What's Happening in Sustainability & ESG (Week Recap 09.04 - 15.04) 🌎

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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:

• Europe stands firm against US-driven ESG backlash, a Reuters insight 📈

• SBTi backtracked on its endorsement of carbon credits after a staff revolt ⏪

• The EU Parliament voted to establish a carbon removal certification system 🇪🇺

• The European Court of Human Rights ruling backed Swiss women in a historic climate change case ⚖️

• The US state of West Virginia banned several major banks due to their “engagement in boycotts" of fossil fuel companies 🏦

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

📈 Steady investor demand in Europe for environmental and socially responsible investments and wide-ranging regulation are helping Europe's finance industry withstand political pressures that have pushed some US peers to backtrack on their green agendas, reports Reuters. In the US, conservative politicians have been successful in tamping down ESG product marketing, in diluting regulations that promote ESG disclosures, and in discouraging financial firms from co-ordinating on curbing GHG emissions. Europe has so far largely resisted the anti-ESG tide, due to greater political and consumer support for greener products and a swathe of regulations that underpin the operations of the finance industry and companies in the real economy.

Despite some politicians having been active in Europe to soften environmental rules and legislation and some new regulations have been watered down, fund flow data shows that Europe overall remains a sustainability and ESG stalwart. European investors have seven times as much capital in sustainable fund assets than US investors, following five consecutive quarters of US outflows, based on Morningstar data.

Across Europe's financial services sector, there are 20 rules and 25 voluntary guidelines pertaining to ESG, compared to just two rules and five voluntary guidelines in the US, according to ESG Book. What we're seeing in Europe is everyone continues to be quite focused on ESG and how it is implemented," said David Zahn, head of sustainable fixed income at asset manager Franklin Templeton. Zahn said, however, that ESG is not investors' only concern. "It's not just ESG that they care about. They want to see portfolios that take into account ESG, that maybe have some constraints, but they also want performance.”

⏪ In other news, the Science Based Targets initiative (SBTi), a leading arbiter of corporate climate targets, has backtracked on its endorsement of carbon credits as a means to address GHG emissions following a staff revolt that called for the resignation of the CEO and board members. On April 9th, SBTi stated that companies could use carbon offsets to meet climate goals. However, three days later, the organization came out with another statement, clarifying that there was "no change" to its standards. The employees claimed that SBTi's policy on offsets was made without consulting its technical and advisory groups, and they fear that this will enable greenwashing and avoid necessary cuts in GHG emissions. The board defended the plan, stating that when supported by policies and procedures based on scientific evidence, offsets could be an additional tool to tackle climate change.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

⚖️ Over 2,000 elderly Swiss women won a court case against Switzerland for failing to adequately combat global warming. The group, known as KlimaSeniorinnen, argued that the government's inaction put them at risk during heat waves due to their age and gender. The European human rights court ruled in their favor, stating that Switzerland violated its citizens' rights. The court did not prescribe specific actions for Switzerland but established minimum governance standards for states, including setting carbon budgets, interim targets, and transparency. The ruling, which was met with mixed reactions, is expected to influence climate case law in Europe and could impact climate litigation worldwide.

🇪🇺 A couple of things happened in the EU in the past week:

• The Parliament voted to adopt a law establishing a certification system for quantifying, monitoring, and verifying carbon removals. The move aims to counter greenwashing, encourage the development of carbon removal technologies, and create income opportunities for industries and land managers. The new legislation now awaits approval from member states in the EU Council.

• The Council formally adopted the revised Energy Performance of Buildings Directive (EPBD), setting targets for all new buildings to be zero emissions by 2030 and to phase out fossil fuels in building heating systems by 2040.

• The Commission approved a €2.2 billion German scheme to support investments in the decarbonization of industrial production processes. The scheme, which provides direct grants, aims to reduce GHG emissions from production processes by at least 40% and is open to companies that use fossil fuels as an energy source or feedstock for their production processes.

