Weekly News | 15th to 22nd May 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 | “Carbon bombs”: projects dooming the green transition to fail

• The Guardian revealed a list of 195 projects, driven by oil and gas giants, that undermine world’s efforts to keep temperatures from rising above 1.5°C. These massive investments to foster fossil production are motivated by the high returns made by this industry, despite scientist’s clear statement: without a drastic cut in fossils, we will lose “our last chance to secure a livable and sustainable future for all”.
• The emissions that would arise from these projects, called “carbon bombs”, are estimated to total a decade worth of CO2 emissions from China (largest emitter worldwide).
• The countries with the biggest fossil fuels’ expansion plans are the US, Canada and Australia, which are also the most generous countries for subsidies to the oil and gas industry, according to investigators.
• Read more about this story: Les Echos, Le Monde

EU | Towards more exigent EU Green Bond rules to expand the market

• EU’s Green Bond Standard is about to be equipped by more stringent rules, expected to impact the whole green bond market. This standard, launched last July, aims at promoting sustainable investment and the advance of EU’s climate goals.
• Proposals for this new set of rules include transparency improvement, the tackling of greenwashing and reinforced supervision. It would for instance require all users of EU Green Bond label to issue debt to have a certified climate transition plan and a clear understanding of the environmental impact of their activities.
• Read more about this story : ESG Today, NextGenerationEU

Comment from Codo: Low-carbon transition plans are an essential component of any corporate climate action: without such as plan, any target set by a company remains virtual. Demand from regulators, investors and NGOs is therefore growing for concrete and credible transition strategies, with disclosure and independent assessment.

EU | New plan for an accelerated deployment of clean energy and part with fossils

• The European Commission presented the REPoweEU plan (€210 billion), a strategy to part with Russian fossils in the nearest future and to push a massive deployment of renewables and energy efficiency initiatives.
• Designed to promote energy independence and support the green transition, this plan also paves the way to speed up the launch of major renewable energy projects (Solar Strategy, scaling up use of green hydrogen).
• By quickly shifting away from fossils, Europe thus aims at leading fight against climate change at the global level. European policy makers are proactively working on the EU’s Green Deal, and the pressure to accelerate this process increased with the burst of the Russian invasion of Ukraine: it is “untenable for Europe to continue spending as much as 1$ billion a day on coal, gas and oil imported from Russia”, comments Bloomberg.
• Read more about this story : ESG Today, Nikkei

UK | Regulator warns against greenwashing and its “huge reputational risk”

• UK’s Financial Conduct Authority urged the financial industry to work on the prevention of greenwashing, which is only for investors “huge reputational risk”, in a biodiversity roundtable organized by NGO ShareActions.
• UK’s Sustainable Investment and Finance Association recognized the difficulty to identify greenwashing within the numerous honest innovations taking place. More regulation should be defined to help financial advisors screening credible green products, such as upcoming disclosure frameworks and labelling tools.
• UK Green Party also pointed out that some initiatives and mechanisms like the GFANZ (Glasgow Financial Alliance for Net Zero) are not as efficient in contributing to climate agendas as they claim to be, and accountability is a key component of efficient rule-making.
• Read more about this story: Environmental Finance, ESG clarity

Japan | Climate change related extreme weather events to cause record losses

• Research on extreme weather events in Japan is clear: human-caused climate change is increasing the likelihood of catastrophic weather events, such as giant typhoons, destructive storms, and torrential rainfall.
• The cost associated to these massive damages are equally expected to increase. For example, typhoon Hagibis’ increased rainfall has been estimated to cost $4 billion worth of damage.
• Calculating the cost of inaction, this study shows that “the negative consequences of the continued burning of fossil fuels are now evident and can be felt also in wealthy countries like Japan”, concludes one of the researchers.
• Read more about this story : Bloomberg, The Japan Times

Japan | Government plans to push investment for country’s decarbonization

• Planning a 20 trillion-yen fund dedicated to investments for improving energy efficiency and push alternative sources of power energy. This is part of PM Kishida’s “green transition” based recovery plan to boost Japanese economy’s growth: in the months to come, new subsidies and infrastructure plans are to be announced in line with this new direction.
• To finance this plan, the government would implement a carbon tax and other new revenue sources. The METI plans to gather 150 trillion yen in the span of 10 years, in order to reach net-zero by 2050.
• Read more about this story : Nikkei Asia, Nikkei

Comment from Codo: According to Nikkei Asia, in addition to support to low-carbon infrastructures, the government plans to introduce “subsidies to help companies to make longer-term plans of their own”. This would be a welcomed signal, in a country that so far has been focusing mainly on technological solutions, rather than on planification and transformation of business models.

Japan | National car makers are the “least prepared for Zero-Emissions Shift”

• Influence Map shows in its last research how Japanese automakers are late compared to their global competitors, when preparing for the green transition in the industry.
• National leaders Toyota, Nissan and Honda’s production of electric vehicles is already lagging, and domestically the market remains exceptionally small. In 2029, while Tesla, Mercedes-Benz and BMW’s fleet ratio of zero-emission vehicles are respectively expected to be 100%, 56% and 45%, Nissan’s is only to be 22% and Toyota’s 14%.
• While Toyota is betting on hydrogen as a key solution for carbon neutrality, hydrogen-power cars are expected to represent only 0.1% of production worldwide by the end of the decade. This lack of alignment with global peers’ standard comes from Japanese car makers’ “negative climate policy engagement”, Influence Map points out.
• Read more about this story : Bloomberg, Euractiv

Comment from Codo: This study from Influence Map corroborates the findings of the World Benchmarking Alliance, that shows that Japanese companies are lagging when it comes to low-carbon transition strategies. In the latest edition of its climate benchmark, the best-ranking Japanese company – Toyota – is 10th out of 30, at the same level as Tata Motors (India). All other Japanese car manufacturers are in the last two thirds of the ranking, while the 9 first ranks are shared between occidental and Chinese companies.