April 8, 2022 - ESG and Climate News

How F^&*ed are we?

This week began with another report from the Intergovernmental Panel on Climate Change (IPCC).? This was their third installment of the sixth assessment report - and, yes, it can be confusing to keep up with the cadence of these reports. A meme floating around social media all week boiled it down this way:

• IPCC 1 - what f^&*ed it?
• IPCC 2 - exactly how f^&*ed is it?
• IPCC 3 - how do we unf^&*k it??

On a more serious note, the report is a damning assessment of how global mitigation pledges fall short of the progress required to avoid the worst effects of climate change. UN Secretary General António Guterres called the report “a litany of broken climate promises” saying that “some government & business leaders are saying one thing, but doing another. Simply put, they are lying.”

Backing up his greenwash rhetoric, Guterres announced an expert group to help organizations “walk the talk” by creating better standardization around net-zero goals and speeding up implementation.

The heat is on

The report concluded that current policies put the world on track for warming within a range of 2.3C to just above 4C by 2100, with the consensus at 3C. If countries meet their current nationally determined contributions (NDCs) for 2030 under the Paris Agreement it would shave a few tenths of a degree off future warming – but a large gap remains between 2030 commitments and the magnitude of emissions reductions needed to put the world on track for below 2C or 1.5C warming by 2100.

?The good news is this report tells us how we can get out of this mess. Nearly all scenarios that limit warming below 2C rely on some degree of carbon dioxide removal (CDR) technology to accelerate the pace of emissions reductions, to offset residual emissions, and to provide the option for net negative CO2 emissions in case global temperatures need to be brought back down.

Climate concerns overshadowed??

Highlighting the harsh global situation, on the same day as the IPCC release, Jamie Dimon, CEO of JP Morgan, released an open letter calling for an “immediate approval for additional oil leases and gas pipelines.”? With soaring fuel prices adding to pandemic-fueled inflation and the ongoing war in Ukraine, there is an increasingly unstable political environment that has pushed climate concerns down the list of priorities.??

Watered down

Similar to what happened with the COP26 final report, the IPCC wording was changed at the last minute and a section of the report critical of the oil and gas industry’s ‘climate blocking activities’ was cut from the final draft. Reportedly, Saudi officials and big oil companies pushed the watered down language about fossil fuels.?

It's now or never

The report is a call to nations and companies to bring their net zero ambitions into reality.

Prof Jim Skea, a co-chair of the report, says “it’s now or never to limit global warming to 1.5C”. To maintain 1.5C, the IPCC states rising emissions must peak before 2025—a mere 32 months away—and that immediate action and deep emission reductions across every sector is necessary.? To put this in context, the amount of CO2 that the world has emitted in the last decade is the same amount that's left to us to stay under this key temperature threshold.

When calls for drastic and immediate changes are juxtaposed with an unstable geopolitical environment, it seems unlikely that we will change course. But, the report lists some hopeful signs of progress. For example, renewable energy is now as cheap or cheaper than fossil fueled power. And, even though emissions have increased in the last decade, they grew more slowly than they did in the previous decade.?

The message of this report is that we have cost-effective technology to avoid the worst effects of climate change, but lack the political will to take the actions needed.?

Carbon sucks

One of the key takeaways from this report is that natural carbon sinks and carbon capture technology are needed. The report recommends a wide range of actions for agriculture, forestry, and even a greater shift to plant-based diets to reduce carbon in the atmosphere, concluding that such measures could provide as much as 20%-30% of the emissions reductions needed to remain within 1.5-2C of warming.

Carbon capture technologies are contentious because they have been used to justify extraction of oil and gas. These technologies got a big boost this week when Climeworks, a Swiss carbon capture company, announced a massive $650 million investment. They forecast that the new cash will take them from the 4,000 tonnes of CO2 they capture today to over 1 million tonnes captured per year by 2030.?

The backlash begins?

Surprising no one, the Securities and Exchange Commission’s (SEC) landmark climate disclosure proposal is drawing pushback from Senate Republicans who are urging its withdrawal, arguing the move is outside of the agency’s authority. The opposition won’t derail the rule-making process but is a preview of the legal challenges that are certain to follow.?

