What We're Watching in ESG & Impact: A Weekly Newsletter from IPA (04/01/24)

ESG AMD IMPACT UPDATES

???The UK is the first major economy to halve its emissions

• The UK is halfway to meeting its net zero targets as emissions have decreased by 53% from 1990 – 2023, totaling “428 MtCO2e…more than the combined emissions reductions from the US, Canada, France, Italy and Japan between 1990 and 2021.” Almost half of the UK’s electricity generation comes from renewables

???A CDP and Oliver Wyman report found over half of European companies have climate transition plans, yet only one in five are taking necessary actions to move to a greener business model which includes CapEx alignment, low-carbon products, and value chain management

• The report also found “70% of European companies disclosing through CDP dedicated less than a quarter of their capital expenditures (CapEx) to projects that are aligned with their transition plan or a sustainable finance taxonomy”

???A Communications Earth & Environment’s study found that climate change exacerbates food price inflation

• The study found that “the 2022 extreme summer heat increased food inflation in Europe by 0.43-0.93 percentage-points which warming projected for 2035 would amplify by 30-50%.” ?The results were “indicative of a supply-side productivity shock given the considerable evidence for impacts on agricultural production from temperature”

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REGULATORY DEVELOPMENTS

???The U.S. Department of Energy (DOE) will invest $6b in 33 decarbonization projects which are expected to annually reduce emissions equivalent to 3 million gas-powered cars

• The projects are a part of the DOE’s Office of Clean Energy Demonstration’s Industrial Demonstrations Program and target “difficult-to-decarbonize industries, including seven chemicals and refining projects, six cement and concrete projects, six iron and steel projects, five aluminum and metals projects, three food and beverage projects, three glass projects, two process heat-focused projects, and one pulp and paper project”

???The Nature Restoration Law did not pass in the EU Council as it failed to receive support from member states

• After receiving approval from the European Parliament, the rule was set on the Council’s agenda for a vote. However, after Austria, Belgium, Finland, Italy, the Netherlands, Poland, Sweden, and Hungary announced they would oppose or abstain, the rule was removed from the agenda. The rule “included a mandated target for EU countries [to] implement measures to restore at least 20% of the EU’s land and sea areas by 2030, and for all ecosystems in need of restoration by 2050.”

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IN THE MARKETS

Enpal, a Germany-based solar and heat pump installation platform, secured €1.1b in debt funding from Bank of America, Barclays, and Credit Agricole

MN8 Energy, a solar energy and energy storage producer, raised $325m

Silicon Valley Bank led a $250m debt financing for Sol Systems’ Illinois-based solar project

Southwest Airlines acquired SAFFiRE Renewables, a U.S. Department of Energy-backed sustainable aviation fuel startup