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  • What's Happening in Sustainability & ESG (Week Recap 23.07 - 29.07) 🌎

What's Happening in Sustainability & ESG (Week Recap 23.07 - 29.07) 🌎

Despite delays in ESG regulations, companies are preparing by measuring and sharing their ESG risks and opportunities

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This week’s read time: 7 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:

 Despite delays in ESG regulations, companies are proactively preparing by measuring and publicly sharing their ESG risks and opportunities 💭

The European Securities and Markets Authority (ESMA) issued recommendations to enhance the EU Sustainable Finance regulatory framework 🇪🇺

2024 is very likely to be the warmest year on record 🌡️

In the first half of 2024, wind and solar power generated 30% of the EU's electricity, surpassing fossil fuels 🇪🇺

and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

Despite delays in implementing ESG regulations, companies are proactively preparing by measuring and publicly sharing their ESG risks and opportunities. Experts note that while regulatory timelines are uncertain, businesses recognize the need for increased ESG disclosures and are integrating ESG data into core business functions. Despite the term ESG becoming politically charged, most companies remain committed to their ESG strategies. “I know that we’ve all been reading a lot about the ESG backlash,” said Nithya Das, chief legal and administrative officer at Diligent. “But interestingly, only 3% of companies have actually changed their ESG strategy or priorities as a result of the backlash.”

By and large, companies know that they will need to share more ESG disclosures in the near future and many are even relieved that the fractured regulatory landscape is becoming more harmonized. Das cited further data from a recent Diligent report showing that an overwhelming 96% of directors expect a “continued or stronger” focus on ESG in the next five years. The survey, conducted with executive search firm Spencer Stuart, represented the views of 800-plus board members in the US, UK, and EU. And while nearly all companies remain firmly committed to ESG, 17% say they’re evolving how they’re communicating their sustainability strategies.

Kristina Wyatt, CSO at climate data disclosure software company Persefoni, said one way companies can get a better handle on the material business risks to ESG gaps is by getting good data. To that end, she’s seen the emergence of a new job title, the ESG controller, who is responsible for collecting data from different business functions to assess better governance. Frequently, this role reports to the CFO and is in the finance department. “That’s a step in the right direction of integrating ESG and ESG data into the core business functions of the company,” Wyatt said.

🇪🇺 The European Securities and Markets Authority (ESMA) issued recommendations to enhance the EU Sustainable Finance regulatory framework, including mandatory sustainability disclosures for all financial products, regulation of ESG data products, and establishment of categories for sustainable and transition investments. ESMA aims to improve transparency, comparability, and the quality of ESG data and supports the transition to a sustainable economy by recommending detailed disclosures on harmful activities and creating EU labels for transition bonds. One of the key recommendations provided by ESMA was for the implementation of minimum sustainability disclosure requirements for all financial products, including those that do not have stated sustainability ambitions, which the regulator said would serve to “improve transparency and facilitate comparability between financial products,” as well as to allow “comparability between products with an ESG objective, products with smaller ambition and products without such ambitions.” The recommendations also advocate for the EU Taxonomy to be the sole reference for assessing sustainability performance, phasing out the SFDR's flexible definition of sustainable investments.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

Source: Copernicus/ ECMWF ERA5 | Graph: Carbon Brief

🌡️ Last Monday, Earth experienced its hottest day ever recorded, with a global average temperature of 17.15°C, surpassing the previous record set in 2023. This unprecedented heat is attributed to human-caused climate change, with additional factors such as a warmer Antarctic winter and regional heatwaves in California and Europe. Scientists emphasize that the frequency of these records is a clear indicator of climate change, driven primarily by GHG emissions. Despite the potential for a cooling La Nina, 2024 is likely to surpass 2023 as the warmest year on record, with Carbon Brief's analysis indicating a 95% probability. Additionally, Antarctic sea ice extent has fallen to near-record lows, reflecting broader trends in polar ice loss.

🇪🇺 In the first half of 2024, wind and solar power generated 30% of the EU's electricity, surpassing fossil fuels. Power generation from coal, oil, and gas fell by 17%, leading to a one-third drop in emissions since early 2022. Thirteen EU member states, including Germany and the Netherlands, generated more energy from renewables than fossil fuels for the first time. Despite challenges in the wind industry, the shift towards renewables is accelerating, driven by policy changes and the need to meet climate targets.

🇬🇧 The UK government, through Secretary of State for Transport Louise Haigh, confirmed a mandate requiring 2% sustainable aviation fuel (SAF) in jet fuel by 2025, increasing to 22% by 2040. This is part of the "Jet Zero" strategy to achieve net zero emissions in aviation by 2050. SAF, produced from sustainable resources, can reduce lifecycle GHG emissions by up to 85%. Challenges include limited supply and high costs. The mandate includes innovation incentives, feedstock caps, and buy-out mechanisms to stabilize prices and encourage supply. A bill supporting SAF production with a revenue certainty mechanism is also planned.

WHAT ARE COMPANIES DOING?

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

KLM and ZeroAvia Plan Zero-Emission Demonstration Flight Using Liquid Hydrogen | Photo: ZeroAvia

🛩️ KLM and ZeroAvia announced plans for a hydrogen-powered test flight using ZeroAvia's hydrogen-electric engines, aiming for zero emissions. This initiative is part of broader efforts to decarbonize aviation, with hydrogen seen as a promising long-term solution. ZeroAvia's technology produces only low-temperature water vapor emissions. The demonstration flight is expected in 2026, potentially reducing climate impact by up to 90% compared to kerosene-fueled flights.

