A group of investors that manages $ 2 trillion on Monday pressed cement manufacturers to accelerate efforts to reduce their emissions. The coalition is formed by members of the Institutional Investors Group on Climate Change and Climate Action 100+, a leading campaign group with 320 supporters.
The production of cement, which uses enormous amounts of heat and energy, is responsible for 7% of the carbon dioxide emissions produced by man. If the cement industry were a country, it would only follow the United States and China in greenhouse gas emissions.
"The cement sector needs to drastically reduce its contribution 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 critical issue for the business for the sector."
Global investors are becoming more active in pressuring companies to take meaningful action to combat climate change. Previously they had addressed oil and gas companies, extracting commitments from Royal Dutch Shell (RDSA).
The latest call to action is aimed at four major building materials companies based in Europe: CRH (CRH)Lafarge Holcim Heidelberg Cement (very well) and Saint-Gobain. Investors want cement producers to commit to being carbon neutral by 2050. They are also calling for improvements in corporate transparency, disclosure and monitoring of climate change.
The demands have been sent to the chairmen of the boards in each of the four companies. The letters are signed by investors, including BNP Paribas Asset Management and Aberdeen Standard Investments.
Companies that do not move quickly to change their practices run the risk of losing access to capital, according to investors. Without a clear single path to decarbonisation, they recommend that companies look for a range of options.
Cement manufacturers must "anticipate the profound transformation facing their sector by addressing the barriers to decarbonization in the short and medium term," said Pfeifer.
According to the International Energy Agency, it will be difficult to reduce the CO2 emissions of the concrete while satisfying the demand for the material. It is expected that the reduction in China's demand will be compensated by the expansion in other markets.
Investors said that Heidelberg Cement, a German multinational, has already committed to some key reforms.
The Swiss company Lafarge Holcim said in a statement that "it is aware of the carbon footprint of cement and concrete and that we are at the forefront of mitigating climate change." He said he was exploring new technologies to reduce their carbon use.
Heidelberg Cement, CRH and Saint-Gobain did not respond to requests for comments.