2O2O PROGRESS REPORT - Action Climate Action - Climate Action 100+

 
2O2O PROGRESS REPORT - Action Climate Action - Climate Action 100+
Action
 Global Investors Driving Business Transition

Climate
Action
Global Investors Driving Business Transition

2O2O
PROGRESS
REPORT
2O2O PROGRESS REPORT - Action Climate Action - Climate Action 100+
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.

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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   5
                                       Benchmark                                  78   Trade association lobbying in 2020
                                  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
                                                                                  91
                                                                                       B: Technical Advisory Group
                                                                                       C: Acknowledgements

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1

WHO WE
ARE                                        545
                                           TOTAL SIGNATORIES
                                           REPRESENTING

                                           SIGNATORY ASSETS UNDER
                                           MANAGEMENT TOTAL

                                           $52
                                           TRILLION

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CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT
2O2O PROGRESS REPORT - Action Climate Action - Climate Action 100+
REPORT INTRODUCTION
AND HIGHLIGHTS

WHAT IS CLIMATE                            WHO IS BEHIND THE                                                                                                                                                                                  WHO WE ARE              1

ACTION 1OO+?                               INITIATIVE?                                CLIMATE ACTION 1OO+ AT A GLANCE                                                                                                            Report introduction and highlights

                                                                                                      545                                                        16O
                                                                                                                                                                                                                                                   Highlights: 2020
                                                                                                                                                                                                                                            company commitments
Launched in 2017, Climate                  The initiative has been shaped and                                                                                                                                                          Foreword from Mark Carney

Action 100+ is now the                     led by its participating investors                                                                                                                                                                   Foreword from the
                                                                                                                                                                                                                                               Steering Committee
largest ever investor                      who determine the engagement
                                                                                                                                                                 FOCUS COMPANIES IN 32 MARKETS2
                                                                                                                                                                                                                              Executive summary of report findings
                                           strategy pursued with each focus                           SIGNATORY INVESTORS
engagement initiative                      company and update the initiative                                                                                                                                                    HOW WE MEASURE PROGRESS               2
on climate change. The                     on progress.
initiative focuses investor                                                                           SIGNATORY ASSETS UNDER                                     COMPANIES ENGAGED BY THE INITIATIVE
                                           The management of the initiative                                                                                                                                                              HOW COMPANIES ARE
engagements on 160                                                                                    MANAGEMENT TOTAL 1                                         ARE RESPONSIBLE FOR AN ESTIMATED                                              PROGRESSING            3

                                                                                                      $52                                                        8O%+
                                           day to day and engagement of
global companies that have                 investors is assisted by five investor
significant greenhouse gas                 networks: the Asia Investor Group on                                                                                                                                                       WHERE WE ARE MAKING
                                                                                                                                                                                                                                                PROGRESS              4
(GHG) emissions and/or                     Climate Change (AIGCC), Ceres, the
are critical to the net-zero               Investor Group on Climate Change
                                                                                                                                                                 OF GLOBAL INDUSTRIAL
                                                                                                      TRILLION
                                           (IGCC), the Institutional Investor
emissions transition and to                Group on Climate Change (IIGCC)                                                                                       EMISSIONS3                                                                 KEY ISSUES IN 2020        5
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

                                                                                                      32 MARKETS                                                 $8.4
companies, signatory investors             secretariat support for investors,
                                           help facilitate meetings, provide                                                                                                                                                                           APPENDIX       7
to Climate Action 100+ are
helping to accelerate the business         technical assistance and create
transition to a net-zero emissions         opportunities for engagement skills
future and ensure that global
economies are more resilient to
                                           enhancement. The investor networks
                                           also lead regionally focused working                                                                                  TRILLION              4
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.

