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LONDON – A major investor-led initiative to get companies to take action on climate change has so far rarely been achieved and it should be clear how investors will push back, according to a report by British-responsible investment NGO ShareAction.
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 reduce their greenhouse gas emissions and improve climate change governance and climate-related disclosures.
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As the initiative enters its final year of its initial five-year phase, NGO ShareAction has analyzed the engagement-related reports of 60 of the largest signatories.
It has been found that four out of five investors do not specify their objectives or do not specify how they will grow if the engagement does not work, and one out of every five reports a low engagement progress.
The Climate Action 100+ Climate Policy should set minimum transparency requirements, minimum growth expectations for engagement and disclose engagement activities and results statistics, ShareAction said in a report released on Thursday.
“To avoid the risk of green washing, transparency is important,” said Isobel Mitchell, research and engagement manager at ShareAction.
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Investors’ ability to stay in the venture should depend on meeting strict transparency requirements and if they fail to raise the bar, key investors should be removed, ShareAction added.
A spokesman for Climate Action 100+ defended his work.
“Since the initiative was launched, it has been instrumental in bringing employment and stewardship into the mainstream of climate issues,” the spokesman said, adding that more than 110 focus companies have made net zero promises today, up from five in 2017.
The team acknowledges the need to do more.
In a March benchmark assessment, Climate Action 100+ said 17% of companies have medium-term emission targets aligned with the 1.5 degree Celsius situation.
Only 5% of companies are committed to aligning their capital expenditure plans with long-term greenhouse gas reduction targets, although a spokesman said this did not represent the broader impact of the initiative. (Reporting by Tommy Razorio Wilkes; Editing by Amelia Sithol-Mataris)