The update comes from AIGCC’s Asian Utilities Engagement Program, which sees 20 influential regional investors with $11 trillion* in assets under management or advice, who engage with power companies including:
- China’s China Resources Power Holdings and Huaneng Power International,
- Hong Kong SAR’s CLP Holdings,
- Indonesia’s PT Perusahaan Listrik Negara,
- Japan’s J-POWER and Chubu Electric Power, and
- Malaysia’s Tenaga Nasional Berhad.
Decarbonising Asia’s energy systems is an extremely high priority for investors because the climate damage caused by continued high emissions endangers widespread economic growth and returns for their beneficiaries.
The projected growth of energy demand across industries and projected to further accelerate from AI has heightened the importance of reducing the emissions intensity of the sector.
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AIGCC CEO Rebecca Mikula-Wright said:
“In 2024 the leading Asian power companies have a much more positive attitude when it comes to phasing out coal and preparing their businesses to thrive in the coming net zero economy.”
Highlights of Electric Utility Companies’ Progress
- Companies are starting to disclose more detailed short- and medium-term plans, including some instances of transition plans that include the phase-out of coal-fired power plants, for example;
- Malaysia’s state-owned utility, Tenaga Nasional Berhad (TNB), published a decarbonisation plan spanning its entire value chain, with a focus on decarbonising energy sources. TNB is enhancing its transmission grid to support Malaysia’s goal of having 70% renewable energy in its power mix by 2050.
- Companies are setting more granular, asset-level decarbonisation targets towards achieving their medium-term climate targets in 2030.
- Two of the electric utilities in the program have published strategies relating to physical resilience of their assets.
- Leading companies have linked executive pay to climate goals, for example
- The performance measures of CLP’s executive directors and senior management and their remuneration are linked to science-based greenhouse gas emissions intensity targets and phasing out of coal-based assets.
However, with Asia’s economies still on an emissions path that entails significant economic damage, AIGCC’s Asian Utilities Engagement Program will continue to focus on the following priorities in the year ahead:
- accelerating the transition to renewables,
- expanding commitments and accelerating action to phase out coal,
- highlighting the need for clear government policies and corporate strategies to minimise reliance on gas,
- facilitating connections between investors, corporate executives and policy-makers,
- analysing and responding to the utilities’ exposure to physical damage and disruption from climate change.
AIGCC CEO Rebecca Mikula-Wright Continued
“This year’s results from AIGCC’s Asian Utilities Engagement Program show that strong and smartly targeted stewardship works and it’s a vital part of investors’ fiduciary duties.
“Engagement with heavy emitting companies works best when it is integrated with policy engagement, because policymakers set roadmaps and shape the economic incentives for companies right across the system.
“Energy utilities who transition quickly to renewables can remain competitive, avoid stranding their assets and avoid deploying their workforces into the risky and high-cost segment of the energy market, namely gas-fired generation.
“Since we started the program, the discussion has progressed from asking companies to commit to no new coal fired power plants to implementing the phaseout plan of existing coal fired power plants within a specific timeframe.”
“We’re delighted that the Program’s success is attracting more investors to join these important engagements and that increased support allows us to keep accelerating this crucial work.”
Asian Utilities Engagement Program Continues To Expand
The Program welcomed 7 new participating investors since the last investor statement in 2022 – abrdn, Cathay Life Insurance, LGIM, Lion Global Investors, Neuberger Berman, SeaTown Holdings, and Sun Life. The investor participants – all AIGCC members – are collectively responsible for $11 trillion in assets under management and advice.
In the fourth year, investors working through the program will continue to work with focus companies on implementing clean energy technologies while highlighting the economic and other benefits to phase out coal assets. AIGCC will continue to facilitate policy-level engagements between focus companies, policymakers and investors and work towards a higher adoption of renewable energy.
