Investors put hard word on cement makers

The world’s biggest cement makers have been under pressure from environmental groups, regulators and lawmakers to cut pollution. Now, some of the world’s most powerful investors are echoing those calls.

Members of the Institutional Investors Group on Climate change and the Climate Action 100+, a coalition of money managers with more than US$33 trillion under management, are asking that European construction-materials companies commit to a target of reducing net carbon dioxide emissions to zero by 2050.

The group sent the demands to CRH, LafargeHolcim, HeidelbergCement and Compagnie de Saint-Gobain, with letters setting out steps applicable for each company on how to get there.

Just like industries from traditional power generation, to shipping and transportation, pressure is mounting on cement companies to clean up and help slow global warming. The industry accounts for 7 per cent of the world’s man-made carbon dioxide, according to the International Energy Agency.

“Construction material companies may ultimately risk divestment and lack of access to capital,” says Vincent Kaufmann, chief executive of the Ethos Foundation, a member of the group. “An increasing number of investors seek to exclude highly carbonintensive sectors from their portfolios to meet their own decarbonisation plans.”

Jocelyn Brown, a senior investment manager for sustainable ownership at RPMI Railpen, a pension fund for the British railway industry, says that “if the cement industry was a country, it would be the third largest global emitter, behind China and the US”.

HeidelbergCement, for one, has already set net zero emission targets for 2050. It aims to achieve that through measures from cutting CO2 in clinker, cement and concrete as well as through carbon capture and recycling, according to an email from the company.

LafargeHolcim has since 1990 reduced its net carbon emissions per tonne of cement by 25 per cent and is increasing its focus on innovative technologies, says a company spokesman.

“The cement sector needs to dramatically reduce the contribution it makes to climate change. Delaying or avoiding this challenge is not an option,” says Stephanie Pfeifer, chief executive at IIGCC and a member of the Climate Action 100+ steering committee.