ExxonMobil, Blue bonds, Shoes, Poverty & Power2

Giles Gibbons

Good Business - Sustainability | Strategy | Impact

January 30, 2024

1. Invested interests

For most public businesses, keeping investors happy is a key concern. And as climate change rises up many investors’ agendas, this often means measuring emissions and setting reduction targets in order to demonstrate commitment to climate action.

Unless, of course, you are ExxonMobil, in which case it means taking your investors to court.

In an unprecedented move, earlier this week, ExxonMobil launched a lawsuit against two of its investors to try to block a proposal calling for emissions cuts from going to a shareholder vote. Exxon’s argument is that the “extreme agenda” set out in the proposal breaches Securities and Exchange Commission (SEC) rules which define the types of proposals that shareholders can submit for consideration.

The investors in question aren’t your average investors looking solely for financial returns; they're activist investors, using their stakes in companies to push for environmental and social changes. In this case, they're urging Exxon to step up its game in reducing greenhouse gas emissions.

Why is this worth paying attention to? This legal battle has the potential to reshape the playing field for shareholder influence in corporate decisions. If Exxon succeeds in court, it could set a precedent, limiting the power of shareholders to sway company policies on crucial issues like climate change. Additionally, this case puts the spotlight on the SEC and could redefine the SEC's role in balancing corporate interests with shareholder activism, particularly under varying political climates. It’s also hard to separate this move from the growing anti-ESG sentiment in financial and political spheres – a concerning shift we’ve written about before.

We’ll be watching closely to see how the Exxon case plays out. Investor voices matter, and the freedom to challenge companies to do better for shareholders and society is one that is worth preserving.

2. Blue Bonds: riding the wave of sustainable finance

Ever wondered if there is a financial solution that can not only lower your finance costs but also help save the oceans? If not, maybe it's time you did. In the dynamic realm of environmental finance, where green bonds have gained popularity for funding sustainable endeavours, a compelling alternative is emerging in the form of blue bonds.

As the world grapples with the urgent need to address the precarious state of our oceans, 400 million tons of pollutants being discharged in the ocean annually, the Financial Times highlights how blue bonds offer a fresh avenue for financing marine conservation efforts. Taking a cue from the success of green bonds in supporting eco-friendly initiatives, the concept channels financial resources to projects dedicated to preserving and rejuvenating marine ecosystems.

The potential of blue bonds goes beyond financial gains. This innovative instrument could play a crucial role in mitigating the impacts of overfishing, climate change, and habitat degradation. The encouraging news is that investors are already exploring the possibilities offered by this financial tool.

In the face of habitat degradation, blue bonds could provide the financial muscle needed to restore and conserve critical marine habitats, be it funding research into coral reefs, establishing protected mangroves, or cultivating more seagrass.

In a world seeking sustainable solutions, blue bonds emerge not just as a financial investment but as powerful statement of corporate commitment to the well-being of our oceans. It's time to ride this wave and reshape the narrative for a more harmonious coexistence between profit and planet.

3. A step in the right direction

Did you know the sneakers you’re wearing generated around 13kg of CO2 emissions? Sneaker manufacturing is an emissions intensive operation, responsible for around 1.4% of global CO2 emissions.

Decarbonizing sneaker production is no easy feat. Shoes are complicated and material intensive. This means developing a low-carbon solution involves looking at every element individually – leather, plastic, cotton, foam, glue – and finding sustainable alternatives. Right now, when people decide to spring for a new pair of shoes, their old ones are not being recycled but burned or put in a landfill – that’s around 90% of the 24.3 billion shoes currently in circulation becoming waste.

You may be thinking that you’ve heard a lot of talk about greener alternatives – perhaps VEJA vegan leather sneakers have caught your eye or the Adidas fully recyclable shoe. Allbirds too announced a zero-carbon shoe made primarily with carbon-negative regenerative wool that does not rely on offsets. Better yet, Allbirds has released a toolkit for other businesses to follow suit and create their own zero-carbon footwear. According to Allbirds Vice President Jad Finck, ‘to be a true sustainability leader, we think you need to have a track record of changing the way people make things’ and we couldn’t agree more.

However, there are two issues that make shoe production unsustainable: emissions and waste. Many ‘sustainable’ alternatives that use vegan or fruit leather rely heavily on polyurethane and polyvinyl chloride (PVC) to provide durability which can limit the materials ability to biodegrade. Sceptics note that these vegan leathers, while having a lower carbon footprint, can also shed microplastics as they wear. Real leather, on the other hand, is biodegradable and a by-product of the meat industry, so using it lowers waste, yet the emissions associated with this industry are significant. A complex solution is needed to manage both of these impacts simultaneously.

While the shoe industry is making strides towards sustainability, the complexity of creating a sustainable shoe underscores just how much innovation and collaboration is necessary to decarbonize some of our favourite products. But rather than running out to buy a new pair of shoes, however sustainable they may be, the most sustainable shoe is the one you already own. Consider giving the shoes in your closet a little extra love, give them a polish, get them resoled, and recycle or donate them when they are at the end of their life with you.

4. Crossing the poverty line

A recent report from The Joseph Rowntree Foundation (JRF) shows that poverty in the UK is deepening, and that escaping poverty has become significantly harder over the past two decades.

The report highlights that the average person living in poverty had an income 29% below the poverty line in 2021-22, compared to 23% in the mid-1990s. The signs of this are all around us – record high usage of food banks, temporary accommodation, and reliance on charities for food and shelter. Failure to address this is damaging to both the wellbeing of those affected and to already stretched public services.

At the heart of the change needed is secure, affordable housing, employment, and social security. But despite the fact that work can still act as a route out of poverty, previous reports from the Social Market Foundation remind us that in-work poverty remains a growing problem and it is not a guaranteed method of escape.

This means that the record-high number of people in employment is not as positive a signal for future prospects as it might once have been. Recent increases in employment are primarily driven by increased numbers of part-time and self-employed workers, who face a higher risk of in-work poverty than other workers.

As we approach a general election, government-led action to alleviate national hardship is even more critical. However, business can play an important role too – something we wrote about in a previous Friday 5 special. But business action is not just limited to paying employees responsibly, it encompasses respecting the rights of workers, accommodating flexible working and ultimately provide security. As the JRF’s report states, employees want – and need – their employers to do more to help tackle in-work poverty problem.

The Goods: Power2 you

Deciding what career you want, and then knowing how to get it can be a daunting and overwhelming experience. It’s difficult to know what careers exist beyond the ones you always hear about and often the world of sustainability can fall through the cracks. That’s why we’re excited to be moderating an industry showcase panel discussion for current university students, as part of Power2’s Aspire programme, where the insights from three sustainability experts will help debunk what exactly a career in sustainability could look like (and how you might go about getting one).

Power2 is an organisation centred around the value of reengaging children and young people with education, through building their networks, opportunities, life skills and confidence. We’ve partnered with them over the past two years, as part of their Aspire Programme, which works specifically with 18+s who previously received free school meals. The programme offers structured employability and career support to recipients, and as part of this, we’ve hosted a careers day, as well as providing work experience and internship opportunities, making sustainability consultancy more accessible.

The panel, taking place at 5pm on the 6th February, will provide a chance to hear from three experts across the field, including the Head of DE&I at Brentford Football Club, a senior sustainability advisor at WWF, and an ex-Amazon Customer Sustainability Lead. They’ll share the honest truths about what they do, how they got there, and what you can be doing right now to get the ball rolling.

If you’re interested in coming along, please get in touch with kerry@good.business for more details about joining.