What's Happening in Sustainability & ESG (Week Recap 21.11 - 27.11) 🌎

Today’s newsletter is brought to you by 3BL: At the heart of the conversation on people, planet, and profit.

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:

🌍 COP28, the year’s most important meeting on climate change, will take place in Dubai from this Thursday, 30 November to 12 December. Some of the key issues discussed will be the progress made since the Paris Agreement, the future of fossil fuels, technologies to tackle emissions, the boosting of clean energy capacity, and the financial costs of climate change, among others. This year’s event will feature the first “global stocktake,” which will provide a comprehensive assessment of progress since the Paris Agreement. It will bring together 198 states and parties, with the aim of keeping the goal of limiting global temperature rises to 1.5C alive. However, a recent UN report casts doubt on the feasibility of achieving this target, indicating that to maintain global warming within 1.5°C, GHG emissions need to decrease by 42% by 2030. Presently, even under the most favorable emissions scenario, the likelihood of restricting warming to this threshold is a mere 14%, a finding that aligns with increasing scientific consensus questioning the viability of this goal. The objective of the summit is to align efforts on climate action, including measures to bridge the gaps in progress.

🇪🇺 The European Parliament voted in favor of a resolution calling for an end to global fossil fuel subsidies by 2025 at the upcoming COP28. The resolution also supports phasing out fossil fuels, halting new investments in fossil fuel extraction, and increasing renewable energy and energy efficiency targets. The European Commission also opened the 2023 call for proposals for the Innovation Fund, allocating a record budget of €4 billion to support the deployment of innovative decarbonization technologies. The funding is sourced from the EU Emissions Trading System (EU ETS) and aims to strengthen industrial manufacturing capacity, technology leadership, and supply chain resilience in Europe. Project promoters can apply for grants under different topics based on the scale and focus of their projects, with evaluation criteria including GHG emissions reduction, innovation, replicability, and cost efficiency. Furthermore, the Commission launched a €800 million subsidy program under the European Hydrogen Bank to support renewable hydrogen producers. The program aims to develop the market for renewable hydrogen, which is crucial for decarbonizing heavy industry and transport. The auctions will provide support to producers of renewable hydrogen, bridging the gap between production costs and consumer prices. In other news, the European Parliament also voted to establish a certification system for carbon removals, aiming to increase their use and counter greenwashing. The system will ensure the quantification, monitoring, and verification of carbon removals, aligning with the European Green Deal's goal of climate neutrality by 2050.

📄 The Global Reporting Initiative (GRI) has released proposed Climate Change and Energy Standards, aiming to enable companies to disclose their climate change transition plans and actions. The drafted Climate Change Standard will enable organizations to: fully disclose climate change transition and adaption plans and actions; detail annual progress on emissions reduction targets; and robustly explain and be transparent about their use of carbon credits and GHG removals. Meanwhile, the exposure draft for a revised Energy Standard has a sharp focus on the ways in which organizations are reducing energy consumption, achieving energy efficiency, and sourcing renewable energy.

• The International Energy Agency (IEA) suggests that global oil and gas investment needs to be halved by 2030 to limit global warming to 1.5 degrees Celsius, with a 60% reduction in emissions. Oil and gas companies currently account for just 1% of global clean energy investment, but they will still play a role in ensuring energy security and supporting sectors with harder-to-abate emissions. Global demand for oil and gas is expected to peak by 2030, with a 45% decrease by 2050 if governments fulfill their energy and climate commitments. The report highlights that a successful clean energy transition requires scaling back oil and gas operations and investing 50% of capital expenditures in clean energy projects by 2030. The IEA also declared that the oil and gas industry needs to let go of carbon capture as a solution to climate change. Excessive reliance on carbon capture is seen as a pitfall, as it would require massive amounts of carbon capture and significant investment to achieve net-zero emissions. ⚡️

• The UK government plans to invest over £960 million ($1.2 billion) in green industries to accelerate manufacturing in net zero sectors. The investment will support clean energy supply chains, focusing on offshore wind, electricity networks, nuclear, CCUS, and hydrogen. Reforms to the electricity grid will also be implemented to address energy transition needs. While welcomed, sustainable investment groups criticized the government for not going further to respond to major clean energy packages launched by the US and EU. 🇬🇧

• According to a survey by Boston Consulting Group (BCG), over half of companies now disclose at least some of their Scope 3 emissions, although there has been little progress in comprehensive reporting across all emissions scopes. The study also found that fewer companies are on track to meet their emissions reduction goals, with macroeconomic conditions and capital constraints cited as key challenges. However, there are signs of improvement, with more companies including partial Scope 3 emissions in their reporting and setting reduction targets. Technology adoption, leadership buy-in, and a sustainability-focused culture were identified as key enablers for emissions reductions. 📄

• However, according to another survey by EY, corporate progress on sustainability initiatives, particularly in addressing climate change, is slowing down due to economic and geopolitical turmoil. The survey of Chief Sustainability Officers revealed a sharp slowdown in climate achievements and commitments, with respondents reporting an average decline in GHG emissions of 20%, down from 30% in a study last year, a decrease in the average number of actions organizations are taking relating to climate change to 4, from a prior average of 10, and an extension of deadlines for achieving corporate climate goals to a median year of 2050, compared to 2036. Despite this, respondents reported financial and brand value improvements from their sustainability initiatives. 🔴

🧐 What are companies doing?

