Ceres Launches Investor Initiative Targeting the Largest Food Sector Emitters

Sustainability non-profit Ceres announced the launch of Food Emissions 50, a new initiative to lead institutional investors to engage the highest greenhouse gas (GHG) emitting companies in the North American food sector to disclose and reduce GHG emissions.

Addressing the climate footprint of the food sector is key to accelerating the transition to a net zero future, according to Ceres, with the global food system is responsible for a third of all global GHG emissions. The sector contributes significantly to the Scope 3 supply chain emissions of other companies and organizations that buy, distribute or sell food and ag products.

Julie Nash, Director of Food and Forests at Ceres, said:

“High-emitting food companies have a significant role to play in achieving a net zero emissions economy. Moving top North American food companies to disclose and reduce supply chain emissions will have considerable ripple effects in the global food and agriculture sector.”

The initiative will target 50 of the largest food and agricultural companies in North America, including McDonald’s, Starbucks and Kraft Heinz. Ceres released results of a study indicating that 60% of the companies do not currently include Scope 3 emissions in their existing climate targets, 70% do not disclose emissions from agriculture, and 80% do not disclose emissions from land use.

The companies will be asked to commit to a series of actions including disclosing GHG emissions across their value chains, set 1.5 °C-aligned science-based emissions reduction targets, and to develop, disclose, implement and report progress on climate transition action plans.

Leslie Samuelrich, President of Green Century Capital Management, one of the first investor signatories to the new initiative, said:

“We are thrilled to be an investor signatory to Ceres’ Food Emissions 50. Deforestation and land conversion are the single largest contributors to the emissions generated by the food system, and we look forward to bringing our expertise on shareholder advocacy on deforestation to rapidly reduce agricultural sector emissions.”

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Leading Investors Push for Vote on Company Climate Strategies

A group of 53 major investors representing over $14 trillion of assets have issued a call for greater accountability and transparency from companies on their climate strategies, in order to progress their net zero aligned-investing efforts.

In a statement published by the Institutional Investors Group on Climate Change (IIGCC), the investors, including J.P. Morgan Asset Management, GAM Investments and BT Pension Scheme, released an Investor Position Statement requesting that companies provide disclosure on their efforts to reach net zero goals, and offer investors the ability to vote on their plans and progress.

Stephanie Pfeifer, Chief Executive, IIGCC, said:

“In order for investors to do their job as stewards of capital, companies must establish effective mechanisms to demonstrate their net zero transition plans to shareholders and outline how they will be achieved. It is clear that shareholder voting and director oversight is needed to hold companies to account on their commitments to achieving a net zero future.”

While the investors acknowledge that many companies have announced commitments to reach net zero emissions, including more than half of the major emitters targeted by the Climate Action 100+ initiative, they note that the plans presented lack standardization and consistent data reporting.

Yo Takatsuki, EMEA Head of Investment Stewardship, J.P. Morgan Asset Management, said:

“If we stand any chance of closing the gap between current carbon emissions and meeting the goals of the Paris Agreement, the transition to net zero has to be scientifically credible. Responsibility, accountability and delivery of a credible net zero transition plan, coupled with the provision of good quality data, must therefore be implemented by the Board of investee companies. And there’s no time to waste.”

To address these issues, the statement urges companies to undertake a series of key actions to improve consistency, transparency and accountability. Specifically, the  investors request listed companies to disclose a climate transition plan, provide a routine vote on the implementation of the net zero transition plan (where permissible), and identify the director responsible for the plan. Disclosure should be aligned with the Taskforce on Climate Related Financial Disclosures (TCFD) climate reporting recommendations and utilizing the Climate Action 100+ Net-Zero Company Benchmark.

The IIGCC noted that several major companies have already implemented the measures outlined in the investor statement following engagement, including Shell, Unilever, Nestle, Glencore, Iberdrola and TotalEnergies.

Stephanie Maier, Global Head of Sustainable and Impact Investment, GAM Investments, said:

“Transparency and accountability are critical to the effective delivery of net zero commitments. Putting corporate net zero alignment plans to the vote will allow shareholders to send a clear message to the Board on the scale and pace of implementation.”

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Canada Bids to Host International Sustainability Standards Board HQ, Offers Seed Capital

The Government of Canada announced its support for the International Financial Reporting Standards Foundation’s (IFRS) proposed International Sustainability Standards Board (ISSB), and has offered to host the ISSB’s Board of Trustee’s headquarters, according to a letter to IFRS Chair Erkki Liikanen by Canadian Deputy Prime Minister and Minister of Finance Chrystia Freeland, representing a coalition of 55 public and private institutions in Canada.

Freeland wrote:

“Canada recognizes the importance of effective disclosures based on high-quality data in addressing climate change and nature degradation, improving opportunities for women, visible minorities, and other underrepresented groups, and enhancing public and private sector governance.  Canada is a reliable, multilateral partner dedicated to promoting sustainable outcomes that would be respectful of an organization whose objective is to develop global sustainability standards on behalf of over 140 member countries.”

