Daily ESG Briefing: Generation Investment Management among latest additions to Net Zero by 2040 pledge

The latest developments in sustainable finance

Generation Investment Management is one of 20 new signatories to The Climate Pledge, committing to reach Net Zero by 2040. The pledge requires signatories to report Scope 1, 2 and 3 emissions, implement Paris-aligned decarbonisation strategies and ensure all remaining emissions are offset by 2040. Other new signatories include large corporations such as Acciona, Iceland Foods, Johnson Controls and Orsted, bringing the total to 53 companies across 12 countries and 22 sectors. Existing signatories include Amazon, Microsoft and Unilever.

S&P Global has freed up its ESG scores for 9,200 companies, representing 95% of global market capitalisation. The scores are informed by over 1000 data points, and are the key factor for selecting companies for the Dow Jones Sustainability Indices. Last year, MSCI, Vigeo Eiris and Sustainalytics all published their ESG scores for the first time, for free. 

The UK’s Environmental Audit Committee has recommended cutting Value Added Tax (sometimes known as goods and services tax) in green sectors to support a sustainable recovery from the Covid pandemic. In its latest report, the parliamentary group also suggests increasing investment in nature recovery projects, and asks the Bank of England to set out the steps it intends to take to reduce the carbon intensity of its corporate bond portfolio.

Only 14% of heavy industry companies are Paris-aligned, according to new research from the Transition Pathway Initiative. Just six of the 111 firms assessed were found to be in line with a 2℃-or-below pathway: Air Liquide, BHP, Vale, Anglo American, Klabin and Koninklijke Philips.

The International Corporate Governance Network has written to the Council of the Japanese Financial Services Authority, calling on it to ensure corporate boards assess the impact of climate change on business models, set and disclose Paris-aligned targets and develop a shareholder approved plan on reaching Net Zero. 

Rio Tinto has become the latest company to agree to give shareholders a say on its climate plans. The firm says it will put its TCFD report to an advisory vote at its 2022 AGMs – just a day after fellow mining giant Glencore agreed to put its climate plan to advisory vote. 

Blackrock has said it expects investee companies to disclose their scope 1 and 2 emissions and accompanying reduction targets, and that companies in carbon-intensive industries should also disclose scope 3 emissions. In a note on climate risk and the energy transition, the investment giant threatened to vote against directors responsible for climate risk oversight if it felt that companies’ plans for transition to a low-carbon economy were not credible.