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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

   BY SECTOR1                                                                                                                                                                                                                         Highlights: 2020
                                                                                                                                                                                                                               company commitments
                                                                                                                                                                                                                          Foreword from Mark Carney

                39
                                                   BP                                       ENEOS HOLDINGS INC                      OCCIDENTAL PETROLEUM                  PETROCHINA CO. LTD                                       Foreword from the
                                                                                                                                                                                                                                  Steering Committee
                                                                                                                                    CORPORATION                                                                  Executive summary of report findings

                OIL AND GAS COMPANIES              BP has set a new ambition to             ENEOS updated management plans          Occidental Petroleum 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

                23
                                                   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
                                                   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               HOW COMPANIES ARE
                                                                                                                                                                                                                                                         3
                                                                                                                                                                                                                                  PROGRESSING
                                                   intensity of products it sells by 2050   aspirations to link social and          products by 2050.                     focus on wind and solar power.
                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

                31
                                                   production 40% by 2030.                  into its business transition plan.                                                                                                     PROGRESS

                                                                                                                                                                                                                               KEY ISSUES IN 2020        5
                UTILITIES COMPANIES

                26
                INDUSTRIALS COMPANIES
                                                   RELIANCE INDUSTRIES                      REPSOL                                  ROYAL DUTCH SHELL                     SK INNOVATION CO LTD
                                                                                                                                                                                                                        HOW WE ARE GOVERNED              6

                                                                                                                                                                                                                                          APPENDIX       7

                26
                TRANSPORTATION
                                                   Reliance Industries announced a
                                                   target to become net carbon zero
                                                   by 2035.
                                                                                            Repsol announced an ambition
                                                                                            to achieve net-zero emissions by
                                                                                            2050 for scope 1, 2 and 3 emissions
                                                                                            becoming the first global oil and
                                                                                                                                    Shell has set a new long-term
                                                                                                                                    ambition to reduce the net carbon
                                                                                                                                    footprint of its energy products by
                                                                                                                                    65% by 2050, and by around 30%
                                                                                                                                                                          SK Innovation reconfirmed its
                                                                                                                                                                          commitment to achieving Green
                                                                                                                                                                          Balance 2030 by 2030, ultimately
                                                                                                                                                                          aiming to achieve net zero
                COMPANIES
                                                                                            gas company to assume this goal.        by 2035. To reach overall net-zero    emissions in all material scope 1, 2

                14
                                                                                                                                    emissions, Shell will pivot towards   and 3 emissions by 2050.
                                                                                                                                    serving customers that are aligned
                                                                                                                                    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.

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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
                                                                                                                                                                                                                 Foreword from Mark Carney
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 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
                                                                                    renewable energy in the company's                                                                                           WHERE WE ARE MAKING
                                                                                                                                                                                                                                                4
                                                                                                                                                                                                                          PROGRESS
                                                                                    portfolio will increase to 50% and
                                                                                    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.

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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
                                                                                                                                                                                                                                               4
                                                                                                                                                                                                                         PROGRESS

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.

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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
                                                                                                                                                                                                                company commitments
high expectations that                     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
                                           thrive and will create enormous      with many of these commitments        net-zero. And as investors                                                  Executive summary of report findings
considers the most
                                           value for their shareholders.        driven through investor               increasingly demand these
pressing issues for people                 Those that don’t will become         engagement. I have been truly         strategies of companies, it may
                                                                                                                                                                                                    HOW WE MEASURE PROGRESS               2
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
                                                                                                                                                                                                                   PROGRESSING            3
society’s demand for a                     operate. By the time of the 2021     given the backdrop of the             annual advisory vote on transition
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.
                                                                                This progress report highlights                                                                                                 KEY ISSUES IN 2020        5
gas emissions is both                      wind down the business over
                                           coming years, or an assertion        the imperative of starting with       The new Climate Action 100+
an imperative of climate                                                        an appropriate level of ambition      Net-Zero Company Benchmark
                                           that the business is somehow
physics and a commitment                   separate from the society in         by building net-zero and interim      indicators give landmark clarity                                                   HOW WE ARE GOVERNED              6
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
                                                                                chain. It also outlines how           Yet, over time, investors won’t       CLIMATE ACTION AND FINANCE, AND THE                            APPENDIX       7
strategic reset across                     be unforgiveable.                                                                                                UK PRIME MINISTER’S FINANCE ADVISER
                                                                                companies need to do more             just judge company transition
businesses sees the                                                                                                                                         FOR COP26
                                                                                to reconcile positive talk with       plans. They too shall be judged
adoption of strategies to                  Investors are increasingly focused
                                                                                action, including embedding           on their own plans and alignment
                                           on assessing how well companies
align with a net-zero future.              are positioned for both climate
                                                                                net-zero across all aspects of        to net-zero. With a sustained
                                                                                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

