International initiatives attempting to promote better climate practices are hindered by the lack of ambition in corporate ESG transparency. US companies lag behind the ambition of regulators The Securities and Exchange Commissions made headlines in March by proposing new climate disclosure rules for listed companies in the United States. Concretely, large companies would be required to disclose their Scope 1 and 2 GHG emissions, certain financial statements, as well as qualitative and governance information within registration statements and annual reports. The proposed rule has faced resistance from corporate America, with business associations including the U.S. Chamber of Commerce, the Bank Policy Institute, the National Association of Manufacturers and the American Petroleum Institute asking the SEC to scale back on the required disclosures. This reaction is a reflection of how far behind large companies in the US are in terms of ESG transparency. A recent JUST Capital report found that only 57% of the 1,000 largest companies by market capitalization (the Russell 1000 Index) disclose their Scope 1 and 2 emissions. About 43% of them disclose their emissions reductions commitments; 30% disclose Scope 3 emissions from business travel; and only 11% and 7% disclose climate commitments in line with science-based targets for Net Zero by 2050 and 1.5°C temperature rise, respectively. Even Blackrock, an investment firm known for pushing companies in its portfolio to take climate action, wrote a letter to the SEC saying that its proposed rules risked increasing compliance costs for companies and creating confusion for investors. Considering the level of backlash, the SEC will likely have no choice but to reign in its regulatory ambition, keeping the level of ESG commitment in corporate America lower than in other parts of the world. Stricter ESG reporting requirements coming into force in the EU  In the European Union, large companies have been required to report on their ESG performance since 2018, when the Non-Financial Reporting Directive (NFRD) came into effect. The NFRD applies to all public interest companies with more than 500 employees, a balance sheet that exceeds €20 million or a turnover that exceeds €40 million – about 11,700 companies in total. As a result, 100% of companies included in the NFRD disclosed their GHG emissions in 2020, and 74% included their Scope 3 emissions in the report, according to the Climate Disclosure Standards Board.  Now, the EU is preparing to introduce the Corporate Sustainability Reporting Directive (CSRD), an updated version of the NFRD that increases its reach and scope. It is estimated that about 50,000 large and small companies in Europe will have to comply with the CSRD by the time it reaches full implementation in 2026. The new rules will require them to disclose detailed and audited information on their ESG impact, in line with the EU Green Deal and Green Taxonomy. More on this: Your guide to sustainability reporting in the EU Lack of information delays the publication of ESG benchmark in Spain and Italy UK ratings agency Standard Ethics is planning to create a sustainability index for mid-sized Spanish and Italian companies, but has been forced to delay it due to the scarcity of information disclosed. In a press release, Standard Ethics revealed that the publication of the ESG index has been moved from June to November 2022, “due to the additional time required by Standard Ethics’ analysts to complete a correct and more in-depth analysis of the Indices’ potential components given the complexity of locating the necessary public documentation”. Large companies in these countries do have a sustainability index, as they are already subjected to the rules of the NFRD and required to disclose information about their ESG impact. In Spain, the FTSE4Good IBEX Index identifies Spanish companies with leading corporate responsibility practices. Carbon footprint calculation: the first step towards ESG transparency If you are a company that hasn’t yet had to comply with ESG reporting requirements, now is the time to prepare. In order to disclose your emissions, the first step is to calculate them. Check out our guide to calculate your company’s CO2 emissions or get in touch with one of our experts to start the journey. Article written with contributions from Francisco Martín Rubio, head of ESG services at ClimateTrade.

