Deutsche Bank’s Asset Management Arm, DWS Group, Under Investigation

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Deutsche Bank’s Asset Management Arm, DWS Group, Under Investigation

Deutsche Bank’s asset management arm, DWS Group, is under investigation after the former Head of Sustainability, Desiree Fixler, claimed they overstated how much sustainable investing criteria was used to manage assets.

DWS Group has over $1 trillion in assets under management.

Once news broke, the DWS Group’s stock price fell 13% in 24 hours.

The investigation, launched by the U.S. Securities and Exchange Commission (SEC) and federal prosecutors in Brooklyn, New York, is still in its early stages.

With environmental, social, and governance (ESG) initiatives rising, the SEC has established a 22-person task force to investigate ESG investment disclosures – and other global regulators have joined in.

The goal is to prevent “greenwashing” – disclosure-related fraud involving ESG investments.

If you’re wondering why companies would want to “greenwash” their investments so that they appear more favorable, consider this:

  • ESG investments totaled $51B in the U.S. as of 2020.
  • Morningstar reports that assets in ESG funds have surpassed $2 trillion globally during the second quarter of 2021 alone, with investments on track to exceed $53 trillion by 2025 (according to Bloomberg).
  • According to Bank of America, ESG investing could rise by $15 trillion to $20 trillion over the next decade due to changing demographics. In other words, Millennials and Gen Z care about the environment and want to invest in its future.

Because of SEC oversight, investors can now feel confident as they invest in various ESG funds since they will no longer be green in title only.

For investors that still feel suspicious about ESG funds, the carbon offset industry can serve as an excellent alternative. It is projected to reach $100B in value by 2030, up from just $300 million in 2018.

Unfortunately for Deutsche Bank, the struggle to restore its brand may continue.

After several investigations concerning their long-term client, former President Donald Trump, and a $125 million penalty regarding foreign bribery schemes and manipulated precious metals markets, this new investigation may be more challenging to recover from.

As of now, no statement from DWS Group or Deutsche Bank has been released.

The ESG industry and investors alike are watching closely to see what happens.

BRIC Nations Take Stance Against EU’s Tax

Tony S
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BRIC Nations Take Stance Against EU’s Tax

BRIC nations have called the EU’s Carbon Pricing Schemes “discriminatory”, aligning themselves with India who took a stand against the carbon tax. These nations – Brazil, Russia, China and South Africa – have released statements opposing the EU’s plans to stand with India.

The EU’s plan would tax foreign carbon imports as if they were made in the EU. As a result, this would massively restrict world trade, especially from nations with less carbon legislation.

BRIC nations have opposed the EU’s plan, but are working on the reduction of emissions jointly. As well as working on carbon emissions, BRIC nations are also looking at water and air pollution in urban areas.

The major climate change conference, COP26, is coming up in November. This conference provides a massive opportunity for BRIC nations to make their ideas heard and possibly affect future carbon legislation. As well, legislation could be introduced to reduce air and water pollution in addition to biodiversity loss.

BRIC nations realize that climate change is an urgent matter. India’s environment minster Bhupender Yadav outlined the impending danger of climate change saying the world faces a “now or never” situation. The recent IPCC report has provided the BRIC nations a reason to act. Collective global actions will need to be taken to stop climate change.

Maersk Orders Eight Zero-Carbon Tankers to Set Sail in 2024

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Maersk Orders Eight Zero-Carbon Tankers to Set Sail in 2024

Shipping giant Maersk has taken a big step to reduce carbon emissions by purchasing eight new tankers powered by carbon-neutral methanol.

Maersk’s goal?

To deliver net-zero emissions by 2050.

The purchase of eight new zero-carbon tankers is only the beginning.

Maersk is committed to launching an entire carbon-neutral fleet by 2030.

These eight new vessels, built by Hyundai Heavy Industries, will prevent 1 million metric tons of carbon from being pushed into the atmosphere – a reduction of nearly 3%.

Green methanol is a newer, carbon-neutral fuel produced using biomass or renewable hydrogen combined with carbon obtained from biomass or capture. Hyundai designed the ships to run on both green methanol and standard fuel since there is currently not enough carbon-neutral fuel available within the market. This should change over time.

Last year Maersk emitted 33 million tons of carbon into the atmosphere.

While some may feel eight ships isn’t enough effort, it is undoubtedly a solid and impressive start.

Maersk’s new ships are expected to launch in 2024 and will carry 16,000 containers each.

The vessels are 10-15% more expensive than the normal vessels Maersk has purchased in the past (costing $175M each ship). However, it is well worth the investment. Many of Maersk’s customers – such as Amazon, Disney, and Microsoft – are focused on cutting their emissions – and the supply chain process for their goods is a part of that.

