Climate Action 100+, the investor engagement initiative on climate change involving 700 investors and $68trn in assets under management, has launched an updated version of its Net Zero Company Benchmark assessment tool.
Benchmark 2.0 is the third iteration, and according to CA100+ will continue its role “informing and supporting investors in their engagements with companies during this critical decade”.
The framework for the benchmark draws on analytical methodologies and datasets, from public and self-disclosed data from companies, categorised into two types of indicators.
These are disclosure framework indicators, which evaluate the adequacy of corporate disclosure, and alignment assessments of company actions with the Paris Agreement goals.
CA100+ made the enhancements after a public consultation with investor signatories, other stakeholders and interested parties, and assessments using the benchmark 2.0 will be released in September or October 2023.
Updates follow lack of outcomes
The latest changes follow criticism CA100+, despite its huge share of investor assets and large number of investors, has done little to have a real positive change towards net zero.
Campaign organisation ShareAction took aim at CA100+ in May 2022, accusing it of achieving little in its five years of existence, lacking transparency and not using its influence to drive down emissions.
Thematically, the latest benchmark changes centre around emissions reductions, and the key underlying factors leading to these, as well as alignment with 1.5°C pathways, evaluating if companies are on track to meet the goals of the Paris Agreement.
It also looks at net-zero transition planning, assessing the key drivers of company decarbonisation, corresponding capital allocation, and asset-level changes.
Disclosure indicator 11 is new this year, which will track historical emissions reductions, focusing on company past emissions intensity reductions and the key factors that led to these.
CA100+ has also made significant amendments to indicator 5 on decarbonisation strategy, indicator 6 on capital allocation, indicator 7 on climate policy engagement and indicator 9 labelled ‘just transition’, to ensure assessments of corporate performance in these areas are as robust and comprehensive as possible.
Benchmark assessments
A number of changes have also been made to how the benchmark assesses companies.
Climate accounting and audit assessments, evaluated by Carbon Tracker Initiative, are staying the same this year, but will now include “a more nuanced, granular scoring system”.
Companies will receive a ‘traffic light’ score of green, amber or red, rather than a binary yes or no score on climate accounting and audit metrics.
Climate policy engagement alignment assessments, provided by InfluenceMap, are being expanded this year.
This includes new aggregate scores of a company’s overall direct and indirect climate lobbying performance, on a scale from A+ to F, and a new indicator assessing the accuracy and completeness of company climate lobbying disclosures.
A third new indicator will evaluate how companies review and ensure alignment between their climate policy engagement activities and the goals of the Paris Agreement.
Capital allocation alignment assessment indicators for utilities and oil and gas, provided by Carbon Tracker Initiative, will now be assessed against the IEA’s ‘net-zero emissions by 2050 scenario’ and announced pledges scenario, rather than the beyond 2 degrees scenario.
Capital allocation alignment assessments for aviation, automotive, cement steel and utilities, provided by the Rocky Mountain Institute (RMI), will be expanded to include a new indicator for electric utilities and autos assessing company aggregate alignment with the IEA’s net-zero emissions by 2050 scenario.
RMI is also adding a new indicator for electric utilities, assessing the rate at which companies are decarbonising their electricity generation and capacity, and whether the changes at asset level are real, or ‘virtual’, that is, merely resulting from ownership transfers.
Joe Brooks, programme manager for CA100+ and investor engagement at InfluenceMap, said: “Corporate climate policy engagement is increasingly seen as a mainstream indicator of readiness for the energy transition. 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.
“InfluenceMap has provided its analysis on the real-world policy engagement activities of CA100+ focus companies to the benchmarks since March 2022. From 2023, InfluenceMap’s new assessments will provide additional information on the quality and accuracy of a company’s disclosures on climate policy engagement.”