Investors accuse over 700 global firms of not disclosing environmental impact

Environmental, social and governance (ESG) risks and reporting continue to rise up the corporate agenda, as a group of 88 global investors has accused more than 700 companies with $15.3trn market capitalisation of not adequately disclosing their environmental impact. The investors, with nearly $10trn of assets, said the global firms – including Exxon Mobil, Amazon, Volvo, BP, Chevron, Qantas Airways and palm oil company Genting Plantations Bhd – are not delivering enough transparency on environmental risks they pose. The investors urging action include HSBC Global Asset Management, Candriam and Investec Asset Management, Environment Agency Pension Fund, Cathay Financial Holdings, Amundi, NN Group and Washington State Investment Board. They are pushing the firms from across 46 countries to disclose more information and improve reporting on climate change, water security and deforestation data though CDP, the non-profit global environmental disclosure platform. The companies have been chosenbecause of their high environmental impact and lack of transparency on these issues to date. Some 546 of the 707 companies are being targeted to disclose on climate change, 166 on water security and 115 on deforestation. This investor engagement is part of CDP’s 2019 Non-Disclosure Campaign, which aims to drive further corporate transparency by using shareholder influence to push companies to respond to CDP’s disclosure requests. Emily Kreps, global director of Investor Initiatives at CDP, said: “While some companies may say they already disclose in their own sustainability reports – that is not enough on its own. Investors and the wider market need transparency in the form of consistent, comparable and relevant metrics that are easy to access, compare and benchmark. “And as for companies that say their investors do not care about these issues, this campaign demonstrates that is simply not the case. Investors are asking for this information and using it… the ‘vow of silence’ from non-disclosing companies cannot go on,” she added. The services industry is most targeted for climate change disclosure on 27%, followed by manufacturing (18%) and fossil fuels (12%). For water security, the most targeted industries are manufacturing (26%), retail (23%) and fossil fuels (11%). While for deforestation, it is retail (30%), food, beverage and agriculture (26%) and manufacturing (16%). Overall, the US is home to most companies being targeted in the campaign on 20%, closely followed by Australia on 16%. CDP’s Non-Disclosure Campaign has been running for four years and been successful in driving more transparency. Companies targeted in last year’s campaign were more than twice as likely to disclose than those that were not, CDP said. Last year, CDP updated its disclosure platform to align with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This means that in 2018, more than 7,000 companies prepared TCFD-aligned disclosures through CDP. With 88 now onboard, more investors are taking part in this year’s CDP Non-Disclosure Campaign than ever before. Last year 75 took part, and 57 in 2017. More companies are also being targeted, up from 622 in 2018 and 416 in 2017. Thomas O’Malley, global head of corporate governance at HSBC Global Asset Management, said good disclosure enables investors to assess how well companies manage their ESG risks. “CDP now reflects TCFD requirements and is a model disclosure framework on climate change, one of the broadest risks facing companies. We encourage all companies to respond fully to the CDP questionnaire,” he added. Vincent Hamelink, chief investment officer at Candriam, said “it is of the greatest importance that companies disclose and manage their environmental impact”. “Collaborative initiatives are crucial for effective impact, as they ensure a consistent message from asset owners. These will continue to increase in importance, as the financial community’s ESG awareness gains momentum,” he added. Sophia Cheng, chief investment officer at Cathay Financial Holdings, said the CDP campaign should improve corporate transparency and help investors better manage environmental risks and opportunities. The investors will be engaging with companies during the summer while CDP’s disclosure system is open. Companies will be asked to submit their response to investors via the CDP online response system. In related news, risk managers have been encouraged to pay urgent attention to rising sea levels, after scientific research suggested the risk could be much greater than previously thought.

Investors accuse over 700 global firms of not disclosing environmental impact

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