Weekly News | 14th to 20th June 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 warns that more fossil fuels investment is just “delusional”

• UN Secretary General Antonio Guterres renewed its call to G20 countries to “dismantle coal infrastructure” and to aim for a full phase-out by 2030. He extended his call to financial actors to abandon their support to the fossil fuel economy for the development of renewables.
• He straightly criticized national governments for making pledges that are simply “not good enough” and for setting climate policies that are far from what are expecting scientific and citizen communities.
• Read more about this story: UN official website

World | Students asking universities to better align curriculum with climate urgency

• Academic groups have been pushing for universities to respond to climate urgencies, most of them are late in acknowledging the need to update their curriculum accordingly.
• This is now changing, as the demand for climate skills and knowledge is sharply rising in the race for net-zero by 2050. Climate change is therefore to become a prominent part of curriculum, especially in business schools.
• Elite students are also increasingly vocal against institutions that can only prepare them to be another “cog” in systems that led us to current and future environmental crisis.
• Read more about this story: Financial Times , Harvard Business Review

US | Goldman Sachs under SEC’s scrutiny over dubious ESG claims

• US financial markets’ watchdog is investigating Goldman Sachs’ ESG labeled funds. The case has been relayed by The Wall Street Journal, but the SEC refused to comment publicly on it for now.
• This may be a first demonstration of the SEC’s recent commitment to hunt greenwashing in financial institutions’ sustainability claims.
• Read more about this story: Financial Times, Bloomberg

Comment from Codo: This story echoes the Deutsche Bank and DWS case featured in our weekly news summary two week ago, with the German police raiding the offices of the bank as part of an investigation from the German financial regulator over fake ESG claims. This case is also under investigation by the American regulator.

Asia | Study shows that climate change can result in collapse of yen and yuan

• A recent study from Barclays confirms that a severe climate shock will disrupt the global economy. It shows how in the worst scenarios, the Chinese yuan and the Japanese yen will drop by more than 50% before 2070.
• Based on the incorporation of climate change forecasts into their model, they derived prediction for currency markets. The study also points out that for now “markets are priced for a 2°C world”.
• About the Japanese yen, the study explains that geography is why this currency is one of the “most vulnerable” in the scenario of extreme climate change, potentially losing 11% of its value each year.
• Read more about this story: Bloomberg, South China Morning Post

South Korea | Businesses practices over plastic use drastically changing to meet consumers’ expectations

• Strong zero-waste movements in Korea leave domestic companies with no room for complacency. Society’s engagement to change for green practices made Korea to rank top in MIT’s Green Future Index 2022.
• Government is also pushing this trend for green living through an extension of producer responsibility program around plastic waste and other upcoming measures to upgrade country’s waste management system. Korea aims at becoming a “benchmark” in the field.
• Domestic companies and local branches are also swiftly adapting to this new demand. For example, Starbucks Korea will make its store plastic-free by 2025. Yet, activists deplore that more fundamental discussions around industrial restructuring and shift towards renewables are still lacking.
• Read more about this story: Financial Times

Japan | Toyota attacked by European investors for not engaging in green transition

• Green activist investors and three major European pension funds openly criticized the Japanese car manufacturer’s climate strategy during the annual shareholder meeting.
• Deploring its “lobbying against much-need climate related regulation of the auto industry”, critical investors also point out that Toyota is only “buying time” until it can reposition in EV market.
• More attacks of this kind are expected as Toyota’s approach already undermines its capacity to transition from polluting cars. Last year, the company’s climate policy engagement has been graded among the lowest in the industry. Now, its shareholders warned that they would not tolerate any longer its “outspoken” climate negativity.
• Read more about this story: Financial Times

Comment from Codo: After J-Power in May, comes Toyota’s turn. These two stories of European investors attacking Japanese companies on their climate plans could be the first of a bigger wave of attacks from occidental shareholders concerned about the apparent weaknesses of low-carbon transition strategies of Japanese firms. In this context, Japanese companies could benefit from “stress testing” their plans, to identify weaknesses ahead of attacks.

Japan | Government recent push for net-zero opens industries’ eyes to existing opportunities… but do they look at the right ones?

• According to latest research and market investigation by Nikkei Asia, Japan has the potential to do more, and even better than its Asian counterparts in the race for decarbonization.
• On the global level though, Japan is everything but close to pro-eminence. Country’s resistance in parting of with coals and its lack of proactivity in the development of renewables are two important reasons for its worsening lag against its European counterparts.
• Yet, McKinsey analysts are confident in the country’s capacity to realize decarbonization at relatively low costs if measures are taken before 2050, after which they would “rise substantially”. Unfortunately, most heavy industrial leaders keep focusing on CSS, hydrogen, and other technological solutions, which are likely to attract most of the upcoming government’s “aggressive” subsidies.
• Read more about this story: Financial Times

Comment from Codo: The focus on technological solutions, including some yet non-commercial technologies such as green hydrogen or carbon capture and storage, is taking Japanese stakeholders’ attention away from other approaches such as governance alignment and policy-based solutions such as carbon pricing. It is a dangerous path, as these technologies will not be able to cut emissions early enough to meet the requirements of the Paris Agreement. The priority should be to improve low-carbon transition strategies, to define comprehensive plans in which technologies is one among other contributors.