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  • What's Happening in Sustainability & ESG (Week Recap 02.07 - 08.07) ๐ŸŒŽ

What's Happening in Sustainability & ESG (Week Recap 02.07 - 08.07) ๐ŸŒŽ

The EU-China saga continues as tariffs get official, and other news

Todayโ€™s newsletter is brought to you by GS2.

This weekโ€™s read time: 9 minutes

Welcome to this edition of Green Digest, where you will get updated about everything happening in the Sustainability & ESG space in less than 10 minutes. ๐ŸŒŽ

We go through tons of articles and data from the most reliable sources, filter & simplify them, and serve them to you in bite-sized chunks every week. ๐Ÿ€

In this edition, weโ€™ll cover:

โ€ข The EU officially started imposing duties on imports of EVs from China, while China intensified its anti-dumping investigation into European imports ๐Ÿ‡ช๐Ÿ‡บ ๐Ÿ‡จ๐Ÿ‡ณ

โ€ข A US Court will hear a challenge to a Biden rule on ESG investing by retirement plans, testing court scrutiny of agency rules post-Chevron deference rejection ๐Ÿ‡บ๐Ÿ‡ธ

โ€ข The European Securities and Markets Authority (ESMA) issued guidance to help companies prepare for the CSRD ๐Ÿ‡ช๐Ÿ‡บ

โ€ข Google's GHG emissions surged by 48% over the past five years, largely due to the energy demands of AI-driven data centers ๐Ÿ“ˆ 

โ€ข SBTi CEO resigned for personal reasons amid controversy over the group's consideration of carbon offsets for corporate climate goals ๐Ÿ“‘

โ€ข and other news ๐ŸŒ

THE WEEKโ€™S TOP NEWS

Regulatory Oversight & Industry Insights

๐Ÿ‡ช๐Ÿ‡บ๐Ÿ‡จ๐Ÿ‡ณ The EU officially started imposing duties on imports of EVs from China on July 5, citing unfair subsidization threatening European EV manufacturers. Specific duties have been applied to automakers like BYD, Geely, and SAIC, with varying rates from 17.4% to 37.6%. As a result, China's new energy vehicle (NEV) exports slowed in June, but this impact may be temporary. In response, Chinese EV makers, including BYD and Nio, are considering price adjustments and expanding production facilities in Europe to mitigate tariff impacts. BYD plans to establish plants in Hungary and Turkey, while Chery Auto and CATL are also increasing their presence in Europe. Conversely, China has intensified its anti-dumping investigation into European brandy imports. Major European cognac producers will attend a hearing in Beijing to defend against claims of selling below market rates. China is also probing EU pork imports and considering actions against European dairy and petrol car imports.

๐Ÿ‡บ๐Ÿ‡ธ The Fifth US Circuit Court of Appeals will hear a challenge to a Biden administration rule allowing ESG investing by retirement plans, marking an early test of how courts will scrutinize agency rules after the Supreme Court's rejection of Chevron deference. The case, brought by 25 Republican-led states, questions whether the Employee Retirement Income Security Act permits considering nonpecuniary factors in investment decisions. The rule, affecting $12 trillion in retirement savings, has faced criticism from conservatives. The Fifth Circuit, known for its conservative leanings, will now apply independent judgment in evaluating the rule's validity.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

๐Ÿ‡ช๐Ÿ‡บ The European Securities and Markets Authority (ESMA) issued guidance to help companies prepare for the new CSRD, which expands sustainability reporting requirements significantly. Key areas of focus include establishing governance and internal controls, conducting materiality assessments, ensuring data collection and management systems are robust, and preparing digitization-ready sustainability statements.

๐Ÿ“‘ Luiz Amaral, CEO of the Science Based Targets initiative (SBTi), has resigned for personal reasons amid controversy over the group's consideration of carbon offsets for corporate climate goals. Amaral led significant organizational changes during his tenure, including separating standard-setting and validation activities and incorporating SBTi in the UK. The number of companies with validated climate targets more than doubled under his leadership. SBTi faced controversy over plans to extend the use of environmental attribute certificates and is still consulting on the use of offsets, facing criticism from environmental groups and internal dissent.

โ›ฝ๏ธ Estimates by the FT show that the EU's expansion of its carbon market will increase diesel prices by at least 50 cents per liter by 2031, as fuel suppliers pass on the cost of carbon allowances to consumers. The new emissions trading system (ETS2) will also raise heating fuel costs and aims to cut EU GHG emissions by 55% by 2030. A "social climate fund" will help lower-income households and small businesses adapt. The initiative faces political challenges and concerns over affordability, with calls for alternative measures like hybrid heating fuels to mitigate costs.

๐ŸŸข Meanwhile, a European team of carbon removal specialists, called remove, launched an initiative to support Indian businesses in developing carbon dioxide removal (CDR) projects. With over โ‚ฌ220 million raised, remove will provide access to experts, international buyers, and potential funding for successful Indian applicants. The focus will be on biochar and enhanced weathering techniques. The global CDR market is expected to grow, but current demand is limited and reliant on voluntary markets. The EU is also considering integrating CDR credits into its emissions trading system to mainstream these efforts.

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WHAT ARE COMPANIES DOING?

