In this article, we’ll explain the controversy regarding “drill baby, drill”, why it may not be so easy, and how Trump will impact the environment.

Why Trump’s “Drill Baby, Drill” Could Face Challenges

Upon Donald Trump’s re-election as the 47th president of the United States, many are concerned regarding reproductive freedom, rights for the LGBTQ+ community, and climate change – especially in light of Trump’s previous comments to “drill baby, drill” to stimulate the U.S. economy. 

Having always been skeptical of climate change and an advocate for boosting the economy of the United States, regardless of how it may impact the environment, Trump has an infamous motto to “drill baby, drill” – but it may not be as easy for Trump to increase gas and oil production as it he may think it be.

In this article, we’ll explain the controversy regarding “drill baby, drill”, why it may not be so easy, and how Trump will impact the environment regardless of “drill baby, drill”.

“Drill Baby, Drill” is a Republican, politico motto first coined in 2008 by Micheal Steele at the Republican National Convention as an effort to incite excitement regarding the idea to avoid dependency on foreign oil and reduce energy costs.


💡NPR has previously stated how it’s important to remember that “drill baby, drill” is more of a slogan than it is a fully-fleshed out business plan – especially as, unbeknownst to most, Republicans prior to Trump have used the phrase before.

Although many like the idea of “drill baby, drill” as it could make the United States more independent in terms of energy production, several critics are concerned how the vague outline of “drill baby, drill” could impact the environment.

Milwaukee, USA: Former US President Donald Trump promised more oil extraction in America at RNC 2024 on July 19. Donald Trump also pledged to reduce tax rates, and inflation, and more relief to US citizens. Watch the full video to know more and follow Mirror Now for the latest updates.
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'Drill, Baby Drill…' Donald Trump On Oil Extraction In America at RNC 2024, | World News

Here are some of the reasons why the Republican party has continued to boast the notion of “drill baby, drill”:

Energy Independence – Republicans first and foremost value taking care of Americans, which means making resources and prices more accessible to the average U.S. citizen. As a result, Republicans place a strong emphasis on domestic gas and oil production and straying from any dependence on foreign energy sources.

Boost the Economy – As economic factors remain as one of the primary principles for Republicans, pursuing the notion to “drill baby, drill” could help to create new jobs and help generate new revenue for the U.S. government.

Decreased Dependence on Foreign Energy Sources – Mitigating the need to rely on other nations for energy sources could not only help to reduce utility costs for Americans as the energy will now be made, “in house” – but could help to keep the United States out of complicated foreign affairs that could possibly put their energy resources at risk. This has previously been shown with the European Union in the midst of the Russia-Ukraine conflict, as energy bills in Europe have since skyrocketed.  

Lower Costs for the U.S. – Increasing national energy production would mean less money needed for importing energy into the country in addition to Americans having extra money in their pockets from reduced utility bills. This extra cash might incentivize them to stimulate the economy by purchasing unnecessary goods with their influx of income. 

Ultimate Disapproval of Environmental Regulations – ”Drill baby, drill” is the antithesis of implementing strong environmental regulations to curb carbon emissions and our current environmental impact. 

👉 Overall, “drill baby, drill” is a phrase used by Republicans, most infamously by Trump, to encourage excitement around the idea of increasing domestic oil and gas production in hopes of curbing inflation and boosting the economy.

Why are so many Americans in support of “drill baby, drill”?

A whopping 44% of Americans are in favor of increasing domestic oil production in hopes of reducing energy prices and decreasing dependence on foreign energy sources. 


💡 Since Trump’s re-election for president in 2024, it is more evident than before that a large majority of the country is more concerned about increasing prices, inflation, and keeping their businesses afloat as opposed to many of the issues discussed in Kamala Harris’s campaign – illustrating that many are interested in “drill baby, drill.”

“Let’s reduce our dependency on foreign sources of oil, and promote oil-and-gas production at home. Let me make it very clear: Drill, baby, drill – and drill now.” – Micheal Steele, using “drill baby, drill” for the first time at the Republican National Convention in 2008.

Here are some of the reasons why Americans are in support of “drill baby, drill”:

Reduce Grocery Prices – One of the main areas of concern for the majority of Americans as of the most recent presidential election, many in support of “drill baby, drill” believe increasing oil production can help to curb inflation and reduce living costs for the average American.

Greater Independence for the U.S. – Patriotism is a key factor for many Americans, meaning that the United States takes pride in building and executing something on its own without additional help. Many supporters of “drill baby, drill” like the idea of the United States decreasing its dependency on foreign fossil fuels.   

Decrease National Debt – In light of the most recent debt ceiling, many Americans are concerned with the country’s current debt of over $36 trillion USD – and view “drill baby, drill” as a way to avoid continued negative cash flow for the country. 

👉 Ultimately, those in support of “drill baby, drill” are concerned about both their own and the country’s current financial obstacles – and view increased oil fracking and finite energy resource projects as a way to escape fiscal peril.

Why are so many Americans against “drill baby, drill”?

Up to 53% of Americans are against oil fracking and increasing domestic oil production, as it could cause continued harm to the planet – and prevent the United States from adhering to its previous international treaties, such as the Paris Agreement, vowing to prevent global temperatures from exceeding 1.5°C.


