What's Happening in Sustainability & ESG (Week Recap 14.11 - 20.11) 🌎

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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 US Securities and Exchange Commission (SEC) is considering scaling back its proposed climate rules (particularly regarding the disclosure of Scope 3 emissions), with officials expressing concerns about legal challenges and the burden on companies. The SEC may pursue a compromise or require disclosures for companies already reporting Scope 3 emissions in other jurisdictions. A final decision has not yet been made, but Chair Gary Gensler and other top officials are inclined to make Scope 3 disclosures optional or find a compromise. Last week, a federal report compiled by more than 750 experts was also released on the US climate assessment, showing that climate change costs the US around $150 billion a year. Some of the key takeaways: climate impacts are already happening, worsening, and costly; certain communities, particularly low-income and people of color, are at higher risk; climate solutions are being deployed nationwide, but more action is needed; current efforts are insufficient to halt global warming, and the future depends on the choices societies make to reduce carbon footprint and prevent further warming. In coordination with the release of the report, President Biden announced more than $6 billion in investments to make communities across the country more resilient to the impacts of climate change, including by strengthening America’s aging electric grid infrastructure, reducing flood risk to communities, supporting conservation efforts, and advancing environmental justice.

🇪🇺 The EU has agreed on a law to curb methane emissions from the fossil fuel industry, requiring companies to report emissions, find and fix leaks, and limit wasteful practices by 2027. The new rules also aim to tackle imported fuels and could potentially decrease global methane emissions by 30%, and will affect major gas suppliers such as the US, Algeria, and Russia. The law includes financial penalties for importers who buy from non-compliant suppliers and introduces requirements for measuring and reporting methane emissions in the oil, gas, and coal sectors. In other news, GHG emissions in the bloc dropped by over 5% in the second quarter of 2023, with the largest decline seen in the electricity and gas supply sector. The EU's emissions amounted to 821 million metric tons of CO2 equivalents, down 5.3% from the previous year, while the bloc's economy remained stable. Furthermore, the European Commission has also approved over €396 million in funding for climate and environmental sustainability projects under the LIFE Programme. The funding will support 171 projects across EU countries, focusing on nature and biodiversity, circular economy, climate change mitigation and adaptation, and clean energy transition.

• Over 75% of large companies globally have reduced their operational emissions intensity since the implementation of the Paris Agreement in 2016, according to a study by Accenture. However, less than a fifth of these companies are on track to achieve net zero emissions by 2050. The report also highlights the growth in companies committing to net zero emissions, with European companies leading the way. The utilities sector has seen the most significant emissions reductions, while Software and Platforms companies have seen an increase in emissions. Overall, only 18% of companies are assessed to be on track for net zero by 2050. 🌍

• 94% of investors believe that corporate sustainability reporting contains unsupported claims, indicating increasing concerns about greenwashing, according to a survey by PwC. Investors are seeking more information on the cost of companies' ESG commitments and the impact of their portfolio companies on the environment and society. While there is a broad consensus on the importance of ESG and sustainability issues, the levels of agreement have decreased compared to a prior survey. Many investors are looking to emerging regulatory sustainability reporting regimes to address greenwashing concerns. 🔴

• The UK's Financial Conduct Authority (FCA) has also found that many retail investment funds have inadequate labelling of their sustainability features, raising concerns about greenwashing. The FCA's review highlighted issues with disclosure, clarity of information, and the inclusion of Scope 3 carbon emissions. The FCA expects firms to address these shortcomings to meet new sustainability disclosure requirements and consumer protection standards. 🔴

• Canada's government plans to launch subsidies for carbon capture and net-zero energy projects, worth around $20 billion over five years. The legislation aims to attract investments in low-carbon technologies and help Canada achieve its goal of net-zero emissions by 2050. The government is also introducing labor provisions tied to the ITCs, requiring investors to pay workers the prevailing union wage and provide apprenticeship opportunities. 🇨🇦

• The California Public Employees’ Retirement System (CalPERS), one of the largest public pension funds in the US, has launched its Sustainable Investments 2030 Strategy, committing to invest $100 billion in climate solutions by 2030. The strategy includes engaging with portfolio companies on their net zero plans, exiting investments in companies without credible emission reduction plans, and integrating ESG analysis. CalPERS aims to reduce portfolio emissions intensity by 50% by 2030 and achieve carbon balance by 2050. 🇺🇸

🧐 What are companies doing?

• IBM has launched free sustainability courses through its SkillsBuild program to address the skills gap in the green economy. The courses aim to provide valuable skills and career opportunities for underrepresented communities in technology. The curriculum includes interdisciplinary coursework on ecology, biodiversity, AI, and data analytics, and offers introductory, mid-level, and advanced courses. 🟢

• Novata, a private markets ESG data solutions provider, has expanded its platform's capabilities to include SFDR reporting. The EU Sustainable Finance Disclosure Regulation (SFDR) requires financial market participants to report on sustainability risks and impacts. Novata's SFDR solution offers data collection, PAI automation, expert guidance, and educational resources to simplify the reporting process and ensure compliance. 📄

• Wolters Kluwer, an information services company, has upgraded its ESG reporting capabilities, allowing companies to meet sustainability disclosure requirements. Its integrated solution enables professionals to collect and connect operational and ESG data from various applications, including mapping data to frameworks like CSRD, GRI, and SASB. The solution offers features such as workflow management, collaboration, and publishing auditable ESG disclosures, bringing digital transformation to ESG reporting. 📄

