What's Happening in Sustainability & ESG (Week Recap 03.10 - 09.10) 🌎

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This week’s read time: 9 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:

🇪🇺 A couple of things happened in the EU over the past week:

• The Parliament formally approved the appointment of Wopke Hoekstra as the EU's new head of climate change policy. Among others, Hoekstra promised to tax kerosine – the only fossil fuel that remains untaxed – to regulate aviation further. He also wants to scrap fossil subsidies and further increase targets for CO2 reduction as far as 90% reduction by 2040.

• The Parliament also approved the adoption of a new European Green Bond (EuGB) label to combat greenwashing and provide investors with confidence in sustainable investments. The standard requires strict investment and transparency criteria, including disclosure of bond proceeds and commitment to a green transition plan. The rules also regulate external reviewers and allow flexibility in investing 15% in sectors without established taxonomy criteria.

• They also reached a provisional agreement on new legislation to significantly reduce GHG emissions from fluorinated gases (F-gases) and ozone-depleting substances (ODS). The proposed legislation aims to prevent nearly 500 million tonnes of emissions by 2050. The agreement includes phasing out hydrofluorocarbons (HFCs) by 2050, reducing them by 95% by 2030, and implementing a ban on certain products containing HFCs.

• The EU Commission launched an anti-subsidy investigation on imported electric vehicles (EVs) from China due to concerns about heavily subsidized EVs posing a threat to the EU's automotive industry. The EU aims to determine if anti-dumping duties should be imposed on Chinese battery EVs.

• On Thursday, the EU’s Copernicus Climate Change Service said that 2023 is on track to become the hottest year on record since at least 1940. Climate change and the El Nino weather pattern have contributed to the record-breaking temperatures. The global average temperature for January-September was 0.52 degrees Celsius higher than the reference period of 1991-2020, and 1.4 degrees Celsius higher than the pre-industrial period.

🇺🇸 California Governor Gavin Newsom signed two new climate-related disclosure bills on Saturday, that require more than 5,300 companies that operate in California and make more than $1 billion in annual revenues to report both their direct and indirect emissions. However, Newsom has indicated that the timelines for implementation will be extended and the cost impacts on businesses will be addressed before the laws take effect. He also expressed concerns about the feasibility of the implementation deadlines and potential inconsistent reporting across businesses.

• Asset owners are increasing their allocations to ESG investments despite facing challenges in regulatory clarity and data quality, according to a survey by Morningstar. The survey found that 34% of asset owners now have at least half of their assets in ESG strategies. However, asset owners also reported growing barriers to ESG implementation, including the impact on returns and data-related challenges. Regulatory factors were also cited as a significant challenge. Asset owners expect artificial intelligence to play a significant role in ESG investing, particularly in data collection and analysis. 📈

• A study by the European Securities and Markets Authority (ESMA) reveals that the use of ESG-related terms in the names of investment funds in Europe has increased more than fourfold in the past decade. The study also highlights a preference for generic ESG terms, potentially making it difficult for investors to verify alignment with fund names. ESMA's focus on greenwashing in the fund management industry aligns with global regulatory efforts to address issues related to the marketing of investment products without clear rules on ESG attributes. The report emphasizes the need for accurate descriptions of sustainable financial products to maintain investor confidence. 📈

• Instances of greenwashing by banks and financial services companies increased by 70% in the past 12 months, with European institutions accounting for most cases, according to a report by ESG data firm RepRisk. The majority of greenwashing involved claims about fossil fuels. RepRisk recorded 148 cases globally in the banking and financial services industry in the past year, compared to 86 in the previous year. Of these cases, 106 were attributed to European financial institutions. 🔴

🧐 What are companies doing?

• EY and Microsoft have launched the Green Skills Passport, a free online education program aimed at equipping young people with sustainability skills for green jobs. The program addresses the skills gap in sustainability and includes a 10-hour virtual course on topics such as entrepreneurship and employability skills. Successful pilot programs have already been conducted, with participants expressing interest in green jobs and further education in sustainability. 🟢

• Clarity AI has launched a methodology to assist index and ETF providers in creating and marketing products that comply with the EU's Sustainable Finance Disclosure Regulation (SFDR). The methodology allows for the assessment of companies based on sustainable investment criteria, including UN Sustainable Development Goals and EU Taxonomy contribution, within the ranges accepted by the regulation. 📄

• Infosys and Economist Impact have launched the Value Chain Navigator (VCN), a platform aimed at helping businesses understand and reduce their scope 3 value chain emissions. Scope 3 emissions, which make up a significant portion of a business's carbon footprint, are typically challenging to track and report. The VCN provides interactive tracking, tools, and tailored recommendations to address these emissions. The platform also features a global survey, personalized recommendations, and a spotlight film series of business leaders discussing their scope 3 journeys. 📄

• BNP Paribas Asset Management has launched two new fossil-free fixed-income funds, the BNP Paribas Easy € Corp Bond SRI Fossil Free Ultrashort Duration UCITS ETF and BNP Paribas Easy USD Corp Bond SRI Fossil Free UCITS ETF. These funds are classified as Article 8 under the EU's Sustainable Finance Disclosure Regulation and replicate the performance of sustainable bond indices while excluding controversial sectors and fossil fuel issuers. The launch aims to meet the growing investor demand for ESG-focused fixed-income exposure. 📈

• Mirova has launched Mirova Energy Transition 6 (MET6), a new €2 billion investment fund focused on energy transition infrastructure in Europe. The fund aims to finance proven technologies such as wind power, photovoltaics, hydropower, storage, and energy efficiency, while also supporting low-carbon electric mobility and hydrogen. MET6 will provide financial resources to project promoters and retain flexible investment approaches. 💡

• Energy giants Occidental and ADNOC have announced an agreement to conduct an engineering study for a potential 1 million tonne-per-year Direct Air Capture (DAC) facility in the UAE. If approved, it would be one of the largest DAC projects globally and the first megaton-scale facility outside the US. The project aims to extract CO2 from the atmosphere for storage or utilization. 🟢

💸 Recent funding rounds:

🟢 Electric Hydrogen, a hydrogen electrolyzer manufacturer, has raised $380 million in a Series C funding round. The funds will be used to accelerate manufacturing and deployment plans. The company produces powerful electrolyzers that generate green hydrogen from renewable electricity and water. With a 1.2GW factory in Massachusetts, US, Electric Hydrogen aims to begin commercial production in early 2024.

📈 Paris-based VC firm HCVC has raised a new $75 million fund dedicated to "hard-tech" startups that tackle challenges in sectors like climate, defense, and aerospace. The firm aims to invest in breakthrough technologies that exist in the physical world, such as ultra-precise sensors and new satellite designs. HCVC will back companies with tickets ranging from €250k to €2.5m and has already announced investments in nuclear fusion, satellite design, nuclear waste recycling, and bioreactor technology.

🌾 French food-tech firm Umiami has raised €32.5 million in a Series A funding round. The funding will be used to expand its plant-based meat alternative technology in Europe and the US. The company aims to revolutionize the food industry by offering sustainable and tasty alternatives to meat-based products.

💡 Energy analytics startup Amperon has raised $20 million in a Series B funding. The US-based company uses AI to forecast energy usage and supply and plans to use the funding to expand its data analytics solution, address demand unpredictability caused by climate change, and accelerate grid decarbonization. Amperon's revenue has grown by 5x since 2021.

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 🍀