Key highlights from October 2024 in the sustainability space.
1- European Commission Proposes One-Year Implementation Delay for Deforestation Regulation
On October 2, the European Commission issued new guidance on implementing the EU Deforestation Regulation, and proposed a 12-month delay. This delay responds to feedback from international partners on their readiness to comply, particularly for countries producing goods like palm oil and soy. Concerns were raised that tools to trace links between these products and deforestation may not be ready in time. If approved, the regulation will apply to large companies starting December 30, 2025, and to micro and small enterprises from June 30, 2026, providing a phased approach for effective implementation. The European Council, aligning with the Commission’s position, has scheduled a plenary vote for November 14, with the goal of adopting the regulation and publishing it in the EU's Official Journal by year-end.
2- COP16 on Biodiversity Held in Colombia: Highlights and Challenges
The sixteenth Conference of the Parties (COP 16) to the Convention on Biological Diversity took place in Cali, Colombia, from October 21 to November 1. This was the first Biodiversity COP since the signing of the Kunming-Montreal Global Biodiversity Framework in 2022, but it was overshadowed by disappointment. Only 34 of 195 framework signatories submitted actionable plans to meet its goals. The conference was also criticized for not leveraging sufficient resources to address the scale of biodiversity loss, especially as the discussions on resource mobilization were cut short due to delays. This lack of progress is particularly concerning in light of the World Wildlife Fund's October 9 Living Planet Report, which highlights a "catastrophic 73% decline in the average size of global wildlife populations over the last 50 years."
Nonetheless, COP16 saw some breakthroughs. A new global levy on products derived from genetic resources was introduced, creating one of the world’s largest biodiversity conservation funds. Additionally, Indigenous communities achieved a milestone with formal inclusion in the UN biodiversity decision-making process.
3- ESMA Issues 2024 European Common Enforcement Priorities for Corporate Reporting
On October 24, the European Securities and Markets Authority (ESMA) released its 2024 European Common Enforcement Priorities for corporate reporting. Key priorities include a strong focus on sustainability reporting, alongside standards for IFRS financial statements and ESEF reporting.
For sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD), ESMA emphasizes materiality considerations in reporting under ESRS, the need for well-structured sustainability statements that align with financial statements, and disclosures related to Article 8 of the Taxonomy Regulation. ESMA also clarified that enforcers will take action on any significant misstatements, countering expectations of leniency due to early implementation challenges with the CSRD.
4- Tech Giants Turn to Nuclear Power to Fuel AI Growth Amid Rising Emissions Concerns
Last month, new research from Morgan Stanley projected that data centers powering AI technologies could generate approximately 2.5 billion metric tons of CO₂-equivalent emissions globally by 2030. This finding has amplified concerns over the energy demands of AI, which risk undermining tech companies' sustainability goals.
In response, Microsoft, a major player in AI technology, formed a team dedicated to reducing cloud and AI emissions and signed a deal with Constellation Energy to restart the Three Mile Island nuclear plant, aiming to source low-carbon energy for its data centers.
Following Microsoft, Google and Amazon also turned to nuclear power this month. Google became the first corporation to purchase energy from small modular reactors (SMRs) under development by Kairos Power. Amazon signed agreements to advance SMR technology in the Pacific Northwest with Energy Northwest and X-energy and in Virginia with Dominion Energy. While these agreements refer to nuclear energy as carbon-free, this designation remains debated due to emissions generated during uranium extraction, transport, and processing.
- Content prepared with the help of Defne Fresko Tasci.