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Investors With $54
Trillion Say Net Zero Requires Drastic Action
Alastair Marsh
March 22, 2021
For all the talk of reaching
net-zero emissions, the world’s largest polluters are a long way from
achieving that goal.
That’s the findings of an analysis of companies’ climate ambitions and
progress towards net zero from Climate Action 100+, an investor group
that seeks to pressure the largest carbon emitters to cut their
greenhouse-gas emissions. The investors found that none of the 159
companies they studied has fully disclosed how they will eliminate
their net emissions. And while 83 of them have said they plan to reach
net zero by 2050, only half of those commitments include emissions
generated by customers using their products.
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“There’s an urgent need for greater corporate action and higher
ambition in accelerating the net-zero economy and ensuring a safe and
viable future,” said Mindy Lubber, chief executive officer of
sustainable investment nonprofit Ceres and a member of Climate Action
100+ steering committee, in a statement. “The world’s largest
corporate emitters have an opportunity to act quickly to distinguish
themselves from their peers, and move forward with plans to become
net-zero businesses.”
Companies in all sectors are being pressed by investors, governments
and the general public to cut emissions and retool their operations
for a low-carbon world, and nowhere is this pressure greater than for
fossil-fuel companies. That’s because they account for the lion’s
share of emissions -- the companies targeted by Climate Action are
responsible for more than 80% of global industrial greenhouse-gas
emissions -- and because scientists have said emissions will need to
drop by about 50% by 2030 and reach net zero by the middle of the
century to avoid the most catastrophic impacts of climate change.
The Climate Action 100+ Net-Zero Company Benchmark revealed that only
six companies, including RWE AG, Total SE and Repsol SA, have
explicitly committed to align their future capital expenditures with
their long-term emissions reduction targets. In addition, while
climate change issues are overseen by the board at 139 of the focus
companies, only a third of companies tie executive remuneration
directly to the firm’s emission-reduction targets.
Climate Action 100+ was formed in 2017 and now has more than 575
members that manage a combined $54 trillion of assets. The initiative
engages with 167 companies, which include the likes of BP Plc and
Exxon Mobil Corp., to improve governance, curb emissions and
strengthen climate-related financial disclosures. The net-zero
benchmark covers 159 of the companies.
For Lucie Pinson, director and founder of environmental nonprofit
Reclaim Finance, it’s not only corporate emitters who are moving
slowly to address climate risks. Some investors are dragging their
feet, she said.
“Investors need to drastically up their engagement game,” Pinson said.
“If investors don’t want to do what needs to be done for the climate,
let’s hope they now decide to act out of self-protection from future
stranded assets.”
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