Climate-focused investor engagement initiative Climate Action 100+ announced today the release of the Climate Action 100+ Net-Zero Company Benchmark. The new benchmark aims to provide investors with detailed, comparative assessments of individual focus company performance against the initiative’s three high-level commitment goals, including reducing greenhouse gas emissions, improving governanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights., and strengthening climate-related financial disclosures.
Climate Action 100+ is an investor initiative, with 575 investors representing more than $54 trillion in assets, that targets the world’s largest corporate greenhouse gas emitters to promote taking necessary action on climate change, and align their business strategies with net zero in order to help limit average global temperature rise to 1.5 degrees Celsius. Signatories to the initiative engage with companies to ensure they implement a strong governanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. framework that takes into account climate risks and opportunities, reduce emissions across the value chain, and increase climate-related financial disclosures.
The initiative announced in September 2020 that it would develop and release the benchmark this year, aiming to help determine which companies are leading the transition to net-zero emissions. The organization also sent a letter to the CEOs and Chairs of the Board of its target companies, representing up to 80% of global industrial greenhouse gas emissions, calling on the businesses to put in place net-zero business strategies and define targets to support delivery. The letters informed CEOs that their companies will be assessed on progress made in becoming net-zero businesses.
Fiona Reynolds, CEO of the Principles for Responsible Investment (PRI) and Climate Action 100+ Steering Committee member, said:
“Just as the climate crisis is a global problem, investor action to compel companies to meaningfully address this crisis must also be global. Ambition from companies is essential, but commitment to deliver on net zero targets is critical. The Climate Action 100+ Net-Zero Company Benchmark provides the market with a consistent, comparable way to quantify action across sectors and regions. In doing so, it provides the world’s largest emitters with a common and consistent goal to aim for – and investors with metrics to assess companies’ performance.”
Rather than scoring or ranking companies, the benchmark assesses each company’s individual progress against a series of nine key indicators and metrics, including setting a 2050 or sooner net zero ambition, long-term, medium-term and short-term GHG reduction targets, a decarbonisation strategy, capital allocation alignment, climate policy engagement, climate governanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights., and TCFD disclosure.
According to Climate Action 100+, the benchmark revealed that despite the increasing momentum in companies’ launching ambitious climate commitments, significant work remains to put the companies on the pathway to a net-zero, Paris Agreement-aligned future, with none of the focus companies performing at a high-level across all of the nine metrics.
Additionally, none of the companies have fully disclosed how they will achieve their goals to become a net zero enterprise by 2050 or sooner, including establishing short and medium-related targets to deliver ambitious emissions reductions within the next decade. Furthermore, while roughly half of the companies assessed have announced an ambition to achieve net-zero by 2050 or sooner only around roughly half of these commitments cover the full scope of the most material Scope 3 emissions.
Mindy Lubber, Ceres CEO and President and Climate Action 100+ Steering Committee member, said:
“The Climate Action 100+ Net Zero Company Benchmark shows there is an urgent need for greater corporate action and higher ambition in accelerating the net zero economy and ensuring a safe and viable future. Investors, companies and all stakeholders now have a clear marker of progress that can drive transformational change at the necessary speed and scale. Right now, the world’s largest corporate emitters have an opportunity to act quickly to distinguish themselves from their peers, and move forward with plans to become net zero businesses.”
Rebecca Mikula-Wright, Asia Investor Group on Climate Change (AIGCC), Executive Director and Climate Action 100+ Steering Committee member, said:
“The growth of Climate Action 100+ in Asia has been remarkable and is symbolic of the strong willingness of investors across the region to work constructively with companies to help them reduce emissions and accelerate the transition to net zero. While the Net Zero Company Benchmark results show some good progress across Asian markets, we expect that greater progress can be made this year as companies respond to the increasingly strong climate policy signals from national governments in the region.”
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