Archives For air pollution

Please watch, this great video from Hong Kong’s Clean Air Network. It really says it all.

  • Hong Kong University of Science and Technology/Civic Exchange research has shown that 53 percent of the time, the pollution that affects us most in HK is from transport – trucks, buses and ships
  • Last March the government introduced retirement schemes for old Commercial Diesel Vehicles as well as selective catalytic converters for taxis and mini-buses
  • And last year, data did show that HK’s air improved slightly
  • More good news: The government recently tabled regulation in Legco that mandates ships switch to cleaner from bunker fuel while at berth
  • But measures to improve our air have been largely offset by the huge increase in private car ownership in recent years as well as the massive development initiatives that are being undertaken
  • The Hedley Environmental Index estimates that in 2014, air pollution caused 2,616 premature deaths, 32.657 billion in lost dollars, 174,926 hospitalizations, and 4.253 million doctor visits
  • The so-called “end of pipe” solutions the government has introduced are certainly a beginning but inadequate alone
  • Hong Kong needs to follow Singapore and European cities in establishing low emission zones, pedestrian zones, electronic road pricing and intelligent transport solutions
  • We urgently need a smarter, cleaner city. This is within our reach.

Lisa and Charly Kleissner

Sophisticated Investors like to think their portfolio risk has been carefully mitigated and hedged. For the average portfolio, however, standard risk calculations don’t necessarily include analysis relative to environmental and social  issues an investee company potentially faces, or even resource consumption analysis, yet all can have a significant impact on returns. This is particularly true of a long-term “buy and hold” investment strategy.

By contrast, impact investors believe not only that these factors weigh on a company’s returns, but also a positive screen for companies actively managing these risks can improve a portfolio’s performance.

Speaking in Hong Kong about their own 13-year journey toward an “Impact Portfolio” were Lisa and Charly Kleissner, founders of the KL Felicitas Foundation. As part of their mission, the Kleissners have urged audiences globally to think about how we can better deploy capital to help better steward the planet’s resources. On Tuesday, they spoke at a forum organized by the RS Group, hoping to advance the discussion in Hong Kong.

Today, the Kleissner’s foundation and personal portfolios, managed by San Francisco-based Sonen Capital, are more than 93 percent allocated across four different asset classes to “Impact Investments”, which signal the intent to generate both financial return and “purposeful, measurable, positive social or environmental impact”.

According to “Evolution of an Impact Portfolio: From Implementation to Results“, a report published by Sonen in October last year, the Kleissner’s portfolios have achieved index-competitive risk-adjusted returns, illustrating that, “impact investments can compete with and, at times, outperform, traditional asset allocation strategies, while simultaneously pursuing meaningful and measurable social and environmental impact”.

Their journey toward impact has not been easy, according to the Kleissners, Silicon valley denizens who both worked under Steve Jobs at Apple, among other firms. The process began with dim looks from early investment managers who wanted to focus only on returns.

“We wanted to know about the positive upside for communities, for the environment, from our investments,” Lisa said. “We wanted to make money and have positive impact but our early investment advisors had no idea how to achieve this.”

They sought an advisor who cared about impact. “We didn’t want someone who saw this as simply a job,” Charly said. “We want to change the world not just make money and our investment advisor needed to be a partner in this.”

The results were far-reaching, meaning investment policies needed to become impact investment policies, due diligence restructured, term sheets re-written, new monitoring and exit strategies developed. Sonen Capital was founded in response to this need.

The portfolios the Kleissners ended up with are far from US-centric, with more than 50 percent of investments made globally. Among those are holdings in renewable timber, carbon offsets, water and land use that is respectful of biodiversity. In other words, the Kleissners invest in companies that reflect positive impact. They have opted not to invest in coal-fired power plants or extractive industries.

Three percent of their assets are in early stage direct investments, reflecting their silicon valley, entrepreneurial background. Indeed, the Kleissners efforts to promote the impact sector has included investments of money and their own time in social enterprise incubators. These, and others, the Kleissners like to think of as “catalytic” investments that can lead to change.

Beyond the incubator model to support social enterprise development, the Kleissners  also have invested in helping to build networks of like-minded investors to share due diligence as well as in promoting intermediaries to help develop the impact sector.

