Green Finance Advisor of Friends of the Earth (HK)
sustainability and other associated terms are now in everywhere. A few years
back they were jargons that are very still new to many of us in Asia. We are
glad to hear more people talking about sustainability and taking positive
actions to make our life more meaningful and more hopeful for the generations
after us. But at the same time, we have to be aware that many companies are
trying to leverage on our purpose to make us believe that their behaviors or
activities are environmental-friendly and sustainable. In reality, there are
many greenwashing traps – when companies exaggerate their environmental claims
There is a clear
desire from you, me and many other people for greener, more sustainable
products and services. According to the Global Sustainability Report 2021 by
global strategy consultant Simon-Kucher & Partners,
85% of people indicated that they have shifted their consumption behavior towards
being more sustainable in the past five years. Sustainability was rated as an important
purchase factor for 60% of consumers and 34% of those surveyed would be willing
to pay more for sustainable products or services. The business opportunities are
driving companies to develop more green, sustainable products but at the same
time incentivize some of these companies to greenwash their brands and
Climate change is front and center of environmental
sustainability issues. Due to pressure from investors, many public companies
have made pledges toward net zero and declared long-term targets to cut
emissions or reduce negative impact to the environment. However, devil is in
the details for some of
these pledges and targets. Companies should be challenged by customers,
investors and regulators if they lack explanation and reporting about their
net-zero trajectories or leave most of their emission reduction works towards 2040s.
The heavy reliance on the development of unproven technologies or carbon
credits are not going to help the environment and should not be encouraged. Greenwashing
issues need to be addressed.
the Net-Zero Asset Owner Alliance have updated its Target-Setting protocol
which includes the ban of carbon removal to achieve intermediary emission
I do think that some carbon removal technologies will be able to commercialize,
becoming cost- effective, scalable solutions in the longer run. Companies with
sufficient resource should certainly contribute to help accelerate the
development of these technologies in different ways. But for now and in the near
future companies should focus a lot more on reducing their own emissions and
working with their suppliers and customers to reduce their emissions.
consumers are choosing brands, goods and services that are working for the good
of our environment. Because of the shift in what consumers want, many companies
are developing goods with no or less plastics and other materials made from
fossil fuels, growing plants and animals using techniques that emulate nature with
no or less chemicals and medicines, and sourcing their power and energy from
renewables. Without any doubt, we are seeing more products and services which
are more friendly to our environment. But with greenwashing tactics getting
more sophisticated, we need to scrutinize environmental-related claims, in
particular those appear in the marketing and labelling of clothes, foods and
other consumer goods. Special attention should be paid to words such as
“eco-friendly”, “all natural”, “chemical-free”, “natural products” and
“non-toxic” and imagery that is associated with green and sustainable. These
words and imagery could be vague, irrelevant or misleading. My advice is to
read into the details of green or sustainable related labels and look behind the
imagery for the goods and services, including investment products.
2023, a non-profit organization Planet Tracker published a report that examined
the greenwashing issues and highlighted six types of greenwashing –
greencrowding, greenlighting, greenshifting, greenlabelling, greenrinishing and
greenhushing. The report provided a good summary of the strategies and tactics
companies are using to greenwash.
If you are interested to know about greenwashing cases, NGO Truth in Advertising
provided a list of companies that have been accused of not being as
environmentally friendly as advertised.
is an issue that is hard to be resolved anytime soon. We are glad to see more regulators
coming up with new or refined measures to scrutinize green and sustainable
claims and to penalize the wrongdoings. We as individuals are also important
influencers. Companies, brands and products that are responsible to the people
and our planet need our support. When we are in doubt of a company or a
product, do our research – the internet has plenty information. At the end, we
should avoid those companies and products that are intentionally greenwashing.
Mostafa Monira Firdouse, Green Finance Advisor of Friends of the Earth (HK)
The price of solar energy has been
dropping past few years. In contrary, energy crisis is increasingly becoming the
main topic more than a year in the world. In my view, both demand and supply
situation are working hand in-hand, playing a catalytic role towards to ENERGY
TRANSITION (my passion!).
However, we should remember that the
‘INVESTOR’S INTEREST’ is the key element to make this RE evolution as a
unprecedented energy crisis last year due to the reduction, the European Union
is expected to diversify away from fossil fuels at a faster pace. The region is
estimated to add a record-breaking 41.4GW of solar power in 2022, 47% more than
the previous year, and another 53.6GW in 2023 to bring total solar capacity to
262GW, which represents over 280 organizations across the entire solar sector
on the continent. The reduction in solar panel prices by Chinese manufacturers
is expected to stimulate demand globally, particularly in Europe.
Perfect time to refocus on Voluntary Carbon
As more businesses and individuals begin to
invest in solar power, production rates have increased, resulting in lower
prices. Furthermore, as more countries become aware of the economic and
environmental benefits of solar energy, they have begun to offer incentives,
such as tax credits and subsidies, to encourage the adoption of solar energy.
This has led to more people and businesses investing in solar energy, further
driving the prices down. VCM nears 500 million credits traded in 2021, quadrupled to nearly $2B.
The demand for
carbon credits is expected to increase exponentially, especially driven by the
surge of corporate climate pledges that will boost activities in the voluntary
market. As of November 2022, over one-third of the world’s largest publicly
traded companies have announced net-zero targets. These companies are set to
use carbon credits they purchase to offset emissions that are hard to
completely abate, alongside actions to decarbonize their emission activities.
The voluntary market has already topped $1 billion in 2021, and the global
demand for voluntary credits is forecasted to increase by a factor of fifteen
by 2030, reaching1.5 to 2 gigatons per year.
market is a dynamic, complex system and so the pressure is high when it comes
to its governance. But governing carbon markets can be tricky. Setting an
appropriate carbon price for renewable energy is an important step to
encouraging investment and adoption of renewable energy technologies. The
higher the price, the more expensive it is to emit these gases, and the more
incentive people have to switch to renewable energy sources. Its success will
depend on how well market integration and governance will be implemented by
initiatives such as the Taskforce or the VCMI. Even more importantly, VCM’s
triumph is reliant on the credibility of each and every one of its
participants: standards, offset project proponents, traders.
Exchanges and Clearing Limited (HKEX) celebrated the first four weeks of trading
on Core Climate, Hong Kong’s new international carbon marketplace. Since Core
Climate launched on 28 October 2022, it has generated significant momentum for
voluntary carbon trading in the region. The platform recorded more than 40
trades in less than a month between 28 October and 24 November 2022,
representing a total volume of around 400,000 tonnes of carbon credits.
Leveraging Hong Kong’s status as a champion of international standards, a facilitator to channel global capital into the Mainland and an international financial center, looking forward to seeing a stable and mature regulatory system to capture impact of energy transition. Developing Hong Kong into a regional carbon trading center.
 Berg, Florian and Kölbel, Julian and
Rigobon, Roberto, Aggregate Confusion: The Divergence of ESG Ratings (August
15, 2019). Forthcoming Review of Finance, Available at http://dx.doi.org/10.2139/ssrn.3438533