UK asset owner rallies investors to tackle air quality and pollution

Guy's & St Thomas' Foundation working on air pollution corporate benchmark to address 'blind spot' for investors.

Guy’s & St Thomas’ Foundation is working with other market participants to create a benchmark focused on how companies are addressing air quality and pollution, its engagement director for investments told Responsible Investor. 

Matthias Lomas said the issue has not had much focus from investors despite the dual E and S impact it has.

“We think this is a big blind spot,” he said. “Air pollutants such as particulate matter and nitrogen oxides kill more people every year than smoking. Around one in eight deaths globally is caused by it due to its link to diseases and conditions like ischemic heart disease, strokes, diabetes and lung cancer.

“It is also a big drag on the productivity of workforces due to the ill-health it causes and regulation surrounding it is increasing globally. At the same time, leadership on air quality could position companies well for the future compared to their competitors.”

Since May, the asset owner has been engaging with portfolio holdings in the construction and delivery sector, which Lomas noted are two of the largest commercial contributors to air pollution in cities.

“When going to companies we’ve kept it quite broad to initially understand how they’re looking at the issue,” he said. “Then the main thing we’ve been pushing is for them to start measuring their impact on air quality when it comes to pollution and ultimately report it and set targets to mitigate their impact.”  

To avoid increasing firms’ reporting burden, Guy’s & St Thomas’ Foundation has been pointing them to the Air Pollution Footprint Partnership tool by Ricardo, an environmental consultancy, that it funded. The tool enables companies to measure their air pollution and do it in a way that seamlessly integrates with greenhouse gas reporting.

Two companies are currently trialling the tool. 

Benchmark early days

On the foundation’s work with other market participants, Lomas said it is early days and that the number of companies and geographic focus are still being ironed out – although he suspects it will be international and probably focus on 100 companies. 

On the potential parameters of the benchmark, he said it will likely look at governance on air quality and pollution, strategy to reduce emissions and performance management.

“We think a benchmark would be valuable to investors because it will show which companies are best placed to be leaders in this space as well as identifying laggards,” Lomas added. “Ultimately, it will help investors enhance the long-term value of their investments while also having a positive impact on public health.”

As well as continuing to engage firms and working on the benchmark, Guy’s and St Thomas’ is working with ShareAction to create an investor engagement on air quality as part of the NGO’s Long-term Investors in People’s Health coalition.