Investors with $4 trln assets aim to tackle Asian firms on climate change goals

September 29, 2021

MELBOURNE (Reuters) – A group of six investors with a combined $4 trillion of assets under management, including Fidelity International, said on Wednesday it aims to step up engagement with big Asian companies like banks and energy producers to ensure they have a road map to meet climate change targets.

Initial engagement will focus on carbon risk and coal at banks and coal-exposed power companies, the group of investors, facilitated by Singapore-based advisor Asia Research & Engagement (ARE), said in a statement.

The move comes as investors 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. ESG-related steps they have taken include backing activist shareholder resolutions and voting on board members and remuneration.

At Royal Dutch Shell (RDSa.L)’s annual shareholder meeting in May, nearly a third of shareholders backed a resolution filed by an activist group, but rejected by the board, that wants the company to set short- and medium-term targets to cut absolute emissions.

The six investors include BMO Global Asset Management EMEA, Fidelity International, Dutch pension fund PGGM, Britain-based Local Authority Pension Fund Forum (LAPFF), Aviva Investors and Legal & General Investment Management.

“Over the past year we have seen encouraging developments in sustainability-related business practices and policies, such as a raft of net zero announcements,” Mirza Baig, global head of ESG investments at Aviva Investors, said in the statement.

“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 said. “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. Huaneng and Huadian did not immediately respond to requests for comment.

The investor group will encourage companies such as banks to commit to concrete actions like exiting from financing the most carbon-intensive fossil fuels, and stopping financing fossil-fuel expansion and related infrastructure.

Measures would also include encouraging Asian power utilities to set out plans to bring their businesses in line with Paris Agreement targets.

(Reporting by Melanie Burton in Melbourne and China team; Editing by Kenneth Maxwell)

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