Investor pressure slowly pushing firms to set net-zero targets

The report notes that investor pressure played a key role in net-zero commitments from corporates including Nestlé

The Climate Action 100+ is a group of 370 global investors operating more than $35trn in assets under management. The group’s first progress report revealed how investor engagement with 161 ‘focus companies’ has helped to push climate change up the agenda, but that more needs to be done to meet the rapid decarbonisation required to deliver the Paris Agreement and limit global warming to a 2C increase at most.

The report found that just 9% of the focus companies, considered the most polluting global corporates, have decarbonisation targets aligned with the 2C goal of the Paris Agreement. In total, 70% of the firms have long-term emission reduction targets.

In particular, the report notes that investor pressure played a key role in net-zero commitments from corporates including Nestlé, ArcelorMittal, Centrica and Thyssenkrupp in the last seven months.

“Investor engagement through Climate Action 100+ is playing a major role in changing corporate attitudes on climate change and we have seen some very significant commitments from companies,” the Institutional Investors Group on Climate Change’s chief executive and Climate Action 100+ steering committee member Stephanie Pfeifer said.

“Yet we have much more to do before business is on track to meet the goals of the Paris Agreement. We must now build on the momentum achieved to date if we are to succeed in addressing the climate crisis and safeguarding investments on which the futures of millions of pensioners depend.”

Tipping point

The Climate Action 100+ are calling for corporates to implement specific measures in order to drive the business sector towards a low-carbon economy.

Alongside calls for net-zero targets for 2050 to be set, the group is calling for lobbying activities to be aligned to action on climate change – currently, only 8% of the firms examined have done so. The other key recommendation is for corporates to support the recommendations of the Taskforce on climate-related Financial Disclosures (TCFD). According to the report, 40% of companies have pledged to disclose climate data, but the percentage of firms that support the TCFD recommendations drops to 30%.

Even with the slow progress, the group notes that it has set new records for investor support of climate change shareholder resolutions. The most notable example was the “largest-ever co-filing backing secured for a climate change shareholder resolution” from investors that held a $12bn (10%) stake in BP.

“We are now at a tipping point,” HSBC Global Asset Management’s director of responsible investment Stephanie Maier added.”A significant number of companies have made bold commitments to achieve net-zero emissions, with others increasingly following suit. Given the urgency of the situation, the role of investor engagement is critical in ensuring we build on this momentum.”

Green finance at edie’s Sustainability Leaders Forum

edie’s Sustainability Leaders Forum returns in 2020, as some of the biggest companies, individuals and organisations championing sustainability gather at the Business Design Centre on 4 & 5 February.

Green finance will be a key discussion point, with speakers including Green Finance Institute CEO Rhian Mari Thomas, M&G Investment’s head of responsible investment and ESG Anita McBain and Aviva Investors’ global head of governance Mirza Baig. 

Other keynote speakers at this flagship, multi-award-winning event features include Mary Robinson, former President of Ireland; Rebecca Marmot, Unilever CSO; Tom Szaky, TerraCycle CEO and Gilbert Ghostine, Firmenich CEO. For details and to register visit:https://event.edie.net/forum/

Matt Mace