The Net Zero Company Benchmark draws on distinct analytical methodologies and datasets, designed to evaluate focus company performance against the initiative’s goals and provide greater insight for investors on companies’ transition to net zero emissions business models.
The types of assessments can broadly be categorised into two types of indicators, which form a dual approach to evaluate corporate progress. Disclosure Framework Indicators evaluate the adequacy of corporate disclosure. Alignment Assessments evaluate the alignment of company actions with the Paris Agreement goals.
In March 2023, following a consultation with investor signatories, Climate Action 100+ released an updated Benchmark (Benchmark 2.0) Framework to ensure that it continues to effectively support investor engagements with focus companies during this critical decade. View the summary of these changes and the Indicators applicable to the upcoming October 2023 assessments.
DISCLOSURE FRAMEWORK INDICATORS
The Disclosure Framework Indicators, assessed by Transition Pathway Initiative, draw on public and self-disclosed data from companies. These are collected from sources such as company annual reports, sustainability reports, press releases, and Carbon Disclosure Project (CDP) disclosures. The Benchmark is not a disclosure mechanism or database itself, but rather an assessment tool. Companies are assessed against ten indicators:
- Net zero GHG Emissions by 2050 (or sooner) ambition
- Long-term (2036-2050) GHG reduction target(s)
- Medium-term (2026-2035) GHG reduction target(s)
- Short-term (up to 2025) GHG reduction target(s)
- Decarbonisation strategy (target delivery)
- Capital allocation alignment
- Climate policy engagement
- Climate governance
- Just Transition [Beta]
- TCFD disclosure
The elements of the Disclosure Framework are structured by:
- Indicator: Specific area the company is being assessed on (e.g. Indicator 8 evaluates companies on climate governance).
- Sub-indicator: Component of an indicator that divides it into specific areas of interest (e.g. Sub-indicator 8.2 evaluates executive remuneration).
- Metric: Highest resolution assessment that separates Sub-indicators into components (Metrics) that are scored on a Yes/No basis (e.g. Metric 8.2.b focuses on the company’s progress against their climate change targets as a KPI to remuneration).
Each indicator comprises 1-4 sub-indicators; Sub-indicators are comprised of 1-2 metrics. Each metric is assessed on a Yes/No basis from information and evidence published by the company. Based on the results from the metric level assessment, Sub-indicators and Indicators are also scored on a Yes/No/Partial basis (or Not Applicable/Not Assessed), and are then labelled Green/Red/Amber (or Grey) respectively. The Benchmark assessments do not present an overall (or aggregate) score or ranking for the company.
DISCLOSURE FRAMEWORK INDICATOR SUMMARY
Summary of the disclosure Indicators that focus companies are assessed against by TPI. Select your language to download the summary applicable to both the March 2022 and interim October 2022 assessments:
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DISCLOSURE FRAMEWORK METHODOLOGY
Methodology guidance used to collect company data and assess disclosures, as well as describe how assessments are presented (i,e., the Green/Red/Amber ‘traffic light system’). Select your language to download the assessment methodology applicable to both the March 2022 and interim October 2022 assessments:
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ALIGNMENT ASSESSMENTS
Alignment Assessments complement the Disclosure Framework. They provide independent evaluations of the alignment and adequacy of company actions with the goals of Climate Action 100+ and the Paris Agreement.
These assessments come from different data providers of the Climate Action 100+ Technical Advisory Group including Carbon Tracker Initiative (CTI), the Climate Accounting and Audit Project (CAAP), The Rocky Mountain Institute (RMI) (formerly 2 Degrees Investing Initiative,2DII) and InfluenceMap. For the March and October 2022 Net Zero Company Benchmark assessments, they cover the following topics and sectors:
CAPITAL ALLOCATION ALIGNMENT (CTI)
For oil and gas focus companies, CTI’s alignment assessments analyse companies’ potential capital expenditures (CapEX) for unsanctioned upstream oil and gas carbon-emitting assets relative to a range of climate change scenarios. In addition, for electric utility focus companies, CTI’s alignment assessments analyse companies’ announced retirement schedules for their legacy coal and gas-fired power generation capacity and new planned additional carbon-emitting assets relative to a range of climate change scenarios.
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CLIMATE POLICY ENGAGEMENT ALIGNMENT (INFLUENCEMAP)
InfluenceMap’s alignment assessments provide detailed analyses of corporate climate policy engagement and the alignment of company climate policy engagement actions (direct and indirect via their industry associations) with the Paris Agreement goals. Their assessments cover nearly all focus companies.
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CAPITAL ALLOCATION ALIGNMENT (RMI – formerly 2DII)
For electric utility and autos focus companies, RMI’s alignment assessments analyse focus companies’ planned CapEX and production capacity relative to a range of climate change scenario pathways for the sectors. In addition, for steel, cement, and aviation focus companies, RMI’s alignment assessments analyse companies’ planned economic outputs and associated emissions intensities relative to selected climate change scenarios.
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CLIMATE ACCOUNTING & AUDIT [PROVISIONAL] (CTI AND CAAP)
CTI and CAAP’s alignment assessment evaluates whether a focus company’s accounting practices and related disclosures, and the auditor’s report thereon, reflect the effects of climate risk, the global move towards a 2050 (or sooner) net zero emissions pathway, and the Paris Agreement goal of limiting global warming to no more than 1.5°C. This assessment covers nearly all focus companies and is considered Provisional, meaning the information will be collected and publicly assessed for the March and October 2022 iterations of the Benchmark, but the framework will be subject to change in future iterations.
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ADDITIONAL RESOURCES
SUMMARY OF METHODOLOGY UPDATES MADE BETWEEN MARCH 2021 AND MARCH 2022
This outlines the key enhancements to the Benchmark framework and methodologies between the first iteration in March 2021 and the second iteration in March 2022. It includes an overview of the assessments provided by the Benchmark data providers: Transition Pathway Initiative (TPI), Carbon Tracker Initiative (CTI), 2 Degrees Investing Initiative (2DII) (now referred to as The Rocky Mountain Institute,RMI) and InfluenceMap. Select your language to download the summary:
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INVESTOR GUIDE TO SUPPORT ENGAGEMENT IN ASIA
The updated investor guide supports investors engaging with Asian companies on the Climate Action 100+ focus list in understanding how the Net Zero Company Benchmark relates to them and the key challenges they might encounter during the engagement process. Case studies are included to provide examples of how Asian companies are taking actions to meet the indicators of the Disclosure Framework. Although the guide has a focus on supporting engagement in Asia, it is generally applicable across regions.
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