sustainable investment
Nature’s value, seaweed’s strength and green luxury
What news led the sustainability agenda in July? We cover the macroeconomic, corporate and financial stories that sustainable investors need to know.
European Council agrees on tougher renewables and energy efficiency targets for EU, reports ESG today. The European Council announced that its member states have agreed on higher targets for renewables and energy efficiency for its negotiating position for “Fit for 55,” the EU initiative to cut GHG emissions by 55% by 2030, from 1990 levels. The Council’s agreed position includes setting a target of 40% of energy from renewable sources in the overall energy mix, compared to the current 32% target and reducing energy consumption by 9% by that date, from 2020 levels. The EU’s Fit for 55 target was initially proposed in September 2020 by European Commission President Ursula Von der Leyen, with the new level putting the region on track for 2050 climate neutrality. Looking to learn more on energy and adaptation? Click here to read our latest issue of Futureturns discussing the urgency of the topic and how investors should prepare for the ongoing transformation of the global economy.
G7 leaders have been accused of “backsliding” on climate goals after they reduced pledges to halt fossil fuel investment because of fears over energy security, says the Financial Times. Vladimir Putin’s war against Ukraine has forced Europe to reduce its reliance on gas from Russia and sparked fears of energy shortages this winter. In its final communique from the summit, the G7 said investment in liquefied natural gas was a “necessary response to the current crisis”, adding “in these exceptional circumstances, publicly-supported investment in the gas sector can be appropriate as a temporary response.” Some countries, including Germany, have said they will restart mothballed coal power stations in an attempt to keep the lights and heating on this winter. Climate groups criticised the G7 for failing to deliver new climate finance pledges, and for its renewed focus on gas: “We cannot afford this kind of backsliding. There are lives on the line,” said Laurie van der Burg, campaigner at Oil Change International, a US-based campaign group.
The Global Energy Crisis May Get Worse, Bloomberg reports. A global squeeze on energy supply that has triggered crippling shortages and sent power and fuel prices surging may get worse, says the head of the International Energy Agency. “The world has never witnessed such a major energy crisis in terms of its depth and its complexity,” IEA Executive Director Fatih Birol said at a global energy forum in Sydney on 12 July. “We might not have seen the worst of it yet -- this is affecting the entire world.” Soaring prices are lifting the cost of filling gas tanks, heating homes and powering industry across the world, adding to inflationary pressures and leading to deadly protests from Africa to Sri Lanka. “This winter in Europe will be very, very difficult,” Birol said. “This is a major concern, and this may have serious implications for the global economy.”
The Guardian: Humans need to value nature as well as profits to survive, UN report finds. Taking into account all the benefits nature provides to humans and redefining what it means to have a “good quality of life” is key to living sustainably on Earth, a four-year assessment by 82 leading scientists has found. A focus on short-term profits and economic growth means the wider benefits of nature have been ignored, the report says. To achieve sustainable development, different approaches need to be incorporated into decision making. The assessment includes more than 13,000 references, including scientific papers and indigenous and local sources of information. It was created in collaboration with experts in social science, economics and humanities. The report builds on the Dasgupta Review, which found the planet is being put at “extreme risk” by the failure of economics to take account of the true value of nature. Incorporating diverse worldviews and knowledge systems will be key to leading to a more sustainable future, it concludes.
A recent UN report reveals that wild species support half of world’s population, says The Guardian. Wild plants, animals, fungi and algae support half of the world’s population but their future use is threatened by overexploitation, according to a new assessment by leading scientists. From the 10,000 known wild species that humans harvest for food to the firewood that one in three people need for cooking, nature is key to the livelihoods and survival of billions of people in developed and developing countries, says the UN report. Amid a global food crisis sparked by Russia’s invasion of Ukraine, the study offers insights into how humans can more sustainably use resources from ecosystems, drawing on more than 6,200 sources from approximately 200 contributing authors with a summary approved by 139 countries in the German city of Bonn. Interested to learn more about our growing population and if it can sustain the remaining planetary boundaries? Click here to register for our upcoming webinar on the topic.
Experts predict impacts on ocean biodiversity over next decade, says ScienceDaily. An international team of experts has produced a list of 15 issues they believe are likely to have a significant impact on marine and coastal biodiversity over the next five to 10 years. Lithium extraction from the deep sea, overfishing of deeper-water species and the unexpected ocean impacts of wildfires on land are among issues experts warn society should be addressing now. The aim is to raise awareness and encourage investment into full assessment of these issues, and potentially drive policy change. "Marine and coastal ecosystems face a wide range of emerging issues that are poorly recognised or understood, each having the potential to impact biodiversity," said Dr James Herbert-Read in the University of Cambridge's Department of Zoology, joint first author of the paper. He added: "By highlighting future issues, we're pointing to where changes must be made today -- both in monitoring and policy -- to protect our marine and coastal environments."
