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Oct. 2, 2019, 9:08 a.m. EDT

Companies are too slow with shift to carbon neutral, say investors with $35 trillion at stake

Climate Action 100+ report card finds that only 9% of the most polluting companies are aligned with 2 degree warming targets

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By Rachel Koning Beals

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Read : Demand for climate-proofed portfolios was a key proxy-season theme this year

Even with investor interest on the rise, these voices are often little match for corporate lobbying interests. Reform in this area remains a key focus of the Climate Action 100+ group as investor advocates believe that many companies still engage in “obstructive, negative or evasive lobbying” usually in favor of fossil fuels over cleaner alternatives.

Don’t miss : Climate change could impact your mortgage even if you live nowhere near a coast

Analysis shows that 77% of the companies targeted by the group have clear board responsibility for climate, but nearly all companies perform very poorly on alignment of their climate lobbying activities. Less than 8% of companies have alignment between the lobbying undertaken by their industry associations and their stated policy position.

In September, 200 institutional investors with a combined $6.5 trillion in assets under management announced they are calling on 47 of the largest U.S. publicly traded corporations to align their climate lobbying with the goals of the Paris Agreement, warning that lobbying activities that are inconsistent with meeting climate goals are an investment risk.

The group’s leadership claims that even if the two-year participation results have been slower than hoped for, mounting interest even as recently as the last few months has been notable. “We must now build on the momentum achieved to date if we are to succeed in addressing the climate crisis and safeguarding investments on which the futures of millions of pensioners depend,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change and a Climate Action 100+ steering committee member.

Institutional investor buy-in is established, but anecdotal evidence and polling show that individual investors near to or in retirement tend to consider climate risk a low priority .

Cynthia McHale, senior director of insurance with Ceres and a senior director of the Climate Action 100+, was asked by MarketWatch in an interview why individual investors appear more reluctant to add climate worries to their portfolio checklists.

“There are still instances of heads-in-the-sand, but money managers get it,” she said. “Innovation should lead the decision-making. After all, venture capital is not going to oil and gas but into the materials we need for decarbonization. Investors should be asking, Where’s the money flow? Look at the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.81%  [in which the energy-stock weighting has steadily dropped to about 5% by mid-2019 compared to the 21% for index-leading information technology].”

“Is this climate-issue reluctance among dividend investors? These are not growth investors,” McHale said.

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May 24, 2022 4:55p

Rachel Koning Beals is a MarketWatch news editor in Chicago.

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