What's Happening in Sustainability & ESG (Week Recap 24.10 - 30.10) 🌎

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This week’s read time: 10 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:

🇨🇭Switzerland's Federal Department of Finance (FDF) will propose regulations to prevent greenwashing in the financial sector, including investment and disclosure rules for 'sustainable', 'green', or 'ESG' labeled financial products. The proposed measures require such products to pursue at least one sustainability goal and specify these in the product documentation. Transparency rules will require providers to describe their sustainability approach and provide regular reporting on sustainability goals. The FDF will consider industry self-regulation solutions and plans to submit a consultation draft for the proposed regulation by August 2024.

🇪🇺 The EU Council has adopted a regulation establishing a European green bond standard, setting uniform requirements for issuers wishing to designate their bonds as 'European green bond' or 'EuGB'. It also establishes a registration system and supervisory framework for external reviewers of European green bonds. All proceeds from instruments issued under the new EuGB designation must be invested in activities aligned with the EU Taxonomy, with some flexibility for sectors without established taxonomy criteria. The new standard is expected to foster consistency in the green bond market, prevent greenwashing, and stimulate capital flows into environmentally sustainable projects.

🇺🇸 US Securities and Exchange Commission’s (SEC) Chair Gary Gensler declared that investors support the proposal for Scope 3 value chain emissions reporting from companies, as it helps them assess company risk. The comments were made in a forum discussion at the US Chamber of Commerce. Although the final formulation of the supply chain emissions reporting requirements remains unclear due to concerns from companies and smaller enterprises, Gensler's comments suggest that Scope 3 emissions reporting will likely be part of the finalized rule. The SEC's proposed climate disclosure rules, released in March 2022, aim to provide investors with material information in an environment where companies are increasingly making climate-related disclosures.

📉 European sustainable funds experienced another quarter of outflows due to economic uncertainty and regulatory changes. Investors withdrew €20.5 billion from lower sustainability classified funds, while inflows into higher classified funds were at their lowest since early 2021. Non-sustainable funds, however, saw inflows of €17.8 billion. The introduction of the Sustainable Finance Disclosure Regulation led to many funds being downgraded to a lower sustainability category. US sustainability funds are also struggling, with more funds closing than opening in the third quarter.

• Starting in 2026, public companies in Brazil will be mandated to provide annual sustainability and climate-related disclosures, according to Brazil’s Securities and Exchange Commission and Ministry of Finance. The new reporting requirements will be based on the sustainability and climate-related disclosure standards issued by the IFRS Foundation’s ISSB. Public companies and investment funds can voluntarily begin reporting in 2024, with mandatory reporting for public companies starting in 2026. From 2027, sustainability reporting will be required within three months after the end of the fiscal year or simultaneously with the release of financial statements. 🇧🇷

• New York Governor Kathy Hochul has announced the largest-ever state investment in renewable energy in the US, with awards for 6.4 GW of projects. These projects are expected to generate enough electricity to power over 2.5 million homes, deliver 12% of New York’s energy needs, and reduce GHG emissions by 9.4 million metric tons annually. The investment will bring New York’s renewable energy capacity to 79% of the state’s needs by 2030, surpassing its goal of 70%. ⚡️

• The European Commission has proposed methane emissions limits on EU gas imports from 2030, pressuring international fossil fuel suppliers to reduce leaks of the GHG. The proposal comes in response to pressure from the European Parliament and some EU countries. Methane, the main component of natural gas, is a significant cause of climate change. The new proposal would require foreign gas suppliers to curb methane emissions from leaky oil and gas infrastructure. If approved, the Commission would detail the proposal in an "implementing act" at a later date. 🟢

• The International Union for Conservation of Nature (IUCN) and partners have launched the End Plastic Pollution International Collaborative (EPPIC), a science-focused public-private partnership aimed at transforming the plastic sector towards circular solutions. EPPIC will be jointly hosted by IUCN, the Aspen Institute, The Ocean Foundation, and Searious Business, with support from the US Department of State. The partnership aims to convene governments, businesses, civil society, and others to accelerate global action on plastic pollution, focusing on science-based solutions to reduce, reuse, and recycle plastic waste. ♻️

🧐 What are companies doing?

