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  • What's Happening in Sustainability & ESG (Week Recap 07.01 - 13.01) 🌎

What's Happening in Sustainability & ESG (Week Recap 07.01 - 13.01) 🌎

The backlash against DEI programs intensifies in the US, and other news

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. 🌎

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In this edition, we’ll cover:

The backlash against DEI programs intensifies in the US, with Meta, Amazon, and McDonald’s scaling back their initiatives 🇺🇸

The Net-Zero Asset Managers (NZAM) initiative suspended activities following BlackRock’s departure 🌎

  The Los Angeles wildfires are projected to result in insured losses exceeding $20 billion and economic damages ranging from $135 to $150 billion 🇺🇸

The Platform on Sustainable Finance (PSF) launched a consultation to simplify and expand the EU Taxonomy for sustainable economic activities 🇪🇺

and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🇺🇸 Meta Platforms, Amazon, and McDonald’s have joined a growing number of US companies scaling back their diversity, equity, and inclusion (DEI) programs amidst growing conservative opposition and legal challenges to such initiatives. Meta is ending DEI-focused hiring, training, and supplier programs and disbanding its dedicated DEI team, citing a shifting legal landscape following recent US Supreme Court decisions. Meta has also taken steps to repair relations with conservatives, including appointing Trump ally Dana White to its board and contributing $1 million to Trump’s inaugural fund. Similarly, Amazon phased out DEI-related materials and McDonald’s is restructuring its initiatives by retiring specific representation goals and its supplier-focused Mutual Commitment to Diversity, Equity, and Inclusion (MCDEI) pledge, citing shifts in the legal and corporate landscape following the 2023 Supreme Court ruling on affirmative action.

The backlash against DEI programs has intensified, with conservatives denouncing them as preferential treatment and threatening legal action. These moves reflect a broader retreat from diversity efforts by major US corporations in response to political and legal pressures. Here is a list of companies that either discontinued their DEI programs or adjusted certain policies in 2024:

Starbucks - In March 2024, the coffee giant's shareholders voted for an executive compensation plan that dropped a bonus related to DEI goals.

Boeing - The planemaker has dismantled its global DEI department according to Bloomberg News. Boeing's diversity vice president Sara Liang Bowen announced in October on LinkedIn that she had left the company.

Walmart - The retailer will no longer consider race and gender to boost diversity when granting supplier contracts and is scaling back racial equity training. Walmart is also stopping participation in rankings by HRC and also reviewing its support for Pride and other events.

Tractor Supply - The company said that it would no longer submit data to the Human Rights Campaign (HRC), which advocates for LGBTQ rights. Tractor Supply also said it would eliminate DEI roles and retire its current DEI goals.

Deere - The company said it would not participate in or support external social or cultural awareness parades, festivals, or events. It also reaffirmed that the existence of diversity quotas and pronoun identification have never been and are not company policy.

Harley-Davidson - In August 2024, the motorcycle manufacturer said it would not participate in the HRC survey and had ended its DEI initiatives.

Brown-Forman - The Jack Daniel's maker said it would ensure executive incentives and employee goals are tied to business performance, end participation in the HRC survey and scrap its quantitative workforce and supplier diversity goals.

Lowe's - The home improvement chain will no longer participate in HRC surveys and will combine its various business resource groups that represent diverse employees into one umbrella organization. Lowe's said in August it would not sponsor or participate in community events such as parades, festivals, or fairs.

Ford Motor - The automaker said it will change its DEI program, including ending participation in an LGBTQ advocacy group's ranking system.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

Source: Getty Images

🌎 The Net-Zero Asset Managers (NZAM) initiative, a coalition of over 325 members managing $57.5 trillion, has suspended activities following BlackRock’s departure amid escalating US political backlash against ESG practices. BlackRock, managing $11.5 trillion, cited confusion over its climate efforts and legal inquiries as reasons for leaving, joining other US financial institutions like JPMorgan that have exited similar climate alliances (Net-Zero Banking Alliance) due to Republican-led accusations of “woke capital” and antitrust violations. NZAM has launched a review to address differing regulatory and client expectations and prevent further member withdrawals. Despite the political challenges, advocates stress the critical role of the financial sector in driving emissions reductions and supporting the global clean energy transition. However, the exits from key climate coalitions signal growing tensions between political pressures and the financial industry’s climate commitments.

