What's Happening in Sustainability & ESG (Week Recap 29.10 - 04.11) 🌎

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This week’s read time: 7 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:

• Two COP summits, one big question: who will pay? 🌎

• The EU’s net GHG emissions dropped by 8.3% in 2023, marking one of the largest annual declines in recent decades 🇪🇺

• Gucci owner Kering, GSK, and Holcim have become the first companies to adopt new science-based targets from the SBTN to curb biodiversity loss 🌳

• HSBC removed Chief Sustainability Officer Celine Herweijer from its executive board amid a restructuring 🤔

• The International Public Sector Accounting Standards Board released SRS ED 1, a draft climate-related disclosure standard to guide public sector sustainability reporting 📑

• and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🌳 The COP16 biodiversity summit in Cali, Colombia, ended in disarray after intense negotiations that stretched through the night left critical issues unresolved. Delegates from nearly 190 countries gathered intending to advance biodiversity targets and implement a “Paris Agreement for nature,” yet talks were abruptly suspended as the early departure of numerous delegates resulted in a lack of quorum. Among the breakthroughs achieved was the establishment of a voluntary global levy on profits derived from genetic data used by industries like pharmaceuticals and agritech, responding to calls from biodiversity-rich nations seeking fair compensation. Additionally, the summit marked a milestone by formally incorporating Indigenous communities into the UN biodiversity decision-making process, a move praised as a “watershed moment” for Indigenous rights. However, the summit’s failure to secure an overarching finance strategy to mobilize the $200 billion annually by 2030 needed for biodiversity protection left many developing nations frustrated. These countries voiced concerns over unmet funding promises from wealthier nations, particularly the unfulfilled commitment to provide $20 billion by 2025. The next UN biodiversity summit, COP17, is set to be held in Armenia in 2025, where unresolved issues are expected to reemerge on the agenda.

🌎 The other upcoming COP, the UN climate summit (COP29) in Azerbaijan, starting November 11, will focus heavily on climate finance, often referred to as the “finance COP.” With the Paris Agreement goals increasingly out of reach, the summit aims to secure new funding commitments—estimated between $200 billion and $300 billion annually—to help developing nations manage severe climate impacts. This target, significantly higher than the original $100 billion pledge, will require contributions from multilateral banks, the private sector, and countries, including efforts by the US to encourage China to contribute. Though expectations for major breakthroughs are tempered by global economic uncertainties, such as the US election and ongoing conflicts, a robust financial outcome could set the stage for future emissions reduction commitments. The summit will also explore international emissions trading systems and additional financing strategies.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🇪🇺 The EU’s net GHG emissions dropped by 8.3% in 2023, marking one of the largest annual declines in recent decades, driven largely by a 24% reduction in emissions from electricity and heating due to increased renewable energy (especially wind and solar) and gas replacing coal. Renewables now account for nearly 45% of EU electricity, while fossil fuel-generated electricity fell by nearly 20%. The European Commission’s 2024 Climate Action Progress Report highlights these achievements and outlines the EU’s progress toward its climate goals, including the legally binding target of a 55% GHG reduction by 2030 and a potential new 90% target for 2040. Investments needed to meet these targets are projected at €660 billion annually for energy and €870 billion for transport. Since 1990, EU emissions have fallen by 37%, while GDP has grown by 68%.

🇪🇺 The European Securities and Markets Authority (ESMA) issued its annual enforcement priorities, emphasizing key aspects of the CSRD for close scrutiny. With the CSRD expanding mandatory sustainability disclosures to over 50,000 companies, ESMA highlighted double materiality assessments, sustainability statement scope and structure, and adherence to EU Taxonomy templates as primary focus areas. ESMA also stresses consistency between sustainability and financial statements and requires transparent disclosure of efforts to collect value chain data. This stance contrasts with the European Commission’s more flexible messaging, suggesting ESMA may pursue stricter compliance and enforcement actions.

