Weekly News | 2nd to 8th August 2022

Codo Advisory keeps an eye for you on the latest events and trends in climate finance and corporate sustainability, in the world and in Japan. Here’s what caught our attention last week.

World | UN chief urges governments to tax fossil fuel profits

• UN Secretary General António Guterres has called the record profits of oil and gas companies “reprehensible” and urged states to impose a windfall tax, with the proceeds going to people in need.
• BP was the latest fossil fuel behemoth to report massive profits, announcing that it had tripled its profits to about £7 billion in the second quarter of the year due to high oil prices during the war in Ukraine.
• Guterres stated that governments must do more to manage energy demand and promote the transition to renewable energy sources, specifically emphasizing the role of developed countries in helping developing nations’ transition.
• Read more about this story: The Guardian, Reuters

Europe | New ESG rules put more pressure on asset managers

• A new set of EU rules requires asset managers and financial advisers to understand and act on the “sustainability preferences” of their retail clients. These “everyday” investors can in turn hold asset managers responsible if their ESG funds don’t meet their expectations.
• Under the new rules, sustainability is defined by other parts of EU legislation such as the green taxonomy and the Sustainable Finance Disclosure Regulation.
• EU member states have some flexibility regarding the national enforcement of the new rules. For instance, France’s market regulator will not apply the new requirements before 2023.
• Read more about this story: Bloomberg

Europe | EU greenlights 3-billion-euro German green heating scheme

• The European Commission approved the German government’s 3-billion-euro scheme to support renewable energy and waste heat-based district heating programmes.
• The scheme is expected to promote green energy by offering government grants until 2028 to new district heating networks run on at least 75 per cent renewable energy and waste heat, or to projects decarbonizing existing networks.
• The scheme would fund the installation of 681 MW of renewable heat generation capacity per year, covering up to 40% of eligible project investment costs.
• Read more about this story: Reuters, European Commission

Comment from Codo: Renewable heat (and cold) is often overlooked in renewable energy talks, usually focused on wind and solar photovoltaic, two sources used to produce renewable electricity. Japan’s renewable energy strategy is limited to electricity, that actually represents only 30% of final consumption of energy. By expanding the scope of their approach to also include renewable heat/cold, Japanese energy companies as well as local and national policymakers would unlock access to a massive untapped potential of decarbonization.

Europe | BP, Shell found running greenwashing ads on social media

• The Guardian reveals that oil and gas giant BP has been running social media advertisement campaigns since the beginning of this year, to boost its green credentials ahead of policy talks about taxes on fuel companies.
• According to a researcher at Kyoto University, the ads are “misleading” as “the green investments they describe represent only a minor portion” of BP’s current production and investment behavior.
• In addition, Shell was found running influence ads on Meta’s plaforms Facebook and Instagram, without a disclaimer that the company was paying for the ads. Meta said “We require all advertisers running ads about social issues, including those about environmental topics to include a ‘paid for by’ disclaimer.”

Comment from Codo: Over the past few years, social media has become under scrutiny over the propagation of fake news, in various domains. Climate change deniers found on these platforms the space that they were gradually losing on mainstream media. As a response, some social media platforms have been introducing stricter policies on climate change denial contents. In April, Twitter announced a ban on ads contradicting the scientific consensus on climate change.

Asia | India unveils new commitments to UN and plans for carbon credit market

• The cabinet of Prime Minister Narendra Modi approved plans to reduce the carbon intensity of its economy to 45% by 2030 compared to 2005 levels.
• India will submit its revised nationally determined contribution (NDC) to the UN, making it one of the last large polluters to meet this responsibility under the Paris Climate Agreement.
• As part of its efforts to accelerate the transition to cleaner fuels, India also announced plans to launch a carbon trading market for major emitters in the energy, steel, and cement industries, following a similar model to the one launched last year in China.
• Read more about this story: Independent, Bloomberg

Comment from Codo: Carbon markets are considered a key tool for climate action. The UNDP says they can “help accelerate the transformation needed, by effectively putting a price on pollution and creating an economic incentive for reducing emissions”. After South-Korea and China, India is the third major Asian economy to announce the establishment of a carbon market to drive down emissions. Japan, still heavily focused on technological rather than regulatory solutions, has not yet announced any national carbon market.

Japan | Toyota affiliate under scrutiny for falsifying emissions data

• A major affiliate of Toyota Motor, Hino Motors, falsified emissions data on some engines going back to at least 2003, more than a decade earlier than previously indicated, a company-commissioned probe finds.
• The investigation committee blamed the scandal on the corporate culture in which engineers did not feel free to question superiors, urging Hino to come up with a new corporate governance system within three months.
• Subaru, Nissan and Suzuki were some of the other automakers who have been under scrutiny for improperly tested vehicles for fuel economy and emissions in the past years.
• Read more about this story: Reuters

Comment from Codo: Once a global leader in car making, Japan is gradually losing its reputation of excellence, after a series of similar scandals, but also because of its resistance to truly embrace the transition to zero-carbon vehicles. In the climate benchmark published by the World Benchmarking Alliance last year, all Japanese companies are in the lower two thirds of the 30 ranked companies, while 3 Chinese companies are in the top 10. The best ranking Japanese company, Toyota, is on par with India’s Tata Motors. Earlier this year, European and American investors started to question Toyota’s low-carbon transition strategy.