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Investor influence helped climate policy change

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  • Investor influence helped climate policy change

GLOBAL - Increasing investor activity with companies is partly responsible for an improvement in the way companies address climate change, according to environmental, social and governance (ESG) research provider EIRIS.

Details of EIRIS' Climate Change Compass: The road to Copenhagen study suggested 99% of all companies labelled as having a ‘high' or ‘very high' climate change impact - compared to 84% in 2008 - now have a corporate-wide climate change commitment which can be attributed to investor engagement.

And of these companies, 91% disclose absolute CO2 or greenhouse gas (GHG) emissions date, up from 73% last year.

The study found almost three-quarters of the companies - 73% compared to 61% last year - have referenced the wider policy context by referring to international targets, regulations or the scientific imperative.

That said, although the quality of companies' management response to climate change has improved overall, a third of companies with a ‘high' or ‘very high' climate change impact are still failing to mitigate their climate change risk.

"It is encouraging to see some evidence that regulation and the increasing engagement activity of investors on climate change are driving companies to focus more attention on the climate change risks and opportunities they face," said Stephanie Maier, head of research at EIRIS.

However, there are areas where further progress can be achieved. The key challenges for investors are the high level of unmitigated risk among the global top 300, the general scope for more improvement by high-risk companies and the quality of quantitative disclosure.

"Board level responsibility and ownership of a company's response to climate change is crucial," Maier added. "Linking remuneration to performance in this area will help ensure companies remain focussed on these issues. Likewise, the increased use of verification for GHG emissions data will provide investors with further reassurance on the reliability of the information published. These are key areas where investors should exert influence so as to help them minimise their risk."

The research focused on the 300 largest companies of the FTSE All-World Index and examined their progress over the last 12 months in responding to the challenges of climate change.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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