💡 The main reasons why over half of Americans, many of them Democrats, are against “drill baby, drill” is because it could harm our air quality surrounding ecosystems, increase global temperatures and spur more frequent and intense natural disasters – putting the country and the world in a vicious cycle where the effects of climate change never end.

“What is the rest of the world going to think when we tell them to pull their fair share… if we’re just going to start drilling because it’s more convenient for us to have that oil in the short term?” – Owen Bland, a sophomore in International Relations from Connecticut.

Don't believe Big Oil-funded politicians who say that more drilling will lower prices at the pump. Our addiction to oil and gas is driving up inflation, fueling wars, exacerbating the climate crisis, and spewing poison into our air and water. Moving to renewable energy is the only way to a safer, cleaner, and more equitable future.

Take action and demand President Biden to declare a climate emergency: https://bit.ly/3H9Mxir 

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Why “Drill, Baby, Drill” Won’t Lower Gas Prices

Here are some of the reasons why Americans are against “drill baby, drill”:

Increased Pollution – There is no doubt that increasing our production of domestic oil would also mean polluting our air and local water resources, which could create new issues for the country by compromising the health of Americans. 

Impact on Coastal Cities – While areas such as Florida, Louisiana, and the Carolinas are already suffering the devastating impacts of more severe hurricanes, coastal areas around the world could be impacted by “drill baby, drill” – such as Panama City Beach. This is because increasing drilling could harm the Eastern Gulf Coast by threatening local wildlife, tourism, and even Panama City’s training range for air force and military purposes. 

Skyrocketing Gas Prices – As a country where driving is more common than using public transportation, gas prices are important to Americans – but “drill baby, drill” could, contrary to what many supporters believe, ironically drive up the prices of gas across the country. 

👉 ”Drill baby, drill” could have irreversible consequences on our climate in a time period where taking proactive measures are more imperative than ever before – making “drill baby, drill” a living nightmare for environmental activists.

Why would “drill baby, drill” not be as simple as it sounds?

“Drill baby, drill” isn’t as easy as Trump has made it sound to be, as he would need the approval of producers to increase their production of crude oil and petroleum – in addition to getting companies on board with, “drill baby, drill” despite the poor market forecast. 

💡Two major components that may keep Trump from proceeding with, “drill baby, drill” include the decreased global demand for finite energy in addition Wall Street aren’t going projecting a global, low-value trade market for oil and gas.


Here’s a breakdown of why Trump won’t be able to, “drill baby, drill” as easily as he might think he’ll be able to:

As countries around the world, including the United States during Biden’s presidency, make an honest effort to transition to a clean energy economy and reduce their GHG emissions – the production of finite energy sources is becoming less valuable to other nations around the world.

Therefore, despite Trump’s desire to slash the development of energy efficiency infrastructure in place of new oil drilling projects, companies will be aware of the decrease in fiscal value of drilling, and in turn – not be willing to drill as much as Trump may want them to. 

When there is an increase in tariffs, demand goes up – especially when no longer importing cheaper goods from other countries such as China, Canada, or Mexico. If these potential American-made goods and services, such as domestically produced energy, become the most affordable and relevant option available – there will be a spike in demand, and a subsequent increase in price.

👉 Ultimately, American producers won’t want this to happen as their product or service will become inaccessible to many American consumers – meaning that Trump won’t be able to, “drill baby, drill”.

Even if there are companies willing to be on board for Trump’s, “drill baby, drill” movement – their current supply chain dynamics may not allow for a sudden increase in oil production. 

In the end, it’s important to remember that even if Trump is president – he can’t magically find all of the resources, various moving parts, and approvals necessary to “drill baby, drill” at the sudden speed he believes he can.

As companies around the world begin to shift their focus to energy efficiency and eco-friendly measures to coincide with new environmental regulations, it would be challenging for Trump to go against the grain of these new global recommendations and actions that have been rising to prominence since his last presidential term.

The table below will depict additional reasons why, “drill baby, drill” could be challenging for Trump:    

<table border="1" cellspacing="0" cellpadding="5">
    <tr>
        <th>Challenge</th>
        <th>Description</th>
    </tr>
    <tr>
        <td>Oil Price Volatility</td>
        <td>Crude oil prices remain volatile, complicating investment decisions for new drilling projects as they depend on stable price forecasts for profitability.</td>
    </tr>
    <tr>
        <td>Environmental Opposition</td>
        <td>Environmental regulations and public protests against fossil fuel projects create legal and social barriers, delaying projects or increasing costs.</td>
    </tr>
    <tr>
        <td>Global Market Dynamics</td>
        <td>Global competition, particularly from OPEC+ and their control over oil supply, influences U.S. production by affecting price competitiveness.</td>
    </tr>
    <tr>
        <td>High Production Costs</td>
        <td>Shale oil extraction, a key U.S. method, often has higher breakeven costs compared to conventional drilling, especially when oil prices are low.</td>
    </tr>
    <tr>
        <td>Investor Hesitation</td>
        <td>With rising global focus on ESG (Environmental, Social, and Governance) criteria, investors are increasingly cautious about financing fossil fuel projects.</td>
    </tr>
    <tr>
</table>


Will Trump still impact the environment if he can’t, “drill baby, drill” ?

