In this article, the fourth in a five-part series, we examine ecological trends facing business in 2017 and beyond. Oddly, environmental factors may be the murkiest, given the President-elect’s staunch opposition to climate change initiatives, and Cabinet appointments that support his position.
Heading into 2017, legislative and regulatory action is unknown, but here is the state of key environmental trends leading into the New Year:
The Paris Agreement
As the socio-economic-political landscape shifted from the Cold War to the post-9/11 era, political strife around the world resulted in significant limitations in nations’ abilities to find common ground on environmental policy. In particular, China, the world’s largest polluter, was unwilling to come to the table.
The Paris Agreement, signed in December 2015 and put into effect in November, was to unify 55 countries representing 55% of the world’s emissions in an effort to reverse climate change.
The provisions of the agreement are as follows:
“(a) Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;
(b) Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production;
(c) Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”
The President-elect has threatened to reverse the Paris Agreement, but will have little latitude to do so during the first four years of its implementation.
The Clean Power Plan
The centerpiece of President Obama’s plan was challenged by 27 states. The U.S. Supreme Court issued a stay, and the D.C. circuit will announce its ruling in early 2017. The plan seeks to set national standards to limit carbon dioxide emissions. It would allow states some latitude, and Wyoming, South Carolina, Virginia, Arizona, Idaho and New Jersey are already moving forward on such standards.
Energy prices will be higher in 2017
While solar and wind power prices are plummeting, Kiplinger predicts crude oil will rise from $50 to $55 in March 2017.
According to the U.S. Energy Information Administration, 2017 costs for electricity (a barometer for energy costs) will be:
2016 2017
Electricity (industrial cents per kilowatt-hour) 6.75 6.87
Power Generation Coal (dollars per million Btu) 2.14 2.21
Power Generation Natural Gas 2.94 3.83
Residential Fuel Costs 8.44 9.80
Shift in business sustainability practices
The Great Recession forced many business leaders to focus on survival, thus investment in sustainability waned. As the economy improved, there was a refocus on the environment. Businesses wanted to promote their corporate social responsibility, and employers began to outwardly measure and report their impact on the environment.
Industries who are behind in protecting the environment will be in the spotlight. For example, fast fashion is under scrutiny for poor recycling practices.
Consumers are interested in “ethical consumption”, and are more aware than ever of their impact on the planet. Providers are clearly being judged based on their ecological footprint.
Socially responsible investing continues to gain favor as investors become increasingly aware of the social impact of their investments.
Agricultural innovation
Over $1 billion was invested in food startups in 2016. Silicon Valley companies are looking for innovations in food production to nourish the planet with healthier food. As farm-to-table gains popularity, companies will look to scale such production across the globe.
Water quality and conservation
About 20% of the U.S. is experiencing moderate to extreme drought conditions. As the focus on drought has shifted from California to the East Coast in states like Georgia, water conservation remains a hot topic. Also, regulators are stepping up oversight effort to protect aquatic life and water supply. Local water boards are developing new water quality criteria for discharger permits.
Ocean Cleanup, an effort to capture plastics in large bodies of water, will launch in 2017.
[i] 2017 Outlook Sunstar
[ii] Ten Food Trends by Phil Lempert, Forbes
[iii] Emerging ecological risk trends you should keep in mind in 2017 by Chris McCarthy CH2M
[iv] Sea Change by Boyan Slat, The Economist