What's Happening in Sustainability & ESG (Week Recap 10.10 - 16.10) 🌎

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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 Task Force on Climate-related Financial Disclosures (TCFD) has issued its 6th annual status report, with the main findings revealing that 58% of companies now disclose in line with at least five of the TCFD’s 11 recommended disclosures (up from 18% in 2020), while nearly 70% of the largest 50 asset managers and 36% of the leading 50 asset owners disclosed in line with at least five of the recommended disclosures. This was also its final report, with responsibility for monitoring the progress of climate-related reporting now being transferred to the IFRS Foundation’s International Sustainability Standards Board (ISSB), following the ISSB’s recent publication of global standards for sustainability and climate reporting. The report also highlights an increase in the number of companies following TCFD recommendations, with 90% of companies providing disclosures in line with at least one recommendation in 2022. However, only 4% of companies reported in alignment with all 11 recommendations. To conduct the study, the TCFD used AI technology to analyze the publicly available reports of more than 1,350 large companies across a broad range of regions and sectors over three years. The report emphasizes the need for more transparency and consideration of climate-related issues in financial statements.

🇺🇸 The Biden administration has announced a $7 billion investment to establish a national network of clean hydrogen hubs across the US. These hubs aim to significantly increase low-carbon hydrogen production and reduce carbon emissions from industrial sectors. The selected sites are expected to collectively produce 3 million metric tons of hydrogen annually, resulting in the reduction of 25 million tons of carbon emissions per year. The investment will be funded through the Bipartisan Infrastructure Law and is anticipated to catalyze over $40 billion in private investment, making it one of the largest-ever investments in clean manufacturing.

🇪🇺 A group of more than 40 lawmakers in the European Parliament, mainly representing centre-right parties, have filed a motion to reject the recently passed European Sustainability Reporting Standards (ESRS) and replace them with simpler and less burdensome sustainability disclosure rules for companies. The ESRS, adopted by the European Commission in July 2023, sets out the requirements for companies to report on sustainability impacts. The motion argues that the ESRS introduces a high administrative burden and lacks usable KPIs. The MEPs call for a new delegated act with reduced reporting standards, longer implementation periods, voluntary standards for smaller businesses, and increased employee-based thresholds. While there is opposition to the EU's green agenda, it may be challenging to gather enough support to reject the proposed ESRS.

🛢️ ExxonMobil, one of the largest oil companies, has announced an agreement to acquire Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion - in a move that has been considered as a vote of confidence in US oil, and one that contradicts US climate policy. The merger will more than double Exxon's production in the Permian Basin to 1.3 million barrels of oil-equivalent per day, with expected growth to 2 million daily in 2027. Analysts view the deal as a demonstration of ExxonMobil's bullishness on long-term oil demand and prices. They also note that the acquisition strengthens ExxonMobil's oil-weighted portfolio but poses challenges in transitioning to low-carbon solutions. The reaction from climate groups has been mixed, and the response from the Biden administration remains unknown.

• The UK’s Transition Plan Taskforce (TPT) has launched the TPT Disclosure Framework, aiming to provide a "gold standard" for companies to develop and report on their climate transition plans. The framework sets out good practices for robust and credible transition plan disclosures, aligning with international standards and addressing the need for consistent and standardized reporting. The TPT aims to support companies in backing up their net zero ambitions with high-quality and clear transition plans, ensuring action and accountability in achieving climate goals. 📄

• The Tokyo Stock Exchange (TSE) has started trading carbon credits as part of Japan's strategy to tackle climate change and achieve carbon neutrality by 2050. The new market, called J-Credit, allows registered members to trade credits for GHG emissions reduction. The TSE aims to provide transparency in carbon pricing and facilitate the buying and selling of credits. The trading volume on the first day reached 3,689 tonnes of CO2, with transaction prices set twice a day. The TSE plans to introduce a market-maker mechanism to boost trade liquidity. 📈

• According to Lloyd's of London, global economic losses from extreme weather events linked to climate change could reach $5 trillion. This hypothetical scenario, which models the impact of extreme weather on the global economy, highlights the need for businesses and policymakers to understand their exposure to such threats. Adjusting for probability, the expected losses over a five-year period were estimated at $711 billion. The research also revealed that extreme weather events concentrated in Greater China would result in the largest losses, while the Caribbean region would experience a 19% loss of GDP. 🔴

• According to a survey by PwC, more than two-thirds of corporate boards lack a strong understanding of ESG risks affecting their companies. Only a quarter of boards have a strong grasp of carbon emissions, and even fewer understand their companies' climate risk or strategy. While ESG issues are regularly discussed in board agendas, a majority of directors admit to lacking a strong understanding of key sustainability-related matters. However, there has been improvement in readiness for ESG-related reporting, and there is strong support for tying executive compensation to non-financial metrics. 💭

🧐 What are companies doing?

