Fossil fuels debate fires up in time for COP26
The focus ahead of the crucial COP26 United Nations Climate Change Conference has been on our continued reliance on fossil fuels and how that can be changed in the face of global warming.
One leaked report claims that some wealthy nations have been pressing UN scientists to play down the need to move away from fossil fuels, although the Intergovernmental Panel on Climate Change (IPCC), which evaluates the science of climate change, says it will not be influenced.
Eco campaigner Greta Thunberg says world leaders at COP26 must reverse decades of “blah, blah, blah” inactivity and “creative accounting”.
Among other major reports laying out the battleground ahead of the Glasgow conference, which started on 31st October, have been the 2021 World Energy Outlook, The Production Gap and the Global Sector Strategies: Investor interventions to accelerate net-zero electric utilities report. In addition, COP26 host, the UK, has published important climate change reports, including its Greening Finance Roadmap and Net-Zero Strategy.
Many pre-COP26 reports say the leaders at COP26 must do much more to even get close to the lower Paris Agreement target of 1.5 degrees Celsius, compared to pre-industrial levels. But more optimistic documents, including the Inevitable Policy Response, point to significant pledges and progress being made by nations and businesses.
As COP26 gets up and running, iResearch Services covers these and many more important ESG developments in this October Sustainability Summary.
What exactly is COP26 and what might it achieve?
COP26 is the short form for the 26th Conference of Parties to the UNFCCC (United Nations Framework Convention on Climate Change), which takes place in Glasgow from Sunday 31st October- Friday 12th November. It is being led by Presidency co-partners, Britain and Italy.
In 1992, UNFCCC laid out the framework for global cooperation on combating climate change. The “parties” are the 196 countries that ratified the treaty plus the European Union. The treaty has since been updated, including the Paris Agreement in 2015.
The heads of state and their teams will discuss how to tackle climate change and limit carbon emissions to net-zero by 2050 and how to finance the changes, including helping poorer nations. The aim is to limit the global temperature rise this century to 2°C above pre-industrial levels and preferably to 1.5°C.
Ministerial teams and advisors will negotiate and work out the detail. At the end of COP26, an agreed declaration is set to be announced, along with specific commitments that have been approved.
Additionally, under the Paris Agreement, nations are mandated to update their national climate action plans - Nationally Determined Contributions (NDCs) every five years and the plan is to update them at COP26.
iResearch Services Chief Executive Yogesh Shah says, “COP26 will continue to hit the headlines, not only while it is taking place, but in the months and years ahead, as the practical outworking of the decisions made become clear. Given the level of debate ahead of COP26, sustainability will remain a major focus for all businesses – indeed, for many, it is the number one issue we face. Business is already facing big changes surrounding sustainability and the urgency of change, with much more to come.”
GOVERNANCE AND POLICY
Climate policy growth ‘good for planet and investors’
Investors and the environment both look set to benefit from rapid accelerations in climate policy by 2025. The Inevitable Policy Response 2021 (IPR) from the United Nations-backed PRI (Principles for Responsible Investment) suggests that the significant change could bring the ‘below 2C’ Paris Agreement within reach. To meet 1.5C requires an immediate ramp-up in Energy & Land Use policy action, Transport Electrification, Coal Retirement and an End to Deforestation, the report says. The IPR prepares institutional investors for the portfolio risks and opportunities associated with the forecast acceleration of policy responses to climate change. Fiona Reynolds, CEO of Principles for Responsible Investment, says, “Global finance has an increasingly vital role to play in rapidly moving capital markets and corporations towards sustainable outcomes. IPR is now a significant tool for investors committed to making that a reality. IPR scenarios for investors encompass both the large-scale market shifts to come in carbon, energy and land use as well as invaluable granular analysis to help guide investment directions. The 2021 IPR forecasts signal to investors that they must focus on the transition, 2030 and net-zero pathways and the investment opportunities emerging as policymakers respond to growing climate challenges.”
