What's Happening in Sustainability & ESG (Week Recap 17.10 - 23.10) 🌎

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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 International Energy Agency (IEA) released its annual World Energy Outlook report, predicting that the energy world is set to change significantly by 2030. Some of the highlights:

• clean energy technologies will surge between now and 2030 based on today’s policy settings alone,

• by the end of the decade, there are set to be almost 10 times as many electric cars on the road worldwide,

• solar will generate more electricity than the entire US does currently, and renewables’ share of the global electricity mix will be nearly 50%, up from around 30% today.

In this scenario, the share of fossil fuels in the global energy supply, which has been stuck for decades at around 80%, declines to 73% by 2030, and global energy-related CO2 emissions peak by 2025. However, demand for fossil fuels globally is set to remain far too high to achieve the Paris Agreement goal of limiting the rise in average global temperatures to 1.5 °C. To keep this target within reach, it proposes a five-pillar global strategy, some of which include tripling the global renewable capacity, doubling the rate of energy efficiency improvements, and slashing methane emissions from fossil fuel operations by 75%. Another energy report by Ember shows that half of the world's economies are already past their peak in power generation from fossil fuels, with emissions falling by almost 20% in the last decade.

🇪🇺 The European Parliament has voted in favor of keeping the European Sustainability Reporting Standards (ESRS), making sustainability reporting mandatory for 50,000 companies starting from January 2024. The endorsement signifies the transition from political debate to practical implementation, while the European Commission has agreed to make some requirements voluntary to alleviate pressure on companies. The ESRS has achieved a high level of interoperability with the widely used GRI Standards, aligning definitions, concepts, and disclosures. The ESRS is a key part of the Corporate Sustainability Reporting Directive (CSRD) and will apply to large and listed companies in the EU, with non-EU companies also required to report using the ESRS or equivalent standards from 2028. The European Commission also plans to delay the adoption of sector-specific and non-EU company sustainability reporting rules under its CSRD. The delay, outlined in the Commission's 2024 Work Programme, aims to alleviate the reporting burden for companies and allow for the implementation of the first set of the ESRS. The CSRD also requires large non-EU companies operating in the EU to provide sustainability reporting, with the adoption of rules for these businesses also postponed. The Commission's 2024 Work Programme also includes various sustainability and climate-related actions, such as establishing a 2040 climate target and launching initiatives on wind power, industrial carbon management, and water resilience.

🇺🇸 The US government has announced a $3.5 billion investment in projects to strengthen the US electric grid and deploy cleaner energy. This is the largest-ever direct investment in the US electric grid and will be funded by the Bipartisan Infrastructure Law. The projects are expected to leverage over $8 billion in federal and private investments and will help bring more than 35 GW of new renewable energy online and invest in 400 microgrids. The investments aim to improve grid resilience, reliability, and affordability while supporting the administration's Justice40 initiative to direct clean energy investment benefits to disadvantaged communities.

• The EU Council has also agreed on new rules to strengthen CO2 emission standards for heavy-duty vehicles. The proposal aims to reduce CO2 emissions, introduce new targets for 2030, 2035, and 2040, and increase the share of zero-emission vehicles. The targets include a 45% emissions reduction by 2030, a 100% zero-emission target for urban buses by 2035, and a review clause for effectiveness and infrastructure deployment. 🇪🇺

• Over 23,000 global companies, including major listed companies, have disclosed their environmental data through CDP in 2023, indicating a 24% increase from the previous year. The USA, China, Japan, UK, and Germany lead in the number of disclosing companies. While reporting on climate change, water security, and deforestation has increased, only 1% of companies reported on all three areas, highlighting the need for better disclosure on nature. 🟢

• The UN-Convened Net-Zero Asset Owner Alliance (NZAOA) released its third annual report. Some of the key data points include: 69 members with $8.4 trillion in AuM have set intermediate climate targets (up from 44 members with $7.1 trillion in AuM in 2022), all 69 members with intermediate targets also have engagement targets, 67 members have set sub-portfolio targets (up from 41 in 2022), who target, on average, CO2e reduction ranges of 22%-32% for 2025 and 40%-60% for 2030, and $380.6 billion has been dedicated to investments in climate solutions in 2023 by the Alliance’s members. 📈

• A study by Schroders reveals that 64% of institutional investors prioritize long-term financial returns as the main driver for sustainable investing. The report, based on a survey of 770 investors representing $35 trillion in assets, also highlights a shift towards viewing sustainable investing as an opportunity rather than solely a risk management tool. The study shows that investors are increasingly focused on thematic investing, with 61% preferring this approach, followed by impact investing at 59%. 📈

• According to a report by PwC, venture capital and private equity investment in climate technology ventures has declined in 2023, but still outperformed the broader market. The report highlights a broadening investor base for climate tech startups and a shift towards funding technologies with greater emissions reduction potential. Climate tech private market funding decreased by 40.5% in 2023, but climate tech gained a record share of 10% of overall investment. The report also reveals a growing alignment between funding flows and emissions reduction potential, with increased investments in startups targeting emissions reduction in industrials. Additionally, there is a shift in climate tech funding away from early-stage deals towards mid-stage deals and a rise in first-time investors in the market. 📉

🧐 What are companies doing?

