We’ve discussed the green economy before and that it is a term wholly inclusive of sustainability, climate mitigation, growth, and responsibility. Yet, that isn’t an exhaustive list.
The central hallmark of the green economy is sustainability. It focuses on fostering economic growth while ensuring environmental protection and social inclusivity. A green economy aims to use resources efficiently, reduce carbon emissions, promote renewable energy sources, and encourage sustainable practices across industries and sectors.
The practical elements of this lofty goal lie in the ‘top-down’ and ‘bottom-up’ elements–namely, the governmental- and the company-driven factors of mitigating climate change.
This article will revisit the founding law of today’s green economy, the Paris Agreement, and highlight the leading countries and companies in this global shift.
On December 12, 2015, at the 21st Conference of the Paris, or ‘COP 21’, in Paris, France, the world’s leading economies ratified an agreement to limit global warming and establish a framework for holding every government accountable. As of today, 194 countries have joined the Paris Agreement.
There are three elements to the Paris Agreement:
Global Warming. The primary goal is to limit global warming to below 2 degrees Celsius above pre-industrial levels (before the 1800s), with a further effort to limit that increase to 1.5 degrees Celsius. The more conservative number is vital to avoid the catastrophic impacts of climate change, though a recent study backed by AI has predicted humanity crossing that threshold in less than 15 years.
Nationally Determined Contributions (NDCs). Each participating country must submit their own NDC, outlining its commitments and targets for reducing greenhouse gas emissions or decarbonising. These contributions are determined by the respective countries.
Regular Review and Adaptation. All parties to the agreement are mandated to regularly report on their emission and progress towards their NDCs. Countries that are struggling or lagging will receive ‘encouragement’ and can receive additional funding, such as developing or yet-to-be green economies.
The Paris Agreement represents a historic shift in redefining economic success in the twenty-first century. Pure growth without concern for environmental repercussions is no longer permitted nor acceptable.
On a governmental and policy level, there are three standout countries: Denmark, Sweden, and Norway.
With each country, we’ll review the three pillars of any green economy’s efforts towards combating climate change: policy, renewable use, and research. First, we’ll cover Denmark.
Denmark employs comprehensive policies advocating renewable energy and sustainability throughout its economy. The nation’s Energy Agreement aims to have at least 50% of Denmark’s energy consumption deriving from renewable sources by 2030 and to become completely independent of fossil fuels by 2050.
To achieve this aim, the Danish government introduced various measures, such as feed-in tariffs, tax incentives, and subsidies for renewable energy production. Feed-in tariffs provide financial incentives by offering guaranteed payment to renewable electricity producers for a specified duration.
Denmark is a pioneer in the utilisation of wind energy. Wind power contributes significantly to the country’s electricity generation. According to the International Energy Agency, over 44% of Denmark’s total electricity consumption came from wind energy.
The country has consistently increased its share of renewable energy in its overall energy mix. As of 2020, around 61% of Denmark’s total energy consumption was sourced from renewable energy.
Denmark remains home to leading research institutions and companies dedicated to renewable energy and sustainability. Institutions like the Technical University of Denmark (DTU) and the Danish Energy Agency conduct research in renewable energy technologies.
Given its inspiring use of wind technology, Danish companies like Vestas and Ørsted are global leaders in the wind energy sector and set the standard for green economies.
Here, we’ll see how Sweden closely follows Denmark’s lead, but with a few differences in its energy makeup and use of financial incentives.
Sweden retains a set of ambitious goals to transition to a leading green economy. It aims to achieve 100% renewable energy production by 2040 and zero net greenhouse gas emissions by 2045. This means that any greenhouse gas emission, such as carbon dioxide, is met with equivalent or more reductions coming from Sweden.
The Swedish government offers various incentives and support mechanisms for renewable energy, including investment grants, tax incentives, and a unique certificate system called the Renewable Electricity Production Certificate (elcertificates) scheme. This system is a part of a secondary, tradable market where renewable electricity producers sell certificates to energy suppliers who must possess a set quote of these certificates.
Historically, Sweden has relied heavily on hydropower for electricity generation. It’s one of the largest producers of hydroelectricity in Europe, accounting for at least 40% of its overall electricity generation.
Similar to Denmark, Sweden has been rapidly expanding its wind power capacity. It has substantial wind resources, both onshore and offshore, and has been investing in wind energy projects to diversify its renewable energy mix.
Generally, Sweden fosters a culture of innovation in green technologies. The country supports research institutions, universities, and companies engaged in renewable energy research and development.
These institutions comprise a substantial list: KTH Royal Institute of Technology, Chalmers University of Technology, Swedish, Energy Agency, and Vattenfall, amongst others. Each focuses on either investing in renewable energies or exploring potential new sources of energy.
