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| | | | |  | | By Debra Kahn | | | | | 
ESG investing is at a crossroads. | Claudine Hellmuth/E&E News (illustration); Arne Hückelheim/Wikipedia (pumpjacks); Freepick (stock ticker); jannoon028/Freepik (oil barrels) | 'EXISTENTIAL' ESG MOMENT — Sustainable investing is at a crossroads and needs clearer, more rigorous standards, according to a new report by accounting firm EY. Environmental, social and governance funds are huge — the fastest-growing asset management segment, according to Morningstar Inc., with $2.7 trillion under management as of last year — but they're confusing and opaque, EY points out. Greenwashing is rampant, and ratings systems are all over the place. That's a problem for investors, as is the basic fact that there's often a mismatch between investors' aims and what ESG scores are measuring. The report points out that 71 percent of investors worldwide say they want to have a positive impact through investing, but that ratings are mostly focused on companies' risk exposure to ESG factors rather than their impact on society. One of the report's recommendations is to develop "taxonomies" of what economic activities are considered sustainable. (That has its own pitfalls; see Austria's lawsuit this week against the European Commission for including natural gas in its list of green investments.) Another recommendation is to increase the transparency of ESG ratings. While investors often think they're getting a good sense of a company's performance on climate change, it actually makes up on average less than 15 percent of ratings companies' overall ESG scores. The risk of being misled is larger for millennials, 75 percent of whom said they want their investments to have a positive social impact. "If we don't get better at explaining to those investors where their money is really going, there's an opportunity for disappointment and accusations of greenwashing, and then a loss of trust for that generation in particular," said Steve Varney, EY's global vice chair for sustainability.
| | | MANCHIN DOES IT AGAIN — Sen. Joe Manchin (D-W.Va.) blew up Democrats' hopes of a climate and energy spending bill on Thursday, citing inflation, POLITICO's Burgess Everett reports. Manchin soured intensely this week on a deal that would have spent as much as $500 billion as inflation continued plaguing the economy, telling reporters on Wednesday that it was unclear what beyond prescription drugs Democrats could accomplish. He said anything Democrats pass needs to be “scrubbed” to make sure it's not inflationary. “Political headlines are of no value to the millions of Americans struggling to afford groceries and gas,” said Sam Runyon, a spokesperson for Manchin. “Sen. Manchin believes it’s time for leaders to put political agendas aside, reevaluate and adjust to the economic realities the country faces to avoid taking steps that add fuel to the inflation fire.” The move almost certainly quashes the prospects for major climate legislation this Congress, as Nick Sobczyk and Jeremy Dillon report for POLITICO's E&E News. With Republicans favored to take back at least one chamber in this year’s midterms, it could mean climate advocates will have to wait years to advance the kind of large-scale, emissions-slashing policies that were being negotiated as part of the reconciliation package.
| | | | INTRODUCING POWER SWITCH: The energy landscape is profoundly transforming. Power Switch is a daily newsletter that unlocks the most important stories driving the energy sector and the political forces shaping critical decisions about your energy future, from production to storage, distribution to consumption. Don’t miss out on Power Switch, your guide to the politics of energy transformation in America and around the world. SUBSCRIBE TODAY. | | | | | ALL EYES ON UTILITIES — Utilities are more crucial than ever to shifting to renewable energy and electric vehicles, especially after the Supreme Court struck down EPA's greenhouse gas rules for power plants earlier this month. But they're concerned it doesn't always make good business sense, writes Kristi Swartz of POLITICO's E&E News. See: Florida Power & Light Co.’s attempt earlier this year to hamstring rooftop solar power. Policymakers sometimes stand in the way. Georgia lawmakers don't want utilities to subsidize EV chargers on the backs of customers. And South Carolina utility regulators want utilities to keep coal plants running longer, despite Duke Energy's proposal to close its last one. Read more from Kristi here.
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Get ready for more debates over critical minerals. | Photo courtesy of the Arizona Geological Survey. | MORE COPPER — The push to achieve net-zero carbon emissions by 2050 will strain global copper supplies and threatens to push climate goals out of reach unless new supplies of the metal can be brought online quickly, according to a new report from S&P Global Inc., Jeff Tomich reports for E&E News. Electric vehicles, batteries, wind and solar components, and power lines and transformers will drive a global doubling in demand for copper to 50 million tons per year by 2035, the report says. An EV, for instance, requires about 2.5 times the amount of copper as an internal combustion engine vehicle, S&P said. For a heavy-duty truck, it can be four to 20 times as much copper. That's good news for mining companies (who backed the report). The U.S. is also projected to have to increasingly rely on imports — it's expected to be importing at least 60 percent of its supply by 2035, up from 10 percent in 1995 and 44 percent today.
| | | TGIF! Team Sustainability is editor Greg Mott, deputy editor Debra Kahn, and reporters Lorraine Woellert and Jordan Wolman. Reach us at gmott@politico.com, dkahn@politico.com, lwoellert@politico.com and jwolman@politico.com. Want more? You can have it. Sign up for the Long Game. Four days a week and still free. That’s sustainability!
| | | — Kelp farmers in Alaska are on the growing edge of an industry that could help counteract ocean warming and acidification. — Abortion could be what revives one Midwestern steel town across the border from more-restrictive states, the Washington Post reports. — KLM draws the aviation sector's first greenwashing lawsuit — over its "Fly Responsibly" ad campaign. — Defunct coal plants are set to provide the grid hookups for solar, storage and wind projects in at least 10 states, the NYT reports. — Intrigued by Matt Levine's description of this book: "a science-fiction comedy about … market manipulation in conservation-credit markets?"
| | | Events are listed in Eastern Time. July 16 — SEC Division of Enforcement Director Gurbir Grewal will give the keynote address at the 2022 South Asian Bar Association of North America Conference. 10:30 a.m. July 18 — The Brookings Institution holds its 11th annual Municipal Finance Conference through July 20. 11 a.m. July 19 — The House Financial Services Committee's Investor Protection, Entrepreneurship, and Capital Markets Subcommittee holds a hearing on "Oversight of the SEC's Division of Enforcement." 10 a.m. July 19 — The Senate Banking, Housing and Urban Affairs Committee holds a hearing on "Fairness in Financial Services: Racism and Discrimination in Banking." 10 a.m. July 19 — The House Energy and Commerce Committee's Oversight and Investigations Subcommittee holds a hearing, "Roe Reversal: The Impacts of Taking Away the Constitutional Right to an Abortion." 10:30 a.m. July 19 — The International Dairy Foods Association holds a "Regulatory RoundUP" virtual conference. Noon. July 19 — The House Oversight and Reform Committee's Environment Subcommittee holds a hearing, "Regenerative Agriculture: How Farmers and Ranchers are Essential to Solving Climate Change and Increasing Food Production." 2 p.m. July 20 — The Blockchain Association and Electric Coin Co. hold a pancakes-and-crypto discussion. 9 a.m.
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