Even if Trump won’t be able to, “drill baby, drill” – he will still create a colossal, irreversible impact on the environment – as his presidency could result in over 4 billion tonnes of carbon dioxide equivalent (GtCO2e) by 2030.

Trump’s efforts to reduce any of the environmental protocols created by the Biden administration, in addition to withdrawing from the Paris Agreement – means that the U.S. will run rampant in terms of GHG emissions.

Here are some of the ways a second Trump-term will have an effect on climate change:

Reversing the clean energy incentives in the Inflation Reduction Act of 2022 will no longer encourage energy efficiency in households and businesses alike

Trump’s decision to reverse the Affordable Care Act will impact millions of Americans and their current healthcare plans 

Misinformation regarding climate change may spread under Trump’s presidency and prevent Americans from re-thinking how their day to day actions will impact the environment 

Overall, whether Trump is able to “drill baby, drill” or not – he will be able to reverse several of Biden’s policies previously implemented to prevent climate change from becoming a national emergency.

As Trump will indeed be successful in passing some new oil and drilling projects, which will contribute to global warming – it’s more important than ever before for businesses and households in the U.S. and beyond to take control of their actions to fight against climate change.

If reading this article on Trump’s motto regarding, “drill baby, drill” has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!

It can be overwhelming to figure out how to effectively reduce emissions in your business, but don’t worry – Greenly is here to help. Click here to schedule a demo to see how Greenly can help you find ways to effectively reduce emissions across your company.

Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.

ESG investing has proven to be one of the most durable investment trends over the past decade. Learn why all kinds of investors support ESG funds and investments.

ESG investing: meaning and trends

ESG investing has brought about a transformative shift in our approach to investments. Gone are the days when investing was solely focused on financial returns. Today, ESG investing aims to generate returns that not only benefit investors but also contribute to the betterment of society.

👉 What is ESG investing? Why is it becoming so popular? And what are its advantages? 

The term "ESG" encompasses environmental, social, and governance performance, which, along with profitability, reflects the values and impact a company can have on society. It recognises that businesses must strike a balance between these diverse forms of value to ensure their long-term business sustainability.

By integrating ESG factors into investment decisions, investors are taking into account the environmental impact of companies, their social responsibility, and the effectiveness of their governance structures. This comprehensive evaluation of companies enables investors to align their investments with their values and contribute to positive change.

Moreover, ESG investing has broadened the definition of success in the investment world. It acknowledges that financial returns alone are not sufficient indicators of a company's true worth. Instead, ESG investing recognises that companies that excel in environmental stewardship, social responsibility, and strong governance are more likely to deliver sustainable and resilient performance over the long term.

ESG investing has also spurred companies to become more transparent and accountable in their operations. In order to attract ESG-minded investors, companies are increasingly disclosing information about their environmental impact, social initiatives, and governance practices. This level of transparency fosters trust between companies and investors and promotes responsible business practices.

ESG investing has revolutionized the way we approach investments by emphasizing the importance of societal benefits alongside financial returns. It encourages a holistic evaluation of companies, taking into account their environmental, social, and governance performance, to ensure long-term business sustainability and contribute to positive change in the world.

ESG is a catch-all term for investing strategies that consider a company’s environmental, social and governance factors. ESG investing is predicted to surge following the coronavirus pandemic and demonstrations over racial justice. Consumers and Wall Street investors alike are increasingly holding companies accountable for their performance on environmental, social and governance benchmarks—or ESG, for short. Here's how ESG investing could transform the financial and business industry.

Before the police killing of George Floyd in Minnesota and before Covid-19 forced corporate America into lockdown, companies were being singled out for social responsibility.

It’s a trend that began to accelerate well before the current crises, and has now gone mainstream.

“Investors were really flocking to ESG strategies,” said Valerie Grant, senior portfolio manager of responsible investing at AllianceBernstein. “For ETFs, there were $8 billion inflows into ESG strategies. And for mainstream funds, the flows were $12 billion.”

 While critics have called ESG investing vague and even a fraud, analysts predict it will double in 2020 and become integrated into the investment decisions of every investor.

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The Rise Of Socially Conscious Investing

The Rise Of ESG Investing

ESG investing goes beyond traditional profit-focused approaches by placing equal importance on environmental, social, and governance factors and performance. It acknowledges the material risks and opportunities associated with these factors that businesses encounter.

ESG investing is often referred to by several interchangeable terms, including sustainable investing, impact investing, socially responsible investing, and ethical investing. These terms all reflect a commitment to sustainable development. 

ESG investing prioritizes a long-term perspective over short-term profits that come at the expense of the environment and society. The goal is to ensure that businesses can thrive while preserving the natural resources and human capital they rely on.

The popularity of ESG investments has been driven by increasing consumer demand and regulatory pressures for environmental and social responsibility. Even in the absence of legally required reporting, businesses often choose to voluntarily adopt corporate social responsibility standards and frameworks to measure, report, and communicate their ESG performance. 