🌡️ The Los Angeles wildfires, among the costliest in California’s history with projected insured losses of over $20 billion and economic damages reaching $135–$150 billion, underscore the escalating risks posed by climate change. The wildfires were fueled by “hydroclimate whiplash,” a climate pattern of extreme wet winters followed by parched, hot conditions, exacerbated by powerful Santa Ana winds, land use patterns, and ignition sources like power lines and arson. The situation has forced California’s Insurance Commissioner to suspend policy cancellations for one year, as insurers face mounting pressure to reassess their presence in high-risk regions. Globally, 2024 marked a grim milestone with temperatures exceeding 1.5°C above pre-industrial levels for the first time, intensifying climate-related disasters like these wildfires, deadly heatwaves, and catastrophic floods. Despite the growing urgency for action, political commitment has faltered, with some governments, including the US, prioritizing fossil fuel production and industrial competitiveness, raising concerns over the future trajectory of global climate efforts.

🇪🇺 The Platform on Sustainable Finance (PSF), an EU advisory group, launched a consultation on proposed updates to the EU Taxonomy to simplify and expand the classification system for sustainable economic activities. The EU Taxonomy, part of the EU Action Plan on Sustainable Finance, defines activities that contribute to six environmental objectives, including climate change mitigation and adaptation, biodiversity protection, and circular economy transitions, while ensuring no significant harm (DNSH) to other objectives. Based on stakeholder feedback, the proposals focus on improving DNSH criteria usability and adding new activities, such as digital solutions and lithium, nickel, and copper mining. Chair Helena Viñes Fiestas emphasized the priority to enhance the Taxonomy’s usability and effectiveness, with plans for broader activity inclusion in future updates.

🇪🇺 The European Banking Authority (EBA) issued final Guidelines on managing ESG risks, requiring banks to identify, measure, manage, and monitor these risks, particularly those tied to the EU’s goal of climate neutrality by 2050. Developed as part of the EBA’s sustainable finance roadmap, the guidelines aim to integrate ESG considerations into banking frameworks to enhance institutions’ resilience as ESG risks intensify. Key measures include regular ESG risk assessments, the use of tools to evaluate short- and long-term ESG impacts, and embedding ESG risks into standard risk management systems. Banks must also develop forward-looking plans addressing ESG resilience, covering strategic objectives, targets, governance, and engagement strategies. The guidelines apply to large institutions starting January 2026, with smaller institutions following in 2027.

WHAT ARE COMPANIES DOING?

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

🛩️ London’s Heathrow Airport announced an £86 million expansion of its Sustainable Aviation Fuel (SAF) incentive scheme, aiming to reduce the cost gap between SAF and traditional jet fuel and increase SAF usage to 3% by 2025, surpassing the UK’s 2% mandate. Heathrow’s program, funded by aeronautical service fees, plans to scale SAF use to 187,000 tonnes in 2025, up from 70,000 tonnes in 2023, reducing flight emissions by 500,000 tonnes.

📑 A coalition of institutional shareholders, including ShareAction and ACCR, filed a resolution calling on Shell to clarify how its plans to expand liquefied natural gas (LNG) production align with its 2050 net-zero commitment. Concerns arise from Shell’s 2024 Energy Transition Strategy, which projects a 20–30% increase in LNG production by 2030, a forecast that exceeds International Energy Agency (IEA) demand scenarios and raises questions about potential financial risks and reliance on unproven negative emissions technologies. Shareholders argue Shell’s LNG strategy lacks transparency and could conflict with its climate targets, particularly following the removal of its 2035 interim emissions goal.

🇺🇸 A Texas federal judge ruled that American Airlines violated federal law by allowing ESG factors to influence investment decisions for its employee retirement plan, breaching its legal duty to prioritize financial interests under the Employee Retirement Income Security Act (ERISA). This decision, stemming from a class action led by American pilot Bryan Spence, is among the first of its kind amid a conservative backlash against ESG investing. The judge criticized American’s relationship with asset manager BlackRock but found the airline’s actions aligned with industry standards, avoiding a breach of prudence. Damages for over 100,000 plan participants remain undecided.

💼 Appointments / Departures

The Science Based Targets initiative (SBTi) appointed climate action veteran David Kennedy as its new CEO, following a challenging year that included the resignation of its previous CEO over controversial plans to incorporate carbon credits into corporate net-zero strategies. Kennedy, the founding Chief Executive of the UK’s Committee on Climate Change (CCC) and most recently a Partner at EY specializing in corporate sustainability, brings extensive leadership experience in climate policy and net-zero strategy.

