- Net Zero Company Benchmark annually assesses focus companies’ decarbonisation strategies and alignment with a 1.5°C emissions pathway as a tool for investors to understand their exposure to climate-related financial risks and opportunities.
- The vast majority of companies have set net zero 2050 emissions targets for their operations and assigned board responsibility for climate risk oversight, demonstrating widespread recognition that climate risk is financial risk.
- This year’s Benchmark includes the first analysis on historical emissions reductions and shows that most of assessed focus companies have reduced their emissions intensity over the past three years. But fewer are reducing emissions at the pace necessary to achieve a 1.5°C aligned pathway.
- Despite stronger disclosures related to companies’ decarbonisation strategies, capital allocation, and just transition, few companies reveal how they will align their business practices to achieve their net zero commitments.
- Climate Action 100+ also announces that 90 new signatory investors have joined since 1 June 2023.
Thursday, 17th October 2024 – Climate Action 100+, the world’s largest investor engagement initiative on climate change, has released the latest round of company assessments against the Net Zero Company Benchmark. The Benchmark assesses the performance – based on disclosures and alignment assessments – of 168 Climate Action 100+ focus companies against the initiative’s three high-level goals: improved governance, emissions reduction and enhanced climate-related disclosures.
The Benchmark’s assessments provide a useful tool to help inform and support investors’ corporate engagements during this critical decade, as well as outlining the steps companies can take to reduce climate-related risk.
Overall, the assessments show companies are responding to investors’ requests to see more details about their climate transition plans, showing the most improvement in their reporting on capital allocation to low carbon solutions, and how they’re planning a just transition for workers. However, most companies are still not meeting all expectations of the Climate Action 100+ Benchmark in terms of delivering a comprehensive decarbonisation strategy.
A summary of results can be found here and the full dataset can be found here.
Key Net Zero Company Benchmark Results:
- For the first time, Climate Action 100+ has assessed the emissions performance of focus companies, finding 65% have reduced their emissions intensity in the past year. More and more companies are reducing their emissions intensity; however, fewer are reducing emissions at the pace necessary to achieve a 1.5°C-aligned pathway (Indicator 11).There are instances of some sectors working faster than others – with a majority of the assessed Climate Action 100+ focus companies in airlines, autos, cement, diversified mining, electric utilities and steel industries showing reduced emissions intensity over the past three years (Metric 11.1b), making up 32 Climate Action 100+ focus companies that have reduced emissions intensity in line with a 1.5°C scenario (Metric 11.1c).
- Companies continue to perform well on net zero targets, climate governance and climate-related disclosure outside of the financial statements, showing growing evidence of companies – and their shareholders – viewing climate risk as financial risk. Over 90% of all companies assessed have disclosed evidence of board-level oversight of the management of climate change risks(Metric 8.1.a), reflecting their recognition that this is material to business decision-making and the long-term success of businesses. 88% of companies are publicly committed to implement the recommendations of the Task Force on Climate related Financial Disclosures (TCFD) OR International Sustainability Standards Board (ISSB) Standards (Sub-indicator 10.1.a). 80% of companies committed to net zero across at least Scope 1 and 2 emissions (Metric 1.1.a).
- Overall, this year’s assessments show progress in companies’ disclosures associated with their decarbonisation strategies and capital allocation plans. The number of companies presenting a decarbonisation strategy explaining how they intend to meet their medium- and long-term GHG reduction targets and specifying the role of climate solutions (Indicator 5) is higher in 2024 than 2023. A large majority of these companies (78%) have set a target to increase revenue or production from climate solutions, indicating that those companies setting targets are signaling additional clear commitments to invest (Metric 6.2.b). While only 39% of companies satisfy at least one Metric on the Disclosure Framework Just Transition Indicator, there’s been an overall improvement of 9 percentage points since 2023.
Additional Key Findings:
- Target setting is not happening as fast as we’ve seen in the past. This is specifically the case across short-term target setting which has seen a decline since 2023. This year, there are seven companies whose targets have expired and four companies who have removed their short-term targets (Sub-indicator 4.1). No companies have rescinded their Net Zero ambition, nor long or medium-term targets.
- Despite improvements in company disclosure, capital allocation alignment assessments continue to exhibit limited progress. CTI’s assessments show just over a quarter of the electric power companies assessed are aligning their coal capacity with their interpretation of 1.5°C alignment.CTI also shows that the alignment of oil and gas companies’ capital expenditure and broader transition strategies has regressed since the 2023 assessments, increasing their exposure to financial risks in a 1.5°C-aligned future.
