MATERIALS SECTOR – KEY ESG RISKS, OPPORTUNITIES & MACRO TRENDS

• Carbon intensity and resource use are the sector’s core ESG risks, particularly in cement, steel, metals and chemicals, where production is energy‑intensive and highly exposed to pricing, regulatory and transition risks.
• Decarbonisation pathways are capital‑intensive and uneven. Progress depends on technologies such as EAFs, green hydrogen, CCUS and alternative fuels, with implementation slowed by cost, regulatory constraints and conservative industry practices.
• Energy‑transition demand supports long‑term growth, especially for metals & mining, where electrification, infrastructure, AI and supply‑chain bottlenecks (notably copper) underpin pricing, margins and M&A activity despite geopolitical and trade tensions.
• Regulatory pressure is rising in Europe, with carbon pricing, CBAM and investor scrutiny accelerating action toward 2030 targets, while oversupply from China and competitiveness challenges continue to weigh on steel and chemicals.
• Circularity and sustainable sourcing are key value levers, with increasing focus on recycling, low‑carbon materials, certified forestry and bio‑based solutions, supported by demand shifts toward packaging, infrastructure and clean‑energy applications.

ESG NEWS MONITORING

• Shell (Integrated O&G | GB) and other- Follow This and 23 institutional investors with €1.5 trn in assets filed resolutions for the 2026 AGMs of Shell and BP, requesting to disclose how they plan to create shareholder value in a world of declining O&G demand. Follow This
• BNP Paribas (Banks | FR) - A U.S. judge upheld a $20.75 million verdict against BNP Paribas for financing Sudan’s regime despite sanctions, rejecting the bank’s attempt to overturn the ruling.The decision increases pressure on BNP to settle, as thousands of similar claims could push potential liability into the billions. Money Control

SOVEREIGN

• World - The World Meteorological Organization confirmed that 2025 was among the three warmest years ever recorded. 2025 completed the first three-year period in which average global temperatures exceeded 1.5°C above pre-industrial levels. Reuters
• EU 
  • Wind and solar power (30%) overtook fossil fuels (29%) in the EU’s electricity mix for the first time in 2025, marking a major milestone in the region’s energy transition. Reuters
  • The Commission changed “controversial weapons” to “prohibited weapons,” allowing companies linked to nuclear deterrence, depleted uranium, or white phosphorus to qualify for Article 8/9 ESG funds. Financial Times 
• UK
  • UK and EU to develop 100GW of new hybrid offshore wind projects that link wind capacity to cross-border grids. ESG News
• US
  • US has officially exited the Paris Agreement for second time under the Trump administration. ESG News

REGULATION

• UN Biodiversity Beyond National Jurisdiction – UN treaty to protect biodiversity in international waters has officially entered into force, establishing the first legally binding global framework to govern the high seas. It is a critical step toward the global “30 by 30” target to protect 30% of the oceans by 2030, though currently only about 8% is protected. Reuters

EXTERNAL REPORTS

• United Nations – The UN reports that many global water systems have reached critical limits, making previous "normal" conditions unattainable. "Water bankruptcy" occurs when water use and pollution exceed safe and renewable limits, with irreversible damage to resources like wetlands and lakes. Since the 1990s, over half of large lakes have shrunk, 35% of natural wetlands have disappeared since 1970, and nearly four billion people face severe water scarcity each year. Drought-related losses total $307 billion annually.  World enters era of “global water bankruptcy
• WEF - The Global Risks Report 2026 outlines growing uncertainty, with risks increasingly linked to ESG priorities. Environmental concerns are being deprioritized for the short term, even as climate impacts worsen; extreme weather and ecosystem collapse remain long-term threats. Climate instability, social fragmentation, technological change, and geopolitical tension are becoming more interconnected. Global Risks Report 2026