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Evening ESG news and briefings to wrap up your day.
Fossil fuels have long been denounced as the main culprit of the climate crisis. In fact, the U.S. petroleum industry is said to have known since 1968 that carbon emissions from fossil fuels could cause global climate change, as revealed in a report submitted by Stanford University. Over the 50-plus years since, humanity and fossil fuels have become a relationship that is not easily broken. Too much binds them together. Power generation, transmission and distribution infrastructure relying on fossil fuels is already densely built across many nations. Moreover, the global economy frequently turns to recession, wavering under the fatal temptation of fossil fuels’ low generation costs. Despite knowing the risks inherent in the continued use of fossil fuels, overcoming this inertia is difficult. To overcome it requires stronger decision-making, but that is no easy task. Even when decisions are made, there may be regression for various reasons. Nuclear energy experienced this. After the Fukushima disaster, nuclear power was pushed to the brink of ‘global phase-out,’ only to return under the banner of carbon-free green energy in response to the climate crisis.Late last year, global leaders gathered in the United Arab Emirates to corner fossil fuels. One of the goals of the 28th UN Climate Change Conference (COP28) was to issue a joint declaration on the ‘phase-out of fossil fuels.’ It seemed contradictory that they gathered in an oil-producing nation boasting the world’s sixth-largest oil reserves. But it could have been meaningful — if they had declared a phase-out. [Group photo of world leaders attending COP28 ©COP28UAE]The COP28 joint declaration stopped short of a fossil fuel ‘phase-out.’ Instead it was replaced with the softened expression ‘transitioning away from fossil fuels.’ In effect, they left room for ambiguity. The joint declaration at the Conference of the Parties must be determined unanimously, and opposition from oil-producing nations was fierce. Underdeveloped countries such as those in Africa also expressed opposition.There may be meaning in the fact that since the first COP in Berlin, Germany in 1995, ‘fossil fuels’ was mentioned in a joint declaration for the very first time. However, after the oil industry became aware of the climate crisis in 1968, it took 30 years before the first COP convened, and then another 30 years for fossil fuels to appear in a joint declaration. Thirty years from now, the year 2050 — by which the international community, including South Korea, has declared it will achieve carbon neutrality — will already have passed.The COP has been held annually since 1995. Yet fossil fuel and coal consumption has also hit record highs each year. The bigger problem is that advances in technology are also increasing the amount of recoverable fossil fuels. It seems that humanity will not be able to say goodbye to cheap, warm fossil fuels for quite some time.by Editor L
The pandemic that swept across the globe accustomed office workers to remote work—performing their jobs from locations other than the office. However, as more companies like Amazon, Meta, and IBM have brought all employees back to the office following the end of the pandemic, debate has intensified over whether remote work benefits a company's long-term ESG strategy. According to Forbes, as of 2023, 12.7% of full-time employees work remotely, while 28.2% utilize a hybrid model that combines both office and remote work. Analysis from video conferencing technology company Owl Labs also indicates that 16% of companies globally operate entirely remotely without a physical office. Freelance platform Upwork has even predicted that if the current trend actively encouraging remote work continues, approximately 32.6 million Americans—22% of the entire U.S. workforce—will choose remote work by 2025.[Future of Remote Work Report 2020 ⓒUpwork]Fewer Commutes, Smaller Carbon FootprintDuring the pandemic period when remote work was actively encouraged, positive assessments emerged that it supported corporate ESG strategies. From an environmental perspective, remote work can reduce a company's carbon footprint by cutting down on time spent commuting via car or public transportation, as well as reducing the fixed office space required. According to Spain's Institute of Environmental Science and Technology, remote work can reduce nitrogen dioxide—a major air pollutant emitted by transportation—by approximately 10%. Between 2020 and 2022, numerous San Francisco-based IT companies reportedly transitioned to remote work or downsized their operations and relocated offices. As a result, San Francisco's office vacancy rate surged to 34% in the third quarter of last year.[San Francisco Office Vacancy Rate Graph ⓒCBRE Research]There are also benefits from social and governance perspectives. 35% of remote workers reported improved productivity, while 71% indicated that remote work helps maintain work-life balance. Moreover, the ability to work without being physically gathered in one location broadens recruitment diversity and can increase organizational inclusivity and flexibility. Hiring employees from various regions also expands the talent pool and increases the potential to provide more jobs. Tom Wilson, CEO of U.S. insurance company Allstate, stated that after adopting remote work, Allstate saw a 30% increase in hiring diversity. The U.S. Department of Labor also noted that compared to February 2020 when the pandemic began, the number of employed workers with disabilities nationwide increased by approximately 28%, reaching about 1.8 million, as commuting became unnecessary.Hidden Carbon Emissions from Remote WorkOn the other hand, there is criticism that many ESG values have been lost with the introduction of remote work. This is because individual employees cannot consider their own environmental impact, making it impossible for companies to manage pollution levels in an integrated manner. Harvard Business Review raised the possibility that while commuting to a fixed office allows measurement and management of carbon emissions based on consistent travel distances, remote work makes it difficult to manage the pollution levels generated by