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Environment

Environmental performance measures the energy a company consumes, the waste it generates, the use of natural resources, and the consequences for ecosystems and habitats. An overarching factor is climate change, increasing the frequency and force of extreme weather events. Climate change and instability also cause uncertainty, which increases corporate risk and delays investment.

View Our ESG - Environment Framework

Environment
Climate change
Contributing factors
Mitigating actions
Set science-based emissions reduction targets
Invest in low carbon technologies
Greenhouse gas emissions
Invest in carbon capture and storage technologies
Commit to credible carbon offset projects
Invest in energy efficiency projects
Set an internal price on carbon
Pollution
Air pollutants
Invest in clean energy sources and conduct air quality assessments
Water pollutants
Invest in advanced waste management techniques
Land pollutants
Incorporate principles of the circular economy into product design and operations
Space pollutants
Invest in space debris removal and tracking technologies
Biodiversity
Deforestation
Invest in reforestation projects and sustainable forest management
Pollution
Invest in clean energy and waste management techniques
Agriculture
Invest in precision agriculture technologies using safe pesticides and fertilizers
Construction
Build on brownfield sites and incorporate living structures in architecture and planning
Trade in endangered species
Implement recovery programs for endangered species
Overfishing
Implement responsible fishing and investment in breeding programs
Natural resources
Overuse of fossil fuels
Invest in renewable energy sources
Overuse of metals and minerals
Incorporate principles of the circular economy into operations using sustainable resources
Overuse of water
Invest in water conservation programs and smart water initiatives
Overfishing
Implement responsible fishing and investment in breeding programs
Land mismanagement
Priortize greater use of brownfield rather than greenfield sites

Climate change

Climate scientists overwhelmingly agree that the global economy must reach net-zero greenhouse gas (GHG) emissions by 2050 to ward off the catastrophic effects of climate change. Despite this scientific consensus and broad agreement that climate change will disrupt every sector of the global economy, governmental action has not been sufficient to establish a path to net-zero.

The same experts who accurately predicted such consequences decades ago say today’s disruptions will not only continue but will accelerate for decades to come, even if we could halt further GHG emissions immediately. This is because of the amount of GHGs already in the atmosphere. CO2 persists in the atmosphere for 300 to 1,000 years, while methane, with more than 80 times the warming power of CO2, persists for about 12 years. In other words, environmental issues such as pollution, biodiversity, and natural resources, while important, pale in relation to climate change.

The World Bank estimates that 140 million people will be affected by extreme droughts, floods, and storms by 2050. In addition, research has found that climate change has boosted heat-related deaths in warm seasons by an average of 37%. By 2050, the rise in sea levels could affect much of the US east coast, while islands such as the Bahamas and low-lying cities such as Jakarta and Mumbai could be catastrophically submerged.

In terms of business impact, a report titled The Truth Behind the Climate Pledges, authored by climate scientists at the Universal Ecological Fund, paints a bleak picture. It estimates that failure to reduce emissions will cause economic losses of $2 billion per day by 2030 from weather events exacerbated by human-induced climate change. Analysis by the giant reinsurance company Swiss Re in April 2021 found that global temperature rise, if not addressed, will reduce global economic output by between 11% and 14% by 2050, potentially cutting global economic output by $23 trillion each year.

To avoid such consequences, scientists overwhelmingly agree that there is just one meaningful course of action: halting the increase in GHGs, primarily from the burning of fossil fuels but also from gases such as methane.

Contributing factor Description Impact on the environment Mitigating actions
Greenhouse gas emissions Gases that trap heat in the Earth’s atmosphere. The main GHGs are carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), and fluorinated gases. GHGs from human sources strengthen the greenhouse effect, the largest contributor to climate change. According to the US Environmental Protection Agency (EPA), from 1990 to 2019, the total warming effect from greenhouse gases added by humans to the Earth’s atmosphere increased by 45%.2011 to 2020 was the warmest decade in recorded history, with global average temperature reaching 1.1°C above pre-industrial levels in 2019. Set a science-based carbon reduction target through a widely recognized scheme (e.g., the Science-Based Targets initiative (SBTi)). Investing in low-carbon technologies, switching to renewable energy sources, and undertaking energy efficiency projects will also help companies reduce their emissions. Many companies are opting to set an internal carbon price, which helps them assess climate-related risks and make investment decisions. For unavoidable emissions, companies are committing to credible carbon offset schemes, purchasing carbon credits, or investing in carbon capture and storage (CCS) solutions.

