Opinie Archive

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BCG’s Center for Climate Action: Climate Should Not Be the Virus’s Next Victim

The COVID-19 pandemic swept the world in just a few months, with immediate and catastrophic consequences: hundreds of thousands of deaths and a global economic standstill. The climsate problem has unfolded over decades but, if left unchecked, will likewise have profound and permanent consequences for lives and economies on the planet.

As countries globally are feeling the strain on their economies, climate is at risk of becoming the pandemic’s next victim. This must not happen. As they  mobilize massive resources to tackle COVID-19 governments, businesses, and investors have a once-in-a-lifetime opportunity to rebuild in ways that support a carbon-neutral future and usher in a new economy. By focusing on the climate agenda, even in the midst of this pandemic, leaders can direct investments toward sustainable infrastructure, green jobs, and environmental resilience. This isn’t just a moral imperative—it’s also an economic one.

The COVID-19 Crisis Is a Threat to the Climate

In the wake of the pandemic, global carbon emissions are expected to decline by 5% to 10% in 2020. This is the largest drop since World War II. (See Exhibit 1.) But instead of offering relief for the climate, it actually veils a significant threat.

In theory, this year’s projected drop in greenhouse gas emissions puts the world on a trajectory to limit global temperature rise to 1.5°C by 2050. (According to the UN’s Intergovernmental Panel on Climate Change, the world requires a 5% reduction of global net emissions every year to reach the 1.5°C goal by 2050.) But a crippling economic shutdown cannot be a first step toward this path. Instead, preventing the climate crisis will require fundamental economic transformation.

On the one hand, COVID-19 will almost certainly trigger a few helpful structural shifts—including more remote working, less frequent and shorter-distance business travel, and abbreviated supply chains—as companies seek to derisk their operations. On the other hand, the risk of a significant rebound in emissions—and worse, a delay in the needed transformation of global economies—currently seem much more likely, for several reasons:

  • The asset base is carbon dependent. In many sectors, dependence on fossil fuels is hardwired into production and business models. Without active moves by governments and businesses, countries will gradually revert to combusting high levels of coal, oil, and gas as the economy rebounds.
  • Fossil fuels are cheap. Much of the energy transition so far has been driven by the growth of wind and solar, with electric mobility gaining momentum. Now a perfect storm of COVID-19-induced demand shock and oil-producer-induced oversupply has hit the oil market—briefly turning US prices negative for the first time in history. As gas and coal prices fall, the economic case for lower-carbon energy sources diminishes.
  • Funding capacity has eroded. The pandemic has eroded trillions of dollars of global GDP, and while many decarbonization levers can benefit GDP, delivering on the Paris agreement will require a total of $75 trillion in investments. Funding these investments will become more challenging, especially in emerging economies that are already struggling to pay off their existing foreign-currency debt as a result of capital flight.
  • Focus may shift. With jobs, health, and economic well-being on the line, governments and the public are more focused on addressing this urgent and very visible crisis than on longer-term challenges such as climate. As a result, the needed economic transformation could well be put on hold.

Despite the decline in this year’s emissions, we will still be adding more than 47 gigatonnes of CO2 equivalent into the atmosphere (down from approximately 53 gigatonnes last year). The next few years are decisive for bringing this figure down further, and our actions will shape the planet for generations to come. Unless we manage to fundamentally transform global energy systems and lay the foundation for a green economy now, the pandemic-induced drop in global emissions will not be the beginning of a turnaround, but a one-off effect for climate.

By Patrick HerholdVeronica ChauMichel FrédeauEsben HegnsholtJoerg HildebrandtCornelius Pieper, and Jens Burchardt

More: BCG

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Allianz: Shipping losses at record low, but Covid-19 impact and political tensions cloud the horizon

  • Safety & Shipping Review 2020: 41 large ships lost worldwide in 2019, down by more than 20% year-on-year and almost 70% over a decade.
  • Number of shipping incidents (2,815) is up, as are claims from machinery issues. Ro-ro vessel safety is a growing concern.
  • Consequences of coronavirus and a sustained economic downturn could threaten long-term safety improvement and trigger an uptick in losses from cost-cutting measures, fatigued crew, idle vessels and weakened emergency response.
  • Rising geopolitical tensions, emissions rules and de-carbonization targets, mis-declared cargo and fire incidents continue to pose risk challenges.

