Climate Action 100+, the world’s largest investor engagement initiative on climate change, has launched its next phase to encourage greater corporate action in this critical decade for the climate.
The new phase shifts focus from corporate climate-related disclosure to the implementation of corporate climate transition plans, to create long-term shareholder value in this critical decade of climate action – from words to actions.
In consultation with signatories, Climate Action 100+ has renewed its three goals, evolved the net-zero company benchmark, enhanced the ways in which investors can participate, including the lead investor terms of references, and made marginal updates to the focus list.
In this next phase, Climate Action 100+ is asking companies to implement a strong governance framework, which clearly articulates the board’s accountability and oversight of climate change risk.
This means companies taking action to actively reduce greenhouse gas emissions across the value chain, including engagement with stakeholders such as policymakers and other actors to address the sectoral barriers to transition.
It also means providing enhanced corporate disclosure and implementing transition plans to deliver on robust targets.
Climate Action 100+ also wants improved and expanded ways investors can participate, drawing upon the value and influence of investors to ensure engagement is effective and will drive real change.
This initiative will introduce a new ‘lead sector investor’ category, to help create the conditions needed for sectors to transition.
It will also introduce a new ‘lead thematic investor’ category, allowing signatories to engage on specific themes in any given year, and will enhance the lead engagement model, with stronger and more robust engagement strategies.
In particular, lead investors will be asked to submit an annual schedule of engagement, specifying actions and escalations strategies they intend to deploy.
Companies will be able to opt-in to disclosing their organisation’s identity on the Climate Action 100+ website, providing greater transparency and more ways for investors to be agents of change.
Climate Action 100+ engagement
Corporates will also be expected to disclose votes and rationales on Climate Action 100+ flagged votes, where allowable by jurisdiction, practical, and in line with signatories’ own internal policies and business objectives.
Climate Action 100+ has also enhanced the net-zero company benchmark, the details of which were published in March 2023.
The Climate Action 100+ initiative asks investor signatories to work with the companies in which they invest to encourage them to work towards the global goal of halving GHG emissions by 2030 and delivering net zero GHG emissions by 2050, consistent with creating long-term shareholder value and the goals of the Paris Agreement to pursue efforts to limit warming to 1.5°C.
The aim is to do this by engaging with focus companies to get them to implement a strong governance framework, take action to reduce greenhouse gas emissions across the value chain, and provide enhanced corporate disclosure on, and implement transition plans to, deliver on robust targets.
Rebecca Mikula-Wright, CEO of Asia Investor Group on Climate Change, Investor Group on Climate Change and a member of the global steering committee, said: “This next phase of Climate Action 100+ will provide investors with more opportunities to exercise their active ownerships rights and ensure investors have a reliable, independent way to stay on top of company’s progress, from their capital strategy to real-world emissions reductions.”
Francois Humbert, current steering committee chair and lead engagement manager at Generali Group, added: “Phase two is the time to demonstrate the additionality of the initiative, and to work with our investor signatories to support an orderly, just transition for their focus companies.
“Additional expected transparency in our practices will ensure greater accountability, and the new governance of the steering committee will enable us to be more representative of the wide diversity of signatories. In addition, the new sector and thematic engagements will enable signatories to bring additional value inside their engagement groups and to the companies they engage.”