UHY GLOBAL JULY 2019 ALL AROUND THE WORLD


SLEEPWALKING INTO A CRISIS


WITH OUR OCEANS CHOKING IN PLASTIC AND OUR SCHOOLCHILDREN MARCHING IN PROTEST TO SAVE THE PLANET, IS THERE THE WILL – AND THE MONEY ‒ TO FIX IT? It is the World Economic Forum’s Global Risks Report 2019 that asks if the world is sleepwalking into a crisis. According to the report, “Global risks are intensifying but the collective will to tackle them appears to be lacking.” Their annual survey once more found environment-related risks topping the charts, and not least failure of environmental policy. The European Union has identified the need to “mainstream” funding for environmental and social sustainability. The OECD too has published its 2019 report Global Outlook on Financing for Sustainable Development, which proposes that the private sector is called on not just to help underwrite the United Nations’ sustainable development goals for 2030, but “to engage as partners in the development process, to invest in areas critical to sustainable development, and to shift to more sustainable consumption and production patterns.” INTEGRATING ESG The good news is, in the world of institutional investment, environmental, social and governance (ESG) criteria are rapidly gaining momentum as investable factors in organisations. There is a growing business case for integrating ESG into investment decisions as companies with strong ESG credentials are seen as more viable, better run and in tune with brand community sentiment. A lot of work is being done to better define ESG variables, so that corporations and financial providers alike can more clearly set out their stall. Ultimately, this is less about saving the planet and more about long term risk management and return on investment, but it is a start. GOOD GUYS AND BAD GUYS Notwithstanding the pleas from global thinktanks, asset managers with a fiduciary duty to act in the best interests of their investors realise that client demand for an ethical dimension is growing significantly. It will become particularly acute when millennials and generation X become the significant investors. They have long held a natural concern for the environment that previous generations have not. Consequently we are now seeing a diversification of asset models that reflect investments aligned with investors’ personal values and where funds can make a positive impact. Impact investing works in a number of different ways. Positive screening means including the stock of companies whose business is built around serving environmental or social-based needs. Examples might be alternative energy players or organisations with very strong diversity policies. Conversely, portfolios can negatively screen (exclude) those perceived to be doing the opposite - oil or tobacco industry businesses, for example. GREEN EARTH, BLUE PLANET Perhaps the most encouraging trend, is the development of financial instruments that appeal specifically to investors looking for environmental returns. Examples include the issuing of green – and blue – bonds. In 2016, Luxembourg launched its Green Exchange, cited as the world’s first platform dedicated to environmentally-friendly securities. Today, it lists almost half of all green bonds globally. Last year, the Seychelles government, in conjunction with three private institutions and overseen by the World Bank, launched the world’s first sovereign blue bond—a pioneering public and private sector-designed product created to support the islands’ sustainable marine and fisheries projects. And in February this year, the Nordic Investment Bank listed its Nordic-Baltic Blue Bond to support water management and protection projects. Clearly, innovative financial products like these are indicative of a growing will to support green and blue initiatives at a domestic level. If our global interconnectedness can propel responsible impact investing into the mainstream, there is still a chance that governments will secure sustainable growth, hit internationally-agreed climate targets, clean up our oceans, and get our young people back behind their desks. WORLD ECONOMIC FORUM STEPS FORWARD It is no surprise that the environment took centre-stage at this year’s World Economic Forum (WEF) Annual Meeting, held in Davos, Switzerland, attended by global governments and business leaders. Failure to act on climate change figured prominently in the WEF’s recently published Global Risks Report 2019 and as a result, the meeting saw public figures, including the Prime Ministers of the Netherlands and New Zealand, leading the debate on climate action. Shinzo Abe, the Japanese PM, confirmed that climate change would be a top priority at the 2019 G20 meeting in Osaka, in June, and that Japan would use its G20 Presidency to “work towards a global commitment to reduce plastic in the oceans.” ACTIONSMUST SPEAK LOUDER A number of other important outcomes emerged from Davos, not least the example of young people standing up for the planet, and for their futures. A new global campaign was launched #VoiceForThePlanet, calling on citizens, consumers and employees to demand a raising of the bar on climate action, from governments and businesses. Similarly powerful calls for support were made, and initiatives launched, for new action agendas on nature (David Attenborough making a well-publicised call to action on the biodiversity crisis); preservation of the rain forests; reduction of electronic waste; innovation for food systems; and the practice of translating climate risk into business processes. Our infographic has all the details. UHY CLIENT SOLVING FOOD TRANSIT ISSUES While delegates at the World Economic Forum (WEF) Annual Meeting 2019 in Davos, Switzerland, attended the launch of WEF’s ‘Innovation with a Purpose’ platform, (see our WEF Steps Forward infographic), a new initiative for accelerating policies and financing to support technology innovations in the global food system, one pioneering UHY client in the United States has already been busy addressing some of the most pressing global food challenges. LIGHTNING STRIKES US FOOD SYSTEMS Lightning Technologies, a start-up client of UHY Advisors, Inc, Michigan, has developed the industry’s first pallet with active RFID, a radio frequency identification device that transmits real-time data to customers’ cloud-based dashboards.Known as LIMs (Lightning Intelligent Modules), the devices monitor location, time in transit, cold chain temperature, humidity, and shelf life of its palletised food products. This identifies problems and enables quick response to any adverse events in the supply chain, ensuring food quality – and safety - is maintained throughout the distribution process. According to the World Health Organisation, 600 million people globally fall ill, and nearly half a million die, from contaminated food. REINVENTING THE HUMBLE PALLET But that is not all. The Oakland County, Michigan-based firm has also reinvented the pallet itself, into which the LIMs are embedded. The environmental credentials are impressive: Made from engineered plywood sourced from sustainable plantations Coated with a proprietary polyurea spray, every pallet is stronger and lighter than traditional wooden pallets, and more durable – lasting up to 10 years Better weight to strength ratio means lighter comparative loads for reduced fuel consumption and emissions in transit The Lightning pallet surface is hermetically sealed for easy sanitising and zero contamination A fire-retardant spray coating improves warehouse and distribution safety. With two billion traditional wooden pallets circulating the US every day, and another six billion around the world, it is no wonder that Lightning Technologies is causing a stir. For more information about this ground-breaking pallet technology, visit the Lightning Technologies website. To learn how UHY member firms provide essential services to start-ups across the world, please visit www.uhy.com

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