“Development of these investor resources is critical,” Charly said, “We want people anywhere to be able to tap into the knowledge”, which is available on the KL Felicitas website.

Measurement, always a difficult discussion, is rigorous across the portfolios, captures trends across the sectors and then includes qualitative analysis, which involves telling the story from the numbers and more.

Charly spoke of impact investment as often an evolution of smarter philanthropy. He also spoke of the importance of collaboration between grantmaking and investment to widen impact, pointing to microfinance as an example of this and to social enterprises that can start life as a nonprofit but move into a more commercial space over time using blended capital.

Speaking in Hong Kong, the Kleissners said, was a learning for them, that having worked with an incubator in India over a number of years, the entrepreneurial context there was more familiar.

In China, where the environmental challenges are substantial and polluting companies numerous, an audience member pointed out that impact might also come from working with conventional companies to change their environmental and social practices, rather than shunning them altogether.

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At a recent environmental forum in Beijing, the speakers were in full swing with relatively predictable insight into China’s environmental challenges, and more broadly, environmental challenges elsewhere.

Then came the question-and-answer period and again a couple of relatively innocuous questions before a Chinese man strode to the front of the auditorium and launched into a discussion of his own.

In angry tones and raised voice, he said the Chinese government was not doing enough to mitigate air, water and soil pollution and demanded immediate attention to related public health concerns.

No one flinched, people listened intently, respectfully, no one emerged from the shadows to haul him away. Several students in the audience also asked about lack of action on pollution and suggested that more should be done to clean the environment and protect citizen health.

I sat beside a Chinese friend who simply shrugged, saying she had seen the man speak out at two other recent environmental forums. She said that because of his stature as an energy expert, he was left unhindered to express his opinions publicly.

She pointed out that the students were also feeling free to criticize the government, whereas previously the unspoken line everyone knew not to cross was any sense of direct opposition to Beijing authorities.

My sense from the entire trip (my previous visit being only four months earlier) was that China is changing, and perhaps faster than we could have imagined.

For the first time, censors this year have allowed Chinese media to carry reports about the “cancer villages” in areas of high industrial pollution.

Environmental advocate Ma Jun told me with some amazement that he had felt free recently to criticize a recent Ministry of Environmental Protection decision not to release data about soil pollution, which it considered a “state secret”.

Ma Jun said this was irresponsible and put public health at risk, a comment that was unusually picked up by the People’s Daily and Xinhua, among other news sources that aren’t usually inclined to publish remarks critical of the government.

“Previously, these comments would have been removed by censors,” Ma Jun said. “Now these issues are allowed to be talked about, debated and discussed.”

This became particularly clear, as March brought the annual meetings of the legislative and consultative bodies of China where major policies traditionally are decided and key government officials appointed.

Concern for the environment was a constant throughout the session – and was the subject of one in ten of the 5,000 proposals submitted by delegates.

Social media was also alive with commentary on the environment throughout.

And talk about environmental protection wasn’t simply a side act to the main show. The National People’s Congress (NPC) at 2,987 members is the largest parliament in the world and gathers alongside the People’s Political Consultative Conference (CPPCC) whose members represent various groups of society. This year, the NPC confirmed the new leadership of President Xi Jinping and Premier Li Keqiang.

This once-in-a-decade leadership change emerged from November’s Communist Party congress with a strong reform mandate and promising a more sustainable China, balanced growth as well as more emphasis on environmental protection.

To be fair, this was not, however entirely a departure in direction from the previous Hu Jintao, Wen Jibao administration and it remains to be seen whether the result will be real change.

The 2011, 12th Five-Year Plan, which sets the direction for policy, of course emphasized balanced growth and set priority green industries. The mantra that emerged then was that economic growth should not come at the expense of resource depletion or pollution.

Wen Jibao, representing the departing Old Guard, opened the 12th National People’s Congress with a “Report of the Work of the Government” pointing to “steady progress in conserving energy, reducing emissions, and protecting the environment.

