sustainable investment
Arctic plastics, low-carbon milk and banks’ emissions disclosures: key sustainability news
What news led the sustainability agenda in April? We cover the macroeconomic, corporate and financial stories that sustainable investors need to know.
It’s now or never: on 4 April 2022, the Intergovernmental Panel on Climate Change (IPCC) published a roadmap of the climate crisis with the final part of its assessment report, stating that greenhouse gas (GHG) emissions must peak by 2025 and can be nearly halved this decade to give the world a chance of limiting future heating to 1.5°C above pre-industrial levels. According to the report, the final cost of doing so will be minimal, amounting to just a few percent of global GDP by mid-century, though it will require a massive effort by governments, businesses and individuals. If no changes are made, temperatures will soar to more than 3°C with catastrophic consequences, unless policies and actions are urgently strengthened. For the first time, an entire chapter deals with the demand, services and social dimensions of climate-change mitigation. The report emphasises that individual behavioural changes will be necessary, but insufficient on their own if they are not integrated into broader structural and socio-cultural transformations that facilitate and incentivise citizens to change. To understand the magnitude of the net zero challenge, click here to access our infographic discussing three reasons to rethink net zero.
Scientists can predict carbon transfer in the ocean based on deep-diving tiny organisms, says a USC-led team of international scientists. The speed of this carbon transfer is influenced by the size and type of bacteria that latch onto the particles, according to a report published by ScienceDaily. It states that the discovery has enabled researchers to develop a computer model for estimating carbon transfer, a part of the Earth's natural carbon cycle to stabilise its climate in oceans across the globe. This discovery brings attention to how carbon – including pollution from cars – moves from the atmosphere into the ocean, said Naomi Levine, an Assistant Professor of Biological Sciences, Quantitative and Computational Biology and Earth Sciences at USC Dornsife College of Letters, Arts and Sciences. Knowing the carbon transfer rate could help scientists better understand how well the Earth is retaining carbon in the deepest parts of its oceans, or whether much of the carbon that normally would sink is returning to the atmosphere, Levine said. Interested to learn more about the steps we are taking to measure carbon levels in portfolios? Click here to read our PDF on comparisons of various ITR approaches.
The global 'plastic flood' has reached the Arctic. According to ScienceDaily, an international study released by the Alfred Wegener Institute shows the flood of plastic has reached all spheres of the Arctic. Large quantities of plastic transported by rivers, the air and shipping can now be found in the Arctic Ocean. High concentrations of micro plastic can be found in the water, on the seafloor, remote beaches, in rivers and in ice and snow. The plastic is not only a burden for ecosystems but also can worsen climate change. To learn more about how we are turning the tide on plastics, click here to read Natural Capital Portfolio Manager Alina Donets’s views on the issue.
Scientists have mapped coral reefs in the Caribbean to identify those most likely to survive climate change, reports the BBC. According to the report, corals with the highest potential to escape destruction from marine heat waves are predominantly located along the northern shoreline of Cuba and other promising sites are clustered around the Bahamas, Dominican Republic, Guadeloupe, Haiti, eastern Jamaica, and the US state of Florida. According to a recent IPCC report, at up to 1.5°C of warming, only 10-30% of coral reefs are expected to survive. If warming rises about that, survival prospects will plummet drastically. However, the scientists say their research – in line with other studies – shows coral reefs will not survive 2°C of warming, meaning urgent GHG emission reductions are needed to save them for future generations.
Spanish energy company Iberdrola1 has started construction of the 476 MW Baltic Eagle offshore wind farm in the German Baltic Sea, having secured approvals from the German Federal Maritime and Hydrographic Agency. According to NS Energy Business, the farm is expected to be fully operational by the end of 2024 and will power 475,000 homes with renewable energy. It’s estimated to offset 800,000 tonnes of CO2 emissions per annum and is being built 30 km northeast of the Rügen island, off the Pomerania coast. Baltic Eagle is part of a large offshore wind complex in the Baltic Sea, which will have a total installed capacity of over 1.1 GW. The offshore wind complex is expected to involve a combined investment of EUR 3.5 billion.
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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.
Swiss start-up Climeworks AG1 has raised CHF 600 million (USD 650 million) to scale up its technology that sucks CO2 directly from the air. According to an article from Bloomberg, the company currently operates the world’s largest direct-air-capture plant in Iceland, where trapped CO₂ is injected underground and stored permanently. So far, it can capture only about 4,000 tons each year, which is roughly equivalent to the annual emissions of 600 people living in Europe. The start-up would need to go grow quickly to contribute meaningfully to the billions of tons of emissions reductions that will be needed by 2050 to meet global climate goals.
