue of climate change first as a potential business risk for some of their enterprises and supply changes, but also as an opportunity for some of them in how they looked at thier future strategic planning.

During the course of our discussion I was surprised by some of the questions that were asked by the business men and women, and I was reminded by a GP friend who often challenged her patients with the phrase when presented by a medical claim – “Is that a fact or a ‘feelie-fact’ (i.e. it feels like a fact)?”

So after jotting down questions, and a quick bit of research on various websites here is a quick trot through the some of the most asked questions – presented in TRUE or FALSE colours for facts and mythsFEELS .

THE CLIMATE IS ALWAYS CHANGING!

 True

There is natural variability in the Earth’s climate but the current state of climate change  we are experiencing is unusual as the is now a wealth of evidence that verifies it is not exclusively part of a natural cycle.

Natural factors which affect climate include volcanic eruptions, aerosols and phenomena such as El Niño and La Niña (which cause warming and cooling of the Pacific Ocean surface).  Natural climatic variations can lead to periods with little or no warming, both globally and regionally, and other periods with very rapid warming. However, there is an underlying trend of warming that is now almost certainly caused by Man’s activities.

THESE CHANGES ARE ALL DOWN TO THE SUN AND OTHER NATURAL FACTORS!

False

Many factors contribute to climate change.  Only when climate scientists have aggregated all these variable factors together can we explain the size and patterns of climate change that has occurred over the last 100 years or so.

Although it has been common for some people to ask whether the Sun and cosmic rays have been responsible for climate change, measured solar activity has shown no significant change in the last few decades and little evidence to back up this claim.  However there is sufficient evidence to show that global temperatures have continued to rise since the Industrial Revolution, suggesting strongly that the additional greenhouse gases that have been emitted since then have had about 10x the effect on climate as fluctuating changes in solar output.

Much of the relatively small climate variability over the last 1,000 years, before industrialisation, can be explained by changes in solar output and occasional cooling due to major volcanic eruptions. Since industrialisation, however, CO2 has increased significantly and we now know that man-made CO2 is the likely cause of most of the warming over the last 50 years.

CLIMATE SCIENTISTS DON’T REALLY AGREE ABOUT CLIMATE CHANGE

False

The overwhelming majority of climate scientists agree on the fundamentals of climate change — that climate change is happening and has recently been caused by increased greenhouse gases from human activities.

The core climate science from the Intergovernmental Panel on Climate Change (IPCC) was written by 152 scientists from more than 30 countries and reviewed by more than 600 experts. It concluded that most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in man-made greenhouse gas concentrations.

I once asked this question within the context of being astounded by the degree of unity between so many branches of science and scientific professions, especially within those  areas where they commonly fell out!  One of the IPCC experts who had reviewed the data put the answer this way to me:

“It is as if all the religious leaders in the world got together to discuss ‘Is there a God?”

A few days later they appear with a statement that says ‘Yes, there is a God….. and his name is Elvis!” 

 

IT’S POSSIBLE THAT THERE’S NO LINK BETWEEN TEMPERATURE RISE AND CO2

 False

Temperature and CO2 are linked. Studies of ice core layers taken within polar-ice show that in previous centuries and millenia, rises in temperature have been followed by an increase in CO2.  Now, it is a rise in CO2 that is causing the temperature to rise.

Concentrations of CO2 have increased by more than 35% since humanity’s industrialisation phase began, and they are now at their highest for at least 800,000 years.  When natural factors alone are considered, computer models do not reproduce the climate warming we now observe and record.  Only once man-made greenhouse gases are fed back into the equations and computer models do we recreate results that mirror what is happening today in the real world.

THE RECENT WARMING IS DUE TO THE GROWTH OF OUR TOWN AND CITIES

 False

No.  CO2 emissions are causing the climate to warm everywhere around the globe.  Temperatures in our cities are unnaturally high because of the warmth from heating building, heavy traffic, high concentrations of people and the effects of this heat being stored in our buildings, roads and concrete.

