What's Happening in Sustainability & ESG (Week Recap 30.01 - 05.02) 🌎

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: 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. 🍀

🌍 In this edition, we’ll cover:

• EU policymakers to set new rules for boosting domestic production of renewable energy equipment and clean technologies 🇪🇺

• Global clean energy investment surged to $1.8 trillion in 2023 ⚡️

• The European Central Bank released a new climate and nature plan for 2024-2025 🏦

• Germany plans to subsidize gas power plants that can switch to hydrogen with $17 billion 🇩🇪

• Microsoft signs another carbon removal deal 🟢

• and other news 🌍

⭐️ The week’s top news:

🇪🇺 EU policymakers will meet today to establish new rules to boost domestic production of renewable energy equipment and other clean technologies to compete with China and the US. The goal is to produce 40% of the needed products by 2030, covering areas such as renewable energy, battery storage, heat pumps, and carbon capture. The EU is concerned about its reliance on China for solar power manufacturing and the potential relocation of European producers due to US green subsidies. Negotiations are underway to finalize the Net-Zero Industry Act, which aims to streamline permitting processes and promote sustainable criteria in contract awards. Discussions will focus on defining clean tech, shortening permitting timelines, and applying non-price criteria in tenders.

⚡️ Clean energy investment globally surged to $1.8 trillion in 2023, with strong growth in electrified transport, hydrogen, carbon capture, and energy storage, according to a report by BloombergNEF. However, the report states that the investment falls short of what is needed to align with a net zero scenario. China remains the largest market, but Europe and North America are closing the gap. Investment in clean energy supply chains is on track, but renewable energy, grids, and electrified transport require higher investment levels, concludes the report.

🏦 The European Central Bank (ECB) has announced an increased focus on climate risk and the green transition, releasing a new climate and nature plan for 2024-2025. The ECB aims to address the impact and risks of the green transition, the physical risk of climate change, and risks related to nature loss and degradation.

• The Global Reporting Initiative (GRI) has launched a new mining sector reporting standard aimed at enabling companies to disclose their sustainability impacts. The standard addresses 25 material topics, including emissions, waste, human rights, and community engagement. It sets expectations for site-level transparency and applies to all organizations engaged in mining and quarrying. ⛏️

• Germany plans to subsidize gas power plants that can switch to hydrogen with $17 billion in subsidies. The government aims to tender up to 10 GW of gas power plants, which must transition to hydrogen by 2040. The government will also introduce a market-based capacity mechanism for the electricity market and subsidize power plants running exclusively on hydrogen. 🇩🇪

• According to a survey by Morgan Stanley, over half of investors plan to increase their allocations to sustainable investments over the next year. The survey found that a majority of investors believe that strong ESG practices can lead to better long-term returns. Interest in sustainable investing is highest in the US and Europe, particularly among millennial investors. In Japan, interest in sustainable investing is lower, potentially due to a less developed market. The survey also revealed that investors do not see a conflict between ESG and financial performance, with many considering a company's sustainability practices when making investment decisions. 📈

• According to another study by WTW, more than 80% of companies globally are incorporating ESG metrics in their executive compensation plans. The study found that the use of ESG metrics has increased, with environmental metrics rising rapidly. While Europe leads in the integration of ESG factors, the US has seen significant growth, and practices vary in the Asia Pacific region. Social metrics are the most common ESG factor, but the use of environmental metrics has seen substantial growth. The study also found that ESG metrics are most prevalent in short-term incentive plans. 📄

🧐 What are companies doing?

• Microsoft has signed another carbon removal deal with nature-based startup Grassroots Carbon, obtaining high-quality soil carbon drawdown credits from regeneratively managed grasslands. Grassroots Carbon works with ranchers to reward them for carbon sequestration through regenerative grazing practices and connects them with companies purchasing carbon credits. 🟢

• Allianz has launched SAMEpath, a tool that enables users to track transition pathways to net zero, including emissions reductions, investment requirements, economic developments, and transition risks for sectors and economies in different climate scenarios. The dashboard provides customized data searches, a geographical map for country comparisons, risk assessment features, and abatement cost curves. 📄

• Deloitte has partnered with Informatica and Workiva to create a new ecosystem aimed at helping clients accelerate ESG deployment and reporting with accurate data. The expanded alliances aim to simplify ESG enablement and implementation, addressing client concerns around ESG data management, and helping them manage environmental and social governance, meet regulatory requirements, enable transparent disclosure, address ESG risk, and align responsible business practices. 📊

• TotalEnergies and Air Liquide have launched TEAL Mobility, a joint venture aimed at developing a hydrogen station network for heavy-duty trucks in Europe. Over the next decade, TEAL Mobility plans to establish more than 100 hydrogen stations, creating the first transnational European network of this size. 🚛

• Ørsted has partnered with Danish district heating companies VEKS and CTR to utilize surplus heat from carbon capture at Avedøre Power Station, providing district heating to up to 16,000 households in the Greater Copenhagen area. The carbon capture plant will capture 150,000 tonnes of CO2 annually and the surplus heat will be used to provide cheap, green district heating. ⚡️

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

📈 Brookfield Asset Management has raised $10 billion for its Brookfield Global Transition Fund (BGTF II), focused on investments accelerating the transition to a net-zero economy. The fund is on track to exceed the size of its predecessor, reaching $15 billion, and its strategy includes clean energy expansion, transforming carbon-intensive sectors, and accelerating sustainable solutions.

📈 Generate Capital, a sustainable infrastructure developer, has raised $1.5 billion in capital commitments from institutional investors and pension funds. The funds will be used to build and finance sustainable resource infrastructure in areas such as sustainable power, sustainable mobility, sustainable water & waste, and sustainable cities.

⚡️ Sustainability-focused investment manager Mirova has raised $282 million for its Mirova Gigaton Fund, a blended finance debt fund aimed at accelerating the clean energy transition in emerging markets. The fund focuses on providing debt financing for clean energy projects in Africa, Latin America, the Middle East, and Asia, with a particular emphasis on SMEs.

🟢 San Francisco-based enterprise sustainability platform Watershed has raised $100 million in a Series C funding round, valuing the company at $1.8 billion. Watershed provides solutions for measuring, reporting, and reducing GHG emissions, and counts General Mills, Spotify, and top US banks among its customers.

🟢 Sustainable fintech startup Crux has raised $18.2 million in Series A funding to support the development of its sustainable finance platform for transferable tax credits. The funding comes after the passage of the Inflation Reduction Act, which made tax credits transferable for the first time. Crux is already working with over 100 partners and has over $8 billion in credits available for sale.

🌳 Nature-based project investor Cultivo has raised $14 million in Series A funding to accelerate its AI-driven platform for investing in nature regeneration. The California-based company identifies high-quality nature-based solution projects worldwide, forecasts returns, validates projects on the ground, and measures their impact.

🤝 Partner with Us

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 🍀