The International Financial Reporting Standards Foundation (IFRS) is looking to establish the ISSB in order to address the emerging need for global sustainability reporting standards. In October 2020, the IFRS initiated a consultation process seeking input on the potential formation of a global sustainability reporting standards board, and on the Foundation’s own place in that process. After receiving positive responses to its consultation paper, the IFRS launched a working group including other sustainability and standards-focused organizations, and released its views towards the strategic direction to be taken in the formation of the new ISSB, focusing on information that is material to the decisions of investors, lenders and other creditors, beginning with climate-related issues, and extending to other ESG matters. 

Freeland’s letter cites Canada’s credentials as a leader in the fight against climate change, along with key attributes including the country’s diverse and developed economy, central location, and its longstanding support for IFRS Standards.

The Deputy PM also promised financial support for the ISSB operations, including a “significant ‘Welcome Fund,’” to be provided by a coalition of Canadian public and private institutions, aimed at supporting the ISSB’s initial period of operations.

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SEC Chair Eyes Mandatory Climate Disclosure Rules Proposal By End of Year

The U.S. Securities and Exchange Commission’s (SEC) Gary Gensler is aiming to have proposed rules in place for mandatory climate risk reporting by companies by the end of this year, according to a speech by the SEC Chair on Wednesday.

Speaking at the Principles for Responsible Investment’s “Climate and Global Financial Markets” webinar, Gensler said that mandatory rules would bring greater clarity to climate risk disclosures, with benefits including consistency and comparability of the information provided, and ensuring that investors are equipped with “decision-useful” levels of qualitative and quantitative data.

Gensler said:

“Companies and investors alike would benefit from clear rules of the road. I believe the SEC should step in when there’s this level of demand for information relevant to investors’ decisions.“Thus, I have asked SEC staff to develop a mandatory climate risk disclosure rule proposal for the Commission’s consideration by the end of the year.”

The SEC Chairs remarks come as the commission undergoes a re-examination of the role of sustainability disclosure in company reporting. In February, SEC Acting Chair Allison Herren Lee announced a review of the commission’s guidance for public company obligations for disclosures related to climate change risk, citing increased demand by investors for material, comprehensive and consistent information, including the extent to which such reporting should be mandatory for companies.

Gensler also cited investor demand as the key driver of the move towards revamped reporting rules, saying, “investors increasingly want to understand the climate risks of the companies whose stock they own or might buy.” According to the SEC Chair, the SEC received more than 550 responses to Herren Lee’s review, with roughly 75% supporting mandatory climate disclosure.

Gensler said:

“The basic bargain is this: investors get to decide what risks they wish to take. Companies that are raising money from the public have an obligation to share information with investors on a regular basis.”

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Robeco Launches US-Focused Green Bond Fund, Anticipating Major Market Growth

International asset manager Robeco announced today the launch of RobecoSAM US Green Bonds, one of the first US-focused green bond strategies in Europe. Robeco partnered with Quintet Private Bank on the launch of the new fund, with Quintet targeting an initial commitment of €125 million.

According to Robeco, the new strategy is being introduced ahead of an anticipated boom in green debt issuance in the US, as the Biden administration ramps climate action over the next several years, including plans for massive investments in renewable energy and sustainable infrastructure.

A recent report from the Climate Bonds Initiative indicated significant growth in the US sustainable debt market, but noted that the market is highly concentrated, with mortgage financing company Fannie Mae’s green MBS issuances accounting for 39% of overall volume, while local and state-backed government entities green US Municipal bonds making up another 23%. The Biden administration’s renewed climate focus and opportunities for billions in clean energy spend are expected to drive meaningful market proliferation and growth.

Christoph von Reiche, ExCo Member and Global Head of Sales at Robeco, said:

“The RobecoSAM US Green Bonds strategy perfectly fits Robeco’s strategic ambitions in sustainable investing in general and our focus on climate-related risks in particular. We are excited to have Quintet as our launch partner and look forward to providing our other clients with an excellent opportunity to participate in the largest economy in the world opening up to greener investments.”

RobecoSAM US Green Bonds will be managed by Robeco’s Michiel de Bruin, Executive Director, Global Fixed Income Macro and Peter Kwaak, Portfolio Manager, Executive Director, Credit Investments. The fund will invest in USD-denominated green bonds issued by corporates, government-related agencies and governments, utilizing a proprietary screening process to ensure the green credentials of the securities.

Jakob Stott, Group CEO at Quintet, said:

“As the recent floods in Europe demonstrated with devastating clarity, mitigating the impact of climate change is an urgent, universal challenge. At Quintet – where we place sustainability at the heart of our business and as the driving force behind our clients’ investments – we are very pleased to partner with Robeco’s experienced team as we continue to bring our sustainability strategy to life, meeting client needs and contributing to a brighter future.”

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