'Peak ESG' concerns heat up as investors scrutinise sustainability claims
This earnings season, investors are looking for companies backtracking from climate commitments, while fund managers are applying added scrutiny to ESG strategy.
Following Air New Zealand’s surprise decision to abandon its climate target and withdraw from the Science-Based Targets Initiative (SBTi) last month, investors have been watching closely for news from other companies seeking to dial down their climate ambitions.
The airline cited difficulties in securing more efficient aircraft, a slower-than-expected rollout of sustainable aviation fuels in its home market, and a lack of regulatory policy support as reasons for its inability to meet its target of a 30% emissions reduction by 2030 — significantly more ambitious than the broader aviation sector’s 5% target.
So far this earnings season, no ASX 200 companies have backtracked on their sustainability commitments. However, in 2023, both Rio Tinto and Boral conceded they would not meet their stated near-term targets.
Some observers believe it’s only a matter of time before companies — especially those considered “early movers” in hard-to-abate sectors — admit they are struggling to meet the emissions reduction pathways they previously set.
