$4trn investor coalition presses chemical company CEOs on climate commitments

15 investors 'deeply concerned' Europe's chemical companies not transitioning fast enough

Legal and General Investment Management, KBI Global Investors and Amundi are among a $4trn coalition of 15 investors who have written to the 13 biggest chemical companies in Europe to insist they set a path to transition away from their reliance on fossil fuels in order to live up to the climate policies many have publicly committed to.

In a joint statement coordinated by NGO ShareAction, investors said they were “deeply concerned” that major European chemical companies are “not moving fast enough to help the world keep global warming to 1.5C”.

Penny Fowler, head of corporate climate campaigns at ShareAction, added: “With a globally significant carbon footprint, the chemicals industry’s huge reliance on fossil fuels is often overlooked as a major contributor to global warming.

“It is time Europe’s chemicals industry turned high-level commitments into practical deeds and set out a clear path of how they will transition and transform the industry from reliance on climate damaging fossil fuels to cleaner and greener energy sources.”

The statement was directed at Air Liquide, BASF, LyondellBasell, Covestro, Croda International, EMS-Chemie Holdings, Evonik Industries, Givaudan, Koninklijke DSM, Lanxess, Solvay, Symrise and Yara International.

Citing research by Carbon Brief, the investor coalition warned any hope of staying within 1.5C of warming could vanish within six years if the world sticks to current rates of carbon consumption.

They have asked to meet with CEOs again this year, following engagements with the companies that began in 2021, and have set out five expectations for chemical companies, to:

  1. Set out and disclose a plan over the short, medium and long term, with intermediate targets, to: a) phase in electrified chemical production processes, with the aim of transitioning to 100% electrified processes by 2050; and b) increase energy consumption from renewable energy sources, with the aim of transitioning to 100 per cent renewable energy by 2050.
  2. Set out and disclose a plan over the short, medium and long term, with intermediate targets, to phase in non-petrochemical feedstocks that are emissions-neutral over their entire lifecycle, with the aim of transitioning to 100% emissions-neutral feedstocks by 2050.
  3. Set Scope 3 targets that are aligned with 1.5C low/no overshoot pathways covering all relevant upstream and downstream emissions.
  4. If relying on woody biomass, which can be more polluting than coal, phase it out from direct and indirect energy generation by 2050 at the latest.
  5. Explicitly commit to align capital expenditure plans with the objective of limiting global warming to 1.5C without overshoot; and disclose future capital spending on new and existing assets broken down by the type of asset, and by plant/facility, across all geographies.

Making strides

Progress from chemicals companies is starting to be seen. In December last year, LyondellBasell introduced a target to reduce Scope 3 emissions by 2030, following pressure from ShareAction and CA100+, including with the former’s benchmarking report analysing the company.

Outside Europe and the coalition’s current engagement statement, Saudi Basic Industries Corporation (Sabic), has this week announced it has joined the Value Balancing Alliance (VBA), a nonprofit organisation working to develop a methodology for measuring the value companies provide to society, the economy, and the environment.

The Saudi-based chemicals company will be part of a group that will pilot VBA’s methodology in day-to-day applications to test its feasibility, scalability, comparability and connectivity to existing systems. Sabic will then exchange learnings and implications for decision-making and steering to inform further refinements to the methodology.

Vincent Kaufmann, CEO of the Ethos Foundation, said: “The progress we have seen over the past 18 months, with some companies setting increasingly ambitious targets and transition plans, indicates that sustained investor engagement is important and effective.

“Investors will continue to engage these companies to set credible 1.5°C-aligned strategies. This is the only way to ensure long-term profitability and competitiveness, as well as a liveable planet for the future.”


Natasha Turner

Natasha is global editor at ESG Clarity, part of Mark Allen Financial, and has been a financial journalist for seven years. She has been shortlisted for Story of the Year and Investment Journalist of the...