IPCC Releases Their Sixth Synthesis Report Highlighting the Need to Transition Faster to Climate Solution Technologies
Welcome to this week’s ESG policy roundup. A home to find out some of the week’s headlines in the ESG world.
As the climate crisis intensifies and regulators tighten their scrutiny, The latest reports from the Intergovernmental Panel on Climate Change, including the synthesis report released March 20, 2023, discuss changes ahead, but they also describe how existing solutions can reduce greenhouse gas emissions and help people adjust to impacts of climate change that can’t be avoided.
In other news this week, Florida Governor Ron DeSantis led an 18-state coalition to ban ESG investing by public pension funds and other state agencies, alleging that it harms returns and undermines fiduciary duty; the European Union unveiled its Net-Zero Industry Act, a visionary plan to decarbonize its industrial sectors by 2050 and lead the clean energy transition; Kering, the luxury group behind Gucci, Saint Laurent and Boucheron, announced a new commitment to reduce its greenhouse gas emissions by 40% across its value chain by 2035, based on a 2021 baseline; Whirlpool Corporation achieved Zero Waste to Landfill Gold or Platinum status at its large manufacturing sites worldwide by diverting at least 95% of waste from landfills; Microsoft, Nestlé PepsiCo SK Group Starbucks, and Unilever - joined Brookfield Asset Management to invest in scaling circular economy infrastructure and services through Closed Loop Partners’ operating company Circular Services.
These developments demonstrate the diverging paths that countries and companies are taking towards ESG goals. While some are embracing responsible investing and circular economy initiatives, others are taking a regressive stance. The question remains whether the global community will unite to tackle the greatest challenge of our time - climate change - or continue to be divided on the issue.
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IPCC Releases AR6 Synthesis Report Climate Change 2023
IPCC’s Synthesis Report under the Sixth Assessment Report (AR6) cycle was released on March 20 highlighting some of the technological, economic, institutional, ecological, environmental and socio-cultural barriers facing the climate change solution. The report focused on the following headlines:
Current trends and statuses: looking at the different ways in which climate change is being faced globally today. “Global greenhouse gas emissions have continued to increase, with unequal historical and ongoing contributions arising from unsustainable energy use, land use and land-use change, lifestyles and patterns of consumption and production across regions, between and within countries, and among individuals”-IPCC
Future Climate Change, Risks, and Long-Term Responses: takes a look at how not much has changed since the 5th report was released and if this continues “For any given future warming level, many climate-related risks are higher than assessed in AR5, and projected long-term impacts are up to multiple times higher than currently observed”-IPCC
Responses in the Near Term: Swift response is need in the near term to help mitigate further climate change disaster. “There is a rapidly closing window of opportunity to secure a liveable and sustainable future for all”-IPCC
The IPCC report looks at various themes around climate change and the 6th cycle takes a particular focus on some of the socioeconomic effects of climate change and how swift action is needed to mitigate further losses. A major headline coming out of their assessment is that climate change solutions are ready but require us to embrace innovation to allow for their success.
DeSantis Leads Anti-ESG Crusade with 18 States to Ban Responsible Investment Practices
Governor Ron DeSantis of Florida has launched an alliance of 18 U.S. states aimed at banning ESG investing. The alliance will coordinate actions to protect individuals from the ESG movement and will include measures to ban the use of ESG considerations in state and local pension funds. This is the latest move in the ongoing anti-ESG movement by Republican politicians in the U.S. who have been targeting investors over their support for energy transition-focused investments and disclosure.
DeSantis, who has been among the most vocal anti-ESG advocates, has previously barred fund managers for state pension funds from incorporating ESG factors in the investment process and recently pulled $2 billion from BlackRock over its use of ESG factors. Last month, he proposed new legislation with a broad range of anti-ESG rules, including prohibiting the use of ESG in all investment decisions at the state and local level.
In a statement, DeSantis said that the ESG movement "threatens the vitality of the American economy and Americans' economic freedom." The alliance will consider a series of actions such as blocking the use of ESG in all investment decisions at the state and local level and eliminating the consideration of ESG factors in bond issues by state and local governments.