Large shipping losses are at a record low having fallen by over 20% year-on-year, according to marine insurer Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2020. However, the coronavirus crisis could endanger the long-term safety improvements in the shipping industry for 2020 and beyond, as difficult operating conditions and a sharp economic downturn present a unique set of challenges.

“Coronavirus has struck at a difficult time for the maritime industry as it seeks to reduce its emissions, navigates issues such as climate change, political risks and piracy, and deals with ongoing problems such as fires on vessels,” says Baptiste Ossena, Global Product Leader Hull Insurance, AGCS. “Now the sector also faces the task of operating in a very different world, with the uncertain public health and economic implications of the pandemic.”

The annual AGCS study analyzes reported shipping losses over 100 gross tons (GT) and also identifies 10 challenges of the coronavirus crisis for the shipping industry which could impact safety and risk management. In 2019, 41 total losses of vessels were reported around the world, down from 53 12 months earlier. This represents an approximate 70% decline over 10 years and is a result of sustained efforts in the areas of regulation, training and technological advancement, among others. More than 950 shipping losses have been reported since the start of 2010.

Coronavirus challenges

The shipping industry has continued to operate through the pandemic, despite disruption at ports and to crew changes. While any reduction in sailings due to coronavirus restrictions could see loss activity fall in the interim, the report highlights 10 challenges that could heighten risks. Among these are: 

  • The inability to change crews is impacting the welfare of sailors, which could lead to an increase in human error on board vessels.
  • Disruption of essential maintenance and servicing heightens the risk of machinery damage, which is already one of the major causes of insurance claims.
  • Reduced or delayed statutory surveys and port inspections could lead to unsafe practices or defective equipment being undetected.
  • Cargo damage and delay are likely as supply chains come under strain.
  • The ability to respond quickly to an emergency could also be compromised with consequences for major incidents which are dependent on external support.
  • The growing number of cruise ships and oil tankers in lay-up around the world pose significant financial exposures, due to the potential threat from extreme weather, piracy or political risks. 

“Ship-owners also face additional cost pressures from a downturn in the economy and trade,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS. “We know from past downturns that crew and maintenance budgets are among the first areas that can be cut and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions. It is crucial that safety and maintenance standards are not impacted by any downturn.”

More: AGCS Marine Risk Consulting

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The eight essentials of innovation

It’s no secret: innovation is difficult for well-established companies. By and large, they are better executors than innovators, and most succeed less through game-changing creativity than by optimizing their existing businesses.

Innovation and creativity

In this engaging presentation, McKinsey principal Nathan Marston explains why innovation is increasingly important to driving corporate growth and brings to life the eight essentials of innovation performance.

Yet hard as it is for such organizations to innovate, large ones as diverse as Alcoa, the Discovery Group, and NASA’s Ames Research Center are actually doing so. What can other companies learn from their approaches and attributes? That question formed the core of a multiyear study comprising in-depth interviews, workshops, and surveys of more than 2,500 executives in over 300 companies, including both performance leaders and laggards, in a broad set of industries and countries (Exhibit 1). What we found were a set of eight essential attributes that are present, either in part or in full, at every big company that’s a high performer in product, process, or business-model innovation.

Since innovation is a complex, company-wide endeavor, it requires a set of crosscutting practices and processes to structure, organize, and encourage it. Taken together, the essentials described in this article constitute just such an operating system, as seen in Exhibit 2. These often overlapping, iterative, and nonsequential practices resist systematic categorization but can nonetheless be thought of in two groups. The first four, which are strategic and creative in nature, help set and prioritize the terms and conditions under which innovation is more likely to thrive. The next four essentials deal with how to deliver and organize for innovation repeatedly over time and with enough value to contribute meaningfully to overall performance.

By Marc de Jong, Nathan Marston, and Erik Roth

More: McKinsey; About the authors: Marc de Jong is a principal in McKinsey’s Amsterdam office, Nathan Marston is a principal in the London office, and Erik Roth is a principal in the Shanghai office.

