In late October 2023, the UK government backed calls for a global moratorium on deep-sea mining over concerns about its impact on the environment, after dozens of British scientists signed a letter entreating Prime Minister Rishi Sunak to do so.
The shift to clean energy and its impact on our biodiversity
It’s not surprising that the prospect of even more damage to marine ecosystems than has already been done by humankind through the practice of deep-sea mining has been met with apprehension. After all, it’s estimated that the oceans absorb around 25% of man-made carbon emissions each year, while also supporting the livelihoods of more than three billion people around the world.
However, given the global shortage of critical minerals that are essential to the net zero transition, others argue that the exploration of the deep seabed, more than 2,000 metres below the ocean’s surface, is a risk worth taking to address this shortfall.
Earlier in 2023, we addressed the issue of battery material supply shortages. We now explore another complex question that we expect many of our clients may be grappling with: will the benefit of decarbonisation outweigh its adverse impacts on biodiversity?
The green transition
A recent report published by the Energy Transitions Commission (ETC), an international think-tank focused on economic growth and climate change mitigation, explains why, to a certain extent, the transition to a green economy allows us to both have our cake and eat it.
According to the ETC, producing all the materials needed to build a low-carbon energy system would emit 15—35 gigatonnes of CO2 equivalent over the next 30 years. This figure is not insignificant, especially amid the backdrop of an ever-shrinking global carbon budget (the limit of total carbon emissions beyond which humanity breaches the Paris Agreement’s targets). However, these emissions pale in comparison to the estimated 41 gigatonnes that a fossil fuel-based energy system would emit each year on average over the same period.
These decarbonisation-related emissions would be a one-off, assuming improvements in recycling and other developments in the circular economy over that time period.
What’s more, assuming projects are managed responsibly, the way in which new renewable energy infrastructure interacts with the natural environment that surrounds it would be considerably different to that of an oil rig or refinery. Clean Action — a partnership aimed at protecting nature during the energy transition — concluded that, from sourcing raw materials to final operation, all forms of renewable power are better for nature than fossil fuels.
Source: Clean Action, Rathbones.
A utopian solution?
We are not suggesting, though, that the transition to a clean energy economy presents a utopian solution free of challenges and difficulties. As the controversy surrounding deep-sea mining exemplifies, trade-offs will invariably need to be weighed up along the way.
It is within this context that our engagement with companies we invest in on behalf of our clients is crucial. Shareholders have an important role to play in challenging companies to manage the tensions inherent in the energy transition with respect for the natural environment.
This is why, at the start of 2023, we launched an engagement campaign aimed at pressing 52 companies within our portfolios to demonstrate that they are effectively measuring and disclosing their impacts on nature and assessing the risks that nature and biodiversity loss poses to their businesses. This is also why, through a combination of individual and collaborative engagement efforts, we continue to challenge the companies we invest in to do what’s in their power to support climate action.