What's Happening in Sustainability? (Week Recap)🌎

This week’s read time: 5 minutes

Welcome to this edition of Green Digest, where you will get updated about everything happening in the sustainability space in less than 5 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. 🍀

Last week’s most important news:

🌎 Even though a ton of companies reported to the Carbon Disclosure Project (CDP), only 0.4% of them actually have climate transition plans that are actually credible. Crazy, right? CDP runs a global environmental disclosure system in which 18,606 organizations have reported in the climate category in 2022. This means investors and other people involved can check how companies are doing when it comes to climate change, deforestation, and water security. The report pointed out that only 81 of the 18,606 companies reported credible climate transition plans, and only 4,100 of them have a 1.5°C-aligned climate transition plan. On the other hand, 6,520 companies said they plan to develop a transition plan within two years.

💪Since the passage of the Inflation Reduction Act (IRA) last August, companies have announced an astonishing more than 100,000 clean energy jobs across the US, according to a report by the nonprofit Climate Power. This sweeping legislation is expected to have a profound impact on the American economy, with the IRA providing tax credits for zero-carbon energy production, and is projected to cut domestic carbon emissions by an impressive 40% by 2030 - a goal that could potentially create 9 million clean energy and climate-related jobs over the next decade. These jobs will bring with them not only the potential for economic growth but also a cleaner, more sustainable future for generations to come.

🍀According to Perkins Coie attorneys (an international law firm with +$1bn in revenue), sustainability is still a priority for corporations’ boards in 2023 as they face increasing demands from investors, consumers, and governments for more responsibility, transparency, and accountability. They have listed biodiversity, methane, carbon offsets, supply chains, and climate adaptation & resilience as the top priorities that will be discussed in corporate board meetings.

👀The U.S. Securities and Exchange Commission (SEC) announced that ESG investing will be a priority area of focus for its Division of Examinations in 2023, assessing whether ESG products are appropriately labeled and whether recommendations of ESG products for retail investors are made in the investors’ best interests. The SEC is targeting potential issues such as portfolio management practices that do not align with disclosures about ESG approaches, inconsistencies between ESG-related proxy voting claims and actual practice, and compliance programs that don’t address adherence to the firms’ stated ESG frameworks.

🧐On the other hand, Republicans in the U.S. Congress have launched a new ESG Working Group to coordinate the party's approach to ESG proposals, with a particular focus on the upcoming climate disclosure rules anticipated by the Securities and Exchange Commission (SEC) this spring. The group aims to "combat the threat to our capital markets posed by those on the far-left pushing environmental, social, and governance (ESG) proposals" and will focus on "reining in" the SEC's regulatory overreach, reinforcing the materiality standard, and holding market participants accountable for misusing their influence.

💡While the Financial Conduct Authority (FCA) in the UK has also warned asset managers that it will be testing the ESG and sustainable investing claims made in their communications with investors in order to reduce greenwashing risk. The FCA has proposed rules for investment product sustainability labels and disclosure requirements and will soon publish a review of some firms' ESG practices.

✅In other news, the UK government has launched a new Department for Energy Security and Net Zero, headed by Grant Shapps, to ensure near- and long-term energy supply and keep the UK on track to meet its climate commitments. The department's objectives include reducing energy bills, meeting net zero commitments, accelerating energy infrastructure and production, and investing in green industries. These measures will help to reduce the UK's reliance on fossil fuels and aid in the transition to renewable energy sources. Sustainable investment-focused groups have welcomed the new department but called for more ambitious climate transition plans.

⭐️Goldman Sachs Asset Management has launched Verdalia Bioenergy, a biomethane-focused business, to deploy more than €1 billion in biomethane in Europe over the next four years. Biomethane is produced from organic waste and is expected to play a critical role in transitioning to cleaner energy sources. The EU has set out a plan to ramp biomethane capacity across the EU to 35 billion m3 by 2030, requiring investments of approximately €80 billion. Verdalia Bioenergy aims to become a leading biomethane operator, focusing on developing, acquiring, building and operating biomethane plants.

What else is happening:

• Aviva (a global asset manager with £232 billion of assets under management) has outlined a series of sustainability-focused expectations for its portfolio companies, including the publication of decarbonization-aligned climate transition plans and preparation to disclose nature-related risks and opportunities. These expectations are part of the asset manager's stewardship priorities for the upcoming year, which focus on tackling the cost-of-living crisis, transitioning to a low-carbon economy, and reversing nature loss. Companies are expected to pay a living wage, commit to climate targets, and provide decision-useful disclosure on nature-related risks and opportunities. ✅

• ClientEarth has launched legal action against Shell's Board of Directors, alleging their energy transition strategy puts shareholder value at risk. Investors and advocacy groups accuse Shell of greenwashing and failing to meet climate goals. Shell is denying the allegations and will oppose the claim in court. 🏛

• Bank of America unveiled a loan program to fund residential electric vehicle chargers, anticipating increased demand due to the Inflation Reduction Act. Research estimates 27.5 million EV chargers are needed by 2030. Bank aims to mobilize & deploy $1.5 trillion in sustainable finance by 2030. 🚙

• BMW Group announced an €800M (US$860M) investment in a Mexican EV production & battery assembly facility, aiming for 50% EV sales by 2030. This includes €500M for high-voltage battery assembly and expansion of the San Luis Potosí plant for NEUE KLASSE vehicles in 2027. BMW is also investing $1.7B in the US to boost electromobility capacity. 🚘

Cash is also pouring into the space 👀:

• Redwood Materials, co-founded by Tesla co-founder JB Straubel, has been awarded a $2 billion federal loan to build up a U.S. supply base for essential components needed to make batteries for electric vehicles, which are currently imported almost entirely from Asia. Redwood plans to invest $5 billion in its Nevada and South Carolina operations and has 800 employees with the goal of supplying enough materials for a million electric vehicles a year. 🚙

• Carbonplace, a global carbon credit transaction platform launched in July 2021 by a consortium of banks (including UBS, BBVA, and SMBC), has raised $45 million in funding and appointed Scott Eaton as its first CEO. The platform will enable buyers and sellers of carbon credits to connect through their banks, and the new investment will be used to scale the platform and grow its team, with an expected launch later this year. 🌲

• Planet A Ventures, a Germany-based venture capital investor, has closed its first fund, raising €160 million to back green-tech startups in Europe. The fund has already invested in 14 green-tech startups, and has received investments from BMW, KfW Capital, REWE, Vaekstfonden/EIFO, and entrepreneurs, and utilizes an in-house science team to assess the lifecycle impact of investments. 🍀

• Planet First Partners, a sustainable investment growth equity platform, has raised €450 million in its second funding round, surpassing its initial target size. The fund will invest in growth-stage companies with technologies helping to deliver the transition to a sustainable economy, taking minority positions as a lead or co-lead investor. 📈

• Liminal, a battery manufacturing intelligence startup, has raised $17.5 million to scale its platform providing data and analytics for EV battery manufacturing, utilizing ultrasound technology and machine learning to provide advanced insights to battery manufacturers. The funding round was led by ArcTern Ventures and included new investors such Northvolt and Ecosystem Integrity Fund, with Northvolt investing to accelerate the transition to a sustainable and electrified society. 🚙

Stat of the week:

That’s it for this week. Thanks for making it to the end, your attention span is absolutely impressive 💪.

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