TCFD Reports, SBTi, California, and Heat Pumps
Here are 5 ESG insights you might have missed this week:
1. BlackRock's 2021 TCFD Report-
The report is their first disclosure of financed emissions using the PCAF Standard and it is major step for climate transparency in the financial sector.
Wall Street titan BlackRock Inc. in 2020 helped pump more than 330 million tons of greenhouse gases into the atmosphere — the equivalent of 71 million passenger vehicles driven for one year.
Those eye-popping figures don't come from environmentalists; they're from the investment firm itself. The world's largest money manager disclosed in December the planet-warming emissions associated with a majority of its investment portfolio — marking a first for BlackRock and also Wall Street more broadly.
Link to Source: https://www.blackrock.com/corporate/literature/continuous-disclosure-and-important-information/tcfd-report-2021-blkinc.pdf & https://www.politico.com/news/2022/02/01/wall-street-giant-climate-impact-blackrock-00003447
2. Climate Targets Oversight Group Under Scrutiny Over Its Own Governance-
Science Based Targets initiative makes changes after complaints about transparency and potential for conflict of interest.
Its stamp of approval is deemed the gold standard for corporate climate targets. “People are terrified of SBTi” pronouncing their goals as insufficient, said one person from a global bank.
Reforms are now under way, the SBTi says. They include a new technical board that will “create more independence and prevent any potential conflicts of interest in our decision making related to target setting methods and criteria”.
Link to Source: https://www.ft.com/content/75527cce-9748-4aec-b6e6-7c7828460d2a
3. California Senate Passes Bill for First Law in US Requiring Companies to Disclose all GHG Emissions-
By a 23-7 vote, the California Senate has passed the Climate Corporate Accountability Act (CCAA), advancing the first law in the U.S. requiring large companies to disclose all of their greenhouse gas emissions.
Under the new legislation, companies doing business in California and generating over $1 billion in gross annual revenue would be required to disclose annually on their emissions from all scopes, including direct emissions (Scope 1), emissions from purchase and use of electricity (Scope 2), and indirect emissions, including those from the company’s supply chain (Scope 3).
Several jurisdictions across the world have announced moves towards required sustainability disclosure, including the U.S., where the SEC is currently examining rules for mandatory climate risk reporting.
4. As Investors Demand Climate Data, Sustainability Software Is Booming-
Just like the earth, the market for climate reporting software is heating up.
Shareholders have made it overwhelmingly clear that a company’s approach to sustainability can make or break its investment prospects. But it’s not enough for enterprises to say they’re sustainable — they have to prove it.
Driven by pressure from investors, regulators and consumers, demand is rising for software that can track and report environmental data. When it comes to betting on the messy business of wrangling environmental data from disparate sources, investors spent more than $570 million backing startups in the first six months of 2021 alone, according to a report by PwC.
5. The Elephant in the Room: The ESG Contradiction-
We all agree that finance has a key role to play in getting us to net zero. But we can’t ignore the elephant in the room: the inherent conflict between the “E,” the “S,” and the “G” in environmental, social, and governance (ESG) investing.
As much as we might wish otherwise, the goals embedded in these initials don’t always align with one another. That’s why a compromise must be made. Investors, asset managers, and businesses have to agree on which of the three is the most important.
Generating returns and being true to the “S” takes time. Short-termism is the antithesis of sustainable growth. For companies to meet the net-zero challenge, they need investors who understand what’s at stake and what it will take to achieve.
One more thing: An 11-min YouTube video from The Economist on the best ways to heat our homes, without heating the planet. The heat pump saga in the UK and experiments in carbon-intensive South Africa.
Find the video here: https://www.youtube.com/watch?v=0iQTRTaVqrI
Do share your comments or the content you think our community should not miss!