The Governors' statement added that the proliferation of ESG throughout America is a direct threat to the American economy and individual economic freedom, putting investment decisions in the hands of the "woke mob" to bypass the ballot box and inject political ideology into investment decisions, corporate governance, and the everyday economy.
The alliance follows recent votes in Congress to overturn a Biden administration rule allowing fund managers for ERISA plans to include ESG considerations in the investment process. Biden has promised to veto the Congressional action, but the alliance said they can work together and leverage their state pension funds to force change in how major asset managers invest.
The proposed laws have divided opinions, with some arguing that they prioritize profits over people and the environment. Others argue that ESG investing has been overly politicized and could lead to the imposition of social credit scores by financial institutions in banking and lending practices.
The new alliance formed by Governor DeSantis and 17 other states aims to coordinate actions to protect individuals from the ESG movement. Their proposed actions, including the banning of ESG considerations in state and local pension funds, are the latest moves in the ongoing anti-ESG movement by Republican politicians in the U.S. However, the proposed laws have divided opinions, with some arguing that they prioritize profits over people and the environment.
The Net-Zero Industry Act: EU’s Ambitious Plan to Lead the Clean Energy Transition
The European Union Commission proposed the Net-Zero Industry Act to scale up manufacturing of clean technologies in the EU and strengthen the Union's resilience and competitiveness in the clean energy sector. The Act aims to make the EU well-equipped for the clean-energy transition and create better conditions to set up net-zero projects in Europe, with the goal of reaching at least 40% of the Union's deployment needs by 2030.
The proposal addresses technologies that will make a significant contribution to decarbonization, including solar photovoltaic, wind energy, batteries and storage, heat pumps, carbon capture and sustainable alternative fuels technologies, among others.
The Act is built on pillars that include setting enabling conditions for investment in net-zero technologies, enhancing skills to support the production of net-zero technologies in the EU, facilitating access to markets and fostering innovation.
The Act sets an EU objective to reach an annual 50Mt injection capacity in strategic CO2 storage sites in the EU by 2030 and requires public authorities to consider sustainability and resilience criteria for net-zero technologies in public procurement or auctions.
The proposal will help increase the resilience of Europe's clean energy supply chains, reduce the EU's reliance on highly concentrated imports, and accelerate progress towards the EU's 2030 climate and energy targets. It will also boost the competitiveness of EU industry, create quality jobs, and support the EU's efforts to become energy independent.
President of the European Commission, Ursula von der Leyen, said the Act would "create the best conditions for those sectors that are crucial for us to reach net-zero by 2050." Together with the proposal for a European Critical Raw Materials Act and the reform of the electricity market design, the Act sets out a clear European framework to reduce the EU's carbon emissions and help transition to climate neutrality.
Kering Sets New Climate Goal: 40% Emissions Cut by 2035
The luxury group behind Gucci, Saint Laurent and Boucheron, Kering, has announced a new commitment to reduce its greenhouse gas emissions by 40% across its value chain by 2035. This ambitious target covers Scopes 1, 2 and 3 of the GHG protocol and is based on a 2021 baseline.
The company has updated its previous emissions targets, which included reducing absolute emissions by 50% by 2025 on a 2015 baseline. The new target reflects the company’s growth and expansion since then, as well as its alignment with the latest climate science.
The company has also committed to achieving net-zero emissions by 2050 at the latest, following the recommendations of the Science Based Targets initiative (SBTi). Kering said it will achieve this goal by decarbonizing its operations and supply chain as much as possible, and by investing in high-quality carbon removal projects to offset any residual emissions that cannot be avoided or reduced.
The company has identified Scope 3 emissions, which account for more than 90% of its total emissions, as a key area of focus. Kering said it will work with its suppliers and partners to implement low-carbon solutions across its value chain, such as renewable energy, circular materials, regenerative agriculture, and green logistics. The company said it will publish its 2020-2023 Sustainability Progress Report in March, which will detail its achievements and challenges in this area.
