Yesterday, Zach wrote that Poland generates so much renewable power that prices go negative during peak sunlight hours. Looks like California is in a similar boat – but with potentially more perverse impacts. According to this piece from the Washington Post, “… the state and its grid operator are grappling with a strange reality: There is so much solar on the grid that, on sunny spring days when there’s not as much demand, electricity prices go negative. Gigawatts of solar are ‘curtailed’ — essentially, thrown away. In response, California has cut back incentives for ..read more

One of the world’s premier climate pacts for financial institutions is the UN-backed Net Zero Banking Alliance (NZBA). Formed in 2021, the NZBA aimed at getting financial institutions to adopt voluntary climate commitments to limit global heating to 1.5 degrees Celsius. NZBA is one of the most stringent climate pacts with over half of its 144 members adopting SBTi targets for 2030. However, the effectiveness of NZBA and other climate finance pacts is being called into question. The European Central Bank (EBC) recently published a paper looking into the effects of voluntary climate commitments ..read more

More about banks and climate… The Reserve Bank of New Zealand (RBNZ) released their stress tests to assess New Zealand banks’ resilience to climate risk. The results may be surprising – and controversial: “The key stress-test for New Zealand’s five largest banks in 2023 … show that the ‘Too Little Too Late’ scenario did not threaten bank solvency, as all banks were able to maintain their capital ratios. However, it did highlight that climate-related risks have the potential to significantly reduce bank profitability, raise risk-weighted assets and reduce shareholders’ returns over the medium ..read more

I’m a fan of making things simple, easy to understand and practical. That is a challenge in ESG, sustainability and climate matters, especially when so many practitioners seem to revel in opacity, ambiguity, complexity and the insular lexicon of the space. However, last week renowned Harvard and Oxford professor Robert Eccles wielded a light saber like a Jedi master through the Empire of Climate Financial Risk Overcomplication. His article in Forbes (subscription may be required) is the clearest explanation I’ve seen of climate-related financial risk. Spoiler alert – he’s not talking climate i ..read more

It turns out you can have too much of a good thing. Recently, Poland’s renewable energy production was a little too effective, creating an oversupply and pushing the price of electricity into negative levels. This resulted in the government ordering cuts to renewable energy in order to balance things out, as Bloomberg reports: “Sunny and windy weather increased production from solar panels and wind turbines amid reduced weekend demand, triggering the need to balance the country’s power system, state grid operator Polskie Sieci Elektroenergetyczne SA [PSE] said on its website. It prompted the ..read more

In a small victory for DEI, a U.S. appeals court upheld a ruling blocking a Florida law signed by Governor Ron DeSantis, which prohibited mandatory workplace diversity training promoting certain progressive concepts. The law, known as the Stop WOKE Act, banned discussions on topics like inherent racism or sexism and imposed penalties on violators. The court found the law violated free speech rights by targeting specific ideas deemed “offensive.” The decision comes amid broader debates on state laws discouraging corporate stances on social issues. The challenge was brought by businesses and a c ..read more

[Ed. note: You can read Part 1 of this series here, along with Part 2 and Part 3.] In Part 1 of this “occasional blog series,” I introduced a very simple model of how executives think about business. In Part 2, the original model was expanded to reflect elements of current conditions and expectations of future conditions: If we apply the expanded model concept in Part 2 to the ESG/CSO model from Part 1, we get something like this: Following this general structure, business opportunities come from finding future improvements over a current (actual) situation. These can be revenue increases an ..read more

The EU’s Corporate Sustainability Reporting Directive (CSRD) and its accompanying European Sustainability Reporting Standards (ESRS) require companies to disclose a lot of information. Among that information is key data on companies’ climate transition plans and strategies, and part of that disclosure includes explaining how these plans and strategies are funded. Real Economy Progress reports on a recent study from the French Autorité des Marchés Financiers (AMF) assessing company readiness stating: “CSRD demands a level of granularity that can’t be captured by companies’ current tools, the r ..read more

The EU Emissions Trading Scheme (ETS) is often considered the gold standard for cap and trade policy. The government sets a certain number of carbon allowances, and companies are allowed to trade allowances on a secondary market. Funds generated from carbon sales are invested into decarbonization technology and used to transition the EU to a low carbon economy. However, as reported by Politico, a wrench has been thrown into the gears of the ETS mechanism – lower than expected carbon prices. The article states: “A generation ago, the EU made a big bet: It could climate-proof Europe by making c ..read more

ESG Investor wrote about their Stewardship Summit 2024 earlier this month. One of the topics discussed was how investors are engaging with oil and gas companies, and the information they use to do so. In general, the article explains that the industry isn’t particularly effective at communicating their future plans and investor engagement can only do so much. For instance: “Oil and gas companies are improving on climate-related disclosures, but are still failing to provide evidence of alignment with decarbonisation metrics and targets, Valeria Piani, Head of Stewardship at UK-based long-term ..read more