- Companies are not effectively reviewing if their climate policy positions are aligned with the Paris Agreement. 2024 has seen marginal increase in companies producing and improving the quality of their review process, however companies are still not effectively reviewing if their climate policy positions are aligned with the Paris Agreement. Additionally, despite a decline in misalignment since previous iterations, the large majority remain partially aligned in their climate policy engagement actions (direct and indirect via their industry associations).
New joiners represent growing and global impact:
Climate Action 100+ is a growing global initiative that has taken on 90 new joiners since June 2023 representing a net increase of 19 over the period. The regional breakdown of new signatories is as follows: Africa – 2, Asia – 10, Australasia – 12, Europe – 52, North America – 10, and South America – 4. Three quarters (75%) of new signatories have joined as contributing investors on company engagements. Contributing investors may provide inputs into company engagements and attend meetings with companies, as set out in the Signatory Handbook (linked here),
More information about new joiners including supporting investor quotes available here. As of 17 October 2024, Climate Action 100+ has over 600 signatories.
Supporting Quotes
Michael Cohen, Chief Operating Investment Officer, CalPERS and global Steering Committee chair: “The annual Benchmark serves as a reminder that Climate Action 100+ is dedicated to providing the information necessary for institutional investors to measure climate risk and to track companies’ plans in response to that risk. This year’s report offers some encouragement that the urgency of our engagements is breaking through. But make no mistake: More must be done and there’s no time to waste.”
Mindy Lubber, President and CEO, Ceres and global Steering Committee member: “This year’s Benchmark shows that investor momentum is moving the largest emitters to address climate-related financial risk. Corporate emissions are going down – especially in the transportation, steel, and electric utility sectors – and more climate transition action plans are being published. While it is good to see companies moving in the right direction, they still need to move faster. The US is still not on track to reach a 1.5-degree alignment by 2030. We have the roadmaps and solutions to reach our climate goals. Every company needs a transition plan detailing how they will get there. We look forward to supporting investors and companies as they make further progress on their climate journeys.”
Stephanie Pfeifer, CEO, IIGCC and global Steering Committee member: “Climate Action 100+ remains the most significant investor-led engagement initiative to address climate-related financial risks and opportunities with the addition of 90 new investor signatories a sign of its continued value and importance. While more companies need to make greater progress in ensuring their business is fit for purpose in a low carbon economy, including identifying the opportunities associated with the transition, corporate engagement – particularly in Europe – is leading to constructive dialogue and some positive action. Investors will want to build on the pockets of positive company progress as they look to further manage their investment exposure to climate risk and opportunities.”
Rebecca Mikula-Wright, CEO, AIGCC and IGCC and global Steering Committee member: “This year’s company assessments show the brighter spots in Asian and Australian companies’ climate progress. In Asia, investors want to see more transparency and disclosure from companies, progressing from setting long-range targets to making credible plans. Companies that lay out detailed plans signal to investors that they are ready to transition to net zero and will attract investment capital needed to future proof their businesses. In Australia we can see the rewards from climate disclosures becoming mandatory. In comparison to other regions, Australian companies are doing well showing investors the climate risks and opportunities they face. This is a significant step forward, but there is still more work to be done to accelerate a just transition in Asia-Pacific. We need significant capital expenditure on climate solutions in the region.”
David Atkin, CEO at the Principles for Responsible Investment, comments: “This most recent benchmark update shows that the continued work of CA100+ is helping investors to mitigate portfolio risk through their climate stewardship activity. The direction of travel for CA100+’s focus companies is clear – through investor stewardship, the world’s highest emitting companies are taking steps to mitigate their impact on climate and to keep their activities within planetary boundaries. This trend ultimately stands to provide clear benefits to investors and their beneficiaries, by helping us move towards a sustainable global economy that’s well placed to provide investors with returns well into the future. With that said, we must see ambition continue to increase, with more work done to address the immediate and short-term plans needed to align with the goals of the Paris agreement. The PRI looks forward to continuing to work with CA100+ and its signatories who are undertaking this important work in line with their fiduciary duties.”
