Category: Investments

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.”

Global insurance and financial services company Prudential Financial has joined the ranks of companies tying the cost of capital to progress on ESG goals, with the introduction of a sustainability-linked credit facility.

The new credit facility was created with the renewal of its prior $4 billion facility with the addition of terms linking borrowing costs to the company’s greenhouse gas emissions targets and initiatives to increase the diversity of senior leaders.

Margaret Foran, Chief Governance Officer and Corporate Secretary for Prudential Financial, said:

“We are committed to ensuring that sustainability runs through everything we do. This transaction is another important step forward to integrate our ESG and liquidity framework, and to ensure greater accountability around our commitments for all of our stakeholders.”

Prudential’s announcement marks another step in the surging use by companies globally of sustainability-linked debt instruments. In a study released earlier this week, credit ratings, research, and risk analysis provider Moody’s Investors Service reported that that sustainability-linked loans reached record levels in Q2, with loan volumes reaching $156 billion, up 54% over the prior quarter.

Nandini Mongia, Treasurer of Prudential, added:

“We continually look for opportunities to align our liquidity framework with Prudential’s broader commitment to sustainability. This credit facility is the natural next step in our journey.”

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.”

Asset Manager Legal & General Investment Management America (LGIMA), and the US-based nonprofit environmental advocacy group Environmental Defense Fund (EDF) announced today a new collaboration aimed at fostering emissions reductions across industries and business sectors by promoting climate-aligned investing and corporate engagement for action towards net zero goals.

Through the new collaboration, LGIMA and EDF will call on business leaders to advocate effective policies and regulations to deliver at-scale emissions reductions, push for increased corporate climate action in areas ranging from methane emissions and flaring to vehicle electrification, and help to meet the increasing demand for ESG-aligned investment options.

Ben Ratner, Associate Vice President of EDF+Business, EDF’s corporate engagement division, said:

“Investors have a tremendous opportunity to accelerate corporate climate progress by aligning their voices and choices with the concrete actions needed to actually achieve net zero.”

LGIMA and EDG stated that they will initially prioritize opportunities for corporate climate engagement within the on oil and gas, and transportation sectors. Looking forward, they will also explore the creation of net zero aligned funds to deliver attractive returns and help lower emissions.

John Hoeppner, Head of US Stewardship and Sustainable Investments at LGIMA, said:

“LGIMA and EDF share the conviction that asset managers have the opportunity and the responsibility to use their market power to accelerate climate pledges into climate progress, shifting the needle towards a net zero future. With shareholders and regulators increasingly demanding transparency and leadership from the private sector, climate action has become a business imperative.”

Global consultancy Bain & Company has committed to cut emissions from business travel by 35% over the next five years, as part of a new set of sustainability goals announced today.

Business travel is typically a primary source of Scope 3 emissions for professional services firms. Bain has also unveiled new targets to reduce the climate impact of its own operations, aiming to further cut emissions from activities such as powering and heating its offices by 30% over the next five years.

The company stated that it will also continue to invest in high-quality carbon removal projects, both nature-based reforestation and the implementation of green technologies.

Torsten Lichtenau, Bain partner and global head of the firm’s Carbon Transition impact area within its Sustainability & Responsibility consulting practice, added:

“Like most businesses, the pandemic gave us a chance to step back and reimagine the ways we’ve historically worked. One area where we’ve decided to go above and beyond is optimizing carbon emissions associated with travel. The pandemic proved there are times when we can still be extraordinarily effective with our clients by leveraging technology to collaborate in a hybrid work environment.”

According to Bain, the new goals come on top of the firm’s achievements of reducing Scope 1 and 2 emissions by 68% over the past decade and converting to 100% renewable electricity. The firm has also turned its attention to initiatives aimed at helping clients follow their own sustainability journeys and pursue opportunities from the emerging green economy.

Sam Israelit, Bain’s Chief Sustainability Officer, said:

“We are long past picking low-hanging fruit, and we are following the same advice we give to our clients: setting audacious goals that are realistic and measurable. Our firm is hyperfocused on mitigating the impact of our emissions on the environment and accelerating our carbon transition. We continue to lead the way in our own industry while also equipping our clients and nonprofit partners to do the same.”

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.