Apple1 successfully pushes suppliers to use more renewable energy. Apple suppliers have more than doubled their clean power usage over the past year, the company announced. According to The Verge, the renewable energy projects they support prevented 13.9 million metric tonnes of CO₂ from entering the atmosphere, which has almost the same impact as taking 3 million cars off the road for a year, the company says. It is part of Apple’s efforts to become completely carbon neutral by 2030.
Dairy giant Arla Foods1 is willing to pay European farmers extra for milk based on how many carbon-reducing activities they can tick off a provided list, says Bloomberg. The incentives, which are still being decided, are aimed to help the Denmark-based co-operative achieve its target of reducing farm-level emissions by 63% this decade. The agriculture industry is being pushed to turn greener, and Arla has committed to using fossil-free trucks, renewable sources of electricity and low-energy operations at its sites. “The more activities you do that reduce the climate impact, the better the milk price you get from us,” CEO Peter Tuborgh said. “We know it will make a huge difference to the farmers if they are financially motivated to do the right thing.” Interested to learn more about farming efficiency? Click here to read our Q&A with Thomas Höhne-Sparborth, Head of Sustainability Research, discussing regenerative agriculture and more.
HelloFresh1 meal kits slash emissions by a quarter compared to supermarket shopping. According to Business Green, a lifecycle assessment concluded that meal kits result in less waste, greater efficiency and streamlined supply chains that deliver lower emissions. Households which use meal-kit delivery firms can cut their carbon emissions by 25% compared to those who buy separate ingredients from supermarkets, according to leading meal-kit provider HelloFresh, which was cited by the report. The company has published a technical summary of its ISO 14040-compliant life cycle assessment. The study analyses the environmental footprint across the whole value chain from 'field to fork' in seven HelloFresh markets, including Germany, Austria, Australia, the US, Belgium, the Netherlands and Luxembourg, and found that one meal from a HelloFresh meal kit causes on average 3.7kg CO2e emissions compared to 5.0kg CO2e per meal cooked with supermarket ingredients.
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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.
Banks will now face new standards on carbon emissions disclosures. According to the FT, financial institutions will publish estimates of the carbon emissions associated with their loans and investments, under draft international standards aimed at eliminating companies’ greenwashing. Concerns arose from the International Sustainability Standards Board (ISSB) during the COP26 climate summit about the lack of transparency around the environmental and social impacts of companies and the associated risks for investors. The board’s mandate is aimed at developing standards for corporate disclosures on sustainability-related issues, and to help put an end to allegations of “standard procurement” by companies seeking to flatter their business’ environmental impact and risks posed by climate change. On 31 March, the ISSB published a draft of their proposed standards, which will now be open for public comment until the end of July.
Global green financing, aimed at environmentally friendly projects around the world, has grown over 100 times in the past decade, a new study published by Reuters from TheCityUK1 and BNP Paribas1 showed. The data reported that global borrowing by issuing green bonds and loan and equity funding through initial public offerings targeting green projects rose to USD 540.6 billion in 2021 from USD 5.2 billion in 2012. The jump in issuance highlights the growing push from governments and corporations trying to tackle carbon emissions and achieve climate goals. In 2021, global green bond issuance stood at USD 511.5 billion, compared with USD 2.3 billion in 2012. The countries with the two highest GDP numbers, China and the US accounted for 13.6% and 11.6% of the green bond issuance between 2012 and 2021.
JPMorgan Chase1 ramps sustainable finance activity to USD 285 billion in 2021. The global bank revealed a significant increase in its sustainable finance activity in 2021, reporting that it financed or facilitated USD 285 billion in support of climate, community development and sustainable development projects and initiatives during the year – an increase of approximately 30% from 2020. According to ESG Today, the this puts the company ahead of its USD 2.5 trillion, 10-year sustainable development target, announced in April 2021. Of the USD 285 billion mobilised in 2021, USD 106 billion was enabled for green initiatives, including over USD 35 billion for sustainable transportation, renewable energy and energy efficiency, with financing activities including underwriting green bonds for corporate and sovereign issuers, capital raising and advisory services for electric vehicles companies and lending to emerging renewable energy companies.
Global financial services company Citi1 revealed that it more than doubled its sustainable finance activity in 2021, deploying USD 160 billion in sustainable finance throughout the year, compared with USD 62 billion in 2020, according to its newly released 2021 ESG Report. Citi stated that it is “well on track to meet its USD 1 trillion commitment by 2030.” The company announced this commitment last year, including goals to deploy USD 500 billion to environmental finance by 2030, and USD 500 billion for other areas aligned with the Sustainable Development Goals (SDGs), including education, affordable housing, health care, economic inclusion, community finance, international development finance, racial and ethnic diversity and gender equality. In 2021, Citi’s environmental finance activity increased significantly to over USD 130 billion, nearly quadrupling 2020’s USD 33 billion.
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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.
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