Physical Risks in China and Germany, Anti-ESG Politics, GFANZ, and John Oliver

1. Drought and Power Shortages Worsen China's Supply Chain Snags-

China's power crunch threatens supplies of everything from metals such as aluminum to automotive parts — as well as food commodities.
A severe drought and sweltering heat have led to low water levels and a drop in hydroelectric power generation in China in recent weeks, causing power shortages and forcing the government to ration electricity in some provinces.
China relies heavily on hydroelectric power to meet its electricity needs, with the source accounting for about 15% of its overall energy mix. In places like Sichuan, which has been the worst affected, the figure is as high as 80%.
Link to Source: https://www.dw.com/en/drought-and-power-shortages-worsen-chinas-supply-chain-snags/a-62928037

2. German Supply Chains Are Hobbling Recovery of Europe’s No. 1 Economy-

Roughly a third of Germany’s coal, crude oil, natural gas, grains and chemicals—travel along inland waterways.
Germany’s logistics problems are worsening an economic slowdown, with shallow rivers for barge traffic exposing fragile inland supply routes, an under-invested railway system that can’t take on the extra capacity, and seaports that are still heaving with cargo.
Although The Rhine’s levels have rebounded a bit in recent days after low depths in the past weeks, German supply chains are still wobbling. Barges are carrying only 15-25% of their usual loads to decrease their weights.
Link to Source: https://www.bloomberg.com/news/newsletters/2022-08-22/supply-chain-latest-germany-is-struggling-to-avoid-a-recession

3. Texas and Florida's war on ESG-

Politicians in some US states have been railing against so-called “woke capitalism,” targeting ESG funds in particular.
Texas Comptroller Glenn Hegar released a list of 10 companies and 348 investment funds that will be barred from doing business with the state because they “boycott energy companies.”
The Texas action is not an isolated development. The Florida State Board of Administration passed a resolution banning ESG considerations in managing its pension plan, and late last month, West Virginia barred five major financial firms, including BlackRock and JPMorgan Chase, from new state business after concluding they were boycotting the fossil fuel industry.
Link to Source: https://www.axios.com/2022/08/25/texas-bans-blackrock-ubs-esg-backlash & https://www.pionline.com/esg/florida-state-board-backs-desantis-resolution-ban-esg-considerations-managing-pension-plan

4. California is Poised to Phase Out Sales of New Gas-Powered Cars-

California is the biggest auto market in a country where transportation is the biggest source of greenhouse gas emissions. Its policies also influence other states.
California is poised to set a 2035 deadline for all new cars, trucks and SUVs sold in the state to be powered by electricity or hydrogen, an ambitious step that will reshape the U.S. car market by speeding the transition to more climate-friendly vehicles.
People can continue driving gas-fueled vehicles and purchasing used ones after 2035. The plan also allows for one-fifth of sales after 2035 to be plug-in hybrids that can run on batteries and gas.
Link to Source: https://www.npr.org/2022/08/25/1119381508/california-ban-gas-cars-2035

5. Finance Groups Risk Being Kicked Out of Mark Carney-Led Climate Coalition-

Independent body will have the power to eject members for not meeting new criteria such as ending coal financing.
Beefed-up checks by the UN on whether finance groups meet new criteria on ending coal financing and phasing out fossil fuels from portfolios could be announced at New York Climate Week in September and launched at the COP27 climate talks to be held in Egypt in November, according to Race to Zero, the UN group behind the plans.
The rules introduced in June require all signatories to phase “down and out all unabated fossil fuels” — projects that are not offset by carbon capture — by 2050 at the latest. It also requires them to stop financing new coal projects and meet interim 2030 net zero emissions targets. The deadline for meeting the rules is June 2023 for existing members, while any who join will need to comply immediately.
Link to Source: https://www.ft.com/content/58575db9-5670-4b2d-a555-2c3aed0fdd6d

One more thing: check out the latest episode of HBO’s Last Week Tonight with comedian John Oliver on their take and summary of carbon offsets.

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