Investors’ climate action initiative reports progress on engagement but expects companies to step up

Climate Action 100+ initiative publishes first progress report

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The Climate Action 100+ initiative has published its first progress report, in which the group of investors say “significant progress” has been made at some of the 161 companies targeted as the most systemically important carbon emitters, although “far more needs to be done” by those corporates.

In December the initiative will mark its second anniversary and by the peak of the next AGM season in April-May 2020 it will be halfway through its planned five-year lifespan.

The first progress report was announced back in April as a response to a letter from a number of civil society organisations which called on CA100+ investors to show more transparency in their engagement activity.

The investor initiative currently has support from 373 signatories, 51% of them asset owners, representing more than $35trn in assets under management – up 65% since the initial 225 signatories.

The report highlights some of the initiative’s most successful engagements. Some 44 companies in total are quoted within six corporate sectors (oil and gas, mining and metals, transportation, industrials, utilities and consumer products).

Quoting research by the Transition Pathway Initiative (TPI), CA100+ said there is “a crucial ambition gap” that needs to be addressed:

“TPI’s analysis shows 70% of companies have set long-term quantitative targets for reducing GHG emissions. However, only 9% of companies have targets that are aligned with either the IEA Beyond 2°C Scenario or the IEA 2°C Scenario.

“A further 9% of companies are aligned with emissions reductions pledged by governments as part of the Paris Agreement via Nationally Determined Contributions (countries’ climate plans).”The CA100+ report features as case-studies not only the prominent engagements undertaken at Shell, BP or Equinor this AGM season but also at other less known companies from which CA100+ has secured commitments and climate ambitions beyond the oil and gas sector.

Stephanie Maier, Director of Responsible Investment at HSBC Global Asset Management and CA 100+ steering committee member, said:

“We are now at a tipping point. A significant number of companies have made bold commitments to achieve net zero emissions, with others increasingly following suit […] the role of investor engagement is critical in ensuring we build on this momentum.”

Mindy Lubber, CEO and President of Ceres and CA 100+ steering committee member, said that more investors are needed to join the initiative as well as “more companies to act on the global climate crisis more quickly, boldly and broadly than ever before.”

Anne Simpson, CalPERS Director of Board Governance and Strategy, and CA 100+ steering committee member, said that this first report shows the progress the initiative has begun to make. However, she added: “There is no room for complacency.”

Meanwhile, £30bn UK rail pensions manager RPMI Railpen has said it will now start voting against chairs and senior directors at companies who are ranked 0, 1 or 2 for management quality by the Transition Pathway Initiative.

Chief Investment Officer Richard Williams said: “As a responsible asset owner, we expect our portfolio companies to play their part in the low carbon transition. The time for action is now.” This year saw Railpen’s first exceptional vote against directors due to concerns over their approach to managing climate risk.