Irish companies are among the best in the world at adopting climate targets and policies but fall down when it comes to actually curbing emissions, a major international report has found.
Legal & General Investment Management (LGIM), one of the world’s largest investment firms with €1.4 trillion in assets, has rated the climate policies of a 1,000 companies worldwide as part of its ongoing engagement programme to to promote net-zero carbon emissions globally by 2050.
The selected companies were chosen from 15 climate-critical sectors and are responsible for more than 60 per cent of the greenhouse gas emissions from listed companies, according to LGIM.
They were rated on a range of climate metrics and data points and then given a “climate impact pledge” score.
LGIM said that while Irish companies scored highly on governance, disclosures, lobbying (positively) and targets “this high-level alignment” was yet to translate into action.
“Irish companies have the widest gap between high-quality policies and poor emissions performance,” the report’s authors said.
The companies, which have not yet been named, will be ranked using a traffic light system on their approach to climate change, and these rankings will be published on LGIM’s website.
Lagged on performance
The financial sector here was pinpointed as a sector that had lagged on performance.
Food giant Kerry Group, packaging company Smurfit Kappa and insulation specialist Kingspan were also rated and are understood to have scored well.
LGIM said utility sector worldwide had the highest score, reflecting the adoption of renewable energy alternatives while food retail scored poorly.
"Transparency is key – companies must be consistent in what they declare publicly and how they lobby governments behind the scenes," Meryam Omi, LGIM's head of sustainability and responsible investment strategy, said.
“ And investors must be transparent about how they assess companies. By making our climate ratings publicly available, we want to encourage companies to address gaps in their disclosures and strategies, whilst adding a layer of public accountability,” she said.
Climate catastrophe
LGIM has become one of the most outspoken fund managers on climate change, warning that the world is facing a “climate catastrophe” unless drastic action is taken.
Since the 2015 Paris climate accord, it has been ratcheting up pressure on companies to beef up their climate policies and voting against chairpersons and directors who fail to adopt more sustainable policies.
LGIM said companies falling short of its minimum standards, which includes lacking detailed disclosure of emissions, will be subject to both votes against decisions and potential divestment.
Ms Omi said Japanese car manufacturer Subaru had been on its sanctions list but was recently removed for improving on several key metrics.
Companies that remain on the exclusion list include ExxonMobil, Hormel, Kroger, Sysco, Rosneft Oil, KEPCO, Loblaw, MetLife, Japan Post Holdings and China Construction Bank.
