What's Happening in Sustainability & ESG (Week Recap 15.10 - 21.10) 🌎

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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:

• The key issues on COP16’s agenda 🌳

• Insurers ramp up climate goals amid $36 billion Hurricane Milton loss 🌀

• US and Germany commit billions in subsidies, grants, and loan guarantees for decarbonization 🟢

• Amazon is the next big-tech company turning to nuclear energy to power its data centers ☢️

• Major worker strikes continue at Boeing and Volkswagen ⚒️

• and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🌳 From October 21 to November 1, nearly 200 countries, NGOs, and companies are gathering in Cali, Colombia, for COP16, the first biodiversity summit since the landmark Kunming-Montreal Global Biodiversity Framework (GBF) was agreed upon in 2022. This summit aims to address the alarming decline in biodiversity, which has plummeted by 73% over the past 50 years. Key topics include financing biodiversity conservation, the role of Indigenous communities, and the implementation of national biodiversity strategies.

Implementing the Kunming-Montreal Framework

The GBF, referred to as the “Paris Agreement for nature,” commits countries to halting biodiversity loss by 2030 by protecting 30% of land and sea areas and mobilizing $200 billion annually for conservation. However, progress has been slow. Only 31 of 195 countries have submitted detailed National Biodiversity Strategies and Action Plans (NBSAPs), with wealthier nations leading the way. Developing countries, often lacking resources and expertise, face challenges in meeting biodiversity goals.

Mobilizing Resources for Conservation

Finance remains a major hurdle. The GBF sets a target of $30 billion in annual funding by 2030, with a minimum of $20 billion per year by 2025. However, in 2022, developed nations contributed just $12.1 billion. Only Norway, Sweden, and Germany met their commitments, while countries like Japan fell short by $2.4 billion. Much of the funding consisted of loans, raising concerns about debt burdens on developing nations. Banks and financial institutions are expected to explore new mechanisms, including biodiversity bonds and funds, to help close the $700 billion annual funding gap. With the global economy under strain, developing countries are demanding greater financial support and accountability from wealthier nations.

Indigenous Inclusion and Genetic Data Compensation

Colombia, as host, emphasizes Indigenous inclusion, promoting discussions on creating Indigenous-led environmental authorities. However, skepticism remains, with some Indigenous leaders cautioning that meaningful participation has yet to be achieved. A permanent body for Indigenous representation may be established to ensure their voices are heard in future biodiversity efforts.

Another contentious issue on the agenda is the use of digital sequence information (DSI) from nature for commercial products. The summit aims to establish payment mechanisms to compensate for genetic data used in pharmaceuticals and other industries, addressing legal uncertainties and balancing economic development with conservation.

A Race Against Time

Despite its ambition, COP16 faces significant challenges. The global community is far from achieving the biodiversity goals set in the GBF, mirroring difficulties encountered with the Paris Climate Agreement. Ecologists warn that ecosystems are nearing collapse under mounting pressures from deforestation, pollution, and climate change. The summit highlights the urgency of finding effective solutions, balancing conservation with economic needs, and securing sustainable financing mechanisms. As participants work to hash out these complex issues, COP16 will serve as a crucial test of the global commitment to safeguarding biodiversity for future generations.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

Insurers face $36 billion Hurricane Milton loss amid rising climate risks

🌀 Hurricane Milton is set to cost private insurers an estimated $36 billion, marking it as one of the most expensive storms in recent history. The steep costs reflect the escalating impacts of climate change but also a trend of Americans moving into high-risk areas. This figure excludes payouts from the federal flood insurance program. Meanwhile, AXA’s industry survey has identified climate change as the biggest risk to the insurance sector for the third consecutive year. Insurers are grappling with mounting natural disaster losses, which now exceed $100 billion annually, reinforcing the urgency to address climate risks through investment and strategic action.

