INSIGHT by Climate Action 100+
Climate Action 100+, the world’s largest investor-led engagement initiative on climate change, has launched its next phase to inspire greater corporate climate action in this critical decade.
Building on the demonstrable success of the initiative’s first five years, including an increase from only five Climate Action 100+ focus companies at outset to 75% of themnow committing to net zero, the next seven years mark a further evolution that intends to support a global scale up in active ownership. The new phase shifts focus from corporate climate-related disclosure to the implementation of corporate climate transition plans, to create long-term shareholder value in this critical decade of climate action.
| Key developments for phase two
In consultation with signatories, the initiative has renewed its three goals, evolved the Net Zero Company Benchmark, enhanced the ways in which investors can participate including the lead investor terms of references, and made marginal updates to the focus list.
Specifically, Climate Action 100+ has:
Evolved its core goals through to 2030, encouraging signatories to ask companies to move from words to action, by:
〉Implementing a strong governance framework which clearly articulates the board’s accountability and oversight of climate change risk.
〉Taking action to actively reduce greenhouse gas emissions across the value chain, including engagement with stakeholders such as policymakers and other actors to address the sectoral barriers to transition.
〉Providing enhanced corporate disclosure on and implementing transition plans to deliver on robust targets.
Improved and expanded the ways investors can participate, drawing upon the value and influence of investors to ensure engagement is effective and optimised to drive real change. The initiative will:
〉Introduce a new ‘lead sector investor’ category, to help create the ecosystem conditions needed for sectors to transition.
〉Introduce a new ‘lead thematic investor’ category, allowing signatories to engage on specific themes in any given year.
Enhanced the lead engagement model, with stronger and more robust engagement strategies. In particular, lead investors:
〉Will be asked to submit an annual schedule of engagement, specifying actions and escalations strategies they intend to deploy.
〉Will be able to opt-in to disclosing their organisation’s identity on the Climate Action 100+ website, providing greater transparency and more ways for investors to be agents of change.
〉Will be expected to disclose votes and rationales on Climate Action 100+ flagged votes, where allowable by jurisdiction, practical, and in line with signatories’ own internal policies and business objectives.
Enhanced the Net Zero Company Benchmark, the details of which were published in March 2023.
Signatories are encouraged to reach out to regional networks should they have further questions following the launch of Phase 2. For a complete overview of all changes see our summary of changes*.
| Investors have a vital role to play in the net-zero transition across the global economy
Climate change is reshaping the way the world and the global economy can operate and the science is clear that every increment of warming will worsen the effects. Furthermore, a just transition is critical to enabling the shift to clean energy. Despite the challenges, the transition is accelerating. The global policy environment has never been more supportive of a shift to zero carbon alternatives globally, creating new opportunities for investors, businesses and communities.
As institutional investors seeking to address the material financial risks and opportunities of climate change consistent with their fiduciary duty to their beneficiaries, investor-signatories will work with the companies in which they invest to encourage them to work towards the global goal of halving GHG emissions by 2030 and delivering net zero GHG emissions by 2050, consistent with creating long-term shareholder value and the goals of the Paris Agreement to pursue efforts to limit warming to 1.5°C.
The initiative asks investor signatories to do this by engaging with focus companies to get them to implement a strong governance framework, take action to reduce greenhouse gas emissions across the value chain, and provide enhanced corporate disclosure on, and implement transition plans to, deliver on robust targets.
| about
Climate Action 100+ is an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
