Questionable decarbonisation reporting by the UN-convened alliance of institutional investors committed to net-zero emissions could thwart efforts to reverse global warming, it is claimed.
The analysis, conducted by the University of Edinburgh and SDG Labs and commissioned by the Sunrise Project, found shortcomings in public disclosures, proxy voting and bondholding behaviours for 74 Net Zero Asset Owners Alliance (NZAOA) institutional investors.
Seven members of the NZAOA own more fossil fuel company bonds than Vanguard, a market benchmark with no climate considerations. Besides, about 75% of members have some exposure to fossil fuel bonds. These activities make realising the Paris agreement on arresting global warming to 1.5 degrees celsius more challenging.
Only 26% of members disclosed information about emissions enabled external to their corporation. Most members fell in the ‘middle’ range on disclosure completeness and underperformed on setting measurable engagement targets and disclosing their climate voting records.
Climate finance specialists engage with global institutional investors to uplift climate actions through their shareholding power, but the analysis found that non-member investor groups are more likely to cast climate votes in favour of the Paris agreement than NZAOA members.
“Even so-called climate leaders are failing to deny debt and close the backdoor route for fossil fuel investments.,” said Alice Delemare Tangpuori, coordinator of Toxic Bonds Campaign, a network opposing financing of fossil fuel expansion.
Remediation includes disclosure improvements, changes to proxy voting practices that align members with net zero commitments and denial of new bonds for any fossil fuel company expanding high-emissions output and infrastructure.
Lauren Chin, a researcher at the University of Edinburgh, claimed: “NZAOA members are falling short of what is expected of them, as guided by the best and latest science of climate change. This research presents the opportunity to critically examine how they are honouring their commitments.”
© 2023 funds europe
