The latest insights from the We Mean Business coalition

March 31, 2023

Net zero transition – the latest signals of change: March 31, 2023

We Mean Business Coalition

Signals of change in the net zero transition this week include the passing of key climate legislation in Australia and the EU.

Net Zero Economy

EU legislators reached an agreement on new climate legislation this week to double the share of renewables in the bloc’s electricity mix by 2030. The revised renewable energy directive includes a legally binding target to raise the share of renewable energy in the EU’s overall energy consumption to 42.5% over the next seven years, with more ambitious member states encouraged to aim for 45%. Business networks including CLG Europe, who campaigned for a 45% target, welcomed the increased ambition.

The Australian government has also passed landmark new climate legislation requiring some of the country’s largest companies to cut emissions by 5% each year until 2030. The 200 facilities covered under the new safeguard mechanism account for around a quarter of Australia’s emissions, with the planned curbs predicted to reduce emissions by around 205 million tons by the end of the decade.

The European Financial Reporting Advisory Group (EFRAG) is set to focus on helping companies to implement its first set of European Sustainability Reporting Standards, while delaying the release of its sector-specific guidance. With the EU’s Corporate Sustainable Reporting Directive set to apply to large companies initially from 2024, EFRAG will hone its resources on creating a user-friendly and comprehensive documentation hub and facilitating educational initiatives for business.

Energy

In South Africa, renewable energy firm Juwi plans to install a further 1 GW of wind, solar and hybrid power plants in this year. The MVV Energie subsidiary already has 4 GW of installed renewables in South Africa and has shared that its Wolf Wind Project in the Eastern Cape province, developed for Red Rocket Energy, has completed financial arrangements and begun construction.

Iberdrola has announced that it will enter into power purchase agreements with Amazon to provide the company with electricity from its wind and solar projects in Europe, the US and the Asia-Pacific region. In Europe, Amazon will procure 1.1 TWh each year from two of the Spanish company’s offshore wind farms in German waters.

Electricity generated from renewables surpassed coal in the US for the first time in 2022, the country’s Energy Information Administration announced this week. Growth in wind and solar significantly drove the increase in renewable energy, contributing 14% of the electricity produced domestically. Coal power’s share reduced by 3% year-on-year.

Transport

The European Commission this week approved a law stating that all new cars sold must be zero-emissions vehicles by 2035. In a divergence from the original version, the new climate legislation will allow combustion engines for e-fuels after the 2035 deadline, provided they emit no carbon. The auto industry must also reduce emissions from 2021 levels by 55% by 2030.

In the Middle East, Ford has revealed plans to roll out its first EVs in the region next year, after expanding production capacity. The company, which plans to build 2 million EVs annually by 2026, is responding to demand by launching in the six Persian Gulf countries as a precursor to moving into the wider region. In hotter climates, EVs’ batteries must be kept cool, but Chris Noel, Managing Director of Ford MENA, says the company’s recent tests have gone well. “The key is going to be around public-private sector participation on charging infrastructure,” Noel said.

Retail giant Walmart’s new Director of Workplace Mobility has shared the company’s plans to get 10% of employees at its HQ using low-carbon transport by 2025. The 15,000 employees at Walmart’s headquarters in Arkansas, US are encouraged to commute via active or public transport – or any form of transit that isn’t a single-occupancy automobile. Less than 1% of its workforce currently meets that standard, according to the company. The scheme is aimed not just at reducing emissions, but at creating a healthier and happier workforce with greater access to the outdoors.

Land & Nature

This week, the Integrity Council for the Voluntary Carbon Market (ICVM) launched its Core Carbon Principles, as part of an initiative to reassure businesses about the quality of purchased carbon credits. Under the new guidelines, carbon credit certifiers will have to demonstrate how their credits were generated, show they offer genuine emission reductions or removals with scientific methods, and adhere to rules respecting the rights of indigenous communities. Further rules on permitted project types are due to be published in May.

Eight of the UK’s biggest grocery chains – representing an 80% share of the market – have kicked off a new initiative with WRAP and WWF to cut the sector’s climate impact. The Retailer Net-Zero Collaborative Action Plan, signed on to by household names from Aldi to Waitrose, aims to unify approaches used to measure the carbon footprint of food and drinks. Under the plan, the stores will work with 17 key suppliers this year to trial WRAP’s new measurement and protocols for measuring Scope 3 emissions. The project’s full roll-out would help customers across the country to choose food and drink options with lower emissions footprints.

Nestlé, Cargill and the National Fish and Wildlife Foundation are working together to scale the adoption of regenerative farming practices in the meat sector. A new partnership will see the companies support vital habitats for native wildlife in the US, investing a combined $15 million in the project. Cattle farmers in the companies’ supply chains will be supported to implement practices to help benefit hundreds of species, from migrating songbirds to freshwater mussels, while securing a sustainable and productive future for their farmland.

Built Environment & Heavy Industry

Australian developer Landlease is constructing a New York tower block that will become one of the United States’ largest heat-pump-heated residential buildings when complete in 2025. The geothermal system at the 1 Java Street development is expected to reduce carbon emissions by 53% compared to a similar building using conventional heating and cooling systems.

UK homebuilder Taylor Wimpey has published its climate transition action plan, submitting its goal to reach net zero by 2045 for SBTi approval. The company predicts that its measures to reduce Scope 1 and 2 emissions will only incur a small net cost, with cost efficiencies from reduced energy use offsetting expenditure. Priorities during the first phase of Taylor Wimpey’s plan include improving home energy efficiency, procuring renewable electricity for new sites, finding alternatives to diesel generators and decarbonizing supply chains for key materials.

And in heavy industry, Swedish steelmaker SSAB has estimated a boost of almost $1 billion to its annual profits by 2030 from its shift towards carbon-free metals production. The producer stated last year that it would accelerate a switch to fossil-free steel production and invest heavily in a bid to dramatically cut its CO2 emissions within the next decade. The annual improvement in earnings would come from energy and material cost cuts, higher volumes and premium product deliveries.

Company Commitments

1 company joined RE100:

JK Lakshmi – Indian cement manufacturer

12 companies committed to set science-based targets aligned with SBTi’s Net Zero Standard:

Artwell Holdings Ltd – Hong Kong-based textiles company

BWI Group – Chinese mobility company

DO & CO AG – Austrian hospitality company

HMD Global OY – Finnish technology company

INDUSTRIALIZADORA OLEOFINOS S.A DE C.V. – Mexican food company

J Barbour & Sons Ltd – UK-based fashion company

Kerry Properties Limited – Hong Kong-based real estate company

LOTTE SHOPPING Co., Ltd. – South Korean retailer