EU Adopts Supply Chain Rule

Last-minute deals and a series of failed votes threatened to block the EU’s Corporate Sustainability Due Diligence Directive (CSDDD - also known as the CS3D), but a weakened version squeaked through the EU Council last month. There was no such drama when the EU Parliament made it official this week - passing the directive 374 to 235. 

Although weakened, it is one of the most far-reaching sustainability laws in the world. When implemented, thousands of EU and non-EU companies must identify, assess, and mitigate environmental and human rights violations  - ranging from child labor and slavery to pollution, deforestation, and damage to ecosystems – in their upstream supply chain and some downstream activities such as distribution and recycling.

While labor issues have dominated the coverage of this law, it also requires companies to adopt climate transition plans aligned to 1.5°C (the goal adopted in the Paris Climate Accord). It also has teeth!  Each EU country will create supervisory authorities to investigate and impose penalties on non-complying firms.

The CS3D’s complex journey is not quite over. The EU still has a bureaucratic grip over it for two more rounds of voting ending on May 23rd. However, member states are expected to rubber-stamp the directive without discussion (this time for real), and member states will have two years to transpose it into national law. 

Sustainability advocates see this as a huge win. Richard Gardiner of the World Benchmarking Alliance said, “Today ends a process that included nine parliamentary committees, over 3,000 amendments and closes five years of debate and negotiations between MEPs.”

MEP Lara Wolters said, “Today’s vote is a milestone for responsible business conduct and a considerable step towards ending the exploitation of people and the planet… This law is a hard-fought compromise and the result of many years of tough negotiations.”

But it’s not all rainbows and unicorns in the EU. In recent years, they have issued a torrent of new environmental regulations, and many expect the pushback - especially among rural voters - to swing the June elections to the right. After a winter of farmer protests, some anticipate that the upcoming elections could even “kill’ the EU Green Deal. Belgian Green MEP Philippe Lamberts says, “The likelihood of [the far right and right] killing the green deal is very high” and that Greens have “to play their best game ever” to avoid the “absolute bullshit” of allowing right-wing politicians to win the information war against green policies.

New US Carbon Trade Task Force

As one of his first acts as US Senior Advisor for Clean Energy after replacing John Kerry, John Podesta announced a new task force aimed at reducing emissions around manufacturing and global trade. The move comes as the US attempts to deploy a domestic clean energy manufacturing sector to challenge China's massive presence in the sector. 

The task force will take on “carbon leakage” - which refers to the emissions associated with products imported to the United States. For example, when the US imports goods from countries with poor environmental standards, the emissions from manufacturing can be much greater than if the product was made in the US. In other words, US imports are making the problem worse, no matter how much domestic carbon is reduced.  

Podesta said, "The United States alone imported over one gigaton of emissions from traded products—just in the year 2019. That’s the same amount of emissions we expect to reduce in 2030 thanks to the Inflation Reduction Act and Bipartisan Infrastructure Law."  He also gave an example in his speech at Columbia University: China’s aluminum manufacturing process creates 60% more emissions than the US process. 

Strict EPA Rule May Force Coal Plants To Close

Coal-fired power plants would be forced to use carbon capture technologies or close completely under a new rule issued by the US Environmental Protection Agency (EPA) this week. Under the rules, coal plants that plan to be open beyond 2039 would have to capture 90% of their emissions, while plants that plan to close before then will have to capture less. The EPA claims the rule will save 1.4 gigatonnes of carbon from the atmosphere. EPA Administrator Michael S. Regan said this is “a defining moment” for the EPA and their work to “build a cleaner and healthier future for all of us.”

Goodbye Doomer

Fear sells, which means we are bombarded with negative news about the multiple sustainability crises we face. While the threat is real, there is a lot more good happening than is portrayed in the media. Plus, climate doomerism does not catalyze support, so maybe it is time for a new approach.  

Earth Day this week is a great occasion to take stock of how far we have come and share some optimistic stories. Here are a few from this last week:

• Eleven of the world’s wealthiest nations just announced $11 billion to fund the World Bank to tackle the climate crisis. The World Bank is gearing up to use these funds to help the global south transition to a low-carbon economy.

• Spurred by the growth of low-cost EVs in China, the International Energy Agency has released a bullish forecast for EV sales in 2024. Battery and hybrid models could make up one-fifth of global sales.

• President Biden marked Earth Day by announcing $7 billion in investments in solar power through an EPA ‘solar for all’ fund. The fund aims to create 200,000 jobs in disadvantaged communities.

Global Plastics Treaty

The theme of this year’s Earth Day was planet vs. plastics. The Earth Day charity is calling for a 60% reduction in the production of all plastics by 2040 and pushing for a robust global UN Treaty on Plastic Pollution.

