What's Happening in Sustainability & ESG? (Week Recap 05.09 - 11.09) 🌎

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This week’s read time: 7 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:

G20 leaders have agreed to pursue tripling renewable energy capacity globally by 2030 and phase-down unabated coal power. However, they stopped short of setting major climate goals. The declaration did not mention cutting greenhouse emissions but said member nations will pursue efforts to triple renewable energy capacity globally by 2030. The G20 has agreed that "national circumstances" will be factored into the phasing down of "unabated coal power" but did not mention a reduction in usage of crude oil. The bloc had failed to reach a consensus during previous ministerial meetings on environment and energy. 🟢

Microsoft has signed a multi-year deal with Direct Air Capture (DAC) technology company Heirloom for the removal of up to 315,000 tonnes of CO2, marking one of the largest carbon removal agreements to date. The agreement will enable a new funding mechanism for Heirloom's DAC development, as one of the first CO2 removal agreements to use a bankable mechanism that funds the project with future project cash flows, similar to structures used for large-scale infrastructure development agreements.

The UK government has pledged $2 billion to the Green Climate Fund (GCF) for its second replenishment, a 12.7% increase from its commitment for the GCF's first replenishment. The GCF is the world's largest climate fund, supporting developing nations to reduce carbon emissions, develop cleaner energy sources, and adjust to a warming world. The UK's pledge is an added boost for the growing momentum surrounding GCF's second replenishment and in the lead up to the Fund's High-Level Pledging Conference in Bonn, Germany on 5 October 2023. 🇬🇧

The European Financial Reporting Advisory Group (EFRAG) and the Global Reporting Initiative (GRI) have achieved a high level of interoperability between the European Sustainability Reporting Standards (ESRS) and the GRI Standards, reducing the sustainability disclosure burden for many companies and avoiding the need for double reporting. The ESRS set out the rules and requirements for companies to report on sustainability-related impacts, opportunities, and risks under the EU’s upcoming Corporate Sustainable Reporting Directive (CSRD), while the GRI Standards are one of the most commonly accepted global standards for sustainability reporting by companies. The high level of interoperability achieved will help companies prepare for the new requirements under ESRS and reduce the reporting burden for companies. ✅

• The European Central Bank's second climate stress test found that banks' credit risk could rise by over 100% by 2030 if initiatives to hit global climate goals are delayed until after 2025. The test considered three climate transition scenarios, with the "accelerated transition" resulting in the lowest financial and physical risk in the long-term, while the "late-push" scenario resulted in the most severe medium-term impact on costs and risk. The "delayed transition" scenario led to much higher long-term physical risk from climate hazards. The report highlights that the sooner and faster the necessary green transition is completed, the lower the overall costs and risks. 🇪🇺

• New climate disclosure rules in the European Union are causing concern for some companies, with one leading executive from Puma calling them "over the top." The regulations require companies to report their carbon emissions and those of their suppliers. Regulators are reassuring firms that they will not come down hard on them from the introduction of the EU's Corporate Sustainability Reporting Directive (CSRD) in phases from this year. The new requirements replace a patchwork of voluntary private sector norms that regulators say have not been robust enough to stop companies and investors from making misleading environmental claims. 💭

• Less than 5% of banks have disclosed a net zero target covering all financing activities, according to a report by the Transition Pathway Initiative’s Global Climate Transition Centre. The report assessed 26 of the world’s largest global banks according to its recently released Net Zero Banking Assessment Framework, which considers a wide range of indicators from banks’ net zero commitments and targets to their disclosure, climate risk governance and climate solutions financing. While banks have made progress toward integrating climate change into their business strategies, there is significant room for improvement to align their strategies and financing activities with global climate goals. The report also found significant progress in banks’ climate-related disclosure practices, with 69% of banks now disclosing absolute financed emissions for at least one sector, compared with only 33% in 2022. 🔴

• BlackRock, a major shareholder of Glencore, voted against the mining company's climate progress report at its annual meeting in May, citing inconsistencies. BlackRock's entities, which collectively own more than 6% of Glencore's stock, boosted dissident shareholders and helped the total votes in opposition to the company's climate plan pass 30% for the first time. The asset manager also did not back a shareholder resolution seeking more disclosure on progress in scaling back thermal coal production, which got 29% support. BlackRock's declining support for shareholder resolutions on environmental and social themes has drawn much scrutiny of its practices. 🔴

🧐 What are companies doing?

