Gustavo Bernal Torres
Net Zero Bullsh*t, Sector-wide Engagement, ESG Talent War, and Asian Coal
Here are 5 ESG insights you might have missed this week:
We Need To Talk About Net Zero Bullsh*t-
From Responsible Investor, Pablo Berrutti questions the credibility of disclosures, CCS and scenario analysis in the race to Net Zero.
If our two-decade journey on climate change disclosure tells us anything, it is that understanding how much of the current excitement around Net Zero commitments is bullsh*t really matters. So, is Net Zero bullsh*t?
The good news is that the acceleration in some areas has been truly remarkable. It was only a few years ago that shareholder resolutions at company annual general meetings requesting rudimentary climate disclosure would receive scant support.
Exxon rejected all 62 shareholder resolutions on climate change from 1990 to 2015, and this continued despite almost 40% of shareholders supporting a 2016 climate change resolution, reaching 62% in 2017. It took another four years for a director to be removed at Exxon — 31 years after the first resolution — and these are the investors who will halve their emissions by 2030?
Climate Action 100+ Zeroes In On Industry-Wide Decarbonisation-
New Global Sector Strategies workstream will coordinate sector-wide engagement, inform investor expectations on company transition plans and recommend interim actions to accelerate progress.
Sector-wide actions and dialogues with investors mark an evolution of the initiative’s engagement strategy. It is the first time that investors, through Climate Action 100+, have engaged with companies at sector level and challenged industries to collaborative action.
As part of this new workstream, IIGCC published today the first Global Sector Strategy specifically for the steel industry, which reflects 12 months of multi-stakeholder dialogue with consultants, investors and steel companies engaged through Climate Action 100+. The report outlines specific challenges the sector faces in closing the gap to net zero and proposes actions that companies, the industry collectively and investors can take to address these.
ADB, Citi, HSBC, Prudential Hatch Plan For Asian Coal-Fired Closures-
Financial firms including British insurer Prudential, lenders Citi and HSBC and BlackRock Real Assets are devising plans to speed the closure of Asia's coal-fired power plants in order to lower the biggest source of carbon emissions, five people with knowledge of the initiative said.
The group plans to create public-private partnerships to buy out the plants and wind them down within 15 years, far sooner than their usual life, giving workers time to retire or find new jobs and allowing countries to shift to renewable energy sources.
The proposed carbon reduction facility would buy and operate coal-fired power plants, at a lower cost of capital than is available to commercial plants, allowing them to run at a wider margin but for less time in order to generate similar returns.
5 Ways To Separate Real ESG Leadership From Greenwashing-
How can people better identify greenwashing and help reinforce the growing sense of accountability for ESG standards? Look for these factors.
ESG is strategic: Sustainability is made a priority from the top down, with boards and C-suite accountable for material ESG risks and opportunities.
ESG is integrated: It sits in strategy, risk, reporting and board oversight—and the effectiveness of these processes relies on business leaders adopting a data-driven and digitally-enabled approach to get a complete overview of emerging risks and opportunities.
ESG is cash rich: Budget is not assigned to marketing, but is assigned to activities that improve the business model.
ESG is included in audited financial reporting: The company has processes to determine material ESG risks and opportunities and includes this in its financial statements.
ESG is made specific: Companies explain which issues matter most and why—and where they sit in the value chain.
Reactions To The ‘War For ESG Talent’-
From GreenBiz, a piece last month about the fierce competition to attract and retain professionals working in the field of ESG — environmental, social and governance metrics and strategy — elicited a rousing response.
Three themes stood out from the discussion:
The whole story is overblown- there were those whose job-seeking experience in the real world didn’t quite jibe with the journalistic conclusion.
The process is the problem- With demand far outstripping supply, companies are going to need to be brave and think laterally. We need to consider the people with transferable skills but with little or no direct experience.
ESG can’t be standalone- while there is a high demand for professionals with ESG knowledge and experience, unless they are fully integrated and represent a diverse range of interests, their impact will be limited.
One more thing: From The Washington Post, how climate change is making parts of the world too hot and humid to survive, and great visuals showing the impact of rising temperatures on the human body.
Find the article here: https://www.washingtonpost.com/world/interactive/2021/climate-change-humidity/
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