TBLI Weekly - September 26th


TBLI Weekly - September 26th, 2023

Your weekly guide to Sustainable Investment

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10 & 11 OCTOBER 2023

Robert will be the chair during the Panel Discussion on Sustainable Forestry. You can find the full programme and more information here

Europe’s banks helped fossil fuel firms raise more than €1tn from global bond markets

By: Energy correspondent - The Guardian

Exclusive: Pan-European investigation looked at thousands of transactions since Paris climate agreement in 2016

Banks including some of Europe’s largest lenders have helped fossil fuel companies to raise more than €1tn (£869bn) from the global bond markets since the Paris climate agreement, according to an investigation by the Guardian and its reporting partners.

In the push to zero carbon Europe’s biggest lenders face growing pressure to limit their financial support for fossil fuel companies through direct loans and other financing facilities.

But analysis of thousands of transactions since 2016, when more than 190 countries agreed at a UN summit in Paris to limit global warming by curbing pollution, has revealed that lenders including Deutsche Bank, HSBC and Barclays have continued to profit from the expansion of oil, gas and coal by supporting the sale of fossil fuel bonds.

The findings have raised concerns among sustainable investment campaigners that banks are continuing to offer “hidden” financial support to energy companies that are responsible for increasing the world’s carbon emissions – even as they pledge publicly to phase out direct lending for new projects.

The Guardian worked alongside other European newspapers and the Dutch platforms Investico and Follow the Money to look in detail at 1,700 bond issues recorded by the financial information provider Bloomberg.

Bonds are issued by companies to help raise funds for specific projects, or their general operations. They effectively act as an IOU between the company and investors purchasing the bond. Banks earn fees by underwriting and marketing the bonds to their clients and other investors, and by providing advisory or administrative services. Underwriting banks guarantee bond sales by buying them before selling them on to investors on the global bonds market. Typically a single bond issue will involve the help of multiple banks.

The investigation focused only on bonds from energy companies identified by the campaign group Urgewald as having publicly disclosed their aims to increase their production of fossil fuels, and only since the Paris climate agreement. The agreement enshrined the goal to limit rising temperatures to well below 2C above pre-industrialised levels. Climate experts have warned that no new fossil fuel projects are compatible with the Paris accord.

The research revealed €1tn in such bonds issued through the global bond markets since the start of 2016. Big borrowers included Brazil’s state-owned oil company Petrobras and Russian state oil company Rosneft. The Paris agreement committed global governments to taking action.

Europe’s top facilitators of fossil fuel bonds, according to the research, were Germany’s Deutsche Bank, Britain’s HSBC and Barclays, and the French banks Crédit Agricole and BNP Paribas.

Read full article

How climate change is fueling alcohol-related hospitalizations

A new study in New York found that hospital visits from alcohol-related disorders spike along with temperatures.

This story is part of Record High, a Grist series examining extreme heat and its impact on how — and where — we live.

Many studies have shown that climate change threatens alcohol production around the world, from vineyards in France to whiskey distilleries in Scotland. Now there’s alarming evidence that climate change affects hospitalizations for alcohol consumption, too.

A study published this week in the journal Nature Communications Medicine found that temperature spikes due to climate change have led to a marked increase in the number of hospital visits for alcohol-related disorders — such as alcohol poisoning, alcohol withdrawal, and alcohol-induced sleep disorders — in New York state. “We found that there was an almost linear relationship between temperature increases and alcohol-related disorder hospital admissions and visits,” said Robbie Parks, an environmental epidemiologist at Columbia University and the lead author of the study.

The researchers also found associations between temperature and hospitalizations related to cannabis, cocaine, opioids, and sedative use — a result that was felt most acutely in the suburban and rural areas outside of New York City. But the connection between hospitalizations related to alcohol use and temperature was the most “robust” in the study, Parks said.

A growing body of research that shows Americans have become increasingly reliant on drugs, especially opioids, and alcohol over the past few decades. There has been a fivefold increase in overdose deaths in the United States since the turn of the century. This trend could be made even worse “with rising temperatures under climate change,” the study’s authors write.

By looking at hospital admission records and comparing them to weather data over the course of three decades between 1995 and 2014, the researchers figured out how short-term spikes in temperature over the course of a few days affect hospital admission rates related to substance use.

