What's Happening in Sustainability & ESG (Week Recap 09.07 - 15.07) 🌎

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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:

• What are Trump’s new VP running mate’s views on climate and energy? 🇺🇸

• The current EU ESG regulatory framework faces critical challenges, according to a new study from the CFA Institute 🇪🇺

• The new state and federal laws will likely require thousands of companies to report on climate-related issues, even without SEC rules 🇺🇸

• The "Green Economy" has significantly outpaced the broader market in growth and valuation over the past decade 📈

• GRI unveils solution to help companies comply with the ESRS 📑 

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🇺🇸 Former US President Donald Trump has selected Ohio senator Sen. J.D. Vance as his vice presidential running mate. What are his views on energy and climate? Vance once said society had a climate problem but changed his position sharply while seeking Trump’s endorsement in his Senate race. He is a strong supporter of the oil and gas industry, opposes solar power and electric vehicles, and has said climate change is not a threat. Vance has also criticized the Biden administration's clean energy policies and the Inflation Reduction Act and has introduced legislation to repeal federal tax credits for EVs and other environmental regulations while receiving substantial campaign contributions from the oil and gas industry. Environmental advocates have denounced the choice, while conservative climate activists see potential alignment with Vance on competitiveness with China.

🇺🇸 In other US news, the new state and federal laws will likely require thousands of companies to provide climate-related reports, including value chain emissions and climate risks, even without SEC rules, according to a Sustainable Fitch report. Despite federal barriers, states like California, New York, and Illinois are advancing their own mandatory climate reporting laws. For example, California’s SB 253 requires companies with over $1 billion in revenue to report on all emission scopes and obtain third-party assurance. However, the state's governor recently proposed delaying the climate laws by two years. The SEC's new mandatory climate reporting rule for public companies, announced in March 2024, faces implementation challenges, including a lawsuit by ten states and a petition by Liberty Energy and Nomad Proppant, leading to a temporary halt by the Fifth Circuit Court.

🇪🇺 The current EU ESG regulatory framework, including the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation, faces critical challenges, according to a new study from the CFA Institute. Key issues include unreliable ESG data, complex ratings, and varied interpretations of rules. The study calls for clearer, more consistent ESG terminology, better data reliability, and improved fund categorization under SFDR Articles 8 and 9. “While a broad consensus exists that the EU regime is advancing the international agenda on sustainable finance, a similar proportion feel that EU efforts are confusing, and the lack of reliable ESG data does not make it worth integrating ESG considerations in investment decisions,” said Josina Kamerling, head of regulatory outreach, EMEA, at the CFA Institute.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🟢 The market for environmental and climate solutions, or the "Green Economy" has significantly outpaced the broader market in growth and valuation over the past decade, second only to the technology sector, according to a study by the London Stock Exchange Group (LSEG). The green economy's market cap grew at a 13.8% CAGR, compared to 8.3% for global equity markets, and its revenues grew at a 7.6% CAGR. Despite recent volatility due to factors like supply chain disruptions and geopolitical issues, the green economy now accounts for 8.6% of the global market cap. Energy Management and Efficiency has been the best-performing area, while Renewable and Alternative Energy has underperformed recently. Future growth drivers include digital technologies and AI, with tech giants investing heavily in renewable energy and low-carbon solutions.

📑 The Global Reporting Initiative (GRI) launched the GRI-ESRS Linkage Service to help companies align their sustainability reporting with the ESRS. This service aims to ensure interoperability between GRI and ESRS standards, preventing double reporting. It includes feedback on GRI-ESRS linkages, suggestions for structuring ESRS sustainability statements, and identification of ESRS data points not covered by GRI standards.

🇬🇧 The UK government launched a £7.3 billion National Wealth Fund to decarbonize heavy industry, focusing on green steel and gigafactories, with investments starting immediately. The fund will be managed by the UK Infrastructure Bank and aims to attract an additional £20 billion in private-sector investment. It forms part of Labour's broader "green prosperity plan" and will work closely with the British Business Bank to mobilize institutional capital for low-carbon projects.

WHAT ARE COMPANIES DOING?

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

🇺🇸 The Biden administration will award nearly $1.1 billion to Stellantis and GM as part of a $2 billion investment to modernize 11 auto manufacturing sites for EV production across eight states. Funded by the Inflation Reduction Act, these investments aim to keep the US automotive industry competitive by producing 1 million EVs annually, retaining 15,000 jobs, and creating 3,000 new positions. Selectees include major automakers and suppliers, with final awards subject to negotiations and environmental reviews.

⚡️ Amazon achieved its goal of powering its global operations with 100% renewable energy by 2023, seven years ahead of its initial 2030 target. The company invested in over 500 renewable projects, including solar and wind farms, battery storage, and offshore wind projects, helping to avoid an estimated 27.8 million tons of carbon emissions annually. Amazon has also declared that it is requiring key suppliers to provide decarbonization plans and will prioritize those committed to net zero, aiming to reduce its value chain emissions. In its 2023 Sustainability Report, Amazon revealed that Scope 3 emissions constitute about 75% of its carbon footprint. The company’s emissions grew 13% in 2023 over the previous year with the increased demands of AI.

