Climate Week Recap and Potential Lower Contract Risk Premiums in the Winter

Energy Market Update

Prompt-month NYMEX natural gas contract is trading up at $2.92/MMbtu. The EIA reported an injection of 90 Bcf into underground storage this week. An injection of this level is above historical levels, up more than 6% Bcf compared to the 5-year average and 13.4% more than the same period last year. As summer fades, increasing focus on the winter weather outlook looks bearish. A strong correlation between el Ni?o and a warm December could prefer winter contract risk premiums being lower at the end of the year. Weather forecasts for the next week show temperatures for a majority of the country to be above normal, with the exception of cooler conditions in the West. While natural gas may reverse recent losses in early winter, the balance of price risks for Cal 2024 is lower.

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Sustainability

?? Climate Week Recap ??

Last week, two of our very own sustainability analysts, Prerana Tirodkar and Annika Prinz , attended several events from the annual New York Climate Week. Be sure to check out our latest blog summarizing the 5 key takeaways and lessons on sustainability they took away from their discussions.

1. The Role of Generative AI Tools to Boost Corporate Sustainability and Improve Data Coverage

2. The Role of ?Finance and ESG is Converging?

3. Legislation and Regulation Inform One Another for Decarbonization?

4. Transparency can help companies increase consumer trust and manage communication risk from Greenwashing??? Focus on what's material to your business

5. Partnerships are Critical to Achieving Impact at Scale??

Green Buildings

Also be sure to check out our guest post published by GRESB and authored by two WatchWire team members: Sustainability in the built environment: Why green buildings make economic sense. The built environment influences various facets of human existence ranging from residences and workplaces to industrial facilities and road networks, encompassing both real estate and infrastructure.

1. ?? LEED-certified buildings in the United States were estimated to have USD 1.2 billion in energy savings, USD 149.5 million in water savings, USD 715.2 million in maintenance savings, and USD 54.2 million in waste savings.

2. ?? 74% of organizations said they would be willing to pay a premium for leasing a building with leading sustainability or green credentials (eg: LEED)

3. ?? 40 cities, counties, and state governments?committed?to passing community-driven, holistic?building performance?policies by April 2024

Notable News

Articles on Climate & the Environment

• The world needs to cut carbon intensity seven times faster to limit warming to 1.5°C - PwC Net Zero Economy Index 2023. The required annual rate of decarbonization has risen to 17.2% and no G20 country has achieved a decarbonization rate of more than 11% in a single year since 2000.

• IEA publishes 2023 updates to its landmark report Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach .
• Climate and nature action are inseparable and face the same urgent timeline, S&P Global.

Articles on Corporate Sustainability, Regulation, & Global Events

• SEC Fines Deutsche Bank Subsidiary DWS $19 Million Following Greenwashing Investigation , ESG Today. This constitutes the SEC's largest-ever greenwashing fine, just a week following the enhancement to the "Names Rule", which attempts to prevent improper labeling of ESG financial products. The SEC alleged the firm made materially misleading statements about its ESG investment products and, while not admitting guilt, the firm agreed to pay the fine.?A statement from the SEC alleges: “Whether advertising how they incorporate ESG factors into investment recommendations or making any other representation that is material to investors, investment advisers must ensure that their actions conform to their words. Here, DWS advertised that ESG was in its “DNA,” but, as the SEC’s order finds, its investment professionals failed to follow the ESG investment processes that it marketed.”
• Carbon credits for forest preservation projects are mostly ‘illusory’, UC Berkeley study says, Green Biz.
• Customer-driven clean energy procurement, not regulation, is driving decarbonization , Utility Dive.
• SEC Enhances Rule to Prevent Misleading or Deceptive Fund Names , SEC. This "Names Rule" is aimed at curbing "greenwashing" in investment funds.?
• Testimony Before the United States House of Representatives Committee on Financial Services , SEC. Gary Gensler, Chair of the SEC testifies in the House, clarifying the purpose and defending the importance of the upcoming Climate Disclosure Bill amidst growing criticism and a clear risk of litigation once the rule passes.
• SEC Chair Says Climate Disclosure Rule Feedback Pushes Back on Scope 3 Reporting as Less Developed, Unreliable , ESG Today.
• ‘The SEC needs to do its job’: Warren presses Gensler on climate risk , Politico.
• SEC chief says new California law could 'change baseline' for coming SEC climate rule , Reuters. "If it were signed into law, as I understand it, that would require companies a certain size to report their climate risk," Gensler said in testimony before the House of Representatives."That may change the baseline. If those companies were reporting to California, then it would be in essence less costly because they'd already be producing that information."
• EU Lawmakers Ban Generic and Emissions Offsetting-Based Green Product Claims , ESG Today.
• The EU Plans To Ban ‘Climate Neutral’ Claims By 2026 , Carbon Herald. "In an attempt to stop consumer products greenwashing, the EU will ban claims such as “climate neutral” or “eco” unless companies can prove their accuracy. The rules are expected to come into force by 2026." The EU would ban: ???sweeping carbon-neutral, biodegradable, and eco claims that cannot be fully proved in evidence;???claims to carbon neutrality that rely on carbon offsetting; and???sustainability labels that are not based on certification schemes or established by public authorities.
• IEA says route to net zero requires more cash and less politics , Reuters.
• Companies Might Be Forced to Report Their Impact on Nature. A New Framework Aims to Help , WSJ.
• Lego ditches oil-free brick in sustainability setback , Financial Times. "World’s biggest toymaker says new material made from recycled bottles would have bigger carbon footprint"
• Speaking during one of the opening sessions of Climate Week NYC, Newsom said he would sign the two bills: The Climate Corporate Data Accountability Act (S.B. 253 ) and the Greenhouse Gases: Climate-Related Financial Risk bill (S.B. 261 ).
• More Companies Are Disclosing Their ESG Data, but Confusion on How Persists , WSJ. "63% of US companies are reporting their ESG data in 2023 compared to 56% in 2022."
• White House Directs Agencies to Account for Climate Change in Budgets , New York Times.
• Investors want to hear from companies about the value of sustainabilit y, McKinsey.