individuals moving between workspaces or producing waste, potentially resulting in higher overall environmental pollution. Opinions also point to risks in the social and governance dimensions. With communication taking place remotely, there has been an increase in isolated employees feeling a lack of belonging and experiencing loneliness. Burnout resulting from conducting work solely through video conferences and messaging apps has also been cited as a downside of remote work. Additionally, alongside analysis linking a 238% increase in cyberattacks during the pandemic to remote work, management has expressed concerns about security risks arising when information is exchanged outside internal networks.Companies Pursuing Hybrid Work to Reduce Direct and Indirect Carbon EmissionsOwl Labs' "2023 State of Hybrid Work Report" analyzed that 54% of companies still require fully on-site work. As more companies adopt hybrid work or mandate in-office attendance, discussions on how closely work models and ESG strategies interact are expected to become even more active. The EU's recently expanded Sustainable Finance Disclosure Regulation (SFDR) now includes both direct and indirect emission sources in carbon footprint calculations for companies. Going forward, companies based in or operating within the EU market will need to calculate both direct and indirect carbon emissions according to their work models and focus on reducing their total carbon footprint. The CEO and CTO of UK office management software company Kadence, together with a Vice President at real estate firm CBRE, published the "Hybrid Manifesto for Sustainability." Through this manifesto, they expressed their ambition to find ways to achieve ESG strategy without being tied to a single fixed office, by combining both remote work and commuting. Just like the goals of the companies joining this manifesto, businesses of the future are expected to focus more on creating work environments that can simultaneously achieve improved work efficiency and the pursuit of ESG values, rather than maintaining traditional work systems.by Editor N
The term 'greenwashing' has been used since the 1980s with the same meaning it holds today. Now, with the expansion of ESG, greenwashing is once again drawing attention. Greenwashing refers to the practice of making a product or service appear environmentally friendly through advertising, promotion, or packaging when it has little to no actual environmental benefit. It also includes communicating corporate strategies or activities as purely environmental initiatives when their true purpose is closer to profit generation.Why Companies GreenwashIt is not difficult to imagine why companies engage in greenwashing. They seek to gain favor from customers and society, increase investment from shareholders and institutions, and reduce government sanctions. Of course, there may also be genuine corporate concern for the environment and future generations. However, when communicating these "intentions" and "outcomes" to consumers, careful attention is essential.Regulatory Crackdown on Greenwashing BeginsAs corporate sustainability communications, particularly those centered on the environment, have increased, regulations against greenwashing have also strengthened worldwide. In the UK, the Advertising Standards Authority (ASA) has identified and banned over 20 cases of greenwashing advertisements since 2022. The issue lay in specific words or expressions used in advertising and promotional copy.For example, in June 2022, German airline Lufthansa released a digital poster featuring the slogan "Connecting the World. Protecting its Future." as part of its #MakeChangeFly campaign promoting environmental efforts. This slogan—meaning to connect the world and protect its future—is the type of expression one might have encountered somewhere before, even outside of Lufthansa's advertising. Nevertheless, the ASA raised concerns that the slogan could "give consumers a misleading impression of Lufthansa's environmental impact." In particular, the phrase "Protecting its Future" was seen as an "absolute promise" regarding the environment. Lufthansa countered that the poster was clearly linked to website content detailing the airline's efforts in carbon emission mitigation and waste reduction. They also added that if the first part of the phrase—"Connecting the World"—was not viewed as an absolute promise, then treating only the second part—"Protecting its Future"—as an absolute promise represented an inconsistent standard.However, the UK's CAP Code requires a high level of substantiation for environmental claims such as "protecting the environment." Ultimately, the ASA ruled that the advertisement could not be displayed in the UK because Lufthansa's environmental targets would take years or even decades to verify, and considering the aviation industry as a whole—which has a significant impact on climate change—there existed no plan or commercially viable technology sufficient to say they are protecting the environment.[Lufthansa #MakeChangeFly Campaign Poster ⓒ lufthansagroup]South Korea Also Establishes Advertising Guidelines to Combat GreenwashingThe South Korean government has also created greenwashing prevention guidelines for domestic companies. On October 31, the Ministry of Environment, together with the Korea Environmental Industry & Technology Institute (KEITI), published the "Guidelines for Labeling and Advertising of Eco-Friendly Management Activities." Based on the principles of truthfulness in labeling and advertising, clarity of expression, specificity of subject, and completeness of information, the guidelines categorize corporate environmental activities into eight types and provide case studies and self-assessment checklists for each.Sanctions against greenwashing ask companies to reflect on whether they have repeated exaggerations and falsehoods, not only to consumers but to themselves. As social concern over the climate crisis grows, companies have faced pressure to act immediately. However, messages that deceive consumers and society cannot be allowed to continue indefinitely. While it may be difficult to change the inertia shaped by circumstances overnight, the time has come to communicate objectively and based on substance.by Editor N