Welcome 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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SEC rule sparks frackers’ fury, green groups’ angst
Before the dust has even settled, there are lawsuits to the right, lawsuits to the left, and a temporary injunction staying the SEC’s new climate disclosure rule. The emergency stay was granted (without a detailed explanation) by the conservative, industry-friendly 5th Circuit — despite the SEC’s objection late last week. The decision came after two oil and gas fracking companies claimed the new transparency requirements arbitrarily and capriciously violated their First Amendment rights, and reporting would be too costly. Then, in the least surprising move, the fossil fuel-boosting Chamber of Commerce joined self-serving Republican Attorney Generals in filing suit.
Complying would have cost less than a big holiday party even before the SEC watered down the final rule, and the agency has both the legal authority and a long history of requiring non-financial metric reporting from publicly traded companies. But that’s only part of the story. After omitting key provisions, including emissions reporting requirements that would have identified up to 90% of the oil and gas company’s climate pollution via so-called “Scope 3” emissions, two other lawsuits were filed by groups concerned the rule didn’t go far enough to protect investors, Americans’ retirement savings, and the broader economy from growing climate financial risks. A “venue lottery” will determine whether the final decision is made in the industry-friendly 5th Circuit, or one of the more consumer-focused judicial circuits where the green groups filed their lawsuits. With Big Oil and aligned polluting interests putting climate on trial, the lottery results could be a big factor in determining the fate of this rule.
Bloomberg’s big bet on cities
Bloomberg Philanthropies announced a $200 million commitment to support emissions reduction initiatives in 25 U.S. cities. This investment aims to help these cities capitalize on federal funding opportunities from the Inflation Reduction Act and the Bipartisan Infrastructure Law to expand their building and transportation sectors in a more environmentally sustainable manner. Dubbed Bloomberg American Sustainable Cities, the initiative provides cities not just with funds but also with valuable expertise to ensure they can effectively tap into available federal resources for cutting emissions.
The philanthropic endeavor will benefit cities including Akron, Birmingham, Charlotte, Cleveland, Montgomery, Nashville, Newport News, Hampton, and St. Louis. These cities will have the opportunity to launch or expand projects focused on building affordable, energy-efficient housing, and enhancing the availability of electric vehicles and charging infrastructure, particularly in underprivileged communities.
Charging more for Chunky Monkey
Grocery runs are getting more expensive as climate change-induced extreme weather, heat, and pests disrupt supply chains and the availability of input resources like water and fertilizer. While food prices rose by 5.8% last year, particular goods are uniquely volatile. Cocoa prices doubled since the start of the year, hitting a record-high of $8,488 per metric ton on the Intercontinental Exchange in New York yesterday. Disease outbreaks and extreme weather events in West Africa — responsible for roughly two thirds of cocoa production — devastated global supply, putting the world on track for a third straight supply deficit.
Industry experts at the World Banana Forum last week warned that climate impacts pose an "enormous threat" to the world’s most exported fruit. Temperatures are increasing beyond optimal levels for banana growth and diseases like the TR4 fungus have a better chance of dispersing during floods, storms, and hurricanes. Regardless of the crop, nutrition and global health expert Uriyoán Colón-Ramos recommends mobilizing food to incite climate action, as we use it to “celebrate, grieve, share, and preserve our cultures and traditions.”
Maritime emissions makeover
The International Maritime Organization (IMO) is in London for its second week of negotiations shaping the shipping sector’s pathway to zero emissions by 2050. Shipping transports 90% of the world’s trade and accounts for 3% of global greenhouse gas emissions. While support for a global price on shipping emissions has more than doubled in the past year, the United States has been notably silent this week following its commitment in November to support developing nations through the Green Shipping Challenge. Currently, 47 countries support a pollution fee, or levy, that aims to hold polluters accountable while supporting nations’ transition to clean shipping.
The most ambitious proposal is sponsored by the Marshall Islands, Vanuatu, and Belize, shipping-reliant countries facing existential threats from rising sea levels, which want to price carbon at $150 per tonne of CO2. If approved, this plan could raise more than $100 billion annually in much-needed transition finance. Meanwhile, wealthier shipping-reliant economies like Norway, Brazil, China, and the United Arab Emirates strongly oppose this pricing mechanism.