3 November: Lendlease delivers annual ESG report against background of COP26
PRESS RELEASE: As global leaders continue to negotiate a lower carbon future at COP26, Lendlease today reported the company’s significant progress against its ambitious ESG commitments during FY21, including industry leading carbon reduction targets.
Initiatives including veggie-powered construction equipment, rubbish-digesting maggots and plant-loving solar PV panels are examples of Lendlease’s commitment to trialing technologies during the past year that will help it make progress against its industry leading targets.
Speaking at the annual Sustainability Market Briefing, Lendlease Sustainability Head Cate Harris told investors, analysts and stakeholders about the significant inroads made by the company towards achieving its net zero carbon target by 20251 – and absolute zero carbon by 20402 – as well generating $250 million in social value by 2025.
The briefing comes in the wake of Lendlease funds and assets under management being named among some of the most sustainable in the world, with GRESB – the global sustainability benchmark for real estate assets – placing four of 17 Lendlease funds in the global top 10.
Quotes from Cate Harris, Group Head of Sustainability and Lendlease Foundation
“In FY21, Lendlease offset 23 per cent of our Scope 1 & 2 emissions – meaning we’re well on our way to offsetting 100 per cent of our residual carbon emissions to achieve Net Zero Carbon by 2025.
“We also made significant progress on our target of being powered by 100 per cent renewables by 2030. In FY21, 33 per cent of our electricity use was drawn from renewables and our Europe business is now powered entirely by renewables including every project, site and office.
“As part of our plan to phase out diesel and gas, we trialed the use of biofuels including hydrotreated vegetable oil in the UK and biodiesel in Australia to power onsite equipment including cranes, generators, boom lifts and excavators.
“We are working closely with our supply chain partners to start the engagement necessary to set pathways to achieve absolute zero carbon by 2040. This has included becoming one of the first companies globally to join SteelZero as well as becoming a founding member of MECLA, the Materials and Embodied Carbon Leaders Alliance in Australia.
“In recognition of the active contribution Lendlease makes to the communities in which we operate, the company evaluated $47.2 million in social value, from a number of shared value partnerships during FY21. This represents 18.9 per cent of our 2025 target.
“Social value initiatives included a mental health and suicide prevention program for unions and contractors on our construction projects in the US; a women in entrepreneurship program in Kuala Lumpur; restoration and conservation activities on three islands in The Great Barrier Reef; and a skilling and job placement program in Italy to enhance social inclusion for offenders in the Milan prison system.”
27 October: Press Release from Race to Zero, a “UN-backed, global campaign to rally leadership and support from all non state actors for a healthy, resilient, zero carbon recovery.”
Responsible for an astounding near 40 per cent of all greenhouse gas emissions, the built environment is a driving force behind global climate change mitigation efforts. The range of actors across the sector – from architects, engineers, construction companies to asset managers – have recognised their power to act by signing up in waves to the Race to Zero through which they have committed to achieve net zero carbon by 2050 at the latest.
In the year leading up to COP, the campaign has resulted in hundreds of companies globally committing to the Race to Zero. Highlights include:
• USD 1.2 trillion real estate assets under management are part of Race to Zero
• Percentage of construction companies in the Race to Zero doubles in the two months prior to COP26
• Over 100 SME construction companies across 10 countries join Race to Zero
• 2030 Breakthrough reached as 20 per cent of Architects and Engineers join the Race to Zero
Race to Zero members are committed to the same overarching goal: halving emissions by 2030 and achieving net zero emissions by 2050 at the very latest.
Signatories are required to publish their action plans for delivering against their commitment on an annual basis. These acts send a clear signal from businesses to policymakers that the private sector is taking meaningful action on climate change. That they are investing in the low carbon solutions needed to move the dial and they require policymakers to put in place the regulations, guidance, and incentives to facilitate the transition.
For real estate assets under management, globally USD 1.16 trillion of property assets under management now have a net zero carbon commitment. This means that these real estate asset management companies will need to bring their property portfolio to net zero carbon across all scopes of emissions that relate to whole life carbon.
Within the built environment, construction companies lie in a sub-sector that is notably challenging to decarbonize. Nevertheless, the commitment from these parts of the sector is strong and growing despite the challenges.
In fact, the percentage of construction companies signed up to the Race to Zero doubled in 2021. This effort from large businesses is reinforced by SME action. Over 100 SME construction companies from 10 different countries have made net zero carbon commitments through the SME Climate Hub.
