From 30 November to 11 December Paris will host the COP21 UN Climate Change Conference. Whilst the main stage is for governments, perhaps now more than ever the corporate sector will play a pivotal role behind the scenes to make the summit a success. Triodos engages with companies to persuade them to take up their responsibility on climate protection.
Back on track?
In 2009, at the summit in Copenhagen, governments failed to achieve a new and binding ‘Kyoto-style’ treaty. It seemed for a while that the world had missed the opportunity to slow down climate change. And with extremely low carbon prices, nothing stood in the way of the heavy greenhouse gas emitters. But climate talks continue, and concrete evidence of climate change keeps piling up. The remarkably successful ‘stranded assets’ and fossil fuel divestment campaign initiated by the Carbon Tracker think tank is shifting capital away from fossil fuels.
Critical performance reviews
In the past, many powerful companies have been an obstructive power, actively lobbying against political interference to keep global warming within acceptable boundaries. But these days a growing number of companies knows that they can only keep their public license to operate if they clearly speak out their stance on climate change. Over the past year many ‘Business leader’ statements and ‘climate coalitions’ have seen the light. And under increasing pressure of nongovernmental organisations and progressive investors, businesses are being questioned over inconsistencies between positive public statements and support for obstructive practices at the same time.
As a socially responsible investor, we only invest in companies that take the issue of climate change seriously. When analyzing companies for potential investment, we critically review their performance on climate change issues such as greenhouse gas emissions, carbon intensity levels and renewable energy use. For carbon intensive industries like car manufacturers, utilities and chemical companies, we require strong emission reduction programs, with clear targets and annual reporting of progress. Furthermore, we exclude for investment all companies that have more than 5% of revenues from production of oil and gas or products and services required for oil and gas extraction. We also exclude companies that are involved in coal mining, the production of energy from coal and that derive any revenue from unconventional oil- and gas operations.
Active engagement
We actively engage with the companies in our universe that operate in carbon intensive industries. We discuss ways they can reduce their carbon footprint and increase renewable energy sources. This year, for instance, we have addressed the issues and engaged with DSM, BMW, Toyota and Tesla. We have also signed the UN PRI investor statement on corporate climate change lobbying. This statement addresses corporate lobbying practices which may be counter to the interests of long-term investors. The statement calls upon companies to develop climate protection related policies that are in line with the universally accepted goal of limiting global temperature rises to two degrees Celsius.
Companies play a crucial role in the mitigation of climate change and global warming. They need to take their responsibility by implementing renewable energy strategies and energy efficiency measures. The impact that their opinions and actions make on the December summit will be felt for years to come.
Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.