Sustainability Newsletter #44

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#Figure of the month - $950 billion

Sustainable bond issuance to hit $950 billion in 2023

Global sustainable bond issuance in 2023 is on track to reach or even eclipse an expected $950 billion despite a decline in the number of debt issuers, according to Moody’s Investors Service. Indeed, new issuance volumes in the global Sustainable Bond market are expected to increase by around 36% in 2023, mainly driven by the green bond segment which remain a growth driver this year with a forecasted new issuance volume up to $620 billion. The sustainable debt space has continued to evolve in response to new pressures and market considerations.

Recently, the International Capital Market Association updated its Sustainability-Linked Bond Principles to include accommodations for sovereign issuers and a broader range of social causes.

Sources: BloombergMoody’s Investors Service


Trends and Initiatives

Mental health: Investors call for more responsibility from tech companies

Screen addiction, sleep disorders or children’s exposure to inappropriate content: after climate change, the mental health of high-tech users is becoming the new hobbyhorse of institutional investors.

Initiated by Sycomore AM and Axa Investment Managers, the coalition brings together 27 institutional investors, including US funds Boston Common AM and Trillium AM, as well as asset manager Aviva Investors, highly influential in the London financial center. With $2.11 billion in assets under management, they are launching "a collaborative engagement initiative with tech companies". In the crosshairs of these investors are some of the world's largest capitalizations: manufacturers of cell phones such as Apple and Samsung, video games such as Microsoft, content such as Netflix, and Internet giants such as Alphabet and Tencent.

The coalition says it wants to obtain clear and short-term objectives for reducing the risks of excessive screen use among children, addiction, stress and sleep disorders among adults. These problems are often neglected by the tech industry, even though their long-term consequences have been the subject of scientific studies for years and are of growing interest to regulatory authorities in Europe, the USA and China.

Sources: Novethic, Le Monde, Reuters


New generation of plastic-free sneakers can be recycled or buried in the ground

More than 24 billion pairs of shoes are made every year, and 300 million pairs are thrown away. This presents a real problem for the planet, as the vast majority of shoes are made with plastics and other petrochemicals, which break down into harmful micro-plastics that find their way into our oceans, our food, and even our bodies. While more brands like Nike, Adidas and Reebok jump on the sustainable footwear bandwagon, a new generation of plant-based sneakers seems to be emerging.

In December 2022, Unless Collective – composed of Adidas veterans – announced a partnership with material innovation company NFW (Natural Fiber Welding) to debut the world’s first regenerative sneaker called the Unless Degenerate. Every part of this sneaker – from outsole to laces – is made entirely from plants and minerals. With zero plastic, the Unless Degenerate is designed to harmlessly decompose at the end of its life. Unless company takes full responsibility for ensuring that all their products can be repaired, recycled or decomposed.

Recently, the company collaborated with outdoor brand Mammut on a line of biodegradable hoodies and T-shirts. Today, Unless company is keen to keep growing by working with even bigger brands, including Nike, New Balance or even Adidas. This spring, Adidas CEO - Bjorn Gulden - announced that discussions had already been initiated with the new company.

Sources: Bloomberg, Forbes


Sustainable Finance

Deep-sea mining authority targets 2025 for regulations

In July, the International Seabed Authority (ISA) reached an agreement that gives the United Nations-affiliated regulator breathing room to finish rules for strip-mining deep ocean ecosystems for valuable metals before it must consider issuing mining licenses. At its annual meeting, the ISA’s 36-member policymaking Council said it would work “with a view” to adopting regulations in 2025. The agreement came after hours of closed-door negotiations at the organization’s Kingston headquarters in Jamaica.

Since 2017, the ISA has been slowly developing a “Mining Code” that involves establishing environmental standards, a formula to share mining royalties and the creation of inspection and compliance procedures to police industrial activity. However, the Authority missed a deadline on July 9 to enact regulations to allow mining of the seabed for key minerals used to the clean energy transition. Although 168 member nations are calling for a pause on deep sea mining, the ISA must now accept license applications from mining companies. Thus, the ISA has issued 31 licenses to mining contractors to explore the seabed in international waters for minerals, but none are yet allowed to start mining.

