Fertile ground for corporate biodiversity goals

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Opponents of collective climate action have set their sights on a new target: a group of large insurers, founded on the eve of the 2021 United Nations climate summit in Glasgow.

Republican attorneys general for states including Texas, Virginia and Alabama argued in a recent letter to these insurers that the push to “rapidly reduce emissions” had raised insurance costs and fuel prices. This had “result[ed] into record inflation and financial hardship for the residents of our states”.

A trio of Europe’s biggest insurers, including Axa, the group’s former chairman, exit the Net-Zero Insurance Alliance yesterday, following other high-profile departures this month. Japanese insurer Sompo Holdings also withdrew, saying it would continue to pursue its climate goals “as forcefully” outside the group as Australian insurer QBE has.

The trigger? Insurers (and other financial institutions) fear that setting common climate goals could lead to lawsuits against them for anti-competitive behavior. It is worth noting that this threat has mainly been advanced by politicians, rather than competition regulators.

On the other hand, activists accused the insurance body of being too weak, given that its members can still underwrite new coal mines and do not have to set decarbonization targets that cover the entire value chain of their customers.

But the United Nations Environment Program Finance Initiative, which convenes the group, issued a stark warning in response to some of this week’s departures: “To successfully address the climate emergency, there is a fundamental and urgent need collaborative, not just individual action.” This morning the group still had 23 members listed on its website.

Today, Gillian brings a different perspective from Virginia, where strong local voices spoke out for green energy at a Federal Reserve conference. But first, the United Nations’ Elizabeth Maruma Mrema tells Simon that companies don’t need regulation to initiate nature-related disclosures.

Please note that Moral Money will take a break on Monday, due to UK and US public holidays. I’ll see you Wednesday. (Kenza Bryan)

Elizabeth Maruma Mrema: ‘Companies, don’t worry’ over nature revelations

During more than a decade as a senior official at the United Nations Environment Programme, Elizabeth Maruma Mrema has witnessed a frustrating lack of progress towards global biodiversity goals, with limited efforts from governments and even less from the private sector.

So she was taken by surprise, when she headlined December’s UN Biodiversity Summit in Montreal, to see hundreds of big companies calling on governments to hit them with new biodiversity regulations. “Where the hell would business be expected to take that leadership?” Mrema said at our Moral Money Summit on Wednesday.

Mrema – who oversaw the December COP15 conference as executive secretary of the United Nations Convention on Biological Diversity – said she was heartened by the unprecedented level of corporate engagement at the annual meeting. Both governments and companies, he said, have learned lessons from the failures of recent years.

“The global targets we had on biodiversity for the last 15 years – we had 20. And we failed them all,” Mrema told me. “And one of the reasons for the failure was that the private sector was not engaged in their development and, likewise, in their implementation.”

A significant outcome of COP15 was the international agreement on “Target 15”, which states that all large companies will need to assess and disclose their nature-related risks, impacts and dependencies by 2030. Mrema is at the heart of this push: also as deputy executive director of UNEP, he co-chairs the Taskforce on Nature-related Financial Disclosures, an initiative to create standards that companies can use for this type of reporting.

Interestingly, while strongly supporting the push for mandatory disclosures, he has struck a cautious note about the pace of movement by governments. While climate-related disclosures have become the norm for large companies in many major markets, similar disclosures about biodiversity have far fewer.

One exception is France, where large financial institutions have had to do so since 2021. But Mrema did not urge other countries to rush to follow France’s lead on mandatory biodiversity disclosures.

“We have to give companies time. . . to understand, to build their capacity” to make revelations about biodiversity, he said, underscoring his hope that mandatory reporting will follow in due course.

The TNFD expects to unveil its final biodiversity reporting framework in September, and Mrema emphasized that it is building its approach on that of the Climate Financial Reporting Taskforce, which is already widely used by companies around the world.

“So companies, please don’t be concerned,” he said. “When you’re reporting for climate, you can also report for nature at the same time.” (Simon Mundy)

Talking about fossil fuels with the Federal Reserve

Last weekend I went to Richmond, Virginia for the first time for a Federal Reserve conference with the presidents of the Richmond and Atlanta branches of the US central bank. It was enlightening. As you might expect, there was ample chatter about the economy, debt ceiling negotiations and inflation targets (key takers: in the southern states, there is still little sign of a recession or evidence that the Fed can hit its inflation target of 2 percent anytime soon).

But what was equally notable was a lively debate on the energy transition. This matters enormously for these two branches of the Fed, since they cover several large fossil fuel-producing states and work closely with the Dallas branch of the Fed. And – perhaps unsurprisingly – the conference saw calls from some local business owners for the government to continue supporting fossil fuels.

They stressed that the International Energy Agency did not expect a significant drop in oil and gas demand in the coming decades and argued that America cannot abandon its energy self-sufficiency. They also said that energy efficiency has increased: pollutants and carbon emissions from the automotive sector, for example, have apparently decreased by 71 and 15% respectively since 1981, even as vehicle miles traveled have increased by 114%. .

However, there were also strong local voices in favor of green energy, albeit within a mix of energy sources. The Tennessee Valley Authority, a federally owned utility that serves several Southern states, is one example: It’s adopting nuclear, solar, hydroelectric, biodiesel and natural gas to generate electricity, along with controversial coal. And its leaders expect this hybrid approach to continue in the coming years as they seek to achieve net zero goals without experiencing disruption.

This stance won’t appeal to die-hard environmentalists; least of all in California whose senate voted overwhelmingly this week it passed a bill to force its public funds to divest completely from fossil fuels. But this “hybrid” stance captures a broader zeitgeist among many leaders in the American South. While Texas is notoriously central to oil and gas, for example, it is the first US state in terms of wind energy and is on its way to becoming the largest producer of solar energy as well. This green record has attracted some local opposition; listen to this great podcast for proof of this. But attendees at the Fed meeting seemed to assume that hybrid energy was the only way forward.

“People want to make money green, even if they don’t want to talk too much about oil and gas,” one business executive told me. He considers this, if you will, one of the great victories of the Inflation Reduction Act: “renewable” is no longer a derogatory term. (Gillian Tett)

Smart readings

• Tom Wilson of the FT talks about it what could prove to be a historic turning point: International Energy Agency head Fatih Birol said investment in solar energy will outpace spending on oil production this year.

• Norway’s $1.4 trillion sovereign wealth fund will support climate-focused shareholder proposals at ExxonMobil and Chevron, increasing pressure on US oil giants to introduce carbon reduction targets, reports Richard Milne from Oslo.