To help investors drive engagement with companies to pursue climate action, 2DII provides analysis on businesses in the power, automotive, steel, cement, and aviation sectors that form part of the Climate Action 100+ (CA100+) target group.

Climate Action 100+ is the world’s largest investor engagement initiative on climate change. It involves almost 700 investors, responsible for over $68 trillion in assets under management. Investors are focused on ensuring 166 of the world’s biggest corporate greenhouse gas (GHG) emitters take the necessary actions to align their business strategies with the goals of the Paris Agreement. This includes improving corporate governance, reducing GHG emissions, and strengthening climate-related financial disclosures.

The 166 focus companies include the initial 100 ‘systemically important emitters’, identified with the highest combined direct and indirect GHG emissions, and additional companies selected by investors as critical to accelerating the net zero transition.

Launched in 2017, Climate Action 100+ is coordinated by five investor networks: Asia Investor Group on Climate Change (AIGCC); Ceres (Ceres); Investor Group on Climate Change (IGCC); Institutional Investors Group on Climate Change (IIGCC) and Principles for Responsible Investment (PRI).

2° Investing Initiative has been supporting the work of CA100+ as an alignment metrics provider and member of the Technical Advisory Group to the Net Zero Company Benchmark. Specifically, 2DII uses the Paris Agreement Capital Transition Assessment (PACTA) methodology and data from Asset Resolution to provide CA100+ with forward-looking, company-level scenario alignment assessments for the power and automotive sector, and additionally this year, the steel, cement, and aviation sectors.

These alignment assessments are used by CA100+ as the basis for engaging with the 166 focus list companies to reduce their carbon emissions. This helps ensure that CA100+ signatories have access to the most accurate, complete information about company performance against the three goals of the initiative.

Contributions to CA100+’s Net Zero Company Benchmark

For the 33 power and 13 automotive focus list companies, 2DII provided a comparison of each company’s technology mix with the sector average and an assessment of the alignment of their production capacity for each technology with the decarbonization pathways of International Energy Agency (IEA) climate scenarios. In addition, this year 2DII introduced a new company-level scenario alignment assessment, measured using the IEA’s Net Zero 2050 scenario for power and Beyond 2 Degrees scenario for automotive. This provides an overall perspective on a company’s alignment without losing the focus on the technology level, which allows investors to identify whether the phasedown of high carbon technologies or investment in low carbon technologies requires attention and engagement.

2DII found that while a notable proportion of electric utilities and automotive focus list companies have started to reduce their production of coal power and Internal Combustion Engine vehicles, there is not yet sufficient planned investment in renewable power and electric vehicles for most focus list companies to be on a pathway to net zero. Additionally, although there are positive signs of a phasedown in coal power capacity, investors must pay close attention to ensure this capacity is being closed down, not simply sold off. To address this issue, 2DII is currently working on new metrics, which we will propose to CA100+, that would allow investors to distinguish between capacity that has been shut down or sold.

This year, 2DII also expanded its coverage to assess three new sectors: steel (8 companies), cement (11 companies) and aviation (5 companies). For these sectors, 2DII measured the emission intensity of production in 2021 and an assessment of each company’s distance to meeting the 2030 emissions intensity target of the IEA’s Beyond 2 Degrees Scenario. Critically, 2DII’s scenario alignment assessment found that almost no steel, cement, or aviation focus companies’ emissions intensities are aligned with a 1.5°C climate scenario.

Learn more here.

Access 2DII’s methodology document here.

Previous work: Joint report with Institutional Investors Group on Climate Change (IIGCC) on the auto industry

In 2020, 2DII published a joint report with IIGCC finding that that no single production plan of 14 leading auto companies was fully aligned with the goals of the Paris Agreement. The report, Changing Gear: Alignment of major auto manufacturers with the goals of the Paris Agreement, assesses the production plans for the 14 biggest global car companies by emissions – covering electric (EV), hybrid and internal combustion engine vehicles. Its findings, based on modelling of vehicle emissions and climate scenarios from the International Energy Agency (IEA), showed none were aligned with climate scenarios consistent with limiting warming to below 2°C, let alone well-below 2°C, as goals of the Paris Agreement.

Read the full report here.

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