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The Role of Investors in Combating Climate Change

Investor Pressure Means It’s Time to Exceed Expectations

At the end of 2021, there were 2,253 companies across 70 countries and 15 industries, representing more than one third of global market capitalization ($38 trillion USD), that had approved emissions reductions targets or commitments with the SBTi.

This means that sustainability and the global climate crisis are hot topics for both consumers and the news cycle and so it’s time to prepare for public pressure to tackle climate change.

BlackRock and Aviva Set the Stage

BlackRock and Aviva, two of the world’s most influential investment firms, recently vocalized their desire to see their corporate partners combat climate change. In 2021, BlackRock Chairman and CEO, Larry Fink, released his annual letter to CEOs. This letter stressed the impact of climate change on the environment and how businesses should adapt to set and meet ambitious climate goals. Fink calls on the hundreds of companies that BlackRock manages to produce plans to participate in a ‘net-zero economy’ by 2050. BlackRock itself also adjusted its stewardship principles to greater reflect its commitment to combat global warming and lead by example.

Based in the UK, Aviva also placed high emphasis on global warming mitigation. Amanda Blanc, Aviva’s CEO, has joined as co-chair of the Transition Plan Taskforce, which was created to mandate that large financial firms have a written and published plan for their contributions to a net-zero economy by 2050. These plans, introduced by the British Finance Minister, urge firms to publish their strategies for combatting climate change by 2023 and share their goals to meet the 2050 target.

Investor Influence Trickles Down to Your Business

The dominance of climate change concern has expanded from consumers, politicians, and businesses to include investors and larger shareholders as well. Investors are putting pressure on their companies because they understand that the worsening effects of climate change will wreak havoc on global economies. Many investors see they can influence a company to drive change and are doing so in creative ways. For example, BlackRock has exercised its ability to put companies ‘on watch,’ and vote against certain companies and directors that they deem aren’t doing enough.

Bottom line: investment firms and stakeholders are taking notes, so leadership needs to understand a carbon-light approach is key to safeguarding future investor support.

Investor Pressure is Cooking

Many investors are keenly aware of the impacts of climate change and are pressuring eco-conscious decision-making from the brands they own. With this shift in market pressure, businesses must adapt in order to be set up for long-term success. If investors are increasingly moving away from less eco-conscious companies with their investing dollars, companies who don’t change their strategies will fall behind.