Hedge fund TCI vows to punish directors over climate change
Christopher Hohn’s activist hedge fund TCI has outlined plans to punish directors of companies that fail to disclose their carbon dioxide emissions in a move that underlines rising investor concerns over climate change and the pressure on boardrooms to respond.
TCI has warned Airbus, Moody’s, Charter Communications and other companies to improve their pollution disclosure or it will vote against their directors and called for asset owners to fire fund managers that did not insist on climate transparency, according to letters seen by the FT.
“Asset owners should fire asset managers that do not require such disclosure,” Sir Christopher said. He also accused BlackRock, the world’s largest asset manager, of “greenwash” because it does not require emissions disclosures.
The decision by TCI, an activist fund with $28bn under management, comes as investors are becoming increasingly concerned about how climate risks will impact their portfolios. None of the world’s major financial centres have made climate risk disclosure mandatory, though regulators in London are weighing it.
“Investing in a company that doesn’t disclose its pollution is like investing in a company that doesn’t disclose its balance sheet,” said Sir Christopher, one of the highest paid fund managers in the industry. “If governments won’t force disclosure, then investors can force it themselves.”
TCI’s move comes ahead of UN climate talks in Madrid this week, and as Bank of England Governor Mark Carney — a strong advocate for more climate risk disclosure — announced he would take up a new post as UN envoy for climate action and finance from February
Sir Christopher, whose personal charity the Children’s Investment Fund Foundation donates around $150m a year to climate groups, said that it was time for investors to step up in the fight to save the earth.
“Major asset managers such as BlackRock have been shown to be full of greenwash,” he said, calling their record on voting for climate-relevant resolutions “appalling”.
“Investors don’t need to wait on regulators who are asleep at the switch and unwilling or unable to regulate emissions properly,” he said. “They can use their voting power to force change on companies who refuse to take their environmental emissions seriously. Investors have the power, and they have to use it. ”
Sir Christopher pointed to a report last week from InfluenceMap, a non-profit research group, which found that BlackRock and Capital Group were the least supportive out of the world’s 15 largest asset managers of climate-related shareholder resolutions which were covered in the study.
A spokesperson for BlackRock said: “BlackRock has the largest stewardship team in the world, and engaged 370 companies globally on the topic of climate risk in the past two years, more than five times the number of climate-related shareholder proposals that came to a vote over the same period . . . We put a priority on engaging with a company on addressing climate-related issues even in the absence of shareholder proposals.”
TCI has asked the companies in its portfolio to disclose their annual carbon dioxide emissions through CDP, an environmental non-profit consultancy, and to publish emissions reduction targets.
TCI, which has seen its main fund rise by 39 per cent this year, said the worst climate performer in its portfolio was Charter Communications, the telecoms group, in which it holds a 4.2 per cent stake. Charter’s failure to disclose any emissions data were “unacceptable”, TCI wrote in a letter. “The company must disclose its GHG emissions, GHG reduction targets and a low carbon transition plan,” the letter to Charter said.
A spokesman for Charter said the company was preparing to release its first emissions repot in coming weeks, but declined to provide an on-the-record response.
Other poor climate performers in TCI’s portfolio include Airbus, Moody’s, Anthem, Aena, Atlantia, Canadian Pacific, Getlink, and Univar — all of which have made some degree of disclosure, but received low grades from CDP.
In recent years groups such as BlackRock, Vanguard, Fidelity and State Street have all championed environment, social and governance products. Larry Fink, head of BlackRock, has been seen as a pioneer in this field because he has written missives — known as “Larry’s Letter” — to companies he invests in urging them to seek a sense of corporate purpose.
However, some environmental campaigners have become critical about whether BlackRock and others are meeting their lofty targets, since a growing part of these asset managers’ portfolios are run with passive strategies, based on indices, and automatically invested in companies with poor ESG records.
A spokesperson for Airbus said it was committed to sustainable aviation, and working to achieve net-zero emissions for its industrial operations by 2050. Moody’s did not respond to a request for comment.