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AI, Robots, and Ethics in the Age of COVID-19

Before COVID-19, most people had some degree of apprehension about robots and artificial intelligence. Though their beliefs may have been initially shaped by dystopian depictions of the technology in science fiction, their discomfort was reinforced by legitimate concerns. Some of AI’s business applications were indeed leading to the loss of jobs, the reinforcement of biases, and infringements on data privacy.

Those worries appear to have been set aside since the onset of the pandemic as AI-infused technologies have been employed to mitigate the spread of the virus. We’ve seen an acceleration of the use of robotics to do the jobs of humans who have been ordered to stay at home or who have been redeployed within the workplace. Labor-replacing robots, for example, are taking over floor cleaning in grocery stores and sorting at recycling centers. AI is also fostering an increased reliance on chatbots for customer service at companies such as PayPal and on machine-driven content monitoring on platforms such as YouTube. Robotic telepresence platforms are providing students in Japan with an “in-person” college graduation experience. Robots are even serving as noisy fans in otherwise empty stadiums during baseball games in Taiwan. In terms of data, AI is already showing potential in early attempts to monitor infection rates and contact tracing.

No doubt, more of us are overlooking our former uneasiness about robots and AI when the technology’s perceived value outweighs its anticipated downsides. But there are dangers to this newfound embrace of AI and robots. With robots replacing more and more job functions in order to allow humans to coexist as we grasp for some semblance of normalcy, it’s important to consider what’s next. What will happen when humans want their former jobs back? And what will we do if tracking for safety’s sake becomes too invasive or seems too creepy yet is already an entrenched practice?

A New Normal Comes Racing In

After a vaccine for COVID-19 is developed (we hope) and the pandemic retreats, it’s hard to imagine life returning to how it was at the start of 2020. Our experiences in the coming months will make it quite easy to normalize automation as a part of our daily lives. Companies that have adopted robots during the crisis might think that a significant percentage of their human employees are not needed anymore. Consumers who will have spent more time than ever interacting with robots might become accustomed to that type of interaction. When you get used to having food delivered by a robot, you eventually might not even notice the disappearance of a job that was once held by a human. In fact, some people might want to maintain social distancing even when it is not strictly needed anymore.

We, as a society, have so far not questioned what types of functions these robots will replace — because during this pandemic, the technology is serving an important role. If these machines help preserve our health and well-being, then our trust in them will increase.

As the time we spend with people outside of our closest personal and work-related social networks diminishes, our bonds to our local communities might start to weaken. With that, our concerns about the consequences of robots and AI may decrease. In addition to losing sight of the scale of job loss empowered by the use of robots and AI, we may hastily overlook the forms of bias embedded within AI and the invasiveness of the technology that will be used to track the coronavirus’s spread.

More: https://sloanreview.mit.edu

About the Authors

Ayanna Howard (@robotsmarts) is the Linda J. and Mark C. Smith Professor and Chair of the School of Interactive Computing in the College of Computing at Georgia Tech. She also serves as director of the Human-Automation Systems (HumAnS) Lab in the School of Electrical and Computer Engineering. Jason Borenstein is the director of graduate research ethics programs and associate director of the Center for Ethics and Technology within the School of Public Policy and Office of Graduate Studies at Georgia Tech.

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ANTI-COVID-19 – Cluster anti-crisis shield

The Baltic Sea and Space Cluster has launched the BSSC ANTI-COVID-19 anti-crisis shield. This is a special website on the Cluster’s website www.bssc.pl, where members of the Cluster inform about their activity during the pandemic and offer for other maritime business participants. The portal is also available to other companies and institutions related to maritime economy, education and research of the sea.

Many institutions and enterprises operating in the maritime economy have not slowed their activity despite the pandemic. It changed the forms of operation, implemented security procedures, switched to remote work or activities in smaller teams. Ports and shipyards are still active on the international market. Additional requirements arise, as the clients of these enterprises are often people from outside Poland. The initiative works under the slogan: BSSC Anti-crisis Shield.

The main mission of the BSSC Cluster is to integrate maritime business, science, administration and the community. Cluster BSSC promotes cooperation, commercialization and positioning of our members on international markets. Therefore, the information is in both Polish and English. Members operate under the slogan: We help people and Maritime Business. Photo: Marek Grzybowski

More info: https://glosgdyni.eu/klaster-na-pandemie-anty-covid-19-klastrowa-tarcza-antykryzysowa/