The new IPR Forecast Policy Scenario (FPS), which covers 21 major economies, predicts that total CO2 emissions could fall by 80% by 2050, giving a one in two chance of keeping warming to well below 2 degrees at (1.8 degrees). Policymakers will be pushed to make the changes necessary to reach a below 2C pathway by 2025, driven by investor, corporate and civil society pressure around Net Zero, climate impacts, volatile weather patterns and low-carbon technology developments. Forceful policy in the 2020s across the energy and, crucially, food and land systems will help and sector emissions fall 125%, from around 6 GtCO2 in 2020 to around -1 GtCO2 per year by 2050, returning land to be a net CO2 sink. By 2030, zero-emission vehicles will make up around 30% of all vehicles on the road with significant declines in oil use after 2026/27. Wind and solar power are set to contribute over 30% of global electricity generation by 2030, three times today’s levels. Energy sector emissions are predicted to fall 75%, from around 34 GtCO2 in 2020 to around 9 GtCO2 in 2050.
Rapid changes in the food and land systems, often overlooked in climate scenarios, also play a critical role. Huge shifts in food production see land use becoming a net carbon sink within 30 years as the world reaches ‘peak meat’ consumption in 2030, and Nature-Based Solutions (NBS) accelerate. Land sector emissions fall 125%, from around 6 GtCO2 in 2020 to around -1 GtCO2 per year by 2050, returning land to be a net CO2 sink. However, even with this rapid transformation, the forecasted changes in the FPS would not yet be enough to keep warming to 1.5C – the temperature the IPCC has defined as critical to avoiding the worst impacts and most costly effects of climate change.
Additional key actions include:
- An end to deforestation across the entire globe, ideally by 2025. If not, the energy system has to absorb greater reductions, potentially through BECCs. (Bioenergy and CCS)
- Eliminate unabated coal in most advanced economies including China by 2035.
- Phasing out new fossil cars in almost all markets by 2040 o Transition to 100% clean power globally by 2045.
The Forecast Policy Scenario is based on a detailed review of key climate policy developments in all major countries alongside an extensive survey of more than 200 national climate policy experts. The doubling of net-zero commitments by countries, now representing 70% of global GDP, have made a forceful policy response to climate change even more likely than before the pandemic, says the report, as 48% of 124 forecasts show higher policy ambition, and only 6% lower than IPR’s 2019 outlook.
The key trigger years will be 2023-2025 as countries under the Paris Agreement submit their third round of climate pledges following the Global Stocktake in 2023, which will detail how far the world is from meeting the Paris goals and act as a crucial forcing mechanism for governments to accelerate policy. In November, IPR will publish an investor-based announcement, releasing Energy Systems and Food and Land Use forecasts.
Gurpreet Purewal, Vice-President of Sales – Thought Leadership, at iResearch Services, says, “Only a short time ago, sustainable investing was thought to be altruistic, but now it is also recognised that it can be beneficial for both the environment and the bottom line. Now, with the far-reaching changes set to be brought about by COP26, climate-friendly investment funds could lead stock market trends for the next decade.”
UK publishes Greening Finance roadmap
The UK has published its plan to make it the best place in the world for green investing, by introducing tougher sustainability disclosures to combat greenwashing. Greening Finance: A Roadmap to Sustainable Investing sets out how the British government aims to green the financial system and align it with the UK’s net-zero commitment. Stricter industry reporting regulations for businesses will be introduced, with additional requirements to publish net-zero transition plans and consistent sustainability information. The report aims to combat greenwashing – over-ambitious claims of environmental benefits - and make consumer investment in sustainable financial products easier. Chancellor Rishi Sunak says, "In the year of our COP26 Presidency, the UK is leading by example by putting the world’s most ambitious climate-change targets into law and setting out policies to kick-start a green industrial revolution. That is why greening the financial system is an integral part of my plans for the future of the UK’s financial services. Ensuring the financial sector is equipped to play its part is vital. Aligning the financial system with a sustainable future will bring real benefits for the environment and society.”
The first phase of change will be delivered through new Sustainability Disclosure Requirements (SDR), which are designed to create a more robust regulatory framework for the UK's sustainable investment market. They will apply to large companies, pension schemes, investment products, and asset managers and owners.
The new requirements will be:
- Integrated – investment products, financial services firms, and real economy corporates will be required to report consistent information on sustainability.
- Streamlined –existing disclosure requirements – such as the UK’s commitment to make reporting aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) mandatory – will integrate with new requirements, including reporting environmental impact.
- Consumer-focused – investment products will need to set out consumer-focused disclosures showing the impact, risks and opportunities of the activities they finance on sustainability. The FCA will adopt simple labelling so that consumers can make informed investment decisions that take sustainability into account.