Announcing: Full Disclosure?

My colleague, Kristina Wyatt, has launched a new weekly newsletter: Full Disclosure.?

Ms. Wyatt is a globally recognized expert on ESG disclosure policy.? As a seasoned attorney, she has worked on a long list of ESG policy matters, including the SEC climate disclosure proposal.???

This newsletter breaks down the complex and dynamic policy developments from around the world and provides readers a succinct summary and call to action.? The inaugural edition summarizes how global climate reporting requirements are converging.? Please read, share and subscribe to this wonderful newsletter.?

Notable news of the week:

• In an article from Protocol this week, Kentaro Kawamori and I discuss the power CSOs have to bring companies in line with their climate ambitions. Of course, their success depends on several factors, like CSOs having a direct line to the CEO or linking executive pay to decarbonization.?
• Robert Eccles and I commented in this E&E News article about early-stage software companies that calculate corporate carbon emissions experiencing a boom in interest from businesses that will soon be required to disclose their planet-warming gases.
• Robert Eccles covered the recent announcement of a collaboration agreement between the standard-setting boards of the IFRS Foundation and the Global Reporting Initiative (GRI). In a progressive step for corporate transparency, the ISSB and the GSSB will seek to coordinate their work programmes and standard-setting activities.?
• Following the groundbreaking SEC proposal, CIOs are getting more involved in disclosure compliance work. The CIO's evolving role will begin to cover the "E" in and “S” in ESG, experts predict.
• The SEC proposal cements the need for companies to report consistent, accurate, and transparent emissions data. Software startups are racing to help companies do so.
• Biden is set to use a Korean war era authority to boost supply of electric vehicle batteries. The Defense Production Act would increase availability of key EV materials like nickel, cobalt, and graphite as the administration tries to wean the country off foreign energy supplies.
• A new study led by researchers from the University of Waterloo projects that within 60 years, hardly any previous Winter Olympic host cities will have the snow suitable to hold the competitions. The culprit? Climate change.
• Bank of America revealed that it has more than doubled its sustainable finance activity, reaching a high of $250 billion in capital mobilized for financing SDG-aligned projects in 2021.

Notable podcasts:

• The America adapts podcast is a podcast about climate change adaptation with adaptation expert Doug Parsons as he talks with experts from different fields about the choices we face and the people who make them. In the latest episode, he hosts the Federal Reserve’s Dr. Elizabeth Mattiuzzito who discusses her research on the ways low- and moderate-income communities are vulnerable to climate risks.
• This week’s ClimateTech with Kentaro podcast features Dan Ahn of Clearvision Ventures: a leading evergreen venture capital fund, which he founded to help world-changing entrepreneurs. Dan shares what he looks for in founders, and what he saw into the future of electric vehicles that most investors on Sandhill Road failed to see.

Notable events:

• The Bloomberg New Energy Finance Summit (BNEF) will occur from April 19-20 in NYC. Its focus is on the role of capitalizing the technology to mitigate climate change and build a more sustainable future. Speakers include leaders from the private sector and international governmental leaders focused on energy and climate change.?
• Responsible Business USA will take place from April 19-20 in New York. The event will focus on enabling businesses, financial institutions, and governmental agencies to build blueprints aligning business models and value chains with the goal of combating and mitigating climate change. You can register for the event and read more here.
• City Week 2022, the UK’s annual gathering of the international financial services community, is taking place from April 25-27 in London, UK. Key topics include climate transition for developing economies, a net zero global financial system, the Paris Agreement’s implications for financial portfolios, and climate change policies. You can register for the event here.
• The Sustainable Investment Forum is hosting its 5th annual conference in London this year, with the first part on April 26. The forum will center on increasing momentum towards a net zero global economy, the implications of COP26, natural capital risk, responsible investing, and net zero finance. You can register for the event here.
• Bloomberg Green Summit is an upcoming event on April 27. The virtual event is a big one on the sustainability calendar, convening top climate leaders to create solutions and drive actions that will shape the future of our planet. It's a true thought leadership experience operating at the crossroads of sustainability, design, culture, food, technology, science, politics and entertainment. You can register for the event here.