How was the Benchmark developed?
The Benchmark framework was developed during 2020 with EY and through collaboration and feedback with almost 50 signatory investors, investor network experts, leading climate research and data organisations and corporate stakeholders to establish assessment indicators that are robust, fair, and applicable to local markets and across sectors. The Climate Action 100+ Technical Advisory Group, comprised of Carbon Tracker Initiative (CTI), InfluenceMap (IM), Transition Pathway Initiative (TPI) and 2° Investing Initiative (2DII), has been central to the overall development of the new Benchmark and the indicators used to assess focus company alignment. This benchmarking project was undertaken through the leadership and support of the Climate Action 100+ Steering Committee and the investor network staff.
What companies are assessed?
The benchmark resets and clarifies investor expectations for what the Climate Action 100+ focus companies need to do and provides a mechanism for tracking progress. The first set of company assessments will include the initial 160 focus companies of the initiative. With the exception of Uniper, the additional companies added to the Climate Action 100+ focus list in November 2020 will not be scored in the first iteration of the benchmark. However, these companies will be included in the next assessment cycle.
How is the common Climate Action 100+ engagement agenda advanced by the Benchmark?
Climate Action 100+ seeks to focus investor engagement on the world’s largest greenhouse gas (GHG) emitters, including emissions across the value chain, and companies that present the greatest climate-related risk to portfolios or that have a significant opportunity to drive the net-zero economy transition. The Benchmark supports this objective by providing investors and other stakeholders with a tool that is both transparent and robust to facilitate focus company engagement and action.
How does the Benchmark align with the existing Climate Action 100+ Company Dashboard for Investors?
In 2019, Climate Action 100+ took a first step at helping signatories assess focus companies against the initiative’s goals by releasing a repository of data known as the Climate Action 100+ Company Dashboard. The dashboard displayed a range of performance indicators developed by selected data providers that included TPI, CTI, 2DII, and InfluenceMap. The new Benchmark builds upon the Climate Action 100+ Company Dashboard, providing enhanced and more granular guidance on how focus companies can align their business strategies with the goals of the initiative and a net‐zero emissions future. The Benchmark will ultimately supplant the dashboard as the main source of engagement relevant company data for the initiative.
How does the Benchmark drive high company ambition?
Signatories have agreed on a common engagement agenda that seeks commitments from boards and senior management to reduce GHG emissions across the value chain consistent with the Paris Agreement goal of limiting global average temperature increase to well below 2°C above pre-industrial levels and pursuing efforts to limit the increase to 1.5°C.
Higher ambition was embraced by signatories following the October 2018 release of the Intergovernmental Panel on Climate Change’s (IPCC) Special Report on the Impacts of Global Warming of 1.5°C which demonstrated the direct and immediate benefits of limiting global warming at 1.5°C. Achieving this goal requires a global reduction in GHG emissions of about 45 per cent by 2030, and net-zero emissions by 2050 or sooner. The Benchmark indicators are consistent with this level of ambition.
Of note, the necessary timeframe for companies to achieve net-zero emissions differs depends on the sector. Some companies in certain sectors, such as electric utilities, may be expected to set more ambitious goals and achieve net-zero emissions by 2040 or even sooner. Future iterations of the Benchmark will reflect these sector differences.