One thing to start...has jane fonda outsmarted jamie dimon? perhaps. the celebrity recently made viral videos lambasting jpmorgan chase for its financing of fossil fuel companies. now, the banking behemoth has responded: it announced on tuesday that it is cutting its exposure to fossil fuels. that wont placate critics. but it shows the zeitgeist is shifting. todays announcement is significant. the worlds largest lender to the fossil fuel industry has clearly signalled that the fossil fuel game is coming to an end, said alec connon, co-ordinator of the stop the money pipeline coalition that fonda backs. brace yourself for more unexpected signals of change at the imf meetings in the coming days.
This week we also have:
With billowing language that referenced the british sailors drake, raleigh and nelson, uk prime minister boris johnson on wednesday pledged that offshore wind capacity will be increased to 40 gigawatts in 10 years enough to power every home in the country. the government will invest 160m in ports and factories to manufacture turbines, he said, and floating windmills will be built to add one gigawatt of energy by 2030.
His statements at the tory party conference drew praise, but also, alas, must be met with scepticism. the fts editorial board noted that increasing offshore wind generation within 10 years could require billions of pounds more than what mr johnson proposed.
The uk does not appear to have grasped the scale of the task, the ft editors wrote. what is missing is a coherent plan.
Naval pedigree is not a prerequisite for harnessing the wind. the eu is developing its own wind energy opportunities. as part of the green deal, the european commission is working on an offshore energy strategy that includes wind, wave and tidal power. the plan is expected to be adopted by the end of this year.
For all its cleanliness, wind power is controversial. in germany, some citizens have fallen out of love with the electricity source and have been fighting new turbine construction. before he became us president, donald trump castigated a planned offshore wind farm near his luxury golf resort in aberdeenshire as ugly monstrosities and horrendous machines. it will be interesting to see how british voters respond. (patrick temple-west)
Esg issues usually push credit ratings down not up but not so for one brazilian miner.
Last week, vale regained an investment grade rating from moodys, marking a significant milestone in the companys rehabilitation from a deadly mine disaster that killed 270 people in january 2019.
Moodys said the upgrade to baa3 reflected improvements in vales esg practices. it cited enhanced risk management and governance oversight of tailings dams, including the appointment of a safety and operational excellence officer, which it said materially reduced the risk of a similar accident in the future. tailings dams are used to hold waste material from mines.
It also highlighted changes to vales remuneration policy, in which esg targets are now an important component of the annual pay packages of senior executives.
In an interview with moral money, vales chief financial officer luciano siani pires said he was pleased the companys efforts had been recognised by moodys but the journey was not complete.
They want to continue to see progress to continue to upgrade our rating, he said.
But from a purely financial standpoint, mr siani said vale should have a similar credit rating to rival iron ore producer rio tinto, which is rated single a.
Both vale and rio are generating huge amounts of cash with the price of the steelmaking commodity above $120 a tonne. however, vale could be hit with further fines for the brumadinho tragedy. (neil hume)
One of the biggest stories to come out of the un general assembly this year was the big 4 accounting firms joining forces to clear up the alphabet soup of environmental, social and governance disclosure standards.
It sounds encouraging. however, now that critics have had time to examine the plan, some worry that it may not actually improve esg disclosures in a meaningful way.
The plan has some notable weaknesses around emissions reporting, said bas eickhout, a green mep from the netherlands.
Emissions reporting is typically broken down into three levels or scopes as explained in this document from the greenhouse gas protocol:
The problem is that the framework developed in conjunction with the world economic forums international business council mandates only scope 1 and scope 2 disclosure, said mr eickhout. that is the easiest part, he explained. the more important part is [scope 3] where you see the emissions over the entire chain. and there they say, ok, report where applicable and that makes it voluntary.
If one were to look at this cynically, it would seem like the big 4 and the wef are attempting to get ahead of binding regulation that might require companies to make some painful changes, said mr eickhout.
