Sustainability & ESG insights April'23: ESG as revenue enabler and UN’s free Sustainability Courses

??Via this monthly newsletter, we'll share more knowledge and content about what's arguably the most important domain of our generation: Sustainability and ESG. The goal is to inspire and share insights so each and everyone of us can make a difference in the Environmental, Social and Governance domain we call Sustainability.

Valuable ESG and Sustainability news of April '23

??In this months’ newsletter: 

• Over 70% of businesses view ESG as a revenue enabler
• Earth Day 2023: Invest in our Planet
• Accounting for flood risk would lower American home prices by $187bn
• BCG whitepaper: Financed emissions are 700x greater than bank operational emissions
• United Nations free Sustainability Courses
• A mere 5% of FTSE 100 companies have credible Net Zero Plans
• Bank of Canada begins disclosing climate-related risks
• Webinar series ESG, mandatory disclosures, and software solutions
• And more…

Over 70% of Businesses View ESG as a Revenue Enabler: IBM Study

The argument that ESG harms profitability is “more than a myth—it’s misinformation that leads to poor business decision-making,” according to a new study released by IBM, which found that more than 70% of executives view ESG as a revenue enabler, and that consumers increasingly focus on companies’ sustainability performance when making purchasing and employment decisions.

The executive survey indicated that ESG is a top priority for businesses, with 76% of respondents reporting that it is central to their business strategy, 72% approaching ESG as a revenue enabler rather than as a cost center, and 45% expecting ESG efforts to result in improved profitability.

The benefits of sustainability-related initiatives was particularly evident for the segment identified as “ESG leaders,” with these companies 52% more likely to report that ESG efforts have “a very great” impact on profitability, and also more often reporting ESG-related improvements in customer engagement (70% more often than low ESG maturity companies), risk management (90% more often), and access to finance (85% more often).

Jonathan Wright, Global Managing Partner Sustainability Services and Global Business Transformation, IBM Consulting, said:

“Consumer commitment to environmental sustainability and social responsibility has intensified with consumers voting with their wallets. As a majority of consumers choose to buy from and work for ESG leaders, businesses must prioritize transparency and break down barriers to ESG data.”

Click here to access the report.

Earth Day 2023: Invest in our Planet

Last week was Earth Day! Earth Day is dedicated to acting as a reminder for all of us to protect the environment, repair damaged ecosystems, and to live a more sustainable life. At Sustaira, Earth Day speaks to the core of what we do. On Earth Day 2023 we will celebrate our planet, the creatures on it, and reflect on how we can be better to our Earth and enable others to do the same.

This year, Earth Day’s theme is for the first time ever the exact same as last year. The theme is, “Invest in our Planet” From Earthday.org “For Earth Day 2023, we need to act (boldly), innovate (broadly), and implement (equitably). Businesses, governments, and citizens — everyone accounted for, and everyone accountable. A partnership for the planet”. 

Read more via: https://www.sustaira.com/blog/earth-day-2023-invest-in-our-planet

G7 Ministers Urge Implementation of Mandatory Climate Disclosure

As shared via ESGtoday.com, G7 climate and environment ministers are urging the implementation of mandatory climate-related financial disclosures as a necessary step to accelerate sustainable finance and help achieve global climate goals, according to the communique released by the ministers following the G7 Ministers’ Meeting on Climate, Energy and Environment in Sapporo, Japan this weekend.

The meeting brought together energy and climate officials from Canada, the EU, France, Germany, Italy, Japan, the UK, and the US to discuss climate, energy and environmental issues, including commitments and initiatives targeting the achievement of environmental global sustainability goals such as accelerating the clean energy transition to net-zero greenhouse gas (GHG) emissions by 2050, and halting and reversing biodiversity loss by 2030.

Click here to access the G7 communique.

The Economist highlights: Accounting for Flood Risk Would Lower American Home Prices by $187bn

In the United States, flooding is the most expensive type of natural disaster and yet a new study highlighted this week by The Economist, suggests that including flood risk in the price of American homes could significantly lower their total value. The study estimates that accounting for flood risk could decrease the total value of American homes by as much as $187 billion, or 4.4%.

