Sustainability Newsletter #35

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#Figure of the month - $11 billion

Growth in renewables saved the EU $11 billion in gas imports since March

An increase in wind and solar power capacity allowed the European Union to save billions of dollars that would otherwise have been spent on gas imports since March. Clean power covered 24% of the EU’s energy needs between March and September this year, the highest ever for this six-month period, according to a study by think tanks E3G and Ember. The increase in wind and solar capacity over that period alone was equivalent to 8 billion cubic meters of avoided gas imports, or 11 billion euros ($10.75 billion) in avoided gas costs.

“There is a macroeconomic and a socioeconomic advantage to support higher renewable power targets,” said Artur Patuleia, the study’s co-author and a senior associate at E3G. “Renewables reduce the exposure to highly-priced fossil fuels, which according to international agencies, are here to stay.” 

The total amount of installed wind and solar capacity in the bloc’s 27 countries amounted to the equivalent of 70 billion cubic meters of natural gas imports between March and September 2022, according to the report. That equals 99 billion euros ($96 billion) in avoided gas costs.

Sources : Bloomberg, Edie


Trends and Initiatives

Singapore lowers emissions forecast target to 60 mln tonnes CO2 in 2030

Singapore plans to reduce its carbon emissions target for 2030 to 60 million tonnes of carbon dioxide, and will achieve a peak in emissions earlier than that, as the city state strives to achieve net zero by 2050, Deputy Prime Minister Lawrence Wong said in October.

The country previously aimed for emissions to peak at 65 million tonnes of CO2 equivalent in 2030.

"This 5 million tonne improvement is significant as it is equivalent to reducing our current transport emissions by two thirds," Wong said at the Singapore International Energy Week conference.

A spokesperson for Singapore's National Climate Change Secretariat said that the exact peak emissions level and year would "depend on the results of our decarbonisation efforts, which are in turn dependent on technological maturity, effective international collaboration, and the contributions by all citizens and businesses to reduce their carbon emissions."

Sources : Reuters, Nasdaq

Automakers to double spending on EVs, batteries to $1.2 trillion by 2030

The world's top automakers are planning to spend nearly $1.2 trillion through 2030 to develop and produce millions of electric vehicles, along with the batteries and raw materials to support that production, according to a Reuters analysis of public data and projections released by those companies.

Automakers have forecast plans to build 54 million battery electric vehicles in 2030, representing more than 50% of total vehicle production, according to the analysis. To support that unprecedented level of EVs, carmakers and their battery partners are planning to install 5.8 terawatt-hours of battery production capacity by 2030, according to data from Benchmark Mineral Intelligence and the manufacturers.

Source : Reuters


Sustainable Finance

IMF’s new climate tool allows Rwanda to access $310 million

The International Monetary Fund said in October that it had reached a staff-level agreement with Rwanda for $310 million of funding to support the country’s economic reforms and help it build resilience against climate change. The funding agreement is subject to approval by the IMF’s executive board, which is scheduled to consider it in December this year.

The IMF said a mission to the East African country had discussed reforms to strengthen the fiscal framework, sustain effective forward-looking monetary policy and mitigate the effects of the COVID-19 pandemic. “Addressing high inflation, long-term development needs and emerging climate risks remain a policy challenge in a highly volatile global environment,” the Fund’s statement said.

Sources : Bloomberg, Reuters


Norfund, BII, Finnfund invest $200m in African forestry fund

The Norwegian, British and Finnish development finance arms have put $200 million into an African forestry fund, the organisations said in October, as part of a plan to invest in sustainable tree businesses in the region.

Norfund has put $76 million, British International Investment (BII) $75 million and Finnfund $48 million into the African Forestry Impact Platform (AFIP), a fund run by Sydney-based forest investor New Forests. The investment follows a pledge by the three development finance institutions to scale up Sub-Saharan Africa's sustainable forestry sector made at last year's COP26 climate change conference, as policymakers gear up for this year's COP27 in Cairo next month.

Deforestation from the forest, land and agricultural industries contributes to about 11% of annual global greenhouse gas emissions, according to the Intergovernmental Panel on Climate Change. Getting companies in these sectors to curb emissions is seen as crucial to limiting climate change.

New Forests, which said in May it was being acquired jointly by the Japanese companies Mitsui and Nomura, said it plans to raise a further $300 million for the African forestry fund in the next two to three years to invest in other plantation owners and related companies. Its fund is also making its first acquisition, Green Resources, a forestry and wood processing company with 38,000 hectares of pine and eucalyptus plantations in Tanzania, Uganda and Mozambique, New Forests said in a statement.