But levels of anger are rising, fueled by recent truly off-the-charts air pollution in Beijing as well as the repeated and increasingly public (because of the rapid spread of news on social media platforms) water pollution incidents nationwide. Rampant corruption among local officials that has allowed harmful practices to continue unhindered has also been a target of microbloggers.

This sense of disregard for public health coupled with an increasingly affluent and vocal middle class presents a problem for the Chinese government in terms of its own legitimacy.

Recognizing this, Xi Jinping said at the March proceedings that the government should play a stronger role in pushing reform and opening up.

“The new administration wants a new start,” Ma Jun said. “They want to make clear that the current environmental challenges are not their fault.”

This first appeared as an Op-ed in the October 25 opinion pages of the SCMP.

We might finally have an administration that cares about cleaning our filthy air. Indications are that the new administration led by C.Y.Leung will act to finally stem the choking smog that represents Hong Kong’s No 1 public health crisis and is a major impediment to the city’s competitiveness.

Last week, in his first address to the reconvened Legislative Council, the chief executive said improving air quality was among his top objectives. In a move that already stirred optimism about the government’s determination to protect public health, Leung last month named environmentalist Christine Loh Kung-wai undersecretary for the environment.

It was also encouraging to see, a day after Leung’s address, Secretary for the Environment Wong Kam-sing calling roadside pollution the city’s greatest problem, and that a basket of initiatives to improve the city’s air quality would be introduced next year. These, he said, would aim to comply with World Health Organisation standards rather than the outdated air quality measures still in use.

Among the initiatives being considered are “carrot and stick” policies that include removing some 60,000 heavily polluting diesel vehicles from our roads.

Such measures are urgently needed. Some older vehicles have been on the road for as long as 20 years and should be refused registration if they don’t comply with vehicle emission standards.

While atmospheric pollution might have improved somewhat – due mainly to lower emissions from the city’s power stations – the concentration of roadside emissions remains unacceptably high, and it is these emissions that affect us the most.

Wong has said that 80 per cent of roadside pollutants come from outdated commercial diesel vehicles.

Retiring obsolete commercial diesel vehicles will improve our air and our health. It’s also worth remembering that research from the Hong Kong University of Science and Technology showed that, 53 per cent of the time, pollution that affects us most comes not from across the border, but from our own roads and ships on the harbour.

Indeed, the recent flurry of positive announcements from the government came amid a string of bad air days and public health warnings to moderate outdoor activity.

According to Hong Kong University’s Hedley Environmental Index, which measures the cost of pollution, yesterday was a “clear day” (one that complies with WHO air quality guidelines) in Hong Kong. The last such day was September 22, which means that our air stayed bad for more than a month.

According to the index, there have been only 59 clear days so far this year. The polluted days represent a cumulative HK$33 million in health-related and other costs.

Beyond the direct cost to our economy, surveys of business executives regularly point to our smoggy air as a real obstacle in recruiting and retaining workers – whether foreign or local. Patience is wearing thin.

By now we have heard from doctors and scientists that our dangerously high level of pollutants raises the risk of such conditions as bronchitis, asthma, pneumonia, headaches, lung cancer, stroke and heart attack.

So we should applaud the suggestion of phasing out outdated commercial diesel vehicles, despite what I imagine will be heavy lobbying from the transport sector.

As Wong pointed out, mainland China is phasing out diesel vehicles more than 15 years old, so why should we be any different? The government’s carrot will include subsidies to soften the blow of replacing vehicle fleets.

It is encouraging that the administration has also spoken about retrofitting Euro II and III franchised buses with selective catalytic reduction devices to reduce nitrogen oxide emissions and might even tighten emission standards for LPG and petrol vehicles as well.

Here’s hoping that our new government will finally act to protect our health.

 

One of the more important conversations that emerged from June’s Rio+20 Summit was around valuing natural resources and, ultimately, moving our economies beyond GDP as a sole measure of growth.

The concept is not a new one but it did seem gain traction.  Included among the side events on one day alone were at least two standing-room-only sessions on the topic: “Measuring the Future We Want” and the Natural Capital Summit.

In Measuring the Future, the panel recognized that over the last 20 years we have seen poverty decline but at the cost of growing environmental challenges. The call was for governments to institute a framework for natural capital accounting.

