The REP Wrap: Companies accepting lower hurdle rates for climate projects
Your weekly summary of corporate sustainability news.
More than 40% of CEOs say their companies have reduced the minimum acceptable rate of return for climate-friendly investments, compared with other investments. PwC’s latest annual survey of nearly 5,000 CEOs globally found that nearly a third expect climate change to alter the way the do business over the next three years, compared with less than a quarter over the previous five years. Hurdle rates were between one and four percentage points lower for climate-friendly projects, which PwC said was “clear evidence that some CEOs are willing to make complex trade-offs as they strive to boost the sustainability of their businesses”. The practice was especially common in Asia-Pacific, according to the study, “even though [CEOs in the region] were no more likely than CEOs elsewhere to report feeling highly or extremely exposed to climate change”.
Australian waste management business Sims Ltd has landed the top spot in Corporate Knights’ ranking of the world’s most sustainable companies. The Canadian research house has published the annual league table for 20 years, based on information about emissions, tax practices, pay and investment into green growth. Sims leapt from 14th place to first this year, while fellow Australian firm Brambles, which specialises in manufacturing, came in second. Danish wind giant Vesta fell from second to third, followed by Taiwan’s High Speed Rail Corp.
European Parliament has signed off on rules to “empower consumers for the green transition”. The legislation seeks to update various existing rules in an attempt to clamp down on greenwashing. It pushes for green claims made by companies to be backed up by evidence and targets, and be verified by a third party. It wants them to be benchmarked against “excellent” environmental performance, as laid out in existing environmental standards. The provisional agreement now has to be formally adopted by Parliament and Council.
The Global Reporting Initiative and the IFRS Foundation have teamed up explain the interplay between the two bodies’ standards on GHG emissions. The analysis maps “the areas of interoperability a company should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 GHG emissions in accordance with both GRI 305: Emissions and IFRS S2 Climate-related Disclosures,” the pair explained.
Murray Auchincloss has insisted that BP will continue its transition away from oil, in a statement confirming his position as the firm’s CEO this week. After three months as interim CEO, Auchincloss has taken the role on permanently. BP has been at the centre of controversy after rowing back on its climate strategy as a result of the European energy crisis, but Auchincloss said the oil major’s “strategy – from international oil company to integrated energy company, or IOC to IEC – does not change. I’m convinced about the significant value we can create.”
Meanwhile, Shell’s board is facing pushback from 27 investors about its emissions reduction targets. Dutch campaign group Follow This is coordinating support for a shareholder resolution to be tabled at the oil major’s May annual meeting, which will ask it to align its medium-term targets with the goals of the Paris Agreement.
The world’s biggest investment house seems to have softened its position on portfolio companies meeting net zero. In its latest climate expectations, BlackRock said it “is not our role to engineer a specific decarbonisation outcome in the real economy”, arguing that its sole responsibility was to help its clients navigate investment risks and opportunities. In the same document from 2021, on the other hand, it told companies they were expected to “articulate how they are aligned to a scenario in which global warming is limited to well below 2°C”.