Ahead of COP26, 220 global financial institutions, representing over US$29.3 trillion in assets under management, are urging the world’s highest-impact companies to set science-based emissions reduction targets aligned with a 1.5°C warming scenario. This represents a 60% increase in institutional support compared to last year and includes major investors and lenders such as Allianz, Amundi, Credit Agricole, and Legal & General.
The call for emissions reduction targets is coordinated with the Carbon Disclosure Project (CDP), with 26 CDP supply chain members also joining the initiative. These companies, including L’Oreal, Renault, AstraZeneca, and HP, have a combined annual procurement value of US$500 billion. The targeted companies, which have a combined market capitalization of over US$41 trillion and account for 11.9 gigatons of Scope 1 and 2 emissions, represent 36% of the entire MSCI World Index.
The initiative aims to ensure that corporate ambitions in emissions reductions are independently verified against industry standards through the Science Based Targets (SBTs) initiative. So far, over 20% of companies by global market capitalization are already part of the SBTi.
The impact of previous similar campaigns has been significant, with 154 companies joining the initiative, representing a market capitalization of US$5.2 trillion and emissions equivalent to Germany’s annual total. Of the companies asked to set targets, 96% reported that investor pressure played a role in their decision. Companies that have set targets have achieved emission reductions of 6.4% per year, surpassing the linear reduction rate of 4.2% required to meet the 1.5°C goal of the Paris Agreement.
This growing financial institution engagement in corporate climate issues highlights the increasing importance of emissions reductions and sustainable practices in the business world.
