This week in ESG
A lukewarm outcome from the biodiversity conference, EU emissions cuts, and an investment company fined over misleading ESG claims.
Key highlights
🌍 COP 16 Biodiversity Summit mixed results – a plan to raise money from companies profiting from nature, like pharmaceuticals creating new drugs from plants, was agreed. But little progress was made towards implementing the biodiversity framework set-up in 2022. Only a fraction of the required funding to support nature was offered up by developed countries themselves. A massive shortfall remains.
📄Biodiversity risk reporting – over 500 companies worldwide have now committed to report on biodiversity risk. They'll produce Taskforce on Nature Related Financial Disclosures (TNFDs) as part of their 2024/25 corporate reporting.
✅ EU cuts emissions by over 8% – new reporting from the European Commission shows the bloc cut its greenhouse gas emissions by over 8% in 2023, once of its largest annual declines in decades.
❌ WisdomTree fined for misleading ESG claims –fund manager fined $4m by the US Securities and Exchange commission (SEC). They had invested in coal mining, natural gas extraction and tobacco, despite claiming these were excluded from certain ESG products.
Chart spotlight - climate tech funding
Source: BloombergNEF Note: Data excludes undisclosed values and deals under $1m
The chart above shows the funding provided to 'climate tech' start-ups each quarter since Q1 2022, split by sector.
Why this matters?
The generation of new and innovative climate solutions are key to reaching the world's emissions goals - so it's discouraging to see a continued drop in finance being provided to early-stage companies in this area. Bloomberg analysis puts this drop partially down to greater competition for funding versus AI related projects and companies. Here the clearer commercialisation benefits of AI often win compared with less understood and potentially riskier climate technologies, like green hydrogen or nuclear fission.
Climate tech is also struggling to attract funding for its later (and more expensive) stages of development, including the building of physical infrastructure. New technology often initially requires public policy support to be successful, an area that is becoming increasingly harder to rely on as climate issues become more politicised.
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