ESG Essentials: A week of 80 percent and SEC rules put on ice

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Polluters unmasked

A new report by InfluenceMap has revealed that since the Paris Agreement was signed in 2016,  only 57 fossil fuel and cement producers are responsible for 80% of global CO2 emissions. This amounts to 251 GtCO2e, highlighting the over-proportionate role that a select group of corporations play in climate change.

Building upon the Climate Accountability Institute’s Carbon Majors Database, the report exposes that just 78 entities are responsible for 70% of historical global fossil fuel and cement CO2 emissions since the Industrial Revolution. The worst offenders on the list are Saudi Aramco (responsible for approximately 5.7% of global emissions since 1751) and investor-owned giants such as ExxonMobil and Shell.

Despite global climate commitments, the report reveals a concerning trend: major polluters have expanded fossil fuel production since 2015, outpacing renewable energy growth. The report is a useful tool for holding key polluters accountable, educating the public and policymakers, and emphasising the need for a shift towards a clean energy future.

Investors back sustainable investment policies 

Almost 80% of investors have established sustainable investment policies, up from only 20% in 2019, according to a new study by Deloitte and Tufts University. Over 1,000 asset owners, asset managers and investment advisers were surveyed and only 1% reported no plans for implementation of any sustainability-related policies. 

Interestingly, despite ongoing anti-ESG campaigns in the US, American investors are leading the way in adopting ESG policies, with 83% reporting implementation compared to 75% in Europe. 

The study identified regulatory requirements, improved financial performance and stakeholder pressure as the top reasons for integrating sustainability factors into investment decision-making.

While most investors use sustainability indicators in their investment analysis, they expressed doubts about the effective incorporation of ESG factors into equity prices. Key challenges include a need for clarity on integrating ESG information, consistency in ESG rating data and cost constraints. However, investors show trust in in-house proprietary data systems and audited corporate disclosures as reliable sources for sustainability data.

SEC Climate Disclosure Rules put on hold amid legal disputes 

Following a series of legal challenges, the US Securities and Exchange Commission (SEC) announced it has halted the implementation of its climate disclosure rules. 

Since the SEC introduced the rules in March, several states and business groups have criticised them for being too arduous and expensive, requiring unreliable information and exceeding the Commission’s authority.

Despite these challenges, the SEC argued it would continue to defend the regulations as they were consistent with applicable law and within the Commission’s long-standing authority. Moreover, a coalition of 19 Democratic attorney generals has launched a campaign to defend the rules, arguing they will provide investors with standardised data.

According to the SEC, the decision to pause the implementation will enable orderly judicial resolution of the challenges and avoid any uncertainty if the Commission implemented the rules while the cases were still pending.

AI revolution signals golden era for natural gas

US fuel producers expect a golden era for natural gas due to a surge in demand for electricity to power data centres and AI. The energy demand will surpass renewable energy and batteries, making gas supplies even more crucial. 

Though the US government has offered incentives to clean energy providers to decarbonise the electricity grid, fossil fuel execs have argued that renewable energy sources would not be reliable for energy-hungry data centres. 

Data centres’ power needs are rocketing, with Microsoft opening a new centre globally every three days. The International Energy Agency estimates that global power demand from data centres could top 1,000 TWh by 2026, double 2022 levels, and an increase equivalent to Germany’s total power demand. 

Climate scientists have warned that expanding gas infrastructure could undermine global efforts to combat global warming. Companies including Google and Microsoft have set ambitious targets to use green electricity, which could reduce the reliance on fossil fuels in the future. 

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