On Wednesday, in a significant development, a group of six investors with a combined $4 trillion of assets under management said, it aims to increase engagement with large Asian companies, including energy producers and banks, to ensure that they have a road map to meet climate change targets.
In a statement the group of investors, facilitated by Singapore-based advisor Asia Research & Engagement (ARE) said, initial engagement will focus primarily on “carbon risk and coal at banks and coal-exposed power companies”.
The development comes at a time when investors have become more active in the field of environmental, social and corporate (ESG) governance, helping to shape firms’ climate commitments to better manage that risk for their clients.
Earlier this year in May, during Royal Dutch Shell annual shareholder meeting, almost a third of shareholders backed a resolution which was filed by an activist group but was rejected by the board, that wants the company to set short- and medium-term targets to cut absolute emissions.
The six investors includes Fidelity International, BMO Global Asset Management EMEA, Local Authority Pension Fund Forum (LAPFF), PGGM, Legal & General Investment Management and Aviva Investors.
“Over the past year we have seen encouraging developments in sustainability-related business practices and policies, such as a raft of net zero announcements,” said Mirza Baig, global head of ESG investments at Aviva Investors. “In reality, there is still a stark mismatch between where we are today and what is required to ensure that the objectives of the Paris Agreement (on climate change goals) are met.”
He went on to add, “There is a huge opportunity for Asian companies to take the lead in tackling the climate emergency.”
The group has already begun engagement with companies including China power firms Huaneng and Huadian.
Measures would also include encouraging Asian power utilities to set out plans to bring their businesses in line with Paris Agreement targets.