ESG Essentials: Greenwashing accusations and climate coalition departures

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Corporates and trade associations accused of greenwashing in new Planet Tracker report 

The battle over climate transition plans is shifting from lobbying management and shareholder meetings to legal courts and legislative lobby. Climate activists have influenced this change and have increasingly been going to court to force companies to adopt more ambitious climate transition plans.

Two years ago, a Dutch court ordered Royal Dutch Shell to lower its carbon emissions by 45% following a complaint from several climate groups, and there has been a litany of climate cases against companies ever since.

Trade associations are also finding themselves increasingly in the eye of the storm regarding climate activists and NGOs. This week, Planet Tracker released a report urging corporations to reassess their affiliation with trade associations misaligned with the Paris Agreement.

According to Robin Millington, Planet Tracker’s CEO, the report highlights that “greenwashing can be very subtle and very clever,” pushing readers to question why companies that are sincere in pursuing climate goals are happily linked to trade associations that diverge from their environmental objectives. 

JP Morgan amongst investors to leave climate coalition

JP Morgan and State Street’s investment arms have both left the global investor coalition Climate Action 100+ (CA100+), withdrawing nearly $14 trillion in assets. BlackRock has also shifted its membership to the international arm of CA100+, reducing its involvement. 

This move comes after CA100+’s call for stronger action against climate change, with State Street arguing that its priorities threatened the firm’s independence. Additionally, financial institutions have faced mounting pressure in the US from Republican politicians who argue that collective action could be breaching certain laws. 

The departure of these large companies from the coalition raises questions about the future of shareholder activism on ESG issues.

Investors call for child labour transparency

A shareholder proposal aimed at increasing transparency on child labour risks at Tyson Foods, the Arkansas-based meat processing giant, has been rejected.

In February 2023, the US Department of Labor (DOL) found that more than 100 children were illegally employed by Packers Sanitation Services (PSSI), a company that contracts with meat-packing companies to clean slaughterhouses. Some children were employed at two Tyson facilities in Arkansas and Tennessee.

Despite growing evidence that child labour violations are growing, the proposal was unsuccessful. It sought an audit that assessed Tyson’s policies and practices related to child labour and engaged stakeholders for solutions. 

The failure to pass the resolution at Tyson’s AGM is attributed to the company’s dual-class share structure, which allows the Tyson family to control much of the company’s actions. Investors are urged to persist in their engagement efforts to address child labour protection.

New research urges asset owners to invest in the blue economy 

According to new research, asset owners must prioritize the world’s oceans and marine life to address climate and nature crises. The ocean economy, worth $2.5 trillion annually, has attracted only $13 billion in sustainable investment over the past decade.

Recent reports have shown that a minimum of US$175 billion a year will be needed between now and 2030 to achieve UN SDG 14 on life below water, which aims to conserve oceans and marine resources for sustainable development. Recent agreements on the Global Biodiversity Framework and the High Seas Treaty should reassure asset owners that investments in the blue economy are crucial to supporting international goals.

The research provides recommendations for asset owners, such as engaging with investment managers and portfolio companies on marine biodiversity to limit harmful impacts and understand portfolio dependencies on the ocean. Asset owners are also encouraged to use their voting power to encourage marine conservation and sustainable business practices and follow existing guidance to help institutional investors identify credible investment opportunities, including blue-themed bonds. Late last year, Planet Tracker proposed a novel Blue Recovery Bond, to invest capital in fisheries in exchange for a temporary reduction in fishing and help improve the health of fish populations that billions depend on worldwide. 

The research also highlights some easy wins for asset owners interested in the blue economy, including long-term investments in sewage infrastructure and engaging with water companies to reduce harmful sewage practices.

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