What's Happening in Sustainability & ESG (Week Recap 27.02 - 04.03) 🌎

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This week’s read time: 8 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. 🌎

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. 🍀

In this edition, we’ll cover:

• The EU failed to approve the CSDDD, which requires companies to address their impacts on people and the planet in their supply chains 🇪🇺

• However, the bloc adopted a new nature restoration law and approved stricter penalties for environmental crimes 🇪🇺

• The US SEC will vote on March 6 on adopting rules requiring US-listed companies to report climate-related risks 🇺🇸

• Global energy-related CO2 emissions reached a record high in 2023 🌍

• Singapore will implement mandatory climate-related reporting for companies starting in 2025 🇸🇬

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Policies

🇪🇺 The EU Council failed to approve the Corporate Sustainability Due Diligence Directive (CSDDD), which mandates companies to address their negative impacts on human rights and the environment. The legislation was opposed by Germany and Italy, citing concerns over bureaucratic and potential legal impacts on companies. France also proposed to limit the scope of the directive to companies with more than 5,000 employees, instead of the proposed 500-employee threshold, excluding approximately 80% of businesses from the obligations. The CSDDD, which has been in process for four years, would have required companies to identify, assess, prevent, mitigate, and address impacts on people and the planet in their supply chains.

However, the bloc’s Parliament has:

• adopted a new law aimed at restoring and protecting natural habitats and ecosystems, with a target to restore at least 20% of the EU’s land and sea areas by 2030, and all ecosystems by 2050. The legislation includes an "emergency brake" for agricultural targets if they impact food production. Member states must submit their first restoration plans within two years of the law's enforcement.

• approved stricter penalties for environmental crimes. The legislation, applicable to all 27 EU member states, also targets illegal depletion of water resources, serious breaches of EU chemicals law, and large-scale ecosystem destruction. Individuals and companies committing environmental crimes could face up to eight years in prison, and companies could be fined up to 5% of their annual global turnover or up to 40 million euros.

• reached a provisional agreement to ban products made with forced labour from the European single market. The agreement includes the creation of a database of forced labour risk areas and products and sets clear criteria for assessing potential violations. The agreement now needs to be endorsed and formally adopted by both institutions.

🇺🇸 In other news, the US Securities and Exchange Commission (SEC) will vote tomorrow March 6 on adopting rules requiring US-listed companies to report climate-related risks. The rules aim to standardize disclosures about GHG emissions, risks, and transition costs to a low-carbon economy. The proposed regulations have faced opposition from companies and Republican state officials. As a result, the SEC has dropped its most ambitious requirement for companies to disclose emissions from their supply chains and softened requirements for other emissions disclosures.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🌍 Global energy-related CO2 emissions reached a record high in 2023, partly due to increased fossil fuel use in countries where droughts affected hydropower production. Despite a global expansion in clean technology, the reopening of China’s economy, increased fossil fuel use, and a recovery in the aviation sector led to an overall rise in emissions.

🇸🇬 Singapore will implement mandatory climate-related reporting for listed and large non-listed companies starting in 2025, in line with the ISSB standards. The phased approach will begin with listed companies, followed by large non-listed companies in 2027. The obligations include reporting on Scope 1 and 2 emissions initially, with Scope 3 reporting starting in 2026 for listed companies and 2029 for non-listed companies.

🇨🇦 The Government of Canada has issued its second green bond, a 10-year, $4 billion bond, fulfilling its commitment for the 2023-24 fiscal year. This is the first issuance under Canada's updated Green Bond Framework, which includes certain nuclear energy expenditures as eligible for green bond proceeds. The bond saw strong demand, particularly from environmentally and socially responsible investors.

📉 Reuters reports that companies are struggling to balance ESG disclosures due to various pressures. While stakeholders demand ambitious ESG goals and transparency, companies face scrutiny from regulators and investors for accuracy, and political pressure to drop ESG policies. This has led to a trend of 'greenhushing', or discretion about ESG policies. The US financial sector showed the biggest drop in ESG-related statements in Q3 2023, down 20%.