The Program will also continue to complement the current engagement efforts of Climate Action 100+ in Asia and assist investors to increase the effectiveness of their work with Asian utility companies to manage and mitigate climate risk.
Quotes from Participating Investors
Amundi Global Head of ESG Research, Engagement and Voting, Caroline Le Meaux, said: “Japan’s Green Transformation policy and sectoral roadmaps aim to unlock accelerated efforts for energy transition as the nation moves towards carbon neutrality by 2050. Through both individual and investor collaborative efforts via AIGCC, we have been actively engaging with utility companies in Japan and we have witnessed positive progress over the recent years.
“This year’s progress report show that a number of companies have notably enhanced corporate transparency, undertaken ambitious targets and integral investment plans, and have recognised the opportunities and challenges behind transition technologies. We believe that the quality and persistence of the dialogue between investors and companies will continue serving as a cornerstone towards a stronger, more resilient business model and practice that will effect real changes in the economy.”
Nikko Asset Management President, Stefanie Drews, said: “AIGCC’s AUEP has been a valuable channel in deepening engagement through collaboration in Asia, a region where collaborative engagements are gaining momentum.
“Through AIGCC, we have engaged top management of major Japanese electric utilities that need to leverage Japan’s innovative spirit and technological advancements to drive transformative change. Robust collaboration with domestic and international investors enabled constructive dialogue on decarbonisation. Outside of Japan, this also rings true as we engage with companies and their key stakeholders such as regulators, to harness the power of collaboration.
“While progress is commendable, we’re not complacent in a warming world. We look forward to jointly accelerating decarbonisation in the region and setting new standards.”
Sumitomo Mitsui Trust Asset Management Representative Director and President, Yoshio Hishida, said: “We are encouraged by the progress from Japanese electric utilities in the program over the past year.
“To make sure we are on track to meet emissions reductions goals by 2030 or 2050, we need to accelerate this momentum and focus on phasing out coal plants.
“We believe in investment stewardship that is also aligned with our fiduciary duty. Through collaboration with our peers, we are looking forward to working directly with companies to accelerate the development of clean energy solutions and build a more sustainable energy landscape in Japan and beyond.”
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*The Asian Utilities Engagement Program includes participation by some investors that are acting on behalf of their clients that have chosen to have their assets managed with the goal of achieving net-zero alignment.
Background on the AUEP
The investors and stewardship service providers (all AIGCC members) set to participate in the fourth year of the program are:
- abrdn
- Amundi
- BNP Paribas Asset Management
- Cathay Financial Holdings
- Cathay Life Insurance
- Eastspring Investments
- EOS Federated Hermes
- Fidelity International
- Fullerton Fund Management
- GIC
- LGIM
- Lion Global Investors
- Manulife Investment Management
- Neuberger Berman
- Nikko Asset Management
- Resona Asset Management
- Seatown Holdings
- Sumitomo Mitsui Trust Asset Management
- Sun Life Asset Management
- UOB Asset Management
Through the Investor Expectations of the Asian Utilities Engagement Program, these investors will engage with seven utility companies across five markets:
- China Resources Power Holdings (China)
- CLP Holdings (Hong Kong SAR)
- Chubu Electric Power Co. (Japan)
- Electric Power Development Co. (J-POWER) (Japan)
- Huaneng Power International (China)
- PT Perusahaan Listrik Negara (Persero) (PLN) (Indonesia)
- Tenaga Nasional Berhad (Malaysia)
The program is coordinated by AIGCC, and it complements and runs in parallel with the global Climate Action 100+ initiative. Asian electric utility companies that are currently the focus of Climate Action 100+ were excluded from consideration.
The 2024 investor statement from participating investors can be found here. The 2021 launch statement can be found here. The 2022 launch statement can be found here.
In December 2020, AIGCC released an investor guide for climate change engagement with Asian utilities, which can be found at the following in English, Simplified Chinese, Traditional Chinese, Japanese, and Korean.
Read more about the AUEP