Weekly ESG Highlights: Jan. 12, 2023

Weekly ESG Highlights: Jan. 12, 2023 ESG

By FactSet StreetAccount| January 12, 2023

FactSet StreetAccount publishes regular company-level and summary-style ESG news. Below is our recap of key ESG developments and insights over the past week.

Thematic Performance

• Thematic sectors are markedly higher so far this week, outperforming the broader market.

• Hydrogenrallying as positive risk appetite drove gains in speculative stocks. Renewables are higher led by solar on falling material costs and signs of reduced UFLPArisks for Chinese names. South Korea's Hanwha Solutions announcedlargest single investment in US solar in a move capitalizing on IRA support.

• Australian transition materialsgaining amid warningsof China's dominance and calls for supply chain diversification, along with Allkem analyst upgrade. North American miners seeing more muted performance though Piedmont Lithium and Livent Corporationgained upgrades as well. Street researchers have diverging views on lithium pricing, where Deutsche Bank sees support in 23H2 while Morgan Stanley defended its longer-term bearish call.

• EVsare broadly higher though Chinese makers are underperforming, struggling to contendwith Tesla's price cuts and analyst perceptionthat Covid reopening rally may be overdone.

Environment

• In the US, Chair Powell says Fed will not become a climate policymaker as that is job of government. Meanwhile a report showed US greenhouse gas emissions grew 3% in 2022.

• In Europe, EC industry chief Breton is pushing for the Bloc to adopt the Clean Tech Act as a response to Biden's IRA. In the UK, more stringent energy standards were proposed, as well as reforms to its electricity security program to align with climate goals.

• Globally, the Abu Dhabi oil chief was appointed COP28 President sparking concern among climate advocates. Despite research finding the last eight years have been the warmest on record, China power sector emissions are set to reach new highs as the economy reboots while India expects coal use to rise 8% after missing 2022 renewables targets. Australia, rebooted its safeguard mechanism in an effort to reduce GHG emissions; big polluters must cut emissions intensity each year until 2030. Pakistan still seeks post-flood recovery, a pledged $9B in aid is short of $16B needed. On a positive note, a UN-backed scientific panel found the Earth's ozone layer is recovering as damaging chemicals are phased out.

Social and Governance

• Meta to tighten restrictions on adsshown to teenagers, and to remove advertisers' ability to see user's gender, though fined €390M by Irish data watchdog for breaches of EU data privacy rules across Facebook and Instagram. Meanwhile, President Biden called for bipartisan legislation to keep Big Tech in check.

• Elsewhere, European FS gender equalityimproving as women now account for 40% of board seats. Shareholders are pressuring Glencore to explain how thermal coal business aligns with efforts to limit warming. PepsiCo and Coca-Cola are under preliminary FTC investigation over potential price discrimination. The US FTC proposed a rule banning companies from requiring noncompete, training repayment agreements.

Chart of the Week: Lithium Carbonate Prices With Street 2023 Forecasts and Select Company Share Prices

Lithium prices (source: Investing.com and currency converted using FactSet data, pictured in blue) have risen sharply since the end of 2020, supported by EV battery demand. In response, lithium mining stocks have seen sharp gains led by Australian producers (price index for Alkem Limited-AKE-ASX pictured in orange, US producer Albermarle-ALB-USA pictured in grey). However, some street forecasts call for sharp declines in the underlying commodity price, with Morgan Stanley being among the most bearish. The dotted lines show where lithium carbonate prices would end 2023 in select broker forecasts.

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