Weekly News | 18th to 29th May 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. 

Japan | SMBC withdraws from EACOP project 

• Japanese bank SMBC, a financial advisor and loan arranger for EACOP, joins Standard Chartered in distancing itself from the pipeline project in Uganda and Tanzania, amid mounting environmental and social concerns. 
• The StopEACOP coalition urges other financial advisors, Standard Bank and ICBC, to follow suit and publicly disassociate from the controversial project, led by TotalEnergies (mentioned above), and attacked in court by NGOs. 
• Activists hope that other Japanese financial institutions, including MUFG Bank, will follow SMBC’s announcement and further distance themselves from harmful projects. 

Read more about this story: Bank Track, Research Institute for Environmental Finance 

World | Experts caution that the G7’s adoption of natural gas is a step backward in achieving climate objectives 

• Despite pledging to increase offshore wind capacity and cut greenhouse gas emissions, the G7’s endorsement of natural gas for addressing the energy crisis has raised concerns about the continued reliance on fossil fuels and contradicts the goal of decarbonization. 
• While the G7 has backed Japan’s efforts to promote carbon emissions abatement through carbon capture technologies, conditional support was given to ammonia co-fired coal plants and hydrogen energy in the power sector. 
• The G7’s reaffirmation of their commitment to climate finance and supporting climate-vulnerable groups was praised, but concerns were raised about the credibility and achievement of the $100 billion annual mobilization goal. Some experts attributed the G7’s push for fossil fuel investments to Japan’s lack of urgency in addressing the climate crisis. 

Read more about this story: The Japan Times, Reuters 

World | Proxy advisor endorses activists’ climate resolution at total amid calls for reduced oil and gas projects and stronger emissions goals 

• Proxy adviser supports climate resolution at TotalEnergies, French oil and gas giant, urging emissions cuts and scrutiny of gas projects. A Dutch activist group and 17 investors call for more aggressive emissions reduction targets by 2030. 
• The climate resolution proposed to shareholders focuses on TotalEnergies’ total greenhouse gases emissions (scope 3) reduction targets, highlighting concerns about their alignment with the Paris Agreement goals. 
• Institutional Shareholder Services (ISS) recommends investors to vote in favor of the resolution, providing potential momentum. 

Read more about this story: Financial Times, The Independent 

Codo’s comment: As covered in our previous editions, TotalEnergies has been under increasing fire since last year, with a growing number of attacks from NGOs, including in court. The image of the company is affected by these attacks, even more in a context where it achieved record levels of profits following the energy crisis. In addition to legal risks, companies seen by the public as sacrificing climate over profit are exposed to the risk of losing their social license to operate. 

World | Study reveals fossil fuel companies responsible for $209 billion annual climate reparations 

• A groundbreaking analysis by One Earth (sustainability journal from Cell Press) quantifies the economic burden caused by heavy-emitting companies in compensating communities most affected by their polluting business practices and years of misinformation. 
• Top polluters, including BP, Shell, ExxonMobil, Total, Chevron, and Saudi Aramco, account for $5.4 trillion in climate catastrophes: the study identifies the largest 21 polluters responsible for the projected costs of climate-related disasters such as droughts, wildfires, rising sea levels, and melting glaciers between 2025 and 2050. 
• This research marks the first attempt to quantify the economic burden imposed by companies that have profited from extracting and burning fossil fuels, with a focus on the moral case for these corporations to use a portion of their wealth to compensate victims. 
• While the estimated $209 billion annual reparations are already substantial, the study acknowledges that the methodology does not account for the full economic value of lost lives, livelihoods, biodiversity loss, and other intangible factors beyond GDP. 

Read more about this story: The Guardian, Climate Home News 

Codo’s comment: Such research works pave the way for future talks about how to finance climate change adaptation, especially in developing countries where communities have less contributed to the global emissions. It is likely that, as the effects of climate change will become increasingly tangible, victims will start asking firms responsible for emissions to pay the bill. We already covered in a previous edition the case of a Peruvian farmer suing a German oil and gas company. 

Asia Pacific | Heatwave exacerbates Asia’s dependency on Russian energy 

• Russian energy emerges as a beneficiary of the extreme heatwave in Asia as countries prioritize securing coal, gas, and fuel oil to meet electricity and cooling demands. 
• Russian exports of thermal coal and natural gas to Asia have significantly increased this year, with coal volumes rising by about a third compared to the previous year. Asian imports of Russian oil, a cheaper alternative for power generation, reached record highs in March and April. 
• Rising demand for Russian energy is driven by concerns about power shortages and the need to ensure an adequate fuel supply in the face of extreme weather events and increasing temperatures. 

Read more about this story: Bloomberg Green, The Japan Times 

Codo’s comment: The increased volumes of energy consumed by cooling systems can be seen as a feedback loop: the higher demand for cooling results from global warming, and global warming is largely caused by emissions from energy production. Breaking this loop requires that cooling needs are reduced – with more energy-efficient buildings – and that the remaining part of cooling is covered by CO2-free energy sources such as renewables. To better understand the feedback loop phenomenon, join a Climate Fresk workshop organized by Codo!