Global investors take on climate change

By Lucy Dean

December 13 2017
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Investors around the world have turned their eyes to the world’s largest greenhouse gas emitters, hoping to send an “unequivocal sign” that they will be held accountable.

The likes of Nestlé, BP, Rio Tinto and Wesfarmers are in the sights of 225 institutional investors which have signed on to the Climate Action 100+ initiative.

Launched in Paris yesterday, the initiative brings together a group of global institutional investors with more than USD$26.3 trillion in assets under management. They’re calling on 100 of the world’s biggest polluters to “act swiftly to improve governance on climate change, curb emissions, and strengthen climate-related financial disclosures”.

AMP Capital, Australian Ethical Investment, Colonial First State Global Asset Management, Cbus, First State Super, HESTA, Janus Henderson Investors, Local Government Super, VicSuper and AustralianSuper are among the investors.

AustralianSuper senior investment governance manager, Andrew Gray said: “In [a] 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.”

The HSBC Global Asset Management director of responsible investment, Stephanie Maier added that climate change is a risk that no long-term investor can ignore.

The launch of the initiative falls on the second anniversary of the Paris Agreement, which saw a number of nations pledge to limit global temperature increases to a maximum 2-degrees Celsius above pre-industrial levels.

Noting this, Ms Maier continued: “To support the full implementation of the Paris Agreement it is also vital that investors and universal owners across the mainstream investment community do more to ensure major corporate emitters move swiftly to address the risks and pursue the opportunities presented by climate change, providing greater disclosure on how they are aligning with the 2-degrees transition.”

Investors are specifically calling on the 100 companies to:

1. “Implement a strong governance framework” which clearly states the board’s “accountability and oversight” of climate risk

2. “Take action to reduce greenhouse gas emissions across their value chain” as part of the Paris Agreement

3. “Provide enhanced corporate disclosure” to ensure that investors can assess the quality and strength of companies’ climate risk plans and procedures.

According to the investment director of sustainability at CalPERS, (one of the largest public US pension funds), Anne Simpson said that the initiative could have significant impact.

“Moving 100 of the world’s largest corporate greenhouse gas emitters to align their business plans with the goals of the Paris Agreement will have considerable ripple effects.

“Our collaborative engagements with the largest emitters will spur actions across all sectors as companies work to avoid being vulnerable to climate risk and left behind.”

In partnership with researchers, Climate Action 100+ will each year produce a report assessing companies’ responses to the “collaborative engagement” while setting the investors’ priorities for the next year.

In the Climate Action 100+ sign-on statement, signatories said; “The institutional investors that are signatories to this statement are aware of the risks climate change presents to our portfolios and asset values in the short, medium and long term.

“We believe that engaging and working with the companies in which we invest – to communicate the need for greater disclosure around climate change risk and company strategies aligned with the Paris Agreement – is consistent with our fiduciary duty and will contribute to achieving the goals of the Paris Agreement.”

The launch of the Climate Action 100+ initiative was a feature of the One Planet summit held in Paris this week. The summit was convened by the United Nations secretary-general António Guterres, French President Emmanuel Macron and World Bank President Jim Yong Kim.

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