What's Happening in Sustainability? (Week Recap 25.07 - 31.07) 🌎

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. 🍀

⭐️ The week’s top news:

⛔️ The G20 nations (who together are responsible for about 80% of global GHG emissions) failed to agree on concrete targets to cut emissions, dismissing current measures to address climate change as "insufficient". The bloc remained divided on calls to reduce GHG emissions by 2025 and cut them by 60% by 2035 over 2019 levels. Developed countries in the group had demanded mitigation of GHG emissions to limit global warming to 1.5 Celsius, opposed by developing countries who said the mitigation targets would limit their ability to develop infrastructure and grow. Meanwhile, the IMF called for coordinated efforts to address climate change, warning that extreme weather events pose material risks to countries globally, especially developing economies already burdened with high debts. The case of Argentina, which has seen a prolonged financial crisis worsened by a ferocious drought that reduced agricultural exports by an estimated $20 billion this year, shows how profoundly weather events can exacerbate existing strains. The IMF raised its 2023 global growth estimates slightly but warned that low productivity growth and sluggish trade meant growth would likely level off at around a historically low 3.0% for years.

🇪🇺 The European Commission has adopted the final version of the European Sustainability Reporting Standards (ESRS), which will require companies to report on sustainability-related impacts, opportunities, and risks under the EU’s Corporate Sustainable Reporting Directive (CSRD). While welcomed, investor groups expressed concerns about the EU Commission’s recent move to ease several aspects of the new rules, particularly its removal of the mandatory nature of many of the CSRD’s sustainability disclosures. The CSRD will expand the number of companies required to provide sustainability disclosures to over 50,000 and introduce more detailed reporting requirements on company impacts on the environment, human rights, and social standards and sustainability-related risk. Reporting is set to begin for some companies as soon as the 2024 financial year. Last week, the European Council also adopted a new series of laws and regulations aimed at achieving the EU's climate goals, including reducing energy consumption, deploying more recharging and refueling stations for alternative fuels, and reducing emissions in the maritime transport sector. They include requirements for publicly available charging infrastructure for cars and vans, fast-charging stations every 60 km along the trans-European transport network, and a gradual reduction in the GHG intensity of fuels used by the shipping sector.

📈 According to a report from Moody's Investors Service, issuance volumes of green, social, sustainability, and sustainability-linked bonds rose 7% year-over-year to $526 billion in H1 2023, outperforming the overall bond market, with green bonds hitting record levels. However, there was a growing divergence in the sustainable finance market by region, with absolute issuance volume growth in most regions but declines in North America. Moody's indicated that the GSSS bond market has the potential to eclipse its full-year issuance forecast of $950 billion, but a drop in first-time issuers, declining issuance in some markets, and potentially higher borrowing costs and tighter lending could temper growth in H2 2023. Staying in sustainable finance - another research by Morningstar Direct shows that sustainable funds globally attracted $18 billion in new money in Q2, despite investors pulling out of funds as a whole due to inflation, high interest rates, and recession fears. Sustainable funds in the US saw outflows slow to $635 million, while US funds overall attracted $20 billion. In Europe, sustainable funds attracted $20 billion in net new money, while conventional funds lost $19 billion.

🟢 IOSCO (International Organization of Securities Commissions) has officially endorsed the new IFRS sustainability and climate-related disclosure standards, calling on its 130 member jurisdictions to consider incorporating the new standards into their regulatory frameworks. IOSCO is the leading international policy forum and standards setter for securities regulators that covers 95% of global capital markets. The standards are deemed appropriate to serve as a global framework for capital markets to develop the use of sustainability-related financial information. The endorsement is seen as a major step towards consistent, comparable, and reliable sustainability information, allowing investors to price sustainability risks and opportunities and make investment decisions.

⛔️ Republicans in the US Congress have introduced a series of bills aimed at reducing the influence of ESG initiatives in capital and financial markets, including proposals to derail ESG and climate-related disclosure requirements on companies, reduce the ability of investors to engage with companies on sustainability issues, and limit the SEC's authority to regulate shareholder proposals. The bills include the GUARDRAIL Act, which targets the SEC's upcoming climate-related disclosure rules, and the Protecting Americans' Retirement Savings from Politics Act, which makes it more difficult for investors to address ESG issues through the shareholder proposal and proxy voting process. The move is the latest in a string of anti-ESG initiatives by Republican politicians in the US.

