What's Happening in Sustainability & ESG (13.01 - 19.01) 🌎

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:

• CDP report shows sustainability leadership is translating into financial outperformance, but only for a small group of companies 📑

• EFRAG’s analysis finds companies and investors divided over the EU’s simplified ESRS, with users warning of weaker data and preparers welcoming lower costs 🇪🇺

• US courts push back on Trump’s offshore wind pause, clearing the way for major projects 🇺🇸

• Large corporates continue to increase purchases of carbon removal credits across nature-based and engineered pathways 🟢

• European financial regulators are moving to more deeply embed climate, nature, and ESG integrity into supervision, market oversight, and stress testing 🇪🇺

• and other news 🌍

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THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

📑 CDP’s Corporate Health Check 2026 shows that sustainability leadership is increasingly translating into financial outperformance, but only for a relatively small group of companies. Based on disclosures from more than 10,000 companies, the report finds that 15% of firms are cutting emissions four times faster than peers, collectively unlocking $218 billion in value in the past year. Leadership remains limited, with just 13% of companies qualifying as climate leaders, 11% in water, and 8% in forests, yet those at the top are growing market capitalisation faster across several sectors. CDP identifies shared characteristics among leaders, including strong governance, 1.5°C-aligned transition plans, value-chain engagement, and executive compensation linked to environmental outcomes.

The financial payoff of climate leadership varies sharply by sector, highlighting where sustainability is already investable and where structural barriers remain. Apparel companies classified as climate leaders outperformed peers by 14% in market capitalisation growth, while infrastructure, financial services, and biotech, healthcare, and pharma also showed strong alignment between climate performance and growth. In contrast, materials sectors such as steel, cement, chemicals, and mining struggled due to high energy prices, capital-intensive decarbonisation pathways, and slow deployment of low-carbon technologies. Power generation presents a mixed picture, with a relatively high share of climate leaders but muted investor returns amid rising costs and volatile electricity prices, while hospitality and transport underperformed on both climate and growth metrics.

Geographically, Japan stands out as the global leader, underscoring how policy alignment and corporate execution can drive value creation. Japanese companies recorded the highest share of climate leaders at 22%, capturing more than $76 billion in new climate-related opportunities in a single year, helped by a higher rate of SBTi-approved targets and consistent performance across climate, water, and forests. The UK followed at 17%, the EU at 16%, while China and Southeast Asia stood at 8%, and the US lagged despite continued corporate engagement. Looking ahead, CDP flags adaptation as the next major value frontier, with companies identifying $1.47 trillion in physical climate risks but disclosing relatively limited investment to address them, suggesting significant unrealized financial and resilience upside for early movers.

However, CDP has faced growing criticism from companies and practitioners over how recent scores reflect underlying performance. Recent CDP results have triggered criticism that year-on-year score declines are being driven less by deteriorating performance and more by methodological shifts, new metrics introduced mid-cycle, and rising disclosure burdens. As Anastasia Kuskova, CEO of beSirius, noted, processes and budgets cannot change overnight, meaning some companies are seeing weaker scores despite stable or improving underlying performance, while others are opting out of the assessment altogether.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🇪🇺 A new EFRAG cost-benefit analysis finds a clear split between companies and investors over the EU’s proposed simplified ESRS, with most users expecting weaker sustainability data while preparers welcome major cost savings. The amended standards cut mandatory datapoints by 61% and remove all voluntary disclosures, reducing total datapoints by over 70%, a move expected to save reporting companies €3.7 billion between 2027–2031 (or €4.7 billion including supply-chain effects), equivalent to a 34–44% cost reduction. Around 90% of Wave 1 reporters expect lower internal recurring costs and nearly 75% expect lower external costs, with a median reduction of 20%, while most companies believe data quality and access to green finance will not be negatively affected.

By contrast, 55% of ESG data users and 67% of investors and financial institutions expect a decline in information quality, citing reduced comparability (52%), loss of critical climate data (45%), and weaker environmental disclosures (43%), raising concerns about their ability to assess companies’ ESG performance, even as most acknowledge that streamlined standards could improve usability.

