Natural Gas-Generated Power Continues Upward Trend & SEC Climate-Related Disclosure Rule Updates

Weekly Energy Market Update:

The July ‘23 natural gas contract is trading up at $2.33. Supply and demand remain strong as production continues around the 101 Bcf/d level and power burn demand stays elevated. Residential and commercial demand is up as well, about 2.0 Bcf/d from a week ago as higher temperatures roll through the country, increasing cooling demand. Working gas in storage was 2,550 Bcf, 28.3% more than the same period last year and 16.1% more than the 5-year average. LNG feed gas over the last week is just below 12 Bcf/d as maintenance on a couple of facilities restricts exports. This past winter, power generation from gas in the United States reached a record high and is anticipated to increase by 3% this summer compared to last year. Meanwhile, the Texas House passes two bills meant to increase natural gas-generated electricity.?

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Sustainability

We are pleased to highlight a personal sustainability project from our own Senior Sustainability Analyst, Prerana Tirodkar. After a 30-day educational social experiment on LinkedIn dedicated to simplifying sustainability, she has consolidated her work into an open-source dashboard, containing a summary of content, polls, and resources. This is for anyone looking to deepen their understanding of sustainability and positively impact their personal and professional lives.

--> Access here

What's going on with the SEC?

The US Securities and Exchange Commission’s final climate risk disclosure rule is likely to be?delayed ?until the fall of 2023, according to a former SEC commissioner. The proposed rule, unveiled in March 2022, would require publicly traded companies to disclose their greenhouse gas emissions and any climate-related risks to their operations. A final draft publication ruling was previously expected in April 2023, but further industry resistance and public scrutiny from the extended comment period have forced the SEC to revisit some of the precise details of the draft once again. Many companies say the disclosure rules are too expensive, complicated, and far-reaching. Currently, there are reports indicating that the Commission may weaken or altogether drop Scope 3 emissions disclosure requirements in the final rule, likely in an attempt to avoid numerous lawsuits aimed at challenging the rule after it's finalized. Securities and Exchange Commission Chair, Gary Gensler, has yet to reveal any definitive statements on the scope 3 inclusion, but has acknowledged that far fewer companies accounted for those emissions and said the calculations weren’t as “well developed.” We will continue to provide regular updates on the SEC ruling, via this newsletter and on our blog over the coming months.

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

SEC

• 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
• A new interview from the WSJ discusses climate disclosure and the usefulness of ISSB, and GRI standards in preparing for anticipated U.S. SEC disclosure rules:?A Materiality Focus Can Help Clear Up Climate Disclosure Uncertainty

ISSB ?The?International Sustainability Standards Board

• ISSB Standards launch week 26-30 June 2023: More information here
• In its recent meeting, the G7 reiterated its support for the ISSB: “We support the International Sustainability Standards Board (ISSB) finalizing the standards for general reporting on sustainability and for climate-related disclosures and working toward achieving globally interoperable sustainability disclosure frameworks .”?
• Is G7 Support for ISSB Climate Reporting Standards a Sign That Scope 3 Emission Disclosures Will Soon Be Required in U.S.?, National Law Review Article >>
• NEW:?ISSB?on April 4 announced that companies can take a phased-in approach to reporting under its forthcoming?sustainability?standards, allowing them to focus only on?climate-specific information in the first reporting year of 2024 and wait to add other sustainability-related disclosures in 2025.?
• ISSB said it will relax other elements of the standards for the full first year a company uses the standards, including not having to report on Scope 3 greenhouse gas emissions
• Key dates for S1 General Sustainability-Related Disclosures and S2 Climate-Related Disclosures:
• Released by: end of June 2023
• Come into effect: start of Jan 2024
• Thirteen of fourteen members of ISSB’s board ?agreed to reference both the Global Reporting Initiative (GRI) and the European Sustainability Reporting Standard (ESRS) frameworks in sources of guidance for IFRS S1.
• ISSB has just decided that its initial IFRS Sustainability Disclosure Standards, S1 (general sustainability) and S2 (climate-specific), will?become?effective starting January 2024, meaning that businesses can start collecting sustainability-related disclosure information for the 2024 period to publish reports in 2025.
• ISSB will be releasing the finalized versions of the first global standards for sustainability and climate-related reporting (IFRS S1 and IFRS S2) in?June?of this year or end of Q2 2023?—?according to the IFRS head , Erikki Liikanen?

CSRD

• The release of sector-specific European Sustainability Reporting Standards (ESRS) will be delayed by one year, according to European Financial Reporting Advisory Group (EFRAG).
• ?EFRAG Update ?for March 2023
• Europe’s three primary financial regulatory agencies, the European Supervisory Authorities (ESAs) each announced the?release of their opinions ?on the first set of draft European Sustainability Reporting Standards.
• The?European Commission?re-confirmed that it will publish its regulatory proposal on ESG ratings on?June 13, 2023.
• European Financial Reporting Advisory Group (EFRAG) published its?update for January 2023 , reporting on the work that has begun to develop the ESRS for listed small and medium enterprises (SME) and small and noncomplex financial institutions and captive insurances and re-insurances. CSRD and ESRS are aiming to bring smaller companies – both listed and private – into the fold, which is important to keep an eye on.

