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Businesses Double Down on Sustainability as Consumers Focus on Costs

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While most businesses have intensified their sustainability efforts, many residential consumers’ actions have stalled as cost and complexity have slowed commitment to clean-energy solutions, according to Deloitte’s “Resources 2019 Study — Balancing climate, cost, and choice,” released today.

Although the annual survey shows widespread agreement on the need to address climate change and reduce their carbon footprints, businesses seem much more willing to take action than residential consumers. The survey found that businesses increasingly view sustainability as an opportunity to create value, while residential consumers tend to have a more nuanced view that factors in the cost and convenience of sustainability improvements.

“Consumer complacency may be settling in as costs outweigh climate as a motivator in adopting new technologies and cleaner energy sources,” said Marlene Motyka, Deloitte U.S. and global renewable energy leader and principal, Deloitte Transactions and Business Analytics LLP. “On the other hand, most businesses don’t perceive a choice between climate and cost. They see green energy choices as a win-win: doing the ‘right thing’ is good for the environment and the bottom line.”

According to the study, about two-thirds of business respondents say their customers are demanding they procure a certain percentage of their electricity from renewable resources, and nearly half of the businesses surveyed are seeking to do so. On the other hand, despite their own hesitations about investing in sustainability, most residential consumers surveyed expect action from the business sector and the government. Households also tend to believe it is the government’s responsibility to set the vision and path for U.S. energy strategy, indicating that government policies could help overcome consumer reluctance to adopt sustainable technologies.

Among the key findings:

Of the 84% of business respondents aware of recent global climate change reports, nearly two-thirds reviewed or changed their energy management strategies in response, with 83% increasing their commitment.

While energy management remains a top priority, with 9 in 10 reporting goals to reduce electricity consumption, most businesses surveyed are also expanding resource management goals in other areas — with water gaining the most ground with an increase from 59% in 2016 to 75% this year.

Among residential consumers polled, 67% are very concerned about climate change and their personal carbon footprints, but there was a slight retrenchment in how they felt about the importance of renewable sources of electricity — down to 48% from 53% in 2018.

Keeping total energy bills affordable rose five points to 63% in 2019, continuing to be the most important energy issue for residential consumers surveyed, while using clean energy sources fell slightly from 2018 to 50%.

Residential consumer behavior on climate in holding pattern: complacency or confusion?
When it comes to translating attitudes into action, the cost of electricity and the perceived cost/time investment required for changing behaviors or adopting new technologies, can be significant barriers to change. Moreover, messaging about new technologies, alternate providers, and other options do not appear to be coming through clearly. Whether it’s installing solar panels, enrolling in green energy programs, or purchasing battery storage or electric vehicles, many residential consumers consider those options too expensive or too complicated.

Slowing down on solar
Interest by surveyed residential consumers in installing rooftop solar fell from higher levels seen in 2016–17. Forty-four percent of those polled cite expense as the top barrier to solar installation, followed by uncertainty that panels would work as promised (21%). On the other hand, 39% of respondents would be extremely or very interested in purchasing a share in a community solar project, with interest highest among millennials (49%).

The millennial factor — the countertrend consumer
Surveyed millennials stand out as concerned about climate change and the only generation who consistently rate clean energy and exploring new technology options higher than other age cohorts. According to the study, 53% of millennials rate renewables’ role in their electricity supply as extremely or very important, as opposed to 40% in the mature age category (68+). In terms of technology adoption, 18% of respondents use software apps to track energy usage, with 29% of them using it daily. They’re also more likely to use home automation than older cohorts.

Home automation gaining momentum despite cyber concerns
Although home automation is at an early stage of deployment (only 2 in 10 of respondents), there are signs adoption is accelerating, with a doubling since 2016 of home device connectivity with smartphones. Fully 61% of active users surveyed are increasingly concerned about privacy and security, while 46% of all residential consumers say that these concerns might prevent them from purchasing smart home technology, and 39% of households link cyber risk with concerns about power outages.

Business see green begetting more green
While desire to cut costs was the top driver of those surveyed for resource management programs, “just ‘the right thing to do’” rose 11 points in 2019 to second place, at 39%. In fact, companies who view energy procurement as an opportunity to reduce risk, improve resilience and create new value, rather than as a cost — rose to 88% from 81% in prior years.

More businesses are also tying resource management goals to employee compensation, with 48% polled already incorporating energy objectives into goals, the highest level ever. Of those not working to procure more renewable energy, 65% said they could be motivated to do so by combining renewable energy with battery storage to provide backup generation and/or to improve the economics of the overall system.

Businesses increasingly look to onsite/self generation
By 2021, surveyed companies generating electricity on-site expect to source less power from electricity providers, falling from 40% of power consumed in 2018 to 35% of power consumed in 2021. They expect to replace this electric power with increased supplies from on-site renewable generation, off-site renewables and on-site co-generation. The top three reasons cited for installing onsite generation were diversification of energy supply, cost savings (up sharply) and price certainty.

