Investors managing more than $4tn in assets have called on Europe’s 13 largest chemical companies to transition away from fossil fuels and reduce their carbon emissions.
The investors, including Legal & General Investment Management, Amundi, and EFG Asset Management, argue that the chemicals industry’s contribution to greenhouse gas emissions has been overlooked and that action on decarbonization is not optional.
In a joint statement published this week, the investors called for credible decarbonization plans that include electrifying production processes, switching to green energy sources, and replacing raw materials with emissions-neutral alternatives instead of relying on fossil fuels.
They also recommended eliminating woody biomass as an energy source.
ShareAction, the responsible investment NGO that coordinated the investor statement, highlighted the chemical industry’s reliance on fossil fuels as “often overlooked as a major contributor to global warming.”
Penny Fowler, Head of Corporate Climate Campaigns at ShareAction, said the push towards renewable energy is essential as investors are increasingly demanding sustainable practices from companies.
The investors’ letter was delivered to BASF, LyondellBasell Industries, Yara, and other large chemical firms.
While some companies have already set ambitious targets for reducing greenhouse gas emissions, others have yet to respond to the letter.
In December, LyondellBasell increased its greenhouse gas reduction target for both direct and indirect emissions by 2030, but companies such as BASF and LyondellBasell did not immediately respond to requests for comment.
Norway’s Yara, expressed its ambition to become climate neutral by 2050 and has already set targets for further reductions while taking part in developing the Sectoral Decarbonization Approach for the chemical industry to align their climate targets with the goals of the Paris Agreement.
The investors have urged companies to take heed and establish credible decarbonization plans that reduce carbon emissions and promote sustainability.
The move towards a low-carbon economy is underway, and companies that fail to adapt risk being left behind.
The chemicals industry must take steps towards decarbonization to become a leader in sustainability and contribute to a more sustainable future.