- Credible – asset managers, asset owners and investment products will be required to substantiate sustainability claims they make.
- Robust – disclosure requirements will include reporting under the UK Green Taxonomy, which will provide a robust list of economic activities that count as environmentally sustainable.
- In line with international standards – the UK preparing to adopt international standards (subject to consultation).
The document calls the pensions and investment sectors to action, outlining the government’s expectations that they will use the information generated to help shift their financial flows to align with a net-zero, nature-positive economy. It highlights how the UK is leading international efforts to bring about global and systemic change in the financial system, including through the UK’s G7 presidency and by rallying the international community ahead of COP26 at the end of the month. *The UK has attracted £8 billion of foreign capital for clean energy projects since the launch of its green industrial transition strategy late last year,” says the Department of International Trade. It includes £900 million for zero-emission vehicles and £650 million invested in offshore wind projects.
And Britain also issues transformative Net-Zero Strategy
Britain’s long-awaited Net-Zero Strategy has been published by the UK government, which says decarbonisation will transform every part of the economy. The 368-page document contains plans to move toward clean electricity, electric cars and low-carbon heating to Build Back Greener. There is also another 135 pages of analysis. However, the Net-Zero strategy has been criticised for not showing how much carbon savings will be made and too little policy and investment detail. It includes £620 million being provided to boost electric vehicle manufacture and set up on-street charging points. By 2035, the government wants 100% clean electricity, "subject to security of supply", with 40 gigawatts (GW) of offshore wind power by 2030 and 1 GW of floating offshore wind, as well as at least one new large-scale nuclear plant by 2024. Prime Minister Boris Johnson says, “Our strategy for net-zero is to lead the world in ending our contribution to climate change while turning this mission into the greatest opportunity for jobs and prosperity for our country since the industrial revolution. In 2050, we will still be driving cars, flying planes and heating our homes, but our cars will be electric gliding silently around our cities, our planes will be zero-emission, allowing us to fly guilt-free, and our homes will be heated by cheap reliable power drawn from the winds of the North Sea.”
To support the “green industrial revolution”, the government needs to invest more than £26billion to support 190,000 jobs by 2025, and 440,000 by 2030. It also aims to attract up to £90billion of private investment by 2030. The net-zero programme will work with business to deliver affordable low-carbon tech. Mortgage providers may have to meet targets to improve the energy efficiency of the buildings on which they have provided loans. Another £140 million will go towards a new hydrogen and industrial carbon capture business scheme. The government is to restore around 280,000 hectares of peat in England by 2050 and treble woodland creation rates.
Phoenix Group calls for insurance industry collaboration
UK pensions business, the Phoenix Group, says the insurance sector has an instrumental role to play in the fight against climate change. Speaking at The Power of Pensions: Accelerating Action Towards Net Zero, event, CEO Andy Briggs called for urgent action in three key areas.
- Ahead of COP26, for organisations globally to set robust and ambitious near term science-based emission reduction targets.
- Greater collaboration across the finance and pensions industry
- Change in government policy and financial regulation to unlock the trillions of pounds of private investment required for the transition to a low carbon economy.
Phoenix Group supports the priorities of phase one of the Government’s Green Finance Roadmap, says Mr Briggs. “As an asset owner with £300bn of investments that we have committed to align to net zero, we believe that net-zero transition plans are vital for all organisations, and that transparency of data and consistency of reporting is key if we are to succeed in the challenge of decarbonising our investment portfolio and giving consumers confidence that real action is being taken and reported in a robust way. COP26 will be an important milestone on the journey to net zero, but the real work will start after it. The next decade is going to be critical and we need to act with urgency and at scale. Only by working together across our industry, and with a broad range of stakeholders, will we be able to bring about the investment and change that is required.”