Pollution

Most pollution is caused by industrial and domestic waste products. Pollution occurs in four primary forms: air pollutants, water pollutants, land pollutants, and space pollutants. All forms of pollution can adversely affect human health and cause environmental damage. For instance, smog—sometimes known as ground-level ozone—can irritate the eyes and throat and damage the lungs. Mercury, which enters the environment through burning fossil fuels, attacks the central nervous system. The table below summarizes the key pollutants in each category, how they impact the environment, and the actions companies can take to mitigate their impact.

Contributing factor Description Impact on the environment Mitigating actions
Air pollutants Toxic gases produced primarily from burning fossil fuels. The main gases are sulfur dioxide, nitrogen oxides, carbon monoxide, lead and heavy metals, benzene, and particulate matters PM₁₀, PM₂.₅, and PM₁. Air pollution is ranked as one of the top 10 health risks, leading to approximately seven million deaths worldwide per year. The World Bank estimates that the economic cost of air pollution is $5.1 trillion per year globally. According to the World Health Organization (WHO), almost all of the global population (99%) breathe air containing high levels of pollutants that exceeds WHO guideline limits, with low- and middle-income countries suffering from the highest exposures. Invest in clean energy sources that do not require the burning of fossil fuels. Conduct air quality assessments to identify the largest sources of air pollutants throughout the value chain and identify the appropriate areas to address. For instance, companies in the logistics sector can reduce tailpipe emissions by switching to electric vehicle (EV) fleets.
Water pollutants Infectious agents and chemicals that affect the health of humans and wildlife. The main pollutants are bacteria and viruses from sewage, pesticides, fertilizers, detergents, oils, plastics, industrial effluents, and radioactive materials. Water pollution can cause serious and widespread health problems. Plastic contamination has reached dangerous levels: one in three fish caught for human consumption now contains some form of plastic. Invest in advanced waste management systems to ensure that a company does not degrade the quality of the water it uses and that it uses the least amount of water possible.
Land pollutants Land pollutants result from unsustainable agricultural practices (such as the overuse of pesticides and fertilizer), inefficient irrigation, and improper solid waste management (e.g., hazardous chemicals, nuclear waste, and plastics). Every minute, around one million plastic bottles are bought worldwide. Land pollution can degrade agricultural soil quality, impacting our food supply and our ability to build stable infrastructures. It can also reduce the quality of life significantly. Incorporate the principles of the circular economy into product design and operations. The circular economy is a model of production and consumption that involves sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products as long as possible.
Space pollutants Space debris resulting from manufactured satellites orbiting the Earth, especially those in low earth orbit. Critical communications or military satellites could be damaged by fast-moving debris, potentially causing national security concerns. Invest in space debris removal and tracking technologies.

Biodiversity

In the last few decades, rapid urbanization and industrialization have led to a significant decline in our planet’s biodiversity. According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), biodiversity loss is one of the top two dangers facing the world. Since 1700, 80% of the world’s forests, 85% of its wetlands, and almost half of its coral reefs have been destroyed. By 2070, according to a 2019 study by Yale ecologists published in Nature Climate Change, human activity will put 1,700 animal species at greater risk of extinction.

Biodiversity is important for the survival of all species, including our own. Mismanaged, it can exacerbate global warming, pollute our water supplies, and restrict our food supplies. According to a 2019 Global Assessment Report by IPBES, one million plant and animal species face extinction.

The table below summarizes the contributing factors to biodiversity loss and the actions companies can take to mitigate their impact.

