Climate Action Global Investors Driving Business Transition Climate Action Global Investors Driving Business Transition

2O2O PROGRESS REPORT ABOUT THIS REPORT This report is the second update on progress, issued by the Climate Action 100+ initiative. It summarises overall progress of the initiative including an update on measurement and benchmarking, key focus company commitments against the initiative’s goals, growth in signatories, and a sector level update on company performance against a set of indicators aligned to the aims of the initiative.

THANKS TO CLIMATE ACTION 1OO+ FUNDERS The five investor networks are thankful for the support of our philanthropic partners: Bloomberg Philanthropies, Children’s Investment Fund Foundation (UK), ClimateWorks Foundation with a contribution from the IKEA Foundation, The Grantham Foundation for the Protection of the Environment, KR Foundation, New York Community Trust — Lise Strickler and Mark Gallogly Charitable Fund, Sea Change Foundation International, Martha Records and Richard Rainaldi, Wellspring Climate Initiative, and our anonymous supporters.

CLIMATE ACTION 100+ IS SUPPORTED BY FIVE COORDINATING INVESTOR NETWORKS

Notes All values are in USD unless otherwise stated. The reporting period (‘this year’) spans 1 October 2019 - 30 November 2020 unless otherwise stated. For 2019 data, please see the 2019 progress report.

2 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CONTENTS

1 WHO WE ARE 4 WHERE WE ARE MAKING PROGRESS 5 Report introduction and highlights 66 AIGCC-PRI Asia Working Group update WHO WE ARE 1 6 Highlights: 2020 company commitments 68 Ceres North America Working Group update 9 Foreword from Mark Carney 70 IGCC Australasian Working Group update HOW WE MEASURE PROGRESS 2 10 Foreword from the Steering Committee 71 IIGCC Europe Working Group update 11 Executive summary of report findings 73 PRI Global Working Group update HOW COMPANIES ARE PROGRESSING 3

WHERE WE ARE MAKING PROGRESS 4 2 HOW WE MEASURE PROGRESS 5 KEY ISSUES IN 2020 15 The Climate Action 100+ Net-Zero Company 76 Towards net-zero emissions by 2050 KEY ISSUES IN 2020 78 Trade association lobbying in 2020 5 16 Disclosure indicators 79 Just transition 21 Capital allocation indicators HOW WE ARE GOVERNED 6

APPENDIX 7

3 HOW COMPANIES ARE PROGRESSING 6 HOW WE ARE GOVERNED 25 Review of company progress 82 How the initiative is governed 29 Oil and gas sector 86 Priorities for 2021 35 Mining and metals sector 41 Utilities sector 49 Industrials sector 54 Transportation sector 61 Consumer products sector

7 APPENDIX 88 A: Data indicators used in this report LEGEND 90 B: Technical Advisory Group 91 C: Acknowledgements Internal page reference Home Next/previous page (click to go to page)

3 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT 1 WHO WE ARE 545 TOTAL SIGNATORIES REPRESENTING

SIGNATORY ASSETS UNDER MANAGEMENT TOTAL $52 TRILLION

4 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT REPORT INTRODUCTION AND HIGHLIGHTS

WHAT IS CLIMATE WHO IS BEHIND THE WHO WE ARE 1 CLIMATE ACTION 1OO+ AT A GLANCE ACTION 1OO+? INITIATIVE? Report introduction and highlights Highlights: 2020 company commitments Launched in 2017, Climate The initiative has been shaped and Foreword from Mark Carney led by its participating investors Foreword from the Action 100+ is now the Steering Committee who determine the engagement largest ever investor Executive summary of report findings 545 16O 2 strategy pursued with each focus SIGNATORY INVESTORS FOCUS COMPANIES IN MARKETS engagement initiative 32 company and update the initiative HOW WE MEASURE PROGRESS 2 on climate change. The on progress. initiative focuses investor The management of the initiative SIGNATORY ASSETS UNDER COMPANIES ENGAGED BY THE INITIATIVE HOW COMPANIES ARE 1 3 engagements on 160 day to day and engagement of MANAGEMENT TOTAL ARE RESPONSIBLE FOR AN ESTIMATED PROGRESSING global companies that have investors is assisted by five investor significant greenhouse gas networks: the Asia Investor Group on WHERE WE ARE MAKING 4 (GHG) emissions and/or Climate Change (AIGCC), Ceres, the PROGRESS are critical to the net-zero Investor Group on Climate Change $52 8O%+ (IGCC), the Institutional Investor OF GLOBAL INDUSTRIAL emissions transition and to 3 KEY ISSUES IN 2020 5 Group on Climate Change (IIGCC) TRILLION EMISSIONS meeting the objectives of and the Principles for Responsible the Paris Agreement. Investment (PRI). HOW WE ARE GOVERNED 6 INVESTOR TOTAL MARKET CAP FOR By engaging with these focus The investor networks provide SIGNATORIES IN ALL FOCUS COMPANIES IS secretariat support for investors, companies, signatory investors APPENDIX 7 to Climate Action 100+ are help facilitate meetings, provide helping to accelerate the business technical assistance and create transition to a net-zero emissions opportunities for engagement skills 32 MARKETS enhancement. The investor networks $8.4 future and ensure that global 4 economies are more resilient to also lead regionally focused working TRILLION climate change. groups that support engagement with a subset of focus companies For more information, visit: and help to ensure engagements are www.ClimateAction100.org and effective. follow: @ActOnClimate100. For more detail on the governance 1 As at 30 November 2020. 2 Represents active engagements in 2019 and 2020, and does not include new additions to the Climate Action 100+ focus list. See page 85 and operations of the initiative for more information about the companies added to our focus list in 2020. please visit the website and the 3 Based on total 2018 emissions for all Climate Action 100+ focus companies (CDP data), compared to 2018 global emissions 2019 progress report. (Global Carbon Project data). 4 Bloomberg data as at 30 November 2020.

5 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HIGHLIGHTS: 2O2O COMPANY COMMITMENTS These highlights are a small selection of company commitments from 2020

WHO WE ARE 1

FOCUS COMPANIES OIL AND GAS Report introduction and highlights 1 Highlights: 2020 BY SECTOR company commitments Foreword from Mark Carney Foreword from the BP INC OCCIDENTAL PETROCHINA CO. LTD Steering Committee 39 CORPORATION Executive summary of report findings OIL AND GAS COMPANIES BP has set a new ambition to ENEOS updated management plans announced PetroChina announced a near-zero HOW WE MEASURE PROGRESS 2 become a net-zero emissions and company vision for carbon an operational net-zero by 2040 emissions target by 2050, and company by 2050 for scope 1, 2 neutrality by 2040 through its target and ambition for net-zero plans to use some of the $38 billion HOW COMPANIES ARE and 3 with a 50% cut in the carbon updated 'vision for 2040', including associated with the use of its received from gas pipeline sales to 3 23 intensity of products it sells by 2050 aspirations to link social and products by 2050. focus on wind and solar power. PROGRESSING MINING AND METALS or sooner. It also became the first environmental goals to executive COMPANIES oil major to announce that it will cut remuneration and investing 14 billion WHERE WE ARE MAKING 4 production 40% by 2030. into its business transition plan. PROGRESS

31 KEY ISSUES IN 2020 5 UTILITIES COMPANIES

HOW WE ARE GOVERNED 6 26 SK INNOVATION CO LTD INDUSTRIALS COMPANIES APPENDIX 7 Reliance Industries announced a Repsol announced an ambition Shell has set a new long-term SK Innovation reconfirmed its target to become net carbon zero to achieve net-zero emissions by ambition to reduce the net carbon commitment to achieving Green 26 by 2035. 2050 for scope 1, 2 and 3 emissions footprint of its energy products by Balance 2030 by 2030, ultimately TRANSPORTATION COMPANIES becoming the first global oil and 65% by 2050, and by around 30% aiming to achieve net zero gas company to assume this goal. by 2035. To reach overall net-zero emissions in all material scope 1, 2 emissions, Shell will pivot towards and 3 emissions by 2050. serving customers that are aligned 14 with its net-zero ambitions. CONSUMER PRODUCTS COMPANIES

1 The focus list includes one company that is classified as ‘other’ which is not included in this list.

6 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HIGHLIGHTS: 2O2O COMPANY COMMITMENTS

MINING AND UTILITIES CONSUMER METALS PRODUCTS WHO WE ARE 1 BHP AGL ENERGY LTD PGE POLSKA GRUPA THE SOUTHERN COMPANY UNILEVER PLC ENERGETYCZNA S.A. (PGE) Report introduction and highlights Highlights: 2020 BHP made a significant AGL targeted net-zero emissions PGE published a new strategy Southern Company reaffirmed Unilever announced it would achieve company commitments enhancement in its approach to by 2050 and set out plans to which contained, among other its mid-term goal of a 50% net-zero emissions from all its Foreword from Mark Carney Foreword from the industry associations and lobbying invest more in renewable energies things, a commitment to carbon reduction in GHG emissions by products by 2039 in addition to its Steering Committee on climate to ensure improved and tested the resilience of its neutrality by 2050. The long-term 2030 and set a new long-term goal existing science-based target to Executive summary of report findings climate policy positions from plans against a 1.5°C climate strategic goal of the company is for of net-zero carbon emissions by reduce its scope 1 and 2 emissions associations it is a member of, and pathway scenario. 100% of the energy sold by PGE to 2050. The company complemented 100% by 2030. It intends to establish HOW WE MEASURE PROGRESS 2 to improve real-time disclosure come from renewable sources by this commitment with the report a 1 billion Climate and Nature on misalignment and escalation. 2050. The company will also reduce ‘Implementation and action toward Fund to invest in projects such as The company also set a medium- its investment in coal. PGE also net-zero.’ The goal does not cover reforestation, carbon sequestration HOW COMPANIES ARE PROGRESSING 3 term target to reduce operational set interim targets and milestones. scope 3 emissions. and conservation. emissions by 30% by 2030. Specifically, by 2030, the share of WHERE WE ARE MAKING renewable energy in the company's 4 portfolio will increase to 50% and PROGRESS carbon dioxide emissions will be reduced by 85%. KEY ISSUES IN 2020 5

XCEL ENERGY INC. WEC ENERGY GROUP, INC. WOOLWORTHS GROUP LIMITED HOW WE ARE GOVERNED 6

Xcel Energy published its ‘Electric WEC Energy upgraded its 2030 Woolworths set a medium-term APPENDIX 7 Vehicle Vision’, announcing intent goal from 40% to 70% emissions science-based target to reduce its to power 1.5 million electric vehicles reduction, and its 2050 goal from operational emissions by 63% and (EVs) in its service areas by 2030 80% emissions reduction to net scope 3 emissions by 19% by 2030, and an investment of $300 million carbon neutral generation. The which was endorsed by the Science to accelerate adoption of EVs in goal does not yet cover scope 3 Based Targets Initiative. its communities. emissions.

7 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HIGHLIGHTS: 2O2O COMPANY COMMITMENTS

INDUSTRIALS TRANSPORTATION

WHO WE ARE 1 CEMEX S.A.B. DE C.V. HON HAI PRECISION INDUSTRY AMERICAN AIRLINES GROUP INC. DELTA AIR LINES, INC. FORD MOTOR COMPANY Report introduction and highlights Highlights: 2020 Cemex committed to delivering Hon Hai committed to ensuring that American Airlines released a new Delta Air Lines announced a Ford announced its ambition to company commitments Foreword from Mark Carney net-zero carbon dioxide (CO2) its GHG emissions policies across ESG (Environmental Social and commitment to carbon neutrality become carbon neutral by 2050, Foreword from the concrete by 2050 and linking its the value chain are consistent with Governance) report in October and to offset all its emissions signed a compromise agreement Steering Committee targets/performance to executive the goals of the Paris Agreement 2020 formally committing the from March 2020 onward. It also with California (“California Executive summary of report findings compensation. The company will with an aim to achieve net-zero company to net-zero emissions announced a $1 billion investment Agreement”) under which it agreed also be setting science-based GHG emissions by 2050. This comes by 2050. The company intends to to meet its new goals. to comply with standards stricter HOW WE MEASURE PROGRESS 2 targets for 2030. with an acknowledgement as a do this via a combination of fuel than the Trump Administration’s response to the objectives set out efficiency, operational efficiencies, vehicle emissions standard. by Climate Action 100+. fleet renewal, new aircraft types, HOW COMPANIES ARE PROGRESSING 3 sustainable aviation fuels, carbon offsets, and the use of renewable energy at the company's facilities. WHERE WE ARE MAKING PROGRESS 4

CUMMINS INC. LAFARGEHOLCIM LTD QANTAS AIRWAYS LIMITED ROLLS-ROYCE KEY ISSUES IN 2020 5

Cummins announced a new LafargeHolcim set a net-zero Qantas announced a net-zero by Rolls-Royce announced a HOW WE ARE GOVERNED 6 sustainability strategy, committing emissions by 2050 target and 2050 target, the first airline in the commitment to net-zero emissions it to net-zero emissions by 2050 in committed to set a science based world to do so, to cap its emissions in its operations by 2030 and to company operations. The company 2030 emissions reduction target. It at 2019 levels, invested $50 million play a leading role in enabling the APPENDIX 7 also set new emissions reduction also announced that it is partnering in advanced biofuels research and sectors in which it operates to reach targets including a science-based with the Science Based Targets development, and doubled its offset net-zero emissions by 2050. It target which included coverage Initiative to pioneer setting climate program. intends to publish a roadmap by the of scope 3 emissions, committing targets for a 1.5°C future in the end of 2020 with interim targets to it to reduce emissions by 25% cement sector. achieve these aims. from newly-sold products, and partnerships with customers to reduce emissions by 55 million tonnes by 2030.

8 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT FOREWORD FROM MARK CARNEY

As we navigate the Climate change, and society’s analysis to support the world’s Our collective expectations WHO WE ARE 1 recovery from the response to it, is creating highest-emitting companies in of transition plans, as well as unparalleled risks and the strategic resets they need approaches to measuring the Report introduction and highlights Covid crisis, there are opportunities. Those companies to make. Companies are clearly position of companies and Highlights: 2020 high expectations that company commitments that are part of the solution and taking note. As this progress portfolios on the transition path, Foreword from Mark Carney businesses adapt their are making the transition to net- report reveals, 2020 has seen a will continue to evolve and Foreword from the strategies in a way that zero have the opportunity to surge in net-zero announcements, ratchet up as we move towards Steering Committee considers the most thrive and will create enormous with many of these commitments net-zero. And as investors Executive summary of report findings value for their shareholders. driven through investor increasingly demand these HOW WE MEASURE PROGRESS 2 pressing issues for people Those that don’t will become engagement. I have been truly strategies of companies, it may and planet. Indeed this increasingly uncompetitive and astounded by the momentum in be desirable to give them a crisis has reinforced could lose their social licence to the past year alone, particularly “Say on Climate” – an automatic HOW COMPANIES ARE society’s demand for a operate. By the time of the 2021 given the backdrop of the annual advisory vote on transition PROGRESSING 3 sustainable future that UN Climate Change Conference Covid-19 pandemic. plans just as there is an advisory in Glasgow, transition plans for “say on pay” in some jurisdictions. WHERE WE ARE MAKING takes climate change into large companies will increasingly But there is still some distance to This would establish a critical PROGRESS 4 account. The transition be the norm, with their absence go. It’s time for every company link between responsibility, to net-zero greenhouse either signalling an intention to to engage with this conversation. sustainability and accountability. KEY ISSUES IN 2020 5 gas emissions is both wind down the business over This progress report highlights the imperative of starting with The new Climate Action 100+ an imperative of climate coming years, or an assertion that the business is somehow an appropriate level of ambition Net-Zero Company Benchmark HOW WE ARE GOVERNED 6 physics and a commitment separate from the society in by building net-zero and interim indicators give landmark clarity in 126 countries. It is which it operates. The former targets that cover emissions and transparency on the asks of MARK CARNEY, therefore vital that this may be logical, the latter would across the full business value companies by leading investors. UNITED NATIONS SPECIAL ENVOY FOR CLIMATE ACTION AND FINANCE, AND THE APPENDIX 7 strategic reset across be unforgiveable. chain. It also outlines how Yet, over time, investors won’t companies need to do more just judge company transition UK PRIME MINISTER’S FINANCE ADVISER businesses sees the to reconcile positive talk with plans. They too shall be judged FOR COP26 Investors are increasingly focused adoption of strategies to action, including embedding on their own plans and alignment on assessing how well companies net-zero across all aspects of to net-zero. With a sustained align with a net-zero future. are positioned for both climate their strategy and investment focus on transition by companies change and the net-zero pipeline, and holding industry and financial institutions, we can transition, by identifying which associations to account for the build the net-zero future that our companies will be on the right climate lobbying carried out in citizens are demanding and that and wrong side of climate history. their name. future generations deserve. Climate Action 100+ has been leading this charge, providing the momentum, stewardship and

9 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT FOREWORD FROM THE Many of the world’s largest corporate emitters are setting ambitious targets STEERING COMMITTEE to decarbonise by mid-century.

In our second progress A prosperous net-zero emissions Investors have been calling for WHO WE ARE 1 report on Climate Action world is increasingly within our consistent metrics to assess reach: nine of the 15 largest company performance on climate CLIMATE ACTION 100+ Report introduction and highlights 100+, we are pleased to economies have now set net-zero risk, which the newly released Highlights: 2020 present an update on STEERING COMMITTEE company commitments targets, and as this report shows, Climate Action 100+ Net-Zero Foreword from Mark Carney the achievements of the many of the world’s largest Company Benchmark delivers. Foreword from the initiative from October corporate emitters are setting The benchmark will provide Andrew Gray, Director ESG and Stewardship, Steering Committee 2019 to November ambitious targets to decarbonise more clarity to companies on AustralianSuper Executive summary of report findings by mid-century. Calls for a specific disclosures and targets Anne Simpson, Managing Investment Director, HOW WE MEASURE PROGRESS 2 2020. This report also sustainable recovery have been and is a useful tool for investors Board Governance and Sustainability, CalPERS contains detail on the widespread as recognition grows to assess and compare company recently released Climate that sparking fresh investments in performance. Climate Action HOW COMPANIES ARE Emma Herd, CEO, Investor Group on Climate 3 Action 100+ Net-Zero zero and low-carbon industries, 100+ announced the Net-Zero Change PROGRESSING Company Benchmark, technologies and infrastructure Company Benchmark to focus can help countries stimulate their companies in August 2020 Fiona Reynolds, CEO, Principles for Responsible WHERE WE ARE MAKING provides a summary of economies, drive growth and and are pleased to have had Investment PROGRESS 4 company progress at create new jobs. strong engagement on it to date sector level, and sets out with 117 companies indicating Laetitia Tankwe, Advisor to President Jean-Pierre Costes, Groupe Caisse des Dépôts, Ircantec KEY ISSUES IN 2020 5 initiative priorities for the The case for immediate action their support and intention to is clear. Unprecedented wildfires coming year. disclose in accordance with the Mindy Lubber, CEO and President, Ceres in Australia, the United States, framework. the Amazon and Siberia, record- Rebecca Mikula Wright, Executive Director, Asia HOW WE ARE GOVERNED 6 There is no doubt that 2020 has breaking floods and typhoons in We thank our investor signatories, Investor Group on Climate Change been a hugely challenging year Asia, a record-breaking Atlantic Climate Action 100+ staff at the globally. Communities continue to hurricane season and the rapid coordinating investor networks, Seiji Kawazoe, Senior Stewardship Officer, APPENDIX 7 face fear and uncertainty because retreat of polar ice sheets and our funders, for continuing Sumitomo Mitsui Trust Asset Management of the COVID-19 pandemic, an accelerating sea-level rise are all to support our efforts to address (SMTAM) economic downturn with rising stark reminders that the physical climate change risk. unemployment and financial impacts of climate change are Stephanie Maier, Director of Responsible stress, and in some parts of the here. While we don’t have all of Investment, HSBC Global Asset Management world, growing social unrest. the answers to decarbonisation Stephanie Pfeifer, CEO, Institutional Investors Despite these challenges, climate yet, we know the time to increase Group on Climate Change change has remained firmly our collective ambition is now. on companies’ and investors’ agendas as an urgent issue.

10 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT The 2020 Climate Action 100+ Progress EXECUTIVE SUMMARY Report shows that while some companies are taking steps to decarbonisation in OF REPORT FINDINGS line with a net-zero emissions by 2050 trajectory, there is a long way to go.

The 2020 Climate Action Growth in signatories • Governance, including executive Company progress against Nearly half (43%) of companies WHO WE ARE 1 100+ Progress Report remuneration linked to climate selected indicators have set a net zero by 2050 Climate Action 100+ is growing. targets. target or ambition in some form, Report introduction and highlights provides an overall update The 160 companies2 engaged by Highlights: 2020 The initiative has now attracted which is an important signal • Just transition. the Climate Action 100+ initiative company commitments on the initiative and its 545 investor signatories, including to investors that companies • Task Force on Climate related represent over 80% of global Foreword from Mark Carney activities, as well as an notable new additions Blackrock understand and are preparing for Foreword from the Financial Disclosures (TCFD) industrial emissions and are, as a assessment of focus and State Street Global Asset the transition. However, only 10% Steering Committee reporting, including scenario group and individually, critical to Executive summary of report findings Management – the first and third of focus companies have net-zero company progress at the analysis. progressing the global economy largest asset managers in the targets that explicitly cover the sector level against a series to net-zero emissions by 2050. HOW WE MEASURE PROGRESS 2 world (respectively). Climate companies’ most material scope A subset of these indicators has This level of ambition is necessary of benchmark indicators. Action 100+ signatory assets 3 emissions. been used to assess company according to the IPCC3 in order under management now total HOW COMPANIES ARE performance at the sector-level to hold global warming to 1.5°C Similarly, while more than half of 3 $52 trillion. PROGRESSING in this report. A full company- above pre-industrial levels, and focus companies (51%) have set level assessment against all the New approach to measuring to avoid the most catastrophic a short-term (to 2025) emissions indicators in the new benchmark WHERE WE ARE MAKING company progress effects of climate change. reduction target, and just under PROGRESS 4 is underway and will be released half (38%) have set a medium- In 2020, the initiative developed in the form of company For this report, companies have term target (2026 to 2035), the Climate Action 100+ Net scorecards in early 2021. been assessed against a subset these targets do not often cover KEY ISSUES IN 2020 5 Zero Company Benchmark, of the new Climate Action 100+ It is recognised that for both the companies’ operational which will be used to publicly Net-Zero Company Benchmark companies to improve scope 1 and 2 emissions as well as benchmark focus companies. indicators, including disclosure HOW WE ARE GOVERNED 6 their performance against the most material upstream and The first company scorecards assessments provided by these indicators as a region, downstream scope 3 emissions. will be released in early 2021. The Transition Pathway Initiative and actions led or incentivised by Benchmark includes indicators capital allocation assessments At a sector-level, indicators APPENDIX 7 government and policymakers which cover: provided by Carbon Tracker assessing companies in the form an important part of Initiative and 2° Investing oil and gas, utilities and • Net zero by 2050 ambition. the conversation. For many Initiative. transportation (autos) sectors 1 The Climate Action 100+ Net-Zero companies engaged by the Company Benchmark will only assess • Targets and goals for show gaps in companies’ planned focus company greenhouse gas emission greenhouse gas (GHG) initiative, policy settings will be The report shows that while some capital allocation and technology reduction targets against a well below 2°C emissions reduction in the short, key to driving the transition. companies are taking steps to climate scenario in the first assessment. In mix. For example, despite nearly the future these will be assessed against a medium and long-term and decarbonisation in line with a net- half (54%) of oil and gas focus 1.5°C climate scenario where available. whether targets align with a zero emissions by 2050 trajectory, companies having a net-zero 2 In November 2020, an additional 9 1 there is a long way to go. companies were added and 2 companies 1.5°C climate scenario . by 2050 target in some form, removed from the Climate Action 100+ • Decarbonisation strategy. Carbon Tracker analysis shows focus list. Reporting on progress of these that 194 of the new oil and gas companies is not included in the scope of • Capital allocation alignment. this report. projects sanctioned this year 3 See the IPCC Special Report on the impacts • Climate policy engagement. are misaligned with the <1.75°C of global warming of 1.5C https://www.ipcc. ch/sr15/ climate scenario.

