What's Happening in Sustainability & ESG (Week Recap 11.06 - 17.06) 🌎

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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:

• EU gives final green light for the Nature Restoration Law & imposes tariffs of up to 38% on Chinese EVs 🇪🇺

• 63% of companies are ready to report under the CSRD but highlight challenges with data availability and quality, value chain complexity, and staff capacity 📑

• The world is significantly off track on most of the sustainable development targets set in 2015 🌎

• Microsoft and Swiss Re signed more carbon removal agreements, while Telstra announced it will cease using carbon credits 🟢

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🇪🇺 As usual, here’s a quick roundup of the key events and developments in the EU over the past week:

• The Council gave its final approval to the long-contested and first-of-its-kind Nature Restoration Law, aimed at protecting and restoring natural ecosystems, with a target for EU countries to restore at least 20% of the EU’s land and sea areas by 2030. The law also mandates member states to restore 30% of habitats in poor condition by 2030, increasing to 60% by 2040, and 90% by 2050.

• The EU Council also agreed on proposals to protect consumers from greenwashing, setting requirements for companies to substantiate and verify environmental claims for products and services. The Council's position distinguishes between "offset claims" and "contribution claims" in climate-related claims, and provides more flexibility than the Commission's proposals regarding third-party verification of green claims.

• The bloc imposed tariffs of up to 38% on Chinese-made EVs in response to excessive subsidies. This move is part of broader efforts to diversify EV supply chains away from China and comes as European automakers face competition from lower-cost Chinese EVs. These new trade restrictions could potentially slow down global EV adoption and they raise the risk of retaliatory measures from China, which is an important market for European automakers like Volkswagen and BMW.

🤔 What should the EU do to catch up with China and the US in the green tech race?

💬 Spain's climate and energy minister, Teresa Ribera, urges the next EU Commission to help Europe catch up with China and the US in the green tech race. Ribera, a potential future head of EU green policies, rejects calls to slow the EU's green transition but acknowledges the need for greater efforts to manage its impact on citizens and industries. She warns that delaying Europe's green shift could cost European companies their competitive edge in low-carbon industries and exacerbate climate impacts on agriculture. Ribera supports consultation with local industries to identify supportive conditions, such as public investments in next-gen technologies or simpler bureaucratic rules. Former Italian PM Mario Draghi also suggests that Europe needs to lower energy prices, develop capital markets, and strengthen industrial and trade policies to stay competitive. He highlights the need for faster renewable energy roll-out, greater research and innovation spending, and better coordination of investment across EU countries.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

📑 Despite 63% of companies expressing confidence in their readiness to report under the EU’s Corporate Sustainability Reporting Directive (CSRD), they face challenges with data availability and quality, value chain complexity, and staff capacity, according to a PwC survey. Less than half of these companies have completed key activities like confirming reporting options and validating data availability. However, 76% believe CSRD will lead to greater consideration of sustainability in decision-making. The survey also revealed that companies expect benefits from CSRD, including improved environmental performance, stakeholder engagement, and risk mitigation.

🔴 The world is significantly off track on most of the sustainable development targets set in 2015, including poverty and hunger, according to a UN report. It found none of the 17 goals were on course to be met by 2030, with most showing limited or reversed progress. The report urged countries to address chronic funding shortfalls and revamp the UN system. It identified hunger, sustainable cities, and biodiversity protection as areas of weakness. Finland, Sweden, and Denmark ranked highest, while the world's poorest countries have fallen further behind.

🌎 The G7 leaders met in Italy and pledged to accelerate their transition away from fossil fuels this decade, aiming for net-zero by 2050. They plan to phase out unabated coal power generation in the first half of the 2030s but have allowed some flexibility for countries still dependent on coal. Despite these commitments, climate activists criticized the lack of new, concrete pledges. The G7 also confirmed the possibility of public investments in natural gas as a temporary response to phasing out dependency on Russian energy.

WHAT ARE COMPANIES DOING?

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

🟢 Microsoft purchased nearly 1 million tonnes of nature-based carbon removal credits from climate solutions provider Anew Climate. The credits are generated from improved forest management projects across the US. Insurance company Swiss Re also signed a carbon removal agreement with Carbonfuture for 70,000 tonnes of credits from the company’s partner Exomad Green's new facility in Bolivia. The facility transforms forestry waste into carbon-sequestering biochar, a soil enhancer that also supports Indigenous communities and reduces deforestation. While Microsoft and Swiss Re were busy signing carbon removal agreements, Australia-based telecommunications company Telstra announced it will cease using carbon credits to offset operational carbon emissions, opting instead to invest in decarbonization projects to reduce its direct emissions footprint. The company said it will no longer seek certification from Climate Active (a government-backed carbon-neutral certification scheme) and will remove references to its plans being "carbon neutral" or "carbon offset."

📑 ISS ESG launched an enhanced Modern Slavery solution to help investors monitor and report modern slavery risks in their portfolios. The solution identifies portfolio exposure to modern slavery-related risks and allows benchmarking against industry peers. It uses an expanded dataset from ISS ESG solutions and external sources and assesses 25 factors developed by ISS ESG’s experts. The solution covers approximately 60,000 issuers globally and provides a detailed report on risk exposure and management of modern slavery risks.

⚡️ Google launched a first-of-its-kind clean energy partnership with NV Energy, a subsidiary of Berkshire Hathaway Energy, to meet growing power demand cleanly and reliably. The partnership introduces a new "Clean Transition Tariff" (CTT), which can be replicated in many electricity markets across the US. The CTT facilitates investments into new projects that deliver clean firm capacity to the grid, allowing customers to meet their electricity demand with 24/7 carbon-free energy. NV Energy is the first utility to operationalize this approach, with a focus on enhanced geothermal power.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

📈 BlackRock launched a suite of five iShares MSCI Climate Transition Aware UCITS ETFs, aimed at providing exposure to companies leading the transition to a low carbon economy. The new ETFs follow the MSCI Transition Aware Select Index methodology, including companies that meet certain criteria such as having approved GHG emissions targets and deriving a significant portion of sales from green revenues.

⚡️ Brookfield Asset Management and ALTÉRRA launched the Catalytic Transition Fund, targeting $5 billion in capital for clean energy and transition assets in emerging economies. The fund aims to achieve greater emissions reductions per dollar invested in emerging and developing countries, which currently receive less than 15% of global clean energy investment.

🟢 Mizuho Financial Group and Lombard Odier launched a "sustainability alliance" to provide sustainable investment products and solutions for Japan-based clients. Lombard Odier will act as a strategic advisor to Mizuho, helping to establish sustainability systems and enhance solutions for high-net-worth clients, while Mizuho will provide insights on the Japanese market and help develop investment strategies.

📈 Vsquared Ventures, an early-stage deep tech fund in Europe, closed its latest fund, Vsquared II, oversubscribed at €214 million, making it the largest European early-stage deep tech fund to date. The fund targets six growth themes: AI & next-gen software, energy transition, new computing and sensing, new space, robotics and manufacturing, and tech-bio.

🔋 Battery Smart, an India-based battery-swapping services provider, raised $65 million. The firm plans to use the funds to expand its operations and strengthen its tech capabilities. Despite reporting a loss in FY23, the company saw a 200% growth in revenue in FY24.

⚡️ Belgian company Gorilla, which provides real-time data and analytics to the energy sector, raised a €23 million Series B round. Gorilla's solutions help utility companies understand energy portfolios, ensure operational stability, and provide bespoke pricing strategies.

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