Is Climate Action 100+ doing enough?

Climate Action 100+, a major global initiative that unites over 700 investors controlling $68 trillion in assets, aims to ensure that the world’s largest corporate greenhouse gas emitters take necessary action on climate change.

However, this influential initiative faced stark criticism earlier this year from Majority Action, a US-based climate watchdog, accusing the organisation of greenwashing. The allegations focused on the autonomy granted to investors associated with Climate Action 100+ to vote against environmental measures during shareholder meetings, a loophole that Majority Action believes undermines the initiative’s declared intentions.

Shifting focus to implementation

Last week, in the wake of this criticism, Climate Action 100+ announced the commencement of its second phase. In this renewed action plan, the initiative highlighted that lead investors would be obliged to disclose votes, along with their reasoning, on matters specifically marked as vital for climate action. This measure aims to foster transparency and accountability, key facets often demanded by critics of corporate climate action.

Taken from latest press release at climateaction100.org

Furthermore, the announcement asserted a shift in focus for its upcoming phase. The primary objective now is the “implementation of climate transition plans,” aiming to create long-term shareholder value during this pivotal decade of climate action, moving beyond mere advocacy for climate-related disclosures.

Improved disclosure

Since its inception, Climate Action 100+ has had a significant impact on improving disclosure practices. The recent statement highlighted that back in 2019, 20% of corporations in high-carbon sectors had established net-zero targets, and this ratio has since increased to an impressive 75%. This achievement is reinforced by the pressing need for annual emissions reporting.

As Climate Action 100+ embarks on its second phase, it intends to exert more pressure on its signatories to ensure their investments align with robust climate transition plans. These plans should outline a credible path to achieving net-zero emissions by no later than 2050.

Comprehensive transition plans must cover emissions throughout the value chain, including indirect (Scope 3) emissions, as well as provide dedicated plans for investing in low-carbon alternatives and mechanisms to assess climate-related risks. Corporate boards must hold accountability for the management of these climate risks, ensuring a firm commitment to their climate transition strategy.

With the allegations of greenwashing made earlier this year, it is clear that Climate Action 100+ must show unwavering resolve in ensuring their policies are effectively implemented and result in meaningful climate action. The newly unveiled measures represent a promising start, but the concerns raised by Majority Action underscore the importance of continuous scrutiny and strict accountability in the global fight against climate change.

 

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