• Gulfstream has completed the first-ever transatlantic flight using 100% sustainable aviation fuel (SAF), a significant milestone in aviation decarbonization. The flight from Savannah to Farnborough in England was achieved using a Gulfstream G600 aircraft powered by Pratt & Whitney engines. While SAF can reduce GHG emissions by up to 85%, challenges remain in terms of low supply and high prices. This achievement precedes a planned 100% SAF-powered commercial aircraft transatlantic flight by Virgin Atlantic. 🛩️

• Frontier has secured $47 million in offtake agreements with CarbonCapture and Heirloom for the removal of 72,000 tons of CO2 on behalf of buyers including Stripe, Alphabet, H&M, and JPMorgan. These agreements mark the first direct air capture (DAC) offtakes for Frontier, which aims to accelerate the development of carbon removal technologies. CarbonCapture will remove 45,500 tons of CO2 by 2028, while Heirloom will remove 26,900 tons by 2030. Both companies offer innovative approaches to driving down costs. 🟢

• DHL Supply Chain, a division of DHL Group, has launched a new global Green Transport Policy to reduce emissions and invest €200 million in fossil fuel alternatives over the next three years. The policy aims to have 30% of the fleet running on sustainable fuels by 2026 and will initially transition 2,000 vehicles to alternatives such as hydrotreated vegetable oil, biogas, electric, or hydrogen. The investments are expected to reduce close to 300,000 tons of CO2 emissions, equivalent to offsetting the emissions of 2,200 trucks driving 500 kilometers daily for a year. 🟢

• JPMorgan Chase has accelerated its financed emissions reduction targets for carbon-intensive sectors, including Oil & Gas, Electric Power, and Auto Manufacturing, to align with net zero by 2050. The targets were announced alongside the release of the company's 2023 Climate Report, which also included new sector targets and disclosures on financed emissions. The updated goals are part of JPMorgan's commitment to align its financing activities with the Paris Agreement and support the transition to a low-carbon world. 📈

💸 Recent funding rounds, acquisitions, and private equity:

📈 BlackRock has raised nearly $1 billion for its Evergreen Infrastructure fund, which focuses on investing in infrastructure businesses aligned with energy transition and energy security. The fund aims to support infrastructure businesses in their decarbonization efforts and track progress towards a 1.5°C temperature rise scenario. The initial close of the fund saw commitments from European institutional investors, and the fund has already acquired the US solar and battery storage platform, Lighthouse.

⚡️ Octopus Energy has launched a dedicated fund with Tokyo Gas to invest £3 billion ($3.7 billion) in offshore wind projects by 2030. The fund will focus on Europe and invest in offshore wind farms and companies creating new offshore wind capacity, including traditional and floating turbines. Octopus Energy aims to invest $20 billion in offshore wind by 2030 to boost energy security and reduce dependence on fossil fuels.

🔋 Geothermal Engineering is raising $745 million to expand its production of zero-carbon lithium for EVs. The company aims to address the increasing demand for lithium in the EV market while overcoming sustainability challenges in the lithium supply chain. Geothermal Engineering plans to extract lithium using zero-carbon geothermal power, avoiding water evaporation and carbon-intensive quarrying. The company aims to produce 100 tons per annum of Lithium Carbonate Equivalent by 2024, ramping up to over 12,000 tons per annum by 2030.

🔋 CDPQ announced a C$200 million investment in Northvolt, a leading battery platform focused on sustainable battery cells and systems. The investment will contribute to the Northvolt Six project in Québec and is expected to benefit Québec's economic development.

🛩️ Macquarie Group's asset management arm will invest up to $190 million in sustainable aviation fuel (SAF) supplier SkyNRG. This marks Macquarie's first investment in the SAF space and will support the construction of dedicated SAF facilities in Europe and the US by 2030.

🔋 Element Energy, a battery management technology company, has closed a $111 million capital raise, consisting of a $73 million Series B equity investment and a $38 million debt facility. The investment will support the deployment of Element Energy's adaptive battery management systems in the growing battery storage market. Element Energy's technology improves battery safety, efficiency, and visualization, and is being validated through a 50 MWh pilot project in the US.

🟢 Montreal-based Deep Sky has raised C$75 million in Series A funding to advance gigaton-scale carbon removal in Canada. The funding will support the construction of their first commercial carbon removal facility, team growth, software development, and carbon removal R&D. Deep Sky aims to become the world's first gigaton-scale carbon removal company, permanently removing and storing billions of tons of carbon from the atmosphere.

🚙 Tenet Energy Inc., a climate fintech platform, has raised over $30 million in funding to support the expansion of its EV financing product and the scaling of its renewable energy platform, TenetConnect. Tenet aims to make EV ownership more accessible and affordable, offering smart charging technology that optimizes charging based on utility rates and driving patterns.

🌾 US-based Aigen Robotics has raised $12 million in a Series A funding round led by ReGen Ventures to scale its fleet of solar-powered autonomous robots for agriculture. The robots use sensors, cameras, and software to monitor and manage plants, autonomously removing weeds and providing data to farmers. Aigen plans to launch its robotic fleet on over 20,000 acres of US farmland in April 2024.

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