Climate Action 100+ First Progress Report

By Rebecca Wright 18 November, 2019

How are 370+ global investors managing >USD35 trn in assets pushing climate action from co's? AIGCC's Rebecca Wright shares

In its first progress report released, Climate Action 100+ shows that despite significant progress achieved, far more needs to be done by the worlds’ largest corporate greenhouse gas (GHG) emitters in tackling climate change.

Climate Action 100+ brings together more than 370 global investors with over USD35 trillion in assets under management, in seeking to ensure some of the world’s largest companies take necessary action on climate change. The 161 ‘focus companies’ engaged through the initiative are collectively responsible for over two-thirds of global industrial GHG emissions and represent a combined market capitalisation in excess of USD8 trillion.

Climate Action 100+ brings together 370+ global investors with >USD35 trn in assets under management

Supported by Climate Action 100+ investor engagement, a range of breakthrough net zero emission commitments are now in place. Significant progress has been seen across a range of industries, many of which are among the most challenging to decarbonise. Examples of focus companies making substantial net zero commitments over just the past seven months alone include; Heidelberg Cement, Duke Energy, Nestle, Daimler, VW, Thyssenkrupp, ArcelorMittal, BHP Billiton, Centrica and Saint-Gobain, among others.

Focus co’s engaged are making net zero commitments e.g. Duke Energy, Daimler & more…

…but a significant step change is still required

Despite these examples of first-wave leadership, analysis shows a significant step change is still required from the majority of focus companies in addressing climate change as a strategic business risk.

The Progress Report outlines the goals of Climate Action 100+, the development of the initiative to date, organising and co-ordinating the implementation of collaborative engagement, the supporting governance of the initiative.

Analysis in the report includes sector progress and is demonstrated across the 161 focus companies:

• 70% have set long-term emissions reduction targets. 
• 9% have emissions targets that are in line with (or go beyond) the minimum goal of the Paris Agreement to keep the rise in global temperature to below 2°C, highlighting a crucial ambition gap to be addressed. 
• 8% of companies have policies in place to ensure their lobbying activity is aligned with necessary action on climate change (leaving scope for obstructive, negative or evasive lobbying). 
• 40% undertake and disclose climate scenario analysis, and 30% of companies have formally supported recommendations of the Task force on climate-related Financial Disclosures.
• 77% have defined board level responsibility for climate change.

Numerous case study examples included in the report highlight the significance of shareholder engagement as a key factor in contributing to progress by companies, in line with goals of the initiative.

While Asian co’s may not yet be ready for public commitments, many are becoming more familiar with shareholder engagement…

While Asian companies may not yet be ready for public commitments, many are starting to be more familiar with collective or collaborative shareholder engagement and are starting to view this as an opportunity to work with investors who are part owners of the companies to improve on overall performance around climate risks and opportunities.

To illustrate the engagement landscape in Asia, a summary of the process undertaken to develop the most appropriate framework in Japan is provided. Japanese investors participating in Climate Action 100+ formed a strong foundation for continued engagement and collaboration with their international investor peers. The support and endorsement from the Japanese Government Pension Fund (GPIF) in the initiative and their participation in the Asian Advisory Group has helped to build credibility and momentum. Engagement with financial and corporate regulators and business industry associations was vitally important to lay the foundations for effective and positive engagement between investors and companies.

The example in Japan highlights the need for market specific strategies for Asia, to provide the basis for effective engagement and ultimately, company progress. Recruitment and involvement of local investors are particularly important to help identify appropriate strategies and inform the engagement processes and likewise bringing in international investor peers to partner with them, brings different perspectives and experience. Case studies for PetroChina and PTT (Thailand) are also featured in the report.

The challenge ahead is to align all 161 co’s with the goals of the Paris Agreement…

…engagement will focus on reaching net zero emissions by 2050, implementing of TCFD recommendations etc.

The challenge ahead is clear. While companies across many sectors have announced ambitious goals, the task of moving all 161 companies into alignment with the goals of the Paris Agreement has only just begun. Engagement priorities ahead will focus on lobbying reform, goals or targets for emissions reductions towards net zero by mid-century, implementation of TCFD recommendations, recruiting new investor signatories particularly in Asia, Africa and Latin America, and working with partners to measure impact.

This initiative has become a vitally important tool to collectively reiterate to companies that investors, as part owners of their investee companies, want them to succeed now and in the long-term. With climate impacts affecting companies and their supply chains, investors need companies to articulate how they are adapting their strategies to successfully transition to net zero by 2050.

About Climate Action 100+: 

Climate Action 100+ is a five-year investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. More than 370 investors with over $35 trillion in assets collectively under management are engaging companies on improving governance, curbing emissions and strengthening climate-related financial disclosures. The companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition. 

Launched in December 2017, Climate Action 100+ is coordinated by five partner organisations: Asia Investor Group on Climate Change (AIGCC); Ceres; Investor Group on Climate Change (IGCC); Institutional Investors Group on Climate Change (IIGCC) and Principles for Responsible Investment (PRI). These organisations, along with five investor representatives from AustralianSuper, California Public Employees’ Retirement System (CalPERS), HSBC Global Asset Management, Ircantec and Manulife Investment Management, form the global Steering Committee for the initiative. For more information, visit: www.ClimateAction100.org and follow: @ActOnClimate100.

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