The UK Met Office’s observations come from urban and rural areas on land and from the sea, which covers 70% of the Earth.  The Met Office manages data from cities carefully to ensure they do not skew their understanding of climate change.

Changes to how we get and use energy will cost billions and throw millions out of work

False

There are costs to any change, but study after study shows the net effect of conservation, efficiency and less-polluting energy will be more local jobs, cheaper power, and savings in health and improved local air quality (especially in cities).  The costs of severe climate change effects, like catchment flooding and coastal erosion, will be far greater than working to reduce them.

Engineered Technology will solve the problem for us

False

Significant ‘fixes’, like removing CO2 and other greenhouse gases from the atmosphere, are very unlikely because they are not available now and are not an alternative to reducing emissions.

It’s already too late to stop climate change

True

Although some climate change effects are now unavoidable (and are already being experienced within some communities), recent evidence indicate that action needs to start now if we are to limit the peak of global emissions in the next decade and to start bringing a fall in emission levels to well below current levels to avoid some of the worst climate change scenarios.  This is still possible, and can be achieved by collective global action at governmental and societal level, using technologies that are available today.  Putting off action will make it harder and harder to achieve equilibrium, and more difficult and expensive to reduce emissions in future decades, as well as creating higher risks within society to severe climate change.

I can’t possibly make a difference

False

Globally, the three main contributors to greenhouse gas footprints are cars, coal and cows; and those are three areas in which our individual choices can make a future  difference.  Over 40 per cent of CO2 emissions in the UK come directly from central heating systems in our home and from our personal transport choices.

The recent IPCC report suggested that we need to look closely at our consumption of animal products, seeking to reduce them by at least 30%.  The decision to eat less meat and dairy products has been identified as having a bigger impact on greenhouse gas reduction than personally reducing airline flights or buying an electric car.  Beef production compared with peas results in six times more greenhouse gas emissions and the use of 36 times more land.  Reducing food waste is another area where consumer decisions can make a future positive impact on global warming as up  to 30% of food purchased can end up as food waste – the equivalent of throwing over 3 months food shopping into the bin each year!

There is no point in my country acting if other countries don’t!

False

Every reduction in emissions makes a global difference not a local difference by not contributing to risk.  Western countries, especially the US, UK and other European neighbours can make a positive contribution and set a positive example to the rest of the world – if the heavily energy dependent countries of the western world can rise to the challenge successfully, others will follow.   The average Chinese citizen still consumes only 10 to 15 per cent as much energy as the average US citizen, and in its latest renewables report the IEA states that it is China that will continue to dominate global renewable energy growth and that the country is likely to become the largest consumer of renewable energy (surpassing the EU by 2023).

Business as Usual

False

Moreover, there are good economic reasons for individuals, government and especially business leaders to take action now and act together.   The Stern Review, the UK Treasury’s comprehensive analysis of the economics of climate change, estimated that not taking action could cost from 5 to 20% of global GDP every year.  In comparison, reducing emissions to avoid the worst impacts of climate change could cost around 1% of global GDP each year.

 

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At Leading Green, our approach to sustainability in business consulting encourages our clients to look closely at their own internal leadership strengths.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.

 

Sources of information:

My thanks to the following website, some of whose content I have incorporated into the text.

IEAhttps://www.iea.org/publications/renewables2017/

 UK Met Office:  metoffice.gov.uk/climatechange/guide/quick/doubts.html.

UK Government (Act on CO2 website):  http://actonco2.direct.gov.uk/actonco2/home/climate-change-the-facts/Climate-change-myths-and-misconceptions.html.

New Scientist: https://www.newscientist.com/article/mg23431310-700-living-with-climate-change-you-can-make-a-difference/

Stern Report: www.hm-treasury.gov.uk/sternreview_index.htm.

