Big investors warn companies against backtrack on climate change
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Big investors have urged companies to maintain their focus on reducing carbon emissions, even as businesses grapple with the economic fallout of coronavirus.
Eight investment groups, including BNP Paribas Asset Management, DWS and Comgest Asset Management, told FTfm that tackling global warming must continue to be a priority for public companies, despite unprecedented pressure on businesses globally after government measures to tackle the pandemic left whole sectors unable to operate.
The investors said businesses would be given leeway when it came to climate change this year, but warned against backtracking on targets to reduce carbon emissions.
“We will be quite vigilant that companies do not use this to cancel or postpone some commitments they have already made,” said Sebastien Thevoux-Chabuel, a portfolio manager at Comgest, the French asset manager. “What is happening now is what we could see with climate change . . . with a lot of supply and demand falling.”
Michael Herskovich, head of corporate governance at BNP Paribas Asset Management, said the €440bn fund house continued to discuss climate change with the businesses it invests in.
“The environmental issues we are facing are not going away,” he said. “For now the main focus is on coronavirus. But we are still discussing environmental and social issues. We hope [the Covid-19 pandemic] won’t change the approach of companies, that they won’t cut their focus on shifting towards a low-carbon economy.”
He added: “We cannot afford to wait.”
Over the past couple of years, big investors have pushed companies to tackle their carbon emissions, teaming up together through initiatives such as Climate Action 100+, amid growing concerns of an economic fallout from global warming.
Partly in response to investor and customer pressure, businesses have begun making so-called net zero commitments — pledging to cut or offset emissions by taking an equivalent amount out of the atmosphere through carbon capture and other technologies.
Companies including oil major BP, British bank Barclays, food company Nestlé, miner Vale and airline group IAG have all set net zero targets, usually for 2050. On Thursday, Royal Dutch Shell became the biggest global energy group to announce a net zero emissions target.
Neville White, head of responsible investment policy at EdenTree Investment Management, said many companies will see a reduction in their carbon emissions this year, because businesses have had to close manufacturing facilities, ground aircraft and close offices.
But he added: “Any company that would ditch a lot of targets because of what they are focusing on at the moment is potentially very short-sighted. There is no reason why longer term targets should be thrown out.”
The UN climate talks that were set to take place in Glasgow in November have already been postponed to 2021 because of coronavirus, delaying a round of new global climate commitments.
Eugenia Unanyants-Jackson, head of environmental, social and governance research at Allianz Global Investors, the €563bn asset manager, said: “We don’t see the reason why the net zero targets for 2050 should be abandoned in 2020.”
Michael Lewis, head of ESG thematic research at DWS, the €767bn asset manager, said it was important that measures to reinvigorate economies in the wake of the pandemic had a green focus. “There will be a huge scrutiny on what is the proportion of green spending in these programmes,” he said.
Last month, BlackRock, the world’s biggest asset manager, said it would continue to expect companies to report in line with the Task Force on Climate-related Financial Disclosures, a framework headed by Mark Carney, the former Bank of England governor, regardless of the pandemic.