Climate-focused investor engagement network Climate Action 100+ (CA100+) announced the launch of its “Phase Two,” shifting the focus of its actions towards the implementation of climate transition plans by major greenhouse gas emitting companies.
Launched in 2017, Climate Action 100+ is an investor initiative that has targeted the world’s largest corporate greenhouse gas (GHG) emitters to promote taking necessary action on climate change, and align their business strategies with net zero in order to help limit average global temperature rise to 1.5 degrees Celsius.
The network has grown to include more than 700 investors representing more than $68 trillion in assets. Climate Action 100+ has also become a key target for anti-ESG politicians – earlier this year, a group of U.S. Republican state attorneys general sent a letter to large asset managers warning that participation in groups such as CA100+ raised concerns about the investors’ adherence to fiduciary duties and compliance with anti-trust rules.
According to CA100+, the network’s second phase builds on the success of its first five years, with 75% of the initiative’s initial focus companies now committed to net zero. The organization recently revealed, however, that while companies have made significant progress on setting decarbonization goals, many have not advanced on setting transition strategies to match.
Stephanie Pfeifer, CEO, Institutional Investor Group on Climate Change and a member of the global Steering Committee:
“Climate Action 100+ has been transformative for corporate engagement and the role of investors in the context of climate change. However, there is no hiding from the fact that overall focus companies need to be more action-oriented if they are to support and capitalise on the transition of the global economy.”
Phase 2 will see CA100+ shift focus from corporate climate disclosure towards the implementation of climate transition plans. Accordingly, the initiative has updated its core goals to more clearly emphasize implementation, for example adding to its request for companies to “implement a strong governance framework on climate change” that the framework “clearly articulates the board’s accountability and oversight of climate change risk,” and now asking companies not only to “provide enhanced climate disclosures,” but now to also implement robust transition plans to deliver on targets.
CA100+ has also introduced new categories for investors including “lead sector investor” and “lead thematic investor,” to drive more robust engagement strategies, with lead investors responsible for submitting annual engagement schedules including specified actions and escalation strategies, among other factors.
Additionally, the new phase utilizes an enhanced Net Zero Company Benchmark. CA100+ introduced its Net-Zero Company Benchmark in 2021 in order to provide investors with detailed, comparative assessments of individual focus company performance against the initiative’s three high-level commitment goals, including reducing greenhouse gas emissions, improving governance, and strengthening climate-related financial disclosures. The updated benchmark includes a stronger focus on areas including emissions reduction and their underlying driving factors, evaluating if companies are on track to align with 1.5°C pathways, and on net zero transition planning.
Mindy Lubber, President and CEO of Ceres and global CA100+ Steering Committee member, said:
“The majority of the initiative’s focus companies have made serious commitments to reach net zero, and some are even beginning to publish transition plans on how they will get there. But now it is time to turn their words into deeds. The economic case for action is stronger than ever, and in this next phase Climate Action 100+ will raise our ambition and expand our efforts to achieve lasting climate action that accelerates the just transition to a zero emissions future.”