Tesla Inc is among a group of companies that have been criticized by investors with more than US$31 trillion in assets for failing to disclose their environmental footprints through global reporting standards.
Amundi SA, Aviva PLC and Nuveen are some of the institutional investors calling on Tesla, Saudi Arabian Oil Co, Exxon Mobil Corp, Glencore PLC, Volvo Group and others to report impacts on the climate, water and forests through CDP, a nonprofit whose disclosure system is used by more than 13,000 companies.
Asset managers targeting environmental, social and governance (ESG) goals have been stepping up pressure on the companies in their portfolios to use consistent reporting metrics as they try to gain clarity and steer clear of potential greenwashing. That is amid growing regulatory scrutiny of the industry and ever-stricter rules designed to slash greenhouse gas emissions before it is too late.
Photo: AFP
“Climate change, deforestation and water security present material risks to investments,” Laurent Babikian, joint global director of capital markets at CDP, said in a statement. “Companies that are failing to disclose their impact risk are trailing behind their competitors in their access to capital.”
This year’s campaign is the sixth coordinated by CDP, with a record 57 percent jump in the number of financial institutions signing up.
Tesla, which is a staple of climate funds due to its dominance in the electric vehicle industry, did not answer e-mails seeking comment.
Tesla chief executive officer Elon Musk has previously criticized the ESG industry, even going so far as to call it a “scam.”
He also railed against ESG investing theory after Tesla was excluded from an S&P Global index that tracks companies’ environmental, social and governance standards.
This year, investors participating in the campaign to convert companies to the CDP reporting system are taking aim at 1,473 firms.
Companies that adhere to CDP standards would be in a better position to deal with stricter ESG regulations once they become a reality, Babikian said.
That comes as the US Securities and Exchange Commission hopes to propose tough climate disclosure rules that, in some cases, would require firms to report indirect, or so-called Scope 3, emissions.
Investors backing the CDP campaign asked most of the companies targeted to report on how their business is affecting climate change.
They also wanted more information on water and forest impacts.
European companies lead the pack in environmental reporting, with about 2,400 firms using the CDP framework, Babikian said.
One in four has science-based emission reduction targets, with more expected, he added.
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