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CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT
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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
100+, we are pleased to
                                           reach: nine of the 15 largest         company performance on climate       CLIMATE ACTION 100+                                    Report introduction and highlights

                                                                                                                      STEERING COMMITTEE
                                           economies have now set net-zero       risk, which the newly released                                                                                Highlights: 2020
                                                                                                                                                                                        company commitments
present an update on                       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
                                           ambitious targets to decarbonise      more clarity to companies on         AustralianSuper                                     Executive summary of report findings
2019 to November
                                           by mid-century. Calls for a           specific disclosures and targets
2020. This report also                     sustainable recovery have been        and is a useful tool for investors
                                                                                                                      Anne Simpson, Managing Investment Director,           HOW WE MEASURE PROGRESS               2
contains detail on the                                                                                                Board Governance and Sustainability, CalPERS
                                           widespread as recognition grows       to assess and compare company
recently released Climate                  that sparking fresh investments in    performance. Climate Action          Emma Herd, CEO, Investor Group on Climate                      HOW COMPANIES ARE
                                                                                                                                                                                           PROGRESSING            3
Action 100+ Net-Zero                       zero and low-carbon industries,       100+ announced the Net-Zero          Change
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
                                           The case for immediate action                                              Costes, Groupe Caisse des Dépôts, Ircantec                        KEY ISSUES IN 2020        5
initiative priorities for the                                                    their support and intention to
                                           is clear. Unprecedented wildfires     disclose in accordance with the
coming year.                               in Australia, the United States,                                           Mindy Lubber, CEO and President, Ceres
                                                                                 framework.
                                           the Amazon and Siberia, record-                                                                                                       HOW WE ARE GOVERNED              6
                                                                                                                      Rebecca Mikula Wright, Executive Director, Asia
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.

