Committing to 1.5 °C, still on few agendas of Spanish firms

For many, the Glasgow summit was the summit of companies, the moment in which to demonstrate with facts their firm decision to be part of the solution, not the problem. And in that goal, any push is welcome. This is where various entities and institutions have entered, willing to demand commitments from companies now.

One of the most interesting actions is the SBT 2021 campaign, coordinated by the non-profit organization CDP, which has the world’s largest database of corporate information on climate change. In it, 220 global financial institutions, with 29.3 billion dollars in assets, have called on the companies with the greatest impact in the world to urgently establish emission reduction targets in line with 1.5°C warming scenarios. They do this through the Science Based Targets Initiative (SBTi).

In 2020, the number of Spanish companies with the highest rating in climate change management grew from 7 to 16

In the campaign, a very large number of companies from around the world have been questioned, “which together have equivalent emissions higher than those of the United States and the EU together and with a market value of 36,500 million euros”, highlights Laurent Babikian , Global Head of Capital Markets at CDP. New previews will be published in 2022.

So far, 52 Spanish firms are part of the SBTi. Of these, 17 have fixed targets of 1.5 °C. The rest have committed to establishing a purpose within two years from the date of signature. With these data, our country ranks 11th worldwide in terms of companies with set objectives, according to CDP.

The implication is uneven according to the sector and the available technologies

Regarding the campaign deployed this year, Aena has already committed to the SBT and other companies such as ACS, Acerinox, Grifols, Abengoa, CaixaBank and Dia have proposed to do so, according to Babikian.

To this, Cristina Sánchez, executive director of the United Nations Global Compact in Spain, adds that during 2020 the national companies included in the list that CDP prepares with the companies with the highest rating in climate change management rose 129%, going from 7 to 16. “Meliá Hotels International, Siemens Gamesa Renewable Energy or Red Eléctrica, partners of the Global Compact, are some of the names that have become part of this list during the last year”, he assures. Mapfre also aspires to be a carbon neutral company on an international scale by 2030.

“What we are clear about is that the action and leadership of the private sector in climate matters are going to be fundamental for the transition towards a resilient model”, highlights the head of the United Nations Global Compact in our country, since companies have a fundamental role “in sending strong signals to the market, offering innovative solutions, generating trust and presenting credible plans towards a zero-emissions economy”.

Adoption of SDG 13

In the adoption of the Sustainable Development Goals (SDG) “we have both sides of the coin”, summarizes Sánchez. SDG 13 on climate action is one of the most worked on by Spanish companies, and “we know that the progress is positive, but also that it is insufficient if we want to limit the increase in temperature to 1.5 °C”, he admits.

The saying goes that the sin is said, but not the sinner, however, many organizations mention names. Thus, the Annual Study of climate action and disclosure of the companies in the Euro Stoxx 50, Dow 30 and FTSE 100, prepared by EcoAct, concludes that the four companies belonging to the European index, Amadeus, Banco Santander, Iberdrola and Inditex, are Below average performance regarding its alignment with the recommendations of the TCFD (Task Force on Climate-Related Financial Disclosures) compared to the rest of the companies in the same index.

“However, we value positively that the four report on the emissions of their entire value chain and have undertaken actions to reduce them. In addition, all companies report using an internal carbon price, which is one of the most ambitious initiatives within corporate climate action”, highlights Cristina Raventós, director of EcoAct Spain.

“The progress is being uneven depending on the sector and the available technologies and if these allow a greater or lesser economic and environmental profitability after their implementation”, observes Elvira Carles, director of the Fundación Empresa y Clima, who does not believe that there are already signatures in our country to ignore the current scenario. “What I can tell you is that we are reaching a point where companies and investors have more risk if they bet on economic models based on fossil fuels than on renewables,” he says.

LARGE INVESTORS PROMOTE THE ENERGY TRANSITION IN THEIR INVESTEES

The financial institutions most committed to the fight against climate change participate in various initiatives that are gaining more and more prominence. Climate Action 100+, for example, is led by 615 investors who seek to ensure that the world’s largest greenhouse gas (GHG) emitting companies take the necessary steps to lower the planet’s temperature.

But perhaps one of the most interesting proposals in which the main managers participate is Net Zero Asset Managers (NZAM), which brings together more than 200 entities committed to the goal of zero net GHG emissions by 2050 or earlier, supporting investments aligned with that end. Together, the participants manage 49,000 million euros.

This initiative has recently been joined by BBVA Asset Management, which has proposed to accompany the companies in which it invests in their goals of being carbon neutral. To do this, in a first step, the manager will analyze your portfolio and establish an initial target for the volume of assets that will form part of the commitment. In addition, it commits to setting intermediate goals for the decarbonization of these assets by 2030 and reviewing that goal at least every five years, with the intention of increasing the proportion until it reaches 100% of the assets under management. A few months ago, the BBVA group joined the net-zero emissions banking alliance Net-Zero Banking Alliance and announced its commitment to reduce exposure to carbon-related activities to zero.

Banco Santander also participates in this financial initiative, in this case, as a founding member, assuming the commitment to be carbon neutral by 2050. To this end, they have already established objectives for 2030, such as stopping providing financial services to electricity generation customers whose income depends on more than 10% of thermal coal, and eliminating their exposure to thermal coal mining worldwide.

In addition, Santander Asset Management was the first Spanish manager to sign up to the aforementioned NZAM initiative, and it has already set a goal for 2030 to halve the net emissions of its assets under Net Zero management, that is, those for which There are measurement methodologies and emissions metrics.

For Elodie Laugel, director of responsible investment at Amundi, “the energy transition is not just a financial risk. With a deep awareness of our responsibility as a responsible global asset manager”, Amundi also joined the NZAM initiative. In their case, responsible investment has been a pillar since their creation and they are founding signatories of the UN Principles for Responsible Investment in 2006. “We understand that the systematic integration of ESG (environmental, social and governance) risks and opportunities in our investment decisions, together with financial analysis, is part of our duty to preserve and maximize the long-term interests of our clients”, indicates Elodie Laugel.

Decisions that add up

Stragglers. “The main conclusion of this COP26 may be that we should focus less on generic promises and more on the implementation of these”, summarized Giles Moëc, chief economist of Axa IM. Precisely, the entity has announced that it is reinforcing its actions to accelerate its contribution to a low-carbon world; for example, divesting from what they call climate laggards, or the entry into force of a strengthened investment policy for the oil and gas sector, with new exclusions to mitigate the industry’s adverse impacts on the environment.

Biodiversity. At La Financière de l’Échiquier they are convinced that the financial sector plays a crucial role in preserving biodiversity. That is why they have adopted a strict carbon emission policy and an ambitious climate strategy, for example by committing to integrate biodiversity criteria into their analyzes by the end of 2024, to measure the impact of their investments and to report on them with full transparency.

Millions. The global financial community has pledged to contribute €113 billion to reach the goal of zero emissions by 2050. “Much more is needed to reflect the obligation of the developed world to help mitigation and adaptation in the developing world,” says Eva Cairns, head of climate change at Abrdn.

Sources: Five Days