🟢 1PointFive, a subsidiary of Occidental Petroleum, signed an agreement with Microsoft to deliver 500,000 metric tons of CO₂ removal (CDR) credits over six years, marking the largest-ever DAC-based CDR credit purchase. The credits will be enabled by STRATOS, a Direct Air Capture (DAC) facility under construction in Texas. Microsoft has been increasing its offset purchases to counteract rising emissions from its investments in AI data centers.

📊 Schneider Electric launched enhancements to its EcoStruxure™ Resource Advisor, a comprehensive software suite designed to support corporate sustainability efforts. The upgrades include a robust ESG indicator framework, an AI-driven data hub, multi-entity data management, and custom visualizations. These features aim to help companies comply with regulations like the EU's CSRD and improve their renewable energy management.

🏘️ Real estate and infrastructure-focused ESG data provider GRESB launched Transition Analytics, a new emissions and activity analytics tool designed to help asset managers and owners manage transition risks, engage portfolio companies, and meet environmental commitments. The solution provides comprehensive emissions data for 11 high-emission sectors, linking over 148,000 physical assets to 3,000 listed companies.

🔌 E.ON and Volkswagen's MAN Truck & Bus are collaborating to establish a pan-European electric charging network for trucks, aiming to support the EU's goal of reducing heavy vehicle emissions by 90% by 2040. The first site will open this year, with 80 more by 2025 and a total of 170 planned, primarily in Germany. Initial sites will feature 400 kW charging stations, enabling trucks to recharge for up to 300 km in about 45 minutes, with future plans for faster charging infrastructure.

🟢 280 Earth, a carbon capture startup spun out from Alphabet, secured a $40 million deal facilitated by Frontier to remove 61,571 tons of CO₂ by 2030 at their pilot facility in Oregon. The agreement involves major companies like Google, Meta, and others. 280 Earth's DAC system captures CO₂ from the air, which can be stored underground or mineralized. The company plans to expand its facilities and integrate its technology with data centers to provide cooling benefits and reduce water usage.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

📈 HSBC launched a new climate-focused infrastructure finance unit, HSBC Infrastructure Finance (HIF), to target deals in infrastructure and project finance linked to the transition to a low-carbon economy. The unit aims to grow HSBC's debt origination and distribution businesses and align with the bank's net-zero emissions goals.

📈 North Sky Capital raised $250 million for its impact secondaries fund, Clean Growth VI (CG VI), focusing on energy transition, climate tech, circular economy, and healthy living sectors. The fund has already deployed nearly 60% of its capital and will make its first distribution to investors soon.

♻️ SHEIN launched a €200 million Circularity Fund to support European and UK startups focused on textile-to-textile circularity solutions. This initiative aims to address the environmental impact of the fashion industry, particularly fast fashion, by investing in early-stage and mature startups developing recycled materials and preferred fibers.

📈 Netherlands-based VC firm LUMO Labs launched the €100M LUMO Rise Fund to invest in 30-35 impact-driven European startups, focusing on emerging digital technologies for societal and environmental benefits. The fund targets startups addressing UN SDGs such as health, education, sustainable cities, and climate action.

👕 Inditex, owner of Zara, acquired a stake in US sustainable agriculture startup Galy, which develops lab-grown cotton, as part of its sustainability strategy. The company aims to have 40% of its fibers from conventional recycling and 25% from next-generation materials by 2030.

💧 ZwitterCo secured $58.4 million in Series B funding to advance its membrane technology for unconventional water sources, addressing water scarcity and decarbonization challenges. ZwitterCo's membranes, which resist organic fouling, are crucial for industries needing reliable, clean water. The technology has already been implemented in over 50 industrial facilities, delivering significant cost savings and operational efficiencies.

🟢 Climate tech startup 44.01 raised $37 million in a Series A funding round to scale its CO₂ mineralization technology, which turns captured CO₂ into rock. Its technology leverages mafic and ultramafic rock formations found globally, offering a cost-effective alternative to conventional carbon storage.

🟢 Danish green hydrogen company Dynelectro secured €11 million in investment to advance its solid-oxide electrolysis (SOE) technology, which offers higher efficiency and longer lifespan for green hydrogen production. The technology aims to reduce hydrogen costs, support heavy industries, and aid in the green energy transition.

⚡️ epilot, a Cologne-based green energy transition platform, raised €10 million to help utilities and grid operators transition from outdated IT systems to more efficient, streamlined processes. epilot's software reduces reliance on siloed tools, enabling projects to be completed in weeks instead of months, thus accelerating the renewable energy transition.

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