• Investment data provider MSCI has announced the acquisition of Trove Research, a specialist firm focused on corporate climate action and carbon markets. This move allows MSCI to offer clients insights into companies' transition plans, carbon credit pricing, and increase transparency into carbon credit quality. The acquisition comes as demand for carbon offset projects is expected to rise, and MSCI aims to strengthen its position as a leading provider of climate-related investment solutions. ✅

• EY and SAP have announced an expanded alliance to collaborate on solutions and services that enable clients to advance climate and sustainability-related action and reporting. The collaboration aims to help clients manage sustainability and climate-related challenges, streamline reporting, enhance operational performance, and navigate changing regulations. EY will advise SAP and customers on the design of software solutions for impactful climate, nature, and social impact strategies. The companies will also work together on SAP's green ledger concept and provide real-time legal and regulatory updates on sustainability incentives. 🌎

• easyJet has become the first airline to join Airbus' carbon removal initiative, utilizing Direct Air Carbon Capture and Storage (DAC) technology to help achieve its aviation decarbonization goals. The aviation industry aims for net-zero emissions by 2050, and carbon capture is considered an important solution in this agenda. DAC technology filters and removes CO2 emissions directly from the air, which can be stored underground or used to create synthetic aviation fuels. 🛩️

• Honeywell and GranBio have partnered to produce carbon-neutral sustainable aviation fuel (SAF) by combining their respective technologies. SAF is considered key for decarbonizing the aviation industry, and demand is expected to increase as airlines and governments aim to achieve their climate goals. GranBio's AVAP technology converts biomass to low-cost sugars, which can be converted to SAF using Honeywell's ETJ technology. The collaboration aims to use abundant and low-cost feedstocks and achieve net-zero emissions. The SAF will be produced at GranBio's US demonstration plant, supported by an $80 million grant from the US Department of Energy. 🟢

• Logistics company DHL, renewable fuel supplier Neste, and supply chain certification provider ISCC are collaborating to develop a system for tracking and reporting emissions reductions in air travel using SAF. DHL already offers a service using SAF, and the collaboration aims to provide transparency and reliability in sustainability claims related to its use. The pilot of the ISCC Credit Transfer System, which tracks and transfers SAF use and emission reductions, was successful, and the system is now ready for public consultation. 🛩️

💸 Recent funding rounds:

🔋 Skeleton Technologies, an Estonian graphene-based supercapacitor and battery energy storage developer, has raised €108 million in a funding round led by Siemens and Marubeni. The investment will be used to develop Skeleton's SuperBattery technology and automate their upcoming factory in Germany. Skeleton Technologies has raised over €300m to date and is known for its high-power battery technology and patented raw material, Curved Graphene.

⚡️ SHINE Technologies, a US-based fusion technology company, has raised $70 million in funding to accelerate the commercialization of near-term applications of fusion technology. The funding will support the production of medical isotopes and the scaling of fusion technology in industrial, defense, and healthcare markets. SHINE aims to provide cost-effective fusion technologies and ultimately achieve affordable fusion energy.

⚡️ UK-based smart home energy technology startup myenergi has raised $37 million in funding from Energy Impact Partners to support its growth and international expansion. The company manufactures smart home energy devices, including EV chargers, energy monitoring sensors, and smart home batteries. The investment will enable myenergi to develop new products, expand its grid services, and provide better customer support.

🏠 US-based startup Bedrock Energy has raised $8.5 million in seed capital to advance its geothermal heating and cooling technology for decarbonizing real estate. The company's drilling technologies and subsurface modeling enable the use of geothermal HVAC systems in dense urban areas, providing a solution for reducing carbon emissions from buildings.

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 🍀