11 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT EXECUTIVE SUMMARY OF REPORT FINDINGS

The majority of oil and gas capital • Just transition and increasing Priorities ahead WHO WE ARE 1 expenditure (68%) assessed by investor expectations for Carbon Tracker is also outside companies to appropriately In 2021, the initiative will focus on Report introduction and highlights several key priorities: Highlights: 2020 of this climate scenario. Carbon develop transition plans for company commitments Tracker analysis also shows workers and communities that • Company engagement on the Foreword from Mark Carney only 26% of electric utility focus are best practice, reflect broad Climate Action 100+ Net-Zero Foreword from the companies have coal phase out consultation, and are clearly Company Benchmark and the Steering Committee plans aligned with the <1.75°C disclosed. rollout of the first company Executive summary of report findings climate scenario (up from 13% in • Lobbying via industry scorecards. 2 2019). HOW WE MEASURE PROGRESS associations, including the • Producing global sector 2° Investing Initiative analysis progress seen in 2020 on this decarbonisation position issue globally via Climate Action HOW COMPANIES ARE similarly shows that automotive papers. PROGRESSING 3 companies are falling short of the 100+ engagements, and some • Further development of required investments required analysis on the uptick in fossil lobbying, just transition and fuel lobbying that has occurred WHERE WE ARE MAKING to switch technologies at an other indicators for the Climate PROGRESS 4 appropriate pace from internal as economic recovery proposals Action 100+ Net-Zero Company combustion engines (ICE) to are being developed and Benchmark. hybrid and electric vehicles. released due to the COVID-19 KEY ISSUES IN 2020 5 pandemic. • Improving the signatory While setting a net-zero by 2050 experience and boosting target or ambition is critical, there New companies added signatory accountability in the HOW WE ARE GOVERNED 6 are clear gaps in target coverage, initiative. ambition, capital expenditure, The Climate Action 100+ focus strategy and planning to align list now comprises 167 companies These are in addition to priorities APPENDIX 7 with these long-term plans. as a result of nine strategic and projects advanced by additions and two removals. regional engagement working Key issues for 2020 This progress report assesses groups, and the ongoing the list of 160 companies that engagements led by signatories The report also includes the initiative engaged during with focus companies globally. summaries of important issues the 2019/2020 season, including raised by investors in their the two companies that were company engagements in 2020, recently removed from the list including: (Southern Copper Corporation • Net-zero emissions ambitions and Wesfarmers). The nine and the need for companies to companies added to the focus list align capital expenditure, short this year will be assessed in the and medium-term targets, and 2021 Progress Report. company strategy and planning on the long-term move to net- zero emissions. 12 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT 2 HOW WE MEASURE PROGRESS

13 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HOW WE MEASURE PROGRESS

The Climate Action 100+ Disclosure assessments These additional third-party WHO WE ARE 1 Steering Committee and analyses, which correspond The framework has ten indicators with company disclosures’ WHAT ARE THE KEY GOALS OF THE CLIMATE ACTION 1OO+ supporting investor network HOW WE MEASURE 2 that reflect the overall initiative relative to indicator six in the INITIATIVE? PROGRESS organisations have worked goals. It will assess companies’ benchmark, will be included The Climate Action 100+ Net-Zero to ensure the best data alignment with specific points for upstream oil and gas Climate Action 100+ recognises that decarbonisation of the Company Benchmark including ambition to align with and research are available companies, electric utilities global economy is complex and will require unique strategies Disclosure indicators the Paris Agreement goal, GHG to investors engaging with (coal and gas generation and approaches across different businesses, regions and sectors. Capital allocation indicators emissions reduction targets, However, investors agree there should be a common global companies, and that there assets) and automotive decarbonisation strategy, capital engagement agenda seeking commitments from boards and senior HOW COMPANIES ARE companies. Similar analyses for 3 is sufficient information alignment, climate policy support, companies in other sectors will management to: PROGRESSING to assess the alignment of governance, just transition and be added in the future. companies with investor disclosure. Transition Pathway WHERE WE ARE MAKING Initiative (TPI) has been selected The Climate Action 100+ PROGRESS 4 expectations and initiative to conduct research and analysis Technical Advisory Group, goals. on companies’ disclosed comprised of Carbon Tracker information and based on this, Initiative (CTI), InfluenceMap KEY ISSUES IN 2020 5 During 2020 the initiative score each company. (IM), Transition Pathway IMPROVE REDUCE GHG PROVIDE ENHANCED developed the Climate Action Initiative (TPI) and 2° 100+ Net-Zero Company Capital allocation Investing Initiative (2DII) has GOVERNANCE OF EMISSIONS IN LINE DISCLOSURE HOW WE ARE GOVERNED 6 Benchmark. It draws upon two assessments been central to the overall CLIMATE RISKS AND WITH GOALS OF THE ALIGNED WITH THE distinct analytical methodologies Carbon Tracker Initiative and development of the new OPPORTUNITIES PARIS AGREEMENT RECOMMENDATIONS and data sets, each designed to APPENDIX 7 2° Investing Initiative will also Benchmark and the various OF THE TASK FORCE evaluate company performance analyse companies’ capital approaches used to assess and provide greater transparency ON CLIMATE-RELATED expenditures (CAPEX) and focus company alignment. for investors. FINANCIAL DISCLOSURE output relative to a range of climate change scenarios to (TCFD) give investors additional insights on the relative adequacy and alignment of company action with the Paris Agreement goals.

14 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT THE CLIMATE ACTION 1OO+ NET-ZERO COMPANY BENCHMARK

The Climate Action BENCHMARK PURPOSE • Engagement advancement: WHO WE ARE 1 100+ Net-Zero Company Focus company assessment results will inform advancement HOW WE MEASURE 2 Benchmark was developed Climate Action 100+ seeks to decisions including voting, PROGRESS during 2020 through focus investor action on the for Climate Action 100+ focus The Climate Action 100+ Net-Zero collaboration and feedback world’s largest GHG emitters, companies. Company Benchmark including emissions across the with almost 50 signatory • Decision making: The results Disclosure indicators value chain, and companies that Capital allocation indicators investors, investor network present the greatest climate- of company assessments will experts, leading climate related risk to investors’ portfolios be used by signatories to inform their actions during HOW COMPANIES ARE research and data NGOs or that have a significant PROGRESSING 3 year five of the initiative (the and corporate stakeholders opportunity to drive a broader net-zero economy transition. The original time horizon for Climate to establish indicators Action 100+) particularly WHERE WE ARE MAKING Climate Action 100+ Net-Zero PROGRESS 4 that are robust, fair and Company Benchmark supports with unresponsive or poor applicable to local markets this objective by providing performing firms. and across sectors. investors with a tool that is • Initiative transparency KEY ISSUES IN 2020 5 both transparent and robust and reporting: Company to facilitate focus company assessment results will be a key engagement. This framework input for the initiative’s progress HOW WE ARE GOVERNED 6 may be used for: reports and used to assess the overall effectiveness of the • Ongoing engagement: APPENDIX 7 The Benchmark resets and initiative. clarifies expectations for what • Assessing alignment or companies need to do to align misalignment: Between with the goals of the initiative companies’ stated ambitions and provides a mechanism for and their planned investments, tracking progress. activities and projects.

15 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT DISCLOSURE INDICATORS

The disclosure indicators WHO WE ARE 1 DISCLOSURE INDICATORS DATA PROVIDER rely on companies’ publicly HOW WE MEASURE 1 2 disclosed information. 1 NET-ZERO GHG EMISSIONS BY 2050 (OR SOONER) AMBITION PROGRESS There are ten overall 1.1 The company has set an ambition to achieve net-zero GHG emissions by 2050 or sooner. TPI The Climate Action 100+ Net-Zero indicators, each supported Company Benchmark The company has made a qualitative net-zero GHG emissions ambition statement that explicitly includes at least 95% Disclosure indicators by one or more sub- 1.1a TPI indicators. of scope 1 and 2. Capital allocation indicators The company’s net-zero GHG emissions target covers the most relevant scope 3 GHG emissions categories for the 1.1b TPI HOW COMPANIES ARE Transition Pathway Initiative (TPI) company’s sector, where applicable. PROGRESSING 3 supported by its research and 2 LONG-TERM (2036 to 2050) GHG REDUCTION TARGET data providers the Grantham WHERE WE ARE MAKING Research Institute on Climate The company has set a long-term (2036 to 2050) target for reducing its GHG emissions on a clearly defined scope 4 2.1 TPI PROGRESS Change and the Environment at of emissions. the London School of Economics The long-term (2036 to 2050) GHG reduction target covers at least 95% of scope 1 & 2 emissions and most relevant scope 2.2 TPI (LSE) and FTSE Russell, has 3 emissions (where applicable). KEY ISSUES IN 2020 5 been appointed as the research organisation for delivering the 2.2a The company has specified that this target covers at least 95% of total scope 1 and 2 emissions. TPI HOW WE ARE GOVERNED 6 company data for the disclosure If the company has set a scope 3 GHG emissions target, it covers the most relevant scope 3 emissions categories for the indicators within the Climate 2.2b company’s sector (for applicable sectors), and the company has published the methodology used to establish any scope 3 TPI Action 100+ Net-Zero Company target. Benchmark. Company disclosed, APPENDIX 7 public information will be The long-term target is aligned with a trajectory to achieve the Paris Agreement goal of limiting global temperature increase 2.3 to 1.5°C with low or no overshoot (equivalent to IPCC Special Report on 1.5°2 Celsius pathway P1 or net-zero emissions by TPI collected by TPI and used to 2050).3 assess and score each focus company against the disclosure 3 MEDIUM-TERM (2026 TO 2035) GHG REDUCTION TARGET indicators. The results of this The company has set a medium-term (2026 to 2035) target for reducing its GHG emissions on a clearly defined scope research and scoring will be 3.1 TPI made available in early 2021 on of emissions. The medium-term (2026 to 2035) GHG reduction target covers at least 95% of scope 1 and 2 emissions and most relevant the Climate Action 100+ website. 3.2 TPI In this report, a subset of the scope 3 emissions (where applicable). disclosure indicators is reported 3.2a The company has specified that this target covers at least 95% of total scope 1 and 2 emissions. TPI on at the sector level.

16 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT DISCLOSURE INDICATORS

WHO WE ARE 1 Company disclosed, DISCLOSURE INDICATORS DATA PROVIDER If the company has set a scope 3 GHG emissions target, it covers the most relevant scope 3 emissions categories for the HOW WE MEASURE 2 public information will PROGRESS be collected by TPI 3.2b company’s sector (for applicable sectors), and the company has published the methodology used to establish any scope TPI 3 target. The Climate Action 100+ Net-Zero and used to assess and Company Benchmark The medium-term target is aligned with a trajectory to achieve the Paris Agreement goal of limiting global temperature Disclosure indicators 2 score each focus 3.3 increase to 1.5°C with low or no overshoot (equivalent to the IPCC Special Report on 1.5°C pathway P1 or net-zero emissions TPI Capital allocation indicators company against the by 2050).3 4 SHORT-TERM (2020 TO 2025) GHG REDUCTION TARGET HOW COMPANIES ARE disclosure indicators. PROGRESSING 3 The company has set a short-term (2020 to 2025) target for reducing its GHG emissions on a clearly defined scope The results of this 4.1 TPI of emissions. WHERE WE ARE MAKING 4 research and scoring The short-term (2020 to 2025) GHG reduction target covers more than 95% of scope 1 and 2 emissions, and relevant scope PROGRESS 4.2 TPI will be made available 3 emissions (where applicable). in early 2021. 4.2a The company has specified that this target covers at least 95% of total scope 1 and 2 emissions. TPI KEY ISSUES IN 2020 5 If the company has set a scope 3 GHG emissions target, it covers the most relevant scope 3 emissions categories for the 4.2b company’s sector (for applicable sectors), and the company has published the methodology used to establish any scope 3 TPI HOW WE ARE GOVERNED 6 target. The short-term target is aligned with a trajectory to achieve the Paris Agreement goal of limiting global temperature increase 4.3 to 1.5°C2 with low or no overshoot (equivalent to IPCC Special Report on 1.5° Celsius pathway P1 or net-zero emissions by TPI APPENDIX 7 2050).3 5 DECARBONISATION STRATEGY

5.1 The company has a decarbonisation strategy to meet its long, medium and short-term GHG reduction targets.4 TPI The company identifies the set of actions it intends to take to achieve its GHG reduction targets over the targeted 5.1a timeframe. These measures clearly refer to the main sources of its GHG emissions, including Scope 3 emissions TPI where applicable. The company quantifies key elements of this strategy with respect to the major sources of its emissions, including scope 3 5.1b emissions where applicable (eg. changing technology or product mix, supply chain measures, research and development TPI spending). The company’s decarbonisation strategy includes a commitment to ‘green revenues’ from low carbon products and 5.2 TPI services.5

17 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT DISCLOSURE INDICATORS

WHO WE ARE 1 DISCLOSURE INDICATORS DATA PROVIDER

HOW WE MEASURE 2 5.2a The company already generates ‘green revenues’ and discloses their share in overall sales. TPI PROGRESS The company has set a target to increase the share of green revenues in its overall sales or discloses green revenue share 5.2b TPI The Climate Action 100+ Net-Zero that is above sector average. Company Benchmark Disclosure indicators 6 6 CAPITAL ALLOCATION ALIGNMENT Capital allocation indicators

6.1 The company is working to decarbonise its future capital expenditures. TPI HOW COMPANIES ARE PROGRESSING 3 6.1a The company explicitly commits to align future capital expenditures with its long-term GHG reduction target(s). TPI

The company explicitly commits to align future capital expenditures with the Paris Agreement’s objective of limiting global WHERE WE ARE MAKING 6.1b TPI 4 warming to 1.5° C. PROGRESS The company discloses the methodology used to determine the Paris Agreement alignment of its future 6.2 TPI capital expenditures. KEY ISSUES IN 2020 5 The company discloses the methodology it uses to align its future capital expenditure with its decarbonisation goals, 6.2a TPI including key assumptions and key performance indicators (KPIs). HOW WE ARE GOVERNED 6 The methodology quantifies key outcomes, including the share of its future capital expenditures that are aligned with a 1.5° 6.2b TPI Celsius scenario, and the year in which capital expenditures in carbon intensive assets will peak.

7 CLIMATE POLICY ENGAGEMENT7 APPENDIX 7 The company has a Paris-Agreement-aligned climate lobbying position and all of its direct lobbying activities are aligned 7.1 TPI with this. The company has a specific commitment/position statement to conduct all of its lobbying in line with the goals of the 7.1a TPI Paris Agreement. 7.1b The company lists its climate-related lobbying activities, e.g. meetings, policy submissions, etc. TPI The company has Paris Agreement-aligned lobbying expectations for its trade associations, and it discloses its trade 7.2 TPI association memberships. The company has a specific commitment to ensure that the trade associations the company is a member of lobby in line 7.2a TPI with the goals of the Paris Agreement. 7.2b The company discloses its trade associations memberships. TPI

7.3 The company has a process to ensure its trade associations lobby in accordance with the Paris Agreement. TPI

18 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT DISCLOSURE INDICATORS

WHO WE ARE 1 DISCLOSURE INDICATORS DATA PROVIDER

The company conducts and published a review of its trade associations’ climate positions/alignment with the Paris HOW WE MEASURE 2 7.3a TPI PROGRESS Agreement. The Climate Action 100+ Net-Zero 7.3b The company explains what actions it took as a result of this review. TPI Company Benchmark Disclosure indicators 8 CLIMATE GOVERNANCE Capital allocation indicators

8.1 The company’s board has clear oversight of climate change. TPI HOW COMPANIES ARE PROGRESSING 3 The company discloses evidence of board or board committee oversight of the management of climate change risks via at least one of the following: WHERE WE ARE MAKING • There is a C-suite executive or member of executive committee who is explicitly responsible for climate change PROGRESS 4 8.1a (not just sustainability performance) and that executive reports to the board or a board level committee, and/or; TPI • The CEO is responsible for climate change AND he/she reports to the board on climate change issues, and/or; • There is a committee (not necessarily a board-level committee) responsible for climate change (not just sustainability KEY ISSUES IN 2020 5 performance) and that committee reports to the board or a board-level committee. The company has named a position at the board level with responsibility for climate change, via one of the following: HOW WE ARE GOVERNED 6 8.1b • A board position with explicit responsibility for climate change, or; TPI

• The CEO is identified as responsible for climate change, if he/she sits on the board. APPENDIX 7 8.2 The company’s executive remuneration scheme incorporates climate change performance elements, TPI The company's CEO and/or at least one other senior executive’s remuneration arrangements specifically incorporate 8.2a climate change performance as a KPI determining performance-linked compensation (reference to ‘ESG’ or ‘sustainability TPI performance’ are insufficient). The company's CEO and/or at least one other senior executive’s remuneration arrangements incorporate progress towards 8.2b achieving the company’s GHG reduction targets as a KPI determining performance linked compensation (requires meeting TPI relevant target indicators 2, 3, and/or 4). 8.3 The board has sufficient capabilities to assess and manage climate-related risks and opportunities. TPI

19 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT DISCLOSURE INDICATORS

WHO WE ARE 1 DISCLOSURE INDICATORS DATA PROVIDER

The company has assessed its board competencies with respect to managing climate risks and discloses the results of HOW WE MEASURE 2 8.3a TPI PROGRESS the assessment. The company provides details on the criteria it uses to assess the board competencies with respect to managing climate The Climate Action 100+ Net-Zero 8.3b TPI Company Benchmark risks and/or the measures it is taking to enhance these competencies. Disclosure indicators 9 JUST TRANSITION8 Capital allocation indicators

9.1 The company considers the impacts from transitioning to a lower-carbon business model on its workers and communities. TPI HOW COMPANIES ARE PROGRESSING 3 10 TCFD DISCLOSURE WHERE WE ARE MAKING The company has committed to implement the recommendations of the Taskforce on Climate-related Financial Disclosures 4 10.1 TPI PROGRESS (TCFD). The company explicitly commits to align its disclosures with the TCFD recommendations OR it is a listed as a supporter on 10.a TPI the TCFD website. KEY ISSUES IN 2020 5 10.1b The company explicitly sign-posts TCFD aligned disclosures in its annual reporting or publishes them in a TCFD report. TPI HOW WE ARE GOVERNED 6 10.2 The company employs climate-scenario planning to test its strategic and operational resilience. TPI

10.2a The company has conducted a climate-related scenario analysis including quantitative elements and disclosed its results. TPI APPENDIX 7 The quantitative scenario analysis explicitly includes a 1.5° Celsius scenario, covers the entire company, discloses key 10.2b TPI assumptions and variables used, and reports on the key risks and opportunities identified.

1 The necessary timeframe for companies to achieve net-zero GHG emissions differs depending on the sector. Some companies in certain sectors, such as electric utilities, may be expected to set more ambitious goals and achieve net-zero GHG emissions by 2040 or even sooner. Future iterations of the Net-Zero Company Benchmark will reflect these sector differences. 2 Note that sub-indicators 2.3, 3.3 and 4.3 will be based on Transition Pathway Initiative’s Carbon Performance methodology, which applies the Sectoral Decarbonisation Approach (SDA), a science- based method for companies to set GHG reduction targets necessary to stay within a 2°C temperature rise above pre-industrial levels. 3 In the absence of a credible 1.5°C scenario, companies will be measured against a below 2°C scenario. Company assessments will be adjusted when a 1.5°C scenario becomes available, most likely in the next reporting cycle. 4 The use of offsetting or carbon credits should be avoided and limited, if at all applied. Offsetting or ‘carbon dioxide removal’ should not be used by companies operating in sectors where viable decarbonisation technologies exist. For example, offsetting would not be considered credible if used to offset emissions for a coal-fired power plant because viable alternatives exist to coal-fired power plants. 5 The assessment will leverage the EU’s Green Taxonomy criteria on ‘turnover’ (or revenues) for companies headquartered in the European Union. Companies headquartered outside of the EU will not be assessed in the first quarter 2021 iteration of the framework. The criteria used to assess non-EU companies will be an ongoing area of development as part of broader discussions on the use of green revenue classification systems and regional taxonomies. 6 Related to Indicator 6, there will be an additional set of Capital Allocation Indicators in the company scorecards to be provided by Carbon Tracker (CT) and 2° Investing Initiative (2Dii). CT and 2Dii will analyse recent focus company CAPEX and output relative to a range of alternative climate change scenarios to give investors additional insights related to company capital allocation plans. Initially, these will apply to focus companies in the upstream oil and gas, electric utilities and auto sectors. 7 Note that current benchmark indicators, in particular Indicator #7 on Climate Policy Engagement are intended to be enhanced and will evolve over time with an update ready in advance of the next scoring cycle. 8 This indicator will be further developed, and companies will not be assessed in the 2021 company scorecards.

20 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CAPITAL ALLOCATION INDICATORS

The capital allocation WHO WE ARE 1 indicators are designed to CAPITAL ALLOCATION Upstream oil and gas companies complement the disclosure HOW WE MEASURE 2 indicators by providing INDICATORS INDICATOR DATA PROVIDER PROGRESS further insights to investors The capital allocation indicators How many conventional and and gas projects were sanctioned by CTI The Climate Action 100+ Net-Zero regarding the adequacy of Company Benchmark presented in this report are a focus companies in 2019 that are outside of the IEA B2DS? companies’ capital allocation Disclosure indicators subset of indicators developed by If the company provided impairment price assumptions CTI plans, and relative alignment Capital allocation indicators 2 - are they flat, declining or increasing? with the company’s stated CTI and 2DII . Percentage of total potential capital expenditure (below STEPS cap) that is inside B2DS, CTI emissions reduction targets. HOW COMPANIES ARE These indicators rely on a number for oil, gas and total. PROGRESSING 3 These indicators are provided of climate scenarios3 provided by Percentage of total potential capital expenditure (below STEPS cap) outside B2DS, for oil CTI by Carbon Tracker (CTI) and the International Energy Agency’s 2° Investing Initiative (2DII) and gas. WHERE WE ARE MAKING (IEA) to assess companies, PROGRESS 4 and currently apply to a including the: subset of Climate Action 100+ Electric utilities companies1. • IEA’s Beyond 2 Degrees Scenario (B2DS) INDICATOR DATA PROVIDER KEY ISSUES IN 2020 5 • IEA’s Stated Policies Scenario Alignment of company’s current and future capital stock and capital expenditures with 2DII climate scenarios. (STEPS) HOW WE ARE GOVERNED 6 • IEA’s Sustainable Development Company’s future (2025) technology mix compared to the market average. 2DII Scenario (SDS) Has the company announced a full phase-out of coal units by 2040 that is consistent with CTI APPENDIX 7 CTI’s interpretation of the IEA’s B2DS scenario? Has the company announced a full phase-out of gas units by 2040 that is consistent with CTI CTI’s interpretation of the IEA’s B2DS scenario?

Automotive companies (transportation sector)

INDICATOR DATA PROVIDER Alignment of company’s current and future capital stock and capital expenditures with 2DII climate scenarios. Company’s future (2025) technology mix compared to the market average. 2DII

1 CTI indicators cover upstream oil and gas companies and electric utilities, and 2DII indicators cover automotive companies and electric utilities. 2 For more detail on the analysis available from 2 Degrees Investing Initiative on Climate Action 100+ focus companies visit: https://2degrees-investing.org/resource/pacta-company-profiles- engaging-with-companies-to-pursue-climate-action/ For more detail on the analysis available from Carbon Tracker on Climate Action 100+ focus companies, visit https://carbontracker.org/reports/ making-it-mainstream-ca100-power-utility-profiles/ 3 Climate Action 100+ intends to apply a 1.5 degree scenario that requires net-zero emissions by 2050 to assess companies. In October 2020 the IEA released a net-zero emissions by 2050 scenario in line with the pathways used by the Intergovernmental Panel on Climate Change for the Special Report on Global Warming of 1.5 °C (IPCC SR1.5). The IEA has not yet provided their net-zero analysis at a more detailed, sectoral level – a requirement to assess companies’ alignment across a range of sectors. 21 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HOW WE MEASURE PROGRESS

• Expanded sector alignment • Expanded green revenue WHO WE ARE 1 NEXT STEPS FOR THE methodologies: At present indicator: The current indicator there are not sufficient 5.2 applies the European HOW HAS THE NEW BENCHMARKING FRAMEWORK NET-ZERO COMPANY HOW WE MEASURE 2 methodologies available to Union’s (EU) Green Taxonomy BEEN COMMUNICATED TO FOCUS COMPANIES? PROGRESS BENCHMARK assess GHG target alignment for criteria on ‘turnover’ (or In September 2020 the Net-Zero Company Benchmark was The Climate Action 100+ Net-Zero companies in certain sectors, revenues) for companies Company Benchmark formally introduced to focus companies in a letter sent to the including chemicals, consumer headquartered in the EU). Thus, Disclosure indicators After its launch and the first Chief Executive Officer, Board Chair or relevant focus company company assessment cycle is goods, other industrials and companies headquartered Capital allocation indicators services. Climate Action 100+ outside of the EU are not being contacts. Acknowledging that many companies operate in completed, the Net-Zero Company jurisdictions where their governments are expected to ratchet and TPI will look to develop assessed in the 2021 iteration HOW COMPANIES ARE Benchmark will continue to up their Nationally Determined Contributions (NDCs) that are PROGRESSING 3 be updated and revised based these for future iterations of of the benchmark. Future the benchmark. iterations of this indicator will currently not on track to meet 1.5°C or well below 2°C, the letter on investor priorities and the invited companies to: assess non-EU companies using WHERE WE ARE MAKING latest available information • Climate accounting: A top PROGRESS 4 and methodologies to assess priority is the development appropriate green revenue 1. Work towards providing disclosures consistent with the new companies’ climate transition of a new disclosure indicator classification systems and Climate Action 100+ Net-Zero Company Benchmark, which preparedness. In particular, to assess whether or not a regional taxonomies where includes disclosure against TCFD, to enable investors to assess KEY ISSUES IN 2020 5 there are five key topics which company’s accounting practices available. the company’s potential for long-term value; are top priorities for inclusion in and related disclosures reflect It is expected that these 2. Confirm if the company will outline strategies that go future iterations of the Net-Zero consideration of transition risk HOW WE ARE GOVERNED 6 additional methodologies and beyond current NDCs, and/or implement appropriate capital Company Benchmark: relative to a range of possible indicators will be developed in climate scenarios. investment decisions to achieve net-zero emissions by 2050 • 1.5°C Scenario: Given the time for the 2022 benchmark. or sooner across all material GHG emissions, and establish APPENDIX 7 absence of a 1.5°C IEA • Just transition: While medium-term targets consistent with a global reduction in scenario, Climate Action 100+ companies will not be assessed emissions of 45% by 2030 relative to 2010 levels;1 and its research provider on just transition in 2021, Transition Pathway Initiative Climate Action 100+ will work 3. Join investors working through Climate Action 100+ in the will assess available options with leading Just Transition development and implementation of net-zero transition and start to develop alternative advocates and experts to action plans to provide pathways toward achieving net-zero methodologies as required. develop appropriate disclosure emissions for the company’s sector or value chain overall. requirements and a related 117 scoring approach to be applied FOCUS COMPANIES PROVIDED during the next reporting cycle. A FORMAL RESPONSE TO THE LETTER 1 The IPCC Special Report on Global Warming of 1.5°C published in October 2018 found that limiting global warming to 1.5°C would require 'rapid and far-reaching' transitions in land, energy, industry, buildings, transport, and cities. Global net human-caused

emissions of carbon dioxide (CO2) would need to fall by about 45% from 2010 levels by 2030, reaching ‘net-zero’ around 2050. The 2030 GHG emissions reduction targets required to achieve this outcome vary by sector. For more information, see here.