Another new survey by BlackRock, involving 410 senior insurance executives managing $27 trillion in assets across 32 markets, reveals a sharp shift in climate commitments. Nearly all insurers now have at least one low-carbon transition goal—a big change from just two years ago, when only 2% had actual commitments. Key objectives among insurers include year-on-year emissions reduction, reported by 52% of respondents, and increased investment in clean energy infrastructure such as wind, solar, and energy storage. Insurers are also focusing on transition technologies like carbon capture and battery systems to better manage risks. The primary motivations for these efforts are climate risk mitigation (57%), stakeholder interest (54%), and regulatory compliance (47%).

Subsidies, grants, and loan guarantees for decarbonization

🇺🇸 The US Department of Energy (DOE) plans nearly $3 billion in loan guarantees to boost sustainable aviation fuel (SAF) production. A $1.46 billion package will support Gevo’s Net-Zero 1 plant in South Dakota, converting corn starch into jet fuel while capturing CO₂. Another $1.44 billion will help Montana Renewables expand its plant to produce SAF from vegetable fats, along with naphtha and diesel. With aviation responsible for 3.3% of US emissions, these projects target SAF’s limited supply and high costs.

🇺🇸 The US also opened applications for up to $900 million in funding to deploy small modular reactor (SMR) technology, seen as key to achieving emissions goals. SMRs offer simpler designs and lower costs through factory production, though none are commercially operational, and concerns remain about their waste and economies of scale.

🇩🇪 Additionally, Germany allocated up to €2.8 billion in subsidies via 15-year “climate protection contracts” to help 15 industrial companies cut emissions, supporting sectors like glass, paper, and chemicals by offsetting the costs of green production. These projects aim to reduce 17 million tonnes of emissions but face criticism for high costs and limited impact. Beneficiaries include BASF, Suedzucker, and the German arms of Kimberly-Clark, Saint-Gobain, and Wienerberger.

WHAT ARE COMPANIES DOING?

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

☢️ Amazon is also turning to small modular reactors (SMRs) to power its growing data centers amid rising energy demands driven by AI. The announcement follows a similar SMR-related energy deal by Google, signaling a growing interest in nuclear solutions within the tech sector. The company signed an agreement with Energy Northwest to develop four SMRs at Washington’s Columbia Generating Station, initially providing 320 MW, with potential expansion to 12 reactors producing 960 MW—enough to power 770,000 homes. Amazon also led a $500 million investment in X-energy through its Climate Pledge Fund, aiming to bring 5 GW of nuclear energy projects online over 15 years. Additionally, Amazon is exploring another SMR project with Dominion Energy in Virginia. These efforts align with a broader trend among utilities, including Dominion, to meet new energy demands with low-carbon sources.

⚒️ Labor tensions are rising on both sides of the Atlantic, with major disputes at Boeing in the US and Volkswagen in Germany. In the US, 33,000 Boeing workers have been on strike since September 13, demanding a 40% wage increase and better pensions, disrupting production of key aircraft like the 737 MAX. Boeing’s latest offer includes a 35% raise over four years, a $7,000 bonus, and enhanced 401(k) contributions, though older workers remain dissatisfied without a restored pension plan. In Germany, Volkswagen faces friction with unions over planned job cuts and site closures. Union leaders, with significant sway over company strategy, criticized early talks as “abysmal” and demanded stronger job guarantees and a 7% wage increase, rejecting Volkswagen’s 3.6% offer over 27 months. Volkswagen plans to unveil a new strategy by year’s end, but unions insist savings, production plans, and wages be negotiated as a package. With unions holding significant influence through half of the company’s supervisory board, the outcome of these negotiations will shape Volkswagen’s future direction amid rising economic pressures.

🟢 Meta committed to investing $35 million in carbon removal projects in 2024, aligning with the US Department of Energy’s (DOE) carbon removal purchase program launched in March. Meta’s pledge follows Google, the first participant, which made a similar commitment on the same day the DOE announced its program. The company emphasizes that reducing emissions remains its primary strategy but recognizes the role of high-quality carbon markets.

