Will focus companies be scored using the Climate Action 100+ Net-Zero Company Benchmark?
The objective of the new Benchmark is to support investor engagement with focus companies. To support this objective, we will produce a scorecard for each company reflecting the results of the company research and assessment of its disclosed information. Company disclosures will be assessed as: Yes, No, Partial or Not Assessed. As every component of the Benchmark is important, a total or overall score for each company is neither useful, nor will it be provided.
Will the focus company assessments be used to rank companies?
The purpose of the new Benchmark is not specifically to rank companies, nor is it a disclosure mechanism or database. The Benchmark and associated company assessment results are intended to draw attention to the most significant aspects of corporate strategy and action related to emissions reductions, with some indicators having greater relevance at certain companies or sectors than others. Sector-level assessment results will be developed and released following the company scorecards to allow comparisons between a company and its peers.
What is the data collection period for company assessments using the Benchmark?
Individual company scorecards will reflect assessments that are as up-to-date as possible. To achieve this, TPI will provide freshly collected data by mid-December 2020 reflecting a 30 September 2020 cutoff date for initial data capture. A fact checking period then begins in mid-December 2020, allowing companies, investor engagement leads, and individual engagers the opportunity to review the preliminary company assessments and flag any material disclosures that have occurred post 30 September 2020. If the new disclosures meet the necessary requirements, they must be submitted by 22 January 2021 for this information to be considered, and potentially reflected in the final company scorecards scheduled for release during the first quarter of 2021.
How have company assessments been communicated to focus companies?
In late August and early September 2020, the Climate Action 100+ Steering Committee and lead investors sent a letter (via email) to the CEO and lead independent director(s) of the focus companies. The letter was accompanied by a copy of the Benchmark and other relevant contextual information. The objectives of the letter were to:
- Ensure companies are aware of the introduction of the new standardised progress reporting framework in Climate Action 100+, and most importantly, expectations linked to the new Benchmark;
- Provide context on the process and timeline for the development of the company scorecards and first Benchmark results in Q1 2021, and;
- Encourage companies to make new commitments and provide them with new opportunities to participate in the development and implementation of sector-specific net-zero transition action plans. More details on this work will be released in 2021.
How will the company assessments be made available to focus companies, investors and the general public?
Company scorecards will be available through a public database hosted on the Climate Action 100+ website. Using the structure of the Climate Action 100+ Net-Zero Company Benchmark, the digital version will provide investors, focus companies and stakeholders with easy access to the information in a searchable format that enables cross-company comparisons by indicator and sub-indicator, as well as across sectors and/or regions.
Will the Benchmark be further developed?
After its launch and the first company assessment cycle is completed, the Benchmark will continue to be updated and revised based on investor priorities and the latest available information and methodologies to assess companies’ climate transition preparedness. In particular, there are five key topics which are top priorities for inclusion in future iterations of the benchmark:
- 1.5°C Scenario: Given the current absence of a 1.5°C scenario from the International Energy Agency, Climate Action 100+ and its research partner TPI will assess available options and may start to develop alternative methodologies as required.
- Expanded sector alignment methodologies: At present there are not sufficient methodologies available to assess greenhouse gas (GHG) target alignment for companies in certain sectors, including chemicals, consumer goods, other industrials and services. Climate Action 100+ investor network partners and TPI will seek to develop these for future iterations of the Benchmark.
- Climate accounting: A top priority is the development of a new disclosure indicator to assess whether or not a company’s accounting practices and related disclosures reflect consideration of transition risk relative to a range of possible climate scenarios.
- Just transition: While companies will not be assessed on just transition in 2021, Climate Action 100+ will work with leading just transition advocates and experts to develop appropriate disclosure requirements and a related scoring approach to be applied during the next reporting cycle.
- Expanded green revenue indicator: Indicator 5.2 applies the European Union’s (EU) Green Taxonomy criteria on ‘turnover’ (or revenues) for companies headquartered in the EU. Companies headquartered outside of the EU are not being assessed in the 2021 iteration of the Benchmark as a result. Future iterations of this indicator will assess non-EU companies using appropriate green revenue classification systems and regional taxonomies where available.