The year 2015 has been a monumental one for sustainable business, as it gains momentum across the world. From the historic climate change deal inked in Paris to the rise of responsible finance and surge in renewables investment, sustainability has become a core concern for businesses worldwide.
Here are our picks of the top 10 headlines for the year:
1. The Paris Agreement
After two decades of tough negotiations and political wrangling, 196 nations finally agreed on the first ever universal treaty on climate change in Paris on December 12, a move leaders said marked a turning point in history and the transition to a renewables era.
The agreement set a target of limiting global warming below 2 degrees Celsius, with further efforts to cap it under 1.5 deg C. Countries were required to submit emission reduction targets, and the agreement includes the option to review these targets every five years and to ramp up cooperation in areas such as finance, forest protection and technology transfer. Developed countries have also promised at least US$100 billion of funds per year for developing nations to tackle climate change.
The deal is expected to have a wide-ranging impact, as it provides political certainty - particularly for businesses - to invest in low-carbon projects. Civic society leaders maintain that the deal isn’t sufficient to prevent dangerous climate change, although they acknowledge that the agreement was a good starting point for the world to tackle the challenge seriously.
2. Hottest year on record
Meteorological readings around the world showed that 2015 was the hottest year on record. The United States National Ocean and Atmospheric Administration (NOAA) in July said that global sea and land temperatures between January to June this year had been the hottest on record since 1880.
Meanwhile, the UK Met Office said in November that for the first time ever, the world was one deg C hotter than pre-industrial levels; “uncharted territory” for the planet. But with an early peak in emissions, it is still possible to limit warming to 2 degrees, it said.
That same month, the World Meteorological Organisation (WMO) predicted that the atmospheric concentration of carbon dioxide will pass a symbolic milestone of 400 parts per million (ppm) next year, far exceeding the safe limit of 350ppm.
2015 also saw an unusually strong onset of El Nino - typically associated with abnormally hot and dry weather - which exacerbated extreme weather patterns.
In November, the United Nations Office for Disaster Risk Reduction (UNISDR) released a report that showed over the last 20 years, 6,457 recorded floods, storms, heatwaves, droughts and other weather-related events made up 90 per cent of all major disasters. This has had a huge impact on local economies and businesses.
The report highlighted data gaps, noting that economic losses from weather-related disasters in that period are much higher than the recorded figure of US$1.891 trillion. Only 35 per cent of records include information about economic losses. UNISDR estimates that the true figure on disaster losses – including earthquakes and tsunamis – is between US$250 billion and US$300 billion annually.
3. UN adopts the new Sustainable Development Goals
In September, the United Nations General Assembly adopted its 2030 Agenda for Sustainable Development: 17 goals and 169 targets to eradicate poverty, eliminate inequality, and fight climate change over the next 15 years.
The 17 SDGs build on the eight Millennium Development Goals (MDGs) ratified by the United Nations in 2000, This effort by the global community saw significant progress in reducing poverty, childhood mortality, and deaths from AIDS and malaria over the past 15 years.
Earlier in July, UN members agreed to overhaul global finance practices and generate investments to tackle a range of economic, social and environmental challenges at the UN Third International Conference on Financing for Development, held in Addis Ababa, Ethiopia.
This groundbreaking agreement, known as the Addis Ababa Action Agenda, provided a foundation for implementing the 17 SDGs and contains more than 100 measures, addressing all sources of finance - the lynchpin in the success of the SDGs - and covering cooperation in issues such as technology, science, innovation, trade and capacity building.
4. Record-breaking pollution from forest fires triggers humanitarian crisis
Southeast Asia experienced its worse haze crisis on record when illegal forest fires raged in Indonesia from July to October this year. It caused air pollution indicators to hit record levels, forcing schools to shut, flights to be cancelled and even resulted in several deaths in Indonesia. Countries that were affected besides Indonesia, where fires raged in Sumatra and Kalimantan, included Singapore, Thailand, Malaysia and the Phillippines.
The disaster prompted calls for financial institutions in the region to behave more responsibly, especially those linked to forest-related companies operating in Indonesia. In October, the Association of Banks in Singapore said they would for the first time adopt standards that govern responsible financing and integrate ESG issues such as deforestation, human rights and corporate ethics into their lending and business practices.
5. Cities lead the way in climate action
City and municipal leaders have shown leadership in pledging commitments to reduce emissions and build resilient societies, ahead of commitments by national governments.
The UN’s Non-State Actor Zone for Climate Action (NAZCA) database showed that by mid-December, the number of pledges had grown to 10,773, led by 2,255 cities, 150 regions, 2,025 companies and 424 investors, making urban centres the largest non-state contributors of climate pledges. The NAZCA database acts as a platform that functions as a central clearinghouse on climate-related commitments by all entities other than national governments.
As part of the Lima to Paris Action Agenda (LPAA), cities across the world representing almost a fifth of the global population also launched a five-year vision during the Paris climate talks to scale up actions to tackle climate change. The LPAA is a joint initiative by the Peruvian and French presidencies of the UN meetings - known as COP - which aims to mobilise action towards low-carbon and resilient societies.
