ESG Essentials: Church of England votes against Shell executives, the livestock industry and plastic pollution policies

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Church of England Pension Board Loses Confidence in Shell

Investors have announced their plans to vote at the upcoming AGM against Shell’s Chair and Directors, as well as their transition plan update, in a move that maintains pressure to increase efforts to cut greenhouse gas emissions.

The Church of England Pension Board has lost confidence in the company, arguing that it is prioritising short-term returns without considering medium to long-term risks. The Church is also publicly backing the Follow This resolution which pushes ‘Big Oil to go green’.

This investor action reinforces the message that the transition towards a low-carbon economy is a present imperative. Energy companies must prioritise long-term sustainability over short-term returns in a rapidly evolving energy landscape, or risk losing the trust and support of investors and stakeholders.

Climate Change is putting livestock companies at risk: can they handle the heat?

By 2030, the top forty global livestock companies could see profits fall by nearly $24 billion due to projected increases in costs in a high emissions scenario, according to a new report released by the FAIRR Initiative. Feed is projected to be the largest driver of cost increases, particularly in North America.

Not only does the meat and dairy industry contribute to climate change, but it is uniquely exposed to its effects. Physical risks including heat stress, crop failure, and water shortages can all result in increased operational costs and disruption of supply chains.

Additionally, livestock producers in Latin America and elsewhere may be subject to indirect carbon pricing as a result of regulations that limit deforestation (and thereby the amount of grazing land available) or the voluntary carbon offset market, which in Brazil is already encouraging landowners to preserve forests rather than clear them for cattle grazing.

Climate risk is a material issue for the animal agriculture sector, and it is crucial investors and companies act now or risk facing a problem that gets harder to swallow.

Delegate disagreement at COP28

The incoming president of  COP28 sparked concerns this week during his speech at the Petersberg Climate Dialogue in Berlin, during which he said that fossil fuels would “continue to play a role in the foreseeable future”.

Sultan al-Jaber, also the head of the Abu Dhabi National Oil Company, advocated for maintaining “all sources of energy” while adopting carbon capture and storage (CCS), a technique that has not yet been scaled up, to lessen emissions from power plants and other fossil fuel-dependent industries.

However, other ministers and delegates argued the opposite point – that we must end reliance on fossil fuels in order to dramatically reduce emissions and that reliance on CCS represents a business-as-usual attitude that disincentives meaningful action.  

Disagreements over how to address fossil fuel usage and reduce emissions can result in policy uncertainty, regulatory risks, and market volatility, which can all impact investment returns.

Investors sound alarm over weak corporate plastic pollution policies

An urgent statement for action has been released this week by a coalition of 185 investors, urging companies to significantly improve their efforts to reduce plastic waste amid increasing costs and risks. 

The investors, who collectively hold $10 trillion in managed assets, want to see companies such as supermarkets, retailers and consumer goods firms significantly reduce material consumption, eliminate single-use packaging, and rapidly expand reusable packaging systems. 

Given the tightening of legislation globally and the potential threat to brand value and reputation, the investors claim that companies that do not proactively address these risks will be exposed in a way that endangers long-term value creation and investment returns.

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