ESG Exodus?, Renewable Energy Momentum: 2023’s Global Growth, and Apparel Brands’ Green Investments.
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According to a recent study of more than 260 global CEOs and institutional investors, organizations are distancing themselves from the term ESG, due to its polarizing nature and its controversy in the past year. However, despite the rebranding, companies are likely to maintain ESG policies to comply with international laws and satisfy activist shareholders.
The recent politicization of ESG initiatives has compelled organizations to reassess the way they operate, adopting a more cautious approach to external communications. Recognizing the positive impact of scrutiny, companies are likely to increasingly align their actions with their stated goals. This emphasis on authenticity and tangible efforts, over mere rhetoric, signifies a promising shift towards a more sustainable and accountable business landscape.
Renewable energy experienced unprecedented growth in 2023, with a 50% increase in global capacity additions – totaling 510 GW – fueled significantly by China. The International Energy Agency’s “Renewables 2023” report indicates the world is expected to achieve a 2.5x increase in renewable capacity by 2030, nearing the COP28 goal to triple capacity and surpass coal in global electricity generation by 2025. While progress is substantial, challenges such as policy uncertainty, insufficient investment, and administrative barriers need addressing in order to meet the COP28 target.
Given the global nature of environmental challenges, coordinated efforts between countries are essential to ensure the transition has an overall positive environmental impact, considering not only efforts to reduce carbon emissions, but also the manufacturing and resource extraction requirements related to these technologies.
Global apparel brands, Bestseller and H&M, have committed to invest in a pioneering offshore wind-power project in Bangladesh. As announced at COP28 in Dubai, both organizations made the pledge as part of the Global Fashion Agenda. The project has an approximately 500-megawatt capacity and is set to become the first utility-scale offshore wind farm off the coast of Cox’s Bazar. Scheduled to begin operations in 2028, the initiative aligns with Bangladesh’s goal to meet 40% of its power demand from renewable sources by 2041. The project aims to create jobs, stabilize energy supply, and annually reduce emissions by approximately 725,000 tonnes, advancing sustainable practices in the fashion industry.
Climate change threatens industries operating in vulnerable regions, risking billions in earnings. Fashion brands can mitigate these risks and improve supply chain resilience by investing in adaptation measures, electrification, and renewable energy, addressing climate challenges and securing large-scale, cost effective energy supply in manufacturing countries.