Updates to Sustainability Reporting?Regulations?and Moves for?Consolidation?of Standards:

SEC Climate Related Disclosures

• The week of June 19-23, the Securities & Exchange Commission indicated--through an update to a?GSA website ?--that the proposed climate change disclosure rule would likely be finalized and released in October 2023
• SEC climate disclosure rule?delayed until fall 2023, former commissioner says,?S&P Global. ?The SEC initially suggested the rule would be published in December 2022 and then again pushed that date back to April 2023.
• Given the new time frame, financial statements and disclosures under the rule would not be due until 2024

European Commission: ESRS under the CSRD

• The European Commission officially adopted the?first set of European Sustainability Reporting Standards (ESRS) ?requiring companies to provide comprehensive and robust information about social and environmental impacts, risks and opportunities to a broad group of stakeholders on July 31, 2023.

ISSB ?The?International Sustainability Standards Board

• International Sustainability Standards Board (ISSB)?will take over the Task Force on Climate-related Financial Disclosures’ (TCFD)?role in monitoring companies’ progress on climate-related disclosures. ISSB Chair?Emmanuel Faber ?said, “The ISSB welcomes the FSB's request to transfer the TCFD’s monitoring responsibilities to the ISSB… This announcement provides yet further clarification of the so-called ‘alphabet soup’ of ESG initiatives for companies and investors .”
• ISSB Standards?launch week?26-30 June?2023

Insightful Reports

IEA publishes 2023 updates to its landmark report Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach .

The UN’s global report card as part of the “The Global Stocktake ” assessed progress since the 2015 Paris Agreement.

Investing in American Energy report by the US Department of Energy (DOE). Significant Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy Economy and Emissions Reductions

Struggling with the details of?ISSB?/?IFRS,?ESRS?/?CSRD?or just overall?ESG?or?sustainability?frameworks? Check out the detailed analysis, tips and guidelines from?WBCSD – World Business Council for Sustainable Development.

This year’s edition of the?World Energy Investment ?provides a full update on the investment picture in 2022 and an initial reading of the emerging picture for 2023.

IBM's recent ESG global survey ?covered more than 20,000 consumers and +2,500 executives with a focus on their sustainability preferences when making employment and purchase decisions.

Ember's Global Electricity Review 2023 . The report analyzed electricity data from countries representing 93% of global power demand and found that electricity produced in 2022 was the cleanest ever. Solar and wind represented 12% of global electricity production, up from 10% in 2021, and all clean energy, including hydro and nuclear, made up a record 39%.

After years of work, involving hundreds of researchers from around the world, the Intergovernmental Panel on Climate Change (IPCC ), has published a synthesis report on the latest?Climate Change?science this week.?Intergovernmental Panel on Climate Change’s (IPCC)?Sixth Assessment Report (AR6)

The 2023 Climate Risk Landscape Report , by the UN Environment Program. It highlights the latest developments in the rapidly evolving climate tool marketplace, featuring over 3 dozen tools for physical and transition risk as well as climate alignment

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