Business News

What happens when demand for oil peaks?

Forget peak oil: what about peak demand? Since the First Industrial Revolution, oil and gas have played a pivotal role in economic transformation and mobility. But now, with the prospects that major economies like the United States, China and European nations will try to shift away from oil, producers are coming to realise that their oil reserves under the ground – sometimes referred to as “black gold” – could become less valuable in the future than they are today. Of the four scenarios for the future of the industry outlined in a new set of whitepapers from the Global Agenda on the Future of Oil and Gas, three of them envisage this type of world. Factors such as technological advancements, the falling price of batteries that power electric vehicles, and a post-COP21 push for cleaner energy could even drive oil use below 80 million barrels a day by 2040 – 15% lower than today. So what would a future of falling demand mean for the oil and gas industry? We’re already feeling the effect Uncertainty about whether oil demand will continue to grow is already impacting the strategies of oil and gas firms. Through the 2000s and up until last year, the Organisation of Petroleum Exporting Countries (OPEC), whose policies influence global oil supply and prices, took a revenues-oriented strategy, believing that scarce oil would be more valuable under the ground than out in the market, as global demand rose exponentially over time. Oil companies, too, responded to this world view by pursuing a business model that maximised adding as many reserves as possible to balance sheets and warehousing expensive assets. Now, with new trends discussed in a new whitepaper, producers are coming to realise that oil under the ground might soon be less valuable than oil produced and sold […]

Reducing poverty among smallholder farmers

In some countries, smallholder farmers earn as little as $1.26 a day Life can be hard for a smallholder farmer. The International Fund for Agricultural Development (IFAD) estimates that there are 500 million smallholder farmers worldwide – usually working on plots of land smaller than two hectares – producing about 80% of the food consumed in Asia and sub-Saharan Africa. Despite this, smallholder households are often some of the poorest in the world, a fact which is causing the children of smallholders to abandon their farms in search of better opportunities in cities. This shift contributes to two very real risks. First, food security. the UN estimates that the global population will reach 9 billion by 2050 and consume 60% more food. And second, rising urban poverty. For these reasons, it is imperative that smallholder farming becomes a much more profitable and sustainable venture; this is the goal that we at Kennemer Foods International, together with the Philippine Government, have been working on for the past five years. Based on our experience in driving the growth of the Philippine cacao industry, here are some of the key ingredients necessary to dramatically reduce poverty among smallholder farmers: 1. Comprehensive credit, guarantee and insurance policies geared towards smallholder farmers The average coconut farmer in the Philippines earns approximately $450 a year from one hectare of land (gross revenue). This translates to roughly $1.26 a day, for a household of 4-5 people. Given this situation, it is almost impossible for a smallholder farmer to adequately provide for the needs of his or her family, much less to make the necessary investments into newer or better farm inputs and technologies in order to improve yields. Without access to affordable – and more importantly, patient – capital, smallholders cannot break the cycle of low farm […]

Cities need more ‘living green’, concludes International conference

The importance of ‘living green’ was brought to the attention of sixteen countries at an International Green City Conference this month. Becoming the greenest city in the world, using plants to manage stormwater threats, how to implement greening and change the public mindset, how buildings need to be able to ‘heal people and the benefits of a ‘Green City’, were all on the agenda. Organised by the International Association of Horticultural Producers (AIPH) and the Canadian Nursery Landscape Association (CNLA) the event was held in Vancouver, Canada on 14-18 March. Sponsored by TD and Davey Trees, it attracted delegates who are committed to greening city landscapes. Vancouver is working towards being the greenest city in the world by 2020. The former Mayor of Vancouver and Premier of British Columbia, Mike Harcourt, opened the conference by demonstrating that Vancouver has had an environmental focus since the 1980s when back then they were already looking at alternatives to cars and different energy sources as well as planning the city to be more sustainable. For a long time it has been a philosophy of Vancouver that there is a close link between greening the city, economic sustainability and livability. Vancouver Urban Forest Strategy which has a target of achieving 22% tree coverage in the city by 2050 was introduced by Bill Stephen from the City of Vancouver. In a densely populated city this is a big challenge as growing space has reduced with city development, but initiatives such as ‘Street tree cooling networks’, the ‘citizen forester’ and planting 150,000 trees by 2020 will all help in reaching the goal. Local examples of green city projects were provided from the University of British Columbia, including the East Clayton Neighbourhood Project, introduced by Patrick Condon and Sara Barron, and how plants have been used to […]

