Global investors are pressuring Asian utilities to reduce emissions

Global investors, including JPMorgan and Fidelity, will demand that five of Asia’s most polluting power generation companies cut their greenhouse gas emissions as part of a new climate change commitment program.

The investor group, which has combined assets of $ 8.8 million, will target utilities in mainland China, Hong Kong, Japan and Malaysia that operate large coal operations. Together, these power companies produced approximately 285 million tons of CO2 in 2019, equivalent to Spain’s national emissions, according to the program’s sponsors. Other investors include the asset management arms of BNP Paribas and Amundi in Europe, as well as the Japanese Sumitomo Mitsui.

It marks the latest impetus for global investors to force major polluters to reform their businesses and act on climate change.

China Resources Power Holdings, Hong Kong’s CLP Holdings, Malaysian Tenaga Nasional Berhad, Japan’s Chubu Electric Power and J-Power have been alerted to the commitment program, which will be launched on Monday.

Utilities have been singled out by investors because they produce substantial greenhouse gas emissions, have a large capacity for coal energy, or are considered by investors to be a strategic role in achieving a global emissions target. net zero, according to documents seen by the Financial Times.

The program is coordinated by the Asian Climate Change Investor Group, which has 56 members from 13 countries and manages more than $ 15 billion in assets.

“Asian service companies are responsible for 23% of global carbon emissions,” said Rebecca Mikula-Wright, executive director of AIGCC. “The transition of Asian utilities to zero net emissions will be critical for the world to meet its Paris Agreement targets to limit global warming to 1.5C.”

Under the program, investors will challenge the accountability of companies for their advice on climate risk, how they can phase out the use of coal in a manner consistent with the goals of the Paris Climate Agreement, its dissemination and how they can reach zero net emissions by 2050.

The initiative will be developed in parallel with a similar scheme persecuted by the Climate Action 100+ initiative, an influential global investment group with more than 500 members, including BlackRock and Pimco.

Paul Milon, head of custody in Asia Pacific at BNP Paribas, said the new program would target some of the Asian service companies that are not yet covered by the Climate Action 100+ initiative and are heavily dependent on coal.

“We believe that maintaining a constructive dialogue with these focused companies can facilitate their transition to zero-net emissions,” he said.

There are “strong expectations of investors towards companies, in terms of what they need to do to meet our own expectations to continue investing in these companies in the medium and long term.”

J-Power said it was promoting the use of carbon-free hydrogen for power generation and that it had set a provisional target to reduce CO2 emissions by 40% by 2030 compared to 2017-19.

CLP said: “We welcome the commitment and look forward to discussing our decarbonisation plans with AIGCC.”

Chubu Electric Power declined to comment.

China Resources Power and Tenaga did not respond to requests for comment.