A new imperfect carbon scheme of the shipment could still have an impact

Glad to see you again. Economists and environmental defenders have long been pressure for international carbon prices as a means of driving decarbonization. So, why did the historic agreement on Friday on carbon costs in the navigation sector get such a silent response?

Also in the current bulletin, we examine a new approach by activists of corporate governance in Japan. See you Wednesday. – Simon Mundy

Carbon price

The step in front of the maritime transport industry on carbon emissions

Friday, the international agreement on shipping emissions concluded in London was, in some respects, a major breakthrough. For the first time, a United Nations conference has agreed to impose carbon prices on a whole world industry. But environmental defenders and vulnerable climate nations are dissatisfied – and not without reason.

A coalition of countries, including the Low Pacific states, had put pressure on a carbon tax of $ 150 per tonne for all shipping emissions. Instead, last week's meeting in the UN international maritime organization has approved a system with a much higher level of complexity and a much lower level of ambition.

“This is a missed opportunity,” said Aoife O'Leary, responsible for the non -profit opportunity of the climate. “It is very clear that some countries quickly hold the status quo.”

Maritime transport operators should reduce their intensity of carbon emissions by 17% compared to a 2008 reference, going to 21% by 2030. If they do not, they will have to pay $ 100 for the OMI for each tonne of carbon dioxide at the target level. (Those who achieve less than 8% by 2030 will have to pay higher rates up to $ 380 per ton.)

The product will go to a fund that will support decarbonization on the industry scale. High emission operators will also have the possibility of buying “emission units” from those who manage to go beyond target discounts.

This marks a clear reduction in the ambition of the OMI's previous objective to reduce emissions by 30% by 2030. abstained from the vote. “We cannot support a result that does not correspond to the agreed strategy,” said Manasse Maelanga, Minister of Infrastructure of the Salomon Islands.

The motion has nevertheless been adopted with the majority support of the present nations, in particular the major economies such as China, India and Brazil. Oil exporters like Saudi Arabia and the United Arab Emirates voted against the measure.

The potentially the most serious opposition was expressed by the US government of Donald Trump, who boycotted talks and threatened unspecified reprisals against countries that impose carbon samples on American expeditions.

The system must still be officially adopted during a new session in OMI in October. Even if it is fully implemented, it is doubtful how it will make the world shipment in the era of clean energy. Rico Luman, an economist at ING, noted that the agreement had not introduced targeted measures to push maritime companies to invest in new generation fuel technologies such as green ammonia, which, according to him, would be necessary in the long term for the sector to completely decarbonize.

Before the meeting, the Danish giant of the AP Møller-Maersk expedition had warned that a low pricing system could encourage companies to move on to the use of liquefied natural gas (which produces substantial emissions, although less than conventional shipping) rather than really low carbon options.

However, any type of international carbon pricing contract around a major world industry is an important development – offering a basis on which a more rigorous system could still be built. “This is a first step, not the final phase,” said Luman. (Simon Mundy)

governance

Japanese activists deploy a new strategy

On the surface, the annual general season of Japan annual meetings could resemble a familiar replay.

As they have done over the past five years, some of the largest companies in Japan will be faced with legally binding shareholder proposals on climate -related disclosure on Tuesday.

But an apparently small procedural step by activists reveals that even if activists become more creative, Japanese companies become more deeply rooted in maintaining the status quo.

This year, the market for non -profit groups, Kiko Network, Foe Japan and Rainforest Action Network first chose to present non -legal advice to seven companies, including Megabanks Mizuho, ​​Mufg and Sumitomo Mitsui, Trading Houses Mitsubishi Corporation, Mittsui & Co and Sumitomo Corporation, as well as energy.

Non -profit organizations said it was done in the hope of “a more open dialogue on improving risk management of climate change”. However, the seven companies approached by the activists rejected by providing advisory proposals to a vote, which led the activists to respond with legally binding resolutions.

The advisory proposals are common in the United States, with around 600 ESG proposals submitted last year, according to Harry Ashman, specialist in engagement at Dutch Asset Manager Robeco. In the United States, these proposals have obtained an average support rate of around 19% in the past four years. In the United Kingdom, Germany and France, the quantity of ESG consultative resolutions is much lower, but has generally had support rates of around 80% in the past four years.

In Australia, advisory resolutions on ESG issues are also becoming more common (although forcing a legal solution) and increasingly considered as a useful tool to show the assessment of investors on how a business deals with climatic disclosure.

“Our thought was that this less conflictual approach would allow a more fruitful commitment, benefiting the company and the shareholder,” said Eri Watanabe, the Energy financing activist in Japan among market forces. “As it is not legally binding, companies would have more freedom to decide how to manage disclosure, while allowing shareholders to access this important information,” she added.

Previously, I wrote on the way in which Japanese companies hesitated to approve the proposals of the shareholders linked to the climate, due to structural problems linked to Japanese law. More specifically, the explanation was that ESG proposals have often taken the form of an amendment to the statutes of a company, that companies do not take light because they are legally restrictive. However, the response of companies to the last decision of the activists challenged this argument.

But the rejection of the advisory proposal does not spend a certain defeat – and was in fact part of the plan from the start. Activists hope to use the failure of the initial proposal for leading investors to support the resolution when submitted to a vote in June as a legally binding resolution.

In their resolutions of legally binding shareholders, the market forces, enemies Japan and Rainforest Action Network, call on the Japanese megabanks to disclose the assessments by their audit committees on the way in which administrators manage the risks, as well as their assessments of the climate change transition plans of their customers.

We will see how all this takes place in June, when the AGM season begins in Japan. The resolutions of shareholders linked to the climate intended for Japanese megabanques gained approximately 20 to 25% of support last year. “Although this is a real change compared to the companies that concern us the most, we hope that this year, we will be able to exceed this number,” said Watanabe. (Kaori Yoshida, Nikkei))

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