The Race to Zero Campaign underpins the UN High-Level Climate Champions 2030 Breakthroughs Campaign. These breakthroughs are derived from the Climate Action Pathways, a set of comprehensive roadmaps to achieve the Paris Climate Agreement in line with 1.5 degrees Celsius across all sectors. They centre around breakthrough targets, which are the proportion of a sector that is signed up to the Race to Zero by COP26. This target is 20 per cent.
A number of built environment sub-sectors hit this breakthrough. Notably, in the month leading up to COP26, the 20 per cent breakthrough target for global architects and engineers to join the Race to Zero was reached.
This momentum continues to ripple through the built environment. The Race to Zero is an umbrella campaign – driven by science – that aggregates credible, existing initiatives to become net zero, absolute zero, or climate positive from a range of leading networks and initiatives across the climate action community. These initiatives pave the way for a successful built environment specific day at COP26. The Cities, Regions and Built Environment Day will highlight the efforts made to commit to net zero carbon through the Race to Zero and outline key topics to be taken forward after COP26 to transition the built environment towards a resilient, zero carbon future.
“Winning the Race to Zero means prioritising net zero infrastructure and buildings. We celebrate further, faster climate action from cities and businesses, and expect the entire industry to transform at scale in a just and equitable way. Through deep collaboration, businesses and governments can ensure our sector delivers a safe and prosperous future for everyone, everywhere,” Cristina Gamboa, chief executive, World Green Building Council.
“2021 has been the year of net zero carbon commitments. The built environment has seen a groundswell of companies of all sizes committing to achieve net zero carbon by 2050 at the latest, sending a clear signal to government that they are ready to invest in and drive this transition,” Nigel Topping, UK high-level climate action champion.
“The built environment is where life happens, it is where our homes, offices, and leisure centres are. With just under 40 percent of global emissions coming from the built environment, it is therefore central to driving meaningful action on climate change. Majid Al Futtaim has been dedicated to this cause through its Net Positive Strategy since 2017. We are proud to reaffirm our commitment by joining the Race to Zero, joining other industry leaders on delivering a net zero carbon future,” Ibrahim Al-Zubi, chief sustainability officer, Majid Al Futtaim.
“The importance of the Race to Zero campaign could not be clearer. Every sector of every community needs to take action now to decarbonise to limit global warming to 1.5?C by 2050. For decades, SOM has promoted innovative design solutions to reduce the carbon impact of the building sector, which is responsible for almost 40% of global carbon emissions. We are proud to join the Race to Zero commitment, joining other global leaders on delivering a carbon-free future,” Kent Jackson, partner, Skidmore, Owings and Merrill (SOM)
25 October 2022: during COP26, the Business Council for Sustainable Development Australia will be hosting a daily online news program to discuss the latest developments and insights with delegates and observers from the UN Glasgow climate conference.
BCSD Australia chief executive Andrew Petersen will host G’day Glasgow: The BCSD Australia COP26 Daily News Program daily from 6:00 – 6:30pm AEDT from 1-12 November, excluding 7 November, and will include guest speakers live from Glasgow as well a business leaders in Australia.
Click here for the link to the media release on the BCSD Australia website. This will be promoted on BCSD Australia’s LinkedIn and Twitter accounts at 9am AEDT tomorrow (Monday, Oct. 25).
If you are going to be at COP you’re also invited to join the news program, which you can register for here.
22 October 2021: From S&P Global Sustainable1, a new report: Asset Owner Perspectives on Climate Change Measurement, Management and Reporting in Australia.
The report shares insights from leading asset owners who attended a round table event hosted by S&P Global Sustainable1.
Key asset owner perspectives from the report:
- The federal government’s lack of a clear policy model on climate change is complicating the situation and putting Australia at risk of capital flight as more domestic and international investors look for green opportunities. Change is happening within the government, but at a slow pace.
- Members, regulators, the urgent need to manage climate change and government are placing many demands on super funds today, and are often working at cross purposes. In the end, the super funds look to their fiduciary duty to do what’s right to protect and grow the retirement assets of their members
- The lack of available data is being used as an excuse by some for not taking action, but this is viewed as a poor reason since investment managers are used to working in a world of uncertainty and valuing investments on a forward-looking basis.
