Ceres: Climate Action 100+ Investors Seek Net Zero Business Strategies Through Company Engagement
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- Breakthrough commitments have been achieved, yet step change in broader corporate response to climate change is necessary given
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In its first progress report released today, Climate Action 100+ shows that despite significant progress achieved, far more needs to be done by the world's largest corporate greenhouse gas (GHG) emitters in tackling climate change.
Climate Action 100+ brings together more than 370 global investors with over
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;
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.
"We are now at a tipping point. A significant number of companies have made bold commitments to achieve net zero emissions, with others increasingly following suit," explains
Analysis in the report demonstrates 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/4.
* 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.
This and other data in the report is provided by leading climate research partners to the initiative, and provides an initial baseline of progress against the core goals of the initiative across relevant sectors. The research partners include Carbon Tracker Initiative, CDP, InfluenceMap, Transition Pathway Initiative and 2 Investing Initiative, with additional data provided by the Science Based Targets Initiative.
The need to ensure a smooth and orderly transition to a decarbonised global economy has never been clearer, while the latest science shows the scale and pace of change must be rapid. Given the size of their collective GHG emissions as 'systemically important emitters', a more ambitious response by the Climate Action 100+ focus companies is pivotal - on both a company and global level - in ensuring the transition is realised in the timeframe required.
"Investor engagement through Climate Action 100+ is playing a major role in changing corporate attitudes on climate change and we have seen some very significant commitments from companies," adds
Issued by the Climate Action 100+ steering committee, the report also contextualises the contribution investor engagement has made to progress achieved to date. Highlights and broader examples of impact include:
* Securing four Climate Action 100+ investor led agreements with global companies -
* Breaking new ground in defining investor expectations on corporate lobbying activity, to ensure activity is aligned with and supports delivery of the Paris Agreement on climate change. 11 commitments have been secured to date from companies in line with investor expectations, to review and act on alignment of lobbying activity, inclusive of trade bodies/5.
* Mainstreaming the expectation that companies need to take responsibility for and act on emissions across their value chain (scope 3 emissions).
* Defining new approaches to alignment of emissions in line with the goals of the Paris Agreement, through both target-setting and future capital expenditure.
"Climate change is a financial risk of unprecedented scale and impact," said
The initiative has also achieved significant progress in 'mainstreaming' shareholder engagement by investors globally. Highlights include:
* Achieving over 65% growth in investor participation in the initiative since launch, with an additional
* Setting new records for investor support of climate change shareholder resolutions. This includes the largest ever co-filing backing secured for a climate change shareholder resolution (from investors owning equivalent to 10% of BP in the form of a
* Setting a new precedent on the scale, growth and nature of collaborative investor engagement across
* Building further capacity and strengthening investor engagement globally.
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.
The global role and impact of Climate Action 100+ has been especially transformative. This has been achieved in large part through the collaboration of the five regional partner organisations with a key role in driving the initiative forward. They are: the
Investors are nonetheless cognisant of the significant progress that still needs to be seen from focus companies. Priorities for engagement to help build on existing momentum include:
* Lobbying reform: securing more disclosure commitments on climate lobbying and expecting companies to demonstrate support for critical climate policy.
* Net zero goals or targets: expecting companies to articulate how their businesses are compatible with the carbon neutral world envisaged by the Paris Agreement. Building on existing engagement, this includes long-term goals to achieve carbon neutrality mid-century, supported by medium- or short-term targets and appropriate business plans.
* TCFD implementation: looking for all of the 161 companies to produce credible TCFD reporting and climate scenario analysis that tests the financial resilience of the business.
The focus by investors on net zero emission targets is in line with the latest science in meeting the Paris Agreement's preferred target to keep global warming below 1.5 C/7. This builds on existing engagement through the initiative and will increasingly be a priority in dialogue with companies/8.
Publication of the progress report follows a key United Nation's climate conference in
"Cutting carbon in half by 2030 and reaching net zero carbon before 2050 will help avoid the most catastrophic impacts of climate change on our economy, communities and environment," said Mindy Lubber, CEO and President of Ceres and steering committee member, Climate Action 100+. "In the first two years of Climate Action 100+, we have already seen progress towards this goal. But time is running out. We need more investors to join us in our efforts and more companies to act on the global climate crisis more quickly, boldly and broadly than ever before."
Other members of the Climate Action 100+ steering committee, commenting on report findings and progress of the initiative, explain:
"Climate Action 100+ is the most ambitious investor engagement initiative launched to date - and rightly so given the scale and urgency of the challenge we face," adds
"The future of the climate and the future of investing are completely intertwined," adds
"We have already shown the benefits collaboration with investors offers," explains Laetitia Tankwe, Adviser to Ircantec President
"Given climate change threatens the ability of long-term investors to generate investment value and meet their investment objectives over time, the importance of the Climate Action 100+ initiative cannot be underestimated," sets out
"As we reflect on the meaningful progress of Climate Action 100+, we also look forward to even greater engagement and action from corporations to reduce their greenhouse gas emissions," explains
"This initiative is 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," adds
Footnotes:
1/34 leading central banks have highlighted that global assets in the order of
2/ See report or here for a full list of focus companies.
3/ With many commitments made in a short timeframe, this points to a growing comprehension of the significant change required and a display of corporate leadership for other companies to follow. The pace of progress with recent announcements means there is a lag in how these commitments are factored into analysis within the report.
4/ Some 39% of the 161 company focus list were not able to be assessed on alignment with the goals of the Paris Agreement.
5/ 11 commitments to produce reviews of lobbying activity from companies across industrials, mining, oil and gas: namely Anglo American, ArcelorMittal,
6/ Individual investor signatories have grown from 225 (representing
7/ IPCC special report on the impacts of global warming of 1.5 C (see here).
8/ While expectations will be tailored to sector and company specific engagement strategies, commitments would be expected to cover both company operational and value chain (scope 3 emissions).
9/ Many countries, with the addition of the EU, are in the process of developing, setting or have already passed net zero emissions target legislation. This includes the
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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
Launched in
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