How technology can improve air quality
When people think about sustainable investing, they often focus on just the narrow topic of how a company itself operates in an environmentally friendly manner. But sustainability is about more than a business’s immediate environmental impact. David Harrison explores the pivotal role tech is playing during the pandemic.
When people think about sustainable investing, they often focus on just the narrow topic of how a company itself operates in an environmentally friendly manner. But sustainability is about more than a business’s immediate environmental impact, and as a result many cases companies can make good candidates for a sustainability theme across several dimensions.
Take the problem of air pollution. Many urban centres in Europe have high levels of nitrogen oxide pollution, which is produced by road traffic as well as manufacturing industries and power plants that burn fossil fuels. For much of the past decade, London has struggled with nitrogen oxide counts that exceed legal limits.
One by-product of the lockdowns that governments have implemented in response to the coronavirus pandemic has been reduced air pollution levels in many of the world’s major urban centres. The Centre for Research on Energy and Clean Air (CREA) reported that lockdown measures across Europe resulted in a 40% reduction of nitrogen oxide levels and a 10% reduction in particulate matter in April.
Does this suggest that a shift in the way we operate as a society – both as individuals and as employees – is not only possible, but it can result in dramatic improvements to air quality? As someone who has spent a career in sustainable investing, I like to think that it does.
The potential benefits of remote working
The lower air pollution levels seen in lockdown was the direct result of lower demand for electricity in the manufacturing sector and reduced traffic on roads. With manufacturing activity slowing down, there was less need for coal and oil-fired power generation, which is a major source of particulate pollution in Europe.
What we are observing right now is only temporary, of course. As lockdown measures are eased and the economy ramps up, emissions will continue where they left off. Except now we know that transformative technology can play a role in reducing the emissions we produce.
Remote-working solutions such as video conferencing and cloud computing make it possible for people to work from home or meet people around the world without driving to an office or flying to a different city. This alone can help to reduce the pollution caused by travelling for work.
The drive for lower air pollution
Throughout much of the UK, large numbers of people commute to work in their car. Citymetric found that, in cities such as Birmingham, Bristol, Manchester and Newcastle, more than 50% of commuters drive to work. Meanwhile, data from the UK government show that 60% of trips between one and two miles are by car.
If transportation is responsible for more greenhouse gas emissions than any other, then the challenge is to encourage people to make fewer journeys in their cars. Working from home, not travelling for meetings, and reducing travel by air can arguably make a big difference here.
A study by a major American computer manufacturer back in 2016 found that employees who on averaged worked from home 9.5 days a month reduced their environmental footprint by around one metric tonne of carbon dioxide per year. That is said to be equivalent to one passenger on a return flight between London and New York.
Big technology may hold the answers
When we invest, we select companies for several qualities that stand out: we want them to be cash generative, have no financial stress and be long-term thinkers. We also want them to have quality management teams, good corporate governance and a strong culture that benefits employees and society. This is because, in my view, companies that have a positive and sustainable approach stand a greater chance of survival than those with short-term views.
Big technology companies that develop software and cloud computing solutions are now emerging as major creators of solutions that can have a positive environmental impact, such as energy efficiency, waste reduction or even lower emissions. This can be a major software developer that offers solutions that make it easier to work remotely through collaborative systems and video conferencing services. Or it can be a program that helps to link together the computers of people working from home as though they are based in a traditional office.
Away from products that reduce the need for commuting are those that simply make it more efficient for manufacturers to bring products to market. The traditional approach to manufacturing involves significant physical prototyping and product testing, which consumes energy and creates waste. Being able to design and model these products in a software environment not only makes this more efficient from a resource consumption perspective, but it also speeds up the process.
Evolution not revolution
It’s important to mention that many of the technology companies that could make a world of remote working possible were already part of a noticeable structural change. The lockdown only served to accelerate the adoption of their services. We may not see a sudden shift among society to work from home permanently, but we do know that having fewer people commuting to work and travelling by air reduces emissions noticeably.