📑 The International Public Sector Accounting Standards Board (IPSASB) released SRS ED 1, a draft climate-related disclosure standard to guide public sector sustainability reporting, marking the first such standard for governments and other public entities. Supported by The World Bank, this initiative responds to an urgent demand for public sector-specific sustainability guidance, particularly around climate-related disclosures. The standard draws from existing frameworks like the IFRS S2 and GRI standards and focuses on entities responsible for climate-related public policies.

🔴 A new EY survey reveals that most finance leaders globally worry about greenwashing risks in sustainability reporting, with only a minority believing their organizations will achieve major sustainability goals. The survey of 2,000 finance leaders and 815 institutional investors found that 96% of finance leaders face challenges with non-financial data, citing issues like inconsistent, incomplete, and outdated data. With 69% reporting increased investor scrutiny on non-financial value drivers, 55% of finance leaders see sustainability reporting as lacking credibility. Despite these concerns, investors are optimistic about emerging regulations, third-party assurance, and AI improving reporting accuracy. However, only 32% of finance leaders currently have advanced technology for data analysis, and 43% are open to AI, while many are cautious. As demand grows, 36% of companies have established ESG controller roles, with 58% planning to add them.

⚖️ A survey by Wolters Kluwer reveals that demand for ESG legal expertise is rising, yet less than half of law firms and corporate legal departments feel prepared to meet it. Conducted with over 700 lawyers in the US and Europe, the 2024 Future Ready Lawyer Survey found that 68% of respondents see increased demand for ESG expertise, up from 43% in 2023. Key drivers include regulatory demands, data quality challenges, and employee preference for higher ESG standards. Only 41% of legal departments and 29% of law firms feel very prepared, leading many to provide ESG training—56% in legal departments and 45% in law firms. Additionally, around 42% of respondents have set up dedicated ESG departments, and others are establishing internal ESG policies and consulting with experts.

WHAT ARE COMPANIES DOING?

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

🌳 Gucci owner Kering, GSK, and Holcim have become the first companies to adopt new science-based targets from the Science Based Targets Network (SBTN) to curb biodiversity loss. These targets focus on protecting land and reducing freshwater usage, reflecting a broader trend of businesses recognizing the critical role of nature in sustaining both the environment and economic stability. Established by organizations like CDP and WWF, SBTN aims to extend science-based targets beyond climate to cover broader environmental impacts, including biodiversity and oceans. Following a year-long pilot with 17 companies, SBTN validated goals for 60% of participants. GSK, Kering, and Holcim announced specific targets: Kering targets freshwater and land use in Tuscany; GSK aims to reduce freshwater usage in India’s Upper Godavari basin; and Holcim commits to a 39% reduction in freshwater withdrawals in Mexico’s Moctezuma basin by 2030.

🤔 HSBC removed Chief Sustainability Officer Celine Herweijer from its executive board amid a restructuring aimed at cost-cutting and streamlining management, raising concerns about the bank’s climate commitment. New CEO Georges Elhedery insists HSBC remains dedicated to the net-zero transition, but investor Epworth criticized the move as prioritizing profits over climate promises. Climate advocates argue that senior-level sustainability representation is crucial for accountability, especially as banks struggle to align climate goals without stronger government policies.

🟢 Microsoft announced new initiatives to reduce the embodied carbon footprint of its data centers, including replacing steel and concrete with cross-laminated timber (CLT) in construction. CLT, a fire-resistant and durable wood material, will be used in data centers in Virginia to reduce steel and concrete usage, lowering embodied carbon by 35% compared to steel and 65% compared to concrete. Microsoft is also introducing low-carbon requirements for construction materials and investing in low-carbon tech companies like Stegra and CarbonCure through its Climate Innovation Fund.

🚢 A.P. Moller – Maersk signed a long-term agreement with China-based LONGi Green Energy Technology to supply bio-methanol for its dual-fuel methanol container vessels, supporting Maersk’s emissions reduction goals. Bio-methanol, sourced from sustainable feedstocks like straw and tree cuttings, will meet over half of Maersk’s methanol fleet’s needs by 2027, achieving at least a 65% lower GHG emission lifecycle compared to fossil fuels. Production will begin in 2026 in central China, with the agreement extending into the 2030s.

