Weekly Headlines - 12th Dec
Vanguard pulling out of NZAM, UK's approval of new coal mine, and rising EV battery prices
What’s up this week?
The sustainable investing space suffered heavy blows this week with Vanguard, the second largest asset manager in the world, pulling out of the Net Zero Asset Management alliance due to increasing political pressures in the US. Besides, the UK with strong green credentials in the past decade has recently approved a new coal mine which would mainly support energy demand from steel production and exports. Meanwhile, battery prices for EV also rose for the first time - threatening the undergoing EV transition.
News in Summary
ESG Investing
Vanguard quits climate alliance in blow to net zero project
Vanguard is pulling out of the Net Zero Asset Management (NZAM) alliance on tackling climate change at a time when Republicans in the US have stepped up their attacks on financial institutions that they say are hostile to fossil fuels
Vanguard, which mainly manages passive funds that track market indices, said the alliance’s full-throated commitment to fighting climate change had resulted “in confusion about the views of individual investment firms”.
Last month, a group of Republican attorneys-general asked the Federal Energy Regulatory Commission not to renew Vanguard’s authorisation to buy shares in US utilities. They cited its NZAM membership as evidence that it was trying to influence corporate policy rather than being a passive investor.
Norwegian oil fund to vote against companies without net zero targets
The world’s largest sovereign wealth fund will become a more vocal shareholder and plans to vote against companies that fail to set a net zero emissions target, overpay their top leaders, or do not have sufficiently diverse boards.
Nicolai Tangen, chief executive of the $1.3tn Norwegian oil fund, told the Financial Times’ Global Boardroom event that the fund would become more aggressive on environmental, social and governance (ESG) issues as well as aim to be a more contrarian and long-term investor.
$250 Million World Bank Financing to Help Bangladesh Improve Environment Management
The World Bank has approved $250 million financing to help Bangladesh strengthen environment management and promote private sector participation in green investment.
The project will pilot new financing mechanisms to promote green investments in targeted sectors. It will also establish a Green Credit Guarantee Scheme to incentivize the financial sector to support green investments to reduce air pollution.
Currently, Bangladesh has the largest IDA program in the world with a total of $15.7 billion commitment to 55 ongoing projects.
Energy Transition
Coal mine approval sends UK green credentials up in smoke
Here’s an example of how net zero offsetting shouldn’t work: following up an announcement about onshore wind farm liberalisation with one approving the UK’s first new coal mine for 30 years.
The government says the coal will be used for the production of steel and would otherwise need to be imported. The problem with this is that it represents what Tim Buckley of the Climate Energy Finance think-tank calls the drug pusher’s argument: if it’s not our coal, it will be someone else’s.
The correct response to that uncertainty is not to opt for more fossil fuel production when it conflicts with the UK’s wider positioning on climate change.
Carbon Trading in China Isn't Helping Tackle Climate Change
Trading volumes have underwhelmed as narrow participation and outsized allowances keep the price of polluting at a fraction of the more established market in the European Union.
The cost to a power firm in China for releasing a ton of carbon dioxide has averaged less than $9 this year. That compares to $85 in the EU.
The slow start is a feature of the system rather than a bug: the government has deliberately been generous with its permits, kept prices low, and left out other polluting industries, in order to avoid straining the finances of some of its most important companies.
EV Transition Threatened as Battery Prices Rise for First Time
The global average price for lithium-ion battery packs climbed 7% to $151 per kilowatt-hour, according to BNEF’s annual battery price survey.
The higher prices strike at a delicate moment. Automakers worldwide are rolling out new electric car and truck models aimed at the mass market, not just early adopters, and high battery prices are one of main reasons EVs cost more up-front than comparable gas-burning cars.
Exxon, Japan's Mitsubishi Heavy Tie-Up in Carbon Capture Technology
ExxonMobil and Mitsubishi Heavy Industries (MHI) have joined forces to deploy MHI’s leading CO2 capture technology as part of ExxonMobil’s end-to-end carbon capture and storage (CCS) solution for industrial customers.
ExxonMobil Low Carbon Solutions is working to bring lower-emission technologies to market, making them accessible to hard-to-decarbonize industries, including its recent agreement with a leading global manufacturer of nitrogen and hydrogen products in Louisiana.
This newsletter is jointly distributed by General Pacific. General Pacific is an advisory house and venture builder with a focus on growing high-impact businesses, with the potential to be game-changers and disruptors in their respective sectors in Southeast Asia.
