Sustainability Roundup

Good Morning,

Do you have time to talk about EU Taxonomy? Knowing the basics of Taxonomy is highly encouraged to everyone in the sustainability field. The system already has notable impacts on corporate life and environmental policy, and its influence will only grow in the near future.

keywords: EU Taxonomy, sustainable investing, environmental goals, DNSH principle

What is EU Taxonomy?

Taxonomy is a classification system for companies' economic activities issued by the European Union. It aims to determine which economic activities are sustainable and provide investors with knowledge on such investments. Taxonomy is a part of the EU Sustainable Finance Disclosure Regulation and is influenced by Paris Climate Compact.

How does it work?

EU Taxonomy aims to guide companies’ activities towards sustainability. It informs investors and works as a guide in comparing different investment options based on their sustainability track record.

The criteria for sustainability

EU Taxonomy consists of six environmental goals:

1. Climate change mitigation

2. Climate change adaptation

3. Sustainable use of water and marine resources

4. Transition to a circular economy

5. Pollution prevention and control

6. Protection and restoration of biodiversity and ecosystems

To be included in taxonomy, a company must contribute to at least one of the goals listed while not doing significant harm to any of the other objectives (DNSH principle). The company must also respect UN and OECD basic human and labor rights.

What does this mean for different actors?

EU Taxonomy already applies to banks, insurance companies, and public companies with 500+ employees meaning that these actors must report their taxonomy-related activities. In practice, EU Taxonomy will also impact other parties because large companies must pay closer attention to their collaborators' sustainability-related activities. EU Taxonomy will naturally affect small investors' decision-making, as the guidelines for investing are under unprecedented reform.

On Tuesday, ESG Book published a paper suggesting that ESG funds are not as green as they seem: up to 40 % of 'climate' funds holdings do not align with the goals in the Paris Climate Agreement. Specifying the criteria for sustainable investments is crucial to achieving well-functioning and transparent green capital markets.

New Open Positions section! From this week onwards, Sustainability Roundup will gather top sustainability open positions in Finland at the end of each newsletter.

Let's jump into this week's major headlines.

EU's Carbon Allowance (ETS) price development

UK's Carbon Allowance (ETS) price development

Major News Roundup

Reuters | Environmental effects of the Nord Stream rupture: possibly the biggest single release of methane ever recorded, according to the U.N.

• Methane has 28 times greater global warming potential than CO2. The climate impact of the Nord stream rupture exceeds Finland's annual methane emissions. (Syke)

CNN | Hurricane Ian is the fifth most powerful storm to hit the US mainland. The current death toll of the storm is nearly 100 and its costs are estimated to be 47 billion dollars in insured losses.

YLE | Brazil presidential election may decide the fate of the Amazon rainforests. The general election was held on October 2nd resulting in neither of the candidates – incumbent Jair Bolsonaro and former president Luiz Inácio Lula da Silva – receiving over 50 % of the votes. The second round of the election will be held on October 30th.

YLE | Impending food crisis after devastating floods in Pakistan: according to U.N., approximately 5,7 million people will face a serious food shortage within the next three months. The Death toll caused by the floods is 1695.

The Guardian | Saudi Arabia to host 2029 Asian Winter Games at 'desert megacity'. The Winter Games will be held in the middle of a desert in Trojena Winter Sports Center, which is estimated to be ready by 2026. Trojena is a part of the Gulf Arab state's $500 billion flagship Neom project.

Latest from the environmental news in Finland

YLE | Electricity use has decreased significantly in Finland. Electricity consumption in Finland has fallen 7 % compared to September 2021, according to Fingrid. A Further saving on electricity is still needed to avoid rolling blackouts during winter.

• Total energy consumption in Finland has also faced a notable decrease in the first half of the year. The consumption has reduced by 10 % compared to the previous year and is due to the Russian invasion of Ukraine and rapid inflation. (HS)

HS | Government proposes expanding Tiilikkajärvi national park. Metsähallitus (Forestry Ltd) opposes the proposal because the 40 square kilometer expansion would require preserving its commercial forests, which are currently under continuous cover forestry.

YLE | Metsähallitus (Forestry Ltd) logging plans in Oulunjärvi were turned down by the local ELY centre.

Climate pledges and action

Reuters | Nestle stops sourcing from palm oil producer Astra Agro Lestari (AAL). Environmental groups have accused the major Indonesian palm oil producer of land and human rights abuses.

• Nestle also pledges $1 billion by 2030 to protect coffee production from climate threats (Bloomberg)

HS | Outokumpu seeks €25 million in investment aid to reduce emissions from Tornio steel plant

Reuters | Vattenfall obtains rights to build a major offshore wind farm in the German part of the North Sea

Reuters | Germany's largest power producer RWE to phase out coal by 2030

YLE | Isku furniture company's new solar plant: production fuelled by solar energy up to seven months of the year

Reuters | Glenmont Partners launches 250 million euro green credit fund to invest in clean energy and infrastructure

Latest from the academics on environment, biodiversity, and carbon sequestration

Aalto University study: Utilisation of agricultural byproducts has the potential to feed 1 billion people. The current utilisation of byproducts is ineffective and huge amounts of valuable resources are wasted. A considerable portion of the feedstuffs used in livestock production consists of food-competing raw materials, which could also be used as human food, the study notes. Furthermore, agricultural byproducts not suitable for human food could be refined into animal feeds. The study was published in Nature Food.

The Arctic Ocean is acidifying up to four times faster than other oceans, a recent study finds. The Arctic Ocean absorbs one-third of the atmosphere's CO2 and its acidification has accelerated due to sea ice melt and the use of fossil fuels. (Science)

Bitcoin has an enormous impact on climate, according to researchers at the University of New Mexico. Bitcoin (BTC) is the dominant cryptocurrency, which is reliant on "proof-of-work mining" – a computing process with huge energy expenditures. The study concentrated on the economic estimates of the energy-related damages of Bitcoin mining: three different criteria for unsustainable climate damages were used in the study with Bitcoin failing all of them. The study was published in the journal of Scientific Reports. (The Guardian)

Sphagnum moss has the potential to save communities from flooding, a study finds. According to researchers at the conservation group Moors for the Future Partnership, planting sphagnum moss in upland areas has a drastic potential to slow down rainwater runoff. The plant can absorb up to 20 times its weight in water, meaning that more rainwater could stay upstream, helping to mitigate severe flooding.

Open sustainability positions in Finland

Picture of the week: 2029 Asian Winter Games venue in Saudi Arabia desert

References for EU Taxonomy: A Short Guide to the EU's Taxonomy Regulation – S&P Global, EU-Taksonomia – mikä se on ja miten se vaikuttaa pk-yrityksiin? – Carbon Deed