“$37 trillion pressure group tells big emitters to meet 1.5°C goal”. What’s the CDP science-based targets campaign all about?

A Q&A with Bastiaan Pluijmers, Head of Investment & Strategy Research at Anthos Fund & Asset Management.

First things first, what are science-based targets?

“Science-based targets provide a clearly-defined pathway for companies and financial institutions to reduce greenhouse gas (GHG) emissions, helping prevent the worst impacts of climate change and future-proof business growth.

Targets are considered ‘science-based’ if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to 1.5°C above pre-industrial levels.”

What is the Carbon Disclosure Project (CDP)?

"CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Over the past 20 years they have created a system that has resulted in unparalleled engagement on environmental issues worldwide."

What is the CDP Science-Based Targets campaign?

"The CDP Science-Based Targets Campaign offers CDP capital markets signatories and supply chain members the opportunity to play a key role in accelerating the adoption of science-based climate targets in the corporate sector, by collaboratively engaging companies on this matter.

This unique campaign builds on CDP’s tried and tested collective engagement mechanism – and their experience as one of the founding partners of the Science-Based Targets initiative (SBTi) – to accelerate the adoption of science-based targets."

Why now?

"The latest Intergovernmental Panel on Climate Change report makes it clear that without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C will be impossible.

Science-based targets provide a roadmap for reducing emissions at the pace and scale that science tells us is necessary to avoid the most catastrophic effects of climate change.

Companies from across the globe must urgently set robust, credible targets via the SBTi as a first crucial step to keep warming below 1.5°C and ensure a safe future for people and planet."

Why did Anthos Fund & Asset Management (Anthos) decide to join the campaign?

"We decided to join the CDP in March 2022, seeing it as a valuable partnership to both learn from and share our experience when it comes to decarbonisation.

Typically the CDP launches a couple of engagement campaigns a year, mainly focused on getting companies to disclose TCFD-compliant information around their carbon footprints and policies. This year, they launched a new campaign that engages with high-polluting companies to get them to set 1.5°C aligned science-based targets.

After joining as a member, it was a no brainer for us to formally join this campaign for multiple reasons. Fundamentally, engagement and stewardship are one of the main pillars of our ESG policy. Next to that, we strive to influence real world change by pushing companies to change–if more high-carbon emitters are motivated to instate a proper SBTi target, this means change in the right direction. Last but not least, for us datapoints like SBTi-audited targets are vital to see how our portfolios are progressing on a path to decarbonisation.

Due to the fact that we are fund-of-funds investor, we are invested in thousands entities. It’s impossible to closely analyse all different investments to obtain a total view on decarbonisation efforts, hence clear datapoints like SBTi targets, that clearly summarize  decarbonisation efforts in one datapoint per company, are vital."

How does this fit into our plans as a responsible investor?

"We strive for real world change, which means we must do more than simply divest or ignore certain segments of the investible universe. We therefore want to maximise the leverage we have on companies we are exposed to. This engagement campaign really falls into the sweet spot two things: real change by convincing high-polluting companies to design and implement a policy to net zero (and verifiable due to the fact its pushing for SBTi targets), and maximising Anthos’s influence by adding our “AuM muscle” to a large group of institutional investors backing this campaign - $37 trillion’s worth of capital is compelling."

How do you expect this involvement will help us influence change?

"Normally, there is a fund layer in between us and the companies which tends to limit our direct engagement potential. In addition, due to the fact we are fund-of-funds, our portfolios are highly diversified with very little concentration in any one particular company which means we have relatively small investments in single companies.

But by joining this very targeted campaign, and joining forces with a large group of institutional investors, this problem is now a huge opportunity.

To get an idea of how much our involvement matters, please refer to the progress report for this campaign from 2021-22. Of course, we are relatively new to this campaign but we are convinced of its potential to help drive real world change. It will do this by encouraging heavy emitting companies to create credible net zero policies and action plans and more data transparency for us investors when they are due.

In turn, this helps Anthos achieve our and our investors’ net zero ambition while we still have time."