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ESG Weekly News Update: April 21, 2023

General ESG News

Sustainable Brands: Corporate Leaders: Solve Hiring Needs by Embracing Second-Chance Employment

  • Last year, the Biden Administration marked April as Second-Chance Month, but second-chance hiring remains a blind spot for companies searching to fill open roles, close skill gaps, and expand their DEI efforts.

  • In recent years, a few companies have been leading the way in challenging common perceptions of who should be considered an “ideal candidate,” and some are taking a more holistic view of justice-involved citizens and the barriers they may face to employment and economic mobility.

  • Businesses can widen their impact by partnering with local hiring organizations and those that provide services to individuals who are willing and able to work but who face obstacles to their employment.

  • Programs for hiring justice-involved candidates can be tailored to each company and community and can help businesses fill the existing skills gap that spans most industries.

GreenBiz: Black talent is necessary for fashion’s sustainable future

  • Fashion is one of the fastest growing areas in the green economy in the U.S., but racial diversity continues to be a challenge for sustainability talent and Black talent is still underrepresented.

  • Today’s consumers are increasingly diverse and demand more from brands than ever before, specifically around racial equity and sustainability. In 2021, Black spending power reached a record and has seen significant growth in the luxury market.

  • Despite these advancements, more than 80% of individuals working in sustainability are white. DEI cannot be limited to a company’s HR department or philanthropic efforts. These efforts must be integrated into programs that address the environmental footprint of the fashion industry, with education being the first step in building an equitable and inclusive fashion talent pipeline.

  • Climate change affects Black and Indigenous communities most severely, so it makes sense that diverse fashion talent should be included in the development of climate change solutions.

GreenBiz: Bloom 23 and the growing business of biodiversity

  • Business and biodiversity are intersecting more frequently as interest and activity are growing in how companies contribute to and address species loss, habitat degradation, and destruction.

  • GreenBiz announced its newest annual event called Bloom, which will focus on business and biodiversity. The inaugural event takes place Oct. 24-25 in San Jose, California (alongside, but separate from, our VERGE 23 conference).

Investment Trends

Sustainable Brands: Pension Funds Committed to Net Zero Are Still Not Seeing the Forest for the Trees

  • According to research by Global Canopy and Make Money Matter, the majority of pension funds and providers within the Glasgow Financial Alliance for Net Zero (GFANZ) and the Race to Zero campaign backed by the UN have not issued comprehensive policies or commitments to tackle deforestation.

  • Deforestation driven by the four highest forest-risk commodities currently accounts for 11% of the world’s greenhouse gas emissions. Both Race to Zero and GFANZ have acknowledged that eliminating deforestation is fundamental to credible net-zero transition plans. Finance is key to driving change, and pension funds have the power to take the lead.

Reuters: When It Comes To Climate Risk, Investors Prize Disclosure, Report Suggests

  • Researchers at Lazard’s climate center stated that many firms have found that investors will penalize their stock less for higher greenhouse gas emissions if they voluntarily disclose that data. Lazard bankers and professors also found that “Russell 3000 companies seem to be better off being upfront about their emissions.”

  • In general, the report found that 10% higher Scope 1 GHG emissions could be expected to shave just over 1% over its price-to-earnings ratio, but if the company discloses these emissions, the ratio of the discount in price is offset about 40-50% (making the price-to-earnings ratio about 0.6%).

  • The report also expressed how investors may not interpret pledges to reduce carbon emissions “as bearing material weight, but rather as bolstering public relations.”

Companies and Industries

Bloomberg: Pentagon Sounds Alarm Over Biden Plan For Offshore Wind Sites

  • The Biden Administration plans to advance offshore wind projects along the central Atlantic U.S. Coast. The Pentagon has warned that almost all the areas identified for development conflict with military operations.

  • The Defense Department has said the focus going forward will be on finding ways to accommodate wind development while not disrupting the military too heavily. Some military exercises could be relocated to minimize interference from the turbines.

  • Offshore wind advocates continue to express how imperative a shift to renewable power sources could be to help shrink the United States’ reliance on commodities for energy, thereby strengthening national security.

ESG Today: H2 Green Steel Announces €250 Million Supply Agreement for Low Carbon Steel

  • H2 Green Steel announced Monday that it has secured a supply agreement for the delivery of low-carbon footprint steel with BILSTEIN GROUP.

  • Steelmaking is one of the biggest CO2 emitters globally. Total greenhouse gas emissions from the sector account for 7 to 9% of direct emissions from the global use of fossil fuels.

  • H2 Green Steel is the world's first large-scale fossil-free steel plant, utilizing a green hydrogen plant as an integrated part of the steel production facility. H2 Green Steel aims to produce 5 million tons of fossil-free steel by 2030.

  • These companies plan to work together to develop steel grades, share best practices, and increase confidence in the future of sustainable steel production.

Reuters: Vanguard’s Galloway: climate group exit does not change environmental concerns

  • According to Vanguard's top stewardship executive, the firm’s departure from the Net Zero Asset Managers (NZAM) initiative will not change its approach to environmental issues. For example, Vanguard has issued a stewardship report calling on companies to disclose their own direct and indirect emissions from purchased energy.

  • John Galloway, who oversees the firm’s proxy voting at portfolio companies, explained that NZAM was a poor fit for Vanguard’s funds built around indexes that don’t have a built-in net-zero objective. The firm did not want to cause confusion regarding its climate action.

ESG Ratings, Standards, and Regulation

Forbes: How European Union ESG Rules Will Affect American Companies

  • The European Union is driving ESG regulations forward as it is developing sustainability reporting standards for EU companies. The first wave of ESG reporting standards applies to publicly traded companies, but the EU will later expand the requirements to small and medium-sized enterprises (SMEs). Companies have expressed concern about unclear standards.

  • The United States closely follows the EU and may expect standards imposed by the Securities and Exchange Commission (SEC). U.S. companies may also have to meet EU requirements. A recent study by Refinitiv noted that the current Corporate Sustainability Reporting Directive (CSRD) will impact approximately 10,000 U.S. companies.

ESG Today: G7 Ministers Urge Implementation of Mandatory Climate Disclosure

  • The G7 Ministers’ Meeting on Climate took place this past weekend in Sapporo, Japan. The meeting brought together energy and climate officials from Canada, the EU, France, Germany, Italy, Japan, the UK, and the US to discuss climate, energy, and environmental issues. The G7 climate and environment ministers are urging the implementation of mandatory climate-related financial disclosures as a necessary step to accelerate sustainable finance and help achieve global climate goals.

  • The communique from the meeting included new commitments to significantly increase the deployment of renewable energy capacity this decade and eliminate plastic pollution by 2040.

ESG Today: Hong Kong Exchange Should Require Climate Reporting From All Issuers Beginning 2024

  • According to a new proposal released by the exchange, all issuers listed on the Stock Exchange of Hong Kong will be required to provide climate-related disclosures aligned with the ISSB Climate Standard, beginning January 1, 2024.

  • The exchange's proposals include interim provisions and allow issuers to provide quantitative disclosures for the first two years for some of the required disclosures, such as “Scope 3 emissions, the financial effects of climate-related risks and opportunities, and certain cross industry metrics.”

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