Weekly Roundup June 24
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.
Senator Whitehouse and colleagues have introduced new legislation, the Clean Competition Act, which would create a carbon border adjustment mechanism to improve competitiveness of domestic manufacturers and tackle climate change. The environmental trade policy would impose a carbon border adjustment on energy intensive imports as well as a levy on domestically produced primary goods which fall below the applicable industry carbon intensity baseline.
Invert Insights: Absent a federal carbon price, the US is taking a novel approach to carbon border adjustment mechanisms by including domestic producers in the proposal. Given that US manufacturers are on average less carbon intensive than foreign competitors, the relative boost in competitiveness should improve the likelihood of this legislation passing the house and senate.
Natural Resources Minister Wilkson announced Canada’s low-carbon industrial strategy, officially known as the Regional Energy and Resource Tables, which sees the government partnering with each province to promote critical mineral infrastructure, hydrogen production, and other low-carbon projects. The focus of the strategy is to identify advanced projects in each region and help advance them as quickly as possible through various tools including direct funding through various government programs.
Invert Insights: The Canadian Government is seeking to capitalize on the diversity of industry and renewable and natural resources across the country by working with provinces individually and funding a variety of decarbonization strategies. Given the relative cleanliness of the Canadian electricity grid on a global basis, Canada is aiming to become a leader in the production of low-carbon products and development of green technologies through the use of public investment to incentivize further decarbonization and investment in these nascent industries.
The European Parliament Committee announced a new deal on corporate sustainability reporting requirements for large companies this week, aimed at ending greenwashing and laying the groundwork for global sustainability reporting standards. If ratified, firms would be required to disclose ESG risks and opportunities, the impacts of their activities on the environment and people, and have disclosures externally audited.
Invert Insights: This latest proposal goes a step beyond the proposals from the US SEC and the IFRS International Sustainabaility Standards Board (ISSB) by introducing more detailed requirements on environmental impacts beyond climate disclosures, as well as social rights, human rights, and additional governance factors. Investors and consumers are increasingly making decisions based on these disclosures and regulators are steadfast in determining these claims are not inaccurate or unsubstantiated.