Sustainability Newsletter #43

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#Figure of the month - 5 years

China on course to hit wind and solar power target 5 years ahead of time

China is shoring up its position as the world leader in renewable power and is on track to hit its 2030 clean energy targets five years early by doubling its wind and solar energy capacity. The country is expected to produce 1,200 gigwatts of solar and wind power by 2025 if all prospective plants are built and commissioned, according to the study from the non-profit Global Energy Monitor. In 2023, solar capacity in China is already greater than the rest of the world combined.

According to the report, the country’s renewable energy boom is the result of a combination of incentives and regulations. However, while China may have become the global leader in renewable energy, the world’s biggest producer of planet-heating pollution is also ramping up coal production. Although China’s reliance on coal poses a significant challenge to global green energy targets, the report suggests that the relative cheapness of renewable energy should certainly persuade China to kick its coal habit. Eventually China’s ability to build and deploy homegrown, cost-competitive renewable energy at speed and scale further should call into question the economic viability of new coal projects into the future.

Sources : The Guardian, Connaissance des Energies


Trends and Initiatives

ChatGPT, Tiktok, Facebook: Content moderators create their first union in Kenya 

They are invisible, yet their role is essential. In Kenya, far from the head offices of the big tech companies, content moderators work to ensure that Internet users can surf the social networks safely, sometimes at the cost of their health. To improve their working conditions, they have set up Africa's first trade union for the profession. Employed by subcontracting companies, they are demanding an improvement in their working conditions, which they consider "unworthy". Moderators are tasked with analysing a large number of publications in order to eliminate problematic content, depicting scenes of paedophilia, murder, torture or incest, sometimes for less than two dollars an hour. A service that entails a heavy mental burden, for some employees even leading to post-traumatic stress disorder.

A subcontractor at the heart of controversy: in 2023, Sama was the subject of an investigation by Time into its contract with OpenAI. Kenyan moderators revealed to the American media that they had had to review thousands of violent texts in order to develop the chatbot's security mechanism, without any real psychological support. It was a painstaking task that left the workers traumatised. The employees are now calling for better recognition of their profession and intend to make their voices heard through this new union.

Sources : Le Monde, Time


Sustainable Finance

EU Commission proposes regulation of ESG rating providers

In June, the European Commission released a series of measures aimed at bolstering its sustainable finance framework, including a new proposal to regulate ESG ratings providers. Calls to regulate the ESG ratings sector have increased in recent years. In 2021, European markets regulator ESMA alerted that the current unregulated status of the ESG ratings sector and the resulting lack of transparency posed a potential risk to investors.

Under the new proposals, ESG ratings providers will be therefore supervised by ESMA to ensure the quality and reliability of their services, and the providers will be required to use methodologies that are “rigorous, systematic, objective and subject to validation.” The proposals also include organizational requirements to prevent potential conflicts of interest, and transparency rules regarding the methodologies, models and key rating assumptions underlying the provider’s ratings activities.

Sources : Reuters, ESG Today


IFRS releases global sustainability and climate reporting standards

The IFRS Foundation’s International Sustainability Standards Board (ISSB) announced in June the official launch of its new global sustainability and climate disclosure standards, expected to form the basis for emerging sustainability reporting requirements by regulators around the world, and marking a major step towards the integration of sustainability reporting into the broader financial reporting process.

The two new standards include “IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information,” and “IFRS S2 Climate-related Disclosures.” The core content of each standard includes disclosures relating to general sustainability and climate-specific risks and opportunities.

Following the launch of the new standards, the ISSB also recently stated that the board might soon add requirements to reporting standard covering areas including to natural ecosystems, deforestation, and biodiversity.

Sources : IFRS, ESG Today


Society and Planet

WEF Report: Gender gap not on pace to close until year 2154

Gender parity globally has recovered to pre-COVID-19 levels, but the pace of change has stagnated as converging crises slow progress, according to the World Economic Forum’s Global Gender Gap Report 2023. The report finds that the overall gender gap has closed by 0.3 % compared with last year’s edition. The year of expected parity is 2154, which means that another 131 years will be needed to close the global gender gap. “While there have been encouraging signs of recovery to pre-pandemic levels, women continue to bear the brunt of the current cost of living crisis and labour market disruptions,” said Saadia Zahidi, Managing Director, World Economic Forum.

The Global Gender Gap Report benchmarks the evolution of gender-based gaps in 4 areas: economic participation; educational attainment; health and survival; and political empowerment. For the 14th consecutive year, Iceland remains the most gender-equal country in the world and is the only country to have closed more than 90% of its gender gap. Global data provided by LinkedIn covering 163 countries shows that while women account for 41.9% of the workforce in 2023, however the share of women in senior leadership positions (director, vice-president or C-suite) drops to almost 32.2%.

Sources : World Economic Forum, ESG News


Company news

Ford gets $9.2 Billion to help US catch up with China’s electric vehicle dominance

-          Company : FORD MOTOR COMPANY

-          Sector : Automobiles

-          Clover rating : 4/10

A deep-pocketed US government program designed to finance futuristic energy businesses is issuing a conditional $9.2 billion loan to Ford Motor Co. for the construction of three battery factories. The enormous loan marks a watershed moment for President Joe Biden’s aggressive industrial policy meant to help American manufacturers catch up to China in green technologies.

