A new programme has been launched to engage systemically important electric utilities in China, Hong Kong, Japan and Malaysia on climate-related issues.
It is being coordinated by the Asia Investor Group on Climate Change (AIGCC) and backed by 13 institutional investors and stewardship service providers, which are responsible for $8.8 trillion in assets under management.
The initial focus is five utility companies: China Resources Power Holdings in China; CLP Holdings in Hong Kong; Chubu Electric Power Co in Japan; Electric Power Development Co (J-POWER) in Japan; and Tenaga Nasional in Malaysia.
These utilities produce substantial greenhouse gas emissions, have large coal-fired power capacity or have a strategic role in driving the net zero emissions transition, said AIGCC in a statement. Collectively, it added, the five companies emitted roughly 285 million tonnes of CO2 in 2019, equivalent to the national emissions of a country like Spain.
“The transition of Asian utilities to net zero emissions will be critical for the world to meet its Paris Agreement goals to limit global warming,” said AIGCC executive director Rebecca Mikula-Wright. “Asian utilities are responsible for 23% of the world’s total carbon emissions. The average age of coal-fired power plants in Asia is only 13 years when compared to an average life of 40 years.”
Asian electric utility companies that are currently the focus of Climate Action 100+ were excluded from consideration.
Added Liew Tzu Mi, chief investment officer for fixed income, and chair of the sustainability committee, at GIC: “Helping these companies reduce their emissions while strengthening their disclosure and governance standards will not only advance the sustainability agenda, but ultimately protect and enhance their long-term value.”
The agenda for discussion between investors and companies includes strengthening the board’s accountability of climate risk, action to reduce emissions across the value chain, enhancing disclosure, identifying physical risks and ensuring companies are supporting policy in line with achieving net zero emissions by 2050.
“Investors understand that the success of the Asian electricity sector is critical to the region’s continued development, maintaining sustainable returns for beneficiaries and achieving a net zero carbon future,” explained Sophia Cheng, chief investment officer of Cathay Financial Holdings. “To achieve this, it is important investors work collaboratively with key companies through initiatives like the AIGCC Asian Utilities Engagement Program to ensure they are reducing climate risk and are well positioned to capitalise on the opportunities in clean technologies.”
These and other similar issues will be discussed at FinanceAsia’s upcoming event, ‘Financing Climate Change’, from 21-25 June. Click here for more details