22 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HOW WE MEASURE PROGRESS

WHO WE ARE 1 HOW DOES THE BENCHMARK ALIGN WITH NATIONALLY DETERMINED HOW WE MEASURE 2 CONTRIBUTIONS, OTHER DISCLOSURE FRAMEWORKS AND TARGET PROGRESS

SETTING APPROACHES? The Climate Action 100+ Net-Zero Company Benchmark Nationally Determined Contributions Disclosure indicators Some focus companies are aligning their emissions reduction targets with those of Capital allocation indicators their listed country’s nationally determined contribution (NDC), which, in line with HOW COMPANIES ARE the UNFCCC process, will become more ambitious over time. The Climate Action PROGRESSING 3 100+ Net-Zero Company Benchmark intends to assess companies on their targets and other metrics compared to credible net-zero by 2050 or sooner pathways with WHERE WE ARE MAKING the goal of limiting global warming to 1.5°C. The benchmark also asks companies to PROGRESS 4 identify the path that is needed to address this issue in their respective sectors and regions. In some instances, companies' targets, while aligned with their respective NDC1, may not currently be aligned with a 1.5°C pathway once assessed via the KEY ISSUES IN 2020 5 benchmark.

It is recognised that there are gaps in the development of appropriate HOW WE ARE GOVERNED 6 decarbonisation pathways in some sectors; thus it has been challenging for companies and investors alike to understand what a net-zero emissions pathway looks like in practice. Investors will continue to engage with companies over time APPENDIX 7 to understand which pathway they are using to select GHG targets, and how this aligns with investor expectations. Other leading frameworks and mechanisms There are a number of climate reporting mechanisms (such as CDP), target setting mechanisms (such as the Science Based Targets Initiative), and frameworks assessing companies’ preparedness for a low-carbon transition (such as TPI), as well as the TCFD framework. The Climate Action 100+ Net-Zero Company Benchmark is designed to be complementary to these initiatives, mechanisms and frameworks. It is designed to provide more detail on specific disclosures that investors want to see within the context of companies’ reporting, with a particular emphasis on how companies are planning to transform their business in line with a net-zero emissions future.

1 Note: via the UNFCCC process as outlined in the Paris Agreement, more ambitious NDCs were due to be announced at COP26 in November 2020; however this has been delayed until 2021 due to COVID-19.

23 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT 3 HOW COMPANIES THIS REPORT SHOWS THAT WHILE 2050 NET-ZERO TARGETS SET BY FOCUS COMPANIES HAVE SHARPLY INCREASED IN NUMBER AND AMBITION THERE ARE CLEAR GAPS IN ARE TARGET COVERAGE PARTICULARLY OF SCOPE 3 EMISSIONS. COMPANIES ALSO NEED TO DO FAR MORE TO ALIGN THEIR CAPITAL EXPENDITURE AND STRATEGIES TO THEIR NET-ZERO PROGRESSING TARGETS.

43% 10% OF FOCUS COMPANIES OF FOCUS COMPANIES ENGAGED BY THE CLIMATE ENGAGED BY THE CLIMATE ACTION 100+ INITIATIVE HAVE ACTION 100+ INITIATIVE HAVE SET A NET-ZERO TARGET. SET A NET-ZERO BY 2050 TARGET THAT COVERS THE COMPANY'S MOST MATERIAL SCOPE 3 EMISSIONS.

24 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT REVIEW OF COMPANY PROGRESS

WHO WE ARE 1 The disclosure indicators Net-zero targets. The company has set a target or ambition to reduce its GHG emissions to net-zero by 2050 presented here have Companies were assessed by TPI in November 2020. been provided by 100 HOW WE MEASURE PROGRESS 2 TPI. These show the Close to half (43%) of focus performance of all focus companies have now set a clear ambition to reach net- HOW COMPANIES ARE companies against a PROGRESSING 3 zero GHG emissions by 2050, 80 subset of the Climate which is a promising start. Review of company progress Action 100+ Net-Zero However, analysis shows that Oil and gas sector 69% Company Benchmark far fewer companies (10%) Mining and metals sector indicators. have set targets which cover Utilities sector the most material scope 3 60 Industrials sector 54% emissions for their sector. Transportation sector Consumer products sector 43% 40 38% 38% WHERE WE ARE MAKING PROGRESS 4 31% 31%

KEY ISSUES IN 2020 5 20 19%

12% 12% 10% 8% 8% HOW WE ARE GOVERNED 6 4% 0

Consumer Industrials Mining & Metals Oil & Gas Transportation Utilities TOTAL APPENDIX 7 products (26 companies) (23 companies) (39 companies) (26 companies) (31 companies) (14 companies)

Company has set a net-zero by 2050 target or ambition that covers its scope 1 and 2 emissions

Company has set a net-zero by 2050 target or ambition that covers its most material scope 3 emissions

25 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT REVIEW OF COMPANY PROGRESS

Medium-term targets. Companies were Has the company set a medium-term (2026-2035) GHG emissions reduction target? WHO WE ARE 1 assessed by TPI in March 2020.

Over a third (38%) of focus companies have set a HOW WE MEASURE PROGRESS 2 medium-term target, with 29% of these covering 100 at least 95% of the company’s operational emissions (scope 1 and 2). Only one in twenty (5%) HOW COMPANIES ARE PROGRESSING 3 of companies have medium-term targets which cover material scope 3 emissions. 80 Review of company progress Oil and gas sector Mining and metals sector Utilities sector 60 57% Industrials sector 55% Transportation sector Consumer products sector 46% 43% 40 38% 38% WHERE WE ARE MAKING 35% PROGRESS 4 29% 27% 22% 23% KEY ISSUES IN 2020 22% 21% 5 20 14% 13% 8% HOW WE ARE GOVERNED 6 4% 6% 5% 0 0% 0%

Consumer Industrials Mining & Metals Oil & Gas Transportation Utilities TOTAL APPENDIX 7 products (26 companies) (23 companies) (39 companies) (26 companies) (31 companies) (14 companies)

Company has set a medium-term target (2026-2035)

Company has set a medium-term target that covers 95%+ scope 1 and 2 emissions

Company has set a medium-term target that includes its most material scope 3 emissions

26 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT REVIEW OF COMPANY PROGRESS

Short-term targets. Companies were Has the company set a short-term (2020-2025) GHG emissions reduction target? WHO WE ARE 1 assessed by TPI in March 2020.

Over half (51%) of focus companies have short- HOW WE MEASURE PROGRESS 2 term emissions reduction targets. Just under a 100 third (31%) of companies have targets that cover HOW COMPANIES ARE at least 95% of the company’s operational (scope 1 PROGRESSING 3 and 2 emissions), however once again a very small 81% 80 percentage of companies (4%) have targets that Review of company progress include coverage of material scope 3 emissions. Oil and gas sector Mining and metals sector Utilities sector 60 57% Industrials sector Transportation sector 51% 50% 50% Consumer products sector 42% 40 38% 39% 38% WHERE WE ARE MAKING 35% PROGRESS 4 31% 26% 23% KEY ISSUES IN 2020 5 20 14% 15%

8% HOW WE ARE GOVERNED 6 4% 4% 0% 0% 0% 0 Consumer Industrials Mining & Metals Oil & Gas Transportation Utilities TOTAL APPENDIX 7 products (26 companies) (23 companies) (39 companies) (26 companies) (31 companies) (14 companies)

Company has set a short-term target (2020-2025) that covers 95%+ scope 1 and 2 emissions

Company has set a short-term target that covers 95%+ scope 1 and 2 emissions

Company has set a short-term target that includes its most material scope 3 emissions

27 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT REVIEW OF COMPANY PROGRESS

Board governance of climate change. Does the company's board have clear oversight of climate change? WHO WE ARE 1 Companies were assessed by TPI in March 2020. HOW WE MEASURE PROGRESS 2 Over three-quarters (78%) of focus companies 100 93% have disclosed clear evidence of board or board 90% committee oversight of the management of HOW COMPANIES ARE PROGRESSING 3 climate change risks. Nearly half (45%) have 81% also created a named position at board level 77% 78% Review of company progress 80 responsible for climate risk. Oil and gas sector Mining and metals sector 65% Utilities sector 61% Industrials sector 60 52% Transportation sector 50% 50% Consumer products sector 45% 43% 44% WHERE WE ARE MAKING PROGRESS 4 40 31%

KEY ISSUES IN 2020 5

20 HOW WE ARE GOVERNED 6

0 APPENDIX Consumer Industrials Mining & Metals Oil & Gas Transportation Utilities TOTAL 7 products (26 companies) (23 companies) (39 companies) (26 companies) (31 companies) (14 companies)

Company discploses board level governance of climate change

Company has a named position at board level responsible for climate change

28 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT OIL AND GAS SECTOR OIL AND GAS SECTOR

39 $1.9 TRILLION FOCUS COMPANIES MARKET CAPITALISATION1

The 39 oil and gas Investors see significant WHO WE ARE 1 companies on the Climate transition risk arising from these companies given their very Action 100+ focus list high emissions profiles, and HOW WE MEASURE PROGRESS 2 are a mix of upstream, significant uncertainty around and downstream the demand outlook for oil and HOW COMPANIES ARE producers, with a number gas products given the move PROGRESSING 3 of integrated energy to decarbonisation by mid- century. Investors are looking for Review of company progress companies. companies to align their long- Oil and gas sector term objectives and targets with Mining and metals sector It is estimated that the oil and gas net-zero emissions by 2050, and Utilities sector Industrials sector industry is responsible for around to ensure their business plans, Transportation sector 53% of global emissions when governance structures, portfolio 2 Consumer products sector scope 3 emissions are included . sanction activities and strategies The most material emissions for are aligned with this overarching WHERE WE ARE MAKING this sector arise from: goal. Each focus company is PROGRESS 4 • Product use by the end user unique, so investors are seeking – the burning of oil and gas to understand how the company for energy, transportation and sees its own transformation into KEY ISSUES IN 2020 5 industrial processes. the future, and the assumptions companies are using to underpin • Upstream emissions from HOW WE ARE GOVERNED 6 extraction and drilling, flaring decisions about future capital and fugitive emissions from expenditure on oil and gas venting and leaks. exploration and production. Another key issue for this sector APPENDIX 7 • Midstream emissions from is climate lobbying: industry transportation. associations representing the oil • Downstream emissions and gas sector have a particularly including electricity use from problematic record of lobbying processing of oil and gas into against environmental regulations other products. including carbon pricing, emissions trading schemes and lobbying for favourable government incentives. Investors see this misalignment as a key risk for companies. 1 Source: Bloomberg, as at 30 Nov 2020. 2 https://www.iea.org/reports/world-energy-outlook-2019

29 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT OIL AND GAS SECTOR

In 2020, several companies have WHO WE ARE 1 made progress toward meeting Climate Action 100+ requests: HOW WE MEASURE PROGRESS 2 • Repsol made a commitment to achieve net-zero emissions by 2050 covering scope 1 and 2, and part of HOW COMPANIES ARE 3 its scope 3 emissions. The company PROGRESSING OIL AND GAS FOCUS COMPANIES was the first oil and gas company to Review of company progress 1 commit to scope 3 targets. BP Exxon Reliance Industries Oil and gas sector • BP, Shell, OMV AG and Total2 Canadian Natural Corporation Repsol Mining and metals sector made commitments to achieve net- Resources Limited Formosa Oil Utilities sector zero emissions by 2050 including Chevron Petrochemical Company Industrials sector scope 1 and 2 emissions, and some Transportation sector Corporation Royal Dutch Shell coverage of scope 3 emissions.3 Consumer products sector China National Santos Limited • ENEOS became the first oil and Offshore Oil Kinder Morgan, Inc. WHERE WE ARE MAKING gas company in Asia to set net- Corporation Sasol Limited PROGRESS 4 zero emissions goals by 2040. (CNOOC) Limited Lukoil OAO SK Innovation Co Marathon Petroleum Ltd • PetroChina developed a climate China Petroleum KEY ISSUES IN 2020 5 change strategy signalling the & Chemical Occidental Inc. company’s intention to align its Corporation Petroleum TC Energy climate policy with the goals of () Corporation Total HOW WE ARE GOVERNED 6 the Paris Agreement, and pledged ConocoPhillips Oil & Natural Gas a 'near-zero' emissions target by Valero Energy OMV AG 2050. Corporation Corporation APPENDIX 7 Origin Energy Woodside Energy • Woodside Energy, ConocoPhillips Sa and made commitments PetroChina Co. Ltd to achieve net-zero operational Enbridge Inc. Petróleo Brasileiro emissions by 2050. ENEOS Holdings Inc SA - • Occidental Petroleum set an SpA operational net-zero by 2040 PTT target and expressed ambition for net-zero associated with the use of its products by 2050.

1 The coverage of emissions reduction and net-zero targets for oil and gas varies considerably. There is the need for greater standardisation of targets which will be a priority for the initiative moving forward. 2 Total committed to net-zero emissions by 2050, including scopes 1 and 2 worldwide, net-zero emissions by 2050 including scopes 1, 2, and 3 in Europe; and 60% reduction by 2050 for scope 3 emissions worldwide with intermediate targets of 15% by 2030 and 35% by 2040. 3 These targets are varied in coverage and do not cover the full scope of the company’s emissions in all cases. 30 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT OIL AND GAS SECTOR

CLIMATE ACTION 100+ NET-ZERO WHO WE ARE 1 COMPANY BENCHMARK SHORT-TERM TARGETS 2050 NET-ZERO AMBITION BENCHMARK INDICATOR 4.1 BENCHMARK INDICATOR 1.1 HOW WE MEASURE PROGRESS 2 Percentage of companies that have set Percentage of companies that have set a Disclosure indicators provided by TPI a short-term (2020 to 2025) target for net-zero target or ambition for reducing reducing GHG emissions on a clearly 100% of GHG emissions by 2050 on HOW COMPANIES ARE The data presented here show sector level performance against a PROGRESSING 3 preliminary set of indicators from the Climate Action 100+ Net-Zero defined scope of emissions. a clearly defined scope of emissions. Company Benchmark. Review of company progress Oil and gas sector More than half of the oil and gas focus companies (54%) have set a Mining and metals sector net-zero emissions by 2050 ambition or target which is a significant 38% 21% 54% Utilities sector step forward. However only 12% of the companies have net-zero Industrials sector emissions targets that cover the majority of their most material Transportation sector Consumer products sector emissions which stem from product end use. A smaller proportion MEDIUM-TERM TARGETS of companies have set medium-term (21%) and short-term (38%) BENCHMARK INDICATOR 3.1 WHERE WE ARE MAKING targets for reducing GHG emissions; but no companies have short and Percentage of companies that have set PROGRESS 4 medium term targets that cover the most material scope 3 emissions. a medium-term (2026 to 2035) target for reducing GHG emissions on a clearly On governance, a substantial portion of oil and gas focus companies defined scope of emissions. KEY ISSUES IN 2020 5 (90%) have set out clear board-level governance of climate risks, and 44% of companies also have a named position responsible for climate at the board level. See Company Progress Review Summary for more details on these indicators. HOW WE ARE GOVERNED 6

APPENDIX 7 90% OF COMPANIES PROVIDED EVIDENCE OF BOARD OR BOARD COMMITTEE OVERSIGHT OF THE MANAGEMENT OF CLIMATE CHANGE RISKS BENCHMARK INDICATOR 8.1

31 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT OIL AND GAS SECTOR

CLIMATE ACTION 100+ NET-ZERO COMPANY BENCHMARK

Capital allocation indicators

Projects sanctioned outside climate scenarios Impairment price assumptions Capital expenditure alignment WHO WE ARE 1 According to Carbon Tracker analysis, three-quarters The future commodity price deck used for upstream This indicator assesses all upstream oil and gas (76%) of the upstream oil and gas focus companies asset impairment test provides a proxy for the companies (33) on their potential capital expenditure HOW WE MEASURE PROGRESS 2 have sanctioned conventional or unconventional company’s view of future demand and therefore is an for unsanctioned oil and gas projects between 2020 exploration projects in 2019 that are assessed as important indicator for investors. and 2030 with associated production between 2020 1 HOW COMPANIES ARE being outside the scope of the IEA B2DS. This and 2040 and how this aligns with the demand 3 covers 194 total projects across these 25 companies In 2020, 15 of 33 upstream or 45% of oil and gas constraints from IEA B2DS relative to the business PROGRESSING equivalent to about US$64.5 billion in capital focus companies provided impairment price as usual approach assumed in IEA STEPS2. Carbon assumptions (compared to 14 or 42% in 2019). The Review of company progress expenditures. Tracker’s assessment shows that on average 32% of Oil and gas sector largest share of focus companies’ (21%) impairment upstream oil and gas focus companies’ unsanctioned Mining and metals sector price assumptions followed a flat trajectory, 18% oil and gas project capital expenditures match the Utilities sector increasing, and 6% declining. The remaining 55% did demand constraints in the B2DS scenario, leaving Industrials sector not disclose. 68% unmatched with such demand constraints. This Transportation sector metric is unchanged from 2019. Consumer products sector

WHERE WE ARE MAKING Conventional and unconventional oil and gas The company provided impairment price Percentage of total potential capital expenditure PROGRESS 4 projects were sanctioned by focus companies in assumptions - flat, declining or increasing for oil and gas focus companies that aligns with IEA 2019-2020 that are outside of the IEA B2DS STEPS and IEA B2DS KEY ISSUES IN 2020 5

HOW WE ARE GOVERNED 6 l % of total potential 6% capital expenditure (below STEPS cap) APPENDIX 7 194 that is inside B2DS, 21% SANCTIONED PROJECTS 32% and STEPS, for oil, ACROSS 25 COMPANIES gas and total. 55% 68% l % of total potential capital expenditure 18% l Declining (below STEPS l Flat cap) outside B2DS, 1 In the International Energy Agency’s Beyond 2 Degrees Scenario, the energy l Increasing inside STEPS for oil sector reaches carbon neutrality by 2060 to limit future temperature increases l Not disclosed and gas. to under 1.75°C by 2100. See: https://www.iea.org/reports/energy-technology- perspectives-2017. 2 The aim of the Stated Policies Scenario is to provide a detailed sense of the direction in which existing policy frameworks and today’s policy ambitions would take the energy sector out to 2040. See: https://www.iea.org/reports/world- energy-model/stated-policies-scenario

32 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY REPSOL

Repsol1 is an energy There were four engagements zero goal across scope 1, 2 Engagement in 2021 will cover • Consideration of the IEA’s WHO WE ARE 1 company headquartered with the company in the past and 3 emissions of the energy key elements of Climate Action Paris aligned 1.5°C scenario. 12 months, and the company it produces, supported by a 100+ benchmark: • The integration of interim in Madrid operating has participated in two IIGCC decarbonisation pathway with HOW WE MEASURE PROGRESS 2 across upstream and • Measurement, commitments targets into executive convened roundtables seeking interim targets. This set a higher and actions on material Scope 3 compensation. downstream oil and gas, standardisation in approaches benchmark for the industry on emissions. • Actions taken with trade HOW COMPANIES ARE chemicals, renewables and reporting in oil and gas commitments to climate action. PROGRESSING 3 • Implementation of the associations significantly decarbonisation. At the • The company assumed a new and other energy services. commitments, including aligned misaligned on climate policy. Review of company progress company’s 2020 annual general oil and gas price scenario The Climate Action 100+ meeting the lead signatories business planning and capital Oil and gas sector engagement with the consistent with scenarios allocation and consistency with Mining and metals sector submitted a statement that aligned to the goals of the Paris company has been led by congratulated the company on the EU taxonomy. Utilities sector Agreement. Industrials sector its new net zero commitment BNP Paribas AM, EOS at Transportation sector and asked whether the current • The company incorporated Federated Hermes and UBS Consumer products sector oil price situation and pandemic TCFD recommendations into Asset Management, and its disclosures and continues to crisis would have a material WHERE WE ARE MAKING coordinated by IIGCC. impact on the climate change advance its climate reporting. PROGRESS 4 strategy and commitments to In its 2018 and 2019 integrated A constructive dialogue invest in low-carbon solutions. management reports, the between Climate Action 100+ The CEO reaffirmed the company provided greater KEY ISSUES IN 2020 5 signatories and the company company’s commitment to net- detail on the short, medium has been ongoing since the zero and leading the energy and long-term risks and launch of the initiative in late transition, and confirmed a opportunities from low-carbon HOW WE ARE GOVERNED 6 2017. The engagement has been detailed strategy and roadmap transition scenarios out to 2040. led primarily by the CEO, the would be published later in • The company undertook an Chairman, the EMD In Technology the year. internal assessment to ensure APPENDIX 7 Development, Resources and the industry associations and Sustainability and the Director Progress seen to date has initiatives it takes part in were of Investor Relations. It has also included: aligned with the goals of the included internal specialists in • In December 2019 Repsol Paris Agreement and its own climate change and other senior became the first oil and gas climate change strategy, and management in Sustainability. company to commit to a net- published the results last May, 2020.

1 Repsol’s strategic plan for 2021-25 was released on November 26th following the writing of this case study.

Photo: tanaonte - stock.adobe.com 33 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY PETROCHINA CO. LTD

PetroChina Co. Ltd is an In 2020, PetroChina has Engagement in 2021 will focus WHO WE ARE 1 oil and gas company, progressed on the following on obtaining further clarity fronts: on the transition plan towards headquartered in China near-zero emissions, particularly HOW WE MEASURE PROGRESS 2 and listed on the • Disclosed scope 1 and 2 GHG emissions for the first time in its on supporting medium-term Stock Exchange, Hong 2019 ESG report. emission reduction targets, HOW COMPANIES ARE Kong Stock Exchange and capex and decarbonisation PROGRESSING 3 • Committed to raising the New York Stock Exchange. pathways. Engagement will proportion of new energy and also encourage PetroChina to Review of company progress The Climate Action 100+ renewable energy produced to embed climate change in risk Oil and gas sector engagement is co-led a new high by 2050. management processes through Mining and metals sector by EOS at Federated • Further developed CCUS conducting scenario analysis and Utilities sector Industrials sector demonstration projects at aligning reporting and underlying Hermes, joined by Fidelity Transportation sector processes with the TCFD International at the Xinjiang and Changqing oil Consumer products sector beginning of 2020. fields. recommendations. WHERE WE ARE MAKING In August 2020, PetroChina PROGRESS 4 Given the circumstances of pledged to cut carbon emissions 2020, the lead and collaborating to near-zero by 2050, and investors had one formal group announced plans to invest in KEY ISSUES IN 2020 5 meeting this year with the geothermal, wind, solar and pilot company, with several supporting hydrogen projects. This plan conversations happening in calls for capital expenditure of HOW WE ARE GOVERNED 6 parallel. $400-700 million per year for 2021-25 rising to $1.4 billion per The engagement priorities with year thereafter. Notably, this is APPENDIX 7 the company this year included: the first near-zero pledge made • Climate change governance. by a major Chinese state-owned • Disclosure of scope 1 and 2 enterprise and was followed by emissions. China’s pledge in September 2020 to be carbon neutral by • Setting ambitious GHG emission 2060. reduction targets. Photo: Игорь Головнёв - stock.adobe.com

34 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT MINING AND METALS SECTOR

The 23 mining and metals Investors see significant WHO WE ARE 1 companies engaged by transition risk arising from these companies given their typically MINING AND METALS SECTOR Climate Action 100+ high emissions profiles, but also HOW WE MEASURE PROGRESS 2 include major steel makers, recognise the critical importance diversified miners, and of the sector to the economy HOW COMPANIES ARE several industrial firms that and the transition to a net- PROGRESSING 3 have metals operations. zero emissions world. Materials BILLION 23 $666 Review of company progress produced by miners are used 1 They are a diverse group in almost all aspects of modern FOCUS COMPANIES MARKET CAPITALISATION Oil and gas sector with different emissions society including housing, Mining and metals sector profiles, commodity and/ healthcare, infrastructure and Utilities sector Industrials sector technology. They also provide or product portfolios, and Transportation sector essential commodities for the decarbonisation challenges. Consumer products sector low-carbon transition such as copper for electrical components The most significant emissions WHERE WE ARE MAKING and lithium for batteries. PROGRESS 4 sources for this sector are generated from: Engaging with these companies, • Energy products including as with other sectors, investors KEY ISSUES IN 2020 5 thermal and metallurgical coal, are looking for robust climate and oil and gas2. governance practices, TCFD disclosure reflecting best HOW WE ARE GOVERNED 6 • Ores requiring processing such practice for the sector, and to see as iron ore into steel or bauxite ambitious emissions reduction into aluminium. targets including consideration APPENDIX 7 • Energy consumed from of scope 3 emissions. Lobbying fossil fuels and electricity in by trade associations continues operations, including metals to be a significant challenge for processing. many mining and metals firms, given many of the associations that represent the sector have historically played a detrimental role in lobbying against effective climate policy.

