Welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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An ESG summer
It’s looking like Barbie and Oppenheimer won’t be the only blockbusters this summer. House Republicans are gearing up for an anti-ESG crusade in the House Financial Services Committee in July. Six hearings, beginning Wednesday, will cover responsible investing, the role of proxy voting and advisors, housing and insurance, capital markets and financial institutions, and monetary policy. The hearings come after GOP House members sent a letter last Friday to asset managers over antitrust concerns relating to net-zero targets. The House Financial Services Committee also published a list of 18 legislative proposals last week that aim to limit investor freedom and the authority of regulators, including the SEC.
Global climate disclosure standards advance
Robust international climate financial risk and sustainability disclosure rules are moving forward. The International Sustainability Standards Board (ISSB) rolled out baseline climate disclosure standards that will be used globally. Furthermore, the consultation period for the European Sustainability Reporting Standards (ESRS) concluded last week.
In addition to major investors advocating for strong reporting requirements, a coalition of 52 North American nonprofit organizations submitted a letter calling for reliable, comparable mandatory disclosures, including advocating for an “always-to-be-disclosed” basis for Scopes 1, 2, and 3 greenhouse gas emissions. Additional resources on the ISSB and ESRS disclosure proposals are available here.
Insurance firms enlist fossil fuel lobbyists
Amidst the rise of extreme weather events in the United States, several leading home insurance providers have made the decision to suspend new homeowner policies in states vulnerable to climate-related risks. A recent database sheds light on a concerning trend: Over 150 insurance companies and associations, including major players like State Farm and Allstate, have enlisted lobbyists who also work for the fossil fuel industry.
The findings from the F Minus research reveal that State Farm, which ceased issuing new home insurance policies in California in May, engaged a state-based lobbying firm that also represents gas developer Tenaska. And in the rest of the country, State Farm and other insurers are also contracting lobbyists who advocate for clients including ExxonMobil, Chevron, and Occidental. James Browning of F Minus summed it up best, saying the “allegiance with gas interests clearly pits State Farm against the interests of its customers.” By aligning themselves with fossil fuel lobbyists, there is a risk that insurers may support efforts to weaken disclosure requirements and other measures that may slow climate action, ultimately harming policyholders in the long term.
Shipping emissions levy delayed
Last Friday, the International Maritime Organization (IMO) delayed the highly anticipated decision to impose a global levy on greenhouse gas emissions, instead settling for a lackluster net-zero agreement “by or around 2050” that has been criticized by many campaigners for not being 1.5 C aligned. An agreement was also reached on “indicative checkpoints” for reducing total emissions by at least 20%—striving for 30%—by 2030. Major shipping countries such as Brazil, South Africa, China, Indonesia, and the United Arab Emirates (this year’s host of COP28) reportedly opposed the levy, which was supported by EU member states, the UK, South Korea, Japan, and a number of Pacific islands. The United States said it was “open to a funding mechanism.” While the decarbonization of a sector that accounts for 3% of global emissions is important, the inability of the IMO to agree to a levy is a lost opportunity (on the scale of at least $40 billion) on climate finance, including a possible contribution to the Loss and Damage Fund.