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CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT
EXECUTIVE SUMMARY                                                                                                                                 The 2020 Climate Action 100+ Progress
                                                                                                                                                  Report shows that while some companies
OF REPORT FINDINGS                                                                                                                                are taking steps to decarbonisation in
                                                                                                                                                  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
                                                                                         targets.                                                                  target or ambition in some form,        Report introduction and highlights
provides an overall update                       Climate Action 100+ is growing.
                                                                                                                             The 160 companies2 engaged by         which is an important signal                              Highlights: 2020
                                                 The initiative has now attracted      • Just transition.                                                                                                             company commitments
on the initiative and its                        545 investor signatories, including
                                                                                                                             the Climate Action 100+ initiative    to investors that companies                   Foreword from Mark Carney
activities, as well as an                                                              • Task Force on Climate related       represent over 80% of global          understand and are preparing for
                                                 notable new additions Blackrock                                                                                                                                          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   of focus companies have net-zero     Executive summary of report findings
company progress at the                          Management – the first and third
                                                                                         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.        companies’ most material scope
                                                                                                                                                                                                          HOW WE MEASURE PROGRESS               2
                                                 world (respectively). Climate         A subset of these indicators has
of benchmark indicators.                         Action 100+ signatory assets
                                                                                                                             This level of ambition is necessary   3 emissions.
                                                                                       been used to assess company           according to the IPCC3 in order
                                                 under management now total            performance at the sector-level                                                                                             HOW COMPANIES ARE
                                                                                                                                                                                                                                                3
                                                                                                                             to hold global warming to 1.5°C       Similarly, while more than half of                    PROGRESSING
                                                 $52 trillion.                         in this report. A full company-       above pre-industrial levels, and      focus companies (51%) have set
                                                                                       level assessment against all the      to avoid the most catastrophic        a short-term (to 2025) emissions
                                                 New approach to measuring                                                                                                                                      WHERE WE ARE MAKING
                                                                                       indicators in the new benchmark       effects of climate change.            reduction target, and just under                                             4
                                                 company progress                                                                                                                                                         PROGRESS
                                                                                       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+        both the companies’ operational
                                                                                       It is recognised that for             Net-Zero Company Benchmark
                                                 which will be used to publicly                                                                                    scope 1 and 2 emissions as well as
                                                                                       companies to improve                  indicators, including disclosure                                                                                   6
                                                 benchmark focus companies.                                                                                        the most material upstream and              HOW WE ARE GOVERNED
                                                                                       their performance against             assessments provided by
                                                 The first company scorecards                                                                                      downstream scope 3 emissions.
                                                                                       these indicators as a region,         Transition Pathway Initiative and
                                                 will be released in early 2021. The
                                                                                       actions led or incentivised by        capital allocation assessments        At a sector-level, indicators                                                7
                                                 Benchmark includes indicators                                                                                                                                                   APPENDIX
                                                                                       government and policymakers           provided by Carbon Tracker            assessing companies in the
                                                 which cover:
                                                                                       form an important part of             Initiative and 2° Investing           oil and gas, utilities and
                                                 • Net zero by 2050 ambition.          the conversation. For many
1 The Climate Action 100+ Net-Zero
                                                                                                                             Initiative.                           transportation (autos) sectors
  Company Benchmark will only assess             • Targets and goals for               companies engaged by the                                                    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         mix. For example, despite nearly
  climate scenario in the first assessment. In
  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                                                                                          there is a long way to go.
  companies were added and 2 companies             1.5°C climate scenario1.                                                                                        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
  companies is not included in the scope of
                                                                                                                                                                   that 194 of the new oil and gas
                                                 • Capital allocation alignment.                                                                                   projects sanctioned this year
  this report.
3 See the IPCC Special Report on the impacts     • Climate policy engagement.                                                                                      are misaligned with the
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
of this climate scenario. Carbon             develop transition plans for        several key priorities:                                      Highlights: 2020
                                                                                                                                       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
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+                          HOW WE MEASURE
supporting investor network                                                                                                                                                                                                  2
organisations have worked
                                           that reflect the overall initiative   relative to indicator six in the   INITIATIVE?                                                                      PROGRESS
                                           goals. It will assess companies’      benchmark, will be included
                                           alignment with specific points                                                                                                              The Climate Action 100+ Net-Zero
to ensure the best data                                                          for upstream oil and gas           Climate Action 100+ recognises that decarbonisation of the                     Company Benchmark
and research are available                 including ambition to align with      companies, electric utilities      global economy is complex and will require unique strategies                    Disclosure indicators
                                           the Paris Agreement goal, GHG         (coal and gas generation           and approaches across different businesses, regions and sectors.
to investors engaging with                 emissions reduction targets,                                             However, investors agree there should be a common global
                                                                                                                                                                                             Capital allocation indicators
                                                                                 assets) and automotive
companies, and that there                  decarbonisation strategy, capital     companies. Similar analyses for    engagement agenda seeking commitments from boards and senior               HOW COMPANIES ARE
is sufficient information                  alignment, climate policy support,                                                                                                                        PROGRESSING             3
                                                                                 companies in other sectors will    management to:
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°
                                           Capital allocation                                                       GOVERNANCE OF        EMISSIONS IN LINE     DISCLOSURE                  HOW WE ARE GOVERNED               6
100+ Net-Zero Company                                                            Investing Initiative (2DII) has
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                                                  Benchmark and the various                                                                                                   APPENDIX        7
                                           2° Investing Initiative will also                                                                                   OF THE TASK FORCE
evaluate company performance                                                     approaches used to assess
and provide greater transparency
                                           analyse companies’ capital
                                                                                 focus company alignment.                                                      ON CLIMATE-RELATED
                                           expenditures (CAPEX) and                                                                                            FINANCIAL DISCLOSURE
for investors.
                                           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:
                                                                                     Focus company assessment
                                                                                                                                             WHO WE ARE          1
100+ Net-Zero Company
                                                                                     results will inform advancement               HOW WE MEASURE
Benchmark was developed                    Climate Action 100+ seeks to              decisions including voting,                         PROGRESS
                                                                                                                                                                 2
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
with almost 50 signatory                   including emissions across the                                                               Disclosure indicators
                                           value chain, and companies that         • Decision making: The results
investors, investor network                present the greatest climate-             of company assessments will                 Capital allocation indicators

