Climate Action 100+: Is the $68tr investor group failing to drive 'meaningful progress' from top emitters?

Michael Holder
clock • 5 min read
Credit: iStock

Credit: iStock

ShareAction warns world’s largest climate investor group is at risk of greenwashing - but Climate Action 100+ insists it is pushing climate issues into the corporate mainstream

Climate Action 100+, the world's largest green activist investor group, has been accused of failing to deliver any meaningful progress in pushing the biggest global emitters to slash their emissions over the past five years, despite its members boasting trillions of dollars of assets under management.

The initiative was first launched in 2017 with the aim of using its vast investor influence to accelerate decarbonisation among the world's largest corporate greenhouse gas emitters in line with the goals of the Paris Agreement. It now boasts 700 members representing $68tr in assets between them.

But five years since its formation, the investor group has come under increasing fire over its relative lack of success in engaging with targeted companies to spur climate action. And today a new report from campaign group ShareAction argues that only a fraction of the corporates Climate Action 100+ engages with have set near-time emissions reduction goals, adequately disclosed climate their climate risks, or aligned their capital expenditure with Paris Agreement goals.

The new analysis argues there is "little evidence" of Climate Action 100+ (CA100+) having secured meaningful success in shifting corporate strategies, and a lack of transparency around its objectives "risks allowing investors to greenwash their brands by signing up to the initiative".

The research found that just 12 per cent of so-called focus companies that the group prioritises engagement with now have adequate short-term emissions goals or decarbonisation strategies in place, while not one of the target firms has aligned its expenditure with a 1.5C warming trajectory or taken account of climate risks in their financial statements.

Moreover, every single oil and gas companies targeted by Climate Action 100+ - which includes the likes of ExxonMobil, Shell, and BP - is continuing to plough ahead with capital expenditure on fossil fuel projects that are inconsistent with the goals of the Paris Agreement, ShareAction said.

Catherine Howarth, chief executive of ShareAction, called on the investor initiative to better harness its vast influence to drive change among targeted corporate emitters, by strengthening the accountability, requirements, and expectations it places on its members.

"CA100+ is the investor initiative on climate change many were waiting for," she said. "It has the scale and focus required to make a meaningful impact on global carbon emissions. But success depends on action and real effort by all signatory investors, and so far, not all are stepping up."  

ShareAction's report assessed the climate engagement and reporting of 60 of the largest CA100+ investor members. It found that 82 per cent did not specify any objectives or escalation steps for their engagement with focus companies, which it argued were "essential" for driving change. The lack of clear policies and practices means that when corporates decline to respond to investors' calls for them to develop credible net zero strategies it is often unclear what, if anything, then happens.

Moreover, only 10 investors assessed by ShareAction reported on the progress of their engagements, and only three named all the focus companies for which they were a lead investor driving engagement efforts.

As CA100+ moves beyond its initial five year term, ShareAction urged it to set stricter membership requirements around transparency and engagement with focus companies, and report more clearly on activities and outcomes against the initiative's Net Zero Company Benchmark.

Isobel Mitchell, research and engagement manager at ShareAction, warned that without stricter membership conditions in place, CA100+ was at risk of greenwashing some of its members' relatively weak efforts to drive change at the world's biggest greenhouse gas emitters.

"To avoid the risk of greenwashing, transparency is critical," she said. "Clear reporting on engagement objectives, outcomes and escalation activities is essential for stakeholders to monitor progress on climate action and hold both companies and investors to account when their actions fall short. This is key to strengthening the initiative and ensuring that signatories commit to meaningful action." 

However, Climate Action 100+ today hit back at the criticism, arguing that since its launch its members have "played a key role in bringing engagement and stewardship on climate issues into the mainstream".

Specifically, it pointed out that more than 110 of its focus companies have now made mid-century net zero commitments - representing 69 per cent of the firms it has targetted - up from just five which had done so in 2017. Moreover, 89 per cent of its focus companies have now aligned with the risk reporting guidelines set out by the Taskforce on Climate-related Financial Disclosures (TCFDs).

In a statement, the investor group stressed that some metrics included in its Net Zero Company Benchmark were "relatively new and a specific areas of focus" going forward.

"While these are clearly important factors, they are not representative of the full breadth of the initiative's work and focusing too heavily on them risks giving a rather one-dimensional account which does not fully reflect the wider impact that it has had to date," it said.

"Overall, there is no doubt that there is still urgent work to do if we are to meet the goals of the Paris Agreement and effectively tackle the climate crisis," it added. "As Climate Action 100+ moves into the final year of this phase and looks to the future, we intend to further develop and strengthen the initiative to ensure its continued success in addressing the issues at hand."

Given CA100+ is seeking to wring climate commitments from the world's biggest corporate emitters, many of which are hardly the biggest cheerleaders for the net zero transition, the initiative was perhaps always going to struggle to deliver significant change inside five years. Consequently, the progress it has made in driving climate action up the corporate agenda at some of the world's largest emitters is not to be dismissed.

Yet at the same time, with global emissions urgently needing to fall by around 45 per cent within the next eight years to bring the world into line with the goals of the Paris Agreement, there can be little doubt that the companies CA100+ is pressuring for action have an outsized role in turning the dial on the climate emergency. Almost all of them are not moving nearly fast enough, and investors are facing significant risks as a result. Backed by $68tr of assets, CA100+ has the scale and influence to drive significant transformations at the businesses they invest in, and over the next five years it is critical that its members now rapidly accelerate the pace of change.

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