The Natural Capital Summit, meanwhile, featured speeches from Britain’s Nick Clegg and Norwegian Prime Minister, Jens Stoltenberg, as well as remarks from the presidents of Gabon and Costa Rica, illustrating clearly the level of interest in the topic.

“How to value nature is one of the most important political decisions,” Stoltenberg said, shortly after Clegg had talked over a masked heckler, accusing world leaders and the World Bank of commoditizing nature.

Despite the mask and the point well taken about assigning value to nature, the reality is not so simple. As we have it now, few benefit from our forests, oceans, our extractive industries and water.  The costs of pollution are borne by us all rather than the polluter.

This creates a world where we are rapidly depleting our natural resources for the enrichment of a few, and economic growth, as measured by GDP, is vastly inflated.

Both Rio+20 side sessions were short on answers or plans of action, despite some participants stating the desire to help international gatherings move beyond declarations – something that is sorely needed.

As a path toward action, however, also at Rio, the United Nations Environmental Program (UNEP) and the UN Environmental Program, the International Human Dimensions Programme on Global Climate Change (IHDP) introduced the Inclusive Wealth Index.

The idea is to consider a country’s assets to get a better picture of a country’s wealth and the sustainability of its growth.  In reporting every two years, IHDP will calculate the IWI for 20 countries that together account for almost three-quarters of global GDP.

Unsurprisingly, the first report showed that despite strong GDP growth, the United States, China, Brazil and South Africa had significantly depleted their natural capital base.  This was calculated as the total of renewable and non-renewable resources such as fisheries, forests and fossil fuels.

Again, not surprisingly, China showed the most dramatic difference between GDP and IWI. GDP growth alone was measured at 422 percent between 1990 and 2007 but IWI measured over the time was just 45 percent.

The report also showed that future growth, as measured by IWI, was dependent on the sustainable use of resources since all countries surveyed had a higher share of natural than manufactured capital.

The key factor here is that countries are using their natural resources faster than they can be replenished, thus challenging future economic development.

The strong sense in Rio was that governments need to step in to create a policy framework by which natural capital can be valued in order for real change to happen. The private sector, of course, wants a level playing field.

Meanwhile, some leading companies that are among the biggest beneficiaries of natural resources and free pollution, also stepped into the discussion this week in Rio.

Twenty-four of them, including Cocoa-Cola, Xerox, Dow Chemical and Kimberly-Clark announced a four-step framework for a methodology that would value natural resources.

Two-thirds of our planet’s land and water ecosystems are now significantly degraded thanks to human activity and climate change is only accelerating the damage. The UN estimates that mismanagement of natural assets costs the global economy an estimated $6.6 trillion a year or 11 percent of GDP collectively.

According to the report, these costs are expected to reach $28 trillion by 2050 and threaten core business interests through potential supply chain disruptions or costly substitutions, regulatory or legal risks.

KPMG has estimated that if companies had to pay for their own environmental bills they would lose 41 cents for every $1 in earnings.

The text of Valuing Natural Capital acknowledges that “each year our planet’s land and water systems produce an estimated $72 trillion worth of “free” goods and services essential to a well-functioning world economy.”

Because these are not bartered and sold in the marketplace it is hard to assign them with a value or corporate or government financial statements. “As a result this value has been largely unaccounted for in business decisions and market transactions.”

But this is starting to change, according to the document, with, “business executives recognizing the business imperative of safeguarding them.”

Among the natural goods and services on which the global economy was seen to depend are: Clean water and air; affordable raw materials and commodities; fertile soils; fisheries; buffers to floods, droughts, fires and extreme weather; barriers to the spread of disease; biological information to propel scientific and medical breakthroughs.

Still, the report although strong on the challenges is short on how natural resources will actually be valued.

Puma has been a leader in this field. Last year the company introduced an environmental profit and loss screening that represented an interesting step toward assigning economic value to resources consumed, to emissions and toward determining the true cost of production for the apparel and shoe brand. I have written about this here.

Finally, also this week the leaders of 37 banks, investment funds and insurance companies agreed to take better stock of the stress put on ecosystems by the economic activity they manage, and work towards integrating natural capital into products and services.