Even a slight increase in temperature, say from 15 degrees Fahrenheit one week to 20 degrees F the next week, or from 60 to 65 degrees F, led to more hospitalizations for substance use. That trend held strong from negative 22 degrees F all the way up to 86 degrees F — the full range of daily average temperatures across New York state between 1995 and 2014.

“It’s not just seasonal,” Parks said. “If today was 5 degrees hotter than this time last week or this time next week, we would expect more hospital visits for alcohol and substance disorders.”

Daily average temperatures in New York have risen 3 degrees F statewide since 1970 and are expected to rise another 3 degrees F by 2080, due to the warming effects of fossil fuel combustion. This trend has contributed to the short-term temperature fluctuations Parks and his team compared against local hospitalization rates in their study.

Previous research has shown that temperature fluctuations can influence drug use in the United States and overseas, but this study is among the first to look at different types of drugs and find that climate change is linked to spikes in hospital admissions for alcohol-related disorders in the U.S., specifically. Parks and his team found that the pattern was near-universal across the demographic characteristics they looked at, which included age, sex, and social vulnerability (an umbrella term for socioeconomic and minority status). The study controlled for seasonal variations in alcohol use, such as peoples’ tendency to drink more during the winter holidays and summer months.

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Thinking Long-Term: Why We Should Bring Back Redwood Forests

By: JOHN REID -YaleEnvironment360

Only 5 percent of the redwood forests that once stretched across coastal Northern California have never been logged. An initiative to restore these forests is gaining momentum, aided by research showing that redwoods store more aboveground carbon than any forest on Earth.

Lyndon Johnson signed the bill that established the Redwood National Park in California 55 years ago. It was a long time coming, with proposals blocked in the 1920s, 30s, and 40s by an industry that was beavering through the most valuable timberlands on the planet. When the National Park Service recommended a park again in 1964, bipartisan support in the Senate, a nod from President Johnson and, I believe, the trees’ own power to inspire eventually got a deal through Congress.

The national park was not the first redwood park. Several small California state parks had been created decades earlier. But it was the first from which most of the old growth had already been removed. Created in two phases, in 1968 and 1978, 75 percent of our national park had been razed. Overall, the public owns over 100,000 acres of injured, young forest on federal and state land. Land managers are trying to actively nurture some of them into new old growth. Tactics include one-time thinning of dense stands, prescribed fire, closing roads, dropping trees in streams to make salmon-friendly pools, ongoing selective logging to favor a few large trees, and just leaving the forests alone.

Restoration has drawn recent attention and picked up momentum with the launch of Redwoods Rising, an ambitious recovery program. Operations began in 2020 and have been gaining urgency, as the impacts of climate change have become a part of everyday life in the region, and a growing body of science has shown that old-growth redwoods store more aboveground carbon than any forest on Earth, up 2,600 tons per hectare. That’s three to five times as much as even the oldest secondary forests. “The only vegetation that grows faster is sorghum and sugarcane,” says University of Washington scientist Robert Van Pelt.

But a redwood forest still takes a long time to grow, and, in an era when short-term thinking threatens the very livability of our planet, it’s extraordinary that people are investing careers and great sums of money in these projects. Redwoods get big after a few hundred years but take much longer to develop their most unique features, such as dazzling canopy gardens of ferns, berry bushes, small trees, and fauna normally found on the forest floor. Van Pelt and colleagues point out that in a bona fide old-growth ecosystem some of the trees are old enough to fall over and decompose, forming “a silvatic mosaic much older than its oldest trees.”

While redwood forest restoration is largely a gift to the distant future, some life comes back quickly. Ben Blom, director of stewardship and restoration for Save the Redwoods League, says that coho salmon can reappear a year after roads are repaired and stop bleeding sediment into creeks. The response can be equally swift as sunlight returns to the floor of a thinned forest, diversifying understory plants.

Unfortunately, these laudable recovery efforts are currently confined, like the old growth, to tiny islands scattered within a battered forest landscape. Redwoods Rising, a partnership between the Redwood National and State Parks and the Save the Redwoods League, reaches just 600 acres annually. The ancient redwood forest once occupied 2 million acres of fog-bathed coastal hills, from central California to the Oregon border. Of that, around 400,000 acres of land have been paved, urbanized, and otherwise irrevocably converted. Of the remaining 1.6 million acres still growing trees, only 5 percent has never been logged and contains the iconic forest giants, the tallest trees on the planet. Over 75 percent of redwood lands are privately owned and, in general, logged repeatedly. Trees that can live 2,000 years are cut after just a few decades of life.

