There are many global environmental problems that need solutions. These include the effects of climate
change and extreme weather, wastewater pollution, sewage, solid waste disposal
problems, deforestation, lack of access to clean cooking fuels, contaminated
industrial sites, agricultural issues like fertilizer runoff and soil erosion, wells
leaking oil, saltwater, and methane, and biodiversity loss. Mitigating and
reversing some of these issues yields quantifiable environmental benefits,
including greenhouse gas emissions reduction benefits. The value of those
benefits is agreed upon in various carbon trading systems. The same is
sometimes done in various “green trading” schemes, such as air pollution
emissions trading, which can also be referred to as environmental benefits trading.
Corporations are well known for purchasing ‘carbon offsets’ to offset their emissions
by investing in carbon emissions reduction projects.
Conservation
consulting companies such as the Wildlife Habitat Council, which recently
merged with the World Environment Center to become Tandem Global, advise
corporate clients on conservation projects. The CEO Margaret O’Gorman published
a book in 2020, Strategic Corporate Conservation Planning: A Guide to
Meaningful Engagement. A section from the description is below:
“Leading corporations have begun to leverage nature-based
remediation, restoration, and enhanced lands management to meet a variety of
business needs, such as increasing employee engagement and establishing key
performance indicators for reporting and disclosures.”
“With limited government funding available for
conservation and increasing competition for grant support, corporate efforts
can fill a growing need for environmental stewardship while also providing
business benefits. Strategic Corporate Conservation Planning presents a
comprehensive approach for effective engagement between the public and private
sector, encouraging pragmatic partnerships that benefit us all.”
Less Focus on Tackling Environmental and Social Risks
in 2024
With ESG efforts
declining in the U.S. especially, there is probably less focus on conservation
projects in general. One group found that interest has dropped significantly
over the last few years. According to an article in the Evening Standard:
“Proposals aimed at tackling environmental and social
risks saw record-low support from asset managers at shareholder meetings last
year, according to an analysis.”
“ShareAction, which campaigns for responsible investment,
found that only 1.4% – four of the 279 shareholder resolutions it assessed –
received majority support in 2024, down from 21% in 2021.”
“ShareAction’s annual Voting Matters report, released on
Tuesday, found that four of the world’s largest asset managers – BlackRock,
Fidelity Investments, State Street Global Advisors and Vanguard – voted against
shareholder proposals aimed at protecting human rights, nature and climate last
year.”
Thus, it seems that the asset managers are voting more and
more against such proposals. Most denial of such proposals came from the U.S. However,
asset managers like BlackRock justified voting against them, saying some were
too costly for the benefits provided. Overreach was also mentioned.
“For the 2024 proxy year, we found that most
environmental and social shareholder proposals were overreaching, lacked
economic merit, or were unlikely to promote long-term shareholder value,” they {BlackRock}
said.”
Green Trading/Environmental Benefits Trading
According to Tio
Markets:
“Green trading is an increasingly popular approach to
investing that emphasizes environmental sustainability and social
responsibility. It is a form of trading that takes into account the
environmental impact of the companies and industries being invested in, with a
focus on promoting green technologies and sustainable practices.”
Green trading is also known as environmental trading or
eco-trading. These markets rely on quantifying environmental benefits. Green
trading began as mutual fund investments that screened out projects that did
not meet certain environmental criteria, similar to what is known as socially
responsible investing, in this case environmentally responsible investing. Corporate
transparency and disclosure are required for companies in these markets. Now,
there are many types of green trading including green stocks, green bonds,
environmental commodities, and green mutual funds. Green stocks mean investing
in green companies such as renewable energy developers. Green bonds are specifically
designed to finance environmental projects. New regulations and corporate
support aid environmental benefits trading and investment by encouraging it.
New technologies to measure and monitor those benefits improve accountability
and transparency.
Nature-Based Economic Policies
International organizations
like the UN and the World Bank have encouraged nature-based economic policies
to stem the loss of biodiversity and ecosystem services. The World Bank points
out that low-income countries stand to lose the most in ecosystem service
collapse. Their argument given in the 2021 report The Economic Case for
Nature is that focusing on these matters will result in both natural and financial
rewards compared to not acting. They have focused on the 30x30 goal, the need
to protect 30 percent of the planet for nature by 2030.
According to the
Business for Nature website:
“Business for Nature, The World Economic Forum and The
World Business Council for Sustainable Development have developed guidance for
14 sectors that build on the high-level actions businesses should take to
credibly help halt and reverse nature loss and contribute to an equitable,
nature-positive economy.”
These sectors include agri-food, automotive, built
environment, cement and concrete, energy, fashion and apparel, financial services,
forest products, household and personal care, mining and metals, pharmaceuticals,
travel and tourism, waste management, and water utilities and services. They
have a workflow to assess, commit, transform, and disclose. Examples from the agri-food
and built environment sectors are shown below.
