Investors urge 1,600 companies to set science-based targets for carbon emissions

Sep 29, 2021
Campaign in 2020 saw 8 percent of targeted companies join Science Based Targets initiative

A major investor coalition has called on 1,600 companies to set science-based targets covering carbon emissions, as pressure on the corporate sector over climate risk continues to ramp up.

The campaign, organized by non-profit CDP, urges companies to work with the Science Based Targets initiative (SBTi), which verifies whether emissions-reduction goals are in line with limiting global warming to 1.5°C above pre-industrial levels.

In total, 220 financial institutions with around $30 tn in assets have pledged their support to the campaign, including global firms like Allianz, Amundi, DWS Group and Legal & General Investment Management.

Signatories hope to build on the results of last year’s campaign, when 8 percent of companies targeted – around 150 issuers – agreed to join SBTi over the following 12 months. Companies that adopt science-based targets ‘typically cut emissions by 6.4 percent per year, well above the average rate needed for 1.5°C alignment,’ says CDP.

This year significantly more investors have taken part in the campaign, with the number of signatories rising by 60 percent on 2020’s numbers. Underlining the prominent role of European investors in climate engagement, 75 percent of supporters are based in continental Europe or the UK.

‘Today, we fully integrate the emissions trajectory of the companies we invest in. Adapting their business models to the climate challenge as well as aligning with the Paris Agreement is not just desirable anymore, but also a necessity to ensure long-term growth and profitability,’ says Jean-Jacques Barbéris, director of the institutional and corporate client division and ESG at Amundi, in a statement.

Founded in 2015, SBTi today works with more than 1,700 companies and has approved 550 emissions-reduction targets. The project produces specific guidance and frameworks for certain sectors, although it has yet to finalize its approach for two key areas: oil & gas and transport.

Speaking at IR Magazine’s Europe Forum in June, Randeep Somel, portfolio manager at M&G Investments, said science-based targets would continue to grow in importance for the investment community.

‘You’re going to have SBTi companies and non-SBTi companies,’ he said. ‘SBTi doesn’t cover everything today. It doesn’t cover oil & gas, it doesn’t cover chemicals, but it is working with companies to get those frameworks in place. And they’re going to be incredibly important.’

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