Investors call on Europe’s largest companies to address missing climate costs in financial accounts

A group of leading global investors have written to 36 of Europe’s largest companies, urging them to properly reflect the implications of global commitments to limit temperature increases to well below 2°C in their financial statements.

The 38 investor signatories to the letter, which was sent by the Institutional Investors Group on Climate Change (IIGCC), collectively represent $9.3 trillion in assets under management or advice, underscoring the growing significance of the issue for the sector.

This includes global investors such as DWS, the International business of Federated Hermes, Aegon Asset Management, Nordea, Northern Trust, the UK’s Local Authority Pension Fund Forum, the Church of England pension funds, and numerous others, with the letter authored by Sarasin & Partners LLP2. 

IIGCC, the European membership body for investor collaboration on climate change and has more than 250 members, mainly pension funds and asset managers, with over €33 trillion in assets under management, has also just released a new timely report, setting out more detail on the steps investors require companies to take on the issue.

Companies receiving the letter were selected due to their exposure to decarbonisation risks, as economies transition away from fossil fuels in line with the Paris Agreement on climate change. This includes the largest listed European firms by revenue across the energy, transport and materials sectors. A few examples include, Anglo American, BASF, BMW, BP, Deutsche Lufthansa, EDF and Shell, among numerous others.

The companies have a total combined value of $1.7 trillion by market capitalisation and combined revenues of $3.2 trillion and are among Europe’s largest companies.

Stephanie Pfeifer, CEO at Institutional Investors Group on Climate Change, said: “Companies can no longer afford to ignore what climate change means for their business. Investors need financial impacts of getting onto a net zero pathway to be booked and acted on."

“Climate change is material and the importance of alignment with the Paris Agreement is beyond doubt, what investors now need is visibility from companies in their accounts. They are making this clear today and expect companies to report in line with existing global accounting standards.”

Brunno Maradei, Global Head of Responsible Investment, Aegon Asset Management, said: “Addressing climate change is an urgent matter, and one that must be addressed with action."

"Ensuring that the Paris Agreement is considered in financial statements is one way to ensure that the firms most exposed to carbon will be held truly accountable against this important global commitment, while also protecting long-term value for investors.”

Read the letter here.