Environmental crises will dominate the global risks landscape over the coming decade, according to a report by the World Economic Forum – with extreme weather events, natural resource shortages, biodiversity loss and ecosystem collapse ranking among the main concerns. The proliferation of risks raises the question of whether we are heading towards an uninsurable world, as Allianz Research puts it, noting that 2023 is likely to be the fourth year in a row in which insured costs from natural disasters globally top the US$100 billion mark. Climate and sustainable finance were among the top agenda items for the 2024 G20 Rio de Janeiro summit, which took place on February 28-29.
Brands and causes
Our vision: Sustainable performance, as recognized by international institutions, is a positive factor in building reputation and credibility. Brands can stand out by contributing to the collective advancement of society and leading pioneering initiatives.
Our reading selection: Brazilian brands are playing a key role in sustainability efforts. S&P Global included 27 Brazilian companies in its Sustainability Yearbook 2024, which assesses more than 9,400 firms on sustainability criteria. Five Brazilian brands are ranked among the top 5 percent: Klabin, Banco do Brasil, Renner, Boticário, and Fleury. Seven Brazilian companies – Compass, CPFL Eergia, Lojas Renner, M Dias Branco, TIM Brasil, Marfrig, and Votorantim Cimentos – earned an “A” rating for the first time from CDP, the largest global platform for measuring the environmental impact of organizations.
Global tech and manufacturing firms are also spearheading environmentally friendly innovations. Google partnered with U.S.-based nonprofit Environmental Defense Fund to use satellite data and AI technology to map sources of methane emissions. Airbus has launched a global aircraft recycling project in Chengdu, China, which aims to recover about 90 percent of aircraft weight, thus curbing the environmental impact of aviation.
Sustainable finance
Our vision: Social and environmental criteria are gaining importance as areas of opportunity and commitment for investors.
Our reading selection: Canada’s Brookfield Asset Management raised US$10 billion for a new decarbonization fund focused on investing in clean energy and transforming carbon-intensive business models. Brazilian development bank BNDES joined forces with the Glasgow Financial Alliance for Net Zero (GFANZ) – the world’s largest climate finance coalition – to boost funding for clean energy as well as conservation efforts such as reforesting the Amazon rainforest. Morgan Stanley reported that 54 percent of individual investors plan to increase their allocations to companies or funds that consider positive social and/or environmental impact.
Corporate sustainability
Our vision: Responsible business conduct strengthens institutions, laws, and systems, contributing to the creation of more peaceful, fair, and inclusive societies. The biggest challenge for companies is to integrate sustainability into their business models.
Our reading selection: The United Nations Global Compact launched the Transformational Governance Corporate Toolkit, a set of online resources to support business leaders in driving responsible conduct and bringing greater accountability, integrity, and transparency to their companies. That might come in handy for many executives; only 37 percent of the sustainability, finance, and technology leaders surveyed by Salesforce and GlobeScan said that sustainability is well integrated into their business operations.
Deep dive
A changing world requires new perceptions, analyses, and approaches. The impact of geopolitical events, health crises, and climate change is never limited to a single sector or market. Supply chain snares are a notorious example, grabbing headlines in recent years due to escalating global risks. Look Forward: Supply Chain, a new report published by S&P Global, tackles the main challenges in this sector, exploring how international trade, logistics, and manufacturing are likely to develop through 2030.