Indo-Danish carbon removal company MASH Makes has launched a new technological solution to decarbonise hard-to-abate industries, including shipping. Following external tests, the group successfully developed a carbon-negative shipping fuel made from agricultural waste, which it says can be used as a viable replacement for fossil fuels in the sector. The product will now be trialled in live vessels, in collaboration with global shipping company NORDEN. MASH Makes said the trials represented a key milestone in the transition to net zero, predicting biofuel will play a key role in decarbonising shipping and heavy industry. “Shipping facilitates over 80% of global trade and uses more than 330 million tonnes of fossil fuel every year, accounting for over 3% of CO2 emissions annually – more than all of Germany,” it added. “Achieving climate goals is impossible without decarbonising this global economic lynchpin, and it has proven difficult to achieve this using the go-to technologies of the green transition.” The use of the biofuel could help to avoid 90% of greenhouse gas emissions in the sector, MASH Makes claimed. The company will use a proprietary thermochemical process to transform a wide range of waste products into energy and carbon-removal solutions, aiming to deliver positive environmental impact at the “gigaton level”. Alongside biofuel, its technology will produce hydrogen, methanol, ammonia, and biochar – all of which play a part in industrial decarbonisation efforts. “These results represent a paradigm shift for sustainable shipping fuels and a glimmer of hope for other industries struggling to find viable solutions for the green transition,” said Jakob Andersen, CEO of MASH Makes.
Sustainable Investor
News in Brief
The Brunel Pension Partnership has prioritised transparency in its climate reporting, exceeding requirements outlined under the Task Force on Climate-related Financial Disclosures (TCFD) framework. The UK pension fund’s latest climate change progress report outlined how the asset owner performed last year against a range of climate targets, and set out plans to accelerate reporting this year. “Our progress report captures the delivery on our investor commitments towards Paris alignment, including targets now covering 85% of our AUM,” said Faith Ward, Chief Responsible Investment Officer at Brunel. Ahead of the 2024 reporting round, Brunel chose to accelerate progress by operationalising requirements. Its methodologies will have enhanced reporting on averages specific to industry sectors and proxies for Enterprise Value including Cash (EVIC). In addition, Brunel has focused on including additional qualitative context to support its data disclosures, as demonstrated in its climate-related product report. “Climate reporting at Brunel has a dual role – to improve the delivery of our climate ambitions across our portfolios, and to set a standard that resonates across the wider industry,” said Laura Chappell, Brunel’s CEO. Brunel is one of eight UK pooled local government pension schemes.
The market for ESG reporting capabilities is growing rapidly, with new and enhanced products vying to help corporates improve disclosures as regulatory deadlines loom. US-based Certa has introduced generative AI capabilities to its platform for managing firms’ risk, compliance and ESG issues arising from third-party relationships. An upgrade uses AI to support intelligent workflow design and smart fills for questionnaires and assessments. It also includes plug-and-play ESG modules to support compliance with ESG-related reporting regulations such as the EU Corporate Sustainability Reporting Directive (CSRD), as well as Scope 1-3 climate disclosures. Meanwhile, Dutch information services provider Wolters Kluwer has expanded its CCH Tagetik ESG & Sustainability for Carbon Emissions solution to cover corporate reporting of direct and indirect carbon emissions. The product now embeds pre-configured, carbon data management capabilities based on the Greenhouse Gas Protocol to support accurate emissions tracking and accelerate compliance with relevant ESG regulations and standards. Separately, digital transformation specialist Experion Technologies has partnered with sustainability reporting platform ESG Playbook to develop “cutting-edge” solutions in the fields of sustainability, risk management, and regulatory compliance. The alliance aims to leverage Experion’s product-engineering expertise, consulting services, integration and testing capabilities to streamline clients’ ESG reporting processes and demonstrate clients’ commitment to responsible business practices. Less than a third (29%) of companies feel sufficiently confident in their ESG reporting to have it assured by third parties, according to KPMG’s annual ESG Assurance Maturity Index. Though slightly higher than the 25% reported nine months ago, the figure suggests a widespread unpreparedness for reporting under CSRD, which will require large firms to provide independently assured data by early 2025.
European inflows to ESG funds hit US$11 billion in the first quarter of 2024, as outflows in the US reached US$8.8 billion, demonstrating a widening gap between the two jurisdictions. New research by the Institute of Energy Economics and Financial Analysis (IEEFA) suggested the “anti-woke” backlash in the US has led to money outflow from ESG funds. In contrast, expanding green requirements in Europe and parts of Asia, combined with growing appetite from asset owners, has kept demand for sustainable funds strong in those jurisdictions. The report also found that ESG funds outperformed non-ESG investments in both equities and fixed income by an average of four percentage points. “Sustainable funds generated better returns than traditional funds in 2023, with a median return of 12.6% versus 8.6%,” said Ramnath N Iyer, the report’s author and Sustainable Finance Lead for Asia at the IEEFA. “This outperformance was extended across both equity and fixed-income fund asset classes.” In the US, the ESG sector has been harmed by “sustained attacks” from the conservative side of politics, leading companies to “quietly” remove mentions of ESG from their materials. Meanwhile, financial firms under threat of boycotts and legal challenges in some states have stepped back from offering or advertising ESG funds altogether.
