Net Zero

➚ Buy: Russia. After months of discussions, the EU has finally reached an agreement to cap the price of Russian oil at $60/barrel, about 31% below the current trading price for Brent crude. The aim is to curb Moscow’s revenues and hit the financing of its war against Ukraine.

➘ Sell: Almost everyone else. The G7 subscribed to the EU’s price cap. The U.S. can claim victory because the cap is high enough to keep oil flowing and unlikely to hurt supply on world markets. India and China aren’t backing the cap, but will be able to ask Moscow for significant discounts.

Global payments Russia has received in euros since the beginning of the war in Ukraine, according to the Russia Fossil Tracker. EU countries accounted for just less than half of those payments.

Ikea redesigns itself for climate change

THE NEWS

Rising inflation and environmental awareness are spurring consumers to turn to secondhand sofas and tables, and IKEA is following them as the largest furniture retailer looks to burnish its sustainability credentials.

The company recently upgraded its bargain corners, where customers can purchase damaged pieces and display objects, and promotes them as “circular hubs” to cut waste and help the planet. A company spokesman told Semafor that reducing IKEA’s climate footprint requires changes that impact every aspect of its operations, including what products to produce and what materials to use.

Elsewhere, ads for furniture and homeware in online classified sites show that the secondhand sector is expanding fast. Dutch site Marktplaats says its users last year traded almost four million pieces of secondhand furniture.

And at Milanuncios, one of Spain’s largest classified websites, demand for furniture jumped 11% from January to October 2022 compared to last year. A poll of its users showed that 84% considered secondhand goods more sustainable.

GABRIELE’S VIEW

The shift to secondhand furniture is likely to have a significant impact on the amount of waste produced. Of the 12.1 million tonnes of furniture manufactured in the U.S. every year, only 0.3% is recycled, while 80% ends up in landfills.

In the EU, the total annual furniture waste reached 10.8 million tonnes in 2018, the most recent data. And up to 90% of that waste is incinerated or sent to landfill, according to the European Federation of Furniture Manufacturers.

“It’s the beginning of a trend,” said Joanna Parman, strategic insight director at Kantar, a data analytics consultancy. “The concept of sustainability has been around a long time. Now it’s gaining traction with big-ticket items, where consumers are more sensitive to prices.”

While the move to secondhand furniture is good news for the environment, it dents the earnings of manufacturers and retailers, and cuts their labor needs. Inter IKEA Group, owner of the IKEA furniture brand, recently said its fiscal 2022 annual sales volume to franchisees fell 7-8% compared to last year. U.S.-based Wayfair, which also operates in Europe, said its sales declined 13% in the first nine months of the year.

ROOM FOR DISAGREEMENT

Shrinking disposable income may explain the fall in furniture sales, rather than a heightened awareness of environmental issues. That means it will bounce back as soon as inflationary pressures ease. Goldman Sachs, for one, expects U.S. consumers to start spending again after Christmas.

THE VIEW FROM EUROPE

Wherever the economy ends up, governments — especially in Europe — are enacting policies that incentivize the reuse of resources. That means furniture is bound to become more expensive, and therefore less affordable.

New sofas and tables will be competing with other products that come with a raft of incentives to lure consumers, such as electric vehicles.

Governments are also taking creative approaches. Berliner Stadtreinigung, the city’s municipal waste company, has opened NochMall, a department store selling discarded furniture.

NOTABLE

• The EU is taking the circular economy seriously: the bloc has adopted the new circular economy action plan in 2020 to reduce pressure on natural resources.

One Good Text with... Gilles Dufrasne

• A landmark EU directive aimed at forcing companies to report environmental and human rights abuses in their supply chains is falling victim to post-Brexit competition between the EU-UK. Some EU countries, led by France, have backed a carveout of the proposed rules for the financial sector, a move critics say will allow large financial institutions to keep financing fossil fuel or mining projects with little scrutiny. According to diplomats interviewed by the FT, France’s move is to be read as part of the country’s bid to make Paris a hub for international finance to the expense of London.
• Rising temperatures are making it easier for urban animals – such as rats and pigeons – to reproduce more and faster. In Brussels, where milder winters have caused the pigeon population to boom, authorities have been looking for new ways to keep the number of birds under control. Not an easy feat, considering that animal protection laws forbid killing the birds. Officials, reports Politico, have resorted to putting contraceptives in bird food. The strategy, first tried in 2019, has dropped the number of pigeons living in square Clémentine, close to the royal palace in Laaken, by half.
• The relocation of entire villages due to climate change has so far been common in island states in the Pacific. But a warming planet is requiring governments to take radical action to shield communities elsewhere. The U.S. administration has earmarked $75 million to move three tribes — two in Alaska, one in Washington state — away from areas close to the coast or to rivers, where rising waters can wreak havoc. The funding covers the relocation of public buildings, with the expectations that homes will follow. Eight more tribes are slated to receive $5 million each from the Interior Department, the New York Times reports.

Grawindy embodies the next generation of wind technology. Designed on the principle of regulating moving parts similar to sails on a boat, the system is able to operate in low wind speeds with winds blowing in any direction, contrary to wind turbines. And the units, which swing with the combined effect of wind and gravity, don’t need to be oriented towards prevailing winds to generate power. They are also easy to put together and cheaper than regular wind turbines.

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