What's Happening in Sustainability & ESG (Week Recap 22.04 - 28.04) 🌎

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In this edition, we’ll cover:

• Global sustainable funds face record outflows, but broader trends point to continued resilience 📈

• The ISSB proposed changes to its climate standard (IFRS S2) to ease certain reporting requirements 📑

• Mark Carney, who helped launch climate initiatives like TCDF and GFANZ, wins Canadian election 🇨🇦

• France launched a charter promoting transparent, high-integrity use of carbon credits to support climate goals 🇫🇷

• and other news 🌍

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THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

📈 Global sustainable funds saw a record $8.6 billion in outflows in Q1 2025, according to Morningstar, driven largely by shifting sentiment against climate and social initiatives under US President Trump. Europe, which still holds most of the $3.16 trillion in sustainable assets, recorded its first net outflows since at least 2018, with $1.2 billion withdrawn. US sustainable funds saw $6.1 billion in outflows, marking a tenth straight quarter of withdrawals. Morningstar noted increased fund consolidations, rebrandings, and slower product launches amid growing ESG backlash and declining clean energy performance.

However, the broader context shows resilience: European outflows amounted to just 0.04% of the region’s $2.68 trillion in sustainable assets, and markets like Canada, Australia, South Korea, and Taiwan still posted positive flows. Sustainable fixed-income funds also saw inflows, and sustainable funds overall outperformed the broader market in asset retention. Despite serious headwinds, particularly in the US, sustainable investing remains a firmly established part of the global financial landscape. With approximately $3 trillion in assets and participation across multiple regions, it continues to play a notable role in global investment strategies.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

📑 The IFRS Foundation’s International Sustainability Standards Board (ISSB) proposed changes to its climate disclosure standard (IFRS S2) to ease certain reporting requirements, especially for financial sector companies. Key amendments include allowing entities to exclude Scope 3 emissions linked to derivatives, facilitated emissions, and insurance activities, while requiring disclosure of the magnitude of exclusions. Other proposed updates offer flexibility around emissions calculation methods and classification standards. The changes aim to address early market feedback and simplify application without reducing the usefulness of disclosures for investors. The proposals are open for public comment until June 27, 2025.

📑 Early analysis of 250 sustainability statements under the EU’s CSRD shows companies are widely reporting but with major inconsistencies in depth and quality, according to a PwC study. Some disclosed as few as eight impacts, risks, and opportunities (IROs), while others listed over 120, reflecting varying interpretations of materiality. Climate risks were commonly acknowledged, but disclosures on pollution, biodiversity, and circular economy opportunities were far less frequent. Companies were more willing to admit negative impacts on their own workforce than on communities or ecosystems, and positive impacts often centered on internal benefits. Despite the early-stage challenges, 80% of companies now include sustainability risks alongside financial risks in their annual reports, signaling that sustainability is steadily moving into the core of corporate strategy.

🇨🇦 Mark Carney’s Liberal Party won Canada’s election, riding a wave of anti-Trump sentiment and securing the most seats in Parliament, though a majority remains uncertain. Carney, a former central banker and global leader in sustainable finance, helped launch initiatives like the Task Force on Climate-related Financial Disclosures (TCFD) and Glasgow Financial Alliances for Net Zero (GFANZ). His leadership marks a move to embed climate ambition more firmly into Canada’s economic strategy. However, balancing ambitious environmental goals with Canada’s role as a major oil and gas producer will present challenges, testing the country’s ability to reconcile climate leadership with economic realities.

🇨🇦 In related news, Canada’s securities regulators announced a pause on developing new sustainability reporting rules, including mandatory climate-related disclosures and diversity reporting amendments, citing the need to support markets amid shifting global conditions. The Canadian Securities Administrators (CSA) said the move reflects rising competitiveness concerns following regulatory changes in the US and EU. The CSA said it will revisit mandatory disclosure initiatives in future years.

🇫🇷 France launched a new “Charter for Paris-aligned and high integrity use of carbon credits,” encouraging companies to commit to transparent and credible use of carbon credits in support of climate goals. Announced by Minister Agnès Pannier-Runacher, the charter builds on momentum from COP29’s adoption of standards under Article 6.4 of the Paris Agreement, aiming to strengthen trust in international carbon markets. Companies signing the pledge must prioritize emissions reductions, use carbon credits only to complement—not replace—decarbonization, and ensure credits meet high-integrity standards like those of the ICVCM. 17 companies, including Schneider Electric and Capgemini, have signed on.

🇺🇸 US President Trump signed an executive order to boost the US deep-sea mining industry, aiming to secure critical minerals like nickel and copper and counter China’s dominance. The order seeks to expedite mining permits in US coastal waters and support international resource access, with over 1 billion metric tons of mineral-rich nodules estimated in US waters. Supporters highlight economic gains and job creation, while conservationists warn of severe environmental harm.

The Trump administration also shut down the State Department’s Office of Global Change, terminating federal employees responsible for US global climate policy and participation in climate negotiations, including the Paris Agreement and international aviation and shipping decarbonization efforts. The administration also plans to absorb the Bureau of Energy Resources into the Bureau of Economic and Business Affairs, shifting focus toward promoting American energy exports. Officials said the changes align with President Trump’s goal of prioritizing US energy dominance.

