Weekly News | 15th to 30th June 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 sustainability disclosure standards introduced by the ISSB 

• After 18 months of development, the International Sustainability Standards Board (ISSB) have  
• The new standards, that can be used for annual reports starting from 2024, build upon the voluntary guidelines set by the G20’s Task Force on Climate-related Financial Disclosures (TCFD). 
• Countries such as Canada, Great Britain, Japan, Singapore, Nigeria, Chile, Malaysia, Brazil, Egypt, Kenya and South Africa are considering the implementation of these standards. 
• The International Financial Reporting Standards foundation (IFRS), which includes the ISSB, writes accounting rules used in over 100 countries, and the global securities watchdog IOSCO is expected to endorse the new standards. 

Read more about this story: IFRS, Reuters, Eco Watch 

Codo’s comment: The new ISSB standards join a growing landscape of sustainability reporting and disclosure frameworks, aiming at facilitating comparison and verification across businesses. The existing global reach of the IFRS could facilitate their wide adoption, however companies will most likely use a new framework only if it replaces an existing one, or if it becomes mandatory. The limited approach of the ISSB regarding double materiality (i.e. considering the impact on businesses of sustainability factors such as climate change, but also the impact of businesses on the environment) may reduce its adoption in some regions. Regardless of whether companies switch to ISSB reporting or maintain TCFD/SASB/CDP reporting, robust transition plans are mandatory parts of all major disclosure frameworks. Companies should work to develop low carbon transition plans agnostic of any particular framework so as to be able to easily adjust to the shifting reporting landscape. 

World | World Bank offers developing countries to temporarily halt debt payments in the event of a climate disaster 

• The World Bank plans to allow debt repayments to be paused by developing countries in the event of a climate disaster. New clauses will be inserted into loan agreements, enabling the suspension of debt payments during extreme weather events, starting with the most vulnerable nations. 
• The UK commits to applying similar arrangements to its loans to twelve countries in Africa and the Caribbean. 

• The World Bank announced this new debt relief measures at the Paris Summit for Global Climate Finance, organized in June to support the world’s poorest nations, address climate change threats, and foster cooperation in areas such as low-carbon fuels and green finance, including with China. 

Read more about this story: Carbon Brief, The Guardian 

Codo’s comment: Climate justice has been a growing theme in global climate negotiations, as it is expected that the countries that will suffer the most from climate change are the ones who have contributed the least to greenhouse gas emissions. Debt relief is a key demand of developing nations impacted by climate change. The World Bank’s new plan aligns with this demand, but will only apply to new loans and will not constitute full debt forgiveness. 

World | Study shows minimal financial impact for general public if fossil fuel assets were lost 

• New research reveals that a rapid reduction in fossil fuels, crucial for combating climate change, would have minimal financial impact on most people. 

• Urgent action to reduce fossil fuel production is necessary to prevent severe climate consequences and subsequent economic and social upheaval. 
• Opponents of climate action argue that such measures would result in stranded assets and financial losses for the public, but the study shows that the wealthy would bear the bulk of these losses. 
• Governments could easily compensate for the minimal impact on middle and lower-income groups, making rapid action feasible and relatively inexpensive. 

Read more about this story: The Guardian, Carbon News 

Asia | Hottest June in 60 years in Beijing as heatwave hits the city 

• The Chinese capital experienced its hottest June days in over 60 years, with temperatures reaching 41.1 degrees Celsius, according to Chinese weather authorities. 
• Record-breaking monthly heat records have been observed across China this year, raising concerns about an energy crunch. 
• Rising temperatures and more frequent heatwaves are attributed to global climate change, with a recent study indicating a 30-fold increase in heatwave likelihood in Asia and temperature rises of at least two degrees in many parts of the region. 

Read more about this story: BBC, The Guardian 

Codo’s comment: As mentioned in our recent news summaries, this summer is expected by scientists to break temperature records across the world. From wildfires in Canada to extreme heatwave in China, signs are already visible. 

Europe | Takeaways from the Paris Summit for Global Climate Finance and France advocacy for worldwide taxation 

• Over forty heads of state and government, along with numerous ministers and high-level representatives, gathered at the Paris Summit for Global Climate Finance to finalize a roadmap for reforming public finance institutions and overseas aid and climate finance.  
• French President Emmanuel Macron called for a global taxation system overhaul to finance efforts against poverty and climate change. He suggested implementing new taxes on airline tickets, financial transactions, or shipping to generate funds for these causes. 
• The draft roadmap includes proposals to be delivered at various international meetings until September 2024, covering topics such as emissions trading, debt payment suspensions for climate-affected countries, and the expansion of development banks’ lending capacity. 

Read more about this story: Bloomberg Green, The Guardian 

Codo’s comment: This aligns with the carbon tariffs being levied against all imported goods to Europe under the CBAM regulations. Corporations of all sizes can expect to need to pay for the added carbon costs of their goods or pass on that cost to consumers, as such it doesn’t seem entirely absurd that Europe would impose similar financial disincentives towards the extended supply chain, not just those delivering goods and services to Europe.