Action to tackle climate change remains dangerously behind where it needs to be to prevent a global catastrophe, warned NN Investment Partners this week.
Only half of companies in the global bond market are actually on the path to limiting global warming to 2 degrees this century – let alone the recommended 1.5-degree scenario.
“Some companies have made significant strides but overall, many are not far enough along to credibly claim that they are in line with the 1.5C scenario,” says an NN IP analyst.
“The extreme weather patterns seen across the world this year have been a stark reminder of the consequences of a relaxed attitude to decarbonisation and net zero ambition.”
Extreme weather has impacted large parts of the globe this year, including this week’s deadly flash floods as Hurricane Ida hit the US.
According to a report published by the World Meteorological Organization (WMO) this week, the number of weather disasters has multiplied fivefold over the past 50 years, resulting in two million deaths and losses of USD3.6 trillion.
Pension scheme members in the UK are pushing companies to improve ESG standards. Legal & General Investment Management found that members of its DC schemes were very vocal on climate, with shareholder proposals drawing the second-highest level of support, after governance resolutions concerning pay.
It has been a banner year for climate activism so far, with activist investors winning battles against the boards of oil giants ExxonMobil, Chevron and Shell over the firms’ plans to cut carbon emissions.
Meanwhile, UK pension schemes are preparing to begin mandatory reporting on the climate impact of their investments from October onward.
One of the challenges that remains for pension schemes is calculating their total carbon emissions and carbon intensity of their investments – which will rely on external asset managers supplying them with reliable and accurate data.
Asset managers are asking themselves how they ought to add up different metrics or different measures to “come up with equity absolute emissions figure, credit absolute emissions”.
Madeleine Taylor
Editor, Institutional Asset Manager
maddy.taylor@globalfundmedia.com