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Companies and investors adjusting to a low carbon economy future

Responsible investment advocacy group, ShareAction has called on US asset manager, Vanguard, to demonstrate its commitment to company engagement on climate issues by voting in favour of shareholder resolutions on climate risk at ExxonMobil and Chevron, in an open letter to its chief executive Bill McNabb.

In the letter Catherine Howarth, chief executive of ShareAction, calls on the company to undertake a “robust and stretching form of stewardship over this sector [oil and gas] on behalf of those who entrust your firm with their assets.” She was responding to recent comments made in the press by McNabb criticising the fossil fuel divestment movement and advocating instead a shareholder engagement approach.

Howarth’s letter points out that Vanguard’s track record of voting in favour of shareholder resolutions addressing the economic risks of climate change has so far been “negligible.” Citing the upcoming ExxonMobil and Chevron AGMs on 25th May as “a litmus test” for Vanguard’s approach to proxy voting, Howarth urges the firm to vote in favour of climate-related resolutions filed at each firm. “The world will be watching on 25th May,” the letter concludes.

A survey of US-based socially responsible investment (SRI) professionals has found that for the first time ever, more than half (51%)  are offering fossil fuel-free portfolios to investors, up from 22% in 2013 and 42% last year, according to SRI investment advisers, First Affirmative Financial Network.

Based on the 391 responses received the SRI Conference 2016 Fossil Fuels Divestment Survey found that the number of respondents indicating that institutional investors are interested in fossil-free investing rose from 49% in 2014 to 61% in the 2015 to 68% in the 2016 survey. Results also showed that  77% of SRI professionals see 2016 as “the right time for investor to assess and perhaps alter” their investments in fossil fuels and interest from institutional investors.

The survey also found that 79% of respondents believe that there are growing risks associated with investing in fossil fuel extractors/manufacturers, compared with 77% last year, while the proportion that said they believe “the movement to divest from fossil fuel extraction companies is expanding to include companies that produce large… greenhouse gas emissions,”  remained the same as last year at 47%.

Meanwhile the  Science Based Targets initiative, which is a partnership between CDP, UN Global Compact, WRI and WWF, has exceeded its target of getting 150 companies worldwide to commit to emissions reduction targets in-line with the global effort to keep warming well below 2°C. These commitments form the foundation of a credible corporate climate action strategy as the world transitions to the low-carbon economy, the initiative said.

There are now 155 companies that have signed up to the initiative. Those participating are headquartered in 27 countries around the world, including 77 in Europe, 34 in the Asia Pacific region, 25 in the United States and 9 in Canada. They represent a wide variety of industries, from carbon-intensive industrial sectors to consumer-facing industries that include household brands.

The initiative said 13 of these companies have now had their emissions reductions targets reviewed and approved by the experts at the Science Based Targets initiative. This means the targets are aligned with the decarbonization necessary to limit warming to below 2°C and meet other best-practice criteria defined by the initiative. Combined, these 13 companies will reduce their emissions from operations by 874 million tonnes CO2 over the lifetime of the targets, the equivalent of closing over 250 coal-fired power plants for a year, according to the initiative. These companies have also made commitments to reduce emissions throughout their value chains.

What do you think?