Insights
New data from engagements under the Net Zero Engagement Initiative (NZEI) shows significant developments, from company progress on target setting and emissions reductions to a growing number of investor signatories. We share some of the highlights.
NZEI is an investor-led initiative aimed at helping IIGCC members align more of their individual investment portfolios with a net zero pathway – as set out by investor net zero commitments – through corporate engagement. Launched in early 2023, growth is hard-wired, with the initiative refreshing its company focus list annually and incorporating investors' latest data and inputs to drive impactful engagement.
Analysis from the first year shows that progress was notable across the initiative's core asks, particularly in target setting. Some two-thirds of focus companies made progress and 10 had their targets verified by the Science Based Target initiative (SBTi) during the reporting cycle. Seven NZEI companies reported a reduction in their emissions over the same period.
More than half of companies made progress in quantifying the steps they have taken to reduce carbon emissions, and one in ten have either disclosed a transition plan for the first time or enhanced their disclosures to support existing plans.
Additionally, some 60% have taken steps toward, or committed to, a comprehensive 1.5°C-aligned transition plan or are advancing efforts to align their emissions with net zero targets. A similar proportion have improved transparency by providing greater disclosure on how their capital allocation aligns with climate goals. These are encouraging signs as investors continue engagements in 2025.
Strategic importance
As planned, the focus list of companies expanded to 160 in year two, with new additions from high-emitting sectors and companies which are essential to the energy transition. Investor signatories continued to increase, surpassing 100 with more enquiries ongoing.
Some 150 engagement activities were recorded in that first year: in year two the initiative will have facilitated more than 400. This demonstrates a clear value-add for investors and companies alike.
NZEI signatories received ongoing support through webinars, best practice guidance, and third-party analysis from IIGCC partners and peers. This included data from the Transition Plan Initiative (TPI) and Influence Map to help inform engagements.
Engaging primarily with European companies and investors at first, NZEI expanded its coverage into emerging markets and developing economies (EMDE) in the second year. More companies from East Asia and Eastern Europe will likely feature in future, given the strategic importance of those regions and potential for high impact engagements.
Scalability will remain a key priority of the initiative, which set out to offer an agile approach to engaging companies beyond Climate Action 100+, which considers the world’s largest corporate emitters. This model helps IIGCC members to expand the breadth of their portfolios covered by engagement in line with the goals of the Paris Agreement.
An important role
A new resource, launched in 2023 alongside NZEI, aimed to better support investors and companies in their engagements.
“Investor expectations of net zero transition plans: From A to Zero” has been delivered to companies alongside an initial engagement letter, offering more detail on the questions investors might ask when assessing transition plans. This includes the rationale for those requests and how companies can meet them.
Like NZEI, the resource is compatible with the Net Zero Investment Framework (NZIF) - now the most widely implemented net zero methodology by investors who have set a net zero commitment. Both aim to support the individual asset-level alignment and engagement targets NZIF suggests.
The overarching goal is to help asset managers and asset owners deliver on their net zero commitments by 2050, in line with individual net zero strategies and mandates and with a focus on real economy decarbonisation.
This latest data, and the growing popularity of NZEI, suggests that it will continue to play an important role in facilitating engagements in the year ahead.
Find out more about the Net Zero Engagement Initiative. If you’d like to take part in our working groups and help shape future resources, get in touch today to become a part of IIGCC.