1 Source: Bloomberg, as at 30 November 2020. 2 Where a company’s primary business is oil and gas, they have been covered in the oil and gas sector chapter.

35 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT MINING AND METALS SECTOR

The other key focus globally • Swedish steel company SSAB • plc published a scope WHO WE ARE 1 for investor engagement is AB launched the world’s first 3 emissions reduction projection understanding how these pilot plant for fossil-free steel of 30% by 2035 and investors companies are developing using renewable electricity and are now expecting the company HOW WE MEASURE PROGRESS 2 strategies for decarbonisation. hydrogen. to release long-term ‘Paris- Depending on the company • ArcelorMittal announced an aligned’ scope 1 and 2 targets HOW COMPANIES ARE 3 this may focus on: diversifying interim target to reduce its total this year. PROGRESSING away from thermal coal mining MINING AND METALS FOCUS COMPANIES emissions 30% by 2030 and in • Rio Tinto conducted an asset Review of company progress given its expected decline in June released its first climate by asset review of emissions Aneka Tambang Tbk Glencore plc AG the global energy mix; and Oil and gas sector action report. It also announced reduction targets which was (ANTAM) United Tractors Mining and metals sector reducing or eliminating emissions a net-zero emissions by 2050 disclosed in its 2020 annual from the processing of metals, Anglo American Corporation Vale Utilities sector target. report. The company also Industrials sector both via decarbonisation of ArcelorMittal Norilsk Nickel • Anglo American committed announced plans to reduce Vedanta Ltd Transportation sector electricity sources (switching to GHG emissions to net-zero BHP POSCO Consumer products sector renewables) and development to align its lobbying practice by 2050 and committed to Bluescope Steel Rio Tinto into zero emissions production with the Paris Agreement via a spending $1 billion towards this Limited WHERE WE ARE MAKING pathways for key metals (for plan to escalate misalignments Severstal PROGRESS 4 that emerge between its new goal. example substituting hydrogen Bumi Resources South32 for metallurgical coal). Investors policy positions and those • Teck Resources Limited China Shenhua of its industry associations, committed to net-zero Southern Copper KEY ISSUES IN 2020 5 are also interested in broader Energy Corporation1 value chain risks such as which will include publishing emissions by 2050 in its own the membership of all its operations (scope 1 and 2), China Steel SSAB AB emissions arising from the global Corporation shipping and transportation of industry associations, including and announced an intensity Teck Resources HOW WE ARE GOVERNED 6 commodities. fees paid and rationale for emissions reduction target of Coal India Limited each membership. It also 33% by 2030. The company In 2020, several focus companies announced its ambition to cut also withdrew its application APPENDIX 7 have made progress aligned with its operational emissions to for a $15 billion Alberta oil investor expectations: net-zero by 2040, with eight of sands project and wrote-off its sites set to become carbon associated costs, citing climate neutral by 2030. change and environmental concerns.

1 Southern Copper is a subsidiary of Grupo México and was removed from the Climate Action 100+ focus list in 2020. Grupo México will be the focus of Climate Action 100+ engagement moving forward.

36 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT MINING AND METALS SECTOR

CLIMATE ACTION 100+ NET-ZERO COMPANY WHO WE ARE 1 BENCHMARK SHORT-TERM TARGETS NET ZERO AMBITION BENCHMARK INDICATOR 4.1 BENCHMARK INDICATOR 1.1 HOW WE MEASURE PROGRESS 2 Percentage of companies that have set Percentage of companies that have set a Disclosure indicators provided by TPI a short-term (2020 to 2025) target for net zero target or ambition for reducing reducing GHG emissions on a clearly 100% of GHG emissions by 2050 on a HOW COMPANIES ARE The data presented here show sector level performance against a PROGRESSING 3 preliminary set of indicators from the Climate Action 100+ Net-Zero defined scope of emissions. clearly defined scope of emissions. Company Benchmark. Review of company progress Oil and gas sector Just under one in three (31%) mining and metals focus companies Mining and metals sector have set a net-zero emissions by 2050 target, however only 4% of 39% 22% 31% Utilities sector companies have targets which cover material scope 3 emissions. Industrials sector A minority of companies are setting medium-term targets (22%), Transportation sector Consumer products sector and short-term targets (39%), however some companies have set MEDIUM-TERM TARGETS targets that do not cover all of their scope 1 and 2 emissions. Further BENCHMARK INDICATOR 3.1 WHERE WE ARE MAKING none of the companies’ medium-term targets, and less than one in Percentage of companies that have set PROGRESS 4 20 companies (4%) have short-term targets which cover the majority a medium-term (2026 to 2035) target of material scope 3 emissions. for reducing GHG emissions on a clearly defined scope of emissions. KEY ISSUES IN 2020 5 Nearly two-thirds (61%) of focus companies in this sector have disclosed a clear governance framework for climate risk with board or board committee oversight, and 43% have a named position at the HOW WE ARE GOVERNED 6 board level responsible for climate risks. See Company Progress Review Summary for more details on these indicators.

APPENDIX 7 61% OF COMPANIES PROVIDED EVIDENCE OF BOARD OR BOARD COMMITTEE OVERSIGHT OF THE MANAGEMENT OF CLIMATE CHANGE RISKS BENCHMARK INDICATOR 8.1

37 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY BHP

BHP is a diversified mining • BHP’s approach to its scope 3 deal with industry association • A scope 3 goal for 2030 to emissions and the WHO WE ARE 1 company, headquartered in emissions. misalignment. help develop technologies achievement of key actions • An enhanced and explicit link • Enhancements to its own and approaches to make and milestones to reduce London and Melbourne and steelmaking 30% less carbon scope 1, 2 and 3 emissions. HOW WE MEASURE PROGRESS 2 listed on both the London to climate change in executive disclosures on industry remuneration. associations and the company’s intensive and shipping 40% Stock Exchange and the less carbon intensive. BHP has Engagement in 2021 will focus • Updated scenario analysis, influence. on monitoring the company’s HOW COMPANIES ARE Australian Stock Exchange. also developed two steel value PROGRESSING 3 including a 1.5-degree scenario. In October 2020, the company chain partnerships, investing implementation of its new The Climate Action 100+ industry association policy Review of company progress engagement has been • Equity-based emissions suspended its membership of the up to US$35 million under an disclosures. Queensland Resources Council MOU with steel producer China including further detail on how Oil and gas sector co-led by investors AMP it will deal with misalignment, Mining and metals sector • Capital expenditure, the when it found the association to . Capital and HSBC Global be engaging in direct advertising getting additional clarity Utilities sector US$400 million Climate • An enhanced link to climate Industrials sector Asset Management with to voters on the Queensland on its transition plans Investment Program (CIP), and change in the Cash and including capital expenditure, Transportation sector support from BMO Global seeking to understand how elections, in misalignment with its Deferred Plan (CDP) scorecard, Consumer products sector new policy. development of reporting Asset Management, and the company will align these with 10% weighting to on physical risk, and further reductions in operational WHERE WE ARE MAKING investor network support to its commitment to the Paris In September 2020 it also discussion of its scope 3 plans. 4 Agreement goals. PROGRESS from IGCC and IIGCC. announced: In July 2020 the company • A series of projects and The investors had had five formal announced an update to its milestones aimed at reducing its KEY ISSUES IN 2020 5 meetings with the company industry association approach scope three emissions. this year, in addition to many which included: • Further transport electrification HOW WE ARE GOVERNED 6 more informal meetings. Several • A commitment to developing and renewable energy roundtables on specific topics minimum standards for the commitments. also took place. associations of which it is a • Scenario analysis that applied APPENDIX 7 The major engagement priorities member. three transition scenarios to for this company in 2020 have • A protocol for the allocation the company’s portfolio. This included: of industry advocacy showed it was most profitable • Engaging with BHP on its accountabilities. in a 1.5°C world, and least so in a industry association policy • The requirement for disruptive late transition. review. associations to publish an • A 30% medium-term emissions • Establishing medium-term annual advocacy plan in reduction target to 2030 for scope 1 and 2 emissions targets. advance. scope 1 and 2 emissions. • The development of a real- time escalation process to Photo: Alexander Sánchez - stock.adobe.com

38 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY ARCELORMITTAL

ArcelorMittal is a steel lobbying review of its industry • Governance of climate change WHO WE ARE 1 and mining company association memberships taking risks and the company’s into account investor feedback. transition plan. headquartered in HOW WE MEASURE PROGRESS 2 Luxembourg. Engagement • Working on various pilot • Linking the achievement of technologies for carbon- greenhouse gas reduction with the company was neutral steelmaking and will be targets to executive HOW COMPANIES ARE 3 led by Aegon, LAPFF and producing steel with hydrogen remuneration. PROGRESSING from renewables from 2020. Ruffer, and coordinated by • Additional disclosures aligned Review of company progress IIGCC. • Joined the Energy Transition with the TCFD. Oil and gas sector Commission and is a driving Mining and metals sector To date investors have had force behind the net-zero Investors will continue to Utilities sector a number of meetings with pathway. engage with the company on its Industrials sector ArcelorMittal management, transition plan and monitor the Transportation sector • The company published its implementation of its greenhouse Consumer products sector and the company has joined first Climate Action report in an IIGCC convened roundtable gas reduction targets. 2019, which included scenario WHERE WE ARE MAKING on decarbonisation of the steel analysis. PROGRESS 4 sector. The company has been positive and responsive to Investors intend to engage with engagement so far. ArcelorMittal in the future on: KEY ISSUES IN 2020 5 Progress seen to date has • The company’s second Climate included: Action report is due to be published in December 2020 or HOW WE ARE GOVERNED 6 • In October 2020, ArcelorMittal January 2021 which will include announced a group-wide more details of how the carbon commitment to be carbon neutral 2050 target will be APPENDIX 7 neutral by 2050, building on the achieved. commitment made in 2019 for its European business to reduce • How the company plans to emissions by 30% by 2030 and reduce emissions from its be carbon neutral by 2050. operations including ensuring its transition plan is aligned • In mid-2020 the company with the goals of the Paris also released an updated Agreement.

Photo: Massimo Todaro - stock.adobe.com

39 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY TECK RESOURCES LIMITED

Teck Resources Limited Engagement priorities with Teck • Emphasising the importance of • In May 2020, Teck announced WHO WE ARE 1 (Teck) is Canada's largest have included: executive compensation and it would not renew its • Offering input and support incentive structures in support membership in a major diversified mining company HOW WE MEASURE PROGRESS 2 to the company’s post-2020 of climate strategy. Canadian energy industry and is headquartered association as part of a cost- emissions target-setting Progress to date has included: in Vancouver, British process, including highlighting cutting drive. This change HOW COMPANIES ARE 3 Columbia. The Climate the importance of establishing • Teck has been an official substantially addressed PROGRESSING supporter of the TCFD since investors’ previous concerns on Action 100+ engagement a long-term net-zero emissions Review of company progress with Teck has been jointly goal with interim milestones, September 2018, one amongst climate lobbying. very few North American Oil and gas sector led by the British Columbia and encouraging the company Building from the productive Mining and metals sector to set a more ambitious extractive companies, and Investment Management subsequently published two engagement so far, continued Utilities sector alternative energy generation Industrials sector Corporation and the TCFD-aligned reports. dialogue with Teck in 2021 target for some mining would be beneficial to address Transportation sector Shareholder Association operations. • In February 2020, Teck opportunities and challenges Consumer products sector for Research & Education • Asking for enhanced climate committed to net-zero of capturing some scope 3 emissions by 2050 in its own WHERE WE ARE MAKING (SHARE), along with three scenario analysis including emissions in future target-setting PROGRESS 4 additional disclosure of climate operations (scope 1 and 2), exercises and to further assess additional collaborating and announced an intensity investors. considerations associated with the company’s approach to Teck’s existing energy portfolio emissions reduction target of incentivising employees and KEY ISSUES IN 2020 5 as well as its proposed Frontier 33% by 2030. executives to achieve its climate Climate Action 100+ signatories mining project under • Teck achieved its alternative targets. held four group-wide meetings review. energy generation target for HOW WE ARE GOVERNED 6 with the company’s senior • Advocating for Teck to assess 2030 ahead of schedule and set management and independent a clean energy target of 100% board directors since the the climate lobbying alignment for its Chile operations. APPENDIX 7 beginning of the initiative, and of industry associations it is a participating investors have member of with its own internal • In addition to enhanced climate had individual interactions climate positions. scenarios disclosure, Teck with the company to reinforce announced in February 2020 it expectations. was withdrawing the regulatory application for the Frontier oil sands project from federal review, and wrote off associated costs.

40 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT UTILITIES SECTOR UTILITIES SECTOR

31 $1 TRILLION FOCUS COMPANIES MARKET CAPITALISATION1

The 31 electric utility focus maintain or expand fossil fuel WHO WE ARE 1 companies engaged via infrastructure. They are also calling for ambitious emissions reduction Climate Action 100+ are targets. HOW WE MEASURE PROGRESS 2 electric and gas power companies. Electricity production and distribution is highly regulated, HOW COMPANIES ARE PROGRESSING 3 Electricity production is so the issue of engagement with responsible for just under a third policymakers continues to be Review of company progress of global emissions2, due to the important for investors both at Oil and gas sector high prevalence of fossil fuels the company level and via trade Mining and metals sector Utilities sector (thermal coal and natural gas) in associations. Investors are also Industrials sector the energy mix. Engagement with keen to understand companies’ transition plans as the closure of Transportation sector electric utilities via Climate Action Consumer products sector 100+ is focused on the transition coal and gas fired power stations over the coming decades has away from emissions intensive WHERE WE ARE MAKING forms of power generation implications for workers and PROGRESS 4 such as gas and coal, to zero communities. emissions technologies such as While policy settings in the United KEY ISSUES IN 2020 5 renewables. Investors are looking States, parts of Asia and Australia for companies in this sector to have been challenging, there has be ramping up investments in been significant momentum in this HOW WE ARE GOVERNED 6 renewable energy projects and sector this year. Notable progress infrastructure including battery has occurred in the United States, storage, and to be providing where six electric utilities have APPENDIX 7 a clear pathway to net-zero now committed to net-zero emissions by 2050. emissions by 2050: Dominion Investors are engaging with Energy, Inc., Duke Energy utilities to understand how Corporation, NRG Energy, Inc., The investment decisions and Southern Company, WEC Energy transition plans align with the Group, Inc., and Xcel Energy Inc.. goals of the Paris Agreement, including investments to retire,

1 Source: Bloomberg, as at 30 November 2020. 2 World Resources Institute Climate Data Explorer http://cait.wri.org/.

41 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT UTILITIES SECTOR

Other company commitments • AGL Energy Ltd, the WHO WE ARE 1 include: largest corporate emitter in • AES Corporation committed Australia, has linked executive HOW WE MEASURE PROGRESS 2 to a 70% emissions reduction remuneration to its new net- target by 2030. zero emissions by 2050 target. • Vistra Energy Corp. announced • NTPC Ltd, India’s largest electric HOW COMPANIES ARE PROGRESSING 3 the retirement of its Midwest power generator, and ONGC, the country’s top oil and gas UTILITIES FOCUS COMPANIES coal fleet by 2027, a new Review of company progress emissions reduction target of producer, have agreed to set AES Corporation Eskom Holdings PGE - Polska Grupa Oil and gas sector 60% by 2030, and a long-term up a renewable joint venture AGL Energy Ltd SOC Ltd Energetyczna S.A. Mining and metals sector in India which will include Utilities sector objective of net-zero emissions American Electric Exelon Corporation Power Assets by 2050. renewable power assets such Holdings Limited Industrials sector as offshore wind in India and Power Company, FirstEnergy Corp. Transportation sector • Duke Energy Corporation overseas. Inc. Fortum Oyj PPL Corporation Consumer products sector and Dominion Energy, Inc. Centrica Naturgy Energy RWE abandoned the proposed Aktiengesellschaft WHERE WE ARE MAKING Atlantic Coast Pipeline after CEZ, A.S. Iberdrola, S.A. PROGRESS 4 SSE PLC billions of dollars spent and Dominion Energy, Korea Electric years of delays. Inc. Power Corp The Southern Company KEY ISSUES IN 2020 5 • Dominion Energy, Inc. Duke Energy National Grid PLC announced that it is selling Corporation Vistra Energy Corp. NextEra Energy, most of its natural gas assets HOW WE ARE GOVERNED 6 E.ON SE Inc. WEC Energy to Berkshire Hathaway and Group, Inc. has positioned itself as a EDF NRG Energy, Inc. ‘sustainability-focused utility Xcel Energy Inc. Enel SpA NTPC Ltd APPENDIX 7 operation’. ENGIE

42 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT UTILITIES SECTOR

CLIMATE ACTION 100+ NET-ZERO COMPANY WHO WE ARE 1 BENCHMARK SHORT-TERM TARGETS NET-ZERO AMBITION BENCHMARK INDICATOR 4.1 BENCHMARK INDICATOR 1.1 HOW WE MEASURE PROGRESS 2 Percentage of companies that have set Percentage of companies that have set a Disclosure indicators provided by TPI a short-term (2020 to 2025) target for net-zero target or ambition for reducing reducing GHG emissions on a clearly 100% of GHG emissions by 2050 on a HOW COMPANIES ARE The data presented here show sector level performance against a PROGRESSING 3 preliminary set of indicators from the Climate Action 100+ Net-Zero defined scope of emissions. clearly defined scope of emissions. Company Benchmark. Review of company progress Oil and gas sector Over two-thirds (69%) of utilities focus companies have now set a net- 55% 69% Mining and metals sector zero emissions reduction ambition or target, though only 8% of these 42% Utilities sector cover material scope 3 emissions.1 Over half (55%) of companies have Industrials sector set medium-term GHG reduction targets, but only 35% of these cover Transportation sector Consumer products sector at least 95% of the company's operational (scope 1 and 2) emissions, MEDIUM-TERM TARGETS and only 6% of companies have set a target that covers their most BENCHMARK INDICATOR 3.1 1 WHERE WE ARE MAKING material scope 3 emissions . 42% of companies have a short-term Percentage of companies that have set PROGRESS 4 GHG emissions reduction target, but only around half (23%) of these a medium-term (2026 to 2035) target cover at least 95% of scope 1 and 2 emissions. No companies have for reducing GHG emissions on a clearly set short-term targets and only 6% of companies have set medium- defined scope of emissions. KEY ISSUES IN 2020 5 term targets that cover the most relevant scope 3 emissions. Four out of five companies (81%) have disclosed board level responsibility for the management of climate risks, and half (52%) of companies have See Company Progress Review Summary for more details on these indicators. HOW WE ARE GOVERNED 6 disclosed a named position at the board level for this oversight.

APPENDIX 7 81% OF COMPANIES PROVIDED EVIDENCE OF BOARD OR BOARD COMMITTEE OVERSIGHT OF THE MANAGEMENT OF CLIMATE CHANGE RISKS BENCHMARK INDICATOR 8.1

1 The most material sources of scope 3 emissions for utilities companies arises from the provision of natural gas and procurement of electricity for customers. For a full list of material scope 3 emissions according to the Climate Action 100+ Net-Zero Company Benchmark, please visit: https://climateaction100.wpcomstaging.com/wp-content/uploads/2020/12/Climate-Action- 100-Benchmark-Indicators-December-2020-FINAL-1.pdf . 43 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT UTILITIES SECTOR

13% 19% 26% CLIMATE ACTION 100+ NET-ZERO COMPANY 39% 13% BENCHMARK 6% 48% Capital allocation indicators 35%

Carbon Tracker 3. Growing clean energy capacity 3. Announced a partial WHO WE ARE 1 without retiring fossil capacity retirement schedule for parts 2O19 2O2O Both coal and gas fired could create a negative of the operating fleet and with generation must be phased out to investment signal in the future. assigned retirement years to HOW WE MEASURE PROGRESS 2 Has the company l Full retirement, achieve global net-zero emissions parts of the operating plants. by mid-century. Carbon Tracker’s For a company to be Paris- announced a full phase- consistent with B2DS 4. Insufficient or no information out of coal units by l Full retirement, not HOW COMPANIES ARE validation work checks whether aligned it will need to publish and consistent with B2DS 3 provided. 2040 that is consistent PROGRESSING companies are phasing these announce: l Partial retirement with Carbon Tracker generation sources out in a timely 1. A coal and natural gas- Retirement of coal and gas l Unannounced/ totally Review of company progress Initiative’s interpretation way. Carbon Tracker examines generation retirement schedule fired power stations in 2020 insufficient Oil and gas sector of the IEA B2DS? Mining and metals sector actual and announced retirements consistent with a credible since these are the critical, real- climate scenario such as IEA The data show some promising Utilities sector Industrials sector world steps companies must take B2DS or IEA Sustainable trends — the number of Transportation sector to reduce emissions. The model Development Scenario (SDS)2. companies that have announced tracks ~95% of global operating, a full coal phase out consistent Consumer products sector under-construction and planned 2. A retirement date assigned to with the IEA B2DS has doubled each coal or gas unit. WHERE WE ARE MAKING coal powered capacity at boiler- since last year (13% in 2019, PROGRESS 4 level and approximately 45% of Companies will fall into one of versus 26% in 2020). Also, the 1 natural gas-powered capacity . four categories; percentage of companies that have begun to announce a partial KEY ISSUES IN 2020 5 Retirement schedules for coal 1. Announced full retirement phase out of coal has increased Has the company and natural gas power are vital schedule with assigned from 35% to 48%. Overall, more announced a full phase- to ensure companies collectively retirement years for all units than 80% of the utilities examined out of gas units by 2040 3% HOW WE ARE GOVERNED 6 meet the temperature goal in the that is consistent with the have announced plans for coal that is consistent with Paris Agreement for three main temperature goals from the retirements. CTI’s interpretation of reasons: Paris Agreement. the IEA B2DS? APPENDIX 7 This year, Carbon Tracker began 1. Climate change is about 2. Announced full retirement evaluating retirements from gas- absolute emissions rather schedule with assigned l Full retirement, fired generators. Among Climate than emissions intensity. retirement years for all units consistent with B2DS that is not consistent with the Action 100+ target companies, l Full retirement, not 2. Long-term retirement consistent with B2DS temperature goals of the Paris only 3% have announced % schedules will likely minimise l Partial retirement 9O Agreement. retirements consistent with the out-of-market payments. IEA B2DS scenario (or lack gas- l Unannounced/ totally generation capacity altogether). insufficient

2O2O 1 All assumptions and modelling details are discussed in Powering down Coal and How to waste over half a trillion dollars by Carbon Tracker (2018, 2020). Coal capacity is global and natural gas capacity analysed is within US, the EU, Australia, India and South Korea. Additional countries and regions will be added in early 2021. 2 The IEA Sustainable Development Scenario sets out an energy transformation aligned with achieving three energy related Sustainable Development Goals. The SDS holds the temperature rise to

below 1.8°C with a 66% probability without reliance on global net-negative CO2 emissions; this is equivalent to limiting the temperature rise to 1.65°C with a 50% probability.

44 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT UTILITIES SECTOR

CLIMATE ACTION 100+ NET-ZERO COMPANY BENCHMARK

Capital allocation indicators (cont)

2° Investing Initiative (2DII) Actual 2019 and 2020 electric utilities generation capacity WHO WE ARE 1 technology mix for renewables, hydro, nuclear, gas, oil and coal. 2DII assesses the current and future capital stock of utilities companies, based on business intelligence and financial data providers1 ACTUAL 2019 ACTUAL 2020 HOW WE MEASURE PROGRESS 2 and assesses their alignment with climate change scenarios. This Renewable capacity 10% 12% data is based on actual capital expenditure plans of the utility HOW COMPANIES ARE 12% companies. This can therefore give an assessment of whether the Gas capacity 32% 28% 3 PROGRESSING FOCUS COMPANIES utilities companies’ stated ambitions and actions reflect their efforts to Coal capacity 29% 29% HAVE INCREASED THEIR transition the business model. Review of company progress INSTALLED RENEWABLE Hydro capacity 9% 11% Oil and gas sector CAPACITY FROM 1O% IN The technology mix tables provided by 2DII assesses utilities based on Mining and metals sector 2O19 TO 12% IN 2O2O their energy technology mix (renewables, hydro, nuclear, gas, oil and Nuclear capacity 15% 17% Utilities sector coal) in terms of current and planned installed generation capacity Industrials sector Oil capacity 5% 4% against the IEA B2DS (<1.75°C). It shows that a market aligned with Transportation sector this scenario would see renewable electricity installed capacity rising Consumer products sector The third table shows what percentage of utility companies are aligned to 19% of the technology mix by 2025. This shows that companies with which IEA scenario in terms of their renewable power capacity and need to change the technological mix of their generation more WHERE WE ARE MAKING their coal power capacity. The table shows whether these companies are 4 rapidly than currently planned (16%), while decreasing their installed PROGRESS aligned with IEA B2DS, IEA Sustainable Development Scenario2, or above capacity from gas and coal. On a positive note, the second table does IEA SDS. It shows that only 14% of companies analysed have renewables show that focus companies have increased their installed renewable 14% capacity aligned with the IEA B2DS. KEY ISSUES IN 2020 5 OF COMPANIES capacity from 10% in 2019 to 12% in 2020.