Sources: Bloomberg, Financial Post


Society and Planet

From the USA to China, via Europe, the northern hemisphere is suffocating

A heat dome in the United States, 10 million hectares burned in Canada, heatwave warnings in Spain, Italy and France with temperatures of over 40°C expected, chaotic fires in Greece and Algeria, heatstroke in Japan and record temperatures in China: the summer of 2023 confirms that climate change is well and truly at work, and that it's hitting the Northern Hemisphere with full force.

In addition to the dramatic environmental consequences, climate change is having a direct impact on revenues of some major companies. Extreme heat has already prompted some airlines, such as American and Delta Airlines, to limit passenger numbers for fuel reasons. High temperatures make the air less dense, reducing engine performance. As a result, airlines have been forced to reduce the weight of their aircraft, with a consequent loss in profitability. If scientists are worried about heat waves for the coming years, summer 2022 was already particularly deadly with over 60,000 deaths in Europe caused by heat, according to a study recently published by Inserm and ISGlobal.

Sources : Novethic, Bloomberg, Inserm


Company news

Google commits to replenish 20% more water than it uses by 2030

-          Company : GOOGLE LLC


-          Clover rating : 5/10

In July, Tech giant Google announced its new 2030 water stewardship ambition with a commitment to replenish 120% of the water it consumes, and to support water security and ecosystems in which the company operates. According to Google, the company’s main water uses include cooling its data centers, in its offices and campuses around the world, and in its value-chain including the manufacturing of its hardware products and data center equipment. In addition, the company has announced the financing of the project Global Water Watch, a platform aimed at democratizing information on water resources using world-wide to provide indicators for balancing water equally across society and sectors.

Sources: ESG Today, Reuters


CarbonCure raises $80 million for its concrete tech and plan to expand globally



-          Clover rating : Not Rated

Concrete is the most widely used building material in the world and responsible for roughly 5% of the world's greenhouse-gas emissions, making it the second-largest industrial emitter behind coal. To solve this problem, CarbonCure has developed a new technology able to capture and inject CO2 in concrete mixes used in constructions. The CO2 mineralization also increases the concrete’s strength, resulting in economic and climate benefits. In 2020, the company captured 290,000 tonnes of CO2 as part of its concrete manufacturing for various construction projects. According to CarbonCure, that is equivalent to taking 64,000 gas-powered cars off the road for a year. Recently, the startup already backed by investors including Breakthrough Energy Ventures LLC, Inc. and Microsoft Corp., has raised $80 million in its latest funding round. CarbonCure plans to use the funding to accelerate its product roadmap an expand globally.

Source: Financial Post, Bloomberg


Apple faces $1 billion UK lawsuit by apps developers over app store fees

-          Company : APPLE INC


-          Clover rating : 4/10

In July, Apple found itself the target of a $1 billion class action lawsuit brought by more than 1,500 apps developers in the UK over its App Store fees. Apple's services business, which includes the App Store, has seen revenues grow at a rapid pace in the last few years and now hovers around $20 billion per quarter. However, the commissions of 15% to 30% that the company charges some app makers for use of an in-app payment system has been criticised by apps developers and targeted by antitrust regulators in several countries. The UK lawsuit at the Competition Appeal Tribunal was brought by Sean Ennis, a professor at the Centre for Competition Policy at the University of East Anglia and a former economist at the OECD, on behalf of 1,566 app developers. "Apple charges are unfair in their own right, and constitute abusive pricing. They harm app developers and also app buyers" said Ennis in a statement.

Sources : Reuters, Bloomberg, SwissInfo


Studies - Infographic

ESG slightly outperforms

Americans are moving toward climate danger in search of cheaper homes

A recent study shows that the U.S. nation’s most flood-prone counties experienced a net influx of about 400,000 people in 2021-2022, which represents a 103% increase from the two-year period before that. The U.S. counties with the highest risk of wildfire saw 446,000 more people move in than out over the last two years (a 51% increase from 2019-2020). And the counties with the highest heat risk registered a net influx of 629,000, a 17% uptick. According to Redfin Deputy Chief Economist Daryl Fairweather, “It is not that people don’t care about climate dangers but that affordability concerns are primary and dominate everything else”.

However, even if those near-term considerations tend to trump any of these climate risks, homeowners in disaster-prone areas may see the profitability of their real estate investments decline over the years. According to forecasts by analytics firm Climate Alpha, expected growth in property values is expected to decrease by about -5% as natural disasters escalate and insurance becomes more expensive.

Sources: Bloomberg, Climate Alpha


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