experts, leading climate                   related risk to investors’ portfolios     be used by signatories to
                                                                                                                                   HOW COMPANIES ARE
research and data NGOs                     or that have a significant                inform their actions during                         PROGRESSING             3
                                                                                     year five of the initiative (the
and corporate stakeholders                 opportunity to drive a broader
                                                                                     original time horizon for Climate
to establish indicators                    net-zero economy transition. The                                                     WHERE WE ARE MAKING
                                           Climate Action 100+ Net-Zero              Action 100+) particularly                            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
                                                                                     input for the initiative’s progress       HOW WE ARE GOVERNED               6
                                           engagement. This framework
                                           may be used for:                          reports and used to assess
                                           • Ongoing engagement:                     the overall effectiveness of the
                                                                                     initiative.                                                 APPENDIX        7
                                             The Benchmark resets and
                                             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
disclosed information.                     1      NET-ZERO GHG EMISSIONS BY 2050 (OR SOONER) AMBITION1                                                                                                          PROGRESS
                                                                                                                                                                                                                                        2
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
by one or more sub-                        1.1a
                                                  The company has made a qualitative net-zero GHG emissions ambition statement that explicitly includes at least 95%
                                                                                                                                                                                       TPI
                                                                                                                                                                                                               Disclosure indicators

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                                                PROGRESS               4
                                           2.1                                                                                                                                         TPI
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
(LSE) and FTSE Russell, has                2.2                                                                                                                                         TPI                   KEY ISSUES IN 2020         5
                                                  3 emissions (where applicable).
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
company data for the disclosure                                                                                                                                                                       HOW WE ARE GOVERNED               6
                                                  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
                                                  The long-term target is aligned with a trajectory to achieve the Paris Agreement goal of limiting global temperature increase
public information will be
                                           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
                                                  of emissions.
made available in early 2021 on
the Climate Action 100+ website.                  The medium-term (2026 to 2035) GHG reduction target covers at least 95% of scope 1 and 2 emissions and most relevant
                                           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

    public information will                       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
                                                                                                                                                                                                                 PROGRESS
                                                                                                                                                                                                                                         2
    be collected by TPI                    3.2b   company’s sector (for applicable sectors), and the company has published the methodology used to establish any scope
                                                  3 target.
                                                                                                                                                                                        TPI
                                                                                                                                                                                                   The Climate Action 100+ Net-Zero
    and used to assess and                        The medium-term target is aligned with a trajectory to achieve the Paris Agreement goal of limiting global temperature
                                                                                                                                                                                                               Company Benchmark

    score each focus
                                                                                                                                                                                                                Disclosure indicators
                                           3.3    increase to 1.5°C with low or no overshoot (equivalent to the IPCC Special Report on 1.5°C2 pathway P1 or net-zero emissions          TPI              Capital allocation indicators
    company against the                           by 2050).3

    disclosure indicators.                 4      SHORT-TERM (2020 TO 2025) GHG REDUCTION TARGET                                                                                                           HOW COMPANIES ARE
                                                                                                                                                                                                                 PROGRESSING             3