And the winner is…Jerry Hall

In a week where film and television awards were to take centre stage there was an upstaging announcement regarding Rupert Murdoch and Jerry Hall. They got engaged! Somehow Rup always gets to be the centre of attention. Whether its the family battle about who is going to run the country when he retires, the hearings in London about hacking, the re appointment to a pivotal role of Rebecca Brooks or his influence this year on the Australian elections. He is always making a noise. If Jerry is marrying Rup for love and not money – that’s wonderful. If Jerry has drawn up the ‘legals’ then I hope they don’t separate. He would have been much wiser to have donated a financial package to the Syrian refugees who would probably then have enough money to rebuild their own country…and appointment a new leader. What is fascinating about all this is that Rupert Murdoch is a busy man. He’s running a great media empire with lots of different claws ( newspapers, films, television etc) and still has time at his age to get engaged and probably married for the fourth time. The whole thing is more hysterical than Coronation Street or the US presidential race. His kids must be pulling their hair out in their attempt to get him to sit at his desk of a day instead of wondering around finding a new marriage partner. And another thing, if he outlives Jerry, is he a beneficiary to her will…or doesn’t he need the money? www.themirrorinspires.com and on FaceBook @ The Elephant in the Conversation.

E. Freya Williams on the Business Case for Sustainability

What’s the business case for sustainability? Over the past eight years that I’ve spent compiling evidence that brands can both maximize profit and be a force for social good, that’s the question I’ve been asked most often. And it’s one that tends to be on the minds of business leaders each year around Earth Day. This year that question has a new answer: a billion dollars. For a generation, influenced by the thinking of economist Milton Friedman, business wisdom has held that purpose and profit are fundamentally opposing forces. But there are now at least nine companies globally that generate a billion dollars or more in annual revenue from products, services, or lines of business with sustainability or social good at their core. They are the Green Giants. Far from the hemp-wrapped products of yore, they include some of the most sexy and dynamic brands out there today, from relatively new start-ups to business lines incubated within major blue chip corporations. They are Tesla, Chipotle, Nike Flyknit, Whole Foods, Unilever, GE Ecomagination, Toyota Prius, Natura and IKEA’s line of Products for a More Sustainable Life at Home. These companies cut across the global economy. They make products as diverse as burritos and beauty cream, sports shoes and sports cars, organic kale and airplane engines. They cover a spectrum of price points and spend types, from low-cost and discretionary to big-ticket, corporate purchases. They span B2B and B2C companies. Yet they share six factors in common. These factors enable them to generate over $100 billion in combined annual revenues from their sustainable business strategies. They are:  An Iconoclastic Leader. In each case, the sustainability journey can be traced back to one individual who started it all. He or she is a resident of the C-Suite, and exhibits the 4 Cs […]

Green Giants, how smart companies turn sustainability into billion dollar businesses

E. Freya Williams Sustainability has come a long way in a decade. Once seen as a negative thing, sustainability is increasingly being recognised as a source of advantage for business. A number of companies stand out as exemplars in this field and their stories provide the backbone of this book by sustainability consultant Freya Williams. Williams is as much an insider as an observer, and the blurb here says she was the brains behind campaigns such as Coca-Cola’s PlantBottle, Hellmann’s switch to free range eggs and the award-winning Copenhagen campaign in support of the United Nationsat the COP15 climate change conference. Her skill, it seems, is in making sustainability relevant to the mainstream. Williams has drawn firm conclusions from the case studies she has examined to produce a very readable work on a subject that often receives a dull treatment. The green giants are businesses with a turnover of $1 billion or more that can be directly attributed to a product, service or line of business with sustainability at its core. They include restaurant chain Chipotle, which raises the meat in all its products in natural and sustainable ways, Unilever which is committed to halving its environmental footprint by 2020 and Tesla which makes the first commercially successful all-electric vehicle. Some businesses, meanwhile, have specific product lines that are sustainable, such as Toyota Prius or Ikea’s Sustainable Life at Home range. Old attitudes persist, however. Williams quotes conservative economist Milton Friedman dismissing businesses with a social conscience as “unadulterated socialism” in the 1970s. That view has hardened in some quarters, driven by the cynicism and short-term thinking of Wall Street. Scepticism about environmental concerns is rife in some boardrooms. In a briefing to journalists in 2008, Bob Lutz, then vice-chairman of GM, famously called global warming “a crock of shit”. […]

The Rubik’s Cube of Economics

Deciphering real world issues in economics is like solving a Rubik’s Cube, says SMU Assistant Professor Zhang Haiping. By Yamini Chinnuswamy “The job of an economist is to explain how the world economy works – from analysing economic data, conceptualising economic phenomena, forecasting economic trends to making policy suggestions,” says Assistant Professor Zhang Haiping from the Singapore Management University (SMU) School of Economics, whose work focuses on international finance and trade. Like the Rubik’s Cube, a three-dimensional combination puzzle where every twist also scrambles the face opposite of it, economics puzzles are similarly interlinked—a change in policy may lead to repercussions elsewhere. “My research is motivated by empirical puzzles in economic literature,” he says. “As economists, we seek to augment or update existing economic theories to explain real world data. The challenge lies in the fact that markets and economies seldom function in a frictionless manner.” For example, Professor Zhang notes that capital has been flowing “uphill” from the poor to the rich, and from emerging economies to developed ones since the end of 1990s. This stands in stark contrast to neoclassical economic theory which states that capital should flow from the rich to the poor, as the rate of return on investments in poor countries should be higher than in rich countries. Financial friction and the resulting borrowing constraints in poor countries can explain such a puzzling fact, he explains. Similar income levels, different patterns of capital flows Patterns of international capital flows in emerging economies are another real world puzzle Professor Zhang has studied. Although income levels per person were comparable in emerging Asia (Indonesia, Malaysia, Philippines, Thailand and Vietnam) and emerging Europe (countries such as Hungary, Poland and Romania in Central and Eastern Europe), their patterns of international capital flows were not. “We looked at the data […]

