Cracking Down on Greenwashing: UK's ASA Bans Misleading Ads from Shell, Petronas, and Repsol

This week witnessed a series of impactful developments in the ESG landscape. From the UK's crackdown on greenwashing to Mercedes-Benz's green steel supply chain initiative, the global commitment to sustainability was evident.

• The UK's Advertising Standards Authority (ASA) banned advertisements from Shell, Petronas, and Repsol, citing misleading environmental claims.

• Mercedes-Benz announced agreements with H2 Green Steel to supply low-carbon steel for its vehicles in Europe and North America.

• Spanish insurance company MAPFRE discontinued its membership in the Net-Zero Insurance Alliance (NZIA), highlighting the complexities of navigating the intersection of climate commitments and political pressures.

• The International Energy Agency (IEA) highlighted the need to double the global pace of energy efficiency progress by 2030 to meet net-zero targets.

• The Biden administration requested a federal judge to dismiss a lawsuit by Republican-led states aiming to overturn a rule that permits ESG-focused investing in employee retirement plans.

This week's developments reflect the ongoing global commitment to ESG principles, despite the challenges and complexities involved. As the world continues to grapple with the urgent need for sustainable practices, these events underscore the importance of transparency, innovation, and policy in driving the global transition to a sustainable future

UK's ASA Bans Misleading Shell, Petronas, Repsol Ads

The UK's Advertising Standards Authority (ASA) has issued a series of rulings banning several advertisements from major energy companies Shell, Petronas, and Repsol. The ads, which highlighted the companies' clean energy initiatives, were found to potentially mislead consumers about the companies' overall environmental impact.

• The ASA ruled that the ads, which highlighted the companies' clean energy initiatives, breached codes regarding misleading advertising and environmental claims.

• Shell's ads gave the impression that a significant proportion of its business comprised lower-carbon energy products, which the ASA found misleading.

• The Petronas ad omitted material information on the company’s continuing contribution to greenhouse gas emissions.

• The Repsol ad lacked context that the company's biofuels and synthetic fuels would not achieve net zero emissions as a single measure.

The ASA's rulings underscore the importance of transparency in environmental claims, potentially setting a precedent for stricter advertising regulations in the energy sector

Mercedes-Benz and H2 Green Steel: Pioneering Green Steel Supply Chains

Mercedes-Benz has announced new agreements with Swedish startup H2 Green Steel to supply low-carbon steel for its vehicles in Europe and North America. This move marks a significant step towards establishing a green steel supply chain.

• H2 Green Steel, founded in 2020, is building the world’s first large-scale fossil-free steel plant in Boden, Sweden. The plant includes a giga-scale green hydrogen plant as an integrated part of the steel production facility, aiming to start production in 2025.

• The company uses hydrogen produced using green power to remove oxygen from iron oxide, avoiding most of the CO2 emissions typically produced. It also uses electricity from 100% renewable sources for the energy requirements generated in the manufacturing process.

• Under the new agreement, H2 Green Steel will supply Mercedes-Benz’ European press shop with approximately 50,000 tonnes of almost CO₂-free steel per year. The companies also announced an MoU aimed at establishing a sustainable steel supply chain in North America.

• Mercedes-Benz purchased an equity stake in H2 Green Steel in 2021, as part of the steelmaker’s $105 million Series A financing round. The automaker aims to achieve a green steel supply chain from 2039 at the latest.

Mercedes-Benz's agreement with H2 Green Steel signifies a crucial step towards sustainable manufacturing. By sourcing low-carbon steel, the automaker is not only reducing its environmental impact but also fostering the growth of green industries. This initiative could potentially set a precedent for other manufacturers to follow, leading to more sustainable supply chains in the automotive industry.

MAPFRE Joins Major Insurers in Exiting Net-Zero Insurance Alliance

Spanish insurance company MAPFRE has announced its decision to discontinue its membership in the Net-Zero Insurance Alliance (NZIA), following a trend of major insurers exiting the UN Environment Program (UNEP)-backed climate action-focused industry group.

• The NZIA, established in 2021, aimed to help insurance companies accelerate the global transition to net zero greenhouse gas emissions through their underwriting and risk management practices. MAPFRE joined the alliance in April 2022.

• Several major insurers, including founding members of the NZIA, have recently announced similar decisions to exit the alliance. This trend is largely driven by pressure from Republican politicians in the U.S., who have warned financial institutions about potential legal violations from their participation in climate-focused alliances.

• Despite its departure from the NZIA, MAPFRE remains part of the Net Zero Asset Owner Alliance. The company has reaffirmed its commitment to its sustainability strategy and to supporting clients throughout their own energy transition.

• MAPFRE has maintained all its public commitments, including reaching net zero emissions globally by 2050. The company recently announced a 26% reduction in its overall carbon footprint compared to 2019, putting it ahead of its plan to reduce its operational carbon footprint by 50% and to become carbon neutral in all countries by 2030.

MAPFRE's decision to exit the NZIA highlights the complexities of navigating the intersection of climate commitments and political pressures. Despite the departure, the company's continued commitment to sustainability and its progress in reducing its carbon footprint underscore its dedication to the global transition to net zero emissions.

Doubling Energy Efficiency by 2030: A Key to Net Zero, Says IEA

The International Energy Agency (IEA) has highlighted the need to double the global pace of energy efficiency progress by 2030 to meet net-zero targets. This assertion was made during the IEA Global Conference on Energy Efficiency in France.

• The IEA's report, "Energy Efficiency: The Decade for Action," states that increasing annual energy efficiency progress from 2.2% to over 4% by 2030 would deliver significant reductions in greenhouse gas emissions. This would also create jobs, reduce energy bills, and decrease reliance on fossil fuel imports.

• Energy efficiency investment in 2023 is expected to reach record levels, despite a slowdown in year-on-year growth. To double annual progress, investments must increase from USD 600 billion today to over USD 1.8 trillion by 2030.

• Countries representing over 70% of the world’s energy consumption have introduced new or improved efficiency policies since the global energy crisis began over a year ago.

• The IEA has developed and updated its policy toolkit for governments to support stronger action on efficiency. The toolkit includes strategic principles and sectoral policy packages to deliver faster and stronger efficiency gains.

The IEA's report underscores the critical role of energy efficiency in achieving net-zero targets. By doubling the pace of energy efficiency progress, significant environmental and economic benefits can be realized. This calls for increased investments and the implementation of robust policies to drive efficiency gains.

 

Biden Administration Counters US States' Challenge to ESG Investing Rule

The Biden administration has requested a federal judge to dismiss a lawsuit by Republican-led states aiming to overturn a rule that permits ESG-focused investing in employee retirement plans.

• The U.S. Department of Justice stated that the rule was necessary to replace improper limitations that the Trump administration had imposed on considering ESG factors in investment decisions.

• A coalition of 25 states, led by Utah and Texas, filed a lawsuit in January, alleging that the U.S. Department of Labor rule could jeopardize the retirement savings of millions of Americans by allowing investments based on political agendas rather than financial considerations.

• The Biden administration clarified that the rule primarily requires retirement plans to base decisions on financial factors. However, it also acknowledges that issues such as climate change and social justice can impact companies’ long-term financial health.

• The rule, which took effect on January 30, covers plans that collectively invest $12 trillion on behalf of 150 million Americans. Congress voted to repeal the rule in March, but President Biden vetoed the proposal.

The Biden administration's move to dismiss the lawsuit underscores its commitment to integrating ESG factors into investment decisions. The outcome of this legal challenge could have significant implications for the future of ESG investing in the United States, particularly in the context of retirement plans.