Investors target companies outside CA100+ list in transition engagement push

Renewables companies and airlines among targets of IIGCC-coordinated initiative, which includes LGIM, PGGM and USS.

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Ninety-three European investors are set to engage companies in sectors including renewable energy and airlines under a new initiative intended to complement Climate Action 100+.

The Institutional Investor Group on Climate Change (IIGCC) has assembled the group, which will focus on engaging 107 companies important for the transition beyond those currently targeted by CA100+.

Companies on the list have already been sent a letter by investor members asking for more detail on their corporate transition plans, as well as whether they plan to put these plans to a shareholder vote. The letters also set out the investors’ expectations for a credible transition plan.

The list is mainly composed of European companies across a number of sectors. Ryanair, Lufthansa and Turkish Airlines are among the airlines being engaged, while Ørsted, Vattenfall and Norsk Hydro are among the renewables companies. Other major names on the list include Ferrari, UK retailer Tesco and German shipping company Hapag-Lloyd.

The investor list is comprised of many of the IIGCC’s members including LGIM, Northern Trust Asset Management and Fidelity International on the manager side and several UK LGPS pools, USS and Sweden’s AP1, 2, 4 and 7 on the asset owner side.

BAE Systems makes a double appearance – the company will be targeted by investors over climate change, while its pension fund has signed up to engage. It is not clear, however, whether the pension fund signed the letter to its sponsoring employer as neither responded to a request for comment.

Adam Matthews, chief responsible investment officer at the Church of England Pensions Board, also a member of the new initiative, told Responsible Investor that while CA100+ is effectively targeting major emitters, investors need to be able to engage with a much larger portfolio of companies.

The companies on the list, Matthews said, had been selected in a manner similar to that of CA100+. “It is broadly the next raft of companies that you would come to as you move down the list in terms of company size and carbon impact.”

The list is mainly Europe focused but does include some companies outside of the region, such as Siam Cement Group, while taking care not to overlap with existing initiatives by local investor networks such as one coordinated in the US by Ceres.

Asked why renewables companies and other ESG favourites such as Schneider Electric were on the list, Matthews said that it was important to target solutions providers as well.

“Renewables companies also have significant dependencies with reliance on critical minerals… such elements are material to their business and we do need to have confidence they are understood,” he said. “I do think transition plans for those companies are as relevant as they are for a company that is very high carbon and requires a real evolution of their business model.”

Based on company responses, investors will draw up appropriate engagement plans. Matthews said that the initiative will aim to support companies in building up transition plans, as well as bring institutional weight to engagements where companies are not really engaging or responding.

The initiative is also designed to allow for increases in scale. While it is targeting 107 companies initially, there are plans to increase the number of companies in the next 18 to 24 months depending on progress.

Wider participation

Simonetta Spavieri, senior engagement analyst at Royal London Asset Management (RLAM), told RI that the manager had signed up to the initiative to engage with companies that have a high contribution but haven’t been targeted directly, and as part of the investor’s goal of engaging at least 70 percent of financed emissions by 2030.

Spavieri said that RLAM’s clients “are demanding tangible outcomes from engagement”, and that collaborations were particularly useful for achieving impact.

Maria Nazarova-Doyle, head of responsible investments and stewardship at Scottish Widows, told RI that signing up would help it achieve targets under its climate action plan, and that the Net Zero Investment Framework that it uses as a basis for decarbonisation emphasises the need to prioritise real economy transition. This should be accomplished by active engagement with emitters rather than repositioning portfolios, she said.

Asked how the UK pensions giant selected initiatives to join, Nazarova-Doyle said that it was always looking for collaborative opportunities on priority areas, and these tended to focus on top holdings that present the highest risk to savers.