Top 10 ESG Markers - August 2023

The month of August covers EU’s adoption of mandatory sustainability reporting requirements, halting of oil drilling in the Amazon, a climate lawsuit victory in Montana by youth, more extreme weather events intensified by climate change, unprecedented ocean warming, Sydney’s drinking water threatened by climate change, Victoria banning residential gas by 2024, modern slavery legislation proposal in New Zealand and other headlines.

Again, if I happen to miss some key markers in a particular month. Just drop me some comments, and I will pick them up next month!?

*‘ESG Markers’ – like biomarkers that tell us how healthy our body may be, ESG Markers showing us the big movements in the field of ESG in Oceania and globally.?

So, here are my Top 10 for August 2023, again in no particular order.

EU adopts sustainability reporting standards for corporate transparency and accountability

The European Commission has endorsed the European Sustainability Reporting Standards (ESRS), a part of the upcoming Corporate Sustainable Reporting Directive (CSRD), a law set to be effective from 2024. The ESRS stipulate regulations for companies to disclose sustainability-related impacts, risks, and opportunities. The CSRD replaces the 2014 Non-Financial Reporting Directive (NFRD) and broadens the scope, increasing reporting companies from 12,000 to over 50,000. The adopted ESRS accommodate some companies reporting from the 2024 financial year. Concerns have arisen over the Commission's decision to make certain sustainability disclosures non-mandatory, impacting investment decisions and adherence to regulations like the EU's Sustainable Finance Disclosure Regulation (SFDR). The European Financial Reporting Advisory Group (EFRAG) developed the ESRS, initially trimming requirements to ease the administrative burden on companies. The Commission introduced changes, including materiality assessments for most disclosures, aiming to align with other sustainability reporting standards. Following scrutiny by the EU Parliament and Council, companies subject to NFRD and large non-EU listed firms will report under ESRS from 2024, while listed SMEs start in 2027. Non-EU firms with significant EU revenue report from 2028.

The adoption of European Sustainability Reporting Standards (ESRS) by the EU has implications for Australian companies with ties to Europe. These standards, differing from the International Sustainability Standards Board (ISSB) norms, will impact large EU and listed companies, as well as non-EU parent companies with substantial European operations or affiliations. Compliance timeline for adoption by non-EU parent companies is by 2028 (reporting in 2029), requiring comprehensive data collection and reporting system updates. ESRS covers a wider range of Environmental, Social, and Governance (ESG) concepts, extending beyond ISSB's focus on climate change. Australian companies linked to Europe should prepare for enhanced reporting demands to align with these standards.

Ecuadorians vote to halt oil drilling in Amazon's Yasuní National Park, marking a historic environmental victory

Ecuadorians have voted in a ground-breaking referendum to cease new oil well development in the biodiverse Yasuní national park in the Amazon, protecting a significant biosphere and the "uncontacted" Tagaeri and Taromenane Indigenous communities. The referendum, held during the presidential elections, resulted in a 58% in favor and 41% against vote. This move safeguards about 726 million barrels of oil and positions Ecuador as one of the first nations to limit resource extraction via democratic decision. Another referendum also saw citizens voting to prevent gold mining near the capital. The decision impacts Ecuador's fossil fuel industry and is a win for environmental and Indigenous rights activists.

Montana youth secure landmark legal victory in climate lawsuit

In a landmark decision, a Montana state court has ruled in favour of young plaintiffs in Held v. Montana, asserting that the state violated their right to a "clean and healthful environment" by promoting fossil fuels. This precedent-setting ruling invalidates a provision in the Montana Environmental Policy Act, deeming it unconstitutional and harmful to the environment and young plaintiffs. The case was brought by 16 young Montanans aged 5 to 22, representing the nation's first constitutional and youth-led climate lawsuit. Experts believe this ruling could have far-reaching effects on climate-related cases and encourage more legal action to address climate change. The ruling is significant in a country where youth-led climate lawsuits have faced challenges and dismissals. The case is expected to face an appeal to the Montana Supreme Court.

Climate change intensifies global climate risk: Fires, floods, and heatwaves

Around the globe, the intensification of extreme weather events, propelled by climate change, is wreaking havoc through soaring death tolls, severe infrastructure damage, and profound societal impacts. Recent disasters serve as alarming reminders of the imperative need for immediate climate action and disaster preparedness.

?In Maui, Hawaii, devastating wildfires have ravaged communities, taking at least 115 lives. Global warming has amplified conditions, rendering parts of the state tinder-dry and primed for conflagrations. These fires, coupled with strong winds from a nearby cyclone, underscore the dire consequences of climate change. While not the ignition source, it undeniably exacerbates fires, magnifying their destructiveness.

?China's catastrophic floods illustrate the catastrophic results of inadequate climate policies. The flooding, spurred by heavy rainfall, claimed hundreds of lives and inflicted widespread destruction. The event underscores the critical need for resilient infrastructure capable of withstanding escalating extreme weather events, emphasizing the urgency of effective climate policies.

In Mediterranean countries like Algeria, Greece, and Tunisia, unprecedented wildfires have surged, leaving devastating impacts in their wake. These fires, intensified by hotter and drier conditions, have taxed firefighting resources and caused significant loss of life and property. Climate change amplifies the fire risk, necessitating innovative strategies to combat escalating challenges.

