Weekly Roundup December 23

Invert is focused on providing clients and subscribers up-to-date news on net-zero developments, carbon markets, and how many sectors are evolving to meet climate change goals and ESG requirements.

Special Announcement

The last Weekly Roundup of 2022 is upon us and the team at Invert want to thank you for your continued readership and wish you all a Happy Holiday season! See you all in the New Year!

World Reaches Global Agreement on Biodiversity

Delegates from 196 nations reached an agreement on a post-2020 Global Biodiversity Framework, known as the Kunming-Montreal Agreement, at the UN Biodiversity Conference (COP15) in Montreal. The framework sets out a plan for how the world will work to stop and reverse the loss of global biodiversity, including a commitment to protect 30% of land and oceans by 2030 and to take urgent action to end human-induced species extinction by 2030. The agreement also includes a financial component, with developed nations committing to increasing their contributions to $20bn per year by 2025 and $30bn by 2030.

Invert Insights: This landmark agreement aims to halt the continued human impacts on earth's ecosystems and species by integrating biodiversity into policy-making processes. For organizations, this means not only understanding your carbon footprint, but your risks, dependencies, and impacts on biodiversity. Similar to the current evolution of carbon disclosure requirements, mandatory reporting on biodiversity impacts may one day be required.

IFRS - ISSB Announces Guidance and Reliefs to Support Scope 3 GHG Emission Disclosures

The International Sustainability Standards Board (ISSB) has released guidance to support companies applying the Climate-related Disclosures Standard (S2) requirement to disclose Scope 3 greenhouse gas (GHG) emissions when material for a company. The ISSB has agreed to a framework for the measurement of Scope 3 GHG emissions using "reasonable and supportable information that is available without undue cost or effort and incorporates the use of estimation” and to temporarily exempt companies from disclosing scope 3 GHG emissions for a minimum of a year after the effective date of S2. The ISSB has also confirmed it will further refine proposed requirements for financed emissions for asset management and custody activities, commercial banks and insurance, and will consult on priorities including biodiversity, ecosystems, ecosystem services, human capital, human rights and reporting connectivity.

Invert Insights: Understanding an organizations Scope 3 emissions is necessary in order to assess their transition risk, as Net Zero emissions requires all emissions scopes to be addressed. As further guidance is developed by the ISSB, companies will have increased clarity on how best to address, measure, and disclose emissions throughout their value chain.

Deal on a More Ambitious Emissions Trading System

The European Parliament and EU governments have agreed to reform the EU Emissions Trading System (ETS) to reduce industrial emissions and invest more in climate-friendly technologies. The reform will increase the emissions cut required from sectors covered by the ETS to 62% by 2030, compared to 2005, and includes the phasing out of free allowances for industries in the ETS and the establishment of a new ETS for transport and buildings by 2027. The reform also includes the extension of the ETS to cover shipping for the first time, the creation of a market stability reserve, and the inclusion of municipal waste incineration installations in the ETS from 2028.

Invert Insights: The EU continues to strengthen and expands its emissions trading system and ensure emitters must purchase their right to pollute. The reform of the ETS will have wider implications for global markets due to its impact on global industries, such as the shipping sector, and may inspire or influence similar policy actions in other countries.

Biden-Harris Administration Announces $3.7 Billion to Kick-Start America’s Carbon Dioxide Removal Industry

The US Department of Energy (DOE) has launched four programmes aimed at developing a carbon dioxide removal industry in the US. The programmes, which are funded with $3.7bn from President Biden’s Bipartisan Infrastructure Law, will accelerate private-sector investment, improve monitoring and reporting of carbon management technologies, and provide grants to state and local governments to purchase and use products developed from captured carbon emissions. The DOE’s programmes, in conjunction with the Inflation Reduction Act, aim to reduce economy-wide greenhouse gas emissions to 40% below 2005 levels by 2030.

Invert Insights: This latest set of programmes continues to build on previous incentives to develop the technologies needed to address legacy emissions and create new economic opportunities by incentivizing demand for the downstream utilization of captured CO2.

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