An assessment of the climate lobbying activities of the world’s largest asset owners has named ABP, Aegon, Phoenix and the Government Pension Fund Norway (GPFG) as leaders in the field.
Using publicly-available information like media reports, disclosures and consultation responses, InfluenceMap scored 30 pension funds and insurers from around the globe.
It found that none of the asset owners were “fully utilising” their influence over climate policy, which the think-tank splits into five categories: direct advocacy, membership of trade bodies, engagement and voting at portfolio companies, expectations of asset managers’ engagement and voting, and pressure on asset managers over their own lobbying.
Unlike most other assessments of responsible investment practices in the investment industry, pension funds in the US trounced those in Europe.
One of the report’s authors, Cleo Rank, said this was partly because of the important role public pension funds in places like New York and California have played in speaking out against the current political clampdown on sustainable investing in the US.
New York City Comptroller’s Office, which runs the city’s retirement system, also scored well for engaging publicly to promote specific real-economy policies, such as local rules for low-carbon buildings, and its staff have testified in City Council hearings related to climate, explained Rank.
In Europe, Dutch pension giant ABP was found to have aligned its own policy advocacy activities with science-based pathways to limit global warming to 1.5°C.
Norway’s GPFG scored a relatively high ‘C’ grade for both its own advocacy and its work with portfolio companies and managers, and was deemed the most transparent of the 30 when it came to its lobbying activities.
Dutch insurer Aegon was one of only two asset owners to have engaged with its managers on their stewardship practices, publicly asking them to vote in favour of certain climate lobbying resolutions at companies’ annual meetings.
It was also one of two found to have demonstrably engaged with managers on their own lobbying activities, along with Allianz. Phoenix Group was namechecked for voting against the re-election of directors at one company because it didn’t disclose its climate lobbying record.
Policy advocacy is fast becoming a focal point for asset owners with net-zero commitments, who know they will struggle to fully decarbonise their portfolios if real-economy policy doesn’t change to allow more companies to green their business operations.
The United Nations-backed Net Zero Asset Owner Alliance recently published a ‘call to action’ on behalf of its members, asking governments to “urgently enact” five measures, including phasing out support for fossil fuels, raising carbon prices and developing and mandating climate transition plans.
Rank said asset owners keen to improve their climate lobbying credentials should begin by assessing their trade associations and improving transparency around their activity.
“If a pension fund isn’t ready to undertake direct engagement immediately, then a good place to start is working out how their industry bodies are doing it on their behalf,” she suggested.
“The gold standard would be to assess the alignment of each of those groups with their own positions on climate,” he added.
This is one of the demands made by shareholder engagement body Climate Action 100+, and companies such as Unilever have been praised for undertaking the process in response to investor pressure.
“It’s important for asset owners to demonstrate how it should be done if they’re serious about asking their portfolio companies to do it,” said Rank.
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