31 Mar, 2021
Moving beyond E, S, and G; What rising EV demand means for supply chains
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The largest pension fund in the U.S. wants to have a conversation about sustainability that goes beyond just environmental, social and governance factors.
"At CalPERS we don’t really talk about 'ESG,'" Anne Simpson said this week at the Financial Times Climate Capital Live Summit. Simpson is managing investment director for board governance and sustainability at the California Public Employees' Retirement System, or CalPERS, which has total fund market value of approximately $447 billion.
"It is an acronym that is hard to integrate into investment because there is a letter missing — there is no 'F' for finance," Simpson continued. "The way we think about this is that there are three forms of capital that need to be managed to produce long-term sustainable value: Financial capital, human capital and natural capital, and that approach is now becoming more widespread."
This week we bring you stories about the ways that companies, investors and governments are approaching the whole sustainability alphabet soup — the E, S, G and F. In the U.S., we heard Special Envoy for Climate John Kerry hint that he is looking to line up green financing commitments from major lenders and asset managers ahead of U.S. President Joe Biden's April 22 climate summit.
We explore the growing appetite for electric vehicles in the U.S., which is leading to surging imports of lithium-ion batteries from Asia, and especially China.
EVs are also taking off in China, where by one estimate, sales of new energy vehicles and hybrid electric vehicles combined are expected to rise at least 15-fold by 2035, as the country works to meet President Xi Jinping's carbon neutrality pledge. China is expected to become the biggest market for U.S. carmaker Tesla in the long term, CEO Elon Musk said last week in an interview with Chinese state-run broadcaster China Central Television.
Podcast:
The United Nations warns that water scarcity could displace 700 million people by 2030. Water management is a threat for companies, too. S&P Global Trucost data shows that more than half of companies' water usage comes from supply chains, so even companies operating in water-abundant regions can be affected by scarcity, given the global nature of suppliers.
We explore the looming risks of water scarcity in the latest episode of S&P Global's "ESG Insider" podcast. We hear from Will Sarni, founder and CEO of water consultancy Water Foundry. Will says the world struggles to value water, which makes it difficult to secure capital investments in water technologies and solutions. To learn about some of the solutions that do exist, we talk to Emilio Tenuta, chief sustainability officer at Ecolab, a provider of water and hygiene solutions.
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Chart of the week
Top Stories
US lithium-ion battery imports jump as China seizes market share
Imports of lithium-ion batteries jumped 86% in the last three months of 2020 to 43.7 million kilograms, growing eight times faster than a year before, according to data from Panjiva. China shipped a 48% share of the imported lithium-ion cells and packs in the fourth quarter of 2020. The acceleration comes as the U.S. federal government reviews the risks of the country's rising reliance on foreign sources of critical battery metals and system components and seeks to stimulate domestic manufacturing, as President Joe Biden ordered in February.
Kerry looks to marshal bank financing commitments in climate change fight
"I'm talking now with many major finance institutions in the country, at a very high level, both asset manager and lending institutions, banks," John Kerry, Biden's special envoy for climate, said at a March 25 conference hosted by the Institute of International Finance. While Biden has pledged large amounts of government spending to achieve the transition away from fossil fuels, Kerry said the push will depend on private sector innovation. "We're on the cusp of a massive transformation," Kerry said. "And ultimately, the market is going to make the decisions, not the government."
Environmental
China's EV manufacturers, battery-makers eye greater control over nickel supply
Climate Bonds Initiative approves new sustainability criteria for hydropower
BlackRock, Vanguard, 41 other asset managers commit to net-zero emissions goal
Social
Flexible hours, political pressure may ease German bank gender problem
Bank of America boosts racial equality, economic opportunity pledge to $1.25B
Microsoft details additional efforts to help people develop skills, find jobs
Governance
UK proposes mandatory climate-related financial disclosures by 2022
Banks need market, standards in sync to boost sustainable lending – ING exec
Nearly half of UK's 100 biggest companies link executive pay to ESG measures
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