Sustainability Weekly — Week 14
Tell me, fellow sustainability professionals, if it’s just me or has this week been somewhat quiet in the world of sustainability? This week we will look a bit deeper at sustainability on a system level, as well as how global inequality impacts sustainability.
🧑🔬 First article here comes from Andreas Rasche .
In his post Rashce discusses a paper published by Di Febo, Angelini and Le regarding the relationship climate risk and loan quality in the European banking sector. It is interesting to see weather lawmakers will heed the recommendations of scientists in the future, when more research comes out about the business and growth benefits of sustainability data, especially in risk management.
Banks that publish sustainability reports tend to have better overall loan quality when considering climate risk effects. --> You can exclude firms from reporting, but you cannot exclude them from the underlying risks... The authors therefore argue: “Transparency is not only a reputational practice but a structural factor in credit risk management.” Of course, reporting alone doesn’t reduce banks’ climate risk, but it can expose previously hidden risks and increase sensitivity. But the study also shows that once you zoom in on transition risks, loan quality deteriorates more strongly for banks that report. This likely indicates that relevant data is not yet fully integrated into credit risk management. 👉 And despite all this, the “simplification crew” (some politicians and business associations) frame reporting exclusively as a cost burden...
📝 Another interesting post from Andreas Rasche detailing the recommendations fro...
📝 Another interesting post from Andreas Rasche detailing the recommendations from the EU Platform on Sustainable finance regarding the revised ESRS with a lot of talk about voluntary sustainability reporting. You can go see the previous edition of my newsletter where I discuss the current voluntary adoption of ESRS based reporting. These recommendations are another signal, that the interest and demand for voluntary disclosure is considerable.
To me the most interesting thing here is the discussion about the future of SME’s voluntary reporting standards. Rasche here says that the standard will likely not be referred to as VSME in the future. I for one am excited to see where this topic develops in the future.
The EU’s Platform on Sustainable Finance has published its recommendations on the revised #ESRS. Among the points, there is a very clear-eyed view on the future of voluntary reporting in the EU... 1️⃣ Voluntary ESRS reporting: The Platform calls for “clear and robust provisions” to govern voluntary ESRS use, ensuring disclosures remain consistent and transparent. Balance is emphasized: avoid divergence from ESRS-aligned reporting without discouraging voluntary uptake. 2️⃣ Design of Voluntary Standard: The future voluntary standard (likely not labelled ‘VSME’) should not prevent large companies from voluntary ESRS adoption where this meets investor needs and supports market access. 3️⃣ Data Platform: The response underscores the need for a centralised reporting platform for SMEs and descoped larger firms, capable of producing machine-readable data and integrated with the European Single Access Point (ESAP). 👉 If 42,000 EU companies are descoped from the #CSRD, voluntary reporting cannot be an afterthought - it needs to be structured, usable, and credible.
💡 This post comes from Julia Vol.
The conversation raised here is one of the reputation of sustainability work and legislation. The sad reality is that by labeling activities as “sustainability” we often hand opponents a way to undermine the important work that is trying to get achieved.
Risk management and consumer protection can get scuppered just because an activity aimed at these goals can be seen as burdening people and organisations. This is why communication is integral to sustainability efforts. The sustainability community needs to find a way to convey the importance of the work we do to people better. We need more focus on the outcomes and less on the responsibilities, in my opinion at least.
The EU just killed a law that would have told 450 million citizens what is actually in their food, set limits on sugar and salt in processed products, required schools and hospitals to serve healthier meals, and for the first time forced agriculture, health and climate policy to stop contradicting each other. 92% of public consultation respondents supported it, and you haven't heard a word about the EU killing off the entire thing. You know why nobody noticed and no media outlet bothered to cover it? Because it was called the "Sustainable Food Systems Framework." Once and again we encounter that moment you label what is essentially a consumer protection and public health law as a "sustainability" initiative, we hand the opponents a weapon. It stops being about food safety and transparency and becomes a story about Brussels overreach and green ideology. It becomes politically killable, and that is exactly what happened. The Commission let it disappear without explanation, replaced it with a "simplification" package for industry, and moved on. This is what keeps frustrating me about sustainability communications. The data is there, the public support is there, a law that would directly improve the lives of every person who eats food in Europe was sitting on the table. And it got packaged in language that turned it into a culture war target before anyone outside the Brussels bubble even heard about it. Those of us who care about sustainability need to relearn how to package and communicate it, because the language we have been using is not protecting our goals. It is becoming toxic to them. Thank you Andreas Rasche for always tracking what the Commission quietly does and undoes.
🇮🇳 This article from ESGtoday is very interesting.
All news can’t be good news, although in this context we are still discussing India improving their 2035 climate goals after surpassing their previous goals ahead of schedule. Still experts have stated that the lack of ambition from the 3rd biggest polluter on the planet is lacking.
But let’s examine this further. India is using carbon intensity, instead of total carbon emissions in their new targets. Carbon intensity just means that they measure emissions as compared to GDP. This move has been criticised by experts as a method to still increase their total emissions while still nominally reaching targets. However India is one of the fastest growing economies globally, and it is a bit unrealistic to expect their economy to continue urbanising and industrialising in its rapid pace without some emissions. Furthermore, when compared to countries like the US and China the carbon footprint of an average Indian is very low. The image I used as a cover here illustrates this well. We would need 5.1 and 2.4 earths if everyone on the planet lived like Americans or Chinese respectively. India however is still within their planetary boundaries, at least when it comes to carbon emissions. Is it then unreasonable for them to set their goals based on carbon intensity, such that even while their economy grows and their overall emissions may rise, they still won’t cross these planetary boundaries?
Sustainability Weekly
Get weekly EU sustainability reporting updates, industry analysis, and regulatory insights delivered to your feed.