ANALYSED HAVE 2 Utilities companies climate scenario alignment for coal and Planned and required (under a <1.75°C scenario ) electric renewable capacity RENEWABLES utilities focus companies generation capacity technology mix HOW WE ARE GOVERNED 6 CAPACITY ALIGNED for renewables, hydro, nuclear, gas, oil and coal. CLIMATE SCENARIOS PERCENTAGE COMPANIES PERCENTAGE COMPANIES WITH THE IEA B2DS WITH ALIGNED WITH ALIGNED COAL 3 REQUIRED 2025 PLANNED 2025 RENEWABLE CAPACITY CAPACITY APPENDIX 7 Renewable capacity 19% 16% B2DS (<1.75C) 14% 15% Gas capacity 26% 27% SDS (1.75C-2C) 3% 4% 1 2DII uses GlobalData for the utilities sector. Coal capacity 24% 29% Above SDS (>2C) 83% 81% 2 The IEA Sustainable Development Scenario provides an integrated approach to energy and sustainable development and Hydro capacity 11% 11% focuses on achievement of three energy- related sustainable development goals. Nuclear capacity 16% 14% The scenario aligns with approximately 1.75°C-2°C in global warming by 2100. Oil capacity 3% 4% 3 This column only assesses companies that have coal capacity. Note that 10% of Climate Action 100+ target utilities companies do not own coal capacity.

45 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY WEC ENERGY GROUP, INC.

WEC Energy Group, Inc. Over the past year, WEC has WHO WE ARE 1 (WEC) is an electric power progressed in the following areas: • In July 2020, WEC increased and natural gas utility HOW WE MEASURE PROGRESS 2 company, headquartered in the ambition of its medium and long-term targets. The company the US. The Climate Action upgraded its 2030 target HOW COMPANIES ARE 3 100+ engagement is led from 40% to 70% reduction PROGRESSING by UBS Asset Management of CO2 emissions. Additionally, Review of company progress and Wespath Benefits it upgraded its 2050 target Oil and gas sector from an 80% reduction of CO and Investments, and 2 Mining and metals sector emissions to net carbon neutral supported by Ceres. Utilities sector generation. Industrials sector • WEC released its 2019 Transportation sector Investors had one group meeting Consumer products sector with the company over the past Corporate Responsibility Report. 12 months, wrote a letter to WHERE WE ARE MAKING 4 the company urging increased Future engagement will focus PROGRESS long-term ambition, delivered a on benchmark assessment, separate letter outlining investor clarity about capital expenditure KEY ISSUES IN 2020 5 expectation on climate lobbying, alignment with targets, defining and presented a statement at the the role of natural gas within virtual AGM. Engagement has the company's portfolio, and HOW WE ARE GOVERNED 6 focused on increased ambition of responsible policy engagement medium and long-term targets, on climate at the state and discussion of scope 3 emissions federal levels. from natural gas delivery in APPENDIX 7 targets, working towards robust TCFD-aligned disclosure, and advocating for responsible policy engagement on climate.

46 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY KEPCO

Korea Electric Power power projects in Indonesia • Raising emissions reduction by 2025. As KEPCO owns the WHO WE ARE 1 Corporation (KEPCO) is an (Jawa 9 and 10) and in Vietnam targets beyond South Korea’s majority of coal-fired power (Vung Ang 2). NDC. plants in South Korea, this plan is electric utility company, likely to have a significant impact HOW WE MEASURE PROGRESS 2 headquartered in South Wider investor pressure in Concerted international on accelerating the reduction of Korea and listed on the parallel to engagements has pressure led to delay of key its GHG emissions. South Korea’s also captured attention from decisions for overseas coal HOW COMPANIES ARE Korea Composite Stock parliament is also debating new PROGRESSING 3 international and local media and fired power plants in Indonesia Price Index and New legislation to ban participation has added weight to ongoing and Vietnam, however these in the construction, operation Review of company progress York Stock Exchange. conversations with KEPCO. APG were ultimately approved and maintenance of foreign coal Oil and gas sector The Climate Action 100+ Asset Management, Church by KEPCO. Soon afterwards, power projects, following Japan’s Mining and metals sector engagement has been led Commissioners for England, KEPCO confirmed that it will not recent tightening of financing Utilities sector Industrials sector Legal and General Investment pursue the remaining two coal criteria for overseas coal-fired by APG Asset Management Transportation sector Management, Sumitomo Mitsui power pipeline projects in the power plants. and Sumitomo Mitsui Trust Trust Asset Management and Philippines and South Africa. Consumer products sector Asset Management and UBS Asset Management have Engagement in 2021 will focus This has been a significant year WHERE WE ARE MAKING is supported by a group been public in their concerns, on obtaining further clarity on PROGRESS 4 quoted in FT articles in February, of progress in discussions on coal coal plant closures as per the of collaborating investors phase-out within Korea. Investors from Europe. August and October this year government’s directive, phase-out and in local Korean media in the were referenced repeatedly timeline of overseas coal plants KEY ISSUES IN 2020 5 Korean Herald and Chosun Biz. in the National Assembly and commitment to the full Over the past 12 months, during ministerial questioning alignment of corporate disclosure investors have had three formal Other recurring themes in group on KEPCO’s overseas coal with TCFD recommendations. HOW WE ARE GOVERNED 6 group meetings, several letter engagement meetings with projects. In a significant regional exchanges with the company, and KEPCO have included: announcement, in October 2020, delivered a public statement to its • Request for a disclosure of the South Korean government APPENDIX 7 largest shareholder, the Ministry emissions reduction targets committed to achieve net-zero of Economy and Finance. with a detailed breakdown emissions by 2050, pledging to of emissions at parent level spend US$7 billion on green- Engagement priorities with the focused growth. This continued company this year have focused and from independent power producers. the momentum of earlier national on engaging KEPCO on its plans plans to close 30 coal-fired to limit and exit overseas coal and • Working towards alignment of power plants by 2034 and 10 of fossil fuel exposure, in particular, corporate disclosure with TCFD those by 2022, phase out nuclear investors have expressed their recommendations. power and triple the number of concerns about KEPCO’s coal solar and wind power installations

47 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY ENGAGING WITH STATE-OWNED ENTITIES IN INDIA

NTPC Limited (NTPC), Engagement priorities with • NTPC announced a new WHO WE ARE 1 Oil & Natural Gas Corp. the three companies have sustainability strategy in included raising management September 2020, setting (ONGC), and Coal India awareness on climate change carbon intensity and renewables HOW WE MEASURE PROGRESS 2 Limited (CIL) are majority- issues, improving disclosure on targets for 2022 and 2032. state-owned corporations carbon emissions based on TCFD • NTPC acquired two hydro HOW COMPANIES ARE 3 headquartered in India. recommendations, and plans to power companies from the PROGRESSING NTPC is the largest electric increase the use of renewable government of India in March energy. Electricity demand in Review of company progress utility in the country and 2020 to increase its share of Oil and gas sector India is expected to grow rapidly renewable energy. predominately a coal- as the economy grows and the Mining and metals sector based thermal power government electrifies rural areas • NTPC and ONGC entered into Utilities sector Industrials sector aiming to increase energy access an agreement in May 2020 to producer. CIL is the largest Transportation sector for its population. In this context, establish a joint venture for a coal producer in the world, new renewable energy business. Consumer products sector and ONGC is Indias largest reduction of thermal power generation is a challenge, and fast • CIL is investing heavily in WHERE WE ARE MAKING crude oil and natural gas expansion of renewables-based efficiency improvement at its PROGRESS 4 producer. The Climate power generation is crucial in coal mines, and in a coal-to- Action 100+ engagements preventing a sharp increase in methanol plant in West Bengal. domestic GHG emissions. KEY ISSUES IN 2020 5 for these companies have Engagements for the three been led by SBI Funds Progress to date for the three companies in 2021 will focus on Management Private engagements has included the monitoring progress on TCFD HOW WE ARE GOVERNED 6 Limited and supported by following: implementation, renewables the AIGCC and the PRI. • Climate-related disclosure investment, introducing the improved significantly. NTPC concept of just transition, and APPENDIX 7 seeking opportunities to set As a result of consistent outreach released a 2019 CDP climate report publicly in early 2020, ambitious emissions reduction to the company since 2019, the targets. Lead investors are also investors were able to arrange included disclosure of its scope 3 emissions in its integrated open to including investors from three formal engagement other regions to strengthen the meetings with NTPC in 2020 report in September 2020, and its 2020 report incorporated case of global engagement with despite the difficult environment state-owned entities in India. created by COVID-19. The several aspects of TCFD aligned investors also commenced disclosure. engagements with ONGC and CIL this year and held one meeting with each company.

48 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT INDUSTRIALS SECTOR INDUSTRIALS SECTOR

26 $956 BILLION FOCUS COMPANIES MARKET CAPITALISATION1

The 26 industrials focus Many of these companies are WHO WE ARE 1 companies include firms considered hard to abate as there are currently no cost- focused on the production effective and readily available HOW WE MEASURE PROGRESS 2 of materials including decarbonisation options. It is cement, heavy-duty likely that many of the emissions HOW COMPANIES ARE machinery and equipment, intensive processes particularly PROGRESSING 3 construction materials, and the production of clinker for cement and some chemical Review of company progress chemicals. production processes will require Oil and gas sector significant carbon capture and Mining and metals sector Material emissions sources vary storage (CCS) in order to reach Utilities sector Industrials sector widely by firm and according to net-zero emissions. As in other the products produced: Transportation sector energy intensive sectors, the Consumer products sector • The majority of emissions from rapid decarbonisation of global cement production arise from electricity grids via switching to WHERE WE ARE MAKING the chemical reaction and heat renewables will also be key to PROGRESS 4 required to produce clinker, a reduce emissions from this sector. core component of cement. Investors engaging with industrial KEY ISSUES IN 2020 5 • Emissions from chemicals companies within Climate companies arise from energy- Action 100+ are setting out intensive operations, including specific engagement priorities HOW WE ARE GOVERNED 6 ammonia production and steam depending on the company and cracking. Many chemicals firms its products and operations. At a also have significant scope high-level, investors are looking APPENDIX 7 3 emissions associated with for companies to set net-zero product use. emissions targets and to disclose • Construction materials and the way they are approaching heavy-duty equipment firms and acting on the need to have upstream and downstream decarbonise by mid-century. emissions sources that vary by company, and many also have significant scope 2 emissions from energy use.

1 Source: Bloomberg, as at 30 November 2020.

49 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT INDUSTRIALS SECTOR

For many companies this • CEMEX S.A.B. de C.V., CRH, WHO WE ARE 1 includes partnerships with and Daikin Industries, Ltd. research organisations, industry committed to net-zero bodies and other organisations emissions by 2050 across all HOW WE MEASURE PROGRESS 2 within their sector to look scopes. at decarbonisation options • LafargeHolcim Ltd, set a HOW COMPANIES ARE 3 including CCS. Other key areas science-based target including PROGRESSING of focus include electricity use INDUSTRIALS FOCUS COMPANIES scope 1 and 2 emissions and a Review of company progress and energy efficiency measures net-zero ambition. The company Adbri Ltd HeidelbergCement companies can take to achieve Oil and gas sector claims to be the first global Anhui Conch AG Mining and metals sector emissions reduction targets building materials company to in the short term. As in other Cement Company Hitachi, Ltd. Utilities sector sign the ‘Business Ambition for Industrials sector sectors, establishing strong Limited Hon Hai Precision 1.5°C’ pledge with intermediate Transportation sector BASF SE Industry climate governance frameworks targets approved by the Science- Consumer products sector at the board level, and ensuring Based Targets initiative (SBTi) in Bayer AG Koninklijke Philips alignment between companies’ alignment with net-zero pathway. Boral Limited NV WHERE WE ARE MAKING internal climate policies with PROGRESS 4 LafargeHolcim Ltd those of industry associations of • Boral Limited conducted a Caterpillar Inc. which they are member is also a physical risk analysis across its CEMEX S.A.B. de L'Air Liquide key priority. These companies are assets identifying vulnerabilities C.V. LyondellBasell KEY ISSUES IN 2020 5 related to extreme weather for highly exposed to both transition CRH Industries Cl A risks from increased regulatory its global operations. Cummins Inc. Martin Marietta HOW WE ARE GOVERNED 6 requirements, and to physical • Bayer AG set a science-based Materials, Inc. risks depending on the location target to reduce its emissions Daikin Industries, of the companies’ operations, so 42% by 2029. Ltd. Panasonic Corporation APPENDIX 7 investors are increasingly asking • Cummins Inc. committed to Dangote Cement Saint Gobain companies to model, assess, and net-zero emissions by 2050 Plc disclose a plan to manage these 1 across its operations, and a Dow Inc Siemens Energy climate risks. science-based target to reduce General Electric Toray Industries, Inc. There have been a number absolute GHG emissions 50% Company Trane Technologies of noteworthy company by 2030 (scope 1 and 2). In PLC commitments and progress addition, the company set a by industrials focus companies science-based target to reduce this year: emissions from newly-sold products 25% by 2030.

1 Note that Siemens AG was the original focus of Climate Action 100+ until a demerger in September 2020. Siemens Energy will be the focus of the initiative moving forward.

50 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT INDUSTRIALS SECTOR

CLIMATE ACTION 100+ NET-ZERO COMPANY WHO WE ARE 1 BENCHMARK SHORT-TERM TARGETS NET-ZERO AMBITION BENCHMARK INDICATOR 4.1 BENCHMARK INDICATOR 1.1 HOW WE MEASURE PROGRESS 2 Percentage of companies that have set Percentage of companies that have set a Disclosure indicators provided by TPI a short-term (2020 to 2025) target for net-zero target or ambition for reducing reducing GHG emissions on a clearly 100% of GHG emissions by 2050 on a HOW COMPANIES ARE The data presented here show sector level performance against a PROGRESSING 3 preliminary set of indicators from the Climate Action 100+ Net-Zero defined scope of emissions. clearly defined scope of emissions. Company Benchmark. Review of company progress Oil and gas sector Over one-third (38%) of industrials focus companies have now set a 50% 46% Mining and metals sector net-zero emissions by 2050 ambition or target, however just 8% of 38% Utilities sector companies have a target that covers the most relevant scope 3 Industrials sector emissions. Nearly half of companies (46%) have set a medium-term Transportation sector Consumer products sector emissions reduction target and half (50%) have set a short-term target, MEDIUM-TERM TARGETS however a slightly smaller share of companies have set targets that BENCHMARK INDICATOR 3.1 WHERE WE ARE MAKING cover over 95% of their operational emissions for both medium-term Percentage of companies that have set PROGRESS 4 (38%) and short-term (38%) targets. Only 8% of companies have set a medium-term (2026 to 2035) target a medium-term target that includes coverage of their most material for reducing GHG emissions on a clearly scope 3 emissions, and the same is true of short-term targets. Nearly defined scope of emissions. KEY ISSUES IN 2020 5 two in three (65%) of companies have disclosed clear board level responsibility for climate change, and nearly half (31%) have a named position on the board responsible for managing climate risks. See Company Progress Review Summary for more details on these indicators. HOW WE ARE GOVERNED 6

APPENDIX 7 65% OF COMPANIES PROVIDED EVIDENCE OF BOARD OR BOARD COMMITTEE OVERSIGHT OF THE MANAGEMENT OF CLIMATE CHANGE RISKS BENCHMARK INDICATOR 8.1

51 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY CUMMINS INC.

Cummins is an engine, • Encouraging the company The lead investors believe that WHO WE ARE 1 power systems and to consider tying executive the engagement with Cummins compensation to climate has been highly constructive and industrial machinery change performance metrics. that the company is emerging HOW WE MEASURE PROGRESS 2 manufacturing company • Asking the company to as a sector leader in addressing headquartered in evaluate its climate lobbying its climate change risks and HOW COMPANIES ARE 3 Columbus, Indiana in the practices and ensure alignment opportunities. PROGRESSING between its internal climate United States. The Climate Among other topics, engagement Review of company progress Action 100+ engagement change policy and the lobbying in 2021 will focus on encouraging Oil and gas sector with Cummins has been activities of trade associations Cummins to provide more Mining and metals sector of which it is a member. jointly led by Wespath granular reporting about the Utilities sector Industrials sector Benefits and Investments Progress to date has included: actions it intends to take to meet its net-zero emissions by 2050 Transportation sector and AGF Investments, • In November 2019, Cummins target (for example: changes Consumer products sector along with seven additional announced its ‘Planet 2050’ to its product mix, specified sustainability strategy, WHERE WE ARE MAKING collaborating investors. low-carbon R&D investments). PROGRESS 4 committing it to net-zero Signatories continue to advocate emissions by 2050 in company Climate Action 100+ signatories that the company tie executive operations. In addition, the held two meetings with the compensation to climate change KEY ISSUES IN 2020 5 strategy had several interim company over the year covered performance metrics. They emissions goals for 2030, by this progress report. also intend to hold a discussion including: with the company to go over HOW WE ARE GOVERNED 6 Engagement priorities with the - Reduce absolute GHG relevant elements of the new company this year included: emissions from the company’s Climate Action 100+ Net-Zero • Offering input and support facilities and operations by Company Benchmark, including APPENDIX 7 to Cummins’ new ‘Planet 50% (a science-based target). an exploration of just transition 2050’ strategy and other - Reduce absolute lifetime GHG considerations in Cummins’ sustainability work the company emissions from newly sold ‘Planet 2050’ strategy. is undertaking. products by 25% (a science- • Seeking clarity on the based target). company’s strategy for - Partner with customers to transitioning to net-zero reduce GHG emissions from emissions within distinct products in the field by business lines. 55 million metric tonnes.

52 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY CEMEX S.A.B. DE C.V.

CEMEX S.A.B. de C.V. Engagement priorities with the Progress to date has included: WHO WE ARE 1 (CEMEX) is a cement- company this year have included: • In February 2020, CEMEX • Supporting CEMEX’s new 2030 committed to delivering net- making and building HOW WE MEASURE PROGRESS 2 GHG reduction goal, including zero CO concrete by 2050. materials company 2 asking the company for more The company also set an headquartered in Mexico. details on establishing interim enhanced target for 2030 HOW COMPANIES ARE 3 The Climate Action milestones between 2030 and consistent with science-based PROGRESSING

100+ engagement with 2050, and the R&D investments methods. Specifically, CEMEX Review of company progress CEMEX has been led necessary to achieve its goals. increased its goal to reduce net Oil and gas sector CO emissions 35% by 2030 by Wells Fargo Asset • Suggesting that the company 2 Mining and metals sector (compared to 1990 levels), a 5% Management, with consider a more restrictive Utilities sector ratchet on its 2019 goal of 30% Industrials sector support from Universities central scenario than the IEA’s 2-Degree Scenario (2DS) in its by 2030. Transportation sector Superannuation Scheme target-setting process and to • CEMEX has tied its new GHG Consumer products sector (USS) and Alfore XXI include an assessment of the reduction targets to its CEO WHERE WE ARE MAKING Banorte (one of the largest impact this would have on its and top management variable PROGRESS 4 pension funds in Mexico). emissions reduction goals. compensation scheme. • With already strong board-level • CEMEX reports against the Climate Action 100+ signatories climate oversight practices TCFD framework via its 2019 KEY ISSUES IN 2020 5 held two meetings with the in place, encouraging the Integrated Report and became company over the period company to disclose more to one of only eight companies in covered by this progress report. showcase this and provide Mexico and one of only 10 in the HOW WE ARE GOVERNED 6 The second meeting focused more formulaic details on global construction sector to on a detailed letter from the executive-linked pay to climate be an official supporter of the engagement coalition setting performance. TCFD (as of March 2020). APPENDIX 7 out expectations, assessing • Asking the company to disclose CEMEX’s relative position against Among other topics, engagement more information about its in 2021 may focus on continuing expectations, and asking for more scope 3 emissions and supply clarity and commitments. to seek improvements in CEMEX’s chain management. climate-related disclosures where • Advocating for the company to necessary, as well as holding issue a standalone TCFD report. further discussions on the company’s plans for achieving its ambitious net-zero emissions by 2050 goal. Photo: Björn Wylezich - stock.adobe.com

53 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT TRANSPORTATION TRANSPORTATION SECTOR SECTOR 26 $1.3 TRILLION FOCUS COMPANIES MARKET CAPITALISATION1

There are 26 transportation There is potential for significant WHO WE ARE 1 companies on the Climate reductions from marine shipping from improving efficiency in Action 100+ focus list. maritime vessels and adopting HOW WE MEASURE PROGRESS 2 These include automobile zero emission technologies, as and truck manufacturers, well as the use of advanced HOW COMPANIES ARE aerospace companies, biofuels. PROGRESSING 3 airlines and shipping firms. Investors are engaging with Review of company progress airlines and aerospace companies Oil and gas sector For the vehicle manufacturers to understand how they plan to Mining and metals sector (automobile and truck makers) manage transition risks including Utilities sector and airplane manufacturers, the the likelihood of increased Industrials sector most material emissions sources regulation and carbon pricing, as Transportation sector are their downstream emissions well as physical and reputational Consumer products sector (scope 3) due to fuel used in risks. Investors are also seeking their products. These companies WHERE WE ARE MAKING to understand how carbon PROGRESS 4 will need to increase vehicle offsets and fleet upgrades will and plane efficiency and shift to be used during the transition electrification and zero emission alongside R&D investments and KEY ISSUES IN 2020 5 technologies over the next commercialisation measures for decade. low-carbon fuels and alternative propulsion technologies. HOW WE ARE GOVERNED 6 For airlines and shipping Physical risk is an important companies, the most material issue particularly for airlines as source of emissions comes from a result of increased frequency APPENDIX 7 the use of fuel for transportation. of extreme weather events due These companies are generally to climate change that could considered ‘hard to abate’ – impact airports, flight patterns, given the lack of cost-effective, and other company assets. While readily-available technologies for COVID-19 has hit airlines and these companies to decarbonise. aerospace companies particularly hard, given the critical long-term implications of GHG emissions from the sector, investors are continuing to seek progress on these issues.

1 Source: Bloomberg, as at 30 November 2020.

54 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT TRANSPORTATION SECTOR

Investors engaging with • Delta Air Lines, Inc. announced WHO WE ARE 1 automotive companies are a commitment to carbon seeking net-zero emissions neutrality, to offset all its across their value chain by or emissions from March 2020 HOW WE MEASURE PROGRESS 2 before 2050, while ramping up onward, and a $1 billion production of zero emissions investment to meet its goals. HOW COMPANIES ARE 3 fleets in the medium term. With • Rolls-Royce announced a PROGRESSING an average 15 year product TRANSPORTATION FOCUS COMPANIES commitment to net-zero Review of company progress lifecycle, automotive companies emissions in its operations by A.P. Moller - Maersk PACCAR Inc will need to develop zero Oil and gas sector 2030 (a science-based target) Air France KLM S.A. Peugeot SA Mining and metals sector emissions fleets much earlier, as and to play a leading role in California committed to by 2035. Airbus Group Qantas Airways Utilities sector enabling the sectors in which Industrials sector Short-term objectives include Limited it operates to reach net-zero American Airlines Transportation sector committing to set science- emissions by 2050. It intends to Group Inc. Raytheon Technologies Consumer products sector based targets, investments publish a roadmap by the end Bayerische Renault S.A. in electrification and ICE of 2020 with interim targets to Motoren Werke WHERE WE ARE MAKING improvements, remuneration Rolls-Royce PROGRESS 4 achieve these aims. Aktiengesellschaft incentives for executives linked to BMW Saic Motor climate targets, and Paris-aligned • In October 2020, American Corporation Airlines Group Inc. released an Boeing Company KEY ISSUES IN 2020 5 lobbying, including by companies’ Suzuki Motor industry associations. ESG report formally committing Daimler AG the company to net-zero Corporation Select progress by companies emissions by 2050. The report Delta Air Lines, Inc. Toyota Motor HOW WE ARE GOVERNED 6 this year has included: also included a TCFD index for Fiat Chrysler Corporation • Qantas Airways Limited the first time. Automobiles NV United Airlines became the first airline in the Ford Motor Company Holdings, Inc. APPENDIX 7 world to commit to net-zero General Motors Volkswagen AG emissions by 2050 in October Company Volvo 2019, alongside a $10 million Honda Motor Company investment in sustainable aviation fuels, and a pledge to Lockheed Martin double its offset program. Corporation Nissan Motor Co. Ltd

55 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT TRANSPORTATION SECTOR

CLIMATE ACTION 100+ NET-ZERO COMPANY WHO WE ARE 1 BENCHMARK SHORT-TERM TARGETS NET-ZERO AMBITION BENCHMARK INDICATOR 4.1 BENCHMARK INDICATOR 1.1 HOW WE MEASURE PROGRESS 2 Disclosure indicators provided by TPI Percentage of companies that have set Percentage of companies that have set a a short-term (2020 to 2025) target for net-zero target or ambition for reducing 100% of GHG emissions by 2050 on a HOW COMPANIES ARE The data presented here show sector level performance against a reducing GHG emissions on a clearly PROGRESSING 3 preliminary set of indicators from the Climate Action 100+ Net-Zero defined scope of emissions. clearly defined scope of emissions. Company Benchmark. Review of company progress Oil and gas sector Over a third (38%) of transportation focus companies have set net- 81% Mining and metals sector zero emissions by 2050 targets or ambitions, and 19% of companies 27% 38% Utilities sector have set targets which cover material scope 3 emissions. Over half Industrials sector (27%) of companies have set medium-term targets, and four of five Transportation sector Consumer products sector (81%) have set short-term targets. However as with other sectors, MEDIUM-TERM TARGETS very few of these targets cover the full scope 1 and 2 emissions for BENCHMARK INDICATOR 3.1 WHERE WE ARE MAKING the company (23% of companies for medium-term targets and 35% Percentage of companies that have set PROGRESS 4 of companies for short-term targets). Less than one in five (4%) a medium-term (2026 to 2035) target have medium-term targets that include their most relevant scope 3 for reducing GHG emissions on a clearly emissions, and no companies have short-term targets that do. defined scope of emissions. KEY ISSUES IN 2020 5 Nearly four out of five (77%) companies have clear board or board committee oversight of climate risks and half (50%) have a named HOW WE ARE GOVERNED 6 position at the board level responsible for managing climate risks. See Company Progress Review Summary for more details on these indicators.

