225 global investors with more than $26.3 trillion AUM pledged to engage with 100 most polluting corporates (linked to about two-thirds of all emissions from industry worldwide) and to step up their ambition on climate action (FT, Reuters, BusinessGreen, 12 Dec): Climate Action 100+ is a five-year initiative coordinated by five partners: Asia Investor Group on Climate Change (AIGCC); Ceres; Investor Group on Climate Change (IGCC); Institutional Investors Group on Climate Change (IIGCC), and Principles for Responsible Investment (PRI). The coalition asks corporations to improve governance on climate change, curb emissions and strengthen climate-related financial disclosures, in line with the final recommendations of the Task Force on Climate-related Financial Disclosure (TCFD). Investors from eight of the worlds’s top asset managers, pensions funds, insurers and top sovereign wealth funds, as well as 20 globally systemic banks, backed the initiative (FT, 13 Dec).
The companies targeted in the initiative include fossil fuel producers, such as ExxonMobil, Royal Dutch Shell and Coal India, but also groups linked to greenhouse gas emissions when their products are made or used, including Toyota, United Technologies and Korea Electric Power.
“We’re trying to ensure that the transition is one that benefits the company and its investors” said Stephanie Maier, director of responsible investment at HSBC Global Asset Management (FT, 12 Dec).
CalPERS told the FT that engagement with boards was particularly important for index-following funds that were unable simply to sell shares in companies that were making rash decisions with climate risk. “You’re tied to the railroad tracks with this threat hurtling towards you” said Anne Simpson, Investment Director of Sustainability at CalPERS. “There is nowhere for CalPERS to hide”.
“Many long-term investors made a clear commitment two years ago to work with companies to ensure that they both curb emissions and do more to disclose the risks and maximise the opportunities presented by climate change. Today global investors are following through to put in place a global strategy to drive greater engagement that will deliver on this commitment”, said Laetitia Tankwe, Responsible Investment Adviser to Ircantec President Jean-Pierre Costes, Groupe Caisse des Dépôts.
“In few short months a substantial community of institutional investors have coalesced around this initiative because they want to send an unequivocal signal– directly to companies – that they will be holding them accountable in order to secure nothing less than bold corporate action to improve governance, curb emissions, and increase disclosure to swiftly address the greatest challenge of our time”, added Andrew Gray, Senior Manager of Investments Governance at Australian Super.