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 circus coming to House Financial Services
July is shaping up to be a big month for ESG-related hearings in the House Financial Services Committee. House Republicans released an interim report last week targeting ESG metrics, climate risks, big asset managers, shareholder proposals, proxy voting, and authority of regulators including the SEC—basically everything. A slew of hearings are slated to begin the second week of July, with the introduction of proposed anti-ESG legislation anticipated by the end of the month. We’ll be watching to see if these hearings go any better than the previous round in the Oversight and Accountability Committee, which were a “colossal waste of time” and the “stupidest hearing ever.” The word is Financial Services Committee members are savvier in this area, so stay tuned.
State anti-ESG bills falter, draw ire of conservatives
A new report finds that legislative efforts to restrict the use of ESG investment criteria failed to gain widespread support, even in Republican-led states. The bulk of 165 anti-ESG bills introduced in 37 states did not pass, with no bills passing in 17 states, according to Pleiades Strategy. This movement has faced opposition from the public, labor representatives, and even conservative business leaders. Jay Kaprosy of the Arizona Bankers Association expressed his concern to lawmakers about “probably the most anti-free market bill that you'll see this legislative session," in response to an anti-ESG bill that failed to move past the GOP-controlled Arizona state House.
Last week’s Summit for a New Global Financing Pact either provided much-needed momentum to efforts to reform the global financial system for a warmer world or was a bit of a washout, with limited agreement and frustrated delegates, depending on who you asked. Treasury Secretary Janet Yellen and Special Envoy John Kerry supported ramping up IMF climate finance, a historic debt relief agreement for Zambia, and climate-resilient debt clauses, which the new World Bank President Ajay Banga proudly announced in his international debut.
A new “Just Energy Transition Partnership” to help Senegal expand clean energy was also announced, with $2.7 billion of funding coming from wealthy EU countries and Canada. Notably, while the US backed a similar deal in South Africa, they’re not participating. The money is intended to boost Senegal’s renewable capacity from 30% to 40%. Ensuring the money doesn’t fund additional gas projects was a point of contention. During the same summit, French President Emmanuel Macron said he would “allow” Senegal to develop gas for export, a move Powershift Africa Director Mohamed Adow described as “outrageous.”
Ships ahoy!
Attention will now turn to the International Maritime Organization. Shipping, a sector that sits outside the Paris Agreement and contributes 3% of global emissions through handling 90% of world trade, has long been a target of climate campaigners. At the Paris Summit, proposals for a global levy on carbon dioxide emissions within the sector gained traction. One proposal led by the Marshall Islands imposes a $100 per-tonne CO2 fee on all international shipping voyages, directing a potential $100 billion annually to fund climate resilience and decarbonization within the sector. Danish industry leader Maersk estimates consumers would see this tax reflected in pennies added to shipped goods.