Sustainability & ESG Insights December '23: COP28 and Heightened Sustainability Awareness

??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 and Sustainability news of December '23

??In this months’ newsletter:

* COP28: Highlights and Fossil Fuel Agreement

* EU’s New “Ecodesign” Framework sets a high bar for product design

* Report Capgemini: Heightened Sustainability awareness yet lagging action

* EFRAG and GRI enhance collaboration?

* Evaluation Criteria Framework for ESG & Sustainability Software

* Ambitious climate funds are showing a promising future

* EU’s new climate regulation CSRD puts pressure on American companies

* And more…

COP28: Highlights and Historic Agreement Over Fossil Fuels

Historic Agreement Over Fossil Fuels

An agreement at COP28 was reached! This marks a historic precedent where over 200 nations agreed upon the transition away from fossil fuels. The nations also agreed upon tripling the amount of renewable energy, halting deforestation, and curbing the release of methane by 2030. At the UN’s COP28 climate conference in Dubai, an agreement was finalized after intense negotiations, signaling a historic shift away from fossil fuels. Led by COP28 President Dr. Sultan Ahmed Al Jaber, the deal didn’t mandate a strict timeline to phase out fossil fuels but notably gained support from energy-producing nations, including Saudi Arabia, which initially sought to eliminate references to fossil fuels from the text. The agreement strengthened language from an earlier proposal, emphasizing the transition away from fossil fuels in a just and equitable manner while mining for net-zero emissions by 2050, aligning with scientific recommendations.?

Loss and Damage Fund Approved

In a historic precedent, a loss and damages fund— the allocation of investments from developed countries to help restore the mass destruction—was agreed upon on the first day of the summit. Vulnerable and poor countries, particularly in the global South, have contributed little to the climate crisis and want to hold bigger fossil fuel-polluting countries liable for the suffering they have experienced due to climate change.?

Controversy Among Develop and Lesser Developed Countries

Attendees noted that wealthier countries have failed to show the leadership necessary to solve the climate crisis. They also found that many rich countries are too involved in hypocritical deals, publicly pushing for the phase-down of fossil fuels without committing to the necessary action plans to do so. Mohamed Adow, the director of a Nairobi-based energy and climate think tank, claimed “rich countries say they want a global phase-out of fossil fuels, but they are refusing to fund it. There is simply not enough in the current text for developing countries to believe there will be finance to help decarbonize.”

And more! Read the articles below for more insights:

The European Union’s New “Ecodesign” Framework Sets a High Bar for the Future of Product Design

?? The European Union recently enacted a new deal that will make sustainable products the norm: The "Ecodesign" framework.

?? As of early December, the EU decided to adopt these rules and companies have two years to adopt these new programs.

?? The “Ecodesign” framework will establish sustainability targets for nearly all products across industries in the EU. The framework will set a wide range of requirements including in the areas of product durability, reusability, reparability, presence of substances that inhibit circularity, energy/resource efficiency, recycled content, remanufacturing, and carbon footprints.

? The EU decided to enact actions around product waste as there is a projected 70% increase in waste generation foreseen by 2025, over 90% of biodiversity loss and water stress caused by resource extraction and processing, and 80% of a product's environmental impact is determined at its design phase.

? Read more about this topic via the article below!

Report Capgemini: A World in Balance: Heightened Sustainability Awareness yet lagging actions

??A substantial shift has occurred: 63% of executives now recognize the clear business benefits of sustainability, a significant leap from a mere 21% last year.

This recent research by our Capgemini Research Institute, diverging from the typical environmental focus in sustainability discussions, sheds light on the profound relevance of the social dimension.

The report “A world in balance” uncovers striking revelations:

?? 56% of executives say they are increasingly focusing on the social dimension of ESG

?? 38% of executives say the only work with suppliers who pay a living wage

?? 63% actively pursue the recruitment of individuals from diverse backgrounds.

Access the report via the link below.

EFRAG and GRI enhance collaboration with deeper ties

Global Reporting Initiative (GRI) signed a new Memorandum of Understanding (MoU) with EFRAG, which substantiates the benefits of the alignment achieved between the European Sustainability Reporting Standards and the GRI Standards.

As the first outcome of this second agreement, a GRI-ESRS Interoperability Index is now publicly available. The index:

?? sets out how the disclosure requirements and data points in each set of standards relate to one another

?? enables ESRS reporters to report ‘with reference’ to the GRI standards

?? helps existing GRI reporters to leverage their current reporting efforts to prepare their ESRS ‘Sustainability statement’

?? lays down solid foundations for a reciprocal digital taxonomy

CEO, Eelco van der Enden , said:

"The partnership between GRI and EFRAG has already borne fruit by ensuring that the new EU standards and the GRI Standards – which many companies in Europe and beyond are using to report their impacts — are closely aligned. Encompassing practical resources and training alongside deeper engagement on standards, this new MoU reassures companies and all stakeholders of our joint commitment to an aligned, efficient, and feasible EU and global ecosystem for impact reporting. I look forward to continued collaboration with our European partners to achieve this aim."

