$30 Trillion Shareholder Initiative Partnering With Biggest Greenhouse Gas Emitters
Climate Action 100+ is a new five-year investor initiative designed to engage with the world’s largest corporate greenhouse gas emitters in curbing their emissions, strengthening related financial disclosures and improving governance on climate change. The initiative launched publicly last December 2017 at the One Planet Summit in Paris and now 256 investors, representing nearly $30 trillion in assets, have signed on as members.
Why this and why now?
The Paris Accord indicates that we must halt the rise of gas emissions by 2020 and then cut them by 80 percent by 2050 to achieve the goals of the Paris Agreement. A just transition for those employed in impacted sectors must also be pursued. CalPERS ran a carbon footprint analysis in response to the UN PRI’s Montreal Pledge, in which investors agreed to annually disclose their portfolios' carbon footprints, and learned that around 80 companies out of the 10,000+ in its portfolio are responsible for 50 percent of its portfolio’s carbon emissions. We realized many institutional investors likely have a similar concentration of carbon risk and began building a global coalition. Climate Action 100+ is designed to help investors and companies partner towards achieving a shared goal - reducing emissions in line with the Paris Agreement to well below 2 degrees above pre-industrial levels.
What impact can Climate Action 100+ have?
Climate Action 100+ investor members will engage companies with a common framework, seeking disclosure in line with the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This framework requests disclosure on governance, strategy, risk management and metrics/targets related to climate change.
The business planning of the top emitters, as identified by Climate Action 100+, are key to enabling the global economy to make a low-carbon transition in line with the Paris Agreement. Climate Action 100+ is so named because initially investors will focus on partnering with 100 of the world’s largest corporate greenhouse gas emitters, taking into consideration CDP data on their scope 1 (direct emissions from the companies’ assets), scope 2 (indirect emissions from electricity they purchased) and scope 3 emissions (indirect emissions not included in scope 2 that occur in the firm’s value chain).
How is the initiative organized?
The regional partner organizations who collaborate as the Global Investor Coalition on Climate Change coordinate Climate Action 100+— the Asia Investor Group on Climate Change, Ceres in North America, the Investor Group on Climate Change Australia/New Zealand and the Institutional Investors Group on Climate Change in Europe – along with the Principles for Responsible Investment.
To inform Climate Action 100+ with an investor perspective, institutional investors including Australian Super, HSBC Global Asset Management, Ircantec, Manulife and CalPERS formed a steering committee.
The effort is truly global - 38 of the firms are headquartered in Europe, 32 in North America, 27 in Asia and the remainder in South America, Australia and Africa.
Additional companies that investors consider to be particularly exposed to climate-related risks will be added to the focus list next year. We encourage more investors to sign on to the initiative by visiting www.climateaction100.org.
Investment Manager, Sustainable Investments Program, CalPERS