ESG Essentials: SBTi reviews and UK food security risk

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SBTi launches review process for net zero standards

The Science Based Targets initiative (SBTi) is assessing and revising its Corporate Net Zero Standard, potentially allowing companies to use carbon credits to offset emissions from their value chain.

Last month, the SBTi board announced its intention to relax regulations and allow firms to use more carbon offsets to tackle their Scope 3 emissions, sparking backlash from employees and environmental groups. 

Opponents of the proposed changes have warned they risk undermining the integrity of approved SBTi targets by allowing companies to increase their reliance on carbon offsets, rather than tackling emissions at the source. 

The board insisted there had been a misunderstanding and no changes have yet been made to its Corporate Net Zero Standard. The revision process aims to align its standards with the latest scientific thinking and best practices, and better integrate the SBTi’s Corporate Net Zero Standard with other external climate frameworks and standards.

DEI low on pension funds’ agendas 

With DEI themes becoming increasingly included in pension funds’ investment policies and assessment criteria, asset owners are urged to reflect their priorities better when engaging with third-party providers and underlying investments.

According to Pensions for Purpose’s report, all asset owners surveyed agreed that DEI correlates directly with business performance and have integrated DEI themes into their business models. 

However, the level of development of pension funds’ DEI action plans and strategies varies significantly. Nearly a third of asset owners had not set specific targets. Only two of them are intentionally considering DEI topics in their investments. 

Pensions for Purpose outlined recommendations for best practices, including initiating mandatory internal DEI training to establish a common understanding and set clear standards for diversity across investment committees.

Banks dominate fossil fuel funding in 2023, report reveals 

According to new research, the world’s largest banks have given ~$7tn of financing to the fossil fuel industry since the Paris Agreement in 2016. The research exposes private interests continuing to funnel money to oil, gas, and coal companies, which have used it to expand their operations.

The report exposed the world’s top 60 banks’ underwriting and lending to over 4,200 fossil fuel firms and companies causing the degradation of the Amazon and Arctic. It argues financiers of fossil fuels perpetuate the climate crisis and create unlivable conditions for Indigenous peoples.

The banks gave $6.9tn in financing to oil, coal, and gas companies, nearly half of which went towards fossil fuel expansion. Even in 2023, bank financing of fossil fuel companies was $705bn, with ~50% of this going towards expansion.

The research revealed US banks were the biggest financiers of the fossil fuel industry, contributing 30% of the total $705bn provided in 2023, while European banks financed a quarter.  

However, the report’s methodology has drawn some criticism for relying on investigating deals reported by financial market data companies, meaning researchers did not have a detailed view of what was being financed and by whom.

Source: Banking on Climate Chaos 2024

UK food security at risk due to record rain, ECIU warns 

The Energy and Climate Intelligence Unit (ECIU) has predicted the UK’s ability to feed itself could fall by almost 10% due to one of the wettest winters on record. The 18 months leading up to March 2024 were England’s wettest since records began in 1836, with 445.8mm of rain falling within the season, 29% higher than the long-term average. 

The reduced production of key arable crops will reduce UK self-sufficiency across all farming sectors by eight percentage points by volume, declining from an average of 86% between 2018 and 2022 to 78% this year. 

The think tank predicts the UK could become dependent on imports for around a third of its wheat, with self-sufficiency estimated to decline from 92% to 68%. The UK depends on imports for the foods that cannot be grown here and will likely require the support of often poorer and more climate-vulnerable countries for agricultural production.

Climate scientists warn that milder, wetter winters like the one the UK has just experienced are projected to become increasingly common as the world warms, fuelling fears climate impacts could undermine food security in the UK. 

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