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What’s next for the world’s largest-ever investor engagement initiative on climate change?

As the CA100+ initiative looks to move into Phase II, we argue there is a real opportunity to increase its ambition.

‘CA100+’ - or Climate Action 100+ - has become almost synonymous with investor engagement on climate change.

But as time runs out to avoid the worst impacts of climate change, the initiative – and the investors signed up to it – are not yet driving the scale of change required within the highest emitting companies.

As the CA100+ initiative looks to move into Phase II, there is a real opportunity to increase its ambition.

The initiative must set a higher bar in its next phase if it is to achieve its stated goals. Read on to find out how ShareAction thinks it can do this.

CA100+: The investor initiative the world needed

CA100+ was launched in December 2017 by 225 signatories as a five-year initiative.

Four and a half years on, it is the world’s largest-ever investor engagement initiative on climate change, boasting 700 signatories responsible for US$68 trillion in assets under management between them.

It was set up to ensure that the companies responsible for the largest stake of global greenhouse gas emissions take necessary action on climate change.

To do this, CA100+ provides a platform for groups of ‘Collaborating Investors’, led by a ‘Lead Investor’, to engage with each of their 167 focus companies.

These include high emitting companies in the fossil fuel, transport, manufacturing, energy, and other industrial sectors and together cover over 80 per cent of global industrial emissions.

CA100+ is the investor initiative on climate change many were waiting for.

Investors do not operate in a vacuum.

Decisions taken, or not taken, by them have an impact on the world around us.

Investors can and must use their influence to drive corporate action on the climate crisis and reduce emissions.

CA100+ has enormous potential to drive effective climate action

By providing a platform for coordinated action, it offers an opportunity for a critical mass of investors to speak with one voice.

They can use their collective influence over portfolio companies to demand urgent action on emissions.

It also empowers investors to collectively escalate engagement if those demands are not met.


There are signs the CA100+ is not meeting its potential

CA100+’s own Net Zero Company Benchmark found that less than 12 per cent of the initiative’s focus companies have adequate short-term emissions reduction targets or decarbonisation strategies.

No company has fully aligned its capital expenditure with a 1.5C future or produced financial statements that reflect relevant climate risks.

Every single oil and gas focus company is planning capital expenditure on projects that are inconsistent with the goals of the Paris Agreement.

While 42 per cent of the initiative’s focus companies have long-term net-zero ambitions, CA100+ signatories have so far failed to trigger the practical actions needed for companies to achieve those goals.

This raises questions about the ambition and effectiveness of CA100+ engagement to date

A new report from ShareAction analysing 60 of CA100+’s largest signatories’ engagement reporting found cause for concern.

On engagement strategy… Over one-third of the investor signatories did not specify climate change as a thematic engagement priority.

82 per cent of analysed investors did not specify objectives or escalation steps for climate change engagement at all.

On engagement reporting… Inconsistent and vague reporting made it difficult to assess the extent to which investors are engaging on climate change.

For example, only 30 investors (half the sample) named companies in case studies on climate change engagement.

None gave an indication of the next steps for engagement, besides generic statements such as “we will monitor the company” or “we will continue to engage”.

Meanwhile, only 10 provided statistics on the progress of their engagements and even fewer reported progress on a thematic basis.

On CA100+ involvement… Of the 46 investors who mentioned CA100+ in their reporting, only three (representing five per cent of the full sample) clearly stated the number of companies for which they are the Lead Investor and disclosed the names of all those companies.

These investors represent US$53 trillion – 78% of the assets under management of the entire CA100+ signatory base.

Despite being signatories to the largest-ever investor initiative on climate change, our conclusion from these findings is that there is little evidence to show that these investors are managing the risks posed by the world’s highest emitting companies.

As major fiduciaries, responsible for millions of people’s savings and pensions, this is just not good enough.

The success of CA100+ depends on signatories taking action

The next year will be crucial to ensuring that CA100+ fulfils its aim of ensuring that the world’s largest corporate greenhouse gas emitters take necessary action on climate change.

As a five-year initiative, CA100+ will be concluding its current phase in 2023.

It will be re-launching phase II the same year.

This relaunch provides an opportunity to drive courageous climate action. It cannot be missed

With less than three years left before global emissions must peak if we are to be within a chance of staying under 1.5C, CA100+ must be bold and act fast to achieve its aim.

So, how does CA100+ get the most bang for its $68 trillion bucks?

Here’s how we think the initiative can double down in its crucial second phase:

  • Strengthen signatory requirements: Set minimum transparency requirements on climate change policies and require Investor Participants[1] to commit to them.
  • Raise the bar on engagement: Set minimum escalation expectations for engagements undertaken via CA100+ and require Investor Participants to commit to them.
  • Improve signatory accountability: Publish and maintain a list of Lead and Collaborating Investors for each focus company and update the list annually.
  • Establish clear expectations for focus companies: Publish and maintain a list of engagement objectives and milestones for each focus company.
  • Report on activities and outcomes: Publish aggregated statistics on engagement activities and outcomes against the CA100+ Net Zero Company Benchmark accompanied by detailed case studies on engagement with each focus company in annual progress reporting.

Signatories can act now

Whilst the relaunch of CA100+ provides a critical opportunity to drive up standards, signatories needn’t wait until 2023 to raise their game.

Many CA100+ focus companies are still to hold their 2022 AGMs.

Voting for climate-related shareholder resolutions and against standing items is a powerful way for investors to signal to investee companies that they need to take action to reduce emissions.

With key oil majors’ AGMs ahead of us (Shell, Total, Chevron, and Exxon, to name a few) investors will face decisions on whether or not to use their proxy voting rights to demand action on climate change at portfolio companies.

With the company AGM becoming the battleground for ESG issues, clients and civil society will be monitoring investors’ voting decisions on these carefully.

[1] There are two types of signatories to CA100+: Investor Participants and Investor Supporters. Investor Participants are signatories responsible for engaging with focus companies via CA100+, whereas Investor Supporters are asset owners signatories who publicly support the initiative's goals, but do not participate directly in engagements with focus companies.

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