Heatwaves continue to grip regions globally, with Phoenix, Arizona, experiencing temperatures reaching alarming levels. These heatwaves, exacerbated by climate change, impose severe strains on infrastructure and public health. The impacts are grim: heat-related illnesses and deaths, overstressed power grids, and compromised water systems, affecting vulnerable communities disproportionately.?

These calamities underscore that climate change is a present and escalating crisis with quantifiable impacts. The pressing need for proactive measures and robust policies is evident. The toll of lives lost, infrastructure shattered, and societies disrupted demands urgent climate action. Resilience-building in communities, enhancing disaster response capabilities, and accelerating emissions reduction efforts are paramount to mitigate the mounting threats of wildfires, floods, and heatwaves.?

The numbers speak volumes: 55 lives lost in Hawaii's fires, hundreds of casualties from China's floods, and untold destruction in the Mediterranean fires. With each catastrophic event, the global urgency to address climate change grows stronger. International collaboration and sustained climate action are indispensable to safeguard our world from the relentless impacts of a changing climate.

Victoria mandates all-electric new homes from 2024 to cut emissions

Starting in 2024, new homes in Victoria, Australia, will be required to be all-electric, eliminating the use of natural gas connections. This move is a crucial step towards reducing greenhouse gas emissions and advancing the state's climate goals. The policy aims to make homes more energy-efficient, with a focus on electric appliances for heating, cooling, cooking, and hot water. This transition aligns with Victoria's commitment to achieving net-zero emissions by 2050. By mandating all-electric homes, the state aims to enhance sustainability and accelerate the shift towards a cleaner energy future.?

New Zealand takes strides against modern slavery with landmark legislation

New Zealand is embarking on a pioneering initiative to combat modern slavery through ground-breaking legislation. The proposed law introduces a pivotal requirement for large businesses in New Zealand, those with an annual revenue of NZD $50 million or more, to disclose the actions they are taking to address modern slavery risks in their supply chains. This significant step towards transparency and accountability aligns with global efforts to eradicate forced labour and human trafficking. By imposing clear thresholds for disclosures, the legislation underlines New Zealand's dedication to upholding ethical business practices and safeguarding human rights. Through this proposed law, New Zealand aims to confront modern slavery head-on, fostering a business environment that champions justice and responsibility.

Unprecedented ocean warming: Alarming data reveals disturbing trends

Newly released data has unveiled a troubling reality: ocean temperatures are undergoing unprecedented and concerning increases. In recent years, ocean warming has accelerated to a degree that defies historical patterns. A comprehensive analysis demonstrates that sea temperatures have soared beyond previous records, reflecting a deeply concerning trajectory of climate change. The data, which shows that surface waters in certain regions have risen by up to 3 degrees Celsius, emphasises the urgency of addressing global warming. Scientists are sounding the alarm, warning that these off-the-charts temperature rises have far-reaching consequences for marine ecosystems, including coral bleaching, disrupted marine life, and intensifying weather events. Urgent and coordinated actions are imperative to curb further ocean warming and protect the delicate balance of our planet's ecosystems.

IOSCO urges regulatory adoption of IFRS sustainability reporting standards

The International Organization of Securities Commissions (IOSCO) has issued a call to global regulators, urging them to integrate the new sustainability reporting standards established by the International Financial Reporting Standards (IFRS). Recognising the growing importance of environmental, social, and governance (ESG) disclosures, IOSCO emphasizes the need for standardized reporting frameworks to enhance transparency and comparability across markets. The adoption of IFRS sustainability standards, designed to align financial and non-financial reporting, is seen as a pivotal step toward sustainable and responsible business practices. By urging regulatory incorporation of these standards, IOSCO seeks to facilitate informed investment decisions, foster ESG integration, and advance global efforts to address pressing sustainability challenges.

Report warns of climate crisis threat to Sydney's drinking water quality

A recent report titled "Water Resilience in a Changing Climate" sheds light on the concerning vulnerability of Sydney's drinking water quality due to the climate crisis. The study reveals that rising temperatures, driven by global warming, are exacerbating the city's water challenges. Higher temperatures intensify evaporation rates, diminishing water levels in catchments and reservoirs. Additionally, increased rainfall intensity can lead to soil erosion, raising sediment levels in water bodies. This situation escalates the presence of pollutants and potentially harmful microorganisms in the water supply. Data highlights a worrying trend of decreasing water quality, underscoring the urgency of adopting adaptive strategies. As the climate crisis deepens, effective measures are imperative to ensure the resilience and safety of Sydney's drinking water for its residents.

Legal Action Initiated Against Active Super for Greenwashing

Active Super, a major Australian superannuation fund, is facing legal action for alleged greenwashing practices. The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against the fund, asserting that it made false or misleading representations about its investment options' climate credentials. ASIC claims that Active Super's marketing materials inaccurately portrayed the investments as having a lower carbon footprint and greater climate focus than they actually did. This case signifies a significant step in holding financial institutions accountable for accurate ESG disclosures, aligning with global efforts to combat greenwashing and ensure transparent investment practices. As regulatory scrutiny intensifies, the outcome of this legal action could set a precedent for greater accountability within the financial sector for the accuracy of environmental claims.