Interest in electric vehicles (EVs) accelerating
Residential respondents are showing significant interest and intent in EVs, with 26% of respondents saying they are extremely or very interested in purchasing an EV, and 11% planning to replace their current vehicle with an EV. Concerns hindering growth are cost (44%), recharging convenience (29%) and range (26%), but if gasoline prices were higher, interest in purchasing an EV would likely rise for about 44% of residential consumers — and 55% of millennials.

On the business side, the survey shows that while business intentions to purchase EVs for their fleets remain unchanged, more are making the charging stations they provide to employees available for public use. More than half (54%) of respondents said their companies provide EV charging stations for employees, and of these companies, the percentage who make them available to the public ticked up to 6 points in 2018.

“For incumbent electricity providers and new entrants, inertia among residential consumers may, paradoxically, provide a competitive advantage,” said Stanley Porter, vice chairman, U.S. energy, resources and industrials leader, Deloitte Consulting LLP. “Generational preferences for greener energy, more choice, and more appetite for technology could open up markets. By understanding and segmenting the customer base and targeting them with clear and compelling messages through the appropriate channels, providers could break through consumer complacency and expand adoption of new services.”

Since 2010, Deloitte’s annual Resources study has been focused on the thinking of U.S. business and household decision-makers on energy usage, climate change, environmental responsibility, energy management and clean technologies. Based on surveys of 600 businesses across multiple sectors, and 1,500 residential consumers, the nationwide study was designed to provide insights that can help energy companies and businesses make energy-related investment and business decisions.

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Collapsing consumer demand amid lockdowns cripple Asia-Pacific garment industry

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Women at work in a garment factory in Hai Phong, Viet Nam. © ILO

The COVID-19 pandemic has triggered government lockdowns, collapsed consumer demand, and disrupted imports of raw materials, battering the Asia Pacific garment industry especially hard, according to a new report released on Wednesday by the International Labour Organization (ILO).

The UN labour agency highlighted that in the first half of 2020, Asian imports had dropped by up to 70 per cent.

Moreover, as of September, almost half of all garment supply chain jobs, were dependent on consumers living in countries where lockdown conditions were being most tightly imposed, leading to plummeting retail sales.

ILO Regional Director for Asia and the Pacific, Chihoko Asada Miyakawa, pointed out that the research highlights “the massive impact COVID-19 has had on the garment industry at every level”. 

Ripple effect

In 2019, the Asia-Pacific region had employed an estimated 65 million in the sector, accounting for 75 per cent of all garment workers worldwide, the report reveals.

Although governments in the region have responded proactively to the crisis, thousands of factories have been shuttered – either temporarily or indefinitely – prompting a sharp increase in worker layoffs and dismissals.

And the factories that have reopened, are often operating at reduced workforce capacity.

“The typical garment worker in the region lost out on at least two to four weeks of work and saw only three in five of her co-workers called back to the factory when it reopened”, said Christian Viegelahn, Labour Economist at the ILO Regional Office for Asia and the Pacific.

“Declines in earnings and delays in wage payments were also common among garment workers still employed in the second quarter of 2020”.

Women worst impacted

As women comprise the vast majority of the region’s garment workers, they are being disproportionately affected by the crisis, the report tracked.

Additionally, their situation is exacerbated by existing inequalities, including increased workloads and gender over-representation, as well as a rise in unpaid care work and subsequent loss of earnings

Moving forward

To mitigate the situation, the brief calls for inclusive social dialogue at national and workplace levels, in countries across the region.

It also recommends continued support for enterprises, along with extending social protection for workers, especially women. 

The ILO’s recent global Call to Action to support manufacturers and help them survive the pandemic’s economic disruption – and protect garment workers’ income, health and employment – was cited as “a promising example of industry-wide solidarity in addressing the crisis”.

“It is vital that governments, workers, employers and other industry stakeholders work together to navigate these unprecedented conditions and help forge a more human-centred future for the industry”, upheld Ms. Miyakawa.

Nuts and bolts

The study assessed the pandemic’s impact on supply chains, factories and workers in Bangladesh, Cambodia, China, India, Indonesia, Myanmar, Pakistan, Philippines, Sri Lanka and Viet Nam.

It is based on research and analysis of publicly available data together with interviews from across the sector in Asia.

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A few ‘green shoots’, but future of global trade remains deeply uncertain

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Although global trade is making a frail recovery, the outlook remains uncertain, UN trade and development body UNCTAD said on Wednesday, in announcing its latest COVID-era update

Estimates show that world trade will drop by five per cent this quarter, compared with the 2019 level. While this is an improvement over the nearly 20 per cent decline in the second quarter of the year, it is still not enough to pull trade out of the red. 

Furthermore, UNCTAD expects the value of all good traded to contract by seven to nine percent compared to last year, depending on how the COVID-19 pandemic evolves in the winter months. 

Uncertainty aggravating trade 

“The uncertain course of the pandemic will continue aggravating trade prospects in the coming months”, said UNCTAD Secretary-General Mukhisa Kituyi. 

“Despite some ‘green shoots’ we can’t rule out a slowdown in production in certain regions or sudden increases in restrictive policies.” 

