A major investor-steered initiative to organize companies to take action over climate change has achieved so little this far and must be more direct on how investors will influence laggards, a report by British responsible investment NGO ShareAction said.
Climate Action 100+ is the largest investor engagement initiative on climate change globally, with $68 trillion in assets and seven hundred signatories. It requires companies to lower their greenhouse gas emissions and boost climate-related disclosures and climate change governance.
With the initiative entering the final year of its initial five-year phase, NGO ShareAction reviewed the engagement-related reporting of sixty major signatories.
It observed that four in five investors do not indicate their objectives or how they will advance if engagement does not work and that less than one in five reports on the growth of engagements.
Climate Action 100+ should settle on minimum escalation expectations for engagements, minimum transparency requirements on climate policies, and issue statistics on engagement activities and outcomes, ShareAction said in the May 18 report.
ShareAction’s Research and Engagement Manager Isobel Mitchell stated:
“To avoid the risk of greenwashing, transparency is critical. It is necessary to track progress and “hold both companies and investors to account when their actions fall short”.
Investors’ ability to stay in the initiative should depend on satisfying tougher transparency requirements, and key investors should be dismissed if they fail to set higher standards, ShareAction added.
A Climate Action 100+ spokesperson justified its work. The spokesperson added:
“Since the initiative launched, it has played a key role in bringing engagement and stewardship on climate issues into the mainstream.”
He noted that over 110 focus companies have made net zero commitments today against five in 2017.
The group also admits more efforts are needed. In a March benchmark assessment, Climate Action 100+ said 17% of companies had medium-term emissions targets agreeing with a 1.5 degrees Celsius scenario.
Just 5% of companies have promised to align their capital expenditure plans with long-term greenhouse gas depletion targets, but the spokesperson said this was not indicative of the initiative’s larger impact.