sustainable investment
IPCC sounds alarm, hydrogen-powered transport, scope 3 in focus: key sustainability news in February
What news led the sustainability agenda in February? Here, we cover the macroeconomic, corporate and financial stories that sustainable investors need to know.
According to the latest report from the IPCC, many of the impacts of global warming are now considered "irreversible" and, without action, will intensify faster than scientists had thought. According to the UN’s latest assessment, humans and nature are being pushed beyond their abilities to adapt and over 40% of the world's population are "highly vulnerable" to climate change. Maintaining the resilience of nature at a global scale depends on the conservation of 30% to 50% of earth’s land, freshwater and oceans, the IPCC report said. Today, less than 15% of land, 21% of freshwater and 8% of oceans are protected areas, and some regions, like the Amazon, have switched from storing carbon to emitting it. Adaptation to climate change and mitigating climate risks is an integral part of the transition to net zero. To learn more about our views on adaptation activities, click here to listen to our CLIC™ conversations podcast on the topic.
A new study involving more than 100 scientists from across the globe estimates that there are about 73,000 tree species on Earth, including about 9,200 species yet to be discovered. According to Science Daily, the global estimate is about 14% higher than the current number of known tree species. Most of the undiscovered species are likely to be rare, with very low populations and limited spatial distribution, the study shows. That makes the undiscovered species especially vulnerable to human-caused disruptions, such as deforestation and climate change, according to the study authors, who say the new findings will help prioritise forest conservation efforts. Deforestation undermines the biodiversity vital to human health and economic prosperity, which is why we are proud to have joined the Forest Investor Club as a founding member to increase the scale, pace and scope of forest and nature-related financing.
Deep-sea explorers have found a sprawling reef of giant rose-shaped corals in a ‘twilight zone’ off the coast of Tahiti. The ‘pristine’ and rare 3km long reef near the French Polynesian island appears to be largely unscathed by climate change and human activity. It lies at depths of more than 30 meters (100 feet) deep enough to protect it from the bleaching effects of the warming ocean. According to scientists, it probably took about 25 years for the reef to grow. Environmentalists have hailed the discovery of the rose shaped corals and hope more research on them can help experts understand how the reef has been resilient to climate change and human pressures, and what role can these deeper corals play in protecting the ocean ecosystem.
The EU comfortably surpassed its overall 2020 renewable energy consumption target, according to data released by Eurostat in January. According to the report, most member states met their power sector targets, but those for decarbonising transport and heating and cooling proved much harder. Six countries – including the Netherlands, Slovenia and Belgium – failed to use enough renewable energy to satisfy their legally binding national targets but made up the shortfall by buying statistical transfers. Only France formally failed to meet its national target, which could carry penalties. Which countries could represent the future of wind and solar power? Read our views, based on joint research with the University of Oxford.
The Australian government has pledged AUD 1 billion (USD 700 million) to protect the Great Barrier Reef, months after it narrowly avoided being placed on the UN cultural agency's danger list due to the threat of climate change. Prime Minister Scott Morrison unveiled the nearly decade-long conservation package days ahead of a 1 February 2022 deadline set by UNESCO to submit a report on the reef's state of conservation. "We are backing the health of the reef and the economic future of tourism operators, hospitality providers and Queensland communities that are at the heart of the reef economy," Morrison said in a statement. The funding will support new climate adaptation technology, investment in water-quality programmes, and protect key species, he added.
EU plans to require the aviation sector to use more sustainable fuels are not ambitious enough, seven countries have said. Last summer, the European Commission proposed measures to tackle greenhouse gas emissions from aviation, as part of the EU's goal to cut overall net emissions by 55% by 2030 from 1990 levels. The EU plan would force suppliers to blend at least 2% of sustainable aviation fuel (SAF) into their kerosene from 2025, rising to 5% in 2030 and 63% in 2050. In a letter sent to the Commission's climate and transport policy chiefs on 1 February 2022, seven countries (Austria, Denmark, Finland, Germany, Luxembourg, the Netherlands and Sweden) said that while the EU-level requirements were needed, the proposal should allow countries to go further. Looking to learn more about decarbonisation in this sector? This stewardship case study describes how we engaged an airliner using our proprietary engagement framework to encourage emissions reduction.
