Climate Activism: Status Check and Opportunities for Public Companies

Sanjay M. Shirodkar is of counsel, and Deborah R. Meshulam and Jeffrey L. Salinger are partners at DLA Piper. This post is based on a DLA Piper memorandum by Mr. Shirodkar, Ms. Meshulam, Mr. Salinger, Edward Hanover, and Arielle Katzman. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here); For Whom Corporate Leaders Bargain by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita (discussed on the Forum here); and Socially Responsible Firms by Alan Ferrell, Hao Liang, and Luc Renneboog (discussed on the Forum here).

The United Nations Framework Convention on Climate Change was established in 1992 with the goal of preventing “dangerous” human interference with the climate system.

The Paris Climate Agreement was the most recent attempt to establish international cooperation over climate change. Although the United States withdrew from the agreement effective November 4, 2020, President-elect Joe Biden has promised to rejoin the Paris Agreement on his first day in office. In addition, former Secretary of State John Kerry has been named special envoy to lead the Biden Administration’s efforts to fight climate change. In this role, it is expected that Mr. Kerry will coordinate programs to address climate change across multiple agencies.

As the new Administration is expected to make climate change a top priority, there is a broad consensus that climate change presents a profound challenge for humanity. We anticipate that public and private companies will face increasing pressure to respond to this challenge and act in climate-positive ways. In the short run, we expect this pressure will come principally from market participants, including during the upcoming 2021 proxy season. That pressure that has already started; discussions in boardrooms related to governance matters, ESG activism and other similar shareholder/investor driven initiatives are well under way, and climate-related topics have assumed increased prominence among areas of focus. Accordingly, as we wind down the unprecedented year of 2020 and look ahead to the 2021 proxy season, we want to focus your attention on climate activism.

What follows is a brief summary of the actions of a particular group of investors who have formed a group, Climate Action 100+. The steps taken by Climate Action 100+, including the commitments and other measures the group is seeking from targeted companies, provide a roadmap of issues other companies and their board of directors might face and might consider in planning how to address climate action over the coming months.

The business imperative of climate change is clear. The imperative is equally applicable to public and private companies. This systemic risk is increasingly being discussed and managed in board rooms across the US and the globe.

Climate Action 100+

Climate Action 100+ (CA100+) is an investor-led initiative to ensure that the world’s largest corporate emitters of greenhouse gases (GHG) take necessary action on climate change. [1] More than 500 investors with over $47 trillion in assets have signed on to the initiative, which launched in December 2017 at the One Planet Summit. The initiative principally focuses on a group of what CA100+ describes as 100 “systemically important emitters,” which CA100+ believes are globally significant emitters of GHG, and 60 other companies CA100+ believes can play a strategically important role in the transition to net-zero emissions by 2050 or earlier. CA100+ is directing its actions at these specific companies, aiming to engage them on improving governance, curbing emissions and strengthening climate-related financial disclosures.

September 2019 Climate Action Letter

In September 2019, CA100+ sent a letter [2] to 47 of the largest US publicly traded companies outlining the group’s expectation that those companies would align their climate lobbying with the goals of the Paris Agreement. The letter asserted that the companies had “significant influence on climate and energy policies” and that there appeared to be lobbying activities that were “inconsistent with addressing the risks posed by climate change.” The letter went on to warn that lobbying activities which are inconsistent with meeting climate goals are an investment risk. It then set out a list of expectations, the “Investor Expectations on Corporate Climate Lobbying”; called on companies to publicly report on how they were meeting these expectations; and asked the companies to establish meaningful governance of their lobbying activities, including full public transparency.

In particular, the letter asked companies to review their “own corporate lobbying activities as well as [those of] the trade associations and other politically active organizations” that represent the business interests of the company “but, unfortunately often lobby against public policy initiatives addressing the climate crisis.” The letter informed the recipients that a similar document concerning expectations on corporate climate lobbying had been sent to a large group of European companies the prior year, and that about a dozen companies had committed to certain steps to reform their climate lobbying practices.

