Investors target firms over failure to report environmental information

A group of 88 investors – including HSBC Global Asset Management, Amundi and Investec Asset Management, and with combined assets totaling more than $10 bn – is pushing for companies to do more when it comes to environmental reporting.

The group, whose latest engagement is part of CDP’s 2019 Non-Disclosure Campaign, is pushing for greater transparency at companies it sees as having high levels of environmental impact, but low levels of disclosure around a number of environmental issues including climate change, water security and deforestation. The campaign is calling on these companies to disclose environmental information through CDP, a non-profit, global environmental disclosure platform.

Recognizing that some companies say they are in fact publishing environmental information, Emily Kreps, global director of investor initiatives at CDP, argues that what’s needed is a comparable approach.

‘While some companies say they already disclose in their own sustainability reports, that is not enough on its own,’ she says in a statement announcing the campaign launch. ‘Investors and the wider market need transparency in the form of consistent, comparable and relevant metrics that are easy to access, compare and benchmark.

‘And as for companies that say their investors do not care about these issues, this campaign demonstrates that is simply not the case. Investors are asking for this information and using it – for corporate engagement, selecting stocks and building investment products.’

Braden Reddall, senior external affairs adviser for downstream, midstream and company affairs at Chevron, tells IR Magazine that the firm did in fact previously contribute to the CDP survey.

‘Chevron responded to CDP’s climate change questionnaire from 2004 to 2017 and in 2018 made the decision to improve the efficiency of our reporting by enhancing our website to make key ESG-related information readily available in response to feedback received from external stakeholders,’ explains Reddall, adding that Chevron has reported its carbon footprint for more than a decade in its corporate responsibility report and in its climate reports since 2017.

‘Chevron believes in transparency on ESG issues in an easy-to-access format that is relevant and useful to investors and other stakeholders,’ he continues, noting that the firm’s reporting follows the framework outlined by the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD).

Chevron was ‘one of the first to issue a report leveraging the recommendations of the TCFD in 2018, which was updated in 2019,’ says Reddall, adding that the firm’s ‘commitment to TCFD principles was further demonstrated in our participation in last week’s statement on climate risk disclosures led by the Vatican.

‘We plan to continue our long-standing, voluntary ESG reporting, which is informed by external reporting frameworks, and continue our active engagement with stakeholders to learn about their future needs as we constantly strive to improve our performance.’ 

Volvo Group also says it has made a decision to report on sustainability in its own reports rather than through surveys.

'Reducing the CO2 footprint is a prioritized area for the Volvo Group, for our owners and for society as a whole,' Claes Eliasson, senior vice president of media relations and group communication at the truck maker, tells IR Magazine. 'In order to make sure our message reaches our stakeholders in a co-ordinated manner, we have chosen to disclose such information in our annual and sustainability report, rather than report it in various surveys.'  

Amazon issued a statement in reply to a request from IR Magazine, saying: ‘Playing a significant role in helping to reduce the sources of human-induced climate change is an important commitment for Amazon.

‘We’ve eliminated more than 244,000 tons of packaging materials and avoided 500 mn shipping boxes. And with anticipated and continued progress in electric vehicles, aviation bio-fuels and renewable energy, we have set an ambitious goal to reach 50 percent of all Amazon shipments with net zero-carbon by 2030. We are on a path to becoming the most sustainable retailer and cloud provider in the world, and will release our carbon footprint later this year.’

The company adds that Amazon’s sustainability team ‘is using a science-based approach to develop data and strategies to ensure a rigorous approach to our sustainability work.’ 

The remaining companies mentioned here did not immediately respond to a request for comment.

Of the 707 firms being targeted – which include Qantas, Chinese e-commerce giant Alibaba and palm oil company Genting Plantations – 546 are being targeted to disclose on climate change, 166 on water security and 115 on deforestation.

A fifth of the companies being targeted are from the US, while 16 percent of those being called out by the campaign are Australian. And while fossil fuel firms are often seen as the biggest offenders when it comes to climate change, the most-targeted industry for climate change disclosure is in fact the services industry at 27 percent, followed by manufacturing (18 percent) and fossil fuels in third place at 12 percent. For water security, the most-targeted industries are manufacturing, followed by retail and fossil fuels, while for deforestation, it is retail, food, beverages & agriculture in second place and manufacturing in third.

‘It is of the greatest importance that companies disclose and manage their environmental impact,’ says Vincent Hamelink, chief investment officer at Candriam, in the CDP statement. ‘Collaborative initiatives are crucial for effective impact, as they ensure a consistent message from asset owners. These will continue to increase in importance, as the financial community’s ESG awareness gains momentum.’

Both the number of investors signed up to the campaign and the number of companies targeted have grown notably in recent years: in 2017, CDP’s Non-Disclosure campaign attracted 57 investors and targeted 416 firms. That has grown to 88 investors and 707 companies this year.