Weekly News | 13th to 19th September 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 | S&P reveals fallout from climate change on asset values

• According to a recent data analysis tool launched by S&P Global, over 90% of the world’s largest companies will have at least one asset financially exposed to physical climate risks such as wildfires or floods by the 2050s.  
• As increasing numbers of companies are exposed to climate hazards, risk assessment providers are under heavy pressure from clients to provide even more detailed environmental, social and governance-related information, water stress and extreme heat having the highest possible impact, studies found. 
• A recent study led by Stockholm University and the University of Exeter showed that even if nations manage to restrain global warming to 1.5°C, the lower threshold mentioned by the Paris Agreement, climate tipping points may still be reached, exacerbating hazards in the coming decades. 
• Read more about this story: Responsible Investor, Novethic Essentiel 

World | GFANZ Race to Zero initiative faces criticism due to lagging ESG guidelines

• The Race to Zero initiative was set up by the Glasgow Financial Alliance for Net Zero (GFANZ) after COP26 to associate financial institutions to achieve carbon neutrality. However, the commitments made by some members seem too weak. Some members could be excluded from the initiative if they do not share an outline of their process for updating ESG guidelines. 
• 16 NGOs led by ShareAction (UK), BankTrack (Netherlands) and Reclaim Finance (France) are asking members of the Net Zero Banking Alliance (NZBA) to restrain their financing of fossil fuel-related projects and create accountability mechanisms to ensure compliance with their commitments.  
• Read more about this story: Responsible Investor, Novethic Essentiel 

Comment from Codo: After private companies, the pressure for more transparency and accountability when it comes to climate effort claims is now reaching recognized international initiatives. One year after its establishment at COP26, the Glasgow Financial Alliance for Net Zero will be expected to report on its progress at COP27 in November in Egypt.

US | New green-listing standards to be enforced on companies to insure ESG efforts 

• Green Exchange, an American public benefit corporation, initiated discussions with the U.S. Securities and Exchange Commission to register a new environmentally focused equities exchange, the Green Impact Exchange (GIX), seeking to bring together green investors and companies committed to green corporate governance. 
• Expected to live in 2023, GIX would require public companies to show clean investments towards their ESG efforts and steady disclosure of their results by enforcing new green-listing standards. 
• Read more about this story: Bloomberg  

US | Patagonia founder gives away company to help fight climate crisis 

• Yvon Chouinard, the billionaire founder of outdoor apparel brand Patagonia, announced he has transferred his ownership of the company, valued at about $3 billion, away to the specially designed Patagonia Purpose Trust and Holdfast Collective, a nonprofit association fighting climate change. 
• With growing criticism addressed to billionaires and corporations, accused of actively contributing to the problems they want to solve by implementing ESG goals, this unusual move is set to appeal to a new form of capitalism, said Mr. Chouinard. 
• Read more about this story: Reuters, NY Times 

Russia | Russian government facing the country’s first-ever climate lawsuit  

• The first climate lawsuit in Russia was filed recently by a group of climate activists, charging the government with violating the European convention on human rights with climate inaction, asking for significant actions to reduce the country’s greenhouse emissions to be taken. 
• Russia is the fourth most climate-polluting country in the world. It is also warming twice as fast as the international average, causing risks of permafrost melt, wildfire spreading in Siberia and endangering wildlife.  
• While Russia’s carbon emissions are predicted to reach 2,200 million tons by 2030, the country should reach a milestone of less than 1,000 million tons (31% of the level of the 1990s) by the same year to reach the Paris climate goal. As of today, the government planned reduce its emissions to 1,830 million tons by 2050. 
• Read more about this story: The Guardian, Ecowatch 

Korea | Samsung, top electricity user in Korea, announces decarbonization efforts but fails to tackle emissions across value chain 

• South Korea’s biggest company aims to achieve cut-out direct pollution by 2050. To meet this goal and respond to customers’ and investors’ criticism of its lack of initiative, Samsung will invest in carbon capture and storage, recycling and reducing water consumption during semiconductor manufacturing. Despite this measure, the company still has not developed any plan to tackle emissions produced by its value chain. 
• As the biggest electricity user in the country, Samsung’s use of fossil fuels sets South Korea’s standards in consumption and production. In 2021, the company consumed 32,322 gigawatt-hours of energy, an amount equivalent to the totally of the country’s wind, solar and hydropower generation the same year.  
• As the Korean government doesn’t support companies much, Samsung’s influence could make a real change in enforcing ESG policy changes at a national level.  
• Read more about this story: Reuters, Bloomberg 

Comment from Codo: Samsung’s announcement shows that the Korean industrial leader is aware of growing expectations from global consumers and investors. However, by limiting its 2050 plan to direct emissions (scopes 1 and 2), without considering emissions from suppliers and users (scope 3), the company is still very far from making a significant step, as scope 3 usually represents 70% to 90% of emissions for industrial companies. In comparison, Apple has committed to carbon neutrality on all scopes 1+2+3, and by 2030, not 2050. 

Japan | Japan’s top refiner prepares for the oil industry’s decline 

• Eneos Holdings announced the company will have to shut down 10 refineries next year due to the Japanese fossil fuel demand expected to drop by 50% by 2040, further weakened by the country’s shrinking population.  
• Between fiscal years 2021 and 2026, oil products demand is slated to fall by 7.1% according to the trade ministry. However, the present government’s gasoline subsidies help to prevent some of the impacts of the current weak yen situation and the drop in demand.  
• To keep up with ESG pressure, Eneos seeks to achieve carbon neutrality by 2050 and said it planned to invest $2.8 billion in renewable energy by March 2023. Without any clear plan, and granted government support, it is difficult to assess the effective consequences of such resolutions.   
• Read more about this story: Bloomberg, Japantimes  

Comment from Codo: Eneos is ranked 11^th out of 100 international companies in the climate benchmark of the World Benchmarking Alliance (WBA) for the oil and gas industry. But this relatively good position of the Japanese company results more from the very low collective low-carbon readiness of the sector: Eneos received a score of 2.6C under the ACT methodology that assesses low-carbon transition plans, very far from the average score of 10B and maximum of 20A. According to WBA, “ENEOS emissions intensity indicates that it is not yet prepared for the rate of change required by its 1.5°C pathway.”