Corporate sustainability, new tools and services & companies in the news

Graphic: Financial Times | Source: Google

๐Ÿ“ˆ Google's GHG emissions have surged by 48% over the past five years, largely due to the energy demands of AI-driven data centers. The company's 2023 emissions increased by 13% from the previous year, reaching 14.3 million tonnes. The IEA predicts that data center electricity consumption could double by 2026, with AI potentially using 4.5% of global energy by 2030. To reduce its emissions, Google launched the Google Renewable Energy Addendum, urging its largest hardware suppliers to commit to 100% renewable energy by 2029. The company also partnered with BlackRock to develop solar energy in Taiwan, with Google investing in New Green Power (NGP) to power its data centers. Google plans to procure up to 300 MW of solar energy from NGP and may offer clean energy to its suppliers.

๐Ÿšง Shell paused construction of its major biofuels plant in the Netherlands due to market conditions. Initially planned to start production in 2025 with a capacity of 820,000 tonnes per year, the facility aimed to produce sustainable aviation fuel and renewable diesel. Shell emphasized that the pause will help control costs and optimize project sequencing while reaffirming its commitment to achieving net-zero emissions by 2050. BP has also scaled back its sustainable fuel projects to focus on โ€œvalueโ€ and returns.

๐ŸŸข The LEGO Group launched a Supplier Sustainability Programme to enhance collaboration with suppliers to meet its climate goals, including net zero emissions by 2050 and a 37% reduction by 2032. The program mandates suppliers to report on emissions and set reduction targets, starting with annual reporting in 2024. Key actions include improving facility efficiency, switching to renewable energy, and reducing carbon-intensive transport.

๐Ÿ›ฉ๏ธ American Airlines signed a conditional purchase agreement with ZeroAvia for 100 hydrogen-powered engines, aiming to power regional jets with zero inflight emissions. The airline also increased its investment in ZeroAvia through its Series C financing round. ZeroAvia's hydrogen-electric engines promise significant cost savings and lower emissions, with plans to support ranges of 300 miles by 2025 and 700 miles by 2027.

๐ŸŸข Zurich Insurance Group and Aon launched a new insurance facility for clean hydrogen projects, covering blue and green hydrogen initiatives with capital expenditures of up to $250 million. This facility addresses the complex risks across the entire hydrogen project lifecycle, including construction, operational cover, and carbon capture technologies, and has already seen strong demand and is oversubscribed, highlighting the critical role of insurance in facilitating the net-zero transition.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

A Zunder charging point | Source: Zunder

๐Ÿ”Œ Zunder, a company developing charging points for EVs across Europe, secured a โ‚ฌ225 million loan from Santander, addressing a critical need for infrastructure to support the growing adoption of EVs. The funding will help install over 3,000 new charging points in countries including France, Portugal, and Italy.

๐Ÿ“ˆ BlackRock launched the iShares Global Real Estate Environmental Tilt UCITS ETF, focusing on environmentally sustainable real estate equities. The ETF tracks the FTSE EPRA Nareit Developed Green Low Carbon Target Select UCITS Capped Index, excluding issuers involved in oil sands, thermal coal, weapons, tobacco, and controversies. It aims for a 20% better environmental indicator through ESG integration.

๐Ÿ“ˆ Spanish VC firm Seaya raised โ‚ฌ300 million for its Andromeda climate tech fund, aimed at investing in companies focused on energy transition, decarbonization, sustainable food, and circular economy. The fund, supported by major investors like Iberdrola and BNP Paribas, plans to make 25 investments by 2027, addressing unique challenges faced by deep-tech climate entrepreneurs.

๐Ÿ“ˆ Investment manager Nuveen raised over $200 million for its second global climate inclusion private equity strategy, targeting investments to mitigate climate change, provide financial services, and build resilience in low-income communities. The fund meets SFDR Article 9 requirements and has received commitments from global investors, including the Danish pension fund Velliv.

๐ŸŸข Iberdrola acquired decarbonization solutions provider Balantia. Founded in 2011, Spain-based Balantiaโ€™s technology helps companies create a decarbonization plan to meet regulatory requirements. Following the acquisition, both companies will launch the Net Zero Emissions Manager (NZE Manager) platform aimed at helping companies manage energy and CO2 emissions and design a custom decarbonization plan with a time horizon to be achieved between 2030 and 2050.

๐ŸŸข  H2 Green Steel secured investment from Demeter to support the construction of its green steel plant in Boden, Sweden, which aims to produce steel with 95% lower emissions than traditional methods. The plant, incorporating a green hydrogen facility, is set to start operations in 2026 and produce five million tons of green steel annually by 2030.

๐ŸŒณ Natural Capital Research (Natcap) raised $10 million in a Series A funding round to scale its technology for quantifying and integrating nature-related risks and opportunities into business strategies. Founded in 2018 and spun out of Oxford University, Natcap helps businesses measure, report, and act on nature-related risks and opportunities.

๐Ÿ’ผ Biomaterials company UNCAGED Innovations raised $5.6 million in Seed funding to support the commercial launch of its sustainable, grain-based leather alternative, BioFuze, which significantly reduces GHG emissions, water, and energy use compared to traditional leather. The company aims to disrupt industries reliant on leather by offering a high-quality, scalable, and price-competitive alternative.

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