More than 500 global investors with over $47 trillion in assets, including a Big Four U.S. bank unit and the world’s largest asset manager, have pushed some of the biggest corporate polluters to move to reduce their carbon emissions before they’re called out in a new benchmarking report.
Wells Fargo Asset Management, BlackRock, AXA and BNP Paribas Asset Management are among the investors represented in a letter asking 161 companies to “put in place net-zero business strategies and define targets to support delivery” in the lead-up to a 2021 analysis showing companies’ progress, the Climate Action 100+ initiative, as the investor group bills itself, said Monday.
Geico owner Berkshire Hathaway, the world’s fifth-largest insurer, is among the letter’s targets, which also include numerous energy, consumer goods and auto manufacturing companies, such as ExxonMobil, Procter & Gamble and General Motors. Together the group is responsible for “up to 80% of global industrial greenhouse gas emissions,” according to the investors.
Fifty of the companies targeted in the letter already plan to erase their emissions within 30 years, but the scope of emissions “varies considerably,” highlighting the need for the benchmark, the investors said. They want companies to reduce emissions across their entire value chain, for example, through transportation and distribution and the use of sold products.
“Investors and their beneficiaries are becoming increasingly vocal and demanding more tangible climate action on the part of companies, especially those that are high emitters of greenhouse gases,” said Fiona Reynolds, CEO of the Principles for Responsible Investment and a member of the Climate Action 100+ steering committee.
“Central to achieving climate goals is the setting of clear targets on how companies plan to move to net-zero as well as ensuring that they are transparent and held accountable for actions taken,” she continued.
Reynolds and her fellow steering committee members, including asset managers from HSBC and Sumitomo Mitsui, asked CEOs and board chairs to confirm their companies have or will set a good-faith ambition “to achieve net-zero emissions by 2050 or sooner across all material greenhouse gas emissions, and medium-term targets or goals consistent with a global reduction in emissions of 45% by 2030 relative to 2010 levels.”
The Climate Action 100+ Net-Zero Company Benchmark will feature a “comprehensive analysis” of which companies are leading the net-zero transition, “alongside a range of other indicators used by investors to inform investment and corporate engagement strategies,” the group said.
The indicators include the alignment of capital to the goals of the Paris Agreement, which aims to limit global temperature rise by 1.5 degrees Celsius to avoid the most catastrophic effects of climate change. The consistency of a company’s climate risk reporting with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures is another factor.
The benchmark “is a critical investor engagement tool to make further progress at speed and scale with the world’s largest corporate emitters on climate change,” said Ceres CEO and President Mindy Lubber. “It will send a strong message to corporate boards and management that companies across sectors have already begun to make the shift to a net-zero emissions business, and it is time for the rest to follow.”
The group’s investors also include the asset management arms of UBS and Northern Trust, as well as Allianz, Neuberger Berman and Munich Re, the world’s second-largest reinsurer.
Climate Action 100+ was formed in 2017 and is coordinated by the Asia Investor Group on Climate Change, Ceres, the Investor Group on Climate Change, the Institutional Investors Group on Climate Change, and Principles for Responsible Investment.
Those organizations have separately been pressuring investors to cut carbon out of their portfolios by 2050, the European Union’s deadline for climate neutrality.
For instance, the Institutional Investors Group on Climate Change, comprising 70 global investors controlling more than $16 trillion, last month revealed its Net Zero Investment Framework, the “first-ever practical blueprint” for doing so.