Could avoiding endings for not meeting sustainability goals provide the key to motivating to solve the climate crisis? Gothenburg thinks so, having become the first municipality in the country to link climate and social objectives to its funding.
The Swedish city’s local authority, Gothenburg Stad, recently renegotiated its SEK 8 billion (£645 million) revolving credit facility with six banks – a flexible deal that allows it to withdraw, repay and withdraw again – based on four goals, three of which are climate-related. Related. If these targets are met, Gothenburg Stad will receive a discount. If he misses them by more than a defined margin in each case, he will have to pay additional interest on his borrowings.
As the city aims for carbon neutrality by 2030, some of the incremental goals it has set to achieve this goal seem very ambitious. It seems unlikely that Gothenburg Stad will avoid being penalized next year, for example. With half a dozen banks closely monitoring proceedings, there is unlikely to be much leniency.
The toughest of the three climate goals is to remove all fossil-fuel vehicles from Gothenburgs Stad’s fleet by next year, according to its portfolio manager, Fredrik Block. He is confident this will happen by 2025 and hopes the promised discount for the making will negate any costs incurred along the way.
The second climate target is also challenging – to provide fossil fuel-free heating for the district by 2025 – as the vagaries of Gothenburg’s climate will have a strong influence. In 2020, for example, Gothenburg Stad managed to achieve 94% renewable energy due to an exceptionally warm winter. Compare that with 63% in 2019, as extremely low temperatures forced the city’s own energy company, Gothenburg Energi, to rely heavily on its fossil-fuel generators for backup. Today it’s 79% of the way there, giving Block reason to be optimistic.
The climate objective that seems the most achievable concerns the reduction of the energy consumption of the buildings managed by Göteborgs Stad. About half of them are municipal properties, including administrative buildings, schools and nursing homes. The plan is to reduce their consumption from just over 175 kWh per year in 2022 to 142 kWh per year in 2029 (about 19%), by making buildings more energy efficient and converting many of them to solar energy.
Achieving carbon neutrality by 2030 is of course the ultimate goal. For Block, it’s also about setting the benchmarks needed to secure additional funding based on longer-term sustainability, while inspiring other local authorities to follow suit.
He is due to make a presentation on Gothenburg’s credit agreement to municipal officials in western Sweden and has even received a request from a municipal council in another European country. But, despite his city’s progress, Block expects to see a significant difference between the current level of interest and eventual adoption, not least because local authorities tend not to take risks when it comes to deals with the management of public funds.
“Signing a deal of this nature means you’ll be in the spotlight, which is pretty scary,” Block admits. “Everybody wants to be sustainable, but nobody wants to be responsible. Everyone hopes everyone will save the planet. It is therefore a bit stressful for companies and administrations who would draw attention to their success or not.
Swedish bank SEB has taken over the management of Göteborgs Stad as sustainability coordinator. It secured its first sustainability-linked loans (SLLs) in 2019 from the private sector, leading to what the bank’s senior sustainability product adviser, Mats Olausson, calls “an explosion” of sustainability. activity in 2021.
Leading companies that have entered into SLLs with SEB include Electrolux, which secured a €1bn (£850m) loan in December 2021 as part of its aim to become carbon neutral from by 2030; and Husqvarna, which in March 2022 tied a SEK 5 billion loan to a target of reducing its carbon emissions by 35% by 2025.
“The extent to which our clients seek advice when it comes to articulating their sustainability strategy into their financing has exploded over the past five years. We believe this trend will continue,” says Olausson. “A few years ago, a lot of them had a business strategy here and a sustainability strategy next door. These two things are merging now. So when we have the chance to advise our clients on their sustainability strategies, we can better understand their business strategies. »
He adds that corporate finance teams have a stronger mandate than their public service counterparts to demand that their finances become sustainably responsible. Despite the differences in approach between the public and private sectors, Robin Millington, CEO of the environmental and financial think tank Planet Tracker, believes that the Gothenburg initiative marks the beginning of a new era in which such agreements “will be the basis for the restructuring of the global financial system.
Millington points to another Swedish city, Helsingborg, which in March became the first municipality to issue a sustainability bond tied to reducing its carbon emissions (similar to an SLL but sourcing funds from the investment in the broad sense). In the same month, Chile became the first country to use sovereign debt to fund its long-term climate policies in the form of a $2tn (£1.6m) bond.
City authorities are making greater strides in financing sustainability than big governments, notes Angela Hultberg, global head of the sustainability team at US consultancy Kearney, who was born and raised in Gothenburg. They are leading the way by cooperating with other city councils, donors, energy suppliers, transport companies, construction companies and other important stakeholders.
