|
|
|
|
|
The Key ESG Regulation Questions for Business in 2022
|
|
|
|
|
|
Welcome back and happy new(ish) year. This is, of course, a time for making earnest commitments that may or may not be kept. But for some, 2022 will be a year for grappling with commitments already made. Hundreds of companies promised to get to net-zero carbon emissions last year, not to mention sundry vows to save water, waste less or recycle more. Now the pressure is on to deliver.
Sticking to resolutions is difficult. Among the complicating factors that could make it tough to keep sustainability high on the agenda in 2022: resurgent inflation, an energy crunch and a supply-chain mess that makes it hard for some companies to get hold of necessary materials, let alone worry about their embodied carbon emissions. Plus a pandemic.
Anyway, our resolution for 2022 is to chronicle the decisions and challenges facing companies trying to put promises into action.
đź“– Recommended Reading. Is there a book that changed the way you think about sustainability, prompted you to start thinking about it, or maybe influenced you to enter the field?
If so, it would be great if you could tell me what it was, along with a sentence or two summarizing your thoughts. I'll save up your replies until I have enough for a roundup in this newsletter.
|
|
|
Content from our Sponsor: DELOITTE
|
|
At the Intersection of ESG Oversight and Strategy
Jamere Jackson’s experiences as AutoZone CFO and Eli Lilly and Company audit committee chair are shaping his views on how ESG strategy and risk management can serve both corporate purpose and the bottom line.
Learn More ›
|
|
|
|
|
|
|
|
|
|
A ship carrying coal to a power plant in Hanchuan, China. Beijing is expected to expand China’s new carbon market this year. PHOTO: GETTY IMAGES/GETTY IMAGES
|
|
|
|
The rulemaking agenda. Companies and investors are facing crucial sustainability policy decisions in 2022 that will shape the way they operate around the world. Coming rule changes with far-reaching implications include the U.S. Securities and Exchange Commission’s much-discussed climate-change disclosure mandate, a United Nations effort to combat biodiversity loss and a scuffle over what should be included in Europe’s new green investing typology. Here are five key questions for 2022.
|
|
Puzzling over EU sustainability calculations. European Union rules that came into force this year require thousands of companies to disclose what percentage of their operations falls under the bloc's new green taxonomy. Companies must map their business operations against various criteria and tabulate how much of their revenue, investments and costs stem from activities deemed sustainable. But many companies’ business models don’t fit neatly within the criteria. Helsinki-based engine maker Wärtsilä, for instance, is struggling to figure out how to categorize the production of engines that can run on different kinds of fuel.
|
|
|
|
đź“… Sustainability and Energy Transition. Join us on Feb. 14 for a discussion about corporate energy use and the practicalities of shifting to renewable sources. You can sign up for free here.
|
|
|
|
|
|
Trees burned by the Dixie fire in Greenville, California last year. PHOTO: JOSH EDELSON/AGENCE FRANCE-PRESSE/GETTY IMAGES
|
|
|
|
Wildfires threaten California carbon market. California’s cap-and-trade system allows businesses to offset carbon emissions by purchasing a limited number of credits, most of which are used to protect trees that store carbon dioxide from being cut down. But researchers warn the state’s stockpile of carbon dioxide credits is rapidly depleting because of the growing size and intensity of wildfires.🔒
Over the past two years, wildfires along the West Coast have consumed as many as 6.8 million metric tons of stored carbon dioxide in forests enrolled in the program, according to preliminary estimates by the Climate Trust, a Portland, Ore., nonprofit—more than one fifth of the total set aside for potential losses by regulators.
|
|
|
“The impact of the 2020 and 2021 fire seasons indicates to us that the buffer pool is severely undercapitalized and therefore unable to insure the offsets program’s carbon for a 100-year period”
|
— Danny Cullenward, policy director of CarbonPlan
|
|
|
|
|
|
|
Director training programs on the rise. U.S. companies are turning to programs run by law firms, universities and others aimed at preparing women and people of color for corporate board rolesđź”’ in a bid to broaden the pool of candidates and comply with pressure from regulators and investors.
Programs offer training on topics from corporate governance to committee work. Some are free or sponsored by companies, while others can cost thousands of dollars. Amazon and Microsoft are among the companies that have provided financial support to the Black Boardroom Initiative, an effort started in June by law firm Perkins Coie. The first cohort, about two dozen people, attended sessions through November about topics such as shareholder activism and cybersecurity risks.
|
|
|
60%
|
The proportion of executives who say directors' reluctance to retire makes it harder to increase board diversity, according to PricewaterhouseCoopers. Some companies are hence adding seats rather than replacing existing directors.
|
|
|
|
|
|
I.T. chiefs expect big impact from sustainability. In a recent survey by the IBM Institute for Business Value, 42% of 5,000 chief information officers and chief technology officers said sustainability was the area where technology would have the biggest impact in their organization over the next three years, above things like process automation and security.
In many cases, the pressure to reduce environmental impacts is creating another incentive to move applications to the cloud. “We are definitely committing to optimizing energy consumption,” said Francesco Tinto, the senior vice president and global CIO of Walgreens Boots Alliance, acknowledging the role the cloud is playing in the effort.
|
|
|
|
Sony's Plan to Sell Cars Could Catapult Its Business Model and Innovation Score
Sony's plans to create a car unit and explore entering the electric-vehicle market is a move that underpins the company's business model and innovation. Along with the positive environmental implications of zero-emissions EVs, Sony's incursion into the automotive industry could be a long-term positive boost for its business-model and innovation profile, since the strategic shift would fully integrate the company's technology, from sensors to entertainment and software, into EVs. The auto industry is seeing a wave of new tech companies and startups looking to break into the business, an effort driven in part by new technologies like EVs and autonomous vehicles that are reshaping the competitive landscape.
This is a sample of exclusive analysis of sustainability news from the Journal’s environment, social and governance (ESG) research analysts, whose work is primarily published by Dow Jones Newswires to help institutional investors and wealth managers integrate ESG factors into portfolio models, risk management programs and financial advice. The commentary by our research analysts is independent of the news coverage by reporters at the Journal. For more information about Dow Jones Newswires, click here.
|
|
|
|
|
Tesla opened a showroom in Xinjiang, the region where Chinese authorities' campaign of forcible assimilation against religious minorities has become a public-relations quagmire for Western brands. (WSJ)
Soaring demand for carbon offsets is driving up prices. (Financial Times)
The U.S. utilities sector could suffer annual losses of up to $4.1 billion from climate impacts, according to new research. (Bloomberg)
Four trends in climate-related financial risk to watch this year. (Climate Risk Review)
Some executives say corporate boards have long overlooked qualified women and nonwhite people. Last year showed that could be changing. (New York Times)
The inclusion of natural gas in a green investing taxonomy is causing controversy in South Korea as well as in Europe. (Power Magazine)
America's largest lithium-ion battery factory will open in Georgia this year to recycle old batteries and turn them into new ones. (Circular Online)
Lenovo customers will be able to add carbon offsets to their laptop purchases. (ESG Today)
England's government will pay farmers for nature restoration under a post-Brexit subsidy plan. (Guardian)
More people are building "Earthships" to live off-grid. (Washington Post)
|
|
|
|
We would like to hear your tips, suggestions and feedback. This newsletter was written by Ed Ballard. Contact the WSJ ESG research team at ESGresearch@wsj.com
|
|
|
|