Investors call on high-emitting companies to set science-based climate targets

net zero

A USD20 trillion group of financial institutions including Amundi, Fidelity International, and Aviva Investors is asking over a thousand companies to commit to “science-based climate action” in line with achieving net-zero by 2050.

Non-profit disclosure platform CDP launched the engagement campaign to target companies that do yet comply with “de-facto industry standards” for climate action, allowing them to be independently verified.

This is the largest global collaborative engagement campaign bringing together investors to collectively ask companies to set science-based targets with clear methodological guidance from the Science Based Targets initiative (SBTi).

Tesla, Roche Holding AG and Rio Tinto are among the 1,800 companies that have been contacted, representing the “most significant ones from a market capitalisation and GHG emissions perspective”. 

Together, these firms account for 25 per cent of global greenhouse gas emissions, or 13.5 gigatonnes, and have influence over 3x this volume of cumulative emissions across their entire value chain.

“The adoption of emission reduction targets by corporates is a critical factor of capital mobilisation. Responsible investors want to invest in companies that are transitioning to a Paris-aligned economy,” says Jean-Jacques Barbéris, director of the Institutional and Corporate Clients division and ESG at Amundi. “Science-Based Targets represent a global, robust and helpful tool to support companies on their transition journey.” 

Amundi was joined by 136 other investors calling on companies to change, a group which includes Arisaig Partners, Aegon Asset Management, AXA, Credit Agricole, Federated Hermes, Legal and General Investment Management, Lazard Asset Management, HSBC Global Asset Management, Nikko Asset Management, Neuberger Berman, and Storebrand Asset Management.

Hiroki Tsujimura, chief investment officer at Nikko Asset Management, comments: “Nikko AM is committed to integrating ESG into its investment management processes, but this is only possible with strong commitment and transparent disclosure from companies, and the willingness of senior management to engage with investors.”

The firms represent 40 per cent of the global equity index, MSCI ACWI Index, and many investors are looking to manage exposure to climate-risks in their portfolios. 

Previous CDP research warns that companies see USD1 trillion at risk from climate impacts.

"As an active investment manager we allocate capital to companies that we believe can outperform throughout an economic cycle. Companies that do not set science-based targets risk being surprised by increased costs or lost business that could result from the increasing focus on climate change by society and regulators. We need companies to rigorously evaluate the ways in which their businesses need to change to keep global warming below a 2-degree increase,” says Ted Maloney, chief investment officer at MFS Investment Management.

Emily Kreps, global director of Capital Markets at CDP, adds: “The importance of investor engagement to drive sustainable corporate action cannot be overstated. Climate change presents material risks to investments, and companies that are failing to set targets grounded in science risk losing out – and causing greater damage to the world economy.”