January 28, 2022 - ESG and Climate News

Climate action is building momentum across the globe and is looking to become the new norm . This week, ESG and Climate news is focused on tangible actions in the battle against climate change that can sometimes be obscured by the steady drumbeat of dire warnings and greenwash.?

Decarbonization Wheels in Motion

In a world addicted to fossil fuels, decarbonization is complex and affects all aspects of the economy. But, the wheels are in motion.

Electric vehicles continue their meteoric rise. While only two per cent of the vehicles sold in the U.S. last year were E.V.s., far behind E.V. adoption rates in China and Europe - (in Norway, a whopping seventy-five per cent of new car sales in 2020 were E.V.s.), all major car companies have committed to an electrified future. Two of America’s largest automotive companies - Ford and General Motors -? unveiled plans to double down on electric trucks - the best selling (and highest emitting) class of vehicles in the US.?

Renewable energy growth is poised to accelerate in 2022, as concern for climate change grows. Deloitte estimated an additional 13.8 GW of wind and solar power was added in the first eight months of 2021 - up 28% over the same period in 2020 - driven by renewable portfolio standards and energy storage procurement mandates . The report points to an 85% cost decline over the past decade for solar photovoltaic (PV) systems making them one of the most cost-competitive energy resources in 2022.

Offshore wind power is also on the rise - particularly in the two highest emitting countries - the US and China. In the US, record-breaking offshore wind projects in New York and the Gulf coast’s first offshore turbines off Louisiana are in the works.? China - the world’s largest emitter - installed more offshore wind power in 2021 than all other countries did in the last five . As a result, China now has half of all global offshore wind power capacity.

I Wish They All Could Be California Laws?

In one of the most positive climate action steps ever taken by a state, California just passed The Climate Corporate Accountability Act (S.B. 260) through its State Senate. The bill requires companies with revenues above $1 billion that are doing business in California to disclose their carbon emissions. It will affect some 5,200 companies, including the nation's largest corporations, as nearly all do business in The Golden State. Importantly, the bill mandates disclosure for all three scopes of emissions — which includes the emissions from the company's supply chain. S.B. 260 continues California’s tradition of leadership in environmental policy and - if enacted - will set a precedent for other states.?

Investing in the Future

PWC's latest report on climate tech shows strong growth in this emergent sector. A total of US$87.5bn was invested in climate tech in the second half of 2020 and first half of 2021. The first six months of 2021 delivered record investment levels in excess of US$60bn. This represents a 210% increase from the US$28.4bn invested in the twelve months prior. Climate tech now accounts for 14 cents of every venture capital dollar.

In parallel with the growth in climate tech investment, divestment in the fossil fuel sector continues. While a controversial tactic, universities - often pressured by their students - continue to divest. Here’s how one student convinced her university to take action. Arizona State University’s Foundation didn’t need coercion to take action. Instead, they recently released a report describing and outlining their approach to sustainable investing as part of their goal of carbon neutrality by 2035.

Climate Justice Gets Top Billing

A fair and equitable transition to a low carbon future is essential so it was heartening to see pop star Rihanna bring attention to this mission by investing $15 million in climate justice foundations around the Caribbean. ??

Indigenous people tend to bear a disproportionate amount of the impacts of climate change, so it is encouraging that indigenous-led conservation efforts are keeping fossil fuels and trees in the ground in the Arctic and California .

Carbon Offset Rating Race

Companies often utilize carbon offsets to meet their carbon emissions targets, but concerns about their lack of quality, assurance or international standards make their effectiveness hard to gauge . Climate tech companies are racing to change that. One of the leaders in this race is Sylvera, a London-based company that provides ratings similar to that of a credit score . They use machine learning with 3-D scanning and satellite imagery data to estimate how much carbon is stored in trees. Then, they can extrapolate their findings into an estimate of an offset project’s effectiveness.?

Moving Beyond Greenwash

This week, Charmian Love and Robert Eccles gave their tips on what actions business leaders can take to overcome greenwash . Their recommendations include: listening to your constructive critics, collaborating with other companies in your industry (including competitors) to advocate for action, supporting your employees who engage in social movements, and establishing principles about who you will and will not do business with.?

One company that has embraced these recommendations is UK-based Aviva - the largest general insurer and a leading life and pensions provider. This week, Aviva Investors fired a warning shot at British boardrooms saying it will vote against the election of directors at companies where their commitments on climate change, biodiversity and human rights fall short of its expectations.

The quest for a single global standard for reporting on greenhouse gas emissions got a boost this week when the newly formed International Sustainability Standards Board (ISSB) appointed Sue Lyons as vice chair and Janine Guillot (CEO of the Value Reporting Foundation) as special advisor.??

Build Back Better 2.0

Like a phoenix rising from the ashes, Democrats are taking action to revive the climate portion of Biden's ‘Build Back Better’ bill . They hope that by stripping out everything but the key climate and clean-energy provisions, the new package will pass muster with Senator Joe Manchin - who was the spoiler for the full plan.

Carbon Neutral Catwalks?

The fashion industry is also stepping up its act. Last November, the Fashion Industry Charter for Climate Action was renewed at COP26, propelling its vision to achieve net-zero emissions by 2050. And in New York, recent legislative proposals for a Fashion Sustainability and Accountability Act could make it the first state to set broad sustainability regulations for the industry.

As always, please like, share, and subscribe.

Upcoming ESG and Climate Events

• Greenbiz22, the premier event for sustainable business leaders, is fast approaching (February 15-17). I will be speaking at the 'ESG Standards: The State of Play' session on February 16 at 4:15pm (local Arizona time). Register here.

ACTION REQUESTED - We invite interested corporate and investor representatives to participate in a study on costs incurred by corporations and investors for measuring, managing, and disclosing carbon emissions and climate risk information. Participants will be asked to take part in an online survey that will be distributed in early-February 2022. If you would like more information and/or would like to participate in the survey, please register your interest by contacting ERM’s Emily Brock - [email protected]