What's Happening in Sustainability & ESG (Week Recap 06.05 - 12.05) 🌎

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. 🍀

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In this edition, we’ll cover:

• Global banking regulators step up climate risk oversight amid regulatory divides 🏦

• Federal vs State climate clash continues across the US 🇺🇸

• German Chancellor Friedrich Merz called for the full repeal of the EU’s supply chain law, CSDDD 🇩🇪

• Euronext rebrands ESG in drive to help European defence firms 📈

• Microsoft signs more carbon removal agreements 🟢

• and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🏦 Global banking regulators agreed yesterday (May 12) to intensify efforts to better understand the financial risks posed by climate change amid pushback from the US. The Basel Committee’s oversight body prioritized the assessment of climate-related financial risks, particularly those stemming from extreme weather, and announced plans to release a voluntary disclosure framework for jurisdictions to consider. While Europe continues to integrate climate risks into central bank supervision, with the ECB making it a key regulatory focus, the US is moving in the opposite direction. Under political pressure from Trump and Republican leaders, US institutions like the Federal Reserve and Treasury have scaled back or withdrawn from global climate initiatives, including the NGFS and joint principles for managing climate risk in banks. The divide underscores a growing rift in how the world’s largest economies view the role of climate in financial stability.

In related news, the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) launched its first set of short-term climate scenarios to help financial regulators analyze the near-term economic and financial impacts of climate change and policy responses. Unlike its existing long-term models, the new five-year scenarios provide granular sector analysis and detailed coverage of financial and macroeconomic variables, accounting for extreme weather events, transition dynamics, and compound risks. The four scenarios include physical-only, transition-only, and combined risk models, designed to support stress testing, policy calibration, and climate risk assessment across financial institutions.

🇪🇺 In the EU, the European Central Bank (ECB) raised concerns about proposed cuts to sustainability reporting rules, warning they could jeopardize investor transparency, and undermine financial stability and climate goals. In response to the European Commission’s Omnibus I package (which would reduce the scope of the CSRD by excluding 80% of companies), the ECB urged that firms with 500+ employees remain covered under simplified standards. The bank emphasized the importance of reliable ESG data for assessing financial and transition risks, opposed eliminating sector-specific reporting standards, and cautioned that voluntary disclosures could lead to greenwashing and critical information gaps.

Meanwhile, German Chancellor Friedrich Merz called for the full repeal of the EU’s supply chain law, CSDDD, arguing it imposes excessive regulatory burdens on companies. Merz said Germany will revoke its national Supply Chain Act and expects the EU to cancel the CSDDD as well. Adopted in 2024, the CSDDD requires companies to identify and address human rights and environmental harms across their value chains, but its scope and timeline have already been scaled back. While the CSDDD’s implementation has already been delayed to 2028, Merz said postponement is not enough and reiterated his push for a “complete repeal” of the directive.

🇪🇺 The European Commission also launched a new call for evidence to revise the Sustainable Finance Disclosure Regulation (SFDR), aiming to enhance its clarity, reduce compliance burdens, and improve its overall effectiveness. In effect since 2021, the SFDR requires financial market participants to disclose how they integrate sustainability risks and impacts in investment decisions. While the regulation is widely supported, the review addresses issues like legal ambiguity, data limitations, and confusion around the Article 8 and 9 classifications being used as unofficial ESG labels. The Commission is considering simplifying disclosures and potentially introducing formal sustainability product categories. Feedback is open until May 30, 2025.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🇺🇸 A coalition of 18 US State Attorneys General, led by New York AG Letitia James, filed a lawsuit against the Trump Administration to block its indefinite freeze on new wind energy developments. The legal challenge follows a presidential directive issued on Trump’s first day in office halting all federal wind project approvals, including construction on the Empire Wind project off New York’s coast. The lawsuit argues the freeze is legally unjustified, contradicts bipartisan energy policy, and threatens clean energy goals, economic investment, and states’ ability to meet growing electricity demand while cutting emissions.