Research and Data Organisations involved in the Benchmark
Ciara Ellis, Senior Analyst, Investor Research, Influence Map: “InfluenceMap has provided its analysis on the real-world policy engagement activities of Climate Action 100+ focus companies to the Benchmarks since March 2022. Over this period, focus companies’ alignment on, and disclosure of, climate policy engagement activities has improved, however the vast majority continue to fall short of investor expectations across InfluenceMap’s assessments. Companies must take action to align their advocacy activities with what the science says is necessary to deliver the goals of the Paris Agreement, and accurately disclose and assess the alignment of their own policy engagement activities, and that of their industry associations.”
Kaitlin Crouch-Hess, Senior Principal, Climate Finance programme at RMI: “The 2024 Net Zero Company Benchmark continues to show a clear gap in implementation against targets for the necessary greenhouse gas emissions reductions. Investor engagement is needed more than ever to reduce emissions from the highest global climate polluters. RMI’s capital alignment assessments provide investors with an essential tool to measure the credibility of company targets against their announced capex plans, giving critical insight to inform collaborative engagements to accelerate corporate transitions and fulfill their fiduciary duties”.
Barbara Davidson, Head of Accounting, Audit, and Disclosure at Carbon Tracker Initiative: “The Climate Accounting and Audit Assessment enables investors to determine whether the financial information they use for capital allocation and voting decisions reflects the material impacts of relevant climate and energy transition risks and achieving a company’s own targets. While we have seen some improvements in disclosures, certain jurisdictions like the US, and sectors like transportation, continue to lag behind. Companies, auditors and regulators need to do more, and urgently. Without adequate, timely and accurate information, investors, as well as policymakers and other relevant stakeholders, cannot make the decisions needed to achieve our rapidly approaching climate targets.”
Guy Prince, Senior Analyst for Oil & Gas at Carbon Tracker Initiative: “To both assess and mitigate financial exposure, investors need to understand the long-term risks faced by oil and gas companies during the energy transition. Our forward-looking metrics show that many of these companies are not adequately protecting shareholders, by failing to stress-test management expectations against the anticipated decline in fossil fuel demand and lower commodity prices, as projected in credible energy transition scenarios.”
About the Net Zero Company Benchmark
This is the fifth round of Net Zero Company Benchmark assessments to be released by Climate Action 100+ since March 2021. These assessments are updated annually in October of each year, and this year, companies have been assessed against Version 2.1 of the updated Benchmark 2.0 framework. Please see here for an overview of these minimal updates.
The Benchmark draws on distinct analytical methodologies and datasets from public and self-disclosed information from companies, categorised into two types of indicators: Disclosure Framework Indicators, which evaluate the adequacy of corporate disclosure and Alignment Assessments, which evaluate the alignment of company actions with the Paris Agreement goals. The Disclosure Framework is assessed by the Transition Pathway Initiative Centre (TPI Centre) and FTSE Russell. Alignment Assessments are provided by Carbon Tracker Initiative (CTI), InfluenceMap (IM) and the Rocky Mountain Institute (RMI). The version 2.1 Benchmark framework used for assessments released in October 2024 has been kept largely consistent with the version 2.0 iteration, to maintain continuity between assessments whilst allowing for year-by-year comparison
About Climate Action 100+
Climate Action 100+ is the world’s largest investor engagement initiative on climate change. Investors are focused on ensuring 168 of the world’s biggest corporate greenhouse gas (GHG) emitters take the necessary actions to align their business strategies with the goals of the Paris Agreement. This includes improving corporate governance of climate change, reducing GHG emissions, and strengthening climate-related financial disclosures. The 168 focus companies include the initial 100 ‘systemically important emitters’, identified with the highest combined direct and indirect GHG emissions, and additional companies selected by investors as critical to accelerating the net zero transition.
Launched in 2017, Climate Action 100+ is coordinated by five investor networks: Asia Investor Group on Climate Change (AIGCC); Ceres; Investor Group on Climate Change (IGCC); Institutional Investors Group on Climate Change (IIGCC) and Principles for Responsible Investment (PRI). These organisations, along with investor representatives from Afore Sura, BNP Paribas Asset Management, California Public Employees’ Retirement System (CalPERS), Generali Insurance Asset Management (Generali Group) Franklin Templeton, Ninety One, Phoenix Group, QIC and Rest form the global Steering Committee for the initiative. Follow us on Twitter: @ActOnClimate100.
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