Climate accounting is one of five priority topics for inclusion in future versions of the net-zero company benchmark developed by Climate Action 100+, according to a report from the $52trn (€41.7trn) investor engagement initiative.
A 1.5°C scenario, expanding sector emissions target alignment methodologies, developing requirements related to a “just transition”, and expanding the green revenue indicator to non-EU companies are also on the agenda, the report indicated.
CA100+ said the additional methodologies and indicators related to those areas were expected to be developed in time for the 2022 benchmark.
With regard to climate accounting, CA 100+ said “a top priority is the development of a new disclosure indicator to assess whether or not a company’s accounting practices and related disclosures reflect consideration of transition risk relative to a range of possible climate scenarios”.
The engagement network introduced the benchmark earlier this year, which it will use to publicly assess focus companies. The focus companies compromise the world’s 100 largest corporate greenhouse gas emitters and over 60 more who are deemed critical to accelerating the transition to net-zero emissions.
The first full company-level assessment against all the indicators in the benchmark is underway and will be released in the form of company “scorecards” in early 2021.
In this year’s progress report, a subset of the benchmark indicators were used to assess company performance at the sector-level.
“We are in the foothills of a long climb”
Anne Simpson, CalPERS managing investment director, board governance and sustainability, and member of the CA100+ global steering committee
The 2020 progress report found that almost half of CA100+’s focus companies now had goals or commitments for net-zero emissions by 2050 or sooner, but that only 10% had net-zero targets including coverage of their most material indirect (Scope 3) emissions.
Other findings included that 194 new oil and gas projects sanctioned by focus companies this year are misaligned with the Paris Agreement goals, as was 68% of planned oil and gas capital expenditure.
“We are in the foothills of a long climb,” said Anne Simpson, CalPERS managing investment director, board governance and sustainability, and member of the CA100+ global steering committee member.
“Tackling the world’s systemically important carbon emitters is ambitious and necessary. It requires partnership from all sides: investors, companies, policymakers, and civil society.”
She added: “The results from Climate Action 100+ show what can be achieved, and what still lies ahead, for us to drive the transition to net zero by 2050.”
Energy companies agree transition principles
Yesterday’s release of CA100+’s progress report coincided with eight leading energy companies announcing agreement on principles for the energy transition.
Adam Matthews, chair of the CA100+ European investor working group on a net-zero standard, welcomed the move as “an important foundational commitment”.
“It represents a significant consolidation of the progress that has been made in Europe whilst also seeing the first US oil and gas company joining with their European peers,” he said.
“As CA100+ investors we are in extensive and detailed dialogue with the oil and gas sector and it is extremely helpful to have a position from these companies that unifies around core principles including on scope 3 emissions and corporate lobbying amongst others.”