• Oil giant Chevron has announced an all-stock deal to acquire Hess Corp. for $53 billion. This follows Exxon's recent acquisition of Pioneer Natural Resources. Chevron's deal differs in that Hess operates in North Dakota's shale patch and has multinational operations, including developments in Guyana and gas operations in the Gulf of Thailand. Both Chevron and Exxon are betting on continued oil and gas demand despite climate policies. 🛢️

• Deutsche Bank has set emissions reduction targets for loans to clients in the coal mining, cement, and shipping sectors, covering 55% of its financed emissions. The bank aims to reduce absolute emissions from coal mining by 49% by the end of the decade and by 97% by 2050. Emissions linked to oil and gas, steel, power, and autos fell in 2022. The bank's targets do not include emissions linked to underwriting stocks and bonds. 📄

• International asset manager Robeco will disclose sustainability information for all of its investment products. This includes themes such as climate, net zero, biodiversity, and the Sustainable Development Goals (SDGs). The information will be added to product factsheets and webpages, providing transparency on environmental footprint, SDG alignment, engagement levels, exclusions, and ESG ratings. 📄

• DHL Express has signed a seven-year agreement with World Energy for the purchase of 668 million liters of sustainable aviation fuel (SAF) through SAF certificates. This is one of the largest SAF agreements in the aviation industry to date, which is expected to reduce 1.7 million tonnes of CO2 emissions and supports DHL's goal of using at least 30% SAF blending for all air transport by 2030. 🛩️

• General Mills, Walmart, and Sam's Club have partnered to accelerate the adoption of regenerative agriculture on 600,000 acres in the US by 2030. The initiative aims to address the environmental impact of agriculture, improve soil health, reduce emissions, enhance watershed management, increase biodiversity, and improve farmers' livelihoods. 🌾

• Berge Bulk, a dry bulk ship owner, has launched the Berge Olympus, a cargo ship retrofitted with wind-assisted propulsion technology to reduce fuel consumption and CO2 emissions. The ship is equipped with four BARTech WindWings by Yara Marine Technologies, which are expected to save 6 tonnes of fuel per day and reduce CO2 emissions by approximately 19.5 tonnes per day. The ship is considered to be the world's most powerful sailing cargo vessel. ⛴️

• The Volkswagen Group delivered 45% more all-electric vehicles (BEVs) in the first nine months of the year, with a total of 531,500 vehicles handed over to customers. The BEV share of total deliveries increased to 7.9%, reaching 9.0% in Q3. Europe remained the key driver of Volkswagen Group's electrification strategy, followed by the USA and China. 🚙

💸 Recent funding rounds:

⚡️ Energy infrastructure investment manager Copenhagen Infrastructure Partners (CIP) has raised €2 billion ($2.1 billion) for two new clean energy infrastructure funds. The CI Advanced Bioenergy Fund I focuses on advanced bioenergy infrastructure investments in Europe, while the CI Green Credit Fund I provides private project finance debt for renewable energy projects in Europe, North America, and select Asia Pacific jurisdictions. CIP's flagship fund, CI V, has also reached its first close at €5.6 billion, with a target fund size of €12 billion.

💡 Swedish home energy tech supplier Aira has secured €87 million in equity funding to expand its presence in Europe and provide clean energy tech solutions to 5 million households. Aira aims to reduce reliance on gas-based heating by supplying heat pumps and home energy tech, which could help households save up to 40% on heating costs and reduce CO2 emissions by over 75%. The funding will also be used to launch an affordable monthly payment model for homeowners and expand the product and service offerings.

🟢 US-based green hydrogen developer NovoHydrogen has raised $20 million in equity commitment from clean energy company Modern Energy. The funding will support NovoHydrogen's growth and the development of its green hydrogen projects. Green hydrogen, produced through electrolysis using clean energy, is seen as a key component in the transition to cleaner energy, and the investment will also enable NovoHydrogen to strengthen its team and advance its portfolio of green hydrogen projects.

⛰️ Climate tech startup Overstory has raised $14 million in funding to develop its AI-based product for reducing the risk of wildfires and power outages. Overstory offers predictive AI technology for utilities, providing tree-level insights to mitigate wildfires and protect biodiversity. The funding will accelerate the development of Overstory's platform, which uses AI and satellite imagery to provide visibility, risk analysis, and optimization recommendations for vegetation management.

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 🍀