Nearly 3% of all carbon emissions are a result of ocean transport. Since 90% of world trade happens by boat, you can expect many other shipping companies to follow Maersk’s lead.

As more and more consumers recognize the importance of reducing carbon emissions, demand for zero emissions, green methanol, and other environmentally friendly fuels will only increase.

The decarbonization of fleets, combined with innovative technology, and the carbon offsetting industry, will play a significant role in improving our atmosphere. With so many options at hand, there is a world of opportunity for companies, customers, farmers, and more.

EU Carbon Futures Hits an All-Time High

Tony S
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EU Carbon Futures Hits an All-Time High

EU carbon futures have shot up to above €59/mt, the highest price so far in the history of the future. EU carbon futures have been slowly approaching the €59/mt mark since early July, however, have not broken through. But futures shot up today due to the current strength of the energy sector.

Additionally, supply has been cut drastically from government auctions in primary supplies. As well, beginning August 30, only three auctions will occur due to holidays and closures, meaning a reduced supply.

The EU ETS has been slowly growing since the beginning of the year when it started at around €33/mt. It hit €40 in February and then €50 in May. Now it approaches the €60 mark, almost double what the futures started the year at.

The UKA prices continue to stay flat. The UK has yet to unveil its major plans towards carbon emissions. The KRBN ETF continues to rise as it rose just under 5% today. The carbon market has shown its strength this year. As more countries begin to roll out further carbon restrictions, we may see a shift in carbon ETF’s and futures. The race against climate change is heating up. Urgent action is required and that may include higher carbon prices.

Maersk Purchases Carbon Neutral Tankers

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Maersk Purchases Carbon Neutral Tankers

Shipping company Maersk (Ticker AMKBY) has purchased 8 carbon neutral tankers to prove its commitment towards a green future. The carbon neutrality in the tankers comes from low emitting methanol fuel.

The shipped are pegged to be completed in 2024 saving 1 million tons of carbon emission. In addition, the ship capacity will be 16,000 shipping containers.

Hyundai will be providing the facilities to build the tankers. Currently, each tanker comes in at a price tag of $175 million meaning the total investment will be around $1.4 million. As well, there are talks of Maersk buying four more additional tankers.

Many large companies such as Apple and Amazon have set carbon neutrality targets. Now, the shipping industry is taking steps towards a net-zero future. The shipping industry accounts for 3% of carbon emissions worldwide. Moving the shipping sector towards carbon neutrality is a huge step in the fight against climate change.

The CEO of Maersk is committing to a greener future, saying “The time to act is now if we are to solve shipping’s climate challenge”. In addition, the company said it was committed to helping customers seek a greener future, as well as helping customers decarbonize supply chains. This is a huge step in the shipping industry towards carbon neutrality.

Scope 3 Emissions Reductions Considered by SEC

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Scope 3 Emissions Reductions Considered by SEC

Scope 3 carbon emissions are emissions that do not come directly from a company or assets they own. Nonetheless, those emissions are still emissions. Emissions that fall under this category include emissions from the transportation of the good or how a consumer uses the product. With all this information, the SEC is still considering whether to include these emissions when considering the carbon neutrality of companies.

The problem when considering indirect emissions into regulations is that they are usually the largest and hardest to detect. How can a company find out how consumers use their product? It requires a lot of assumptions into calculating final numbers, many of which are wrong.

The IPCC report that outlines the impending danger of climate change urges immediate action. The SEC mentioned that many companies offer voluntary disclosures regarding scope 1 and 2 emissions. They have also discussed with companies how to disclose indirect emissions. There is still nothing concrete about how companies should disclose their emissions yet.

Scope 3 emissions account for around 65-95% of a company’s total carbon output. In turn, indirect emissions, therefore, have the most potential for reductions. But scope 3 emissions should be released and open if there is to be any reduction of emissions to keep companies accountable.

Methane a Leading Factor in Climate Change, Scientists Say

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Methane a Leading Factor in Climate Change, Scientists Say

Carbon dioxide emissions are a leading cause of climate change. But there are other Greenhouse Gases that are also affecting climate change.

Based on a recent UN study, Methane gas was found to be 80 times more potent than carbon dioxide in terms of warming power change.

While reducing carbon emissions is important as ever, methane emissions will need to be reduced quickly as well.

According the IPCC, a UN body responsible for climate change, methane levels are at their highest point in 800,000 years.

The high level of methane goes hand in hand with the temperature increases seen across the globe. To keep under the limit set by the Paris agreements, restrictions could be implemented to curb further temperature increases.

Methane is the key ingredient in natural gas, used to heat homes everywhere.

It is produced in nature by plants and also produced by livestock and landfills, as well as the oil and gas sectors.

While natural gas is less harmful than using coal as a power source, it is not perfect.

Any leaks from natural gas pipelines could be extremely harmful to the atmosphere. Leaks also occur from oil and gas deposits as well.

