COP26 will lead to legal action

Morningstar’s Hortense Bioy discusses the implications of the commitments made at COP26 for firms that are greenwashing

There will be more “naming and shaming” of companies that are greenwashing, and increased legal activity as a result of the announcements from COP26, said Morningstar’s Hortense Bioy.

Speaking to ESG Clarity during the second week of the Glasgow climate change conference, the global director of sustainability research and ESG Clarity committee member explained while there will be more collaboration within and across sectors, it will also mean more companies that are greenwashing or not aligning themselves with climate friendly initiatives will be exposed.

“We expect there to be more filing of shareholder resolutions, and more collaboration – we have already seen a lot but I think we will see more.

“But there will also be more naming and shaming as well as legal implications – like we saw with Shell. This will put more pressure on the biggest managers to really act on climate.”

Specifically, she said she looks forward to seeing what Blackrock comes up with after Larry Fink spoke on several occasions about the weight asset managers carry in terms of delivering on climate. ESG Clarity also reported how the CEO took aim at private companies for not pulling their weight on environmental commitments and initiatives.

“Blackrock have had since March to come up with net-zero targets and I look forward to what Larry’s letter comes up with in January. 

“This is going to be very challenging for the passive managers – I am not even sure how much companies like Vanguard can commit to net zero,” she pondered.

Make it happen

Overall, Bioy said she is positive on the news and initiatives coming out of the finance industry at COP26 but added “this is just the beginning.”

She highlighted the challenges around creating the ISSB standards that are applicable to so many different companies, as an example. “But we need to make it happen,” she adds.

She also expressed some slight disappointment that not all the asset managers involved in the Net Zero Asset Managers Initiative announced targets during COP26.

“We expected the first wave of signatories would come up with the target. I haven’t yet looked closely at those that have come up with a target, but I did notice there was quite a wide range.

“Some are not transparent enough, and don’t have a plan in place.”

Bioy added given the focus on private market capital mobilisation at COP26, she will be keeping an eye on the number of private equity firms that begin to announce net-zero plans.

She said: “The largest private equity firms should be making similar commitments to what the asset management industry has done over the next few months if they want to attract business.”


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...