By Ira Srivastava
1. Citi clients are missing net-zero transition strategies. According to Citi’s annual climate report, 42% of their clients in the energy sector had low transition plan alignment, meaning “an absence of a substantive transition plan and/or disclosure on Scope 3”. Only 8% of energy clients assessed in the report had strong transition plan alignment. While generally performing well on Scope 1 and 2 emissions, failing to put strategies in place to limit Scope 3 emissions will make it extremely difficult to deliver on net-zero commitments. Citi highlights transition challenges including evolving disclosure requirements, global failures to reach emissions targets, over-reliance on climate technology that is still relatively new, and inequalities in developing countries’ transitions. Despite this, overall Citi’s absolute financed emissions across steel, energy, power, and coal mining have dropped year over year.
2. ESG investment trends in 2024. PitchBook, a company under the Morningstar umbrella, published a report analysing what ESG and impact investing will look like in 2024. Here are some key points:
- Despite varied investment returns, there is no clear evidence that there are negative financial tradeoffs of ESG and impact investing.
- Physical and transitional climate risks are impacting sectors and countries differently, while social diversity and inclusion issues that were once top of the agenda during the pandemic, have lost importance.
- Impact funds received significantly less cash flow in 2023 than prior years, although managers of these funds are performing better than their counterparts.
- Climate solutions are taking up larger shares of Impact funding.
- Fund managers are responding differently, with some pulling away from ESG and some continuing to embrace it.
Read the full report here.
3. Google debates charging a fee for AI searches. In a first for the tech giant, Google is considering charging users for an AI search feature. Google has always been a free service, and the current search function would remain free. However, the huge costs of an AI-powered search engine are causing Google to consider implementing a subscription-based model for access. This AI search is currently in testing and functions similarly to ChatGPT and other generative AI models. Training AI models is staggeringly expensive, with Amazon spending US$65 million on a single training program. The training price is only about 10% of the total cost, as 90% of AI spending goes “towards inferencing [the process by which an AI model is queried]”. Due to these high prices, other free AI services such as Bing are operating at a loss.
4. The UK is the first major economy to make significant emissions reductions. Between 1990 and 2022, the United Kingdom halved its emissions while seeing steady economic growth and exceeding carbon emission targets. The percentage of energy supplied from renewable sources increased from 7% in 2010 to over 40% by 2022. Coal power supplied 40% of the country’s electricity in 2012, and that is expected to drop to 0% by the end of 2024. The UK has outperformed every G7 country over the last ten years. The next target for the country to hit is a 68% reduction by the end of this decade, a more ambitious goal than the United States, Japan, or European Union. Despite the pandemic impacting these figures, the UK remains on the road to quickly reducing emissions.
5. Renewables 2024 Global Status Report. Here are some key insights from Ren21’s global overview of the state of renewable energy.
- Renewable power capacity grew by 473 gigawatts in 2023, a record-breaking 36% increase from 2022. Total renewable capacity reached 3,870 gigawatts by the end of 2023.
- New investments in renewable technologies totalled US$623 billion around the world last year.
- The Inflation Reduction Act spurred nearly US$300 billion in clean investment and created 170,000 jobs.
- Between 2012 and 2022, renewable energy consumption increased by 58% compared to a 16% increase in fossil fuel growth over the same time period.
- High interest rates, poor economic conditions and geopolitical conflicts in 2023 negatively impacted renewable energy investment.
Find the full report here.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.