Weekly News | 1st to 15th November 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.

Note: we will comment about the outcome of COP27 in our next news summary, to be published on 29th November.

World | COP27: Regulators plan closer scrutiny of carbon markets 

• The International Organization of Securities Commissions (IOSCO) made a proposal for closer scrutiny of carbon trading to prevent greenwashing and improve “compliance” carbon markets (regulated markets for trading emission permits) and voluntary markets (unregulated markets in which companies buy credits from emission-reducing projects) to make carbon trading more involved in the net-zero transition. 
• As shown in a report emitted last year, nearly 80% of emissions are not covered by compliance markets. Thus, the IOSCO recommends that authorities should increase integrity, transparency and rely on auction-based markets to reduce vulnerabilities. 
• The IOSCO’s members, representing 95% of the world’s securities markets regulators, pledged to implement such recommendations at COP27. 
• Read more about this story: Reuters   

EU | Sustainable standard setters close in on regulatory gap 

• The European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD), which will make businesses more publicly accountable by obliging them to regularly disclose information on their societal and environmental impact. 
• While the efforts to make EU and ISSB norms interoperable continues, they have received backlash to leave Scope 3 out from disclosures. Chair of ISSB emphasized the importance of adding Scope 3 emissions in disclosures, which stands for carbon emissions from suppliers of companies.  
• The CSRD will have consequences for Japanese companies operating in Europe. Japanese banks and investors will also be covered even if they issue a small bond that can only be sold to institutional investors in the EU, as long as they fit the criteria. 
• Read more about this story: Reuters  

Brazil | Lula vows to undo environmental degradation and halt deforestation 

• Brazil’s Luiz Inacio Lula da Silva received a hero’s welcome at the COP27 meeting in Egypt, where he pledged to recommit the rainforest nation to addressing the climate problem and offered that COP30 is hosted by Brazil. 
• Lula defeated right-wing President Jair Bolsonaro, who presided over escalating damage of the Amazon rainforest, and declined to convene the 2019 climate meeting originally slated for Brazil. 
• Lula emphasized that climate change could only be addressed hand in hand with social justice, while calling on rich nations to deliver on their past pledge to provide $100 billion a year to poor countries. 
• Read more about this story: The Guardian, Reuters   

UK | UK will spend billions on energy efficiency to cut demand by 13% 

• The UK government plans to invest billions of pounds on house insulation and boiler upgrades in an effort to reduce Britain’s overall energy usage by at least 13% this decade. 
• Ministers intend to form a task force to oversee the program, which will get new funds from 2025 through 2028. In addition, the government is planning a public awareness campaign to encourage individuals and businesses to minimize their energy consumption. 
• Chancellor of the Exchequer Jeremy Hunt believes plowing money into making Britain’s housing stock more energy efficient will help the country’s drive to zero out emissions by 2050 while also cutting bills for households and reducing reliance on imports of foreign fuel. 
• Read more about this story: Bloomberg 

Japan | Japan criticized for its lack of involvement in climate issues at COP27 

• The country was given the “Fossil of the Day” award by the Climate Action Network on behalf of financing projects using fossil fuels and promoting experimental technologies with doubtful effects on the environment (such as coal-fired plants equipped with CCS technologies or mixed-fuel plants).  
• With $10.6 billion per year invested on fossil fuels projects on average between 2019 and 2021 and net zero objective by 2050 seemingly unreachable due to Japan’s focus on its economic objectives and energy supply, the archipelago has been called a “marvel at greenwashing”. 
• Furthermore, PM Fumio Kishida didn’t make the trip to COP27 due to a “busy parliamentary schedule” official says, with the minister of environment Akihiro Nishimura being the only government delegate to the summit. 
• Read more about this story: Le Monde 1 & 2, The Japan Times