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: Top climate scientists predict 1.5 is already out of reach: You have probably seen last week’s disconcerting headline from The Guardian conveying the results of a brand new survey with the world’s leading climate scientists, the majority of whom expect global temperatures to rise to at least 2.5C above preindustrial levels this century. In fact, only 6% of the surveyed scientists believe that the 1.5 degree target is still within reach. With headlines like these, it can be challenging to convince investors and companies to stay on course: why pursue a climate strategy consistent with a 1.5 degree scenario if it is out of reach? To avoid the perils of “climate nihilism”, we would argue that it’s never been more important to remember that every action from here on out matters, while bearing in mind that significant strides are being made such as China’s rapid expansion of its renewable energy sector and the continued global expansion of renewable energy as per EIA’s 2023 annual report as covered in our past Recaps. On that: Christiana Figueres has written a nice counter piece on the importance of stubborn optimism in response to the Guardian headline (hint: follow her page Outrage + Optimism for just the right dose of despair and hope to help fuel your inner climate activist)
#2: New paper calls for scientific thresholds in double materiality (and we agree): Last week we came across the new paper, “Understanding risks to the economy and financial system”, from UCL & University of Exeter. The paper lays out the most significant ecological tipping points (from the collapse of Amazon rainforest to coral reef die-offs and marine deserts), their interconnection and their substantial financial effects, most of which should be well-known territory for most sustainability folks by now. The perhaps most interesting part of the paper is the researchers’ call for integrating ecological tipping points into double materiality approaches, reminding us, yet again, that this is not the case today under the Corporate Sustainability Reporting Directive (CSRD), where the matter of thresholds is left entirely up to individual companies. Check out this post by Bill Baue which provides a bit of historic context as to how science-based planetary and societal thresholds disappeared from the GRI concept of “double materiality” over a decade ago. We suspect this will not be the last we hear of context-based materiality thresholds (or the lack hereof) under CSRD in the coming years…
#3: S&P’s latest ESG score for big tobacco firm breeds continued cynicism: When we first started Raison Consulting, we had countless conversations with companies and investors on the difference between “ESG” (or rather perhaps how ESG has been deployed) and “real sustainability”. In this context, we would often refer to the odd phenomenon that some of the highest scoring companies in so-called ESG ratings were often tobacco companies with robust social, ethical and environmental policies, targets, action plans and comprehensive disclosures. Or put differently: Strong “ESG performance” do not necessarily lead to sustainable outcomes. In light of the latest 2023 S&P ESG rating, which – yet again – has placed leading tobacco company, Philip Morris International, as a top ESG performer (85 of 100 points), the Moral Money newsletter of the Financial Timesraised the fundamental question: should there still be a place for tobacco companies in ESG-focused funds? Our take continues to be this: ESG ratings which account solely for management practices and their immediate outputs without consideration to the company’s fundamental business model and its wider societal outcomes are poor proxies for sustainability at best, and, at worst, represents a risk of undermining the genuine efforts of investors committed to sustainable investments.
Read on LinkedIn