This month in ESG: a trillion in renewables, rhino bonds, and massive disaster costs
10 May 2022 at 5:02 pm
In a brand new monthly column for Pro Bono News, Terence Jeyaretnam takes us through the top 10 ESG markers for April.
Another busy month in ESG over April, with expansions in renewable fuels and energy projects. However, the revision by the IPCC for emissions peak to be by 2025 (only three, that’s right three, years from now) to maintain a 1.5 degree trajectory is concerning, along with the continuation of the eastern Australian floods, the devastating South African floods and record heatwaves in India, all capturing the attention of this monthly column.
“ESG markers” – like biomarkers that tell us how healthy our body may be – show us the big movements in the field of ESG in Oceania and globally. Here (in no particular order) are my top 10 from April 2022.
(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!)
Almost one trillion of renewables pipeline in Australia
Australia boasts a pipeline of almost $1 trillion in large-scale renewable projects, encompassing technologies including onshore and offshore wind, solar PV, hydrogen electrolysers and storage, according to a Rystad Energy analysis (as reported by Renew Economy). This comprises a total of around 1,300 projects by 600 proponents that amount to some 400 gigawatts of new capacity. That is more than enough to supply the amount of electricity in Australia, several times over, as well as looking at significant export opportunities via direct infrastructure such as Sun Cable and Hydrogen and Ammonia. Some of these “giga-scale” projects are some of the largest proposed, even at a global scale including the 26GW Sun Cable, a 32 GWh battery, and 52 GW and 25 GW windfarms. Furthermore, Fortescue Future Industries has signed a memorandum of understanding with German energy giant E.ON to produce up to five million tonnes of green hydrogen by 2030.
Greenhouse gas emissions must peak by 2025, says IPCC
The third and final report of the latest assessment by Intergovernmental Panel on Climate Change (IPCC) calls for greenhouse gas emissions to peak by 2025, and be nearly halved this decade to give the world a chance of limiting future heating to 1.5C above pre-industrial levels. The final cost of doing so will be minimal, amounting to just a few percent of global GDP by mid-century, though it will require a massive effort by governments, businesses and individuals.
World Bank sells first rhino bond to aid conservation
The World Bank has issued the world’s first wildlife conservation bond, raising $150 million to help efforts to increase the endangered black rhino population in South Africa, which accounts for approximately half the total black rhino population on the continent. The five-year rhino bond will pay investors returns based on the rate of growth of black rhino populations at South Africa’s Addo Elephant National Park and the Great Fish River Nature Reserve. After five years, investors would get a return of between 3.7 per cent and 9.2 per cent if the population increases. On the other hand, they would get no return if there is no change in the black rhino population.
Review of the Australian Modern Slavery Act underway
On 31 March 2022, Assistant Minister for Customs, Community Safety and Multicultural Affairs Jason Wood MP, announced the commencement of the government’s statutory review of the Commonwealth Modern Slavery Act 2018. The review will be undertaken by Professor John McMillan AO, supported by the Australian Border Force. The review commenced on 31 March 2022 and will be completed within 12 months. The review will have regard to the extent to which the mandatory reporting criteria set out in section 16 of the act are appropriate, the appropriateness of the $100 million reporting entity threshold, reporting periods and reporting deadlines, and whether it is necessary or desirable for an independent body, such as an Anti-Slavery Commissioner, to oversee the implementation of the act and/or the enforcement of the act.
Canada introduces mandatory climate disclosures for banks, insurance firms by 2024
Canada will require banks and insurance companies to provide disclosures on their climate-related risks and exposures by the start of 2024. The budget also outlines over $9 billion in proposed funding to address climate change, and plans for a new green bond offering over the next year. While the rules do not yet apply to other companies, the regulator will also expect the financial institutions to collect and assess information on climate risks and emissions from their customers, as a consequence covering the whole economy.