Contributing factor Description Impact on the environment Mitigating actions
Deforestation The clearance of trees and vegetation on a large scale to make land available for alternative uses such as farming, construction, or ranching. By removing the world’s supply of trees (which absorb carbon dioxide) deforestation exacerbates global warming. Deforestation can also cause desertification, soil erosion, flooding, and habitat loss for many species. According to the Food and Agriculture Organization of the UN, between 2015 and 2020, the rate of deforestation was estimated at 10 million hectares per year, down from 16 million hectares per year in the 1990s. Incorporate the principles of sustainable forest management into operations and undertake reforestation projects.
Pollution The contamination of air, land, water, and (less commonly discussed) space. Caused by plastic packaging, industrial and domestic waste products, and the burning of fossil fuels. Pollution causes severe damage to the Earth’s ecosystems and poses a serious threat to human health. Plastic pollution, which has increased tenfold since 1980, is particularly harmful to aquatic ecosystems, and air pollution decreases human health and places a strain on public health services. Switch to clean energy alternatives (e.g., wind, solar, or geothermal) and reduce the amount of waste sent to landfills by incorporating the principles of the circular economy.
Agriculture The process of cultivating soil, growing crops, and raising livestock to produce food supplies, fibers, and fuels. In developing economies, agriculture is a primary source of employment. Over the last 50 years, the world’s population has almost doubled to 7.9 billion. Intensive farming techniques—which use fertilizers, pesticides, and genetically modified seeds on an industrial scale—have allowed us to feed this growing population but come with unwelcome side effects, like soil degradation and biodiversity loss. Invest in precision agriculture technologies that use safe pesticides and fertilizers.
Construction The process of building on natural habitats. Construction causes biodiversity loss by damaging natural habitats and corridors and polluting water flows. Build on brownfield sites and incorporate living structures in architecture and planning.
Trade in endangered species The illegal trade in animal and plant species, forcing their populations into critical decline. Many endangered species of wild fauna and flora are protected by international treaties. Nonetheless, illegal poaching and trading threaten many animal and plant species with extinction. Implement recovery programs for endangered animals. In 1975, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) introduced internationally agreed rules that regulate the import, export, and transshipment of protected flora and fauna.
Overfishing Depletion of the stock of fish in the sea by excessive fishing. Overfishing damages marine biodiversity and disrupts food chains for both marine life and human life. Implement responsible fishing and invest in breeding programs.

Natural resources

The world's natural resources—from fossil fuels to metals, minerals, land, water, and fish—are limited in supply. The world’s 7.9 billion humans are depleting our natural resources at an alarming rate. The long-term sustainability of our planet depends on the careful management of natural resources.

According to a UN report, Global Resource Outlook 2019, there has been a fivefold increase in the mining of non-metallic minerals and a 45% increase in fossil fuel use since 1970.

The table below highlights the natural resources most at risk of depletion, and the actions that companies can take to mitigate their impact.

Contributing factor Description Impact on the environment Mitigating actions
Overuse of fossil fuels Depletion of the world’s supply of coal, oil, and natural gas, typically used for fueling homes, offices, factories, and transportation. Despite renewable energy capacity increasing, fossil fuels satisfy 80% of the world’s energy demands but generate 70% of GHG emissions. Shift to renewable energy sources—such as wind, solar, and geothermal power—to reduce dependence on fossil fuels.
Overuse of metals and minerals Depletion of the world’s supply of raw materials, many of which are essential for the technology-enabled world in which we live. The process of extracting metal ores and minerals from deposits in the Earth can contaminate surface water, groundwater, and soil, inducing a loss of habitat for wildlife and local communities. Incorporate principles of the circular economy into operations using sustainable resources.
Overuse of water Disruption of the world’s water supplies by mismanagement of local water ecosystems, including agricultural water use. The loss or restriction of water supplies could pose severe health risks and reduce a country’s capacity for agriculture or industry. Invest in water conservation programs and smart water initiatives. For example, many companies use Internet of Things (IoT)-based management systems to identify areas of excessive water use within their operations.
Overfishing Depletion of the stock of fish in the sea by excessive fishing. Overfishing damages marine biodiversity and disrupts food chains for both marine and human life. Implement responsible fishing and invest in breeding programs.
Land mis-management Failure to use land sustainably and efficiently. Land mismanagement could lead to a shortage of arable land in many countries. It could also lead to the loss of biodiversity. Prioritize the greater use of brownfield rather than greenfield sites.

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Our suite of customized ESG solutions uses the collective power of trusted data, expert knowledge, and advanced technology to help you understand how the current ESG trends will affect you and how best to respond by identifying actionable opportunities. Our methodology relies on unique granular, physical asset-level data & forecasts on public & private companies, supported by a team of analysts & data scientists, and a predictive intelligence engine that powers daily updates & insights.

Browse through of our comprehensive climate risk intelligence related case studies.

Estimating Scope 1 and 2 Emissions

  • GlobalData estimates the Scope 1 and 2 emissions for mines without on-site power generation by establishing a linear relationship between the volume of material moved and diesel consumption.
  • Similarly, for mines where power needs are supplied by on-site power, scope 1 emission can be calculated by adding those from diesel, plus a small factor to cover other fuels and the emissions from on-site power

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