October 22, 2021 - ESG and Climate News
You could cut the tension with a knife...
Mixed signals are everywhere as we enter the last week before the all-important COP26 meeting in Glasgow, Scotland. In the US, despite broad support from business and impassioned calls from Google CEO Sundar Pichai and Levi’s COO Liz O’Neill, one Senator – Joe Manchin of West Virginia – with support of the oil, gas and coal industries - has effectively blocked the Biden Administration’s climate plan.
The Daily podcast from the New York Times, did an outstanding job of laying out Biden’s climate plan and the depressing political realities that likely spells its doom. On a more hopeful note, GreenBiz co-founder and long-term friend Joel Makower, published a terrific article about actions the Federal government is taking to address climate change while Congress dithers.
This impasse in the face of dire consequences and overwhelming popular support is maddening and highlights the dysfunction of US federal politics. The point was underlined when the state of North Carolina struck a deal to drastically cut carbon emissions despite deep political division. Unless a last-minute deal is cut, it looks likely that Biden and Kerry will go to Glasgow with good intentions and not much else.
Adding to the misery came news that the leader of the world’s largest greenhouse gas emitter – Chinese leader Xi Jinping – will not attend the event. China represents 30% of global carbon emissions, making Xi’s cooperation critical for the summit’s success. Some say we should not read too much into Xi’s decision because it may hinge more on Covid-19 risk rather than reluctance to engage in the climate talks.
And late this week the BBC broke the news of leaked documents revealing that Saudi Arabia and Australia are among countries asking the UN to play down the need to move rapidly away from fossil fuels. It also shows some wealthy nations are questioning paying more to poorer states to move to greener technologies.
If you are looking for a good explainer piece on what you need to know about COP26 and why it matters, check out this article from the Washington Post.
Climate is risky business
Cutting the other way, this week the news broke that the world’s third-largest economy, Japan, will require 4,000 companies to disclose climate risks. The new initiative from the Japanese Financial Services Agency likely will be enforced from April 2022, starting with the blue-chip market then expanding coverage to all listed companies after fiscal 2023.
Following suit, this week the UK announced new sustainability disclosure requirements to show the environmental impact of financed activities within ESG investment products. In addition, company sustainability claims will have to be justified “clearly”, and their net-zero transition plans properly set out. The U.K. also released a sweeping plan to decarbonize its economy by targeting everything from the finance industry to home heating. The masterplan will give British politicians something to tout as they put pressure on other nations to raise their green ambitions ahead of the COP26 summit in Glasgow, Scotland.
And in the US the Financial Stability Oversight Council (FSOC) - a body of the Treasury Department that grew out of the 2008 financial crisis aimed at preventing financial shocks and systemic risks - issued a report concluding that “climate change is an emerging threat to the financial stability of the United States." The conclusion cited economic disruptions while transitioning away from a fossil fuel-intensive energy system as well damage from extreme weather events, sea-level rise and other impacts of climate change. Moves by the politically independent FSOC carry significant weight.
Connecting the dots between climate change and poor health
In its annual “Countdown on health and climate change,” the medical journal Lancet provides a sobering assessment of the dangers posed by a warming planet. The report outlines warnings across a range of issues for example: rising temperatures have led to higher rates of heat illness. Insects carrying tropical diseases have multiplied and spread toward the poles. Extreme floods and catastrophic storms have boosted the risk of cholera and other waterborne diseases. Smoke from fires in California infiltrates the lungs and then the bloodstreams of people as far away as Texas, Ohio and New York. Droughts intensify, crops fail, hunger stalks millions of the world’s most vulnerable people.
Must. Go. Faster.
ABC News reported on a U.N.-backed study released Wednesday that we need to move further and faster to combat climate change. The study found that the 20 major industrialized and emerging economies have invested more into new fossil fuel projects than into clean energy since the start of 2020. Despite ambitious pledges to curb greenhouse gas emissions, these countries are still planning to extract double the amount of fossil fuels in 2030 than what would be consistent with the 2015 Paris climate accord’s goals.
Investors pick up the magnifying glass
The Wall Street Journal reports that a group backed by some of the world’s biggest investment firms plans to analyze the climate-change plans from 10,000 companies and make the results public. The Transition Pathway Initiative is supported by more than 100 investment firms representing a total of $40 trillion in assets including BlackRock Inc., the world’s largest money manager. It will open a research center next year at the London School of Economics that will publish the assessments.
Greta busts a move
Great Thunberg, the 18-year-old Swedish climate activist who is largely seen as a voice for youth concerned about a warmer future, said world leaders have been responsible for several years of inaction in reducing emissions which she has termed “their decades of blah, blah, blah.” But perhaps she influenced even more young people when she "Rickrolled" an audience, all in the name of climate activism.
Whatever the motivation, now is the time for action. There will be more on the run-up to COP next week, then I will be reporting live from the event in early November. Please comment, share, and subscribe.
Here’s what else you need to know this week:
Axios is reporting on climate risk analytics company Jupiter Intelligence’s promising Series C funding, who secured $54M. In a world where natural disasters are growing in frequency and severity, business supply chains and operations are seeing increased risks making climate change-related services like Jupiter Intelligence (and our very own Persefoni platform) even more vital
A report by the International Energy Agency finds the path to quitting coal won’t be easy. Despite 21 countries pledging to end "unabated" coal-fired power generation, these countries only account for 4.1% of global coal power generation in 2019--with no clear plans from China to reduce their coal power reliance. This is especially alarming given coal-fired power creates approximately 30% of global energy-related CO2 emissions
As the UN climate summit approaches, ESG advocates are pressuring global leaders to pursue policies that keep up with the latest climate science, such as carbon pricing, emission curbs, and better disclosure in order to accelerate the global economy’s transition to net-zero. (Read more about Tim Mohin's moderation of the "Need to Know: Reporting Climate Risk" track at The Economist: Climate Risk Summit North America).
Missed our previous edition of ESG & Climate News? Check it out now and stay in the know: October 8, 2021.