What is the Climate Action 100+?
Climate Action 100+ is an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. The companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition.
Launched in December 2017 at the One Planet Summit by Betty T. Yee, a board member of California Public Employees’ Retirement System (CalPERS), Climate Action 100+ garnered worldwide attention as it was highlighted as one of 12 key global initiatives to tackle climate change.
Which investors support Climate Action 100+?
Climate Action 100+ requires investors to sign on to the Climate Action 100+ Sign-on Statement. The public statement sets out the investor signatories’ commitment and expectations of the companies on the initiative’s focus list. To date, it has been signed by more than 450 investors from across dozens of countries, who collectively manage more than USD $40 trillion in assets under management. The full statement and list of investors is available here.
If you are an investor interested in signing on to the Climate Action 100+ Sign-on Statement, please email: email@example.com. Alternately, you may contact the coordinating partner organisation in your region to learn more about how you can get involved.
Why was Climate Action 100+ formed?
In 2015, nearly 200 countries around the world signed (and 170 have already ratified) the Paris Agreement, which aims to keep the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius, recognizing that this would significantly reduce the risks and impacts of climate change. The investor signatories of Climate Action 100+ believe that engaging and working with the companies in which they invest – to secure greater disclosure of climate change risks and robust company strategies aligned with the Paris Agreement – is consistent with their fiduciary duty and is essential to achieve the goals of the Paris Agreement.
Climate Action 100+ is designed to implement the investor commitment first set out in the Global Investor Statement on Climate Change in the months leading up to the adoption of the Paris Agreement.
In that statement investors committed to the following:
“As institutional investors and consistent with our fiduciary duty to our beneficiaries, we will: …work with the companies in which we invest to ensure that they are minimising and disclosing the risks and maximizing the opportunities presented by climate change and climate policy.”
What are investors asking focus companies to do?
Investors signed on to Climate Action 100+ are requesting the boards and senior management of companies to:
1) Implement a strong governance framework which clearly articulates the board’s accountability and oversight of climate change risks and opportunities;
2) Take action to reduce greenhouse gas emissions across the value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increase to well below 2 degrees Celsius above pre-industrial level;
3) Provide enhanced corporate disclosure in line with the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and, when applicable, sector-specific Global Investor Coalition on Climate Change Investor Expectations on Climate Change  to enable investors to assess the robustness of companies’ business plans against a range of climate scenarios, including well below 2 degrees Celsius, and improve investment decision-making.
 The Global Investor Coalition on Climate Change Investor Expectations on Climate Change sector guides cover oil and gas, mining, utilities and auto manufacturers and provide additional sector specific disclosure recommendations, particularly regarding the oversight of public policy positions.
How is the Climate Action 100+ different from other engagements on climate change?
Climate Action 100+ brings together and builds on a number of pre-existing investor-led engagement initiatives that have been operating in different regions of the world. It will build on the climate change engagement pioneered by the Institutional Investor Group on Climate Change Collaborative Engagement Group in Europe, developed by the Aiming for A Coalition, and pursued under the Ceres Carbon Asset Risk initiative in North America. It also draws on the leadership of the Principles for Responsible Investment and its engagement across environmental, social and governance issues.
Why do investors choose engagement?
Global collaborative investor engagement sends a powerful signal – directly to companies – that investors are asking for and expect companies to respond to climate change. Climate change is a systemic risk – one which investors cannot diversify away from. As equity investors and universal owners, investors have the ability and the responsibility to address climate risks and seek greater disclosure on how the most systemically significant emitters are aligning with transition pathways, specifically including well below 2 degrees Celsius and 1.5-degree Celsius and disclosing climate change risks and opportunities to the market.
How are lead and support investors assigned to focus companies?
When investors sign up to the initiative they nominate which companies they would like to engage with and in the capacity as lead or supporting investor. A set of principles and processes has been developed for investor signatories, by which lead investors are identified to engage with companies on the Climate Action 100+ focus list. These principles include consideration of previous history of engagement with the focus company, geographic proximity, investor capacity and stock holding over the term of the initiative. In addition, where possible, the initiative aims to ensure asset owners and asset managers are among the investors signed on to each engagement.
Does Climate Action 100+ focus on operational emissions or emissions across the value chain?
Climate Action 100+ is focused on ensuring that companies take into consideration climate-related risks and impacts associated with their most material sources of greenhouse gas emissions. This means that investors will be looking at how companies can efficiently address and disclose how they manage climate risk and direct and indirect scope 1, 2, and 3 emissions across their value chain.
For example, the most material or greatest source of greenhouse gas emissions of an auto manufacturer are those generated during the use of the vehicles it sells (scope 3). Value chain emissions, like those of vehicles, are substantial sources of greenhouse gas emissions. Such value chain emissions are highly material to reducing emissions. Transportation emissions account for a quarter of annual emissions. If only scope 1 and 2 emissions had been used to assess the footprint of companies, transportation emissions would have not been taken into consideration.
How was the Climate Action 100+ focus list developed?
Investors aim to engage systemically important greenhouse gas emitters and other companies across the global economy that have significant opportunities to drive the clean energy transition and help achieve the goals of the Paris Agreement.
Companies have been identified using two distinct methodologies for the initial list of 100 focus companies and the + list of focus companies.
- Initial list of 100 focus companies: In December 2017, an initial list of 100 focus companies was identified. This group of companies was selected from a major global index (MSCI ACWI) that represents 85 percent of global investable equity. The initial 100 focus companies have the highest combined direct and indirect Scope 1, 2 and 3 emissions (emissions associated with the use of their products) using CDP modelled and reported data. For companies that do not report to CDP, CDP modelled GHG emissions were used so that companies reporting to CDP were not penalized. CDP explains their modelling techniques in detail here. These initial 100 focus companies represent up to two-thirds of annual global industrial greenhouse gas emissions, according to CDP.