In a broader clash between federal rollback efforts and state-led climate policy, the US Justice Department filed lawsuits against New York and Vermont over their new climate “Superfund” laws, which would require fossil fuel companies to pay billions for climate damages, while 24 state Attorneys General joined a separate suit challenging Vermont’s version. The laws aim to hold energy firms financially accountable for their contributions to GHG emissions, with New York’s law expected to raise $75 billion by 2050. The actions follow a Trump executive order targeting state-level climate and ESG laws, which the administration deems unconstitutional and harmful to US energy interests.

Despite federal resistance, New York’s newly signed 2025–2026 budget includes over $1 billion in climate-focused investments targeting building emissions reductions and transportation electrification, but notably excludes the proposed cap-and-invest program that would have required major emitters to pay for emissions allowances. While the cap-and-invest initiative has been delayed, the budget allocates $450 million for building retrofits and clean heating, $250 million for electric school buses and EV infrastructure, over $200 million for thermal energy networks, and $200 million for renewables and grid upgrades, reinforcing Governor Kathy Hochul’s commitment to a greener New York.

WHAT ARE COMPANIES DOING?

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

🟢 The world’s first commercial-scale e-methanol plant has launched in Denmark, with Maersk set to use the low-emission fuel for its growing fleet of dual-fuel container ships. Built for €150 million by European Energy and Mitsui, the Kasso facility will produce 42,000 tons of e-methanol annually using renewable energy and captured CO₂. While the plant’s output is enough to power one large vessel per year, Maersk emphasized that scaling production and reducing costs remain key challenges. In addition to Maersk, companies like Lego and Novo Nordisk will use the e-methanol for more sustainable manufacturing, and the plant’s excess heat will serve 3,300 local homes.

⚡️ Google announced a new collaboration with nuclear developer Elementl Power, including plans to invest in three advanced nuclear energy projects, each with a capacity of at least 600 MW. The move comes as part of Google’s strategy to decarbonize its rapidly growing data center operations, and aligns with a broader industry pledge to triple global nuclear capacity by 2050. Elementl, founded in 2023, aims to bring 10 GW of next-gen nuclear energy online in the US by 2035. Google also announced two new partnerships with Recoolit and Cool Effect to eliminate superpollutants (highly potent GHGs like methane and HFCs) equivalent to 1 million tons of CO₂. The long-term credit purchases support scalable, science-backed solutions to tackle short-lived but powerful climate pollutants, which are responsible for nearly half of global warming to date. Recoolit enables refrigerant capture and destruction in Indonesia, while Cool Effect will support methane destruction at a landfill in Brazil. Google aims to use these credits to address its short-lived emissions or eventually replace them with longer-lived carbon removals.

🟢 Microsoft and Stockholm Exergi expanded their carbon removal agreement to over 5 million tonnes over ten years, marking the world’s largest deal for permanent carbon removals to date. The partnership centers on Stockholm Exergi’s upcoming BECCS (bio-energy with carbon capture and storage) facility in Stockholm, which will capture and store 800,000 tonnes of CO₂ annually by 2028. Microsoft also signed a new multi-year agreement with forest investment firm EFM for up to 3 million nature-based carbon removal credits sourced from climate-smart forest management projects. The deal includes a direct purchase of 700,000 credits from a property on Washington’s Olympic Peninsula and an investment in EFM’s Fund IV via Microsoft’s Climate Innovation Fund, unlocking access to an additional 2.3 million credits. The collaboration marks Microsoft’s first US forestry investment.

📦 Amazon will deploy advanced automated machines across its European fulfillment centers to produce custom-fit cardboard boxes and paper bags on demand, aimed at reducing packaging waste and emissions. The machines create packaging tailored to the exact size of shipped products and include auto-labeling tech that uses up to 75% smaller labels, improving efficiency and minimizing materials. Over 70 machines will be installed in key markets like Germany, the UK, and France by year-end, with more to follow by 2027.

