Written Commentary
ADM Reports Q1 2024 Results
April 30, 2024
Welcome to this special Sustainability edition of the Ghost In The Machine
In this special edition of the Ghost In The Machine, we take a closer look at how some of the moves to transition the global economy are impacting commodity trading, agriculture, energy and shipping.
Reducing emissions and improving carbon sequestration in the agricultural sector is critical to reaching the global goal of net-zero emissions and fighting climate change, so how can this be scaled up? How is this being deployed in practical terms, PepsiCo outlines the pillars of its drive to encourage regenerative farming, align all aspects of its product portfolio with its comprehensive abatement strategy.
Maritime decarbonisation will be one of the many critical aspects for achieving sustainability, but aligning the efforts of the diverse array of stakeholders is a challenge, though by tackling the ‘dinosaur’ operational practice of ‘Sail Fast Then Wait’ via a contractual mechanism, which incentivizes the sharing of both costs and benefits among owners, charters and cargo interests, fuel savings of 20% could be achieved, and the obstacle of split incentives overcome.
A further important element will be efficient and liquid markets for the trading and clearing of risk management products related to the transition, we look at what is on offer and how these may evolve.
Europe has ostensibly been in the vanguard of global energy transition efforts over the past two decades. But as the shock of both the pandemic and Russia’s invasion of Ukraine have highlighted, divergent national interests, a lack of holistic and systemic thinking about how to effect transition, and often contradictory regulations and directives run the risk of too much ‘stick’, and not enough ‘carrots’ to drive much needed investment for this transition, above all when compared to the US Inflation Reduction Act and China’s drive for great self-sufficiency.
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