General Overview
Climate Action 100+ (CA 100+) is a global investor-led initiative created in 2017, driven by the belief that finance plays a critical role in shaping a low-carbon economy. The initiative brings together investors and companies with the aim to ensure that the world's largest corporate greenhouse gas (GHG) emitters take action against climate change by:
Effectively reduce their carbon emissions;
Improve governance on climate risks;
Improve the quality and transparency of their climate-related financial disclosures.
Climate Action 100+ is an influential initiative, as it is one of the biggest engagement groups of investors on decarbonization working on decarbonizing the economy with 700+ investors cumulating €60 trillions of AUM. It was originally initiated by two internationally-recognized investment groups: Ceres and the Institutional Investors Group on Climate Change (IIGCC).
Typology of the framework
Date of creation: 2017
Framework type: Net Zero engagement
Targets: Asset Owners, Asset Managers, Companies
Number of members: 700+ investors across the world, as of Aug.24
AUM: Over $68 trillions
Objectives of the framework
The primary goal of CA 100+ is to leverage investors’ collective and shareholder influence to accelerate the transition of global companies with high impact on the economy and/or on GHG emissions to a Net Zero emissions model. Thus, the main focus of the framework are large listed companies.
To do so, 3 key features have been developed by the framework:
The Net Zero Company Benchmark, which is an assessment through 10 indicators of the Net Zero performances of companies identified by CA 100+;
The Lead Engagers, i.e. all investor-signatories who agree to meet an “engagement agenda” built around 3 pillars:
GHG emissions reduction: pushing for companies to set ambitious targets to reach Net Zero by 2050, ideally by setting Science-Based Targets (SBTs);
Governance and climate risks management: encouraging companies to integrate climate-related risks into their governance structures
Climate-related financial disclosures: prompting companies to disclose climate-related data, aligned with recommendations made by the Task-Force on Climate-Related Financial Disclosures (TCFD - now absorbed by the ISSB).
Vote Flagging, meaning that any lead engager can flag a vote in a company where he or she is a shareholder. All flagged votes are circulated and made public by CA 100+.
The companies supported by Climate Action 100+ are not necessarily portfolio companies of the initiative's members: they are chosen based on their contribution to global GHG emissions, their economic significance, and their influence over their respective industries.
Here are examples of the sectors covered:
Oil & gas: BP, PetroChina, Gazprom…
Airspace: Boeing, Airbus, AirFrance…
Chemicals: Bayer, Air Liquide…
Consumer goods and services: Walmart, Nestlé, Procter & Gamble…
Implication for investors and their portfolios
For Limited Partners (LPs) and General Partners (GPs)
All types of investors are welcomed in CA 100+, from pension funds (e.g. APG Asset Management), insurance companies (e.g. AXA Group) to asset managers (e.g. BlackRock International) or sovereign wealth funds (e.g. Norges Bank Investment Management). Both LPs and GPs are part of the initiative.
Joining the initiative is non-binding for investors, but they are encouraged to participate in engagement groups so as to initiate discussions with large and emissive companies and support them in their decarbonization journey by setting Net Zero ambitions.
Yet, as Climate Action 100+ is a non-binding framework, investors have no stringent constraints when it comes to direct their investments or backing companies. This has led to paradoxical situations where major lead engagers of the initiative have supported boards of directors for companies that blatantly failed to set or reach Net Zero targets.
Carbometrix’s Opinion
By focusing on major emitting companies and leveraging the influence of investors as shareholders, Climate Action 100+ is an interesting framework. Although it does not set strict obligations, it provides an effective platform for LPs and GPs to engage in direct dialogue with companies and promote responsible and sustainable investment practices.
However, there is room for improvement, in particular to create a more stringent and binding frame for members (lead engagers) to ensure that their companies are effectively working to reach Net Zero targets.
Indeed, several critics have condemned the ‘softly, softly’ CA 100+’s engagement strategy. In a series of joint statements with oil and gas companies, CA100+ has consistently lent its backing to plans that omit concrete emissions targets for the period to 2050. Although well-intentioned, this form of engagement has been criticized for serving as a fig leaf to hide inaction. By publicly approving vague and non-binding commitments, CA100+ may inadvertently provide cover for companies to avoid setting ambitious and measurable emissions reduction targets, thereby undermining the urgency and effectiveness of climate action.