Climate progress undermined by lack of action plans, warns CA100+
The investor engagement initiative said companies are lacking credible strategies to achieve net-zero goals.
Climate Action 100+ (CA100+) signatories are making progress on net-zero commitments, but there is little evidence of concrete plans to achieve these objectives, CA100+’s latest company benchmark report has found.
Three quarters (75%) of the organisation’s 159 focus companies have committed to achieving net-zero emissions by 2050 or sooner across all or some of their emissions footprint, up from 69% in March 2022, while over a third of focus companies have set long-term targets that align with a 1.5°C pathway.
But the round of assessments found that plans to act on these commitments are limited, and companies “do not yet demonstrate any meaningful shifts in business models at some companies to align with the Paris Agreement”.
Only 10% of companies demonstrated adequate short-term decarbonisation strategies or emissions reduction targets – a drop of two percentage points from the previous report. Half (51%) showed comprehensive commitments for net zero by 2050 or sooner that cover all material greenhouse gas (GHG) emissions, including material Scope 3 emissions.
CA100+ found that oil and gas companies, which comprise around a quarter of the group’s focus companies, are commissioning projects that do not align with Paris Agreement objectives, while electric utility companies are not investing in sufficient renewable energy capacity.
Only one in ten companies provided disclosures that fully align their spending plans with Paris Agreement targets or GHG metrics.
The report acknowledged a slight increase in the level of board oversight of climate change, up two percentage points to 92%, and a similar margin was recorded in the number of companies aligned with Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, either by supporting the TCFD principles or by employing climate-scenario planning, up to 91%.
Andrew Gray, director, ESG and stewardship at AustralianSuper and current chair of the global Climate Action 100+ Steering Committee said: “Through Climate Action 100+, investors have helped many heavy-emitting companies make progress on transitioning to net zero but, as these assessments show, that progress needs to accelerate. Companies need credible strategies and capital expenditure plans to deliver on their net-zero targets.”
Rebecca Mikula-Wright, CEO of the Investor Group on Climate Change and the Asia Investor Group on Climate Change and current vice-chair of the global steering committee, said investors wanted companies “to turn intentions into concrete short- and medium-term actions to provide the confidence they can get to net zero.”
“Corporate leaders can and should use each new round of Climate Action 100+ Benchmark assessments to demonstrate their ambitious climate action,” she added.
In May, a report by responsible investment NGO ShareAction stated that CA100+ had underperformed in its capacity as an industry steering mechanism – a sentiment the group has again repeated.
Catherine Howarth, CEO at ShareAction, said the latest report shows that CA100+’s target emitters are “not remotely decarbonising at the pace needed to avert severe climate damage”.
“This failure of stewardship risks significant losses to investment portfolios and economies. Signatories to CA100+ have failed so far to manage climate risks in line with their fiduciary duty of prudent behaviour. If phase two is to be successful, CA100+ needs to step up and significantly raise the bar for signatories, for example by ensuring they have robust engagement plans in place,” she added.
ShareAction previously stated that carbon-intensive companies can “greenwash their brands by signing up to the initiative” and that CA100+ was failing to use its “influence to drive emissions reductions”.