Currently, private insurers generally will not offer residential coverage in the case of flooding. As an attempt to offer American’s some form of coverage Congress created the National Flood Insurance Programme (NFIP). The National Flood Insurance Program (NFIP) is a federal program in the United States that provides insurance coverage to property owners in flood-prone areas. The program is administered by the Federal Emergency Management Agency (FEMA) and was established in 1968 to address the lack of availability of private flood insurance in the market. Under the NFIP, homeowners and business owners in participating communities can purchase flood insurance through a network of insurance agents. These “participating communities” are those where regulators believe that the chance of flooding each year is at least 1%.

According to The Economist,

“The combination of subsidised insurance and myopic buyer behaviour means that houses in flood-prone areas are overpriced. One study in 2021 estimated this overvaluation at $33bn-56bn. But a new paper in Nature Climate Change, whose lead author is Jesse Gourevitch of the Environmental Defence Fund, an advocacy group, puts it at $121bn-237bn, with a central estimate of $187bn.”

Read more via the below link.

BCG whitepaper ‘The Financed Emissions Imperative: Measurement, Disclosure, & Beyond

Managing Director & Partner, Nicole Hildebrandt, at Boston Consulting Group (BCG) shared a new publication on the financed emissions imperative for banks. Financed emissions are 700x greater than bank operational emissions -- and they are notoriously complex to estimate.

While many financial institutions have committed to financed emissions disclosures, few have delivered. Today, 70% of financial institutions that have committed to the PCAF Standard have yet to disclose any of the emissions associated with their loans and investments, representing approximately 50% of total financial assets in PCAF-committed institutions. 

This year will be critical for banks to accelerate progress toward credible financed emissions measurement and disclosure. Stakeholders expect banks to play a critical role in aligning lending and investment activities to the Paris Goals, to set commitments, and then translate these commitments into action, leveraging the tool kits available through standard-setters and regulators. Additional expectations are already being layered onto banks by stakeholders, such as requirements for reporting facilitated emissions and impacts on biodiversity

The paper shares BCG's perspective on seven key steps required for effective capability build as well as the next set of imperatives banks will need to tackle in this arena.

1. Operation model
2. Scope
3. Methodology
4. Data
5. Calculation
6. Disclosure
7. Industrialization

Research paper can be viewed and downoaded below!

United Nations Offers FREE Sustainability Courses

The United Nations, commonly known in the world of Sustainability and ESG for their leadership and advocacy in promoting sustainability particularly through their 17 Sustainable Development Goals (UN SDGs) also offers completely free sustainability classes to all who would like to learn more! The United Nations has created what they call the United Nations System Staff College (UNSSC). The UNSSC houses over 100 courses with topics to choose from that include but are not limited to: Diversity, equity and inclusion, sustainable development goals, stakeholder engagement, climate change, human rights, women leadership, and more. 

After exploring their website, here are a few helpful links to get you started with this invaluable resource: 

• Overview of UNSSC: https://www.unssc.org/ 
• What UNSSC is Focusing on and how you can get Involved: https://www.unssc.org/focus
• View all UNSSC Courses: https://www.unssc.org/courses 
• Classes to Check Out: 

1. The SDG Primer: https://www.unssc.org/courses/sdg-primer-0 
2. Transforming Economies for Sustainable Development: https://www.unssc.org/courses/transforming-economies-sustainable-development 
3. The Paris Agreement on Climate Change as a Development Agenda: https://www.unssc.org/courses/paris-agreement-climate-change-development-agenda 
4. Circular Economy and the 2030 Agenda: https://www.unssc.org/courses/circular-economy-and-2030-agenda-0 
5. Explore their Tailor-Made Learning Services: https://www.unssc.org/tailor-made-learning 

See link below!

Northvolt, a $12 billion startup founded by an ex-Tesla VP, thinks crushing and shredding old batteries is the way to make electric vehicles truly sustainable

• The Swedish battery maker Northvolt wants to fix electric vehicles' sustainability issues.
• The startup, founded by a former Tesla VP, is building the world's largest battery-recycling plant.
• Goldman Sachs, Volkswagen, and Spotify cofounder Daniel Ek have backed the $12 billion company.

In the northern Swedish city of Skellefte?, 250 construction workers brave the cold every morning to build what's expected to be the largest battery-recycling facility in the world.