🇪🇺 The European Commission approved a €128 million state aid package to support steelmaker SSAB’s transition to fossil-free steel production in Sweden. The project will replace coal-based blast furnaces with electric arc furnaces (EAFs) powered by renewable energy, helping decarbonize one of the most CO₂-intensive industries, which accounts for 7-9% of global emissions from fossil fuel use. SSAB’s new steel mill in Luleå, expected to produce 2.5 million tonnes of carbon-free steel annually, aims to reduce Sweden’s CO₂ emissions by 7%.

🔋 Mercedes-Benz opened a battery recycling plant in Germany, with a 96% recovery rate for key materials like lithium, nickel, and cobalt, ensuring they can be reused in new EV batteries. The plant integrates a more energy-efficient mechanical-hydrometallurgical process, operating with low temperatures and 100% green electricity. With an annual capacity of 2,500 tonnes, the facility aligns with the company’s Ambition 2039 strategy for carbon-neutral vehicles and aims to increase the use of recycled materials in its fleet to 40%.

🌳 Bloomberg launched a new solution to help investors assess their exposure to nature-related risks, align with the TNFD, and evaluate the impact of their investments on biodiversity. The tool provides insights into companies’ revenue in high-risk sectors, deforestation-linked commodities, water stress exposure, and governance of nature-related risks. With biodiversity loss potentially reducing global GDP by $2.7 trillion annually by 2030, Bloomberg aims to support investors in identifying both risks and opportunities related to natural capital.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

🔴 ClientEarth reported BlackRock to France’s markets regulator, alleging the asset manager is misleading investors by marketing 18 funds as sustainable despite containing fossil-fuel companies engaged in new projects or not aligned with the Paris Agreement. The targeted funds, marketed in France, represent $1 billion in assets. BlackRock defends its practices, stating the funds adhere to disclosed objectives and relevant regulations. France’s regulator, AMF, did not confirm receiving the complaint but emphasized reviewing all submissions carefully.

🔋 Northvolt AB is close to securing a $300 million rescue package involving debt and equity from shareholders, lenders, and customers, including Volkswagen, Scania, and EIT InnoEnergy, to stabilize production and pursue long-term financing. Despite receiving $10 billion in funding since 2017 and securing large battery orders, the company faces operational challenges and competition from Chinese rivals CATL and BYD. Northvolt has scaled back its ambitions, cutting 1,600 jobs, halting expansion at its Skellefteå plant, and placing the overseeing unit into bankruptcy.

📊 IBM acquired Prescinto, an India-based software provider specializing in asset performance management (APM) for renewable energy projects, to enhance its capabilities in the energy and utility sector. Prescinto’s AI-powered SaaS solutions offer advanced monitoring, analytics, and automation to optimize the performance of solar, wind, and energy storage assets.

🏡 Aira, a provider of clean energy-based heating solutions, raised an additional €63 million, building on its €145 million Series B round closed in January 2024. The investment will support Aira’s expansion across Germany, Italy, and the UK and enhance its clean energy product portfolio. Aira’s heat pumps offer a climate-friendly alternative to gas boilers, reducing household heating costs by up to 40% and CO₂ emissions by 75%, or 100% with fossil-free energy.

⚡️ REsurety, a Boston-based company focused on carbon reduction solutions, raised $32 million in a Series C round and launched CleanTrade, a new marketplace for trading clean energy contracts, virtual power plant agreements, and renewable assets. REsurety aims to improve transparency and liquidity in clean energy markets. The platform provides an alternative to traditional energy transaction systems, streamlining trades with tools for clear asset information and carbon cost rankings.

🔋 Liminal, a company leveraging ultrasound and machine learning for battery quality control, secured a $10 million strategic investment. Liminal’s technology helps battery manufacturers, particularly in the EV sector, by detecting defects, improving production quality, and reducing costs. The company’s solutions identify issues such as electrode misalignments and lithium plating, enhancing battery performance.

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