Members of the UN-convened Net-Zero Asset Owner Alliance have published their joint position on thermal coal today, setting out the principles they say all companies in their portfolios should respect.

The Alliance also called for a shift in focus from policymakers, saying government incentives and subsidies for major new thermal coal projects “run counter to global efforts to tackle the climate crisis and distort market conditions that are naturally evolving in favour of cleaner energy sources”.

The principles the $5trn (€4trn) investor group set out are that:

  • Other than coal plants currently under active construction, no further thermal coal power plants should be financed, insured, built, developed or planned;
  • There should be an immediate cancellation of all new thermal coal projects that are in pre-construction. This includes thermal coal plant, coal mines and related infrastructure projects;
  • There should be a phase-out of all unabated existing coal-fired electricity generation in accordance with 1.5°C pathways, as provided by the Intergovernmental Panel on Climate Change (IPCC) and referenced by the International Energy Agency (IEA) and Powering Past Coal Alliance.

“Participation in activities and projects that are not aligned with these principles is incongruent with our net-zero goals and the aspirations we have in respect to the different decarbonisation strategies of the companies we invest in,” the Alliance said in the position paper.

According to the IEA, the burning of thermal coal for energy is the single largest contributor to man-made global temperature increase, accounting for about one third of the 1°C temperature rise above pre-industrial levels already observed.

The Alliance favours engagement as the means to drive change, but says members may resort to divestment if companies remain irresponsible to demands.

Danish pension scheme provider P+ has decided to join the UN Net-Zero Asset Owner Alliance, it announced this week. The move is in connection with the overhaul of its responsible investment policy, as part of which it said it would lower its threshold for the exclusion of companies failing to meet its expectations. 

Storebrand demands carbon neutrality from all suppliers by 2025

Norway’s Storebrand announced it is taking action to decarbonise its whole value chain by putting new demands on suppliers, saying it wants all significant suppliers to be carbon neutral in their operations by 2025.

The financial group – one of the Nordic country’s main occupational pension providers – said in a statement it wanted to contribute to lower emissions in all parts of the business, including procurement.

Odd Arild Grefstad, Storebrand’s chief executive officer, said: “We now encourage all suppliers to get an overview of their own emissions and make a clearly-defined plan to reduce them.”

Grefstad said his firm would now ask companies providing it with goods and services for documentation on strategy, climate emissions and diversity, and how they used established certifications and systems.

Storebrand said the new ESG framework for suppliers meant it was now placing climate demands on its total annual outsourcing expenditure of NOK2.6bn (€239m).

Storebrand, which claims to be Norway’s largest private asset manager, said the work would begin immediately, adding that as for investments, its main ESG approach on procurement was collaboration with companies and partners to contribute to the green transition.

Neither divestment nor ended contracts were consequences that Storebrand wished for, the firm said.

“We will work together with suppliers to contribute to improvements in their value chains,” Grefstad said.

Storebrand highlighted four key steps that all its suppliers should take:

  1. measuring all their emissions;
  2. setting concrete goals to reduce their emissions;
  3. reducing emissions as much as possible through their own actions; and
  4. compensating for the emissions they could not avoid in the short term.

For its investment portfolios, Storebrand has committed to having net-zero greenhouse gas emissions by 2050, at the latest. “Net zero” and “carbon neutral” are usually understood to be synonyms.

Earlier this week Kempen Capital Management announced a climate change policy targeting net-zero by 2050.

Intermediate targets include implementing new exclusions relating to coal and tar sands across all investment strategies by 2022.

Within its sustainable and impact funds, Kempen will not invest in companies that obtain any of their revenues from coal or tar sands. Elsewhere the restriction is that it will no longer invest in pure coal players that obtain the majority of revenues from coal mining, or those which obtain the majority of revenues from tar sands.

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