Weekly News | January 1st to 12 January 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 | 2023 to be a turning point for climate litigation   

• In 2022, courts from Indonesia to Australia have issued ground-breaking verdicts that have shut down polluting power facilities. 2023 is expected to be even more pivotal in forcing action on governments and companies. 
• The United Nations will vote on a landmark resolution on human rights and climate change early this year. If the bill is enacted, the International Court of Justice will have to rule on what duties governments have under international law to protect the rights of current and future generations from the detrimental effects of climate change. 
• Climate litigation against the private sector is also expected to grow, with the financial sector getting the biggest hit.  
• Read more about this story: The Guardian, Bloomberg 

Comment from Codo: More than ever, corporates with insufficient climate plans or engaged in greenwashing activities are at risk of becoming targets for NGOs and activist investors. Attacks can take place in court, but also through other means such as shareholder resolutions aiming at forcing changes in the company’s plans or management team. Companies can protect themselves by adopting a proactive attitude, including assessing the quality of their current climate plans using recognized methodologies such as ACT, and keeping a close eye at their performance in independent rankings such as WBA’s climate benchmarks.  

Europe | The UK set to publish net zero review in early 2023  

• A review of the UK’s goal of net zero carbon emissions by 2050 will be published early in the new year, raising doubts about Prime Minister Rishi Sunak’s commitment to combating climate change. 
• Most recently, Mr. Sunak has come under heavy fire from environmentalists upon approving the first new coal mine in 30 years in the country. 
• The review was conducted by retiring Tory MP Chris Skidmore, with the goal of protecting energy security while remaining committed to net zero, Bloomberg reports.  
• Read more about this story: Bloomberg, UK Government 

Comment from Codo: A reduction of the UK’s ambitions for climate could further isolate the country from the European block, in the post-Brexit context and considering that the EU has expressed its commitment to an accelerate transition away from fossil energy, both to address the climate crisis and to cut dependency to fossil fuels producing countries such as Russia.  

Asia-Pacific | Contested Australian carbon credits scheme to be improved 

• An assessment of Australia’s disputed carbon credit system has recommended significant improvements in how it is operated, but has refuted charges that the scheme lacks integrity and does not result in real emissions reductions. 
• The Australian government has promised to implement all 16 suggestions made by the panel, including the elimination of new projects that rely on defective approaches to avoid deforestation and stricter regulations regarding “human-induced regeneration” methods. 
• Read more about this story: Bloomberg, The Guardian 

Comment from Codo: Most national or supranational (EU Emission Trading System) carbon credit systems have encountered difficulties in their first years of operation, requiring adjustments based on experience with users. Will Japan, already late in implementing such a scheme at national level, be able to use lessons from other countries to reach more rapidly a reliable and efficient carbon market? 

Asia-Pacific | India to issue its first-ever sovereign green bond  

• India’s government will launch $1.9 billion in green bonds in its first issuance, as Prime Minister Narendra Modi ramps up efforts to change the country’s reliance on fossil fuels. 
• The proceeds will be used to fund renewable energy projects, reduce emissions, and strengthen India’s infrastructure’s resilience to harsh weather. 
• With this, India will be joining Singapore, Hong Kong, and Indonesia as an Asian issuer of sovereign green bonds. 
• Read more about this story: Bloomberg, Reuters, The Guardian 

Asia-Pacific | Singapore appoints its first government chief sustainability officer 

• The Ministry of Sustainability and the Environment of Singapore has established a government chief sustainability officer position to drive the country’s sustainability efforts under the Singapore Green Plan 2030. 
• The government has suggested before that the public sector will lead its sustainability ambitions in carbon reduction and resource efficiency, under an initiative known as “GreenGov.SG”. The administration has also set a target of peaking carbon emissions around 2025, well ahead of the national objective of 2028. 
• Read more about this story: Eco-Business.com, ESG News 

Japan | Japan to strengthen scrutiny of ESG data providers with new standards 

• As global regulators increase scrutiny of organizations that assess companies on their environmental, social, and governance standards, Japan will soon be publishing guidelines for ESG data and ratings providers. 
• Previously, the International Organization of Securities Commissions (IOSCO) cautioned that a lack of rules could lead to risks such as greenwashing and asset misallocation. The draft code in Japan is being based on proposals from the securities group, the Japan Times reports.  
• Singapore and the UK are considering similar criteria, while Mairead McGuinness, the EU’s financial markets and services commissioner, has expressed worry about the lack of transparency and uniformity in the ESG ratings sector. 
• Read more about this story: Japan Times