By Ira Srivastava
1. US Securities and Exchange Commission releases climate disclosure rules. After several delays, the SEC has published its final greenhouse gas emission disclosure rules. The new rules require some companies to disclose specific types of emissions in a watered-down version of what the commission initially shared two years ago. The original version would have “required all public companies to disclose their direct emissions” and some companies to disclose on scope 2 and 3 emissions. The long-awaited ruling now only requires medium and large companies to disclose the emissions that come from the electricity generation required for the companies to operate. Organizations will also have to share climate pledges and net-zero transition plans, and “any oversight by the board of directors of climate-related risks”. These disclosures are legally binding, so companies that misrepresent their emissions can face legal challenges.
2. The United Nations publishes Global Resources Outlook 2024. The Global Resources Outlook examines ways that we can still reach climate targets in a time of ever-increasing resource consumption. Here are some key takeaways:
- Material usage has tripled since the 1970s, and the extraction and consumption of these materials are responsible for over half of greenhouse gas emissions. Biomass consumption is the second largest source of emissions while also being the primary driver of biodiversity loss and aquatic ecosystem degradation.
- Current material consumption and extraction is very far out of line with the Paris Agreement 1.5 degree warming and biodiversity loss prevention targets.
- Developed countries consume 600% more per capita and cause 1000% more environmental damage than developing countries.
- Resource usage can be reduced without impacting economic growth. Simultaneous action in the areas of resource and energy efficiency, sustainable agricultural and land use practices will have the most positive impact. Modelling predicts these policies could reduce growth in material use by almost 30%, and “emissions could be reduced by more than 80% from current levels by 2060”. Find the full report here.
3. The future of the EU’s Corporate Sustainability Due Diligence Directive. After abstentions from Germany, Finland and Italy derailed a vote on the EU’s landmark Corporate Sustainability Due Diligence Directive (CSDDD) in early February, the bill went back to the negotiating table. Since that vote, France has proposed changes that will further water down the bill. The directive would initially apply to any companies with more than 500 employees, but French lawmakers proposed increasing that threshold to 5,000 employees. Increasing the threshold would mean the CSDDD would only apply to 20% of the companies originally covered. With EU parliament elections in early June and polls predicting right-wing gains, it is likely that “the CSDDD is dead for now”. Policy experts have shared that “in 15 years… this is one of the messiest and disappointing processes I have ever witnessed” and “those who blocked this legislation today have shown indifference to exploitation of workers and environmental degradation”.
4. Bloomberg European ESG Data Trends for 2024. A new Bloomberg survey that interviewed ESG data analysts from around the EU finds that meeting new regulatory requirements was the biggest priority in ESG data collection. 63% of respondents named “data coverage and quality issues with ESG reported data” as the biggest challenge they faced in data collection. Over two thirds of firms manage data in-house, with 38% using a central management strategy while 32% of respondents said their data was managed by a single team. Almost half of the surveyees shared that “constantly evolving and new ESG data content” were the largest challenges they faced in data management.
5. The struggles of China’s net-zero transition. China is one of the largest coal burning economies in the world, with 44% of the country’s power coming from coal combustion last year. As a result, China is on track to miss many of its 2025 climate targets such as sourcing 20% of its energy demand from renewable sources. China is a world leader in terms of renewable energy development and capacity, but without a reliable green energy grid it is still heavily reliant on coal. China’s government is still backing the energy transition with ambitious plans to reduce emissions and air pollution, and stock exchanges around the country are publishing sustainability reporting rules. However, until coal burning can be reined back, China faces an uphill battle in terms of reaching net-zero by mid-century.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.