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Heathrow Runway Decision Should Concern All Businesses

What's happening? The Court of Appeal has ruled that plans for a third runway at Heathrow Airport are illegal because the government failed to sufficiently take climate change into account. The government's National Planning Statement, which approved the £14bn ($18bn) runway in 2018, was subject to legal challenges from the Mayor of London, Friends of the Earth, Greenpeace, councils and local residents. It is the first court ruling to confirm the Paris Agreement on climate change has binding effect, and it has global implications, said Margaretha Wewerinke-Singh from Leiden University in the Netherlands.

Why does this matter? This ruling could possibly set a precedent, not just for airlines, but for a whole host of industries. At the core of this story is evidence of how environmental law/regulations will continue to cause friction when it comes to corporate growth and earnings.

The ruling could be viewed as a tax on aviation. The airport is looking to appeal the decision but, should the runway not materialise, there will be fewer anticipated future flight slots available, and those who hold them (notably British Airways) will face less competition.

The net outcome will be a rising cost in air travel. Will customers – both corporate and consumer – turn away from air travel as a result? After all, we’ve already seen the concept of “flight shaming” see holidaymakers chose alternative methods of travel and businesses turn to video conferencing instead of long-haul flights.

Other industries should see this as the writing on the wall. Ecommerce could well face delivery taxes to cut down its emission-heavy logistics operations. “Fast-fashion” could be mandated to recycle a percentage of produced clothes, or charge consumers more for purchases using “virgin” materials. In India, it’s already incumbent on some companies to be responsible for the waste they produce.

The combination of goods becoming more expensive, consumers becoming more climate-aware and environmental legislation raising the cost of compliance suggests corporate earnings will lag.

Will we soon bear witness to the great climate crash?

Lateral thought from Curation – Given the court ruling suggests the Paris Agreement has a binding effect, is the US now disproportionally at a short-term advantage given it opted out? While Europe seemingly will have to make sure every infrastructure project adheres to the Agreement, the US will be able to stimulate its economy by going ahead with projects regardless of their environmental impact.

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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