Climate Action 100+ worked with EY to develop a framework for capturing and structuring the data needed to assess company performance against the initiative’s goals and those of the Paris Agreement. This work involved 50 signatory investors, investor network experts, leading climate research and data organisations and corporate stakeholders. The resulting framework became the Climate Action 100+ Net Zero Company Benchmark.
The Climate Action 100+ Technical Advisory Group is made up of Carbon Tracker Initiative (CTI), InfluenceMap (IM), Transition Pathway Initiative (TPI) and 2° Investing Initiative (2DII). This group has been central to the overall development of the Benchmark, as well as to the indicators and assessments used to evaluate alignment with the initiative’s goals. The Benchmark was developed under the leadership and support of the Climate Action 100+ Steering Committee and the investor network staff.
Once the Benchmark was finalised, TPI was selected to conduct the company research and analysis for the Disclosure Framework. Additionally, CTI and 2DII were chosen to analyse focus company capital expenditures (CapEX) and output relative to a range of climate change scenarios. These were initially called “Capital Allocation Indicators” and were available for companies in select sectors. They are now known as “Alignment Assessments”. The 2021 assessments also include a link to Influence Map (IM)’s data on corporate climate policy engagement practices and their individual IM company profiles to provide deeper insights into focus company approaches to climate policy engagement.
The Climate Action 100+ Steering Committee and lead investors sent a letter to the CEO and lead independent director(s) of the focus companies. The letter was accompanied by a provisional copy of the Benchmark framework and other relevant contextual information. The objectives of the letter were to introduce the new standardised progress reporting framework for Climate Action 100+ and outline expectations linked to the new Benchmark. It also encouraged companies to make new commitments and provided an opportunity to participate in the development and implementation of sector-specific netzero transition action plans.
The framework for the Climate Action 100+ NetZero Company Benchmark was publicly announced in the initiative’s 2020 Progress Report. Preliminary company assessments against the Disclosure Framework were prepared by TPI based on public data as of 30 September 2020. Companies, as well as Climate Action 100+ lead investors and individual engagers, were invited to review these assessments for accuracy of data. Companies were invited to provide factual evidence to contest any inaccuracies, as well as submit any new and valid publicly disclosed information for consideration.
Climate Action 100+ published the first Net Zero Company Benchmark company assessments, ahead of the 2021 US and Europe proxy season.
The Benchmark assessments highlighted that whilst there was growing global momentum around focus companies making ambitious climate commitments (52% had announced a net zero emissions ambition by 2050 or sooner in some form), on the whole focus companies still had a long way to go in delivering on these promises. No focus company performed at a high-level across all of the nine disclosure-based Indicators and Metrics that were used to evaluate each company.
Similarly, the alignment assessments provided by CTI and 2DII showed that there was still much to be desired in terms of aligning companies’ CapEX and economic outputs with the Paris Agreement goals.
Climate Action 100+ announced the timeline, amendments to the Benchmark framework and methodologies for the March 2022 company assessments. Among other amendments, these updates reflect evolving investor priorities around climate accounting and audit and the just transition. New Alignment Assessments were added to provide further information on company climate policy engagement approaches as well as detail on how the emissions intensities of steel, cement, and aviation companies stacked up against key climate scenarios.
Climate Action 100+ opened a public feedback survey on the framework and methodologies used for the March 2022 Benchmark company assessments. The survey was open until 30 April 2022 and is now closed. The feedback will be collated and considered for integration into the methodology used for company assessments in 2023.
Focus companies received their preliminary assessments using the Disclosure Framework on 1 December, prepared by TPI based on public data as of mid-November 2021. Companies, as well as Climate Action 100+ lead investors and individual engagers, were invited to review these assessments for accuracy of data and provide factual evidence to contest any inaccuracies, as well as submit any new and valid publicly disclosed information for consideration by 31 December 2021.
Climate Action 100+ published the second set of Climate Action 100+ Net Zero Company Benchmark assessments, ahead of the 2022 US and Europe proxy season.
The Benchmark will continue to evolve based on investor priorities and the latest available information and methodologies for assessing companies’ climate transition preparedness and alignment with the goals of the Paris Agreement.
Over time, future developments of the Benchmark will likely incorporate a range of other potential enhancements on areas such as offsets, absolute emissions, climate policy engagement, just transition, green revenues, and expanded sector alignment with 1.5°C, among others.
Consultations on the Benchmark framework and the timing of future iterations will be announced in due course. General feedback and questions are welcomed at [email protected].