Organisation:  Eurizon Capital S.p.A.

Signatory type:  Investment manager

HQ country:  Italy

Region of operation:  Europe

AUM: €383bn as of 31/12/2022


Covered in this case study

Asset class(es):  Listed equity and corporate fixed income

Sector:  Cement


Eurizon Capital SGR S.p.A. is the asset management division of the Intesa Sanpaolo Group and is the largest institutional investor in Italy in terms of assets under management. Eurizon adopts multiple management styles and can leverage many years of experience in equity, bond, multi-asset, and quantitative management to meet the needs of investors. In making its investment choices, Eurizon assigns an important role to ESG factors and broader responsible investing principles, including the efforts of investee companies to align to a net-zero pathway.

Why we focus on the cement sector

As a signatory of the Net Zero Asset Managers initiative, we have committed to engage with investee companies that have lagged in the decarbonisation process. Eurizon has identified cement as a critical sector due to the difficulties it faces in reducing CO2  emissions to achieve the goal of net-zero emissions by 2050.

As a basic ingredient of construction materials, cement plays an important role in our daily lives and cement demand is projected to continue to rise due to continuing urbanisation. However, cement production is also a significant source of CO2  emissions: the direct CO2  intensity of cement production increased 1.8% per year during 2015-2020 (IEA Cement Tracking Report – September 2022) and the cement sector alone has been generating 2.8bn tonnes of CO2  every year, more than any country total other than China and the US. Cement production emits greenhouse gases (GHG) in two ways:

i) directly through the production of carbon dioxide when calcium carbonate is thermally decomposed, producing lime and carbon dioxide;
ii) through the use of energy, particularly from the combustion of fossil fuels.

Looking ahead, the cement sector faces significant difficulties in reducing CO2  emissions and in adopting a decarbonisation pathway in line with net zero. To align with the goal of reaching net-zero emissions by 2050, CO2  emissions produced by the sector would have to decline by 3% annually to 2030 (IEA Cement Tracking Report).

To help companies understand and implement the level of climate ambition required to meet the 1.5°C goal of the Paris Agreement, the Science Based Targets initiative has published detailed guidance for the cement sector calling for a sharper focus in two key areas: reducing the clinker-to-cement ratio (including through greater uptake of blended cements) and deploying innovative technologies, including carbon capture, usage and storage. Note that clinker is a high-emissions-generating element of cement production, while blended cements are innovative, more environmentally friendly materials.

How we seek to reduce cement sector emissions

From our engagements with selected European cement companies it appears that one of the main challenges of the sector-decarbonisation process is the barrier to the use of alternative and innovative low-carbon products.

Some companies are developing cement products based on synthetic materials (geo polymers) or those capable of absorbing CO2. But most of these low-carbon solutions have struggled to reach full maturity and are being held back by low public awareness and economic barriers, such as the lack of funding needed to commercialise innovative cements on a large scale. In Scandinavian countries, innovative environmentally sustainable products are in use and are either derived from recycled materials or involve lower clinker-to-cement ratios, and therefore lower emissions. However, other European countries are lagging in the use of low-carbon solutions. Sales of these products have recently started in Belgium and France, while the building sector is more conservative in many other countries, with limited use of new low-carbon solutions. Furthermore, a key consideration is the safety and reliability of materials: new technologies with a limited track record are measured against well-known products with extensive histories (for example, Portland Cement has been used for centuries).

We have integrated these considerations in our companies’ net-zero alignment assessment, identifying slower or faster pathways to carbon neutrality according to the use of low-carbon products within the countries in which they operate.

Key criteria for assessing net-zero alignment

To assess the alignment of cement companies in our portfolio with the International Energy Agency (IEA) net-zero scenario, we carry out analysis of the sector and the individual companies and combine that with the findings from our engagements with company management.

As a reference we use the global decarbonisation pathway provided by the IEA for the cement sector in the report Net zero by 2050 – A Roadmap for the Global Energy Sector. It shows milestones for what needs to happen, and when, to transform the global economy and analyses the role of cement production. In particular, when assessing companies, we apply an adjustment factor for the region in which they operate to reflect local conditions.

