Letter from the Co-Director:
As Charles Dickens famously wrote in the opening line of his 1859 novel A Tale of Two Cities, 2024 has undeniably been “the best of times and the worst of times.” The year has been marked by profound challenges and notable progress in the realm of sustainability. In the United States, we have witnessed one of the most contentious presidential campaigns in recent memory and faced inflationary pressures unseen since the 1970s. Geopolitical instability has further complicated the landscape, with the ongoing Ukrainian-Russian conflict and escalating tensions in the Middle East. These turbulent conditions have set the stage for both significant setbacks and remarkable achievements in our global efforts toward sustainability.
The regulatory environment for Environmental, Social, and Governance (ESG) disclosures has seen considerable shifts. We have observed a notable decline in support for ESG proxy proposals, with BlackRock’s backing reaching a new low, and major asset manager like JP Morgan and BlackRock withdrawing from the Net Zero Alliance.1 Concurrently, the European Union’s Corporate Sustainability Reporting Directive (CSRD) came into effect, and the U.S. Securities and Exchange Commission (SEC) introduced new climate disclosure rules, only to face immediate legal challenges.
In addition, policy experiments under the Inflation Reduction Act encountered obstacles, with notable bankruptcies such as Fisker and SunPower highlighting the difficulties in the electric vehicle and solar sectors.2 A recent study revealed that only 63 of 1,500 policies were effective against climate change, primarily those involving carbon pricing rather than government subsidies.3 Meanwhile, the Earth continued to experience record-breaking temperatures and rising carbon emissions, with many Paris Agreement signatories struggling to meet their commitments.
Despite these hurdles, there has been significant progress in the renewable energy sector. According to BloombergNEF, 40 percent of global electricity was generated from zero-carbon sources last year.4 Mainland China emerged as a leader, achieving its solar and wind generation targets six years ahead of schedule, although it also significantly expanded coal-fired capacity. Solar and wind power contributed more than 90 percent of global energy capacity additions, and global wind capacity surpassed one terawatt. Brazil, with the cleanest power mix among G-20 economies, achieved 88 percent renewable power generation in 2023. Renewable sources, including wind and solar, comprised 17 percent of total electricity generation, with hydroelectric and nuclear power contributing 24 percent. Fossil fuels accounted for 57 percent of global electricity generation, but investment in renewables continued to soar, surpassing fossil fuels.
At the Sustainability Lab, our first full year has been marked by rapid progress and significant achievements. We formalized our partnership with The Water Council and expanded our annual Nexus Sustainability Leaders Summit, experiencing unprecedented levels of sponsorship from the Wisconsin business community and beyond. We established the Sustainable Finance Advisory Council (SFAC), which has contributed to the Forward Water+Energy initiative and the proposal for a “Super” Wisconsin Green Bank. Our Student Shareholder Engagement Program,
in collaboration with the Seventh Generation Interfaith Coalition for Sustainable Investing and the Marquette Endowment, was successfully piloted.
We also advanced research on asset owner governance and explored the intersection of mergers and acquisitions with sustainability factors, while advising the CFA Institute on its sixth edition ESG Certificate curriculum. Amidst these accomplishments, including launching a second sustainable finance course for master’s level students, I personally navigated the challenges of recovering from a broken leg. None of this would have been possible without the unwavering support of our advisory board, the Marquette staff, and our numerous partners and supporters.
As we conclude this milestone first year, we extend our heartfelt thanks to everyone who has contributed to our journey and success.
Christopher K. Merker, Ph.D., CFA
Co-Director, Marquette S-Lab Executive-in-Residence
College of Business Administration Marquette University