British SMEs ‘need more help to decarbonise’
Three-quarters (76%) of UK small and medium-sized businesses have no credible plans to decarbonise, says a survey from British Business Bank. Four in 10 (43%) of the 1,200 SME leaders surveyed deny hearing at least “a fair amount” about the Government’s 2050 net-zero targets, A third (35%) say costs are a major barrier. British Business Bank’s chief executive Catherine Lewis La Torre says “clearly, more needs to be done” to help them prioritise decarbonisation
Lawyering up to avoid ‘greenwashing’ issues
Financial services firms are increasingly seeking the services of lawyers to tackle ‘greenwashing’. With ESG investments rising sharply, financial services firms are bringing in legal help to ensure their claims about social impacts are not exaggerated, reports the Financial Times. Ian Warner, an investment funds partner at Datalis, an investment platform created by law firm Pinsent Masons, says, “There is a massive amount of capital being put into sustainable finance, which clearly poses the risk that people will claim to be investing on a green basis when they are not.” Lawyers can also help during legislative updates and consultations. Claire Puddicombe, a partner in the London office of Cadwalader, Wickersham & Taft, says, “One extra word can change the meaning of an entire clause. It is important when we’re reviewing legislation to make sure that it reflects regulators’ intention but also can be implemented by the market.”
Time to transform financial services
Ideas on how to transform the financial sector as the world faces critical challenges over the next 30 years have been put forward. The world has to address the climate emergency, nature loss and mounting inequality, says the World Business Council for Sustainable Development (WBCSD), a CEO-led organization of over 200 leading companies. It has now published its Vision 2050: Time to Transform report, which lays out a new framework to guide business action to promote ESG in the decade ahead.
At the heart of this framework are nine transformation pathways – routes for companies to take on the road to being more sustainable – covering the areas of business activity that are essential to society: energy; transportation and mobility; living spaces; products and materials; financial products and services; connectivity; health and wellbeing; water and sanitation; and food. The WBCSD’s vision is that “all financial capital and financial products and services are mobilized to support sustainable development.” It requires business to ensure that:
1. The financial system recognizes the value of social and environmental outcomes alongside financial performance.
2. Financial capital allocation enables sustainable development.
3. The financial system has access to comprehensive and comparable data on corporate sustainability performance
4. The financial system works for everyone.
Its guide to Future-Proof Business presents a blueprint to support companies in defining the scope, scale, and specifics of how their businesses need to evolve through corporate purpose, strategy and governance, systems, and performance. Vision 2050 proposes 10 prioritized action areas for business to focus on over the next decade to accelerate the pace and scale of change. “It is designed to help companies be recognized and rewarded financially by capital market actors and wider stakeholders,” says WBCSD.
Hitanshu Dhingra, AVP Investment Research at iResearch Services, says, “These far-reaching goals are not something that can be carried out by businesses in isolation. Businesses can lead, but for the transformation of financial services to be a success, thought leaders, researchers, investors and clients must come together and put into place the changes required to make it happen. And it needs to be done quickly to meet the suggested deadlines.”
Record EU Green Bond issuance 11-times oversubscribed
The launch of the EU’s Green Bond has been oversubscribed by more than 11-times and has raised a record €12 billion for green and sustainable investments across the EU. The first NextGenerationEU 15-year green bond release is the world's largest green bond issuance ever, with books exceeding €135 billion. Commissioner in charge of Budget and Administration, Johannes Hahn, called the release a powerful signal of the EU's commitment to sustainability. “Our future is green and it is extremely important that we seize the opportunity to clearly show to investors that their funds will be used to finance a sustainable European recovery.”
SE Asia banks back ESG projects
South-East Asia’s banks are rushing to support ESG-backed development projects. Singapore's DBS Group Holdings, Oversea-Chinese Banking Corp., United Overseas Bank and Malaysia's Malayan Banking, are among those aiming to support green developments. Asia-Pacific has so far lagged behind Europe and the Americas in sustainable loans, reports Nikkei Asia.
Japan’s FSA presses for guidance to aid green investment
Japan’s Financial Services Agency (FSA) is pressing for guidance to help mobilise more capital investment in sustainable projects. The FSA is “eagerly pushing” for measures to enable more dynamic investment in low-carbon and zero-carbon technologies, Satoshi Ikeda told the UN-convened Principles for Responsible Investment’s 2021 Digital Conference. Governments must introduce provide comprehensive guidance to help investors and companies across all sectors transition in line with their net-zero targets, says the FSA Chief Sustainable Finance Officer. The Japanese government has published guidance on climate transition finance, and is developing roadmaps to reach net-zero greenhouse gas emissions in crucial sectors, including steel, chemicals and cement using science-based information, reports regulationasia.com. The FSA recently announced plans for a mandatory Task Force on Climate-related Financial Disclosure-aligned reporting for large companies from April 2022. From 2023, companies that submit annual securities reports will be included.
