japanja
Engagement is an important tool for climate change risks

Engagement is an important tool for climate change risks

30-03-2020 | インサイト

More companies are making greater efforts to set ambitious decarbonization targets, Robeco’s engagement specialists say.

  • Sylvia van Waveren
    Sylvia
    van Waveren
    Engagement Specialist
  • Cristina Cedillo Torres
    Cristina
    Cedillo Torres
    Engagement Specialist
  • Carola van Lamoen
    Carola
    van Lamoen
    Head SI Center of Expertise

Speed read

  • Targeted engagement program with high carbon emitters
  • More companies are aligning with the Paris Agreement goals
  • Tackling corporate lobbying on climate has become a priority

The Active Ownership team engages with high carbon emitters led by the key fossil fuel producing and consuming sectors such as oil and gas, electric utilities and chemicals. The engagement seeks to meet the goals of the Paris Agreement, which aims to limit global warming to well below 2 degrees Celsius above pre-industrial levels by 2100. 

In order to achieve this, the world effectively needs to become carbon neutral by 2050, which is a major challenge given its reliance on energy generated by fossil fuels.

“A low-carbon world looks very different to the one we live in,” says engagement specialist Sylvia van Waveren. “Low carbon requires an energy system that is predominantly fueled by renewables, with industries operating under a circular business model in which resources used, waste, emissions and energy leakages are minimized.”

“This energy transition entails some sectors incurring financial losses arising from volatile adjustments to asset values, or the higher costs of doing business. How companies respond to these climate-related issues can influence their financial results. Companies that are able to adapt will be the winners of this transition.” 

Now also follow us on Instagram
Now also follow us on Instagram
Follow

Climate Action engagement theme

In 2018, Robeco’s Active Ownership team launched its ‘Climate Action’ engagement theme with 13 companies in the oil and gas, electric utilities and chemical sectors. The engagement program encourages companies to integrate climate-related issues into their organization’s governance, strategy, risk management, metrics and targets. 

The program has been aligned with the UN’s Sustainable Development Goals, targeting SDG 7 on Affordable and Clean Energy and SDG 13 on Climate Action. “Under these SDGs, it is essential to take urgent action to combat climate and its impacts,” says engagement specialist Cristina Cedillo Torres. 

“At the same time, it is necessary to ensure access to affordable, reliable, sustainable and modern energy. Developing zero and low-emission energy sources is one part of the solution. But achieving a carbon-neutral economy will require many more innovative technologies, such as carbon capture and storage, to enable a fluent decline in fossil fuel use. Companies in the energy sector play an essential role in achieving these goals.”

Transition Pathway Initiative

The Active Ownership team assesses companies’ contributions to these SDGs by looking at their scores allotted by the Transition Pathway Initiative (TPI), a global initiative led by asset owners and supported by asset managers. 

In this analysis, companies’ management quality and emissions performance are assessed to determine their incorporation of climate issues in their corporate strategy, emissions targets, strategic risk assessment and executive remuneration. 

A key element of this engagement program is a collaboration with the Climate Action 100+ initiative (CA100+), a global group of more than 450 investors with collectively over USD 40 trillion in assets under management, launched in 2017.

Breakthrough commitments

“The collaborative engagement has brought important commitments to curb greenhouse gas emissions,” says Van Waveren. “Leaders of the energy transition have begun to differentiate themselves from peers by adopting stronger commitments to decarbonize their business operations.”

“Furthermore, we have seen some breakthrough commitments from companies in sectors where emissions are hard to abate, and a raft of disclosure commitments on corporate lobbying on climate change.” 

“One of our objectives is for companies to implement a strong governance framework that clearly articulates the board’s accountability and oversight of climate change risks and opportunities, and to explicitly show the management’s role in assessing and managing these climate-related issues.”

Showing progress in climate governance

This work is now bearing fruit, with a majority of companies agreeing that the viability of their own future depends on sustainability. “The companies under engagement have shown progress in their climate governance,” Cedillo Torres says. 

“Most of the companies (8 out of 13) have shown clear board responsibility for climate changes risks and opportunities and were able to demonstrate a sound climate change management system.” 

“Most of the companies under engagement (9 out of 13) have made positive progress in the alignment of their business strategies with the Paris Agreement goals. According to TPI’s research, three companies are aligned with the emissions reductions pledged by governments as part of the Paris Agreement via Nationally Determined Contributions. One company is aligned with the more ambitious climate scenario of 2°C.”

Lobbying remains a problem

One fly in the ointment is lobbying – where companies either openly or covertly try to persuade lawmakers to water down climate change policies to protect their revenue streams in unsustainable businesses. 

“Research suggests that many companies in high-emitting sectors are pursuing lobbying practices that aim to block or significantly weaken effective climate policy, either directly or via industry association memberships,” says Van Waveren. 

“In our engagement, we have focused on securing enhanced disclosures on climate lobbying practices and urged companies to align their lobbying positions with their own climate change policies. So far, one of the companies under engagement has reviewed its membership of industry associations following the publication of their corporate lobbying report, even dropping memberships if there were significant misalignments.”

Going carbon neutral

Future engagement will continue to focus on reducing emissions and trying to become carbon-neutral by the 2050 cut-off date, Cedillo Torres says. “It is encouraging to see that an increasing number of business leaders are committing to a low-carbon future and are setting net zero targets by mid-century,” she says. “But more action is needed.” 

“So, as the move towards setting net zero targets by 2050 is imminent, our engagement activities going forward will be focusing first and foremost on achieving this net zero emissions objective with our target companies.”

重要事項

当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。

ご契約に際しては、必要に応じ専門家にご相談の上、最終的なご判断はお客様ご自身でなさるようお願い致します。

運用を行う資産の評価額は、組入有価証券等の価格、金融市場の相場や金利等の変動、及び組入有価証券の発行体の財務状況による信用力等の影響を受けて変動します。また、外貨建資産に投資する場合は為替変動の影響も受けます。運用によって生じた損益は、全て投資家の皆様に帰属します。したがって投資元本や一定の運用成果が保証されているものではなく、投資元本を上回る損失を被ることがあります。弊社が行う金融商品取引業に係る手数料または報酬は、締結される契約の種類や契約資産額により異なるため、当資料において記載せず別途ご提示させて頂く場合があります。具体的な手数料または報酬の金額・計算方法につきましては弊社担当者へお問合せください。

当資料及び記載されている情報、商品に関する権利は弊社に帰属します。したがって、弊社の書面による同意なくしてその全部もしくは一部を複製またはその他の方法で配布することはご遠慮ください。

商号等: ロベコ・ジャパン株式会社  金融商品取引業者 関東財務局長(金商)第2780号

加入協会: 一般社団法人 日本投資顧問業協会