Weekly News | 14th to 28th February 2023

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 | New study finds major gap in net-zero pledges of 24 global firms 

• The report published by the Europe-based environmental think tanks NewClimate Institute and Carbon Market Watch examined 24 companies, including Nestle, Volkswagen or American Airlines. 
• It found that only one company, shipping firm Maersk (Denmark), had a climate plan with “reasonable integrity”. The rest were assessed to be moderate to very low. Actual plans would lead to just 36% of greenhouse gas emissions reductions, far from the pledges for zero emission by 2050. 
• According to the study authors, climate strategies lack short term ambition, relying instead on long term targets without fully explaining how they are defined or how they would be achieved. 
• Read more about this story: Carbon Market Watch, The Japan Times, Le Monde 

Comment from Codo: Scrutiny by thinktanks and NGOs over the credibility of corporate climate pledges keeps growing, as the catastrophic effects of climate change keep becoming more and more tangible. Stronger regulations on climate plan disclosures make it easier for researchers and activities to identify weaknesses in corporate low-carbon transition plans. Firms can anticipate these risks by running their own “stress-test”, checking the solidity of their plans using independent science-based methods, such as the ACT methodology.

World | World on the verge of entering a climate ‘doom loop’, warn thinktanks 

• According to research by thinktanks IPPR and Chatham House, just dealing with the rising effects of the climate crisis might divert resources and attention away from measures to reduce carbon emissions, exacerbating the issue. 
• “This report underlines the growing possibility that global temperatures will rise by more than 1.5 C,” said the Grantham Research Institute on Climate Change. “However, this does not imply we should abandon the target.” 
• To avoid a doom loop, governments need to be more honest about the significant risks faced by the climate issue, the researchers said, including the impending threat of tipping points and the massive size of the economic and societal upheaval required to prevent climate change.  
• Read more about this story: The Guardian 

World | World Bank promotes an ESG bond claimed to be immune to greenwashing 

• The World Bank raised $50 million through a bond structure it describes as unique and free of greenwashing — a growing investor concern — and said it is planning more of these deals for later this year. 
• The proceeds from the five-year bond will be used to support the World Bank’s global sustainable development efforts, including a project that will produce 300,000 water purifiers for the use of approximately two million Vietnamese children.   
• The use of the purifiers is expected to reduce the amount of wood burned to boil drinking water, lowering greenhouse gas emissions and producing verified carbon units (VCUs). Investors will receive semi-annual coupon payments linked to these VCUs instead of regular coupons. 
• Read more about this story: Bloomberg Green 

Europe | ‘Greenwashing’ firms face severe new UK fines for misleading claims 

• Green claims commonly used to sell items ranging from vehicles and plane tickets to soft drinks and cleaning fluids are now subject to considerably stricter examination under proposed new legislation in the UK, with fines of up to tens of millions of pounds levied for baseless and misleading claims. 
• Prime minister Rishi Sunak has stated that passing the new bill is a government priority. Under the upcoming digital markets, competition and consumer bill, large corporations face civil fines of up to 10% of global turnover for violations of consumer law. Persons who violate these regulations will incur penalties of up to £300,000 per offense.  
• Last month, France passed legislation mandating companies who claim a product is carbon-neutral to report on all its greenhouse gas emissions during its entire lifespan. In the next weeks, the European Union will also introduce a new rule proposing sanctions for corporations that make unjustified environmental claims.  
• Read more about this story: The Guardian, UK Government 

Europe | Activists sue BNP Paribas over fossil fuels loans, TotalEnergies over human rights 

• Climate and human rights activists have sued two of France’s largest firms over fossil fuel finance and alleged human rights violations, as activists increasingly turn to litigation to pressure large corporations to change their ways. 
• The lawsuit against BNP Paribas concerns financing of oil and gas companies that violates legal obligations to not harm the environment, whereas the lawsuit against TotalEnergies concerns detention and torture of people at the Balhaf gas liquefaction plant in Yemen, in which the company owns a stake. 
• The two cases were brought before the Paris Court of Justice in accordance with a 2017 French law requiring large French corporations to identify and avoid threats to human rights and the environment that may arise as a result of their commercial activity. 
• Read more about this story: Le Monde, Reuters 

Codo’s comment: According to the NGOs suing BNP Paribas, this is the first time in the world that a commercial bank is attacked in court for its involvement in fossil fuel financing. We recently published an overview of policies introduced in France since 2015, that facilitates such cases by increasing requirements for disclosure and due diligence on corporate sustainability. 

Asia | Taiwan commits to net-zero carbon emissions by 2050 

• Taiwanese President Tsai Ing-wen signed a landmark climate change bill that includes a net-zero carbon target for 2050 as well as a carbon pricing system for large emitters, positioning Taiwan as a key player in Asia’s climate policy. 
• The government announced its intention to attain net-zero carbon emissions by 2050 in 2021, but it took time for this to become law. Tsai’s administration intends to increase the usage of renewable energy to 20% by 2025, while coal-powered electricity will be 30% and natural gas will be 50%. 
• The new law will gradually establish a mechanism to collect carbon taxes from enterprises and organizations whose direct and indirect emissions exceed a set level. It will also impose carbon tariffs on carbon-intensive imports. 
• Read more about this story: Nikkei Asia, Reuters