More companies are trying to meet the climate goals of the Paris Agreement, but their plans of action are not keeping up with or addressing investor risk, according to an assessment released Oct. 18 by Climate Action 100+.
More than 700 investors with a collective $68 trillion in assets belong to the investor engagement initiative of five investor networks. Its Net Zero Company Benchmark uses analytical methodologies and datasets from public and self-disclosed data from companies. The 170 focus companies include 100 systemically important emitters plus companies considered by investors to be critical to accelerating the net-zero transition.
Benchmark assessments for 14 Australian focus companies were released Sept. 27 to provide data to investors before annual general meetings in September and October.
Climate Action 100+'s latest report found that companies in the benchmark are performing on long-term and medium-term greenhouse gas reduction targets and related disclosure, but lack "significant progress" on short-term targets, capital expenditure allocations, climate policy engagement and just transition. On those points, "the necessary details to demonstrate that companies have credible transition plans to meet their long-term targets and align with the goals of the Paris Agreement are often missing," Climate Action 100+ said in a release.
On long- and medium-term targets, while more companies have them, most "are not sufficiently comprehensive or Paris aligned," the report said, with roughly one-third covering material Scope 3 emissions.
This year's benchmark includes climate solutions metrics, with 29% of focus companies disclosing how much they invested in climate solutions in the past year and 32% specifying the value of capital expenditures planned. Climate solutions include electric vehicles and wind and solar renewable energy.
"Investors are still concerned by companies' slow progress in actually implementing their plans, particularly in nearer-term time frames," said Rebecca Mikula-Wright, CEO of the Asia Investor Group on Climate Change, in the release.