A new report from the High-Level Panel for a Sustainable Ocean Economy has emphasised the pivotal role of ocean-based actions in averting the consequences of climate change. The study said readily deployable ocean solutions have the potential to reduce emissions by up to 35% on a 1.5°C trajectory by 2050, equivalent to four times the annual emissions of the entire EU. ‘The Ocean as a Solution to Climate Change’ – unveiled during the Ocean Panel’s annual meeting in New York, attended by 17 heads of state – called for immediate collective efforts to implement ocean-based climate solutions. Jonas Gahr Støre, Prime Minister of Norway and Co-chair of the Ocean Panel, said: “This latest report demonstrates the significant potential of ocean-based climate action in closing the emissions gap. Ocean-based climate action is the lifeline that coastal and ocean states must take advantage of to help benefit the climate while creating jobs and economic prosperity.” The report, authored by 28 independent experts from four continents, 13 universities, and six NGOs, assesses seven ocean-based sectors’ potential to combat climate change while promoting a sustainable ocean economy and safeguarding coastal communities. These sectors include scaling ocean-based renewable energy, decarbonising ocean transport, conserving marine ecosystems, utilising low-carbon oceanic food sources, marine carbon dioxide removal, decarbonising ocean-based tourism, and reducing offshore oil and gas extraction. While Sustainable Development Goal 14 focuses on ocean conservation and sustainable use, it remains one of the least funded UN goals, accounting for only 0.01% of development funding. To achieve the full potential of ocean-based emissions reductions, the Ocean Board said a targeted investment of US$2 trillion between 2030 and 2050 is imperative. 

Aviva Investors, the UK Sustainable Investment and Finance Association and Tribe Impact Capital are among the investors who have signed a letter from a 400-strong group of organisations to UK Prime Minister Rishi Sunak urging him not to weaken any net zero policies. On Wednesday (20 September), Sunak announced a U-turn on several net zero policies in what he described as a “more pragmatic, proportionate and realistic approach to meeting net zero”. This included pushing back a ban on the sale of petrol and diesel cars from 2030 to 2035 and weakening plans to phase out the installation of gas boilers by 2035. In the letter to Sunak, the organisations say they have already made substantial investments in the net zero transition and made it clear that sticking to long-term net zero policies is crucial to build business confidence and mobilise investment. “Watering down these policies would damage the UK’s credibility as a good place for green investment, undermining British competitiveness. We are already losing investment to the US and EU, and rowing back would make it worse.”

Over 4️⃣0️⃣0️⃣ businesses and NGOs including @UKSIF, @Nestle, @IKEA, @AvivaUK and @eonenergyuk have written to @RishiSunak to call for #CredibleClimateLeadership and express concern at plans to water down the UK's #NetZero policies.

Read the letter here 👇https://t.co/nIEg2ksauC

— E3G – Third Generation Environmentalism (@e3g) September 20, 2023

UK defined contribution (DC) pension schemes are reluctant to accept higher fees on ESG investments, despite average charges decreasing by 20% over the past decade, a report by investment consultancy firm WTW revealed. Only 26% of schemes are willing to compromise on higher charges for greater access to illiquid assets and private markets, and a mere 25% express interest in boosting their investments in ESG strategies, even if it means incurring higher fees. The remainder appear either reluctant or uncertain about such a trade-off, the report noted. The recent government pension proposals collectively referred to as the ‘Mansion House Reforms’ are encouraging DC schemes to consider more expensive yet potentially higher growth assets like unlisted equities, private markets, and other illiquid assets. Gemma Burrows, Director in WTW’s Retirement Business, said: “While it’s great news that DC schemes have successfully negotiated down fees over the past decade, in reality, we know from our research that these modest gains do not alone provide a significant boost to average pot sizes for members. Scale and innovation are needed quickly in this area, and careful selection of investment strategies, asset managers, and funds will be a key part of the decision.” Additionally, the report touched upon the growing interest in diversity, equity, and inclusion (DEI) within DC pension schemes. Approximately 45% of schemes intend to address their gender pensions gap, while only 8% have taken concrete measures to address retirement disparities among different demographic groups. 

Thirty-two percent of green bonds achieved a ‘greenium’ in the first half of 2023, according to new analysis from the Climate Bonds Initiative (CBI). A sample of 50 green bonds, during H1 2023, were found to be 16 priced inside their own secondary market yield curves. These results are included in the latest iteration of the Green Bonds Pricing in the Primary Market Series, sponsored by IFC, which assesses bonds denominated in EUR or USD, across countries and issuer types. The period saw particularly strong pricing metrics for USD deals with average book cover for USD denominated green bonds being 5.4 times the deal size. The period covered 111 green bonds overall with a combined volume of US$124.6 billion with green bonds in both EUR and USD performing well on all metrics in the primary market, on average, and allocations to green investors remaining stable at 66%. Among other highlights, three EU sovereigns return to the green bond market and Israel priced its debut sovereign green bond deal. Caroline Harrison, Head of Market Research, CBI: “The glowing green bond pricing metrics continue to demonstrate the strong investor appetite for these instruments. Investors are keen to finance the decarbonisation of our economy, and issuers should leverage this by prioritising green investment.” Further, the CBI has released guidance to assist stakeholders in understanding the fundamental markets of credible transition plans. Sean Kidney, CEO of CBI, said:  “Transition plans are the linchpin in the journey towards the Paris goals. They must be built on clear targets, effective strategies, ample financial support, and unwavering leadership. Transparency through regular progress disclosure is paramount, but evaluating these plans can be difficult. To bolster investor and stakeholder trust, Certification is paramount to underscore the credibility of these crucial blueprints.” 

