FactSet StreetAccount publishes regular company-level and summary-style ESG news. Below is our recap of key ESG developments and insights over the past week.
This week, the UN held the first global water conference in over 50 years, yielding hundreds of voluntary pledges but little to no funding. We used FactSet Truvalue Labs data to look at the recent water-related news flow for select soft drink and consumer food companies. Among the highest scored companies were PepsiCo, General Mills, and Unilever. Among the lowest were Keurig Dr Pepper, Danone, and Coca-Cola.
Figure 1: FactSet Truvalue Labs Water Insight Score for Select Companies
Source: FactSet Truvalue Labs
Thematic sectors higher on the week with transition materials leading gains after surging on Albemarle's rejected $3.7B bid for Liontown Resources. Other lithium miners including Allkem, Pilbara, Piedmont, and Sigma gained in concert despite recent concerns of falling lithium prices driven by softening EV demand (the stated reason behind recent Lucid job cuts).
Despite demand concerns, EVs are outperforming on Chinese names. US EV makers are lagging APAC peers as Tesla's price-war triggering cuts seemingly backfired as data showed its cars lose value faster than rival models. Chinese consumers responded to cuts by favoring cheaper, newer BYD models; the company also reported strong Q4 results. EV infrastructure names higher this week following EU agreement for charging and hydrogen refueling station targets. The EU reached a deal with Germany to include exemptions for e-fuels in its 2035 ICE ban; Porsche's 911 brand expects to benefit from the compromise.
Wind pureplays stronger led by US developers as industry predicts rapid growth this year despite forecasts of a supply chain crunch by 2026. Analysts anticipate a nine-fold increase in renewable capacity by 2050, expecting Orsted, RWE, SSE, and Vestas to benefit. In the US, the DoE released its strategy to expand domestic offshore wind to meet its 30 GW by 2030 goal. US solar names and hydrogen segment also firmer on the week.
Global response to Biden's IRA package of green incentives in focus this week as Canada announced $26B of green investment tax credits. Echoing responses to the EU’s green economy plans, Canada's package received a muted response. Industry figures contend the incentives fall short of those in the US. The UK’s recently released energy security plan was similarly met with critique for its lack of support for clean tech.
In 2022, renewable energy generation surpassed coal for the first time in the US, according to a new study from the EIA. Companies growing concerned of threat of climate-related lawsuits as Biden administration prepares regulations for disclosure of climate-related risks. The US declined to support a UN resolution seeking an opinion from the International Court of Justice on nations’ legal obligation to address climate change.
The EU reached a provisional deal on higher renewable energy targets after negotiations were delayed due to treatment of nuclear energy. The bloc now targets reaching 42.5% production of renewable energy by 2030, with provisions made for nuclear to play a small role.
Australia passed a tougher emissions reduction law, the “Safeguard Mechanism”, that will curb some new gas and coal investments and requires emissions be reduced, not just offset. Passage came after the Greens’ party pledged support for the measure.
Social and Governance
The rapidly advancing use of AI in technology is raising ethical concerns, but big tech names, including Microsoft, Amazon, and Google have reportedly been cutting staff responsible for AI ethics, raising safety concerns. Some experts called for a pause on its training until safety protocols are developed while Britain seeks to share AI oversight across regulators and employ adaptable rules.
Some of France’s largest banks, including Société Générale and BNP Paribas, along with offices of HSBC, Natixis, and BNP’s Exane unit, were raided as part of a widening investigation into an alleged tax avoidance scheme. The banks collectively face potential fines of over €1B. Concurrently, a whistleblower alleges that Credit Suisse has aided wealthy Americans to avoid taxes for years.
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