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Investor group announces climate change initiative

An investor group representing more than $26.3 trillion in assets under management is pledging to engage the top contributors to global greenhouse gas emissions.

The initiative, Climate Action 100 Plus, is being coordinated by five organizations: Asia Investor Group on Climate Change; Ceres; Investor Group on Climate Change; Institutional Investors Group on Climate Change; and the Principles for Responsible Investment.

It was announced at the One Planet Summit, organized by the United Nations and the World Bank Group and held in Paris on Tuesday.

Climate Action 100 Plus brings together more than 225 global investors including the A$120 billion ($90.1 billion) AustralianSuper, the $345.1 billion California Public Employees' Retirement System and Hermes Investment Managers.

During the five-year initiative, investors will engage with 100 corporations estimated to be responsible for about 85% of total global greenhouse gas emissions. The aim is to improve governance on climate change, curb emissions and strengthen climate-related financial disclosures.

The 100-strong target list was developed using data from CDP — formerly Carbon Disclosure Project — on companies' direct and indirect emissions associated with use of their products. Companies on the list include Exxon Mobil Corp., Boeing Co., General Electric Corp., Volkswagen AG and PepsiCo.

Engagement covers dialogue in and around company boardrooms, with investors potentially filing proposals at board meetings to improve governance, disclosure and action on climate change.

Fiona Reynolds, managing director at the PRI, in an emailed comment said: "A rise in emissions for the first time in three years shows that governments and investors must do more to support low carbon initiatives in order to meet the goals of the Paris Agreement" (a climate pact made in 2015). "For their part, investors need to step up efforts to ensure their portfolios are adapting to a low carbon transition, which is essential for protecting the returns of millions of beneficiaries. This includes engaging with the companies in which they are invested on how they plan to move away from fossil fuels and reallocate capital to low carbon alternatives. Climate Action 100 Plus, which will see investors engaging the top 100 biggest emitters of CO2, will accelerate climate action."

Ms. Reynolds said the PRI next year will announce a 10-year plan to map out the financial risks of failing to address climate change in their portfolio. "Our signatory base has told us that the material risks around climate change is their number one concern, yet too few are taking decisive action. Unfortunately, much of the momentum around climate change, which we saw after COP21 in Paris in 2015, has been lost so we urgently need to regain that focus," said Ms. Reynolds.

Further details are available on the Climate Action 100 Plus website.