The Climate Action 100+ Net-Zero Company Benchmark offers the first detailed, comparative assessments of individual focus company performance against the initiative's three high-level commitment goals: reducing greenhouse gas emissions, improving governance, and strengthening climate-related financial disclosures.
None of the 167 companies assessed performed at a high-level across all of the nine key indicators and metrics that were used to evaluate each company, and no company had fully disclosed how it would become a net zero enterprise by 2050 or sooner.
The assessments found that scope 3 emissions remained a blind spot, with only 52% of companies setting a target, though about half of the commitments do not cover the full scope of the companies' most material emissions.
It was also found that long-term ambitions needed to be backed by clearer strategies and more robust targets, and further investments needed to be more aligned with the net zero transition.
The assessments found that ambitious 1.5 degree pathways were often missing from climate scenario planning and boards and management needed to improve climate change governance.
The mining companies assessed were BHP, Rio Tinto, Anglo American, Glencore, Vale, South32, Vedanta, Teck Resources, Norilsk Nickel, Grupo Mexico, China Shenhua Energy, Aneka Tambang, Bumi Resources and Coal India, as well as suppliers Caterpillar and Orica.
Sector-by-sector analysis will be published in coming months.
The benchmark did not specifically score or rank companies.
The benchmark provides the US$54 trillion investor-led initiative that seeks greater climate ambition and action from corporate boards and executives with a ground-breaking tool, and a mechanism for tracking corporate progress.
"As the first cohesive investor-led framework for the world's top carbon emitters, this is an ambitious initiative that will enable climate change engagement to go to the next level," Climate Action 100+ steering committee member and AustralianSuper director, ESG and stewardship Andrew Gray said.
"The ability to measure through benchmarking means investors can set a base to track the progress of companies in relation to their management of climate change investment risks and opportunities.
"It creates much needed clarity for both investors and companies in climate change engagement, which will enable better management of the investment risks and opportunities from climate change."
Investor Group on Climate Change CEO and Climate Action 100+ steering committee member Emma Herd said companies that are not demonstrating a concrete transition to net zero emissions will increasingly lose value against those who are making the transition.
"The results of the first Net Zero Company Benchmark show several of Australia's largest companies still need to move beyond glossy sustainability brochures and establish hard strategies and commit capital to cutting emissions and transitioning to net zero," she said.
"In many areas Australian companies are not matching their international competitors in the race to net zero emissions, creating material risks for our national competitiveness and investors' returns."
Australian Ethical head of ethics research Stuart Palmer said investment managers and large asset owners had a responsibility to use their influence as shareholders to help large organisations to implement stronger policies, action plans, and reporting frameworks to reach a net-zero position on carbon emissions as soon as possible.
"Company targets for net-zero emissions by 2050 are a good first step. But high-emission Australian companies should also have 2025 and 2030 targets that cover all their emissions including those produced both upstream in their supply chain and downstream where their products are used," he said.
"A key indicator of whether companies are credibly pursuing a net-zero transition is whether they are actually allocating meaningful capital expenditure to the cause, and ensuring this investment is aligned with credible pathways to limit warming to 1.5 degrees. Unfortunately, many Australian companies are failing this test."
Australasian Centre for Corporate Responsibility (ACCR) executive director Brynn O'Brien said the benchmark heralded the end of greenwashing.
"It is a reality check for global institutional capital's engagement strategies with large emitters. There is no longer room for praising company posturing and losing sight of the need for genuine progress.
"In the context of the emerging global norm of companies offering shareholders an annual vote on their transition strategies, this benchmark analysis will provide an incredibly useful baseline."
ACCR director of climate & environment Dan Gocher said none of the 12 Australian companies in the benchmark had aligned capital expenditure with the Paris Agreement.
"Despite widespread support for net zero emissions by 2050 or sooner, only Woolworths has set an ambitious 2030 target. Everyone else is kicking the can down the road," he said.
Fortescue Metals Group, which was not included in the benchmark, announced plans last week to be net zero by 2030.
"No Australian company has committed to significantly reduce their scope 3 emissions, which is now a key demand from institutional investors," Gocher said.
"The lack of progress from Australian companies is clear for all to see. Investors must now be prepared to take unprecedented action. Support for shareholder resolutions and voting against directors would send a very clear signal that delay will no longer be tolerated."
