COP28 is already mired in controversy due to allegations that the UAE, the host and a leading oil producer, is using the event to negotiate oil and gas deals.
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Climate summit or oil bazaar?
COP28 starts Thursday in Dubai and is already mired in controversy due to allegations that the United Arab Emirates, the host and a leading oil producer, is using the event to negotiate oil and gas deals. Leaked documents indicate the UAE’s strategy included discussing fossil fuel projects with several nations, raising concerns about the summit's integrity and dedication to climate goals.
Ahead of the talks, OPEC Secretary General Haitham Al Ghais criticized what he called unfair vilification of the oil and gas industry’s role in the climate crisis, then dismissed a recent International Energy Agency report urging the industry to embrace a clean energy transition. The start of COP28 also coincides with a crucial OPEC+ meeting where decisions on oil output levels are anticipated, further entangling the fate of the summit with global energy markets.
Tax trouble for renewable energy
Renewable energy companies fear a new rule meant to strengthen the banking system could further dampen their already struggling industry. Under Basel III guidelines, banks financing renewable energy projects via complicated “tax-equity” deals would have to quadruple the amount of capital they hold in reserve. The proposals “would throw cold water on tens of billions of dollars of solar and storage investments over the next decade,” a solar trade rep told Semafor.
Fortunately, it seems regulators are aware of the potential snafu and are open to fixing the issue. Also, the IRA changed the way the tax credits are awarded, allowing others besides banks to get in on renewable financing. One source told us that the alarm “reads to me like the banks trying to protect their incumbency in a post-IRA world.”
How taxpayers bear climate-disaster costs after insurers exit markets
The insurance sector is in the grips of a climate change doom loop that is only getting worse. It works like this: As climate risk grows and climate-induced disasters worsen, insurance premiums escalate and insurers flee high-risk, unprofitable markets. Faced with limited coverage options, consumers become more vulnerable to the next disaster — thus driving future price increases.
With people still migrating toward climate-threatened, disaster-prone areas, policymakers have turned to stopgap fixes, typically relying on taxpayer funds to fill the coverage gap. If left unabated, the cycle could lead to an insurance market failure tipping point, where taxpayer-funded insurers of last resort truly become the last resort, and the panic could spill into other areas of the financial sector, according to a Bank for International Settlements report.
ESG backlash on many fronts. Is the fight lost?
From greenwashing to greenhushing, it seems ESG can’t catch a break. A new report from ShareAction finds that Europe’s largest 20 banks fall short of the actions and transparency needed to back up their net-zero commitments. Separately, a survey by Ernst & Young found one in five companies aren’t even releasing their 2023 sustainability goals — three times the number from 2022 — as more firms fear political backlash from both sides. Further diluting the very concept of ESG, over a thousand ESG funds in Europe include weapons and defense stocks.
While sustainable investing struggles, mega-asset managers like BlackRock and Vanguard continue to uplift the fossil fuel industry through bonds, an often overlooked asset class that makes up more than half of global fossil fuel financing. One bright note to end this dreary rundown: An Oklahoma pensioner is suing state Treasurer Tod Russ and the state for anti-ESG boycott policies, potentially saving public employees about $10 million.
SEC backing down on climate disclosure?
Will the SEC’s final climate disclosure rule miss over 70% of a company's greenhouse gas pollution, falling short of comparable rules by California, the European Union, and every other financial regulator in the world? The answer may be yes, according to sources who talked to Reuters about the SEC’s internal deliberations over the long-delayed rule.
Since the rule was introduced in March 2022, the point of contention has been whether companies must disclose emissions from their supply chains and end users (aka Scope 3). Scope 3 disclosure remains a major sticking point that business groups have pledged to challenge in the courts — a risk SEC Chair Gensler may not be willing to take.
November 29: As You Sow Webinar: Capturing the Diversity Benefit – Workforce Diversity Linked to Financial Performance. Register here.
November 30: Deadline to submit inputs to the UN Human Rights Special Rapporteur on climate change, who is requesting information on corporate accountability in the context of human rights and climate change.
December 4: Last day to sign onto a BankTrack and Reclaim Finance letter to banks financing the expansion of the world’s metallurgical coal capacity. Read the letter and sign on here.
December 12: NYU Stern Value Creation Through Responsible Investing - a Private Equity Sustainability Practicum. Register here.
December 18: Ceres Charting Progress: Regulator Actions on Climate Financial Risks Webinar. Register here.
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