Weekly ESG News: Financial Services and Insurance Industry (41/2024)
News in the spotlight: Google secures a 12-year agreement for 435 MW of clean energy, advancing its goal of 24/7 carbon-free operations by 2030.
Google has signed a 12-year agreement to secure 435 MW of clean energy, supporting its ambitious goal of achieving 24/7 carbon-free operations by 2030. This move furthers its sustainability efforts amid growing data center demands and helps reduce its overall carbon footprint.
Upcoming events
International Sustainability Forum 2024
October 24-25 in Kyiv, Ukraine / The Hague, Netherlands (in person and online)
The International Sustainability Forum 2024 (ISF 2024) is a premier global event focused on collaboration for a sustainable future. Held on October 24-25, 2024, in Kyiv and The Hague, ISF 2024 will bring together experts, policymakers, and business leaders to discuss key trends in sustainability. Through collaborative discussions, case studies, and networking, the forum aims to drive impactful change and promote the achievement of global sustainability goals.
Products and Services
HSBC and IFC Introduce Sustainable Corporate Bond Fund Targeting SDGs in Emerging Markets
HSBC Asset Management and the International Finance Corporation (IFC) have announced a new fund targeting SDG-aligned corporate bond issuers in emerging markets. The fund aims to enhance sustainability in this sector by investing in sustainable technologies, social impact, and a just transition. IFC plans to support the fund with a proposed $100 million investment. This collaboration builds on their previous joint effort with the HSBC Real Economy Green Investment Opportunity GEM Bond Fund, which raised nearly $540 million in 2022. HSBC CEO Nicolas Moreau highlighted the importance of bridging the financing gap for corporate issuers aligned with the UN’s Sustainable Development Goals. Categorized as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR), the fund will emphasize issuer-level sustainability and transparency. IFC Vice President Mohamed Gouled noted that the investment is expected to attract additional institutional investors, increasing capital dedicated to sustainability in emerging markets.
Goldman Sachs Finalizes $440 Million Investment in Renewable Power Company BrightNight
BrightNight, a renewable power company, has secured a $440 million strategic equity investment from Goldman Sachs Asset Management. This investment, initially announced earlier this year, will support BrightNight’s independent power producer (IPP) model and the expansion of its utility-scale portfolio across the U.S. Founded in 2019 in Florida, BrightNight develops and operates renewable power projects, focusing on hybrid renewable solutions to address the intermittency of renewable energy. The company uses its AI-based software, PowerAlpha, to optimize project design and operations.
The new investment, along with existing commitments, is expected to fund BrightNight’s five-year business plan and advance its 31 GW renewable power project portfolio, including solar and energy storage solutions. Additionally, BrightNight has increased its corporate credit facility from $375 million to $400 million to support its U.S. project execution. CEO Martin Hermann expressed enthusiasm for the partnership with Goldman Sachs, highlighting its potential to enhance BrightNight’s operations and deliver innovative clean power projects (source: Brightnight.com).
Form Energy Raises $405 Million to Scale Up Multi-Day Energy Storage Solution for the Electric Grid
Form Energy has raised $405 million in a Series F financing round to advance its 100-hour energy storage battery technology. This funding is crucial as energy storage solutions become essential for transitioning to clean energy, addressing the intermittent nature of renewables like wind and solar. Founded in 2017 in Somerville, Massachusetts, Form Energy specializes in iron-air batteries, enabling utilities to enhance renewable energy usage. The financing round was led by T. Rowe Price, with contributions from GE Vernova and other investors. The new capital will support commercial production at Form Factory 1 in Weirton, West Virginia, which is now operational and undergoing trial production. The factory is expected to expand significantly by 2028, with plans for an annual capacity of at least 500 megawatts. CEO Mateo Jaramillo expressed gratitude to investors and highlighted the importance of scaling operations. Jessica Uhl, President of GE Vernova, emphasized the need for affordable technologies to modernize the grid and support higher renewable energy generation. This collaboration aims to accelerate the deployment of Form Energy’s innovative battery systems, which could significantly impact the energy landscape.
