January 14, 2022 - ESG and Climate News

Time to blow up greenwashing

This week, ESG and climate news is focused on the greenwash permeating through corporate, financial and government sectors.

Looking below the green sheen

In 2021, hundreds of companies and financial institutions made aspirational claims to reduce or completely eliminate their greenhouse gas emissions within a definitive time period. In 2022, these companies will face heightened scrutiny on their plans and performance to achieve these goals. 

This scrutiny will reveal that some of these aspirations are backed by little or no plans to achieve the goals. In other words, they are pure greenwash.  

There are serious consequences for being labelled a ‘greenwasher.’ It can devalue the company’s brand, motivate activist campaigns (including proxy resolutions), upset shareholders, and - importantly - turn off talented professionals in a very tough labor market. An article from GreenBiz made this point well, revealing how many climate savvy young professionals are viewing firms’ sustainability claims with an increasingly skeptical eye.  

Climate activists have also caught on. Instead of merely targeting the “emission-intensive” industries, they have turned to pressuring their enablers - specifically the PR and law firms who are the greenwashing experts.

Company leaders are becoming climate experts

ESG will take center stage in the C-suite and the Boardroom in 2022. A study by EY indicates that 82% of chief executives believe it will be the value-driver to their business in coming years.  

This newfound interest is just in time because the world is watching ESG like never before. For example, Andy Moniz, Director of Responsible Investing for Acadians, developed a sophisticated AI greenwash detector to help hold executives’ feet to the fire. 

Heightened scrutiny, executive interest, investor pressure and the looming regulatory mandates all add fuel to the growing market for robust carbon measurement and disclosure systems.  

From data to profit 

Accurate measurement is only the beginning. Once companies know their carbon footprint, then the hard work begins: companies of all stripes need to manage their impacts, prepare for risks, adapt to the changing climate and adjust their business model to profit in transition. These new climate strategies will be analyzed like any other business strategy: by looking at risks and opportunities.  

Strategic business decisions are continuing to drive the climate-tech market. Bill Gates alone aims to invest $15 billion in cleantech. In addition, BlackRock, the world's largest asset manager, recently unveiled its plan to launch two new climate action equity funds.

Bank on it

Banks are also responding to climate risk. This week nineteen banks formed a consortium to develop common standards for measuring and managing their climate risks. Banks will play a monumental role in funding the transition to a low carbon economy, however, there’s no denying they are still heavily invested in fossil fuels.

Carbon offsets soar

With more than a third of the S&P 500 companies publicly declaring a carbon reduction goal, the price of carbon offsets has skyrocketed. After years of low prices, the cost of ‘nature-based offsetting’ (reforestation, conservation, etc.) has tripled in the last six months due to a supply shortage. However, emergent carbon capture technologies could add more supply to help meet the growing demand.

Headwinds in the US

In stark contrast to the previous Administration, President Biden has returned the US to global leadership in the fight against climate change. Domestically, he has accumulated a few significant policy victories, including restricting support for fossil fuels overseas and leasing half-a-million acres off the New England coast for wind power. 

Sadly, even with all of the new pledges, US emissions rose in 2021. But the biggest disappointment is the failure of  Biden’s Build Back Better Bill. A senior policy advisor admitted that, “without this bill, we don’t really have a plan to tackle the climate crisis in the US.”  It would be almost impossible for the US to comply with its greenhouse gas reduction pledges without the $1.75tn package. 

While there is still a glimmer of hope as political negotiations on a slimmed down package continue, the coming months will be crucial for Biden’s climate legacy. With pundits predicting that Biden will lose control of one or both houses of Congress in the midterm elections, a breakthrough is needed now as it's clear that Republican members of Congress will continue to block climate protection policies.

The SEC is poised to require climate disclosure - here’s how YOU can get involved: 

Notwithstanding the debates on Capitol Hill, just steps away, the US Securities and Exchange Commission (SEC) is preparing to release a proposed rule requiring climate disclosure. The comment period on this proposal offers a unique opportunity to be heard on the necessity and content of the rule. In preparation to provide useful input on this rule, we are working with partners to develop a survey on the cost of carbon disclosure.  

If you would like more information and/or would like to participate in the survey, please register your interest by contacting reply@persefoni.com.  

As always, please like, share, and subscribe. 

Here are some additional ESG and climate news and events on our radar this week:

• The foundation of all ecosystems - insects - are being affected far more than anticipated by the pace of global warming. Half of all insect species are threatened by loss of their habitat by the end of the century. 

• After being battered by extreme weather,  North Korea has joined climate discussions,

  making it “one of the few areas where we can talk to the North Koreans without” according to a senior western diplomat.

• New research showed that ocean temperatures peaked in 2021. Ocean temperatures have now had their hottest years for the 6th consecutive year.

• Last week’s newsletter highlighting seven ESG and Climate predictions was featured  by LinkedIn and re-posted in FastCompany. Thanks for all of your likes, shares and re-posts - keep ‘em coming!

• Persefoni was named a 2022 Global Cleantech 100 Company for helping tackle the climate crisis. The list represents the companies best positioned to deliver solutions to take us from commitments to actions in the sprint to net zero.

Upcoming ESG and Climate Events

• On January 31 at 10:00 US Eastern time, join Persefoni SVP of Strategic Market Engagement, Mike Wallace for a panel discussion hosted by Charlton Morris exploring the crucial role ESG plays in building smart cities and its impact on the future of smart building.

• Greenbiz22, the premier annual event for sustainable business leaders is fast approaching and will be held in Scottsdale, Arizona, from February 15-17. With a range of events covering ESG standards, net zero strategies, and supply chain transparency, it's certainly a worthwhile conference. Register here.

• GreenFin (June 28-29th, New York) will convene an invitation-only audience of more than 600 sustainability, finance, and investment leaders to share insights, address the key challenges and showcase leading sustainable financial products and services. Request an invitation here.

• Reuters is holding an interesting webinar titled 'Sustainable Investment & ESG – The Pathway to a Greener Tomorrow' on January 20, 2022 at 3:00pm GMT. Register here.

Missed our previous edition of ESG & Climate News? Check it out now and stay in the know: December 17, 2021.