Corporate net-zero goals do not add up to a net-zero planet, reports The Business Times. More than 5,200 businesses have pledged to cut their GHG pollution to zero by 2050, or reach "net zero" by cancelling out emissions with forestry or other projects that remove CO2 from the air. They include some of the world's biggest companies: Apple, Zurich Insurance, P&G and General Motors. But as the corporate net-zero juggernaut powers on, the less sense it makes, critics say. Their reason: the only net-zero goal that matters is the one that applies to the entire planet. Companies can help. But companies cannot be net zero, and their pledges are more based on arithmetic than geochemistry, according to Carbone 4, a French consultancy that works with companies measuring their emissions and deciding what to do about them. "The idea of a carbon-neutral company is fundamentally dubious," they say. Our final episode of our ice cubes and burning logs podcast discusses the climate transition and what needs to happen if we are to achieve our global climate goals and reach net zero in 2050. Click here to listen.
A significant increase in corporate action to address deforestation is needed in order to achieve global climate goals, says a new report released by the UN-backed Race to Zero. According to an article from ESG Today, the report, “Why Net Zero Needs Zero Deforestation Now,” deforestation attributable to companies with land-based value chains, particularly in the forest, land and agriculture sectors, is responsible for a significant proportion of global GHG emissions. The sectors contribute 22% of global emissions, half of which are driven by deforestation. While commitments from forest, land and agriculture companies to address their climate impacts have increased, 58% of companies deemed critical to tackling deforestation have yet to set a net zero target. The report was generated in partnership with climate and deforestation focused organizations including Global Canopy, Science Based Targets initiative (SBTi) and the Accountability Framework Initiative (AFI).
Seaweed feed additive maker Symbrosia1 has raised USD 7 million in a Series A funding round led by Danone Manifesto Ventures, the corporate venture arm of Danone, reports ESM Magazine. The startup, based in Hawaii, has developed a seaweed feed additive that reduces livestock methane emissions by over 80%. The company will use the capital to scale the production of these seaweed strains and bring their livestock feed additive, SeaGraze, to market-leading brands and producers.
Shell1 decides to build Europe’s largest green hydrogen plant says Bloomberg. Shell Plc has decided to proceed with building Europe’s largest plant producing hydrogen from renewable power as oil majors bet the fuel could be key to cutting carbon emissions. ‘Holland Hydrogen I’ will include 200 megawatts of electrolysers powered by a wind farm off the coast of the Netherlands, according to a statement from Shell. That is 10 times the size of the largest existing green hydrogen facility in Europe. Shell did not disclose the value of the investment.
ESG Today: Pharmaceutical giant Pfizer1 announced a series of new climate commitments, including goals to reach net zero GHG by 2040 and achieve emissions reductions of 95% in its operations and 90% in its value chain. Pfizer’s new goals include the achievement of the Net Zero Standard. The standard was launched last year by the Science Based Targets initiative (SBTi) to assess and certify commitments to achieve net zero emissions through stringent criteria including decarbonisation of 90-95% by 2050, with neutralisation of residual emissions that are not yet possible to cut. In 2020, Pfizer set its previous GHG emission goal to become carbon neutral by 2030 and reduce Scope 1 and 2 GHG emissions by 46% by 2030 from a 2019 baseline. The company stated that it remains committed to reducing Scope 1 and 2 GHG emissions by 46% by 2030 as an interim milestone towards its new 2040 target.
Luxury fashion house Gucci1 has joined the Ellen MacArthur Foundation as a strategic partner in a move that it says shows its commitment to accelerating the transition towards a circular economy, says EcoTextile. The announcement coincides with the publication of the Italian brand's 2021 Gucci Equilibrium Impact Report, in which it reports on progress towards environmental and social targets. Gucci, part of the French fashion group Kering1, says its partnership with the Ellen MacArthur Foundation will build on its circular economy commitments to eliminate waste and pollution, circulate products and materials and regenerate nature.
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[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.
Switzerland launches climate scores for investment products and portfolios, reports ESG Today. Switzerland’s Federal Council announced the launch of Swiss Climate Scores, based on a series of indicators aimed at providing transparency into the alignment of companies with global climate goals. The council is asking banks, asset managers and insurance companies to apply the scores to their client portfolios and investment products, enabling investors to better assess the climate alignment of their investments, identify climate transition opportunities and meet their own sustainability goals. Criteria assessed in the scores include greenhouse gas emissions, fossil fuel exposure, global warming potential, net zero strategy and commitments and climate stewardship. According to the council, the scores go beyond current systems, such as the EU Taxonomy, by not only providing a snapshot of current environmental status, but also forward-looking information of where companies are positioned and their transition plans relative to the global climate goal to limit warming to 1.5°C. Interested to learn more about active investing within the Swiss market? Click here to read our recent report on our investment approach for Swiss bonds.
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