- Interim cycle of Benchmark assessments provides investors with timely data to inform engagement strategies ahead of upcoming proxy seasons
- Latest assessments reveal progress on net zero commitments, just 6 months after last round, but too often these are not matched by credible transition plans showing how they will be achieved
- Climate Action 100+ launches public consultation to enhance the Net Zero Company Benchmark for the initiative’s next phase, set to launch in mid-202
Climate Action 100+, the world’s largest investor engagement initiative on climate change, has released an interim set of Net Zero Company Benchmark assessments of its focus companies.
This is the second round of Benchmark assessment to be published in 2022. The timing of this release marks a change of the analysis and reporting cycle for the Net Zero Company Benchmark assessments from March to October, to improve alignment with corporate reporting and better support investor engagement with focus companies.
159 companies on the initiative’s focus list were measured on their progress against the initiative’s three engagement goals and a set of key indicators related to business alignment with the goals of the Paris Agreement.
Progress on commitments not matched by credible plans
Though this interim update comes only six months after the previous release, the results are still revealing. While focus companies continue to make progress on net zero commitments, this is not matched by the development and implementation of credible decarbonisation strategies. While mindful of current external factors, including the short-term energy security crisis, investors consider the development of corporate decarbonisation strategies a key priority.
The Benchmark’s Alignment Assessments complement the Disclosure Framework by measuring implementation of Paris-aligned corporate actions. Whilst focus companies are incrementally improving their disclosures under the Disclosure Framework, the latest Alignment Assessments suggest their real-world activities do not yet demonstrate any meaningful shifts in business models at some companies to align with the Paris Agreement.
The assessments reveal:
- An absence of short and medium-term emissions reductions targets aligned with limiting warming to 1.5°C.
- Net zero targets are often not supported by strategies to deliver them
- Scope 3 emissions remain absent
- Alignment of capex strategies with net zero transition goals largely remain missing
The Alignment Assessments, which complement the Benchmark’s Disclosure Framework by measuring implementation of Paris-aligned corporate actions, indicate that despite continued progress on some disclosure indicators, the majority of focus company’s actions are still inadequate in aligning with the Paris Agreement
- Less than one third (eight out of 32) of electric utility focus companies have a coal phase-out plan consistent with limiting global warming to below 2°C (not 1.5°C)
- No change for oil and gas focus companies.
- A step change is still needed in the build out of low carbon technologies by electric utility as well as automotive focus companies.
- The climate policy engagement activities of focus companies and their industry associations remain a barrier to ambitious climate policy.
- The widespread failure to integrate climate risks into accounting and audit practices persists.
Members of the Climate Action 100+ global Steering Committee join investor calls for stepped up climate ambition and action:
Rebecca Mikula-Wright, CEO of AIGCC and IGCC and current vice-chair of the global Steering Committee: “Companies are making net zero commitments, but investors want those companies to turn intentions into concrete short- and medium-term actions to provide the confidence they can get to net zero. Corporate leaders can and should use each new round of Climate Action 100+ assessments to demonstrate their ambitious climate action.”
Seiji Kawazoe, Senior Stewardship Officer at Sumitomo Mitsui Trust Asset Management and a member of the global Steering Committee: “Corporate engagement in Asia over the last five years via Climate Action 100+ has delivered meaningful results. We now need to see even greater progress from companies, namely on developing and implementing credible transition plans to help investors understand companies’ current stage of transition and their plans to reach net zero emissions. The Climate Action 100+ Benchmark is a complementary tool which provides investors with a clear view of where companies are positioned amongst their peers, both regionally and globally.”
Phase two and new public consultation on Net Zero Company Benchmark
This is the final round of Benchmark assessments to be published by Climate Action 100+ in the initiative’s first phase. The investor networks that deliver Climate Action 100+ plan to announce details on the strategy for phase two in H1 2023, ahead of a phased implementation from mid-2023.
The initiative is also today announcing a public consultation on a set of proposals to enhance the Net Zero Company Benchmark. The Benchmark is cited as a crucial tool by many of the initiative’s signatories and wider stakeholders for measuring company progress and identifying engagement priorities.
As Climate Action 100+ enters its second phase in 2023, the initiative is enhancing the Benchmark to ensure that it continues to effectively support investor engagements with focus companies and drives greater company ambition and action on climate change in the critical period up to 2030.
Resources
Read the full media release
View the public summary (presentation)
Read the company assessments
Learn more about the benchmark
Access the public consultation – The consultation will close on 12 November 2022, at 08:59 HKT/SGT | 09:59 JST/KST | 11:59 AEDT