What's Happening in Sustainability & ESG? (Week Recap 19.09-25.09) 🌎

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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:

🇪🇺 EU lawmakers have reached a provisional agreement on new rules to protect consumers from misleading sustainability claims and greenwashing practices. The agreement includes bans on unverified generic environmental claims and those based on emissions offsetting schemes. The rules also prohibit the use of sustainability labels not based on approved certification schemes and address early obsolescence. EU ministers have also agreed to water down the initial European Commission proposal on new vehicle emissions regulations. The Euro7 regulation, as it is known, is intended to limit emissions from vehicles and compels carmakers to reduce CO2 emissions step-by-step, following on from the current Euro6. The final agreement on the new regulations will now be negotiated between the Council, the European Parliament, and the European Commission.

🇬🇧 UK Prime Minister Rishi Sunak has announced a U-turn on the government's climate commitments, delaying the ban on the sale of new petrol and diesel cars and the phasing out of gas boilers. The decision has drawn criticism from various stakeholders, including investors, climate change experts, energy analysts, trade unions, and environmental organizations, who argue that it will cost consumers more in the long run and threaten the UK's global leadership on climate action. Sunak defended the decision, stating that it was a pragmatic approach to bring the country along and save families money. Environmental groups are expected to challenge the decision in court, while concerns have been raised about the impact on investor confidence, the ability to meet legal commitments, job losses, increased energy bills, and damage to the UK's international reputation.

🇺🇸 The US Securities and Exchange Commission (SEC) has adopted a new rule to crack down on "greenwashing" and misleading marketing practices by investment funds. The rule requires that 80% of a fund's portfolio matches the asset advertised by its name, aiming to promote truth in advertising and fund integrity. The rule aims to prevent fund names from misrepresenting their investments and risks, particularly in the context of ESG funds. The SEC noted the rapid growth of ESG funds and the potential for greenwashing, while the rule did not include a proposal to define the use of ESG terms as "deceptive and misleading," but this aspect is still under consideration. Meanwhile, the US Treasury has also released "Principles for Net-Zero Financing & Investment", aimed at establishing a set of best practices and promoting consistency and credibility for private sector financial institutions in making and pursuing net zero commitments. The publication includes 9 Principles, which establish that net zero goals set by financial institutions should be in line with the goal of limiting the increase in global average temperature to 1.5°C and that the goals should be accompanied by a net zero transition plan.

🇫🇷 French President Emmanuel Macron has announced a national "ecological plan" aimed at reducing France's GHG emissions by 55% and phasing out the use of fossil fuels by 2030. The plan, known as "ecology à la Française," includes a €10bn investment and a 50-point program. Key measures of the plan include accelerating electric car production, promoting alternatives to gas boilers, and the development of new offshore wind projects. The plan also includes the opening of electric battery factories, the mapping of natural resources in France, and state investment in the regional train network. Additionally, companies responsible for the most polluting industrial sites will sign agreements to reduce pollution by 45% before 2030.

• The Taskforce on Nature-related Financial Disclosures (TNFD) has released its final recommendations for reporting on nature-related risks and opportunities. The framework aims to inform decision-making by companies and capital providers, shift financial flows towards nature-positive outcomes, and contribute to global biodiversity goals. The guidelines are expected to shape future sustainability disclosure standards and have already been endorsed by organizations such as the International Sustainability Standards Board (ISSB) and CDP. The publication includes recommended disclosures, contextual pillars, indicators, metrics, and additional guidance to support organizations in assessing and disclosing nature-related issues. 🟢

• Britain's financial regulators, the Financial Conduct Authority (FCA) and the Bank of England's Prudential Regulation Authority, have proposed new measures to address sexual harassment and bullying in financial firms. They also require large banks and insurers to set targets for diversity and inclusion. The proposed measures aim to create healthy work cultures, reduce groupthink, and promote talent. Firms would need to develop diversity and inclusion strategies, collect and report data on staff characteristics, and set appropriate diversity targets. The regulators will publish final rules in 2024. 🇬🇧

• According to a survey by KPMG, only about a quarter of companies feel confident in meeting ESG reporting requirements across multiple jurisdictions, while three-quarters of them are not ready to have their ESG data audited externally months before new regulations kick in. While executives see the value of ESG strategies in areas like M&A and customer retention, they are concerned about keeping up with complex and changing regulatory requirements. The survey also highlights the increasing alignment between sustainability and corporate strategies, as well as the pressure from supply chain partners for increased transparency. Challenges in meeting reporting requirements include data collection, resource management, and aligning strategies with reporting requirements. 🔴

🧐 What are companies doing?

• HSBC plans to provide $1 billion in financing to support early-stage climate tech companies globally. The funding aims to address the tightening funding landscape for climate startups and support solutions in areas such as EV charging, battery storage, sustainable food and agriculture, and carbon removal technologies. 📈

• Microsoft has signed an agreement with Carbon Streaming to purchase up to 10,000 tonnes of CO2 removal credits per year from the Waverly Biochar project in Virginia, US. Biochar, a stable form of carbon produced from biomass, will be buried in soil to sequester carbon for centuries. The company has been expanding its portfolio of carbon removal deals, including agreements for Direct Air Capture, ocean-based carbon removal, and biogenic carbon capture and storage. 🟢

• KPMG has launched the KPMG ESG Academy, a digital learning platform aimed at providing businesses with training on various ESG topics. The academy offers customizable courses developed by ESG specialists and covers areas such as sustainability transformations, ESG regulation, climate risk, and decarbonization strategies. The academy is a collaboration with Microsoft and leverages KPMG's training platform, LEAP, powered by Microsoft Cloud solutions. 📄

• Nasdaq has launched two new ESG data offerings, Nasdaq Metrio and eVestment ESG Analytics, to assist corporates and investors in collecting, measuring, and reporting sustainability data. Nasdaq Metrio combines Nasdaq's ESG data management solution with Metrio's technologies to enable corporates to disclose audited ESG data and manage carbon emissions. eVestment ESG Analytics helps asset managers quantify and communicate a portfolio's ESG impact. Nasdaq's collaboration with ESG data providers and investment in Matter allows them to provide comprehensive ESG portfolio analytics. 📄

💸 Recent funding rounds:

📈 Astanor Ventures has raised €360 million for its sustainable food value chain fund, bringing its total assets under management to €800 million. The global impact investor focuses on backing companies that offer nature-positive solutions to social and environmental issues in the agri-food sector. Astanor aims to support disruptive and scalable business models that contribute to sustainable and resilient agri-food and bioeconomy systems, with a particular focus on regenerative agriculture and agri-food technology.

📄 Plan A, a European emissions tracking and reporting software startup, has raised $27 million in funding to expand its team and platform capabilities. The company provides corporate carbon accounting and ESG reporting software, with solutions aligned with international standards. With over 1,500 clients and significant revenue growth, Plan A plans to double its headcount, expand in Europe, and enhance its platform's coverage and capabilities. The funding round was led by Lightspeed Venture Partners and included Visa, Deutsche Bank, and others.

🟢 Metaloop, an Austrian startup, has raised $17 million in a Series A funding round. The company serves as a marketplace connecting scrap metal sellers, typically industrial entities with by-products, with buyers. Metaloop acts as a "merchant of record," handling the buying and selling process and assuming legal responsibility without physical assets. The global scrap metal recycling market is projected to reach $112.94 billion by 2030, driven by the importance of metals in various industries and the recyclability of metals.

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 🍀