Sustainability & ESG insights August '23: Carbon Pricing Initiatives and Direct Air Capture Technology

??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 every one of us can make a difference in the Environmental, Social and Governance domain we call Sustainability.

Valuable ESG & Sustainability news of August '23

??In this months’ newsletter:?

* Mapped: Carbon Pricing Initiatives Around the World

* ESG Is Critical To Successful Deals

* $1.2B to DAC: Direct Air Capture Technology

* EU Mandates Emissions Reporting For Import Carbon Tax

* Nearly Half of High Income Works Consider Switching Jobs for a More Sustainable Company

* Article: Despite Climate Pledges, Fashion Brands ‘way off track’ On Cutting Carbon From the Catwalk

* And more…

Mapped: Carbon Pricing Initiatives Around the World

Over the past two decades, governments around the world have responded to climate change through various initiatives and policies, with carbon pricing at the forefront.

A recent example is the Canadian province of Ontario’s Emissions Performance Standards program, first launched in 2022. The program sets annual carbon emissions limits for industrial facilities, with a fee on excess carbon emitted.

This graphic by Jonathan Letourneau maps 70 active carbon pricing initiatives around the world and highlights their global impact as seen in the 2022 World Bank report .

Read more about this overview via the link below:

KPMG Survey Summary: ESG is Critical to Successful Deals

Sustainability and ESG across the globe has become a massive priority to businesses. KPMG recently released their 2022 EMA ESG Due Diligence Study where they shared the results of their survey to find out what Environmental, Social, and Governance (ESG) due diligence (DD) means for dealmakers across Europe, the Middle East, and Africa. After surveying more than 150 active dealmakers the insights were profound. From struggling to define ESG DD, to division on how to integrate ESG DD into existing frameworks and strategy, all the way to seeing very clearly that ESG DD is a key priority, KPMG provides EMA dealmakers and strategy leaders with new ideas and motivation to drive forward their ESG DD capabilities. Sustaira summarized these findings for you!

According to the 2022 EMA ESG Due Diligence study, dealmakers are more and more integrating ESG and Sustainability considerations into the deal-making process. Survey shows that four out of five dealmakers say that ESG considerations are now on their M&A agenda. More than two-thirds of those surveyed said that they would be willing to pay a premium to a target who demonstrates a high level of ESG maturity in areas that align with their ESG priorities.?

KPMG U.S. ESG and Climate Services Leader Mark Golovcsenko , said:

“The data speaks loud and clear: Companies and investors are increasingly integrating ESG considerations into their M&A strategies, not only because it’s the right and responsible thing to do but also because of the value implications of ESG.”

Read more via the link below:

Biden Administration Commits $1.2 Billion to Transformative Direct Air Capture Technology

In efforts to combat climate change, the Biden-Harris Administration has announced an investment of $1.2 billion dedicated to launching the nation's first-ever Direct Air Capture (DAC) program. This program will launch two new demonstration projects in Texas and Louisiana to essentially vacuum carbon dioxide out of the air. Once captured, this carbon dioxide will be stored underground or used in industrial materials such as cement. This initiative, unveiled on August 11th, 2023 truly highlights the Biden administration's unwavering commitment to innovative solutions aimed at curbing greenhouse gas emissions and preserving our planet for future generations.

It’s become clear that in order to address the climate crisis we currently face, this will require a multifaceted approach and the adoption of new technology. While initiatives like transitioning to renewable energy sources and promoting electric vehicles remain integral to curbing emissions, the introduction of DAC technology expands the menu of tools available. To help do this and really demonstrate how a multifaceted approach is needed, representatives from the Louisiana project location have said that they would be powering the hub with clean energy from the local utility, and in the future will power facilities with renewable energy.

In recent years, Direct Air Capture technology has been gaining momentum and is seen as a potential game-changer in the battle against rising carbon levels. By capturing carbon dioxide directly from the atmosphere, DAC offers a way to not only mitigate emissions from industrial processes but also to actively reverse the effects of historical emissions. The substantial investment by the Biden-Harris Administration underscores the belief in the immense potential of this technology. It is thoughts, that the US direct air capture projects alone could increase the global capacity for the technology by about 400 times. With this being one of the first deployments of this scale, this is a monumental move.

“Cutting back on our carbon emissions alone won’t reverse the growing impacts of climate change; we also need to remove the CO2 that we’ve already put in the atmosphere—which nearly every climate model makes clear is essential to achieving a net-zero global economy by 2050,” said U.S. Secretary of Energy Jennifer Granholm . “With this once-in-a-generation investment made possible by President Biden’s Investing in America agenda, DOE is laying the foundation for a direct air capture industry crucial to tackling climate change—transforming local economies and delivering healthier communities along the way.”

Ultimately, this is a monumental event in the world of ESG and Sustainability. Not only does this investment push climate initiatives forward, but it’s also setting the global stage for a new approach. This will be the world’s largest investment in engineered carbon removal in history and each Hub will eventually remove more than 250 times more carbon dioxide than the largest DAC facility currently operating.