    The results of this                    4.1
                                                  The company has set a short-term (2020 to 2025) target for reducing its GHG emissions on a clearly defined scope
                                                                                                                                                                                        TPI
                                                  of emissions.
    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
                                                                                                                                                                                                        WHERE WE ARE MAKING
                                                                                                                                                                                                                  PROGRESS               4
    will be made available                 4.2
                                                  3 emissions (where applicable).
                                                                                                                                                                                        TPI

    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                     The Climate Action 100+ Net-Zero
                                           5.2b                                                                                                                                       TPI                    Company Benchmark
                                                  that is above sector average.
                                                                                                                                                                                                              Disclosure indicators
                                           6      CAPITAL ALLOCATION ALIGNMENT6                                                                                                                        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                       PROGRESS               4
                                                  warming to 1.5° C.
                                                  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                                                                                                  PROGRESS               4
                                             10.1                                                                                                                                                                                     TPI
                                                      (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                               KEY ISSUES IN 2020         5
                                                      the TCFD website.
                                             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                                                                  Upstream oil and gas companies
complement the disclosure                  CAPITAL ALLOCATION                                                                                                                                                                                           HOW WE MEASURE                2
indicators by providing                    INDICATORS                                        INDICATOR                                                                                                           DATA PROVIDER                                PROGRESS
further insights to investors
                                           The capital allocation indicators                 How many conventional and unconventional oil and gas projects were sanctioned by                                            CTI                    The Climate Action 100+ Net-Zero
regarding the adequacy of                                                                    focus companies in 2019 that are outside of the IEA B2DS?                                                                                                      Company Benchmark
companies’ capital allocation              presented in this report are a                                                                                                                                                                                    Disclosure indicators
plans, and relative alignment              subset of indicators developed by                 If the company provided impairment price assumptions                                                                        CTI
                                                                                                                                                                                                                                                      Capital allocation indicators
                                           CTI and 2DII2.                                    - are they flat, declining or increasing?
with the company’s stated
emissions reduction targets.                                                                 Percentage of total potential capital expenditure (below STEPS cap) that is inside B2DS,                                    CTI                            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
by Carbon Tracker (CTI) and                                                                  Percentage of total potential capital expenditure (below STEPS cap) outside B2DS, for oil                                   CTI
                                           the International Energy Agency’s                 and gas.
2° Investing Initiative (2DII)             (IEA) to assess companies,                                                                                                                                                                                WHERE WE ARE MAKING
                                                                                                                                                                                                                                                                                      4
                                                                                                                                                                                                                                                               PROGRESS
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
                                             (STEPS)                                         climate scenarios.                                                                                                                                     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
                                                                                                               HOW HAS THE NEW BENCHMARKING FRAMEWORK
NET-ZERO COMPANY                      there are not sufficient
                                      methodologies available to
                                                                           5.2 applies the European
                                                                           Union’s (EU) Green Taxonomy         BEEN COMMUNICATED TO FOCUS COMPANIES?
                                                                                                                                                                                                                    HOW WE MEASURE
                                                                                                                                                                                                                          PROGRESS
                                                                                                                                                                                                                                                  2
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
                                      including chemicals, consumer        headquartered in the EU). Thus,     formally introduced to focus companies in a letter sent to the                                            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
Benchmark will continue to            and TPI will look to develop         assessed in the 2021 iteration                                                                                                           HOW COMPANIES ARE
                                                                                                                                                                                                                                                  3
                                      these for future iterations of       of the benchmark. Future            up their Nationally Determined Contributions (NDCs) that are                                               PROGRESSING
be updated and revised based                                                                                   currently not on track to meet 1.5°C or well below 2°C, the letter
on investor priorities and the        the benchmark.                       iterations of this indicator will
                                                                           assess non-EU companies using       invited companies to:                                                                             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
future iterations of the Net-Zero     consideration of transition risk                                         2. Confirm if the company will outline strategies that go                                       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
  absence of a 1.5°C IEA            • Just transition: While                                                                                                                                                                      APPENDIX        7
                                                                                                                   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

                                                                         117
  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
                                      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.

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CLIMATE ACTION 1OO+ 2O2O PROGRESS REPORT
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