|
|
|
|
|
Cryptocurrency Traders Move Into Carbon Markets
|
|
|
|
|
|
Welcome back. The market for carbon offsets is growing fast but remains murky, and many participants want transparency, quality control and common rules. Could crypto technology help?
The enormous energy consumption of bitcoin mining has given crypto a bad environmental reputation, but the distributed-ledger technology behind it could potentially be a good match for the voluntary carbon market, in which companies wishing to offset their carbon emissions buy and sell credits representing greenhouse gasses removed from the atmosphere by projects such as tree-planting.
A host of blockchain projects have popped up offering technology that they say can provide better pricing data and help keep track of who has paid for carbon removal. Of course, making the offset market more transparent wouldn't in itself do anything to improve the underlying effectiveness of the carbon-removal projects themselves—another gripe of offset-market critics.
This week we take a close look at one way crypto technology is already affecting the market. Decentralized finance group Toucan says its technology will improve transparency for buyers and sellers of carbon-offset credits. So far, its main impact has been to remove a lot of those credits from circulation, as we explore below.
This week: Shipping emissions; Larry Fink; ESG and M&A.
|
|
|
Content from our Sponsor: DELOITTE
|
|
At Dell Technologies, Internal Auditors Embrace Their Role in ESG
As environmental, social, and governance (ESG) regulation evolves, internal auditors at Dell Technologies are promoting strong controls and governance over ESG-related activities, laying an important foundation for the future.
Learn More ›
|
|
|
|
|
|
|
|
Crypto traders gobble up carbon credits. The main buyers of BCT, a crypto token recently launched by Toucan that can be tethered to carbon-offset credits, have been people using them to buy another new digital currency called Klima. Klima was conceived as a way of removing offset credits from circulation. The project's anonymous developers say that doing so will push up offset prices, making projects that benefit the climate more profitable.
|
|
|
Klima says it has withdrawn millions of credits from circulation on offset markets, and market participants say prices have been going up as a result. Not everybody is convinced that this is good news. “We support transparent and energy-efficient uses of blockchain technology in carbon markets, but caution strongly against those that are speculative in nature,” said Margaret Kim, chief executive of carbon credit registry Gold Standard.
|
|
|
17 million
|
The number of BCT cryptocurrency tokens that have been created, each tethered to a one-metric-ton carbon offset credit.
|
|
|
|
|
|
📅 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.
|
|
|
|
|
|
Maersk set a number of interim decarbonization targets for 2030, including steep emissions reductions at port terminals. PHOTO: CHRIS RATCLIFFE/BLOOMBERG NEWS
|
|
|
|
Shipping giant brings forward decarbonization target. Maersk now plans to achieve net-zero greenhouse-gas emissions in 2040, a decade ahead of its initial 2050 goal. The accelerated timeframe attests to the development of low-carbon vessels, which have become available years earlier than Maersk expected in 2018 when it set the 2050 target. With 12 ships on the way that will run on green methanol, the challenge now is sourcing enough of the low-carbon fuel—which can be produced from biomass or hydrogen—to power them, said Henriette Hallberg Thygesen, Maersk’s chief executive officer of Fleet & Strategic Brands.
|
|
|
|
📖 Thank you very much to everybody who emailed me in response to last week's question about books that changed the way you think about sustainability. Please continue to send your suggestions, along with a sentence or two summarizing your thoughts. I'm saving your replies for a roundup in this newsletter.
|
|
|
|
Larry Fink pushes for climate action. BlackRock Chief Executive Larry Fink is telling CEOs that companies must prepare for a scaleback of fossil fuels, and that the private sector should work with governments to do so. He warns of the disruption climate change could cause, but sees an historic investment opportunity in the energy shift. Mr. Fink says companies that embrace their responsibilities in crises can fulfill a role in society while delivering returns to shareholders.
|
|
Mr. Fink’s power and advocacy have made him a flashpoint🔒 for activists, politicians and unions, both those who think BlackRock isn’t doing enough and others who say it’s doing too much.
|
|
|
|
|
🎁 Newsletter extra: ESG Driving M&A Deals. Environmental, social and governance factors are increasingly becoming a key driver for mergers and acquisitions, as companies seek assets that will help them meet their sustainability goals and strategies.
A report published this week by EY found that a quarter of U.S. CEOs saw improving their company's ESG profile as the main rationale for dealmaking, trumping usual motives such as growing market share or acquiring technology or talent.
