ESG Insights: Trends, Analysis & Our Featured Chart #5

Photograph of a school of fish in water with waste plastic floating
For financial professionals only

This week’s ESG insights have an environmental focus, as we celebrated Earth Day on Monday (22nd April) with the theme of ‘Planet vs Plastics’, 

There’s a likely UN Plastics Treaty, a new ‘Plastics Bond’ and a possible significant policy change from the Science Based Targets initiative (SBTi). Elsewhere, reports show more public companies are reporting on their emissions and Zurich stops insuring new oil and gas projects.

The key takeaways: 

  • Momentum builds for a UN Plastics Treaty - the United Nations Environment Programme is on track to approve a legally-binding plastics treaty, covering everything from production to recycling of plastic, and ocean clean-ups by the end of 2024. A big step towards addressing the material's harmful impact.
  • World Bank issues first-ever 'Plastics Bond' – the $100 million bond will finance plastic collection and recycling projects in Ghana and Indonesia, with investor returns partly linked to the sale of carbon and plastics credits generated by the projects.

  • Majority of public companies now report on emissions – a new MSCI report shows almost 60% of public companies globally report their direct emissions (i.e. Scope 1) and emissions from purchased energy (i.e. Scope 2). That's a 16% increase from just two years ago.

  • SBTi moves to allow carbon offsetting – the SBTi (a body responsible for evaluating the credibility of net-zero claims) may change its rules on carbon offsetting - potentially allowing businesses to use the (sometimes contentious) practice, while still aligning with SBTi's strict standards.

  • Insurer cuts fossil fuel funding – Zurich Insurance Group has announced it will stop underwriting new oil and gas projects, stating it's not required to transition to a low-carbon economy. The group, that dropped out of the Net Zero Insurance Alliance, will continue to finance existing oil and gas projects.

Global Spending On Green Energy Transition

Source: BloombergNEF

Our chart of the week shows global spending on the energy transition from fossil fuels to green energy between 2004 and today. In 2023, the spend  rose to $1.8trillion – that’s a 17% increase compared to 2022. This figure includes investments, for example, to install renewable energy systems or purchase electric vehicles.

Why’s this worth sharing?

Bloomberg’s chart highlights how rapidly green investments are growing in popularity , showing both the opportunities available to investors and the urgency that they’re needed. Although the increase is positive , Bloomberg estimates that annual investments must more than double (to $4.8trillion) from 2024 to meet the environment’s needs and hit our net zero goals. 

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.  

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