👉 Well-known frameworks include CDP, the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD). Annual corporate social responsibility reporting allows investors to assess and compare the performance of businesses.

ESG investors rely on ESG investment indices such as the Dow Jones Sustainability Index (DJSI), Morgan Stanley Capital International (MSCI), FTSE4Good, and ISS ESG Solutions to analyze ESG rating information. 

Additionally, investors can disclose their own sustainability initiatives by adhering to the Principles for Responsible Investing (PRI), established by the United Nations in 2006. With over 2,000 signatories, these principles are widely recognized as ethical investment guidelines.

👉 To read more about PRI, check out our article. 

In April 2022, the UK implemented two mandatory ESG disclosure laws: the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022.

These Regulations require specific companies to include climate-related financial disclosures in their strategic report. The companies affected are as follows:

UK companies that are required to produce a non-financial information statement, including those with over 500 employees, listed on a UK regulated market, or functioning as banking or insurance companies (Relevant Public Interest Entities).

UK registered companies listed on the London Stock Exchange with over 500 employees.

UK registered companies not falling into the above categories, but with over 500 employees and a turnover exceeding £500m.

Large LLPs (Limited Liability Partnerships) without trading or banking activities, with over 500 employees and a turnover exceeding £500m.

Traded or banking LLPs with over 500 employees.

The impact of this new legislation extends beyond the UK's major companies and financial institutions to include the numerous businesses in their supply chains. This emphasizes the importance of initiating ESG reporting, regardless of direct impact.

Previously, a specific group of large companies (approximately 11,000 entities) in the European Union (EU) were required to disclose ESG information according to the Non-Financial Reporting Directive (NFRD).

However, in 2023, the NFRD was replaced by a new directive called the Corporate Sustainability Reporting Directive (CSRD). The CSRD expands the reach of companies obligated to comply, encompassing around 50,000 companies in the EU. This accounts for approximately 75% of the total turnover of EU companies.

👉 If you would like to acquire more knowledge about the CSRD, you can read our article on the topic. 

At present, there are no compulsory ESG disclosure obligations on the federal level in the United States. However, in May 2022, the US Securities and Exchange Commission (SEC) put forth proposed "amendments to rules and reporting forms to ensure consistent, comparable, and dependable information for investors regarding the integration of environmental, social, and governance (ESG) factors by funds and advisers." 

If the proposal is approved, it will introduce disclosure mandates for funds and advisers that promote themselves as having an ESG emphasis. 

👉 To learn more about the upcoming SEC Climate Disclosure Rules, check out our article. 

Why is ESG analysis becoming important to companies?

ESG investing has experienced remarkable growth, soaring by 456% between 2005 and 2020. This surge is aligned with a burgeoning interest among individuals and organizations to leverage their investments for both financial gains and positive societal impact.

Contrary to common belief, achieving substantial profits does not necessitate compromising environmental and social responsibilities. Numerous studies have established a positive correlation between ESG investment performance and financial growth. For instance, a Fidelity study scrutinising global ESG investments from 1970 to 2014 found that half of these investments outperformed the broader market, while only 11% displayed poor performance.

Further research conducted by Morningstar highlights the favorable characteristics of ESG funds. These funds demonstrate lower volatility and deliver positive returns. Over a span of ten years, an impressive 77% of ESG funds remained active compared to just 46% of conventional funds.

The rapid expansion of ESG investing has prompted investors to demand increased transparency and reliable data from the companies they invest in. Accurate ESG ratings heavily rely on voluntarily reported data furnished by these companies. To facilitate this process, companies can adopt corporate social responsibility (CSR) reporting frameworks, which enable the effective delivery of information that is valuable to investors. Contrary to concerns about exposing poor performance, ESG reporting actually grants companies a clearer understanding of their overall business operations.

Implementing ESG improvements doesn't always require expensive or time-consuming initiatives. In fact, they can yield cost savings and enhance operational efficiency. Shifting the organizational mindset towards ethical business practices allows companies to effectively communicate their ethical values to stakeholders.

Consumers place immense value on these ethical considerations, to the extent that they are willing to boycott brands that do not prioritize business sustainability. Additionally, consumers are even willing to pay more for products from companies that prioritize ESG factors.

As the consequences of climate change and social inequalities intensify, investors will increasingly seek out high-quality ESG investments. To seize the opportunities presented by this burgeoning trend in ESG investing, businesses must embrace sustainability reporting and disclosure as an integral part of their operations.

When it comes to voluntary ESG reporting, businesses have traditionally disclosed their performance based on the issues that are relevant to their operations. Various ESG frameworks suggest that companies report on specific factors such as their greenhouse gas (GHG) emissions.

However, not all factors can be easily categorized into distinct "E" (environmental), "S" (social), or "G" (governance) categories, as they often have interconnected impacts. For example, reducing GHG emissions is crucial for addressing climate change and the environment, but it also has positive effects on community health, which is a social consideration.

In addition, businesses are increasingly expected to report the financial risks and opportunities associated with ESG factors, considering their impact on the company's bottom line. However, quantifying ESG factors in financial terms can be challenging for companies, and verifying the accuracy of these measurements can present further difficulties.