This five-year vision, led by the United Nations Framework Convention on Climate Change (UNFCCC), will include building the resilience of vulnerable cities as well as channelling more finance towards low-carbon infrastructure projects, among others.
6. First ever ‘Buildings Day’ launched
More than a hundred business groups from the global construction and buildings sector unveiled ambitious plans to expand the green building movement around the world and certify about 1.25 billion square metres of space, an area nearly twice the land mass of Singapore.
Industry leaders and members of national green building councils made the announcement on the first ever Buildings Day at COP21 in Paris in early December, and pledged to speed up initiatives to cut greenhouse gas emissions in the industry over the next five years.
The group, led by the World Green Building Council (WGBC), presented a collective commitment from 24 national green building councils worldwide, including several in Asia Pacific such as India, Hong Kong, Singapore and Australia.
7. Water wreaks havoc
Rising sea levels, heavy rain and drought wreaked havoc on local communities across the world in 2015. California in the United States entered its fourth year of a record-breaking drought, while in Asia, Vietnam and Thailand also experienced a severe summer drought.
India and Pakistan were ravaged by floods: In Pakistan, the monsoon’s arrival in July eased a record-breaking heatwave, but triggered flash floods that killed almost 170 people and displaced 800,000 others.
Tamil Nadu in South India also suffered devastating floods in December which killed nearly 270 people and displaced another million. Floods struck neighbouring Myanmar, leaving 100 dead and destroying 180,000 hectares of farmland.
A new report from NASA also showed human activities are alarmingly sucking up water from the world’s underground water basin, with eight of the earth’s 37 largest aquifers classified as “overstressed”.
8. Renewables investment soar, but more needed
Besides the US$100 billion a year promised by rich nations under the Green Climate Fund as part of the Paris agreement, the private sector has announced a slew of initiatives to invest in renewable energy.
Annual investment in renewables is currently at US$280 billion, and the figure needs to jump to about US$500 billion by 2020, according to the International Renewable Energy Agency. In November, Maltese Prime Minister Joseph Muscat unveiled a new US$1 billion Commonwealth Green Finance Facility to support environmental projects within the 53-nation bloc.
The Asian Development Bank also said in September that it will double to US$6 billion a year by 2020 its financing of projects to help Asia-Pacific countries mitigate the impact of climate change.
9. The circular economy increasingly dominates business
The circular economy - which keeps resources in use for as long as possible - continues to gain converts among businesses. In December, the European Commission adopted a new ambitious Circular Economy Package to stimulate the region’s transition towards a circular economy which they say will boost global competitiveness, foster sustainable economic growth and generate new jobs.
The World Economic Forum estimates that 80 per cent of the US$3.2 trillion value of the global consumer goods sector is lost irrecoverably each year due to the current inefficient linear “take, make, waste” model.
Waste prevention, ecodesign, re-use and similar measures could bring net savings of 600 billion euros, or 8 per cent of annual turnover, for businesses in the EU, while reducing total annual greenhouse gas emissions by 2 to 4 per cent, said the Commission.
The concept has also been growing in popularity in Asia. The China Association of Circular Economy – a group of government, academic and business leaders promoting the circular economy - says that the country’s circular economy grew by 15 per cent annually between 2006 to 2010 and that it will double from 1 trillion yuan in 2010 to 1.8 trillion yuan in 2015.
A report by the Fung Global Institute and the Ellen MacArthur Foundation notes that China has the potential to lead the adoption of circular economies in Asia, and possibly globally. But even though it enacted its first Circular Economy Promotion Law in 2009, more public leadership is required, especially in removing regulatory rigidities around waste in order to encourage competition and facilitate the flow of materials, says the report.
10. Volkswagen’s big diesel dupe
The biggest corporate story of the year is the shock revelation in September that German automaker Volkswagen intentionally fitted cheating devices into their diesel vehicles. Dubbed the “great diesel dupe”, the US Environmental Protection Agency had discovered cheating devices in VW diesel cars that detected when a car was undergoing an emission test, and changed its performance to excel at it.
But back on the road, the cars would turn off the controls, which meant the engines emitted nitrogen oxide pollutants - harmful to humans and the environment - up to 40 times above what is allowed in the United States.
VW has since lost billions of its stock market value, its credibility is in tatters and it is faced with lawsuits, hefty fines from the US regulator. A wider investigation also revealed that VW models in other countries were similarly affected, and some Porsche and Audi vehicles - owned by VW - were also fitted with the same cheating devices.
The saga has provided valuable lessons on the importance of transparency and governance, and puts a spotlight on an industry that badly needs to raise its standards and introduce reforms. Against a backdrop of increasingly strict carbon emission controls due to climate change and pollution concerns, industry watchers say the scandal might be the impetus consumers need to embrace new technologies such as autonomous vehicles or electric cars.
Just as 2015 could mark the turning point in which the world transitions from a fossil fuel to a renewables era, it could also mark the death of the diesel engine, and the ushering in of a new, electric age.
This story is part of our Year in Review series, which looks at the top stories that shaped the business and sustainability scene in each of our 11 categories.