More investment in mining is needed for the energy transition and to optimise benefits to host citizens, the International Council on Mining and Metals (ICMM) has said. In a briefing paper, the council examined tax policy principles and design elements to support governments and mining companies in their collaboration on responsible mine development and to enhance impacts on local communities. The ICMM also disclosed the social and economic contributions made by its members to host countries during 2023. Collectively, members paid corporate income tax and royalties of US$54.2 billion, employed 561,800 people, paid US$39.1 billion in wages and related expenses, spent US$187.2 billion with suppliers, and contributed US$1.4 billion in community and social investments. “Contributions to host countries are made possible by investments in projects that are long-term, involve significant upfront capital investment, and often face several unforeseen risks,” said ICMM President and CEO Rohitesh Dhawan. “For these reasons, it is vital that governments design fiscal regimes that encourage responsible mining investments for the common good, and this paper provides important perspectives in that regard.” The council identified six design elements for tax systems to encourage sustainable mining investment, influence cashflows and levels of return, and provide a foundation for constructive dialogue between the mining industry and governments. These included royalty payments, corporate income tax, deductions and incentives, international competitiveness, fiscal stability, and administration and transparency. The principles were applied to scenarios across Latin America, Africa, Canada, the US and Australia. The ICMM estimated the required investment to meet demand for minerals and metals for the global energy transition by 2030 at US$360-450 billion. Investment in mineral-rich countries will be critical, it added – supported by stable tax environments helping countries unlock their economic potential and drive wider development.
Netherlands-based asset manager Robeco is looking to offer clients long-term returns from ‘megatrends’ with the launch of a new Global Multi-thematic Strategy. The fund will target three key areas: transforming technologies, changing socio-demographics, and preserving earth. It is categorised as Article 8 under the EU’s Sustainable Finance Disclosure Regulation, and draws on Robeco’s thematic range to capture and amplify the upside potential of powerful themes while mitigating potential downside risk. Using what it describes as a “bottom-up stock-picking” approach, Robeco will aim to amplify overall returns for investors while minimizing the concentration risks and volatility associated with single themes. The firm currently manages €400 billion of AUM (US$429.9 billion) in global active thematic equities, with an expected annual organic growth of more than 10%. “With our strengthened Global Multi-thematic Strategy, we offer our clients the opportunity to invest in the most relevant trends, while the bundling of these thematic strategies in one capability provides diversification and volatility-adjusting benefits,” said Ralf Oberbannscheidt, Head of Thematic Investing at Robeco. “Our choice of these trends reflects our belief in the significant economic value of addressing inefficiencies, inequalities and imbalances in business, society and the environment.”
Robeco’s Global Multi-Thematic strategy offers investors dynamically tailored exposure across its entire thematic equity platform and more ways to capture diversified growth in the global economy. #thematicinvesting #globalequities #LongTermGrowth https://t.co/nM80q9zdnK pic.twitter.com/VdWU0dgqaC
— Robeco Asset Management (@Robeco) June 4, 2024
Technology provider RepRisk has unveiled its Due Diligence Scores, a new service designed to assess firms’ specific risk factors including biodiversity and human rights on a scale from 0 to 100. According to RepRisk, the disaggregated scores will empower decision-makers including investors to pinpoint risk more precisely than existing combined ESG ratings. Users will be able to either select from a range of ready-to-use packages of risk factors or customise their own set from more than 200 individual scores to align with specific risk priorities. The scores can be combined to focus on particular pillars – environmental, social or governance – as well as specific frameworks and regulations, such as the EU Sustainable Finance Disclosure Regulation or the German Supply Chain Act. They can also be used individually to target themes such as human rights and biodiversity to climate and greenwashing. The launch comes on the heels of the EU’s final sign-off on the Corporate Sustainability Due Diligence Directive, which requires corporates and financial institutions to take responsibility for environmental and human rights in their operations and supply chains. The Due Diligence Scores are currently updated on-demand, weekly or monthly, moving to daily updates in September. RepRisk’s ESG risk database covers 260,000+ companies globally.
