What's Happening in Sustainability & ESG (Week Recap 07.05 - 13.05) 🌎

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This week’s read time: 9 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:

• The US government is expected to announce new 100% tariffs on Chinese EVs 🇺🇸

• EU issues new rules for funds using ESG and Sustainability in their name 🇪🇺

• Renewable energy accounted for over 30% of global electricity for the first time in 2023 ⚡️

• Climeworks opens the world's largest operational direct air capture plant in Iceland 🟢

• A draft from the SBTi suggests that carbon offsets are largely ineffective 🤔

• and other news 🌍

*We apologize for the error in last week’s subject line and appreciate your understanding as we strive to avoid such mistakes in the future!

THE WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🇺🇸 The US government is set to quadruple tariffs on Chinese electric vehicles (EVs) from 25% to 100% and raise other tariffs on key industries including semiconductors, solar, and batteries. The decision is being made to protect American automakers from their high-quality, low-cost competition. Critics argue these tariffs are counterproductive to reducing emissions and increasing EV adoption due to the higher costs, and they could worsen inflation and strain relations with China.

🇺🇸 More about the US:

In a meeting with top US oil executives, presidential candidate Trump pledged to reverse numerous Biden administration environmental rules and policies. He also asked the oil executives to raise $1 billion for his presidential campaign and indicated plans to auction more leases for oil drilling in the Gulf of Mexico and reverse drilling restrictions in the Alaskan Arctic.

According to a new report, despite the high profile of anti-ESG efforts by US conservatives, most initiatives fail or are diluted due to diverse opposition. Of 113 actions taken against ESG by Republican state officials, nearly half were only letters, while other efforts faced strong opposition. However, the report also noted that 40 anti-ESG laws have passed in US state legislatures, with significant consequences in some cases, such as the withdrawal of over $9 billion from BlackRock by state governments accusing it of discrimination against oil and gas companies.

🇪🇺 The European Securities and Markets Authority (ESMA) has released guidelines for the use of ESG and sustainability-related terms in investment fund names, including investment thresholds for sustainable investment funds and a transition category for investments not yet green. The guidelines include a requirement for an 80% minimum proportion of investments to meet the sustainability characteristics of funds using the term “sustainable,” and a transition category with an 80% investment threshold, applying exclusions from the EU’s rules for Climate Transition Benchmarks.

• EU countries have also approved a law requiring a 90% cut in CO2 emissions from new heavy-duty vehicles by 2040, effectively necessitating the sale of mostly CO2-free trucks. The law also mandates a 45% reduction in fleet CO2 emissions by 2030, and 65% by 2035. From 2030, 90% of new urban buses sold in the EU must have zero emissions, increasing to 100% in 2035.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

⚡️ Renewable energy accounted for over 30% of global electricity for the first time in 2023, largely due to a rapid increase in wind and solar power, according to a new Ember report. The growth in clean electricity has already reduced the growth of fossil fuels by nearly two-thirds in the past decade. Solar power was the main contributor to electricity growth, adding more than twice as much new electricity generation as coal in 2023. The report also stated that wind and solar are the fastest-growing electricity sources in history. Despite this, fossil fuels still play a significant role in global energy, making up 82% of the world's primary energy.

🤔 A confidential draft from the Science-based Targets initiative (SBTi) suggests that carbon offsets, used by companies to balance their GHG emissions, are largely ineffective. The findings, which are yet to be finalized, could hinder the adoption of carbon offsets in companies' emission reduction plans. Critics argue that carbon offsets could allow companies to avoid reducing emissions, while supporters, including the Bezos Earth Fund and former US climate envoy John Kerry, see them as a necessary tool to encourage investment in clean energy and achieve net-zero emissions by 2050.

📑 Over a third of S&P 500 companies have monetary incentives linked to emissions reduction, but less than half have set net-zero targets, according to a study by S&P Global. The study also revealed that climate goals primarily focus on Scope 1 and 2 emissions, with less emphasis on Scope 3 value chain emissions. The report suggests that companies could face increased pressure to establish transition plans that include decarbonization or a net-zero goal as investors want more climate-related information and transparency into corporate emissions.

