What's Happening in Sustainability & ESG (Week Recap 06.08 - 12.08) 🌎

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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:

• Anti-ESG resolutions rise in proxy voting, but support for them falls 📈

• The UN is accusing the fossil fuel industry of running a disinformation campaign to slow renewable energy adoption 🔴

• The US SEC defended its new climate disclosure rule in court, asserting that it provides crucial investment-related information 🇺🇸

• The European Commission published a new FAQ to assist companies and auditors in implementing the CSRD 🇪🇺

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

📈 With the 2024 proxy voting season over, Morningstar identified some key marketwide themes among ESG topics. ESG shareholder resolutions have grown steadily since 2022 after the SEC eased filing restrictions. In 2024, the number of resolutions grew by 3%, mainly due to “anti-ESG” filers, who advanced conservative social policy aims. Overall support for ESG proposals remained flat in 2024 at 23%, resolutions to bolster shareholder rights were popular, increasing support for governance-focused proposals from 30% in 2023 to 35% in 2024, while support for environmental and social resolutions fell to 16% from 19% in 2023.

According to Morningstar, anti-ESG resolutions increased to 87 in 2024, from 48 in 2022. Despite their increase, these proposals averaged only 2% support in 2024, down from 9% two years prior. This suggests their goal is gaining attention rather than shareholder support. Average support for ESG resolutions overall stabilized at 23%, or 26% excluding anti-ESG. This follows two years of decline from a 36% peak in 2021.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🔴 The UN is accusing the fossil fuel industry of running a disinformation campaign to slow renewable energy adoption and delay a shift from a carbon-intensive economy. Selwin Hart, UN assistant secretary general, emphasizes that this campaign falsely portrays climate action as difficult and expensive. Hart emphasized that leaders must counteract this narrative, highlighting the value of climate action and the risks of inaction. Despite the perceived backlash, polls show global support for reducing GHG emissions, with 72% favoring a quick transition from fossil fuels. He stated that renewables are cheaper than ever, and the energy transition is accelerating while urging governments to ensure climate policies do not unfairly burden the poor, as poorly designed measures could lead to pushback.

🇺🇸 The US SEC defended its new climate disclosure rule in court, asserting that the rule provides crucial investment-related information and falls within its regulatory authority. The SEC emphasized that climate-related risks significantly impact financial performance and that current reporting is inconsistent, hindering investor decision-making. The rule, which mandates public companies to disclose climate risks, faced legal challenges arguing it is overly burdensome and exceeds the SEC's authority. The SEC countered these claims by highlighting investor demand for detailed climate information and adjustments made to reduce compliance costs. The SEC maintains that the rule aims to protect investors, not regulate climate change.

🇪🇺 The European Commission published a new FAQ to assist companies and auditors in implementing the EU's Corporate Sustainability Reporting Directive (CSRD), which expands sustainability reporting requirements to over 50,000 companies. The CSRD, effective from 2024, introduces detailed reporting on environmental, human rights, and social impacts, and sustainability risks. The FAQ aims to reduce administrative burdens and provide clarity on compliance, covering topics such as scope, company size categories, exemptions, ESRS usage, and auditing requirements.

🇬🇧 The UK government will introduce legislation in 2025 to regulate ESG ratings providers, placing them under the supervision of the Financial Conduct Authority (FCA). This move aims to enhance transparency and address the growing demand for ESG considerations in investments. The initiative aligns with IOSCO's recommendations for regulatory oversight to improve transparency and manage conflicts of interest. Sustainable finance groups, including UKSIF, have welcomed the plan, highlighting the need for clarity in ESG ratings methodologies.

⚡️ A Financial Times investigation found that 40% of major US manufacturing projects announced under President Biden's IRA and Chips and Science Act have been delayed or paused, affecting $84 billion worth of initiatives. The delays, caused by market conditions, slowing demand, and policy uncertainty, complicate efforts to attract blue-collar voters and highlight challenges in the US cleantech and semiconductor supply chain development. Notable projects on hold include Enel's solar panel factory, LG Energy Solution's battery facility, and Albemarle's lithium refinery.

WHAT ARE COMPANIES DOING?