Net-zero strategy guide for banking executives
Leading banks in the Sustainable Markets Initiative’s (SMI) global coalition have published A Practitioner's Guide for Banks outlining considerations in setting a net-zero strategy. The guide drawn up by the SMI’s Financial Services Taskforce (FSTF) examines how banks can support the transition to net-zero that requires trillions in financing and capital. Noel Quinn, HSBC Group CEO and Chair of the FSTF, and Jes Staley, Co-Chair of the FSTF Net Zero working group and Group Chief Executive of Barclays, say, “Many banks have made net zero commitments in recent years, acknowledging that they have a role to play in the climate transition. What is needed now is clarity for banks on how to build their net-zero strategies, demonstrating that banks have a robust approach and enabling external stakeholders to keep track of progress. Net-zero commitments may not be credible unless there is common ground on what the term means for banks in practice, and how to get there.” Among key recommendations are defining the scope of emissions through defined emissions disclosure metrics and the development of industry reporting standards for financed emissions, selecting emissions scenarios, measuring portfolio alignment, setting targets, deciding on the use of carbon offsets, and disclosing progress.
Other financially focused sustainability stories this month
- HSBC has launched a suite of sustainable products for small and medium-sized businesses in Canada, which it says are a first. It includes Green Deposits, Green Trade Finance, Green Revolving Credit Facilities, Sustainability-Linked Loans, and Green Equipment Financing.
- Sustainability requires an industry-wide collaboration and response, says Malta’s Bank of Valetta, as it puts ESG at the heart of operations
- Now is the chance for banks to bring about a sustainable future, says ANZ New Zealand CEO, Antonia Watson
- The fintech contributing to Sweden’s green finance revolution (sifted.eu)
- ESG and Islamic finance come together in Malaysia (Euromoney.com)
BMW to make green power steel
Luxury car maker BMW is to use innovative technologies to make green power steel from 2025, thanks to a partnership with Swedish start-up H2 Green Steel. It will use hydrogen and renewable electricity in its steel production. This will generate up to 95% fewer CO2 emissions and does not require fossil raw materials. Andreas Wendt, board member of BMW responsible for purchasing and suppliers, says,
“Steel is essential for producing cars and will be no less important for future vehicle generations. Innovative technologies that enable virtually carbon-free production of steel have a significant impact on our ability to reduce CO2 emissions in our steel supply chain. Our goal is to reduce CO2 emissions in our steel supply chain by about two million tonnes by 2030. Sourcing steel produced using hydrogen and green power can make a vital contribution to this.”
Volvo and Mercedes-Benz announced plans to purchase climate-friendly steel from H2 Green Steel earlier this year.
New TPI Global Climate Transition Centre to provide free data
A new Transition Pathway Initiative (TPI) Global Climate Transition Centre will provide free in-depth data on how 10,000 companies are progressing towards net-zero operations. The TPI Centre is set to open in early 2022 at the Grantham Research Institute on Climate Change and the Environment, which is part of the London School of Economics and Political Science. It will boost the independent assessments of companies from 400 to 10,000 and will also scrutinise corporate and sovereign bond issuers. The new centre will be a key part of the financial infrastructure after COP-26 to support transparency, accountability and action on climate commitments.
TPI Chair Adam Matthews, says, “This TPI Centre will underpin the global climate transition directly empowering investors to take action and judge climate performance through the same lens. It will be a critical component of the post-Glasgow COP financial infrastructure enabling investors to deliver on their commitments.” Almost half of global assets under management have now pledged to become net-zero investors. The new Centre will support investor commitments to:
- Enable much more detailed analysis of the most carbon-intensive companies and sectors
- Help investors align their portfolios with net-zero targets covering three major asset classes (listed equities, corporate bonds and sovereign bonds) and aid transparency and independent analysis
- Support global investor engagement initiatives.
David Schwimmer, CEO of the London Stock Exchange Group, adds, “The creation of the TPI Global Climate Transition Centre marks an important step forward in accelerating the climate transition. The Centre will dramatically scale the TPI’s ability to provide investors with rigorous, independent and transparent assessments of company performance on climate change and enable expansion across asset classes.” The Transition Pathway Initiative is a global entity led by asset owners and supported by asset managers. It is aimed at investors and is free to use.
