UTAM is pleased to provide an update on Climate Action 100+, the largest-ever investor-led initiative to ensure the world’s largest corporate greenhouse gas (GHG) emitters take necessary action on climate change. The initiative seeks to achieve its objectives by engaging directly with these companies. Participating investors, including UTAM, meet with company management and boards directly to express their views.

On behalf of the University of Toronto, UTAM became a founding participant of Climate Action 100+ in 2017. The initiative started by identifying 100 companies around the world that had the highest combined direct and indirect greenhouse gas emissions, according to data modelled and reported by CDP. Since then, more companies have been added, bringing the list of companies to be engaged to over 160. These companies represent over 80% of global industrial emissions. Companies on the list are either critical to the transition to a net-zero-emissions economy, or they are exposed to climate-related financial risks not captured by emissions data.

The initiative now has more than 570 investor signatories, including some of the world’s largest asset managers. Together, they represent US$54 trillion in assets under management. Participating investors are engaging with companies across 33 markets, with a total market capitalization of US$8.4 trillion.

UTAM takes part in planning calls with other participating investors ahead of engagements with a number of focus companies, and then we engage directly with these companies.

Climate Action 100+ seeks the following three commitments from companies on the focus list:

  • Implement a strong governance framework which clearly articulates the board’s accountability and oversight of climate change risk;
  • Take action to reduce greenhouse gas emissions across the value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increase to well below two degrees Celsius above pre-industrial levels, aiming for 1.5 degrees. Notably, this implies the need to move towards net-zero emissions by 2050 or sooner; and
  • Provide enhanced corporate disclosure in line with the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and sector-specific Global Investor Coalition on Climate Change (GIC) Investor Expectations on Climate Change guidelines (when applicable), to enable investors to assess the robustness of companies’ business plans against a range of climate scenarios, including well below two degrees and improve investment decision-making.

Progress in 2020

Since the launch of Climate Action 100+, we have seen great progress, with numerous companies making public and private commitments that align with the initiative’s objectives. In its 2020 Progress Report, Climate Action 100+ shares highlights from company commitments made last year, including new goals and targets set by companies in the following six sectors: oil and gas, mining and metals, utilities, industrials, transportation, and consumer products.

While there is still much work to be done, we are encouraged to see that nearly half (43%) of the focus companies engaged by Climate Action 100+ have set a clear ambition to reach net-zero GHG emissions by 2050, including 69% of utility companies and 54% of oil and gas companies. Below are just a few examples of companies that made climate-related commitments in 2020:

  • Royal Dutch Shell, an Anglo-Dutch multinational oil and gas company, has set a long-term ambition to reduce the net carbon footprint of its energy products by 65% by 2050, and by around 30% by 2035. To reach overall net-zero emissions (Scopes 1, 2 and 3), Shell will also pivot towards serving businesses and sectors that are aligned with its net-zero ambitions.
  • Delta Air Lines announced a commitment to become carbon neutral by 2030 and to offset all of its emissions (Scopes 1 and 2) starting in March 2020. Delta has committed US$1 billion towards meeting these goals.
  • LafargeHolcim, a French-Swiss multinational company that manufactures building materials, set a target of net-zero emissions by 2050 and committed to setting a science-based emissions-reduction target (Scopes 1 and 2) for 2030. LafargeHolcim also announced that it is partnering with the Science-Based Targets initiative to pioneer setting climate targets for a 1.5°C future in the cement sector.
  • Unilever, a British multinational consumer goods company, announced it would achieve net-zero emissions from all its products by 2039, adding to its existing science-based target to eliminate its Scope 1 and 2 emissions by 2030. The company also intends to establish a €1-billion Climate and Nature Fund to invest in projects such as reforestation, carbon sequestration and conservation.

Climate Action 100+ Net-Zero Company Benchmark

In March 2021, the initiative introduced the Climate Action 100+ Net-Zero Company Benchmark. The benchmark assesses focus companies on their progress in the transition to a net-zero future, and it provides investors with a transparent and robust tool to facilitate focus company engagement. The benchmark’s key indicators include, among other things, an expectation that companies will set an ambition to achieve net-zero GHG emissions by 2050 or sooner, set GHG reduction targets, have a decarbonization strategy, and commit to implementing the measures of the Task Force on Climate-related Financial Disclosures (TCFD). The first assessments of focus companies have been released on the Climate Action 100+ website.

Looking ahead

This year, Climate Action 100+ will focus on several priorities, in addition to ongoing engagements with focus companies, and projects led by regional engagement working groups. Key priorities include:

  • Company engagement on the Climate Action 100+ Net-Zero Company Benchmark and rollout of the first company scorecards
  • Producing global sector decarbonization position papers
  • Further development of lobbying, just transition and other indicators for the Climate Action 100+ Net-Zero Company Benchmark

“Climate Action 100+ is an incredibly important initiative and a great example of how we team up with like-minded investors to take action on climate change,” says Daren Smith, UTAM’s President and Chief Investment Officer. “Engagement with public companies is a critical tool to influence corporate behaviour, and it is a key part of our overall responsible investment program. We’re pleased to see so many companies adopt meaningful commitments in 2020 that will have a significant impact on lowering global GHG emissions.”

For more information, visit Climate Action 100+.