• Fidelity International has launched two new funds classified as Article 9 under the EU's Sustainable Finance Disclosure Regulation (SFDR) and reclassified four additional funds from Article 8 to Article 9. This expansion of Fidelity's Article 9 offerings addresses growing client demand for strategies that invest in issuers contributing to and benefiting from the transition to a more sustainable economy. Each fund will have 100% of investments invested in sustainable investments, based on a sustainable investment definition of having at least 50% of revenues generated from activities contributing to an environmental or social objective according to the EU Taxonomy, Fidelity's proprietary SDG tool, or a robust strategy to decarbonize towards net zero. 📈

• Amazon and Maersk have signed an agreement to transport 20,000 FFE containers using low to very low GHG emissions biofuels, which will result in an estimated 44,600 tonnes of CO2e emissions reduction. This is part of Amazon's goal to achieve net zero carbon emissions by 2040 across its value chain, with Scope 3 emissions accounting for over three quarters of its emissions footprint. The agreement was made through Maersk's ECO Delivery program, which allows shippers to replace fossil fuels with green fuels, and Maersk has announced a series of moves to expand its low-carbon fleet. 🚢

• Euronext has launched a series of ESG tools and sustainable finance-focused initiatives, including making issuers' non-financial data available on its website. The new initiatives will support Euronext's "Fit for 1.5°" climate commitment and "Growth for Impact 2024" strategy. One of the new tools launched by Euronext includes "My ESG Profile," a digital tool enabling issuers to showcase their sustainability efforts and allowing investors to access ESG data. 🟢

• Allianz has committed to investing €20 billion in climate and cleantech solutions by 2030 and achieving net-zero emissions by 2050 in its proprietary investment and Property & Casualty underwriting portfolios, and by 2030 in its own operations. The company also aims to achieve 150% profitable growth in revenues from renewable energy and low-carbon technology solutions in its commercial insurance segment by 2030 and reduce carbon emissions by 30% for its retail motor segment. Allianz remains a member of the Net-Zero Asset Owner Alliance. 📈

• Repsol has acquired ConnectGen, a renewable energy developer, for $768 million, marking its entrance into the US onshore wind market. The acquisition is part of Repsol's pivot from oil and gas to renewables, with a focus on the US. ConnectGen's 20 GW in planned onshore wind, solar, and energy storage projects will help Repsol reach its goal of 20 GW of installed renewables capacity by the end of the decade. 💡

• Apple has expressed support for proposed legislation in California that would require large companies to disclose their full value chain greenhouse gas emissions. The legislation would require companies with revenues over $1 billion to report annually on their emissions from all scopes, including direct and indirect emissions. Apple has been a long-time proponent of mandatory climate disclosure and has publicly called for consistent, audited emissions reporting. The company has also announced that it will require companies in its supply chain to report on progress towards achieving carbon neutrality. ✅

💸 Recent funding rounds:

🟢 Decarbonized steel startup H2 Green Steel has raised €1.5 billion in equity to build the world's first large-scale green steel plant, which will produce steel with 95% lower emissions than traditional blast furnace technology. The plant will use hydrogen produced using green power to remove the oxygen from iron oxide, avoiding most CO2 emissions, and electricity from 100% renewable sources. The company aims to begin production in 2025 and produce 5 million tonnes of nearly fossil-free steel by 2030.

🔋 Ascend Elements, a sustainable battery materials provider, has raised $460 million in a Series D equity funding round to accelerate the production of US-engineered lithium-ion materials for electric vehicle batteries. The funds will be used for the construction of a new Kentucky-based facility that will produce sustainable cathode active materials for 750,000 EVs annually.

🟢 Boston Metals has raised $262 million in Series C funding to accelerate its platform for decarbonized steelmaking using Molten Oxide Electrolysis (MOE) technology. The company's one-step process produces zero CO2 emissions and selectively extracts valuable metals from low-concentration materials that are currently considered waste. Boston Metal plans to ship its first high-value metals in 2024 and bring its MOE technology to the steel market by 2026.

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 🍀