The U.S. government has been looking at ways to view methane. With infrared cameras and satellites, scientists can see where large leaks are happening on a national level.

More work will need to be done to reduce methane emissions. Obviously, changes to the oil and gas industry will come, but restricting the livestock industry could come with severe consequences.

Germany Under Fire for Emissions

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Germany Under Fire for Emissions

The UN recently released a report outlining the urgent dangers of climate change. This has led to debates about how individual countries are implementing carbon laws to reduce emissions, specifically Germany.

A British MP stated that major countries are vital to reducing the effects of climate change. One such country being targeted by the MP, John Redwood, is Germany. Mr. Redwood is quoted as saying “It’s only going to work if Germany, which puts out twice as much as we do, starts to take the issue seriously and closes down its coal power stations.”

According to the European Environment Agency, Germany produced 853.3 Mt of carbon dioxide emissions in 2019. In the same year, the UK produced 365.1 metric tons of CO2. The evidence does support Mr. Redwood’s claims.

However, many factors come into play for these numbers. Manufacturing is a large industry in Germany. 23% of Germany’s GDP comes from manufacturing, compared to 11% of the UK’s GDP. Manufacturing is a high-emitting industry.

In addition, the UK has a smaller population. Around 17 million more people live in Germany.

One massive problem facing the central European nation is its reliance on coal power. Around 25% of German power comes from coal power plants. Coal is one of the worst ways to produce power in terms of reducing carbon emissions.

Germany has pledged to remove all coal power plants by 2038 but that may not be fast enough to stop climate change.

Carbon Tax Being Discussed in the United States

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Carbon Tax Being Discussed in the United States

Democratic Senator Ben Cardin from Maryland stated there is support in the Senate to institute a carbon tax. The discussions come as the EU and China have already implemented measures to curb carbon emissions

With the Glasgow Climate Change Conference is coming up in November, the U.S. has yet to announce in what direction they will move to reduce carbon emissions.

The recent report from the IPCC has concerned world leaders. Global temperature levels are increasing far quicker than expected. The limit of 1.5 degrees Celsius above pre-industrial levels is close.

The report stated if immediate action is not taken, then temperature levels will rise above what is required for normal weather.

A carbon tax would increase taxes on businesses and industries which pollute the most. Specifically, in terms of carbon emissions. This would include increasing gasoline and natural gas prices in households.

The white house has previously mentioned it is leaning towards implementing clean electricity throughout the states, rather than a carbon tax. But the impending danger of climate change may implore President Biden to create many facets to reducing carbon emissions.

Currently, Democrats have introduced laws requiring fossil fuel producers to pay into a climate fund related to the number of emissions produced.

The U.S. is the second largest emitter of carbon emissions in the world currently. Important decisions await President Biden as the climate crisis grows.

Verra VCS Program Offers A Unique Opportunity for Carbon Offsets

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Verra VCS Program Offers A Unique Opportunity for Carbon Offsets

Companies cannot eliminate carbon emissions overnight and developing the technology takes time. Unfortunately, with climate change, time is not on their side.

While there is still a lot of work that needs to be done, companies can reduce carbon emissions right now through carbon offsets.

Here’s how it works:

Companies purchase carbon credits through a carbon marketplace and each credit equals one metric ton of carbon, or greenhouse gas (GHG). One ton of carbon or GHG is then removed from the atmosphere through reforestation, improved forest management, and green energy.

Consider it a trade. A company puts one ton of carbon into the atmosphere. Then, they remove it through something positive, such as planting a forest.

If you were wondering just how lucrative carbon offsetting is, the industry is projected to hit $100B by 2030 – up from $300M in 2018. So, opportunities within the carbon offset industry are endless.

Credits are certified by independent agencies where it’s the agency’s job to verify and manage the standards, projects, and transactions that take place. There are currently four major Green House Gas (GHG) crediting programs that certify projects:

  1. Verra’s Verified Carbon Standard,
  2. Climate Action Reserve,
  3. Gold Standard, and
  4. American Carbon Registry.

Let’s look at Verra’s Verified Carbon Standard (VCS) Program

Verra’s program boasts 1,700+ certified green projects that have removed more than 714 million metric tons of carbon from the atmosphere. They require registered projects to upload descriptions, auditing reports, and the status of all credits issued and retired.

All relevant information is easy to use and understand and CME Group – one of the world’s leading derivatives marketplaces – agrees.

On August 1st, CME Group created their N-GEO™ futures contract where its goal goes beyond just reducing carbon emissions. Their focus is to support biodiversity and conservation efforts within local communities.

They plan to do that by using Verra’s Verified Carbon Standard (VCS) program to measure offsets – a big deal for Verra and the carbon offset industry.

Though each crediting program has excellent incentives, Verra’s Carbon Standard is one to watch.

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