During the 2020 US proxy season, investor signatories to the CA100+ initiative submitted shareholder proposals related to (a) independent board chairs (four companies); (b) disclosure of direct and indirect climate and energy lobbying (five companies) [3]; and (c) lobbying for a policy framework alignment with the Paris Agreement (the Lobbying Proposal) (three companies). The Lobbying Proposal achieved some success, receiving a 53 percent majority vote in favor at one company, including voting support from one of the largest asset managers, a 46 percent vote in favor at the second company and a 31 percent vote in favor at the third company. In addition to the foregoing proposals, several other companies received proposals, which were characterized as proposals regarding general lobbying reports, but the supporting statements indicated an interest in climate lobbying. We are starting to hear about formal and informal discussions occurring about similar resolutions and other initiatives for the 2021 proxy season.

September 2020 Climate Action Letter

In mid-September 2020, CA100+ announced that it had sent a letter to 161 companies requesting that each company make (or reconfirm) the following commitments: [4]

  1. To work towards providing disclosures consistent with the new Climate Action 100+ Net-Zero benchmark (see below)
  2. To confirm that the company would, in good faith, set an ambition to achieve net-zero emissions by 2050 or sooner across all material GHG emissions, and set medium-term targets or goals consistent with a global reduction in emissions of 45 percent by 2030 relative to 2010 levels and
  3. To join in the development and implementation of net-zero transition action plans and to provide pathways toward achieving net-zero emissions for its sector or value chain overall.

CA100+ also announced the release of a new benchmark designed to provide comprehensive analysis on which companies are leading the transition to net-zero emissions. The 161 companies were informed that in 2021, CA100+ would benchmark their climate progress against a set of key indicators that reflect the goals of the initiative. These benchmarks are described below. CA100+ also referred to the Ceres Blueprint for Responsible Policy Engagement on Climate as a guidepost available to assist companies and investors alike (see below). Subsequently, and as in 2019, 47 US companies received a letter from CA100+, urging the companies to disclose how their climate lobbying aligns with the Paris Agreement and to take action when there is a misalignment.

Climate Action 100+ net-zero company benchmark

In a press release issued in September, CA100+ explained that the benchmark is designed to “provide comprehensive analysis on which companies are leading the transition to net-zero emissions, alongside a range of other indicators used by investors to inform investment and corporate engagement strategies.” [5] The press release also notes that the benchmark is intended to address “a need to standardize what constitutes a ‘net-zero aligned’ business strategy and how to measure alignment with a 1.5°C transition pathway.” The benchmark also directs companies to “identify the path that is needed to address this issue in their respective sectors and regions.”

The benchmark contains the following indicators:

  1. Ambition: Whether the company has set an ambition to achieve net-zero GHG emissions by 2050 (or sooner)
  2. Targets and goals: If clear short-, medium- and long-term GHG reduction targets or goals covering all material scope 1, 2 and 3 GHG emissions are in place and aligned to a 1.5°C global warming trajectory
  3. Decarbonisation strategy: Whether the company has a robust decarbonisation strategy to deliver these GHG reduction targets, goals and ambitions
  4. Capital alignment: Whether an assessment has been carried out of the extent to which a company’s capital investment in carbon-intensive assets or business lines are consistent with the goals of the Paris Agreement
  5. Climate policy support: Whether a clear commitment and set of disclosures, clarifying the company’s intent to support climate policy, has been developed, together with a demonstration of how direct and indirect lobbying is consistent with this intent
  6. Governance: Whether the company has effective board oversight of, and remuneration linked to, delivery of GHG targets and goals (as described in point 2 above)
  7. Just transition: Whether the company has disclosed information on how a “just transition” can be achieved—taking account of the impact on employees, communities and other stakeholders—and has been incorporated into the company’s transition planning and
  8. Reporting: Whether the company’s overall climate risk reporting is consistent with the recommendations of the TCFD. [6]

About the Ceres Blueprint for Responsible Policy Engagement on Climate Change

The Ceres Blueprint outlines recommendations on how companies can establish systems that address climate change as a systemic risk and integrate this understanding into their direct and indirect lobbying on climate policies. The Blueprint recommends a three-step approach and suggests some questions companies should address:

