Report: To Address Climate Change, Significant Effort Still Required from World’s Biggest Companies

A new report from Climate Action 100+ states that more effort is needed by the world’s biggest companies if the fight against climate change is ever going to make an impact.

Climate Action 100+ brings together more than 370 global investors with over $35 trillion in assets under management, in seeking to ensure some of the world’s largest companies take necessary action on climate change. The 161 “focus companies” engaged through the initiative are collectively responsible for more than two-thirds of global industrial GHG emissions and represent a combined market capitalization in excess of $8 trillion.

Supported by Climate Action 100+ investor engagement, a range of net zero emission commitments are now in place. Progress has been seen across a range of industries, many of which are among the most challenging to decarbonize. Examples of focus companies making net zero commitments over just the past seven months include; HeidelbergCement, Duke Energy, Nestle, Daimler, VW, Thyssenkrupp, ArcelorMittal, BHP Billiton, Centrica and Saint-Gobain, among others.

Despite these examples, analysis shows a significant step change is still required from the majority of focus companies in addressing climate change as a strategic business risk.

Analysis in the report demonstrates across the 161 focus companies:

• 70% have set long-term emissions reduction targets.
• 9% have emissions targets that are in line with (or go beyond) the minimum goal of the Paris Agreement to keep the rise in global temperature to below 2°C, highlighting a crucial ambition gap to be addressed.
• 8% of companies have policies in place to ensure their lobbying activity is aligned with necessary action on climate change (leaving scope for obstructive, negative or evasive lobbying).
• 40% undertake and disclose climate scenario analysis, and 30% of companies have formally supported recommendations of the Task force on climate-related Financial Disclosures.
• 77% have defined board level responsibility for climate change.

This and other data in the report is provided by climate research partners and provides an initial baseline of progress against the core goals of the initiative across relevant sectors.

Given the size of their collective GHG emissions, a more ambitious response by the Climate Action 100+ focus companies is pivotal – on both a company and global level – in ensuring the transition is realized in the timeframe required.

Issued by the Climate Action 100+ steering committee, the report also contextualizes the contribution investor engagement has made to progress achieved to date. Highlights and broader examples of impact include:

• Securing four Climate Action 100+ investor led agreements with global companies – Shell, Glencore, BP and Equinor – each covering a broad range of commitments.
• Breaking new ground in defining investor expectations on corporate lobbying activity, to ensure activity is aligned with and supports delivery of the Paris Agreement on climate change. Eleven commitments have been secured to date from companies in line with investor expectations, to review and act on alignment of lobbying activity, inclusive of trade bodies.
• Mainstreaming the expectation that companies need to take responsibility for and act on emissions across their value chain (scope 3 emissions).
• Defining new approaches to alignment of emissions in line with the goals of the Paris Agreement, through both target-setting and future capital expenditure.

Numerous case study examples included in the report highlight the significance of shareholder engagement as a key factor in contributing to progress by companies, in line with goals of the initiative.

Publication of the progress report follows a key United Nation’s climate conference in New York last week, in which progress towards a net zero emissions future was further strengthened. Responding to the science, 65 countries and the EU have now announced efforts to achieve net zero emissions by 2050 or sooner, effectively meaning economy wide decarbonization.