What's Happening in Sustainability & ESG (Week Recap 18.02 - 24.02) 🌎

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:

• Some parts of the full EU’s Omnibus proposal were leaked, revealing sweeping cuts to corporate sustainability regulations 🇪🇺

• Leading global banks are scaling back sustainability teams and roles due to slower-than-expected climate action and political pushback 🏦

• A new survey of 500 US CFOs found that over 75% expect sustainability investments to remain stable or increase, despite political shifts 🇺🇸

• BP is dropping its goal to expand renewable energy 20-fold by 2030, refocusing on fossil fuels under investor pressure 🛢️

• and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🇪🇺 Some parts of the full EU’s Omnibus proposal were leaked, revealing sweeping cuts to corporate sustainability regulations, significantly weakening reporting and due diligence requirements under the CSRD, CSDDD, and EU Taxonomy. The leaked draft signals a major deregulation push under the new European Commission, prioritizing economic relief over sustainability commitments. The CSRD’s scope is expected to be drastically reduced, now applying only to companies with over 1,000 employees and €450 million in turnover, rather than the previously planned 50 employees and €8 million threshold for listed firms by 2026. Meanwhile, CSDDD provisions would be severely weakened, restricting due diligence to direct suppliers, reducing monitoring to once every five years, and removing civil liability and requirements for financial institutions. Some businesses support these rollbacks as relief from compliance burdens, while critics argue they dismantle core elements of the EU Green Deal, limiting transparency and corporate accountability in environmental and human rights practices.

The omission of language on double materiality—previously reported to be under threat—raises uncertainty about its final status. Additionally, climate transition planning requirements would be softened, and the obligation to link corporate fines to turnover would be removed. The proposal is set to be formally published tomorrow, February 26, but still requires approval from the Council of the EU and the European Parliament. Separately, the EU agreed on new waste reduction measures for textiles and food, requiring fashion brands to pay for collection and recycling through Extended Producer Responsibility (EPR) schemes and introducing EU-wide food waste reduction targets.

MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🏦 Leading global banks are scaling back their sustainability teams and downgrading top ESG roles amid slower climate action and political backlash. HSBC, Standard Chartered, Barclays, and Wells Fargo have either cut or restructured ESG positions following previous expansions. Standard Chartered reduced its sustainability team from 140 to 90, reallocating roles and laying off some senior staff. Wells Fargo and Barclays did not replace departing sustainability heads, opting to redistribute responsibilities internally. Earlier this year, HSBC, undergoing broader restructuring, also removed its CSO from the executive committee. The retrenchment reflects broader industry uncertainty, as banks cite external factors and regulatory shifts for scaling back their ESG efforts, and many European banks are adopting a “wait-and-see” approach amid potential rollbacks of climate policies in both the US and EU.

🇨🇦 Canada’s financial regulator, OSFI, delayed Scope 3 emissions reporting for banks and insurance companies to 2028, three years later than initially planned, to align with Canadian Sustainability Standards Board (CSSB) guidelines. The update also sets 2029 as the start date for disclosing off-balance sheet emissions from capital markets activities. While Scope 1 and 2 emissions reporting remains on track for 2024, OSFI emphasized that financial institutions should continue improving their measurement and management of climate-related risks despite the extended timeline.

📊 A new BDO survey of 500 US CFOs found that over 75% expect sustainability investments to remain stable or increase, despite political shifts. However, priorities are shifting from environmental and social impact to areas with tangible business and stakeholder value, such as employee well-being (40%), sustainable product development (39%), and supply chain management (34%). While only 21% of companies are fully integrating sustainability into their strategy, those that do report significantly higher revenue and profitability expectations. ESG remains a key risk factor for CFOs, ranking third after operational and product/service risks.

WHAT ARE COMPANIES DOING?

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

🛢️ BP is set to abandon its target of increasing renewable energy capacity 20-fold by 2030, shifting focus back to fossil fuels in response to investor pressure, particularly from activist fund Elliott Investment Management, which has built a 5% stake in the company. The company plans to divest assets, cut low-carbon investments, and reduce debt to boost returns, amid underperformance compared to rivals like Shell, Exxon, and Chevron. BP’s shift follows a broader energy sector trend of refocusing on oil and gas due to higher returns and shifting political dynamics, particularly after the re-election of Donald Trump.

🏦 HSBC abandoned its 2030 net-zero target, pushing it back to 2050, citing the slow pace of global decarbonization across climate technology, energy transition, and policy. The bank now aims for a 40% emissions reduction across operations, business travel, and supply chains by 2030 and also put its interim 2030 financed emissions reduction targets under review. HSBC also plans a “more measured approach” to fossil fuel lending but stopped short of announcing major policy changes.