APPENDIX 7 77% OF COMPANIES PROVIDED EVIDENCE OF BOARD OR BOARD COMMITTEE OVERSIGHT OF THE MANAGEMENT OF CLIMATE CHANGE RISKS BENCHMARK INDICATOR 8.1

56 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT TRANSPORTATION SECTOR To align with IEA’s B2DS scenario automobile companies assessed will need to more than double their planned production of electric cars and almost CLIMATE ACTION 100+ NET-ZERO COMPANY triple their planned production of hybrid cars. BENCHMARK

Capital allocation assessment indicators (cont)

2° Investing Initiative (2DII) The chart below shows what percentage of auto companies are WHO WE ARE 1 aligned with which IEA scenario in terms of their production of electric 2DII assesses the current and future technology mix of automotive companies (the share of electric, cars. The table shows whether these companies are aligned with IEA’s hybrid and internal combustion engine vehicles) based on business intelligence and financial data B2DS, IEA’s SDS, or above SDS.2 HOW WE MEASURE PROGRESS 2 providers, and assesses companies' alignment with climate change scenarios. This data is based on actual production plans of the automotive companies. This can therefore give an assessment HOW COMPANIES ARE of whether the automotive companies’ stated ambitions reflect their currently known capital PROGRESSING 3 expenditure efforts to transition their vehicle production to lower carbon. Auto focus companies scenario alignment Review of company progress The table below shows the technology mix of automotive companies and assesses their planned 7% Oil and gas sector production against the IEA B2DS. The data shows that production aligned with the IEA’s B2DS Mining and metals sector scenario would see the share of electric vehicles rising to 9% of the auto sector's technology mix Utilities sector by 2025. The companies assessed are not aligned with this scenario, as only 4% of their planned Industrials sector l Beyond 2° Scenario production mix by 2025 is expected to be in electric vehicles. To align with the B2DS scenario (<1.75°C) Transportation sector automobile companies assessed will need to more than double their planned production of electric l Sustainable Development Consumer products sector cars and almost triple their planned production of hybrid cars. Scenario (1.75°C-2°C) 29% WHERE WE ARE MAKING l Above Sustainable Development 4 Scenario (>2°C) PROGRESS Planned and required (under a <1.75C° Actual 2019 and 2020 automotive 64% scenario1) automotive focus companies focus companies’ vehicle types vehicle types KEY ISSUES IN 2020 5 Required 2025 Planned 2025 Actual 2019 Actual 2020 HOW WE ARE GOVERNED 6 9% 4% 1% 4% 2% 8% 6% APPENDIX 7

22%

69% 87% 95% 92%

l Electric l Hybrid l ICE

1 2DII uses AutoForecast Solutions data for the automotive sector. 2 2DII classifies ‘above SDS’ as being aligned with a climate scenario that sees over 2°C of warming.

57 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY QANTAS AIRWAYS LIMITED

Qantas is an airline In late 2019, Qantas made COVID-19 presented a significant WHO WE ARE 1 headquartered in Sydney a number of significant challenge for Qantas during 2020 commitments: given the extensive domestic and Australia’s largest border closures between states, HOW WE MEASURE PROGRESS 2 airline by fleet size. The • A target of net-zero emissions by 2050, making it only the and the effective international Climate Action 100+ second airline worldwide to do border closure enacted by HOW COMPANIES ARE 3 engagement has been led so. the Australian government to PROGRESSING by AustralianSuper and manage the pandemic. Due • A commitment to cap emissions to this, less progress towards Review of company progress supported by IGCC. at current (2019) levels. Climate Action 100+ goals Oil and gas sector • Enhancements of its offset occurred in 2020 than originally Mining and metals sector Engagement priorities for Qantas program, to effectively double planned. However, it is expected Utilities sector Industrials sector include: the size of the program. that the engagement will resume Transportation sector • The company’s long-term as normal in 2021/22. Key • A $50 million investment in Consumer products sector plans for decarbonisation and sustainable aviation biofuels priorities for the next two years associated investments and over the coming decade. will include: a) Qantas planned WHERE WE ARE MAKING activities, including its offset biofuels investments and how the PROGRESS 4 program. In 2020 Qantas also retired its airline plans to work with other Boeing 747 fleet, which were 20% stakeholders to advance this, • Short and medium-term targets KEY ISSUES IN 2020 5 typically associated with less efficient than similar sized b) enhanced scenario analysis, improvements in fuel efficiency aircraft. It also signed on to a and c) linking business strategy and fleet upgrades. joint commitment with 12 other with climate targets and capital major airlines who are members investment. HOW WE ARE GOVERNED 6 • Scenario analysis including of the oneworld airline alliance, understanding financial which sets a goal of net-zero implications of both transition emissions across the alliance APPENDIX 7 risk and physical risk. by 2050. oneworld is the only global airline alliance to make this commitment.

Photo: Steve Mann - stock.adobe.com

58 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY ROLLS ROYCE

Rolls-Royce is a civil additional internal experts. At the Progress to date has included: - Implementing closed-loop WHO WE ARE 1 aerospace, power systems company’s 2020 AGM the leads • Rolls-Royce continued to manufacturing techniques on welcomed the company’s goal advance its reporting against high-value metals. and defence company of net-zero emissions by 2050 HOW WE MEASURE PROGRESS 2 headquartered in the the TCFD recommendations Engagement in 2021 will include and presented questions related in its 2019 Annual Report, . The to engagement priorities. The assessing the company’s plans published in early 2020. to reach net-zero emissions and HOW COMPANIES ARE Climate Action 100+ CEO reiterated the company’s PROGRESSING 3 • In June 2020, Rolls-Royce interim targets (in particular engagement with Rolls- commitment to playing a leading role in enabling the sectors in announced a commitment in a post-COVID recovery in Review of company progress Royce has been led by EOS which it operates to get to net- to net-zero emissions in its the aviation industry), the Oil and gas sector at Federated Hermes, along zero emissions by 2050 and that operations and facilities by integration of climate-related Mining and metals sector with seven collaborating this must be a core part of the 2030 (a science-based target) scenarios and goals into business Utilities sector Industrials sector post-COVID recovery of aviation and to play a leading role in planning, further improvements investors. Transportation sector in particular. enabling the sectors in which it to climate-related disclosures, operates to reach its net-zero the integration of executive Consumer products sector Engagement has been influenced Engagement priorities with the emissions by 2050. The compensation with the net-zero by the COVID-19 pandemic, in WHERE WE ARE MAKING company this year have included: company indicated it would pathway and the governance 4 particular a significant drop PROGRESS 1. Encouraging the setting of pursue several measures to of direct and indirect policy in revenue due to reduced reach its new targets, including: advocacy. Photo: Steve Mann - flying hours of planes using the new interim emissions targets, stock.adobe.com KEY ISSUES IN 2020 5 company’s engines. Rolls-Royce including goals to address - Working with the fuels is seeking new fund raising via a scope 3 emissions, aligned with industry to increase the recapitalisation package which net-zero emissions by 2050. availability of lower-carbon HOW WE ARE GOVERNED 6 includes a rights issue, a bond 2. Seeking climate-related alternative fuels. offering and a new term-loan scenario analysis to be - Accelerating the development facility. undertaken, disclosed and and deployment of disruptive APPENDIX 7 integrated into business new technologies (e.g. electric Engagement has been ongoing planning. and hybrid technologies, and and constructive with the 3. Seeking enhancements to the small modular nuclear power company since 2017. Meetings stations). have taken place with internal company’s climate-related specialists, senior management financial disclosures. - Producing technologies and the chair of the board. 4. Asking for the company to that could increase uptake There were three meetings consider linking executive of low-carbon energy (e.g. with the company in the past compensation to climate microgrids). 12 months including a visit to a performance metrics. - Using 100% renewable energy production facility to meet with in its own operations.

59 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY FORD MOTOR COMPANY

Ford Motor Company Over the past year, Ford has WHO WE ARE 1 (Ford) is a global progressed in the following areas: • In June 2020, Ford set a carbon automaker, headquartered HOW WE MEASURE PROGRESS 2 in the US. The Climate neutral by 2050 target. Action 100+ engagement • In August 2020, Ford finalised a compromise agreement HOW COMPANIES ARE has been led by New PROGRESSING 3 with California (‘California York City Office of the Agreement’) under which Review of company progress Comptroller and New York it agreed to comply with a Oil and gas sector State Common Retirement standard stricter than the Mining and metals sector Fund and supported by Trump Administration’s vehicle Utilities sector emissions standard. Industrials sector Ceres. Transportation sector • In September 2020, Ford Consumer products sector Investors had more than six launched a new California ad meetings with the company over campaign, voicing support for WHERE WE ARE MAKING 4 the past 12 months, including California’s emissions standards PROGRESS a Ceres-convened roundtable. and calling out rivals Chevrolet Additionally, investors filed (GM), Jeep (FCA) and Toyota KEY ISSUES IN 2020 5 a shareholder resolution on for siding with the Trump lobbying disclosure and delivered Administration. a letter outlining investor • The company also signed onto HOW WE ARE GOVERNED 6 expectation on climate lobbying. the UN’s Business Ambition for Engagement priorities with the 1.5°C campaign and committed company this year have included: to set a science-based target for APPENDIX 7 • Increased long-term ambition. its scope 1, 2, and 3 emissions. • Lobbying and responsible policy Engagement in 2021 will focus engagement. on further discussion of climate • Robust scenario analysis. lobbying and related disclosures, including playing a constructive role in the development of post- 2025 vehicle emissions standards, and any modifications to the Trump standards. Investors will also monitor the company’s progress on setting a science- based target.

60 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CONSUMER PRODUCTS SECTOR

The 14 consumer products Investors engaging with these WHO WE ARE 1 focus companies engaged companies are asking them to CONSUMER PRODUCTS SECTOR set net-zero emissions by 2050 by Climate Action 100+ targets that include coverage of HOW WE MEASURE PROGRESS 2 include retail, food and scope 3 emissions. Many of the beverage, consumer focus companies in this sector HOW COMPANIES ARE products and paper source significant products via PROGRESSING 3 agricultural or forestry supply TRILLION companies. 14 $1.9 Review of company progress chains, so investors are seeking to 1 understand how the companies FOCUS COMPANIES MARKET CAPITALISATION Oil and gas sector For these companies the most intend to manage these risks. Mining and metals sector material emissions depend on the In turn many of these supply Utilities sector composition of the firm but could Industrials sector chains are exposed to physical include: Transportation sector risks from a changing climate so Consumer products sector • Supply chain (scope 3) investors are asking companies emissions from the purchase of to produce physical risk scenario WHERE WE ARE MAKING materials or products for sale in analysis covering these value PROGRESS 4 retail stores, which could include chains. Several companies in agricultural emissions, industrial this sector also use significant emissions, deforestation, other electricity via large retail stores KEY ISSUES IN 2020 5 land-use change emissions, and and/or operational facilities, so emissions from waste; decarbonisation of electricity use HOW WE ARE GOVERNED 6 • Transportation emissions both via power purchase agreements direct and indirect (via supply or other renewable energy chains); and procurement projects is also a key priority. APPENDIX 7 • Electricity emissions for companies with a large retail footprint.

1 Source: Bloomberg, as at 30 November 2020.

61 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CONSUMER PRODUCTS SECTOR

A number of companies have • Unilever PLC committed to net- WHO WE ARE 1 made notable progress against zero emissions from all of the Climate Action 100+ goals this company’s products by 2039. HOW WE MEASURE PROGRESS 2 year: • Walmart, Inc. announced a new • Coca-Cola Company set target to achieve net-zero GHG a science-based target emissions by 2040 (scope 1 and HOW COMPANIES ARE 3 committing the company 2). As part of this the company PROGRESSING

to reduce GHG emissions will protect, manage or restore Review of company progress (including scope 1, 2, and 3) 50 million acres of land and 1 CONSUMER PRODUCTS Oil and gas sector 25% by 2030 from a 2015 base- million square miles of ocean FOCUS COMPANIES Mining and metals sector year. by 2030. Bunge Limited Utilities sector • Colgate-Palmolive Company • Woolworths Group Limited Industrials sector Coca-Cola Company announced new sustainability committed to net-zero Transportation sector targets, including a commitment emissions by 2050 and set a Colgate-Palmolive Consumer products sector to net-zero emissions by 2040. science-based target to reduce Company WHERE WE ARE MAKING • Danone S.A. committed to absolute operational emissions Danone S.A. PROGRESS 4 align its climate targets with a by 63% and to reduce scope 3 International Paper 1.5°C global warming trajectory emissions by 19% by 2030 from Company a 2015 base year. KEY ISSUES IN 2020 5 across its operations and value Nestlé chain. PepsiCo, Inc. • PepsiCo, Inc. committed to HOW WE ARE GOVERNED 6 100% renewable energy for all Procter & Gamble Company direct US operations by the end Suzano S.A. of 2020 and signed the UN’s APPENDIX 7 Business Ambition for 1.5°C Unilever PLC commitment. Walmart, Inc. Wesfarmers Weyerhaeuser Company Woolworths Group Limited

62 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CONSUMER PRODUCTS SECTOR

CLIMATE ACTION 100+ NET-ZERO COMPANY WHO WE ARE 1 BENCHMARK SHORT-TERM TARGETS NET-ZERO AMBITION BENCHMARK INDICATOR 4.1 BENCHMARK INDICATOR 1.1 HOW WE MEASURE PROGRESS 2 Percentage of companies that have set Percentage of companies that have set a Disclosure indicators provided by TPI a short-term (2020 to 2025) target for net-zero target or ambition for reducing reducing GHG emissions on a clearly 100% of GHG emissions by 2050 on a HOW COMPANIES ARE The data presented here show sector level performance against a PROGRESSING 3 preliminary set of indicators from the Climate Action 100+ Net-Zero defined scope of emissions. clearly defined scope of emissions. Company Benchmark. Review of company progress Oil and gas sector Just under a third (31%) of focus companies in the consumer products 57% 57% 31% Mining and metals sector sector have set a net-zero emissions target or ambition, and 12% have Utilities sector set a target that covers their most relevant scope 3 emissions. Over Industrials sector half of companies (57%) have set a short and medium-term emissions Transportation sector Consumer products sector reduction target. As for the net-zero targets however only 14% of MEDIUM-TERM TARGETS companies have included the most material scope 3 emissions in their BENCHMARK INDICATOR 3.1 WHERE WE ARE MAKING short and medium-term targets respectively. Nearly all (93%) of these Percentage of companies that have set PROGRESS 4 companies have clear board or board committee oversight of climate a medium-term (2026 to 2035) target change risks, and half have named a specific board member who is for reducing GHG emissions on a clearly responsible for managing climate risks. defined scope of emissions. KEY ISSUES IN 2020 5

See Company Progress Review Summary for more details on these indicators. HOW WE ARE GOVERNED 6 93% APPENDIX 7 OF COMPANIES PROVIDED EVIDENCE OF BOARD OR BOARD COMMITTEE OVERSIGHT OF THE MANAGEMENT OF CLIMATE CHANGE RISKS BENCHMARK INDICATOR 8.1

63 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CASE STUDY UNILEVER PLC

Unilever is a multinational • Amplifying, supporting, and • Unilever’s announcement that WHO WE ARE 1 consumer goods company encouraging the company’s the company will establish a leading practices on managing new Climate & Nature Fund, headquartered in London, climate risks and opportunities. initially capitalised by a ¤ 1 billion HOW WE MEASURE PROGRESS 2 United Kingdom. The • Using Unilever’s approach to investment. Over the next 10 Climate Action 100+ climate change to create wider years, the fund will invest in HOW COMPANIES ARE 3 engagement with Unilever sector change. projects such as landscape PROGRESSING is led by CCLA, along with restoration, reforestation, Progress to date has included: carbon sequestration, Review of company progress six additional collaborating wildlife protection and Oil and gas sector investors. The group was • Unilever’s June 2020 Mining and metals sector commitment to achieve net- water preservation. originally led by APG Utilities sector zero emissions from all its • Unilever reports in line with the Industrials sector Asset Management until products by 2039, which builds TCFD recommendations via its Transportation sector September 2020. Majedie upon its previous science-based annual reports and is also an Consumer products sector Asset Management also target to reduce scope 1 and official supporter of the TCFD. WHERE WE ARE MAKING engages Unilever as part of 2 emissions 100% by 2030. 4 To achieve its scope 3 target, Among other topics, engagement PROGRESS Climate Action 100+ on an Unilever said it would prioritise in 2021 may focus on continuing individual basis. to draw insights from the partnerships with suppliers who KEY ISSUES IN 2020 5 have set science-based targets. company’s leading practices to Climate Action 100+ signatories All Unilever packaging will show expand its positive impact across in the engagement group held the sector. This might be done, the carbon footprint of the HOW WE ARE GOVERNED 6 three meetings with Unilever product in the future. for example, by highlighting the company’s leadership as over the period covered by this • Unilever’s goal to make progress report. This included part of Climate Action 100+’s all product formulations forthcoming workstreams on APPENDIX 7 meetings with Unilever’s biodegradable and achieve Reporting and Sustainability staff, sector decarbonisation strategies. a deforestation-free supply The coalition may also seek to where investors worked together chain by 2023. The company with the company to press for secure a meeting with Unilever’s said it will use several digital CFO and encourage the company strategies that could create cross- technologies to increase sector change. to make further improvements traceability and transparency to its climate-related disclosures Engagement priorities with the within its supply chain, as where necessary. company this year have included: well as introduce a new Regenerative Agriculture Code • Expanding and improving for all its suppliers. Unilever’s TCFD reporting, including the metrics used. Photo: JHVEPhoto - stock.adobe.com

64 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT 4 WHERE WE ARE MAKING PROGRESS HOW WE’RE ENGAGING WITH COMPANIES REGIONALLY

CLIMATE ACTION 100+ ENGAGES WITH:

160 32 COMPANIES IN MARKETS VIA FIVE REGIONAL WORKING GROUPS

65 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT AIGCC-PRI ASIA WORKING GROUP UPDATE

WHO WE ARE 1 The Asia Working Group is STRATEGIC ACTIVITIES IN alignment with the TCFD, has net-zero by 2060, quickly followed co-convened by the AIGCC improved quickly and there is by governments of Japan and 2O2O more progress expected. The South Korea publicly announcing Progress in Asia in 2020 and the PRI. It includes engagement approach pursued commitments to net-zero by 2050. HOW WE MEASURE PROGRESS 2 Asian, European, Australian This year the Working Group has: via the Asia Working Group; to These announcements in the region has been meaningful and US investors who are partner Asia-based investors will create additional opportunities • Expanded the Asia Advisory with many company HOW COMPANIES ARE interested in engaging with Group, its strategic advisory that can bring local and cultural for company engagements and engagements reaching PROGRESSING 3 a diverse group of 32 Asian body, to include more Asian knowledge with international galvanise companies into setting investors which have significant more ambitious targets. Where senior levels of the focus companies. investor representatives. WHERE WE ARE MAKING engagement experience previously the government’s organisation, and a PROGRESS 4 • Convened webinars and continues to prove successful. energy policy was reliant on fossil workshops covering topics The move to online meetings fuels, this has hindered companies’ number of net-zero AIGCC-PRI Asia Working including: Asian automotive Group update due to COVID-19 presented a decarbonisation plans. emissions commitments Ceres North America Working companies, power and utilities challenge in Asian engagements, Group update company updates with Carbon These announcements follow arising from investor- IGCC Australasian Working as in-person meetings were Group update Tracker Initiative, lobbying the norm, however many recent trends with Japanese and company dialogues. practices of Japanese industry Korean financial groups having IIGCC Europe Working Group update engagements have resumed via PRI Global Working Group update associations with InfluenceMap, digital platforms, and this has pledged to cease financing new and a strategy session on allowed greater participation of coal projects, already changing the KEY ISSUES IN 2020 5 engagement tools and investors from the US and Europe. short and medium-term financing escalation in Asian markets. options for coal power in key Asian • Delivered an in-person The challenges in the region are markets. The role now for investors HOW WE ARE GOVERNED 6 workshop in Beijing which also significant and complex. In is to follow up with companies covered investor engagement many markets, the government's on how they intend to implement strategy and best practice, energy policy and NDCs under these policies and see progress in APPENDIX 7 analysis, and facilitated cross the Paris Agreement strongly annual engagements. sector collaboration. influence the company’s management of climate risk Engagement with regional policy • Convened regular Working and its own emissions reduction makers and recruitment of more Group calls. targets which can curb ambition. local investors will continue to be For example, Chinese companies, priorities in 2021, as well as better Progress in Asia in 2020 has understanding the decarbonisation been meaningful with many especially Chinese state-owned enterprises (SOEs), are more plans for companies that are company engagements targeting net-zero emissions. reaching senior levels of the policy-driven and lack incentives organisation, and a number of to change with no regulation net-zero emissions commitments in place. Notably in September arising from investor-company 2020, the Chinese government dialogues. Disclosure, including announced a national target for

66 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT AIGCC-PRI ASIA WORKING GROUP UPDATE

FOCUS COMPANIES ENGAGED BY THE AIGCC-PRI WORKING GROUP FOCUS COMPANIES BY MARKET

WHO WE ARE 1

Thank you to the Asia Advisory Group for their work to support Climate Action 100+ in HOW WE MEASURE PROGRESS 2 Asia in 2020 3 1O HOW COMPANIES ARE Amar Gill, Managing Director and Head of PROGRESSING 3 Investment Stewardship for Asia Pacific,BlackRock SOUTH JAPAN KOREA 7 WHERE WE ARE MAKING Anne Simpson, Managing Investment Director, PROGRESS 4 Board Governance & Sustainability, CalPERS 3 CHINA AIGCC-PRI Asia Working Group update Ben Pincombe, Head of Stewardship, 5 1 TAIWAN Ceres North America Working Climate Change, PRI Group update IGCC Australasian Working INDIA THAILAND Group update Crystal Geng, Head of Group ESG, IIGCC Europe Working Group update (Group) Company of China PRI Global Working Group update

Hiroshi Komori, Senior Director, Head of Stewardship KEY ISSUES IN 2020 5 and ESG, Public Markets Investment Department, 3 Government Pension Investment Fund (GPIF)

INDONESIA HOW WE ARE GOVERNED 6 Srinivas Jain, Executive Director & Chief of Strategy, Digital & Technology, SBI Funds Management Private Limited FOCUS COMPANIES BY SECTOR APPENDIX 7 Rebecca Mikula-Wright, Executive Director, AIGCC

Richard Pan, Managing Director, Head of QFII Investment, Head of International Business, 9 3 5 China Asset Management Co Ltd. MINING AND ELECTRIC TRANSPORTATION METALS UTILITIES Seiji Kawazoe, Senior Stewardship Officer, Sumitomo Mitsui Trust Asset Management 6 9 Sophia Cheung, CIO, Cathay Financial Holdings INDUSTRIALS OIL AND GAS

67 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CERES NORTH AMERICA WORKING GROUP UPDATE

The Ceres North In 2020, the working group has: Despite this, investors have WHO WE ARE 1 America Working • Established four new sector continued to press companies working groups focused on to address the systemic risk of Group engages with 32 climate change. While some HOW WE MEASURE PROGRESS 2 companies. Participating oil and gas refiners, oil and gas midstream, electric power engagements have slowed investors span multiple due to COVID-19, many were (utilities), and transportation. HOW COMPANIES ARE regions, with the largest able to resume online. In some PROGRESSING 3 • Launched a bi-monthly numbers coming from cases, lack of in-person AGMs newsletter to provide sector prevented investors from being the US as well as Canada, and engagement topic updates WHERE WE ARE MAKING able to make planned statements. PROGRESS 4 Europe and Asia. to investors. As in previous years, shareholder AIGCC-PRI Asia Working • Supported investor escalation resolutions have been filed with Group update strategies, including a build- companies that refuse to engage Ceres North America Working the-vote roadshow for 10 with investors through Climate Group update IGCC Australasian Working Climate Action 100+ flagged Action 100+. Group update shareholder resolutions. The electric utility sector has IIGCC Europe Working Group update PRI Global Working Group update Climate Action 100+ engagement made significant progress this has been conducted against a year, with most companies challenging backdrop. The US has setting net-zero emissions KEY ISSUES IN 2020 5 experienced significant economic, targets. Many companies social and political upheaval have also accelerated their during 2020, and a very high decarbonisation plans with more The electric utility sector has made significant HOW WE ARE GOVERNED 6 number of COVID-19 infections. ambitious interim emissions progress this year, with most companies setting Restrictions and lockdowns reduction targets. Additionally, a have led to economic challenges number of oil and gas companies net-zero emissions targets. Many companies APPENDIX 7 for companies and investors. have started to write down assets have also accelerated their decarbonisation Additionally, the physical impacts that are no longer aligned with of climate change have been their long-term decarbonisation plans with more ambitious interim emissions evident in North America, with plans and have announced new reduction targets. major wildfires burning millions investments in renewables and of acres of land throughout the carbon offsets. Western US, Mexico and Canada, and an extremely active Atlantic hurricane season that broke records for the number of US named storm landfalls.

