What's Happening in Sustainability & ESG (26.05 - 01.06) 🌎

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:

• TISFD releases draft framework for people-related disclosures 📑

• The US SEC officially proposed repealing its 2024 climate disclosure rule 🇺🇸

• The IFRS Foundation and GRI reaffirmed their commitment to aligning ISSB and GRI sustainability reporting standards 📑

• A Bloomberg investigation uncovered major integrity issues in Europe’s government-backed carbon credit market 🚨

• IEA’s new World Energy Investment report says the Middle East conflict will accelerate efforts to diversify energy systems and strengthen energy security ⚡️

• and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

From the SEC’s proposed repeal of its climate disclosure rule to new social disclosure guidance and efforts to align global reporting standards, sustainability reporting continues to evolve. Here are the latest developments:

📑 The Taskforce on Inequality and Social-related Financial Disclosures (TISFD) released the first draft of its reporting framework to help organizations assess and disclose people-related impacts, risks, and opportunities, including human rights, labor rights, well-being, and inequality. Designed to complement frameworks such as TCFD, TNFD, ISSB, GRI, and ESRS, the draft aims to bring greater consistency to social disclosures while helping investors and companies better understand people-related risks. The consultation period will remain open until July 31, 2026, with the final framework expected in late 2027.

🇺🇸 The US SEC has officially proposed repealing its 2024 climate disclosure rule, arguing that mandatory reporting of GHG emissions and climate-related risks exceeds the agency’s authority and imposes costs that outweigh the benefits for investors. The rule never took effect after facing legal challenges from business groups and Republican-led states, and SEC Chair Paul Atkins said its removal would prevent regulators from influencing corporate behavior through disclosure requirements. Environmental groups and investor advocates criticized the move, warning that investors could lose access to material information needed to assess climate-related financial risks. The proposal is now open for a 60-day public comment period.

New York also approved changes to its climate law that delay key emissions reduction requirements, replacing the state’s 2030 target with a new goal to cut emissions 60% by 2040. The move follows concerns from Governor Kathy Hochul that existing climate targets had become costly and unattainable. While environmental groups criticized the changes as weakening accountability, the new budget also keeps alive the possibility of a future cap-and-invest program that would place a price on emissions and fund climate initiatives.

📑 The IFRS Foundation and GRI released a new statement, reaffirming their commitment to aligning ISSB and GRI sustainability reporting standards, aiming to create a more seamless and comprehensive global reporting system. The organizations highlighted areas where disclosures already overlap, such as GHG emissions reporting, while emphasizing the complementary nature of their standards, with ISSB focused on investor-relevant financial risks and opportunities and GRI focused on broader environmental and social impacts. The collaboration will continue to focus on areas including nature-related disclosures, sector-specific standards, and human capital reporting, with the goal of reducing duplication, fragmentation, and reporting complexity for companies.

MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🚨 A Bloomberg investigation uncovered major integrity issues in Europe’s government-backed carbon credit market, finding that companies across at least nine European countries purchased credits from Chinese projects that appeared non-existent, lacked emissions-reduction equipment, or were linked to questionable auditing practices. German authorities have already invalidated 30 projects claiming 2.1 million tonnes of CO₂ reductions, while investigations revealed cases where project developers and auditors had overlapping roles, raising concerns about conflicts of interest and weak oversight.

The findings expose vulnerabilities in the EU’s former Upstream Emissions Reduction (UER) scheme, which allowed companies including major oil and energy firms to use international carbon credits for compliance. While the credits were purchased legally and in good faith, experts warn that weak verification, inadequate governance, and limited enforcement undermined climate benefits and investor confidence. The scandal comes as the EU prepares to expand the use of international carbon credits after 2030, intensifying calls for stricter quality standards, stronger auditing, and more robust oversight to prevent fraudulent or overstated emissions reductions from entering future carbon markets.

⚡ The IEA expects the Middle East conflict to leave a lasting mark on global energy investment, accelerating efforts to diversify energy systems and strengthen energy security. Global energy investment is projected to reach $3.4 trillion in 2026, with $2.2 trillion directed toward grids, storage, nuclear, renewables, efficiency, electrification, and low emissions fuels, compared to $1.2 trillion for oil, gas and coal. While oil investment is set to decline for a third consecutive year, natural gas investment is expected to reach its highest level in a decade, driven by new LNG projects.