Kevin Anthony, Associate Director of Thought Leadership Sales at iResearch Services, says, “The jump from 400 company assessments to 10,000 will bring a significant boost for asset managers and investors. Multinational investment management corporation BlackRock has joined TPI as a supporter and Sandy Boss, global head of its Investment Stewardship, says TPI data was the “analytical backbone” for Climate Action 100+. Highlighted in our story, electric companies ‘must bring forward net zero targets by 10-15 years.”
Explosion of data brings investment opportunities
An “explosion of data” can help identify better-performing sustainable investment opportunities, says BlackRock. Active investors can increasingly find opportunities to outperform the traditional equities market by incorporating sustainable insights, climate-related financial catalysts and seeking out investment opportunities in emerging technologies. In its Seeking outperformance through sustainable insights report, BlackRock says there has been a tectonic shift in investor preferences and they can use emerging data and research to outperform the broader market. “An explosion of sustainable datasets, and new research techniques will present investors with opportunities to drive outperformance at the portfolio and individual security levels.”
Delving into the data…
- KPMG has partnered with digital workflow company ServiceNow to launch a new integrated ESG Solution and platform. The initiative aims to help companies take a more proactive approach to ESG, including enhancing diversity and inclusion, reducing carbon emissions and enabling business resilience.
LEADERSHIP AND THOUGHT LEADERSHIP
Call for Carbon Currency to fund climate change actions
With the cost of climate change action running into trillions, the idea of using a special currency as an incentive to decarbonise is being proposed. So far, rich countries have promised $100 billion per year to subsidize poor countries’ climate costs, but even that has not been fulfilled, according to The Guardian. Instead, the new currency could also reward carbon clean-ups or offsets, fund ecosystems and more, says the Global Carbon Reward (GCR) website. In fact, a similar idea is a theme of the recently published fiction book, The Ministry for the Future. GCR proposes that carbon currency, backed by central banks, should be used as a global reward for undertaking beneficial climate actions. “Enterprises that wish to earn carbon rewards will be required to sign a service-level agreement that will be enforced for up to 100 years,” GCR suggests. Businesses, scientists and industry associations would be invited to submit applications, including specific climate mitigation technologies and methods. The climate mitigation outcomes should be significant and measurable. The value of the reward would be determined by the exchange rate of the carbon currency. The unit of account of the currency would be “1000 kg of CO2e mitigated for a 100-year duration.”
Andrew Newby, Operations Director, iResearch Services, says, “Some great minds - and many ordinary citizens - are concentrating on the issue of how to pay the cost of limiting climate change. As the world’s richest nations have shown in the case of subsidising poorer countries, promising the money is one thing, but actually coming up with it is another. Finding a practical, global and equitable way of funding climate action is something that requires genuine statesmanship.”
SRI policies ‘will influence investor decisions’
Americans expect financial services firms to adopt socially responsible practices and will make investment decisions on that basis, a new online survey from finds. Almost seven in 10 (68%) say knowing more about the social responsibility efforts of financial services companies will influence their decision to do business with them, and 63% expressed the same about insurance companies. An overwhelming 97% told the Allianz Life survey that Socially Responsible Investing (SRI) was important and more than half (53%) of those not currently investing in socially responsible companies are interested in starting. Allianz Life conducted the survey in August 2021 with a nationally representative sample of 1,000 respondents with an annual household income of at least $50,000.
US again tops renewable investment table
The top three countries in the world for Renewable Energy attractiveness remain the same, according to the 2021 EY (Ernst & Young) ranking. The United States is in top spot in this year’s Renewable Energy Country Attractiveness Index (RECAI), followed by China and India. Moving up one place to fourth is France and the UK falls one place to fifth. The RECAI ranks the world’s top 40 markets on the attractiveness of their renewable energy investment and deployment opportunities. The positions reflect E&Y’s assessments of market attractiveness and global market trends. It considers onshore wind, offshore wind, solar PV, solar CSP, biomass, geothermal and hydro technology.
US offshore wind energy lease sales
To help reach the goal of generating 30 gigawatts (GW) of offshore wind energy by 2030, lease sales are set to be held in up to seven sites around the United States coastline. Details have been announced by the Bureau of Ocean Energy Management (BOEM) for the lease sales planned over the next four years. The areas earmarked by the Biden-Harris administration are in the Gulf of Maine, New York Bight, Central Atlantic and Carolina Long Bay in the east. The Gulf of Mexico is the sole southern region. Oregon and Northern and Central California are the Western areas.
