14 January 2020.

U Ethical recently joined Climate Action 100+, which is an investor initiative driving corporate climate action by engaging with some of the world's largest greenhouse gas emitting companies. Since its launch in December 2017, Climate Action 100+ has grown into one of the largest investor‑led engagement campaigns, with over 370 investor signatories representing over $US41 trillion in assets under management.

The initiative focuses on companies including 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition. These companies are critical to the decarbonisation of investment portfolios and the global economy.

We are joining over 30 Australian investor signatories and there are 13 Australian focus companies including Rio Tinto, AGL Energy, Qantas, Boral and Bluescope Steel. We will begin our own engagement campaign this year, and will keep stakeholders updated on our progress.

What are investors asking focus companies to do?

Investors that sign on to the campaign are asking the boards and senior management of companies to:

• Implement a strong governance framework which clearly articulates the board’s accountability and oversight of climate change risks and opportunities;

• Take action to reduce greenhouse gas emissions across the value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increase to well below 2 degrees Celsius above the pre-industrial level; and

• Provide enhanced corporate disclosure to enable investors to assess the robustness of companies’ business plans against a range of climate scenarios, including well below 2 degrees Celsius, and improve investment decision-making.

Progress so far

The first progress report was released last year showing that the first phase of the initiative has seen some breakthrough commitments from companies in hard-to-abate sectors, the initiation of investor engagement on climate in Asia, and a raft of disclosure commitments on corporate lobbying on climate change.

Among the achievements were big wins with two household Australian names: Rio Tinto and BHP. Following engagement from lead investors AustralianSuper and CCLA, Rio Tinto reviewed its lobbying activity, divested from mining coal and committed to an asset-by-asset review of its emission reduction targets. Meanwhile, BHP committed to developing targets for downstream emissions from its customers’ use of its products—also called ‘scope 3 emissions’. This is a significant shift as BHP’s scope 3 emissions in 2018 were almost forty times larger than its operational emissions.

Despite these strong achievements, the report also showed that most companies have a long way to go to fully meet the expectations of the initiative, which are framed around climate governance, climate action, and climate disclosure.

Emma Herd, CEO of the Investor Group on Climate Change and member of the Climate Action 100+ Global Steering Committee said: "Working with local investors in Australia, we have seen first-hand the impact of collaborative engagement on climate, so we're pleased to welcome U Ethical as a signatory to the initiative."