Between the disclosure of their climate impacts, and the definition of their long-term decarbonization targets, companies need to establish the missing link: low-carbon transition plans. The ACT methodology developed in Europe by CDP and ADEME is receiving a growing international recognition as the most relevant framework. It is now coming to Japan.
According to a recent study, Big Oil companies’ climate claims are not matched by actions. Accusing major oil companies of greenwashing, the researchers found that although corporate climate pledges increased in the reports, concrete actions were rare.
The rising cases or litigation from investors, NGOs and governments are putting companies in the most emitting sectors at risk. In May 2021, the Dutch court ruled that Shell’s climate transition plan was not concrete enough and ordered the oil company to cut its emissions by 45%. Stakeholders need reliable assessment to see how companies orchestrate their green transition.
To make companies in Japan accountable and attractive to global investors, Codo Advisory will use the ACT (Assessing Low Carbon Transition) methodology. Co-developed by ADEME — The French Agency for Ecological Transition, and CDP — the UK-headquartered non-profit organization managing the leading global environmental disclosure platform, ACT links companies’ carbon accounting efforts with their ambitious targets by providing reliable sectoral benchmarking, independent assessment of transition plans and their rating.
ACT: from Europe to the world
As CDP describes on its website, “CDP’s standardized and globally recognized reporting system enables companies to understand best practice, benchmark against peers, and in turn, take meaningful steps to address climate change. Mapped against CDP’s climate change questionnaire, the ACT methodology complements this, and uses the Science-Based Targets Initiative (SBTi)’s Sectoral Decarbonisation Approach to allocate each company a decarbonisation pathway aligned with an emissions scenario”.
First implemented in France, ACT is increasingly used by companies in Europe and Latin America (Brazil and Mexico), and Canada. The ACT-DDP project in South America enabled the construction of bottom-up sectoral pathways for various industrial sectors via assessing 20 key Brazilian and Mexican companies’ low-carbon strategies and transition plans.
As of today, over 350 companies globally have been engaged with ACT, of which 180 assessments were published in the Climate and Energy Benchmark produced by the World Benchmarking Alliance in collaboration with CDP. “ACT methodologies represent a comprehensive approach to assess the private sector and ensure that it remains accountable to effectively contributing to international climate goals such as the ones set out within the Paris Agreement. WBA and our partners utilize ACT to provide in-depth analysis for benchmark research and help our work to serve as an essential tool for measuring corporate climate performance on aligning with a low-carbon future”, comments WBA’s Communication Officer Kidan Araya.
A growing recognition by other leading international initiatives, including TCFD and GFANZ
ACT is a part of CDP’s 2021-2025 strategic plan. In a recent technical note on climate transition plans, CDP compared twelve reporting frameworks and initiatives, finding that ACT is the most comprehensive, covering the nine key elements of a transition plan – governance, scenario analysis, risks & opportunities, strategy to achieve net zero, financial planning, targets, comprehensive GHG accounting, policy, and value chain engagement.
At the international level, ACT is the only corporate climate accountability initiative of the UNFCCC secretariat Global Climate Agenda, supporting the implementation of the Paris Agreement. The methodologies are linked to recognized scenarios and benchmarks such as the SBTi sectoral approach and the International Energy Agency’s net-zero pathway.
The Task Force on Climate-Related Financial Disclosures (TCFD) – a leading global initiative that provides guidance to investors and firms about corporate action for climate risks mitigation – identified ACT as a relevant methodology for sectoral approach of transition strategies.
ACT is also one of the few relevant frameworks identified by the Glasgow Financial Alliance for Net Zero (GFANZ), as explained in its latest progress report: “CDP provides tools to enable corporates to disclose climate and environmental data, and, through the ACT framework, has published a framework for transition plans”.
Leading global companies already using ACT to assess and improve their low-carbon transition strategies
Among ACT-assessed companies are some of Europe’s leaders in the energy and automotive sectors. Spanish multinational oil and gas company CESPA, for example, has been using ACT to better understand the strengths and weaknesses of its climate plan. “The ACT assessment of our Positive Motion strategy by 2030 will be a relevant input to give more reliability to our targets and will show us the best way to keep on improving our pathway towards a low carbon economy and net zero ambition,” comments Susana Revilla Sánchez, Greenhouse Gases manager at CESPA.
French car manufacturer Renault is also a user of the ACT framework. Environment, Strategy and Planification Director Jean-Phillipe Hermine reports: “The quantitative assessment of emission reduction targets is a valuable input in our ongoing process of defining a new low-carbon strategy and management process”. In France as well, BNP Paribas, one of the largest banks in the country, recognizes ACT as a powerful framework to work with SMEs on their climate plans.
ACT is coming to Japan
Some of Japan’s major companies, including drink company Asahi, food corporation Ajinomoto, and paint manufacturer Nippon Paint, have already been involved in the development of the ACT methodology and roadtest. And by 2023, more than 50 Japanese companies will be covered by WBA’s climate benchmark based on ACT.
This year, Codo Advisory launched the first ACT consulting services in Japan, to contribute to the establishment of an ACT community in Asia and help local companies stay aligned with global expectations on climate action. With Japan still being the fifth largest global emitter of carbon dioxyde, a rapid sectoral transition supported by credible plans and reliable benchmarking is crucial to reach carbon neutrality. The time to ACT is now.
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About our insight articles
Codo’s Insights are a series of articles written by our team, on topics that we identify as strategic for our clients and partners. We focus on developments related to corporate environmental sustainability, with the aim of supporting exchanges between Japan and other regions.
This article was prepared by Alexandra Zhasminova, reviewed by Stéfan Le Dû and translated to Japanese by Jeanne Hamidou.
Codo Advisory is an independent consultancy helping companies in Japan at all stages of their green transformation. Codo’s wide range of services are built upon internationally recognized science-based methodologies. They include climate education, ESG certification advisory, zero-carbon strategy definition and boutique consulting. Codo’s clients are organizations of all sizes and sectors looking to improve their global competitiveness and reduce their climate-related risks.
Codo Advisory is a Japan-based consulting agenc