• Bloomberg and Riskthinking.AI have launched science-based physical risk indicators to help companies and investors assess exposure to climate-related risks such as floods, droughts, and wildfires. These indicators are the first to account for every climate scenario endorsed by the Intergovernmental Panel on Climate Change (IPCC). They combine Bloomberg’s data on over 1 million physical assets across nearly 50,000 companies with Riskthinking.AI’s dataset of global climate change projections to calculate companies’ physical risk exposure levels. S&P Global Market Intelligence and Oliver Wyman have also added climate-related physical risk assessment to their Climate Credit Analytics solution. This enhancement will provide information on the physical risk exposure and related financial impact for over 20,000 companies, mapped against a range of seven climate change-related hazards, across four CMIP6 climate change scenarios. 🟢

• ESG Book and the Future Investment Initiative (FII) Institute have launched the Inclusive ESG Tool and Inclusive ESG Score to improve ESG data quality and facilitate sustainable investment capital flows for emerging markets companies. Despite a global surge in sustainable investments, emerging markets receive less than 10% of ESG capital flows worldwide. The new tool aims to address data gaps in emerging market analysis and identify companies that prioritize ESG factors while fostering long-term sustainable growth. This could potentially help reduce the $5.4 trillion ESG investment gap in emerging markets. 📈

• Shell plans to cut at least 15% of the workforce in its low-carbon solutions division and scale back its hydrogen business as part of a strategy to boost profits. The company will cut 200 jobs in 2024 and has placed another 130 positions under review. The changes are part of CEO Wael Sawan's plan to focus on higher-margin projects, steady oil output, and grow natural gas production. 🛢️

• Stellantis is investing $1.6 billion in Chinese EV automaker Leapmotor, acquiring a 20% stake and launching a partnership to boost Leapmotor's EV sales in China and globally. The deal includes the formation of Leapmotor International, a Stellantis-led joint venture with exclusive rights to manufacture, export, and sell Leapmotor products outside China. 🚙

• BP has ordered $100 million worth of Tesla's ultra-fast chargers to boost its EV charging network, marking the first time Tesla's chargers will be deployed on an independent network. The chargers will be installed across the BP pulse network from 2024, including at key BP, Amoco, ampm, and Thorntons-branded sites, and TravelCenters of America locations. The deal is part of BP's plans to invest up to $1 billion in EV charging across the US by 2030. BP pulse has already installed over 27,000 charge points and aims to roll out more than 100,000 globally by 2030. ⚡️

• Amazon has added 39 new renewable energy projects in Europe this year, increasing its clean energy capacity by 1 GW. This makes Amazon the largest corporate purchaser of renewable energy in Europe, with 160 projects expected to provide 5.8 GW of clean energy. The company's 2023 investments include projects in nine countries and 15 rooftop solar installations. Amazon reported that 90% of its global electricity consumption in 2022 was powered by renewable sources, and it aims to power all its operations with 100% renewable energy by 2025. 💡

• A coalition of large US companies, including Apple, Nike, Amazon, Meta, PepsiCo, and REI Co-op, have launched the Clean Energy Procurement Academy. This initiative aims to address supply chain emissions by equipping companies with the necessary skills and knowledge to adopt clean energy. The academy offers both in-person and online training, and other resources, to boost supply chain companies' capacity to invest in renewable energy, encourage escalated renewable energy goals and commitments, and establish renewable energy buying communities in key manufacturing regions. 💡

💸 Recent funding rounds:

🛵 Ola Electric, an India-based electric scooter developer, has raised $384 million in a funding round, including about $240 million in debt, led by Singapore's sovereign wealth fund Temasek and the State Bank of India. The round values the electric vehicle startup at around $5.4 billion. Despite losing more than $130 million in the last financial year, Ola Electric plans to use the funds to expand its EV business and establish India's first lithium-ion cell manufacturing facility.

⚡️ Clean energy startup Eavor Technologies has raised $182 million in financing to accelerate the development and deployment of its geothermal energy technology, Eavor-Loop. This technology is a closed-loop system that taps into the Earth's natural heat to create electrical power. The funding will help Eavor provide a baseload of clean, renewable power, free from production limitations of intermittent renewables like solar and wind energy.

🔋 Germany-based organic flow battery company CMBlu has received a €100 million investment from technology and construction firm Strabag. The two companies have also signed a preferred partnership agreement. CMBlu's 'Organic SolidFlow' technology uses an electrolyte sourced from organic materials, offering a cost-effective, environmentally friendly, and secure alternative to traditional vanadium electrolytes.

🟢 MangoBoost, a developer of Data Processing Units (DPUs), has raised $55 million in a Series A funding round, bringing its total funding to $65 million. The startup, based in Seattle and Seoul, offers DPU hardware and software solutions that help manage large amounts of data, optimize workloads, and reduce power consumption in data centers.

⛏️ Sustainable mining tech startup Eden has raised $12 million in seed funding to scale its Electrical Reservoir Stimulation (ERS) technology - designed to increase the recovery of natural resources and minimize environmental impact. The ERS technology uses high-voltage electricity to increase rock permeability, offering an environmentally friendly alternative to hydraulic fracking.

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 🍀