• ESG Book has launched Risk Score, a tool that assesses company exposure to critical ESG topics based on the UN Global Compact. The tool covers over 10,000 companies and provides comprehensive analytics using more than 200 metrics. It can be used by investors for universe selection and engagement, and by corporates for self-assessment and peer comparisons. ESG Book also released a study, indicating that companies in the US and Canada are three times more likely to risk violating UN environmental standards compared to other regions, while European companies have lower overall risk exposure and Asian companies face greater risk, particularly in anti-corruption. 📄

• Bloomberg has launched a new data mapping and materiality assessment tool that allows investors to assess the impact of a company's business on the UN Sustainable Development Goals (SDGs). The tool integrates the UN Environment Programme Finance Initiative (UNEP FI) Sector Impact Map into Bloomberg's ESG data offerings, providing mapping of sectoral activities to impact topics and the SDGs for 50,000 public companies. This tool aims to support impact integration in portfolios and help investors direct capital towards sustainable assets. 🟢

• Deloitte and IBM have announced a global collaboration to help organizations accelerate emissions reduction strategies and streamline sustainable transformation. The collaboration will leverage IBM's sustainability solutions, including the Envizi ESG Suite, and integrate them with Deloitte's GreenLight Solution. It aims to provide data-driven insights and enable organizations to make strategic decisions towards their climate and sustainability goals. Deloitte Canada has also signed a multi-year agreement with CarbonCure Technologies to purchase carbon credits and support the deployment of CarbonCure's technology, which captures CO2 in concrete. CarbonCure's technology injects captured CO2 into concrete ingredients, reducing reliance on carbon-intensive cement. 🟢

• Maersk has signed a major fuel purchase agreement with Goldwind for the offtake of 500,000 tons per year of green methanol, marking the first large-scale green methanol offtake agreement for the global shipping industry. This deal will enable low-carbon operations for Maersk's first 12 large methanol-enabled vessels. The fuel, which includes green bio-methanol and e-methanol, will be produced utilizing wind energy at a new production facility in Northeast China, with production expected to begin in 2026. 🚢

• BNP Paribas, the largest bank in the Eurozone, announced that it no longer provides financing to projects involving the extraction of metallurgical coal. BNP Paribas has previously set targets to reduce credit exposure to oil and gas by 80% and 30% respectively by 2030. A report by Reclaim Finance revealed that major banks, including BNP Paribas, have provided $557 billion in financing to the top 50 developers in the metallurgical coal sector since 2016. 🏦

💸 Recent funding rounds, sustainable finance, acquisitions, and private equity:

📈 Ericsson has issued its inaugural €500 million green bond to fund energy efficiency initiatives. The bond offering is part of Ericsson's Green Financing Framework and proceeds will be exclusively allocated to investments in energy efficiency. The investments funded by the green bond will target digitalization solutions that reduce energy consumption by at least 35% compared to previous generations. 📈

🟢 Deloitte Canada has acquired fleet management consulting firm Fleet Challenge Canada to enhance its sustainability practice and expand its offerings in fleet management, decarbonization, and electrification strategies. The acquisition will leverage Fleet Challenge's expertise in green fleet accreditation and proprietary tools like Fleet Analytics Review (FAR) to provide thorough and efficient fleet review processes.

🥙 Matsmart-Motatos, a European online retailer of surplus dry food and consumer goods, has secured €40 million in a recent capital round led by Circularity Capital. The funds will be used to automate warehouse operations in Germany and support the company's expansion in Germany and the Nordics. Matsmart-Motatos is committed to reducing food waste and has already put over 60,000 tons of surplus goods back into circulation.

🚗 Advanced Electric Machines (AEM), a UK-based sustainable motor manufacturing company, has secured £23 million ($29 million) in Series A funding. The investment will be used to increase production capacity, expand global sales, and enhance R&D capabilities. AEM's motor technologies eliminate the need for rare earth metals in electric vehicle motors, reducing environmental impact and dependence on critical supply chains.

🦺 Sustainable building tech startup Vizcab has raised $5.5 million in a Series A funding round to accelerate net zero in the construction industry. Vizcab offers a SaaS platform for Life Cycle Assessment (LCA) to reduce carbon impact in construction projects, targeting real estate developers and architects. The funding will support growth and expansion across Europe, as the industry faces evolving regulations for carbon reduction.

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 🍀