Investors pressure oil companies to improve reporting on climate risk

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News of BP joining other oil majors in lowering value of its assets amid global transition to cleaner energy signals campaign is working, investors say

The BP logo in London, the UK. Picture: REUTERS/Luke MacGregorInvestors managing £1.8-trillion in assets are widening a campaign pressing oil majors to better reflect climate risks in their accounting, and will soon target other businesses with heavy fossil fuel exposure, the group said on Monday.

But they have already begun lobbying building materials company CRH and plan to write to Anglo-Australian miner Rio Tinto, which supplies the steel industry. With cement, steel is a major source of greenhouse gases. Early last year, the investors began lobbying the Big Four accounting firms — EY, Deloitte, PwC and KPMG — to do more to ensure climate-related risks are adequately reflected in company financial statements they audit.

The campaign led by Sarasin & Partners emphasises the legal duty companies have to ensure their financial statements fully reflect how government moves to ratchet up climate action and the falling costs of renewable energy are likely to affect future profitability. The coalition includes Sarasin & Partners, M&G Investments, Jupiter Asset Management, NN Investment Partners and pension funds such as the Brunel Pension Partnership and Denmark’s PKA.Though it is difficult to independently assess the impact of the campaign, Landell-Mills pointed to a series of moves that align with the investors’ demands in letters sent to BP, Anglo-Dutch major Shell and France’s Total in November.

Total did not immediately respond to a request for a comment. Shell said it had “comprehensively responded” to similar demands by the investor group, and included climate risks in its accounts.

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