The Natural Capital Declaration is once again short on detail, but at least represents an acknowledgement of the issue.

 

 

In Rio this week up for discussion and negotiation (mostly negotiation) is a 49-page draft document that aims to establish clear sustainable development goals and action to achieve them.

The United Nations Conference on Sustainable Development, better known as Rio Plus 20, marks 20 years since the Earth Summit, which at the time was the largest gathering of heads of state ever to talk about environmental challenges.

This time, the agenda has been softened to be about sustainable development, with an emphasis on development. Indeed, some people here don’t seem to believe that environment really plays any part in the conference. Earth isn’t anywhere isn’t mentioned – despite that this is clearly supposed to be a follow-on to the earlier event.

Yet it’s hard to imagine how the discussion of sustainable development can take place without careful consideration of our natural environment.

The reality and the urgency is that our world’s population is expected to rise from its current 7 billion to more than 9 billion in 2050. That’s scary in a world where already an estimated 3 billion people don’t have clean water to drink and 14 percent of our planet, to adequate food.

According to the final version of the Rio Plus 20 Common Vision submitted today under the title, The Future We Want, one in five people, over 1 billion people, still live in extreme poverty. By 2050 two-thirds of our world will live in cities.

So where we find food and water for another 2 million people in 38 years is the crux of the challenge and one that really can’t be denied, regardless of political leaning.

And we live in Asia, where most of that future population growth is expected to occur. This places the challenges front and centre for those of us engaged in work to combat environmental challenges and with communities without adequate means to survive.

Despite the enormity of the task at hand, however, few here in Rio are optimistic that real change will come from or be led by the conference.

The Brazil delegation worked hard in recent days to ram through a document that is in essence hollow, fearing more than anything a repeat of the Copenhagen disaster when no one could agree on anything.

I guess the sense is that if they can at least agree on nothing meaningful that’s better than agreeing on nothing at all over the three-day official proceedings, which begin Wednesday?

The conference document finalized today was, “the result of intensive and prolonged negotiations,” according to the press release, and is a “compromise text,” in which, “countries have had to both give and take to achieve progress.”

The text is to be approved by heads of state at the conference conclusion on Friday. Significantly, Barack Obama, David Cameron and Angela Merkel will not be present in Rio.

Still, the text does include a commitment at least to the concept of sustainable development and recognition that eradicating poverty is one of our greatest challenges. It emphasizes the urgency around “freeing humanity from hunger and poverty”.

The text establishes the clear linkages between sustainable development and the environment, between sustainable development and the means to bolster our struggling economies, and emphasizes the value of public-private partnerships.

Sadly, the hope that this translates into government action is absent from the jaded community spending long hours being bused among several distant event locations in fancy and frigid coaches that have nothing to do with sustainable development other than collective transport.

Part of the skepticism also derives from the fact that the earlier Rio conference ended with two treaties aimed at curbing emissions of greenhouse gases and conserving biological diversity that have since languished amid lack of political will.

There is, additionally, a certain exhaustion generally with the promotion of international frameworks to make sweeping change toward environmental progress.

Those just have been too hard to achieve in our economically challenged world that doesn’t yet seem to link better development, protection of our natural world and an improved economic environment.

like the posh buses, the main conference venue itself is a reflection of misunderstanding of the challenges we face. The huge Riocentro is two hours in traffic from Ipanema and Copacabana, where most participants are staying.

There, air conditioning blasts through huge buildings that are no model of efficiency – either in space or energy consumption.

At the same time, Rio Plus 20 is largely white and male – at least this is particularly true of the official and business delegations. Amongst the NGO community, women are better represented.

At the alternative youth summit in Flamengo, three hours from Riocentro in traffic and closer to Rio’s pulsing centre, the situation is considerably different.

Here, the youth and community-connected people are basing themselves, including many of the smaller NGOs – and diversity is evident in the variety of national dress, skin hues and music that accompanies many events.

In a long stretch of tents, people gather for animated discussion or to listen to seminars on topics related to conservation and sustainable development. Here, the environment is very much present although it’s hard to see where, concretely, the discussion will lead.

