Climate Action 100+, a global investor group comprised of 370 investors with over $35 trillion USD in assets under management, is urging companies to work toward reducing net emissions to zero by 2050. The group says a more ambitious response by its focus companies is pivotal at both a company and a global level.
“The future of the climate and the future of investing are completely intertwined.”
– Emily Chew, Manulife
Nineteen Canadian investors are currently listed as signatories to the Climate Action 100+’s commitment statement, some of which include Caisse de Depot et Placement du Québec (CDPQ), TD Asset Management, Ontario Teachers’ Pension Plan, the University of Toronto Asset Management Corporation, and Vancity Investment Management.
CDPQ also recently helped to initiate the United Nations-convened Net-Zero Asset Owner Alliance, which commits to carbon-neutral investment portfolios by 2050.
Climate Action 100+ is a five-year investor initiative to assure the world’s largest corporate CO2 emitters take necessary action on climate change. A recent report from the group found only nine percent of the world’s top-polluting companies have emissions targets in line with or beyond the minimum goal of the Paris Agreement, to keep the rise in global temperature below 2°C.
“Climate change is a financial risk of unprecedented scale and impact,” said Emma Herd, CEO of the Investor Group on Climate Change and steering committee member of Climate Action 100+. “Through Climate Action 100+, investors are telling companies it’s time to get serious about climate change. While more work is clearly needed to really drive company action, this report shows that engagement is having an impact and companies must listen to their shareholders.”
The report found that although 70 percent of focus companies have set long-term emission reduction targets, and 77 percent have defined board-level responsibility for climate change, only eight percent have policies in place to ensure their lobbying activity is aligned with what it calls “necessary action.”
Launched in December 2017, the Climate Action 100+ has set out the three key priorities for engagement for companies: lobbying reform, net-zero goals or targets, and implementation of reporting to the Task Force on Climate-related Financial Disclosures (TCFD). Investors looking to sign on must aim to fulfill a commitment to:
(1) Achieving a clear governance framework that explains the board’s responsibility and oversight of climate change risks and opportunities.
(2) Taking action to cut greenhouse gas emissions across their value chain, consistent with the Paris Agreement’s goal of reducing the global average temperature rise.
(3) Providing “enhanced corporate disclosure” in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures.
“The future of the climate and the future of investing are completely intertwined,” said Emily Chew, global head of environmental, social and governance research and integration at Manulife Investment Management. “Ensuring corporate strategy of the companies in which we invest is aligned with our interest in a safe climate helps protect the long-term value of portfolios across all sectors and asset classes.”
The targetted companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, as well as more than 60 others with significant opportunity to accelerate a transition toward clean energy. Canadian companies include Enbridge, Imperial Oil, Suncor Energy, Teck Resources, and TC Energy.
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