The new factories that will eventually supply Ford’s expansion into electric vehicles (EV) are already under construction in Kentucky and Tennessee. Ford plans to make as many as 2 million EVs by 2026, a huge increase from the roughly 132,000 it produced last year. The combined package is going to be a big boost for Ford, which expects to lose $3 billion on its EV business this year. The company has said that it will turn things around and is aiming for an 8% profit before taxes and interest from the EV business by the end of 2026.

Sources : Bloomberg, Zone Bourse


Shell dumped by the influential Church of England pensions fund due to oil risk

-          Company : SHELL PLC 

-          Sector : Energy

-          Clover rating : 3/10

In June, the Church of England Pensions Board has announced its decision to divest its holding in Shell over what it said were insufficient plans to align its strategy to the Paris Agreement goals of limiting global warming to 1.5 degrees Celsius. This decision of this influential fund could indeed mark the beginning of a movement of disengagement within the community of institutional investors such as pension funds.

Following unsuccessful negotiations with Shell until 2022 as part of the global investor coalition Climate Action 100+, the Church of England pension fund decided to withdraw its £1.35 million ($1.72 million) invested in the company. The Pension Fund Board has indicated in its statement its intention to exit from oil and gas, as well as its desire to refocus efforts in favour of energy transition in sectors such as the automotive industry. Although Shell has set several medium-term climate targets, the company has so far rejected all calls to set objectives to reduce CO2 emissions by 2030.

Sources : Bloomberg, Zone Bourse


Airbnb will chip in for its hosts’ green upgrades

-          Company : AIRBNB INC

-          Sector : Internet

-          Clover rating : 4/10

Travellers wishing to book their summer holiday in Massachusetts via the Airbnb platform could be taking part in a brand new eco-friendly campaign. Since May, the platform has been subsidising Massachusetts hosts to improve the energy efficiency of their homes. The program offers homeowners up to $2,000 to install heat pumps and $500 for weatherization upgrades, like insulation. The grants complement the state’s utility-supported Mass Save program, from which homeowners can receive up to $16,000 for their heat pump.

All told, the Airbnb offer, mixed with state and federal incentives, is designed to bring expensive heat pumps within reach for more Massachusetts hosts. Although the company has launched similar programmes in Europe, this is the first initiative of its kind in the United States. As well as the environmental aspect, the switch to a heat pump system would reduce electricity bills for Airbnb hosts, who often rent out their accommodation to supplement their modest incomes. The company's commitment has also been welcomed by the government, which believes that the programme is helping to democratise these new green technologies.

Source : Reasons To Be Cheerful



More than 75% of private markets investors plan to stop investing in products that do not integrate ESG criteria

According to a new report by PwC, global ESG-focused private markets assets under management is anticipated to surge over the next few years. Indeed, the report’s findings indicate that a significant majority of limited partner investors planning to increase allocations to sustainable investments, and more than 75% intending to stop investing in non-ESG-focused products over the next two years.

For the report “GPs’ Global ESG Strategiea” released by PwC Luxembourg, the firm surveyed 300 general partners and 300 limited partners across the U.S., EU, UK, and Asia Pacific. The report follows several years of increasing ESG-focused assets under management in private markets, rising from around $600 billion in 2015 to $1.1 trillion in 2021. This growth is set to accelerate in the coming years, reaching a projected $2.7 trillion by 2026.  In addition, the report highlights the willingness of many investors to shift to an “ESG or nothing” philosophy. Finally, the report also examined the investors’ views of the changes in the ESG regulatory landscape in their respective markets, finding that most investors generally were in favor of recent regulatory adjustments. In the EU for example, over 60% of limited partners reported being either “satisfied” or “very satisfied” with ESG-related regulations including SFDR and the EU Taxonomy.

Sources : PwC, ESG Today



Investment in solar energy exceeds investment in oil for the first time

Solar investment

"A major change is underway in global energy", says Fatih Birol, Executive Director of the International Energy Agency (IEA). In its report on investment in energy, published on the 25th of May, the agency highlights the increase in investment in low-carbon technologies. According to IEA estimates, solar energy is set to eclipse oil production for the first time, with investments totalling $380 billion, compared with $370 billion for oil. In general, investment in clean energy has been driven by a number of factors, including periods of strong economic growth and volatile fossil fuel prices that have raised concerns about energy security. Increased political support through major actions such as the US Inflation Reduction Act and initiatives in Europe, Japan, China and elsewhere have also played a key role, according to the IEA.

Nevertheless, the IEA regrets that more than 90% of these investments are concentrated in OECD countries and China. Indeed, "The largest investment gaps in clean energy are in emerging and developing economies", explain the authors. The IEA also points out that the international community needs to do much more, particularly to stimulate investment in low-income economies, where the private sector is reluctant to venture. Finally, while annual investment in clean energy is increasing, just over $1,000 billion still goes to coal, gas and oil. What's more, global demand for coal reached a record level in 2022, and investment in the sector this year is expected to reach almost six times the levels envisaged in 2030 in the Net Zero scenario. So there is still plenty of room for improvement.

Source : IAE, Novethic


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