- There are concerns about the lack of consistency and comparability of climate reporting,making it difficult to undertake reliable cross-company assessments. This is not a universal issue, however, as some industries and companies want the leeway to frame analysis in a way that supports their particular longer-term strategies. Getting consensus on robust, credible and consistent scenario analysis is critical for comparability and better informed decision-making. Asset Owner Perspectives on Climate Change Measurement, Management and Reporting in Australia
- Scenario analysis should be a decision-making tool to understand the complexities of climate risk and the impact on portfolios. This is more difficult for funds that have many investments across industries, asset classes and jurisdictions. Dictated, top-down scenario analysis may not give the granularity needed to provide valuable insights on asset allocation strategies. In addition, being too prescriptive suggests a level of understanding that just doesn’t exist, especially when looking out as far as 2050.
- In the end, there are many challenges, but it’s time to move forward and find solutions. Much is known about the path to 2030, so it’s best to focus on what can actually be done versus worrying about the longer-term projections. Technological solutions can also come from many directions. No-one expected renewables to move as quickly as they did, for example.
The full report can be found here.
21 October 2021: Following is a lightly edited letter from the International Corporate Governance Network to the United Nations Climate Change Conference of the Parties 26
Via email: email@example.com
20 October 2021
Dear Minister Sharma,
Re: ICGN Statement of Shared Climate Change Responsibilities to the United Nations Climate Change Conference of the Parties 26 (COP 26)
I have pleasure in sending you a Statement from the International Corporate Governance Network (ICGN) regarding climate change related priorities for governments and capital market participants.
Led by investors responsible for assets under management of over $59 trillion, and bringing together companies and stakeholders, ICGN advances the highest standards of corporate governance and investor stewardship worldwide in pursuit of long-term value creation, contributing to healthy and sustainable economies, society, and environment.
ICGN engages with policy makers around the world to advocate for high standards of corporate governance, primarily from the perspective of long-term institutional investors. In this regard we have taken the liberty of articulating a series of priorities relevant for governments, investors, companies, and auditors which we hope will be useful to the deliberations at COP 26. I attach the Statement for your perusal and highlight the following priorities for your consideration:
- For Governments: Publish action plans and commit funding for achieving net-zero carbon emission targets, including carbon pricing, eradication of fossil fuel industry subsidies, phasing out coal-based electricity generation and strengthening Nationally Determined Contributions for 2030 in line with the Paris Agreement.
- For Investors: Publicly commit to science-based targets on how investment portfolios will achieve net-zero carbon emissions by 2050, improve quality of climate-related disclosure, and integrate financial, natural, and human capital considerations into stewardship activities across asset classes.
- For Companies: Publicly commit to science-based targets on how the business will adapt to net-zero carbon emissions by 2050 aligned with company purpose and long- term strategy. Transition plans should include assessments of physical, transition and liability risks and opportunities based on climate change scenario analysis.
- For Auditors: Ensure the application of guidance related to climate change risks in planning and performing audits on financial statements as provided by standard-setters. Commit to discharging obligations under professional standards as external auditors with quality, integrity, and independence.
Much of ICGN’s work is guided by the ICGN Global Governance Principles which were established in 2001 and are used by ICGN Members in their voting policies and company engagements. The ICGN Principles were updated this year with specific reference to climate change under guidance 7.5 as follows:
“The board should assess the impact of climate change on the company business model and how it will be adapted to meet the needs of a net zero economy as part of a long-term strategy. This includes setting and disclosing targets to reduce carbon emissions and a period for achievement. Where climate change risks, whether physical or transitional, are identified as material and relevant, reporting should include discussion of the diligence process, strategy, metrics, targets and initiatives used to manage the risks. Disclosure around these actions would help investors understand the resilience of companies facing climate change risks and to assess progress towards achieving net zero targets.”
As we advance towards a net-zero carbon emission economy by 2050, strong corporate governance, and investor stewardship, supported by common sustainability reporting standards and reporting, will be critical. ICGN’s Statement sets out priorities for companies, investors, auditors, and governments to clearly identify challenges, determine solutions, and implement assertive action. It is in this spirit that we share our Statement with you and hope that our comments are helpful.
We remain at your disposal should you wish to engage with ICGN on the positions outlined in our Statement and wish you a successful 26th United Nations Climate Change Conference.
