Major Issues

There are many reasons why sustainability should be a top concern for your investments. Following are eight of the largest environmental issues and their relationship to corporate sustainability.

Climate Change

The greenhouse effect is an essential process, allowing the earth to absorb and circulate energy from the sun. Without this process, the earth would be too cold to support life. Data shows the levels of greenhouse gases have remained fairly constant over the past 650,000 years. However, with the onset of the 19th century, greenhouse gases began increasing substantially. Many conclude industrialization is the cause of this increase which has created a host of environmental concerns known as “Global Warming.” An increase in average temperatures can cause sea levels to rise, disrupt ecosystems, create floods in low-lying communities, and generate unpredictable weather patterns. For this reason, regulations and emission taxes are in place with the objective of forcing companies to reduce emissions or suffer expensive consequences that directly impact their profit margins and overall long-term performance.

Energy

The single largest resource for the global society is energy. The greatest provider of energy has been fossil fuels such as oil, coal, and natural gas. This is unsustainable for two reasons: 1) the burning of fossil fuels is a big contributor to pollution and climate change, and 2) the current demand for fossil fuels has us burning through our limited supply at a rate that will quickly deplete the reserves. Government subsides and new business opportunities have initiated a grand movement towards the implementation of clean, renewable energy production including wind, solar, and hydro energy. In 2012, these renewable sources accounted for about 4% of global energy production and with the regulations in place, it looks as if that number will continue to rise. Energy efficiency and resource conservation are poised to be critical elements of strategic planning, particularly for companies that have large energy demands.

Water

A primary concern for companies is having sufficient access to water. Increased population among emerging economies puts a stress on water quality and quantity. Protecting precious water reserves has become a priority for all countries. Companies may face increased scrutiny of their water usage in the near future, as well as increased costs for this precious resource.

Biodiversity describes variation of life forms among given species, ecosystems, and the planet as a whole. It provides access to medicines, preservation of our food chain and the intricate ecosystems on which all life depends. A key contributor to the decline of biodiversity is habitat loss. Deforestation and land development can destroy entire ecosystems and disrupt the natural balances that threaten the complex web of life. Over 75% of the world's fisheries are exploited beyond the point of sustainability. More than 20% of the world's coral reefs have died, with many more suffering extreme degradation. The protection of ecosystems has influenced businesses to reconsider supply chain structure, factory locations, and resource consumption in order to protect biodiversity.

Chemicals

Toxic chemicals deal a devastating blow to our air and earth, creating dangerous pollution and severe health concerns such as cancer and birth defects. Laws continue to evolve about refining and honing regulation to impose chemical controls laws in the U.S. and abroad. Legal liability regarding use of toxins can create virtually unlimited downside potential for companies who fail to abide by regulations. Being held accountable for the decontamination of entire factory sites or far-reaching lawsuits associated with health hazards or illnesses are fairly common for companies who deal with toxic chemicals.

Air Pollution

Significant air-quality controls on factories, cars and other emissions sources have significantly reduced air pollution levels in the last 30 years for the U.S., Japan and Europe. This is a strong impetus for tighter controls to remain in those areas, while increasing those in the less developed countries. We have seen great change take place with in the automotive industry as tighter regulation has set standards for emmsions. Companies are now attempting to essentially re-invent the wheel by innovating alternatives such as hydrogen and electric vehicles. Curbing our dependence on gasoline for transportation will be an extremely significant step towards a more sustainable future.

Waste Management

”Superfund” is the name given to the environmental program established to address abandoned hazardous waste sites. It is also the name given to the fund established to clean up the toxic waste dumps. There are about 1,200 such sites across the country that will collectively require about $200 billion to clean up over the next 30 years. Under the liability provisions of the Superfund law, anyone found responsible for the waste at a site can be held liable for the full cost of cleanup, even if the toxins were disposed of legally at the time.

Ozone

Like climate change, the depletion of the ozone layer is a global issue. A thin ozone layer makes the world a more dangerous place by reducing agricultural productivity and also increasing the occurrence of skin cancer and other health problems. The world has banned chemicals that contribute to this problem, and many companies struggle to adhere to these strict regulations.
Source: Green to Gold