Investor group issues AGM warning to climate net-zero laggards

FILE PHOTO: A father and his child are holding a sign as climate activists protest in London
FILE PHOTO: A father and his child are holding a sign as climate activists protest in London, Britain, September 8, 2020. REUTERS/Dylan Martinez/File Photo

September 14, 2020

By Simon Jessop

LONDON (Reuters) – A leading investor group has written to the boards of the world’s biggest corporate emitters of greenhouse gases, warning they must produce a strategy to move their business to net-zero carbon emissions or face pressure at future AGMs.

Climate Action 100+, whose members include most of the world’s biggest investors, collectively managing $47 trillion in assets, said the strategies needed to have clear targets and that companies would be assessed on their performance.

While some companies have already moved to commit to net-zero carbon emissions by 2050 or sooner, many have not. It can also be hard to compare the relative merits of each company’s strategy, which can make engagement harder.

To help fix the problem, CA100+ said on Monday it was launching a new benchmark to help its 500 members and others assess each company’s progress on the way to net-zero against a set of 30 indicators.

In a letter to the boards of 161 companies collectively accounting for around 80% of the world’s greenhouse gas emissions, CA100+ said greater action was needed to meet the terms of the 2015 Paris agreement to limit global warming.

Specifically, the group called on the companies to create strategies that covered their full value chain – including so-called Scope 3 emissions from each company’s products – and were science-based.

Companies also needed to set medium-term objectives and material targets to help demonstrate the longer-term goals were achievable and make it easier for investors to track the necessary changes to their core business strategy.

CA100+ said the companies’ response would guide the way investors engage with the boards, “particularly for unresponsive or poorly performing companies”, which could also include action during future annual general meetings.

“Companies across all sectors need to take more ambitious action to ensure otherwise devastating impacts of climate change are avoided while they still can be,” said Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change, part of the CA100+ coalition.

“The benchmark will ensure it’s clear which companies are acting on climate change as a business-critical issue and embracing a net-zero future. Investors will be paying particular attention to those shown to be falling short.”

(Reporting by Simon Jessop; editing by David Evans)