Impact through client work
Current economic, geopolitical, environmental and other factors led to the adoption of the Paris Agreement in December 2015 at COP21, which was signed by the first 175 countries in April 2016. The world is now committed to a lower emissions future – transitioning from a reliance on fossil fuels to renewable and more carbon-neutral sources.
The world’s economies, whether emerging or developed, depend on the availability of reliable and affordable energy. From late 2014 to early 2016, the price of oil collapsed by approximately 75 percent. This has resulted in major impacts on the oil and gas sector, leading to the cancellation or deferment of large capital projects and significant workforce reductions of direct staff and third-party contractors. At the same time, governments around the world have made commitments to reduce greenhouse gas emissions significantly. Given the ongoing pressure on costs and reduced resource levels, a key challenge facing our clients is how best to deliver desired business outcomes in a safe and sustainable manner.
Impact on business
Companies face risks to their physical assets as changes in weather patterns and stress on water resources interrupt operations. More frequent and intense weather events will lead to an increase in facility shutdowns. Sea-level rise and the consequent impact on wave height may require, for example, redesign of facilities, such as offshore platforms, ports and coastal infrastructure. ERM works with clients to assess weather and climate risks, prioritizing adaptive responses and building climate change resilience so that our clients can minimize business interruption.
Financial investors recognize that environmental and social issues have positive and negative implications on the long-term sustainability of companies. Managing these issues should be core to a company’s strategy. Of particular note, is the growth of green bonds that earmark proceeds for climate or environmental projects and have been labeled as “green” by the issuer. ERM works routinely with multilateral lending agencies and private banks to provide environmental and social due diligence and risk management procedures to support sustainable finance. This includes work for the World Bank and the International Finance Corporation, the European Bank for Reconstruction and Development, the Inter-American Development Bank, as well as export credit agencies and private financial institutions.
In addition to fines and reputational damage for noncompliance with climate change-related regulations, companies can face increasing difficulty in securing adequate financing for projects. ERM and the University of Cambridge Institute for Sustainability Leadership (CISL) jointly produced a paper, The Paris Climate Agreement: Implications for banks, institutional investors, private equity and insurers. Our study identifies the implications for financial institutions and provides a framework for action focused on maximizing commercial opportunities and mitigating risk. The paper analyzes the most pressing points of the Paris Agreement and concludes that a coherent, strategic response is required of financial institutions – and those that seek to raise capital from them. It is particularly timely given the focus of the G20 this year on reviewing the effectiveness of steps taken by financial institutions to integrate emerging environmental risks into their decision-making.
More sustainable future
We have been working with clients to reduce their carbon footprint in innovative ways. The Rio 2016 Organizing Committee and The Dow Chemical Company, the Official Chemistry Company of the Olympic Games, are projecting to deliver more than 2 million tons of third-party verified greenhouse gas reductions by all projects and actions implemented to fulfil the commitment of hosting a global event with minimal carbon impact. Dow selected ERM to provide third-party validation of projects against the Dow Climate Solutions Framework and to verify GHG emissions reductions towards the mitigation of Rio 2016’s owned and associated footprints. Read more here.
We also helped a leading biotechnology company achieve carbon neutrality across its value chain, including Scope 1, 2 and 3 emissions – a first in its sector. ERM is at the forefront in the design of product and supply chain carbon footprinting, a process that accounts for greenhouse gas emissions across the life of a product or service.
Our scientists, engineers, planners and economists lend their expertise to guide clients through planning, development, implementation and end-of-life management of renewable energy projects. We have completed more than 100 site characterization studies for potential wind farms for clients around the world. These comprehensive studies evaluate issues including land use, ecological concerns (such as the potential to affect threatened or endangered avian or bat species), wetland and water-body permitting, noise, impacts on telecommunications, airspace and radar impacts and cultural resources.
ERM is focused on helping our clients operate sustainably when they enter new markets, deliver capital projects, work to improve environmental and safety issues or retire their assets. We understand how environmental and safety functions can operate in a cost-constrained world. Ultimately, our ambition is to work together with our clients and the industry for the safe, reliable and compliant production of energy around the world.