What's Happening in Sustainability? (Week Recap 04.07 - 10.07) 🌎

This week’s read time: 6 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 most important news:

🇪🇺 Investment and sustainable investing groups (including Eurosif, PRI, IIGCC, EFAMA, UNEP FI), along with over 90 asset managers, have called on the European Commission to reconsider proposed changes to the European Sustainability Reporting Standards (ESRS), which they say would limit investor access to sustainability-related information and reduce their ability to meet reporting requirements. The changes would ease several aspects of the EU’s upcoming Corporate Sustainable Reporting Directive (CSRD), which is set to begin applying from the beginning of 2024 and will significantly expand the number of companies required to provide sustainability disclosures. The investors call for maintaining key climate disclosures, ensuring mandatory reporting for items relevant to investor regulatory requirements, and reconsidering the optional nature of disclosures regarding their own workforce for non-employees and biodiversity transition plans.

🚢 Member countries at the International Maritime Organization agreed to a net zero emissions target "by or around 2050" for shipping, with indicative checkpoints to reduce GHG emissions by at least 20% by 2030 and 70% by 2040. However, environmental groups criticized the level of ambition as falling short of what is needed to keep global heating below 1.5C, which was agreed in Paris in 2015.

📈 For the first time, environmentally friendly projects are raising more money in debt markets than fossil fuels, with almost $350 billion raised from green bond sales and loan arrangements in the first half of 2023, compared to less than $235 billion for oil, gas, and coal-related financing, reports Bloomberg. However, much of this year's green issuance is from financial institutions and governments, and it is unclear how the funds are being used and what this means for the energy transition. Transparency remains a major issue in this market, and many fossil fuel companies are flush with cash, so they likely won't need to access fixed-income markets to support operations or meet debt maturities. Meanwhile, equity funds with an ESG tilt experienced a rare net outflow for H1 2023, driven by economic and regulatory worries in Europe and concerns over an anti-ESG backlash in the US. ESG equity funds saw $15.4 billion of net outflows in Q2, which was only the third since at least 2013, and followed an even bigger loss in the second half of 2022.

The European Union's securities watchdog announced plans to verify whether asset managers are adhering to the bloc's regulations regarding sustainability-related disclosures. According to a statement by the European Securities and Markets Authority, the goal is to assess the compliance of supervised asset managers with the relevant provisions of the Sustainable Finance Disclosure Regulation (SFDR), the Taxonomy Regulation, and relevant implementing measures. 🇪🇺

According to the EU-backed Copernicus Climate Change Service, June 2023 was the hottest June globally on record in terms of sea and air temperatures, exceeding the previous record in 2019 by a substantial margin. Europe experienced record temperatures, while parts of North America, Asia, and eastern Australia were significantly warmer than usual. The sea temperature rose to a new record due to longer-term changes and El Nino, and Antarctic sea ice hit its lowest extent for the month since satellite observations began. ⛔️

• Singapore's business reporting and corporate services regulators have proposed mandatory climate-related disclosures for public and large private companies aligned with the IFRS' ISSB disclosure standards, beginning in fiscal year 2025 for all listed issuers and FY2027 for non-listed companies with at least $1 billion in revenues. The proposal aims to contribute to Singapore's Green Plan 2030 and maintain its position as a global business hub, with external assurance on Scope 1 and 2 GHG reporting required beginning in FY2027 for listed issuers and FY2029 for large private companies. 🇸🇬

• Oil company CEOs and OPEC ministers have urged governments to focus on limiting oil demand to reduce emissions rather than pressuring producers to curb supply, which they say only leads to price increases. Despite some Western governments scaling back or halting oil developments, oil demand has reached new peaks this year, driven by strong demand from Asia and for petrochemical production. The oil industry has warned that lower investment in oil and gas in the absence of a reduction in oil demand will only lead to higher prices, and restrictions on access to bank loans for fossil fuel projects have deprived the industry of investments needed to maintain existing production levels. 🛢️

• The European Commission has proposed new rules aimed at making textile producers responsible for the full lifecycle of their products, including the management of textile waste. The proposal includes mandatory Extended Producer Responsibility (EPR) schemes, which will incentivize waste reduction and increase textile circularity. The new rules follow the EU Strategy for Sustainable and Circular Textiles, which aims to make all textile products durable, repairable, and recyclable and to address the environmental impact of fast fashion. 🇪🇺

• A report by McKinsey & Company suggests that up to $4 trillion in investments may be needed by 2030 to scale up the materials supply chain to address upcoming supply shortages of key metals and materials required to meet global decarbonization goals. The report highlights the role of the materials supply chain as a key enabler of the global transition to net zero, with many of the technologies, from renewable energy and battery storage to electric vehicles, requiring more and different materials than the conventional technologies they are replacing. 🌎

• India's exports of high-carbon goods like steel, iron ore, and cement are expected to be hit by the European Union's carbon tax, with tariffs ranging from 20% to 35%. The EU aims to become a net zero emitter of greenhouse gases by 2050, and reporting of carbon content in exports to the EU will be required from Oct. 1, 2023. India's trade deficit rose faster than expected in May to $22.12 billion, up from $15.24 billion in April, due to reduced demand for Indian exports from developed countries. 🇮🇳

• CDP reports a 300% increase in the number of companies reporting on deforestation risk over the past five years, but less than 10% have a "robust" plan to end it by 2025. Of the 1,043 companies surveyed, 269 estimated the potential cost of leaving risks unaddressed at almost $80 billion combined. Regulators are beginning to formalize reporting obligations for boards to slow and reverse biodiversity loss. ⛔️

🧐 What are companies doing?

• Toyota claims to have made a technological breakthrough that could halve the weight, size, and cost of batteries for electric vehicles. The Japanese automaker has simplified the production of solid-state batteries, which could dramatically reduce charging times and increase driving range. Toyota believes it could make a solid-state battery with a range of 745 miles that charges in 10 minutes or less and expects to be able to manufacture them for use in electric vehicles as soon as 2027. If successful, this could be a game-changer for the future of electric cars. 🚗

• Franklin Templeton has launched two new ETFs, the Franklin Future of Food UCITS ETF and Franklin Future of Health and Wellness UCITS ETF, which invest in sustainable food and healthcare companies aligned with UN Sustainable Development Goals. The ETFs are classified as Article 8 under the EU’s SFDR regulation and will be managed by Dina Ting and Lorenzo Crosato. The Franklin Future of Food UCITS ETF will track the Solactive Sustainable Food Index, while the Franklin Future of Health and Wellness UCITS ETF will track the Solactive Sustainable Health and Wellness Index. 📈

• Amazon has rolled out its first custom electric delivery vans from Rivian in Europe, with over 300 vans hitting the road in Germany. The vans are part of Amazon's commitment to create a more sustainable delivery fleet and reach net-zero carbon by 2040. The state-of-the-art vehicles provide drivers with innovative technology for sustainability, safety, and comfort and are designed from the ground-up with safety, sustainability, and comfort in mind. Amazon aims to have 100,000 electric delivery vehicles from Rivian on the road globally by 2030. 🚙

• PUMA has committed to sourcing all bovine leather from verified deforestation-free supply chains by 2030, in line with the Deforestation-Free Call to Action for Leather initiative. The company has acknowledged the traceability challenges presented by suede, which represents half of the leather used by the company. The initiative asks brands to commit to sourcing their bovine leather from deforestation/conversion-free supply chains by 2030 or earlier and set requirements for participating brands including working with farmers and farming supply chains, to set requirements for deforestation-free sourcing, and other commitments. 🌲

🍀 In partnership with Decarb Digest

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