Kering’s new climate commitment is part of its broader sustainability vision, which aims to create positive social and environmental impacts through its business activities. The company’s CEO François-Henri Pinault said: “We have always been pioneers at Kering in setting very ambitious sustainability goals for ourselves and for our industry. We know that if we want to truly decarbonize our global businesses, we need to move from carbon intensity reductions to absolute reductions.”
Whirlpool Achieves Zero Waste to Landfill Status Worldwide
Whirlpool Corporation, the leading manufacturer of home appliances, announced that it has achieved Zero Waste to Landfill (ZWtL) Gold or Platinum status at all its major manufacturing sites worldwide. This achievement is in line with the UL ECVP 2799 Zero Waste to Landfill standard, which requires at least 95 percent diversion from landfills. Whirlpool Corporation’s goal of reaching Zero Waste to Landfill was first set in 2012, and since then, the company has continued to invest in plant efficiency and waste reduction.
The ZWtL achievement is a significant milestone that demonstrates the commendable dedication and collective commitment of Whirlpool Corporation's team to drive meaningful change in the environment. The company has been relentless in its efforts to produce and manufacture products that align with its social and environmental sustainability goals while not compromising product performance.
Zero Waste to Landfill is part of Whirlpool Corporation’s ongoing commitment to World Class Manufacturing (WCM), which sets the highest standards for manufacturing excellence and is the foundation for the company’s sustainable manufacturing journey.
The company's commitment to sustainability also includes other key initiatives, such as in biodiversity, green buildings, renewable energy, and energy retrofits. Furthermore, in 2021, Whirlpool Corporation announced a commitment to reach a net zero emissions target (scope 1 and 2) in its global plants and operations by 2030, spanning all direct (Scope 1) and power-related (Scope 2) emissions.
To achieve this goal, the company has already implemented several actions, such as reducing its carbon footprint by accelerating energy-saving plant retrofits and entering into two wind Virtual Power Purchase Agreements (VPPAs) that will generate wind energy equivalent to 100% of Whirlpool Corp.’s U.S. manufacturing plant energy consumption. Additionally, the company issued its inaugural $300 million sustainability bond in April 2021 to finance social and environmental projects across the organization.
Whirlpool Corporation’s achievement of Zero Waste to Landfill status is a testament to the meaningful work of its employees worldwide. The company remains committed to building on this momentum through its sustainability efforts in 2023 and beyond.
Global Companies Invest in Circular Economy Platform to Boost Recycling and Reuse
A group of global companies, including Microsoft, Nestlé, PepsiCo, SK Group, Starbucks and Unilever, have joined a new platform that aims to improve recycling and reuse infrastructure across North America. The platform, called Circular Services, is led by circular economy investor Closed Loop Partners (CLP) and has raised nearly $1 billion in commitments.
Circular Services was launched in November 2022 with $700 million in backing from Brookfield Asset Management, a global alternative asset investor. The platform owns and operates municipal recycling facilities in several states and provides recycling and reuse services for various materials such as paper, metal, glass, plastic, organics, textiles and electronics. The platform also has a pipeline of growth opportunities to expand its reach and impact.
The new investors have joined Circular Services as part of their sustainability goals to reduce waste and emissions from their products and packaging. For example, Nestlé has committed to make 100% of its packaging recyclable or reusable by 2025 and Starbucks has committed to shift away from single-use packaging by 2030. Both companies have also invested in CLP’s NextGen Consortium, which focuses on advancing sustainable packaging solutions.
Jessica Long, Chief Strategy Officer of Closed Loop Partners, said: “Expanding access to recycling and reuse services will enable cities and businesses to avoid the cost of landfilling products and packaging and achieve their sustainability goals.”
The investment in Circular Services reflects the growing demand for circular economy solutions that can help address the environmental challenges posed by waste generation and disposal. By supporting the development of recycling and reuse infrastructure, the global companies are also creating value for themselves and their stakeholders by securing access to recycled materials and reducing their environmental footprint