Amazon Inc.1 led a record year for corporate renewable-energy purchases worldwide. Amazon accounted for 20% of a record 31.1 GW of clean-power capacity bought by corporations in 2021. According to a recent Bloomberg report, Amazon signed deals for 6.2 GW, bringing its total clean-energy capacity to 13.9 GW. With this, it has the 12th-largest clean-energy portfolio among all companies. To learn more on green competitiveness in the global economy, read our whitepaper on predictors of success in a greening world, part of our research partnership with the University of Oxford.
A new sustainability initiative in the apparel sector aims to bring together eight companies working on innovative solutions to reduce the environmental impact of materials processing – one of the most resource-intensive stages of the fashion supply chain. Sportswear giant Adidas1, luxury fashion brand Kering1, US clothing giant PVH Corp1, Indian textile manufacturers Arvind Limited1 and Welspun India1 have partnered with the Fashion for Good initiative on the scheme, which will initially focus on trialling dry-processing technologies that can reduce the environmental impact of the pre-treatment and colouration of cotton, polyester, blends, denim and wool. Pre-treatment, colouration and finishing of textiles typically take place in large tanks or baths that require vast amounts of energy, heat and water. Dry-processing techniques use less energy and no or minimal water during materials processing, potentially reducing the environmental impact of the textiles industry, the group said. To learn more about how innovative companies are using forests to circular sustainable textiles, read our insight.
Japan’s largest railway company will begin testing the country’s first hydrogen-fuelled train next month in a step toward the nation’s goal of becoming carbon-neutral by 2050. The two-car train, named ‘Hybari’ -- a portmanteau of hybrid and the Japanese noun for a lark – cost about JPY 4 billion (USD 35 million) to develop and can travel up to 140 km (87 miles) at a top speed of 100 km/h on a single filling of hydrogen. East Japan Railway Co., which developed the train in partnership with Toyota Motor Corp. and Hitachi Ltd. plan to use them to replace its diesel fleet and look to export markets. Commercial services should begin in 2030. Europe has been a pioneer in hydrogen trains, with Germany rolling out the world’s first train built by Alstom SA in 2018. We believe the growth of clean hydrogen will provide an abundance of investment opportunities: click here to read our views.
Aircraft manufacturer Airbus and engine manufacturer CFM International have signed an agreement to introduce a hydrogen-powered flight-demonstration programme. This partnership will see the two companies modify and equip an Airbus A380 jet with a hydrogen-powered engine mounted on the rear fuselage. Four hydrogen tanks will be installed in the back of the cabin. The demonstration aircraft is set to take flight near the middle of this decade, according to Airbus. In the United States, CFM International, a joint venture between General Electric and Safran, is modifying an existing engine type to run on hydrogen. The company also develops the fuel and control systems.
Sources
1 Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document
The UN-convened Net-Zero Asset Owner Alliance released the second edition of its Target Setting Protocol, which guides its members in setting further ambitious climate targets that align with the very latest IPCC pathways to keep global warming below 1.5°C. The protocol focuses on Scope 3 emissions, which typically represent the vast majority of an asset owner’s emissions (95-97% in their respective portfolios). The alliance’s recommended decarbonisation range for absolute emissions reductions for the period 2020-2025 should range between 22% to 32%. To date, 30 members have set 2025 targets. The protocol provides comprehensive guidelines that draw on strategies, such as engagement and investment approaches, to support the real-world transition while benchmarking progress. The ‘Clean’ element of our CLIC™ framework and engagement using the Oxford Martin Principles are aligned with these activities.
Austria, Denmark, Sweden and the Netherlands have advised the EU not to label natural-gas projects as green investments, as Brussels attempts to finalise divisive rules on whether the fuel deserves a sustainable badge, Reuters reported. The European Commission drafted plans late last year to label gas and nuclear energy as green investments, an issue that has split the bloc's 27 countries as they disagree about whether the fuels should contribute to Europe's shift to clean energy. Gas investments should not be labelled green unless they emit less than 100 grams of carbon dioxide per kilowatt hour, the countries said. That aligns with recommendations made last week by the EU's expert advisers on the rules, but is far lower than the 270g limit in the Commission's draft plan. Countries are awaiting the Commission's final proposal, which it has said it will publish soon, without giving a date.