Climate UK:  http://climateuk.net/

Climate East Midlands:  http://www.climate-em.org.uk/

Brainstorming with a Property Developer CEO over Energy Efficiency

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About 60% of total energy efficiency investment lies within the property and building construction sector, yet on occasion it seems that 75% of the resistance to building in energy efficiency into new development lies within the C-suite of such companies. This is a hard, pragmatic sector to operate in and risk aversion can be a necessary survival trait as the market fluctuates.

Having grown up around family run property development and estate agency owners  I had been a useful addition to site construction crews on projects as a teenager and subsequently regarded as the black sheep of the family for becoming a corporate environmental manager.  My description of myself as a ‘green businessman’ cut very little ice in their commercial eyes.  Only when I had honed my skills on guiding large infrastructure development through planning systems within the UK power, renewables and water sector did they become interested.  I was now a useful source of advice on EIA, legislation, planning laws and explaining to them why floodplains, ancient woodlands and habitats were being actively protected by communities from their next money-making scheme.

So, this mentoring meeting on sustainability in business with the CEO of a sizeable house building company was following a predictable route.  He was interested in what I had to say, but wary of what I was saying.  His organisation with many others were being bombarded with the ‘sustainability’ message, but few commentators had helped him  drawing linkage to what it meant for him personally and for those actively leading organisations now at the forefront of climate change adaptation hopes.  He was intelligent and strategically far-sighted to understand that the way they operated now had to change, but needed help and more rational reasons to actively jump onto the sustainability wagon.

We agreed that as a ground rule sustainability initiatives had to either add +£1 to the operational profits or save £1 expended in risk.  The core strategy had whatever to add a minimum of +£1 to his balance sheet.

So, we sat down and brainstormed!

First, we addressed the direct benefits of energy efficiency regarding climate change so that we could park that issue first and go on to explore other potential benefits of energy efficiency. We agreed that the building & property development sectors has an important role to play via aggressive efficiency improvements within new build (and existing) as a contributor to limiting the pace of global warming.  As evidence to this we referenced a recent International Energy Agency’s (IEA) market outlook on energy efficiency that claimed that a concerted drive in energy efficiency policies could assist the world in achieving ca 40% of the emission reductions needed without requiring new technology.

We discussed the options open to his company to improve energy efficiency design. There was a lot they could do but the blockage in his mind was just how they could boost financial returns, as any benefit advantage to the buyer was dependent on increased borrowing costs, energy-efficient material costs and added construction time costs to his organisation. These added costs would have to be passed on to the buyer at the detriment of a higher purchase price.  He recognised that the buyer could eventually recover those added costs in lower energy bills, but in risk terms the marketplace still revolved around ‘location, location, location, and mortgage cost.  The only clearly marketable attribute was the attractiveness of a ‘green’ home to his target market – relatively successful, dual income, young and mid-life professionals.  An advantage yes, but unquantifiable in the sellers marketplace or when seeking added capital for a scheme.  Little progress here towards his +£1!

I then turned the discussion over to the evaluation of alternative and more sustainably innovative options to identify added value finance and business model benefits based on added energy efficiency.

Site design and placement

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Asked if he ever took the alignment of new property’s into account, the answer was ‘No! the priority was housing density and profit return on a site!’.  So we discussed placement for solar efficiency with housing density + return.  Exploring an idea where a development was maximised for the fitting a mass photovoltaic scheme in its design as the site was constructed.  The factory unit or property houses benefitting from the scheme, but ownership of the asset remained with the development company for an initial period before transferring over.  How did he feel about his organisation branching out and becoming an ‘energy company’ exporting into the local grid?  Monetising the potential energy benefit as part of the development return had attraction he agreed:

  • It could reduce the risk profile – for even if the buildings were empty, they still produced capital returns post construction.
  • A house build-carbon reduction-renewables scheme could appeal more to the third-party financier marketplace in the future.
  • Such a scheme could have a predictable return on investment, and the cost in solar installation was still reducing in price.
  • The energy units were reproducible on a scale that potentially made the added installation costs attractive.
  • there was still the option of possible energy efficiency grants.
  • The concept could help in demonstrating lower cost starter homes, and
  • It had a marketable factor for those seeking a mortgage and concerned about rising externalities.