Read more via the link below:

Ambitious Climate Funds are Showing a Promising Future; but, Where Do the Funds Go?

Recently, the UAE and World Bank announced billion-dollar climate pledge plans for 2030. These amounts are more than 3x the amount comparable to the Green Climate Fund, the world’s largest multilateral fund with pledges from 32 countries that amount to over 20 billion dollars (the United States being a leader in contributions with 3 billion dollars). This funding dedicates itself to helping developing countries address the climate crisis by investing in decarbonizing eight key areas: energy, transport, forests/land usage, health, food/water, livelihoods of people and communities, ecosystems, and the built environment.

Here are three funds showcase the difference in investment allocation and showcase examples of three organizations targeting the mitigation of climate change differently through climate finance.

? Check out more insights via the article below!

The European Union’s New Climate Regulation Puts Pressure on American Companies

A lack of US climate reporting regulation may pose negative side effects to US companies in the long run as they will have to adhere to stronger EU compliances. The SEC reports on this ongoing issue as it prepares to release its climate regulation in the coming years.?

SEC Chair Gary Gensler highlighted the pivotal role of U.S. climate reporting rules in influencing global compliance standards. Gensler warned that the absence of such regulations might force American companies into adhering to foreign mandates, specifically citing the European Union’s Corporate Sustainable Reporting Directive (CSRD). The CSRD is a new EU standard that companies will adhere to starting in 2024. Within the new regulation, large companies (more than 500 employees) will have to publish information related to the risks and opportunities, and the impact of their actions on people and the environment by these categories; environmental matters, social and treatment of employees, anti corruption matters, and diversity on company boards. These rules also apply to US companies that generate over $150 million in the EU. Gensler emphasized the SEC's inability to negotiate "substituted compliance" with the EU, wherein companies could meet one jurisdiction's requirements by complying with equivalent rules elsewhere.

Read more about this via the link below:

Evaluation Criteria Framework for ESG & Sustainability Software

Sustainability and ESG solution provider, Sustaira releases an insightful evaluation framework for ESG & Sustainability Software, consisting of 60+ criteria. With a growing demand for organizations to aggregate, track, measure, and disclose ESG and Sustainability data, combined with the challenges of doing so, organizations are seeking guidance on where to start. To enable Sustainability, ESG, Finance and IT leaders to make an informed decision on which software and platform to adopt for their Sustainability and ESG needs, Sustaira shares the common Evaluation Criteria that are considered and is guiding organizations through how to look at the ESG domain challenges and what to look for in solutions, going beyond software.

Sustaira has segmented the evaluation criteria into three main groups that consist of various subcategories. Those main groups are:

1.Functional Criteria and Capabilities

2.Technical Criteria and Capabilities

3.Organizational Criteria and Capabilities

These evaluation criteria are essential to making an informed decision and a key tool to use when evaluating and comparing solutions

Read more and download the Evaluation Criteria Framework for ESG & Sustainability Software for free.

Learn More About 2023’s Earth Overshoot Day

As the year is coming to a close, it is important to learn about “Earth Overshoot Day”. This day occurs every year and it marks the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year. In 2023, this date fell on August 2nd, which means that the world exceeded its annual renewable resources four months before the year ended.

The Earth Overshoot Day is determined by the Global Footprint Network, it calculates the number of days of that year that the Earth’s capacity suffices to provide for humanity’s ecological footprint. Since 1971, societies' overshoot days have progressively become shorter as we continue to grow in consumption and increase greenhouse gas emissions.

Research Reveals Economic Connection Between Wind Farms and Property Values

A recent publication in Energy Policy has shown new light on the impact of wind energy projects on property values. Contrary to claims by companies proposing these projects, the study reveals that properties within a mile of a planned wind farm experience an average 11 percent decrease in value following the project's announcement, compared to those situated three to five miles away. This decline persists through construction but gradually diminishes after the wind farm becomes operational, eventually making property values near and far from the project indistinguishable.

Ben Hoen, a co-author of the paper and a research scientist at the Lawrence Berkeley National Laboratory, highlights that while initial reactions to the potential for a wind project affect property values, the long-term benefits—such as increased revenue for local governments and schools—might outweigh the temporary decline in value for many residents.

Read more via the link below:

New “EBF” Framework May Revolutionize the ESG Industry

The struggle for companies to provide transparent metrics across their supply chain in our move towards sustainability may be addressed by the Ecological Benefits Framework, a comprehensive tool developed by Douglas Gayeton aiming to revolutionize ESG investing by considering six critical elements and potentially becoming a universal language for environmental decision-making and market transparency.

As we begin to transition to a more sustainable society, companies are struggling to provide transparency and differentiating metrics across their supply chain- this makes it difficult for investors and consumers to gauge the impact of their investments.

Now, this issue may become inconceivable, as a new “shared market architecture” enters into the market. The Ecological Benefits Framework, created by a San Francisco-based manager, focuses on environmentally, and socially responsible portfolios and gives a more comprehensive overview of the true social effect of investments than traditional ESG investing.

More information via the link below:

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

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