Sustainability Newsletter #34
#Figure of the month - €29 billion saved thanks to solar power
Solar power saved the EU €29bn this summer
In a tough summer for Europe that brought record-high energy prices and sweltering heatwaves, solar power has provided some much-needed relief. Ember’s analysis published in September reveals that record levels of solar power across the EU this summer avoided the need for 20bn cubic meters (bcm) of gas, which would have cost €29bn (£25bn) to import.
During the peak summer months of May to August, solar power generated a record 12% of all the EU’s electricity – up from 9% last summer. That puts it on a level with wind and ahead of hydro, though still four percentage points behind coal power.
Moreover, solar is growing very quickly. The EU has seen consistent 15% year-on-year increases in installed solar capacity – from 104GW in 2018 to 162GW in 2021. The jump in solar generation this summer shows that accumulated capacity paying off. Solar’s rapid growth is happening right across Europe. Some 18 EU countries saw solar generate a record share of summer electricity generation.
The Netherlands generated almost a quarter of its electricity from solar power this summer (23%), the highest share in the EU. Germany (19%) and Spain (17%) are following close behind.
Trends and Initiatives
Indigenous leaders urge businesses and banks to stop supporting deforestation
Indigenous leaders from the Amazon have implored major western brands and banks to stop supporting the ongoing destruction of the vital rainforest through mining, oil drilling and logging, warning that the ecosystem is on the brink of a disastrous collapse. Representatives of Indigenous peoples from across the Amazon region have descended upon New York this week to press governments and businesses, gathered in the city for climate and United Nations gatherings, to stem the flow of finance to activities that are polluting and deforesting large areas of the rainforest.
A new report by the Association of Brazil’s Indigenous Peoples (APIB) alleges that brands such as Apple, Microsoft and Tesla all have products that may be tainted by gold illegally mined in Amazon Indigenous territories. These companies are supplied by two refineries – Chimet and Marsam – that are under investigation by Brazilian authorities for their ties to illegal mining. The total area occupied by illegal mining in the Amazon has increased drastically in the past decade, according to the APIB report, growing 495% to 2,409 hectares in 2021. Illegal gold mining has soared in Brazil since the election of President Jair Bolsonaro, whose allies are currently attempting to push a bill through the country’s congress that would allow mineral extraction in Indigenous lands. The mining is blamed for mercury poisoning of water, deforestation and conflicts with local Indigenous people.
China Has Built 14 Overseas Coal Plants Since Vowing No New Ones
A year after President Xi Jinping promised China would stop building coal power plants overseas, the country has completed 14 such facilities beyond its borders and will finish another 27 soon, according to a new report.
Most of the projects that were in progress when Xi made the announcement are in limbo, but the recently or soon-to-be completed plants will emit about 140 million tons of CO2 a year in total, the Center for Research on Energy and Clean Air and People of Asia for Climate Solutions said in the report. That’s more than the national emissions of the Philippines.
Xi committed to stop building coal power plants in other countries and support green energy in a video speech to the United Nations General Assembly last year. He didn’t specify what would happen to projects already underway. Since then, China has pushed to boost coal production and sped up the permitting process for domestic power plants, part of a campaign to end a series of economy-crippling power crunches.
Source : Bloomberg
Denmark becomes first to offer 'loss and damage' climate funding
Denmark pledged over $13 million (100 million Danish crowns) to support developing nations that have experienced losses caused by climate disruptions, becoming the first country to offer "loss and damage" compensation to the most climate-vulnerable areas.
Some of the world's most fragile areas, such as low-lying islands are pushing to create a funding facility for "loss and damage" - or consequences of climate change that go beyond what people can adapt to - to be established at U.N. climate negotiations in Egypt in November. The United States, EU and other rich nations that represent the bulk of historical greenhouse gas emissions have opposed the creation of a separate fund to address loss and damage.
U.N. Secretary General Antonio Guterres urged rich countries to tax windfall profits of fossil fuel companies and use that money to compensate "countries suffering loss and damage caused by the climate crisis." Denmark offered the new loss and damage funding as part of its 2022 Finance Act and pledge to dedicate at least 60% of its climate aid to help countries adapt to climate change.
As COP27 Looms, Africa Receives a 10th of Climate Financing It Needs
As the international climate community prepares to descend on Sharm el-Sheikh in Egypt, new analysis shows just how far off their host continent is in terms of attracting the finance it needs to adapt to catastrophic global warming, build renewable energy plants and enhance its carbon-absorbing ecosystems.
At $30 billion, annual climate finance flows in Africa are just 11% of the $277 billion needed, according to research published in September by the Climate Policy Initiative, a US-based nonprofit. The research was commissioned by FSD Africa, an organization funded by the UK government, the Children’s Investment Fund Foundation, a charity set up by billionaire hedge fund activist Christopher Hohn, and UK Aid. It’s the first to map climate finance flows in Africa by region, sector and source, and captures available data for 2019 and 2020. Africa accounts for a tiny fraction of the world’s carbon emissions but its nations will be among the hardest hit by global warming, already manifested globally in disasters ranging from heat waves in Europe to droughts in the Horn of Africa and floods in Pakistan.
