Top 10 ESG Markers - September 2023

This, my friends, is an anniversary special. It is three years and 36 editions (they are all on LinkedIn, if you wanted to go back through and browse) this month since I started this ESG markers blog!  Top 10 movements in ESG both positive and negative, and both local and global observed each passing month.  The blog has a strong following now (thanks to you!), and I have been asked to appear on conference panels through to The Drum to discuss the trends and highlights and what they may mean to government, business and broader society.

I started this blog during the middle of Australia’s Covid lockdowns. Covid, for many of us, imposed a much-needed pause + reflection moment. I’d been working in environment, climate, social impact and sustainability for around 30 years at that time, and year-after-year, I continued to see the planetary boundaries being breached, Anthropocene baking in, the prophesies of the 1977 paper Limits to Growth coming true and IPCC-predicted climate impacts actualise.  But, what was more concerning to me was that the pace of change was accelerating beyond what models had predicted, and the intended restraints not effecting the slightest of change. Five 500-year floods in Houston within a decade, the AMOC current starting to slow down, biodiversity loss at a rate to call it the sixth mass extinction (see the story in this blog), world’s warmest day and month on record being this year and on and on and on!

I’d watched in disarray as politics in Western democracies become increasingly anti-scientific and polarised around anthropogenic climate change and ecosystem collapse, leading to significant delays in arresting the planetary scale impacts.  By this time, I had become a hardened plant based, stoic, anti-drinking and pretty much anti-social being! I was depressed at what I was starting to see, and documenting the change, for myself and others was one way of diarising the rapidity of system change – both to sound alarm, and to truly comprehend what is incomprehensible at any level.  No human in the entire 300,000-year timeframe of our species has ever experienced such radical shifts in their environment, and this new epoch has no chance of being rewound – not for millenia.  We’ve now had several strokes and heart-attacks (biomarkers) as a planet, and we are carrying on as if everything is OK.  If these blogs have highlighted anything, it is that we are heading towards planetary death ultimately the collapse of human civilisation.  All because we were too slow and inattentive as a species, falling to the doubt, denialism and delay manufactured by industries with most to lose.  Just think about the following few facts. Firstly, if we had started decarbonising when the IPCC first warned us in the late 80s, we would have till 2100 and beyond to get to net zero and stay under 1.5 degrees. Secondly, if we had spent 50% of what we spent on covid subsidies worldwide, we could have entirely decarbonised the planet.  Thirdly, we raise 80 billion animals a year for our own consumption, eight animals for each human on the planet. Another illuminating fact is that over 10 million people die EVERY YEAR from air pollution linked to fossil fuel generation. That’s more deaths than from Covid in total, which stands at around 7 million – and we are happy to accommodate that death toll because they mostly in lower socio economic populations.  Finally, wild animals comprise under 4% of biomass of all land-based animals/humans. 4%! Now, you see why I may be depressed and angry at the same time – this has happened under our watch, ladies and gentlemen.

There are some micro sprouts of optimism.  2023 may see the largest amount of installation of renewable capacity at 440 gigawatts.  Electric vehicles may account for around 18% of all new cars sold this year.  Russia’s invasion of Ukraine has accelerated EU’s transition to renewables by 40%. Indeed, The European Parliament has voted to increase the share of renewable energy in the EU's energy consumption to 42.5% by 2030, nearly doubling the current level.  Some estimates suggest that fossil fuel emissions may peak by 2025!

On other, local positive news (thanks to Climate Council for this wrap), the NSW Government will spend $1.8bn to accelerate the development of renewable energy.  Also, Australia’s best-selling EV brand has opened 30 of its 63 supercharger sites across Australia to non-Tesla vehicles in a major boost to the travelling plans of electric vehicle owners. Further, four remote Queensland towns; Doomadgee, Windorah, Burketown and Boulia, are set to receive $28 million to help make the switch from fossil fuels to solar and battery storage. A deal made between Western Australia and the Federal Government will ensure $3 billion from the nation’s $20 billion Rewiring the Nation Program will be invested to boost Western Australia’s main grid and help get huge local iron ore mines on the path to zero emissions power. Finally, the Queensland Government announced it will meet its 50% renewable energy target two years early, in 2028 rather than 2030, crediting state ownership of energy assets and transmission lines for the progress.