S&P Global appointed Lauren Smart as Head of S&P Global Sustainable1, its sustainability-focused business unit. Smart, who joined S&P Global through its 2016 acquisition of Trucost and was part of Sustainable1’s startup team in 2020, previously served as Chief Commercial & Market Engagement Officer. Sustainable1, launched in 2021, integrates S&P Global’s sustainability offerings, including analytics, indices, and evaluations.

Schneider Electric appointed Chris Leong as its new CSO, tasked with leading the company’s sustainability strategy, commitments, and environmental impact initiatives. Leong, a Schneider Electric executive since 2012, previously served as Chief Marketing Officer and has extensive experience in global leadership roles, including positions at Nokia and WPP group.

Barclays’ Group Head of Sustainability, Laura Barlow, stepped down at the end of 2024 to pursue other opportunities but will remain as a senior advisor. Daniel Hanna, previously head of sustainable finance for the corporate and investment bank, has taken on an expanded role overseeing sustainable and transition finance. Barlow’s departure follows the recent exit of HSBC’s sustainability chief and comes amid scrutiny over banks’ climate efforts.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

Source: Constellation Energy

⚡️ Constellation Energy announced a $16.4 billion acquisition of Calpine Corp, a natural gas and geothermal company, marking one of the largest deals in US power industry history. Driven by surging electricity demand from AI data centers and electrification, the deal will position Constellation as the largest US independent power provider. CEO Joe Dominguez highlighted Calpine’s advancements in carbon capture technology as a key factor in the deal.

🤝🏻 SGS acquired Aster Global Environmental Solutions, a US-based provider of carbon and GHG validation and verification services, to expand its sustainability offerings. Aster Global specializes in GHG ecosystem services, carbon sequestration, and forestry, providing validation and verification in international markets. The acquisition strengthens SGS’s recently launched IMPACT NOW sustainability suite, focused on climate, circularity, nature, and ESG assurance, while also supporting its Strategy 27 diversity initiative to increase women in leadership roles.

📈 White Summit Capital secured over €350 million for a decarbonization-focused infrastructure fund, aiming to reach €500 million soon, with a potential cap of €750 million depending on deal flow. The fund will invest in mid-market projects in storage, renewables, and decarbonization for transportation and industries, targeting returns in the “mid- to high-teens.”. White Summit, with offices in Switzerland, Spain, and Britain, plans to allocate 40% of investments to Iberia and the rest to Western Europe.

📈 Trucks VC launched its third flagship fund, Trucks Venture Fund 3 (TVF3), with $70 million in commitments, its largest fund to date. Focused on startups advancing transportation decarbonization, safety, and accessibility, the California-based VC firm plans to make approximately 30 seed investments, typically ranging from $500,000 to $2 million, with a target ownership stake of around 10%.

🟢 Irish geophysical data firm XOCEAN raised €115 million to support its expansion, including fleet growth, new technology development, and additional facilities. XOCEAN uses uncrewed surface vehicles to maintain offshore wind and energy infrastructure, conduct hydrography, and support carbon capture projects, offering a low-carbon alternative to traditional crewed vessels with just 0.1% of their emissions. Since its founding in 2017, XOCEAN has grown to over 240 employees across Ireland, Britain, the US, Canada, Norway, and Australia.

🚜 Parsyl, an AI-driven insurer specializing in supply chain risks for food, beverage, and pharmaceutical commodities, raised $20 million in a Series C investment round. Parsyl has grown significantly by blending advanced technology with traditional underwriting to create resilient supply chains, addressing risks heightened by climate change-driven extreme weather events.

🟢 Cleantech startup Karman Industries raised an additional $7.5 million in VC funding to advance its solutions for decarbonizing manufacturing by electrifying industrial heat. The company has developed Thermal01, a compact, affordable electric heat pump designed to replace emissions-intensive gas boilers. The heat pump eliminates onsite CO2 emissions and reduces energy costs by 25-50%, offering a scalable and cost-effective solution for industries reliant on thermal energy.

🚧 Construction decarbonization software startup Tangible raised $3 million to address embodied carbon emissions in the construction and real estate sectors. Founded in 2021, Tangible’s platform enables developers to measure embodied carbon in building materials, identify opportunities to reduce emissions and meet sustainability and compliance demands.

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