ESG Weekly | Microsoft Signs New Deal to Capture Carbon

10.13-10.24

South Korea Mandates Use of Sustainable Aviation Fuel on Flights Beginning 2027

The government of South Korea announced the release of its “Sustainable Aviation Fuel (SAF) Blending Mandate Roadmap,” introducing requirements for international departing flights to begin using fuel containing sustainable aviation fuel (SAF), beginning in 2027, and with SAF content set to increase over the next few years.

Fuel accounts for the vast majority of the aviation sector’s emissions. Generally produced from sustainable resources, like waste oils and agricultural residues, SAF is seen as one of the key tools to help decarbonize the aviation industry in the near- to medium-term. SAF producers estimate the fuels can result in lifecycle GHG emissions reductions of as much as 85% relative to conventional fuels.

According to a recent report by the International Air Transport Association (IATA), however, while SAF production is anticipated to double in 2025, it will still account for just 0.7% of airlines’ total fuel consumption.

South Korea’s new rules form the latest in a series of SAF mandates by jurisdictions globally, including the EU and UK, which each implemented a 2% SAF mandate beginning in 2025,

Under the new mandate, introduced by South Korea’s Ministry of Land, Infrastructure and Transport (MOLIT) and Ministry of Trade, Industry and Energy (MOTIE), international departing flights from Korea in 2027 will be required to use fuel with a 1% SAF blend, with blend mandates increasing to 3–5% in 2030 and 7–10% in 2035. The specific ranges for 2030 and 2035 will be based on recent global market trends and domestic industry considerations.

While MOLIT and MOTIE said that will include penalties for non-compliance will be included in the new mandate, they will be initially deferred. Additionally, the mandate includes flexibility mechanisms allowing up to 20% of the total SAF-blended fuel supply requirement for a given year to be deferred and fulfilled within the following three years. New airlines will be exempt from the mandate in their first three years of commercial operation.

Fuels that will be recognized as SAF in the mandate will be those that have achieved the carbon reduction level required by international standards based on the International Civil Aviation Organization (ICAO), and with bio-aviation fuel quality standards anticipated to be established in the first half of 2026.

UK Launches Plan to Upskill Workforce for 400,000 New Clean Energy Jobs

The UK government announced the publication of its new Clean Energy Jobs Plan, including initiatives to recruit and train workers for the clean energy economy, targeting an incremental 400,000 green sector jobs by 2030.

According to a government statement, the new plan comes as record government and private sector investment in clean energy in areas including renewables and nuclear is creating a boom in demand for jobs.

The plan highlights 31 priority occupations that are in particular demand, including plumbers, electricians, and welders. The government statement also noted that entry level roles in the majority of occupations in clean energy pay 23% more than the same occupations in other sectors.

New initiatives in the new plan include projects to train the next generation of clean energy workers, with 5 new Technical Excellence Colleges to train young people for essential roles, a new program to match veterans up with careers in solar panel installation, wind turbine factories, and nuclear power stations, and a £20 million investment to upskill oil and gas workers for new clean energy roles, in addition to tailored schemes for ex-offenders, school leavers, and the unemployed.

The plan also includes proposals aimed at ensuring strong pay, terms and conditions for clean energy sector jobs, including extending employment protections enjoyed by offshore oil and gas workers working beyond UK territorial seas to the clean energy sector, a new “new Fair Work Charter” between offshore wind developers and trade unions ensuring that companies receiving public funding provide decent wages and strong workplace rights, and including workforce criteria in grants and procurements.

U.S. Federal Reserve, FDIC Scrap Climate Risk Management Framework for Banks

The U.S. major banking regulators, including the Board of Governors of the Federal Reserve System (Fed), Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC), announced that they are withdrawing the interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions, a key framework designed to help large banks manage climate-related risks.

Established in 2023, the principles were designed to support efforts by the largest financial institutions – those with over $100 billion in total consolidated assets – to focus on key aspects of managing the physical risks and transition risks associated with climate change, and to provide guidance to develop strategies, deploy resources, and build capacity to identify, measure, monitor, and control for climate-related financial risks.