Chief Executive Officer, ICGN Kerrie.firstname.lastname@example.org
Cc: George Dallas, ICGN Policy Director (George.email@example.com) Robert Walker, ICGN Sustainability Manager (firstname.lastname@example.org)
The full statement ICGN Statement of Shared Climate Change Responsibilities
to the United Nations Climate Change Conference of the Parties 26 20 October 2021
The United Nations Climate Change Conference of the Parties (COP 26) will bring together governments and stakeholders to accelerate actions to address the world’s climate crisis and limit global warming to below 1.5°c by 2100. This ‘Statement of Shared Climate Change Responsibilities’ clarifies the position of the International Corporate Governance Network (ICGN), a global organisation led by investors responsible for assets of $59 trillion, regarding priorities for governments and capital market participants.
Scientists have warned that global carbon emissions have risen by 20% over the past five years with atmospheric temperature increases set to exceed 3°c by 2100 if action is not taken now to wean our dependence from fossil fuels. We are already experiencing weather extremes with intense temperatures, rainfall, floods, fire, and drought. United Nations Secretary-General António Guterres has characterized the most recent report of the Intergovernmental Panel on Climate Change (IPCC) as ‘code red’ for humanity, asserting that “The alarm bells are deafening, and the evidence is irrefutable.”i
The climate crisis is intricately linked to the biodiversity crisis. In a landmark report, the IPCC and the Intergovernmental Science Policy Platform on Biodiversity and Ecosystem Services concluded: “Unprecedented changes in climate and biodiversity, driven by human activities, have combined and increasingly threaten nature, human lives, livelihoods and well-being around the world. Biodiversity loss and climate change are both driven by human economic activities and mutually reinforce each other. Neither will be successfully resolved unless both are tackled together.”ii
The climate and biodiversity crises have exacerbated social inequality by decreasing life expectancies, disrupting cultures, and impairing the ability of disadvantaged groups to sustain, cope and recover. As the world’s industrial economy transitions towards net-zero carbon emissions, workers, communities, and entire regions are in peril of being stranded. This was recognised in the Paris Agreement 2015 stating: “Actions must take into account the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally-defined development opportunities.” iii The transition to net-zero must be just, inclusive, and effectively address social inequality as a systemic risk.
In this context, the United Nations Sustainable Development Goals (UNSDGs) set out a vision for a prosperous future that can guide efforts towards a just transition to net-zero carbon emissions. Though not initially designed for capital markets participants, the UNSDGs define global priorities for public and private institutions. They provide a strategic vision for the future and can help guide how investors, companies, and other capital market actors to adapt long-term strategy, enhance risk management practices and innovate for a just transition towards net zero carbon emissions.
As we advance towards a just transition, strong corporate governance and investor stewardship, supported by common sustainability reporting standards and reporting, will be critical. Corporate boards, management, investors, the auditing profession, standard setters and others have unique responsibilities to clearly identify challenges, determine solutions, and implement assertive action. This will help ensure that present and future generations are not unfairly burdened with the negative social, ecological, political, economic, and financial consequences that result from the climate and biodiversity crises.
It is in this spirit that ICGN recommends the following priorities for consideration:
- Publicly commit to science-based emission reduction targets (including credible interim targets) on how investment portfolios will achieve net-zero carbon emissions by 2050. Improve the quality of climate- related public disclosure including investment policies, company engagements, proxy voting and submissions to authorities. Where feasible, investors should collaborate to leverage influence and align expectations towards companies and stakeholders.
- Comprehensively integrate financial, natural, and human capital considerations into stewardship activities across asset classes, investment decision-making, company monitoring, engagement (individually or collectively) and votingiv. Stewardship activities should ensure that boards of directors are held to account for achieving progress towards meeting just transition plans.
- Ensure that contractual terms in mandates between asset owners and asset managers incorporate stewardship obligations associated with sustainable value creation and positive impact as described in the ICGN Model Mandatev consistent with just transition concepts.
- Publicly commit to science-based targets (including credible interim targets) on how the business will adapt to net-zero carbon emissions by 2050 aligned with the company’s purpose and long-term strategy. Transition plans should include assessments of physical, transition and liability risks and opportunities based on climate change scenario analysis. The board should communicate progress towards meeting just transition plans through annual reports to shareholders and other stakeholdersvi.
- Ensure robust governance procedures and board competence in overseeing how management identifies, monitors, measures, and manages climate change risks and opportunities aligned with company purpose and long-term strategyvii. Effective oversight relies on a genuinely diverse group of directors with relevant knowledge, independence, experience, and cognitive skills to ensure effective, equitable and inclusive decision-making.
