Hi and 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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COP27 — Nile Delta
COP27 begins next week and the stakes sure feel higher each progressive year. Negotiations this year will feature a showdown over money and responsibility between developed and developing nations – as issues of climate finance and loss and damage escalate. Do check out our new backgrounders: one on expected storylines and another with a deep dive on climate finance. And here’s a good blog post indicating investor expectations for the negotiations, which include a focus on just transition and implementation.
A deal, dubbed the Just Energy Transition Partnership, might be announced with Vietnam by the US, UK, and other G7 countries – with reports of a $5 billion initial cash offer on the table and the private sector expected to join in after public finance commitments. The announcement would be a step forward for Vietnam, as the nation is currently a major coal user. Yet, concerns over the country’s civil society experts' freedom and capacity to aid in the implementation of the partnership are in question, with Vietnam recently imprisoning top climate activists – such as Goldman Environmental Prize recipient Nguy Thi Khanh. Happy to connect you to voices who can speak more on this.
If you’d like to receive daily updates from our team on the ground, do reach out to Shravya (sjain@climatenexus.org). We’ll share updates, upcoming reports, press briefings, and dumb jokes.
Which way for ESG
You’d be forgiven for thinking the news on the ESG front is anything but bad. Last week, CNN reported an outflow of nearly 20% from ESG funds, the biggest drop since the pandemic-induced crash of 2020. And BlackRock was recently downgraded from buy to neutral, largely due to the unwanted attention the firm is getting over its ESG considerations.
But how much of this is investors cooling on the investing strategy versus fluff leaving the market in response to enforcement of new standards on greenwashing is still to be decided, as seen in the UK last week. Investments in so-called impact funds – which seek to actually do good with people’s money, not merely protect it from a changing world – recently hit the $1 trillion mark, a 40% spike in the last two years.
Still bullish?
For the first time ever, the International Energy Agency said the timeline for peak fossil fuels is now in view – sometime in the next decade or so. Peaking fossil fuels means massive demand for investment in renewable energy, which the agency pegged at over $1 trillion a year in the power sector alone, a three-fold jump from today.
This is obviously good news for the planet, its people, and clean energy investors. But maybe less so for Vivek Ramaswamy, who is trying to make a name for himself peddling anti-ESG investment products. Ramaswamy, also known for thinly-veiled defenses of the Jan. 6 uprising and Kyle Rittenhouse, recently made the case that there is still massive upside to oil and gas stocks, even more than tech – which could be why he delayed the launch of his new tech fund.
And in other Treasury news, a proposal from the Federal Insurance office will attempt to pinpoint climate change financial risk by zip code, asking property insurers — who write more than $100 million in annual premiums — to submit claim data from the past five years with the goal of assessing if climate change is causing loss of access and affordability of coverage.
Stat of the week – Does not compute
Renewables gave Texans over $7 billion energy savings so far this year, while the state's dumb ESG bans cost them over $500 million.
Quote of the week
“They probably emitted more carbon flying to the ribbon cutting than it will ever take out of the air." – Lowercarbon Capital co-founder Chris Sacca on the investor frenzy over direct air carbon capture, via Axios.
Reports and releases
The Glasgow Financial Alliance for Net Zero, or GFANZ, released its 2022 Progress Report which shows the alliance growing in size and assets pledged to net zero, though the group has reportedly eased its membership requirements.
Ceres and Influence Map have a report coming out Tuesday looking at how corporate lobbying squares with climate commitments. Reach out to Reggie Zimmerman for an embargoed copy (rzimmerman@ceres.org).
Hopefully soon: A final rule on climate-related financial disclosures has been delayed, as the SEC reviews over 14,000 public comments on the proposed rule, major revisions to a 490-page draft are not expected and companies should start preparing now.
