The Climate Action 100+ initiative includes more than 700 investors and was launched almost six years ago, with the aim of coordinating engagement between investors and corporations in carbon-intensive industries.
Earlier this year, US-based nonprofit majority action accused Climate Action 100+ of failing to deliver on this pledge. It pointed out that investors were free to vote against environmental measures at shareholder meetings, among other loopholes. It urged investors to take stronger action at polluting corporates such as Chevron and ExxonMobil.
At the time, Climate Action 100+ stated that it would enter a new ‘phase’ within months, clarifying its focus and setting out changes to governance. That announcement came late last week.
On Majority Action’s criticism, investors will be expected to disclose their proxy votes and rationales.
More broadly, the initiative stated that it will “shift focus from corporate climate-related disclosure to the implementation of corporate climate transition plans, to create long-term shareholder value in this critical decade of climate action”.
Disclosures have improved significantly since the initiative’s launch, the statement highlighted. 20% of corporates in high-carbon sectors had net-zero targets in 2019, but this proportion now stands at 75%. These targets are supported by the need for annual emissions reporting.
Going forward, Climate Action 100+ signatories will be called upon to ensure that the companies they invest in have strong transition plans, setting out credible pathways to net-zero by 2050 at the latest.
Transition plans should cover emissions across the value chain, including indirect (Scope 3) emissions. They should set out low-carbon investment plans and include plans to measure climate-related risks. Moreover, the board should be accountable for climate risk management.
Beyond engaging with corporates, Climate Action 100+ signatories are being called upon to engage with stakeholders such as policymakers and trade bodies to address sector-wide barriers to decarbonisation. Investors are being asked to volunteer as ‘leads’ for their sector, advocating for the right shift in “ecosystem conditions” including infrastructure and key technology prices.
The Institutional Investors Group on Climate Change’s (IIGCC) chief executive Stephanie Pfeifer said “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”.
“While investors alone cannot bring about this change, Climate Action 100+ remains well-positioned to support this ambitious goal,” she added.
CDP has this week warned that less than 1% of the 10,000+ companies disclosing climate-related data through its platform have credible transition plans to net-zero.
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