Climate risk poses a considerable threat to investors, who stand to lose millions If companies fail to address unsustainable elements in their supply chains. Yet despite growing pressure for action, a vast majority of companies have yet to make meaningful changes.
On the second anniversary of the Paris Agreement, 225 of the most influential global institutional investors with more than $26.3 trillion in assets under management today — including Amundi, BNP Paribas, HSBC Global Asset Management, Northern Trust Asset Management, PIMCO and UBS — launched a new collaborative initiative to engage with the world’s largest corporate greenhouse gas emitters to encourage them to step up their actions on climate change and rein in emissions.
“Climate change is a material and systemic risk no long-term investor can afford to ignore. To support the full implementation of the Paris Agreement, it is also vital that investors and universal owners across the mainstream investment community do more to ensure major corporate emitters move swiftly to address the risks and pursue the opportunities presented by climate change, providing greater disclosure on how they are aligning with the 2 degrees transition,” said Stephanie Maier, Director of Responsible Investment at HSBC Global Asset Management.
Led and developed by investors and supported and coordinated by five partner organizations around the world, the Climate Action 100+ initiative will see investors around the world ask companies to:
- Implement a strong governance framework which clearly articulates the board’s accountability and oversight of climate risk.
- Take action to reduce greenhouse gas emissions across their value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increase to well below 2 degrees Celsius above pre-industrial levels.
- Provide enhanced corporate disclosure in line with the final recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and sector-specific GIC Investor Expectations on Climate Change (when applicable) to enable investors to assess the robustness of companies’ business plans against a range of climate scenarios, including well below 2 degrees Celsius and improve investment decision-making.
From TCFD, to shareholder activism, to transparency gaps ...
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Participating investors will initially focus their attention on the world’s largest corporate greenhouse gas emitters. The initial list of companies was developed using CDP data on the companies’ combined direct and indirect (scope 1, 2 and 3) emissions, including emissions associated with the use of their products.
The majority of companies to be targeted are those in the oil and gas sector, including Exxon Mobil and Imperial Oil, but the list also features auto industry giants, such as General Motors and Ford, as well as food and beverage heavy hitters PepsiCo and Nestlé.
“Moving 100 of the world’s largest corporate greenhouse gas emitters to align their business plans with the goals of the Paris Agreement will have considerable ripple effects. Our collaborative engagements with the largest emitters will spur actions across all sectors as companies work to avoid being vulnerable to climate risk and left behind,” said Anne Simpson, Investment Director of Sustainability at CalPERS.
Climate Action 100+ is designed to implement the investor commitment first set out in the Global Investor Statement on Climate Change in the months leading up to the adoption of the Paris Agreement.
To participate, investors must be a member of at least one of the coordinating partner organizations, sign the Climate Action 100+ Sign-on Statement and commit to pursuing at least one engagement each year with at least one company on the focus list. Since an invitation to sign on to the initiative was first issued in September 2017, 225 investors from around the world have signed on.
Each year, in partnership with researchers, Climate Action 100+ will produce a public report that will assess how the companies have responded to the collaborative engagement and set the investors’ engagement priorities for the year ahead. Companies may be removed from the list if they are considered to have made sufficient progress against the goals of the initiative.
An additional list of companies, which are considered by investors to be potentially exposed to climate-related financial risks, is expected to be added to the focus list next year.