Sources : Bloomberg, Reuters


Society and Planet

NASA instrument detects dozens of methane super-emitters from space

An orbital NASA instrument designed mainly to advance studies of airborne dust and its effects on climate change has proven adept at another key Earth-science function - detecting large, worldwide emissions of methane, a potent greenhouse gas. The device, called an imaging spectrometer, has identified more than 50 methane "super-emitters" in Central Asia, the Middle East and the Southwestern United States of America since it was installed in July aboard the International Space Station, NASA said in October. The newly measured methane hotspots - some previously known and others just discovered - include sprawling oil and gas facilities and large landfills.

view of Qambar before and after the monsoon


It turns out that methane absorbs infrared light in a unique pattern that EMIT's spectrometer can easily detect, according to scientists at NASA's Jet Propulsion Laboratory (JPL) near Los Angeles, where the instrument was designed and built. Circling Earth once every 90 minutes from its perch aboard the space station some 420 km high, EMIT is able to scan vast tracts of the planet dozens of miles across while also focusing in on areas as small as a soccer field. Some of the (methane) plumes EMIT detected are among the largest ever seen - unlike anything that has ever been observed from space," said Andrew Thorpe, a JPL research technologist leading the methane studies.

Examples of newly imaged methane super-emitters showcased by JPL in October included a cluster of 12 plumes from oil and gas infrastructure in Turkmenistan, some plumes stretching more than 32 km.

Sources : NASA, Reuters, Al Jazeera


COP27: Feeding their people or preserving the planet, African states no longer want to choose

"What should we do? Exploit our resources and feed our children and grandchildren? Or contemplate them and let our children and grandchildren starve because we must protect the planet?" It was with these very blunt words, and to a round of applause, that Eve Bazaïba, the Deputy Prime Minister and Minister for the Environment of the Democratic Republic of Congo (DRC) opened the pre-COP27 meeting, organised in Kinshasa, the country's capital, ahead of the climate summit to be held in Sharm-el-Sheikh, Egypt, from 6 to 18 November. "Africa finds itself in a dilemma when we are only responsible for 4% of greenhouse gas emissions. What should we do in these circumstances? It would be like saying that we need oxygen as much as we need bread," she said.

The DRC is using this pre-COP event to present itself as a "solution country". In addition to its resources in key minerals for the energy transition (copper, cobalt, lithium, etc.), the huge Central African country has some 160 million hectares of tropical forest, making it a "green lung" capable of absorbing carbon and contributing to the fight against climate change. This is a bargaining chip that the country does not hesitate to put on the negotiating table in order to demand international funding, while asserting its right to exploit its oil.

At COP26, the DRC signed a 500 million euro agreement committing it to preserving its forests. But at the end of July, the Congolese government launched a call for tenders for exploitation rights to 27 oil fields and three gas fields. 640 billion, a far cry from the promise made in Glasgow... "These blocks cover some of the last intact forests on Earth. Three of them straddle one of the world's largest carbon sinks, estimated to store 30 billion tonnes of carbon. This would be an absolute disaster for the climate, biodiversity and local people," says Greenpeace, which has launched a petition against the projects.

Sources : Novethic, PRECOP27


Company news

Nestle pledges $1 billion to coffee sustainability plan

-          Company : NESTLE SA

-          Sector : Food & Beverages

-          Clover rating : 7/10

Nestle will spend more than 1 billion Swiss francs ($1 billion) by 2030 on efforts to source coffee sustainably, the food company said in October, more than double its previous pledge. The move provides more evidence of how major consumer goods businesses are making changes to decades-old operational systems due to climate change concerns.

Study after study has shown that by 2050 roughly half the land currently used to grow coffee, especially the high quality arabica variety, could be unproductive because of to rising temperatures, drought and disease. Multinationals are meanwhile facing increased reputational and legal pressure from consumers and governments alike to clean up their global supply chains in the fight against climate change.

Nestle, which has already pledged to source all its coffee sustainably by 2025, said it is aiming, by that date, for 20% of its coffee to be grown using "regenerative" agricultural practices. These include planting cover crops to protect soil, using organic fertilizers to improve soil fertility and increasing the use of agroforestry and intercropping to preserve biodiversity - all with the aim of halving greenhouse gas emissions by 2030.

Sources : Reuters, Bloomberg


Germany’s largest power producer RWE commits to exit coal by 2030

-          Company : RWE AG

-          Sector : Energy

-          Clover rating : 0/10

Germany’s biggest power producer, RWE, announced a commitment to significantly accelerate its exit from coal-based power, pulling forward its target by eight years to 2030. According to the company, the decision to accelerate the exit will result in approximately 280 million tonnes of coal remaining in the ground, and 280 million tonnes of CO2 that will not be emitted. RWE said that the decision was part of an agreement between the company, the Federal Ministry of Economics and Climate Protection and the Ministry of Economic Affairs, Industry, Climate Action and Energy of the State of North Rhine-Westphalia.

