Investors worth $33tn call on cement companies to address climate change impact

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Group of investors worth $33 trillion are calling on leading European construction material firms to commit to achieving net zero emissions no later than 2050 and improve their practices. This increased focus on construction companies is mainly due to their significant contributions to climate change, given cement is the source of 7% of global man-made carbon dioxide emissions.

The investors are acting as members of the Institutional Investors Group on Climate Change (IIGCC) and participants in Climate Action 100+, have outlined measures they expect the companies in a new publication ‘Investor Expectations of Companies in the Construction Materials Sector’.

The investor signatories to the letters Hermes EOS, BNP Paribas Asset Management, Aberdeen Standard Investments, the Local Authority Pension Fund Forum, Ethos Foundation, Trusteam Finance, Sarasin & Partners, Degroof Petercam Asset Management and Nykredit Asset Management.

“The cement sector needs to dramatically reduce the contribution it makes to climate change. Delaying or avoiding this challenge is not an option. This is ultimately a business-critical issue for the sector,” sais Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change and a member of the Climate Action 100+ global steering committee.

She added “Major economies such as the UK and France are increasingly adopting economy-wide net zero emission targets. The cement sector needs to get ahead of the profound transformation their sector faces by addressing barriers to decarbonisation in the short- to medium-term if companies are to secure their future.”

“Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios to meet their own decarbonization plans,” explains Vincent Kaufmann, CEO Ethos Foundation, “Thus, investors expect construction materials companies to substantially increase the R&D budgets available for research into decarbonizing cement production.”

The ‘Investor Expectations’ publication sets out key areas for construction companies to follow including:

  • Setting greenhouse gas emission reductions
  • Enable public policy transparency and advocacy for the Paris Agreement
  • Implementation of a strong governance framework
  • Enhanced Disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Construction companies have already taken steps to improve their operations. HeidelbergCement has committed to meeting key aspects of the investor expectations outlined. CRH, Lafarge and Saint-Gobain have been encouraged to follow suit, given the significant role they play as European-based multinationals, with investors making clear the need for the companies to set net zero emission targets.

Indian cement producer Dalmia Cement has set out one of the most ambitious visions by a company in the sector, to be carbon negative by 2040.

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