Report: Listed firms linked to 40% of global emissions

The analysis links listed firms to twice the amount of emissions than previously estimated 

Research from investment management firm Generation Investment Management has found that listed companies are accountable for 40% of emissions globally. The Insights 6: Listed Company Emissions report considers the climate impact of listed firms across all three scopes.

Generation claims that previous estimates tend to underplay the impact of listed companies due to only covering Scope 1 and/or 2 emissions. Most previous estimates focus on Scope 1 emissions (direct) and therefore estimate listed companies’ emissions at around 20% of the total.

Generation’s analysis, however, is based on CDP data that also includes value chain emissions. It includes oil produced by listed global oil majors that are consumed by households and smaller non-listed enterprises and also considers emissions from food production and changes in land use. It, therefore, creates a total that is more than double the 11.2 gigatons of CO2e of Scope 1 emissions MSCI recently recorded.

Generation also notes that this is still likely to be a “conservative” estimate, as it excludes emissions where double counting was too complex to address or where reliable data was unavailable.

Generation’s co-chief investment officer Miguel Nogales said: “Listed companies are hiding in plain sight when it comes to the climate crisis. Far from being minor players, our analysis shows they are responsible for around 40% of all climate-warming emissions. Of course, this also means that the influence and leverage of the investment community has been underestimated. As COP26 approaches, our research highlights the importance of capital allocation choices and meaningful portfolio engagement if we are to be successful in delivering a net-zero world by 2050.”

“Given their outsized resources and focus on developed markets, listed companies will need to deliver the lion’s share of private sector emissions reductions in the next few years. If the world needs to get to net-zero by 2050, the ambition for public companies overall should be 2040 at the latest – and they must focus on decarbonisation in the near term.”

It comes after a study of the decarbonisation plans of 17 of the UK’s biggest sectors has found that most are recording either stable or increasing emissions, jeopardising the nation’s chance of meeting net-zero by 2050.

The analysis from Zurich found that the sectors will not deliver emissions cuts deep or rapid enough for net-zero alignment. The report states that, collectively, the 17 sectors will need to mitigate 382 megatonnes of CO2e by 2035 to align with the UK’s Sixth Carbon Budget. They are likely to deliver cuts of just 131 megatonnes, 34% of this figure.

Matt Mace