What's Happening in Sustainability & ESG (Week Recap 03.09 - 09.09) 🌎

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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. 🍀

In this edition, we’ll cover:

• A new report shows sustainability is now less of a priority for CEOs, as they focus on growth, AI, inflation, and geopolitics 💭

• US presidential candidates Kamala Harris and Donald Trump present starkly different approaches to fossil fuel policies and energy 🇺🇸

• California’s climate laws will proceed as originally planned, as the proposal for delay was rejected by state legislators 🇺🇸

• Australia passes law to begin mandatory climate reporting in 2025 for large companies 🇦🇺

• UK’s FCA delays naming and marketing rules for greenwashing under Sustainability Disclosure Requirements (SDR) 🇬🇧

• and other news 🌍

THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

💭 Sustainability and other environmental issues are dropping down the list of priorities for CEOs, even as consumer climate concerns are on the rise, according to a new Bain & Co. report. AI, growth, inflation, and geopolitical uncertainty are now the top issues for CEOs as they plan their strategies. At the same time, 60% of consumers are more concerned about climate change than they were two years ago, mainly because of their own personal experiences of extreme weather. Many companies have been less vocal about ESG and some have even given different names to such efforts. BlackRock, for example, is calling its tactic for investing in clean energy "transition investing."

A recent analysis by WSJ Pro found that company boards are mentioning sustainability in their financial reports almost as much as ever, but are talking about it less in earnings calls and marketing materials. Another report from Barclays in August showed that clients have withdrawn a net $45 billion from ESG equity funds since the start of the year, with this year being the first that flows have trended negative. However, Bain said that customers and business-to-business companies are demanding more when it comes to sustainability, with 36% of the latter saying they would switch suppliers if they didn’t meet their sustainability expectations.

🇺🇸 As the US elections approach, presidential candidates Kamala Harris and Donald Trump present starkly different approaches to fossil fuel policies and energy. Harris, known for her commitment to green energy, has co-sponsored the Green New Deal and played a key role in the Inflation Reduction Act, advocating for the transition to renewable energy and reducing reliance on fossil fuels. Her administration would likely emphasize further incentives for clean energy, with potential regulatory scrutiny on oil companies and expanded climate risk disclosures.

In contrast, Trump champions aggressive fossil fuel production, pushing for deregulation to increase domestic oil, gas, and LNG exports. His platform aligns with expanding fossil fuel infrastructure, despite global trends toward renewable energy. He pledges to roll back key parts of Biden’s climate policies, such as repealing the 2022 climate law and supporting projects that prioritize oil and gas. While Harris focuses on gradually phasing out fossil fuels, Trump’s agenda emphasizes maximizing fossil fuel use in the near term. Both candidates’ policies reflect different visions for America’s energy future, with implications for investors based on regulatory shifts and market trends. Here’s an in-depth comparison of how the two candidates stack up.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🇺🇸 California’s greenhouse gas emissions reporting requirements will proceed as originally planned, with initial disclosures due in 2026. A proposal to delay the deadline by two years, supported by Governor Gavin Newsom and the state’s Chamber of Commerce, was rejected by state legislators. The laws, SB 253 and SB 261, signed by Newsom last year, require companies with over $1 billion in revenue to report their emissions, including Scope 3 emissions, starting in 2027. These laws surpass current federal regulations, impacting up to 75% of Fortune 1000 companies. The bill now awaits Newsom’s signature, and the deadline for regulators to finalize the rules has been extended to July 2025. However, SB 253 and SB 261 still face legal challenges.

🇦🇺 Australia’s House of Representatives passed the Treasury Laws Amendment bill, introducing mandatory climate-related reporting for large and medium-sized companies, requiring disclosures on climate risks, opportunities, and greenhouse gas emissions starting in 2025 for the largest firms. This follows Senate approval in August and aligns with international standards set by the IFRS’s ISSB. Reporting will begin in phases based on company size, with additional time granted for Scope 3 emissions reporting. Investor groups have welcomed the legislation for providing better climate-related information for risk assessment.

🇬🇧 Britain’s Financial Conduct Authority (FCA) extended the deadline for firms to comply with the ‘naming and marketing’ rules under the Sustainability Disclosure Requirements (SDR), aimed at combating greenwashing. While funds still need to submit applications by October 1, 2024, firms now have until April 2025 to make necessary name changes and adjust marketing. The SDR is designed to ensure that sustainable products are accurately described to protect consumers, with new reporting, disclosure requirements, and sustainability labels for funds. The FCA granted the extension to help firms meet the high standards required, especially those needing investment labels or product name changes.

🇩🇪 Germany’s Environment Agency rejected carbon credits for 215,000 tons of CO2 emissions from oil companies due to suspected fraud in eight climate projects in China. These projects were intended to help oil companies meet EU GHG reduction targets. Concerns about the validity of these projects, particularly their existence and compliance with standards, led to the withdrawal of seven out of eight applications. Biofuel producers argue they’ve been disadvantaged by these cheaper, questionable projects. The agency is now reviewing 13 additional projects, with carbon credits expected to be phased out by 2025.

WHAT ARE COMPANIES DOING?