WHAT ARE COMPANIES DOING?

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

🛩️ United Airlines invested in JetZero, a blended wing body aircraft developer aiming to boost fuel efficiency by up to 50% compared to current planes. The deal includes a conditional order for up to 100 aircraft, with an option for 100 more, tied to JetZero reaching milestones like a full-scale demonstrator flight in 2027. JetZero’s design reduces aerodynamic drag, cuts emissions, and lowers operating costs, while offering wider aisles and larger seats.

📑 Goldman Sachs shareholders overwhelmingly rejected two anti-DEI proposals at the company’s annual meeting, with each receiving just 2% support. The proposals sought to eliminate diversity-based executive incentives and audit the legal risks of DEI policies. Despite growing scrutiny of corporate DEI efforts following a US Supreme Court ruling on affirmative action, Goldman’s board defended its diversity approach, stating it aligns with evolving laws and supports business success. Shareholders at other companies, including Apple and Deere, have similarly rejected anti-DEI proposals in recent months.

🛩️ Wizz Air announced its “Flying Towards Net Zero” roadmap, aiming to cut emissions nearly 90% and achieve net zero by 2050, with sustainable aviation fuel (SAF) as the cornerstone of its strategy. The plan prioritizes SAF and new aircraft technologies over offsets or unproven solutions, targeting 53% decarbonization from SAF use alone. Wizz also calls for government action to scale SAF production and close the price gap with conventional fuels.

⚡️ Google announced its first offshore wind power purchase agreement in Asia, securing renewable energy from Copenhagen Infrastructure Partners’ (CIP) new Fengmiao I project in Taiwan. The deal supports Google’s goal to operate entirely on 24/7 carbon-free energy by 2030, alongside its other Taiwan-based solar and geothermal agreements. Once operational in 2027, the 495 MW offshore wind farm will supply power to Google’s data centers, cloud region, and offices in Taiwan, further advancing local clean energy development and Google’s global sustainability targets.

📊 ESG data solutions provider Novata launched a new ESG Due Diligence tool to help deal professionals streamline sustainability data collection during pre-investment workflows and post-deal monitoring. The platform centralizes diligence workflows, enables real-time data comparisons, collaborative reviews, digitized scoring, and integrates with Novata’s monitoring system. Novata said the solution aims to make sustainability diligence more efficient, actionable, and connected to long-term value creation.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

🇺🇸 New York City Comptroller Brad Lander announced stricter climate expectations for asset managers overseeing the city’s $280 billion pension system, warning that those who fail to submit strong net zero action plans will be replaced. The new standards require managers to push portfolio companies to adopt full value chain net zero goals and integrate climate risks into investment decisions. Lander, a mayoral candidate, said the move responds to the Trump administration’s rollback of climate initiatives and criticized firms like BlackRock for backtracking on climate commitments. The city’s pension funds aim to achieve net zero emissions by 2040.

📈 Sustainability-focused private equity firm Ardabelle Capital announced a strategic partnership and anchor fund commitment from TPG NEXT, TPG’s investment firm seeding strategy. Founded in 2024 by former Eurazeo CEO Virginie Morgon, Paris-based Ardabelle targets mid-market companies driving the Scope 3 value chain transition, with a focus on areas like resource preservation, circularity, and sustainable logistics. The partnership provides Ardabelle with funding and access to TPG’s global climate and impact investing expertise, marking Ardabelle as TPG NEXT’s first European GP investment.

Funding rounds:

🟢 Clean iron producer Electra raised $186 million in a Series B round to advance commercialization of its low-carbon ironmaking technology. Electra’s low-temperature, renewable energy-powered process refines iron ore without coal or extreme heat, enabling use of lower-grade ores and reducing waste.

🏆 XPRIZE announced the winners of its $100 million Carbon Removal competition, launched in 2021 and funded by Elon Musk to catalyze gigaton-scale carbon removal solutions. Chosen from 1,300+ teams worldwide, the $50 million grand prize went to Mati Carbon, a Houston-based startup using enhanced rock weathering on farmland in India to permanently remove CO₂ while boosting farmers’ incomes. Other winners included NetZero ($15M), Vaulted Deep ($8M), UNDO Carbon ($5M), and $1M awards to Planetary and Project Harar.

⚡️ Renewable energy startup Exowatt raised $70 million in a Series A round to accelerate the production and deployment of its Exowatt P3, a modular solar system that stores heat and supplies 24/7 power without relying on the grid. Founded in 2023, Exowatt targets energy-intensive sectors like data centers and has a backlog exceeding 90 GWh.

🟢 Carbon capture startup RepAir raised $15 million in a Series A round to commercialize its low-cost, electromechanical CO₂ removal technology. Founded in 2020, the Israel-based company offers a modular, energy-efficient solution for capturing carbon from both industrial sources and the atmosphere without using heat, liquids, or solvents. RepAir’s process uses 70% less energy than conventional methods.

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