The latest insights from the We Mean Business coalition

March 10, 2023

Net zero transition – the latest signals of change: March 10, 2023

We Mean Business Coalition

Signals of change in the net zero transition this week include a major industrial decarbonization project in Germany and carbon-capturing tequila in Mexico.

Net Zero Economy

In Canada this week, the financial industry regulator published a set of guidelines for banks, insurance companies and other regulated firms that will help them assess and disclose climate risks. Firms will need to release climate-related financial disclosures at least once a year, according to principles that will come into effect at the end of fiscal year 2024 for larger institutions and in 2025 for smaller firms.

CLG UK has shared a new policy brief setting out seven key areas the country must prioritize in the net zero transition. Leading the Way: How government can accelerate UK climate action across the economy includes a checklist ranging from investment to infrastructure, with the group arguing that ministers must take a holistic view of how to remove barriers to climate action.

And the Sustainable Apparel Coalition has unveiled guidance for the textile and fashion industry to help organizations set and commit to science-based targets and develop climate transition action plans. The group is urging its members – 270 leading fashion brands and clothing manufacturers with combined annual revenue of $845 billion – to ramp up efforts to deliver a 45% reduction in emissions by 2030. Luiz Amaral, CEO of the Science Based Targets initiative (SBTi) said the guide “provides a blueprint for other sector trade bodies to follow.”

Energy

A new study by the Lawrence Berkeley National Laboratory argues that Japan can achieve 90% clean power in its energy share by 2035. Japan, alongside the other G7 countries, committed last year to largely decarbonize their power sectors by 2035, but Tokyo has yet to map out a clear path for the goal. The study finds that raising the renewables share to 90% would cut electricity costs by 6% and reduce power sector emissions by 92% from 2020 levels.

UK oil and gas workers have signaled support for a just transition in the energy sector, calling for a government-backed job guarantee and a scheme for workers to retrain in renewables. A new report titled Our Power: offshore workers’ demands for a just energy transition, shares findings from a survey of 1,000 fossil fuel company employees, formulated as ten demands backed by workers and major unions.

And the latest annual report from Climate Group’s EP100 energy efficiency initiative shows that its 125 members have reduced more emissions than the combined annual emissions of Denmark, Italy and Portugal to date, saving $1.2 billion. In 2022, three of the members – Danfoss, JSW Cement, and Mahindra Heavy Engines Ltd – reported hitting their stated energy efficiency targets, doubling their energy productivity.

Transport

Siemens has announced construction of a $220 million train carriage factory in North Carolina, USA. The facility, due to open in 2024, is the company’s response to anticipated growth in demand for commuter and intercity trains across the country. Its first phase will create 500 jobs, and the factory will bring in $1.6 billion to the state’s economy over the first ten years. “This is not the limit – we are targeting more because we know that America is transforming its transportation system into a greener, more sustainable one,” said Siemens CEO Roland Busch.

To Japan, where automaker Nissan has unveiled its development strategy to ramp up electric vehicle (EV) production. By using the same components across models and reducing use of expensive rare materials, the company said development and manufacturing costs will be reduced by 30% in 2026 compared to 2019 levels. By 2030, Nissan’s EV offerings will cost about the same at dealers as the equivalent regular gasoline-engine models.

And cleantech startup ClearFlame Engine Technologies announced that it has raised $30 million aimed at bringing to market its solutions to power heavy-duty engines with renewable fuels. Patented in 2016, ClearFlame’s technology enables heavy duty diesel engines to run on cleaner burning renewable liquid fuels such as ethanol.

Land & Nature

In Denmark, dairy producer Arla has confirmed that its sustainability incentive scheme for farmers will go live in August this year. The initiative, announced late last year, sets aside €500 million per year to pay suppliers more per kilogram of milk if they can demonstrate reduced emissions across their value chain. Farmers will be scored across areas such as renewable energy procurement, efficient fertilizer use and nature impacts.

Staying in Scandinavia, IKEA has joined the CanopyStyle initiative to ensure that it only purchases viscose for its home textiles product ranges from producers that have achieved the highest ranking for environmental practices. The company will work with suppliers that focus on deforestation-free approaches and practices that protect ancient and endangered woodland.

Multinational drinks giant Beam Suntory, meanwhile, has launched a regenerative agricultural pilot in Mexico, which aims to halve emissions from its Casa Sauza tequila brand by 2026. The project will explore methods of maximizing carbon capture in agave fields by introducing additional plants that absorb carbon during the day between the rows of agave, which absorb carbon at night.

Built Environment & Heavy Industry

In Bangladesh, 186 factories are now certified by the US Green Building Council’s Leadership in Energy and Environmental Design standard, up from just three in 2014. Ratings are based on progress toward lowering carbon emissions, water and energy use, and making transport and materials more sustainable. Points are also awarded for improvements in worker health and the quality of indoor work environments. The article notes that factory owners have responded to pressure from international buyers for more worker-friendly and climate-smart products.

Germany’s ThyssenKrupp Steel has ordered a hydrogen-powered direct reduced iron (DRI) plant from engineering firm SMS alongside two innovative smelters, launching one of the world’s largest industrial decarbonization projects. Installation of the DRI plant, which is set to come online by the end of 2026, is expected to reduce the Duisburg steelworks’ emissions by 20% per year. It’s a significant step on ThyssenKrupp’s journey towards achieving 100% hydrogen-based steel production by 2045.

Finally, in Senegal, the International Finance Corporation – the World Bank’s private sector financing arm – has signed a partnership with cement manufacturer Sococim to mobilize a €242 million investment in low-carbon cement. The company will use the funds to replace part of its existing clinker production lines with a new, more fuel-efficient line.

Company Commitments

2 companies joined RE100:

Samsung Fire & Marine – Korean insurance company

Samsung Life Insurance – Korean insurance company

15 companies committed to set science-based targets through the SBTi Net Zero pathway:

All for One Group SE – German software company

Bravida Holding AB – Swedish engineering company

Brisa – Auto-estradas de Portugal,SA – Portuguese logistics company

Chaity Composite Ltd – Bangladeshi textile company

Destia Oy – Finnish construction company

Endress+Hauser AG – Swiss electronics company

Envision Digital International – Singaporean software company