Electrification is also gaining significant momentum, with investment in technologies such as electric vehicles, heat pumps, and industrial electrification rising 15% year over year, supported by lower energy costs, improved resilience, and growing concerns over fuel price volatility. The IEA noted that countries combining clean energy deployment, electrification, and efficiency measures saved an estimated $260 billion in fossil fuel import costs in 2025, underscoring the growing link between decarbonization and energy security. Despite strong growth, adoption remains constrained by high upfront costs, financing challenges, and economic uncertainty, particularly for smaller companies and households.

🇧🇷 Brazil has shifted from mandatory to voluntary sustainability reporting, replacing its planned ISSB-aligned disclosure requirement with a “comply-or-explain” approach. Under the revised rules, public companies can choose whether to publish sustainability and climate reports, but those opting out must publicly explain their decision when filing annual financial statements. Companies that do report must follow ISSB-based Brazilian standards and commit to reporting for at least three consecutive years. The regulator said the changes aim to preserve transparency and comparability while giving companies greater flexibility to weigh the costs and benefits of sustainability reporting.

WHAT ARE COMPANIES DOING?

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

⚡ Elemental Impact, together with Amazon, Google, Meta, and Microsoft, launched the Data Center Innovation Initiative (DCII) to invest in and accelerate clean energy, materials, and infrastructure technologies using data centers as testing grounds for commercialization. The initiative will invest between $500,000 and $5 million in up to 10 startups through 2027, focusing on areas such as energy storage, advanced electrical systems, industrial cooling, and low-carbon materials. By leveraging the rapid expansion of data centers, the partners aim to help emerging technologies scale faster, improve energy reliability and efficiency, and reduce emissions across both the data center sector and the broader economy.

In related news, data centers are emerging as a major source of backlash against AI, with growing concerns over their energy use, water consumption, land requirements, noise pollution, and e-waste. Community opposition has already delayed or blocked more than $64 billion in US data center investments since 2024, while project cancellations and permitting restrictions are rising globally. Although solutions such as cleaner energy, advanced cooling systems, circular hardware design, and better community engagement already exist, deployment remains limited. Critics argue that the biggest barrier is no longer technology, but the lack of stronger disclosure standards, procurement requirements, regulatory frameworks, and industry incentives to make sustainable data center design the norm rather than the exception.

🏢 bp removed Chair Albert Manifold less than a year after his appointment, citing serious concerns related to governance standards, oversight, and conduct. The leadership shakeup follows a period of major change at the energy giant, including the appointment of CEO Meg O’Neill and bp’s strategic pivot back toward increased oil and gas investment while reducing spending on low-carbon energy. Manifold’s departure comes after receiving only 82% shareholder support at bp’s AGM and amid growing scrutiny from investors and climate activists over the company’s governance and climate strategy.

🍔 McDonald’s said it is unlikely to meet its 2030 Scope 3 emissions reduction targets, citing challenges such as rising energy demand, slow clean energy deployment, and supply chain disruptions beyond the company’s control. While Scope 3 emissions, which account for around 99% of its footprint, have fallen only 3% since 2018, the company is on track to exceed its Scope 1 and 2 reduction goals and has nearly achieved its sustainable packaging target.

🌱 The City of Stockholm signed a 15-year agreement with Stockholm Exergi to purchase 750,000 tonnes of permanent carbon removals, becoming the world’s fifth largest buyer of durable carbon removal credits. Under the deal, Stockholm will buy 50,000 tonnes annually from Stockholm Exergi’s BECCS facility, which is expected to capture and permanently store 800,000 tonnes of CO₂ per year starting around 2028.

