Climate Action 100+ (CA100+), the investor engagement initiative targeting the world’s largest polluters, has revealed that almost half (43%) of its 167 target companies have “established commitments to reach net-zero emissions by 2050 or sooner”, but that just 10% of those pledges include the “most material Scope 3 emissions”.
Scope 3 are indirect emissions, such as those from use of companies’ products, and for most firms they constitute the majority of their emissions.
The disclosure was made in CA100+’s second progress report, released today, which also revealed that 194 new oil & gas projects sanctioned by target companies are misaligned with the Paris climate goals. The report also found that 68% of planned capital expenditure in the oil & gas sector was inconsistent with climate goals.
Scrutiny over capital expenditure in the transition plans of big polluters, like oil & gas firms, is likely to be a major focus of investors next year as corporates begin to flesh out how they will fulfill their net-zero pledges.
Firms yet to announce net-zero plans were also warned that they “will come under growing pressure as investor willingness to escalate their engagement will be the new norm” by Stephanie Pfeifer, CEO at the Institutional Investors Group on Climate Change (IIGCC) and a CA100+ global Steering Committee member.
CA100+ target companies include the world’s 100 largest corporate greenhouse gas emitters and an additional 60+ that are “critical to accelerating the transition to net-zero emissions”.
Its progress report is published as the group, which now boasts more than 545 investor signatories, representing over $52trn in assets, reaches the third of its planned five-year lifespan.
Early next year, CA100+ will report on companies’ progress against its recently announced Net Zero Company Benchmark.
The group also welcomed today’s move by eight European oil & gas firms, seven of which are target companies, to adhere to six Energy Transition Principles, described by the oil majors’ CEOs as “a framework for actions leading energy companies are taking together, as well as a platform for collaborating with wider stakeholders”. The principles make no reference to capital expenditure but do allude to Scope 3 emissions.
“We are in the foothills of a long climb. Tackling the world’s systemically important carbon emitters is ambitious and necessary,” said Anne Simpson, Managing Investment Director, Board Governance & Sustainability at pension fund CalPERS and CA100+ global Steering Committee member.
“The results from CA100+ show what can be achieved, and what still lies ahead, for us to drive the transition to net zero by 2050.”
“CA100+ signatories have demonstrated the power of engagement to drive company action in the face of the climate emergency,” added Fiona Reynolds, CEO of the Principles for Responsible Investment and Vice Chair of the CA100+ steering committee. “In the coming year, we expect to amplify our efforts using the CA100+ Net-Zero Company Benchmark, which will score companies on their progress and make clear who are leaders and who are laggards.”