Climate Action 100+ Net-Zero Company Benchmark

Climate Action 100+ is a global initiative with the main objective of ensuring that the largest greenhouse gas emitting companies in the world take necessary actions to concretely combat climate change, to date it involves over 500 investors internationally with over $ 47 trillion in assets.

Launched in December 2017, it seeks to specifically support 161 focus companies, which are key to the global transition to net zero emissions, in their efforts to align their business strategies with the goals enshrined in the Paris Agreement. The companies involved in the initiative are collectively responsible for up to 80% of global industrial greenhouse gas emissions.

Despite the significant progress made by some focus companies, the gap between where we should be and where we really are is still too large, and it is for this reason that Climate Action 100+ has decided to send a letter to the main companies inviting them to implement net-zero business and setting goals to support the transition.

The letters inform CEOs that companies will be subject to evaluation on the progress made in becoming carbon neutral companies, in fact they are working with some of the main research organizations to create "Climate Action 100+ Net-Zero Company Benchmark '', a tool that will be released in 2021 and able to provide a complete and accurate analysis of which companies are driving the necessary net-zero emissions transition.

Climate Action 100+ however highlighted the progress made by companies and in line with expectations and investors, including:

  • Climate change governance: 120 companies have to date appointed a member of the board of directors or a board committee with explicit responsibility for overseeing climate change.
  • Alignment of their supply chain emissions in line with the Paris targets: 50 companies have indicated that they have reached the net-zero emissions target by 2050 or earlier.
  • Task Force for Climate-related Disclosure (TCFD): 59 companies formally supported the TCFD Recommendations through official statements.


The letter shared with the executives acknowledges and therefore underlines the progress seen to date. However, it also stresses the importance of more action, in accelerating the reduction of emissions, in achieving net zero emissions and in preventing the devastating impacts of climate change.

 

The benckmark was designed to clarify investor expectations and will be used to assess the company's action and ambition in addressing climate change. Despite the importance of the transition to a net-zero emissions economy, it is necessary to standardize what constitutes a business strategy "aligned to net zero" and how to measure alignment with a transition path of 1.5 ° C.

The benchmark provided through the initiative provides guidance for companies to identify the path needed to address this issue in their respective sectors and regions, and contains the following indicators:

  • Ambition: if the company has set an ambition to reach the net-zero emissions target by 2050 (or earlier);
  • Targets: if there are clear greenhouse gas reduction targets in the short, medium and long term that are able to consider all emissions (Scope 1-2-3) and aligned aligned with a global warming trajectory of 1, 5 ° C;
  • Decarbonization strategy: whether the company has a solid decarbonization strategy to achieve these goals;
  • Capital alignment: if an assessment has been made of the extent to which the capital investments of a carbon-intensive company are consistent with the objectives of the Paris Agreement;
  • Climate policy support: whether the company has developed a clear commitment and set of information that clarifies its intent to support climate policy, along with a demonstration of how direct and indirect lobbying is consistent with this intent;
  • Governance: if the company has effective supervision by the board of directors and the remuneration linked to the achievement of the objectives (as described in point 2);
  • Just transition: If the company has disclosed information on how to achieve a "just transition" - taking into account the impact on employees, communities and other stakeholders - and has been incorporated into the company's transition planning;
  • Reporting: Whether the company's overall climate risk reporting is consistent with the TCFD recommendations.

There is already a wide range of climate dissemination initiatives and platforms available to investors. The Climate Action 100+ Net-Zero Company Benchmark is designed to provide a complementary and reinforcing assessment of existing initiatives.

The letter was signed by members of the Climate Action 100+ Steering Committee, including investor representatives and CEOs of five investor networks - AIGCC, Ceres, IGCC, IIGCC and PRI - involved, on behalf of the entire initiative.

 

 

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Photo by Ella Ivanescu on Unsplash
Climate Action 100+ Net-Zero Company Benchmark