Investor group urged to step up climate action after falling short – report

© Reuters. FILE PHOTO: A delegate walks past a climate change poster at the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 1, 2021. REUTERS/Phil Noble

By Tommy Wilkes

LONDON (Reuters) – A major investor-led initiative to get companies to take action over climate change has achieved little so far and must be clearer about how investors will pressure laggards, a report by British responsible investment NGO ShareAction said.

Climate Action 100+ is the world’s largest investor engagement initiative on climate change, with 700 signatories and $68 trillion in assets. It wants companies to lower their greenhouse gas emissions and improve climate change governance and climate-related disclosures.

With the initiative moving into the final year of its initial five-year phase, NGO ShareAction analysed engagement-related reporting of 60 of the biggest signatories.

It found that four in five investors do not specify their objectives or how they will escalate if engagement doesn’t work, and that fewer than one in five report on the progress of engagements.

Climate Action 100+ should set minimum transparency requirements on climate policies, minimum escalation expectations for engagements, and publish statistics on engagement activities and outcomes, ShareAction said in the report published on Thursday.

“To avoid the risk of greenwashing, transparency is critical,” said ShareAction’s Research and Engagement Manager Isobel Mitchell, adding that it was essential to monitor progress and “hold both companies and investors to account when their actions fall short”.

Investors’ ability to remain in the initiative should hinge on meeting tougher transparency requirements and lead investors should be removed if they fail to raise the bar, ShareAction added.

A spokesperson for Climate Action 100+ defended its work.

“Since the initiative launched, it has played a key role in bringing engagement and stewardship on climate issues into the mainstream,” the spokesperson said, noting that more than 110 focus companies have made net zero commitments today against five in 2017.

The group also acknowledges more work is needed.

In a March benchmark assessment, Climate Action 100+ said 17% of companies had medium-term emissions targets aligned with a 1.5 degrees Celsius scenario.

Only 5% of firms have committed to align their capital expenditure plans with long-term greenhouse gas reduction targets, although the spokesperson said this was not representative of the initiative’s wider impact.

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