What's Happening in Sustainability & ESG (Week Recap 19.03 - 25.03) 🌎

Today’s newsletter is brought to you by Polar Insight, a specialist research partner and expert network accelerating progress for companies operating in complex, technical, and regulated settings.

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:

• US announces a record $6 billion in funding for industrial projects aimed at reducing carbon emissions 🇺🇸

• EU's nature restoration law adoption has been delayed once again due to a lack of support 🇪🇺

• Central banks are using AI to analyze company disclosures on carbon emissions and other net-zero commitments 💡

• A Texas fund has withdrawn $8.5 billion from BlackRock, accusing the firm of boycotting fossil fuel energy producers 🔴

• Energy giant Iberdrola plans to invest €41 billion in its network and renewable energy from 2024 to 2026 ⚡️

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Policies

🇺🇸 The US Energy Department has announced a record $6 billion in federal funding for 33 industrial projects aimed at reducing carbon emissions. The initiative, the largest industrial decarbonization investment in US history, is expected to leverage a total of $20 billion and eliminate 14 million metric tons of pollution annually. The projects span industries such as iron and steel, cement, concrete, aluminum, chemicals, food and beverages, pulp and paper, and are expected to support job creation and boost US competitiveness.

🇺🇸 In other news, the US Environmental Protection Agency has set new pollution standards for passenger cars, light-duty trucks, and medium-duty vehicles for model years 2027-2032 and beyond. The new standards mandate that electric vehicles (EVs) make up 35-56% of new car and truck sales by 2032, with plug-in hybrids accounting for 13-36%. Given that EVs only constituted 7.6% of new US car sales in 2023, these forthcoming regulations suggest a sixfold increase in demand within eight years. Last year's total sales of 1.2 million marked a 46.3% increase from 2022.

🇪🇺 The adoption of the EU's Nature Restoration Law, a key part of the Green Deal, has been prevented once again due to a lack of support from several member states, most notably Hungary, which withdrew its previous backing. Despite its initial passage through the European Parliament, a necessary majority vote for its final adoption has been postponed. The law mandates EU members to reverse biodiversity loss on at least 20% of the EU's land and sea by the end of the decade, among other environmental restoration targets. Its future is now uncertain, with upcoming EU Parliament elections and ongoing farmer protests influencing the political climate.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

🔴 The Texas Permanent School Fund has withdrawn $8.5 billion from BlackRock, accusing the firm of boycotting fossil fuel energy producers. BlackRock denies the accusation, stating the withdrawn amount is a small fraction of the $10 trillion in assets it manages. The move highlights the ongoing controversy over ESG investing in some Republican-run states. The fund's withdrawal is in compliance with a 2021 Texas law requiring state agencies to “divest from fund managers that reduce investments to lower GHG emissions.” BlackRock called the move "reckless" and "irresponsible", and requested a reevaluation. The company also refuted claims of discrimination against energy companies, highlighting its $320 billion global investment in the sector and the strong performance for the fund over nearly two decades.

🏦 Some countries’ central banks have utilized an AI project called Gaia to analyze company disclosures on carbon emissions, green bond issuance, and voluntary net-zero commitments. The banks include the Bank for International Settlements, the Bank of Spain, Germany's Bundesbank, and the European Central Bank. Gaia overcomes differences in definitions and disclosure frameworks, offering transparency and comparability. The AI system can quickly add new key performance indicators or institutions, enabling large-scale climate risk analysis. The banks are now suggesting that Gaia could potentially be made publicly available as a web-based service for analysts.

🔴 A Dutch court ruled that KLM, the country’s oldest airline, misled customers with an advertising campaign that overstated its environmental efforts, in a case of "greenwashing". The court found that KLM's claims about sustainability were too vague and painted an overly positive picture of its emission reduction measures. The ruling, which does not require KLM to issue any rectification, sets a benchmark for airlines in their public statements about environmental efforts.

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WHAT ARE COMPANIES DOING?

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

⚡️ Global energy provider Iberdrola plans to invest €41 billion in its network and renewable energy from 2024 to 2026, and also hire 10,000 people. The investment will focus on network-based growth, with two-thirds targeting distribution and one-third transmission. The company expects a 38% increase in its network asset base by 2026, with over 40% of the investment allocated to the U.S. More than €15 billion will be invested in renewable energy, primarily in offshore wind projects in the US, UK, France, and Germany.

