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Financiers With US$29 Trillion Ask 1600 Companies For Science-Based Targets Ahead Of COP26

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  • 220 global financial institutions holding US$29.3 trillion in assets call on world’s highest impact companies to urgently set science-based emissions reduction targets in line with 1.5°C warming scenarios;1

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Q2 2021 hedge fund letters, conferences and more

  • Number of investors and lenders writing to corporate CEOs grows 60% year on year, targeting companies responsible for more emissions than the EU and US combined; 
  • Boeing, Alaska Air, Fedex and Catalyst Paper Corporationamong high-emitting companies specifically requested;
  • Coordinated by non-profit CDP, the 2021SBT Campaign is the world’s largest investor engagement campaign specifically requesting companies to set science-based targets through the SBTi2;
  • Following last year’s campaign, over 154 new companies with emissions equal to Germany joined the Science Based Targets initiative (SBTi) - 8% of all those targeted by the campaign.
  • Companies with science-based targets in place have typically cut emissions by 6.4% per year, well above the average rate needed for 1.5°C alignment

Financial Institutions Are Calling On Businesses To Set Science-Based Targets

September 28, 2021 (New York): Financial institutions holding US$29.3 trillion in assets are today calling on the world’s most impactful businesses to set science-based emissions reduction targets in line with 1.5°C warming scenarios, ahead of COP26 in November.3

The request is signed by 220 financial institutions across 26 countries, and whose collective assets are worth more than the GDP of the U.S., China ore the entire EU.4 It represents significant growth in support by 60% on last year, with an increase of 51% in assets behind the call to action.

The group includes some of North America’s biggest investors and lenders including Manulife Investment Management, Neuberger Berman, Lazard Asset Management, Wespath Benefits and Investments and Caisse de dépôt et placement du Québec.

They are pressing 433 North American companies (361 U.S and 72 Canadian companies) to set emissions reduction targets through the Science Based Targets initiative to ensure that corporate ambition is independently verified against the de-facto industry standard for robust and credible climate targets. From July 2022, these must be aligned with a 1.5°C pathway to be approved.

The 2021 CDP Science-Based Targets campaign is coordinated by the non-profit CDP, which runs the world’s largest environmental disclosure platform.

Joining the financial institutions in asking for SBTs this year are 26 CDP supply chain members - large corporate buyers using CDP to green their supply chain – including L’Oréal, Renault Group, Bayer, AstraZeneca and HP Inc, with US$500 billion in annual procurement.

CDP sent the letter to over 1,600 companies worldwide, including Anhui Conch Cement, China’s biggest cement manufacturer, Hyundai Motor Company, Duke Energy, Associated British Foods, Nippon Steel, Tata Steel, Lufthansa and Samsung. 

In North America, Boeing Company, Alaska Air Group, FedEx Corporation, Caterpillar inc. and Catalyst Paper Corporation were among the companies sent letters.

The businesses targeted have a market capitalization of over US$41 trillion, make up 36% of the entire MSCI World Index, and account for 11.9 million tonnes of emissions (scope 1 and scope 2), equivalent to more than the annual total of the U.S. and European Union combined.5

Over 20% of companies by global market capitalization are already part of the SBTi.6

Adaptation To Climate Change Are Critical To Corporate Success

Sophia Cheng, Chief Investment Officer at Cathay Financial Holdings, said: 

“Cathay FHC has participated in CDP Non-Disclosure Campaign for four years and we believe timely transition and adaptation to climate change are critical to corporate success in the low-carbon future. SBT is a valuable scientific tool well received by the international community and offers a useful evaluation framework for corporates planning toward net zero emissions.”

Barnaby Wiener, Head of sustainability and Stewardship at MFS Investment Management, commented: 

“Climate change is creating risks and opportunities for all businesses. In order to effectively respond to the climate challenge companies must have a plan and act. As long-term investors seeking to allocate capital responsibly, we expect our portfolio companies to develop, commit to and execute on science-based emissions reduction plans aligned with the Paris Agreement. The CDP Science-Based Targets Campaign is well aligned with our engagement priorities and we believe a collective voice carries further. For MFS it is an easy decision to participate.”

Last year’s CDP Science Based Targets campaign contributed to strong momentum of the number of companies joining the SBTi. 154 companies, with emissions approximately equivalent to Germany’s annual total and a market capitalization of US$5.2 trillion, joined since this time last year. It represents 8.1% of the companies targeted in this campaign last year.

56% of companies asked by CDP reported that the campaign had a direct influence over their decision, while 96% reported that general investor pressure led to them setting a target.7

The campaign also shows the major role played by European financial institutions in corporate engagement on climate issues. 75% of all investors and lenders signing the letter are based in Europe (including the UK), with 79% of the total assets. Asset managers and pension funds are the most supportive of the campaign, making up nearly 9 out of 10 organizations.

Achieving Net Zero By 2050

Laurent Babikian, Joint Global Director Capital Markets at CDP, said: 

2021 has been a year when global financial institutions have committed en masse to achieve net zero by 2050. But these goals are impossible to achieve without the companies they lend to and invest in having robust science-based targets that drive rapid decarbonization in the entire value chain in line with a maximum of 1.5°C of global warming. It is that simple, and when so many investors and lenders are collectively saying the same thing, companies must act or risk seeing their cost of capital rise. Not having an SBT raises a red flag that they are failing to manage climate risk. Ahead of COP26, we must see greater ambition from the companies accountable for the bulk of global emissions if we are to achieve a net-zero emissions economy, and mitigate the most serious impacts of climate change, which have been all too visible in 2021 so far.”

Globally, over 1775 companies are already part of the SBTi, among which over 550 have approved targets in line with 1.5°C. Analysis has shown that the typical company with a target has cut emissions by 6.4% per year – well abovethe 4.2% linear reduction rate required to meet the Paris agreement’s 1.5°C goal.

Alberto Carrillo Pineda, Managing Director and Co-Founder of the Science Based Targets initiative, said: 

“Money talks and this call from global financiers is loud and clear. A decarbonised business model is the only sensible business choice for a climate safe and prosperous economy. The call for rapid decarbonisation is clear, not only from the scientific community, but also, from the financial community. We are calling now on all companies to set science-based decarbonisation targets and for financial institutions to build on the leadership shown in these campaign and to also set science-based climate targets for their investment and lending portfolios. This is essential if we are to halve emissions by 2030 and achieve net-zero before 2050 – and vital for the future of humankind.”

Over the last two decades, CDP has created a system that has resulted in unparalleled engagement on environmental issues worldwide with investors and businesses alike. This campaign combines CDP’s track record, and expertise as a founding partner of the SBTi, to use investor authority to take disclosure and carbon mitigation further.

While companies can set science-based targets at any point throughout the year, CDP will be engaging these companies to join the SBTi before September 2022, when the impact of this campaign will be evaluated.

About CDP

CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 590 investors with over $110 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 10,000 organizations around the world disclosed data through CDP in 2020, including more than 9,600 companies, worth over 50% of global market capitalization, and over 940 cities, states and regions, representing a combined population of over 2.6 billion. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.