Investors’ ‘systemically important carbon emitters’ initiative goes live with $26trn backing (Update)

(Updates to stress the initiative itself is no longer using the SICEs term and is not seeking to name & shame companies)

Some 225 global investors – representing over $26tn in assets – have backed a five-year collaborative investor engagement initiative to bring the world’s greatest corporate greenhouse gas emitters in line with the Paris climate accord.

The project, which was ‘soft launched’ at PRI in Person in Berlin in September, has been in gestation for some time as RI has reported here and here.

The Climate Action 100+ as it is now known will initially engage the 100 greatest emitters – those once dubbed ‘systematically important carbon emitters’ (SICEs) – from the corporate world. In effect it is the world’s biggest climate watch list, running from A.P. Moller – Maersk to Wesfarmers.

The initiative stresses that it is not seeking to name and shame companies and that it is now not using the term SICEs, which is pronounced “sickies”.

It has three aims: improving governance around climate change; curbing emissions; and strengthening disclosures in line with the Taskforce on Climate Related Disclosures (TCFD).

The launch was linked to President Macron’s One Planet Summit to mark the two-year anniversary of the Paris Agreement.

The investor signatories – which include the likes of Aviva Investors, CalPERS, CalSTRS, PGGM, and Australian super fund HESTA – have each committed “to pursuing at least one engagement each year with at least one company on the focus list”.

They state: “We believe that engaging and working with the companies in which we invest – to communicate the need for greater disclosure around climate change risk and company strategies aligned with the Paris Agreement – is consistent with our fiduciary duty and will contribute to achieving the goals of the Paris Agreement.”The initiative is governed by a steering committee of representatives from Australian Super, Ircantec, CalPERS, and HSBC Global Asset Management, and lead executives from five investor climate bodies who have partnered on the initiative.

Those organisations include the main investor climate bodies: the Asia Investor Group on Climate Change (AIGCC); Ceres; the Investor Group on Climate Change (IGCC); Institutional Investors Group on Climate Change (IIGCC); and the Principles for Responsible Investment (PRI).

Companies are included in the list of 100 based on their direct and indirect (scope 1, 2 and 3) emissions, with the data coming from environmental data body CDP.

A public report assessing the companies’ responses to the engagement will be produced each year, and companies may be removed from the list if they are considered to have made sufficient progress.

An additional list of companies, considered by investors to be potentially exposed to climate-related financial risks, is expected to be added at the Investor Summit on Climate Risk in New York in January.

Anne Simpson, Steering committee member and Investment Director of Sustainability at CalPERS, said of the initiative: “Moving 100 of the world’s 100 largest corporate greenhouse gas emitters to align their business plans with the goals of the Paris Agreement will have considerable ripple effects.

“Our collaborative engagements with the largest emitters will spur actions across all sectors as companies work to avoid being vulnerable to climate risk and left behind”.