Weekly News | 4th to 10th October 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 | Car industry as carbon-heavy per euro as oil industry, says NGO 

• According to a study by European NGO Transport & Environment, the carbon emissions over the full lifecycle of a car – including scope 3 emissions – are so high that investing in a car manufacturing company funds almost as much carbon per euro as investing in an oil and gas firm. 
• The NGO calls carmakers a ‘ticking carbon bomb’ for investors and found that carmakers are significantly under-reporting their scope 3 emissions as there is no legal obligation for them to do so. 
• The EU plans to introduce a requirement that financial institutions disclose their indirect emissions by next year, exposing carmakers in the same process. 
• Read more about this story: Transport Environment, Reuters 

Comment from Codo: Oil and gas companies have been a target for climate lawsuits and activist shareholders resolutions for a few years now. As time passes and climate emergency becomes increasingly visible, it is likely that other sectors will be targeted as well, when observers consider that these industries are not decarbonizing fast enough. Studies such as this one from Transport & Environment will further expose climate impacts and offer additional arguments for activists to attack companies.   

World | Greenwashing: PR companies called to end climate emergency denial 

• In a recent publication highlighted by UN Secretary General, the Intergovernmental Panel on Climate Change (IPCC) exposes how the PR industry has been working with major polluters to mislead customers and downplay the urgency of climate crises as proven in several cases and going back to the 2010s and more. 
• Fossil fuels companies’ investments and PR coverage do not match. For example, Chevron mentions sustainability in approximately 80% of their advertisements while less than 2% of their capital spending are going to non-oil and gas projects. 
• Banning fossil fuel ads is trending worldwide. France takes the first step in prohibiting them in 2023, also asking for more transparency from PR agencies. 
• Read more about this story: Cleancreatives, F-List 2022 Report 

Comment from Codo: Prohibiting ads for fossil fuels, as France will do from next year, can be useful but cannot be extended to all sectors. Therefore, other means of action are also needed. These includes mandatory disclosure of environmental information from companies – an agenda the EU and the US are pushing forward – as well as better education of citizens-consumers. NGOs can lead this, with solutions such as the Climate Fresk already used to educate hundreds of thousands of people to the fundamental science of climate change. 

Germany | Germany’s biggest power producer RWE to phase out coal by 2030 

• Germany’s largest power producer RWE said it will bring forward the country’s exit from coal-fired power generation to 2030, eight years earlier than initially planned, as part of a deal reached with the government. 
• However, the current Europe-wide energy crisis started by Russia cutting gas motivated RWE to temporarily boost its use of heavy-polluting power plants to secure Germany’s energy supply. 
• According to this move, two ‘to be decommissioned’ plants will maintain activity until at least 2024, with complete phase-out limited until 2025. To offset their impact, RWE aims to build a gas-fired power plant that could run on hydrogen, earmarking already existing units for this use.   
• Read more about this story: Reuters 1 & 2 

Comment from Codo: With a national commitment to phase-out both coal and nuclear power, Germany has a narrow set of options to build its electricity mix. If successful, it could become the first major economy to find a pathway towards a low-carbon nation-wide power system that does not rely on nuclear energy. To support its strategy, Germany led a campaign to introduce natural gas in the EU Taxonomy, as this source of energy will be used by the country in the transition from coal to renewables. 

Germany | World’s leading reinsurer takes a stand against oil and gas expansion 

• Munich RE, the world’s leading reinsurer and a founding member of the Net Zero Insurance Alliance (NZIA), has announced that it will no longer cover new oil and gas production projects, as well as new oil infrastructures and oil power plants. 
• The German firm joins the second and third largest reinsurers Swiss Re and Hannover Re who also made similar commitments last March. Environmental NGOs such as Urgewald (Germany) and Reclaim Finance (France) welcomed the announcement. 
• Read more about this story: Reclaim Finance, Munich RE 

Japan | Coverage by Codo: Tokyo “Green Transformation” Week  

• The Ministry of Economy, Trade and Industry held in Tokyo a series of events and conferences around decarbonization, covering topics such as hydrogen, carbon recycling or corporate disclosure. Overall, the events ended up being dominated by discussions on technological solutions, a bias that is characteristic of METI’s approach to decarbonization. 
• In the Innovation for Cool Earth Forum (6^th Oct.), in addition to renewables and electric vehicles, METI also pushed its domestic agenda supporting carbon capture and storage (CCS) and nuclear technologies, now introduced as “sustainable nuclear”. 

• The TCFD Summit (5^th Oct.) highlighted the work currently done by the ISSB to design international standards for corporate sustainability disclosure, aligned with TCFD, and that the Japanese financial regulator said it was ready to adopt. 
• The Global Green Transformation Conference (7^th Oct.) put the spotlight on the First Movers Coalition (FMC), a movement of major companies committing to purchase low-carbon solutions. Members include companies such as Maersk, Salesforce or Boeing. Shipping company Mitsui OSK is currently the only Japanese member.  

Japan | Japanese industries announcing plans for new nuclear 

• Following Prime Minister Kishida’s vow to support the restart of nuclear power in Japan, firms in this sector are announcing new projects. Mitsubishi Heavy and Kansai Electric Power will team up with three other regional electricity companies to create nuclear reactors by the mid-2030s, aiming for increased safety. 
• Hitachi-GE Nuclear Energy, a joint venture of Hitachi and General Electric, also announced that it will design a nuclear reactor addressing safety issues that contributed to the Fukushima accident in 2011. 
• The government’s plan on nuclear may face the same difficulty as renewable energy deployment: the absence of sufficient electricity transport capacity between the east and the west of Japan, reducing the potential for a national planification of electricity generation. All the 17 reactors scheduled to be restarted before summer 2023 are located in the western half of Japan. 
• Read more about this story: Nikkei 1 & 2, Japan NRG, Nippon.com 

Comment from Codo: In 2022 so far and despite the global energy crisis that some observers considered it could trigger a return to nuclear and fossil, renewable electricity generation kept increasing in the world, as highlighted by the Renewable Energy Institute, the leading Japanese think-tank on energy transition. Compared to the first half of 2021, renewable sources gained 12%, while fossil and nuclear respectively lost 1% and 2%.