Existing flows are highly concentrated, with 10 of the 54 countries on the continent accounting for more than half of Africa’s climate finance. These include Egypt, Morocco, Nigeria, Kenya, Ethiopia and South Africa. The Southern African region bears the largest financing gap in absolute terms, attributed by the researchers to the $107 billion annual needs of South Africa alone, combined with one of the lowest regional levels of climate investment. As a percentage of gross domestic product, countries in Central and East Africa face the largest investment gaps.
Society and Planet
How the south Asian monsoon is changing in a warming climate
In August, the world looked on aghast as torrential rains and flash flooding submerged vast areas of Pakistan, affecting 33 million people, killing more than 1,300 and destroying or badly damaging 1.6m homes. Record-breaking levels of glacier melt following “phenomenal heatwaves” earlier in the year was also a key factor in swelling rivers and raising the risk of flooding. This meltwater combined with exceptional rainfall rates, which were described by António Guterres, secretary general of the United Nations, as a “monsoon on steroids”.
Over June-August 2022, Pakistan received nearly 190% more rain than its 30-year average. The southern provinces of Sindh and Balochistan were the worst affected – receiving 726% and 590% of their normal August rainfall, respectively.
The record-breaking monsoon rainfall that led to severe flooding in Pakistan this summer was “likely increased” by climate change, a new “rapid-attribution” study finds. The authors conclude that a five-day period of rainfall that hit the southern provinces of Sindh and Balochistan in late August is now about 75% more intense than it would have been had the climate not warmed by 1.2C.
Congress committee says documents show big oil greenwashing
A House congressional committee said internal documents from Exxon Mobil Corp., Chevron Corp., Shell Plc and BP Plc reveal that their public promises to fight climate change amount to greenwashing. A cache of emails, lobbying and preparation materials for senior executives obtained by the Committee on Oversight and Reform show that Big Oil climate pledges rely on “unproven technology, accounting gimmicks and misleading language to hide the reality,” Subcommittee Chair Ro Khanna said in an emailed statement. Shell touted an ambitious path to achieve net-zero emissions but internally emphasized that this had “nothing to do with our business plans,” emails showed. Exxon sought to water down statements from the industry’s Oil and Gas Climate Initiative to remove a pledge to uphold the Paris Agreement. “Creating a tie between our advocacy/engagements and the Paris Agreement could create a potential commitment to advocate on the Paris Agreement goals,” an Exxon executive said in a briefing note to CEO Darren Woods in August 2019.
“As we face more deadly, extreme weather around the globe, fossil fuel companies are reaping record profits and ramping up their misleading PR tactics to distract from their central role in fueling the climate crisis,” Representative Carolyn Maloney, the chairwoman of the Committee on Oversight and Reform, said in a statement.
Repsol sells $3.4 billion stake in shift from fossil fuels
- Company : REPSOL SA
- Sector : Energy
- Clover rating : 7/10
Spanish oil and gas giant Repsol SA is selling a quarter of its exploration and production division for $3.4 billion to a US private equity firm, in a dramatic downsizing of its exposure to fossil fuels.
The deal is Repsol’s second divestment in recent months as the Madrid-based oil producer raises funds to help pay for low-emission projects while also reducing its cost of capital. Repsol was the first large oil company to announce a strategic push into renewable power.
Europe’s oil and gas giants, flush with cash from soaring prices, are considering whether to turbo-charge their transition to clean energy. The sale of assets by Repsol contrasts with the approach of other oil majors, which are so far resisting pressure to sell off parts of their traditional businesses. The proceeds from the stake sale will further Repsol’s strategic aim of having low-carbon businesses account for 45% of capital employed by 2030.
Mercedes-Benz to Build Windfarm to Cover 15% of Electricity Needs in Germany
- Company : MERCEDES-BENZ GROUP AG
- Sector : Automobiles
- Clover rating : 6/10
Mercedes-Benz announced in September an expansion of its green electricity portfolio, with plans to build a wind farm at its test track in Papenburg, Germany. The wind farm will have an output of more than 100 MW, covering more than 15% of the company’s annual electricity demand in Germany. The new plans follow a series of announcements made by the company at its ESG conference earlier this year, including a goal to cut CO2 emissions per passenger car by more than 50% by 2030, alongside initiatives to expand solar and wind energy at its own locations and to increase the use of power purchase agreements.
The company stated that as part of its plans to erect a double-digit number of wind turbines by the middle of the decade, it is also planning a long-term purchase power agreement (PPA) with a partner, “equivalent to a triple-digit million euros amount.” Additionally, At the 800-hectare Papenburg test site, Mercedes-Benz said that it will evaluate large-scale installation of photovoltaic systems. By 2030, the company’s target is to cover more than 70% of its energy demand in production with renewable energy.
