Down but Not Out

An environment that seems headed toward promoting economic expansion, coupled with a more nuanced demand for sustainability-linked products, leaves us wondering if Sustainability and ESG criticism has run its course.

Environmental

Sustainable Jet Fuel from Agricultural Waste

In a groundbreaking development, scientists have successfully tested a new method to produce sustainable jet fuel from lignin-based agricultural waste. Lignin, a complex organic polymer found in plant cell walls, is typically a byproduct of agricultural processes and is often discarded or burned, contributing to environmental pollution.

This innovative method directly converts lignin into jet fuel through a catalytic process, offering a cost-effective and environmentally friendly alternative to traditional fossil-based jet fuels. The process helps reduce the aviation industry's carbon footprint and provides valuable use for agricultural waste, promoting a circular economy.

This technology can significantly lower the overall environmental impact of jet fuel production by utilising waste materials, making air travel more sustainable and reducing reliance on non-renewable resources.

CO2 to Cement Conversion

Mighty Buildings, a U.S.-based 3D-printing construction company, has recently partnered with Fortera to develop a revolutionary material that converts CO2 into cement. Traditional cement production is a significant source of carbon dioxide emissions, contributing to global warming. This innovative material captures carbon dioxide emissions and transforms them into a critical cement component, significantly reducing the carbon footprint associated with traditional cement production.

The process involves capturing CO2 from industrial emissions and converting it into calcium carbonate, which is then used to produce cement. This partnership aims to promote the use of sustainable materials in construction, paving the way for greener building practices and contributing to the fight against climate change.

Integrating this technology into the construction industry makes it possible to create more sustainable buildings and reduce greenhouse gas emissions, helping mitigate the effects of climate change.

Social

Green Skills in Demand

Demands for a greener workforce and the associated skills are outpacing the natural increase in supply. As we're seeing a significant shift within companies and globally towards a greener form of operations and economy, current trends suggest that there are more than twice as many jobs as there are professionals, according to LinkedIn's 2024 Global Climate Talent Stocktake.

Governance

Australia and Climate Reporting

The Australian House of Representatives voted to pass the Treasury Laws Amendment bill, which introduced mandatory climate-related reporting requirements for medium and large firms. The bill focuses on the value chain's climate-related risks and greenhouse gas emissions.

Beginning in 2025, the legislation also has amendments to include a phased-in approach for Scope 3 reporting.

Firms that would fall into scope have noted a perceived need for more clarity from the Net Zero Economy Authority, the group responsible for guiding the transformation to net zero, regarding reporting style, templates, and even depth and materiality reporting.

We'll have to wait and see if Australia follows the semi-detailed launch of CSRD across the E.U. or takes a more pragmatic and hands-on approach.

My bet, is the former.

Honk Kong Joining the Band

The Institute of Certified Public Accountants announced the new proposal, which focuses on developing a sustainability disclosure ecosystem to align local standards with the more prevalent international standards for sustainability data reporting, in this instance, ISSB.

Technology

MSCI backing Carbon Credits?

The data and research firm has launched a new part of its offerings based around Carbon Project Rating, enabling market participants to quantify and justify their carbon projects.

Part of the new offering will assess over 4000 projects, considering climate impacts and legal and ethical risks. Following this process, new ratings will be evaluated and scored accordingly. Ranging from AAA to CCC, the threshold for achieving the former is based on the likelihood of achieving 1 tonne of emission impact per credit, alongside other positive factors.

Corporate

TotalEnergies $100mn commitment

The French energy giant has agreed to invest $100mn with climate solutions provider Anew Climate to support forestry operations across 10 U.S. states.

TotalEnergies will acquire carbon credits generated by the projects to help offset its remaining Scope 1 & 2 emissions. It is also committed to investing $100mn annually in projects capable of generating at least 5 million metric tons of CO2e of carbon credits annually by 2030. All of this links back to targets set to reduce greenhouse gas emissions by 40% by 2030.

BNP's new fund

The asset manager announced that it has raised $166mn for its Solar Impulse Fund, which is focused on investing in innovative cleantech startups with positive environmental impact that support the acceleration of ecological transition.

As an SFDR Article 9 fund, it aims to make 15-20 investments across the E.U. and the U.S., targeting sectors such as energy transition, sustainable agriculture and food, water and ocean management, and the circular economy.

HSBC's Infrastructure Debt Strategy

The asset management branch has announced the first vintage of its Global Transition Infrastructure Debt strategy, which aims to provide investors with opportunities to finance infrastructure assets and facilitate the transition to net zero in sectors such as clean power and energy efficiency.

Even with the affronted stigmatism around ESG or Sustainability-linked financial products, the supply clearly shows that financial institutions still believe funds are to be captured and that products remain attractive to investors. With more appetite resulting from specifically targeted products proving more prevalent, watch this space as we see a flood of more nuanced offerings from financial institutions.

Opinion

Global economies are looking to shift into a more expansionary setting, alongside developments and movements away from heavy criticism towards anything related to Sustainability. International corporations have been upping their climate goals and commitments, albeit some leaving the pathway somewhat vague. We look to be shifting into a more upbeat, nuanced form of sustainable investing mindset.

The U.S. presidential election may have something to say about this yet. Should a more traditional business format in Donal Trump be re-elected president, and what limits/constraints does he put on Sustainability growth and development across the world's largest economy?

As we see more rate cuts and the cost of borrowing drops, expect more expansions into the Sustainability modem of operations alongside the continued increase in Sustainability-Linked products and the processes that surround them.