The Future Has Arrived
Taking Tech To Lunch, Hedging Geopolitical Risks, and Hurricanes
This is the fifth edition of Honey Drops, a curated view of what’s happening around the Corporate Sustainability world each week.
As The Ocelli Group takes its name from the bee's ocelli, those remarkable eyes that guide its flight via the sun, I felt it a natural extension for this Corporate Sustainability newsletter to incorporate their nectar’s alchemy: Honey.
Feel free to forward on to anyone who would enjoy a drop for their toast or tea.
3 Thoughts From Me:
How Can Your CTO/CIO/Head of Tech Help You?
One of the most entrenched silos I have observed within companies is between Sustainability and Tech/Digital. There’s a belief that each team should stay in their lane and out of each other’s way, when in reality, this is one of the most natural partnerships within any org.
Why is that? First and foremost, as the article in the sub-header attests, ten years ago the tech function was going through the same adoption curve Sustainability is currently experiencing. Like Sustainability now, then Tech’s roles were undefined, misunderstood, underfunded, tagged with an expectation of transforming the business without having any noticeable impact on the day to day operations.
Secondly, there’s an inherent curiosity within practitioners of both disciplines. Both are problem-centric, solution-oriented, efficiency-focused personalities, not content with the status quo. Their roles each involve identifying commercial strategy alignment, minimising their company’s risk exposure (such as physical climate impacts and cyber attacks), by using innovation to disrupt their competitive markets.
Thirdly, Sustainability people need as much clean data for their mandatory reporting, strategy, risk management and metrics & targets as possible, while Tech teams pride themselves on their data cleaning capabilities, building of data models and creation of visibility across the org via centralised data lakes. The Machine Learning (ML)/AI capabilities within Sustainability are endless, and will constitute the next great arms race as organisations continue to embrace the commercial opportunities presented by being climate market leaders.
Which leads me to ask: When was the last time you took your CTO/CIO/Head of Tech to lunch to pick their brain on how you can work together, and what lessons they can share with you so you can avoid avoidable roadblocks?
Using Renewable Energy to Hedge Against Global War
I listened to Michael Weiss last week as he gamed out the possible contagion from the spiralling conflicts in the Middle East. It was sobering as he connected the loss of life in the past 12 months, to the potential responses from Iran and its proxies, through to what an Israeli attack on Iranian oil fields could have on the price of oil.
One aspect in particular stood out to me, which I hadn’t previously considered. Any attacks on Iranian oil fields would have a high chance in resulting in the Strait of Hormuz being closed.
Why does this matter? In order for 20% of global oil to move from the oil-producing countries of the Persian Gulf (Saudi Arabia, UAE, Iraq, Kuwait, Qatar and Iran) to Asia (China, Japan, South Korea, and India), the United States, Europe, Africa and South America, it can only do so by passing through the Strait of Hormuz. If it’s unable to be shipped, the natural result will be an increase in global oil prices due to the restricted supply of one in five barrels.
The mere threat of similar supply-side issues occurring over the past forty years has led to an estimated increase of 10-20% in the price of global oil prices, which then saw higher consumer and commercial fuel prices. If this occurs again, we can expect a flow-on effect of higher costs for transportation, manufacturing, production, operations, prices and therefore increased inflationary pressures.
The easiest way businesses, and the Australian economy in general, can insulate ourselves from geopolitical oil shocks and supply chain disruptions?
Accelerating our transition to renewable energy and becoming energy independent.
Hurricane Helene and Hurricane Milton
What we have witnessed over the past three weeks has been a shocking loss of life (268 deaths so far, with 1,412 people still missing from Helene), untold levels of destruction from Florida all the way up to Asheville in the Appalachian Mountains of North Carolina, 770
kms/479mi from landfall in Perry, FL. Not only did the hurricanes behave in ways we haven’t seen before (Helene’s unusual track northwards, both generating unexpectedly rapid intensification, and the spawning of multiple tornados ahead of Milton’s arrival), the question of insurance has once again come to the fore.
The rebuild from both hurricane’s could “put total insured losses for Florida insurers over $100 billion for the fifth consecutive year”, according to Insurtech Insights.
Bat Cave, a town high in up in the mountains, has been destroyed by flood waters, leaving the residents faced with the challenge of still being cut-off from the rest of the state, and then having to rebuild without insurance cover for a very simple reason: being 1,480 feet (451 meters) above sea level, the need to have flood insurance wasn’t on many people’s radar.
So, as storms alter their historical patterns, homeowners, businesses and insurance companies are evaluating the matrix they are utilising to determine the risk exposure each of them face, which insurance policy is therefore fit for purpose, how to price it, and what’s the walkaway point.
The traditional formula consists of evaluating the property risk based on the probability of three factors: the hazard, the financial exposure (value of property) to each hazard, and the vulnerability (quality) of the structure to any given extreme scenario.
Based on the past few weeks, is it still fit for purpose?
In 2021, I read “The Water Will Come: Rising Seas, Sinking Cities and the Remaking of the Civilized World” by Jeff Goodell, which I highly recommend. It projects the impact of climate change on twelve countries and some of the most well-known cities in the world such as Miami, NYC and Lagos. This is particularly relevant in light of the months and billions of dollars ahead as each town and city pulls itself together again.
If you haven’t seen John Morales, the veteran meteorologist who broke down on live tv as he was communicating the increasing ferocity of incoming Hurricane Milton, please do. Milton’s storm surge peaked at six metres/fifteen feet in Tampa Bay, a shallow inlet on the Gulf of Mexico.
Tampa Bay Mayor, Jane Castor, did not mince words when she told residents in the days leading up to landfall, “If you don’t evacuate now, you will die”.
For context, a population the size of Sydney was evacuated ahead of Milton’s landfall.
2 Quotes From Others:
“The task of building broad, engaged, committed support for climate action is essential. Only that can establish a powerful new norm regarding the need for net-zero emissions. Governments, businesses, and civil societies can do what must be done. And when anyone says the goals are too hard, too difficult, cost too much, require too much effort or too much change, ask them: Compared with what?”
- Todd Stern, a former United States special envoy for climate change
Source: The Climate Action That the World Needs, The Atlantic
“Over the year to March 2024 the 1.7% decrease in emissions from the electricity sector reflected decreases in gas and coal generation of 23.0% and 1.4% respectively and an increase of 13.4% in renewable generation in the National Electricity Market (NEM).”
“Over the period from June 2005 to March 2024, Australia’s population grew strongly from 20.2 million to around 27.1 million, an increase of 34.5%. National inventory emissions per capita were 16.4 t CO2-e per person in the year to March 2024, a 46.4% decline from 30.5 t CO2-e per person in the year to June 2005, in actual terms.“
1 Thing For You To Ponder:
This week I had the pleasure of being on a webinar discussing Greenhushing, and specifically how businesses should be realising commercial benefits from their net zero journeys. The positive reception to it from a number of people whose opinions I value has been hugely rewarding as Ocelli continues to expand our impact. It was another example for me of why we shouldn’t shy away from asking for feedback from those you trust.
So I have a double question for you today: who are the cheerleaders in your life, and how are you giving them the opportunity to cheer you on?
Until next week,
Dan