The site, near the Arctic Circle, belongs to the battery-manufacturing startup Northvolt and sits next door to its well-established gigafactory, where it supplies automotive giants like BMW, Volkswagen, and Volvo.

Northvolt, valued at $12 billion, was founded in 2016 by Peter Carlsson, a former Tesla vice president who dreams of making the world's greenest battery. The startup is backed by many investors, including Goldman Sachs, Baillie Gifford, VC Norrsken, and Spotify's cofounder Daniel Ek.

Demand for lithium batteries has surged since the advent of electric vehicles, which had a record-breaking year in 2022, accounting for 12.1% of the total market share for new cars in Europe.

Going electric has long been touted as a key fix to the climate crisis, but batteries' start and end of life pose a big, dirty problem — something Northvolt wants to solve.

EU Proposing Amendments to Simplify and Extend Sustainable Finance Disclosure Regulations

The European Supervisory Authorities (ESAs), which includes the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA), have proposed amendments to extend and simplify sustainability disclosures for financial market participants under the EU's Sustainable Finance Disclosure Regulation (SFDR). These proposed amendments come from the ESA requesting a review of the SFDR's indicators for principal adverse impact (PAI) and financial product disclosures.

To break this down further, according to Eurosif, the Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing and to increase transparency around sustainability claims made by financial market participants (Eurosif, n.d.). The EU SFDR regulation has classification levels for sustainability-focused investment funds. These include 'Article 8' funds that promote environmental or social characteristics or a combination of both, and 'Article 9' funds that have sustainable investment as their objective. Despite the requirement for asset managers with sustainable investment products to provide disclosures under SFDR beginning in January 2023, there is still uncertainty regarding some of the key reporting details, such as the PAI requirements.

For more info see below.

A Mere 5% of FTSE 100 Companies Have Credible Net Zero Plans

According to a recent analysis by EY, only 5% of FTSE 100 companies have disclosed transition plans that would be deemed “credible” or detailed enough to meet the draft UK government guidance on decarbonization. With looming regulations and policies, along with the growing pressure to set standards that enable the world to achieve the goal of avoiding 1.5 C warming from the Paris Climate Agreement, organizations need to act now. 

The Transition Plan Taskforce’s Framework provides a guideline for creating a credible Net Zero transition plan, and it consists of five main elements. Currently, FTSE 100 firms have performed well (with a 78% compliance rate) in the initial 'Foundation' stage of the TPT Framework. This stage necessitates companies to disclose transition objectives and priorities, as well as the effects on the company's business model.

However, the analysis found that while 78% of these companies had disclosed partially developed plans, they had not yet adequately outlined how they would achieve their net-zero goals by 2050, missing key requirements around strategy and execution. Currently, only 5% would comply with the Transition Plan Taskforce’s draft disclosure framework.

Rob Doepel, EY UK&I Managing Partner for Sustainability, said: 

“The TPT’s draft Framework offers vital guidance around developing detailed, ambitious transition plans, but currently just a handful of the UK’s largest businesses appear to be on track. We expect the Framework to be finalized this year following a Government consultation, and, given the praise it received in the recent Skidmore Review, it’s expected to become mandatory."

Bank of Canada begins disclosing climate-related risks

As shared by the Institute for Sustainable Finance , The Bank of Canada has released its first climate risk report, a move that sets an example of planning for a low-carbon future for the market.

As Ryan Riordan, Director of Research at ISF at Smith School of Business at Queen's University tells Mark Rendell of The Globe and Mail, by "disclosing this, and by signaling to the market that the central bank thinks this is important enough to release a report on, it also signals to the financial institutions and to the system that this is something they’re going to have to do," under forthcoming regulations.

Some other key takeaways from this week's report (https://lnkd.in/eKY_XdD6):

?? The Bank of Canada is investing in climate risk modelling capabilities so it can better assess the impact of climate on financial stability and in turn, meet its mandate.

??The report sends a clear signal to the market that climate disclosures, related data, and reports like this one, are vital to smoothing the climate transition and helping the Bank achieve its objectives.

??The Bank states that this report serves as an accountability piece — it wants other financial institutions to do the same by releasing their own climate reports.

