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$47-trillion investor group calls on big polluters to reach net-zero emissions

Extinction Rebellion stage a protest against fossil fuels and oil and gas company Shell near the Shell building in London, Britain, 28 August 2020 (Keystone / Vickie Flores)

The investors’ group Climate Action 100 + announced last week that they will put pressure again on the world’s biggest polluters to reach net-zero emissions. This time, the initiative involving 518 global investors with over $47 trillion in assets, will assess the companies’ progress in line with the 2015 Paris Agreement against 30 indicators.

Why is it important? Climate Action 100+ has written a letter to 161 polluting companies (fossil fuel, mining, transport, and other big emitting firms) asking them to put 30 climate targets in place in order to commit to net-zero emissions. According to a report by the London School of Economics (LSE) released last year, very few actions have been taken following their first call in 2017. This time, the measures will be published in a report to be released early next year forcing business leaders to explain how their strategies will help to reach the goals of the Paris Agreement. Climate-concerned shareholders hope it will force the targeted corporations responsible for up to 80 per cent of global industrial greenhouse gas emissions to be held publicly accountable.

What is Climate Action 100+? An initiative launched by more than 500 investors worth $47 trillion in assets in 2017 to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. It is governed by a global steering committee across five regions in the world. Their Technical Advisory Group brings together selected organisations that assess companies’ preparedness for the transition to a low-carbon economy, providing technical expertise along with company-specific research and analysis.

Which companies are targeted? The companies include 100 “systemically important emitters”, accounting for two-thirds of annual global industrial emissions. Companies on the list include the Anglo-Australian mining company BHP, the American oil and gas giant Exxon Mobil, PetroChina, BP, Shell, the leading global mining group Rio Tinto, but also the French food company Danone or the German pharmaceutical Bayer. Nestlé is the only Swiss among the signatories.

Methods of analysis. A list of indicators and an analysis of their strategies have been produced by the initiative to analyze 30 climate measures and ensure companies are treating climate change as a “business-critical issue”.

Good move or greenwashing?

  • The indicators will surely help companies to set science-based targets to cut both their own emissions and the greenhouse gases released by their customers (“scope 3” emissions).

  • According to the Climate Action 100+ statement, 59 companies are already supporting recommendations from the Climate Measurement Initiative, a task force launched in 2015 by the Financial Stability Board to help banks and insurers assess the risk of damage from climate-related events (heatwaves, fires, floods, droughts or cyclones).

But…

  • To avoid greenwashing, these indicators should be remeasured after five years. Joëlle Noailly, an environmental economics professor at The Graduate Institute of Geneva:

“The emergence of these kinds of standards like the Climate Measurement Initiative everyone refers to, is positive but it’s important to measure results, check that the action plan has actually led to results.”

  • Companies decide to participate on a voluntary basis.

“If companies are very green they will be more eager to participate: it can give them publicity. Polluters are not obliged to take part. Such initiatives should be accompanied by sanctions.”

  • Finally, such measures are only meaningful if applied together with long-term climate policies to make sure it not only impacts private companies but state-owned ones.

“There is a need not only for punitive policies, but also for incentives to encourage companies to change their equipment and cover the costs of transition.”

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