Heliene Raises $54 Million to Grow U.S. Solar PV Manufacturing Capacity
Heliene, a solar PV module manufacturer based in Ontario, Canada, has secured a $54 million strategic equity investment led by Transition Equity Partners (TEP) to expand its North American operations. Founded in 2010, Heliene produces solar PV modules for utility-scale, commercial, and residential markets, leveraging the 45X production tax credit introduced by the U.S. Inflation Reduction Act to bolster clean energy manufacturing. Recently, Heliene announced the sale of approximately $50 million in 45X credits, with proceeds earmarked for debt reduction and investment in U.S. solar manufacturing facilities. The new capital will help expand the company’s capacity, including the development of a 550 MW production line in Rogers, Minnesota, which will increase Heliene’s total U.S.-based manufacturing capacity to about 1.5 GW per year. Martin Pochtaruk, CEO of Heliene, emphasized the importance of this investment in enhancing the company’s ability to deliver high-quality, domestically produced solar modules. Michael Allison from TEP noted that Heliene’s strong market position and the support of the Inflation Reduction Act present a unique opportunity for investment in U.S. solar manufacturing.
Net Zero Commitments
Google Secures 435 MW of Clean Energy in Pursuit of 24/7 Carbon-Free Operations
Google has signed a 12-year power purchase agreement (PPA) with energyRe to supply 435 MW of renewable energy for its central U.S. operations, supporting its goal of 24/7 carbon-free energy (CFE) by 2030. The solar project, developed and operated by energyRe, will provide electricity and Renewable Energy Credits (RECs) to help Google meet its sustainability targets. In 2023, Google purchased 4 GW of clean energy, and this new agreement further reduces its carbon footprint amid rising data center demands. The deal was facilitated by LEAP, a tool co-developed by Google to streamline clean energy procurement, contributing to the company’s progress toward 24/7 CFE.
Rio Tinto Acquires Arcadium Lithium for $6.7 Billion to Strengthen Position in Energy Transition Market
Rio Tinto has announced a $6.7 billion all-cash acquisition of Philadelphia-based lithium producer Arcadium Lithium, aimed at strengthening its position as a global leader in energy transition commodities. The deal, offering a 90% premium on Arcadium’s stock price, is expected to close by mid-2025. This acquisition will make Rio Tinto one of the world’s largest suppliers of lithium, a key component in lithium-ion batteries for electric vehicles. Arcadium currently produces 75,000 tons of lithium carbonate equivalent annually, with plans to double production by 2028. The company operates globally, with 2,400 employees across sites in Argentina, Australia, Canada, and more. Rio Tinto’s CEO, Jakob Stausholm, said the acquisition aligns with the company’s strategy to expand into high-growth markets like lithium, alongside its existing aluminum and copper operations. The timing of the deal takes advantage of a dip in lithium prices, which are expected to rebound as demand continues to grow.
Regulatory & Law
Canada Mandates Climate Disclosure for Large Companies and Introduces Sustainable Investment Taxonomy
The Government of Canada has announced plans to require large, privately incorporated companies to provide mandatory climate-related financial disclosures. This initiative enhances transparency regarding corporate climate risks and impacts. Beginning in 2021, Prime Minister Justin Trudeau urged cabinet ministers to align reporting with the Task Force on Climate-related Financial Disclosures (TCFD). In 2022, federally regulated financial institutions were mandated to adopt TCFD-aligned disclosures starting in 2024. This new announcement builds on commitments made in the November 2023 Fall Economic Statement. Amendments to the Canada Business Corporations Act will be proposed, defining the specifics of the disclosure requirements. While small and medium-sized enterprises will be exempt, the government aims to encourage voluntary disclosures from these businesses. Deputy Prime Minister Chrystia Freeland stated that these measures will attract private capital, stimulate economic growth, create jobs, and support Canada’s goal of achieving net-zero emissions by 2050.
Leadership Announcement
Emma Pinchbeck Takes the Helm as Chief Executive of the UK Climate Change Committee
The Climate Change Committee (CCC) has appointed Emma Pinchbeck, currently CEO of Energy UK, as its new Chief Executive, effective November 11. Established under the Climate Change Act 2008, the CCC advises UK governments on emissions targets and reports to Parliament on progress in reducing greenhouse gas emissions and adapting to climate change. Pinchbeck has been leading Energy UK since 2020 and has held roles at Renewable UK and WWF-UK, along with experience in finance and consulting in the energy sector. Ed Miliband, the UK Secretary of State for the Department for Net Zero and Energy Security, emphasized her suitability for the role at a critical time for climate action. In her new position, Pinchbeck will oversee the publication of the Seventh Carbon Budget advice in early 2025 and the fourth Climate Change Risk Assessment in 2026. She expressed her commitment to influencing the UK’s progress on emissions reduction and supporting the government in making a beneficial transition for both people and the economy.