🥤 Coca-Cola agreed to revise its recycling claims on plastic bottles following a greenwashing complaint filed by the European Consumer Organisation (BEUC). The company will update labels such as “100% recycled plastic” to specify that only the bottle (excluding cap and label) is made from recycled material and replace prompts like “Recycle me again” with clearer ones like “Recycle me.” The move follows a broader alert issued in 2023 against Coca-Cola, Danone, and Nestlé for misleading sustainability claims.

📊 Intercontinental Exchange (ICE) launched its new ICE Global Climate Risk Solution to help investors assess physical climate risks in their portfolios using advanced geospatial data. The tool provides forward-looking climate risk scores and metrics for corporate and sovereign assets, leveraging data on over 1.6 billion buildings worldwide. Covering more than 3 million corporate asset locations across 20,000 companies, ICE plans to expand to 9 million locations.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

📈 Euronext announced new measures to boost investment in Europe’s defence sector, including faster bond listings, IPO support, and revamped ESG index rules to accommodate defence firms. The initiative aligns with the EU’s broader push to increase military spending and reduce dependence on US arms. CEO Stéphane Boujnah framed the shift as a response to a “new geopolitical order,” redefining ESG to “Energy, Security and Geostrategy.” Euronext will revisit ESG index methodologies to limit exclusions of defence companies and urge rating agencies to classify only treaty-prohibited weapons as controversial. It will also launch the EU-supported IPOready Defence programme in Q3 and has reduced defence bond listing times to two days. The move includes plans for new indexes reflecting security and energy priorities. While companies like Thyssenkrupp expressed interest, analysts cautioned that market forces, not Euronext, ultimately determine IPO success.

🏦 JP Morgan strengthened its green finance and advisory offering in Europe by appointing Kai-Christian Nerger as Head of Green Economy Banking for Europe. The newly created role within its global corporate banking division will focus on supporting clients in reducing emissions and seizing green growth opportunities. Nerger, a decade-long veteran at the bank with experience in renewables and industrial sectors, will lead efforts to accelerate the energy transition and scale climate tech businesses across the region. Despite JP Morgan’s exit from a global climate banking alliance, the bank reaffirmed its commitment to climate finance, having already facilitated $242 billion toward its $1 trillion green target since 2021.

📈 Iberdrola raised €750 million in a green bond offering, the first by any company under the new European Green Bond (EuGB) standard. The bond, also aligned with ICMA’s Green Bond Principles, was met with strong investor demand, being five times oversubscribed with over €3.7 billion in orders. The EuGB standard, effective from December 2024, sets strict criteria on taxonomy alignment, transparency, and green transition planning. The company plans to use proceeds to fund renewable energy projects.

⚡️ Aligned Climate Capital raised over $240 million for its sixth and largest distributed solar fund, Aligned Solar Partners 6 LP (ASP6), which focuses on acquiring and financing construction-ready distributed solar projects across underserved US markets. The fund, aimed at delivering returns through tax credits, income distributions, and eventual portfolio sales, has already placed over 25MW of projects in service and will begin investor distributions this year.

Funding rounds:

🛩️ United Airlines announced a new investment in carbon transformation startup Twelve, supporting its development of sustainable aviation fuel (SAF) made from captured CO₂ and renewable energy. Twelve’s electrochemical process converts CO₂ and water into fuels, materials, and chemicals, with its SAF expected to cut lifecycle emissions by up to 90% compared to traditional jet fuel.

🔋 Battery management software startup Breathe Battery Technologies raised $21 million in a Series B round and unveiled a new suite of battery simulation and optimization tools. The London-based company, spun out of Imperial College in 2019, develops physics-based software for battery design, validation, and embedded control.

🟢 Montreal-based startup Exterra Carbon Solutions raised CAD $20 million (USD $14.5 million) to scale its technology that converts asbestos mine tailings into low-carbon battery and building materials. Founded in 2021, Exterra transforms mining waste into critical minerals like nickel for EV batteries and amorphous silica for construction, aiming to process over 300,000 tons annually at what will be the world’s largest asbestos mitigation facility.

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