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‘Staggering’ green growth gives hope for 1.5C, says global energy head

By: Environment editor - The Guardian

IEA’s Fatih Birol says uptake of solar power and EVs is in line with net zero goal but rich countries must hasten their broader plans

The prospects of the world staying within the 1.5C limit on global heating have brightened owing to the “staggering” growth of renewable energy and green investment in the past two years, the chief of the world’s energy watchdog has said.

Fatih Birol, executive director of the International Energy Agency, and the world’s foremost energy economist, said much more needed to be done but that the rapid uptake of solar power and electric vehicles were encouraging.

“Despite the scale of the challenges, I feel more optimistic than I felt two years ago,” he said in an interview. “Solar photovoltaic installations and electric vehicle sales are perfectly in line with what we said they should be, to be on track to reach net zero by 2050, and thus stay within 1.5C. Clean energy investments in the last two years have seen a staggering 40% increase.

But Birol also noted that greenhouse gas emissions from the energy sector were “still stubbornly high”, and that the extreme weather seen around the world this year had shown the climate was already changing “at frightening speed”.

The IEA, in a report entitled Net Zero Roadmap, published on Tuesday morning, also called on developed countries with 2050 net zero targets, including the UK, to bring them forward by several years.

The report found “almost all countries must move forward their targeted net zero dates”, which for most developed countries are 2050 – though some have closer dates, such as Germany with 2045 and Austria and Iceland with 2040 – and for many developing countries are much later, at 2060 in the case of China, and 2070 in India’s case.

Cop28, the UN climate summit to be held in Dubai this November and December, offered a key opportunity for countries to set out tougher emissions-cutting plans, Birol said.

He wants to see Cop28 agree a tripling of renewable energy by 2030, and a 75% cut in methane from the energy sector by the same date. The latter could be achieved at little cost, because high gas prices mean that plugging leaks from oil and gas wells can be profitable.

But Birol warned that the geopolitical situation, with many nations at loggerheads over the war in Ukraine, and still frosty relations between the US and China, would make for a difficult summit.

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EU Social taxonomy: time for reflection ... in 4 questions

By: Grégory Schneider-Maunoury - Novethic Essentiel

The green taxonomy came into force on January 1, 2023. However, there will be no social taxonomy before 2025, due to a number of stumbling blocks and tensions in the law-making system, and in particular a persistent disagreement between companies, regulators, NGOs and representatives of responsible finance. That's why it makes sense to take the time to reflect. For an efficient but promising start to the new year, here's an introduction to that reflection.

1. Why taxonomy?

The taxonomy answers the question: what is a responsible company? The Green Taxonomy enables us to determine which companies are contributing to the European Union's environmental objectives. In concrete terms, you need to:

1) make a substantial contribution to one of the 6 European environmental objectives,

2) not generate negative externalities on other environmental objectives

3) respect minimum social standards

The taxonomy has a dual purpose. At company level, it enables us to statically define the levels of green or social performance of activities identified as green or social. At fund level, when making investment decisions, it enables us to define the percentage of a company's activities that are aligned. This notion of alignment is important because it introduces a dynamic. More than a percentage of alignment today, it is above all a percentage of alignment in 3 years' time that it would be interesting for investors to estimate and communicate to their clients. Only companies can communicate past alignment data, but the role of ESG agencies should be to estimate 3-year alignment.

2. Why is the absence of a social taxonomy a problem?

The theoretical aim of the taxonomy is to answer the long-ignored question: what is a sustainable company? From 2003 to 2018, the question was more how than what. The fact that we have a green taxonomy but no social taxonomy tends to make us believe that sustainable development is primarily an environmental issue. The social dimension would then only be a matter of minimum levels or good practices to be respected. This poses two problems. On the one hand, asset managers cannot value a social strategy in the same way as they value a green strategy. This confines sustainable finance to the thematic management of green funds, which is very narrow-minded. On the other hand, how can the European Union, which has always promoted the European social model, consider that there are no, or no longer any, European social objectives, and that it is just a matter of respecting a minimum of rules, conventions and procedures?

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