At the time, the agencies explained that the soundness of financial institutions could be adversely affected by weaknesses in their identification, measurement, monitoring, and control of climate-related financial risks, with the interagency framework providing a joint high-level framework to manage risk exposure. The agencies also noted that the principles did not prohibit or discourage banks from providing services to any customers.

In the new communication from the Fed, FDIC and OCC, however, the agencies stated that they “do not believe principles for managing climate-related financial risk are necessary,” as financial institutions are already required to have effective risk management practices in place based on the agencies’ existing safety and soundness standards.

In a memo to Fed staff, the Board also said that “the Climate Principles may be distracting large financial institutions from the management of material financial risks.”

The withdrawal of the principles forms the latest in a series of moves by U.S. federal agencies since the beginning of the Trump administration to reverse course from the prior administration’s focus on climate issues, including the Fed’s exit from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), a global coalition of central banks aimed at working together on climate and green finance issues, immediately following the presidential inauguration in January. In a September speech at the U.N., Trump called climate change “the greatest con job ever perpetrated on the world.”

Five of the Fed Board’s seven members voted to approve the withdrawal. In a statement released after the decision, Governor Michael Barr, who voted against the withdrawal, said that “revoking the principles as climate-related financial risks increase defies logic and sound risk management practices.”

Barr added:

Microsoft Signs New Deal to Capture Carbon in Rocks and Soil

Enhanced rock weathering (ERW)-focused carbon removal project developer UNDO announced that it has signed a new agreement with Microsoft to permanently remove 28,900 tonnes of CO₂ from the atmosphere by 2036 through an accelerated natural process using rocks and soil.

Founded in 2022, London-based UNDO develops carbon removal projects based on enhanced rock weathering. The company’s technology accelerates the natural geological process of weathering by spreading crushed silicate rock onto agricultural land, where plants and microbes in the soil speed up the weathering process, removing CO₂, while simultaneously enriching soil with essential nutrients. The company was recently announced as a $5 million winner in the XPRIZE Carbon Removal competition, aimed at catalyzing gigaton-scale carbon dioxide removal (CDR) solutions.

The new agreement marks the third between Microsoft and UNDO, including deals signed last year and 2023, and brings the commitment between the companies to nearly 49,000 tonnes of ERW-based durable carbon removal. Microsoft is by far the largest corporate buyers of carbon removal credits globally, with purchases exceeding 30 million tonnes, according to carbon dioxide removals (CDRs) platform CDR.fyi.

Under the new agreement, 90,000 tonnes of crushed wollastonite spread across farmland in Canada. Wollastonite is a calcium-silicate mineral, with high calcium content allowing it to neutralize soil acidity and enhance soil fertility, and silicon content to enhance plant health, in addition to its carbon capture properties.

Alongside the new agreement, UNDO announced that its new deal with Microsoft is being supported by new  debt financing by Canadian climate fund Inlandsis, structured to provide the capital needed to deliver on the purchase, and with the scope to scale further high-integrity ERW projects globally.

Schroders Achieves 100% Renewable Electricity Goal

Global investment manager Schroders announced today that it has reached its goal to source 100% renewable electricity for its global operations.

The shift to clean energy forms one of Schroders key operational climate goals, which include targets to increase sourcing of renewable electricity to 100% by 2025, reducing absolute Scope 1 and 2 emissions by 46% and business travel emissions by 50% by 2030, on a 2019 basis, and having 67% of suppliers with science-based targets by 2026. Schroders has also set an ambition to achieve net zero by 2050 or sooner.

The firm said that it achieved the renewable electricity milestone during 2024, beating its 2025 target date by a year. The accomplishment relates to Schroders’ more than 70 global owned and leased offices, which account for approximately 80% of the firm’s operational greenhouse gas emissions.

Schroders said that the achievement was supported by its completion of the installation of more than 2,600 solar panels last year at its Horsham Campus, expected to generate around 1.13 GWh per year. The solar installation meets nearly a quarter of the site’s annual electricity needs, and also includes the installation of 58 EV charging stations to support staff adoption of hybrid or electric cars.