Last year, Germany’s new government set out a clean energy strategy that included speeding up the country’s exit from coal-based power. Earlier this year, the government passed a series of laws approving a major increase in renewable energy development over the next several years, including a target for renewables to meet 80% of electricity demand in the country by 2030.

RWE said that it will invest more than €50 billion globally to drive these technologies in its green core business by 2030, including €15 billion earmarked for Germany.

Sources : ESG Today, Reuters


Munich Re ends investment and insurance coverage for new Oil & Gas projects

-          Company : MUNICH RE

-          Sector : INSURANCE

-          Clover rating : 8/10

Munich Re, one of Europe’s largest insurance companies, and the world’s biggest reinsurer, announced in October that it will no longer provide insurance coverage or investment for new oil and gas projects, as part of a series of new guidelines supporting the company’s decarbonization goals.

The new guidelines follow the release in 2020 of Munich Re’s Ambition 2025 strategy, which, in addition to setting growth and profitability goals for the company, also established a framework for the decarbonization of its insurance, reinsurance and investment activities, on the path to reaching net zero emissions by 2050. Ambition 2025 climate-related goals include reducing the net greenhouse gas (GHG) emissions of Munich Re’s investment portfolio by 25-29% by 2025, and reducing coal-related exposure in its insurance business by 35%.

Sources : ESG Today, Financial Times


Cement manufacturer Holcim presents its ambitious energy plans for 2030

- Company : HOLCIM AG

- Sector : Steel & Construction Materials

- Clover rating : 0/10

Often considered the most polluting company in Switzerland, cement manufacturer Holcim opened its doors to the media in Eclépens in October to explain its sustainability efforts. But convincing is a long way off, as the cement industry is responsible for 8% of CO2 emissions worldwide. "We want to be better understood and better accepted," admitted François Girod, the director of the Vaud cement plant. Tired of accusations of "greenwashing", he said that his group's environmental measures were not "mere slogans", but "concrete projects with measurable benefits".

The Zug-based group, which is the Swiss champion in cement and of which Eclépens is one of the country's three plants, has reduced its CO2 emissions by almost 40% since 1990, said Stéphane Pilloud, director of the "aggregates and concrete" sector in French-speaking Switzerland. However, much more needs to be done to achieve its long-term goal of becoming a net zero CO2 emitting company by 2050. By then, Holcim will have to be able to produce "climate-neutral and fully recyclable" building materials, he added.

To achieve this, Holcim is banking on the circular economy, for example by reusing materials from a construction site. "The idea is to revalue this material and substitute it for natural resources," explained Stéphane Pilloud. The idea is to multiply by seven the tonnes of recycled aggregates (gravel and sand) in its range of concretes. Holcim also plans to burn various types of waste and recycled materials to fuel its kiln "rather than burning oil", added François Girod.

Speaking on the Forum programme, Karen Scrivener, a professor at the EPFL's Building Materials Laboratory, described Holcim's plan as "credible" and "quite good" because it involves "working on several axes at the same time", although there is no "miracle solution with concrete".

Source : RTS



Carbon capture projects hit record, but would mitigate less than 1% of emissions

The number of carbon capture and storage (CCS) projects in development grew to record levels this year on the back of rising carbon prices and government incentives, but would still only mitigate less than 1% of annual emissions, a new report finds. There are now 153 CCS projects in the planning phase, 61 more than this time last year and more than at any time in history, the Melbourne-based Global CCS Institute found in its annual survey of the sector, released in October. They would add to the 30 projects currently operating and a further 11 under construction.

Despite the jump in new capacity, all existing and proposed projects would be able to store just 244 million tons of CO₂ a year, less than 1% of the 36 billion tons of carbon dioxide the International Energy Agency estimates was added to the atmosphere last year. Supporters say it has a vital role in the push to keep global warming to within the Paris Agreement’s stated target of 1.5 degrees celsius, with around 1.3 billion tons of storage capacity needed by 2030 to meet that target, according to the IEA. But critics argue CCS is an expensive, ineffective technology that serves to prolong the life of fossil fuels.

Sources : IEEFA, Bloomberg


Banks run by women lend less to big polluters, ECB study finds

Banks with more gender-diverse boards lend less to more environmentally harmful companies, according to research by the European Central Bank.

The study of loan-level data from the euro area found that banks with a relatively high share of female directors -- above 37% -- directed about 10% lower lending volumes to firms with relatively high pollution intensity. The working paper, published in Ocotber, also established that female director-specific characteristics matter, with better-educated directors granting lower credit volumes to more polluting firms, and that the trend was stronger in countries with more female climate-oriented politicians.

The results confirm “the beneficial effects of more gender-diverse decision-making groups on firms’ outcomes and, in a wider perspective, on the global economy,” researchers led by Leonardo Gambacorta wrote.

Sources : Bloomberg, ECB




ESG slightly outperforms

"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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