Investors worried about climate change are warning the world’s biggest cement producers to reduce their emissions or face extinction.
A group of investors that manages $2 trillion on Monday pressured cement makers to accelerate efforts to reduce their emissions. The coalition is made up of members of the Institutional Investors Group on Climate Change and Climate Action 100+, a leading campaign group with 320 supporters.
Cement production, which uses huge amounts of heat and energy, is responsible for 7% of man-made carbon dioxide emissions. If the cement industry were a country, it would trail only the United States and China in emissions of the greenhouse gas.
“The cement sector needs to dramatically reduce the contribution it makes to climate change. Delaying or avoiding this challenge is not an option,” Stephanie Pfeifer, CEO of IIGCC, said in a statement. “This is ultimately a business-critical issue for the sector.”
Global investors are becoming more active in pushing companies to take meaningful actions to combat climate change. They have previously targeted oil and gas companies, extracting commitments from Royal Dutch Shell.
The latest call to action targets four major building materials companies based in Europe: CRH, Lafarge Holcim, Heidelberg Cement and Saint-Gobain. The investors want the cement producers to commit to being carbon neutral by 2050. They are also asking for improvements to corporate transparency, disclosure and oversight on climate change.
The demands have been sent to board chairs at each of the four companies. The letters are signed by investors including BNP Paribas Asset Management and Aberdeen Standard Investments.
Firms that don’t move quickly to change their practices risk losing access to capital, according to the investors. With no clear single route to decarbonization, they recommend the companies pursue a range of options.
Cement makers must “get ahead of the profound transformation their sector faces by addressing barriers to decarbonization in the short- to medium-term,” said Pfeifer, the IIGCC chief executive.
According to the International Energy Agency, it will be difficult to reduce CO2 emissions from concrete while meeting demand for the material. Reduced demand from China is expected to be offset by expansion in other markets.
The investors said Heidelberg Cement, a German multinational, has already committed to some key reforms. Heidelberg said in a statement that it takes “society’s concerns about climate protection very seriously” and that cutting CO2 emissions is one of its top priorities.
Swiss company Lafarge Holcim said in a statement that it is “cognizant of the carbon footprint of cement and concrete and we are at the forefront of mitigating climate change.” It also said it was exploring new technologies to reduce its carbon use.
CRH and Saint-Gobain did not respond to requests for comment.