🛩️ DHL Express and Standard Chartered have announced a strategic partnership to co-invest in Sustainable Aviation Fuel (SAF) through DHL’s GoGreen Plus service. This partnership aims to balance Standard Chartered's upstream logistics emissions with carbon credits. The bank expects to reduce its own related emissions by up to 30% in the first year, with an additional 7% reduction year-on-year from 2025, saving over 3,750 tonnes of CO2 by 2030.

🟢 Microsoft has signed a six-year agreement with climate solutions startup The Next 150 to purchase 95,000 tonnes of carbon removal credits from a new biochar production facility in Mexico. Biochar, a stable form of carbon produced by heating biomass, enables long-term carbon sequestration and improves soil fertility.

🚙 Mercedes-Benz has signed an agreement with Nucor Corporation to supply low-carbon steel for its production plant in Alabama, US. Nucor will supply Econiq-RE brand steel, made with 100% renewable energy and with less than half the GHG emissions of traditional steel production.

🌳 Nestlé has initiated two projects to reduce carbon emissions in its cocoa supply chain, in collaboration with suppliers Cargill and ETG | Beyond Beans. The five-year projects will promote agroforestry, support reforestation of degraded lands, and accelerate the transition to regenerative agriculture. The projects aim to plant over two million shade trees and are expected to deliver more than 500,000 metric tons of carbon removal and reduction over 20 years.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

📈 Morningstar has launched the Morningstar Low Carbon Transition Leaders (LCTL) Indexes, targeting companies leading in climate transition readiness and action. The new indexes use Sustainalytics Low Carbon Transition Ratings, assessing a company's alignment with a net zero pathway. The index series includes the identification of "climate transition leaders" and emphasizes companies that report emissions, reduce carbon intensity, and have business activities that align with the top-scoring 50% of each sector by market cap.

📈 BNP Paribas Asset Management (BNPP AM) has launched the BNP Paribas Global Net Zero Transition Equity fund, an active fund aimed at investors interested in a decarbonization and sustainable investment strategy. The fund will target a portfolio selected from over 1,000 global companies focusing on achieving net zero.

🟢 French renewable hydrogen producer Lhyfe has secured a €149 million grant from the French government to construct a green hydrogen production plant near Le Havre. The plant, which is expected to be operational by 2028, will have an installed electrolysis capacity of 100 MW and aims to produce up to 34 tonnes of green hydrogen per day.

📊 Greenly, a carbon accounting and management startup, has raised $52 million in a Series B funding round. The funds will be used to accelerate growth and enhance solutions for companies to measure and manage their carbon emissions. The Paris-based company, founded in 2019, offers a suite of solutions including the Climate Suite, Climate Academy, Greenly Cloud, and Greenly Sustainable Procurement.

⛴️ Candela, a Swedish electric hydrofoil vessel maker, has secured €24.5 million in funding to increase production of its P-12 ferry. The P-12, the world's first electric hydrofoil ferry, uses 80% less energy than traditional ships and offers high-speed and long-range battery power.

🟢 UK-based Mission Zero, which builds machines for direct air capture (DAC) of carbon, has raised £21.8 million ($27 million) in a Series A funding round. Mission Zero has three ongoing projects aimed at producing aviation fuel, building materials, and a DAC project in Canada, and aims to deploy a billion tonnes of DAC capability by 2040.

🟢 Climate tech startup Cemvision has raised €10 million in seed funding to accelerate its efforts in providing high-performance, ultra-low CO2 cement. The Sweden-based company offers an alternative to traditional cement, using recycled industrial waste and green electricity, resulting in a 95% lower carbon footprint.

♻️ Renovare Fuels, a sustainable fuels startup, raised $7.6 million to support projects that convert biodegradable waste into renewable biofuels. The company's technology captures gases from organic matter in landfills and converts them into biofuels, reducing GHG emissions by 97%.

📈 Fullerton Fund Management has raised $100 million for its Fullerton Carbon Action Fund, a private equity fund targeting companies accelerating decarbonization in emerging Asian markets. The fund will invest in established businesses in manufacturing, industrials, energy, and electric vehicles/mobility sectors.

⚡️ KKR has acquired a majority stake in US solar and storage developer Avantus. Avantus, which focuses on the southwestern US and California power markets, has developed and sold 6.5 GWp of solar and 6.3 GWh of storage projects and owns a project pipeline of 30 GWp of solar and 94 GWh of battery storage.

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