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October 2, 2023

Editor’s note: Indonesia’s coal controversies and ‘regenerative agriculture’

Solar energy panels and wind turbine
The most popular stocks invested in by climate funds are not aligned with a key goal of the Paris Agreement, a Morningstar report finds (Photo: Perutskyy/Envato)

The latest edition of our Sustainable Views newsletter

Dear reader,

We cheerfully begin the week with the news that coal-fired power plants could be classed as “green” under Indonesia’s taxonomy.

Indonesia appears to be wrapping itself in knots over its green transition. Its Financial Services Authority is weighing up labelling coal-fired power plants as green, provided that they’re involved with renewable energy activities such as electric vehicles (one expert tells Natasha that attempts to label some coal plants as green are “totally ridiculous”).

The country has also delayed a key announcement over how it plans to finance its green transition. Meanwhile, green groups have submitted a formal complaint over apparent backdoor investment in Indonesian coal-fired power. You can read Natasha’s piece here.

Elsewhere, the farming industry has settled on metrics for “regenerative agriculture” – a catch-all term for companies that claim to work with farmers to help them become more sustainable. 

Agriculture is going to be a focus at this year’s COP28 conference, although the practice has its sceptics. Research from the World Resources Institute indicates that regenerative agriculture has “limited potential” to mitigate climate change, as reported by non-profit investigative media outlet DeSmog. You can read Philippa’s article here.

Our latest addition to our knowledge hub features research from Morningstar, which claims that the most popular stocks invested in by climate funds are not aligned with a key goal of the Paris Agreement.

Inflows into these funds and product development have supercharged asset growth, with assets in more than 1,400 open-ended and exchange traded funds with a climate focus jumping 30 per cent over the past 18 months to $534bn. But none of the most frequently found companies in these climate funds are aligned with the 1.5C goal set by the Paris Agreement. You can find the report here.

Finally, we recommend this FT article on the UK’s carbon market, which has witnessed a collapse in carbon prices since Prime Minister Rishi Sunak weakened key UK climate targets in September. The slump could leave British exporters paying eye-watering EU carbon border taxes, with the bloc’s imminent carbon border adjustment mechanism set to slap financial penalties on countries with significantly lower carbon costs than the EU’s.

Until tomorrow,

Alex

Alex Janiaud is senior investment correspondent at Sustainable Views

 

A service from the Financial Times