Climate Action 100+ is a voluntary initiative that brings together – and builds on – a number of pre-existing, investor-led, engagement initiatives that had been operating in different regions of the world. In signing up to Climate Action 100+, investors commit to engaging with at least one of 166 focus companies that are strategically important to the net-zero emissions transition and to seek commitments on the initiative’s key asks:
- Implement a strong governance framework on climate change;
- Take action to reduce greenhouse gas emissions across the value chain and;
- Provide enhanced corporate disclosure.
Asset owners who cannot engage directly can sign on to the initiative as supporters, which requires them to support the Climate Action 100+ goals and request their managers or service providers join the initiative.
WHO’S INVOLVED IN CLIMATE ACTION 100+
The initiative is led by its participating investors who determine the focus companies they wish to engage, the engagement strategy pursued with each and update the initiative on progress. The engagement of investors is assisted by five investor networks from different parts of the world: the Asia Investor Group on Climate Change (AIGCC), Ceres, the Investor Group on Climate Change (IGCC), the Institutional Investor Group on Climate Change (IIGCC) and Principles for Responsible Investment (PRI). The investor networks, as cofounders of the initiative, provide secretariat support for investors, help facilitate initiative meetings, provide technical assistance and create opportunities for engagement skills enhancement. The investor networks also lead regionally-focused working groups that support engagement with a subset of focus companies to provide participating investors with resources and help to ensure engagements are effective.
The initiative is overseen by a global Steering Committee comprising investor representatives and the heads of the five supporting investing networks. The initiative also receives advice from a Technical Advisory Group and an Asia Advisory Group.
Climate Action 100+ as an initiative will not act or speak directly on behalf of the participating investors. While signatories can refer to their participation in Climate Action 100+, they do not represent the initiative, all signatories or the full assets under management they are responsible for.
HOW THE FOCUS COMPANIES WERE CHOSEN
Engagement through Climate Action 100+ is focused on 166 companies who have a major role to play in the transition to a net-zero emissions economy. At the outset of the initiative, the 100 companies across the planet with the highest combined direct and indirect greenhouse gas emissions were identified from the MSCI All Country World Index and using CDP modelled and reported data. The initial 100 ‘focus companies’ are responsible for up to two-thirds of annual industrial carbon dioxide emissions, according to CDP.
In July 2018, an additional 61 companies were added to the focus list. Investors were invited to nominate additional focus companies that are material to their investment portfolios and are critical to the transition to a net-zero emissions economy, or may be exposed to climate-related financial risks not captured by emissions data. These additional companies form what is called the ‘plus (+)’ list. The initiative updates the focus list as required, removing or adding companies, to take account of factors such as changes in ownership or adding companies where appropriate on a select case-by-case basis.
Investors concerned about climate change have never been better organised, thanks to Climate Action 100+…nor have they ever had more success.
ENGAGEMENT PROCESS
As independent fiduciaries, investors are responsible for driving each engagement and, developing and implementing, the company specific engagement priorities and strategy. When investors sign up to the initiative they nominate the companies they would like to engage with and in what capacity. Climate Action 100+ does not facilitate or require collective decision-making regarding an investment decision. The initiative will not provide recommendations to investors to divest, vote in a particular way or make any other investment decision.
Engagement with specific focus companies is conducted by investors, headed by a lead investor or investors and supported by a number of collaborating investors. Investors can also engage with companies on an individual basis, but are required to share information with the engagement working group and the coordinating investor network. Investors have adopted a wide range of engagement approaches such as sending a formal letter or conducting meetings with the company board and senior executives. If dialogue needs to escalate, investors may decide to file a shareholder resolution or exercise voting rights to hold directors and management accountable for climate-related issues at an Annual General Meeting.
SHAREHOLDER RESOLUTIONS
Investor signatories are responsible and accountable for their own voting decisions on climate-related shareholder resolutions, including any pre-declaration or vote solicitation. Climate Action 100+ does not seek to provide voting recommendations or to facilitate block voting. The Climate Action 100+ initiative may flag certain shareholder proposals or management votes and include on its website information from the lead investors and other investor signatories filing or co-filing relevant shareholder resolutions.
The initiative maintains a process for flagging shareholder resolutions that are filed by Climate Action 100+ signatories that align with the goals of the initiative and the Climate Action 100+ Net-Zero Company Benchmark. Non-signatory filed resolutions, where these are deemed highly relevant, may also be disseminated by network partners in specific regions on a case-by-case basis. All signatories to Climate Action 100+ are independent fiduciaries and vote in accordance with their own voting principles and independent internal investment analysis. Climate Action 100+ as an initiative will not file shareholder resolutions, nor require that investors support specific shareholder resolutions.