ESG Essentials: EU passes landmark nature law while oil and gas profits triple under Biden

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European Union passes landmark nature restoration law

The EU Nature Restoration Law (NRL) has been passed in a final EU Parliament vote, requiring member states to restore at least 30% of natural habitats by 2030, increasing to 60% in 2040 and 90% in 2050. 

The NRL requires member states to develop National Restoration Plans (NRPs) which will be submitted to the European Commission within two years of regulation coming into force, pushing member states to monitor and report on their progress.

Adoption of the law could lead to sovereign sustainability-linked bonds being issued to meet targets as the NRL opens up opportunities for member states to integrate nature restoration into their public finances’ asset-liability management. SLBs could reward countries meeting restoration or conservation goals with lower debt service costs and reduce risks to public finances from nature depletion. 

Though the NRL represents a watershed moment for the EU, there was criticism that its targets had been watered down due to resistance from some political and agricultural groups; highlighting the need for better cooperation and understanding across Europe’s economy and society.

Oil and gas profits triple under ‘hostile’ Joe Biden

US oil and gas producers saw profits almost triple during the presidency of Joe Biden, even though the industry lambasted the administration’s policies as hostile and stated that a second presidential term would be “disastrous” for the sector.

The country’s top-10 listed operators by value have amassed a combined net income of $313 billion during Biden’s first three years in administration, compared to $114 billion during the same period under Donald Trump. This comes as the nation overtook Qatar as largest global exporter of liquified natural gas last year. 

Trump has made support for the oil and gas industry a core part of his re-election campaign, arguing the sector’s recent success is bedded in the deregulatory agenda of the previous administration. It will be interesting to see how this plays out as the next election looms in November.

Supply chain audit law blocked by EU member states

Following German opposition, European Union countries blocked new regulations requiring large companies to check if their supply chains cause environmental damage or use forced or child labour.

The corporate sustainability due diligence directive (CSDDD) required a majority of 15 EU countries, representing 65% of the EU population, before a final vote in the European Parliament. 

Germany’s Free Democrats (FDP) argued that CSDDD would burden businesses with excessive bureaucracy. It is the second time in recent months that Germany has pushed back on the EU’s green agenda, and has further criticised EU plans to end sales of CO2-emitting cars by 2035 and to reduce truck emissions. 

Environmental activists issued a joint statement that the delay was a “deplorable setback”. Without a breakthrough within the next two weeks, CSDD could be put on hold until after the EU parliament election in June, casting doubt on its future.

Sustainability gets the green light

The results of IBM’s new survey revealed that companies that embed sustainability into their operations are experiencing increased revenue growth, profitability and talent attraction in comparison to companies that do not. 5,000 C-suite executives from across 22 different countries and 22 different industries took part in the survey, which examined the progress, investments, outcomes and challenges the organisations face in relation to their sustainability efforts.

75% of the senior executives agreed that sustainability drives better business results. However, nearly half (47%) of respondents reported that they struggle to fund sustainability investments. One of the key challenges highlighted in the study was the necessary focus on compliance over strategy, meaning that companies had to spend more on sustainability reporting than sustainability innovation.

Overall, the study highlighted that sustainability must be part of the day-to-day operations of a company, and not viewed only as a compliance task or reporting exercise. When embedded successfully across a business, organisations can drive internal innovation, attract and retain skilled talent, and be better positioned to achieve both positive environmental impact and financial outcomes.

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