Yet if the standards are inadequate to meet either the regulators or markets expectations, they may have the opposite effect and only make esg disclosure standards messier than they are now. if they arent making [scope 3 disclosure] obligatory, it is useless, said mr eickhout. everyone will have their own judgment about what is applicable. i think that shows you need regulation. there will be more debate about this around the imf and world bank meetings. (billy nauman)
To see just how important scope 3 emissions are (as mr eickhout noted above), look to the tech industry. apples, googles and microsofts headquarters may not have smokestacks like the dark, satanic mills of yore but that does not mean the sector is inherently clean. even sending emails can pump a staggering amount of carbon into the atmosphere.
For tech companies climate pledges to actually mean anything, they need to go down into their supply chain and push the companies that manufacture their products and run their data centres to make their operations more sustainable. as katie koch, co-head of fundamental equity at goldman sachs told us a few months ago, this creates a huge investment opportunity for green investors.
And we are already seeing that happen. late last month, aligned energy, an us data centre company, became the first company of its kind to tap into the sustainability-linked credit market with a $1bn facility.
The terms on the deal will be linked to aligneds esg disclosures, workplace safety, and its goal of shifting to 100 per cent renewable energy by 2024.
This will not just help the company win business from the largest tech companies either, said andrew schaap, chief executive of aligned energy. companies of all stripes are moving their operations to the cloud and are looking to do so sustainably.
We have a couple of travel companies and obviously those companies are thinking about how to use less jet fuel, he said. but when we come in and talk about the data centre sustainability, it changes the discussion. now we're not just a service provider, and we might be helping them achieve certain sustainability goals and objectives that they have internally. (billy nauman)
Nikkeis tamami shimizuishi helps you stay up to date on stories you may have missed from the eastern hemisphere.
While large countries in the asia-pacific region have been struggling to get rid of their brown labels, one small nation is leading the way to achieve a greener future.
New zealand aims to become the first country in the world to make climate risk reporting mandatory, using the task force on climate-related financial disclosures (tcfd) framework. prime minister jacinda arderns administration announced the move last month.
Many large businesses in new zealand do not currently have a good understanding of how climate change will impact what they do, said james shaw, the countrys minister for climate change. but mr shaw, leader of the green party, explained that the changes the government is proposing would bring climate risks and resilience into the heart of financial and business decision and make the disclosure of climate risk clear, comprehensive and mainstream.
Many green advocates have applauded the proposal. once again, new zealand is leading the world, said joseph stiglitz, a nobel laureate in economics, in a video message. when new zealand pioneered an inflation-targeting framework in the late 20th century, the concept ended up being adopted all over the world. more recently, mr stiglitz praised the countrys handling of the covid-19 pandemic as well as climate change as great examples of how democratic countries can manage such global issues.
Once approved by the parliament, the policy will apply to up to 90 per cent of the countrys assets under management as early as 2023.
The parliamentary approval wont happen until after the general election on october 17. but impact investors in the region think that the announcement has already been making an impact on financial institutions and companies in new zealand and beyond.
The market is now preparing for [mandatory tcfd disclosures] to be legislated post election, said simon oconnor, chief executive of the responsible investment association australasia. mr oconnor also said that new zealands decision sets a strong global precedent in requiring the largest financial sector organisations, as well as listed companies, to report under the tcfd.
He was once a bestselling author for moral leadership and corporate ethics. now, dov seidman, founder of lrn, has been accused of cheating investors out of millions of dollars when he sold his business ethics consultancy to a private equity firm. the cast of characters involved in this tale include former us president bill clinton, and you can read more about this ethical dilemma in the ft here.
China has outspent the us on renewable energy investments. but a $2tn clean-energy programme proposed by democratic presidential challenger joe biden could, if he is elected in november, help the us compete with its asian rival. please read our energy source colleague derek browers article here, and sign up for the fts must-read energy newsletter here.