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Finance & Investment
Investors Lose Patience with Companies’ Lack of Environmental Disclosure

Investors with nearly $10 trillion in assets are targeting over 700 companies that are not transparent enough about their environmental impact, and pushing them to disclose this information through CDP. This is the first time that CDP is reporting publicly on its Non-Disclosure Campaign.

88 investors with nearly US$10 trillion in assets are targeting hundreds of companies that are not transparent enough about their environmental impact, and pushing them to disclose this information through CDP, the nonprofit global environmental disclosure platform.

The investors are targeting 707 companies with US$15.3 trillion market capitalisation across 46 countries for not reporting their climate change, water security and deforestation data; these companies have been selected because of their high environmental impact and lack of transparency on these issues to date.

This includes Exxon Mobil, BP, Chevron, Amazon, Volvo, Alibaba and Qantas Airways, as well as palm oil company Genting Plantations Bhd (a full list of the companies being targeted in the campaign can be found here).

546 companies are being targeted to disclose on climate change, 166 on water security and 115 on deforestation.

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Candriam, HSBC Global Asset Management, Investec Asset Management, Environment Agency Pension Fund, Cathay Financial Holdings, Amundi, NN Group and Washington State Investment Board are among the investors that will be engaging these companies.

This investor engagement is part of CDP’s 2019 Non-Disclosure Campaign, which aims to drive further corporate transparency around climate change, deforestation and water security, by using shareholder influence to push companies to respond to CDP’s disclosure request.

The most targeted industry for climate change disclosure this year is the Services industry (27 percent of all companies), followed by Manufacturing (18 percent) and Fossil Fuels (12 percent). For water security, the most targeted industries are Manufacturing (26 percent), Retail (23 percent) and Fossil Fuels (11 percent); while for deforestation, it is Retail (30 percent), Food, Beverage & Agriculture (26 percent) and Manufacturing (16 percent).

Overall, the US is home to the most companies being targeted in the campaign (20 percent), closely followed by Australia at 16 percent.

“Companies must disclose their role in addressing the climate crisis we face. We know that climate change, water security and deforestation present material risks to investments, but these risks cannot be managed without proper information,” said Emily Kreps, Global Director of Investor Initiatives at CDP. “While some companies may say they already disclose in their own sustainability reports — that is not enough on its own. Investors and the wider market need transparency in the form of consistent, comparable and relevant metrics that are easy to access, compare and benchmark.

“And as for companies that say their investors do not care about these issues, this campaign demonstrates that is simply not the case,” Kreps continued. “Investors are asking for this information and using it — for corporate engagement, selecting stocks and building investment products. 7,000 companies are already disclosing through CDP and providing the market with the information it is asking for — the ‘vow of silence’ from non-disclosing companies cannot go on.”

This is the first time that CDP is reporting publicly on its Non-Disclosure Campaign, which has been successful in driving more transparency from companies on these three key issues for the past four years. Companies targeted in last year’s campaign were more than twice as likely to disclose than those that were not.

Candriam’s Chief Investment Officer, Vincent Hamelink, commented: “It is of the greatest importance that companies disclose and manage their environmental impact and we are proud to be taking a leading role as a loyal supporter of CDP for the 15th consecutive year. Collaborative initiatives are crucial for effective impact, as they ensure a consistent message from asset owners. These will continue to increase in importance, as the financial community’s ESG awareness gains momentum.”

More investors are taking part in this year’s Non-Disclosure Campaign than ever before (88 this year, in comparison to 75 in 2018 and 57 in 2017), and more companies are also being targeted than in previous years (707 compared to 622 in 2018 and 416 in 2017).

Investors will be engaging with companies over the summer while CDP’s disclosure system is open. Companies will be asked to submit their response to investors via the CDP online response system.

Thomas O’Malley, Global Head of Corporate Governance at HSBC Global Asset Management, commented: “Good disclosure enables investors to assess how well companies manage their ESG risks. CDP now reflects TCFD requirements and is a model disclosure framework on climate change, one of the broadest risks facing companies. We encourage all companies to respond fully to the CDP questionnaire.”