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1 big thing: Coral reef decline intensifies

Mission: Iconic Reefs field team member Cate Gelston assesses the health of coral reef communities in Florida. Photo: Ben Edmonds/NOAA

A new survey of five Florida Keys coral reefs shows extensive damage from a long-lasting and severe marine heat wave last year, Andrew writes.

Why it matters: Corals are biodiversity havens, providing shelter for over 25% of ocean animals, and they are major drivers of fishing and tourism revenue.

  • Increasingly, climate change is threatening their viability.

The details: The preliminary results show that less than 22% of the approximately 1,500 staghorn coral surveyed are still alive.

  • Of the five reefs surveyed by NOAA's Mission: Iconic Reefs program and the Mote Marine Laboratory and Aquarium, only the two most northern reefs examined, Carysfort Reef and Horseshoe Reef, had any living staghorn coral.

How it works: Warm water corals mainly thrive in a narrow temperature range.

  • When water is too warm, they expel algae that lives in their tissues and gives them their bright colors, which causes them to turn white (an event known as coral bleaching.)
  • Bleached corals are more susceptible to further heat stress, including death.

By the numbers: The coral mortality seen as a result of last year's marine heat wave — which came on earlier — reached a record severity and lasted longer than usual for this region.

  • According to Katey Lesneski, the monitoring coordinator for NOAA's Mission: Iconic, the roughly 30,000 staghorn coral outplants at these five reefs (planted between 2020 and 2022) had one-year survival rates from an average of 40% to over 75%.
  • "Outplanting" refers to planting coral fragments that were grown in nurseries, back onto reefs.

Yes, but: Scientists have not yet completed their surveys, including reefs where other coral species may have fared better.

Between the lines: During the past year, scientists at NOAA, Mote, universities and other institutions went to extraordinary lengths to save corals and avoid seeing hard-won conservation gains completely wiped out in the Keys.

The intrigue: Scientists with NOAA's Coral Reef Watch program, which monitors and warns of marine heat waves worldwide, recently added three new alert categories and colors as a direct response to the 2023 marine heat waves seen around the world.

Read more

2. State of play: Wall Street's ESG re-think

Illustration: Sarah Grillo/Axios

Three asset management giants — JPMorgan, State Street, and BlackRock — are ditching or stepping back from a key investor climate group, Ben writes.

State of play: State Street Global Advisors and J.P. Morgan Asset Management are leaving Climate Action 100+, a big coalition of investors launched in 2017 that pushes portfolio firms on climate performance.

  • JPMorgan cited growth of its own risk engagement and sustainable investing strength.
  • State Street cited Phase 2 of Climate Action 100+ unveiled last year, which moves from a disclosure focus to "climate transition plans."
  • Phase 2 "would not be consistent with our independent approach to proxy voting and portfolio company engagement," they said.

Meanwhile, BlackRock Inc. also cited Phase 2 in deciding to leave.

  • "[M]aking this new commitment across our assets under management would raise legal considerations, particularly in the U.S," a spokesperson said.
  • But its BlackRock International unit will be in Climate Action 100+.
  • And BlackRock yesterday unveiled a new "engagement and voting stewardship option" for clients who "explicitly" want assets invested with decarbonization in mind.

The big picture: Republicans in Congress and red states are putting political, legislative and financial pressure on Wall Street to back off ESG.

  • The three companies' moves mean "none of the world's five largest asset managers are fully behind" Climate Action 100+, the FT notes.

Yes, but: It's hard to gauge how much these kinds of affiliations directly affect what financial titans do on climate.

  • Daniel Firger, founder of climate-focused Great Circle Capital Advisors, notes the coalition launched when "systematic investor engagement with corporate emitters" was new.
  • And the market didn't understand climate transition well back then, he said via email.
  • He said the group remains important, but this kind of engagement can and must happen elsewhere.

The bottom line: "[C]limate change simply presents too many material financial risks for any investor to sweep it under the rug," Firger said.

3. Exclusive: WovenEarth closes first fund at $152 million

Illustration: Annelise Capossela/Axios

WovenEarth Ventures has closed its first fund at $152 million, the firm tells Andrew exclusively.

Why it matters: The growing climate tech sector is seeing burgeoning interest, and it's creating an opportunity for funds-of-funds like WovenEarth to tap into a rich vein of institutional investors.

  • "The fundamental thesis of WovenEarth Ventures is that we're building a bridge that's a risk-adjusted product, that in one investment, you get exposure to [300] or 400 companies, instead of 20 to 30," company founder Jane Woodward tells Axios.

Zoom in: As a fund-of-funds, the company provides a way for investors to access multiple early-stage climate tech venture capitalists.

  • WovenEarth is a women-led company headed by Woodward, a longtime energy investor and adjunct faculty member at Stanford University.
  • Woodward tells Axios that many investors are seeking a relatively low-risk entry point into climate tech, a sector that requires specialized knowledge in order to scrutinize and determine where funding should go.

Read more

4. The pandemic's EV mirage

Illustration: Natalie Peeples/Axios

Is COVID partially to blame for automakers getting over their skis on electric vehicles? The hypothesis is not entirely crazy, Ben writes.

State of play: The Wall Street Journal explores the connection in a wider piece about Ford, GM and others slowing their EV ramp up after over-estimating consumer appetites to go electric.

How it works: Via the WSJ...

  • Some auto executives acknowledge they got ahead of the market with overzealous demand projections. Pandemic-era supply-chain shocks and a resulting car shortage created long waiting lists and early buzz for EVs, making the industry overly optimistic.

What they're saying: Last week, Ford CEO Jim Farley name-checked the pandemic when discussing how the company misread the market (but remains bullish on EVs).

  • On the Q4 earnings call, he noted "COVID supply shocks" alongside explosive EV growth in 2021 and 2022 and other forces that "gave us too optimistic of a demand signal at that time."

Yes, but: There are many reasons for the industry's struggles, and the long-term EV growth trend remains upward.

5. Biden sees limited Dem rebellion on LNG — for now

Illustration: Annelise Capossela/Axios

Nine House Democrats joined Republicans in a largely symbolic vote against the White House freeze on liquefied natural gas export approvals to major markets, Ben writes.

Why it matters: President Biden avoided major defections within Democratic ranks in the first Capitol Hill votes on the policy.

Driving the news: The House voted 224-200 to approve legislation that would deem approvals in the public interest.

  • That would short-circuit Biden's review of whether to green-light cargoes beyond the expansion already underway.

Between the lines: ClearView Energy Partners noted that before the vote, there were 13 House Democrats on record against Biden's policy.

  • If fewer supported the GOP bill — which is what happened — it "might be a sign that LNG exports have become even more of a 'wedge' issue."

What's next: Senate Democrats don't plan to consider the bill. But Capitol Hill opponents of the LNG freeze will keep using hearings and other platforms to voice opposition.

  • And critics could continue floating amendments to block or curtail the freeze on future legislation like must-pass spending bills.

6. Charted: big day for graphite producer

Data: Yahoo Finance; Chart: Axios Visuals
Data: Yahoo Finance; Chart: Axios Visuals

Canada's Nouveau Monde Graphite stock soared 22% after it announced anode material offtake deals with GM and Panasonic, and $87.5 million in finance from those firms and other backers, Ben writes.

Why it matters: Growing demand for battery materials from North America — and outside China — is driving new investments, despite questions about the pace of EV uptake.

(H/t to Axios alum Steve LeVine.)

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🙏 Thanks to Chris Speckhard and Javier E. David for edits to today's edition, along with the brilliant Axios Visuals team.

Editor's note: The vote tally in the fifth story, about House LNG legislation, has been corrected.