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Pedal to the mettle

13 October 2015 By Antony Currie

Volkswagen’s emissions scandal is fueling investor fears about the environment. Shareholders from 19 different firms managing a total of almost $1 trillion in assets are pushing the world’s 11 largest carmakers to disclose how pollution rules affect their business. Other industries have come under similar pressure. This campaign, though, also seeks information about the companies’ links to regulators and trade associations.

The investors, which include AXA Investment Managers and four units of the Swedish National Pension Funds, should have no trouble with the first request. Plenty of shareholders in other industries have already had success with that kind of activism.

Shell, BP and other energy producers, for example, acquiesced earlier this year to shareholder resolutions about environmental issues. The companies agreed to explain whether climate change might affect their businesses by, say, eventually making some operations unprofitable. Meanwhile, agricultural giant Bunge last month said it would adopt a policy of replacing as many forests as its operations destroyed. Rival Archer Daniels Midland made a similar commitment last March.

Carmakers have recently been targets of major studies on carbon dioxide emissions. Earlier this year, environmental research firm CDP examined how quickly 14 of the top 16 global vehicle manufacturers were reducing the amount of carbon dioxide their products wheeze into the atmosphere. Some 800 investors with a total of $95 trillion of assets rely on CDP data.

It may be tougher to extract details of how companies deal with their regulators – and how much money they give to trade groups that advocate on their behalf. Some countries may limit the release of such information. And shareholder resolutions requesting lobbying data often garner little support at annual meetings.

That these 19 investors are even asking, though, is a sign that buyside firms are willing to let climate issues take the wheel. The transportation industry is a huge polluter, accounting for some 27 percent of CO2 emissions in the United States, according to the Environmental Protection Agency. That VW managed to hoodwink the EPA, and others, for the past seven years shows just how much additional disclosure is needed.

 

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