Figure 1 shows how we expect companies to proceed on their decarbonisation pathways. Companies are divided into three categories based on where a company sells its low-carbon cement products.

Category A includes companies that operate in a country where the use of low-carbon cement solutions is widespread within the market. We expect faster decarbonisation in this category because these companies will have opportunities to sell more low-carbon cement product. As a result, these companies will consume less of the carbon budget for the sector than companies following the average pathway for the sector globally.

At the other end of the spectrum, category C companies operate in countries where the building industry is more conservative and uses traditional cement. In this case, a company would find itself using more of the carbon budget than a company following the global decarbonisation pathway until 2040.

Category B includes companies that operate in countries where low-carbon solutions have recently become more popular, such as France and Belgium. For such companies we have estimated approximately the same decarbonisation rate as the global decarbonisation pathway.

The above categorisation supports our engagement decisions because it helps us understand the companies’ relative position, the state of their decarbonisation efforts and where one could expect improvement.

In general, our engagement focus is on companies in category C – those on slower decarbonisation pathways. While we recognise that such companies need time to align, we encourage them to speed up their decarbonisation process. We also engage category A companies that operate in both category A and C countries (as defined below). The engagement will be focused on asking what the company, with its experience from the more advanced markets, is doing to encourage the use of low-carbon cement products in countries that have lagged in adopting low-carbon options.


Figure 1: Company decarbonisation pathways based on adoption of low-carbon solutions

Diagram of company decarbonisation pathways based on adoption of low-carbon solutions

Note: Future projections are based on internal process of Eurizon Capital SGR S.p.A.


Hypothetical example:


The company is based and sells its products in southern Europe, where there is limited use of, and lower public knowledge about, low-carbon solutions compared with northern European countries. The company is able to produce low-carbon cement products.

Engagement objectives

The objective of the dialogue is to improve the company’s disclosure, support decisions and influence the company’s behaviour, as follows:

  1. encourage the company to prioritise sales of low-carbon cement products instead of traditional ones;
  2. ask for information about what the company is doing to encourage its customers to use low-carbon products;
  3. ask for information on what role the low-carbon products play in the company’s decarbonisation strategy and which other strategies the company is developing to lower its emissions;
  4. make the company aware of the positive impact these low-carbon products have in the building sector from an emission-reduction perspective;
  5. increase transparency of all the information shared (e.g., detailed net-zero strategy and company KPIs).

Company progress is measured using qualitative and quantitative information relating to performance on the net-zero strategy and emissions reduction.

Follow-up and escalation

The first round of engagement would be followed by an evaluation of the quality of information provided and the engagement’s success in influencing a change in company’s actions. Follow-up engagement activities, including potential escalation measures, could include:

  1. regular follow-up by email or meetings to obtain updates on progress;
  2. joining or launching a collaborative initiative with other investors having similar objectives and potentially extending the effort to an industry or regional level;
  3. sending a formal letter to the Board to inform the company’s directors about our expectations.

Net-zero alignment

To consider the company aligned with net zero, we would need the management to:

  1. provide thorough, credible answers to our information requests;
  2. share disclosure documents with improved public transparency (including the website) that explain the company’s strategy;
  3. take steps that meet our expectations regarding execution of the strategy.



Nothing in this document is intended as investment research or as a marketing communication, nor as a recommendation or suggestion, express or implied, with respect to an investment strategy concerning the financial instruments managed or issued by Eurizon Capital SGR S.p.A.. Neither is this document a solicitation or offer, investment, legal, tax or other advice.

The opinions, forecasts or estimates contained herein are made with reference only to the date of preparation, and there can be no assurance that results or any future events will be consistent with the opinions, forecasts or estimates contained herein. The information provided and opinions contained are based on sources believed to be reliable and in good faith. However, no representation or warranty, express or implied, is made by Eurizon Capital SGR S.p.A. as to the accuracy, completeness or fairness of the information provided.

Any information contained in the present document may, after the date of its preparation, be subject to modification or updating.

Find out how other investment managers and asset owners implemented net-zero commitments in listed equity portfolios in our report, Net zero in practice: Insights from equity investors.