Climate Action 100+ reviews next 50 largest GHG emitters for investor engagement list

Talks with BlackRock, State Street and biggest US asset managers are ongoing

Climate Action 100+, the coalition of 256 investors with $28trn in assets, is currently reviewing the next 50 corporates which will be included in the world’s top greenhouse gas emitters list for prioritized engagement, while talks continue with BlackRock, State Street and other large US asset managers about joining the initiative.

Market players had expected the release of the 50 additional names (or ‘the + list’) by January 31 at the UN-hosted Investor Summit on Climate Risk, after the official launch of the initiative in December 2017. Instead it was announced that 31 new investors had joined, bringing $2trn to the initiative.

It comes as stewardship advocacy group Preventable Surprises has raised concerns about the absence from the five-year initiative of the largest US asset managers.

Preventable Surprises has pointed out that Vanguard and BlackRock (with combined AUM of $11trn) have failed to support a single shareholder resolution requesting climate risk disclosure at US utilities, the largest GHG emitters.

Mindy Lubber, CEO and President of Ceres, which is one of the five CA100+ partner organisations, told RI that conversations with those firms, as well as others, are ongoing.

“They might join or they might not, but in the meantime having 256 investors representing $28trn is fairly unprecedented. Would I like to get to $40trn? Absolutely. We are going to continue talking to them.”

Lubber adds that moving massive enterprises like BlackRock takes a long time, “whether they sign on or not, I have no doubt that they will be supportive in different ways.”

To create the + list each investor has had the opportunity to nominate up to 10 companies.According to Cynthia McHale, Director of Insurance at Ceres and who has participated closely in the conference calls of the CA100+ Steering Committee, the nomination process is now closed and it is expected that the list will be published in about a month’s time.

“One of the challenges we are having at the moment is getting it down to 50 to keep it manageable,” McHale said.

The long-list has not gone yet through the Steering Committee which would then consensually determine the 50 names.

The initiative has dropped the original wording around ‘systematically important carbon emitters’ (or SICEs, pronounced ‘sickies’).

McHale added: “It’s very much an analytical process and not a judgment. There are some excellent companies in terms of leadership on both lists, but they have high level of emissions and are highly impacted by climate change-related risk. Thus investors’ portfolios will be affected by the actions those companies.”

David Murray, CEO of Preventable Surprises, told RI that while welcoming the initiative, it is “a shame” that the largest US asset managers haven’t joined yet with the encouraging exception of Northern Trust.

Murray added that the formula to select the first 100 companies seems to have underweighted energy utility companies, including only 13, despite the sector accounting for 42% of global emissions.

As such Murray said he would expect to see listed the following utilities company:

“In the US First Energy and PPL would get our vote (as they account for 0.84 and 0.78% of US emissions respectively). In Asia CLP Holdings in Hong Kong (as it is increasing its use of coal) and in Europe it would be CEZ A.S. because it has a high percentage of coal fired generation across Eastern Europe.”