Soapbox Snippets October 2024
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Article Type
Sustainability Soapbox
Topic
Responsible Investing
Published
November 20, 2024
Read time
5 mins
Author
Aegon AM Responsible Investment Specialists
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Powering Progress: India’s Energy Leap  

India has made impressive progress in improving access to electricity, achieving near universal electrification. As of 2021, about 99.6% of households are connected to the grid, a significant increase from just 60% in 2000. Despite this progress, approximately 2.4% of households remain unelectrified, primarily in rural areas of states like Uttar Pradesh, Madhya Pradesh, and Bihar.

 

In 2017, the Indian government launched an initiative that successfully provided connections to millions of households at subsidised rates. However, access does not necessarily equate to reliability. Many households experience frequent power outages and inconsistent supply, with rural areas averaging only 20 hours of electricity daily compared to over 22 hours in urban settings.

 

To address these challenges and support the integration of renewable energy sources such as solar, wind and hydroelectric, India plans to invest 9.15 trillion rupees ($109 billion) in revamping its power grid by 2032. This investment aims to accommodate 500 GW of renewable capacity. This initiative is essential not only for enhancing electricity access but also for ensuring that the grid can support future energy demands while transitioning towards sustainable energy solutions.

 

A Long Road Ahead for Gender Parity

The Pipeline's "Women Count 2024" report reveals that progress towards gender balance at the top of FTSE 350 companies has stalled. For the first time since 2016, the percentage of women on executive committees has decreased, dropping from 33% in 2023 to 32% in 2024.

 

 Key findings:

  • Only 9% of CEOs in the FTSE 350 are women
  • 18% of CFOs are women, despite women comprising over 44% of chartered accountants
  • 19% of commercial roles in the boardroom are held by women, a decrease from 2023

 

The business case for gender parity in leadership is compelling and has been repeatedly made for more than a decade. Numerous studies have demonstrated the benefits of gender-inclusive cultures. Companies in the top quartile for gender representation in executive teams have a 39% greater likelihood of financial outperformance than those in the bottom quartile. They are also nearly 60% more likely to experience enhanced reputation, greater ease in attracting and retaining talent, and higher levels of creativity and innovation.

 

The report emphasises the need for sustained effort and commitment from organisations to reverse this trend and accelerate progress towards gender equality in leadership positions.

 

SBTi Pushes Banks to Ditch Fossil Fuel Funding

The Science-Based Targets Initiative (SBTi) is set to launch a new climate target-setting framework for financial institutions, particularly those with significant fossil fuel investments. This framework requires institutions to cease financing new fossil fuel projects and align their existing portfolios with a 1.5°C climate target. It mandates the phase-out of coal projects by 2030 in OECD countries and by 2040 elsewhere. Additionally, the SBTi will introduce tiered expectations for the commitments that that signatories must deliver, based on their level of influence over their clients’ emissions.

 

Nate Aden, SBTi’s finance lead, emphasises that the goal is not to penalise institutions, but to inspire those heavily invested in fossil fuels to structure their engagements towards achieving emission reductions in the real economy. The standards make it clear that financial institutions must comply with any regional legislation or regulations that conflict with the SBTi standard, which could be a challenge.

 

Addressing fossil fuel financing is crucial for climate stabilisation. This initiative is the latest in a raft of incoming regulation that reflects the growing global pressure on financial institutions to ensure their sustainability strategies align with climate goals.

 

The final standard will be published after industry feedback is reviewed and approved by SBTi’s technical council and executive board.

  

Mining's moment

A recent report by ABB, a Swiss/Swedish electrical engineering corporation, highlights progress across the mining industry towards sustainable operations. The report surveyed 412 mining leaders from 18 countries and found that 53% of respondents anticipate "significant or complete transformation" of their mining operations within the next five years. Additionally, 70% believe that significant decarbonisation is possible with existing technology across automation and electrification.

 

It's encouraging to see optimism from mining leaders towards achieving their sustainability targets with current technologies. However, the sector faces a considerable challenge: to accelerate production to provide the raw materials necessary for the green transition while limiting its environmental impact.

 

Beyond environmental concerns, the sector also faces social challenges - such as community impact, labour conditions, and ethical practices. The exclusion of many mining companies from responsible investment mandates due to these factors creates a complex situation. It limits the support required for innovation and sustainable practices, despite the sector’s crucial role in the energy transition. As the last kink in the chain - it's time for mining to step up its game. 

Disclosures

Author

Aegon AM Responsible Investment Specialists
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