Shaken Not Burned 29/02/24

News, changemakers and sustainability solutions

This week’s podcast episode

Glossary - Insect-enriched food

Insect-enriched food contains ingredients derived from insects and is safe to be eaten by humans. Examples include protein bars, biscuits, snacks, crackers, pasta and baked goods.

Insects are a sustainable source of food for the world’s growing population. They have a high content of protein, low fats, and have a much smaller environmental footprint than livestock because they require relatively contained spaces for farming and breed more frequently than mammals. They also contribute to a circular food system because they consume feed from some by-products or food waste.

A new survey by the International Platform of Insects for Food and Feed (IPIFF) shows that insects are becoming increasingly popular in Europe. Consumer taste is evolving due to factors such as taste, market availability, health benefits, product pricing, environmental sustainability, as well as food origin.

Busting a myth

Stories that highlight a changing market

• At SNB we like to focus on solutions, which means calling out false premises when we hear them. The UK government is once again undermining its own net zero strategy, using arguments that simply don’t make sense. Prime Minister Sunak is claiming that the UK needs new gas-fired power stations for energy security reasons, even though onshore wind is not getting support from Westminster, which also messed up the AR5 offshore wind auctions. While throwing huge sums at CCS and hydrogen development, the government seems to be ignoring the potential of renewables alongside energy storage, efficiency and demand side management. Analysis from Danfoss shows DSM cut energy consumption – and therefore cost – by 20-30%. Surely cutting costs through efficiency and technological deployment is more worthwhile than building up path dependency on gas-fired power as the UK’s own North Sea supply dwindles. If Sunak wants to argue energy security, that hardly seems the right pathway forward.

• The European Environment Agency has published its first climate risk assessment of 2024, warning of the systemic risks arising from the impacts of climate change. These include not just the risk to ecosystems, food security, water resources and the like, but also the cost of damage to infrastructure, property, agriculture, and human health. It found that Europe is the fastest warming continent and climate risk has already reached critical levels. While this is a stark warning, it’s also a potential solution to the challenges we face –  if investors and corporations take heed and start being truly transparent. That’s the first step towards building a better understanding of how our systems operate, and what we need to change.

• Concerns about green competency and the way we manage risk also hit the headlines as Australian pension fund HESTA has urged the country’s largest oil and gas firm, Woodside Energy, to recruit directors who are able to understand and address climate challenges. This echoes the requirement by the SEC for management to take responsibility for understanding climate risk. And there’s a lot to learn. Dr Kim Schumacher has been warning for some time that one of the problems in addressing climate change is that financial management rarely has the necessary technical skills to understand the issues – in what he terms ‘competence greenwashing’. In a 2022 paper, he talked about the need for additional capacities and resources needed to get the financial sector to really have the impact it needs to address environmental challenges associated with climate change and nature loss. In order to manage a risk, you need to understand it. This could be an exciting step forward in terms of investor engagement.

• The need for rigour in how we achieve targets was also in the spotlight last week. The Science Based Targets initiative has published its report on Business Ambition for 1.5°C, including an updated list of companies that have failed to achieve their commitment to net zero. The initiative has been criticised for giving corporates two years to develop robust and credible climate plans to achieve their targets. Critics say this has allowed companies with massive negative impacts, such as global meat giant JBS, to suggest an alignment with net zero that it appears to have no intention of reaching. Many companies appear to have set targets before measurement and materiality assessments, and have since found just how challenging effective action will be – especially around value chain or Scope 3 emissions. The SBTi also opened a call for members of its Validation Council, as it looks to separate validation from target setting.

• In support of the news out of the SEC, Workiva published the results of a survey which shows that many senior executives believe that better ESG data is going to result in better investment decisions. Despite the political noise around the decision and concern about how disclosure requirements are going to be met, 91% of investors believe that these new regulations will support a more holistic view of performance. Similarly, 92% of investors agreed that ESG data is important for assessing companies’ long-term financial outlook, and 88% said that ESG data should be treated with the same rigour as financial data. It’s expected that this will help them make more informed investment decisions, including 90% for the EU’s CSRD regulation, 89% for California’s climate disclosure laws, and 91% for the SEC’s climate disclosure rule.

• And in a positive little extra (to make up for the sad news from the UK government), the European Parliament has approved the March 2023 Directive on Green Claims so there will be greater clarity on greenwash, as well as enforcement of rules to protect consumers.