Investors With $29 Trillion Demand Science-Based
September 28, 2021
coalition of financial firms overseeing a combined $29.3 trillion of
assets are calling on some of the world’s biggest corporate emitters
to “urgently” set science-based emissions reduction targets that are
compatible with 1.5° Celsius of global warming.
Allianz SE, Credit
Agricole SA and Legal
& General Investment Management are
among 220 institutions that have written to 1,600 companies to request
they set emissions reduction targets through the Science Based Targets
initiative, a widely-endorsed program for screening corporate climate
plans. The financial firms are asking companies, including Hyundai
Motor Co., Duke
Energy Corp. and Samsung
to align their targets with a 1.5°C pathway.
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Investors are facing growing pressure to use their vast resources to
pressure companies to cut emissions, and expectations for investor
action are only set to increase with the much-anticipated United
Nations climate summit due to start at the end of next month. There is
a steep hill to climb. The Science Based Targets initiative said
earlier this month that the vast
companies in the world’s major economies are failing to make climate
pledges that can be measured against meaningful yardsticks, and only a
fifth of the more than 4,200 companies based in Group of 20 economies
have signed up to science-based reporting.
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need more companies to commit to carbon reduction targets and those
already on this journey need to demonstrate these reductions are
robust,” Aela Cozic, sustainable investing analyst and portfolio
manager at Fidelity International, said in an interview. “The ask from
investors is pretty clear, and the more we see companies introduce
these targets the more likely they will be able to go in a net-zero
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companies targeted by the coalition have a market capitalization of
more than $41 trillion and account for 11.9 gigatons of direct
emissions, which is equivalent to more than the annual greenhouse-gas
pollution of the U.S. and the European Union combined.
Environmental nonprofit CDP,
which is one of four institutions behind the Science-Based Targets
initiative, coordinated the campaign. A similar effort in 2020
resulted in 154 companies, with emissions roughly equivalent to those
of Germany, setting science-based targets.
“This serves the cause of investors since a huge amount of money says
it wants to be net zero-aligned, or 1.5 degrees-aligned, and the
reality is they can only lend to or invest in one in 10 companies
using that criteria,” said Laurent Babikian, joint global director of
capital markets at CDP.
Axa Investment Managers, Amundi
Asset Management and MFS
Investment Management are
also among the 220 finance firms.
“The adoption of emissions reduction targets by both corporates and
investors is critical,” said Jean-Jacques Barbéris, director of the
institutional and corporate clients division and ESG at Amundi.
“Today, we fully integrate the emissions trajectory of the companies
we invest in. Adapting their business models to the climate challenge
as well as aligning with the Paris Agreement isn’t just desirable
anymore, but a necessity to ensure long-term growth and
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