That's why it is essential for businesses to collaborate with organizations that can assist them in quantifying ESG factors accurately. By partnering with such organizations, businesses can receive support in their ESG quantification efforts.

With so many different factors included in ESG and so many different business models, there are no standard metrics that companies report on. To prepare for ESG reporting, organizations select the ESG performance metrics material to their business industry and model. 

‍However, environmental metrics such as GHG emissions are commonly reported, due to the globally binding Paris Agreement target of limiting global warming to well under 2 degrees Celsius by 2100. 

But even for GHG emissions, there are variable methods for measurement. GHG emissions data may be measured in “absolute” or “emissions intensity” terms. 

👉  Absolute emissions measurement reports the total greenhouse gas emissions over a period of time. Emissions intensity shows how much GHG emissions were produced per unit of profit.

While absolute emissions targets are helpful for assessing performance according to a national carbon budget and achieving net zero, emissions intensity targets allow growing businesses to reduce emissions relative to their growth. 

Assessing ESG performance starts with choosing a baseline year for comparison, establishing key metrics to measure performance, and KPIs to assess improvements. 

Many jurisdictions are in the process of introducing ESG fund labelling regulations. Such regulations aim to make the assessment and comparison of ESG funds more transparent and to limit the risk of greenwashing. 

The FCA is currently in the final stages of developing the UK Sustainable Disclosure Regulation (UK SDR), and the finalized regulations are expected to be published later this year. The primary change brought about by the UK SDR is the implementation of a label-based rating system. This system categorizes financial products based on their level of sustainability, allowing investors to differentiate between them based on their sustainability credentials.

Sustainable focus - Assets with this label primarily emphasize environmental or social sustainability. These funds are required to maintain a high level of sustainability by investing at least 70% in sustainable assets.

Sustainable improvers - Assets with this classification aim to have a positive impact on the environment or sustainability in the future. Asset managers are expected to demonstrate measurable improvements in the funds' environmental, social, and governance (ESG) performance.

Sustainable impact -Assets labeled as such focus on investments that address real-world problems and contribute measurably to environmental or social sustainability outcomes. While there is no minimum sustainable investment requirement for this classification, financial products must have a specific sustainable objective as their intended outcome.

👉 To learn more about the UK’s sustainability disclosure requirements take a look at our article. 

The Sustainable Finance Disclosure Regulation (SFDR) is a regulatory framework implemented in the European Union (EU) that enforces compulsory disclosure requirements regarding environmental, social, and governance (ESG) factors for EU financial market participants. These regulations were introduced in 2021 with the objective of ensuring transparency for investors regarding the environmental and social characteristics of financial products.

The SFDR has implemented varying levels of disclosure, categorizing funds into three distinct groups based on their level of sustainability:

Article 6 funds - These funds do not incorporate sustainability into their investment processes.

Article 8 funds - These funds promote sustainable investment, although it is not their primary objective.

Article 9 funds - These funds prioritize sustainable investment as their main objective.

👉 To learn more, read our article on the Sustainable Finance Disclosure regulations. 

The U.S. Securities and Exchange Commission (SEC) has announced proposed amendments to the 'Investment Company Act,' a regulatory framework governing funds. These proposed changes aim to strengthen the fund labeling regulations by categorising funds into three tiers:

ESG-integrated funds, where ESG qualities are a routine selection factor, but only as one factor among many. Where this is the case, the fund needs to disclose its methodologies and data sources used in their ESG evaluation.

ESG-focused funds, where ESG qualities are a “significant” or “main” consideration. In this case funds will need to disclose greenhouse gas emissions and outline their methodology for selecting fund assets. They will also need to display the information in a standardized table for easy comparison. 

Impact-focused funds, where specific ESG outcomes are the primary focus of the funds. They’ll need to disclose how they measure qualitative and quantitative progress towards those ESG goals - this includes relevant emissions data for any environmental goals.

Another aspect of the proposed amendments will mean that any fund that includes a specific type of investment in its name (for example ESG) will need to allocate at least 80% of the fund accordingly. 

👉 To find out more about the proposed ESG fund labeling rules please read our article on the topic. 

In light of the COVID-19 pandemic, the significance of business resilience amidst global disruptions has become paramount. Much like the pandemic, climate change is anticipated to exacerbate social inequalities and present difficulties in adapting to transformative circumstances.. 

As a result, we’ve seen a steady increase in sustainable investment net inflows over the years. 2021 saw the largest amount of sustainable investments totalling $649 billion, according to Bloomberg. This was more than twice the amount invested in 2020. 

Sustainable investments now make up more than a third of the total global managed assets, and this amount grows each year.  In fact, it’s estimated that ESG assets could reach $50 trillion by 2025.

The 2015 Paris Agreement made climate change a key focus for global ambition. Net zero GHG emissions targets cover 70% of global GDP combined from national and regional commitment levels. 

Public opinion also seems to favor climate change action. Yale’s climate opinion polls from 2021 show that 72% of people in the US think that CO2 should be regulated and 70% feel that corporations should do more to address global warming. 

