\u00a0<\/span>The Climate Action 100+ is the largest investor coalition seeking to engage with the world’s largest greenhouse gas emitting companies in the climate transition. In 2021, the initiative developed the <\/span><\/i>Net Zero Company Benchmark<\/i><\/a><\/span> tool to assess the performance of these companies against investors\u2019 climate demands. As the second phase of the initiative begins, <\/span><\/i>Climate Action 100+ has updated the benchmark methodology<\/i><\/a><\/span>. This revision makes welcome changes that strengthen the requirements and robustness of the methodology, but it does not address all the flaws and limitations of the methodology. Investors should therefore use the benchmark with caution in their engagement and voting processes, particularly in the current context of the 2023 annual general meetings.<\/span><\/i>\u00a0<\/span><\/p>\n<\/div> The Climate Action 100+ benchmark relies on ten disclosure indicators, which verify the publication of certain key information about the company’s decarbonization, and three alignment indicators, which assess the alignment of the company’s actions with the Paris Agreement. Currently, the CA100+ targets 166 high-emitting companies globally.<\/p>\n This tool allows investors to identify issues that need to be addressed in their engagement efforts, as well as companies that should be sanctioned when their climate strategy falls short. The updated methodology is the result of a consultation with investors and other stakeholders during 2022. The first assessments based on this revised methodology will be published in September 2023.<\/p>\n<\/div> Most of the benchmark methodology remains unchanged. The changes made do not alter the structure of the benchmark, except for the addition of an eleventh disclosure indicator relating to the historical decrease in greenhouse gas emissions.<\/p>\n The adopted changes improve the robustness of the pre-existing indicators:<\/p>\n Despite these clarifications, the benchmark still has important limitations that require investors to be cautious in its use.<\/p>\n First, the benchmark does not prioritize criteria according to their importance for climate action:<\/p>\n On the other hand, the methodology used for some transparency indicators is questionable:<\/p>\n Reclaim Finance believes that the Climate Action 100+ tool is useful for investors in their engagement and voting decisions, particularly in the context of the 2023 AGMs. However, it is important to keep in mind that its methodology is incomplete and insufficient to ensure that companies are fully aligned with their climate objectives. Investors will therefore need to use other tools – such as <\/span><\/b>Reclaim Finance’s analysis of the transition plans of the oil and gas majors<\/b><\/a><\/span> – to ensure that the plans presented to them are appropriate.<\/span><\/b>\u00a0<\/span><\/p>\n<\/div>Improvements that strengthen the credibility of the benchmark<\/h2><\/span>
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Limitations for investors to keep in mind<\/h2><\/span>
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