??The report signifies that the BoC is very formally acknowledging the severity of climate risks on inflation and financial stability more broadly, a clear sign that climate risk is financially material.

?? It is notable that the report focuses on the impact of climate on the BoC's mandate of controlling inflation and promoting financial stability, while also disclosing climate impacts from its own operations such as buildings.

??The report uses the framework developed by the FSB Task Force on Climate-related Financial Disclosures (TCFD), something that is usually used by the private sector.

EU Commission and EIB Announce €18 Billion to Boost Investments in Climate Action and Sustainable Economies

Shared by ESGnews.com, the European Commission and the European Investment Bank have announced €18 billion of financing under Global Gateway, Europe’s investment strategy for partner countries.

This will boost investment in Global Gateway’s priority areas – climate action, clean energy and connectivity – in Europe’s partner countries around the world. In particular, these projects will aim to help bridge the global climate finance gap and support prevention, adaptation and mitigation.

Speaking from the Global Citizen NOW Summit in New York, President Ursula von der Leyen said: “Europe is already the top provider of climate finance globally and of official development assistance. But more is needed to bridge the climate finance gap – and everyone needs to chip in. This is where our investment strategy Global Gateway comes into play. Global Gateway invests in the projects our partners need – from natural risks prevention to clean transport and energy infrastructure. And this €18 billion in financing will get even more such projects off the ground, swiftly. Global Gateway will help advance the climate transition around the world, improving people’s lives and making our partners more resilient.”

EIB President Werner Hoyer said: “Thanks to our solid partnership with the European Commission, EIB Global has already mobilized investments amounting to €31 billion under Global Gateway. This new financing package unlocks more EU support for projects that will make a real difference in partner countries and in some of the areas of the world most in need of transformation. We believe that the Global Gateway initiative will greatly contribute to the achievement of the Sustainable Development Goals, to which we remain fully committed and strongly aligned with partners worldwide.”

DOE Proposes Rules to Reduce Electric Vehicle Mileage Ratings to Meet Fuel Economy Rules

The U.S. Energy Department (DOE) has proposed new fuel economy rules that would lower the mileage ratings for electric vehicles (EVs) in an effort to comply with existing fuel economy standards. The new proposal would reduce the efficiency ratings of electric vehicles by about 10%, lowering the mileage rating for an EV from 125 miles per gallon equivalent (MPGe) to 113 MPGe. This current system of calculating the petroleum equivalent fuel economy has not been updated in over two decades. 

The proposed changes come as the Biden administration is pushing for a massive expansion of electric vehicle infrastructure and adoption in the United States. The administration has set a goal of achieving net-zero greenhouse gas emissions by 2050 and has proposed a $174 billion plan to promote electric vehicles and other clean energy initiatives.

The US Environmental Protection Agency (EPA) is set to propose new rules aimed at achieving significant cuts in vehicle emissions from 2027 to 2032. The rules are expected to push automakers to increase sales of electric vehicles, with at least half of the new US vehicle fleet being electric or plug-in hybrids by 2030. These proposed rules are in line with President Biden's goal of achieving net-zero greenhouse gas emissions by 2050. The National Highway Traffic Safety Administration (NHTSA) is also expected to propose new CAFE requirements that will be in line with the new EPA rules. Automakers that fail to meet the CAFE standards will be required to pay fines or buy credits.

New series of webinars about ESG, mandatory disclosures and software solutions

Sign up or watch a recording via the link below. Topics include:

• Sustainability & ESG Software Evaluation Criteria: Adopting Software for your Sustainability and ESG needs
• Carbon Accounting: The Engine Behind ESG Disclosures
• How Sellen Construction is solving the top ESG and Sustainability Challenges Through Digitalization with Sustaira.
• Understanding CSRD with Sustaira
• Understanding SEC’s ESG regulations with Sustaira
• A low-code building block approach for ESG & Sustainability Software Applications in Manufacturing

See link below for updated ESG webinars and recordings:

??Of course there are many more insightful articles, so please share your thoughts and recommendations in the comments below.

??As always, we're open to feedback. If you have any ideas of content or want to collaborate, kindly do reach out. Please also like, share and subscribe so we can truly make this impactful.