Climate Action 100+ releases upgrade to net zero company benchmark 

The investor engagement coalition that focuses on countering climate change has modified its series of indicators to encourage companies to act on transition plans.

Climate Action 100+, the coalition grouping investors with more than $68tn in assets under management, has made changes to its net zero company benchmark, including new indicators and scoring systems, to ensure that “it continues to effectively support investor engagements with focus companies during this critical decade”. 

“[The] enhancements made intend to embed a stronger focus on emissions reductions, alignment with 1.5C pathways and the robustness of transition plans,” the $68tn investor engagement coalition said. 

François Humbert, lead engagement manager at Generali Insurance Asset Management and current chair of the Climate Action 100+ global steering committee, said in a statement: “Results from previous iterations of the benchmark show that the initiative has inspired an increase in company net zero commitments, board-level oversight of climate risks and opportunities, and stronger climate-related financial disclosures.”

Now, it is “imperative” that companies “move beyond disclosure to action”, he added.

The framework for the third iteration of the net zero company benchmark draws on distinct analytical methodologies and datasets – either public data or self-disclosed data – and has been classified into two types of indicators; one, disclosure framework indicators, which look at the adequacy of corporate disclosure; and two, alignment assessments, which assess the adequacy of corporate alignment with the Paris Agreement.

For the disclosure framework, the coalition has added a new disclosure indicator that will look at a company’s past emissions intensity reductions and the key factors that led to these. It has also made significant changes to four indicators: indicator 5, which relates to decarbonisation strategy; indicator 6, capital allocation; indicator 7, climate policy engagement; and indicator 9, just transition.

For its alignment assessments, Climate Action 100+ has said that its climate accounting and audit assessments, evaluated by Carbon Tracker Initiative, will now include “a more nuanced, granular scoring system”, replacing a yes/no score with a “traffic light” score.

Climate lobbying performance assessments

The coalition has also expanded its climate policy engagement alignment assessments, provided by InfluenceMap, to include new aggregate scores for a company’s overall direct and indirect climate lobbying performance, and new indicators to assess the accuracy of its lobbying disclosures and policy engagement alignment with the Paris Agreement.

Joe Brooks, programme manager for Climate Action 100+, and investor engagement at InfluenceMap, said it is clear that corporate climate policy engagement “can no longer be viewed as a tick-box exercise by companies”.

“Investors are demanding companies do the work to align their advocacy activities with what the science says is necessary to deliver the goals of the Paris Agreement,” Brooks said. “From 2023, InfluenceMap’s new assessments will provide additional information on the quality and accuracy of a company’s disclosures on climate policy engagement,” he continued. 

Further, utility and oil and gas companies will now be assessed against the International Energy Agency’s net zero emissions by 2050 scenario and announced pledges scenario, rather than its beyond 2C scenario.

And the benchmark will also reference non-profit Rocky Mountain Institute’s new indicator for electric utilities and vehicle, which evaluates company aggregate alignment with the IEA’s scenario of achieving net zero emissions by 2050 and the rate at which companies are decarbonising their electricity generation and capacity.