Sustainability Snippets May 2025

  • First U.S. Green Exchange Approved

  • Breakthrough in EV Charging Technology

  • Data Centres Deplete Scarce Water Resources

  • Climate Threatens Food Security

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Article Type
The Wider Lens
Topic
Responsible Investing
Published
May 14, 2025
Read time
4 mins
Author
Aegon AM Responsible Investment Specialists
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US Anti ESG – all talk??

 

Despite the ongoing and often vocal backlash against Environmental, Social and Governance (ESG) investing in the U.S., there are some promising developments which suggests things are not as bleak as they first appeared:

 

  • The SEC has recently approved the registration of its first green impact stock exchange (GIX). It aims to be the first national securities exchange in the U.S. dedicated to the emerging global green economy. GIX will list companies that make binding commitments to achieve sustainability goals. Companies can list from 2026, initially it will be a dual listing exchange, with plans to evolve into a primary listing venue in the future

  • Following on from some European counterparts, the New York Pension Fund will drop asset managers that do not comply with its climate plans. It stated that some asset managers have forsaken even the symbolic forms of climate action they took such as joining the Net Zero Asset Managers Initiative, which will lead to them to reconsider their suitability to manage their monies.

  • And finally, and rather surprisingly, ExxonMobil is set to overtake BP and Shell in its low-carbon spending – which includes carbon capture, biofuels, hydrogen and lithium extraction. The oil giant plans to spend approximately $5bn per year until 2030. The only company now ahead of them with a higher annual low carbon spend as a % of the total budget is TotalEnergies, this follows Shell and BP scaling back their green investments.

 

Cars charged in a flash

Battery manufacturer CATL has made a significant leap in electric vehicle (EV) battery technology with the launch of its second-generation Shenxing superfast charging battery. This new battery promises a remarkable 520km range with just 5 minutes of charging, outpacing BYD's recent innovation, which offers a 470km range in the same time frame. 

 

But CATL isn’t stopping there.

The company also introduced a new sodium-ion battery, set for mass production in December. This battery is touted as a more affordable and safer alternative to lithium-based batteries. Previously, sodium cells were considered impractical due to their lower energy density compared to lithium batteries. However, CATL claims this new sodium-ion battery will drive the industry towards "energy freedom" and reduce reliance on a single resource, potentially reshaping the global energy landscape. 

 

These advancements place CATL ahead of Western competitors like Tesla and Mercedes-Benz in fast charging capabilities. Currently, Tesla vehicles can add up to 200 miles (321km) of range in 15 minutes, while Mercedes-Benz's all-electric CLA compact sedan can achieve up to 325km of range in 10 minutes using a fast-charging station. 

 

The cloud is drying our rivers

According to Bloomberg's New Energy Outlook, global energy-related emissions likely peaked in 2024, with 2025 potentially marking the beginning of structural emissions decline. However, this reduction is expected to be modest due to the rapid expansion of data centres, which will rely on fossil fuels for energy. 

 

Currently, a single data centre consumes as much electricity as 100,000 households, and some under construction will require up to 20 times more. The surge in AI technology is projected to consume more electricity in the U.S. by 2030 than all manufacturing, steel, cement, chemicals, and other energy-intensive industries combined, according to the International Energy Agency (IEA). 

 

However, energy consumption is only part of the story.

 

Water availability is becoming an increasingly critical issue. Vast amounts of water are required for cooling data centres, and they are often located in water-scarce regions. In 2023, Microsoft reported that 42% of its water came from areas with water stress, while Google stated that 15% of its water consumption occurred in regions with high water scarcity. 

 

Amazon faces criticism for its data centres in Spain's Aragon region. Although Amazon claims it will be “water positive” by 2030, offsetting its consumption elsewhere, water issues are inherently localised and cannot be globally offset like carbon emissions. Further, a Chilean environmental court partially reversed Google's permit to construct a $200 million data centre in Santiago, requiring revisions to address climate-related impacts. 

 

To maintain their social license to operate, tech companies must engage with local communities and evaluate region-specific water risks during the planning process. This will be necessary not only to foster community support but also provide long-term competitive advantages. 

 

Memo triggers climate alarm bells from inside UK’s food industry 

A confidential memo from insiders at the UK’s largest food companies has issued a stark warning: that the UK’s food system is on the brink of failure due to escalating climate risks. The memo is not the work of activists but rather a stark warning from senior professionals within the companies themselves aimed at their investors. 

 

The authors highlight three converging threats: 

 

  • Soil degradation: Up to 40% of UK soil is already degraded, with global experts warning of just 60 harvests left in some regions. 

  • Water scarcity: SE England, a key agricultural hub, faces material water stress by 2030 — turning water from a cost line into a supply constraint that will restrict outputs. 

  • Import fragility: With over 45% of UK food imported, climate shocks abroad are now a direct risk to domestic food security. 

 

The memo goes on to reveal that companies’ current resilience planning is “wishful thinking” and that structural and cultural issues have prevented the sector from fully sharing the extent of the risk with investors, with current disclosures instead being based on “false reassurances.”  

 

The implications for investors are clear. Food and agri-linked firms, already operating on razor-thin margins face rising procurement costs, supply volatility, and potential regulatory curbs. Passing these costs to consumers may not be viable in a cost-of-living crisis, meaning retailers and suppliers could be forced to absorb the hit. 

 

Resilience is now a material financial factor. Investors should look beyond emissions and transition risk and focus on resilience and adaptation towards companies building climate-adaptive models. This includes local sourcing, drought-resistant inputs, and circular water systems. In a sector this exposed and with the current lack of progress, adaptation is no longer optional, it’s existential. 

 

 

 

 

 

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Author

Aegon AM Responsible Investment Specialists
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