The non-energy benefits (NEBs) of energy-efficient buildings.

It was becoming clear from our session that householder or tenant energy cost savings were not always enough to drive sustainability strategies into the property market.  A robust business case and ROI argument needs to consider additional factors in assigning that +£1 to the developer.

I raised the concept of ‘stranded assets’ as the organisation had a property letting arm within its business portfolio.  What was the risk of these properties decreasing in value or becoming stranded if energy efficiency standards dramatically rose in the future?  The scenario we discussed was a significant shift in Government policy in response to the +1.5oC temperature target.  What would be the impact if this became a hard and fast target in government or global energy policy reaction?

  • Could such changes render ‘bought cheap and done up’ properties a future financial liability?
  • Would investors continue to lend real estate capital for properties they deemed at future risk of becoming stranded liabilities?
  • What strategic criteria should now define a ‘cheap’ property in terms of its energy efficiency or retrofit profile?

These were new questions he hadn’t considered before and needed to be considered as future risk scenario.

Moving on from the risk of stranded assets we agreed that the top non-energy benefit for his organisation would lie in increased asset value within their holding portfolio and within individual buildings within that portfolio.  One obvious advantage was the desirability to rent of individual properties as a reflection of energy efficiency.  Anything that increased the longevity of tenants or reduced the lapse time between losing one tenant and gaining another could have a significant NEB return we agreed.  A financial return that was much greater than the energy cost savings implemented into the fabric of that building originally, if a building remained empty for too long.

If a building provided tenants with a greener, more pleasant place to work/live and which also contributed to operational costs, its desirability and occupation periods enhanced during its life. Within the portfolio, we also agreed that such buildings would have a lower risk exposure to future regulatory energy efficiency challenge and the expense of retrofitting. Thus:

  • increased rentability,
  • lower gap periods and
  • reduced regulatory risks

attached to high performing energy-efficient commercial/residential properties were all NEBs that need to be considered within future business strategies he agreed.

The session had I hoped started to alter the perception of this CEO, over his strategic options and how sustainability could assist in safeguarding the business’s longevity.  It had also raised scenario that could go forward into the boardroom for further debate and consideration.  That was a satisfactory start, because sustainability in business is dependant on industry leaders feeling comfortable in taking the lead on sustainability initiatives in a pro-active manner rather than reacting negatively when the opportunity has passed or when new regulation demand change.

However, the wider strategic impression I was left with after our session was that energy efficiency and investment practices remain unaligned in the UK property marketplace. The buildings sector clearly has a significant role to play in offsetting future carbon releases and in mitigating future carbon use, yet the regulatory energy policy and investment routes remain confusing as to whether they can ultimately drive a +1.5oC climate change future or just contribute locally to energy efficiency.

The regulatory preference over the last decade has clearly been aimed at direct grants and subsidies for home owners.  Whilst successful in general, how much greater would have been its success if it had been aimed at achieving greater standardisation in energy efficiency within the new build developments over the last 10 years?  This may reflect political caution when dealing with the sector or that policymaking is still more comfortable with the small subsidy model as they are easier to administer and communicate out to society.  Yet there is clear evidence that when scaled up, energy efficiency schemes are easily replicable and just as easily scalable.  They also have a verifiable ROI, help offset the switch to a low-carbon economy, low carbon cities & their air quality, and can build employment capacity within the construction service marketplace.

Let us be braver in future as the potential monetary value and benefits of energy efficiency can be just as great to developers, financiers and government as the societal value of a households energy reduction savings!

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At Leading Green, our approach to sustainability in business consulting encourages our clients to look closely at their own internal leadership strengths.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.

 

Environmental Impact Assessment: Just another Project or a 1.5-aligned infrastructure strategic opportunity?

