17 Pension Protection Fund Climate Change Report 2022/23 STRATEGY AND RISK MANAGEMENT CONTINUED Industry collaboration We continue to participate in valuable CASE STUDY CASE STUDY climate-focused memberships and networks, such as the IIGCC and the Climate Action 100+ Supporting CDP ongoing Climate Action 100+ initiative. This year, the IIGCC launched a new The PPF is a signatory to Climate Action 100+, the largest- We continue to work closely with CDP, the global Net Zero Engagement Initiative (NZEI) ever investor engagement initiative on climate change, environmental disclosure organisation, on two to scale and accelerate climate-related involving around 700 investors who collectively hold half of corporate engagement. The new the world’s assets under management. Climate Action 100+ campaigns to encourage comprehensive and initiative aims to help investors align puts pressure on the world’s largest greenhouse gas emitters, more of their investment portfolio with which together account for approximately 80 per cent of global robust corporate disclosure on climate and the goals of the Paris Agreement by industrial emissions. 58 per cent of our 昀椀nanced emissions are environmental issues. extended focus beyond the companies attributed to Climate Action 100+ companies. on the Climate Action 100+ list. We A 2022 progress update found that, of 166 companies covered The 2022 CDP Non-Disclosure are leveraging the NZEI initiative to by the initiative: Campaign was fruitful overall, with further align collective engagement companies engaged in the campaign with our Climate Watchlist, which has • 92 per cent have some level of board oversight of material 2.3 times more likely to disclose than emerged from our own Paris Portfolio climate-related issues those that weren’t. Alignment Project. We are leading direct Non-Disclosure Campaign: engagement with one of the NZEI • 75 per cent of targeted companies have made Net Zero Science-Based Targets companies as part of the initiative. commitments (52 per cent in 2021) Again this year, we supported (SBT) Campaign: CDP’s annual campaign to engage The CDP Science-Based Targets The following three case studies • 91 per cent now report in line with TCFD recommendations with major companies that have (SBT) Campaign was launched in highlight the progress made over the (72 per cent in 2021). failed to respond to its climate October 2022, attracting support year for the key industry collaborations change, forestry and/or water from 318 昀椀nancial institutions and we’re involved with. Examples of recent progress seen in companies include: security questionnaires. multinational 昀椀rms, including the Eneos Holdings: The Japanese petroleum and metals company We elected to lead direct outreach PPF, representing $37 trillion in announced in May 2022 its plan to reduce Scope 1 and 2 emissions e昀昀orts with eight companies in assets and spending. The campaign 75 per cent of by 46 per cent by 2030 compared to 2013 and expand its Net Zero our portfolios. Three companies called on over 1,060 of the world’s ambition to cover Scope 3 emissions (Net Zero by 2050). submitted responses as a result highest-impact businesses to set targeted companies of this, directly bene昀椀ting the emissions goals in line with the Origin Energy: The Australian energy company made progress coverage of reported emissions Paris Agreement. in the CA100+ have on climate disclosures and commitments during the year, within our portfolios. For the names including the closure of its coal-昀椀red power stations seven years Last year’s 2022–2023 campaign made Net Zero earlier than previously announced and the inclusion of Scope 3 that declined to respond in 2022, resulted in 77 targeted companies, emissions in its long-term plans. we have re-elected to lead direct as of end-May 2023, joining commitments engagement again with these the ranks of 5,100+ companies Enel: The second-largest power company in the world, based companies in the 2023 campaign. committed to using science-based (52 per cent in 2021). in Italy, became the 昀椀rst company globally to ful昀椀l all its We have also used the lack of targets to align their business with disclosure obligations on the Climate Action 100+ Net Zero disclosure to inform our voting the Paris Agreement. They represent Company Benchmark. 0.2 gigatonnes in CO e emissions decisions at these speci昀椀c 2 Although the success of this initiative has been encouraging, companies, for example if a and $2.9 billion in market cap, there is a long way until companies achieve high-level shareholder resolution has been which is respectively 3 per cent performance across all indicators assessed by Climate Action 昀椀led to request this, or voting and 12 per cent of the 2022 CDP 100+. Lots more work needs to be done as the initiative moves against the audit committee in corporate database. into its second phase this year. more extreme circumstances. Read more about the PPF’s own exposure to companies using science-based targets on page 30.