GLOBAL - A vanguard group of 34 institutional investors with $7.6trn (€5.3trn) in assets is calling on the world's largest companies to implement cost-effective greenhouse gas emissions reduction initiatives.

The request is being made through the Carbon Disclosure Project's (CDP) new Carbon Action initiative, which has been launched in response to investor requirements to protect their investments and accelerate company action on carbon reduction activities.

It will be sent to the world's largest companies in the FTSE Global Equity Index Series (Global 500) this week.

Through the Carbon Action initiative, companies will be encouraged by investors - such as Aviva Investors, CCLA Investment Management and Scottish Widows Investment Partnership (SWIP) - to make year-on-year emissions reductions.

They will also be asked to identify and implement investment in greenhouse gas emissions reduction initiatives that have a satisfactory positive return on investment.

Any companies that do not already have an emissions reduction target will be asked to set and publicly disclose this.
Companies will be asked to demonstrate these actions by disclosing them, including any examples of best practice, through the established CDP system to ensure ease of reporting.

Specialist investment manager CCLA is moving toward divestment in instances where companies fail to disclose targets.

Helen Wildsmith, head of ethical and responsible investment at CCLA, said: "From 2013, CCLA's charity clients intend to divest from developed-world energy, utility, industrial and materials companies in the Global 500 that have not yet disclosed reduction targets to the CDP.

"Management of the carbon challenge is a key part of achieving sustainable and strong shareholder returns."

Craig Mackenzie, head of sustainability at SWIP, added: "This initiative focuses on cases where companies do not need to make a choice between emissions reductions or higher financial returns.

"In the face of rising energy costs, reducing a company's emissions often means higher profits. Efficient management of energy offers a huge win-win - lower carbon emissions, higher returns for shareholders."

Meanwhile, in the UK, a debate in the House of Commons today is expected to discuss mandatory carbon reporting as part of wider scrutiny of the government's record on sustainability.

FairPensions, a charity that promotes responsible investment, is calling for mandatory carbon reporting to be enacted as soon as possible to benefit both the environment and pension savers.

Catherine Howarth, chief executive of FairPensions: "Mandatory carbon reporting by companies may fall victim to the government's 'one-in-one-out' policy on regulation. This would be a loss to society, investors and to those conscientious companies that already report their carbon emissions."