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The Future Challenge

Enormous amounts of upfront capital, rather than slow incremental investments, will be required within the next three decades if we are serious about delivering innovative infrastructure solutions and partnerships that limit climate change to 1.5C above pre-industrial levels.  An earlier and better integrated understanding of climate change risks and impacts should help trigger this transformation.  However climate change and impact assessment professionals in general are rarely used to support the early investment phases of projects and seldom work closely with investors to significantly influence the climate change outcomes of a bespoke project.  Perhaps now is the time for a change?

Accessing the necessary finance for the development and delivery of large infrastructure projects is increasingly being tied into climate change impact funding, wider ESG considerations and increasingly the requirement to demonstrate the sustainability of the proposed investment upfront.  However, whilst there is a growing understanding of physical climate change, environmental and social impact risk within the investment community in the ‘development’ phase and also within the engineering community during the ‘delivery’ phase, the role of the Environmental Impact Assessment (EIA) professional, and in particular specialists in climate change impact assessment (CCIA), should be becoming easier.  Yet there is often no strategic linkage in projects between what climate change conversations are influencing either community and the substance of those conversations in terms of funding impact.  Too often client communication, project management and procurement barriers halt the transfer of knowledge and break the continuity of professional advice.

Climate change is visibly starting to manifest itself in our lives through physical risks such as altered weather patterns, changes in rainfall intensities, coastal flooding through sea level rises, wildfires and drought.  The need to stabilise the global climate through collaboration between nations, and the activities on-going in human societies must soon start to deliver a pathway towards net-zero emissions as quickly as possible – globally by 2050 at the latest, if we are to stand any chance of addressing the issue and mitigating the risks.  The scale of the challenge means that there is very little time for investors, financiers, governments, client businesses and their infrastructure service teams to enact a radical shift in how critical infrastructure projects are brought through to delivery, and how climate risks are incorporated within the strategic decision steps necessary.

Large financing and pension investment institutions are already taking action as reflected within their reporting of climate risks, evaluation of portfolio exposure and in their consideration of impact assessment funding.  Insurers and the banking community are also being urged to adopt strategies that tie in scenario analysis within their business governance systems. Yet we still need greater debate of climate change risk and how it can be passed from funding concept into operational delivery.  This is where the EIA community has specialist knowledge and skills that can benefit both parties to a greater extent than at present.

Investment pressure and regulatory initiatives will undoubtably help place climate change considerations as an integrated component of any eventual capital release. No doubt making investor seekers aware of climate-related risks and how they are expected to present business cases that address and manage them will ultimately assist the longevity of their desired asset or development project.  How long it takes them to appreciate this as a ‘benefit’ is an interesting question!

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Yet with these changes happening slowly within the investment community, it is rare for the engineering project development team, and in particular the EIA/CCIA professionals to have been briefed on or be aware of what evaluation, commitment or agreement has previously been determined during financing talks, or what are commitments funders seek to implement within the terms of their own policies or agreements.  Both engineering and environmental teams often start from ‘scratch’ and whilst committed to project delivery may have different views on how that final outcome sits within the clients needs, the local environment, its legacy impact on that environment and its contribution to the client’s corporate sustainability policy or a 1.5-aligned climate change scenario.

This lack of information and awareness of the entire funding and delivery cycle wastes time, leads to unnecessary conflict, delay construction, consents and permits, and ultimate delay delivery time schedules.  The cost of obtaining upfront capital can be enormous – in some mega-projects it can cost the investment seeking government or private sector $billions, and yet the acquisition of detailed environmental information is often left to a distant point downstream.

It is acknowledged by many EIA professionals that when they are called into the financing and design debate. it is often too late to make a larger positive contribution – opportunities have been missed and the design process has become fixed on a solution that may be optimal to build but is not necessarily optimal in terms of its operational/construction carbon footprint, risk reduction and importantly deliverability through the consent and permitting process.  Indeed whilst vast sums are spent upstream during financing a project, money for environmental (and social) evaluation is often begrudgingly allocated into the delivery budget.

