Sustainability Snippets August 2025

Too fast, too slow—or just off track on climate?

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Article Type
Sustainability Soapbox
Topic
Responsible Investing
Published
August 21, 2025
Read time
5 mins
Author
Aegon AM Responsible Investment Specialists
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Big Beautiful Bill's ugly impacts on green investment in the U.S. 

 

On July 4, President Trump signed the sweeping One Big Beautiful Bill Act (OBBBA) into law—a budget reconciliation package that reshapes tax structures and broader regulatory frameworks. 

 

At the heart of its ESG implications, the OBBBA phases out numerous clean energy tax credits originally granted under the U.S. Inflation Reduction Act. Wind and solar incentives are curtailed unless projects commence construction by mid‑2026 or come online by late 2027. Research by the Rhodium Group suggests this could lead to a 72% drop in new wind and solar installations – resulting in inflationary pressure of 8–10% on U.S. household energy bills according to the American Clean Power Association. 

 

Electric vehicle and charging credits are also slated for elimination by June 2026. Methane emission fees face a decade‑long delay, while biofuel tax credits receive a limited four‑year extension to 2031. Strategically, these provisions incentivise a shift away from green tech and renewables, consolidating energy investments around fewer, often larger traditional players—particularly in fossil fuels and nuclear. 

 

The bill also slashes Medicaid funding by $930 billion over 10 years. This has severe implications for the scope of coverage with the Congressional Budget Office estimating that 11.8 million people will lose coverage by 2034. U.S. healthcare insurers and those managing Medicaid/Medicare plans face not only revenue losses from fewer insured individuals but also higher administrative costs due to stricter eligibility checks, and higher co-payments. 

 

In summary, the OBBBA dismantles key financial supports for renewable projects, climate initiatives, and social welfare —signalling a recalibration of corporate and investor incentives away from sustainability and toward tax-favoured industries. 

 

From Beaches to Blackouts: The impact of Europe’s warming climate  

 

Europe is warming faster than any other continent, at more than twice the global average.  The effects of rising temperatures and associated extreme weather events are far reaching, influencing everything from holiday habits to power grid stability.    

 

Intensifying heat across southern Europe is prompting British travellers to rethink when and where they holiday. Destinations like Ibiza, Greece, and Turkey are seeing increased demand during the cooler “shoulder seasons” of spring and autumn. Companies such as Wyndham Hotels, TUI, and easyJet are responding by extending seasonal operations and flight schedules. Wyndham now operates hotels in Greece from February to November, while TUI flies to Crete until mid-November. 

 

Climate change is a key driver, with 9% of European travellers adjusting their travel months due to heat and wildfires. Economic factors also play a role, as off-peak travel can be up to 38% cheaper. 

 

Meanwhile, Europe’s energy systems are under pressure from record-breaking summer heatwaves. Air-conditioning demand has surged, pushing electricity use up by 7.5% across the EU and 16% in Spain. Nuclear and hydropower output has dropped due to cooling issues and low water levels, causing blackouts in cities like Florence and Bergamo. Solar generation has hit record highs but lacks sufficient storage capacity, leading to evening supply gaps and price spikes above €400/MWh in Germany and Poland. 

 

In response, the EU is prioritising climate-resilient infrastructure in its upcoming energy budget to address these growing challenges. 

 

Trying to clear up the dirty water problem 

 

Given the recent controversies surrounding the UK water industry in terms of pollution and leakages, the government has announced plans to scrap the fragmented group of regulators and replace them with a single body with a far wider remit.  

 

Currently, water companies are overseen by OFWAT, the drinking water inspectorate and parts of the Environment Agency and Natural England. However, the industry has lurched from one crisis to the next, with pollution incidents rising by 60% in England last year, bills rising and ongoing controversy around executive pay.

 

The new approach, coming from a review led by Sir Jon Cunliffe, aims to simplify oversight and introduce holistic regulation. The proposed regulator will have stronger powers, capital requirements, and even a formal turnaround regime for struggling firms. Let’s hope this stems the tide of problems facing the industry.

 

NZBA at a Crossroads: Too green for some, not green enough for others 

 

2025 has been a sobering year for climate action. The U.S. has exited the Paris Agreement, environmental protections are being rolled back, and financial institutions continue to walk away from net-zero alliances. The Net-Zero Banking Alliance (NZBA), once a cornerstone of climate finance, is now caught in a credibility crisis—accused of being too green for some, and not green enough for others. 

 

U.S. banks like JPMorgan Chase, Bank of America, and Morgan Stanley exited amid political backlash and legal risks tied to environmental, social and governance (ESG) commitments. Meanwhile, others, including Triodos Bank, left in protest after NZBA softened its guidance—shifting from strict 1.5°C alignment to a broader “well below 2°C, striving for 1.5°C” target. This loosening of standards was seen by some as a retreat from science-based ambition. 

 

Barclays, the most recent to exit, cited the departure of global peers and said the alliance “no longer has the membership to support our transition.” Yet it reaffirmed its net-zero 2050 goal and $1 trillion climate finance target. Still, its exit raises questions about the credibility of standalone climate strategies. 

 

Meanwhile, the climate isn’t hitting pause. As highlighted in From Beaches to Blackouts, Europe is warming at more than twice the global average. Tourists are shifting travel seasons, power grids are buckling under heatwaves, and blackouts are hitting cities like Florence and Bergamo. Politics may stall, but climate change doesn’t care who’s in office. 

 

In this volatile landscape, alliances like NZBA are more essential than ever. Developing net-zero targets is complex and resource-intensive. NZBA’s shared frameworks and peer learning help institutions navigate decarbonisation more efficiently, offering structure and momentum when backsliding is all too easy. 

 

But with European banks like Deutsche Bank and BNP Paribas now wavering, NZBA faces an uncertain future. Can it adapt—or will fragmentation derail climate finance? 

 

Disclosures

Author

Aegon AM Responsible Investment Specialists
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