Investors and their representatives (‘investors’) engaging Centrica through Climate Action 100+* (EOS at Federated Hermes Limited and Redwheel) recognise the company’s progress in strengthening its Climate Transition Plan (CTP). The company’s updated CTP, released in January 2025, refined its transition strategy to capture climate opportunities, including updated targets and details on its decarbonisation approach. This was informed by ongoing, collaborative engagement with investors.
Context
In 2021, investor engagement with Centrica began under Climate Action 100+, focusing on the company’s energy transition strategy. The company’s 2022 CTP was a step forward, but investors identified gaps in strategy and risk management at the time and deepened their engagement with the company.
In 2024, Climate Action 100+ investors participated in a series of technical engagements with company stakeholders across both the management and board level. These allowed an exchange of views on strategic opportunities for the energy transition and covered areas including:
- Decarbonisation of gas-fired electricity generation
- Commercial levers for low-carbon heat provision
- LNG growth strategy
- Public policy advocacy strategy
Outcomes
Centrica’s updated CTP increased ambition across key dimensions and improved disclosures, supporting investors to better appraise the commercial impact of its strategy. The plan now includes quantified decarbonisation levers across electricity, heat and gas, with clear policy dependencies and advocacy actions. The new CTP received a higher level of support from shareholders in the 2025 AGM (93.44%), compared to the previous CTP vote in 2022 (79.96%).
The company set enhanced targets for Scope 1 and 2 emissions pertaining to baseload power generation, gas production, storage, and LNG shipping, alongside its Scope 3 targets relating to customer gas and electricity emissions. Investors looking to assess the alignment of utilities’ natural gas retail emissions (Scope 3) targets can use IIGCC’s methodology.
Centrica’s enhanced disclosure enabled the company to improve on the 2025 Climate Action 100+ Benchmark assessment. Specifically, Centrica’s quantification of decarbonisation levers, disclosure of approach to offsets and negative emissions technologies and disclosure of abatement measures resulted to an improvement on Indicator 5: Decarbonisation Strategy. Additionally, its disclosure on capital expenditure allocation to unabated carbon-intensive assets and climate solutions improved its score on Indicator 6: Capital Allocation.
John Teahan at Redwheel:
“Our engagement with Centrica, through the CA100+ Collaboration, was both long-term and comprehensive. It was grounded in our desire as investors to ensure Centrica was well positioned for the energy transition and aligned with the UK path to Net Zero. It was characterised by a very constructive approach on the part of the company, building into deep mutual trust that culminated in an intensive exchange as the company developed their updated Climate Transition Plan”
Bruce Duguid, Head of Stewardship, EOS at Federated Hermes Limited:
“The energy transition presents a considerable commercial opportunity for utilities companies such as Centrica through leadership in low-carbon solutions and new service offerings. The CA100+ engagement has enabled a constructive exchange of views on a broad range of strategic opportunities and transition risks.”
*Please see Climate Action 100+ disclaimer here.