The CS3D Digest #35
Ripple Research
Ripple Research works at the intersection of data science, behavior change, and social impact.
Welcome to the 35th edition of The CS3D Digest, a dedicated newsletter by Ripple Research and your weekly compass for navigating conversations that matter in the corporate sustainability landscape. Our goal is simple—to keep you informed about the latest developments in the Corporate Sustainability Due Diligence Directive (#CSDDD) space as we further our understanding of it.
Read our previous editions to catch up, and subscribe for future updates!
Today's focus: Mercer Superannuation fined for greenwashing, UK Government accused of inadequate climate action, EU policies fall short of meeting net zero emissions target, U.S. Congressional Committee demands investors to clarify ESG goals, and majority of EU financial institutions struggle with sustainability compliance.
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What are we reading?
We've employed our proprietary AI tools to curate the most engaging news about CS3D and related regulations. Our focus extends beyond what's trending at the moment to showcase headlines that are fueling meaningful conversations around the world.
The Federal Court of Australia has ordered Mercer Superannuation to pay A$11.3 million (USD 7.4 million) for making false claims about its sustainable investment options. The Australian Securities & Investments Commission (ASIC) initiated the case, accusing the global investment fund of greenwashing. From 2021 to 2023, Mercer advertised seven ‘Sustainable Plus’ investment options as excluding investments in carbon-intensive fossil fuels, alcohol production, and gambling, but investigations revealed that the funds included companies involved in these sectors. Justice Horan, who ruled on the case, highlighted that greenwashing undermines consumer trust in ESG claims and distorts fair market competition. This case is part of ASIC's broader crackdown on greenwashing, which includes actions against other financial entities like Active Super and Vanguard Investments.
The British government is facing a legal challenge at the High Court in London for allegedly failing to protect people, property, and infrastructure from climate change. The case, brought by the environmental group Friends of the Earth and two individuals personally affected by climate change, argues that the latest National Adaptation Programme (NAP3) does not meet the requirements of the 2008 Climate Change Act. Kevin Jordan, whose home was destroyed by coastal erosion, and Doug Palley, whose health is impacted by rising temperatures claim the NAP3 breaches their rights and fails to protect other vulnerable groups. This case, while unprecedented in the UK, follows a European Court of Human Rights (ECHR) ruling against Switzerland for inadequate action on climate change that jeopardized their citizens' rights to a safe and healthy environment.
A new report from economic consultancy Oxera suggests that doubling down on decarbonization efforts would boost economic growth across the EU. The report argues that current policies are insufficient to achieve net zero emissions by 2050 and calls for more stringent regulations, increased deployment of green technologies, fairer tax policies, and a robust carbon pricing system. Giulio Federico, a competition and energy economist at Oxera, stresses that a substantial increase in the strength and scope of existing policies is necessary for the EU to meet its greenhouse gas reduction goals. This includes imposing penalties on high-emission sectors, setting phase-out dates for advanced fossil fuel technologies, providing subsidies for low-carbon technologies, and introducing a carbon pricing system.
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Judiciary Committee Chair Jim Jordan demanded that over 130 investors clarify their environmental, social, and governance (ESG) goals, underscoring a broader partisan divide concerning ESG practices. This scrutiny arises over concerns that collective efforts to reduce greenhouse gas emissions could potentially violate antitrust laws. The Committee's letters have targeted Climate Action 100+, a coalition of around 700 investors committed to addressing climate change through corporate engagement. Ceres, a climate-focused investor group that co-founded Climate Action 100+, has questioned the necessity of these new requests, arguing that the letters are likely intended to discourage investor participation in ESG initiatives. The Committee also interviewed former regulators to explore the legal implications of ESG activities, as a Biden administration rule overturning a Trump-era restriction on socially responsible investing remains under judicial review.
A recent PwC study highlights a major gap in sustainability compliance among EU banks and insurers. Most financial institutions are not meeting the EU’s taxonomy for sustainable activities, falling short of the Union’s transition goals. The analysis, reported by Environmental Finance, found that banks show low alignment with sustainability targets, averaging only 2% for both turnover-based and capital expenditure measures, with country-specific figures ranging from 0% to 13%. The study, covering 12 EU countries and involving 530 non-financial and 97 financial companies, underscores the need for financial institutions to better integrate sustainability into their strategies. PwC partner Mark Wright noted that significant efforts are required to redirect financial flows towards sustainable practices and fully align with EU goals.
Voices from this week
??Karla Boza, Founder at Jacinta , advocates for solutions that ensure better cash flow, less labor, and reduced risk for farmers, emphasizing that dignified livelihoods should be a priority in any approach to improving the coffee industry.
??Amanda Koefoed Simonsen, Board Member at Dj?f , highlights that the enforcement of the EU's CSDDD represents a significant step toward improving corporate responsibility through mandatory due diligence across entire value chains.
??Gert van der Bijl, Senior EU Policy Advisor Solidaridad Network , questions whether CSDDD will avoid the pitfalls of past certification schemes that disproportionately benefit companies, and instead focus on closing the living income gap for smallholder farmers.
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