They note that
many governments adopted the Global Diversity Framework in December 2022. This
was developed by the UN’s Convention on Biological Diversity and is related to
the UN’s sustainable development goals. The UN describes the Global Diversity
Framework as
“…an enhanced mechanism for planning, monitoring,
reporting and reviewing implementation, the necessary financial resources for
implementation, strategic frameworks for capacity development and technical and
scientific cooperation, as well as an agreement on digital sequence information
on genetic resources.”
The World
Economic Forum’s 2020 report The Future of Nature and Business focused on
ecosystem restoration and avoided land and ocean use, agriculture, forests, consumption,
supply chains, the built environment, urban utilities, circularity, metals and
minerals, and sustainable materials.
Corporate Environmental Science and Collaboration with
Government Agencies: ConocoPhillips as a Case Study
Energy companies and
other companies with high levels of Scope 3 emissions are scrutinized more than
others and expected to accurately report and address those emissions. Many of
these companies are involved in collaborative studies and projects with government
agencies and are addressing their environmental and biodiversity impacts as
well as their greenhouse gas emissions.
Another way corporate
conservation projects can be useful is in conducting scientific studies to
determine the environmental and biodiversity impacts of a company’s
infrastructure. Oil & gas company ConocoPhillips has several examples of
this on their website. In some cases, a better understanding was developed of
the actual risks vs, the perceived risks of company operations. ConocoPhillips
studied the nesting, brood-rearing, habitat types, and local migration patterns
of sharp-tailed grouse in North Dakota. They can utilize that knowledge to
minimize their impact on the grouse. They have other similar projects as well. The
company also utilizes formal agreements with the U.S. Fish & Wildlife
Service and/or other federal or state agencies that include stipulations
governing the timing of certain development activities within specific species
habitats or sensitive areas.
ConocoPhillips
has what they call a mitigation hierarchy that includes four types of biodiversity
and environmental impact mitigation: avoid, minimize, restore, and offset. The
above-mentioned grouse project is an example of avoiding impacts. How they
minimize impact is explained below:
“We minimize biodiversity impacts through measures taken
to reduce the duration, intensity and/or extent of the footprint of our
operations. New drilling technology, data analytics techniques and integrated
planning have helped to optimize and reduce our infrastructure footprint and
improve reservoir development efficiency through multi-well pads, longer
lateral wells, multi-lateral wells, tankless pads and central facilities.”
Restoration is
through reclaiming and remediation of impacted lands and habitats. They note
projects involving reclaiming gravel mines (used for toads and well pads) and
others involving regional habitat restoration. They have also conducted surveys
to measure impacts and are involved in other stewardship projects including
seeding native species, controlling invasive species, and fencing.
Where disturbance
can’t be mitigated, they can utilize offsets. They have an internal Biodiversity
Offset Guideline to evaluate offsets, whether to meet regulatory requirements
or as a strategic business preference.
References:
Long-time
conservation strategist to lead new nature nonprofit: Margaret O’Gorman will
lead Tandem Global, created through the merger of Wildlife Habitat Council and
World Environment Center. Heather Clancy. Trellis. February 11, 2025. Long-time conservation strategist to
lead new nature nonprofit | Trellis
Sector
actions towards a nature-positive future. Business for Nature. Business For Nature
The
Future Of Nature And Business. New Nature Economy Report II. In collaboration
with AlphaBeta. World Economic Forum. 2020. WEF_The_Future_Of_Nature_And_Business_2020.pdf
The
Economic Case for Nature: A global Earth-economy model to assess development
policy pathways. The World Bank. 2021. World Bank Document
Plans
to tackle environmental risks ‘got record-low support from asset managers’. Rebecca Speare-Cole. Evening Standard.
February 17, 2025. Plans to tackle environmental risks
‘got record-low support from asset managers’
Green
trading: Explained. TIO Staff. TIO Markets. July 27, 2024. Green trading:
Explained
Managing
biodiversity – related risks and impacts. ConocoPhillips. Managing
biodiversity-related risks and impacts | ConocoPhillips
Strategic
Corporate Conservation
Planning: A Guide to Meaningful Engagement. February 6, 2020. Margaret O'Gorman.
(Amazon book description). Strategic
Corporate Conservation Planning: A Guide to Meaningful Engagement: O'Gorman,
Margaret: 9781610919401: Amazon.com: Books
Kunming-Montreal
Global Diversity Framework. U.N. Convention on Biological Diversity. Kunming-Montreal Global Biodiversity Framework
Plans
to tackle environmental risks ‘got record-low support from asset managers’. Rebecca
Speare-Cole. Evening Standard. February 17, 2025. Plans
to tackle environmental risks ‘got record-low support from asset managers’
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