India experiences record heatwaves
An unprecedented heatwave in South Asia brought dangerously high temperatures to over a billion people. India and Pakistan have been hit the hardest. Temperatures topped 45 degrees celsius. The heatwave began in late March for northern India and Pakistan and spread into the first weeks of April. Although heatwaves are not uncommon in this region during the pre-monsoon season from April to June, it’s been noted that this heatwave was the earliest on record. In addition to the heat, the region has also recorded a significant rainfall deficit in the pre-monsoon season since early March. According to the Indian Meteorological Department, many Indian regions are experiencing a 99 per cent deficit in normal rainfall amounts.
Floods devastate South Africa
The recent South African floods have killed more than 450 people and made thousands homeless. The storm, which delivered close to an entire year’s usual rainfall in 48 hours, took meteorologists by surprise and has been blamed by experts on climate change. The new disaster comes after three tropical cyclones and two tropical storms hit south-east Africa in just six weeks in the first months of 2022.
Counting the toll: Eastern Australian floods 2022
The 2022 eastern Australia floods were one of the nation’s worst recorded flood disasters, with a series of floods that occurred in South East Queensland, the Wide Bay-Burnett and parts of coastal NSW. Brisbane suffered major flooding, along with the cities of Maryborough, Gympie, the Sunshine Coast, Caboolture, Toowoomba, Ipswich, Logan City, the Gold Coast, Murwillumbah, Grafton, Byron Bay, Lismore, the Central Coast and parts of Sydney. Damage from floods is expected to reach almost $1.5 billion, as additional Australian Defence Force troops came to aid in clean-up efforts.
Insurance Council of Australia figures calculate the cost of claims from the disaster is now $1.45 billion, but it is expected to rise once the extent of the damage is known. According to the council, insurers had received more than 96,000 claims, with 80 per cent of those for homes, thus far. Sixty nine per cent of claims have come from Queensland, and 31 per cent have come from NSW. Twenty-three people are known to have died during the disaster.
According to the Washington Post, for many locations, the recent flooding was a once-in-a-lifetime event, as rainfall totals set records. Sydney had its wettest 16-day period on record. Brisbane set a new three-day record, receiving 26 inches from 25 to 28 February. The probability of so much rainfall in Brisbane within 72 hours is just between 0.5 and 0.2 per cent in any given year. Brisbane also set a new weekly rainfall record of 31 inches, the highest observed since records began in 1840. The village of Dunoon received the second-highest daily rainfall ever recorded in New South Wales, at 30 inches in 24 hours on 28 February. The small rural town of Doon Doon in New South Wales received 41 inches in 48 hours, which is calculated to be greater than a one-in-1,000-year event (meaning there is only a 0.1 to 0.05 per cent chance of it occurring in any given year). In many regions, rivers also flowed out of their banks to record levels. The Wilsons River at Lismore reached 46.6 feet on 28 February – eclipsing the previous record from 1954 by 6.5 feet.
Shell triples renewable energy capacity
In a $1.6 billion acquisition that will triple its operational renewable energy capacity, Shell announced the acquisition of Solenergi Power Private Limited, the direct shareholder of the Sprng Energy group of companies in India, from Actis. Sprng supplies solar and wind power to electricity distribution companies in India, with a current portfolio of more than 2.9GW-peak of assets, and another 7.5 GW of projects in its pipeline. Renewable energy is estimated to comprise approximately 60 per cent of India’s installed power capacity by 2030, from 24 per cent in 2020.
Impact of the French election on climate action
France’s voters have said in the polls that alongside the cost of living, climate change is one of their most pressing issues. Despite this, only 5 per cent of airtime was given to discussing climate change by both presidential contenders, Emmanuel Macron and Marine Le Pen. Macron has vowed to completely renew his climate policy, to build up to 14 nuclear reactors by 2050 and regenerate existing plants. France currently relies on nuclear power for about 67 per cent of its energy and around 6.7 per cent of France’s industrial workforce are employed in the sector. On renewables, Macron has committed to set up 50 offshore wind farms, increasing solar panels tenfold and naming a new minister for energy.