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Leading Global Investors Demand More Action from High-Emission Companies

Over 1,800 companies asked to adopt science-based targets as part of a new engagement campaign.

Global financial institutions with collective assets of nearly US$20 trillion have asked major companies with high emission levels to adopt science-based targets in order to achieve net zero emissions by 2050.

Companies such as Tesla, Roche and Rio Tinto are among the 1,800-plus companies being asked to set emissions reduction policies in alignment with science-based targets through the Science Based Targets initiative’s (SBTi) Business Ambition for 1.5°C campaign. Combining annual Scope 1 and 2 emissions, these companies contribute to 25% of the total global greenhouse gas emissions.

The group of 137 financial institutions, which includes AXA Group, Legal & General Investment Management, Nikko Asset Management and Generation Investment Management, are urging companies to set targets through the SBTi in order to measure climate values in a uniform and comparable manner. The request is part of an engagement campaign coordinated by CDP, a non-profit organisation which runs a global environmental disclosure platform.

Institutional investors are increasingly looking to integrate ESG factors into their investment processes, but their efforts rely strongly on transparent disclosure from companies on a range of non-financial metrics, including emissions. More than 1,000 firms are currently working with SBTi to set science-based emissions reduction targets, with around 300 participating in its Business Ambition for 1.5°C campaign.

The willingness of senior management to engage with investors also plays a key role, according to Hiroki Tsujimura, chief investment officer, Nikko Asset Management. “We hope this campaign will signal that investors are serious about climate issues, and emphasise the importance and urgency of creating a forward-looking science-based target, integrated with long-term corporate strategies,” he said.

Emily Kreps, Global Director of Capital Markets at CDP, said the importance of investor engagement to sustainable corporate action cannot be overstated. “Investors want to see accelerated corporate commitment that reflects the unprecedented challenge the planet faces. They expect companies to commit fully to ambitious targets grounded in science. With business resilience and adaptation to systemic risks exposed by the recent public health crisis, the tide is rapidly turning against companies not taking note of investor demands,” she said.

CDP is a founding partner of SBTi, alongside the UN Global Compact, the World Resources Institute and the World Wildlife Fund. Earlier this month, the SBTi launched a new framework that allows financial institutions to set science-based targets for their portfolios.

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