ESG Essentials: Gender led investing and hydrogen energy

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The importance of gender-led investing

A new report by UN Women on gender-led investing (GLI) has highlighted the necessity of extending gender equality efforts across all industries and asset classes to achieve progress. GLI is an investment approach whereby capital is allocated to address gender equality. This includes actively contributing to Sustainable Development Goal 5 (SDG 5), which strives to attain gender equality and empower women and girls. 

Despite the potential of GLI to address gender disparities and contribute to SDG5, many investors lack consensus on defining and implementing gender equality strategies. Challenges include the absence of a unified definition for GLI and the superficial nature of some initiatives, which fail to address systemic gender inequalities and diverse forms of oppression, as well as the inability to obtain reliable gender-disaggregated data from companies.

Despite challenges, the positive outcomes of GLI strategies are beginning to emerge, with more investors benefitting from incorporating gender considerations into their investment approaches. Funds like the Mirova Women Leaders Equity Fund and M&G’s Global Diversity and Inclusion Fund are examples of how evaluating companies’ gender diversity initiatives can enhance accountability and transparency, contributing to a broader impact beyond gender equality alone.

Planet Tracker urges investors to rethink advertisers’ ESG approach 

A new report from Planet Tracker has slammed various advertising agencies for their lack of ESG commitment and calls on investors to reassess their relationship with the holding companies with carbon-intensive clients.

Numerous agencies – including Dentsu, Havas, IPG, Omnicom Group, Publicis and WPP – have clients involved in the fossil fuel industry. The report notes that these holding companies also have high-profile polluting clients within the plastic, fast fashion, IT and food and beverage sectors.

The report also highlights that the top ten shareholders of each holding company include major investment firms, with BlackRock having the largest GHG footprint out of the shareholders.

The report urges investors to refuse to work for environmentally harmful clients and suggests that agencies should strive to transition their clients to sustainable business models. The report also advises agencies to consider the financial implications caused by their relationships, such as employee dissatisfaction and potential write-offs affecting the coverage of debt liabilities by assets.

Hydrogen energy gold rush begins

According to the US Geological Survey, up to 5tn tonnes of hydrogen exists in underground reservoirs worldwide. As a result, geologists are predicting a new gold rush for hydrogen energy. Most hydrogen is inaccessible, but recovering a few percent would supply the projected demand for 500 million tonnes a year for hundreds of years.

Until now, the demand for hydrogen has been met by chemically reforming gas, known as blue hydrogen or grey hydrogen, while a smaller amount of “green hydrogen” is produced by splitting water through electrolysis using renewable energy sources.

Geologists are finding natural hydrogen reserves around the world. Since 2012, almost pure hydrogen has flowed from a borehole in the village of Bourakébougou with no diminution of pressure, while over 200 tonnes of hydrogen a year flow from the Bulqizë chromite mine in Albania.

Tapping natural hydrogen would be a cheaper and cleaner alternative and is already attracting attention from investors. The well-known US hydrogen energy start-up Koloma raised nearly $100mn last year from funds including Bill Gates’s Breakthrough Energy ventures.

Sustainable beef – an oxymoron?

The rise of alternative meat companies like Impossible Foods and Beyond Meat has prompted a discussion about whether meat products, particularly beef, can be sustainable. Product ranges such as ‘low carbon beef’ in the US and ‘Gamechanger’ beef burgers in Australia highlight efforts by meat producers to reduce greenhouse gas emissions and promote sustainability, though scepticism remains about the effectiveness of such measures. 

FAIRR, an investor network that has been tracking the commitments made by major agri-food companies in relation to regenerative agriculture, emphasised the importance of transparent and quantifiable commitments from agri-food companies, particularly regarding regenerative agriculture, amidst increasing scrutiny and new regulations aimed at curbing greenwashing.

While efforts to promote sustainable beef production are noteworthy, questions remain about the effectiveness and sincerity of such initiatives. Concerns about greenwashing and the need for greater transparency in marketing claims are underscored by initiatives like the European Union’s green claims laws and the Taskforce on Nature-related Finance Disclosures framework. 

As businesses navigate these evolving regulatory landscapes, there’s a growing realisation that sustainability claims must be substantiated with concrete actions and verifiable results. 

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