Morningstar has removed more than 1,200 funds with a combined USD 1.4 trillion in assets from its European sustainable investment list after an “extensive review” of their legal documents, the FT reported. The data provider dropped the funds from its “sustainable universe” at the end of last year after closely examining disclosures provided to investors such as prospectuses and annual reports. The cull underscores the challenge in ensuring sustainable investment products meet customers’ expectations and make a positive impact on the environment while regulators try to formalise definitions and best practices. “Morningstar data analysts have revisited these disclosures and tightened their criteria to tag funds as sustainable investments in the database,” analysts wrote in a research paper last week.
informations importantes.
À l’usage des investisseurs professionnels uniquement
Le présent document a été publié par Lombard Odier Funds (Europe) S.A., société anonyme (SA) de droit luxembourgeois, ayant son siège social sis 291, route d’Arlon, 1150 Luxembourg, agréée et réglementée par la CSSF en tant que Société de gestion au sens de la directive 2009/65/CE, telle que modifiée, et au sens de la directive 2011/61/UE sur les gestionnaires de fonds d’investissement alternatifs (directive GFIA). La Société de gestion a pour objet la création, la promotion, l’administration, la gestion et la commercialisation d’OPCVM luxembourgeois et étrangers, de fonds d’investissement alternatifs (« FIA ») et d’autres fonds réglementés, d’organismes de placement collectif ou d’autres véhicules d’investissement, ainsi que l’offre de services de gestion de portefeuille et de conseil en investissement.
Lombard Odier Investment Managers (« LOIM ») est un nom commercial.
Ce document est fourni à titre d’information uniquement et ne constitue pas une offre ou une recommandation d’acquérir ou de vendre un titre ou un service quelconque. Il n’est pas destiné à être distribué, publié ou utilisé dans une quelconque juridiction où une telle distribution, publication ou utilisation serait illégale. Ce document ne contient pas de recommandations ou de conseils personnalisés et n’est pas destiné à remplacer un quelconque conseil professionnel sur l’investissement dans des produits financiers. Avant de conclure une transaction, l’investisseur doit examiner avec soin si celle-ci est adaptée à sa situation personnelle et, si besoin, obtenir des conseils professionnels indépendants au sujet des risques, ainsi que des conséquences juridiques, réglementaires, financières, fiscales ou comptables. Ce document est la propriété de LOIM et est adressé à son destinataire pour son usage personnel exclusivement. Il ne peut être reproduit (en totalité ou en partie), transmis, modifié ou utilisé dans un autre but sans l’accord écrit préalable de LOIM. Ce document contient les opinions de LOIM, à la date de publication.
Ni ce document ni aucune copie de ce dernier ne peuvent être envoyés, emmenés ou distribués aux États-Unis, dans l’un de leurs territoires, possessions ou zones soumises à leur juridiction, ni à une personne américaine ou dans l’intérêt d’une telle personne. À cet effet, l’expression « Personne américaine » désigne tout citoyen, ressortissant ou résident des États-Unis d’Amérique, toute association organisée ou existant dans tout État, territoire ou possession des États-Unis d’Amérique, toute société organisée en vertu des lois des États-Unis ou d’un État, d’un territoire ou d’une possession des États-Unis, ou toute succession ou trust soumis dont le revenu est imposable aux États-Unis, qu’en soit l’origine.
Source des chiffres : sauf mention contraire, les chiffres sont fournis par LOIM.
Bien que certaines informations aient été obtenues auprès de sources publiques réputées fiables, sans vérification indépendante, nous ne pouvons garantir leur exactitude ni l’exhaustivité de toutes les informations disponibles auprès de sources publiques.
Les avis et opinions sont exprimés à titre indicatif uniquement et ne constituent pas une recommandation de LOIM pour l’achat, la vente ou la détention de quelque titre que ce soit. Les avis et opinions sont donnés en date de cette présentation et sont susceptibles de changer. Ils ne devraient pas être interprétés comme des conseils en investissement.
Aucune partie de ce document ne saurait être (i) copiée, photocopiée ou reproduite sous quelque forme et par quelque moyen que ce soit, ou (ii) distribuée à toute personne autre qu’un employé, cadre, administrateur ou agent autorisé du destinataire sans l’accord préalable de Lombard Odier Funds (Europe) S.A. Au Luxembourg, ce document est utilisé à des fins marketing et a été approuvé par Lombard Odier Funds (Europe) S.A., qui est autorisée et réglementée par la CSSF.
© 2022 Lombard Odier IM. Tous droits réservés.
