Corporate efforts to battle climate change have made considerable progress in recent years amid a worldwide effort by businesses, governments, and shareholders to attain net-zero greenhouse gas emissions. But as a new corporate progress report reveals, many companies still have much work to do to reach their targets.
The report, called the Net-Zero Company Benchmark, was released in March by Climate Action 100+, an investor coalition of 575 members representing $54 trillion in assets under management. The benchmark offers detailed and comparative assessments of how certain companies are performing against the coalition’s three high-level commitment goals: reducing greenhouse gas emissions, improving governance, and strengthening climate-related financial disclosures.
The Benchmark found that none of the companies assessed performed at a “high level” across nine key environmental indicators and metrics. The assessments also found that no company has fully disclosed how it will achieve its goals to become a net-zero enterprise by 2050 or sooner – including short and medium-term targets to deliver ambitious emissions reductions within the next decade.
“While some companies in a range of sectors are ahead of their peers in making progress towards some of the disclosure and decarbonization strategy indicators, all companies have more work ahead,” the initiative stated.
Launched in 2017, Climate Action 100+ is the world’s largest investor engagement initiative on climate change. Its more than 570 investors work with companies to improve their climate change governance, cut emissions, and strengthen their climate-related financial disclosures.
The initiative is supported by a global Steering Committee and coordinated by five regional investor networks: the Asia Investor Group on Climate Change, Ceres (Coalition for Environmentally Responsible Economies), the Investor Group on Climate Change, the Institutional Investors Group on Climate Change, and Principles for Responsible Investment.
The Benchmark is designed to evaluate the corporate ambitions and actions of the world’s largest emitters of greenhouse gas, along with other companies that can have a significant impact on climate change. One of the Benchmark’s strategies is to define key indicators of success for businesses that are working toward two separate targets: net-zero emissions, and the Paris Climate Agreement’s goal to limit the rise in global temperatures to 1.5-degrees Celsius.
Climate Action 100+ noted that while there is “growing global momentum around companies making ambitious climate commitments, the Benchmark assessments show that companies still have a long way to go in delivering on these promises.”
Among its key findings:
- Alignment of value chain GHG (Scope 3) emissions “often remain a blind spot.”
- Long-term ambitions need to be backed by clearer strategies and robust short-and medium-term targets.
- Future investments need to be more clearly aligned with the net-zero transition.
- Corporate boards and executive management teams need to improve climate change governance.
- Ambitious 1.5-degree pathways are often missing from climate scenario planning.
The new Benchmark was developed with the help of leading climate research and data organizations, including the Transition Pathway Initiative (TPI), the Carbon Tracker Initiative, the 2° Investing Initiative, and InfluenceMap. TPI conducted the company’s disclosure research and analysis with the help of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, and FTSE Russell.
In the coming months, Climate Action 100+ plans to expand on the company assessments by publishing sector-by-sector analyses. Additionally, they will also update and revise the Benchmark with the latest available data and stakeholder input. The next iteration of the Benchmark will be published next year.
