The sustainability space in the EU and beyond is moving at unparalleled speed, driven by seismic shifts in the regulatory space and bold actions taken by investors, companies and civil society in response to growing societal challenges. To keep up with the daily influx of sustainability news crowding your LinkedIn feeds, the Raison Recap brings you the biggest headlines within the sustainability and ESG space that caught our attention during the week.
#1: The UK Financial Conduct Authority launches new guidance on Anti-Greenwashing Rule
In support of the UK’s Sustainable Disclosure Regulation (SDR) and accompanying investment labels introduced by the Financial Conduct Authorities (FCA) in July 2023, the FCA released final guidance on its Anti-Greenwashing Rules this week. The Anti-Greenwashing rules will apply to all authorized investment firms from May 2024 and is an integral part of the UK SDR objective to reduce greenwashing in the financial sector and ensuring that any sustainability-related claims around financial products are “fair, clear and not misleading”. A quick look at the guidance suggests that any reference to sustainability in the promotion of financial products shall meet four criteria (see graph), including accuracy, clarity, completeness and – as most investment managers should know by now – appropriate documentation. The guidelines also include helpful examples of both good and bad practice, and should be required reading for investment managers and advisers, in the UK and beyond.
#2: China is moving faster than expected in decarbonising its energy system
This week DNV – Energy Systems released a new report looking into China’s energy outlook towards 2050. Many know of the massive structural changes underway in China’s energy sector, but the pace of the change and the implications on global emissions reductions are staggering and should give way to some optimism in the flood storm of bad headlines. As an example: in 2023, China was responsible for a third of the world’s energy-related CO2 emissions. By 2050 that share will have reduced to a fifth as China’s emissions – in absolute terms – are expected to be reduced by a staggering 70%, with emissions expected to peak by 2026 and a 30% reduction by 2040. This is mainly due to the replacement of coal by renewables in the power mix and the electrification of end-use demand, which promises to make China the most electrified world region by 2050.
#3: Three central EU sustainability regulations get the final stamp of approval:
Several pieces of critical legislation that we have followed in our weekly recaps over the past months, got the final stamps of approval by the EU Parliament this week, including the much-discussed and compromised version of the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Forced Labour Regulation and the Packaging and Packaging Waste Regulation (PPWR). For all three pieces of legislation, there have been fundamental compromises and areas of contention underway: As an example, many would have liked to have seen the CSDDD in a less watered-down version, covering more companies, faster adoption and with links to executive pay, while the Forced Labour regulation, too, has come with critical concessions e.g. in terms of the lack of access to remediation for victims in the final regulation. But policy is, at the fundamental level, about compromises and often much better than the alternative, which, in the case of CSDDD, could have been a complete retraction. (NB: For those of you wondering how many companies will be covered by the CSDDD, here’s a neat infographic by SOMO which gives an indication)
#4: Meta and the World Resources Institute (WRI) launch new AI tool to map the Earth’s forests
In the wake of growing interest in how digitisation and Artificial Intelligence (AI) can enhance and accelerate critical sustainable development objectives (check out Annemarie Meisling‘s podcasts on this topic), Meta and World Resources Institute gave a perfect example of what that combination can do this week. To address the gap in the scientific understanding of global forest systems, Meta and WRI launched a global map, allowing the detection of single trees at a global scale. The map is free and open source to encourage comprehensive forest monitoring. The move is partly motivated by Meta’s net zero emissions goal by 2030, which relies heavily on forest-based carbon removals. As the integrity of such removals require technology to better monitor, report, and verify any claimed removals from reforestation, the tool is an essential component of Meta’s own carbon removal strategy (enlightened self-interest can be a powerful vehicle!). But even beyond Meta’s own climate endeavours, the tool has the potential to become a critical resource for improving the integrity of carbon removal schemes linked to nature-based solutions.
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