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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ESG on the ballot
The midterm elections are a day away, and if the polls are right and Republicans take the House, things are bound to get even more heated around ESG. At the state level, races for state treasurer are being politicized over ESG in nearly a half dozen states, while nationally the rhetoric is being dialed up – as last week a handful of top senators warned 51 law firms that their clients who practice sustainable investing could be held in violation of antitrust laws. In the House itself, Republicans promise hearings and are threatening to call in the likes of SEC Chair Gary Gensler and BlackRock CEO Larry Fink. Corporate America is lawyering up.
Developers say money grows on trees
If a tree doesn’t fall in a forest, and someone is around to monetize it, does it make a credible carbon offset? T. Rowe Price seems to think so, recently shelling out roughly $1.8 billion through a subsidiary for 1.7 million acres of timberland in 17 states for one of the biggest bets on the booming forest-carbon offset market. They plan to curb logging and promote forest health and carbon sequestration. But critics view offsets that promise harvest reductions as merely theoretical – and worry that highly polluting companies are getting social cover through purchasing offsets while avoiding actually reducing emissions. And that’s presuming the forests don’t burn down.
Carbon credits center stage at COP27
Offsets will be part of the US offer at COP, as the Biden Administration looks to entice private finance to fill the gap left by insufficient government support. John Kerry floated the idea of creating new carbon offsets associated with efforts in developing countries to move from coal to clean energy, and now the US is officially working on a plan to sell carbon credits to companies that they aim to unveil at the summit this week.
The US government has only provided $20 million to date for its flagship Just Energy Transition Partnership with South Africa, though the total package promised was $8.5 billion. A new partnership with Vietnam is expected this Thursday, with subsequent deals with Indonesia and India in the works.
But while the credits would apparently be certified by an independent accreditation body, it seems that addressing the fundamental drivers of poor offsets quality is on the back burner for now.
Green bank draws scrutiny
The EPA is conducting public input sessions around the design of its green bank or Greenhouse Gas Reduction Fund. $27 billion was earmarked as part of the Inflation Reduction Act, with an emphasis on providing climate solutions in disadvantaged communities. But some are questioning the merits of relying on a market-based, profit-driven system designed to lure more private capital into the space.
“Direct federal funding of distributed renewables, such as community solar, is a good thing,” Mitch Jones, managing director of the climate action group Food and Water Watch, told Truthout. “Laundering that funding through financial institutions that can decide where to send it is not.”
Reports and releases
The Sierra Club released a report analyzing the net-zero pledges of six big US banks, revealing that their commitments and actions fall far short of what's needed to meet global climate goals. With the Net Zero Banking Alliance (NZBA) expected to release an update at COP27 on its members’ progress toward their net-zero commitments, this new report should serve as a useful, critical analysis of US banks’ own net-zero commitments, interim targets, and exclusion policies, all summarized in one place.
Ceres released a new report looking at how companies are, and are not, aligning their lobbying efforts with their public climate commitments.
