• Gustavo Bernal Torres

ECB Climate Stress Test, Real Estate, Melting Runways, Recycling Solar Panels, and NASA


Source: Pixabay


Here are 5 ESG insights you might have missed this week:


1. An Introduction to Responsible Investment: Real Estate-

  • This starter guide provides a quick summary of approaches to responsible investment for direct and indirect real estate investors.

  • Investing in real estate presents two key ESG considerations when compared with many other asset classes. Firstly, real estate is usually a long-term investment, allowing more time for material ESG issues to play out in ways that affect investors, the environment and society. Secondly, many ESG issues play out at a local level, for example extreme weather, water stress, legislative and/or regulatory requirements and community relations.

  • When an investor chooses to invest in a fund managed by an external investment manager, a different approach to responsible investment is required. The investor cannot make, or materially influence, specific investment decisions, but it can still influence a decision-making process through fulfilment of its fiduciary duties and, where applicable, ESG policy.

  • Link to Source: https://www.unpri.org/an-introduction-to-responsible-investment/an-introduction-to-responsible-investment-real-estate/5628.article


2. "Melting" Runways: Another Sign We're Not Ready For Climate Change-

  • The record-shattering heat plaguing the U.K. this week is wreaking havoc on local airports, as high temperatures damage runways that weren't built to withstand the sweltering conditions.

  • These airports' struggles are yet another example of infrastructure failing to keep up with our rapidly changing climate reality. Plus, many European airports were in logistical shambles even before the mercury started rising, and heat-related issues stand to further muck up the works.

  • Heat has been a problem at U.S. airports too. Vice President Kamala Harris' Air Force Two, for example, was delayed for nearly two hours at Chicago Midway last month due to temperature-related tarmac problems, per White House pool reporters.

  • Link to Source: https://www.axios.com/2022/07/19/airport-runways-melting-heat


3. ECB Publishes the Results of the 2022 Climate Risk Stress Test-

  • The 2022 climate risk stress test should be seen in the context of a broader set of activities that ECB Banking Supervision is undertaking in 2022 to assess supervised institutions’ level of preparedness for properly managing climate risk.

  • Focusing on banks’ progress towards developing climate impact factors, and stress test projections along with the key risks faced by banks in terms of both transition and acute physical risks. The report highlights ECB expectations, next steps and highlighted industry benchmark results from the input of over 100 participating EU Banks.

  • The 2022 climate risk stress test was a useful learning exercise for banks and supervisors, acting as a catalyst to strengthen banks’ efforts to develop climate risk stress-testing frameworks in accordance with the expectations laid out in the ECBGuide on climate-related and environmental risks.

  • Link to Source: https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.climate_stress_test_report.20220708~2e3cc0999f.en.pdf


4. California Went Big On Rooftop Solar. Now That’s A Problem For Landfills-

  • California has been a pioneer in pushing for rooftop solar power, building up the largest solar market in the U.S.

  • Beginning in 2006, the state, focused on how to incentivize people to take up solar power, showered subsidies on homeowners who installed photovoltaic panels but had no comprehensive plan to dispose of them. Now, panels purchased under those programs are nearing the end of their typical 25-to-30-year life cycle.

  • The measure exceeded its goals, bringing down the price of solar panels and boosting the share of the state’s electricity produced by the sun. Because of that and other measures, such as requirements that utilities buy a portion of their electricity from renewable sources, solar power now accounts for 15% of the state’s power.

  • Link to Source: https://www.latimes.com/business/story/2022-07-14/california-rooftop-solar-pv-panels-recycling-danger


5. Biden Unveils New Executive Actions to Combat Climate Change-

  • In the wake of a setback from his legislative agenda to combat climate change, President Biden on Wednesday announced a set of new actions to reduce greenhouse gas emissions.

  • To coincide with the speech, the White House released a fact sheet with two new measures to adapt to climate change. FEMA is announcing $2.3 billion in funding to “help communities increase resilience to heat waves, drought, wildfires, flood, hurricanes, and other hazards,”

  • Department of Health and Human Services is issuing guidance to allow the Low Income Home Energy Assistance Program to be used by local governments for home air-conditioning equipment, community cooling centers and more.

  • Link to Source: https://www.yahoo.com/news/biden-unveils-new-executive-actions-to-combat-climate-change-195551624.html




One more thing: Visualizations from NASA’s earth observatory examining the global heat wave that has plagued over the last month.

Find the visuals here: https://earthobservatory.nasa.gov/images/150083/heatwaves-and-fires-scorch-europe-africa-and-asia




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