Investors target 1,320 companies over disclosure of environmental risks

Jun 21, 2021
Campaign encourages companies to disclose using CDP platform

More than 1,000 companies need to boost their reporting of environmental risks, according to a campaign backed by major institutional investors.

The project, which pushes companies to report environmental data through CDP’s disclosure system, says 1,320 businesses were targeted this year, including Netflix, Alibaba Group and Rio Tinto.

In total, 168 investors and financial institutions took part in CDP’s non-disclosure campaign, a rise of 56 percent compared with last year. Participants include Amundi, Aviva, HSBC Global Asset Management, M&G Investments and Schroders.

CDP, formerly known as the Carbon Disclosure Project, runs a disclosure platform where companies can report on three topics: climate change, deforestation and water security. Many investors rely on the data collected by CDP to analyze the environmental profile of their investments.

Investor focus on environmental issues has continued to intensify over the last year, with companies coming under increasing pressure to align their business model with the shift to a low-carbon economy and net-zero emissions. Attention is set to increase further in the run-up to the UN Climate Change Conference, or COP26, due to be held in Glasgow this fall.

The companies included in the non-disclosure campaign were selected by investors due to their ‘high environmental impact’ on at least one of the three areas covered by CDP, says a statement by the reporting organization.

The most popular disclosure request focuses on climate change – 58 percent of companies were targeted over this issue. A fifth of the companies already provide information to CDP in one area, but investors would like them to start disclosing on another theme.

CDP says the campaign has contacted 29 percent more companies than it did in 2020 and, based on previous years, issuers are ‘twice as likely to disclose their environmental impact’ if they are contacted by investors.

‘Investor engagement is critical to driving disclosure, and disclosure is the first step to environmental action,’ says Emily Kreps, global director of capital markets at CDP, in a statement. ‘Climate change, deforestation and water security present material risks to investments, and companies that are failing to disclose their impact risk trailing behind their competitors in their access to capital.

‘We are delighted that this year’s campaign has achieved record levels of investor support. Rather than diverting attention, the Covid-19 pandemic is focusing investors on the need to meet global systemic risks such as climate change, and the tide is rapidly turning against companies not taking note of investor demands.’

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