Investors managing over $1 trillion USD, coordinated by ShareAction, are calling on companies around the world to drastically reduce the impact of their operations on the planet, and protect the financial assets they manage from climate change. Dutch investors that are part of this initiative are Achmea Investment Management, Aegon Asset Management, BPL Pensioen and Triodos Investment Management.
Over 60 major shareholders such as Aegon Asset Management, Candriam Investors Group, and Ethos Foundation (a collective of Swiss pension funds) yesterday sent letters to the chief executives of 15 companies including big brands like Morrisons, Netflix, and The Walt Disney Company, and high carbon emitters from the power generation and cement sectors.
The investors in the group, called the Investor Decarbonisation Initiative, are encouraging the companies they own to set ambitious science-based climate targets to reduce their greenhouse gas emissions in line with the global Paris Agreement on climate change, and to commit to cleaner energy like renewable electricity.
In the letters, investors say they want ‘to invest in environmentally and financially sustainable companies that are prepared for and contributing to the low-carbon economy.’
Momentum behind setting science-based targets is growing, with news today that over 100 companies have now had their targets approved by the Science Based Targets initiative.
Sophia McNab, Project Manager at ShareAction, which campaigns for a more responsible investment system, said: “I still hear from some companies that they’ve received no questions from investors on environmental issues. We welcome the leadership of investors in our networks but there is more work to be done by institutional investors. On a personal note, I’d like to see my own pension fund – NEST – championing these issues.”
Emanuele Fanelli, Responsible Investment Manager at Aegon Asset Management (£279 billion AUM), said: ‘We welcome the momentum behind science-based target setting and are pleased to see that now 100 companies, from Utilities to Real Estate companies across different geographies, currently have approved science-based targets. This encouraging shift from disclosure to action is in the best interests of the environment, society at large, and company long-term investors. In general, there is still a gap between the way companies identify climate-related risks and how they are preparing to tackle them. We hope this approach to target setting becomes the new norm and it will advance the implementation of the Paris Agreement.’
Support from investors can provide vital additional encouragement to companies that recognise the need to prepare for and participate in the low-carbon transition. Investors want to hold companies whose business models are aligned with the low-carbon economy.
Isabelle Cabie, Global Head of Responsible Development at Candriam Investors Group, which manages £97 billion, said: “Climate risk is now seen as a mainstream risk to financial stability by investors and regulators around the world. It is crucial that this translates into pressure on the most high-carbon sectors who are critical in delivering the low-carbon transition. As such, we are pleased to be part of collaborative investor initiatives, such as ShareAction’s, which are driving climate change up the corporate agenda.”
Vincent Kaufmann, CEO, at Ethos Foundation which represents the 24 Swiss pension funds (£50 billion AUM) in ShareAction’s investor group, said: “Pension funds, as the guardians of their members’ savings, have an important role to play in the low-carbon transition. One way they can do this is to engage businesses, who are the world’s largest users of energy, to drive a faster transition to cleaner alternatives. Collaboration among pension funds and other shareholders can be highly effective and powerful in driving change – investors should continue to engage companies to deliver the ambitions of the Paris Agreement.”
Companies are facing increasing pressure to disclose and manage climate-related risks and opportunities following the Paris Agreement and the work of the Governor of the Bank of England Mark Carney’s Task Force on Climate-related Financial Disclosures.
As well as coordinating investor support for science-based targets, ShareAction is also calling on investors to support the shareholder resolution at Shell, asking the company to set Paris-aligned climate targets. The vote is another test of investors’ stance on climate change issues.