What's Happening in Sustainability & ESG (Week Recap 26.03 - 01.04) 🌎

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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:

• Some asset managers are pulling back from public ESG commitments, while others are leaning into it as a value creation and protection tool 📈

• Backlash continues against Blackrock, with the state of Mississippi issuing a cease and desist order against the firm 🔴 

• The US administration has finalized rules to limit methane leaks from oil and gas drilling on public lands 🇺🇸

• Vanguard has been found guilty by an Australian court of making misleading claims about its ESG fund 📉

• Citi Bank reports that 42% of its energy clients lack substantive plans to reduce GHG emissions ⚡️

• and other news 🌍

THE WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🤔 Financial data provider Pitchbook's new "State of Private Market ESG and Impact Investing in 2024" report shows that asset managers are retreating from ESG commitments — at least in public. But it also found others are leaning into it as a method of "value creation and protection … in the challenging macroeconomic environment", reports Axios. Pitchbook's study revealed that programs were being underemphasized in favor of quieter support for ESG, a phenomenon known as "green-hushing". The analysis also highlighted the "extreme" political backlash and macroeconomic factors, such as persistently high inflation rates, as reasons for asset managers to reevaluate their position. "This is a notable shift from the swift adoption and branding of ESG in the private markets that occurred at the start of the pandemic," the firm notes. However, it also states that the financial performance of ESG-centric portfolios varies and that there is no quantitative evidence that using ESG necessitates sacrificing returns. Proponents of environmental and social investing continue to see potential upside, particularly due to decarbonization efforts and the effects of climate change.

🇺🇸 The US administration has finalized rules to limit methane leaks from oil and gas drilling on public lands, requiring drillers to detect leaks, make repairs, minimize waste, and pay royalties for avoidable natural gas losses. The rules, which update 40-year-old regulations, could conserve billions of cubic meters of gas and generate over $50 million in additional royalty payments annually.

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MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

📈 The world’s largest asset manager, BlackRock plans to maintain its view of the global shift towards low-carbon energy sources as one of the most significant drivers of both market opportunity and risk. This holds true even as the energy transition becomes "more contentious in the US" stated Larry Fink, the firm's Chairman and CEO, in his annual letter to investors. Fink also emphasizes the continued need for traditional hydrocarbon-based energy sources and denies claims of BlackRock boycotting traditional energy firms. BlackRock, a leader in the investment industry for ESG practices, has recently been targeted by anti-ESG movements, particularly by Republican politicians in the US. For instance, last week, the Secretary of State for the US state of Mississippi issued a cease and desist order against BlackRock, alleging fraudulent action and misleading statements related to the company's ESG investment policies. The order accuses BlackRock of misleading investors about the extent to which ESG factors are considered in both ESG and non-ESG funds.

🔴 Vanguard Investments Australia has been found guilty by a federal court in Australia of making misleading claims about its ESG fund, such as not excluding investments in fossil fuel companies as stated in its communications and disclosures. The Vanguard Ethically Conscious Global Aggregate Bond Index Fund, launched in 2018, was alleged to have not conducted ESG research on a significant proportion of the bond issuers in the fund, exposing investors to fossil fuel-related investments.

⚡️ Citi Bank reports that 42% of its energy clients lack substantive plans to reduce GHG emissions. Only 8% of its energy clients have a comprehensive plan targeting emissions reductions across all scopes and demonstrate an ability to execute. The bank, which has set a "net zero" target by 2050, bases its analysis on 2021 data and expects to improve data collection and analysis timing.

🇬🇧 The UK's Competition and Markets Authority (CMA) has secured agreements with fashion retailers ASOS, Boohoo, and George at ASDA to ensure their environmental sustainability claims are clear and accurate. This follows a CMA investigation into potential greenwashing in the fashion sector. The retailers have committed to actions including using specific terms like "organic" or "recycled" if products meet certain criteria, and avoiding misleading "natural imagery". They will also provide regular reports on their compliance with these commitments.

WHAT ARE COMPANIES DOING?

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

📊 Persefoni, a Climate Management & Accounting Platform (CMAP) provider, has launched a free tool, Persefoni Pro, to help businesses measure and disclose their GHG emissions. The tool aims to simplify the process of collecting and disclosing emissions data, particularly Scope 3 emissions, to meet increasing regulatory requirements worldwide. The tool guides users through the process, adapting to their responses, and is the first step in a series of planned enhancements.

⚡️ Walmart has announced new clean energy investments and purchase agreements, aiming to add nearly 1 GW of renewable energy capacity across the US. The new commitments include long-term renewable energy purchase agreements and investments in community solar and distributed generation portfolios.

 🟢 LEGO Group and KIRKBI have signed a 9-year carbon removal agreement with Climeworks, a direct air capture (DAC) company. The deal, valued at over $2.8 million, supports LEGO's climate commitments, including achieving net-zero emissions by 2050 and investing over $1.4 billion in environmental sustainability initiatives over the next three years.

⚡️ Microsoft has signed two Power Purchase Agreements for a total of 400 MW of renewable energy with Leeward Renewable Energy from two new solar projects in Texas, US. The projects, expected to be completed by 2024 and 2025, will use ultra-low carbon, thin-film photovoltaic solar modules and aim to provide local economic benefits and environmental enhancements.

EVERYTHING FINANCE

Funding rounds, sustainable finance, acquisitions & private equity deals

🟢 Energy services company SLB is acquiring a majority stake in Aker Carbon Capture for $380 million, forming a joint venture aimed at industrial decarbonization. Aker Carbon Capture offers technology to reduce and remove CO2 emissions from industrial plants.

🛩️ Southwest Airlines has acquired SAFFiRE Renewables, a sustainable aviation fuel (SAF) startup backed by the US Department of Energy. SAFFiRE uses technology to generate renewable ethanol from agricultural waste, which can then be converted into SAF, reducing GHG emissions by up to 84% compared to fossil fuels.

🟢 Global sustainability advisory firm Anthesis has merged with purpose-focused strategic consultancy Given. Given, which works with C-suite decision makers to embed purpose in their organizations for sustainable growth, has clients including IKEA, Lloyds Banking Group, and L’Oreal.

🔋 Battery energy storage provider Lightshift Energy has raised $100 million to expand its utility-scale energy storage solutions. The company, which was recently rebranded from Delorean Power, is developing a range of battery energy storage projects across the US to meet growing demand from utilities and large corporate consumers.

🟢 Cleantech startup EVOLOH has raised $20 million to advance its low-cost clean hydrogen production solution. The company manufactures high-performance electrolyzer stacks for hydrogen production, offering an 80% reduction in capital investment and footprint.

📦 Intelligent heating systems startup watttron has raised €12 million in a Series B funding round to advance its sustainable packaging solutions. The Germany-based company, founded in 2016, helps packaging companies transition to sustainable materials by reducing energy requirements and increasing production efficiency.

⚡️ Clean fuel technology startup WASE has raised £8.5 million (USD$10.7 million) to scale its waste-to-energy solution that produces biogas from organic waste. The company's technology increases biogas generation by 30% and raises the methane content of biogas to over 80% compared to conventional digesters.

♻️ Circular.co has raised $10.5 million to scale its sustainable sourcing platform for recycled materials. The platform connects buyers and suppliers, providing access to over 9,000 global suppliers and 50,000 post-consumer recycled (PCR) materials records.

🟢 Heat pump tech startup Evari has raised $7.5 million in seed financing to commercialize its energy-efficient technology for heating and cooling systems. The funding will support team growth and manufacturing scale-up, as demand for heat pumps increases due to government incentives for decarbonization.

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