WHAT ARE COMPANIES DOING?

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

🛩️ International Airlines Group (IAG), the parent company of airlines including British Airways, Iberia, and LEVEL, has signed its largest Sustainable Aviation Fuel (SAF) purchase agreement with Twelve, a company that produces a synthetic aviation fuel from CO2, water, and renewable energy. The deal involves nearly 1 billion liters of SAF, reducing lifecycle GHG emissions by up to 90% compared to conventional jet fuel.

⚡️ Shell's US solar business, Savion, is selling about a quarter of its assets, representing up to 10.6 gigawatts of solar generation and storage assets. This move is part of Shell's shift under CEO Wael Sawan to focus on the most profitable businesses and higher-margin projects. The sale will allow Savion to concentrate on Shell's integrated power markets strategy. Shell has recently sold other assets and started company-wide staff reductions to save up to $3 billion.

📄 Deutsche Bank has released a new Sustainable Finance Framework, detailing the bank's methods for classifying sustainable transactions and financial products. This follows the bank's commitment to expand its sustainable financing and ESG investment portfolio to over €500 billion between 2020 and 2025. The new framework includes enhanced eligibility criteria, increased transparency, and is aligned with the six guiding objectives of the EU Taxonomy for environmentally sustainable activities.

📈 S&P Dow Jones Indices has launched biodiversity-focused versions of its S&P 500 and Global LargeMidCap indices, integrating sustainability factors including biodiversity, the UN SDGs, and climate change. The indices are designed to offer insights into investments' impact on the natural world, supporting a more resilient and ecologically conscious investment landscape.

🔴 Invesco has become the fifth major US investor to exit or scale back its involvement with the Climate Action 100+ (CA100+) coalition, which aims to push highly polluting companies to reduce their carbon emissions. This follows similar decisions by JPMorgan, State Street, Pimco, and BlackRock. Despite criticism and potential antitrust law breaches, CA100+ continues to have the backing of hundreds of global investors.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

⚡️ French utility Engie has secured over $1 billion in tax equity financing from JPMorgan, Goldman Sachs, and BNP Paribas for six renewable projects in US markets. The projects, located in the ERCOT, MISO, and SPP markets, have a combined capacity of 1.3 GW, including 950 MW of solar and 353 MW of wind.

⚡️ Fervo Energy, a leader in next-generation geothermal development, has raised $244 million in a new funding round. The funding will enable Fervo to deploy technology adapted from the oil and gas industry to deliver commercially viable, carbon-free energy. Fervo has already successfully launched its first commercial project and begun drilling at Cape Station, a 400 MW project in Utah.

🌲 Munich Re Group's asset manager MEAG has raised $207 million for its MEAG Sustainable Forestry Equity Fund, which invests in sustainable forest management. The fund's first investments, scheduled for the first half of 2024, will focus on forested land in the USA, New Zealand, and Australia.

⚡️ German solar startup Enviria has secured over $200 million in capital from BlackRock to expand its projects in Germany. Enviria, which provides photovoltaic systems and services for companies switching to solar power, is capitalizing on the untapped renewable energy capacity in Germany, where only 10% of firms have solar systems despite comprising 70% of national electricity usage.

🔌 Portugal-based EV charging point operator, Powerdot, has closed a €100 million funding round. The investment will allow Powerdot to accelerate R&D projects and expand its charging infrastructure with an additional 10,000 EV charging points. The company currently operates over 5,000 charging points across 1,300 locations and is the largest operator in Portugal.

📄 Hellas Direct, an Athens-based insurtech firm, has secured a €30 million investment to bolster its climate-focused insurance offerings. The company, with over 900,000 customers and €155 million in underwritten premiums, develops innovative insurance solutions for individuals and businesses in areas at risk from natural disasters and extreme weather events, and incentivizes policyholders to contribute to climate mitigation efforts.

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