Happy Lunar New Year of the Ox! Although I live in France, Chinese New Year is always a special time which takes me back to my childhood in Hong Kong and happy memories associated with a period when energy goes from head to heart, from business to human connection.
The traditional greeting of 恭喜發財 (Kung Hei Fat Choy) is all about wishing others a prosperous new year. 2021 in fact marks a turning point for ESG requirements which will have long-term impacts on how business is done, and ultimately on how we define “prosperity”.
In Europe, we have entered a new policy and regulatory regime with the EU Green Deal and the EU Taxonomy on Sustainable Finance setting the tone for a landscape reset in terms of transparency requirements around material ESG issues.
In this newsletter, we’ll look at a comparison between the EU Taxonomy and its Chinese counterpart, as well as several climate milestones from France.
Highlights from green and sustainable finance
💡Historically, Europe and China have been leaders in green finance, starting with the green bond, and in 2020 both of them launched their respective classification systems which define what is a sustainable business activity and investment.
Swedish bank SEB published a helpful comparative analysis earlier this month.
👉 In fact, they are hard to compare because the Chinese approach defines sustainability from a project point of view, whereas the EU version looks at environmental objectives.
Why are they different? Because they were designed for different users.
The EU Taxonomy will be used by regulators and financial market actors to report the alignment of their products. The Chinese Green Bond Catalogue was developed for green bond issuers and regulators to identify and disclose the financing of projects which are sustainable.
One key difference to note is that the Chinese Green Bond Catalogue includes nuclear power in its definition of green, while the EU Taxonomy does not.
The EU version has detailed metrics including, for example, carbon emissions for many activities, whereas the Chinese version does not refer to any specific threshold.
👉 In a landmark legal decision (link in French), a French court ruled earlier this month that the French government’s inaction on climate change is illegal.
The case was brought by a group of non-governmental organisations (NGOs) and backed by over 2 million citizens who accused the French state of not living up to its own commitments.
In its ruling, the Administrative Tribunal of Paris said there were “wrongful deficiencies on the part of the state in implementing public policies to allow it to achieve objectives it had set on the reduction of greenhouse gas emissions.”
The decision follows a similar ruling from the Netherlands in 2019 when the country’s top court ordered the government to slash emissions by 25 percent - far above the reductions the country had managed to that point.
👉 Joining the stampede to rebrand as clean and green, oil giant Total has proposed a name change to TotalEnergies. Time will tell whether this is greenwash, or whether the long-term aspiration is to emulate Ørsted, the largest offshore wind developer in the world, previously called Danish Oil and Natural Gas (DONG Energy), but changed its name in 2017 after selling off all of its fossil fuel assets.
From the podcast and beyond
Since our last newsletter, we’ve published 3 more episodes in our more ESG-focused second season.
🎧 In the latest episode, I talk to Siddarth Shtalekar about his ground-breaking work at Sacred Capital to redefine wealth as social and cultural, through tools developed on distributed ledgers. The distributed tech space is one that’s developing fast, and has the potential to integrate with the real world over time in the same way that we’re starting to see with decentralized finance.
🎧 In episode #13, I talked to Michael Rogerson, a researcher at the University of Bath, about the important and uncomfortable topic of modern slavery in the supply chain. We are completely enmeshed through our purchases of electronics, clothing and food in a system that perpetuates suffering and human rights abuses, and yet this topic does not get the attention it deserves in the media or in the policy agenda. Find out what we can do to eliminate this scourge, and why a piece of draft EU legislation could change the game on corporate reporting for this in 2021.
🎧 In episode #12, I talked to Marilyn Waite from the Hewlett Foundation about the recent arrival of philanthropic foundations into the green and sustainable finance space. Foundations are influential actors who will play an increasingly important role behind the scenes in the coming years.
Our next episode will be all about climate litigation in Australia, which is fast becoming the standard bearer for a new type of climate action: via the courtroom.
In the meantime, 新年快樂 🐂🧧