68 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT CERES NORTH AMERICA WORKING GROUP UPDATE

FOCUS COMPANIES ENGAGED BY THE CERES NORTH AMERICA WORKING GROUP FOCUS COMPANIES BY MARKET

The policy landscape was also In November, Joe Biden and WHO WE ARE 1 challenging for engagements Kamala Harris won the 2020 CERES SECTOR in the US. Regulatory rollbacks US Presidential Election. The EXPERTISE led by the current US Federal new Administration is likely HOW WE MEASURE PROGRESS 2 Administration (the Trump to drive a significant shift in Administration) removed many US climate policy. Under a Thank you to the Ceres HOW COMPANIES ARE of the country’s major climate Biden Administration, the US 5 3 sector experts for their PROGRESSING and environmental policies, is expected to rejoin the Paris support of Ceres-led including limits on carbon dioxide Agreement and set a country- CANADA engagements in North WHERE WE ARE MAKING emissions from power plants. wide target of 100% clean 4 America: PROGRESS Despite the regulatory rollback, energy by 2035. The Biden 27 AIGCC-PRI Asia Working Andrew Logan, Senior declining demand for coal by Administration also intends Group update Director, Oil and Gas electric utilities is being driven to reverse many of the Trump Ceres North America Working by the economic advantages Administration regulatory UNITED STATES Group update Dan Bakal, Senior Director, IGCC Australasian Working of lower carbon emitting fuels, rollbacks on environment and Group update Electric Power including renewables. The Trump climate policy and make a historic IIGCC Europe Working Group update Administration dismantled $2 trillion investment in the Dan Seligman, Director, PRI Global Working Group update measures to reduce GHG transition to net-zero by 2050. Energy Efficiency emissions from cars and trucks. Investors in the Climate Action KEY ISSUES IN 2020 5 Carol Lee Rawn, Senior The new fuel economy and GHG 100+ engagement group will look Director, Transportation emissions rules drastically reduce requirements for increased fuel to capitalise on the momentum HOW WE ARE GOVERNED 6 Meryl Richards, Ph.D., economy and reduced emissions created by the expected shift in Director, Food and Forests by 2025 from approximately 5% domestic climate policy and use FOCUS COMPANIES BY SECTOR improvement per year down to this to encourage more ambition Tracey Cameron, Senior APPENDIX 7 a minimal 1.5% improvement per from focus companies in the US. Manager, Corporate Climate year. The Trump Administration Engagement also revoked state authority to set more stringent standards. 10 14 ELECTRIC OIL AND GAS UTILITIES 3 5 TRANSPORTATION OTHER

69 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT IGCC AUSTRALASIAN WORKING GROUP UPDATE

The IGCC Australasian More than half (62%) of the globally and the improving WHO WE ARE 1 Working Group includes companies engaged in this region economic proposition of have now announced a target alternatives including renewables just over 60 investors from or ambition to reach net-zero and batteries. FOCUS COMPANIES ENGAGED BY THE HOW WE MEASURE PROGRESS 2 Australia, Europe and emissions by 2050, and all of IGCC AUSTRALASIAN WORKING GROUP* Asia. It engages with 13 the companies in this region are The impacts of COVID-19 as in other regions have been HOW COMPANIES ARE companies listed on the now producing reporting aligned PROGRESSING 3 challenging. Extensive domestic Australian Stock Exchange with the recommendations of FOCUS COMPANIES BY SECTOR the TCFD. Many companies are and international border closures (ASX). and lockdowns in Australia have WHERE WE ARE MAKING now producing disclosures on PROGRESS 4 trade association memberships affected company priorities During the reporting period this including assessments of and made engagement more AIGCC-PRI Asia Working group has: difficult. An uptick in fossil fuel 1 4 Group update alignment with internal climate TRANSPORTATION MINING AND Ceres North America Working lobbying and the ‘gas fired • Delivered two investor policies. Two of the focus METALS Group update roundtables on physical and companies have set a science- recovery’ proposed by the IGCC Australasian Working Australian Federal Government Group update transition risk. based target approved by the IIGCC Europe Working Group update SBTi. has also been a factor influencing • Delivered webinars on topics engagement on the role of PRI Global Working Group update including science-based targets, However, while the trend towards Australian gas. Investors continue regional oil and gas transition 2 3 KEY ISSUES IN 2020 5 long-term decarbonisation is to push for climate change as a INDUSTRIALS OIL AND GAS pathways, and briefings on promising, Australian focus critical priority for companies and reports from Carbon Tracker companies currently lack detail will continue to call for increased Initiative, InfluenceMap, and on the scope of these targets, ambition in 2021. HOW WE ARE GOVERNED 6 Transition Pathway Initiative. particularly whether they cover • Established an oil and gas material sources of scope 3 Priorities for the next phase working group for the emissions. Companies are also of engagement will include: 1 2 APPENDIX 7 Australasian region to focus continuing to support trade calling for more short, medium- ELECTRIC CONSUMER particularly on issues related to associations that engage in and long-term targets aligned UTILITIES PRODUCTS gas. problematic climate lobbying with net-zero emissions by 2050 trajectories, engaging • Run bi-monthly working group without clearly articulated * Two of these companies are also engaged by the IIGCC Europe with companies to understand Working Group. calls and held an in-person escalation and exit plans. The role of natural gas in Australia’s detailed sector decarbonisation planning day in Melbourne in strategies including planned February 2020. export future and energy mix is an issue that Australian investors capex, scope 3 emissions, are keenly focused on particularly physical risk assessments, and in light of significant asset write trade association disclosures and downs in this sector in 2020, policies. changing gas demand dynamics

70 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT IIGCC EUROPE WORKING GROUP UPDATE

The IIGCC Europe Working Nearly half of the companies WHO WE ARE 1 Group engages with 46 engaged by the IIGCC Europe Working Group have now set European companies in 15 a net-zero emissions by 2050 HOW WE MEASURE PROGRESS 2 countries. target. While these are of varying degrees of detail and HOW COMPANIES ARE In the reporting period the coverage, the trend towards PROGRESSING 3 working group has: decarbonisation ambitions is • Run roundtables with promising and there are more WHERE WE ARE MAKING companies and investors on companies setting scope 3 PROGRESS 4 the decarbonisation of the steel targets where these are material AIGCC-PRI Asia Working sector, a net-zero standard for emissions. There is also an Group update the oil and gas sector, nature- uptick in companies that have Ceres North America Working based solutions, heavy duty set a science-based target, and Group update IGCC Australasian Working vehicle decarbonisation, CCS, improvements in corporate Group update and hydrogen. disclosure on climate lobbying. IIGCC Europe Working Group update PRI Global Working Group update • Run quarterly sector updates As in other regions, engagement and strategy meetings for the with state-owned firms has been oil and gas, mining, power, challenging. The European group KEY ISSUES IN 2020 5 cement and chemicals sectors. is also engaging across a range • Established an Advisory Group, of different legal jurisdictions, HOW WE ARE GOVERNED 6 comprised of investors, to which can present complexities in provide additional guidance to exercising shareholder rights. the IIGCC Corporate team. APPENDIX 7

71 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT IIGCC EUROPE WORKING GROUP UPDATE

In 2021, the group intends to: WHO WE ARE 1 • Develop a net-zero emissions standard for the oil and gas, FOCUS COMPANIES ENGAGED BY HOW WE MEASURE PROGRESS 2 utilities, steel, and trucks and THE IIGCC EUROPE WORKING GROUP automobile sectors. • Develop additional guidance HOW COMPANIES ARE PROGRESSING 3 for investors on escalating FOCUS COMPANIES BY MARKET FOCUS COMPANIES BY SECTOR engagement and using a range of engagement tools to achieve WHERE WE ARE MAKING PROGRESS 4 outcomes. AIGCC-PRI Asia Working • Further engage with companies 2 Group update on the Climate Action 100+ 4 8 Ceres North America Working CONSTRUCTION INDUSTRIALS Group update Net-Zero Company Benchmark SWEDEN 1 1 MATERIALS IGCC Australasian Working and seek new commitments to Group update disclose against it. NORWAY FINLAND IIGCC Europe Working Group update PRI Global Working Group update 5 7* LUXEMBOURG KEY ISSUES IN 2020 5 UNITED GERMANY RUSSIA KINGDOM 1 9 3 HOW WE ARE GOVERNED 6 1 9 10 IRELAND 1 OIL AND GAS THE MINING AND NETHERLANDS METALS 7 CZECH APPENDIX 7 1 REPUBLIC FRANCE 1 Nearly half of the AUSTRIA companies engaged SWITZERLAND by the IIGCC Europe 3 3 Working Group have ITALY 7 13 TRANSPORTATION ELECTRIC SPAIN now set a net-zero UTILITIES emissions by 2050 target. *Two of the companies are also engaged by the IGCC Australasia Working Group

72 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT PRI GLOBAL WORKING GROUP UPDATE

The PRI Global Working • Produced the first-ever Investor WHO WE ARE 1 Group is comprised of Expectations Statement on 39 companies within Climate Change for Airlines and Aerospace Companies, The companies engaged HOW WE MEASURE PROGRESS 2 16 countries. Investors which was initially signed by by the PRI Global Working engaging these companies 122 institutional investors with HOW COMPANIES ARE come from multiple nearly $6 trillion in AUM. Group have made PROGRESSING 3 regions, with the largest • Ran two recruitment webinars meaningful but mixed numbers coming from for investors in Latin America. WHERE WE ARE MAKING progress this year. To date, PROGRESS 4 Europe and the US. The companies engaged by at least 17 companies have AIGCC-PRI Asia Working the PRI Global Working Group committed to net-zero Group update This year, the PRI Global Working have made meaningful but Ceres North America Working Group: mixed progress this year. To emissions by 2050 or Group update date at least 17 companies IGCC Australasian Working • Built on existing work with sooner in some capacity, Group update smaller, sector-level working have committed to net-zero IIGCC Europe Working Group update groups focused on sharing emissions by 2050 or sooner in and there has also been an PRI Global Working Group update experiences and best practices some capacity, and there has increase in TCFD aligned also been an increase in TCFD- among lead investors engaging KEY ISSUES IN 2020 5 Aviation and Food, Beverage aligned disclosures and climate disclosures and climate and Forestry companies. governance commitments by governance commitments. companies. Notably companies • Launched a new working group HOW WE ARE GOVERNED 6 engaged in Latin America have for lead investors engaging made meaningful progress this state-owned oil and gas year, despite early obstacles. companies. APPENDIX 7 Eight engagements in the region • Ran investor webinars on are now underway (PEMEX, decarbonisation strategies Grupo México, Grupo Argos S.A., within the aviation sector, oil CEMEX, Ecopetrol, Vale, Suzano and gas sector, and pulp, paper and Petrobras). Three new Latin and timber sector. American investor signatories • Conducted quarterly webinars have joined, adding to the local with all investors engaging knowledge and engagement companies in the working capacity in the region. group.

73 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT PRI GLOBAL WORKING GROUP UPDATE

Given the global nature of WHO WE ARE 1 this group, the challenges of engagement are varied. State- FOCUS COMPANIES ENGAGED BY owned companies continue to THE PRI GLOBAL WORKING GROUP HOW WE MEASURE PROGRESS 2 be a challenge for investors to engage, and several existing HOW COMPANIES ARE company commitments could FOCUS COMPANIES BY MARKET FOCUS COMPANIES BY SECTOR PROGRESSING 3 stand to be more robust and ambitious. The COVID-19 WHERE WE ARE MAKING pandemic has also made 2 1 PROGRESS 4 engagements with aviation firms AIGCC-PRI Asia Working more challenging, in particular UNITED DENMARK 9 3 Group update due to the pandemic’s sweeping KINGDOM 1 INDUSTRIALS MINING AND METALS Ceres North America Working impact on tourism and travel. 2 Group update 1 1 1 IGCC Australasian Working In 2021, the group will focus GERMANY Group update NETHERLANDS IIGCC Europe Working Group update on providing and developing CANADA IRELAND POLAND PRI Global Working Group update additional guidance to address 2 1 the challenges faced in engaging 19 KEY ISSUES IN 2020 some of the companies in this SWITZERLAND 3 10 5 FRANCE cohort (particularly aviation) and OIL AND GAS TRANSPORTATION USA will seek to leverage the Climate Action 100+ Net-Zero Company 1 HOW WE ARE GOVERNED 6 Benchmark to push for more ambition and new commitments. MEXICO It will also seek to accelerate APPENDIX 7 some engagements that took 1 1 5 9 more time and resources to ELECTRIC UTILITIES CONSUMER establish. PRODUCTS COLOMBIA NIGERIA 3

BRAZIL

2

SOUTH AFRICA

74 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT 5 KEY ISSUES IN 2O2O

75 CLIMATE ACTION 1OO+1OO + 2O2O 2O2O PROGRESS PROGRESS REPORT REPORT TOWARDS NET-ZERO EMISSIONS BY 2O5O

The climate science is There are a number of challenges companies to those specialising WHO WE ARE 1 clear on the need to reach that investors will be working in renewables or carbon capture with companies to address. and storage. This will have a net-zero global GHG Firstly, the need for clear number of follow-on effects HOW WE MEASURE PROGRESS 2 emissions by mid-century standards in the setting of including site closures, staffing in order to limit global net-zero targets by sector. For changes, new investments, and HOW COMPANIES ARE warming to 1.5°C and to example, the majority of net- new skill sets or training for PROGRESSING 3 avoid the most devastating zero targets in the oil and gas employees. Investors seek to sector do not include coverage understand how the company WHERE WE ARE MAKING impacts of climate change of the companies’ scope 3 is planning for these changes PROGRESS 4 to communities and the product emissions which are the and how it will manage the natural world. sector’s most material source of impact of these adjustments on KEY ISSUES IN 2020 5 emissions. While some companies communities and employees. These commitments matter to state that they have poor control Towards net zero emissions by 2050 investors for several important of the end-use of their product, Finally, investors want to see that companies are aligning Trade association lobbying in 2020 reasons, including that they: value chain risks are high as the Just transition global community moves to a current and planned capital • Provide a long-term market and investments with their long-term policy signal. lower-carbon future. decarbonisation goals. Many HOW WE ARE GOVERNED 6 • Reduce regulatory uncertainty. Investors are also looking for companies are still investing in • Improve profitability and more than a long-term target. long-life, carbon intensive (for competitiveness. They want to see companies set example fossil fuel) projects APPENDIX 7 interim targets that set a clear which may represent a stranded • Create opportunities for glide pathway from 2020 to asset risk in the medium and partnership and innovation. 2050 with ambitious emission long-term for the company and • Provide confidence to investors reduction milestones along the its investors. Understanding how that companies are working way, such as a 45% emissions companies are making capital towards addressing climate reduction by 2030 as per the allocation decisions, and under risks. IPCC SR.15. what scenarios or methodologies is critical to evaluating whether a Investors are conscious that for company is aligning its business many companies the transition to and investments to a net-zero net-zero emissions will require a emissions future. fundamental transformation. For example, some companies may transition from being fossil fuel

76 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT TOWARDS NET-ZERO EMISSIONS BY 2O5O

WHO WE ARE 1 FOCUS COMPANIES WITH NET-ZERO WHAT ARE INVESTORS’ EXPECTATIONS ON ROBUST NET- EMISSIONS TARGETS ZERO EMISSIONS AMBITIONS AND TARGETS? Investors are looking HOW WE MEASURE PROGRESS 2 Additional work is being done to set clear and specific for net-zero emissions A.P. Moller - Maersk Nestlé HOW COMPANIES ARE AGL Energy Ltd NRG Energy, Inc. standards for some sectors on net-zero emissions targets, targets which cover PROGRESSING 3 American Airlines Group Inc. OMV AG however in general investors are looking for: Anglo American Panasonic Corporation scope 1 and 2 emissions WHERE WE ARE MAKING • Net-zero emissions target with a clear timeframe (e.g. 2050 4 ArcelorMittal PGE - Polska Grupa Energetyczna or sooner). with coverage of PROGRESS Bayer AG S.A. Bayerische Motoren Werke Procter & Gamble Company • Clear scope and coverage of at least 95% of emissions for material scope 3 Aktiengesellschaft BMW Qantas Airways Limited scope 1 and 2. emissions. KEY ISSUES IN 2020 5 BHP Repsol • Coverage of material scope 3 emissions. BP Rio Tinto Towards net zero emissions by 2050 CEMEX S.A.B. de C.V. Rolls-Royce • Short and medium-term science-based emissions reduction Trade association lobbying in 2020 Centrica Royal Dutch Shell targets that align with the overall pathway to net-zero. Just transition Colgate-Palmolive Company RWE Aktiengesellschaft • Clear disclosure on the business changes required to ConocoPhillips Saint Gobain achieve the targets. For example: personnel or business HOW WE ARE GOVERNED 6 CRH Santos Limited structure changes, new skill sets required for the board or RECENTLY ANNOUNCED Cummins Inc. Siemens Energy executive, expected changes to or closures of operational Daikin Industries, Ltd. South32 NET-ZERO TARGETS sites or product lines, e.g. an end-date for production of ICE APPENDIX 7 Daimler AG SSE PLC vehicles, or closure of mine sites or coal-fired power stations. Danone S.A. Teck Resources Limited The following companies Delta Air Lines, Inc. The Southern Company • Transition plans for workers and communities affected by announced new net-zero Dominion Energy, Inc. thyssenkrupp AG business changes. targets that have not yet Dow Inc Total • Assessment of current and planned capital expenditure been assessed by the Duke Energy Corporation Toyota Motor Corporation including underlying commodity price assumptions, initiative. These include: E.ON SE Trane Technologies PLC modelling, methodologies and climate pathways that the • Enbridge Inc EDF Unilever PLC companies have used to arrive at these decisions. Enel SpA Vale • Imperial Oil ENEOS Holdings Inc Volkswagen AG • Hon Hai Precision Industry Ford Motor Company Volvo Co. General Electric Company Walmart, Inc. Honda Motor Company WEC Energy Group, Inc. Iberdrola, S.A. Woodside Energy Koninklijke Philips NV Woolworths Group Limited National Grid PLC Xcel Energy Inc. Naturgy Energy

77 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT TRADE ASSOCIATION LOBBYING IN 2O2O

An intense battle over We continue to see increased amongst powerful industry is very different in other regions. WHO WE ARE 1 Paris-aligned climate policy corporate support for climate associations once positioned For example, Australia, where policy ambition (evident in in opposition to climate recent InfluenceMap analysis1 We also continue to see has continued to play out 75% of Climate Action 100+ change policy. found that industry lobbyists HOW WE MEASURE PROGRESS 2 in 2020, heightened by the focus companies covered opposing Paris-aligned climate the industry associations COVID-19 pandemic. by InfluenceMap’s analysis). Despite steps forward, 2020 has policy have an outsized influence representing these also highlighted the need for fact- HOW COMPANIES ARE However, we also continue to over climate policy, has retained companies engage in PROGRESSING 3 Industry players in fossil fuel see the industry associations checking of an increasing stream a focus on fossil fuels in its of disclosures, PR statements value chain sectors have sought representing these companies COVID-19 recovery measures. problematic lobbying on WHERE WE ARE MAKING 4 to leverage the COVID-19 crisis engage in problematic lobbying and high-level commitments climate. Over 8O% of the PROGRESS to secure financial support, on climate. Over 80% of the from both companies and Corporate sector influence on project approvals and regulatory same Climate Action 100+ focus industry associations to check climate policy is also of critical same Climate Action 1OO+ KEY ISSUES IN 2020 5 rollbacks on a global scale, with companies remain members of for alignment between statement importance in Japan, which is focus companies remain potentially long-lasting effects industry associations holding and practice. While nominally revising its Strategic Energy Plan Towards net zero emissions by 2050 back Paris-aligned climate policy. positive, InfluenceMap’s deep- to determine the path forward in members of industry on efforts to mitigate climate Trade association lobbying in 2020 change. At the same time, a dive assessments have shown light of the country’s new 2050 associations holding back Positive trends driven by investor that in numerous cases (e.g. the net-zero ambition. Climate Action Just transition slower-to-organise but much Paris-aligned climate policy. broader coalition of businesses engagement are beginning to US Chamber of Commerce, the 100+ engagements in the country has rallied behind a ‘clean challenge this picture, including Minerals Council of Australia) are currently using InfluenceMap HOW WE ARE GOVERNED 6 recovery’. increasing numbers of Climate such high-level communications analysis, released in August 2020. Action 100+ companies are divorced from the ongoing Investors are engaging both with InfluenceMap’s platform has undergoing industry association detailed regulatory lobbying of companies and also directly with APPENDIX 7 tracked this evolving picture. audits. Shareholder pressure has the industry groups. industry associations on climate It now covers nearly 300 resulted in more robust responses in Japan. companies and 150 industry from companies on the issue, It is of note that Europe, where associations with detailed for example, BHP and Origin’s strong investor pressure has assessments of these entities’ recent decision to suspend seen the highest number of This commentary was climate change lobbying activities membership of the Queensland Climate Action 100+ companies provided by Edward Collins of against science-based and Paris- Resources Council in response strengthen their climate lobbying InfluenceMap. aligned policy benchmarks. to a campaign against a political governance and disclosure party targeting voters in the practices, has seen a shift Queensland State Election. There towards more ambitious policy are early indications of reform outcomes in 2020. The picture

1 See Influence Map report Australian Industry Groups and their Carbon Policy Footprint report here https://influencemap.org/report/Australian-Industry-Groups-And-their-Carbon-Policy-Footprint- c0f1578c92f9c6782614da1b5a5ce94f

78 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT JUST TRANSITION

The necessity for a just Benchmark will assess2 whether The transition to a net-zero • Auto manufacturers may WHO WE ARE 1 transition was written into focus companies disclose the emissions economy offers relocate facilities for electric WHY IS A JUST the 2015 Paris Agreement impacts from transitioning to a the opportunity to improve vehicles from other ICE lower-carbon business model equity in access to economic assembly plants, impacting TRANSITION IMPORTANT? HOW WE MEASURE PROGRESS 2 to recognise that the on its workers and communities. opportunities, reduce social risks communities dependent on the transition to a low-carbon Preliminary assessment criteria for both companies and their Economist Nicholas Stern, employment and tax base of HOW COMPANIES ARE economy needs to be both include whether the company investors, and diminish negative their operations. Chair of the Grantham PROGRESSING 3 Research Institute on fast and fair. Just transition has, for example: health impacts related to a • Food and consumer goods Climate Change and the • Disclosed its engagement with carbon-based economy. companies may transition WHERE WE ARE MAKING incorporates consideration Environment, said: PROGRESS 4 of the positive and workers, communities and Investor expectations related due to physical impacts from other stakeholders such as climate, for example, crops negative impacts on to just transition risks and ‘We should see the just NGOs, union groups and local once suitable to certain regions KEY ISSUES IN 2020 5 employees and their opportunities for companies transition as part of the government actors, to assess differ by sector and region. For may no longer grow well new story of inclusive, communities and relates to the anticipated impacts of its example: due to changes in rainfall or sustainable growth. This is a Towards net zero emissions by 2050 both energy transition and low-carbon transition strategy accelerating desertification Trade association lobbying in 2020 • Workers in electric utilities highly attractive economic ecological transition. and plans. processes brought on by model, with strong Just transition operating coal-fired power climate change. • Developed and disclosed a low- stations are vulnerable to innovation and growth and able to overcome poverty in A just transition is crucial for carbon transition strategy and permanent closure and HOW WE ARE GOVERNED 6 companies and investors as it is plans to incorporate the specific may require retraining for an effective and lasting way. interlinked with the systemic risk recommendations of impacted new opportunities or early But it requires us to manage the process of change in posed by delayed climate action. workers and communities. retirement packages. APPENDIX 7 This contributes to the transition much better ways within There is an ongoing effort to • Oil and gas companies and risks faced by companies, modern market economies. develop just transition indicators mining companies have including their employees and We need to be organising for incorporation into the significant operations located in social or legal licence to operate.1 for transitions in the plural Climate Action 100+ Net-Zero emerging economies. Closure In recognition of the significant including technologies, Company Benchmark, working of these facilities will have a risks and opportunities that a economic structures, with the London School of flow-on effect to workers and just transition presents focus cities and the international Economics, Harvard Kennedy local communities, including for companies, the new Climate division of labour. And we School, International Trade Union Indigenous and First Nations Action 100+ Net-Zero Company must accelerate the pace of Confederation alongside investor communities. decision making if we are to signatories to the initiative. respond to the urgency of climate change.’

1 Robins and Ridge (2019) “Why a just transition is crucial for effective climate action” https://www.unpri.org/download?ac=7092 2 Assessment indicators on just transition will be part of the 2022 benchmark, however will not be included in the initial 2021 company assessment.