🇺🇸 The Biden administration awarded $830 million in grants to fund 80 projects aimed at fortifying the nation's aging infrastructure against climate change. The funds will be used to improve bridges, roads, ports, rail, transit, and other infrastructure across 37 states, Washington, DC, and the Virgin Islands.

🔴 The US state of West Virginia has banned several major banks, including HSBC, Citi, Northern Trust, and TD Bank, from providing banking services to the state due to their “engagement in boycotts" of fossil fuel companies. This is part of an ongoing anti-ESG movement by Republican politicians in the US. These banks join others, such as BlackRock, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo, on West Virginia's Restricted Financial Institution List, which includes companies that limit business activities with coal, oil, or natural gas companies without a reasonable business purpose.

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WHAT ARE COMPANIES DOING?

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

📄 Watershed has launched a dedicated software solution, Watershed for CSRD, to assist companies in complying with the EU’s Corporate Sustainability Reporting Directive (CSRD). The solution extends Watershed’s sustainability data management to CSRD compliance, aiding over 50,000 global companies as they prepare for a new era of sustainability reporting. The software allows companies to collect, calculate, and manage the ESG data required under the CSRD and includes features such as guided workflows, built-in project management tools, and an automated report builder.

📈 Investment data provider Preqin has launched new ESG performance benchmarks for private markets ESG funds, SFDR, impact, and climate funds. These benchmarks aim to address the lack of standardized ESG fund performance data and will enable investors and advisors to make informed decisions. The benchmarks cover over 200 ESG fund performance benchmarks, including more than 1,000 ESG funds across main private market asset classes.

📊 Climate accounting software provider CarbonChain has launched CarbonChain Comply, a carbon reporting solution for businesses in the metals and energy supply chains. The platform aims to meet increasing regulatory requirements and stakeholder demands for transparent disclosure in the commodities supply chain. It automates emissions tracking, provides visibility into Scope 3 and supply chain emissions, and enables carbon traceability and product carbon footprinting.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

⚡️ Nexamp, a developer and operator of distributed solar and energy storage solutions, has raised $520 million to accelerate its growth and expansion into new markets. The Boston-based company currently serves nearly 80,000 customers and maintains over 1.5 gigawatts of generating and construction capacity.

🚚 Electric truck startup Windrose Technology has raised $100 million in Series B funding to accelerate the testing and deployment of its zero-emission long-haul trucks globally. The company's trucks have a range of 670 km under full load and can recharge 400km of range in under 36 minutes.

⚡️ Climate tech company Arcadia has raised $50 million. The company provides energy data solutions that enable consumers, businesses, and developers to access and expand clean energy solutions, including community solar subscriptions and solutions for developers. Arcadia currently manages over 2 GW of solar energy, with more than 200,000 homes and 2,500 organizations connected to solar farms.

🟢 Climate solutions startup Mission Zero has raised $27.7 million in Series A financing to scale its Direct Air Capture (DAC) carbon removal technology. The funding will help accelerate the development of mass-deployable DAC products with a recovery capacity of 1,000 tonnes of CO2 per year. By the end of 2024, Mission Zero aims to have three fully-funded systems on the ground in projects pioneering CO2 mineralization, carbon-negative building materials, and sustainable aviation fuel.

📊 Climate tech software company Cozero has raised €6.5 million in a Series A funding round. The company’s Climate ERP solution streamlines corporate emission management and reduction and is used by companies such as Maersk, Nippon Express Europe (NX Group), DMG MORI, and others.

📈 Toyota Ventures has launched the Toyota Ventures Climate Fund II, a $150 million fund aimed at investing in startups focused on climate and environmental sustainability solutions. This is the second such fund from the company, building on the success of the first fund which invested in 18 companies in areas such as renewable energy and carbon capture.

📄 Institutional Shareholder Services (ISS) has acquired Celsia, a corporate sustainability reporting software solutions provider. Celsia, founded in 2021, offers solutions for regulatory sustainability reporting, focusing on the EU’s CSRD. The software also supports reporting requirements for the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR).

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