LONDON (Reuters) - Investors managing more than $4 trillion in assets have told European chemical companies they must set out a path to move away from fossil fuels, saying that the sector's role in greenhouse gas emissions has been overlooked.
Legal and General Investment Management, Amundi and EFG Asset Management are among 15 investors to have written to Europe's 13 biggest chemical companies including BASF, LyondellBasell Industries (NYSE:LYB) and Yara in a joint statement published this week.
"Europe's chemical companies need to know that action on decarbonisation isn’t optional," said Vincent Kaufmann, CEO at Ethos Foundation, one of the investors.
"The progress we have seen over the past 18 months, with some companies setting increasingly ambitious targets and transition plans, indicates that sustained investor engagement is important and effective."
Penny Fowler, Head of Corporate Climate Campaigns at ShareAction, the responsible investment NGO that has co-ordinated the investor statement, said the chemical industry's reliance on fossil fuels was "often overlooked as a major contributor to global warming."
Norway's Yara said in an emailed statement that its ambition was to become climate neutral by 2050.
"We have set ambitious targets for further reductions ... and take part in developing the Sectoral Decarbonization Approach for the chemical industry to align our climate targets with the goals of the Paris Agreement," Yara's VP Sustainability Governance Bernhard Stormyr said.
BASF and LynondellBassell did not immediately respond to requests for comment.
Some chemical companies have been raising their climate-related pledges. For example, in December LyondellBasell increased its greenhouse gas reduction target for direct and indirect emissions from purchased energy and established a target to cut all other indirect emissions by 2030.
In its statement, the investors said the chemicals firms should establish credible decarbonisation plans that include efforts to electrify chemical production processes and switching to greener energy sources.
Other recommendations include chemical firms changing the raw materials used in chemical production processes to emissions-neutral materials instead of fossil fuels, and eliminating woody biomass as an energy source.