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ESG Monthly (February 2022)

This month’s highlights:

IPCC publishes the latest Assessment Report; EU announces proposals for Social Taxonomy; Singapore raises carbon taxes; Mirae Asset publishes 2021 2021 Responsible Investments Report..

Commentary on ESG news and developments:

Globally…

  • The Intergovernmental Panel on Climate Change (IPCC) published the second part to its 6th Assessment Report which released new climate science on the impacts of climate change, highlighting how vulnerable communities and ecosystems are to climate change and what options we have to adapt (IPCC, February 2022).
  • The United Nations (UN)’s Environment Assembly, which included representatives from 175 nations, endorsed a resolution on the formation of a legally binding agreement on plastic pollution by 2024 (UNEP, March 2022).
  • The European Union (EU)’s Platform on Sustainable Finance published its revised proposals for the EU Social Taxonomy, suggesting three core objectives to define social investments (European Commission, February 2022).
  • The Russian invasion of Ukraine on 24 February marked the beginning of what could become the largest conflict in Europe since the second world war. Not only were there significant casualties from both sides but economic consequences of the war were also felt in financial markets namely due to sanctions and commodity prices.

In Asian Pacific markets…

  • In China, 14 regulatory departments, including the National Development and Reform Commission (NDRC) and the State Administration for Market Supervision (SAMR), published preferential policies to facilitate the recovery of service industries (e.g. catering, retailing) who were affected by epidemic prevention measures (South China Morning Post, February 2022).
  • In Singapore, the carbon tax rate will be increased from the current $5 per tonne of emissions to between $50 and $80 by 2030, outpacing those in other Asian countries like Japan and Indonesia. The carbon tax covers 30-40 large emitters such as oil refineries and power generation plants, which contribute to around 80% of the nation’s carbon emissions (The Strait Times, February 2022).
  • In India, India’s Ministry of Power announced a Green Hydrogen Policy that aims to achieve a green hydrogen production target of 5 million tonnes by 2030. Incentives such as waiving inter-state power transmission charges and providing priority grid connectivity will be offered to green hydrogen and ammonia producers (Reuters, February 2022).

ESG Insights from Mirae Asset:

Can Saudi Arabia, which used to be the world’s biggest oil exporter, become the world’s biggest hydrogen producer?

  • Saudi Arabia, whose economy is heavily reliant on oil and gas (60% of Saudi’s 2021 budget is derived from oil), is looking to diversify towards clean energy, particularly hydrogen.
  • There are plans underway to produce a large-scale multibillion-dollar hydrogen plant on the north-western shores of Saudi Arabia. This new plant could be the world’s largest as it is anticipated to be able to produce 650 tonnes of green hydrogen daily.
  • Green hydrogen is the most environmentally friendly form of hydrogen where renewable electricity is used to electrolyze water, splitting water into hydrogen and oxygen.
  • This new plant has geographic advantages of plentiful solar and wind resources as the north-western shores of Saudi Arabia enjoy year-round sunshine and steady winds

Source: Financial Times, Mirae Asset Global Investments

Key takeaways from the OECD’s recently published “The Global Plastics Outlook”

  • Plastics production doubled in volume between 2000 and 2019 to 460 million tonnes (Mt), overtaking economic growth by almost 40%, and could double again by 2040 if following the current trajectory.
  • Only 9% of plastic waste is recycled: in 2019, 22 Mt of plastic materials leaked into the environment of which 6.1Mt leaked into rivers, lakes, and oceans.
  • Global production of recycled plastics more than quadrupled in the last two decades, but still only account for 6% of the total feedstock of plastics.
  • Plastics contribute to 3.4% of global carbon emissions across their lifecycle and could account for up to 20% of the entire global carbon budget if we continue on the current production trajectory.

Source: OECD, Mirae Asset Global Investments

AUTHORED BY
Holly So, CFA
ESG Specialist

Date
April 08, 2022

Category
Article

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