Budgeting for Climate Change advice

The EIA budget is often a small element of the entire budget – <0.25% during financing and <4% during construction delivery, yet its contribution is ultimately critical to success:

  • No statutory approval – No Project!
  • If the project is pushed through by governments for political reasons, the objection of its citizenry and the verification of adverse environmental impact can still terminate the project.
  • Even when they are pushed through regardless, the life and efficacy of the asset can ultimately be compromised – e.g. siltation behind dams reducing energy production, secondary impacts to other national industries and interests, reductions in agricultural productivity, etc can all mitigate against the ROI.
  • Too Climate change adverse – Future stranded asset!

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It makes sense therefore, that if we are serious about climate change risks to future well-being, and now accept that vast amounts of early upfront capital, rather than incremental investment, will be needed within the next 30 years to bring forward innovative solutions that help limit climate change to 1.5C, then we need to bring climate change experts into the funding discussions earlier.

Key investment decision makers with responsibility for capital will need additional help and support in evaluating climate change scenario risks and their associated impacts early on within their strategic evaluations.  Climate risk cannot be left to a random % point allocated into the risk pot by economists.  As the bullet points above demonstrate, they ultimately will be key to the projects life-cycle and longevity, and not just limited to project delivery.  The active steps taken from the start by implementing EIA and climate change risk advise and thinking into the project can have a significant positive effect on whether the project is sustainable or ultimately a stranded asset.

In these decisions, the financing and funding communities will need early impact assessment advice to a much greater extent than the Engineering project manager will when it is commissioned several years further down the project pipeline.  It is always a wise decision to invest upfront in the management of strategic risk, yet too often it seems that those with the most to lose fail to engage with the one group of experts that are comfortable in determining the significance of climate change impacts, the risk to delivery and whether the design strategy ensures future longevity of investment return.

Calling in the impact assessment community and the tools that define EIA ensures that the knowledge that will arise downstream in the delivery phases when seeking consent is brought upstream and earlier into play when strategic options are still open to debate. The EIA costs will have to be banked at some point in the process, it therefore makes sense to access its strategic information at the funding phases, and have it still available during then delivery phase.

In a recent series of workshops run by Leading Green, the five key areas in which senior IA professionals feel they can make the greatest contribution, benefit and leadership to a large infrastructure project were identified as:

  1. Embedding sustainability and env/soc thinking into decision-making, and being influencial in promoting environmentally (inc climate change) inclusive design.
  2. Defending the project outcomes when EIA & consenting elements are impacted on by engineering parameters.
  3. Ensuring that the voice of the EIA team are heard by the project team.
  4. Safeguarding client (internally) and stakeholder (externally) interests, and
  5. Leading thinking regarding operational and decision-making phases.

Points 1, 4 and 5 clearly have a strategic advantage to investors during the investment phase, whilst points 2 and 3 reflect the continued need for safeguarding client interest when the needs of the engineering project team  to deliver raise risk elements that threaten statutory delivery or the overall legacy risk profile of the investment.

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So my advice is simple, start waking up to the role of EIA early as a design tool and investment guide for the funding decision maker.  In particular how it can assist you deliver a 1.5-aligned infrastructure strategic opportunity.  It makes much more strategic sense than letting your consultant project delivery team view its role solely as an additional project step and a ‘compliance’ tool for regulators!

 

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Leading Green offers its clients specialist advice, training and project management services in 3 key areas:

  1. Client Project Board representation & specialist environmental support in Infrastructure Investment Programmes & Projects (investment planning, site acquisition, project planning, construction and delivery) for large-scale built infrastructure and asset management programmes – Governance, Risk Management, EIA/ESIA & SEA, climate change adaptation strategies, sustainability and stakeholder risk management.
  2. Support to Executive & Operational leadership teams as they develop and deliver environmental and sustainability strategies.
  3. Environmental Leadership & Sustainability in Business training programmes.