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    THE CHALLENGE: SUPPORTING THE ENERGY TRANSITION


    Reduce our dependency on fossil fuels…

    The massive use of fossil fuels (coal, oil and gas) for more than a century has led to considerable advancements in the majority of human activities: mobility, housing, industry, agriculture and health. Today, we know that climate change and the rarefaction of fossil resources are jeopardising our development model.

    To address this issue, it is vital to make a rapid transition, not only towards low-carbon energy resources, but also a more energy-efficient economy. The necessary changes are colossal: world energy consumption is continuing to increase and fossil fuels still represent 80% of word energy supply(1).


    …whilst promoting access to energy for all

    Beyond these environmental issues, there is also a social implication. Around 40% of the population still has no access to modern forms of energy and relies on burning wood and coal for warmth and cooking, which often results in numerous respiratory problems.


    A range of solutions

    Well-known solutions to these issues already exist: improve energy efficiency and massive use of renewable energies. However, the implementation of these solutions is too slow: energy efficiency efforts are not sufficient to stop the increase in energy consumption and renewable energies represent less than 15% of world production(1). As such, these solutions will still require important innovations.

    Other less consensual solutions can equally provide answers to climate change, such as natural gas, due to its reduced carbon footprint compared to that of oil and coal, can act as transition energy. Nuclear energy, despite its security risks, also has the advantage of being a zero greenhouse gas resource.


    Changes driven by regulatory and market developments

    These changes are supported by both increasing regulatory pressure and by rising energy prices. With regards to regulation, international awareness of climate change led to the establishment of various treaties such as the Kyoto Protocol, the Copenhagen Agreement and carbon market development in various parts of the world (Europe, California, Australia, certain Chinese provinces etc.).

    Although disagreements persist among countries on the type of reforms to be implemented in an international level, there is a strong consensus on the fact that it is necessary to act rapidly.
    Beyond regulations, increased pressure on energy prices has been a strong incentive to change. For example, between 2003 and 2008, the “third oil shock” resulted in a fivefold increase in price per barrel and threefold increase in the price of gas.

     

    SOLUTIONS IDENTIFIED BY MIROVA
     


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    REVIEW OF CSR QUALITY


    In addition to the identification of business models that respond to sustainable development challenges, a CSR policy review of quality is systematically carried out prior to stock selection (management systems analysis, investigation of controversy, etc.). This is done to confirm that the company is suitable for the investment theme and ensures that the overall business operations are consistent with the sustainable development positioning of the company’s products and/or services.

    This analysis focuses on key sector issues, for example: review of high-risk installations from an environmental perspective (e.g. gas extraction), inclusion of shareholders in large-scale project management (e.g. construction of large dams), review of safety conditions (e.g. nuclear installations).
     

    (1) International Energy Agency, 2009, Energy Balance for World
    (2) United Nations, 2012, L’énergie et le développement durable
    (3) International Energy Agency, 2010, World Energy Outlook