2025 - a blazing start

January 2025 is here and there’s a lot to contend with. As the second quarter of the 21st century gets going it feels like an apocalyptic start to the year. 

The blaze is moving east, threatening the exclusive neighbourhood of Brentwood, home to the Getty Center, a world-famous art museum. More than 12,000 properties including homes, schools, commercial buildings, outbuildings, sheds, mobile homes, cars and trucks have been destroyed including some 7,000 in the Eaton fire. Whilst the flames rage, an accompanying debate on the reasons for them is also swirling through the media. Although strong winds and lack of rain are driving the blazes, experts agree climate change is altering the background conditions and increasing the likelihood of such fires. "Climate change, including increased heat, extended drought, and a thirsty atmosphere, has been a key driver in increasing the risk and extent of wildfires in the western United States," the National Oceanic and Atmospheric Administration says. 

 

Staying with the USA, a sharp focus for the world politically and economically is the inauguration of President Trump, taking place this month on the 20th of January. It’s impossible to work out which of the ever more startling announcements to focus on – should it be the proposal to take over Greenland and Canada, the Mexican border issues, or the “drill baby drill” strategy clearly resulting in the announcement this week of more major financial institutions - Bank of America, Citigroup and Morgan Stanley - deciding to leave the Net Zero Banking Alliance (NZBA) coming shortly after Goldman Sachs and Wells Fargo announced they were departing the United Nations-backed climate coalition last month. There has also been upheaval in the UK’s politics as President Trump’s key supporter Elon Musk, the richest man in the world, has weighed in with strong inflammatory accusations on X about the UK Prime Minister Sir Keir Starmer and other UK politicians, generating a backlash of comments and concerns. 

 

Moving the lens from the USA to China, its dominance of the global consumer goods markets continues to drive retail supply chains and brings serious questions about sustainability and ethics. Shein, one the world’s biggest fast fashion companies, recently valued at $68 billion, wants to list on the London Stock Exchange (LSE) where listing conditions include a requirement to adhere to clear ESG parameters and reporting requirements. The LSE has been asked what checks are in place to vet firms after Shein refused to answer "basic questions" over its supply chain. Liam Byrne, Chair of the UK’s Business and Trade Committee, wrote to the Exchange’s CEO Dame Julia Hoggett asking if there are tests in place to "authenticate statements" by firms seeking to list, "with particular regard to their safeguards against the use of forced labour in their products". Byrne told Dame Julia that MPs were "profoundly concerned at the lack of candid and open answers". Shein’s legal representative repeatedly refused to say whether the company sold products containing cotton from the Xinjiang region - an area in which China has been accused of subjecting Uyghur Muslims to forced labour. 

 

The London Stock Exchange’s ESG listing requirements are mandatory, and having had some input to their development through my role as CDP’s Engagement Director to the TCFD, on which framework and recommendations the ESG listing conditions are based, I will finish this look at what’s ahead by turning to the raft of regulatory deadlines incoming in 2025. An abundance of acronyms of course, and with the tragic fires still burning, starting with the CCLD (California Climate Disclosure Laws – this climate-related financial risk Act mandates the disclosure of climate-related financial risks and measures adopted to reduce and adapt to such risks, signed into law by the Governor in late September 2024), the CSRD (Corporate Sustainability Reporting Directive), the EGBR (European Green Bond Regulations), the EU Taxonomy reporting requirements, the SFDR (for Sustainability-related Disclosure in the Financial Services sector),and the ISSB’s (the International Sustainability Standard Board’s) requirement for first reports on S1 and S2 due in 2025. 

For those engaged in the increasingly challenging sustainability agenda as the physical symptoms of climate change in a warming world become clearer and more alarming, the need to hold our collective nerve and keep going is more important than ever.