As another nordic, green economy leader, Norway follows the pattern of dominance with hydropower and wind energy.
Norway has set ambitious targets for renewable energy production, despite being a leader with oil production. The country aims to dramatically increase its share of renewable energy in its total energy consumption, focusing particularly on hydropower and wind energy. It plans to be carbon-neutral by 2030.
The Norwegian government also offers incentives and support mechanisms for renewable energy projects. These include tax-deductible investments, reduced tax rates, energy grants, and feed-in tariffs.
Norway is an additional leader in hydropower production. Hydropower accounts for the majority of its electricity generation, making it one of the largest producers of hydropower in Europe and the world–with 96%!
However, Norway also has been increasing its focus on wind energy. It has several onshore and offshore wind projects underway to diversify its renewable energy portfolio. Two known examples with capacities over 1,000 megawatts are the Fosen Vind and Havsul Wind Farms.
Norway remains home to FME CenSES (Centre for Environment-friendly Energy Research). This is a research center in Norway exclusively focusing on sustainable energy. A major component of the global green economy, it conducts research on wind power, solar energy, and bioenergy.
Another comparable institution in Norway is the Norwegian University of Science and Technology. It engages in general renewable energy research as part of the Nordic Five Tech alliance for the leading technical universities of the region.
While by no means featuring an exhaustive list, we’ll focus on the three green economy leaders who are mitigating climate change over and above any governmental policy. First, Brookfield Renewable Partners.
Brookfield is a trailblazer in the green economy due to its extensive and diverse portfolio of renewable energy assets. The company’s strategic focus on multiple renewable energy technologies, including hydropower, wind, solar, and energy storage, sets it apart as a leader in the sector. With a global presence spanning various continents, the company globally harnesses sustainable resources and mitigates reliance on non-renewable energy sources.
Moreover, Brookfield Renewable’s commitment to sustainability and responsible practices amplifies its leadership in the green economy. The company’s annual revenue ending September 30, 2023, was just over 95 billion USD. Currently, Brookfield has over 78 billion USD in assets under management, 4,000 operating employees, and 8,000 power generating facilities.
Unilever stands as a prominent leader in the green economy, driven by its robust sustainability initiatives and significant contributions to environmental conservation. The company has set ambitious sustainability targets, aiming to reduce its environmental footprint while positively impacting society. Unilever’s Sustainable Living Plan, for instance, aims to enhance the livelihoods of millions, improve health and hygiene, and notably, reduce the environmental impact of its operations.
Since 2008, Unilever has achieved more than a 65% reduction in the environmental footprint of its products since 2008. The company has also made considerable strides in sustainable sourcing, with 62% of its agricultural raw materials sustainably sourced, contributing to a more eco-friendly supply chain.
Unilever has pledged €1 billion to the Unilever Climate & Nature Fund, aiming to invest in projects that help preserve and restore forests, landscapes, and biodiversity. Furthermore, Unilever reported that its sustainable brands grew 69% faster than the rest of the business, signifying the financial viability and success of its sustainability-driven business model.
Formerly Schnitzer Steel Industries, Radius Recycling earns our third choice as a surprise leader in the green economy–within the steel recycling industry no less. Annually recycling around 3 million tons of scrap metal, the company diverts substantial materials from landfills, leading to remarkable energy savings equivalent to powering over 480,000 households each year. What’s more, its recycling efforts result in an impressive avoidance of over 2.8 million metric tons of CO2 emissions annually.
Beyond environmental impact reduction, Radius prioritises safety, workforce development, and community engagement. With over 90% of its facilities surpassing industry safety standards, the company demonstrates a strong commitment to employee safety. Overall, it’s clear why Radius has been added to Times’ list of the hundred most influential companies in the world.
Countries and companies each have parts to play. Countries must think like businesses and evaluate how their country’s resources can add to the sustainability equation. Are these an abundance of resources? Can offsetting measures be prioritised instead? What tax incentives work? Denmark, Norway, and Sweden have understood at least as much.
Conversely, companies find that sustainability-driven business models exceed polluting counterparts. The overall global shift is dramatically towards the renewable and the responsible. Executives can invest in this theme, like Brookfield, or ensure that their brand reflects responsible manufacturing, like Unilever. The bottom is that there is no limit to success, regardless of industry, when creativity and sustainability meet hand-in-hand.
Next in this series of modern economy leaders, we’ll cover the top five private companies trailblazing the way for the creative ‘orange’ economy.
The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltec.io.
The co-author of this text, Conor Scott, CFA, has been active in the wealth management industry since 2011. Mr. Scott is a Writer for Deltec International Group, www.deltec.io.
The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees. This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service, or offering. It is not a recommendation to trade.
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