What's Happening in Sustainability & ESG (Week Recap 12.03 - 18.03) 🌎

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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:

• EU approves a scaled-back version of the corporate sustainability due diligence directive (CSDDD) 🇪🇺

• A US appeals court temporarily pauses the new SEC rules due to lawsuits 🇺🇸

• Canada releases new proposed standards for sustainability and climate-related reporting 🇨🇦

• 47 countries are supporting a charge on the international shipping sector's GHG emissions 🚢

• Google and AT&T commit to purchase carbon removal credits 🟢

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Policies

🇪🇺 The European Council has finally approved a scaled-back version of the corporate sustainability due diligence directive (CSDDD), a law mandating companies to address their negative impacts on human rights and the environment. The compromise raises the thresholds for companies covered by the legislation to 1,000 employees and €450 million in revenue, reducing the number of companies in scope by approximately two-thirds. Penalties for violations could be up to 5% of a company's global turnover. The law will be phased in over five years and no longer requires companies to promote climate transition plans through financial incentives.

🇪🇺 The EU Parliament also:

• adopted new rules targeting fast fashion and food waste. They extend producer responsibility schemes to textiles, requiring producers to cover costs for collecting, sorting, and recycling. The rules also strengthen food waste proposals, requiring member states to implement 2030 targets to reduce waste by at least 20% in food processing and manufacturing, and 40% per capita in retail, restaurants, food services, and households.
  

• approved stricter emissions standards for certain vehicles, maintaining current limits on pollutants for cars and vans but setting tougher restrictions for buses and trucks. These rules, still awaiting final approval, will apply to cars and vans from July 2030, and for buses and trucks a year later.

🇺🇸 A US appeals court has temporarily paused new rules issued by the SEC requiring public companies to disclose climate-related risks. The halt comes after a lawsuit filed by Liberty Energy and Nomad Proppant Services, while another lawsuit was filed by the US Chamber of Commerce, claiming that “the final rule makes substantively harmful changes to 50 years of corporate governance precedent that will have implications well beyond this single rule”. Sierra Club, a major environmental group has also sued the SEC, arguing that the rules are insufficient for investor protection. The lawsuit criticizes the exclusion of requirements for companies to disclose “Scope 3” emissions in the final version of the rules.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🇨🇦 The Canadian Sustainability Standards Board (CSSB) has released new proposed standards for sustainability and climate-related reporting, based on the ISSB standards. These standards could lead to mandatory climate-related reporting for Canadian companies. The proposed Canadian standards align with the ISSB's but include some Canada-specific modifications, such as a later effective date and extended reliefs for certain requirements. The CSSB has launched a consultation for feedback on these standards, and the Canadian Securities Administrators (CSA) may incorporate the final standards into a CSA rule, making them mandatory under Canadian securities legislation.

🚢 47 countries, including the EU, Canada, and Japan, are supporting a charge on the international shipping sector's GHG emissions. The proposed policy could raise over $80 billion annually, potentially funding the development of low-carbon shipping fuels and aiding poorer countries in transitioning. However, opponents such as China and Brazil argue it would penalize trade-reliant emerging economies.

🔴 Despite climate pledges, methane emissions from the energy sector remained near a record high in 2023. Human activities, including fossil fuel production and use, contributed to over 120 million metric tons of methane in the atmosphere, a slight increase from 2022. Large methane leaks from fossil fuel infrastructure also increased by 50% in 2023. However, 2024 is expected to be a turning point, with new satellite technology improving monitoring and transparency around methane leaks.

🇺🇸 The US Department of Energy is granting $750 million to projects across 24 states to build capacity for clean hydrogen production and usage. The funding comes from the 2021 Bipartisan Infrastructure Law and will support 52 projects focusing on various aspects of the hydrogen industry. This initiative is part of the National Clean Hydrogen Strategy, aiming to produce 10 million tonnes of clean hydrogen by 2030.

🇩🇪 Germany has initiated a bidding process for subsidies to aid energy-intensive industries in transitioning to green production, with €4 billion in funding available. The subsidies, approved by the European Commission, will be awarded to companies in sectors such as steel, glass, paper, and chemicals that commit to reducing carbon emissions.

WHAT ARE COMPANIES DOING?

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

🛢️ Shell has weakened its 2030 carbon reduction target and scrapped a 2035 objective due to expectations for lower power sales (which include renewables) and strong gas demand. The company will now aim for a 15-20% reduction in net carbon intensity of its energy products by 2030, compared to the previous 20% target. Shell also introduced a new goal to cut overall emissions from oil product sales by 15-20% by 2030.

🟢 Google has committed to purchasing at least $35 million of carbon removal credits over the next year, as part of a US Department of Energy initiative to scale the carbon removal sector. The US Department of Energy has also launched the Voluntary Carbon Dioxide Removal Purchasing Challenge, encouraging organizations to make larger carbon removal purchases, with Google being the first company to join.

🟢 AT&T has also committed to purchase carbon dioxide removal credits from 1PointFive, a carbon capture unit of Occidental Petroleum, as part of its goal to become carbon neutral by 2035. The credits will be bought from Stratos, a direct air capture facility under construction in Texas, which is designed to capture up to 500,000 metric tons of CO₂ annually when fully operational.

📊 Oracle has launched Oracle Cloud EPM for Sustainability, a solution designed to help organizations measure, manage, and track sustainability initiatives. The system aims to streamline the consolidation of environmental data from various sources, a process often done manually and prone to errors. The solution uses AI and machine learning for efficient data recording, tracking, and analysis.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

⚡️ Private equity firm KKR has launched a $3.06 billion takeover offer for German energy producer Encavis. KKR plans to delist Encavis post-acquisition, with management remaining onboard. The takeover is considered to enhance Encavis's contribution to Europe's green energy transition, according to KKR.

⚡️ Octopus Energy is investing in German renewables developer Lintas Green Energy to accelerate its growth. The Octopus’ Sky fund will take a 50% stake in Lintas, aiding in the construction of new wind and solar farms with a target of 1 gigawatt capacity by 2030. Octopus plans to invest over 1 billion euros into Germany's clean energy infrastructure by 2027.

🟢 TotalEnergies has acquired Talos Energy's carbon capture and storage (CCS) business, Talos Low Carbon Solutions, for $148 million. Post-acquisition, TotalEnergies will own a 25% share in the Bayou Bend project, alongside Chevron and Equinor.

⚡️ BlackRock has acquired a portfolio of 38 solar energy and battery storage projects from Excelsior Energy Capital. The acquisition is part of BlackRock's ongoing focus on climate transition infrastructure, aligning with its recent investments in infrastructure businesses and renewable energy.

⚡️ Alternative investment firm Stonepeak is acquiring a $300 million equity stake in a 957 MW portfolio of US onshore wind farms from global energy developer Ørsted. The transaction is part of Ørsted's strategy to divest ownership shares of existing assets to fund future projects.

⚡️ Electric utility Constellation Energy is issuing a $900 million corporate green bond to finance its nuclear energy projects. The proceeds from this 30-year term offering will be used to maintain and expand the company's nuclear power generation.

🟢 Cleantech startup Furno has raised $6.5 million in seed funding to support its solution for decarbonizing the cement industry. Furno's technology enables the production of carbon-neutral cement using novel combustion and kiln technology, which significantly reduces CO2 emissions.

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