79 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT JUST TRANSITION

WHO WE ARE 1 HOW ARE COMPANIES RESPONDING TO THE CALL FOR A JUST TRANSITION? WHAT ARE INVESTORS DOING TO ADVANCE THE ISSUE OF JUST TRANSITION? HOW WE MEASURE PROGRESS 2 Globally, several companies are setting out plans to ensure a just transition for workers and • Investors representing over $10 trillion in AUM have signed on HOW COMPANIES ARE communities. For example: to the Investor Statement of Commitment to Support a Just 3 Transition on Climate Change. PROGRESSING • Xcel Energy, when announcing the closure of three coal fired power stations in Minnesota in • Interfaith Center on Corporate Responsibility’s (ICCR) Investor WHERE WE ARE MAKING 4 2019, also announced plans for workers and the Expectations on the Just Transition describes how investors PROGRESS local community. The company had engaged are engaging with electric power companies to integrate with labour groups, unions, regulators and distributional issues, especially those affecting vulnerable KEY ISSUES IN 2020 5 other key stakeholders. Their plan sees some workers and communities.

workers retire early and others moving into new • Presbyterian Church U.S.A., a signatory to Climate Action 100+, Towards net zero emissions by 2050 jobs created by the opening of a data centre. uses an engagement framework informed by the initiative as Trade association lobbying in 2020 • AGL Energy announced the closure of its well as metrics to assess corporate impact on communities Just transition Liddell Power Station located in the Hunter who have been historically marginalised. As part of its Valley in Australia with seven years notice and engagement, the fund’s Responsible Investment Committee HOW WE ARE GOVERNED 6 released a transition plan with clear principles meets directly with residents impacted by corporate actions for just transition including economic impact, such as pollution and plant expansion, as in the case of employment and skills alignment. Working Marathon Petroleum refineries in Detroit. APPENDIX 7 with a local organisation the Hunter Energy • The PRI released a report in 2018 called Climate Change and Transition Alliance, they intend to repurpose the the Just Transition: A Guide to Investor Action. The guide current site and are engaging with community draws on an international review of just transition approaches and stakeholders to ensure there is a clear as well as an extensive dialogue with investors to provide a transition plan for the site and the community. framework that can be applied both by individual institutions • Vistra Energy provided advance notice of and collaborative initiatives. its planned closure of its Midwest coal fleet. • Ceres released a new report called Practices for Just, Equitable They intend to use this time to work with and Sustainable Development of Clean Energy Resources. impacted communities and employees to • IGCC released a report in 2017 called Coal Carbon and the ensure transition plans are in place. It is yet to Community: Investing in a Just Transition. An updated report announce plans on how this will take place. will be released in early 2021. There are promising first steps of companies • The PRI launched a Just Transition Working Group which is beginning to assess and manage just transition, convened by the Acting Chair of Climate Action 100+, Laetitia but far more needs to be done. Investors will Tankwe of Ircantec. continue to engage to ensure this issue is a high priority for companies throughout the transition.

80 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT 6 HOW WE ARE GOVERNED

The initiative is governed by a global Steering Committee (SC) composed of the five investor network CEOs and five investor signatories representing the regional focus of each investor network.

CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HOW THE INITIATIVE IS GOVERNED

Climate Action 100+ is led The governance of the initiative In 2020, the initiative has: WHO WE ARE 1 by signatory investors and is supported by a series of • Developed and launched the HOW ARE standing and project-based HOW MANY INVESTORS coordinated by the five Climate Action 100+ Net- 2 working groups that advance HAVE SIGNED ON TO SIGNATORIES HOW WE MEASURE PROGRESS investor networks (AIGCC, Zero Company Benchmark, key activities and coordinate an assessment of company CLIMATE ACTION 1OO+? PARTICIPATING? Ceres, IGCC, IIGCC, and strategic projects. These progress to align with both the HOW COMPANIES ARE 3 PRI). The initiative is working groups are tasked initiative’s goals as well as the THE INITIATIVE HAS PROGRESSING governed by a global with ensuring that cross- Paris Agreement. initiative elements of Climate WHERE WE ARE MAKING 4 Steering Committee (SC) Action 100+ are delivered. The • Created a new website with PROGRESS composed of the five dedicated signatory resources. 65% working groups are comprised 545 OF SIGNATORIES ARE investor network CEOs and of staff from the five investor • Launched a Signatory SIGNATORIES AS AT PARTICIPANTS, KEY ISSUES IN 2020 5 five investor signatories networks and representatives Handbook to improve the 3O NOVEMBER 2O2O 35% ARE SUPPORTERS representing the regional from the SC. This year working investor experience and provide Signatory assets under Participants in Climate Action focus of each investor groups have included: the additional support to investor HOW WE ARE GOVERNED 6 Governance Working Group, the signatories. management total $52 trillion 100+ are required to join at least network. Fundraising Working Group, the • Strengthened communication USD. The initiative has seen one engagement group and How the initiative is governed Communications Working Group, and transparency by engaging 143% growth since launch. actively contribute to company Priorities for 2021 the Engagement Coordination engagement. Supporters of the more regularly with key The initiative continues to Working Group, and the Strategic initiative must be asset owners APPENDIX stakeholders including climate attract new investor signatories. 7 Projects Working Group. NGOs, issue experts, climate (asset managers can only join as Company engagement is cross- Notably three of the top 20 participants) and are required to and economics researchers and asset managers (Blackrock, coordinated by regular calls financial regulators. encourage their asset managers between investor network staff. Invesco, and State Street Global to join the initiative to engage Asset Management) joined the on their behalf. initiative. • 267 signatories are asset managers • 273 signatories are asset owners • 15 are engagement service providers who are formally representing assets and/ or typically engage with companies directly.1

1 Many signatories are a combination of asset owners, asset managers, and service providers, and are therefore reflected in multiple categories.

82 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HOW THE INITIATIVE IS GOVERNED

WHO WE ARE 1 SIGNATORY COMMUNICATION CLIMATE ACTION 1OO+ AND AND PROGRESS UPDATES SHAREHOLDER RESOLUTIONS WHAT IS A HOW CLIMATE ACTION Over the past year, 2 FLAGGED HOW WE MEASURE PROGRESS Over the past year, Climate All investor signatories to the 100+ INTERACTS WITH Climate Action 100+ Action 100+ hosted global Climate Action 100+ initiative are RESOLUTION? POLICYMAKERS AND hosted global webinars HOW COMPANIES ARE 3 webinars in December 2019 responsible for their own voting Resolutions may be flagged REGULATORS PROGRESSING and July 2020 for signatories to decisions – this includes pre- by the initiative when they are in December 2019 Investors recognise that provide updates on company declaration and vote solicitation. deemed to be: and July 2020 for WHERE WE ARE MAKING 4 engagement progress and share Climate Action 100+ investor addressing climate risks in PROGRESS insights across the initiative. Both networks do not seek to provide • Consistent with the goals of the global economy and in signatories to provide Climate Action 100+, directly their portfolios requires a webinars featured engagement voting recommendations or to updates on company KEY ISSUES IN 2020 5 case studies presented by facilitate block voting. addressing at least one aspect global transformation of which investors and updates on the of the initiative’s goals. government and policymaker engagement progress In 2020, the initiative developed action is an important part. initiative presented by investor • Worded such that the and share insights HOW WE ARE GOVERNED 6 network staff. The initiative a process for flagging resolutions request of management is Other investor initiatives directly also launched a Signatory that are filed by investor considered reasonable and not engaging on these issues across the initiative. signatories and aligned with the How the initiative is governed Handbook and made a number burdensome. include the Investor Agenda Priorities for 2021 Climate Action 100+ company and the UN-convened Net-Zero of improvements to the signatory • Complementary to existing engagement goals. Flagged Asset Owner Alliance. onboarding process. APPENDIX resolutions are featured on the engagement strategy as set 7 In addition to the global Climate Action 100+ website with out by the Climate Action 100+ For many companies engaged working groups staffed by the information on the content for collaborative engagement by the initiative, policy coordinating investor networks, investor signatories. group for the company settings will be key to driving there are a number of regional affected by the resolution. the transition. Investors will working groups that are sector- When relevant climate resolutions continue to advocate for: specific and led by investors. are filed by external organisations • Appropriate and effective These provide a forum for such as NGOs, investors and climate policy including the exchange of engagement coordinating investor networks carbon pricing. updates, sector trends and may also share that information • Regulations on company leading practices. Updates from with the working groups as disclosure of climate risks and the regional working groups and deemed relevant and appropriate accounting. sector groups are covered in (although they are not flagged). more detail on page 66. • Investable policy frameworks for low-carbon and net-zero emissions investments.

83 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HOW THE INITIATIVE IS GOVERNED

WHO WE ARE 1

THE CLIMATE ACTION 1OO+ GLOBAL STEERING HOW WE MEASURE PROGRESS 2 COMMITTEE HOW COMPANIES ARE 3 The Chair and Vice Chair role of the Steering PROGRESSING Committee rotates every six months to a different investor network and region, with the investor WHERE WE ARE MAKING 4 representative acting in the Chair role and the PROGRESS investor network CEO from the same region acting in the Vice Chair role. KEY ISSUES IN 2020 5 In 2020, there was one change to the membership of the Steering Committee, with Emily Chew stepping off the committee in April 2020. Her HOW WE ARE GOVERNED 6 role as Asia investor representative has been filled by Seiji Kawazoe of Sumitomo Mitsui Trust Asset How the initiative is governed Management. Priorities for 2021

October 2019 – March 2020 APPENDIX 7 Emily Chew, formerly of Manulife Investment Management Rebecca Mikula-Wright, Asia Investor Group on Climate Change

April 2020 – September 2020 Andrew Gray, AustralianSuper Emma Herd, Investor Group on Climate Change

October 2020- (to March 2021) Laetitia Tankwe, Irantec Fiona Reyonds, PRI

84 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT HOW THE INITIATIVE IS GOVERNED

UPDATES TO THE CLIMATE The following companies were Company Country Sector SUPPORTING EFFECTIVE removed under this criteria: ACTION 1OO+ FOCUS LIST Incitec Pivot Australia Industrials ENGAGEMENT TEAMS Wesfarmers The company had Saudi Arabian Oil Saudi Arabia Oil and gas The Climate Action 100+ Steering a demerger with its Company (Aramco) The individual company Committee agreed that in 2020 major supermarket engagement teams across WHO WE ARE 1 Ultratech Cement India Industrials it would be prudent to review chain asset and Climate Action 100+ are investor the focus list of companies all of its coal Grupo Argos S.A. Colombia Industrials led, while the coordinating HOW WE MEASURE PROGRESS 2 and consider limited changes assets, rendering Grupo México Mexico Metals and investor networks provide to refresh the list based on the it a substantially mining support through: original selection criteria. As different company • Engagement groups. HOW COMPANIES ARE 3 a result, two companies have than when it was Orica Australia Industrials PROGRESSING been removed from the focus initially added to Oil Search Papua New Guinea/ Oil and gas • Onboarding of new investors. the focus list in list and nine companies have Australia • Providing additional investors WHERE WE ARE MAKING 4 been added; thus a net increase December 2017. or external expertise to support PROGRESS of seven companies. Petróleos Mexicanos Mexico Oil and gas Southern Company is to be - PEMEX engagement priorities. Copper replaced with its • Topical webinars and sector KEY ISSUES IN 2020 5 Company removals are only Uniper Germany Utilities Corporation parent organisation working groups. considered where there is a (Grupo México significant corporate action or These companies are not included in the company progress data or which has been • Cross-regional meetings to HOW WE ARE GOVERNED 6 other material change to the added to the other updates presented in this report. progress engagement. company that substantially focus list.) How the initiative is governed changes the potential of a Lead investors and investors Priorities for 2021 Climate Action 100+ engagement A number of companies were engaging with companies with the company. also added. These were all COMPANIES WITHOUT LEAD INVESTORS IN 2020 individually must disclose assessed against the original their engagement goals to the APPENDIX 7 criteria for inclusion on the One of the roles of the coordinating investor networks is to coordinating investor networks Climate Action 100+ focus list, appoint lead investors and establish engagement groups for each through a bi-annual engagement meaning companies must either focus company. survey. Through this process, be a significant emitter and/or they recap recent progress and have significant opportunities While the majority of company engagements in the initiative outline their engagement plans to drive a broader clean energy have complete engagement groups, several are yet to appoint a and priorities over the ensuing economic transition. Investor lead investor. Where companies are headquartered in emerging 12 months to ensure strong and signatories have now initiated markets it has been more challenging to find investors to lead concerted action. engagement with all of these engagements. This is likely due to ESG engagement being newer companies. or less established in some markets, and due to lower numbers of local signatories who tend to bring substantial cultural, language and local market skills and knowledge to engagements. In 2020, there are three Climate Action 100+ focus companies that are not formally being engaged due to the lack of a lead investor. These are: ANTAM, United Tractors, and ESKOM Holdings SOC Limited.

85 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT PRIORITIES FOR 2O21

While more Climate Action 2. Global sector to advance effective climate WHO WE ARE 1 100+ focus companies decarbonisation strategies policy including market-based mechanisms to price carbon. FOCUS ON COP26 are increasing their The initiative is committed to HOW WE MEASURE PROGRESS 2 decarbonisation ambitions publishing a series of global This issue is also being advanced The 2021 United Nations climate change conference, known as COP26, is the 26th United Nations Framework Convention on and setting targets for position papers on sector via a project convened by AP7, pathways to decarbonisation by BNP Paribas Asset Management Climate Change (UNFCCC) conference. Postponed in 2020 due HOW COMPANIES ARE 3 net-zero emissions by PROGRESSING mid-century. This work will roll and the Church of England to the COVID-19 pandemic, it is scheduled to be held in Glasgow, 2050, there are huge and out at a global level informed Pensions Board which seeks to Scotland from 1 to 12 November 2021. WHERE WE ARE MAKING 4 persistent gaps in company by industry, sector and climate develop a framework to guide Under the Paris Agreement, COP26 is an important milestone PROGRESS action. experts, and investors. In addition, responsible corporate climate for Nationally Determined Contributions (NDCs) to be set and substantially more thought change lobbying. The project communicated under the agreement’s ratchet mechanism, which KEY ISSUES IN 2020 5 For all companies to achieve the leadership on sector pathways is is also being advised by all five requires all parties to the agreement to increase the ambition of goals of the initiative, it will require planned at the regional working Climate Action 100+ investor their NDC every five years. Unfortunately, the postponement of group level. networks and InfluenceMap. transformation at the heart of COP26 in 2020, which is the critical decade for climate action, HOW WE ARE GOVERNED 6 most of these businesses. 3. A new standard for Other priorities will wait one more year. Signatory investors supported by responsible lobbying on How the initiative is governed Each regional engagement For Climate Action 100+ signatory investors, climate policy the coordinating investor networks climate change Priorities for 2021 working group will also be settings are critical. For substantial private capital to flow into will focus on a number of strategic Investor expectations on lobbying implementing additional climate solutions, government needs to facilitate an appropriate priorities to accelerate corporate APPENDIX 7 by trade associations have priorities. For engagements and consistent policy environment for climate finance. The action on climate change in the evolved significantly over the past with Asian, Latin American and initiative also recognises the role that companies and investors next phase of the initiative. High- few years. It is widely recognised African companies, there remains have in sending a clear market signal to governments via level priorities globally for 2021 are: that the systemic economic risk a need to recruit additional local emissions reduction target setting, improved voluntary climate- related disclosure and investing in climate solutions. 1. Company engagement on the that investors face due to climate market investors. Many of the Climate Action 100+ Net-Zero change is hastened by ongoing engagements in these markets In November 2020, Climate Action 100+ participated in the Company Benchmark problematic climate lobbying by are focused on issues such as Race to Zero dialogues. This event facilitated discussion among trade associations funded by the governance and disclosure of The first company-level investors and business leaders about the need for greater companies they are invested in. climate risk including TCFD ambition in the lead-up to COP26 in 2021. assessments against the new Such lobbying is blocking policies aligned reporting. Each investor benchmark indicators will be that would help to make the network also has plans to expand released in early 2021. Company transition to a net-zero emissions regional capacity recognising that performance on specific economy smoother and more investors from local markets have indicators will be a key focus of orderly. Investors will be looking different levels of experience and engagements in 2021, as well for companies to adopt new skills in engagement on climate, as continued engagement with standards on Paris Agreement unique cultural norms and important stakeholders to ensure aligned lobbying, including different climate policy settings. the benchmark evolves to reflect positive lobbying that seeks best practices over time.

86 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT 7 APPENDIX

87 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT A: DATA INDICATORS USED IN THIS REPORT

WHO WE ARE 1 CLIMATE ACTION 100+ NET-ZERO COMPANY BENCHMARK INDICATORS USED IN THIS REPORT

DISCLOSURE INDICATORS INDICATOR TYPE SECTOR(S) NUMBER OF RESEARCH ASSESSMENT HOW WE MEASURE PROGRESS 2 COMPANIES PROVIDER DATE Has the company set a net-zero target for reducing 100% of its GHG emissions by 2050 on a clearly defined 1.1 All 160 TPI November 2020 scope of emissions? HOW COMPANIES ARE 3 PROGRESSING Does the company’s net-zero GHG emissions target cover the most relevant scope 3 emissions categories for 1.1b All 160 TPI November 2020 the company’s sector (where applicable)? WHERE WE ARE MAKING 4 PROGRESS Has the company set long-term (2036 to 2050) targets for reducing its GHG emissions? 2.1 All 160 TPI March 2020 KEY ISSUES IN 2020 5 Has the company specified that this target covers at least 95% of total scope 1 and 2 emissions? 2.2a All 160 TPI March 2020

Does the long-term (2036 to 2050) GHG reduction target cover the most relevant scope 3 emissions (where 2.2b All 160 TPI March 2020 HOW WE ARE GOVERNED 6 applicable)? Has the company set a medium-term (2026 to 2035) target for reducing its GHG emissions on a clearly 3.1 All 160 TPI March 2020 defined scope of emissions? APPENDIX 7 Has the company specified that this target covers at least 95% of total scope 1 and 2 emissions? 3.2a All 160 TPI March 2020 A: Data indicators used in this report Does the medium-term (2026 to 2035) GHG reduction target cover the most relevant scope 3 emissions B: Technical Advisory Group 3.2b All 160 TPI March 2020 (where applicable)? C: Acknowledgements Has the company set a short-term (2020 to 2025) target for reducing its GHG emissions on a clearly defined 4.1 All 160 TPI March 2020 scope of emissions?

Has the company specified that this target covers at least 95% of total scope 1 and 2 emissions? 4.2a All 160 TPI March 2020

Does the short-term (2020 to 2025) GHG reduction target cover the most relevant scope 3 emissions (where 4.2b All 160 TPI March 2020 applicable)? Has the company provided evidence of board or board committee oversight of the management of climate 8.1a All 160 TPI March 2020 change risks? Has the company provided evidence of a named position at the board level with responsibility for climate 8.1b All 160 TPI March 2020 change?

88 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT A: DATA INDICATORS USED IN THIS REPORT

WHO WE ARE 1 CLIMATE ACTION 100+ NET-ZERO COMPANY BENCHMARK INDICATORS USED IN THIS REPORT (CONT.)

CAPITAL ALLOCATION INDICATORS SECTOR(S) NUMBER OF RESEARCH ASSESSMENT HOW WE MEASURE PROGRESS 2 COMPANIES PROVIDER DATE

How many conventional and unconventional oil and gas projects were sanctioned by focus companies in 2019-2020 that are Upstream oil 33 Carbon Tracker August 2020 HOW COMPANIES ARE 3 outside of the IEA B2DS? and gas PROGRESSING

WHERE WE ARE MAKING Upstream oil 4 If the company provided impairment price assumptions - are they flat, declining or increasing? 33 Carbon Tracker August 2020 PROGRESS and gas

KEY ISSUES IN 2020 5 Upstream oil Percentage of total potential capital expenditure (below STEPS cap) outside B2DS, inside STEPS for oil and gas. 33 Carbon Tracker August 2020 and gas HOW WE ARE GOVERNED 6 Upstream oil Percentage of total potential capital expenditure (below STEPS cap) that is inside B2DS, and STEPS, for oil, gas and total. 33 Carbon Tracker August 2020 and gas APPENDIX 7 Utilities (coal Has the company announced a full phase-out of coal units by 2040 that is consistent with CTI’s interpretation of the IEA’s and gas A: Data indicators used in this report 31 Carbon Tracker August 2020 B2DS scenario? generation B: Technical Advisory Group assets) C: Acknowledgements Utilities (coal Has the company announced a full phase-out of gas units by 2040 that is consistent with CTI’s interpretation of the IEA’s B2DS and gas 31 Carbon Tracker August 2020 scenario? generation assets)

Automotives 14 automotives 2° Investing How does the company’s capital stock align with climate scenarios? August 2020 Utilities 31 utilities Initiative

Automotives 31 utilities 2° Investing How does the company’s planned technology mix by 2023 align with climate scenarios? August 2020 Utilities 14 automotives Initiative

89 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT B: TECHNICAL ADVISORY GROUP

2° Investing Initiative InfluenceMap Carbon Tracker Initiative Transition Pathway Initiative WHO WE ARE 1 The 2° Investing Initiative (2DII) is InfluenceMap launched its Carbon Tracker is an The Transition Pathway Initiative an international, non-profit think corporate climate lobbying independent financial think tank (TPI) is a global initiative led by HOW WE MEASURE PROGRESS 2 tank working to align financial platform on the eve of the that carries out in-depth analysis asset owners and supported markets and regulations with the Paris Agreement in late 2015 in on the impact of the energy by asset managers. Aimed HOW COMPANIES ARE 3 Paris Agreement goals. response to growing demand transition on capital markets and at investors and free to use, PROGRESSING from investors and other the potential investment in high- TPI’s insights and data assess Working globally with offices stakeholders. cost, carbon-intensive fossil fuels. companies’ preparedness for WHERE WE ARE MAKING 4 in Paris, New York, Berlin, and the transition to a low-carbon PROGRESS London, we coordinate the InfluenceMap takes an objective, Its team of financial market, economy, supporting efforts to world’s largest research projects innovative and data-driven energy and legal experts apply address climate change. on climate metrics in financial approach to identifying systemic ground-breaking research using KEY ISSUES IN 2020 5 markets. In order to ensure our blockages to climate progress. leading industry databases to Transition Pathway Initiative, independence and the intellectual The analysis provides clarity, and map both risk and opportunity supported by Chronos integrity of our work, we have a novel measurement approach for investors on the path to a low Sustainability, the Grantham HOW WE ARE GOVERNED 6 a multi-stakeholder governance of how corporations influence carbon future. Research Institute at the and funding structure, with policy needed to address London School of Economics representatives from a diverse climate change. It introduced It has cemented the terms and FTSE Russell, have been APPENDIX 7 array of financial institutions, the concept of a corporation’s “carbon bubble”, “unburnable appointed to deliver the Climate regulators, policymakers, Carbon Policy Footprint. carbon” and “stranded Action 100+ Net-Zero Company A: Data indicators used in this report universities, and NGOs. assets” into the financial and Benchmark data. B: Technical Advisory Group The content provided by environmental lexicon. C: Acknowledgements 2DII has worked with Climate InfluenceMap has become a Action 100+ since its inception, mainstream investor tool in Carbon Tracker has worked and provides data, insights and assessing and engaging with with Climate Action 100+ since expert view on the transition for companies, including Climate its inception, and provides data, companies in key sectors. Action 100+ , and has been cited insights and expert view on in over 1,000 media articles the transition for companies globally. It feeds into numerous in key sectors. NGO campaigns and helps the corporate sector engage more positively on climate policy.

90 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT C: ACKNOWLEDGEMENTS

WHO WE ARE 1 The Climate Action 100+ THANKS TO CLIMATE ACTION THANKS TO OUR TECHNICAL REPORT Steering Committee 1OO+ SIGNATORY INVESTORS ADVISORY GROUP AND DATA ACKNOWLEDGEMENTS would like to acknowledge 2 PARTNERS HOW WE MEASURE PROGRESS the following key Thanks to the Climate Action Preparation of this report was led stakeholders, individuals 100+ signatory investors which by Laura Hillis of IGCC, supported Thank you to the Climate Action HOW COMPANIES ARE 3 and organisations that have support the initiative, lead 100+ Technical Advisory Group by a project team including PROGRESSING contributed to Climate engagements with companies and other data partners for Rebecca Mikula Wright (AIGCC), and participate in a range of providing data, insights and Rebecca Hoffman (Ceres), and WHERE WE ARE MAKING 4 Action 100+ this year and working groups, events and Tom Fern (IIGCC). Commentary PROGRESS in an ongoing capacity. commentary for this report, projects to advance the goals of and on an ongoing basis to and review was contributed the initiative. support engagements through by Valerie Kwan and Yong Por KEY ISSUES IN 2020 5 the initiative. The TAG includes (AIGCC), Morgan LaManna and Carbon Tracker Initiative Cynthia McHale (Ceres), Kate (CTI), CDP, InfluenceMap (IM), Simmonds and Tom Arup (IGCC), HOW WE ARE GOVERNED 6 Transition Pathway Initiative (TPI) Lucia Graham Wood (IIGCC), and 2° Investing Initiative (2DII). and Marshall Geck and Ben We also acknowledge the key Pincombe (PRI). This report was APPENDIX 7 role of Chronos Sustainability, the designed and produced by Grantham Research Institute at BWDstrategic.com. A: Data indicators used in this report the London School of Economics B: Technical Advisory Group and FTSE Russell in supporting C: Acknowledgements the delivery of the Climate Action 100+ Net-Zero Company Benchmark.

91 CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT