What's Happening in Sustainability & ESG (Week Recap 08.10 - 14.10) 🌎

Today’s newsletter is brought to you by Tomorrow University – The Global University for Impactful Careers.

This week’s read time: 9 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:

• RepRisk report found a 12% decline in companies associated with greenwashing risk in 2024, however, cases of severe greenwashing have risen by 30% 📑

• Renewable energy is set to meet nearly half of global electricity demand by 2030, but it will fall short of the UN’s COP28 goal to triple renewable capacity ⚡️

• Canada announced its first expansion of mandatory climate-related financial disclosures to include large private companies 🇨🇦

• A UN expert group reached a compromise on the key elements of a global carbon trading system 🌳

• More than two-thirds of CEOs remain committed to their climate strategies, but many are adjusting their communication 📑

• and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

📑 A new report by ESG data science company RepRisk reveals that the number of companies linked to greenwashing—making misleading claims about their environmental impact—has decreased for the first time in six years, driven by increasing regulatory and stakeholder pressure. The report found a 12% decline in companies associated with greenwashing risk in the year ending June 2024. However, cases of severe greenwashing have risen by 30%, with incidents becoming more intentional and impactful. The study highlighted regional variations, with a 20% drop in greenwashing cases in the EU, where new regulations like the Green Claims Directive have targeted vague environmental claims. In contrast, cases in the US slightly increased but fell overall by over 10%, influenced by rising ESG politicization and companies responding to pressures from investors and political figures. By industry, Oil and Gas accounted for the largest share of greenwashing incidents, followed by Food and Beverage, and Banking and Financial Services. The latter saw the biggest reduction in cases, down 27%. Dr. Philipp Aeby, CEO of RepRisk, noted that while regulators have made progress in addressing greenwashing, companies remain vulnerable to reputational damage as new forms of greenwashing emerge.

⚡️ According to the International Energy Agency (IEA), renewable energy is set to meet nearly half of global electricity demand by 2030, but it will fall short of the UN’s COP28 goal to triple renewable capacity. While over 5,500 GW of renewable capacity will be added, equivalent to the combined power capacity of China, the EU, India, and the US, this will not meet the target. Achieving the goal requires 25 million km of grid upgrades and 1,500 GW of energy storage. Solar PV will drive 80% of this growth, and while solar manufacturing has surged, it has led to oversupply and financial losses for manufacturers. Most of the growth is concentrated in China, which will account for 60% of global expansion. Despite challenges, 70 countries are on track to meet or surpass their renewable targets, driven largely by the fact that renewables are now often the cheapest energy option globally.

Another report by consultancy DNV shows that global CO₂ emissions from the energy sector are expected to peak this year, driven by the falling costs of solar power and batteries. Despite this, experts warn that cumulative emissions and a slow decline will likely result in a global temperature increase of 2.2°C, missing the 1.5°C target. Fitch Ratings also warned that global decarbonization efforts are progressing too slowly, with significant disparities between developed and emerging economies. While CO₂ emissions in 10 developed economies fell to their lowest levels since 1970, emissions in emerging markets, tracked by Fitch, rose by 4.7% in 2022. Global CO₂ emissions grew by 1.8%, compared to a 2.9% rise in GDP, and the emissions-to-GDP ratio declined by just over 1%, far below the 8% annual reduction needed to meet 2050 net-zero targets.

SPONSORED BY TOMORROW UNIVERSITY

The Global University for Impactful Careers

Tomorrow University, a leader in impactful careers, offers a range of programs focused on sustainability—from sustainable business management and technology to leadership and innovation. Upskill with short certificate programs in areas such as Clean Energy, Green Tech, or Sustainability Management, or develop leadership expertise with MBAs in ESG Management, Sustainable Growth, Climate Leadership, and more. These fully remote courses emphasize self-discovery and skill development, preparing you to lead sustainable change. With advanced technology, a global mentoring network, and in-person events at city hubs worldwide, Tomorrow University empowers you to build connections and drive meaningful impact.

Ready to elevate your sustainability skills? Learn how Tomorrow University can help here or Get the brochure now.

MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🇨🇦 The Government of Canada announced its first expansion of mandatory climate-related financial disclosures to include large, federally incorporated private companies. This builds on prior efforts to implement climate reporting aligned with the TCFD. The new rules will amend the Canada Business Corporations Act to introduce mandatory reporting, with details on the requirements and company size still being determined. Small- and medium-sized businesses are excluded but may be encouraged to provide voluntary disclosures. Alongside this, Canada is developing a sustainable investment taxonomy to categorize green and transition economic activities. These initiatives aim to boost private capital flow, create jobs, and support Canada’s net-zero emissions goals by 2050.

🌳 A UN expert group reached a compromise on the key elements of a global carbon trading system, marking progress in nearly a decade of talks. The system, a priority at the upcoming COP29 climate summit in Baku, aims to allow countries to trade carbon credits, representing emission reductions, to meet climate targets. The group overcame significant disagreements, such as defining and monitoring carbon “removal” methods, but concerns remain about the system’s clarity and integrity. Critics warn that it could allow fossil-fuel-producing nations to avoid emissions cuts. While the framework is nearly operational, there is no guarantee it will be finalized at COP29, with ongoing debates over monitoring standards and financial support for developing nations.

🇪🇺 The European Securities and Markets Authority (ESMA) is considering revising its new sustainable fund naming rules, which are set to take effect on Nov. 21. These rules aim to combat greenwashing by preventing funds labeled as “sustainable” or “green” from investing in high-polluting sectors like oil, gas, and coal. However, investors have raised concerns that this could restrict financing for companies in high-emission sectors looking to fund decarbonization projects. Around 55% of affected funds have investments that breach the criteria. Critics argue the rules could raise costs for energy companies, slowing the energy transition, while others worry about regulatory disruptions to the green bond market. ESMA is evaluating whether to provide further guidance or modify the rules, but no decision on the exclusions has been made yet.

📑 According to KPMG’s 2024 CEO Outlook survey, more than two-thirds of CEOs remain committed to their climate strategies, but many are adjusting their communication to align with evolving stakeholder needs. While ESG remains a top priority, with “execution of ESG initiatives” ranked as one of the top three operational focuses for the next three years, CEOs face increasing political pressure on ESG issues. Despite sticking to their climate plans, many CEOs are uncertain about achieving near-term goals, with only 54% confident in meeting net-zero targets by 2030 due to challenges like decarbonizing supply chains and a lack of expertise. Despite these challenges, CEOs are optimistic about the financial returns from their sustainability efforts. In the US, 60% of CEOs expect significant returns within the next three to five years, and ESG strategies are seen as crucial for driving financial performance and attracting talent. The top risks from failing to meet ESG expectations include losing a competitive edge, risking their tenure, and facing recruitment challenges.

WHAT ARE COMPANIES DOING?

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

🛢️ Exxon Mobil acquired leases for over 271,000 acres (≈110,000 hectares) in Texas waters for CO₂ storage, marking the country’s largest offshore carbon capture and storage (CCS) site. This lease expands Exxon’s carbon capture capabilities following its 2021 bid for federal land and a 2023 bid for blocks in the Gulf of Mexico. Carbon capture, embraced by companies like Chevron, Occidental Petroleum, and TotalEnergies, helps reduce emissions by storing CO₂ underground. Exxon aims to drive substantial emissions reductions along the Gulf Coast. Its first project, at a CF Industries site in Louisiana, is set to launch next year, aiming to capture over 14 million tons of CO₂ annually. Despite progress, challenges remain, including obtaining underground injection permits.

🚙 European carmakers are preparing to launch dozens of affordable EV models next year to meet strict new EU carbon emission targets. Renault is leading the charge, but major players like Volkswagen, Stellantis, BMW, and Mercedes-Benz have issued profit warnings due to weak demand and rising costs. The upcoming EU emissions targets require automakers to increase the proportion of EVs or face significant fines, though some companies have called for the targets to be delayed. With growing competition from cheaper Chinese EV models and consumers holding off on purchases in anticipation of better, more affordable options, European carmakers face significant pressure. Meeting emissions targets could involve purchasing credits from cleaner rivals, further squeezing profits. Analysts warn of an “EV winter” as carmakers face the dual challenge of selling lower-priced models and maintaining profitability.

⚡️ Spain’s largest power company, Iberdrola, has doubled its investment plan for its British arm, Scottish Power, to £24 billion (around $31.37 billion) for the period 2024-2028. Iberdrola plans to allocate about two-thirds of its investment to power transmission and distribution networks, which are crucial for handling the increasing renewable energy projects. Iberdrola’s Executive Chairman, Ignacio Galan, described the investment as a vote of confidence in the UK’s stable policies and green energy goals. Macquarie Group also announced plans to invest £20 billion in UK infrastructure, focusing on energy transition and digital infrastructure. Key investments include rolling out fast-charging EV infrastructure through its portfolio company, Roadchef, with 650 fast-charging points and 9 MW of on-site solar energy. Macquarie also aims to develop 5GW of offshore wind, solar, and battery energy storage projects, including the UK’s largest solar project.

⚡️ Google partnered with nuclear technology company Kairos Power to deploy a fleet of small modular reactors (SMRs) across the US, aiming to provide up to 500 MW of carbon-free energy. This marks Google’s first advanced nuclear energy deal, helping the company meet its growing clean energy needs as its data centers expand and emissions rise. The agreement, part of Google’s goal to operate on 24/7 carbon-free energy by 2030, will complement its use of solar and wind power.

🚕 Uber expanded its suite of climate-focused features, allowing users to hail EVs at the same price as standard rides, track emissions savings, and experience new EV models through pop-ups in select cities. Uber now offers over 182,000 EVs across more than 200 cities globally, with an EV-only option available in over 40 cities. In addition to ride-sharing, the company introduced a “Climate Collection” for eco-friendly on-demand shopping and launched sustainable initiatives for drivers and Uber Eats restaurant partners, including AI-powered tools and incentives for greener practices.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

🔋 Rio Tinto announced a $6.7 billion acquisition of Philadelphia-based lithium chemicals producer Arcadium Lithium, positioning itself as a global leader in energy transition commodities. With this acquisition, Rio Tinto will become one of the largest suppliers of lithium, a key material for EV batteries, complementing its existing portfolio in aluminum, copper, and iron ore. Arcadium, with an annual lithium production capacity of 75,000 tons and expansion plans, operates globally, including in Argentina, Australia, and Canada.

🏘️ CBRE, a leading commercial real estate services firm, acquired NRG Energy’s renewable advisory group to enhance its sustainability solutions for clients. NRG’s renewable advisory business, formed in 2018, has facilitated over 5,000 MW of clean power through various renewable energy projects, primarily serving Fortune 500 companies.

📊 ISS-Corporate announced the acquisition of SustainaBase, a Florida-based provider of carbon accounting and data management software solutions for corporate sustainability reporting. SustainaBase, founded in 2020, helps companies track and report GHG emissions, a service in high demand due to increasing regulatory requirements like California’s SB 253 and the EU’s CSRD.

⚡️ Goldman Sachs Alternatives made a $440 million equity investment in BrightNight. Founded in 2019, BrightNight develops and operates large-scale hybrid renewable power projects using its proprietary AI-based software to optimize design and operations. The investment will help fund BrightNight’s five-year business plan and its 31 GW renewable power portfolio.

🔋 Form Energy, a company developing 100-hour energy storage batteries, raised $405 million in a Series F round. The funds will be used to advance the commercial production of its iron-air batteries, which enable utilities to store renewable energy for extended periods, helping to stabilize power grids and ensure reliable clean energy even during weather extremes or outages.

⚡️ Zap Energy raised $130 million in Series D funding to advance its fusion energy system and support the development of a fusion power plant. Founded in 2017, Zap Energy is working on a compact, scalable fusion reactor that doesn’t rely on large magnets or lasers, aiming for a quicker path to commercial fusion.

⚡️ Solar PV module manufacturer Heliene secured a $54 million strategic equity investment to expand its North American operations. Heliene, founded in 2010 and based in Ontario, produces solar modules for utility-scale, commercial, and residential markets.

🏗️ Decarbonization technology company Paebbl raised $25 million in Series A funding to scale its technology that converts captured CO₂ into carbon-storing construction materials. Founded in 2021 and based in Rotterdam, Paebbl has developed a system that accelerates natural CO₂ mineralization by 10 million times, permanently storing CO₂ in building materials. Each kg of the material contains 15-30% CO₂, offering a carbon-negative alternative to traditional cement.

🔋 Lithios, a Boston-based startup focused on sustainable lithium extraction, secured $10 million in seed funding and an additional $2 million in venture debt to scale its Advanced Lithium Extraction (ALE) technology. This innovative method is designed to extract lithium from brine sources more efficiently and sustainably, using less energy and water while accessing previously untapped lithium reserves, particularly in the US.

PARTNER WITH US

Increase your brand awareness and visibility by reaching the right audience and target market. Showcase your company, solutions, services, products, reports, surveys, events, or other content in front of our highly targeted audience of +3,800 Sustainability & ESG professionals. Contact us at [email protected] if you think we can partner in some way.