‍With such a strong consensus among policy leaders and public opinion to reduce global GHG emissions, investors increasingly expect businesses to measure, report, and establish reduction targets for their corporate emissions. 

The investment community no longer sees companies as mere contributors to the problem of climate change. It is also now acknowledged that business assets are vulnerable to climate risks too. 

These risks include “transition risks” related to regulations, consumer demand, litigation, and shifting technologies. They also include “physical risks” related to climate change such as water scarcity, extreme temperatures, sea level rises, and other complex impacts. 

Direct climate change impacts have totalled $2.565 trillion in damages since 1980, according to the NOAA. Without significantly reducing CO2 emissions, these impacts are expected to increase in intensity and frequency. That’s why climate change has become a “hot” trend within ESG investing. 

As climate risks grow, passive investment could become a relic of the past. 

The global pandemic has cast a spotlight on the profound mental health challenges stemming from grief, isolation, and uncertainty. Disruptions to schedules, disparities in healthcare accessibility, and inconsistent safety measures have left individuals in a state of confusion and frustration. And even though the pandemic may have receded, its lingering impacts continue to be felt.

Compounding this issue is the growing cost of living crisis, which is creating financial difficulties for people across the globe and pushing more and more families below the poverty line. This is resulting in an increase in health issues such as anxiety and depression. 

These mental health issues take their toll on the workforce and reduce the morale of team members beyond those directly impacted. Overall, this can affect the profits and reputation of businesses. 

Work-life balance, flexible work schedules, and opportunities for career advancement can all help employees engage more meaningfully at work. Mental health is an important ESG consideration for investors, because it correlates with stronger productivity and financial returns. 

The Covid-19 pandemic also severely impacted and exacerbated social inequalities, many of which are still being felt today. For example, parents had to find childcare or sacrifice work when their children could not attend school, and  this often disproportionately affected women who tend to be the primary caregivers. As a result the gender disparity in the labor market has widened. 

Another impact of the pandemic was a widening of the world’s wealthiest and poorest individuals. Across supply chains, people lacking economic safety nets had to risk their lives to continue producing the world’s commodities. In contrast, global wealth soared during this time, creating a greater divide. 

And this divide has only gotten bigger with the cost of living crisis. As a result, employees, frustrated by the level of social inequality, have taken efforts to form unions, go on strike, and demand stronger health and safety protections, living wages, and equal pay across gender and race. 

Social inequality not only wears down on the performance of a company, it threatens organizations with reputational damage that can last for years. Nike spent over a decade recovering from campaigns and lawsuits highlighting its sweatshop labour practices in the 1990s. 

Companies that prioritize greater equality within supply chains and their own workforce can maintain strong relationships with their diverse stakeholders. The benefits of lower turnover, greater brand loyalty, and increased productivity are all vital for positive financial performance. 

Many people, especially millennials and Gen-Z consumers, are opting for vegan or organic food, second-hand fashion or sustainable brand clothing, eco-conscious travel destinations, and products with low waste or plastic-free packaging options. 

Consumers are also consciously choosing biodegradable or reusable products and packaging to live zero-waste or low-waste lifestyles. They are more likely to compost and save water or electricity when possible. 

The global plant-based protein industry is now valued at $12.2 billion. Mainstream fast food restaurants are beginning to offer plant-based menu options to respond to this growing trend. Alternative meat start-ups like Impossible Burger have successfully tapped into the demand for meatless options. 

‍Second-hand apparel is rapidly expanding and is expected to grow three times faster than the market for new clothing. Online shopping and reselling, as well as cheaper price points have made second-hand clothing convenient to buy and sell. People can upload and sell directly from their closets on apps like Depop, Poshmark, Vinted, and Etsy.

Resellers specializing in brand name clothing like ThredUp, Vestiaire Collective, and the RealReal have also created a high-end equivalent of the second-hand clothing marketplace.

Traditional retail clothing sellers like Patagonia, Levi’s, and Eileen Fisher have also started to buy back their inventory to resell their own used inventory at a lower cost. This way, brand-loyal shoppers can support the companies at lower price points. 

‍Sustainable lifestyle choices are likely to grow in importance as more people respond to global shifts by changing their personal habits. Companies that offer relevant low-waste, ethical opportunities for consumers are likely to reap financial rewards. 

At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. Why not request a free demo with one of our experts - no obligation or commitment required. 

If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here. 

How does carbon accounting work? Why is carbon accounting so important for your business in reducing greenhouse gas emissions?

Carbon Accounting: All You Need to Know

Finances are tricky to navigate when running a business, but did you know that keeping track of more than just your money, like carbon accounting, is just as important to monitor?

Accurate carbon accounting can help you and your company work towards a greener future and better environmental standards – such as developing an Environmental Management System or acquiring an ISO 14001 certification.

Why is carbon accounting a useful tactic to ensure your company is benefiting the environment? 

👉 In this article, we'll explain what carbon accounting is, the methods used for carbon accounting, and how your company can get started with carbon accounting.

What is carbon accounting? Why is it important for your business? 

Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.

What is carbon accounting and how to do it?

