Climate Action 100+, the major institutional investor engagement initiative, today published its first net-zero company benchmark, with the assessment results raising expectations of both companies and investors.
The benchmark does not specifically score or rank the companies, nor use overall numeric or alphabetic ratings, but CA100+ said it provided it with “a groundbreaking tool” and had been designed “to inform investor engagement strategies to drive faster climate action”.
The investor group said the benchmark showed that companies still had a long way to go in delivering on ambitious climate commitments, with none of the 159 companies assessed performing at a high-level across all of the nine key indicators and metrics used to evaluate them.
Very few companies even partially meet the investor engagement initiative’s capital allocation asks, for example. Only BP, Repsol, Total, Unilever, RWE and WEC Energy were deemed to explicitly commit to aligning their future capital expenditures with their long-term emissions reduction target(s).
No company committed to align capital expenditures with a 1.5°C warming scenario or provided key details about how capital allocation was consistent with keeping global warming to 1.5°C above pre-industrial levels.
CA100+ said this showed “a huge gap in corporate reporting on climate risk management”.
The benchmark also found that although 107 companies had set medium-target targets (2026-2035), only 21 met all of the CA100+ group’s assessment criteria, and of the 75 companies with targets up to 2025, only eight met all the criteria.
Adam Matthews, chief responsible investment officer at the Church of England Pensions Board, said: “As we enter the transition decade – the decade during which the key decision on the transition will be taken by companies and investors – this benchmark provides a sharp focus on the distance to be travelled before we can be confident the response to engagement matches the challenge of the Paris climate agreement.”
For campaigners, the benchmark results put more pressure on CA100+ investors as well as companies.
Brynn O’Brien, executive director at the Australasian Centre for Corporate Responsibility, said the benchmark was “a reality check for global institutional capital’s engagement strategies with large emitters”.
“There is no longer room for praising company posturing and losing sight of material progress,” she said. “In the context of the emerging global norm of companies offering shareholders an annual vote on their transition strategies, this benchmark analysis will provide an incredibly useful baseline.”
Mark van Baal of Follow This, a group of shareholders that files climate resolutions at oil majors, said CA100+ had “cleared the smokescreen away from Big Oil”.
“No single oil major can claim to be Paris-consistent anymore,” he added. “We hope CA100+ investors will follow this up with votes in favour of climate resolutions at annual meetings, as that is the only thing boards listen to.”
Asked at a media briefing last week if the assessment results would encourage more CA100+ members to challenge companies, Anne Simpson, managing investment director, board governance and sustainability at CalPERS, said that investors had a fiduciary duty to make their own decisions and that it was important to allow some flexibility as different investors operated in different markets and regulatory contexts.
Matthews said that if one considered where companies were before CA100+ started, the benchmark “clearly shows the impact of coordinated corporate engagement”. He said AGMs were a point within the year, and CA100+ engagement was continuous.
The net-zero benchmark gave CA100+ investors a “common lens” through which to view company progress and to have “an honest and open conversation” with companies.
“This is a complicated, deep transition and this benchmark reflects that we are now understanding some of the depth and the complexity,” he added.
The CA100+ net-zero benchmark assessments can be looked up here.