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

🔴 Glencore decided to retain its coal business after shareholders overwhelmingly supported the move, indicating a shift away from the recent trend of sustainable investing. Despite previous plans to divest from coal and focus on metals and minerals for EVs, the company received significant revenue from coal in the first half of the year. Glencore CEO, Gary Nagle, said that the decision reflects the waning momentum of ESG investing, as global coal consumption remains high, particularly in China and India.

📈 Goldman Sachs' fund division is exiting the Climate Action 100+ investor group, joining other US financial firms amid political backlash and antitrust concerns raised by Republican lawmakers. Goldman Sachs emphasized its commitment to sustainable investing independently, and recent departures include Aristotle Credit, TCW Group, and Vert Asset Management, among others. CA100+ stated that its members act independently and are responsible for their own investment decisions.

🛩️ Virgin Atlantic's ad promoting a landmark flight powered by "100% sustainable aviation fuel" was banned by the UK's Advertising Standards Authority (ASA) for being misleading. The ASA ruled that the term "100% sustainable aviation fuel" could create a false impression of having no environmental impact. Despite Virgin Atlantic's defense that the term is widely used and understood in the industry, the ASA directed future ads to include information explaining the environmental impact of the fuel.

📊 Microsoft unveiled Project ESG Reporting, a new tool designed to help companies create, review, and approve ESG reports across multiple standards and frameworks. The solution includes templates for various ESG standards, integration with Microsoft’s Sustainability Manager, and features for collaboration, approval workflows, and disclosure generation. It aims to simplify the complex ESG reporting process and support companies in achieving their sustainability goals.

🟢 BHP, Rio Tinto, and Qantas will invest A$80 million ($52.8 million) in an Australian carbon credits fund managed by Silva Capital, aiming to raise A$250 million for reforestation projects to generate Australian Carbon Credit Units (ACCUs). The fund supports Australia's goal to reduce carbon emissions by 43% from 2005 levels by 2030.

⚡️ Solar firm SunPower filed for Chapter 11 bankruptcy protection and agreed to sell some assets to Complete Solaria for $45 million. Despite being a restructuring process, the bankruptcy is effectively a liquidation, with the asset sale expected to conclude by late 2024, marking the end of SunPower, founded in 1985. The company has faced significant challenges, including the departure of its CEO, a subpoena from the US securities regulator, and the pausing of several operations.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

📈 Iberdrola raised $525 million through a green bond issuance by its US subsidiary Avangrid to enhance its US network business. The 10-year bond saw strong demand, reducing the funding cost to 5.332%. The company plans to invest €41 billion in electrification and renewable energy from 2024 to 2026, with a significant portion allocated to the US.

⚡️ Blackstone Energy Transition Partners acquired a majority stake in Westwood Professional Services, an engineering firm specializing in renewable energy and infrastructure projects. Westwood, founded in 1972, employs over 1,600 people and focuses on wind, solar, energy storage, and EV infrastructure.

♻️ Nuveen's Climate Inclusion Fund II invested $20 million in Onepak, a digital supply chain and reverse logistics provider, to enhance its e-waste circularity platform. Onepak's ReturnCenter platform connects businesses and consumers with providers to reuse, repair, resell, or recycle obsolete IT products, managing the entire lifecycle of used electronics.

⚡️ Syso Technologies, a Boston-based renewable energy and battery storage market operator, raised $14.5 million in Series B funding. SYSO offers services such as forecasting, market access, asset operation, and optimization, managing over 2.5 GW of assets across multiple US markets since its 2019 launch.

🔋 Gaussion, an EV battery tech startup, raised $12 million in a Series A funding round to advance its rapid charging technology. The company's solution uses an external magnetic field to enhance battery performance, enabling up to 67% faster charging and extending battery life. Gaussion's technology has applications across various sectors, including transportation, construction, and energy storage.

🛩️ Sora Fuel, a startup producing SAF from water, air, and renewable energy, raised $6 million in a Seed round to expand its team, develop partnerships, and advance its technology. Sora's process uses atmospheric CO₂, water, and renewable energy, significantly reducing energy requirements and costs compared to traditional methods. The company's closed-loop system and liquid bicarbonate electrolyzer enable efficient and cost-effective SAF production, potentially transforming the aviation industry's decarbonization efforts.

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