  • ASSESS the impact of climate change to the company, including the ways in which its lobbying efforts on climate change serve to exacerbate or mitigate these risks.
    • Does the company consider climate risk as a part of its enterprise risk management process and materiality analyses? How is climate risk defined?
    • Has the company considered its contribution to climate change, in addition to the risks climate change presents to its business?
    • Has the company conducted scenario analyses on climate change?
    • Has the company considered a range of timeframes, along with stakeholder and shareholder input, when conducting these analyses?
    • Conduct an internal audit of direct and indirect lobbying positions on climate change.
  • GOVERN to systematize decision making on climate change across the company, including in all direct and indirect lobbying. Engage a cross-functional team comprised of relevant internal stakeholders across the enterprise on this risk, including those in legal, government affairs, risk and sustainability departments in this process.
    • Does the company have a systematic process in place to evaluate and determine its public policy engagement on climate change?
    • What are the specific scenarios of global average temperature increase used when determining these positions (1.5° C, 2° C, 4° C, etc.)?
    • Who is involved in public policy decision-making?
    • Does the scope of the process include both direct and indirect lobbying?
    • How do executive management and the board stay informed about current climate science and hold themselves accountable for this education?
    • Engage the board on climate policy, including confirming whether the board has an explicit mandate to address climate risk.
  • ACT to align both direct and indirect lobbying with science-based climate policies.
    • Has the company publicly stated that climate change is caused by human activity that has led to increases in GHG emissions and global average temperature?
    • Has the company publicly supported both the Paris Agreement and the goal of limiting global temperature increase to no more than 1.5°C by 2050?
    • Has the company publicly supported creating a just transition to a net-zero carbon economy by 2050?
    • Are the above positions consistently reflected across all internal and external statements and across all relevant company platforms on climate?

What to expect in 2021

While CA100+ is a voluntary investor initiative without the force of law or regulation, it has the backing of a number of large institutional investors. In addition to seeking information, CA100+ members are pursuing other means of engaging and discussing their concerns with the focus companies. We expect this organized investor group to increase its push for action during 2021 and anticipate that others will join and add to increasing investor expectations that companies will do more to address climate change.

While, CA100+ primarily focuses on large corporate greenhouse gas emitters, the Ceres Blueprint offers workable strategies for all companies as they think about and implement systems that address climate change, governance and other topics related to the 2021 proxy season.

Much is being made about the “success” of the Lobbying Proposal, and we are starting to see increased engagement with management on governance issues and shareholder proposals on topics supported by CA100+ for the 2021 proxy season, especially in the energy, utility, automotive and financial services sectors. Within the greater ESG topic, there seems to be an increased focus on standardization of a climate reporting regime, and, in light of the new Biden presidency, it is also very likely there will be increasing focus on ways to require companies perceived as significant drivers of climate change to act in a manner to reduce their climate impact. Amendments related to additional ESG disclosure are expected to be a top priority for the SEC.

Notably, in November, the UK adopted rules to require companies to report on climate change by 2025. The Wall Street Journal noted that in the UK “companies [will] need to report the financial impacts of climate change on their businesses within the next five years, becoming the first country to make the disclosures mandatory as investors and governments demand corporations curb their greenhouse gas emissions.” In the United States, we are starting to see a new trend of “brand name” hedge-fund activists adopting ESG-related issues to target companies. This is a relatively new page in the activist playbook and we have seen some interesting partnering of hedge funds with traditional pension funds on these issues.

We anticipate that the coming months will see growing investor activism, as well as assertive moves by government regulators mandating additional corporate action, including disclosures, regarding climate change. This trend has already started, and evaluating these issues will be increasingly important.


1See (accessed on November 29, 2020).(go back)

2A sample of the 2019 letter can be found here:>.(go back)

3The support for each of these proposals was quite high and ranged from 20 percent to about 42 percent.(go back)

4Press release dated September 14, 2020 (available here (September Press Release) and press release dated October 26, 2020 (available here (both accessed on December 3, 2020).(go back)

5See September Press Release.(go back)

6September Press Release, page 4 and 5.(go back)

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