How Climate Action 100+ organizations can accelerate their net-zero journey
The primary objective of this ambitious initiative is to enable investors to gain transparent information about the participating companies in areas of climate action.
Climate Action 100+ is the world’s largest investor engagement initiative on climate change, which offers a benchmark for assessing the progress of major global companies toward net-zero greenhouse gas emissions. This initiative includes more than 575 investors with over $54 trillion in assets with 167 focused companies to improve governance and reduce emissions.
The companies include high emitters, accounting for 80 percent of annual industrial emissions, alongside other companies with an opportunity to drive the clean energy transition. Formed in 2017, Climate Action 100+ is backed by five investor networks: Asia Investor Group on Climate Change (AIGCC), Institutional Investors Group on Climate Change (IIGCC), Investor Group on Climate Change (IGCC), Ceres (Ceres), and Principles for Responsible Investment (PRI).
The Climate Action 100+ framework assesses companies’ commitment to achieving high-level sustainability goals such as – reducing greenhouse gas emissions, improving governance, and strengthening climate-related financial disclosures. The detailed disclosure indicators include:
- Net-zero greenhouse gas (GHG) emissions by 2050 (or sooner) ambition
- Long-term (2036-2050) GHG reduction target
- Medium-term (2026-2035) GHG reduction target
- Short-term (up to 2025) GHG reduction target
- Decarbonization strategy
- Capital allocation alignment
- Climate policy engagement
- Climate governance
- Task Force for Climate-related Financial Disclosure (TCFD) recommendations
The above indicators are formed with the common intent of seeking the commitment of the participating companies and their boards for:
- Implementing a governance framework that documents the company management’s accountability and an assessment of climate change risks
- Taking measurable actions to reduce GHG emissions in alignment with the globally agreed net zero targets by 2050 or sooner.
- Corporate disclosure aligned 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 to aid investors in informed decision-making.
The primary objective of this ambitious initiative is to enable investors to gain transparent information about the participating companies in areas of climate action. With the increasing global concerns over climate action, investors expect the world’s largest carbon-emitting companies to demonstrate a genuine concern for rapidly transforming their business model – also a necessity for ensuring shareholder support.
Climate Action 100+ has also launched sectoral decarbonization strategies for the industries like steel to accelerate the sustainability transition. As per IEA, the three heavy industries – steel, cement, and chemicals contribute to almost 60% of all industrial energy consumption, resulting in 70% of carbon emissions from the industrial sector. Countries like the US are in the process to impose tariffs on carbon emissions from steel and aluminum manufacturing.
At Eugenie, our experience of supporting industrial companies in achieving their sustainability goals reveals that despite the right intent, organizations face five common challenges:
- Lack of visibility into the key operational data, which usually resides with operations teams of various plants
- Absence of potent operational measures to reduce emissions while achieving business KPIs
- Absence of baseline emissions measurements which usually relies on static calculations for building the emissions baseline
- Absence of a robust tracking & delegation mechanism for the initiatives across the organization, with multiple plants and stakeholders
- Lack of traceability on the source of emissions and their impact on the company’s sustainability & operational goals
Eugenie: An Emissions Intelligence Product
Eugenie’s digital twin-based product uses a four-step framework to track, trace and reduce emissions. The pillars for this framework are:
- Organizational visibility: Eugenie’s emissions app tracks organization-wide emissions & operations KPIs to identify the high-emitting assets and processes. This enables us to accurately quantify industrial emissions levels and baseline and benchmark them against targets.
- Operational traceability: Eugenie enables drilling down into the core KPIs at the plant and process level. This means tell you exactly how much emissions volume is attributed to each machine or process of your operation. We also track any “excess” emissions or deviations from baseline and tell you the real source of such anomalies.
- Actionability: When Eugenie quantifies and monitors your emissions levels, we also provide real-time recommendations that you can take to converge back to your targets. We also enable CSOs and other decision-makers to delegate the execution of such actions to the right people within an organization.
- Impact assessment: We tell you the real financial and environmental impact of your emissions levels and any deviations therein.
Organizations are not too early, but they can be too late
Of late, there has been a recent wave of net-zero emissions commitments from large companies that happen to be high corporate emitters. This is certainly good progress, but companies need to do more in the next decade to reduce greenhouse gases and meet longer-term climate goals. The world is entering a “decisive decade” where emissions must decrease substantially if the planet is to avoid some of the worst impacts of climate change. The IPCC’s Special Report on the Impacts of Global Warming of 1.5°C calculates that a 1.5°C global warming trajectory will require a worldwide reduction in greenhouse gas emissions of about 45 percent by 2030 and net-zero emissions by 2050.
As per the World Bank, around 70 countries have put a price on carbon so those emitting high carbon are already paying for it. However, for the sectors, which are “hard to abate”, the pathways to decarbonization are not currently clear. Some of the technologies required for the transition are still in their infancy. Eugenie’s converged platform is already aiding leading industrial organizations to solve their most urgent barrier of emission reduction – traceability and impact assessment.