February 6, 2023

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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Shell, which just booked record profits, is facing additional scrutiny from the SEC after Global Witness filed a complaint that the company misled investors by overstating how much it was investing in renewable energy. The record profits for Big Oil are leading to calls for a windfall tax. Meanwhile there is apparently no money for a Loss and Damage fund to compensate poorer countries hit hard by climate change. And thousands of people across the Niger Delta are being forced to sue Shell to pay to clean up the toxic mess they’ve left.

The Net-Zero Asset Owner Alliance set its sights on private equity by requiring them to begin reporting their emission targets. This should finally inject some transparency into the world of PE-backed energy investments – last September, all eight major PE firms were found quite lacking in that department.  

Meanwhile, a KKR-backed pipeline project is in big trouble. The private equity giants have seen the cost of Canada’s Coastal GasLink project rise from $6.6B to $14.5B and continue to face escalating resistance from the Hereditary Chiefs of the Wet’suwet’en and their supporters – who maintain the pipeline crosses unceded sovereign territory.

French Economy Minister Bruno Le Maire and his German counterpart Robert Habeck are in DC today, trying to diffuse a trade spat between the US and the EU, as the two economic superpowers compete in promoting green energy and manufacturing. The European Council (EC) is planning to ease restrictions on tax credits and allow more green investments. This change in approach by the European Union is seen as necessary to compete with the US, as new incentives and subsidies for the energy transition provided by the Inflation Reduction Act come into effect. Reach out if you want to chat with experts. 

Both Politico and Axios ran interviews with Vivek Ramaswamy last week, where the “woke capitalism” crusader and purveyor of fossil fuel-focused funds lamented a focus on “non-pecuniary objectives” – or objectives not related to money – at the big asset managers. Perhaps Ramaswamy missed the bankruptcy of PG&E, Peabody Energy and, more recently, the fallout at Adani stemming from poor governance issues. He may not believe the BlackRock CEO when he says the next 1,000 unicorns will be in clean tech, or the world’s largest investment fund saying it will fire directors for not taking climate change seriously, or Swiss Re’s estimate that climate change will shave $23 trillion off the global economy by 2050. Call us crazy, but that seems like a lot of suspended disbelief. And an awful lot of money. 

Sen. Joe Manchin confirmed he will side with Senate Republicans in their efforts to reject a Department of Labor rule that clarifies retirement plan sponsors' ability to factor ESG considerations into investment decisions. The freedom to offer sustainable investment choices in retirement funds was restricted during the waning days of the Trump administration. Illinois Rep. Sean Casten captured the latest Republican conundrum, “One of the oldest rules of Washington is that losers always cry louder than winners cheer. When capitalism is working well but you’re not winning, you tend to call it woke capitalism. It’s still capitalism.”

Speaking of Sean Casten, he’s down to speak at Capitol Hill Press Breakfast Briefing on Thursday, Feb. 9th at 8:30 AM ET with union representatives and climate financial risk experts on the hidden risk climate change poses to Americans’ retirement and savings. RSVP here by 12:00 PM ET, Wednesday, February 8th to attend in-person or request a link to attend virtually.

• Banco De España: The good, the bad, and the hot house world: conceptual underpinnings of the NGFS scenarios and suggestions for improvement (worth reading as the Fed is now looking at scenario analysis and trying to learn from their European counterparts)
• Norges Bank: Climate Action Plan 
• SEC: ESG: Everything Everywhere All at Once (sadly not Michelle Yeoh explaining ESG in the donut universe)
• Climate and Community Project, Memo Series: Green Bonds

• Today: Conference Board hosts 2023 Proxy Season Preview
• Today: CERES Climate and 401(k) Plans: The DOL’s New Rule Levels the Field for ESG with Secretary of Labor Walsh. Register here
• Feb. 7: The SEC’s Small Business Capital Formation Advisory Committee will meet.
• Feb. 8: House Financial Services Committee hearing: Revamping and Revitalizing Banking in the 21st Century.
• Feb. 9: Hill Press Breakfast Briefing with Rep. Sean Casten and issue experts discussing the hidden risk to your retirement – climate change. To register, fill out this form
• March 22-24: Ceres hosts industry leaders from high-emitting sectors to examine greater corporate ambition and accountability. Register here.

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– Tan Copsey, Katharine Poole, Steve Hargreaves, Jayson O'Neill & Shravya Jain-Conti