📊 Microsoft’s rapid AI expansion has made its 2030 sustainability goals—such as becoming carbon negative—more challenging, with CSO Melanie Nakagawa acknowledging the hurdles but reaffirming the company’s commitment. While AI-driven data center growth has pushed Scope 3 emissions up over 30% since 2020, Microsoft is addressing this by requiring key suppliers to use 100% carbon-free electricity and launching a supplier decarbonization team. Nakagawa also highlighted a shift in Microsoft’s climate strategy, moving away from unbundled renewable energy certificates to focus on high-impact carbon reduction and removal investments, emphasizing AI’s potential to accelerate climate solutions at scale.

🛋️ IKEA parent Ingka Group released its Net Zero Transition Plan, outlining strategies to cut GHG emissions by 50% by 2030 and achieve net zero by 2050, with key initiatives targeting materials, renewable energy, and supplier engagement. The company also revised its climate target for home deliveries, shifting from a 100% zero-emissions goal by 2025 to more than 90% by 2028, citing challenges in EV infrastructure and availability. Despite infrastructure hurdles, CSO Karen Pflug reaffirmed Ingka’s commitment to climate action, emphasizing continued investment, innovation, and cross-sector collaboration to accelerate progress.

⏪ The corporate retreat from DEI initiatives continues, with major companies like Berkshire Hathaway, Morgan Stanley, Citigroup, and PepsiCo scaling back their commitments in the past week. Berkshire Hathaway removed DEI references from its annual report, while Morgan Stanley toned down its emphasis on diversity, shifting to a meritocracy-driven message. Citigroup ended diverse candidate interview requirements and dropped DEI representation goals, renaming its DEI team to “Talent Management and Engagement,” while PepsiCo eliminated workforce representation goals and rebranded its DEI strategy. This trend aligns with broader corporate rollbacks as Trump-led opposition to DEI gains momentum. However, JPMorgan Chase has resisted the shift, maintaining outreach to underrepresented groups despite potential backlash.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

📑 BlackRock and Vanguard paused meetings with portfolio companies over climate and governance issues following new SEC rules that shift power from shareholders to company boards. The SEC’s revised guidance makes it harder for asset managers to push for climate, diversity, and governance reforms, requiring more extensive disclosures when influencing corporate decisions. The changes align with Republican-led efforts to curb ESG influence in corporate governance, and critics argue they weaken investor oversight, making it harder to hold companies accountable for sustainability and governance risks.

🤝🏻 MSCI and Swiss Re Reinsurance Solutions partnered to help financial institutions assess, manage, and mitigate physical climate risk. The collaboration combines MSCI’s GeoSpatial Asset Intelligence, which uses AI-driven mapping for location-based risk insights, with Swiss Re’s CatNet tool, which assesses natural hazard exposure using satellite imagery and climate impact data. This partnership aims to provide asset-level climate risk insights to help institutions develop resilient investment and risk management strategies.

📊 Bloomberg launched MARS Climate, a new tool within its Multi-Asset Risk Management (MARS) suite, designed to help financial firms quantify and manage climate risks across portfolios. MARS Climate enables users to analyze climate scenarios based on NGFS frameworks, using BloombergNEF’s TRACT tool to project company-level revenue risks and opportunities under different climate conditions. The tool provides detailed financial impact reports, categorizing risk into physical acute, physical chronic, and transition risk.

Funding rounds:

🟢 Twelve, a carbon transformation cleantech company, raised $83 million in Series C funding. Twelve uses captured CO₂, water, and renewable energy to produce chemicals, materials, and sustainable fuels, including E-Jet SAF, a power-to-liquid SAF with up to 90% lower lifecycle emissions than conventional jet fuel.

🏗️ Terra CO2, a sustainable building materials startup, raised $82 million in Series B funding to accelerate the commercial deployment of its low-carbon cement alternative, OPUS. Terra’s OPUS SCM cement is produced with 70% fewer CO₂ emissions per ton.

♻️ METYCLE, a Cologne-based startup, raised €14.4 million in Series A funding to expand its online platform for buying and selling recycled and scrap metal. Founded in 2022, METYCLE streamlines the secondary metals market, which currently relies on manual inspections and inconsistent classification standards.

🟢 Ignis H2 Energy, a Houston-based geothermal startup, raised $12.5 million in Series A funding. Founded in 2021, Ignis uses machine learning models and advanced data analytics to predict, locate, and develop geothermal resources, aiming to generate 1 GW of geothermal power by 2030.

🚜 CarbonZero.Eco, a regenerative agriculture and carbon removal startup founded by 16-year-old Harper Moss, raised $3.5 million to support its biochar-based carbon sequestration projects. CarbonZero.Eco is building its first biochar production site in Colusa County, California, set to open in April 2025, with contracts to convert 1.5 million tons of almond shells from over 300 farms into carbon-sequestering biochar, preventing 1.5 million tons of CO₂ emissions.

🍃 London-based startup Leafr raised £600,000 to connect SMEs with vetted sustainability experts at a fraction of traditional consultancy costs. The platform helps businesses navigate complex regulations with on-demand expertise from 1,000+ specialists across retail, manufacturing, and professional services. Clients include WD-40, Freddie’s Flowers, and the UN Foundation.

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