The Integrity Council for the Voluntary Carbon Market (ICVCM) has launched carbon-crediting methodologies that meet its high-integrity core carbon principles (CCPs). The ICVCM has approved seven methodologies, meaning the label can be used on an estimated 27 million carbon credits issued by projects – including those that tackle greenhouse gases by capturing methane from landfill sites. A further 27 categories of carbon credits, representing over 50% of the market, will remain under active assessment. The CCPs were designed to establish a global benchmark for high-integrity carbon credits, build trust in the voluntary carbon market, ensure comparability of credits, and enable the market to maximise its potential to tackle rising greenhouse gas emissions as well as unlock private finance for climate solutions. They also look to facilitate access to climate finance where it is most needed, including in the Global South. The ICVCM has developed guidance on the supply side of carbon credit generation, while the Voluntary Carbon Markets Integrity Initiative has introduced demand-side rules for entities using carbon credits. The announcement by the ICVCM followed the publication by the US government of principles for high-integrity carbon credits closely aligned with the CCPs at the end of last month. “The CCPs set a high bar for integrity and the label is designed to help buyers identify carbon credits that meet our rigorous standards,” said Annette Nazareth, Chair of the ICVCM. “Governments increasingly recognise that a high-integrity VCM can play a key role in scaling up private sector finance for high-quality projects to reduce emissions and remove carbon from the atmosphere.”
📣 Major Milestone for the #VCM: ICVCM is thrilled to announce that our Governing Board has approved the first high-integrity CCP-labelled carbon credits, while assessments continue.
🔗Read the full press release here: https://t.co/LOXT2ytil3 pic.twitter.com/hX9cDjcwHi
— Integrity Council for the Voluntary Carbon Market (@ic_vcm) June 6, 2024
Asset manager Candriam has launched a new equity fund aiming to address the looming global water crisis. The Candriam Sustainable Equity Water Fund will invest in water infrastructure and across the water value chain, with goals to “reduce pressures on water resources caused by human activities through cleaner and more efficient solutions”. It will invest in companies that treat, transport, distribute and valorise water. The fund will be classified as Article 9 under the EU’s Sustainable Finance Disclosure Regulations (SFDR) – the highest sustainability category under the framework. Freshwater use is one of the six “planetary boundaries” that have been crossed, according to the Stockholm Resilience Centre. Climate change is exacerbating the problem, and by 2050 the world is likely to face a water shortage of 40%. Candriam said as much as US$6.7 trillion of investment in water infrastructure would be needed by 2030, and US$22.6 trillion by 2050. “Water, indispensable for survival, is at the centre of a growing global imperative,” said Johan Van der Biest, Co-head of Thematic Global Equity at Candriam. “The launch of this fund provides sustainably conscious investors with an opportunity to be part of the solution to an intensifying global challenge.” The fund will be co-managed by Bastien Dublanc and David Czupryna – both senior managers at Candriam. It will be distributed in Luxembourg, Austria, Belgium, France, Italy, Germany, Switzerland, Finland, Sweden, Denmark and the Netherlands, and will be launched in the UK “in the coming weeks”, the firm said.
The World Benchmarking Alliance (WBA) has published its first heavy industries benchmark, revealing that companies’ emissions intensity reductions are not currently aligned with the 1.5°C-by-2050 pathway. Sectors including aluminium, cement and steel are critical to the world’s decarbonisation journey, as they deliver the materials necessary for transitioning to a more sustainable future. Although good practice provides hope that robust transition planning is possible, there is not yet enough investment in market-ready technologies, the WBA suggested. “From electric vehicles to new homes, to wind turbines and solar panels, the demand for production from heavy industries will continue to grow in the next decade,” it said in a statement. “Yet, to meet decarbonisation goals, manufacturers and suppliers of these materials cannot maintain business as usual, as they are currently responsible for emissions representing 18% of global CO2.” The WBA assessed and ranked 91 influential companies globally – 12 in aluminium, 34 in cement and 45 in steel production, including the likes of Cemex, ArcelorMittal, Holcim, Chalco and Rio Tinto. Those 91 companies alone were responsible for 7% of global energy-related emissions in 2022. Only 24% of them disclosed expenditure in low-carbon technologies, while 50% scored 0 on ‘just transition’ indicators. As such, the WBA called for them to show leadership and take urgent action to support a low-carbon future – adding that policymakers, investors and other stakeholders should hold them accountable. “Heavy industries provide a massive opportunity to help us reach and cement a rapid, just transition – but if these sectors do not accelerate action, they will be a significant obstacle to global decarbonisation targets,” said Vicky Sins, Decarbonisation and Energy Transformation Lead at the WBA. The alliance also suggested that heavy industry companies should triple their emissions intensity reduction over the next five years to align with the 1.5°C trajectory. If this is not achieved by 2030, the need for more market-ready technologies will be even more critical, it added.
