Climate Action 100+ is looking to make companies and signatories more accountable for their actions with regard to net-zero goals in the next phase of its life, according to an update from the $68trn investor engagement initiative.

Launched in 2017, the initiative is in the fifth and final year of its first phase and will move into its second phase in 2023.

Releasing the results of its second round of company net-zero benchmark assessments today, it said the second phase “will see increased ambition, urgency and accountability for both companies and signatories to play their role in the net zero emissions transition”.

A spokesperson for Climate Action 100+ said he could not provide further information.

Last month a report from US-based NGO Majority Action said the proxy voting behaviour of many of Climate Action 100+’s largest signatories was “systematically undermining” the initiative’s efforts and that of its leading investors.

‘Disappointing results’

Today the initiative said results from the latest round of its corporate net-zero assessments were “disappointing” .

This appears in line with the first assessments against the initiative’s net-zero company benchmark, although some progress is seen and the methodology has to a certain extent been tightened, with companies assesses against the International Energy Agency’s more challenging net-zero by 2050 scenario for available sectors.

In this second round of assessments, 166 companies were analysed. Climate Action 100+ said the assessments indicated overall year-on-year improvements on cutting greenhouse gas emissions, improving climate governance and strengthening climate-related financial disclosures.

However, it said it was “alarming” that the vast majority of companies had not set medium-term emission reduction targets aligned with 1.5°C or fully aligned their future capital expenditures with the goals of the Paris Agreement, despite more companies making net zero commitments.

According to the assessments, only 17% of focus companies have set medium-term targets that are aligned with the IEA’s 1.5°C scenario and cover all material emissions.

Only 5% of focus companies explicitly commit to align their capital expenditure plans with their long-term greenhouse gas reduction targets and only 17% of companies have robust quantified decarbonisation strategies to reduce their emissions.

Action wanted

Climate Action 100+ called these and other results disappointing “as they are focussed on areas which demonstrate tangible translation of commitments into action, indicating what companies are going to do over the short term to achieve their longer-term goals”.

“They also come amongst broader evidence that the world is failing to step up to the meet the challenges of the growing climate crisis,” the initiative said in a statement.

Shareholder campaign group Follow This said the alliance’s assessments showed no oil major has emissions reduction targets for 2030 in line with the Paris climate agreement.

“It’s paramount that CA100+ removes all doubt that a single oil major is Paris-aligned, because some oil majors claim to be,” said Mark van Baal, lead for Follow This. “Pledges for 2050 are empty without deep emissions cuts before 2030. Big Oil can make or break the Paris Accord this decade.”

“Overall the Net Zero Company Benchmark clearly shows that focus companies are not making the progress required to align with achieving the 1.5°C climate goal”

Stephanie Maier, global head of sustainable and impact investment at GAM Investments and chair of the CA100+ steering committee

Climate Action 100+ itself said it was calling on all focus companies to step up climate ambition before a third round of net-zero benchmark assessments later this year, and that investors were also expected to escalate pressure on companies and boards during the upcoming proxy season in the US and Europe, following last year’s record high majority votes on climate proposals.

“Overall the Net Zero Company Benchmark clearly shows that focus companies are not making the progress required to align with achieving the 1.5°C climate goal agreed in Paris and reaffirmed in Glasgow last year,” said Stephanie Maier, global head of sustainable and impact investment at GAM Investments and current chair of the global Climate Action 100+ steering committee.

“Given that these companies represent the world’s largest corporate greenhouse gas emitters, their ambition and pace of change is critical to a successful transition and needs to accelerate. The latest IPCC report starkly outlined the social and economic imperative for this.

“As a consequence, we should expect a ratcheting of investor-led shareholder resolutions as well as increased scrutiny on transition plans brought to the vote, starting with the imminent AGM season.”

Last month, in response to the Majority Action report, Maier had told IPE that although there had been notable progress in recent years “there undoubtedly remains much to do if Climate Action 100+ investors are to achieve what no other initiative has been able to do: rapidly move the largest emitting companies towards a net zero future.”

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