General?Corporate Reporting

SBTi ?(Science Based Targets Initiative)

• The Science Based Targets initiative (SBTi) has updated?eight of its key resources ?that enable companies and financial institutions to set and commit to setting science-based emission reduction targets. (April 23)
• The SBTI has launched?new guidance ?for investors to support in identifying the overlaps of the SBTi Financial Institutions (FIs) framework, and Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This will "support enhanced coordination between financial institutions science-based target setting and climate-related financial disclosures".

SASB

• Future of the SASB Standards : What you need to know for 2023 disclosure. The ISSB recently made several decisions that further clarify the role and evolution of the SASB Standards. The ISSB confirmed that industry-specific disclosures are required and, in the absence of specific IFRS Sustainability Disclosure Standards, companies must consider the SASB Standards to identify sustainability-related risks, opportunities, and appropriate metrics.

GRESB

• As a reminder, the deadline to complete the GRESB Assessments is?July 1
• Subscribe to the GRESB Linkedin Newsletter?here >> and read the latest edition for GRESB assessment updates for June 2023

Notable News

Articles on Climate & the Environment

• Our overheating world is likely to break a key temperature limit for the first time over the next few years, scientists predict. , BBC. "Researchers say there's now a 66% chance we will pass the 1.5C global warming threshold between now and 2027." This is significant because it's the benchmark that most scientists agree will tip the planet into the worst effects of climate change.?
• Canada wildfires: US East Coast sees worst air quality in years , BBC.
• Canada could see its worst wildfire season on record , BBC.
• ‘A New Spike’ in Global Temperatures in the Forecast , NY Times. "The World Meteorological Organization reports increased odds that El Ni?o, the global weather pattern often tied to intense heat, will arrive by fall."
• A Fifth of the World Could Live With Dangerous Heat by 2100, New Study Warns , Inside Climate News.
• A Billion New Air Conditioners Will Save Lives But Cook the Planet , Bloomberg News. "In India,?brutal temperatures mean ACs are necessary for survival. But the race against heat is adding to the problem of global warming."

Articles on Corporate Sustainability, Regulation, & Global Events

• What’s in the Debt-Ceiling Deal , WSJ. "the deal came at a cost to the Biden administration’s progress on climate policy and nature conservation"
• California could mandate emissions disclosure even if the SEC doesn't , Washington Post. "Since many businesses that operate in California are also active nationally, the rule could sustain stricter reporting requirements even if federal mandates are pared down."
• EU parliament backs company checks on suppliers for human rights abuses . "Parliament voted 366 in favour, with 225 against, though an attempt to strengthen the obligation of company boards and directors to ensure compliance with the new law failed. The Corporate Sustainability Due Diligence Directive (CSDDD), part of a welter of EU "green deal" plans now facing opposition from centre-right parties, would also require big companies to publish plans on how they will transition to a net-zero economy by cutting carbon emissions."
• According to research from the International Energy Agency , investment in solar is set to overtake spending on oil production for the first time this year.?"Global investment in clean energy is on course to rise to USD 1.7 trillion in 2023, with solar set to eclipse oil production for the first time".
• ESG Is A Response To A Broken Reporting Model , Forbes. "ESG can be viewed as a set of signals that a good analyst would have looked for anyway. Except that the current reporting model under-serves such a diligent analyst."
• Ukraine war: 'Ecological catastrophe' - Five environmental impacts of Nova Kakhovka dam collapse , Sky News. Ukrainian Environment Minister Ruslan Strilets said at least 150 metric tons of oil from the dam have leaked into the Dnipro and the environmental damage had been estimated at 50 million euros ($53.8 million).
• UK Bans Shell, Petronas, Repsol Ads in Greenwashing Crackdown . ESG Today.
• EPA proposes new rules that would dramatically slash planet-warming pollution from power plants , CNN.
• New York Bans Fossil Fuels in New Buildings Starting 2026 , ESG Today.
• DeSantis Signs Anti-ESG Rules into Law , ESG Today. The bill will bar state officials from investing state assets into funds that promote environmental, social, and governance goals and prohibit ESG bond sales.
• Banks and oil groups place bets on carbon capture schemes , Financial Times. "Four companies including H&M and JPMorgan to spend a collective $100mn on carbon removal credits by 2030"
• SEC climate disclosure rule delayed until fall, former commissioner says , S&P global.

Insightful Reports

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

CDPs latest?Non Disclosure Campaign: 2022 Results Report

Norton Rose Fulbright’s?2023 Annual Litigation Trends Survey ?indicates that environmental, social, and governance (ESG) concerns are growing.?

WatchWire Resources:

Don't forget to register for WatchWire's upcoming webinar,?"Peak Load Management and Demand Response in 2023!" ?On Tuesday, June 13th at 2 PM ET | 11 AM PT, we will be discussing the upcoming peak load season, preparing you with how to develop an effective peak load management plan that targets emission reduction and cost management, and diving into the implications of demand response.

Preparing quality sustainability reports is more complicated than ever before and requires extensive planning, resources, and foresight. In our new?Guide to Crafting Sustainability Reports & Communicating Results , we explore:

• The Process of Preparing a Sustainability Report??
• What sections to include
• What data metrics to consider?
• Design and structure of the report?
• How to Communicate Results Effectively?
• The overall design of the report
• How to navigate the writing process
• How to craft a compelling narrative?

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