For the key takeaways, download Guidance to Assess Transition Plans here 🔗https://t.co/XDAmchBduz pic.twitter.com/PCHtcy3Xmw

— Climate Bonds (@ClimateBonds) September 20, 2023

Big Four consultancy firm PwC’s latest ‘Net Zero Economy Index’ indicates that a decarbonisation rate of 17.2% per year is now essential to limit global warming to 1.5°C, up from 15.2% the previous year. According to PwC analysis, no G20 country has achieved a decarbonisation rate exceeding 11% in a single year, with the highest level recorded by the UK in 2014 PwC said all nations must intensify their efforts to meet the IPCC’s 2030 target of a 43% reduction in emissions and a 78% reduction in carbon intensity. Emma Cox, Global Climate Leader at PwC, said: “The fact that the world needs to decarbonise seven times faster is a spur to action, not a counsel of despair.” The past year witnessed a surge in renewable energy adoption, with solar energy experiencing a record growth rate of 24.4% and wind energy increasing by 13.1%, the PwC report noted. This acceleration in renewables was particularly pronounced in Asia, the USA, and Europe, but further action is needed across economic sectors, infrastructure, and support for developing nations. BMI, a Sustainable Fitch company, anticipates a significant acceleration in the growth of non-hydro renewables in the coming decade. This positive projection, in a new report, is underpinned by expectations that annual capacity additions for solar and wind energy will bounce back from industry disruptions, reaffirming their dominance in the global low carbon power expansion landscape. “We expect non-hydro renewables growth to accelerate over the next decade as yearly solar and wind capacity additions rebound from industry disruptions and continue their dominance of global low carbon power expansion,” BMI said in a statement. 

Research by NGO think tank Planet Tracker has found that 95% of “leading plastic players” do not have a “sufficient link” between executive pay and sustainability factors. The ‘Plastics – Executive Compensation‘ report analyses the pay-performance plans of 39 plastic-related companies including ExxonMobil, Saudi Aramco, Costco and Mars. According to Planet Tracker’s data, 41% of plastic-related companies lack any link between sustainability practices and executive compensation which the NGO calls a “key requisite of a credible sustainability plan”. Additionally, its research found that the approaches of the 23 firms that do align compensation with ESG performance are “insufficient”, with them lacking a quantitative link or only tying a minimal proportion of compensation to sustainability performance. The study also found that 54% of companies do not have science-based targets, with Planet Tracker underscoring the need for independently verified target setting to enable investors to rule out greenwashing and compare companies. Thalia Bofiliou, Senior Investment Analyst at Planet Tracker, said: “It’s a positive sign that all plastic companies we analysed are committed to wider sustainability goals. However, without meaningfully tying executive pay with sustainability metrics, this is all wrapping and no substance. To reduce the significant risks the plastic industry faces, from CO2 emissions and microplastics to new regulations, investors can no longer afford to wave pay packages through that aren’t linked to sustainability-related elements.” Last month, analysis by Planet Tracker also found that executives across the plastics value chain could be underestimating the range and urgency of the ESG risks facing the sector. 

📝New Report: 95% of leading #plastic players fail to have a sufficient link between executive pay and sustainability factors.

Nearly half (41%) of plastic companies lack a clear link between #sustainability practices and executive compensation https://t.co/WjNIhCwsnD pic.twitter.com/IBnpyH9XUq

— Planet Tracker (@planet_tracker) September 20, 2023

The Glasgow Financial Alliance for Net Zero (GFANZ) Secretariat has launched a consultation to better support financial institutions in assessing the impact of transition finance strategies on decarbonisations efforts. Last year, GFANZ identified four strategies needed to finance a whole economy transition to net zero: the development and scaling of climate solutions, assets or companies already aligned to a 1.5°C pathway, assets or companies committed to transitioning in line with a 1.5°C pathway, and the accelerated managed phase-out of high-emitting physical assets. The consultation, which is open to feedback until 2 November, is seeking market insight on a voluntary, pan-sector and globally applicable principles-based approach to these identified strategies, highlighting potential approaches to estimate the associated decarbonisation contribution impact. Mary Schapiro, GFANZ Vice Chair, said: “Transforming the global economy to achieve net zero is the biggest challenge facing this generation. To move forward, we must apply more rigour to how we finance the transition and how that investment is truly driving decarbonisation over time – but we must do this thoughtfully and in broad consultation.” Building on GFANZ’s transition plan guidance, the US Treasury has unveiled its Principles for Net Zero Financing and Investment for financial institutions at the Bloomberg Transition Finance Action Forum in New York City.