A group of 60 global investment managers representing more than US$10.4 trillion in assets is calling on fossil companies to take climate action more seriously at their upcoming annual meetings.
“As long-term investors, representing more than $10.4 trillion in assets, the case for action on climate change is clear,” the investors wrote in an open letter to the Financial Times. “We are keenly aware of the importance of moving to a low-carbon future for the sustainability of the global economy and prosperity of our clients.”
The various news reports on the release note that BP was to hold its annual meeting yesterday, and Royal Dutch Shell today. The Seeking Alpha investment blog reported Friday that a non-binding but “symbolically important” resolution on climate risk reporting was adopted by the majority of Anadarko Petroleum shareholders, while a vote at Chesapeake Energy was cancelled after the company promised to issue a report by the end of the year. Investors at Range Resources approved a motion on methane reduction, while Kinder Morgan investors adopted resolutions demanding a carbon risk assessment and an annual sustainability report. “As you are probably aware, these proposals are non-binding,” Executive Chair Rich Kinder said in a statement following the vote.
The group of signatories includes Aberdeen Standard Investments, AXA Investment Managers, Fidelity International, Legal & General Investment Management, Newton Investment Management, Schroders, and Kames Capital, Reuters reports.
The letter noted that the fossil industry and its products account for half of global carbon emissions. “Reducing the carbon impact of their products is the most effective strategy for these companies to move to a low-carbon world,” it stated. “The capital allocation decisions they make today are important to determine how likely they are to survive that transition.”
The Houston Chronicle notes that “oil companies are facing one of their biggest challenges” as investors pay closer attention to greenhouse gas emissions and climate impacts. “They have churned out trillions of dollars of profit over the past century, and investors and pension funds often look to them for steady dividends. Yet, calls for decarbonization are growing louder as the world attempts to limit temperature increases and tackle pollution.”
“The broad support for this letter sends one clear message—investors are embracing their responsibility for supporting the Paris agreement,” a Newton Investment Management spokesperson told Reuters. “It is time for the entire oil and gas industry to do the same.”
The letter said increased climate regulation could lead to higher costs for fossil companies, and stressed that “companies shouldn’t just direct their focus on reducing greenhouse gas emissions from their own operations, but look at the emissions from their products once sold,” the Chronicle adds.