climate risks
The Investor Agenda, which provides a framework for investors to take action to tackle climate change, has been launched. The plan was developed by seven organisations promoting carbon reduction and responsible investment:  Ceres, Asia Investor Group on Climate Change, CDP,  Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative.
investor agenda climate change
2018: Year of investor leadership on tackling climate change

Ceres recently held its 2018 Investor Summit on Climate Risk in partnership with the United Nations Foundation and the United Nations Office for Partnerships in New York which brought together institutional investors, pension fund trustees and company executives.

Following the summit Mindy Lubber, Ceres CEO and President, has called for 2018 to be the year of investor leadership on climate. She said the Investor Agenda provided investors with a range of actions for investors to take in four key focus areas: investment, corporate engagement, investor disclosure and policy advocacy.
Lubber wrote: “Actions in each of these areas not only help investors mitigate risk and capture opportunity, they ensure a safe and sustainable future for generations to come.”
ShareAction: Major shareholders in oil and gas firms should be seeking greater cash returns
Major shareholders should be requesting greater cash returns from outperforming oil and gas companies, instead of seeing it invested into economically unsound growth projects, according to a new report from the responsible investment group, ShareAction.
The research by ShareAction concluded that with improving profitability and cash flows in the oil sector following strong fourth quarter results, investors’ interests would be better served with extra capital returned to them.
However, as prospects improve, companies like BP and Shell are starting to invest that capital in new projects and growing production. ShareAction and investors seriously question the economic assumptions of these new capital projects targeting oil production growth.
The economic life of these projects will stretch over the next 20 years and beyond, ShareAction said, during a period where technological innovation such as new engine technology, the regulatory change triggered by the Paris Climate Agreement and slowing energy demand growth in emerging markets are likely to see declining growth in oil consumption.
ShareAction said it had consulted with over 20 fund managers and oil and gas analysts about its research and intended to engage with more institutional investors about its findings and its recommendations for shareholders. The report suggested that investors should vote against the reinstatement of scrip dividends at 2018 AGM as this sends a strong message that cash, not further shares, should be returned to investors.
ShareAction has also called on investors to demand that remuneration committees develop key measures that reward management teams for capital returns and profitability over hydrocarbon production growth.
The report also recommends supporting the forthcoming climate resolution at Shell’s 2018 AGM (filed by a coalition of Dutch investors and coordinated by Follow This). By supporting the resolution ShareAction said investors can send a strong message to Shell and management teams across the sector that the time for business, as usual, is drawing to an end and the economic assumptions underpinning growing production into the future have to be challenged. ShareAction’s research into voting patterns by institutional investors on US climate resolutions – notably Exxon and Occidental – shows investors are increasingly willing to vote in defiance of management of climate-related issues. However, a climate change resolution filed last year at Shell received little support.
Commenting on the research Andrew Howard, Head of Sustainable Research at Schroders, said: “If oil companies are not capable of instigating real substantive investment in areas that will create value in a carbon-constrained world, then shareholders might be better served if that capital is returned to investors. While climate change presents obvious challenges to fossil fuel producers, capital discipline in the face of shrinking demand could yet create value for shareholders.”
Climate change research: Supply chain emissions can still be reduced
Companies are increasingly recognising the need to report on and reduce their indirect carbon emissions but there is still the potential to do more according to the latest global research from CDP.
The report stated that emissions from companies’ supply chains typically exceed the emissions over which they have direct control. In recognition of this, companies have increasingly begun focusing on their indirect emissions or their Scope 3 footprint. The research, based on data from over 4,800 companies on behalf of 99 of CDP’s supply chain programme members, found that over one-third (34%) of responding suppliers disclosed Scope 3 emissions.
Almost as many (31%) responding suppliers reported a year-on-year decrease in emissions, while 23% disclosed
rising emissions, indicating that there is a significant opportunity to improve on emissions actions. However, only
23% of supplier organisations that responded to the 2017 CDP supply chain questionnaire report engaged with their suppliers. CDP said this showed that large portions of global supply chains remain untapped, representing foregone business opportunities, overlooked carbon reductions, and unrealised financial saving.
Meanwhile, the financial think-tank, the Carbon Tracker Initiative, has published a report explaining the concept of a carbon budget. This is in recognition of the fact that companies, investors and policymakers are increasingly turning to carbon budgets as a core component for analysing the potential implications of a carbon-constrained future.
Last Updated: 9 February 2018
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