ESG DAILY: ‘Misallocated’ Capital Raises Climate Risks, UN Warns

(Bloomberg) -- The world's leading climate finance experts and economists warn of a “persistent misallocation of global capital” as too much money continues to pour into fossil fuels and too little is channeled to clean energy. 

• In its latest assessment of global efforts to contain climate change, published Monday, the United Nations Intergovernmental Panel on Climate Change issued a stark alert that the world is on track to miss its target to limit global warming
• Finance is both driving the problem and a “critical enabler” in the energy transition, the panel said
• The IPCC findings add more cause for alarm amid signs that the energy transition is backsliding, as some nations scramble for polluting alternatives to Russia's gas in the wake of its invasion of Ukraine
• Financing for coal-related projects is running at a rate that's more than double last year's pace. The world already faced “large macroeconomic headwinds” hampering climate finance “even before COVID-19,” said the IPCC authors

FUNCTION OF THE DAY

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ESG MUST-READS

Environmental

• JPMorgan, Citigroup, Wells Fargo and Bank of America have financed the fossil fuel industry, while “claiming to care about climate,” Senator Elizabeth Warren said
• Earth is on track to warm to twice the Paris agreement's target level
• Five Takeaways from the UN's Latest 3,000-Page Climate Report
• Paris Agreement Architect Is Terrified by Lack of Climate Action
• Senator Joe Manchin is calling on the U.S. SEC to reconsider a plan to require companies to disclose information about their greenhouse gas pollution
• Climate change may cost the federal government an extra $25 billion to $128 billion per year by the end of the century, according to estimates from the White House
• Poland signaled that it wants to use coal to produce electricity after 2049 to bolster its energy security, underscoring the challenge the European Union faces in its goal of achieving climate neutrality by mid-century

To see Bloomberg's Climate Government Climate Risk Scores, click BI ESG GOVCLIMATE

Social

• Costs of caring for U.S. gunshot survivors come to about $2.5 billion in the first year after their injuries, according to a Harvard study
• More than 80 organizations pulled out of the U.K. government's international LGBTQ conference due to be held in June after Boris Johnson dropped a plan to ban so-called conversion therapy for transgender people
• A Spotify podcast union said its members are willing to walk off the job if the company doesn't meet its contract demands, complicating the streaming giant's effort to build out that business
• Twitter Chief Executive Officer Parag Agrawal has responded to a poll posted by Tesla chief Elon Musk by calling it important and urging users to “vote carefully.”
• Chipotle Mexican Grill said its goal to source and sell chicken that's certified as humanely raised has been delayed because suppliers weren't able to make the necessary changes without disrupting supply

For more on the Bloomberg Gender Equality framework, click GEI

Governance

• JPMorgan Chase said Jamie Dimon may stay on as chair of the board when he eventually steps down as CEO
• Shares of the shell company taking Donald Trump's media venture public extended their selloff after a report that a pair of key executives resigned and Elon Musk bought a sizable stake in social-media competitor Twitter
• Hasbro added two industry veterans to its board as the company looks to expand its digital-gaming business while fending off a proxy fight
• RWE rejected a request from activist investor Enkraft Capitalto propose an alternative supervisory board candidate to Essen mayor Thomas Kufen

For more ESG news, click DAYB for Bloomberg Daybreak

SUSTAINABLE FINANCE

• The New York Power Authority, the largest state-owned electric utility in the U.S., plans to sell about $600 million of tax-exempt green bonds
• Australian pension funds are increasingly weighing the use of shareholder resolutions to improve environmental, social and governance issues at the companies they invest in
• A German market is introducing a new sustainable debt structure to boost transparency and encourage more smaller companies to dip their toes into the ESG space
• Lazard Asset Management is screening for stocks that are ahead in the race to exit fossil fuels, as war makes reliance on oil, gas and coal riskier than ever
• More than 1,500 commitments by investors and financials were made in 2021 to phase out involvement in fossil fuels. However, not all participants are equally ambitious in their pledges

• New Issues:
  • Enel Finance priced GBP750 million 7Y sustainability-linked bond
  • Yorkshire Building Society priced GBP300 million social bond
• To see all ESG-related news on bond sales, click NI ESGBOND
• See SRCH @ESGALL for a search that includes all types of sustainable debt across all asset classes
• For sustainable debt data from BloombergNEF, click here
• Featured Data: Search “green” on LEAG for data on the biggest managers of green bonds and loans
• See SRCH or BI BESGG DEBT to access Bloomberg's sustainable debt data

RESEARCH AND ANALYSIS

• From BloombergNEF analysts:
  • EU jet fuel demand is increasing as the summer schedule kicks in
  • Solar PV asset owners in Europe are increasingly selling electricity on the spot market, attracted by skyrocketing power prices

  European power prices and LCOEs

  • From Bloomberg Intelligence analysts:
    • Biofuels offering the lowest carbon-intensity scores may become increasingly favored over the next decade as consumers seek to reduce CO2 footprints
    • Board independence and diversity are works in progress at NextEra
  • To see all ESG data available on the terminal, click ESGD
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  • For an overview of Bloomberg's ESG resources, click BESG

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