October 2024 Newsletter

Here is our latest selection of ESG stories from October.

EU Regulator Sets Priorities to Enforce Sustainability Reporting Under CSRD

The EU markets regulator the European Securities and Markets Authority (ESMA) has published its annual European Common Enforcement Priorities (ECEP) Statement, highlighting the key priority to enforce compliance with the new Corporate Sustainability Reporting Directive (CSRD) in 2025.  In place since the start of 2024, the CSRD introduced requirements for double materiality assessments, the accuracy of sustainability statements, and EU taxonomy templates, obliging companies to extensively report on their environmental, social, human rights and sustainability-related impacts. Initially applying to large public-interest entities with over 500 employees, the directive will extend to companies with over 250 employees or €50 million in revenue and listed small and medium-sized enterprises (SMEs) from 2026. The ESMA’s enforcement will scrutinise companies’ materiality assessment processes, the relation between sustainability and financial statements, and the required use of taxonomy templates.

CSRD Mini-Series

We recently produced a mini-series aimed at helping companies and investors to understand how to prepare for CSRD. It includes a step-by-step guide outlining the key elements of the framework and practical steps to take to prepare. Topics include scoping, double materiality assessment (DMA), the ESRS reporting standards, data collection and gap analysis, tagging and reporting, and assurance. Check out the full article here: CSRD: A Practical Guide | Danesmead ESG

World Energy Outlook 2024: Clean Energy, Technology, and Investment Priorities

The IEA’s World Energy Outlook 2024 projects that by 2030, over half of global electricity will come from low-emission sources, driven by rapid growth in renewables such as wind and solar. The report explores strategies for achieving energy security, sustainability, and economic growth in light of the geopolitical landscape. Key insights highlight the need for more extensive clean energy investment to meet global climate targets, with a focus on expanding renewables’ infrastructure, electrification, and energy efficiency. Regional differences are expected to affect transition speeds, with emerging markets requiring targeted financing solutions to bridge clean energy gaps. Emerging technologies, including AI and digitalisation, are expected to drive efficiency, while rising energy demands from electric vehicles reshape oil demand. The outlook’s executive summary offers a key roadmap for investors, balancing sustainable growth with energy security and climate commitments.

BP Refocuses on Oil and Gas While Scaling Back Renewables

BP has dropped its goal to cut oil and gas production by 2030 as CEO Murray Auchincloss shifts focus to investor returns over rapid transition. In its 2020 strategy, BP had originally aimed to reduce output by 40% and accelerate renewable investments, representing one of the most ambitious plans in the industry. However, this target was revised to 25% in 2023 as investors questioned the company’s ability to balance green initiatives with returns. BP’s updated strategy includes new investments in oil and gas, particularly in the Middle East and Gulf of Mexico, to recapture market confidence. The company also reduced its investments in offshore wind, biofuels, and hydrogen, trimming hydrogen projects from 30 to 10. Auchincloss, succeeding former CEO Bernard Looney, aims to prioritise profitable ventures in alignment with competitors like Shell, who have similarly scaled back renewable commitments amid energy security demands. Nevertheless, BP upholds its net-zero commitment by 2050.

Greenwashing

Is greenhushing the new greenwashing?

Greenhushing is the practice of staying quiet about your climate or ESG ambitions and initiatives to avoid scrutiny and negative attention. Some say it’s on the rise, while others view it as a correction of past greenwashing. UKSIF recently published our article on the topic on their new Opinion Page. The article looks at why companies and investors are engaging in greenhushing, why it’s a problem, and how we expect things to play out.

CMA Issues New Guidelines Targeting Greenwashing in Fashion

The UK’s Competition and Markets Authority (CMA) has issued guidance for fashion retailers on formulating accurate environmental claims, following the latest investigations into greenwashing by major fast fashion brands. The guide, aligned with the Green Claims Code, aims to practically support businesses so that their sustainability claims are clear and not misleading. Retailers are encouraged to use specific, truthful statements about sustainability and ensure claims are evidence-based, considering the product’s full lifecycle—from materials and production to disposal. Furthermore, the CMA emphasises transparency in using eco-certifications. Any comparisons with other products must be fair and avoid exaggerating environmental benefits. Claims should be regularly updated to reflect any changes in sourcing, production, and environmental impacts. The initiative seeks to protect consumers from greenwashing and promote fair competition within the fashion retail industry.

Australian Court Imposes Record Fine on Vanguard Over ESG Misrepresentation

The Australian Federal Court fined Vanguard Investments Australia a record AUD 12.9 million (USD 8.9 million) for deceiving ESG claims on its Ethically Conscious Global Aggregate Bond Index Fund. The court found that the fund, which claimed to exclude companies involved in fossil fuels, lacked adequate ESG screening, and exposed investors to bonds from issuers linked to coal and oil activities. The action, led by the Australian Securities and Investments Commission (ASIC), reflects a wider attempt to tackle greenwashing, with the scale of the fine emphasising ASIC’s commitment to ensuring transparency and accountability in ESG-related financial products. Vanguard has accepted the ruling and committed to improving its screening practices.

SEC Targets Greenwashing: WisdomTree Fined for Misleading ESG Claims

The U.S. Securities and Exchange Commission (SEC) has fined ETF provider and asset manager WisdomTree $4 million for misleading ESG claims in three ETFs, marketed as excluding fossil fuel and tobacco investments. An investigation revealed that WisdomTree failed to follow its own ESG screening criteria. The SEC ruled that due to inadequate compliance controls and reliance on unscreened third-party data, the assets held by these ESG-focused funds included coal, natural gas, and tobacco-linked companies. While WisdomTree has neither admitted nor denied the claims, it has agreed to pay the fine and improve its screening processes. This action signals the SEC’s commitment to reduce greenwashing and enforce transparency in ESG-labelled financial products.

If you’d like to know more or discuss any of these topics please get in touch.