• Canada has released a framework to phase out inefficient fossil fuel subsidies, making it the first G20 country to deliver on a 2009 commitment to rationalize and phase out government support for the sector. The framework will apply to existing tax measures and 129 non-tax measures, but will not cancel any ongoing multi-year subsidy agreements that are already in place. However, government support for oil and gas projects that plan to reduce emissions through technologies such as carbon capture and storage (CCS) will continue, which has been criticized by climate policy analysts and campaigners. 🇨🇦

• BMW, GM, Honda, Hyundai, Kia, Mercedes-Benz, and Stellantis have formed a joint venture to build a public charging network for electric vehicles (EVs) in North America. The partnership plans to install at least 30,000 high-speed EV chargers by 2030, with the first ones to open in the US in the summer of 2024. The stations will be powered by renewable energy and will include standardized Tesla North American Charging Standard (NACS) ports and current widely used Combined Charging System (CCS) plugs. 🚗

• The International Seabed Authority (ISA) has delayed plans to begin mining the seafloor for metals until at least next year after a meeting in Jamaica ended without agreement on how the industry would be regulated. The ISA Council ruled out any immediate permission for mining to begin but kept open a legal loophole that could allow it to begin next year. Critics say not enough research has been done into the industry and its impact on wildlife, while proponents argue that mining the seafloor will support the energy transition in a less environmentally damaging way than land-based mining. 🌎

• The Australian Securities & Investments Commission (ASIC) has launched a court action against Vanguard Investments Australia, alleging that the investment manager made false and misleading claims about one of its ESG funds, which did not exclude investments in companies with fossil fuel activities as claimed. Vanguard self-reported to ASIC in early 2021, and has taken steps to strengthen its product disclosure process since then. This is the latest in a series of greenwashing suits and infringement notices issued by ASIC, which has warned against misleading sustainability claims. ⛔️

🧐 What are companies doing?

• TotalEnergies has acquired renewable energy producer Total Eren, raising its stake to 100% from 30%, in a transaction valuing Total Eren at an Enterprise Value of €3.8 billion ($4.2 billion). Total Eren develops, finances and operates renewable energy power plants, including wind, solar and hydro, and has 3.5 GW of renewable capacity in operation worldwide, with a project pipeline of over 10 GW in 30 countries.💡

• United Airlines has increased its sustainable aviation fuel (SAF)-focused investment fund, the United Airlines Ventures Sustainable Flight Fund, to almost $200 million and added eight new corporate partners. The fund invests in and supports start-ups focused on SAF research, technology, and production and aims to help decarbonize the aviation industry, which currently accounts for 2-3% of global GHG emissions. SAF producers estimate the fuels can result in lifecycle GHG emissions reductions of as much as 85% relative to conventional fuels. 🛩️

• Goldman Sachs Asset Management has launched two new sustainable bond funds, the Goldman Sachs Global Impact Corporate Bond Fund and the Goldman Sachs USD Green Bond Fund, aimed at enabling investors to enhance their portfolios’ sustainability profiles through an allocation to green, social, and sustainability bonds. The funds will be managed by a Green, Social and Impact bonds team within GSAM, who will utilize GSAM’s proprietary green and impact bonds assessment methodology to select bonds that finance impactful environmental, social, or sustainability projects. 📈

• Walmart and PepsiCo announced a $120 million investment in regenerative agriculture practices on over 2 million acres (809,000 hectares) of farmland in the US and Canada. The initiative aims to improve soil health and water quality, reduce emissions, enhance watershed management, increase biodiversity, and improve farmers' livelihoods. The companies aim to deliver approximately 4 million tonnes of GHG emission reductions and removals by 2030 and aim to create a model for other brands to invest in regenerative agriculture. 🌾

• French insurer AXA has updated its energy policy to stop providing insurance for upstream gas greenfield exploration and development projects from September 2025. AXA is the tenth insurer to make this move, but environmental campaigners have criticized the company's decision to allow exemptions for companies with climate transition plans. AXA has been tightening its policies for fossil fuels as part of its pledge to reach net-zero carbon emissions before 2050. 🟢

• WTW has launched Climate Vista, a tool to help boards and senior management understand their companies' exposure to ESG and climate-related risks and opportunities and promote alignment on climate action. The tool includes tailored sessions led by WTW climate experts to assess board members' understanding of climate issues, address areas of weakness, and build momentum to respond to climate risk. The tool can be tailored to companies' geographies and sectors. ✅

Recent funding rounds:

🍀 Koloma, a Denver-based startup that drills for carbon-free hydrogen that is continuously generated underground, has raised $91 million. Koloma is hoping to figure out how to scale underground hydrogen into a business, which could significantly speed up the shift away from fossil fuels.

💡 ev.energy, the leading electric vehicle (EV) managed charging software platform, has raised $33 million in Series B funding with the aim of promoting the integration of electric vehicles and power grids in North America and Europe.

⭐️ Carbon Upcycling, which delivers solutions aimed at decarbonizing hard-to-abate industries, has raised $26 million. Its all-electric solution mineralizes CO2 and combines it with industrial byproducts from sources including coal, steel and glass production plants, and natural materials to create new materials with improved performance and a lower emissions footprint, including cement and concrete.

🟢 Dioxycle, a carbon transformation startup that is working on a new process to produce ethylene at scale using recycled carbon emissions, has raised $17 million.

That’s it for this week, thanks for making it to the end! If you enjoyed reading this newsletter, don’t forget to subscribe and share it 🍀