Equilibrium & Sustainability

Equilibrium/Sustainability — New life blossoms in Antarctic ice shelf

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Today is Tuesday. Welcome to Equilibrium, a newsletter that tracks the growing global battle over the future of sustainability. Subscribe here: thehill.com/newsletter-signup 

In the dark recesses below the surface of Antarctica’s Ekström Ice Shelf, scientists have discovered that 77 species are thriving in what they described as an “extremely rich” environment, according to the British Antarctic Survey.

The researchers — from the Alfred Wegener Institute in Germany — drilled two holes 200 meters (219 yards) into the shelf and unexpectedly came across “fragments of life,” including tiny moss animals and tube worms, as they reported in a study for Current Biology. 

“This discovery of so much life living in these extreme conditions is a complete surprise and reminds us how Antarctic marine life is so unique and special,” David Barnes, of the British Antarctic Survey, said in a statement. 

Also in Antarctica, Rice University scientists have identified glacial erosion as a likely culprit in atmospheric oxygen declines over the past 800,000 years. Glacial “grinding,” they found, has caused weathering — processes that break down rocks and oxidize metals when they are exposed to atmospheric oxygen, sucking it out of the air. 

Today we’ll start with that atmosphere theme and look at a new study claiming that federal air pollution management approaches are both underestimating related mortality costs and neglecting associated racial differences. Then we’ll look at how businesses can get  ready for a new era of government scrutiny around climate risks.

For Equilibrium, we are Saul Elbein and Sharon Udasin. Please send tips or comments to Saul at selbein@thehill.com or Sharon at sudasin@thehill.com. Follow us on Twitter: @saul_elbein and @sharonudasin

Let’s get to it.

Pollution deaths underrated by $100B 

Today’s federal approach toward air pollution management largely ignores differences across race and ethnicity — underestimating associated mortality costs by $100 billion, a new study has found. 

Current regulatory analyses assume that all populations are affected equally by air pollution, but older Black and Hispanic individuals are much more likely to die prematurely due to air pollution exposure, according to the study, published in Environmental Health Perspectives.  

First words: “Underlying mortality rates, pollution exposure and pollution vulnerability differ significantly across racial and ethnic groups,” Nicholas Z. Muller, study co-author and a professor of economics, engineering and public policy at Carnegie Mellon University’s Tepper School of Business, said in a statement. 

Federal regulatory analyses of air pollution policies rely on generalized “concentration-response functions” — which connect concentrations of fine particulate matter (PM 2.5) to adverse health effects — in order to assess what mortality and morbidity shifts might occur as a result of policy changes, according to the study. 

These functions smush all impacts into a single number: The study authors, by contrast, sought to determine how these findings changed based on race and ethnicity. 

While this approach did not change the total number of deaths, it did disperse the deaths differently across groups — meaning certain kinds of people were far more likely to face an early death from air pollution, the authors found.

Where did their data come from? To conduct their study, the authors compared new epidemiological research findings that accounted for race and ethnicity with standard estimates.

Their study employed data from the 2014 National Emissions Inventory to look at air pollution-related mortality from all sources, as well as race and ethnicity-specific baseline health data for white Americans, Black Americans, Hispanic Americans, Asian Americans and Native Americans. 

 

AN UNDERESTIMATION OF BILLION-DOLLAR PROPORTIONS

After accounting for both racial disparities and underlying health vulnerabilities to the pollution, the authors found a 9-percent increase in premature mortality estimates for all people older than 65 years — equivalent to a $100 billion increase in currently estimated mortality costs.

Race and ethnicity information made that differential even greater. When factoring in those details, the researchers found that premature mortality estimates related to fine particulate matter pollution jumped by 150 percent for older Black Americans and by 52 percent for older Hispanic Americans, according to the study.  

Under a scenario that involved a uniform degradation of air quality across the country, older Black Americans had a mortality rate three times higher than white Americans, the researchers found. 

Findings could also be affected by where people live: Acknowledging that their study was limited by the geographical aggregation of data available at the county level, the authors stressed that intra-county concentrations of fine particulate matter can vary greatly and that Black Americans are more likely to live near highways and other sources of high emissions. 

A call for the government to change regulatory approaches: Elisheba Spiller, a study co-author and lead senior economist at the Environmental Defense Fund, urged the government to make use of “the best available and most up-to-date race/ethnicity-specific information” related to the health effects of policy changes in future regulatory assessments. 

Last words: Doing so, Spiller said in a statement, could help “identify and reduce environmental injustices of air pollution.

 

To avoid trouble with SEC, companies should start planning now 

Department of Treasury in Washington, D.C., seen on June 3

The potential failure of the Build Back Better package means that the Biden administration will likely turn to the question of climate risk disclosure to meet its sustainability goals, a former financial crimes investigator for the Department of Treasury told Equilibrium.

While official rules aren’t expected until next spring, there’s a lot that banks and publicly traded companies can — and must — start figuring out now to avoid regulatory trouble later, said Alma Angotti, who now works on environmental, social and governance (ESG) issues at the consultancy firm Guidehouse.

