Climate Action 100+ releases the latest evolution of the Net Zero Company Benchmark

30 March 2023
In consultation with investor signatories, the initiative releases today an updated Benchmark (Benchmark 2.0) 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 1.5°C pathways and the robustness of transition plans. The Benchmark will remain one of the key pillars of the initiative as it embarks upon Phase 2.

Climate Action 100+, the world’s largest investor engagement initiative on climate change, has launched the latest evolution – Benchmark 2.0 – of the Net Zero Company Benchmark (‘the Benchmark’).

Now in its third iteration, the Benchmark’s latest iteration will continue its role informing and supporting investors in their  engagements with focus companies during this critical decade.

The Benchmark 2.0 framework draws on distinct analytical methodologies and datasets (from public and self-disclosed data 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 Benchmark is not a disclosure mechanism or database itself, but rather an assessment tool.
Enhancements have been made following a public consultation with investor signatories, other stakeholders and interested parties.

A comprehensive overview of all changes and Benchmark 2.0 can be viewed here.

Key changes to the Net Zero Company Benchmark

Thematically, the Benchmark changes centre around:

  • Emissions reductions, and the key underlying factors leading to these.
  • Alignment with 1.5°C pathways, evaluating if companies are on track to meet the goals of the Paris Agreement.
  • Robust net-zero transition planning, assessing key drivers of company decarbonisation, corresponding capital allocation, and asset-level changes.

Specific to the Disclosure Framework:

  • New this year: Disclosure Indicator 11: Historical Emissions Reductions that will focus on company past emissions intensity reductions and the key factors that led to these.
  • Significant amendments of, Indicator 5: Decarbonisation Strategy, Indicator 6: Capital Allocation, Indicator 7: Climate Policy Engagement and Indicator 9: Just Transition, to ensure that assessments of corporate performance in these areas are as robust and comprehensive as possible.
  • Minor amendments to the timeframe and sub-indicators of Disclosure Indicators 2-4 focusing on company Long-, Medium- and Short-term GHG reduction targets.
  • Disclosure Indicator 8: Climate Governance is staying the same as in the previous iteration, but sub-indicator 8.3, assessing focus company Board climate competencies and capabilities will now apply to all focus companies.

Specific to the Alignment Assessments:

  • Climate Accounting and Audit Assessments, evaluated by Carbon Tracker Initiative. These assessments are staying the same this year, but will now include a more nuanced, granular scoring system at metric level. Companies will receive a ‘traffic light’ score (i.e., green/amber/red) rather than a binary yes/no score on climate accounting and audit metrics.
  • Climate Policy Engagement Alignment Assessments, provided by InfluenceMap, are being expanded this year with the addition of the following elements: 1. New aggregate scores of company overall direct and indirect climate lobbying performance, on a scale from A+ to F; 2. New indicator assessing the accuracy and completeness of company climate lobbying disclosures; 3. New indicator evaluating 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 & gas, provided by Carbon Tracker Initiative: while the indicators underlying these assessments will continue to measure the same areas as last year utility and oil & gas companies 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): This year, RMI are expanding their Capita Allocation Alignment Assessments for  utility and auto companies, by introducing:  1. A new indicator for electric utilities and autos assessing company aggregate alignment with the IEA’s Net Zero Emissions by 2050 Scenario; and  2. 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.

Additionally, we have made several structural changes, streamlining the Benchmark in order to assist investors in their understanding and communication of the framework. These changes include systematising the structure of assessments, so that they are all ordered into:

  • Indicators: top-level point of information being assessed
  • Sub-indicators: constituent point of information
  • Metrics: the unit or standard of measurement.

Key upcoming milestones

  • The company review period for the Disclosure Framework, during which companies will be invited to provide factual feedback on their preliminary Disclosure Framework assessments, will run for four weeks from the end April.
  • Assessments using Benchmark 2.0 will be released in September/October 2023.

François Humbert, Lead Engagement Manager at Generali Insurance Asset Management (Generali Group) and current chair of the global Steering Committee joins investor calls for stepped up climate ambition and action:  
Results from previous iterations of the Benchmark show that the initiative has made great progress in driving an increase in; company net-zero commitments, board-level oversight of climate risks and opportunities, and stronger climate-related financial disclosures.

It is now imperative that focus companies move beyond disclosure to action, developing and implementing credible, Paris-aligned transition plans backed by sufficient investment, enabling an orderly transition from a financial and social point of view.”

Research and data organisations involved in the Benchmark provided comments:
Joe Brooks, Program Manager,CA100+ and Investor EngagementInfluenceMap:
Corporate climate policy engagement is increasingly seen as a mainstream indicator of readiness for the energy transition. It is clear that it 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.

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.”

About Climate Action 100+

Climate Action 100+Climate Action 100+ is the world’s largest investor engagement initiative on climate change. Investors are focused on ensuring 166 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.

  • 700 Investor Signatories
  • US$68 Trillion AUM
  • 166 Focus Companies
  • 80% Global Industrial Emissions

Climate Action 100+ is delivered by five investor networks working with the initiative’s investor signatories.
These organisations, along with investor representatives from AustralianSuper, California Public Employees’ Retirement System (CalPERS), GAM Investments, Generali Insurance Asset Management (Generali Group) and Sumitomo Mitsui Trust Asset Management form the global Steering Committee for the initiative. Follow CA100+ on Twitter: @ActOnClimate100.

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