Q3 Newsletter: Rationalising ESG
- Disha Veera
- 2 days ago
- 8 min read
Updated: 2 days ago
Q3 2025 was a tumultuous quarter that saw a fight between simplification and deregulation. While the US continued on its new agenda to promote oil and gas, the EU witnessed delays in its new deforestation bill. On the other hand, developing economies like China and India witnessed growth in clean-tech and renewables, leading the market as their western counterparts slowed down. Sustainability outflows continued, however investor reports showed relevance, even as companies continued silently on their ESG agendas.
In this newsletter, we have also added a section in the memory of the famous zoologist Dr Jane Goodall, who died on October 01, 2025.
Do click on the headlines to check out the source links and get more detailed insights – Happy Reading!
GLOBAL REGULATORY UPDATES
In the backdrop of the US SEC alienating its climate disclosure requirements, the state of California is preparing for its climate reporting regulation that comes into force from 2026. The California Air Resources Board (CARB) published a list of 4,160 companies subject to the state’s new climate disclosure laws, SB 253 and SB 261. Signed in 2024, the rules mandate Scope 1–2 emissions reporting from 2026, Scope 3 from 2027, and risk disclosures by January 2026. Covering most large US firms, including a majority of the S&P 500, the laws apply to U.S.-based entities with more than US$ 1 billion in annual revenue (for greenhouse gas reporting) or more than US$ 500 million in annual revenue (for climate-related financial risk reporting) that "do business" in California.
The CARB also recently released a “draft checklist”, which provides additional clarity for climate risk reports.
While reporting on Scope 1 and 2 emissions remains mandatory for all listed companies from FY 2025, reporting on scope 3 emissions has been made voluntary for companies that are not part of the Straits Time Index (STI). This excludes many large listed companies from the ambit of scope 3 reporting.
The timeline for external limited assurance has been shifted from FY 2027 to FY 2029. The delay was brought about in response to the global sentiment on climate change and as a measure to provide sufficient time for smaller companies to prepare for these disclosures.
The International Organization for Standardization (ISO) and Greenhouse Gas Protocol (GHG Protocol) have announced a landmark partnership to integrate their existing portfolios of greenhouse gas (GHG) standards and to co-develop new standards for GHG emissions accounting and reporting. This shall combine standards from the ISO 1406X family of standards, alongside the GHG Protocol Corporate Accounting and Reporting, Scope 2 and Scope 3 Standards. The two organisations are also working on a product carbon footprint standard as more and more companies are using this information in their decarbonisation strategy.
The integrated standards are expected to bring about more consistency and facilitate comparability for investors.
INVESTOR UPDATES
The Net-Zero Banking Alliance (NZBA) will cease operations following a member vote to wind up the group after a mass exodus of banks amid US political pressure. Once representing over 140 banks with US$ 74 trillion in assets, the group has faced mounting political pushback and a string of departures including Goldman Sachs, major Wall Street peers, Canadian banks, and more recently HSBC, UBS, and Barclays. The group had already loosened its requirements earlier this year by dropping mandatory alignment of lending and capital markets with 1.5°C pathways, however this move failed to meet its purpose.
While the membership-based structure will dissolve, NZBA’s widely used “Guidance for Climate Target Setting for Banks” and related resources will remain publicly accessible to support financial institutions in setting emissions targets.
To start with, the survey recorded an underwhelming response rate than previous years, with ESG-based investments becoming a more political and controversial subject. Despite this, the survey noted that 86% of the respondents had clients advocating the use of ESG, as against 35% that had clients against the use of ESG (with some having a combination). Alignment with organisational values, impact of social and governance issues on financial performance were the top three reasons for utilising ESG consideration in the investment process.
Climate, energy and agriculture were the top three sectors of interest for impact investors, followed by financial services, healthcare and water solutions.
BlackRock Inc. lost a mandate worth € 14.5 billion (US$ 17 billion) with PFZW, one of the largest pension funds in the Netherlands, amid concerns that the world’s biggest money manager isn’t acting in the best interests of clients when it comes to climate risk. PME, another Dutch pension manager, reported that it is reviewing its mandate with BlackRock, valued at around € 5 billion.
This comes against a contrary pressure by the US government to withdraw from funds that advocate sustainability in their investment process. BlackRock, amid political pressure, exited from Net Zero Asset Managers initiative and is offering "wealth-focused" proxy voting options to clients who oppose environmental and social shareholder proposals. These actions have put the firm at loggerheads with its climate-conscious clients who view these as diluting focus on critical climate risks.
INDUSTRY UPDATES
Indian Railways announced the launch of India’s first hydrogen-powered train on the route connecting Jind and Sonipat in Haryana. The train successfully cleared major trials and is likely to be operational from March 31 next year. With this step towards eco-friendly transportation, India is set to become the fifth country globally, alongside Germany, France, Sweden, and China, to deploy trains powered by hydrogen technology.
The Ministry has plans to develop and deploy 35 such hydrogen trains under 'Hydrogen for Heritage' Initiative, operating across heritage and hill routes. The Ministry also has plans for supporting infrastructure, including an integrated facility for hydrogen production, storage and dispensation to support train operations.