Here are the main takeaways from the EU Green Week 2022 conference, which took place from May 30 to June 1. EU Green Week  is an annual event for all stakeholders to debate Europe’s environmental policy.  In 2022 the theme was EU Green Deal – Make it Happen, and the hybrid conference tackled three aspects of the transformation – circular economy, zero pollution, and biodiversity. Ahead of the conference, Virginijus Sinkevičius, European Commissioner for Environment, Oceans and Fisheries said: “Russia’s invasion of Ukraine has changed our world. Showing solidarity and helping Ukrainians is a top priority, but the war has also shown that we need to strengthen our resilience in response to crises. Climate change, biodiversity loss, and pollution don’t go away when war breaks out. And this is why we have the European Green Deal, our compass for the good and the bad times. At this year’s EU Green Week, I am looking forward to discussing with people from all over Europe about how we can level up our actions to protect our environment.” Day 1: Focus on nature-based solutions On the first day of the conference, nature-based solutions were recognized as key to combating climate change. Most of the winners of the LIFE Awards, announced Monday May 30th, focus on ecosystem and biodiversity conservation in places including Cyprus, Estonia and Germany. LIFE Awards winners The LIFE Award for Nature went to LIFE-KEDROS (Cyprus) for enhancing the conservation status and resilience of cedar forests at risk from climate change in Cyprus. The LIFE Award for Environment went to Clean Sea LIFE (Italy), an awareness-raising project to reduce marine litter along Italian coasts. The LIFE Award for Climate Action went to LIFE VinEcoS (Germany) for boosting biodiversity in vineyards in Saxony-Anhalt, Germany to make them more climate-resilient. Executive Vice-President for the European Green Deal, Frans Timmermans, said: “Nature restoration is an incredibly powerful tool to tackle both the climate and the biodiversity crisis. We need to protect and restore nature, so it can protect us.” At ClimateTrade, we agree wholeheartedly. That’s why you can find many nature-based solutions projects on our marketplace and, since last week, you can even buy biodiversity credits from Terrasos’ Bosque de Niebla Project in Colombia! Browse nature-based solutions projects Day 2: Focus on regulatory efforts On the second day of the conference, speakers reinforced how important laws and their enforcement are to promote a circular economy, ensure zero pollution and restore nature. According to them, the EU needs to start the institutional framework to say loud and clear: ‘We no longer accept unsustainable products.’ Even if it is not popular. Interestingly, speakers mentioned that ‘Polluter pays’ is a principle in the founding treaties of the EU, but that governments find it hard to implement. In fact, only 0.2% of tax revenue is based on pollution and resource use, compared to 54% from labour taxes. Enforcement is key to reach zero pollution and promote the circular economy. Finally, they pointed out that nature restoration is human protection. Questioning the need for a nature restoration law is questioning that humans are part of nature. At ClimateTrade, we support holistic climate action. Visit our marketplace to browse sustainable projects around the world.

Russia’s invasion of Ukraine has had catastrophic human consequences, with thousands of casualties and millions of people fleeing the country. But it is also having a negative impact on the climate, jeopardizing efforts to meet the goals of the Paris Agreement. Russian sanctions Europe has historically been very dependent on Russia to meet its energy needs. Natural gas represents about 20% of its energy mix (the different sources of energy that are used to make electricity) and in 2021, about 40% of all the natural gas imported by Europe came from Russia.  When Russia invaded Ukraine, the European Union retaliated by imposing economic sanctions on the country, and particularly on its banks to hinder financial flows. As the war progressed, sanctions became harsher, many exports to Russia were banned, pipeline projects were stopped and several countries began boycotting Russian oil and gas.  Today, the US has banned all oil and gas imports from Russia and the UK has announced that it will phase out these Russian products by the end of 2022. The EU itself is not in a position to take such a firm stance, but several EU countries, including Estonia, Lithuania and Latvia, have stopped purchasing fossil fuels from Russia. Fossil fuel subsidies This desire to cut energy ties with Russia has disrupted the global fossil fuel market, leading to a sharp rise in gasoline and electricity prices. This has spurred general discontent among the population, fears of rising energy poverty, and trucker strikes. As a result, many governments are promising to cut taxes on fossil fuels, backtracking on a recent trend to increase them to discourage their purchase. Even in California, a US state known for its commitment to climate action, the Governor recently proposed a US$400 yearly rebate per car to bring residents some relief. Return to coal  To make up for the lost oil and gas supply, as well as rising prices, many countries are also turning to a cheap but highly polluting source of energy: coal. Coal consumption in Europe had been declining steadily in recent years, and as recently as October 2021, during COP26, many countries were calling for a total ban on coal. But now, plans to close coal plants have been stopped and the consumption decline has slowed down: from a 29% drop between 2017 and 2019, it went to just 3% between 2019 and 2021. This is likely to slow down Europe’s decarbonization in the short term, even though in the long term, the European Union wants to double down on renewable energy development to get closer to self-sufficiency. Amazon deforestation Another, lesser-known impact of the Ukraine crisis is the threat of further deforestation in the Amazon. Brazil’s far-right President Jair Bolsonaro is a strong supporter of economic development in the region – denying environmental concerns and indigenous rights to land – and he is now using the Russian war as an argument for more extraction in the Amazon. Brazil’s agricultural sector relies heavily on fertilizer imports, and the majority of those imports come from Russia. As the war began, Bolsonaro identified an “opportunity” for Brazil to become less reliant on Russia by developing its own fertilizer production – mining potassium from the Amazon. Even though indigenous leaders have pointed out that only 11% of potassium reserves are inside indigenous lands, the president’s declarations have supported the acceleration of deforestation – both legal and illegal. This pattern has led many experts to warn of an upcoming “tipping point”, where large parts of the rainforest will turn into dry savannah, changing weather patterns and releasing billions of tons of carbon dioxide into the atmosphere. While the short-term social and economic consequences of the Ukraine-Russia war are undeniable, global leaders should not lose sight of the bigger picture in grappling with them: climate change remains the biggest threat for human life on this planet, and our window for action will not stay open much longer.