Deforestation briefing: Palmed off – Rumble in the Jungle

By April Streeter Changes, or at least assurances of changes, are coming to the palm oil industry, a mega-business blamed for much of the deforestation in tropical nations Three of the largest palm oil producers and traders unveiled zero deforestation plans last year, affecting 60% of the global palm oil industry. Wilmar International, which has a 45% market share, Cargill with 10% and Golden Agri-Resources with 5% pledged “to end deforestation in the palm oil trade, both through direct corporate policies and through their demands from the supply chain”, according to US Food News. The three announced their plans along with the Indonesian government at the UN Climate Summit held in 2014. US-based commodities trader Cargill last year also unveiled a pledge that the palm oil it produces, trades or processes will no longer come from deforested lands, carbon-rich peat lands or be linked to “exploitation of rights of indigenous peoples and local communities”, according to a company statement released in July 2014. “It is critical that all parts of the palm oil supply chain – from plantations to retailers – collaborate and act in an environmentally sustainable and socially responsible manner,” the statement notes. The company pledged to involve multiple stakeholders and engage in a constant review and improvement process. Unilever is driving beef sustainability Wilmar, though, recently was cited in a report for abuses of human and environmental rights while acquiring a large parcel of land in Cross River State, Nigeria. The report was released jointly by Friends of the Earth US and Environmental Rights Action-Nigeria. According to the report, the company failed to acquire the free, prior and informed consent of communities directly affected by its operations, did not complete satisfactory environmental and social impact assessments and did not follow through on promises of infrastructure development and […]

Exploring the link between globalisation and stress

A direct relationship exists between stress and globalisation – i.e. transnational corporations and transnational economics – according to a recent study published in the Pertanika Journal of Social Sciences & Humanities. The study, by an international research team in Thailand and Canada, analysed the relationship between globalisation and stress in a sample group of Thai farm workers. Eight years ago, the Thai government began mapping social protection strategies for various occupational groups including rural agricultural workers. Earlier studies had shown that agricultural workers accounted for the highest percentage of all workers, and that more than 30% of them were in debt. Globalisation, also defined as global capitalism, is a well-known dynamic of the twenty-first century. Its effects on health are complex and depend on a variety of factors, including income distribution and the presence (or absence) of resources to support physical and mental health. In the study, the researchers developed a survey based on the hypothesis that a number of factors – including fewer landowners, increased control of scientific management, and increased integration of local and global markets impacting the prices of agricultural goods – has resulted in stress among Thai rural workers. The survey involved 600 rural workers from different areas of Nakhon Pathom province in central Thailand. All the workers were in transition from an existing production system to a new one. Levels of perceived stress were measured using a test developed by the Department of Mental Health in Thailand. The results showed a direct relationship between transnational corporations or translational economics (an umbrella term that broadly describes the economic clout of multinational companies) and stress. The survey also reported that 75% of the respondents had poor health, with stress appearing to be their most frequent illness. The researchers noted that transnational practices, which are associated with mass […]

Cyclone Donald around for a year

It’s a good year out from the US 2016 election and good old Fox Network are at it already with their panel discussions on the potential Republican presidential candidates. Talkfest after talkfest is surrounding us with Megyn Kelly and Donald Trump not exactly getting along in the latest instalment. You have to give it to Trump – he sure knows how to win friends and influence people without outlining exactly what he do will if elected president for the unemployed, Middle East, and illegal immigrants. Somehow a firm grip needs to be kept on this presidential candidate so the issues are out there and not the personalities. If Trump doesn’t shoot himself in the foot and stays in the race he may well become a huge distraction to the real issues affecting the American people. There will be so much concentration on his hair and abrasive personality that the centre of the Republican Party will have a darn hard job keeping the focus on exactly what they are doing in an election year. Fox will ride this personality for all it is worth. Even if he blights his copy book, think of the continual high media profile which will be seen across the network? What he doesn’t do will not matter; what he stuffs up will bring a lot of attention. Rupert Murdoch and Peter Ailes may not see eye to eye on Trump and the way he appears on Fox. Or maybe they do? Maybe it doesn’t matter because it draws viewers, commentators and so called experts from other media to watch Trump, Hannity and the team dribble in their coffee how no news…is just about as good as news can be!

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