🇺🇸 US courts are increasingly pushing back against the Trump administration’s efforts to pause offshore wind development, allowing several major projects to move forward despite ongoing legal challenges. A US federal judge cleared Equinor to resume construction on its Empire Wind offshore project off New York, ruling that the government’s national security concerns did not outweigh the irreparable harm to the $5 billion project, which is 60% complete, has already absorbed $4 billion in investment, and is expected to power around 500,000 homes, while the broader legal challenge proceeds on an expedited basis.

In a similar decision, a US District Court allowed Ørsted and its partner GIP to resume construction on the 704 MW Revolution Wind project off Rhode Island. The ruling blocks a Trump administration order that had paused offshore wind leases on national security grounds, enabling the project, now 87% complete, to restart work while legal challenges continue, with Revolution Wind expected to supply power to more than 350,000 homes starting in 2026.

Meanwhile, another US federal judge allowed Dominion Energy to resume construction on its $11.2 billion Coastal Virginia Offshore Wind project, finding that the Interior Department’s stop-work order was overly broad and insufficiently justified. The decision enables the project, which has already seen nearly $9 billion invested and is expected to power around 600,000 homes, to restart construction as legal proceedings continue.

📑 The International Chamber of Commerce and Carbon Measures named an initial expert panel to help develop a global, ledger-based carbon accounting system capable of tracking product-level emissions across value chains. Launched in October 2025 and led by Amy Brachio, Carbon Measures aims to create consistent company- and product-level emissions accounting and carbon intensity standards for key industrial products.

WHAT ARE COMPANIES DOING?

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

🟢 Large corporates continue to deepen their commitments to carbon removal across nature-based and engineered pathways, signalling sustained demand for scalable, high-integrity supply. Microsoft announced new multi-year agreements totaling nearly 3 million tonnes, including 2.85 million tonnes of soil carbon credits from regenerative agriculture projects in the US and more than 100,000 tonnes of biochar-based removal from India, bringing its early-2026 purchases to 5 million tonnes and its cumulative total to 34.6 million tonnes.

Microsoft also agreed to purchase 2 million afforestation, reforestation, and revegetation (ARR) credits over nine years through Rubicon Carbon, supporting Kijani Forestry’s work with more than 50,000 smallholder farmers in Uganda. The deal represents the first transaction under a broader framework to source up to 18 million tonnes of ARR credits, combining near-term carbon income with long-term land restoration and livelihood creation.

The same trend is playing out across other corporate buyers. Salesforce, working with Milkywire, completed $5 million in carbon removal pre-purchases across 19 suppliers, backing early-stage approaches including biochar, BioCCS, direct air capture, enhanced rock weathering, biomass storage, and mineralization. In parallel, Occidental subsidiary 1PointFive signed a deal to supply 9,000 tonnes of direct air capture credits to Bain & Company from its STRATOS facility in Texas, marking Bain’s first DAC purchase and supporting the scale-up of what is expected to become the world’s largest DAC plant.

🛢️ bp said it expects to write down up to $5 billion from its low-carbon and gas transition businesses as it shifts focus back toward fossil fuels under new leadership. The move follows cancelled hydrogen projects, a planned sale of its solar unit Lightsource, weaker oil trading performance, and lower oil prices, with Brent crude down nearly 20% in 2025.

♲ L’Oréal selected 13 climate, nature, and circularity-focused startups for the first cohort of its €100 million L’AcceleratOR sustainable innovation program, following nearly 1,000 applications. Launched last year with a five-year investment horizon, the program targets solutions spanning low-carbon materials, sustainable ingredients, circular packaging, water resilience, and data intelligence. The chosen companies will now enter a pilot-readiness phase with potential six- to nine-month pilots and future scaling across L’Oréal.