EACOP and Tilenga, Totalenergies' controversial megaprojects in Africa, receive a new sentence
- Company: TOTALENERGIES SE
- Sector : Energy
- Cloverleaf rating : 6/10
Opposition to TotalEnergies' oil extraction (Tilenga) and pipeline (Eacop) projects in Uganda and Tanzania is growing. After citizens, NGOs and some investors, it is now the turn of the European Parliament to condemn this oil megaproject which aims in particular at building the longest heated pipeline in the world (more than 1400 kilometres). The MEPs, meeting in plenary session on Thursday 15 September, voted by a large majority in favour of a non-binding text condemning them. The institution said it was "deeply concerned by the human rights violations" committed, citing "arrests, intimidation and judicial harassment of human rights defenders and non-governmental organisations".
The European Parliament calls for a halt to drilling in "protected and sensitive" areas and calls on the French group to take a year before launching the project to study "the feasibility of an alternative route" and to "consider other projects based on renewable energy". MEPs also call for an end to human rights violations, including the "immediate" release of human rights defenders. Finally, they call for "prompt, fair and adequate" compensation for those expropriated and deprived of their land.
Austrian railway company unveils ultra-modern night trains
- Company: OEBB INFRASTRUKTUR AG
- Sector: Transport
- Clover rating: 3/10
Austria did not wait for the train to come back into fashion before investing massively in this environmentally friendly mode of transport. The country has an extensive network and an attractive commercial offer, such as the "Klimaticket". But above all, Austria offers high-quality trains, especially for night journeys. While most countries were abandoning these routes in the interests of profitability, Austria has been strengthening them since 2016 through major investments. Rome, Milan, Zurich, Hamburg, Berlin, Warsaw, Zagreb via Salzburg... ÖBB operates nearly 30 night train lines on its own or in partnership.
"Night trains are gaining ground all over Europe, because they are the climate-friendly alternative to short-haul flights. When you travel by night train, you choose the most relaxed way to travel. You are also helping to reduce CO2 emissions: travelling by Nightjet is about 50 times more climate-friendly than flying," says Leonore Gewessler, Austrian Federal Minister for Climate Action.
Large companies' assets at growing risk of climate impact - S&P Global
Over 90% of the world's largest companies will have at least one asset highly exposed to the physical impacts of climate change by the 2050s, data and analysis from index and ratings provider S&P Global showed in September.
From heatwaves to floods, extreme weather events are increasingly causing upheaval across the globe, pushing companies and investors to seek to better understand and measure the risks to their assets.
If the world continues on the same path as it is now and fails to rein in climate-damaging emissions, 98% of the largest companies - classed as those in the S&P Global 1200 index - could be highly exposed by the 2090s, it added.
However, if the Paris Climate Agreement goal of limiting global warming to less than 2 degrees Celsius is reached, the share of large firms with assets at high physical risk could be reduced to 39% over that period.
Majority of fans want FIFA to compensate Qatar's migrant workers according to Amnesty International
A majority of football fans from 15 countries would support FIFA compensating migrant workers in Qatar for human rights violations during the country's preparations for the 2022 World Cup, Amnesty International said in September. More than two-thirds of respondents (67%) also said their national Football Associations should speak out publicly about the human rights issues surrounding the World Cup in Qatar as well as call for compensation for migrant workers.
"Across the globe, people are united in their desire to see FIFA step up and make amends for the suffering endured by migrant workers in Qatar," said Steve Cockburn, Amnesty International's Head of Economic and Social Justice. "The past cannot be undone, but a compensation program is a clear and simple way that FIFA and Qatar can provide at least some measure of redress to the hundreds of thousands of workers who made this tournament possible."
"Companies with high ESG scoring by sectors are doing at least as good as the others"
More and more academic research shows the outperformance of ESG
The popularity of environmental, social and governance (ESG) products has increased further in Switzerland. Volumes under management in 2021 rose by 30% to CHF 1982.7 billion, a growth rate almost identical to 2020, according to the Swiss Sustainable Finance (SSF) report on sustainable investment in Switzerland published this year.
In 2015, Professor Timo Bosch reviewed more than 2,200 academic studies analysing the financial effects of ESG criteria since the early 1970s. The senior fellow at the Center for Sustainable Finance & Private Wealth (CSP) at the University of Zurich found that "almost 90% of the studies find a non-negative relationship", with a large majority "reporting positive results" with a "stable impact over time". The latest MSCI indices published at the end of August confirm these observations.
On an annual average basis, the MSCI World ESG Focus often performs better than its benchmark, the MSCI World. The return is very close, with a small advantage for ESG over the long term.
For Falko Paetzold, this is an obvious observation. According to the director of the CSP, "companies that are committed to sustainability will be stronger in the future. Research shows that companies that are managed in this way are more profitable. This conclusion is based on an increasing number of reports, as the subject has become so central to research.
Source : AGEFI
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