Climate-focused investor engagement initiative Climate Action 100+ announced today the results of the most recent round of Net Zero Company Benchmark assessments, examining the emissions reduction goals, decarbonization strategies and climate disclosure practices of the world’s largest greenhouse gas (GHG) emitting companies. The assessment indicated that while action on climate by the focus companies has improved, big gaps remain in articulating and executing meaningful strategies aligned with global climate goals.
Climate Action 100+ is an investor initiative, with 700 investors representing $68 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.
The initiative introduced its Net-Zero Company Benchmark last year, in order 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 Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights., and strengthening climate-related financial disclosures.
Rather than scoring or ranking companies, the benchmark assesses each company’s individual progress against a series of ten 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 Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights., Just Transition (currently in Beta), and TCFD disclosure.
Stephanie Pfeifer, IIGCC CEO and vice-chair of the global Climate Action 100+ Steering Committee, said:
“The Climate Action 100+ initiative has shown that investors can influence companies through meaningful engagement and good stewardship. However, while there has been a level of progress by focus companies towards net zero by 2050 with the majority setting long-term targets, many remain far from where they need to be if they are to help limit a global temperature rise to 1.5°C. Investors are calling on focus companies to credibly set out details of their net zero transition plans and will step up their engagements to ensure companies move from target setting to delivery.”
The assessment found that a greater proportion of focus companies have made climate commitments over the past year, with 69% of companies pledging to reach net zero emissions by 2050 across all or some of their emissions footprint, up from 52% last year. Despite this momentum, however, the report indicated that only 42% of company commitments cover all material emissions, including Scope 3. Additionally, only 17% of the companies have presented robust decarbonization strategies to back up their goals, or set medium-term targets aligned with the IEA’s 1.5°C scenario.
Results by sector indicate that most electric utility companies do not have a coal phaseout plan consistent with limiting global warming to less than 2°C, almost two-thirds of oil and gas focus companies are still approving new exploration and production projects, inconsistent with the less-than-2°C scenario. Additionally, very few steel, cement or aviation companies were assessed as having emissions intensities aligned with limiting global warming to less than 2°C.
Climate Action 100+ Steering Committee chair Stephanie Maier said:
“Overall the Net Zero Company Benchmark clearly shows that focus companies are not making the progress required to align with achieving the 1.5°C climate goal agreed in Paris and reaffirmed in Glasgow last year. Given that these companies represent the world’s largest corporate greenhouse gas emitters, their ambition and pace of change is critical to a successful transition and needs to accelerate.”
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