As time is running out on the climate crisis, the crucial question, according to Hultberg, is: “Will we be able to find the right partnerships – and develop them in time?
When we talk about climate change and conspiracy theories, it’s very common that misconceptions about science, the impact of CO₂, etc. be shared. Most of these hypotheses claim that global warming is a hoax. Without wishing to enter into hollow discussions, what is true is that denying the impact of human behavior on our environment can be problematic.
To combat this issue, Pinterest has launched a new policy to inhibit misinformation about the climate crisis within the platform. Pinterest’s new community guidelines show a stronger commitment to fighting misinformation and taking responsibility for climate change.
What’s more, this means that brands must take care with their organic content and advertising to follow these new rules.
However, although it is known that consumers prefer organic products, sustainable marketing is in its essence much more than a fad or a trend: is a true philosophy for content creators.
Climate change and social networks
Climate change is not a new topic on social media. Even before Greta Thunberg’s speech at the UN, many activists and organizations had already warned of the impact of human behavior on the environment.
In fact, the green movement began in the 1960s and 1970s when scientists began to worry about our influence on Earth pollution. Since then, the message has continued to spread throughout the world through various channels such as the press, radio and television. The Internet is no exception.
For example, search intent to have a green life was up 6x from last year. Additionally, upcycling and DIY ideas are a hugely popular trend on platforms like Pinterest, which is focused on giving more visibility to advocates of an environmentally correct lifestyle.
To complement this idea, experts have said that social media can be a powerful weapon in the fight against climate change. Innovation and technology contribute to reducing the risks and impacts of natural disasters. In addition, it enables better decision-making by helping to disseminate relevant information.
They confirm the positive impact that social networks like Twitter have when it comes to natural disasters. It helps mobilize efforts and resources almost instantly. In other words, it’s easier to help those in need.
Climate change and skepticism
The other side of the coin is not positive, but detrimental. On the same platform that we find ideas for a greener life, we can also detect misleading content. Claiming that climate change is a lie and everything is a global conspiracy is a common feature of this type of fake news.
What worries us is the dissemination of these ideas on social networks. Research conducted at Carnegie Mellon University found that deniers share more climate crisis conspiracy theories than climate change believers. The number of tweets and retweets issued by skeptics is higher than that of believers.
The Guardian magazine found that in the first half of 2020, Facebook ads denying the reality of environmental pollution were viewed at least 8 million times in the United States.
Some actions have been taken in this direction. For example, looking for products and services that claim to be eco-friendly, but provide misleading information to their audience.
We can highlight the efforts of Meta last year. A good example is how the company deleted 9.2 million posts deemed harassing on Facebook and 7.8 million such posts on Instagram.
These actions are not necessarily about climate change denial, however, they show a greater concern for stopping the spread of fake news and creating a safer environment for digital users.
Green Marketing, Green Marketing or Sustainable Marketing
Pinterest’s new policy should encourage marketers to focus on other topics for their brand, considering that Green Marketing, Green Marketing or Sustainable Marketing are interesting strategies to apply in these decades.
But beware, poor implementation of these practices or the dissemination of false information to sell products can be considered greenwashing, which we can translate as eco-laundering.
By definition, green marketing involves the creation and promotion of environmentally friendly products, services and practices. Some methods may include using eco-friendly packaging, a recycling program, or using renewable energy.
Additionally, sustainable marketing is all about promoting a socially responsible aspect of your business. It doesn’t have to be an organic product. This practice goes far beyond the environment, as it is closely linked to other issues such as poverty, hunger and discrimination.
Pinterest now applies these principles by modifying the rules of its platform. They try to spread better messages based on facts and what is good for the environment and the whole community.
Brands should do the same. Both on and off Pinterest.
Why should brands be greener?
Recent studies have shown the importance of socially responsible decisions for the customer. For example, according to Forbes, 92% of consumers are more likely to trust environmentally or socially responsible brands. In addition, they are 88% more likely to retain customers.
Here are some other benefits that the brand can take advantage of these practices:
- improve your reputation;
- save money on the logistics of a product or service;
- attract new audiences more concerned about climate change.
However, the business benefits of going green should not be the only reason for taking this approach. The desire to really want to help your community and environment should be enough to seek improvements in your marketing strategy.
Misinformation and fake news try to change our perception of reality with lies, which is really dangerous. These new practices put in place by Pinterest, Meta and other companies show us that there are some things we simply cannot deny or ignore. Climate change is one of them.
As companies, we do more than sell a product. Therefore, taking care of our internal and external processes and communications is essential to generating a positive impact on our world and mitigating the climate crisis.