🟢 Veolia has become the first company to have its net zero goals validated by both the Science Based Targets initiative (SBTi) and Moody’s, with its decarbonization targets and transition plan receiving high praise. The company’s GreenUp program aims for a 50% reduction in Scope 1 and 2 emissions by 2032 and carbon neutrality by 2050, alongside ambitious Scope 3 emissions goals. SBTi commended Veolia’s net zero ambition as the most ambitious it tracks, and Moody’s rated Veolia’s transition plan as “Advanced” with an NZ-2 score.

🚛 Daimler Truck launched initial trials of its hydrogen fuel cell-powered Mercedes-Benz GenH2 Trucks with customers including Air Products, Amazon, Holcim, INEOS, and Wiedmann & Winz. The trials aim to test the trucks in various long-haul applications, providing insights for future development. The GenH2 trucks, powered by liquid hydrogen, offer higher energy density and range, making them suitable for areas with limited battery charging infrastructure.

🛩️ International Airlines Group (IAG) agreed to purchase over 28,000 metric tons of SAF from Repsol, marking the largest SAF purchase in Spain. This fuel will be used for flights by Aer Lingus, British Airways, Iberia, Iberia Express, and Vueling departing from Spanish airports. The agreement supports IAG's decarbonization goals and the EU's ReFuelEU law, aiming for 2% SAF in aviation fuel by 2025, 10% by 2030, and net zero by 2050. IAG has already secured a third of the SAF needed for its 2030 target and invested over $1 billion in SAF.

🛩️ Google and DHL have partnered to use DHL's GoGreen Plus service and invest in SAF to reduce emissions from air logistics across the Americas, Asia, and Europe. The partnership is part of DHL's Sustainability Roadmap, which aims to use at least 30% SAF blending for all air transport by 2030.

🟢 Siemens Energy will build a 280 MW green hydrogen electrolysis plant for EWE in Emden, Germany, expected to start in 2027. This project will produce up to 26,000 metric tons of green hydrogen annually, potentially replacing 800,000 tons of CO2. The plant will be one of Europe's largest, contributing significantly to Germany's green hydrogen industry.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

Photo: Airbus

🛩️ Airbus partnered with several airlines and investors to launch the $200 million Sustainable Aviation Fuel Financing Alliance (SAFFA) fund to accelerate the production of SAF. The fund aims to invest in technologically mature SAF projects, focusing on waste-based feedstocks and repurposing existing infrastructure. The first investment was made in Crysalis Biosciences to produce low-carbon intensity SAF. This initiative aims to address the challenges of low SAF supply and high costs. Airbus also announced a strategic investment in SAF technology company LanzaJet. This investment follows contributions from companies like MUFG, Groupe ADP, Microsoft, and Southwest Airlines. LanzaJet, launched by LanzaTech in 2020, is developing commercial-scale production of SAF and renewable diesel from waste-based ethanol.

🟢 TotalEnergies acquired a 50% stake in the 795 MW OranjeWind offshore wind farm from RWE to power green hydrogen production. The renewable energy from OranjeWind will support 350 MW electrolyzer projects, producing 40,000 tons of green hydrogen annually and avoiding 400,000 tons of CO2 emissions per year.

⚡️ Masdar acquired a 49.99% stake in Enel’s Spanish renewables portfolio for $887 million, encompassing 2.5 GW of solar and battery storage assets. The agreement includes a 15-year PPA and aims to add 0.5 GW of battery storage.

📈 NGP, a private equity investor, launched NGP Sustainable Real Assets (NGP SRA) with $500 million in capital to invest in energy transition real assets. The fund targets clean power, fuels, carbon, transportation, and critical minerals, aiming for $50 to $150 million per investment. NGP SRA has already invested in Segue Renewables II, Cloverleaf Infrastructure, and CO280 Solutions.

📊 ESG software startup osapiens raised $120 million in a Series B round to accelerate international expansion and invest in its technology platform. Founded in 2018 in Mannheim, Germany, osapiens offers compliance and sustainability reporting solutions through its AI-powered osapiens HUB. The platform helps companies comply with ESG regulations, automate processes, and mitigate risks.

🛩️ Electric aviation company H55 raised $74 million (CHF65 million) in a Series C funding round. Founded in 2015 by the former Solar Impulse team, H55 specializes in electric propulsion, battery packs, and energy management for sustainable air travel. H55 aims to integrate its battery packs into small aircraft by early 2025, positioning itself as a market leader in certified electric aviation solutions.

🔋 Battery technology startup Addionics raised $39 million in a Series B funding round. Founded in 2018, Addionics produces 3D Current Collectors that enhance energy density, reduce charging times, and improve safety while lowering production costs.

🏡 First Street, a climate risk data provider, raised $21 million in a Series A-1 funding round to enhance its software solutions for assessing climate risks. The company has spent the past eight years revealing hidden flood risks in the US and partnering with real estate websites to provide free climate risk information for housing decisions. Their popular "Risk Factor" tool helps prospective homeowners avoid high-risk properties.

🟢 Cowboy Clean Fuels (CCF) raised $13 million in a Series B equity financing round to commercialize its technology that simultaneously produces renewable natural gas (RNG) and removes CO2. Founded in 2020, CCF uses depleted Coal Bed Methane wells in Wyoming to generate carbon-negative RNG from agricultural byproducts.

⚡️ AI startup Splight raised $12 million in Seed funding to support global expansion and further develop its technology for deploying clean energy at scale. Founded in 2020, Splight's AI-based solutions address grid congestion, which wastes up to 40% of renewable energy and leaves many projects waiting to connect. Their technology uses real-time data to unlock up to 2x extra transmission capacity, facilitating faster connection of renewable power plants and distributed energy resources.

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