‘Disappointing’ progress on climate for companies critical to reaching net zero

Benchmark assessments by Climate Action 100+ finds significant gaps in corporates' strategies

Climate Action 100+ (CA100) has found only 17% of companies identified as critical to accelerating the net-zero transition have set medium-term targets for material emissions in line with International Energy Agency’s (IEA) guidance.

CA100, which has some 700 signatories responsible for $68trn in assets under management, published its second annual Net Zero Company Benchmark assessments today. The group said findings show some corporate climate progress against key climate indicators but much more action is urgently needed to limit temperature rise to 1.5°C.

Assessments against the benchmark found 69% of focus companies have set commitments to achieve net zero emissions by 2050 or sooner. However, overall there is no progress across key indicators such as disclosure of 1.5°C-aligned medium-term emissions targets and capex strategies. 

CA100 said it has strengthened the way it measures emissions reductions. To reflect the pace of change required to limit global warming to 1.5°C and to ensure it is aligned with the most recent science-based policy, it updated the benchmark methodology this year to now assesses companies against the IEA’s net zero by 2050 scenario for available sectors.

The group said engagement from CA100 investor signatories has driven 90% of focus companies to have some level of board oversight of climate change and 89% of focus companies to have aligned with Task Force on Climate-Related Financial Disclosures (TCFD) recommendations either by supporting the TCFD principles or by employing climate-scenario planning.

However, CA100 expressed concern around a number of areas it found “disappointing”, including the fact only 42% of focus companies have comprehensive net zero by 2050 or sooner commitments that cover all material GHG emissions, including material Scope 3 emissions.

Read more:- Climate benchmark finds no full disclosure of net-zero goals at biggest emitting companies

It also found alignment of capex strategies with net zero transition goals was present for 5% of focus companies and only 17% of focus companies have robust quantified decarbonisation strategies in place to meet their emissions reduction targets.

Stephanie Maier (pictured), global head of sustainable and impact investment at GAM Investments and current chair of the global CA100 Steering Committee said: “Overall, the net zero company benchmark clearly shows that focus companies are not making the progress required to align with achieving the 1.5°C climate goal agreed in Paris and reaffirmed in Glasgow last year.

“Given that these companies represent the world’s largest corporate greenhouse gas emitters, their ambition and pace of change is critical to a successful transition and needs to accelerate. The latest Intergovernmental Panel on Climate Change report starkly outlined the social and economic imperative for this. 

“As a consequence, we should expect a ratcheting of investor-led shareholder resolutions as well as increased scrutiny on transition plans brought to the vote, starting with the imminent AGM season.”