ESG International Weekly News 7/1 -7/7

1.♻️【IKEA Cuts 1,400 Tons of Plastic Annually with Paper-Based Fitting Bags】

IKEA Components is phasing out plastic fitting bags and replacing them with paper-based alternatives starting FY25, a move expected to reduce virgin plastic usage by 1,400 tons per year. This shift aligns with IKEA’s Plastics Out Agenda, targeting the elimination of all plastic in consumer packaging by 2028. The new bags are made in-house in Slovakia and China from recycled wood waste and production residues. Despite a thin plastic coating for durability, the bags remain recyclable, and IKEA is researching renewable coating alternatives. Rollout began with new product lines like STOCKHOLM 2025 and key ranges such as PAX and KALLAX, with full implementation scheduled by 2028.

🔹 Annual plastic reduction: 1,400 tons

🔹 Production sites: Malacky, Slovakia & Nantong, China

🔹 Materials: Recycled wood waste and by-products

🔹 Timeline: Starting FY25, full rollout by 2028

“Even the smallest change can generate great results,” said Lukas Exner, IKEA Components Production & Distribution Manager.

 

2.🌍【EU Sets 2040 Climate Target: 90% Net Emissions Cut with Flexibility and Industrial Deal】

The European Commission has proposed a 2040 climate target to reduce net greenhouse gas emissions by 90% from 1990 levels, serving as a milestone on the path to 2050 climate neutrality. The plan incorporates flexible mechanisms—up to 3% of emissions may be offset via international carbon credits post-2036, and permanent domestic removals will be integrated into the EU ETS. Closely aligned with the Clean Industrial Deal, it ensures economic competitiveness via tax incentives, state aid, CBAM simplification, and support for PPAs and decarbonization finance. The 2040 goal will also form the basis of the EU’s next NDC ahead of COP30 in Brazil. Public support remains strong, with 85% of EU citizens viewing climate change as serious.

🔹 Target: 90% net GHG reduction by 2040 (vs. 1990)

🔹 Flexibility: 3% intl. offsets allowed post-2036 + removals in EU ETS

🔹 Economic framework: Clean Industrial Deal (state aid, tax breaks, CBAM simplification, decarbonization bank)

🔹 Annual investment needs: €660B (energy), €870B (transport)

🔹 Strategic role: Basis for 2035 NDC, strengthens EU climate leadership ahead of COP30

“The goal is clear, the journey is pragmatic and realistic.” — Ursula von der Leyen, European Commission President
 

3.Gap, Target, and Houdini Partner with Syre to Scale Circular Polyester and Cut Emissions by 85%

Gap Inc., Target, and Houdini Sportswear have partnered with Swedish textile recycler Syre to drive a large-scale shift from virgin polyester to circular polyester made from used textiles. The three brands have signed strategic offtake agreements to secure access to Syre’s recycled polyester chips, supporting rapid industrial scaling.

Syre will launch its first production site in North Carolina in 2026 and build a gigascale facility in Vietnam starting 2027, aiming for 3 million tons annual capacity by 2032—critical to addressing the forecasted 10–12 million ton global circular polyester supply gap. Gap will source 10,000 tons annually; Target will integrate it into its 2040 circular design targets; Houdini pledged 50% of its polyester will be Syre-based within three years.

Syre’s process reduces emissions by 85% compared to virgin polyester, marking a pivotal moment in the apparel industry’s low-carbon transition.

🔹Key Highlights:

• Gap Inc.: 10,000 tons/year commitment
• Target: Uses Syre material for circularity roadmap
• Houdini: 50% of polyester to be circular by 2028
• Syre scaling: 2026 (US), 2027 (Vietnam), 2032 (3M tons/year)
• Climate impact: ~85% less GHG emissions than virgin polyester

“This is not a pilot — this is infrastructure.”— Mattias Jonsson, CEO of Syre
 

4.EU to Include Carbon Removals in 2040 Climate Target

The European Commission plans to incorporate high-quality carbon removal credits into its 2040 climate policy framework, marking the first time that the EU formally integrates carbon removals into its intermediate climate targets.

🌐 Policy Context

• The EU aims to reduce net greenhouse gas emissions by 90% by 2040, compared to 1990 levels, aligning with the path to net-zero by 2050.
• The strategy supports the European Green Deal and the EU Climate Law, addressing hard-to-abate sectors like agriculture, heavy industry, and transport.

🧪 Categories of Carbon Removal

Removals must meet strict permanence, verifiability, and measurability criteria under the CRCF. Accepted methods include:

1. Direct Air Capture (DAC) – Extracting CO₂ directly from the atmosphere.
2. Carbon Capture and Storage (CCS) – Capturing CO₂ from industrial processes and storing it underground.
3. Biochar – Sequestering carbon in soil through charred biomass.
4. Natural Carbon Sinks – Forest restoration, wetlands recovery, soil sequestration.

These removals may count toward national reduction targets under a regulated EU framework.

💼 Business and Market Implications

• Expected to accelerate the EU’s carbon removals market, estimated to reach billions of euros by 2030.
• Companies like Climeworks and Carbon Engineering stand to benefit from policy-driven demand.
• The initiative may be linked with the EU Emissions Trading System (ETS), creating a broader cross-sector market.

🤝 Stakeholder Reactions

• Industry and manufacturing sectors support the policy as it brings flexibility and room for innovation.
• Climate tech startups see opportunities in scaling.
• NGOs like Greenpeace argue that removals must not be a substitute for real reductions and fear this policy may enable greenwashing.
• Scientists and advisors call for strong oversight and third-party certification.

📌 Key Quote

“Integrating removals into the target is a significant step, but we must not use them to delay emission cuts where they are still feasible.”

— Senior EU Climate Official

🔮 Looking Ahead

• A draft implementation plan and market structure are expected by 2025.
• Could inspire other jurisdictions to develop their own carbon removal standards.
• The EU seeks alignment through the Climate Club, promoting international harmonization of removal credit frameworks.

5.CAF Approves Record $5.2 Billion for Sustainable Development Across Latin America & Caribbean

CAF (Development Bank of Latin America and the Caribbean) has approved a record $5.2 billion in financing for sustainable development projects during the first half of 2024, supporting climate action, infrastructure, and digital transformation in the region.

• Funding Priorities: Clean energy, water management, digital inclusion, agricultural modernization, and transportation infrastructure.
• Regional Reach: Includes Argentina, Brazil, Colombia, Dominican Republic, Mexico, Peru, and several Caribbean nations.
• Climate Commitment: At least 40% of funds go to climate-aligned projects, in line with the Paris Agreement and SDGs.
• Tech & Inclusion: Significant focus on digital transformation and innovation, especially in rural and underserved areas.
• Strategic Goal: CAF aims to become the leading development bank for sustainable and inclusive growth in the region by 2030.

“We are taking decisive action to place sustainability and climate resilience at the heart of Latin America’s transformation.” — CAF President Sergio Díaz-Granados