Carbon accounting, also known as greenhouse gas (GHG) accounting, refers to the process of measuring, tracking, and reporting the carbon dioxide and other greenhouse gas (GHG) emissions associated with an organisation’s operations, products, or supply chains. This process provides a foundation for understanding environmental impact and helps organisations take informed actions to reduce emissions.    

💡 Why it matters: Carbon accounting enables businesses to identify key sources of emissions, monitor progress over time, comply with regulations, and align with global sustainability goals. It also plays a crucial role in strategies like carbon credit trading and contributing towards global net-zero aspirations. 

Carbon accounting has many practical uses including: 

<table>
  <thead>
    <tr>
      <th>Purpose</th>
      <th>Description</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Regulatory Compliance</td>
      <td>Ensures adherence to local, national, and international environmental laws and carbon reporting requirements.</td>
    </tr>
    <tr>
      <td>Tracking Emissions</td>
      <td>Provides a clear picture of direct (Scope 1), indirect (Scope 2), and value chain (Scope 3) emissions.</td>
    </tr>
    <tr>
      <td>Carbon Reduction Planning</td>
      <td>Identifies high-emission areas to develop targeted reduction strategies.</td>
    </tr>
    <tr>
      <td>Sustainability Reporting</td>
      <td>Communicates an organization’s environmental performance to stakeholders through reports like CDP, GRI, or TCFD.</td>
    </tr>
    <tr>
      <td>Carbon Market Participation</td>
      <td>Facilitates the trading of carbon credits or offsets, enabling cost-effective emissions reductions.</td>
    </tr>
    <tr>
      <td>Stakeholder Engagement</td>
      <td>Demonstrates accountability and commitment to sustainability for customers, investors, and employees.</td>
    </tr>
    <tr>
      <td>Cost Savings</td>
      <td>Highlights inefficiencies in energy or resource use, potentially reducing operational costs.</td>
    </tr>
    <tr>
      <td>Risk Management</td>
      <td>Identifies potential risks from carbon-related regulatory changes or reputational damage.</td>
    </tr>
    <tr>
      <td>Product Lifecycle Analysis</td>
      <td>Assesses the carbon footprint of products, aiding eco-design and sustainable supply chain decisions.</td>
    </tr>
    <tr>
      <td>Alignment with Global Goals</td>
      <td>Supports compliance with initiatives like the Paris Agreement or science-based targets (SBTs).</td>
    </tr>
  </tbody>
</table>


💡 Calculating your company's GHG emissions and overall carbon footprint often requires the collection of precise emissions data regarding both your direct and indirect emissions. this can prove challenging but luckily there are several available types of carbon accounting software to choose from to make calculating your total greenhouse gas emissions easier, including our own platform at Greenly! 

What Is the Difference Between Carbon Accounting and Carbon Assessment?

Carbon accounting solely refers to the process of measuring the amount of greenhouse gas emissions a company is responsible for producing, whereas a carbon assessment is more complex.

Carbon accounting is nothing more than a number. Carbon accounting is like getting a test score back. Some people will get a bad grade on their last exam and have newfound motivation to want to do better. For others, the poor mark is nothing more than that – and it won't provoke any action or concern for potential improvement.  

👉 Carbon accounting doesn't require someone to reduce their carbon emissions, whereas a carbon assessment suggests that they would like to reduce their carbon footprint – as it is the process of using the data revealed through carbon accounting to implement new, better environmental habits. 

💡 Greenly provides comprehensive carbon assessments to support our clients in their journey toward becoming more eco-friendly and sustainable.

The main goal of carbon accounting is to measure, track, and report the greenhouse gas (GHG) emissions associated with an organization's operations, products, or supply chains. This enables businesses to identify emission sources, develop reduction strategies, comply with regulations, and align with sustainability goals. 

Overview of key objectives of carbon accounting:

Better Understanding of Emissions
Many companies struggle to grasp concepts like carbon dioxide equivalents (CO₂e) and emission factors, both of which are essential for tracking and reducing carbon emissions. Carbon accounting enables businesses to quantify and report their emissions accurately using established methodologies. This understanding lays the groundwork for effective emissions management.

Compliance with Environmental Regulations
As regulations mandating greenhouse gas (GHG) reporting expand globally, corporate carbon accounting has become crucial for staying compliant. By calculating and reporting emissions in line with legal requirements, companies can avoid fines and demonstrate accountability. This includes tracking GHG emissions, supply chain activity, and other environmental impacts to meet regional and international standards.

Identifying Opportunities to Reduce Emissions
Carbon accounting breaks down emissions into categories such as Scope 1, 2, and 3 emissions, as defined by the Greenhouse Gas Protocol. This granular approach allows organizations to pinpoint high-impact areas and develop strategies to reduce emissions, such as optimizing energy consumption and decarbonizing supply chains. By identifying these opportunities, businesses can work toward sustainable development and long-term emissions reductions.

Promoting Accountability
Carbon accounting raises awareness about the negative impacts of global warming and the role businesses play in contributing to emissions. By tracking supply chain emissions and corporate carbon footprints, companies are empowered to take responsibility and act on their climate impact. This accountability not only enhances brand reputation but also motivates organizations to meet their emissions reduction targets.