Solutions

📊 IFS launched IFS Zero, a new agentic AI-powered platform designed to help industrial companies measure, manage, and report Scope 1, 2, and 3 emissions. The solution uses AI agents to automate data collection, mapping, validation, anomaly detection, and audit-ready reporting, addressing challenges such as fragmented data and manual processes.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

🛢️ Shareholder pressure on major oil companies appears to be losing momentum, with climate and governance proposals receiving limited support at recent Chevron and ExxonMobil annual meetings. Chevron directors and executive pay packages received 97% shareholder backing, while environmental and Indigenous rights proposals attracted only 9% support. At Exxon, shareholders approved the company’s move from New Jersey to Texas with 71.3% support, while governance reform proposals gained just 23.5%. The shift highlights waning investor appetite for activist resolutions that once drove climate disclosures across the sector. Meanwhile, concerns are growing that some companies are becoming increasingly resistant to shareholder scrutiny, as governance advocates warn of a broader trend toward reducing investor influence. The developments come as energy companies balance rising power demand, energy security concerns, and decarbonization pressures, with analysts noting that meeting growing electricity needs may increasingly require higher-emitting generation assets.

🏗️ Climate-focused VC firm Gigascale Capital launched a new $250 million fund to back startups “rebuilding the physical economy” through technologies that address climate and infrastructure challenges. Founded by former Meta CTO Mike Schroepfer, the fund will invest in areas such as clean energy, grid infrastructure, automation, and supply chains, reflecting the growing pressures from electrification, AI, industrial reshoring, and extreme weather. Initial investments include transformer developer Heron Power, microreactor company Radiant, and rare earth magnet recycler Solcoa.

M&A

⚡ DigitalBridge acquired power infrastructure investor ArcLight Capital Partners in a deal valued at up to $1.05 billion, creating a combined infrastructure platform with more than $150 billion in assets. The transaction brings together expertise in power, electrification, AI, and digital infrastructure as rising AI demand drives investment in energy and data infrastructure. ArcLight will continue operating as a separately managed business within DigitalBridge, with the combined platform aiming to capitalize on the growing convergence of power and digital infrastructure.

👗 Fashion carbon management platform Carbonfact acquired product impact software provider Vaayu to create a unified environmental data platform for the fashion industry. The deal combines Carbonfact’s carbon accounting and reporting capabilities with Vaayu’s AI-powered product impact data, creating a platform serving more than 300 apparel and footwear brands. The combined dataset includes 150,000 fashion-specific emission factors and primary data from over 7,000 textile factories.

Funding rounds

✈️ Acelen Renewables secured $1.5 billion in financing to build a renewable fuels biorefinery in Bahia, Brazil, aimed at producing 1 billion liters of SAF and renewable diesel annually by 2029. The project will use HEFA technology and feedstocks including soybean oil, used cooking oil, and macaúba, a high-yield native Brazilian palm. The initiative will cultivate 144,000 hectares of degraded land, with 20% dedicated to small farmers, and has already secured most of its planned fuel offtake volumes.

⚛️ Laser fusion startup Focused Energy raised $240 million in a Series A round, the largest Series A financing in the fusion industry to date. The Germany-based company develops laser-driven fusion systems designed to provide virtually limitless clean energy with no direct CO₂ emissions and significantly less long-lived radioactive waste than conventional nuclear power.

⚛️ Fusion startup Thea Energy raised $100 million in a Series B round to accelerate the development of commercial fusion power plants. Thea Energy is developing a stellarator-based fusion system that uses flat, AI-enabled superconducting magnets to simplify manufacturing and construction compared to traditional designs.

🧪 Green chemistry company P2 Science raised $23 million to expand its plant-based ingredients platform across beauty, personal care, and new industrial markets. The Yale spinout develops renewable specialty chemicals using plant-based feedstocks and low-cost manufacturing processes as alternatives to fossil-based materials.

🔬 D-CRBN raised €17.5 million in Series A funding to scale its technology that converts captured CO₂ into carbon monoxide and syngas for sustainable fuels, chemicals, and materials. The company’s plasma reactor technology, already validated through industrial pilots with partners in the steel and chemicals sectors, aims to reduce reliance on fossil feedstocks while strengthening Europe’s industrial competitiveness.

🌊 Tidal energy startup Caudal Energy raised £4.3 million in seed funding to advance its bio-inspired technology for generating predictable renewable power from tidal streams. The Oxford University spinout is developing oscillating fin systems modeled on marine mammal tails, designed to operate efficiently in a wider range of tidal conditions than traditional turbine-based solutions. 

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