🟢 Stegra secured Thyssenkrupp as its first customer for non-prime steel from its hydrogen-based steel plant in northern Sweden, with deliveries starting in 2027. The agreement supports Stegra’s production ramp-up while the company continues discussions to raise around $1.1 billion in additional financing, expected to conclude in Q1, and Thyssenkrupp clarified it will only act as a customer and has no plans to invest financially in the project.

📑 eBay unveiled its first climate transition plan, validated by the SBTi, outlining steps to reach net-zero emissions by 2045. The company has already cut operational emissions by 92% since 2019, achieved 100% renewable electricity across its facilities in 2024, and reduced transportation emissions by 21% toward a 2030 target of 27.5%.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

🇪🇺 European financial regulators are moving to more deeply embed climate, nature, and ESG integrity into supervision, market oversight, and stress testing. The European Central Bank set new priorities to further integrate climate and nature risks into its core work following the end of its 2024–2025 Climate and Nature Plan. Building on measures such as a climate factor in collateral rules, lower carbon exposure in corporate bond holdings, and climate stress testing, the ECB will now intensify its focus on assessing banks’ green transition plans, strengthening analysis of physical climate risks to the economy and financial system, and expanding work on nature-related risks, including water stress.

Alongside this, EU markets regulator ESMA published a new thematic note outlining expectations for how fund managers should address greenwashing risks when marketing ESG integration and ESG exclusion strategies. ESMA warned that these approaches are often less ambitious and inconsistently applied across funds, with ESG factors sometimes having limited real impact on portfolios, increasing the risk of misleading investors. The guidance reinforces four principles for sustainability claims to be accurate, accessible, substantiated, and up to date, while highlighting wide variation in how ESG integration and exclusions are defined, applied, and communicated.

In parallel, Europe’s financial regulators published final ESG stress testing guidelines to help national authorities consistently integrate ESG risks into supervisory stress tests for banks and insurers across the EU. Issued jointly by ESMA, EBA, and EIOPA, the guidelines establish common standards for embedding ESG risks into existing stress-testing frameworks, initially focusing on climate and environmental risks before expanding to other ESG factors over time, and will apply from 2027 under a “comply or explain” approach.

📉 Morningstar Sustainalytics confirmed it will exit the second-party opinion (SPO) business after 12 years, winding down a service that played a central role in assessing sustainability bonds and frameworks. The decision reflects a strategic shift amid changing market dynamics, where SPOs are seen as becoming less decisive in issuance decisions as standards mature and issuers, investors, and regulators rely more on internal frameworks and alternative forms of validation.

📈 UAE-backed climate investment platform ALTÉRRA plans to launch a $1.2 billion global climate fund, with Spain’s BBVA committing $250 million as a strategic partner. Pending approval, the fund will back climate-aligned infrastructure, private equity and credit across energy transition, decarbonization, climate tech and sustainable living in Europe, the Americas and other growth markets.

📈 Impact investor Blue Earth Capital launched its first dedicated impact secondaries strategy, securing over $100 million in commitments from institutional investors in Europe and the US. The global strategy targets sectors such as climate action, circular economy, healthcare, and financial inclusion.

📈 Superorganism closed its debut flagship fund at $25.9 million to invest in early-stage, technology-driven solutions for biodiversity. The fund targets startups across extinction drivers such as agriculture and forestry, climate and biodiversity solutions, and enabling technologies like remote sensing, genomics, and AI.

Acquisitions

⚡️ Canaccord Genuity acquired energy transition-focused bank Carbon Reduction Capital to launch an Energy Transformation group within its US Sustainability practice, strengthening advisory and capital-raising in renewables and decarbonization. Founded in 2008, CRC-IB brings experience across wind, solar, storage and carbon capture, with ~415 deals totaling about $91 billion.

Startup funding rounds

📊 Sustainability software provider osapiens raised $100 million in a Series C round led by BlackRock and Temasek’s Decarbonization Partners, valuing the company at over $1 billion. The funding will support product innovation and international expansion of its AI-powered compliance and sustainability platform, as enterprises face rising regulatory and decarbonization requirements.

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