On that note, and hoping for much better news over the next 36 blogs, here’s the top 10 ESG markers for September.  The month of September covers Australian Government acknowledging climate risk in Government bonds, launch of the Nature Positive Initiative, launch of the TNFD, record rainfall and floods in China, Hong Kong and Libya, California sues major oil companies and introduces climate disclosure laws and Australia's incoming Reserve Bank Governor acknowledging climate risk as a major rick to the economy.

Again, if I happen to miss some key markers in a particular month. Just drop me some comments, and I will pick them up next month! 

*‘ESG Markers’ – like biomarkers that tell us how healthy our body may be, ESG Markers showing us the big movements in the field of ESG in Oceania and globally. 

So, here are my Top 10 for September 2023, again in no particular order.

Australian Government acknowledges climate change risk to bonds in landmark settlement

The Australian government has settled a ground-breaking court case, acknowledging it misled investors by not disclosing climate change risks to its bonds. In 2020, law student Katta O'Donnell sued, alleging the government deceived bond investors. The proposed settlement includes a government statement recognising climate change as a "systemic risk" to bond values, a first for a AAA-rated country. Australia's approach to climate change has evolved since the case's initiation, and the statement highlights climate change's impact on the economy. The settlement signifies growing awareness of climate risk in investments and is pending court approval in October.

Global coalition launches Nature Positive Initiative to combat biodiversity loss

On September 6, 2023, 27 prominent global organisations, including nature conservation groups, businesses, and financial coalitions, launched the Nature Positive Initiative. This initiative aims to clarify and promote the term 'nature positive' while supporting efforts to achieve nature-positive outcomes by 2030. 'Nature positive by 2030' involves halting and reversing biodiversity loss from a 2020 baseline, enhancing the health, diversity, and resilience of ecosystems and species.

The Nature Positive Initiative builds upon work that began in 2019, similar to the 1.5°C goal for climate change, and aligns efforts to combat biodiversity loss with the global climate crisis. Governments, businesses, and civil society have increasingly recognised the importance of reversing biodiversity loss, especially in light of its connections to climate change, pandemics, water, and food security.

The term 'nature positive' has gained popularity, but there's a need for clarity and alignment across sectors. The initiative's primary goal is to foster alignment among various stakeholders, including businesses, financial institutions, and governments, by preserving 'nature positive' as a measurable global goal. It also aims to facilitate the implementation of the Kunming-Montreal Global Biodiversity Framework.

Record rainfall sparks widespread flooding in Hong Kong and Southern China

Hong Kong and southern China are grappling with extensive flooding due to the heaviest rains in over 140 years. In Hong Kong, streets and subway stations were submerged, leading to school and workplace closures. Emergency services rescued over 100 people. Images show streets transformed into rivers and public transport and shopping centres inundated. Rainfall exceeded 70mm per hour, with an hourly record of 158.1mm, the highest since 1884. Landslides occurred in mountainous areas, blocking highways. Southern China also faced heavy rain, with record-breaking showers in Shenzhen. Hundreds of flights were suspended in Guangdong, and residents in low-lying areas were advised to consider evacuations. Climate change is contributing to more intense and frequent tropical storms, causing increased flash flooding and damage.

Additionally, less than a week before this deluge, southern China endured two consecutive typhoons, Saola and Haikui, which triggered a citywide shutdown in Hong Kong. These back-to-back weather events underline the escalating impact of climate change, with more powerful and frequent tropical storms intensifying the risk of flash floods and substantial damage. 

As China's meteorological administration predicts continued extreme rainfall in the southwestern region, the challenges posed by climate-induced weather patterns remain a pressing concern for densely populated coastal areas in southern China. 