- Align CEO and senior executive pay and incentives fairly and effectively with the company’s purpose, strategy and workforce while respecting global best practicesviii. This entails the use of quantifiable financial, human, and natural capital related performance metrics, particularly those associated with the company’s just transition plan and how long-term value is created by integrating these elements into business operations.
- Ensure the application of guidance related to climate change risks in planning and performing audits on financial statements as provided by standard-setters such as the International Accounting Standards Board and the International Auditing and Assurance Board. Commit to discharging obligations under professional standards as external auditors with quality, integrity, and independence.ix
- Where required by regulation or requested by companies, provide assurance on quantitative and qualitative corporate sustainability reporting, and ensure that conflicts of interest are well-managed. Reporting should reflect the complexities in a contemporary business by blending financial, human, and natural capital considerations in the context of a company’s current and future strategic direction.x
- Collaborate with standard-setters as they develop requirements that ensure companies report the effects of climate risks and opportunities on assets and liabilities and develop financial reporting requirements for various types of carbon or other pollutant pricing mechanisms.
For Governments and Standard-Setters:
- Publish action plans and commit funding for achieving net-zero carbon emission targets, including carbon pricing, eradication of fossil fuel industry subsidies, phasing out coal-based electricity generation and strengthening Nationally Determined Contributions for 2030 in line with the Paris Agreement. Introduce incentives to mobilise private capital towards climate solution investments including renewable energy, resource efficiency, smart technologies, and innovative infrastructure investments.
- Support the establishment of the International Sustainability Standards Boardxi as proposed by the IFRS Foundation, to ensure consistency among sustainability reporting standards, coordinated with standards on financial statements and management commentary. This includes consideration of internationally agreed frameworks, such as the Taskforce for Climate-Related Financial Disclosures and the Taskforce for Nature-Related Financial Disclosure to provide material information required by investors and stakeholders to allocate capital appropriately.
- Mandate regulations and collaborate internationally to criminalise ecocide. Ensure sanctions, enforcement, and resources to protect biodiversity, advance conservation and increase protected areas as guided by science. Protect human rights and incorporate the perspectives of disadvantaged groups and regions adversely impacted by biodiversity measures and transition plans. C
Led by investors responsible for assets under management of US$59 trillion, and bringing together companies and stakeholders, ICGN advances the highest standards of corporate governance and investor stewardship worldwide in pursuit of long-term value creation, contributing to healthy and sustainable economies, society, and environment. For more information visit www.icgn.org.
ii https://www.un.org/sustainabledevelopment/blog/2021/06/tackling-biodiversity-climate-crises-together-and-their-combined-social- impacts/
iv See ICGN Global Stewardship Principles (2020): https://www.icgn.org/sites/default/files/ICGN%20Global%20Stewardship%20Principles%202020_0.pdf
v See ICGN Model Mandate (2012) currently being revised in partnership with the UN Global Investors for Sustainable Development Alliance
vi See ICGN Global Governance Principles (2021), Guidance 7.5: Climate change: https://www.icgn.org/sites/default/files/ICGN%20Global%20Governance%20Principles2021_0.pdf
vii See ICGN Global Governance Principles (2021), Guidance 1.5: Commitment: https://www.icgn.org/sites/default/files/ICGN%20Global%20Governance%20Principles2021_0.pdf
viii See ICGN Global Governance Principles (2021), Principle 5: Remuneration: https://www.icgn.org/sites/default/files/ICGN%20Global%20Governance%20Principles2021_0.pdf
ix See ICGN Global Governance Principles (2021), Guidance 7.3 (h): Financial Reportshttps://www.icgn.org/sites/default/files/ICGN%20Global%20Governance%20Principles2021_0.pdf
x See ICGN Global Governance Principles (2021), Guidance 7.4: Sustainability Reports: https://www.icgn.org/sites/default/files/ICGN%20Global%20Governance%20Principles2021_0.pdf
xi See ICGN Letter to the IFRS Foundation in support of the proposed ISSB (14 September 2021): https://www.icgn.org/sites/default/files/19.%20ICGN%20Letter%20to%20IFRS%2C%20%20Proposed%20Establishment%20of%20 an%20International%20Sustainability%20Standards%20Board%2C%2014%20Sept%202021_0.pdf