While the projection represents a decrease, the figure is a more positive result than previously expected, as UNCTAD had projected a 20 per cent year-on-end drop for 2020, back in June. 

Trade trends have improved since then, the agency added, primarily due to the earlier than expected resumption of economic activity in Europe and east Asia. 

China leads recovery 

The report points to China, which has shown a notable trade recovery. 

Chinese exports had fallen in the early months of the pandemic and stabilized in the second quarter of the year, before rebounding strongly in the next quarter, with year-over year growth of almost 10 per cent. 

“Overall, the level of Chinese exports for the first nine months of 2020 was comparable to that of 2019 over the same period”, the report said. 

Within China, demand for goods and services has also recovered.  Imports stabilized in July and August, and grew by 13 per cent in September.   

Growth and decline in Asia 

India and South Korea also recorded export growth last month, at four per cent and eight per cent, respectively. 

UNCTAD reported that as of July, the fall in trade was significant in most regions except east Asia.  

West and south Asia saw the sharpest declines, with imports dropping by 23 per cent, and exports by 29 per cent. 

The report also includes an assessment of trade in different sectors, with the energy and automotive industries hardest hit by the pandemic. 

Meanwhile, sectors such as communication equipment, office machinery, and textiles and apparel, have seen strong growth due to the implementation of mitigation responses such as teleworking and personal protection measures. 

Wealthy nations benefit from COVID-19 medical supply trade 

The report also gives special attention to COVID-19 medical supplies, which include personal protective equipment, disinfectants, diagnostic kits, oxygen respirators and related hospital equipment. 

Between January and May, sales of medical supplies from China, the European Union, and the United States, rose from $25 billion to $45 billion per month.  Since April, trade has increased by an average of more than 50 per cent. 

However, the authors found wealthier nations have mainly benefited from this trade, with middle and low income countries priced out from access to COVID-19 supplies. 

Residents of high income countries have on average benefited from an additional $10 per month of imports of COVID-19 related products.  This compares to just $1 for their counterparts in middle income countries, and 10 cents for those in low income nations. 

 UNCTAD warned that if a COVID-19 vaccine becomes available, the access divide between wealthy and poor countries could be even more drastic. 

The report urges governments, the private sector and philanthropic organizations to continue mobilizing additional funds to fight the pandemic in developing countries and to support financial mechanisms that will provide safe and effective COVID-19 vaccines to poor countries

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COVID-19 crisis puts migration and progress on integration at risk

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Migration flows have increased over the past decade and some progress has been made to improve the integration of immigrants in the host countries. But some of these gains may be erased by the COVID-19 pandemic and its economic fallout. Governments need to secure the health and safety of all workers in essential activities and maintain spending on integration to help migrants continue to contribute to society and the economy, according to a new OECD report.

The OECD International Migration Outlook 2020 says that the COVID-19 crisis has had unprecedented consequences on migration flows. Before the pandemic, permanent migration flows to the OECD amounted to 5.3 million in 2019, with similar figures for 2017 and 2018. Although there were fewer refugee admissions, permanent labour migration rose by more than 13% in 2019 and temporary labour migration also rose, with more than 5 million entries recorded in the OECD.

Following the onset of the pandemic, almost all OECD countries restricted admission to foreigners.

As a result, issuances of new visas and permits in OECD countries plummeted by 46% in the first half of 2020, compared with the same period in 2019. This is the largest drop ever recorded. In the second quarter, the decline was 72%. Overall, 2020 is expected to be a historical low for international migration in the OECD area.

There are strong signs that mobility will not return to previous levels for some time. This is due to weaker labour demand, persistent severe travel restrictions as well as the widespread use of teleworking among high-skilled workers and remote learning by students.

“Migration will continue to play an important role for economic growth and innovation, as well as in responding to rapidly changing labour markets,” said OECD Secretary-General Angel Gurría, launching the report with European Commissioner for Home Affairs Ylva Johansson. “We need to avoid rolling back on integration and reaffirm that migration is an integral part of our lives.” 

Migrant workers have been on the frontline of the crisis. They account for a large share of the OECD medical workforce, with one in four medical doctors in the OECD, and one in six nurses. In many OECD countries, more than a third of the workforce in other key sectors, such as transport, cleaning, food manufacturing and IT services, are immigrants.

Yet immigrants are facing a hard time in the labour market. Much of the past decade’s progress in employment rates among immigrants has been wiped out by the pandemic. In all countries for which data are available, immigrants’ unemployment increased more, compared to their native-born peers. The largest increases for immigrants were observed in Canada, Norway, Spain, Sweden and the United States. In Sweden, almost 60% of the initial increase in unemployment fell on immigrants. In the United States, unemployment of immigrants was lower than their native-born peers by almost one percentage point before the pandemic, it is now 2 percentage points higher.

Migrants are highly exposed to the health impacts of the pandemic as a result of working on the frontline during the pandemic but also vulnerabilities linked, for example, to housing conditions and poverty. Studies in a number of OECD countries found an infection risk that is at least twice as high as that of the native-born. 

Going forward, getting migration and integration policies right will be essential if we are to achieve a strong and truly inclusive recovery.  

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