The Institutional Investors Group on Climate Change (IIGCC) has called on cement and construction companies to take steps against cement production, the source of 7 per cent of global man-made CO2 emissions.

The group, which mainly consists of pension funds and asset managers, said the companies in the cement industry need to secure their future in the face of climate change and commit to achieving net zero emissions no later than 2050.

IIGCC set out the measures they expect to see in the Investor Expectations of Companies in the Construction Materials Sector report, which has been developed in line with the Climate Action 100+ goals and sent to the board chairs for CRH, LafargeHolcim (Lafarge), HeidelbergCement and Saint-Gobain.

The group noted that if the cement industry were a country, it would be the third largest global emitter, behind China and the US.

IIGCC CEO Stephanie Pfeifer, who is also a member of the Climate Action 100+ global steering committee, said the cement sector needs to dramatically reduce the contribution it makes to climate change because it is a business-critical issue, and delaying or avoiding it is “not an option”.

“Major economies such as the UK and France are increasingly adopting economy-wide net zero emission targets. The cement sector needs to get ahead of the profound transformation their sector faces by addressing barriers to decarbonisation in the short- to medium-term if companies are to secure their future,” Pfeifer said.

The expectations include key details such as reducing greenhouse gas emissions and becoming carbon neutral by 2050, public policy transparency and advocacy for the Paris Agreement, implementation of a strong governance framework, and provide enhanced corporate disclosure in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

RPMI Railpen senior investment manager sustainable ownership, Jocelyn Brown, who was one of the lead authors of the investor expectations report, said climate stakes are high, while time is short.

“The construction materials industry needs a significant change in business-as-usual practices to align to a two degrees trajectory in line with the Paris Agreement. These investor expectations highlight good practice, and others in the sector are encouraged to follow their example to avoid the consequences of increased scrutiny from their shareholders.”

IIGCC said governments have committed to limiting global warming in line with the Paris Agreement, which means the cement sector will be exposed to significant risks if it fails to anticipate and keep pace with necessary reductions in greenhouse gas emissions.

Furthermore, companies that are not yet sufficiently pursuing new technologies and approaches to maximise emissions reductions from cement production and use risk being left behind or significantly disadvantaged as construction methods change.

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