Official delegations are noticeably lacking these communities – the NGOs and youth. This is despite the final text emphasizing wide agreement among business, NGOs and government.

Perhaps one bright light here in Rio seems to be the talk on many levels of the importance of valuing our natural resources. Companies, NGOs and governments alike seem to recognize the need to bring environmental value into economic decision-making.

And engaging the private sector, governments, communities in this important dialogue, in partnerships to achieve results, is key to real change.  As always in large gatherings it’s the back-room learnings and discussion that are the real drivers for change.

 

 

This is what the air should look like in HK but rarely does Photo by Ella Smith

Hong Kong finally has found its voice amid government inaction to  clean our air and protect our health. And long may it last – at least until we have real action to address the pollution.

Newspapers this morning featured banner headlines on air pollution, including the SCMP’s  “Clean-Air Targets Don’t measure Up” and then inside, “Gasp it’s Worse Than we Thought.”

Yesterday, the government said it would toughen its clean-air targets for the first time since 1987, but only marginally, and admitted they will still fall far short of World Health Organization standards.

And this four-and-a half-years after first engaging a consultant to review air quality objectives then launching a six-month public consultation that ended in late 2009. The environment secretary sat on the recommendations until yesterday and they were announced unchanged – by the consultation or time.

The new objectives impose tougher limits on the atmospheric concentration for seven pollutants including sulfur dioxide, nitrogen dioxide, carbon monoxide and lead.

For the first time the city also will measure airborne particles smaller than 2.5 micrometres in diameter, known as PM2.5. These are more harmful than the larger particles currently measured.

The government apparently also has identified 22 measures to help achieve the new standards, which are to be introduced over a three-year period after 2014. This will allow infrastructure projects to proceed without delay.

Thus the government, in reality, will allow our air to be made even dirtier while it finishes some mammoth construction such as the Hong Kong-Zhuhai-Macau bridge and a third runway at the airport.

Oh, and the steps to be taken apparently will extend the life expectancy of the average person in Hong Kong by one month.

Secretary for the Environment, Edward Yau, was quoted in the South China Morning Post as saying, “We have to understand that the ultimate WHO guidelines are a distant target” and pointing to regional pollution as the principal source of pollutants.

Yet 2007 research by Alexis Lau from the HK University of Science and Technology and Civic Exchange, “Relative Significance of Local Vs. Regional Sources: Hong Kong’s Air Pollution,” showed that 53 percent of the time the pollution that affects us most is locally generated by buses, trucks, shipping and power plants.

The basic, undisputed message for a long time has been, Hong Kong can do much to clean up its own air and improve the health of its residents.

Despite this, little has been done in recent years, despite urging from Clean Air Network, Civic Exchange, Friends of the Earth and many other environmental groups.

And herein lies the paradox: The HK government speaks and acts as though we are a developing nation, yet HK is one of the world’s richest cities. The government sits on reserves estimated at US$80 billion.

We are so rich in fact that last year the government announced that it would give a cash handout to each adult permanent resident (even those living abroad and those who patently did not need the extra money), of HK$6,000, or US$700. That massive handout cost the government HK$37.98 billion that certainly could have been used to better effect to clean our air.

Meanwhile, Roadside pollution levels reached a record high last year. The number of days that pollution was rated “high” hit 20%. That is five times more than in 2005. And, embarrassingly, the HK government is clearly playing catch up to Beijing, which in response to an online campaign earlier this month said it would provide hourly updates of PM2.5 measurements.

Clearly gone are the days when Beijing looked to Hong Kong for direction and innovation.

Meanwhile, the Civic Exchange yesterday said a revamped environmental index run by Hong Kong University researchers showed that air pollution here is more harmful than previously thought, costing HK$40 billion annually, up from previous estimates of HK$16 billion.

The number of premature deaths per year over the past five years should also be revised upward to 3,200 from 1,000, according to the Hedley Environmental Index. This, of course, is not information that the HK government is gathering.

The sad reality is that Hong Kong’s air has been deteriorating steadily over the past 20 years with almost no action by government to alter the trend.  Pollution now poses a serious threat to public health and we should be angry, very angry.