The amount of M&A money that went into sustainability and ESG-related deals last year reached $293 billion, nearly doubling from 2020, according to an EY analysis of data from Dealogic, Refinitiv and Capital IQ. Such deals accounted for about 5% of deals by value and around 10% by volume in 2021, EY said.
Mitch Berlin, EY's Americas Vice Chair of Strategy and Transactions, said corporate buyers are willing to pay a premium for ESG-friendly acquisition targets.
Companies are finding that they are able to get a lower cost of capital if their ESG performance sings, Mr. Berlin said. "The financial impact is becoming more clear," he added.
—Kimberly Chin
|
|
|
|
|
“A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot.”
|
— U.K. fund manager Terry Smith criticized the consumer-goods company's focus on sustainability issues this week.
|
|
|
|
|
|
|
McKinsey's chief wants to change the firm. Bob Sternfels took over as McKinsey's global managing partner in July at a difficult moment for the consulting giant. The company’s former leader, Kevin Sneader, had failed to win re-election to a second term amid internal dissatisfaction with his handling of a series of crises that he inherited. Mr. Sternfels spoke with The Wall Street Journal🔒 about speeding up decision making, rethinking performance evaluations and avoiding future scandals.
|
|
WSJ:
|
Your predecessor helped oversee systems and processes to assess new clients, or to avoid taking on certain work. Do you think that approach is still effective, or is something different needed to avoid future scandals?
|
|
|
Bob Sternfels:
|
I guess I come at this with humility: Do you know what the future is going to hold with certainty? No. But what I will say is, I didn’t join the firm yesterday, and I’ve been with us for 27 years. In my previous role, who was designing and implementing those risk and client protocols with Kevin [Sneader]? It was me. Everyone knows that internally.
You can have a delegated model that empowers people if you have strong accountability and compliance. So we have taken big steps on client selection, where we now run everything through a framework. In addition to a selection process, we’re adding professionals; we hired a new chief compliance officer. So we’re not going backward. Does it ensure that we’ll never have scrutiny in the future? I can’t say, but I do feel it’s a firm that continues to evolve.
|
|
|
|
|
Kroger Supermarket Workers Go on Strike in Denver
About 8,400 employees at about half of Kroger's 150 King Soopers stores in Denver went on strike Wednesday, demanding more pay, better health and retirement benefits, and safer working conditions. This may put focus on the company's human-capital record, particularly its labor practices. As of now, the implications of the strike look small. The 8,400 workers on strike represent less than 2% of Kroger's total workforce, which according to the company's website is almost 500,000. The company's ability to reach an agreement may have implications on the strike's duration and potential spread.
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.
|
|
|
|
|
There were 20 billion-dollar weather and climate disasters in the contiguous U.S. last year, the second-most on record, according to the National Oceanic and Atmospheric Administration. (Axios)
Worker shortages due to Covid-19 exacerbated the recovery from power outages after severe snowstorms across the Southeast and Mid-Atlantic U.S. threatened the operations of thousands of companies. (Supply Chain Dive)
Two new BlackRock funds are designed to live up to the highest standard for sustainability in the European Union’s green-investing rulebook. (Bloomberg)
Sustainable-investing experts called on the U.S. Office of the Comptroller of the Currency to integrate climate risk into its examination process for banks. (Risk.net)
The Dutch wing of Friends of the Earth, which won a landmark court victory against Shell last year, is targeting 30 major corporate polluters in a new campaign. (Reuters)
A California nonprofit is calling for "extended producer responsibility" rules that would make the textile industry share the cost of recycling or disposing of products. (California Product Stewardship Council)
Some clean energy advocates say California’s plan to slash solar incentives would kill the solar boom. Others say the rules need to change to help lower-income people share in the benefits from rooftop panels. (The Verge)
A new kind of underwater battery that could enable the expansion of grid-scale offshore solar power. (PV Magazine)
Waste management company Veolia said a planned recycling facility in the U.K. will be able to recycle 20% of the country's worn-out electric-vehicle batteries by 2024. (Circular Online)
Proponents of the use of wood pellets for fuel say forestry in North Carolina helps the planet and provides income for Black landowners. But the environmental and social benefits of biomass are disputed. (BBC)
|
|
|
|
✍️ Feedback on this newsletter? We would love to hear from you, so please get in touch.
This newsletter was written by Ed Ballard.
Contact the WSJ ESG research team at ESGresearch@wsj.com
|
|
|
|