Investors Ramp Up Climate Pressure on Asian Utilities

Progress report marks shift from net zero commitments to implementation. 

An investor-led climate engagement initiative with US$10 trillion in collective assets is targeting an increasing number of Asia-based electricity utilities. 

Launched in 2021, the Asian Utilities Engagement Program is coordinated by the Asia Investor Group on Climate Change (AIGCC) and aims to scrutinise and accelerate the net zero transition of the region’s electricity utilities. 

“Investor engagement with Asian electric utilities is playing a critical role in addressing climate risk, with the utilities sector contributing approximately 23% of global greenhouse gas emissions,” said AIGCC CEO Rebecca Mikula-Wright. 

“As expectations for accelerated climate action continue to increase, investors will continue to push for faster and more ambitious commitments in the coming year.” 

Two focus utilities have been added – China’s Huaneng Power International and Indonesia’s PT Perusahaan Listrik Negara. Investors will engage with them and five other firms on themes including energy security, sustainable technologies, phasing out coal and just transition.  

Three further investors have also joined the programme, including Japan’s Nikko Asset Management, increasing total assets under management to US$10 trillion. Original members of the programme include BNP Paribas Asset Management and JP Morgan Asset Management.  

Participating investors work with focus companies to ensure they are committed to decarbonising in line with the Paris Agreement, implementing strong governance frameworks that outline the board’s accountability and oversight of climate change risks and opportunities, publicly disclosing their progress in line with the Task Force on Climate-related Financial Disclosures, and outlining relevant adaptation strategies to mitigate physical climate risks. Investor members are also expected to engage with policymakers on climate-related policy measures.  

The Asian Utilities Engagement Program’s first progress report has highlighted “encouraging progress” made by focus companies so far, said Mikula-Wright. 

Hong Kong-based electric utility CLP has committed to phasing out coal by 2040 and Malaysia’s Tenaga Nasional has pledged to achieve net zero by 2050, the report said.  

“Indonesia will be an important focus country going forward as it works towards a just transition away from coal,” the report added, noting that a further 14 gigawatts (GW) of coal-fired power is expected to come online before 2030.  

The programme has been designed to complement the Climate Action 100+ (CA100) framework, a US$54 trillion investment engagement initiative working with global corporates to drive faster corporate action.  

Ranking companies against its Net Zero Company Benchmark, CA100’s focus corporates are assessed across nine key indicators, including the credibility of their short- and medium-term decarbonisation targets. 

CA100 has published sector-specific net zero strategy guidance for electric utilities, as well as food and beverage, steel and aviation.  

Nikko Asset Management’s President, Stefanie Drews, said: “Engaging with Asian utilities to help them assimilate net zero targets is in line with our fiduciary duty, and will help turn these long-term ambitions into tangible, measurable, solutions to be implemented in the best interest of our planet as well as our clients and investee companies.” 

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