ExxonMobil and MetLife fail to meet LGIM’s climate change criteria

They include ExxonMobil Corporation, which did not meet some of the asset manager’s key minimum requirements, including on emissions reporting and targets.

Other companies facing the axe include Hormel Foods and Kroger, following low scores on governance and strategy and a lack of engagement, as well as Korean Electric Power Corporation, which was was the lowest-scoring company in its sector, particularly on measures of strategy and board composition. LGIM said the company also showed a lack of willingness to engage.

MetLife is among the divestment candidates following no response to engagement attempts, low scores in most categories of assessment, lack of robust climate governance, poor risk disclosure and limited visibility over climate-related opportunities.

LGIM bases its assessments of these firms through its annual climate change audit of six sectors: oil and gas, mining, electric utilities, car manufacturers, food retail and financials.

This year’s results reveal improvements in the average scores of all sectors, with those under most public scrutiny – such as oil and gas, utilities and car manufacturers – making great strides in disclosures and targets.  

Some companies were signalled out for praise. In the oil and gas sector, Equinor has agreed to provide more details about how its future investment plans in oil and gas exploration are consistent with the Paris agreement.

Royal Dutch Shell has adopted comprehensive emission targets, linked to executive pay, which include not just emissions from the company’s operations, but also from the burning of its oil and gas products.

Last year Rio Tinto became the first major miner to own no coal assets. This was followed by a step change in lobbying.

Similarly, BHP Billiton has indicated that coal is to be “phased out, possibly sooner than expected”, with the company having “no appetite for growth in energy coal regardless of asset attractiveness”.

Daimler has committed to a zero-emissions new car fleet by 2039. For its Mercedes subsidiary, it aims for electric vehicles to make up half of total sales in little more than a decade. An industry first, this is coupled with the introduction of targets for full carbon emissions.

Westpac, Citigroup, Commonwealth Bank of Australia and BNP Paribas are piloting climate change scenario analysis, with insurers Axa and Allianz also conducting scenario analysis on assets, as well as introducing stringent restrictions on coal investments and insurance.

Commenting on the research, Meryam Omi, head of sustainability and responsible investment strategy at LGIM, said: “Talks without action are no longer fit for purpose given the urgency to address climate change. We are enormously encouraged by the progress made by many of the companies.

“Companies at the bottom are catching up, while leaders continue to break new ground. But we know much more is needed, and will continue to push companies to build business models fit for a prosperous, sustainable future.”