Q2 2024 was an eventful quarter, with a plethora of developments across different spheres of business, geographies and life. While it witnessed some terrible weather events, it saw governments and activists making good progress on sustainable agendas. It was also a politically crucial period, with the largest economies preparing for elections, which would ultimately decide the fate of climate policies. As you scroll through this newsletter, feel free to click on the links (mostly in the headers) to get more details on the topic. Happy Reading!
Tussle at the Court
The Supreme Court in April this quarter overruled its blanket ban on overhead transmission lines, affecting mainly solar power projects, in the habitat of the endangered Great Indian Bustard. Electrocution of the bird due to open wires and loss of habitat had led to the ban in 2021, but in a landmark judgement recently, we saw the Supreme Court siding with the renewable energy companies. The Supreme Court recognised right against climate change as a fundamental human right, which is linked to the right to life and equality – meaning that development of renewable energy is important to battle climate change - a fundamental right. Hence, in this environment vs development debacle, the Supreme Court suggested all parties to adopt a recalibrated approach that could meet both objectives.
Europe's top human rights court in Strasbourg ruled that the Swiss government had violated the rights of its citizens by failing to do enough to combat global warming. More than 2,000 women over 64 who had initiated the case, said their government's inaction put them at risk of dying during heatwaves. They argued their age and gender made them particularly vulnerable, and demanded that Switzerland design its climate policy in a way that would limit global warming to 1.5 °C.
High Court Judge, Justice Clive Sheldon sided with three environmental groups that brought the case, ruling that the UK government’s decision to approve its Carbon Budget Delivery Plan last year was “simply not justified by the evidence.” It is the second time in two years that the government’s main climate action plan is found to be unlawful and insufficient in meeting legally-binding targets to cut greenhouse gas emissions. The judge said the details in the draft plan were “vague and unquantified,” and didn’t provide officials with enough information on whether the plan should be approved. Government officials said they would publish a new report within 12 months following the judge’s ruling.
Regulatory Ramifications
The month of May 2024 saw two important developments on the Business Responsibility and Sustainability Report (BRSR) applicable to top 1000 listed companies in India (by market capitalisation):
An Expert Committee under SEBI released draft recommendations to ease reporting under BRSR. The notification was three-fold, involving topics such as value chain reporting, green credit program and BRSR assurance.
The National Stock Exchange (NSE) released FAQs-related to BRSR, clarifying common errors and inconsistencies that it had noticed in the past years.
The International Sustainability Standards Board (ISSB) published the IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy), allowing investors to search, extract and compare sustainability-related financial disclosures through digital tagging of information. It does not however affect companies’ compliance with the Standards. It is consistent with the existing IFRS Accounting Taxonomy and facilitates interoperability with other taxonomies.
6. Slew of Strong European Reforms
The EU Council has:
given its final approval to the Corporate Sustainability Due Diligence Directive (CSDDD), which mandates large companies to address their negative impacts on human rights and the environment in their supply chains.
approved the Nature Restoration Law wherein EU countries will be required to restore at least 30% of habitats such as forests, rivers, grasslands, wetlands, lakes and coral beds deemed in poor condition by 2030. This percentage is set to increase to 60% by 2040 and 90% by 2050.
adopted the final version of the ‘Hydrogen and Decarbonised Gas Market Package’. The new package updates the rules for gas network and market operations, with the overall aim to make the regulatory framework fit for a future gaseous energy mix that includes a growing share of renewable and low carbon gases.
After months of negotiations, Denmark unveiled a plan to put a price on greenhouse gases emitted by cows, sheep, and pigs. The proposed law was born from an agreement between the government and “the Green Tripartite” – made up of farmers, the food industry, and environmental groups – and is expected to be approved by the Danish parliament later this year. This comes with the backdrop of Denmark setting a binding target of 55 to 65 per cent emissions cuts from the agriculture sector in 2021, which is expected to account for almost half of Denmark’s total greenhouse gas emissions by 2030.
Industry Updates
Exasperated by the flood of subsidized Chinese EVs, global economies are retaliating with heavy border tariffs. With America's homegrown EVs costing an average of $55,000, roughly double the price of their Chinese counterparts, the US raised the tariff on Chinese EVs from 27.5% to 102.50%. The EU too has levied tariffs of upto 37.6% on these low-cost vehicles. India, which already has 70-100% import duty on EVs, has relaxed some rules for the luxury EV segment that meet the domestic manufacturing criteria.
As per a report released by SBTi (Science Based Targets Initiative), India’s growth curve was the steepest with a 520% increase in the number of companies setting SBTi approved net zero targets in 2023 compared to the previous year. This represents 93 companies in 2023, against 15 companies in 2022. As many companies in India are part of the value chains of large companies headquartered elsewhere, SBTi expects this growth to have a powerful effect on the scope 3 emissions of companies all over the world.
News that Caught Our Attention
10. Increasing extreme weather events
The United Arab Emirates (UAE) recorded the heaviest rain ever, after a severe thunderstorm hit the country on April 15 late night. Brazil witnessed severe floods killing around 150 people and displacing 600,000 others. More than 1,300 people died during this year’s Hajj due to heatwaves, with a larger number of heat stress cases reported. The national capital - Delhi recorded its highest-ever temperature of the season as the mercury soared to 52.3°C. In most cases, experts attributed these extreme weather events to climate change and global warming.
In April this quarter, the SBTi said that it was considering adding carbon offsets as a way companies might address emissions in their supply chain. Offsets generated can include things such as tree-planting projects or direct-air capture, undertaken by third parties. But many offsets have been criticized, some for being outright ineffective, and others for discouraging carbon reduction in the first place. The announcement was met with much backlash, a great deal from the SBTi’s employees writing letters to the board and CEO, condemning the decision. Many even stated that it diverted from SBTi’s ‘science-based’ or ‘empirical approach’ to tackling emissions. The proposal is still in consultation phase, and a final decision is pending.
Fun Read
The cities you won’t find on the map - Link
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