Some of the world's largest investors are urging companies to commit to climate action with science-based emissions targets aligned with limiting global temperature rise 1.5°C and a net-zero future.
Over 1,800 of the global companies with the highest emissions, such as Tesla, and Rio Tinto, have been contacted as part of a new campaign organised by the CDP, a non-profit which specialises in environmental reporting.
There are 137 financial organisations in the group co-ordinated by the CDP, including AXA Group, Legal & General Investment Management and Nikko Asset Management.
They are calling on high emitting companies to set science-based emissions reductions targets in line with the Paris Agreement's 1.5°C trajectory and achieve net zero emissions by 2050 at the latest.
The companies contacted account for 13.5 Gt of emissions (Scope 1+2) each year, equivalent to 25% of total global emissions, and also comprise 40% of the MSCI All-COuntry World index in aggregate.
"Climate change presents material risks to investments, and companies that are failing to set targets grounded in science risk losing out - and causing greater damage to the world economy," said Emily Kreps, global director of capital markets at CDP.
"Investors want to see accelerated corporate commitment that reflects the unprecedented challenge the planet faces. To make this possible, they expect companies to commit fully to ambitious targets grounded in science.
"With business resilience and adaptation to systemic risks exposed by the recent public health crisis, the tide is rapidly turning against companies not taking note of investor demands."
Why climate targets are important
Unless companies start taking action now to reduce their carbon emissions they could find it hard to be profitable in the future, according to CDP.
Previous research from the organisation highlighted how firms face $1trn of risk from the impact of climate change.
Hiroki Tsujimura, chief investment officer at Nikko Asset Management, said: "Nikko AM is committed to integrating ESG into its investment management processes, but this is only possible with strong commitment and transparent disclosure from companies, and the willingness of senior management to engage with investor.
"We hope this campaign will signal that investors are serious about climate issues, and emphasize the importance and urgency of creating a forward-looking science-based target, integrated with long-term corporate strategies."