Some of the world’s largest companies have today been ranked on their progress towards addressing climate change and transitioning to a low-carbon economy.
Legal & General Investment Management (LGIM) assessed 84 companies based on 50 key indicators over the last year, identifying Nestlé as one of the best-performing firms.
The multinational food and drink company has set targets to reduce greenhouse gas emissions by 2020 in line with the Paris Agreement, and discloses how it is performing against those goals.
In contrast, China Construction Bank continues to show “persistent inaction” to address climate risk, and joins a list of firms that LGIM said it would exclude from its Future World investment funds.
“China Construction Bank remains the world’s largest funder of coal mining and plants,” LGIM said. “While the company has increased lending to green projects, it does not disclose total emissions associated with its business.”
Almost three-quarters of the 84 companies responded to letters from LGIM during an engagement period from April 2017 to April 2018, resulting in meetings with 61% of the firms.
Russia’s Rosneft Oil is another “laggard” that will be excluded from LGIM’s Future World funds after the firm produced a 144-page sustainability report that does not mention “climate change” once.
“For investors, this provides little reassurance that the company is planning for a world that must use less of its main product,” LGIM said.
Other companies that the funds will no longer hold include, Japan Post Holdings, Occidental Petroleum, Dominion Energy, Subaru, Loblaw and Sysco Corporation.
It was also found that the average scores for US, Japanese, Australian and South Korean firms have improved over the last year, but French, German and British ones have not, with utilities among the best and worst performers.
Oil and gas major Total was praised for its business strategy having made significant investments in clean energy and battery manufacturers, and outlining its intention to focus on renewables and natural gas.
Spanish Utility Iberdrola was singled out for its leadership in public policy after lobbying the EU to raise its carbon price, while French bank BNP Paribas was praised for its transparency and carbon risk disclosures.
In addition to excluding firms from their investment funds, LGMI said it would vote against the re-election of chairman at companies failing to address climate change risks.
“Climate change is a significant issue for society and investors. Our role is to ensure companies transition successfully and are committed to helping them do that,” LGMI head of sustainability and responsible investment strategy, Meryam Omi, commented.
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