Informing Strategic Decision-Making
With a comprehensive overview of their emissions, businesses gain valuable insights to guide better decision-making. Carbon accounting helps companies identify inefficiencies, reduce indirect emissions, and align with global agreements like the Paris Climate Accord. These informed decisions can mitigate climate risks and improve overall sustainability practices.

Achieving Emissions Reduction Targets More Effectively
Many companies are unaware of their greenhouse gas emissions until they conduct carbon accounting. By creating GHG inventories and providing accurate data, carbon accounting enables organizations to track progress, implement reduction strategies, and improve their carbon management. This systematic approach makes hitting emissions reduction targets more feasible and achievable.

What Are the Main Methodologies Used in Carbon Accounting?

There are two main methods used in carbon accounting: the spend based method and the activity based method. 

The first approach to carbon accounting is the spend based method.

The spend based method works by multiplying the economic value of a product or service purchased by the relevant carbon emissions in order to calculate the amount of greenhouse gas emissions produced. The spend based method of carbon accounting utilizes environmentally extended input and output models, otherwise known as EEIO models, and is often less mathematically complex or time-consuming to calculate.

While using the spend based method for carbon accounting is simpler, it isn't always reliable given the economy and the tendency for prices to constantly fluctuate. Also, the inconsistency of exchange rates between foreign currencies makes it difficult to rely on the spend based method.

💡 Is the spend-based method of carbon accounting worth using?  The spend based method of carbon accounting is the best approach if the carbon calculations need to be done quickly. However, since financial data is often influenced by uncontrollable factors like inflation or currency exchange rate fluctuations, it can introduce inaccuracies, making it a less reliable basis for carbon accounting.

CARBON ACCOUNTING❓- This is what you need to know - There are two main approaches when performing Life Cycle Assessments: Spend-based and Activity-based approaches. Choosing one or the other can significantly impact the understanding of your emissions.

ReFlow has developed a platform that makes it easy to perform LCA assessments based on the Activity-based approach, which provides the clearest picture and uses more data through its granular approach.

The video below introduces Climate Chats, a concept that aims to discuss and explain relevant sustainability topics. Once a month or more, our in-house engineers will discuss these topics.

This time we are sitting down with our teammate Xueqian Zhang, who has a Ph.D. in Eco-industrial System Analysis and is an LCA Specialist at ReFlow - the environmental performance experts

Have a topic in mind? Feel free to suggest topics to us, as we aim to answer questions that are relevant to you!

Read our blog post on the topic: https://www.re-flow.io/2022/04/08/carbon-footprint-accounting-ghg/

Climate Chats: Carbon Footprint accounting - Spend based vs. Activity based

The second approach to carbon accounting is the activity based method.

The activity-based method of carbon accounting is more precise than the spend-based method, as it relies on detailed data to quantify the actual units of materials or components purchased by a company. This approach, often referred to as tracking "real flows" of physical data, provides a clearer picture of emissions across the company's value chain. 

For example, when using the spend based method, only the price of a chair purchased would be used to determine the amount of carbon emissions produced, whereas the activity based method uses the various amounts of the materials used for the product or service, like wood or fabric – to calculate the carbon footprint.

The activity based approach to carbon accounting is more accurate than the data provided by the spend-based method, therefore it is widely encouraged that companies strive to use a hybrid model methodology in carbon accounting. This means that companies should use a dual approach in carbon accounting and use both the spend-based method and the activity based method simultaneously.

This hybrid approach to carbon accounting will allow companies to accurately measure their carbon footprint with the activity based method, while still having the ability to quickly calculate their carbon emissions with the readily available spend-based method.

Key differences between the spend based and activity based methods for carbon accounting:

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                <th>Aspect</th>
                <th>Spend-Based Method</th>
                <th>Activity-Based Method</th>
            </tr>
        </thead>
        <tbody>
            <tr>
                <td>Description</td>
                <td>Calculates emissions by multiplying the economic value of purchased products or services by relevant carbon emissions factors.</td>
                <td>Calculates emissions based on the quantity of materials or components used, considering the actual data of physical flows.</td>
            </tr>
            <tr>
                <td>Complexity</td>
                <td>Less complex, quicker to calculate using EEIO models.</td>
                <td>More specific and detailed, potentially more time-consuming.</td>
            </tr>
            <tr>
                <td>Accuracy</td>
                <td>Less reliable due to price fluctuations and exchange rate inconsistencies.</td>
                <td>More accurate and precise, as it uses real data of material usage.</td>
            </tr>
            <tr>
                <td>Best Use Case</td>
                <td>Useful for quick calculations, especially when time is a constraint.</td>
                <td>Preferred for detailed and accurate carbon accounting.</td>
            </tr>
            <tr>
                <td>Hybrid Approach</td>
                <td>Can be used in conjunction with the activity-based method for a more practical approach.</td>
                <td>Encouraged to be used alongside the spend-based method for comprehensive accounting.</td>
            </tr>
            <tr>
                <td>Example</td>
                <td>Calculates the carbon footprint based on the price of a chair purchased.</td>
                <td>Calculates the carbon footprint based on the quantity of materials like wood and fabric used for the chair.</td>
            </tr>
        </tbody>
    </table>
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