When the exact sites have been identified, approval is subject to federal, state, and local reviews. BOEM Director Amanda Lefton says, “We are working to facilitate a pipeline of projects that will establish confidence for the offshore wind industry. At the same time, we want to reduce potential conflicts as much as we can while meeting the Administration’s goal to deploy 30 GW of offshore wind by 2030. This means we will engage early and often with all stakeholders prior to identifying any new Wind Energy Areas.” There are also 15 other wind farm projects being reviewed, that will bring capacity to approaching 20GW.
Europe’s largest green hydrogen plant investment
Global chemical company EINOS Group is to invest over €2 billion in green hydrogen production, the largest of its kind in Europe. It plans to set up electrolysis plants in the next decade to make zero-carbon, green hydrogen in Norway, Germany, Belgium followed by the UK and France. The first unit is a 20MW electrolyser to produce clean hydrogen through the electrolysis of water, powered by zero-carbon electricity in Norway. This project will lead to a minimum reduction of an estimated 22,000 tonnes of CO2 per year will serve as a hub to provide hydrogen to the Norwegian transport sector. INEOS Chairman, Jim Ratcliffe, says, “Green hydrogen represents one of our best chances to create a more sustainable and low carbon world. Europe is crying out for more investment in green hydrogen and INEOS’ announcement today shows our determination to play a leading role in this important new fuel.”
Call for decade of major investment in clean energy
Despite all the positive talk about sustainability, carbon emissions saw the second-highest annual rise in 2021. As a result, COP26 must provide an “unmistakable signal” that accelerates the transition to clean energy worldwide and herald a decade of massive clean energy deployment, states the 2021 World Energy Outlook (WEO) published by the International Energy Agency (IEA). Investment is critical and there is a shortfall in spending on clean energy transitions, which must be corrected, says IEA. Around two-thirds of the national Covid-19 recovery funds did not go to clean energy. Reaching the critical goal of net zero emissions by 2050 will require major efforts from across society – but it also offers major advantages for human health and economic development. Dr Fatih Birol Executive Director International Energy Agency, says, “What comes through very clearly in this new WEO are the huge opportunities that come with clean energy transitions – for manufacturers of wind turbines, batteries, electrolysers and a host of other technologies. A new global energy economy is emerging, with the potential to create millions of decent jobs across a host of new supply chains. To make this a reality, government leaders in Glasgow must play their part by making the 2020s a decade of massive clean energy deployment.”
Fossil fuel production ‘must be rapidly reduced’
To echo the point about rising fossil fuel production, the United Nations says counties have to make drastic reductions or risk missing the Paris Agreement global warming target. The world’s governments plan to produce more than twice the amount of fossil fuels in 2030 than would be consistent with limiting warming to 1.5°C, says The Production Gap 2021 report from the United Nations Environment Programme (UNEP). There are around 110% more fossil fuels – particularly oil and gas - planned to be mined in 2030 than is consistent with limiting global warming to 1.5°C, and 45% more than would be consistent with limiting warming to 2°C. BY 2040, the figures rise further to 190% over 1.5-degree levels and 89% towards 2°C. “G20 countries have directed around US$300 billion in new funds towards fossil fuel activities since the beginning of the COVID-19 pandemic — more than they have toward clean energy.” says the report, which covers 15 countries who are major producers. Governments have a primary role to play in closing the production gap. In addition to strengthening measures to reduce the demand for fossil fuels, they should place restrictions on fossil fuel exploration and extraction. Lead author, Ploy Achakulwisut, says "The research is clear: global coal, oil, and gas production must start declining immediately and steeply to be consistent with limiting long-term warming to 1.5C."
Electric companies ‘must bring forward net-zero targets by 10-15 years’
A strategy document, which outlines investor expectations for electric companies to reach net-zero by 2040, has been published. The Global Sector Strategies: Investor interventions to accelerate net-zero electric utilities report is from investor-led Climate Action 100+ and the Institutional Investors Group on Climate Change (IIGCC). It examines how electric utility companies can remain within the limited emissions budget set by IEA net-zero pathways. Among the main findings are that most companies still need to set net-zero targets, whilst existing net-zero targets need to be brought forward by 10-15 years. It reveals that only one of 68 publicly listed power companies has a decarbonisation plan consistent with the IEA 1.5C pathway. It says, “With electricity demand predicted to grow over 166% globally by 2050, urgent action is needed now to decarbonise the sector and limit the global temperature rise to 1.5 degrees Centigrade. Although the emissions intensity of power generation is falling, absolute emissions are not. In fact, developing countries – particularly in Asia – continue to expand their fossil fuel generation assets.” Climate Action 100+ is backed by over 600 investors representing more than $60 trillion in assets.