Catastrophic flooding in Libya claims over 5,000 lives and leaves thousands missing

More than 5,000 people are presumed dead and an additional 10,000 are missing in north-eastern Libya following catastrophic flooding. The disaster unfolded after heavy rains caused the collapse of two dams, exacerbating the already severe flooding in the region. 

Of the presumed victims, at least 145 were Egyptian nationals. Derna, one of the hardest-hit cities, had reported around 6,000 people missing, with entire neighbourhoods believed to have been swept away by the floods. Hospitals in Derna are overwhelmed, with morgues at capacity, and dead bodies are left outside. 

The flooding in Libya is attributed to a powerful low-pressure system that previously caused catastrophic flooding in Greece before developing into a medicane—a tropical-like cyclone. Scientists note that rising ocean temperatures, a consequence of climate change, contribute to the intensity of such storms. This devastating event is part of a broader pattern of extreme weather events worldwide, underscoring the growing impact of climate change. 

California sues major oil companies over climate misinformation and passes sweeping emissions disclosure rules for major corporations

California is suing major oil companies, including Exxon Mobil, Shell, BP, and Chevron, for allegedly misleading the public about the dangers of fossil fuels. The state has faced extreme weather events linked to climate change, and the lawsuit seeks funding for recovery efforts. 

California lawmakers have approved ground-breaking emissions disclosure rules, making it mandatory for large corporations, including oil and gas firms and retail giants, to reveal both their direct and indirect greenhouse gas emissions. This encompasses emissions from various activities, such as employee business travel. The legislation applies to public and private businesses generating over $1 billion annually in California, aiming to enhance transparency and encourage companies to assess and reduce their emissions. This initiative is a response to the pressing need to address the climate crisis. High-profile supporters of the legislation include influential companies like Patagonia and Apple. 

Earth's life support systems damaged, placing humanity in perilous territory, warn scientists

The Earth's life support systems have been significantly damaged, placing the planet "well outside the safe operating space for humanity," according to scientists. Their assessment of the nine "planetary boundaries," which are critical global systems like climate, water, and biodiversity, revealed that six of them have now been breached due to human-induced pollution and environmental destruction. These boundaries have moved far from the stable state that existed from the end of the last ice age to the beginning of the industrial revolution, the period in which modern civilisation emerged. 

The most alarming findings are related to the four biological boundaries, which are at or near the highest risk level. These boundaries are crucial for the Earth as they provide resilience by compensating for certain physical changes, such as trees absorbing carbon dioxide. While these planetary boundaries do not represent irreversible tipping points, they indicate a significant increase in the risks of fundamental changes in the Earth's life support systems. 

The researchers noted that dwindling planetary resilience could jeopardise efforts to limit global heating to the 1.5°C climate goal, bringing the world closer to tipping points. Several planetary boundaries were breached a while ago, such as the boundary for biosphere integrity, land use, and climate change. Excessive use of fertilisers has led to excessive nitrogen and phosphorus levels in the environment, while synthetic pollution and ocean acidification are also worsening. 

To address this dire situation, scientists emphasise the need to phase out fossil fuel burning and adopt sustainable farming practices. The planetary boundaries offer a stark warning that humanity must take immediate and decisive action to mitigate further damage to the Earth's life support systems and secure a sustainable future. 

Federal Court Invalidates Woodside's Environmental Plan, Halting Scarborough Gas Project Testing

Woodside's Scarborough gas development, a significant project valued at US$12 billion off Western Australia's Pilbara coast, faces a setback as the Federal Court has deemed part of its environmental plan invalid. The company had planned to begin underwater surveying for the project, but postponed these plans due to a legal challenge by traditional owner Raelene Cooper, who argued inadequate consultation regarding the potential impact of surveying on sea life and Indigenous songlines. Federal Court Judge Craig Colvin has ruled that Woodside's approval was invalid, preventing the company from conducting testing until a new environmentally approved plan, involving adequate consultation with traditional owners, is submitted.

The central issue revolved around Woodside's environmental plan, which included seismic testing to locate gas reservoirs under the seafloor. The regulator NOPSEMA accepted the plan with certain conditions, including consultation with First Nations organizations and individuals. However, Cooper's argument was that NOPSEMA lacked the legal authority to impose such conditions, making the acceptance of the plan unlawful.

