Soapbox Snippets April 2024
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Article Type
Sustainability Soapbox
Topic
Responsible Investing
Published
May 03, 2024
Read time
4 mins
Author
Aegon AM Responsible Investment Specialists
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In this months Soapbox Snippets, we round up some of the latest sustainable investing insights and developments.

 

Hot houses?

Buildings are responsible for a staggering 40% of the total energy consumed by EU member states. The European Council has therefore taken a decisive step towards environmental sustainability by adopting new rules aimed at reducing energy use and greenhouse gas emissions from buildings within the bloc.

 

The new measures specifically target emissions from heating, cooling, and hot water systems in buildings, which make up approximately 80% of household energy consumption. The new rules require all new residential and non-residential buildings to achieve zero on-site emissions from fossil fuels by 2030, (heating, cooling, lighting etc.) with publicly owned buildings required to reach this milestone slightly earlier, by 2028.

 

Additionally, member states are required to set out measures to phase out boilers powered by fossil fuels by 2040, marking a significant stride in the fight against climate change.

 

La Niña expected to cause havoc in the States

Meteorologists from AccuWeather have issued warnings of a potential season with a near-record number of Atlantic storms, many expected to directly impact the U.S. coastline. This forecast is driven by warm waters in the Gulf of Mexico and the ongoing La Niñ;a weather pattern.

 

Experts predict 20 to 25 named storms, including 8 to 12 hurricanes out of which 4 to 7 could become major hurricanes. The U.S. could face 4 to 6 direct hits, underscoring the escalating intensity and frequency of such natural disasters. These figures are significantly higher than the historical average.

 

Hurricanes are the costliest natural disaster in the U.S., according to the U.S. National Centre for Environmental Information, with the average cost per hurricane event sitting at a staggering $20.3 billion.

 

The rising tide of e-waste

The United Nations latest e-waste monitor estimates that electronic waste generation soared to an all-time high in 2022, reaching 62 million tons, an increase of 82% since 2010. With projections estimating a rise to 82 million tons by 2030, the urgency for enhanced recycling is clear. Currently, less than 25% of e-waste is recycled. The UN estimates that this left US$62 billion of recoverable natural resources unaccounted for.

 

In 2022, the value of gold lost to e-waste was US$15 billion, lost iron totalled $16 billion, and lost copper was $19 billion. Currently just 1% of rare earth element demand is being met through e-waste recycling as the price of these elements is too low to support large scale recycling schemes. Future changes in prices, and therefore recycling rates, may have implications for the rare earth mining industry.

 

Improving recycling rates to 60% by 2030 could yield net benefits exceeding US$38 billion. The main benefits would come from avoided greenhouse gas emissions and the recovery of metals.

 

Fast fashion at what cost?

As online fashion retailer, Shein, considers a London listing, it is interesting that the French, Danish and Swedish governments are making moves to restrict exports of textile waste to developing nations like Ghana and Kenya.This follows recently imposed French legislation placing restrictions on fast fashion manufacturers or very rapid renewal companies. The new legislation imposes advertising bans and penalties of up to €10 per item if they fail to consider the environmental impact from the disposal of products by customers.

 

To put into context, Shein lists over 7,000 new products a day - and according to the research behind this legislation the number of clothing items bought in France per year has grown by almost half (3.3 billion items) in the past decade while the population has grown just 3%. The fashion industry, notorious for its rapid turnover of cheaply made clothing, contributes to 10% of global GHG emissions - which is more than aviation and shipping combined.

 

Furthermore, ThredUp, one of the largest online resale platforms for clothing, shoes, and accessories, released the results of its2024 Resale Report.Their annual study unveils a booming second-hand clothing market, with projections indicating a global value of $350 billion by 2028. In the U.S. alone the second-hand clothing market grew 7 times faster than the broader retail clothing market in 2023 and is expected to reach $73 billion by 2028.

 

Interestingly, 45% of younger consumers now prefer buying online versus traditional in-store shopping. This signifies a trend away from fast fashion, towards a more sustainable and circular economy. Is the tide finally turning on the quest for fast fashion?

 

And finally...Underwater golf anyone?

There is nothing like the impact of climate change reaching close shores to spur people into action. A report by the BBC recently highlighted that some of Scotlands oldest golf courses are in danger of disappearing into the sea due to climate change. 34 courses say that rising sea levels and coastal erosion have resulted in them losing parts of their courses, with Montrose losing 7 metres in just one year. The RandA, the governing body of golf, has taken note and is set to release a report later this year, detailing the impact of climate change on the sport with an associated action plan. As the sea encroaches, traditional golf may give way to innovative adaptations - maybe even underwater golf - as communities rally to address the pressing challenges posed by a changing climate.

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Aegon AM Responsible Investment Specialists
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