Group of 88 investors reveal plan to engage major companies they think are not coming clean on climate risk
ExxonMobil, Amazon, and Volvo will be among the firms targeted by a group of investors this summer, who are keen to see more disclosure from companies about the risks their business faces from climate change.
A group of 88 investors with almost $10tr in assets today revealed plans to engage companies they claim are not being sufficiently transparent about their environmental impacts and accompanying risks.
The investors - which include Amundi, Cathay Financial Holdings, NN Group, and Investec Asset Management - are urging around 700 companies to report more environmental information to CDP, the non-profit environmental disclosure platform. In total, the companies targeted represent a total market capitalisation of $15.3tr, and are in operation across 46 countries worldwide.
They include oil giants ExxonMobil, BP, and Chevron, alongside automaker Volvo, e-commerce giant Alibaba and palm oil firm Genting Plantations.
According to CDP, the firms have been singled out because of their high environmental impacts and limited environmental disclosures to date.
Emily Kreps, global director of investor initiatives at CDP, said without clear disclosures investors cannot properly manage portfolio risks from climate change. "While some companies may say they already disclose in their own sustainability reports - that is not enough on its own," she said. "Investors and the wider market need transparency in the form of consistent, comparable and relevant metrics that are easy to access, compare and benchmark."
This is not the first time CDP has urged companies to publicly disclose enhanced environmental information - the disclosure campaign has been running for four years - but it is the first time CDP has revealed its plans publicly.
This year's efforts also boasts the highest number of investors to date, with 88 participating compared to 57 in 2017.
The move comes as investor pressure for companies to address the climate emergency is increasing. Last month a group of investors with more than €23tr in assets under management pledged to step up efforts to align their portfolios with the goals of the Paris Agreement.
As part of the campaign investors will spend the summer engaging with companies to try to convince them to report more fully on their environmental impacts. According to CDP, the tactic is effective - companies targeted in last year's campaign were more than twice as likely to disclose the following year as those which were not.
"Climate change, deforestation and water security are critical challenges that require immediate action," said Sophia Cheng, chief investment officer at Cathay Financial Holdings. "Cathay believes that investors can play an important role in encouraging their investee companies to disclose environmental information - this campaign should improve corporate transparency and help investors better manage these environmental risks and opportunities."
However, there are also worrying signs that investors face significant barriers in convincing firms to improve climate risk disclosures and develop Paris Agreement-compatible strategies.
The FT reported today on a new study from analyst firm Carbon Delta, which assessed greenhouse gas emissions from the world's top 500 companies alongside the number of low carbon patents they hold. It calculated that only 15 per cent of firms have strategies in line with the Paris Agreement.
Meanwhile, an update earlier this month from the Taskforce on Climate-related Financial Disclosures (TCFD) revealed corporate adoption of its reporting guidelines was still moving "too slow". The group undertook an artificial intelligence review of more than 1,100 companies across 142 countries and found the average number of TCFD recommended disclosures per company rose 2.8 in 2016 to 3.1 in 2017 before reaching 3.6 last year, equating to a 29 per cent increase over the two year period. However, there are 11 separate TCFD recommendations and not one company globally is yet reporting in line with all of them.
Coming just days after the Norwegian government approved a wide-ranging new divestment strategy, the latest initiative from CDP joins a wave of moves from top institutional investors who are growing increasingly impatient with corporates' failure to deliver climate disclosures and risk management strategies that are commensurate with the scale of the threat.
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