WHAT ARE COMPANIES DOING?

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

🟢 Climeworks has opened the world's largest operational direct air capture (DAC) plant in Iceland, capable of extracting 36,000 metric tons of CO2 annually. The company aims to reach megaton capacity by 2030 and gigaton by 2050. Despite criticism about the high costs and potential for companies to neglect emission reduction, Climeworks plans to lower the cost of CO2 removal to $200-350 per ton by 2040.

🌳 Microsoft has partnered with re.green for a large-scale carbon removal project, which aims to remove 3 million tons of carbon over 15 years. The project involves the restoration of over 16,000 hectares of forests in Brazil, using native species and planting at least 10.7 million seedlings, and leverages satellite imagery, drones, and machine learning models for land selection and carbon capture validation.

🛩️ Boston Consulting Group (BCG) has signed a five-year agreement with World Energy to purchase sustainable aviation fuel certificates (SAFc). The contract will deliver emissions reductions of 100,000 tons of CO₂, marking BCG's largest SAFc purchase to date. The deal allows BCG to make a GHG reduction claim on climate disclosures while supporting the scaling of new climate technologies.

🛩️ Virgin Atlantic's Flight100, the first transatlantic flight using 100% sustainable aviation fuel, reduced CO₂ emissions by 64% (or 95 tons of CO₂), according to the company. The flight, which happened in November 2023, did not require any changes to the engine, airframe, or fuel infrastructure. The fuel used resulted in a 40% reduction in non-CO₂ particulate emissions and produced 1% more energy compared to the same mass of fossil fuel.

🌳 Sustainability advisory firm ERM has launched a new business, ERM Climate Markets, to assist companies in investing in carbon credits to meet decarbonization goals. The new business will help companies access high-quality carbon credit portfolios, offer social, biodiversity, and economic benefits, and provide enhanced due diligence to de-risk investments.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

🟢 Green hydrogen startup Hysata has raised $111 million in a Series B funding round to advance its electrolyzer technology and expand production. The Australia-based company, founded in 2021, produces high-efficiency electrolyzers for low-cost green hydrogen production.

📈 Private equity firm KKR and Hannon Armstrong Sustainable Infrastructure Capital (HASI) have launched CarbonCount Holdings 1 LLC (CCH1), a venture aimed at investing up to $2 billion in sustainable infrastructure projects over the next 18 months. The investments will focus on behind-the-meter, grid-connected, renewable natural gas and transport projects.

🌊 Ocean 14 Capital (O14C), a private equity firm focused on ocean sustainability, has raised €201 million for its impact fund. The fund aims to support the UN's SDG 14, which promotes the conservation and sustainable use of oceans, and will invest in late-stage venture and early-stage growth companies that address food security and marine ecosystems, including sustainable aquaculture and alternatives to high protein.

🔌 EV solutions startup EnviroSpark Energy Solutions has secured a $50 million investment. The company, which provides solutions to enhance EV accessibility, currently operates over 8,200 charging plug installations across North America.

♻️ German startup Insempra has completed a $20 million Series A financing round. The company is working on bio-based alternatives for lipids - fatty compounds that are used in the production of beauty products, textiles, and the food industry. At present, they’re produced using petrochemicals; Insempra’s process produces them using yeast fermentation.

⚡️ Climate tech startup Electricity Maps has raised $5.4 million to expand its solutions for mapping global electricity grids and aiding data-driven decarbonization. The company provides data on the carbon intensity and origin of electricity, helping businesses understand and reduce their carbon footprints.

🟢 Zepp.solutions, a Netherlands-based hydrogen fuel cell company, has secured a €3 million investment. The company's hydrogen fuel cell systems are designed for medium- to heavy-duty applications, enabling the transition towards zero-emission technology.

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