The Climate Action 100+ coalition (CA100+) is in the process of updating its Net-Zero Company Benchmark, a powerful tool that informs investors\u2019 engagement activities by providing an analysis of companies\u2019 transition plans. While the revision enacts some welcome improvements, the Benchmark still contains some drawbacks. There are too many indicators: most of them are focused on future-oriented commitments (not on current proof of alignment); and the most important indicators do not clearly stand out. Reclaim Finance believes that there is still room for investors to address the Benchmark\u2019s shortcomings and establish it as a central tool for effective shareholder engagement. We call on investors to use this framework selectively, in a simplified and operational manner, so as to clearly link their engagement and voting policies to its content and results.<\/span><\/span><\/b><\/span><\/strong><\/b><\/p>\n<\/div> The CA100+ Net-Zero Company Benchmark, first released in March 2021, defines key indicators of success for business alignment with a net-zero emissions future and assesses over 150 of the world\u2019s largest polluters on those criteria (1). In 2021, the Benchmark provided valuable information to help investors engage companies ahead of the last AGM season. It notably revealed that only 9% of the biggest polluters had a decarbonization strategy<\/a><\/u>, just 5% had adequate short-term objectives, and none of them had aligned their investments with a 1.5\u00b0C pathway.<\/p>\n<\/div><\/div><\/div> The proposed revision of the Benchmark for 2022 (3) provides welcome improvements<\/b>. Most notably, it now uses the IEA\u2019s Net Zero Emissions (NZE) scenario by 2050 for sectors where data is available, instead of the less ambitious \u201cBeyond 2 Degrees\u201d scenario used last year. Other improvements concern scope extension (eight additional companies analyzed), the inclusion of an alignment indicator assessing climate policy engagement and lobbying (based on Influence Map\u2019s methodology) and new indicators on \u201cJust Transition\u201d and climate accounting.<\/p>\n Therefore, the CA100+ Benchmark has the potential of becoming an essential tool for engagement.<\/b> Being produced by a coalition that gathers 615 investors with $60 trillions of assets under management, the benefits from a high degree of legitimacy, confidence and recognition by both investors and emitters (2). Moreover, it provides public and comparable data on a very wide range of companies and criteria. Results are also disclosed publicly, well ahead of the US and European AGM seasons.<\/p>\n<\/div> To materialize the Benchmark\u2019s potential, i<\/strong>nvestors must be aware of (and address) some of its weaknesses<\/b> that currently prevent it from becoming a central and effective tool for engagement:<\/p>\n These weaknesses may partly explain the unfortunate paradox we witnessed during the 2021 AGM season<\/b>: despite the fact that investors heavily used the Benchmark to engage companies, their voting behavior was totally uncorrelated with its results and prescriptions. TotalEnergies is a particularly striking example. 34 investors published an AGM statement<\/a><\/u> implicitly criticizing TotalEnergies\u2019s climate plan by pointing out its failure on most of the CA100+ Benchmark indicators. Yet a few days after signing the statement, some large investors, such as Amundi or AXA IM, approved TotalEnergies\u2019 failing climate plan<\/a><\/u> as if the CA100+ Benchmark had never been published.<\/p>\n<\/div> Ahead of the 2022 AGM season, Reclaim Finance believes that there is still room for investors to adress the Benchmark’s shortcomings and establish it as a central and credible tool for effective shareholder engagement. A simplified and operationalized version of the Benchmark could notably guide investors’ expectations on \u00ab\u00a0Say on Climate\u00a0\u00bb resolutions and allow them to automatically reject failing climate plans presented by management.A powerful and improved framework ahead of the 2022 AGM season<\/strong><\/span><\/h1><\/span>
Three points of attention to have in mind when using the Benchmark<\/h2><\/span>
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