- “+” list of 61 focus companies: In July 2018, an additional list of 61 companies (known as the “+” list) was added to the focus list of companies. Investors recognize that emissions alone do not demark all opportunities to drive the clean energy transition or exposure to physical risks. Therefore, investor signatories were invited to nominate additional companies that are material to their investment portfolios. The “+” list of focus companies identified have either a significant opportunity to drive the clean energy transition at the global or region level or may be exposed to climate-related financial risks, including risks to physical assets, that are not captured solely by emissions data. To ensure a global distribution of the nominated companies, a minimum of five companies each were included from Asia, Australia, Europe and North America. These companies represent those that received the most interest among investor signatories in each region, indicated via a voting mechanism.
How will updates to the focus list take place?
The Global Steering Committee reviews companies that have been subject to a corporate action and decides on a case by case basis which ones should be removed from the Climate Action 100+ focus list. Regional networks are responsible for submitting any revisions to the focus list to the Steering Committee, listing the reason for change. These can include: merger, acquisition, bankruptcy or delisting.
Following the publication of the initiative’s first Progress Report in September 2019, the Steering Committee approved updates to the list. In 2019, one company was removed from the focus list: Tesoro Corporation (Andeavor) because it was acquired by Marathon Petroleum, another Climate Action 100+ focus company. All approved revisions to the focus list are reflected at climateaction100.org and will appear in the 2020 Progress Report.
The Steering Committee reserves the right to add companies to the focus list as deemed necessary and subject to the initiative’s ability to support engagement with new companies.
Can a company get off the focus list?
The focus company list will remain constant for the five years of the initiative, unless there is a corporate action, including a Merger/Acquisition, Delisting or Bankruptcy (anything where company ceases to exist). Companies deemed leaders in their sectors, as informed by the benchmark data and supported by sub‐committee of investors and network leads, could be put on a watch list, where the lead investors will monitor the company to ensure they continue to make progress and assess what level of additional engagement (if any) might be warranted.
Additionally, as the Climate Action 100+ Benchmark data is made public, companies that deliver upon all expectations may be publicly recognised and used as positive and leading examples of how the low carbon transition may be undertaken in their market or sector. Nonetheless due to the long‐term nature of the energy transition we anticipate engagement will continue with these companies to ensure they follow through with their initial plans.
How was Climate Action 100+ formed?
Investor representatives from AustralianSuper, California Public Employees’ Retirement System (CalPERS), HSBC Global Asset Management, Ircantec and Manulife Asset Management have designed and developed the initiative. Climate Action 100+ is supported and coordinated by five partner organisations: Asia Investor Group on Climate Change (AIGCC); Ceres; Investor Group on Climate Change (IGCC); Institutional Investors Group on Climate Change (IIGCC); and Principles for Responsible Investment (PRI). It builds upon the collaborative investor engagement pioneered since 2012 by the four organisations that together form the Global Investor Coalition on Climate Change. It also draws upon the leadership of PRI and its investor engagements across environmental, social and governance issues.
How is Climate Action 100+ governed?
Climate Action 100+ is governed by a global Steering Committee that is made up of investor representatives from AustralianSuper, CalPERS, HSBC Global Asset Management, Ircantec and Sumitomo Mitsui Trust Asset Management (SMTAM). It is also made up of lead executives from the partner organisations coordinating the initiative: Asia Investor Group on Climate Change (AIGCC); Ceres; Investor Group on Climate Change (IGCC); Institutional Investors Group on Climate Change (IIGCC); and Principles for Responsible Investment (PRI).
How is Climate Action 100+ funded?
Climate Action 100+ is supported by grants from ClimateWorks Foundation, KR Foundation, and Sea Change Foundation International, among others, and by the five partner organisations coordinating the initiative. Potential funders interested in learning more about Climate Action 100+ can contact the Fundraising Working Group Chair Mariel Cabral at firstname.lastname@example.org
Is there a cost for signatories to participate in the initiative?
There is no cost for signatories to join the initiative, other than the time and resources they will need to invest in engagements with focus companies. However, signatories may make donations to help support the initiative’s activities. To learn about Climate Action 100+ signatory donation opportunities, please contact the Fundraising Working Group Chair Mariel Cabral at email@example.com
Does Climate Action 100+ take a position on climate-related shareholder resolutions?
Investor signatories are responsible and accountable for their own voting decisions – this includes any pre-declaration or vote solicitation. Climate Action 100+ does not seek to provide voting recommendations or to facilitate block voting. The investor networks will flag certain shareholder resolutions and circulate information from the lead investors and/or investor signatories filing or co-filing relevant shareholder resolutions.
Which shareholder resolutions will be flagged?
Shareholder resolutions filed or co-filed by Climate Action 100+ investor signatories that meet the three tests below:
1. Consistency with goals of the Climate Action 100+: The resolution should address at least one element of the initiative’s goals;
2. Wording of resolution: The resolution wording and positioning should be checked to assess if the request of management is reasonable or burdensome. Resolutions should be categorised as either ‘disclosure’ and/or ‘action’ requests based on the type of instruction provided within the resolution.
3. Complementary to existing engagement strategy: This strategy is set out by the Climate Action 100+ collaborative investor engagement group. Consideration should be given to the effect the resolution could have on the existing engagement relationship, company commitments, and progress against the initiative’s goals to date.