SHS Raises $2 Billion for Green Steel Project in Germany

German steelmakers SHS – Stahl-Holding-Saar Group announced the completion of a €1.7 billion (USD$1.7 billion) financing package, aimed at funding its Power4Steel transformation project, a major decarbonization project advancing the company’s pathway towards producing climate-neutral steel.

Steelmaking is one of the biggest emitters of CO₂ globally, and one of the more challenging sectors to abate, with total greenhouse gas emissions (GHG) from the sector accounting for 7% – 9% of direct emissions from the global use of fossil fuels.

SHS, holding company for steelmakers Dillinger and Saarstahl, has set a goal to reach fully climate neutral steelmaking by 2045, with an interim target to reduce CO₂ emissions by 55% by 2030, supported by the Power4Steel program’s use of hydrogen, electric steel production, and recycling of scrap steel. As part of the Power4Steel project, a new direct reduction plant and two electric arc furnaces are under construction at SHS’ Dillingen and Völklingen production sites, which will gradually replace the existing blast furnaces and converters. According to SHS, the sites expect to begin producing up to 3.5 million tons of CO₂-reduced steel annually in 2028/29.

According to the company, the new financing package, secured through a consortium of leading national and international banks, will ensure full funding through the duration of the Power4Steel investment project.

The package included both corporate financing and investment financing – supporting specific projects or assets – elements, with the investment component supported by the export credit agencies OeKB (Austria) and SACE (Italy), and additional funding provided through the substantial equity contributions and direct financial support from the German Federal Government and the Saarland Regional Government.

83% of Companies Increased Sustainability Investments Over Past Year: Deloitte Survey

More than four out of five companies continued to increase their sustainability-related investments over the past year despite reduced pressure from some stakeholder groups, as executives report already seeing strong tangible benefits from their sustainability actions, including revenue growth and cost reductions, according to a new survey released by global professional services firm Deloitte.

For the survey, Deloitte’s 2025 C-suite Sustainability Report, Deloitte and market research firm KS&R surveyed more than 2,100 C-level executives in 27 countries, across a broad range of industries and enterprise sizes, ranging from $500 million in revenues to over $10 billion.

The report found that climate change and sustainability remains a top priority for companies, cited by 45% of respondents as a most pressing challenge to focus on over the next year, coming in slightly ahead of technology adoption and innovation at 44%, and economic outlook at 38%.

The high prioritization given to sustainability appears to be reflected in executives investment decisions, with the survey finding that 83% of companies increased their sustainability investments over the past year by more than 5%, including 14% who reported increasing by more than 20%. Larger companies were the most likely to report significant increases, with 22% of companies with more than $10 billion in revenue increasing investments by more than 20% over the prior year.

The survey found that sustainability investments continue to grow despite the reduced shareholder pressure, as executives report significant benefits from their sustainability initiatives. Revenue generation was the most frequently reported business benefit of sustainability actions, cited by 66% of respondents, with other benefits reported including regulatory compliance and governance at 61%, brand and reputation (60%), risk and resiliency (55%) and cost reduction (55%).

The implementation of technology solutions was the top action reported by companies to as part of their sustainability efforts, cited by 46% of respondents, followed by closely by using more sustainable materials at 45%, decreasing operational emissions through efficiency at 45%, and tracking and analyzing environmental metrics at 44%. Notably, lower priority was given to areas outside of the organization, with only 35% reporting lobbying or making political donations in support of environmental initiatives, down from 44% last year and 38% requiring suppliers and business partners to meet specific sustainability criteria, down from 47% last year.

Focusing on technology, the survey found that the most common areas reported by executives in which their companies are implementing or planning to implement technology solutions to help achieve sustainability goals included process or operational efficiency at 55% and internal monitoring of sustainability data and performance at 54%, followed by monitoring and managing supply chain environmental performance at 53%, developing new sustainable products or services at 52%, and external reporting of sustainability data at 49%.