UK-based Legal & General Investment Management (LGIM) is stepping up pressure on companies to address climate change, following the release of its second annual ranking of climate change “leaders and laggards”.
Although this year’s results show improvements in the average scores across all sectors involved, many multinationals still fall short of meeting the requirements set out as part of LGIM’s Climate Impact Pledge.
“The world is truly in the midst of a climate emergency, which could have drastic consequences for markets, companies and, therefore, our clients’ assets,” said Meryam Omi, head of sustainability and responsible investment strategy at the asset manager, which has £1 trillion (€1.12 trillion) of assets under management.
“With the UN warning that there is little over a decade in which global emissions must start to decline significantly, the window for action is closing fast,” she added. “That is why we have ratcheted up the pressure on companies globally, demanding to know how they will hasten the transition to a low-carbon economy.”
LGIM’s pledge is an attempt to engage with the biggest firms in the oil and gas, mining, electric utilities, autos, food and retail, and financials sectors – identified as key industries to meeting climate change goals.
“Companies at the bottom are catching up, while leaders continue to break new ground,” Omi said. “But we know much more is needed and will continue to push companies to build business models fit for a prosperous, sustainable future.”
Among the companies lagging behind, according to LGIM, are Korean Electric Power Corporation – the lowest scoring in its sectors – as well as China Construction Bank and Japan Post Holdings. The latter two “will remain divested from due to a lack of sufficient disclosures on high-carbon sectors and emissions”, LGIM said.
Other “laggards” according to the ranking include US oil and gas giant Exxon Mobil, Hong Kong-based CK Infrastructure Holdings, and Russia’s Rosneft.
Scores for US companies are generally on the rise despite president Donald Trump’s decision to withdraw from the Paris climate accord – the global agreement setting out a framework to combat climate change.
“The divergence within the US is particularly stark as companies face a dichotomy between the federal stance on the Paris Agreement and other global, state-level and local initiatives to address climate issues,” Omi said.
Companies that fared well in LGIM’s climate ranking include mining firm Rio Tinto, Royal Dutch Shell, and Danone, among others.
In terms of countries, there has been an increase in average company scores across all those analysed by LGIM – with the exception of Japan and Korea “where there is regrettably a downward trend”.
As global emissions have been on the rise since 2018 – with carbon emissions from the global energy industry rising the fastest since a decade ago – “decisive action and implementation remains critical”, said LGIM.
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