🛩️ Boeing’s US West Coast factory workers have ended a seven-week strike after accepting a new contract with 59% approval. The deal includes a 38% pay increase over four years and a $12,000 ratification bonus, though it does not restore the defined-benefit pension, replacing it with improved 401(k) matching contributions. The strike, which halted most jet production, cost Boeing an estimated $100 million daily in lost revenue, forcing the company to raise $24 billion to protect its credit rating.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

⚡️ KKR and Energy Capital Partners (ECP) announced a $50 billion strategic partnership to accelerate the development of data centers, power generation, and transmission infrastructure to support AI and cloud expansion in the US and globally. Combining KKR’s expertise in digital infrastructure with ECP’s leadership in power and renewables, the collaboration aims to deliver sustainable, large-scale solutions across geographies, addressing electricity pricing and carbon emissions.

⚡️ Brookfield Asset Management signed a deal with Danish energy company Ørsted to acquire a 12.45% minority stake in four UK offshore wind farms—Hornsea 1, Hornsea 2, Walney Extension, and Burbo Bank Extension—for $2.3 billion. These wind farms collectively generate 3.5 GW of renewable energy. Ørsted will retain a 37.55% stake, continue operational control, and maintain governance, with a call option to repurchase the assets within 2–7 years.

📈 European private equity firm Verdane raised €700 million for its second decarbonization-focused fund, Verdane Idun II, reaching its hard cap in five months. With nearly a third of investors from the US, Idun II plans to invest €20-100 million in companies advancing energy transition and resource efficiency, aiming for a 25% gross internal rate of return and a greenhouse gas abatement goal of 5,000 tons per €1 million invested.

🟢 Allianz Trade launched Surety Green2Green, a solution that supports low-carbon technology and renewable energy projects through surety bonds and guarantees, which ensure project completion. These bonds secure companies’ commitments to their business partners, protecting against losses from delays or incomplete performance. Projects meeting Allianz Trade’s sustainability standards undergo an assessment, and premiums from these transactions are invested in certified green bonds, creating a “full-circle benefit.” Covered projects include renewable energy, carbon removal, and green buildings, contributing to the green finance ecosystem and the sustainable transition.

🏘️ Climate and sustainability consulting firm Longevity Partners received a strategic investment from Nuveen and Leon Capital, aiming to expand its global impact in decarbonizing the real estate sector. Founded in 2015, Longevity helps real estate and infrastructure firms with green certifications, energy audits, data management, and climate resilience strategies. Known for certifying over $300 billion in assets, it’s a global leader in BREEAM In-use certificates.

📊 Normative, a leading carbon accounting firm, acquired Denmark-based Eivee, a carbon accounting provider for major Danish companies. With Eivee’s expertise and client roster, Normative aims to support large corporations in meeting regulatory requirements like the CSRD and achieving tangible emissions reductions. Normative’s platform, paired with in-house climate advisors, will now offer enhanced, tailored support across Europe.

🟢 Mizuho Bank acquired a minority stake in climate solutions firm Pollination, forming a strategic partnership to aid Mizuho’s clients in implementing decarbonization strategies and boosting Pollination’s international growth. Founded in 2019, Pollination advises on net zero and nature-positive transitions, working globally with clients across finance, law, and corporate governance.

🏡 Sustainable heating startup Vamo raised €7 million, bringing its seed round to over €10 million, to advance its heat pump solution for households. Founded in 2022, Vamo’s HeatOS software streamlines the transition from oil or gas to heat pumps, managing the supply chain and optimizing installations within 30 days.

🚧 Munich-based startup Emidat raised €4 million in Seed funding to expand its operations and development. Founded in 2023, Emidat provides an environmental data platform for the construction industry, assisting building material manufacturers with Environmental Product Declarations (EPDs). The platform streamlines EPD creation, increases data transparency, and helps manufacturers showcase sustainability efforts.

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