Not as advertised
Although one in four people identify with being disabled, they are represented in just 1% of primetime TV advertisements in the United States. Just over 1% of primetime TV ads in the US feature disabled themes, despite 26% of the population falling within that category, according to the new report, Visibility of Disability: Portrayals of Disability in Advertising, from Nielsen. Only 6,000 adverts in February featured “disability-related themes, visuals, or topics” out of almost 450,000, says the data specialist. “Most of the time, disability is absent from advertising, except when it’s focused on products that treat disabilities. Rarely do ads show disabled people in everyday life, such as working, parenting, household chores or enjoying activities” It adds, “We know that media has the power to shift the narrative around disability by better reflecting the real lived experience of people with disabilities.”
BIPOC developer fund created
Two non-profit finance companies, the Community Preservation Corporation and TruFund Financial Services have launched a $6 million fund to aid Black, Indigenous and People of Color (BIPOC) developers in New York state. It will provide equity capital and technical support to New York State-based emerging BIPOC developers.
Supporting female financial advisors and clients
Women financial advisers should not be put in a position that makes them feel uncomfortable. The industry has a duty of care to ensure they stay safe, says Gemma Harle, managing director, Network Advice Business, Quilter Financial Planning. “While there is clearly a wider structural issue with the way we think of women in this nation, the advice profession needs to lead from the front as women are likely to form a larger share of the future client base. The Office for National Statistics claims that by 2025, 65% of the UK’s wealth will be controlled by women. We know that financial planning is an incredibly personal process and as such many will feel more comfortable discussing their financial matters with someone of the same gender.”
Rachael Kinsella, Editor at iResearch Services, says, “Any steps that can be taken to help women feel safer in their jobs and stop them being put in vulnerable situations are very worthwhile. I have heard some horror stories from independent professionals recently, which just should not have been allowed to happen. The same goes for female clients, who may feel more comfortable talking to same-sex financial advisors, depending on circumstances and personal preference. Diversity of both advisors and clients is another area of development for the industry, thankfully coming to the fore via key initiatives and spokespeople driving action. As women investors step into the spotlight and women in advisory excellence is recognized, shouldn’t the make-up of boards, funds and products further reflect that?”
Look out for the new iResearch Diversity Digest
Want to explore more topics, news and data about Diversity, Inclusion and Accessibility? iResearch Services is launching a new monthly Diversity Digest, bringing you the latest insights, information and ideas in one helpful round-up.
IN OTHER NEWS…
Sustainable Sex Appeal
- Sustainability is being espoused by celebrities including actress Olivia Wilde, who declared that “sustainability is sexy” and the band Coldplay, which is making its 2022 tour “as sustainable and low-carbon as possible”.
- Transform Europe, which covers Sustainability as the Business Imperative, with top C-Suite speakers, is online on Tuesday 23 and Wednesday 24 November. It is run by Reuters Events.
- RI Asia 2021, which examines how Asia is responding to the global ESG regulatory shift, is live and free to air from Monday 8 November-Thursday 11 November. RI USA takes place from Thursday 7 December 7-Saturday 9 December.
- In Net-Nero November, Edie.net brings an entire month's worth of digital content and live events following on from COP26 and is dedicated to accelerating the race to a more resilient, zero-carbon economy.
- Portico Live’s Sustainable Future Summit runs from Tuesday 30 November-Wednesday 1 December in Brussels and online, as it looks to assess the promises made at COP26 and their effects on business sectors.
- Net-Zero Opportunities and Risks for Investors, a webinar held by Responsible Investor in partnership with J.P. Morgan Asset Management, takes place on Thursday 4 November.
- Responsible Business USA, focuses on 2030: The Roadmap to Lead a New Business Future. It is held from Tuesday, November 16- Thursday 18 November and is organised by Reuters Events.
Let us know what you think about COP26 and its implications for your industry. If you need sustainability support and want to take advantage of thought leadership and research opportunities on this and related topics - contact the iResearch Services team.
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