Woodside expressed concerns about the significant undisclosed costs resulting from testing delays, stating that it was necessary to determine the most cost-effective gas extraction method. Despite this setback, the company remains committed to working with NOPSEMA and stakeholders to develop an accepted environmental plan for the seismic survey.

TNFD releases final recommendations for nature-related financial disclosures, encouraging private sector action

The Taskforce on Nature-related Financial Disclosures (TNFD) has released its final recommendations, aiming to help businesses and financial institutions assess, disclose, and manage nature-related risks and impacts, enabling consistent and comparable reporting. The framework, developed in consultation with various stakeholders, offers a risk assessment method, the LEAP approach, for businesses and financial institutions. It provides guidelines for businesses and financial institutions to assess, monitor, disclose, and report on nature-related risks, dependencies, impacts, and opportunities, aiming to integrate nature into financial and business decisions. 

TNFD's recommendations are the result of an open innovation approach, involving co-creation by market participants, market consultation, and global pilot testing. A TNFD pilot program for the financial sector engaged 50 financial institutions from 25 countries over a 12-month period, allowing them to test the framework's beta version and provide feedback to ensure its relevance to the wider private financial sector. The findings from this exercise are detailed in a UNEP FI report.  While the framework is voluntary, it is expected that the private sector will adopt it, leading to greater market transparency through disclosures. TNFD encourages governments, supervisors, and regulators worldwide to play a crucial role in adopting the framework, similar to how they have embraced the Task Force on Climate-related Financial Disclosures (TCFD) and other international standards-setting bodies like the International Sustainability Standards Board (ISSB), which assesses risks beyond climate. 

The accelerated mass extinction: Humanity's irreversible impact on the Tree of Life

The planet is currently experiencing its sixth mass extinction event, and this time, it's driven by the unchecked expansion of one species: Homo sapiens. Unlike previous mass extinctions, which unfolded over geological time spans, this one is occurring at an alarming rate, and it is profoundly altering the tree of life on Earth. 

A study conducted by Gerardo Ceballos and Paul R. Ehrlich focuses on the mutilation of the tree of life due to the rapid extinction of animal genera. Their research is based on the examination of 5,400 vertebrate genera, excluding fishes, which encompass around 34,600 species. 

What makes this mass extinction particularly alarming is the pace at which it is happening. Current generic extinction rates are 35 times higher than the background rates observed over the past million years, in the absence of human impacts. This means that the genera lost in the last five centuries would have taken approximately 18,000 years to go extinct under natural conditions.

The authors emphasise that this mass extinction is accelerating due to various human-induced factors such as habitat destruction, illegal trade, and climate disruption. If all currently endangered genera were to go extinct by 2100, extinction rates could become 354 times higher than background rates. 

This mutilation of the tree of life has serious consequences for ecosystems and the services they provide to humanity, including primary productivity and biogeochemical cycles. Moreover, it poses a significant risk of zoonotic disease transmission to humans. 

The study underscores the urgency of taking immediate political, economic, and social actions on an unprecedented scale to prevent further extinctions and their devastating impacts on both biodiversity and human society. Humanity must act swiftly to mitigate the irreversible damage being inflicted upon the tree of life and ensure a sustainable future.

Incoming Australian Reserve Bank Governor Warns of 'Acute' Climate Challenges for Australia's Economy

Michele Bullock, the incoming governor of Australia's Reserve Bank, has warned that the climate crisis will bring "acute" challenges to the country's economy. Speaking at the Australian National University, Bullock highlighted the uncertainty of climate change impacts and how they affect the financial system. She emphasised that the effects of climate change could be severe and irreversible if tipping points are reached. Bullock's comments echoed the federal government's intergenerational report, which identified significant risks, including lost productivity, decreased crop yields, and costly disasters due to climate change. She also noted the potential for prolonged disruptions in the economy and the need for a timely and orderly transition to a low-carbon future.