First words: “If you’re the board or you’re senior management — how do you know that the people who report to you are doing what they tell you they’re doing?” Angotti asked.

“If they say ‘all these funds are sustainable’’ — how do they know that? How are they measuring that?”

“A reasonable basis:” The Securities and Exchange Commission still hasn’t released its standards for how it wants publicly traded companies and financial institutions to disclose the risks they face from climate change and the transition off fossil fuels.

But that doesn’t mean they’re not looking at how companies are treating the issue — and particularly whether they have good grounds for whatever sustainability benefits they claim, Angotti said.

With climate and ESG disclosure so new, regulators are less focused on achieving 100-percent compliance. Rather, they would like companies to provide “a reasonable basis for what [they’re] saying,” according to Angotti.

What does that mean in practice? Regulators will say, “If you say you’re measuring the risk of climate change on your loan portfolio, how are you measuring that? How are you validating that?” Angotti said.

“If you say that the funds you’re affiliated with are marketed as ESG funds — what do you mean by that? How are you measuring that?” she continued. “What are your controls in place to make sure that you have a reasonable basis for saying that?”

Procedures are important: In an environment where there are many competing standards, it is critical for companies to demonstrate work, Angotti said. 

“Even if you get it wrong, if you have a reasonable basis, it’s probably not a fraud charge. If you don’t have a reasonable basis, it’s probably a fraud charge,” she said.

PREPARING FOR AN AGE OF CLIMATE SCRUTINY

Though specific climate and ESG risk disclosure guidelines aren’t expected till spring, the SEC is already investigating companies for their sustainability claims — with Commissioner Caroline Crenshaw focusing attention last week on executive compensation linked to “sustainability performance.”

What they’ll be asking: “Were those goals really met? Or were the numbers kind of made up to support the executive compensation?” Angotti said. 

But even without specific requirements at this point, companies with, say, a huge loan portfolio along the coast should understand that this region is at increased risk of hurricanes, Angotti explained. 

“We can’t ignore that, just because nobody told us to look at it,” she added.

How do companies prepare for the coming rules? By “putting those governance processes in place” for when they do come out, Angotti said. 

“Who is going to be accountable for the execution of whatever your ESG plan is now and who is going to be responsible for looking at the program once any applicable guides come out?” she asked. “Because like anything else, if nobody’s responsible, it won’t get done.” 

Don’t try to please the regulators: Companies should spend more effort doing a diligent risk analysis than they should trying to anticipate regulators, according to Angotti. 

“I used to say when I was a regulator: ‘You’re not trying to please me. But if you manage your risk. I will be pleased,’” she said.

Last words: The key to winning over sustainability focused investors is the same as that for heading off regulatory trouble and climate risk, Angotti said.

“Figure out what your risks are, manage them and disclose as appropriate,” she added. “And then everyone will be happy. Investors will be happy, the SEC will be happy, the banking regulators will be happy.”

Tech Tuesday 

Senators scrutinize Amazon labor practices, electric semis reach Los Angeles and utility-scale batteries come into their own. 

Bipartisan senators target Amazon after tornado deaths

  • Senators Marco Rubio (R-Fla.) and Sherrod Brown (D-Ohio) have sent a letter calling for the Labor Department “to use every mechanism at your disposal to investigate Amazon’s labor and employment practices immediately.” 
  • The lawmakers cited “concerns regarding the company’s alleged lack of emergency response training, stringent cell phone policies, and expectations that workers continue to work during tornado warnings” — referring to claims by employees at an Amazon warehouse in Illinois that they had been threatened with firing if they left their jobs during last week’s tornadoes, as Bloomberg reported.

Electric truck startup Nikola delivers first semi-trucks to Los Angeles

  • Electric truck startup Nikola has delivered its first two Tre BEV semi-trucks — which have a claimed 350 range — to a customer operating out of the ports of Los Angeles and Long Beach, Calif., Car and Driver reported. If this pilot goes well, Nikola plans to deliver 30 Tre BEVs and 70 Tre hydrogen fuel cell trucks to that same customer within the next two years, according to Car and Driver.
  • The arrival of the first two electric semi-trucks comes following challenging circumstances for Nikola — including founder and executive chairman Trevor Milton’s resignation last year amid fraud investigations and a subsequent decision from General Motors to scale down a deal with the company, Car and Driver reported.

Batteries linked to solar are displacing natural gas plants

  • The U.S. is projected to install 6 gigawatts of utility-scale battery storage this year, and another nine gigawatts in 2022 — a total of 15 times the available capacity in 2020, and enough to over 5 million houses for a few hours, The Wall Street Journal reported.
  • In many parts of the country, batteries linked to solar plants are replacing natural gas-fired power plants — especially in areas where those plants are only needed to meet peak demand. That means “there’s a retrofit piece that is remarkable, because now you can go put storage into every location they have solar,” storage entrepreneur John Carrington told the Journal.

 

That’s it for today. Please visit The Hill’s sustainability section online for the web version of this newsletter and more stories. We’ll see you tomorrow.

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