CRH is a global building materials company that supplies aggregates, lime, cement, concrete and asphalt for a wide range of construction applications.
These include major public roads and infrastructure projects, commercial buildings and residential communities.
ASI is a signatory of Climate Action 100+, an investor initiative targeting engagement with the world’s largest corporate greenhouse gas emitters. As part of the CA100+ initiative, a report was published by the Institutional Investors Group on Climate Change on the construction materials sector, which informed and drove our decision to engage with CRH on its climate change approach. As a large shareholder in CRH, we have closely engaged with it in the past on corporate governance. This marked our first climate change-focused engagement.
Following a letter sent to the chairman in June, we participated in a meeting with the head of sustainability. This meeting focused on CRH’s alignment with the TCFD and its participation in the Construction Preparer Forum; the group’s CO2 emissions reduction targets and plan; governance of climate change and other ESG matters; and, finally, its public policy approach and involvement in industry associations.
In many ways, we see CRH as a global leader in its approach to climate change. Climate change sits both as a core part of the group’s risk management framework, as well as an integral part of its long-term strategy and potential business opportunities. The group is participating in a TCFD preparer forum which should lead to full disclosure in line with this framework – seen as best market practice – by January 2020. We also saw CRH introduce a new Safety, Environment & Social Responsibility Committee in 2018.
We will remain engaged to ensure the introduction of ambitious, market-leading carbon emissions targets.
What is perhaps most impressive is the group and management’s involvement in multiple cross-sector initiatives to develop solutions to reduce the lifecycle carbon emissions of cement. While there are many leading elements to the group’s climate change strategy, we offered several recommendations that we believe could help further strengthen and solidify a leading approach.
• CRH will publish its carbon emissions roadmap later this year. We encouraged it to set ambitious, science based targets for 2030 and 2050, which would support a 1.5 degree warming scenario. We also look for a clear plan on how to meet these targets.
• We recommended that its carbon emissions targets be linked to executive remuneration to ensure alignment of incentives.
• Finally, we encouraged CRH to carry out an exercise to ensure the alignment of its membership association policies with its own climate change policies and ambitions.
The engagement with CRH was largely positive, with open and constructive dialogue. Many elements of the group’s governance, risk management and strategy on climate change are strong. However, we will remain engaged to ensure the introduction of ambitious, market-leading carbon emissions targets. We have requested a meeting with the new chairman once he takes up the role from January 2020 to continue engagement on this topic.