ShareAction has taken aim at investor initiative Climate Action 100+ (CA100+) for achieving little in its five years of existence, lacking transparency and not using its influence – some $68trn of assets – to drive down emissions.
Campaign organisation ShareAction has issued a call to action to the group of investors, including the world’s largest asset managers, to be more transparent and instil clear reporting on engagement objectives, outcomes and escalation activities – or risk greenwashing.
Catherine Howarth (pictured), CEO of ShareAction, said: “CA100+ is the investor initiative on climate change many were waiting for. It has the scale and focus required to make a meaningful impact on global carbon emissions. But success depends on action and real effort by all signatory investors, and so far, not all are stepping up.”
Isobel Mitchell, research and engagement manager for the organisation, added: “To avoid the risk of greenwashing, transparency is critical.”
ShareAction assessed the climate engagement reporting of 60 of the largest CA100+ investor signatories and stated that:
- Climate engagement strategies are often inadequately articulated, or not at all;
- Aggregate engagement reporting is inconsistent and vague;
- Climate engagement case studies are of low quality;
- Signatories often highlight their involvement with CA100+, but rarely report details of activities and outcomes.
Specifically, 82% of the signatories did not specify any objectives for climate change engagement or any escalation steps where engagement is unsuccessful.
ShareAction highlighted in a statement: “Escalation strategies are essential to incentivise companies to meet investors’ asks and move engagement on from endless meetings to more impactful actions such as voting against directors.”
Meanwhile, only 17% of signatories reported on progress of engagements and although 42 (70%) had evidence of engagement cases on climate change, 12 of these failed to name the company that was the subject of the engagement and none gave an indication of the next steps for engagement, besides generic statements such as “we will monitor the company” or “we will continue to engage”.
It highlighted one example where three CA100+ ‘lead investors’ of mining giant BHP welcomed the company’s Climate Transition Action Plan in a media statement. However, ShareAction’s analysis of the plan found it was not aligned with a 1.5C pathway and omitted the company’s largest sources of Scope 3 emissions.
As CA100+ begins its next five-year cycle, expected to be launched early next year, ShareAction called for the following:
- Set minimum transparency requirements on climate change policies and require investor participants to commit to them.
- Set minimum escalation expectations for engagements undertaken via CA100+ and require signatories to commit to them.
- Publish and maintain a list of lead and collaborating investors for each focus company and update the list annually.
- Publish and maintain a list of engagement objectives and milestones for each focus company.
- Publish aggregated statistics on engagement activities and outcomes against the CA100+ Net Zero Company Benchmark accompanied by detailed case studies on engagement with each focus company in annual progress reporting.
ShareAction’s Mitchell commented: “Clear reporting on engagement objectives, outcomes and escalation activities is essential for stakeholders to monitor progress on climate action and hold both companies and investors to account when their actions fall short. This is key to strengthening the initiative and ensuring that signatories commit to meaningful action.”
ESG Clarity contacted CA100+ for comment, they issues the following statement:
“CA100+ is currently in the fourth year of its initial five-year term. Since the initiative launched, it has played a key role in bringing engagement and stewardship on climate issues into the mainstream. Engagement conducted as part of Climate Action 100+ has driven notable progress towards climate goals, with more than 110 focus companies having made net zero commitments today, compared to just five in 2017.
“Progress of focus companies is measured via the CA100+ Net Zero Company Benchmark assessments. These are released publicly to provide insight into where companies are in their transition planning and to inform engagement priorities for investors and wider stakeholders. CA100+ publishes case studies on investor engagement with focus companies and many of the initiative’s 700 signatories also report on their individual engagements as part of their stewardship and sustainability reporting.”
It added much of the activity conducted by signatories as part of the initiative focused on three high-level engagement goals; climate governance, cutting emissions and TCFD reporting.
“Driven by this engagement, Benchmark assessments published in March 2022 show 69% of focus companies have now committed to achieve net zero emissions by 2050 or sooner across all or some of their emissions footprint. In addition, 90% of focus companies have some level of board oversight of climate change and 89% have aligned with TCFD recommendations either by supporting the TCFD principles or by employing climate-scenario planning.”
CA100+ added it is worth noting some metrics included in the Benchmark, including capital expenditure and financial accounting, are relatively new and specific areas of focus for CA100+.
“While these are clearly important factors, they are not representative of the full breadth of the initiative’s work and focusing too heavily on them risks giving a rather one-dimensional account which does not fully reflect the wider impact that it has had to date.
“Overall, there is no doubt that there is still urgent work to do if we are to meet the goals of the Paris Agreement and effectively tackle the climate crisis. As Climate Action 100+ moves into the final year of this phase and looks to the future, we intend to further develop and strengthen the initiative to ensure its continued success in addressing the issues at hand.”