More than 170 countries are meeting in Ottawa, Canada, to craft a plastic pollution treaty. A “high-ambition coalition” of countries wants to limit the production of plastic and restrict the use of some chemicals in it. Oil and gas companies are lobbying against the treaty by offering recycling and reuse as alternatives.

Delegates hope for a final agreement on the plastics treaty in December. You can sign the Earth Day petition supporting the UN Treaty on Global Plastics here.

The Rise and Fall of ESG

To say ESG has had a tumultuous few years would be putting it mildly. This excellent Forbes piece catalogs its rise and fall. The golden era was just a couple of years ago when ESG funds were bulging with cash, and ESG was a central theme of global events. Today, the abbreviation is spoken in hushed tones, if at all, and many states have anti-ESG laws.

The article concludes by saying that despite ESG having all the hallmarks of a ‘fad’ that will now just fizzle out, ESG is not a fad. The ideas motivating ESG are not going away, the climate and sustainability crises are very real, and businesses are still expected to act on environmental and social issues.  

There is also evidence the ESG backlash may have come full circle. Some states are considering rolling back their anti-ESG policies. New research from Oklahoma has revealed that their anti-ESG law has cost $185 million in avoidable expenses, and a new proposed bill would limit the reach of Oklahoma’s anti-ESG policy. 

The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer. 

Other Notable News:

• The International Sustainability Standards Board (ISSB) announced new plans for research projects looking at the feasibility of developing two new standards for biodiversity and human capital.

• The Hong Kong Stock Exchange announced it will require listed companies to report climate-related information in alignment with the ISSB’s S2 climate standard. Starting January 1st, 2025, companies must report Scope 1 and 2 emissions, and the largest must report Scope 3 emissions or explain why they did not. 

• A new study has revealed that companies considering climate risks are rewarded by the market. The study, which analyzed thousands of sales calls over six years, found that companies with a solid transition plan were favored in the market. 

• This new paper asks if Scope 3 is worth all the stress. The paper argues that the idea of Scope 3 should be modernized, data should only be sought when it can be reduced, and companies should focus less on collecting data and more on reducing emissions.

• The EU’s Corporate Sustainability Reporting Directive will impact around 50,000 companies globally. Many of those companies will have to make their first report next year. To help companies in the Telecom sector prepare, BCG and The Centre for Sustainability Policy & Regulation have produced this excellent white paper.

• Carbon dioxide levels have reached another grim milestone. There are now 50% more carbon dioxide molecules in the atmosphere than before the Industrial Revolution.

• Climate risks will create a series of health hazards for 70% of global workers. A new study from the International Labor Organization has revealed that billions of workers will be exposed to health issues from excessive heat in the coming years.

• The International Accounting Standards Board will soon release guidance on climate information for financial accounting.

Notable Podcasts: 

• This week’s episode of The Climate Question from the BBC is all about new ideas for saving global coral in light of the fourth global bleaching event announced last week. Host Graihag Jackson travels to Puerto Rico to see how scientists are using novel approaches to try to save corals from more mass bleachings.

• In the most recent episode of the Harvard Business Review’s The Climate Rising podcast, as part of their adaptation series, they look at how consultants and advisory companies can help their clients be more climate resilient. Peter J. Hall, managing director at Resonance Impact Advisory, gives insights on how consulting and advisory companies can help their clients assess their risks and take action to become more resilient to climate change. 

• This week’s No Small Endeavor podcast with Lee C. Camp was an Earth Day special. It looked at how climate change has become the most polarizing topic in the US. He talks to cognitive scientist John Cook (he/him) on the history of climate misinformation and climate researcher Katharine Hayhoe on what the science is actually saying to get a grip on why the subject is so divisive.

Notable Job Opportunities:

• Check out this post from Katie Kross, which catalogs around a dozen different climate and sustainability job boards.

• Sustainability Impact Manager, Nvidia, US, CA, Santa Clara

• Analyst Climate Policy (1-year Fixed Term Contract), UN PRI, London, Hybrid Role

• Environmental, Social and Governance (ESG) Analyst, UKG, United States, Remote

• Environmental and Social Impact Analyst, BlocPower, NY, Remote

• VP - NA Sustainability Project Manager, Rabobank, Hybrid, St.Louis, MO

• Environmental Sustainability Intern, Hybrid, Sol de Janeiro · New York, NY 

• Climate Officer, MIT Solve, Hybrid, Cambridge, MA

• Sustainability Consultant - ESG / Carbon Services and Climate Risk, WAP Sustainability, remote

• Climate Solutions Specialist, Valere, United States, Remote