A Frankfurt-based court barred Apple from marketing its Apple Watch as “CO₂-neutral,” ruling the claim misled consumers. The case, brought by Deutsche Umwelthilfe (an environment and consumer protection group), argued Apple’s reliance on a Paraguayan eucalyptus offset project was flawed, with leases expiring in 2029, casting doubt on the project’s long-term viability. Further, the use of monoculture eucalyptus plantations for carbon offsets has been heavily criticised by ecologists, who argue they threaten biodiversity and demand intensive water resources.
The ruling comes as the European Union prepares to introduce legislation in 2026 restricting the use of terms such as “carbon neutral” unless they are backed by robust scientific evidence.
Renewable energy, led by solar energy, for the first time, overtook coal as the world's leading source of electricity in the first half of this year. Coal, a major contributor to global warming, was still the world's largest individual source of energy generation in 2024, a position it has held for more than 50 years. However, increased capacity outpacing electricity demand growth in China and India contributed significantly to rising use of renewable energy.
In contrast, developed nations like the US and the EU, saw an opposite trend, with increasing reliance on coal and gas to meet energy demands. The International Energy Agency (IEA) further slashed its forecast for US renewables growth over the next five years by nearly half, in light of President Donald Trump’s cuts to tax credits for renewables, increased tariffs on some solar panel imports and pausing of approvals for renewables projects on federal lands and waters. As a counter-effect of these actions, the US is ceding most its renewables business to markets like China and India, as the demand for renewables continues to grow.
OTHER UPDATES
The EU proposes to delay its deforestation rule by another year: Read more
US SEC Chair threatens disallowing IFRS-aligned reports without reconciling to US GAAP, over IFRS Foundation’s expanding role in ISSB (overseeing sustainability standards): Read more
The Net Zero Tracker released during the New York Climate Week shows an increase in net zero targets by private companies: Read more
The Rainforest Alliance launched a new Regenerative Agriculture Standard to support coffee farmers and restore ecosystems in tropical regions: Read more
SPECIAL MENTION – in the memory of Dr. Jane Goodall
Dr. Jane Goodall, a renowned zoologist and primatologist, died on October 1 at the age of 91 of natural causes.
Dr. Goodall was world-renowned for her 65-year study of wild chimpanzees in Gombe, Tanzania. Later in life, however, she broadened her focus, becoming a global advocate for a range of crucial issues, including human rights, animal welfare, species and environmental protection.
Here’s a short summary of her most notable work:
1. The Discovery of Tool Use and Manufacturing
This is arguably her single most famous scientific achievement. In 1960, Dr. Goodall observed a chimpanzee she named "David Greybeard" strip leaves from a twig and use it to "fish" termites out of a mound. This observation shattered the long-held scientific belief that only humans made and used tools. Her mentor, Louis Leakey, famously remarked, "Now we must redefine 'tool,' redefine 'man,' or accept chimpanzees as humans."
2. Challenging Scientific Orthodoxy by Naming Subjects
Before Dr. Goodall, traditional scientific practice mandated that researchers use numbers, not names, to refer to their animal subjects to maintain objectivity. Dr. Goodall chose to name the chimpanzees (like David Greybeard, Flo, and Fifi) and describe their distinct personalities, emotional lives, and familial bonds. This revolutionary, personal approach introduced the idea that animals, especially chimpanzees, are complex, sentient beings with rich inner lives, fundamentally changing ethology (the study of animal behaviour).
3. Long-Term Documentation of Complex Social Behaviours
Through her decades-long study at Gombe, Dr. Goodall documented the full spectrum of chimpanzee society, revealing both their wonderful and terrifying similarities to humans:
Affection and Altruism: Documenting deep mother-infant bonds, comfort embracing, and even adoption of unrelated orphans.
Darker Behaviours: Observing the Gombe Chimpanzee War (1974–1978), where one group systematically killed members of another, revealing their capacity for systematic violence, hunting, and cannibalism. These findings secured her position as one of the greatest field scientists.
4. Founding The Jane Goodall Institute (JGI)
In 1977, Dr. Goodall transitioned from being solely a field scientist to a global conservationist. She founded the Jane Goodall Institute to continue the Gombe research while also scaling up efforts to protect chimpanzees and their habitats across Africa. JGI pioneered the "community-centred conservation" model, recognizing that chimpanzees cannot be saved unless the local human communities living near them thrive and are included as partners in conservation efforts.
5. Establishing the Roots & Shoots Youth Program
Founded in 1991, Roots & Shoots is a humanitarian and environmental program that empowers young people in nearly 100 countries to take action to make the world a better place for people, animals, and the environment. This global initiative solidified Dr. Goodall's legacy as a powerful advocate and educator, proving her commitment to inspiring future generations of conservation leaders worldwide.
In the words of Dr Jane Goodall:
“You cannot get through a single day without having an impact on the world around you. What you do makes a difference, and you have to decide what kind of difference you want to make.”
HIRING ALERT:
We are hiring a content intern for our firm!
If you are a student who possess good communication skills and is genuinely interested in the field of sustainability, then this one’s for you! Send us your resume with a short note on why you wish to apply at info@esgityadvisors.com.
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