Corporate sustainability, new tools and services & companies in the news

❌ CarbonCapture, a California-based climate tech company, canceled plans for its Project Bison, a direct air capture (DAC) facility in Wyoming, due to insufficient access to clean energy. Launched in 2022, Project Bison aimed to reach a 5-million-ton annual carbon capture capacity by 2030, but the competition for clean energy with industries like data centers and cryptocurrency mining hindered progress. While CarbonCapture has attracted significant investor interest, including an $80 million Series A and an offtake agreement with Microsoft, the energy landscape has proven to be a major challenge. The cancellation underscores the complexities of scaling DAC, highlighting the need for robust infrastructure and clean energy to make these projects viable. CarbonCapture plans to relocate its first-of-a-kind (FOAK) project and will fulfill early carbon credits from a 2,000-ton commercial pilot launching next year. Meanwhile, Bank of America is investing $205 million in exchange for tax credits from an ethanol producer that captures the carbon produced at a plant in North Dakota. The project, operated by Harvestone Low Carbon Partners, captures 200,000 metric tons of CO2 annually, and the investment represents one of the largest in the sector.

🚙 Volvo Cars dropped its target to become fully electric by 2030, instead planning for 90%-100% of its sales to be fully electric or plug-in hybrids, with up to 10% being mild hybrids. Slowing demand for EVs, driven by affordability issues and slow charging infrastructure rollout, prompted the shift. Volvo, majority-owned by China’s Geely, sees hybrids as critical for profit growth and plans to revamp its hybrid XC90. This decision follows a broader trend, with automakers like Toyota and Renault also focusing on hybrids. In related news, Volvo Trucks announced plans to launch a heavy-duty electric truck in 2025 with a range of up to 600 km per charge, significantly extending the range of its electric truck lineup. This new model, the updated FH Electric, will enable long-distance and interregional transport without recharging during a full workday. The enhanced range is made possible by Volvo’s new e-axle driveline technology and improvements in battery efficiency.

🚗 BMW Group announced plans to launch its first series production hydrogen-powered fuel cell electric vehicle (FCEV) in 2028, following the success of its iX5 Hydrogen pilot fleet. The launch coincides with an expanded collaboration with Toyota, focused on developing third-generation fuel cell systems and promoting hydrogen infrastructure. Both companies aim to make FCEVs more affordable and foster a hydrogen-based society to drive carbon neutrality.

🟢 Microsoft formed a new supplier decarbonization team to tackle the growing carbon emissions from its cloud and AI operations. The team is tasked with addressing Microsoft’s rising Scope 3 emissions, which make up over 96% of its total emissions, driven largely by increased data center operations for AI computing. Microsoft aims to reduce Scope 3 emissions by more than half by 2030, but emissions have risen by over 30% since 2020. The company is also implementing various initiatives, including requiring some suppliers to use 100% carbon-free electricity.

⚡️ Nasdaq announced a collaboration between its ESG Solutions and sustainable finance platform Crux to help clients capitalize on clean energy transferable tax credits provided by the US Inflation Reduction Act (IRA). Passed in 2022, the IRA allocated $370 billion for renewable energy and decarbonization, introducing transferable tax credits that allow clean energy developers to sell credits to third parties, offering a funding mechanism for energy projects. Crux, launched in 2023, provides a platform for managing these credits, with the market expected to grow significantly.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

📈 Mirova, a sustainability-focused investment manager, raised €211 million for its first impact private equity fund, Mirova Environment Acceleration Capital (MEAC). Launched in 2021, the fund targets five themes—smart cities, natural resources, agri-tech, circular economy, and clean energy—investing in companies that contribute to the environmental transition and align with SDGs.

🔋 6K, a producer of sustainable engineered materials, raised $82 million in the first close of its Series E funding round. Founded in 2014, 6K uses its UniMelt microwave plasma technology to create advanced materials for lithium-ion batteries and additive manufacturing in a more environmentally friendly way, reducing carbon emissions and energy consumption.

👕 Galy, a US startup producing lab-grown cotton, raised $33 million in a Series B investment round led by Bill Gates’ Breakthrough Energy Ventures. The round, which also included fast-fashion giants H&M Group and Inditex (parent company of Zara), aims to accelerate Galy’s efforts to eliminate cotton’s water consumption by growing it in labs.

🟢 Mantel Capture, a climate tech startup, raised $30 million in a Series A funding round led by Shell and Eni to develop its molten salts-based carbon capture technology. The technology targets capturing 95% of carbon emissions from industrial sites like refineries and factories using the high heat in kilns, boilers, and furnaces, requiring less energy than rival methods. While it shows potential to significantly reduce carbon capture costs to $30-$50 per ton, it has yet to be tested at scale.

🟢 Carbyon, a Dutch direct air capture (DAC) startup, raised €15.3 million in a Series A funding round to advance its innovative “fast swing” CO₂ capture technology. The technology significantly reduces the cost of capturing CO₂ from the atmosphere, enabling large-scale deployment. The company plans to produce 50,000 DAC machines per year by 2031, with the goal of reaching gigaton-scale carbon capture by 2050.

🟢 Signol, a sustainability-focused behavioral science startup, raised £2.5 million (USD$3.3 million) to support its solutions for decarbonizing hard-to-abate industries. Founded in 2017, Signol uses data and behavioral science to motivate employees in emissions-intensive sectors, such as aviation and maritime shipping, to make fuel-saving decisions.

📊 TPG Rise Climate, the climate investing arm of TPG, acquired emissions reduction solutions provider Miratech to address emissions challenges driven by rising power demand from data centers. Miratech offers products like catalysts, filters, and monitoring systems to reduce engine-exhaust pollutants, particularly in stationary power, data centers, and hard-to-decarbonize sectors.

🟢 EcoVadis, a business sustainability ratings provider, acquired human rights tech and analytics company Ulula to enhance its ability to help organizations address human rights issues in supply chains and comply with new regulations. Ulula offers solutions like workforce surveys and grievance management to identify and address human rights risks.

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