US President Donald Trump’s announcement that the US will withdraw from the Paris Agreement, which commits the world’s major economies to significantly reducing greenhouse gas emissions, raises many questions.
02.06.2017 | 17:11 Uhr
President Trump did not announce an exit from the broader UNFCC climate framework[1] and appeared to leave the door open to renegotiation. However, yesterday’s announcement outlines a clear intent to revitalise industries directly or indirectly tied to domestic fossil fuel reserves. A number of headlines are negative and questions over future commitments will continue, but our view of climate change as a key investment focus remains unchanged.
The US contributes around 16% of global greenhouse gas emissions, second only to China. However, while the decision is disappointing it does not change our view that climate change will remain a key issue for companies to navigate in the coming years and decades. The decision will undoubtedly slow the pace of change in the US but we do not expect it to undermine global progress, for several reasons:
Corporates and capital markets have a huge role to play and there are encouraging signs of progress. Recent CDP research found that 48% of Fortune 500 companies have one or more climate change targets and 15% have set targets to buy or invest in clean energy.
In 2016, Schroders engaged with more than 80 companies to push for more robust climate strategies and transparent communication to investors. Over the last three years, Schroders has supported over 80% of the climate resolutions on which we were able to vote.
We are encouraged that a growing number of other institutional investors are moving in the same direction. In particular, the 62% shareholder support for a resolution that Schroders co-filed requiring Exxon to publish an annual assessment of climate policies on its business, is a clear indication of action on the issue. That success follows similar results at other major energy companies and puts the issue firmly on the industry radar.
As long-term, responsible investors we are deepening our analysis of the investment challenges and opportunities climate change represents, engaging companies to demand far-sighted and responsible strategies and supporting political and industry initiatives to address climate challenges.
Yesterday’s announcement is disappointing and represents a backward step in the journey towards decarbonisation. However, considering the progress that has been made and the commitment of most global leaders and many corporate executives, our investment view undoubtedly remains unchanged. We firmly believe that climate change will prove a key theme in the global economy, societies and financial markets. We are committed to developing the tools and pushing for the changes needed to help protect our clients’ investments.
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