Read more via the link below:

EU Implements Regulations Mandating Emissions Reporting for Import Carbon Tax

The European Commission adopted a detailed set of reporting regulations for the transitional phase of the Carbon Border Adjustment Mechanism (CBAM). Set to begin on October 1, 2023 and extend through the year 2025, this transitional phase aims to lay the groundwork for the CBAM's full implementation.

What is CBAM?

The EU’s Carbon Border Adjustment Mechanism (CBAM) aims to fairly price carbon emissions associated with the production of carbon-intensive goods imported into the EU. Alongside tracking the carbon emissions, CBAM is also encouraging cleaner practices from other non-EU nations. The hope is to combat carbon leakage, which happens when companies based in the EU move carbon-intensive production to other countries that don’t have as strict of policies. Lastly, the introduction of CBAM aligns with the gradual phase-out of free carbon emission allowances granted under the EU Emissions Trading System (ETS).

Understanding the new regulation

As part of CBAM, these newly established rules, as outlined in the Implementing Regulation, define the obligations of EU importers of CBAM goods. These regulations are specific to this transitional period and outline a specific methodology for calculating embedded emissions originating from the production process of these goods.

Read more via the link below!

Nearly Half of High Income Workers Consider Switching Jobs for a More Sustainable Company: Deloitte

Nearly half of self-identified higher income respondents reported considering switching jobs to work for a more sustainable company, compared to only 13% of their lower income counterparts, according to a new study released by global professional services firm 德勤 , which found similar gaps in sustainability-focused consumption and political action by income classification, despite similar attitudes on climate change among the groups.

For the study “Economic uncertainty puts pressure on sustainable behavior change,” Deloitte collated results from surveys conducted between 2021 and 2023, including a survey of 24,000 respondents in 24 countries in March 2023, with a focus on sustainability-related behaviors in the home, workplace and community.

For the report see the following link

Read more via the link below:

The Commission adopts the European Sustainability Reporting Standards

The Commission adopted the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD) . This marks another step forward in the transition to a sustainable EU economy.

Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “The standards we have adopted today are ambitious and are an important tool underpinning the EU’s sustainable finance agenda. They strike the right balance between limiting the burden on reporting companies while at the same time enabling companies to show the efforts they are making to meet the green deal agenda and accordingly have access to sustainable finance.”

Read more via the link below!

UK to Create IFRS-Based Sustainability Disclosure Standards

As shared by ESGToday, The UK government unveiled plans to create UK Sustainability Disclosure Standards (SDS), for companies to use to report on sustainability and climate related risks, according to a new statement by the Department for Business and Trade (DBT). The DBT said that the standards will form the basis for any future sustainability reporting legislation or regulation.

According to the DBT, the new standards will be based on the recently published sustainability and climate-related reporting standards issued by the IFRS Foundation’s International Sustainability Standards Board. The ISSB was launched in November 2021 at the UK-hosted COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements enabling a consistent understanding of the effect of sustainability risks and opportunities on companies’ prospects.

Read more via the link below:

Article: Despite climate pledges, fashion brands ‘way off track’ on cutting carbon from the catwalk

An article by Angeli Mehta PhD shared via Reuters and being part of the August issue of Ethical Corporation Magazine, which is about sustainability in the fashion industry.?

Summary

* The fashion sector is estimated to be responsible for up to 8% of global emissions

* Sustainable Apparel Coalition plans a 45% reduction in emissions by 2030

* Fashion Pact brands pledge to have 100% renewables in own operations by 2030

* But emissions in supply chains and consumer use account for 96%, and are going in opposite direction

* Procurement practices focused on cheapest prices hampering suppliers' ability to meet climate target

July 26 - The records are tumbling this year as the world keeps getting hotter. Industries aren’t doing enough to cut greenhouse gas emissions, and fashion is no exception. A plethora of labels and pledges hide the bitter reality that this influential industry isn’t making anywhere near enough progress on taking carbon out of the catwalk.

This is put at anywhere between 2% and 8% of global emissions, depending on factors such as the energy mix of grids and whether consumers washing and drying their clothes is taken into account.

Yet the technologies to make a big dent in emissions inventories already exist and could be added to by materials efficiencies and cutting over-production. An analysis by McKinsey suggests reducing by just 15% the volume of stock that gets sold at a discount would see emissions fall 10% without impacting on value.

Indeed, McKinsey’s analysis sets out a whole range of measures across the supply chain that would generate cost savings that would more than pay for investments in renewables and materials recycling. It estimates that almost 90% of abatement will cost less than $50 per tonne – that’s about half the recent price of a tonne of carbon on the EU emissions trading system.

There’s no shortage of industry groupings that could move the sector forward, although with many of the same members. The 160 brands who’ve signed up to the Fashion Pact have pledged to have 50% renewables in their own operations by 2025, and 100% by 2030.

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

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