Climate Action 100+, the investor engagement initiative on climate change, has issued its first benchmark to evaluate the net zero ambition and action of the world’s largest greenhouse gas (GHG) emitters.
The initiative ranks companies’ performances against its three main commitment goals, which are reducing GHG emissions, improving governance and strengthening climate-related financial disclosures.
It has been developed alongside climate research and data organisations including the Transition Pathway Initiative (TPI), Carbon Tracker Initiative (CTI), 2° Investing Initiative (2DII) and InfluenceMap (IM).
While the need for ambitious climate commitments is growing within companies, the benchmark assessments highlight that they still have a long way to go to deliver them.
The results assert none of the companies assessed performed at a high-level across all nine indicators and metrics used to evaluate and none fully revealed how they would achieve net zero by 2050 or sooner.
Although 52% of the companies assessed pledged to achieve net zero, half of these did not have commitments in place that covered the full scope of their emissions. There was a key issue in targets meeting the assessment criteria; 107 companies set medium-term targets but only 21 of these met the necessary standard.
Climate Action 100+ revealed that 87% of companies assessed have executive and board-level oversight of climate change and stressed the need for change to occur at the top if goals are going to be met.
The $54 trillion (£39tn) investor-led initiative has stated the benchmark was set up to define the key elements of a ‘net zero aligned’ business strategy. It also stated that low-performing companies reflect how most of the world’s largest companies are still in the early stages of their net zero journey and require more clarity on what a robust ‘net zero aligned’ strategy is to get them on their way.
Anne Simpson, Managing Investment Director, Climate Action 100+ Steering Committee member, said: “The Climate Action 100+ net zero company benchmark moves us from ‘why’ to ‘how’ companies make the net zero transition.
“It sets out the indicators that matter to investors, including CapEx, board governance and climate reporting. We cannot manage what we cannot measure. The benchmark gives us the tool needed for engagement and to inform our proxy voting.
“The first assessments show the scale of ambition, where we are and where we need to get to, with measures along the way. We’re in the foothills of a long climb. This is tough, but necessary.”