Shipping, aviation and carmakers failing to align with Paris Agreement
The majority of the worlds largest automotive, shipping and aviation companies are failing to deliver emissions reduction plans in line with a pathway to keep global warming to 2°C - let alone 1.5C - new research has found.
Research from the Transition Pathway Initiative – a research group at the London School of Economics’ Grantham Research Institute which has received backing from investors with more than $23trn in assets under management (AUM) collectively – has analysed transport firms on management quality and carbon performance.
With the transport sector being responsible for almost 25% of total energy-related carbon emissions globally, the report warns that less than one in five major firms within the sector have emissions strategies that are aligned to the Paris Agreement.
Of the 62 companies analysed, only 23% have plans in place that align with the 2C pathway by 2030, while just 18% have alignments in place up to 2050, the necessary date for the global economy to reach the 1.5C ambition of the Paris Agreement.
The analysis found that just 31% of transport firms were disclosing involvement with trade associations that engage on climate-related issues.
Airlines are the laggards of the sector. In total, 91% of airline companies have failed to introduce measures that align with the 2C target – almost double the proportion of the automotive sector, where 48% have failed to align.
The previous iteration of the report, published last year, criticised the likes of easyJet, American Airlines and Air China for failing to publicly outline how they will reduce their flight emissions after 2025, or to set strategies which go beyond carbon to cover additional sources of warming such as the emissions of contrails – the cloud-like trails produced by aircraft.
The need to accelerate the transition to sustainable aviation is clear, with recent research revealing that flights will generate around 43 gigatonnes of CO2 emissions by 2050 – more than 4% of the world’s entire remaining carbon budget.
However, the TPI has warned that the sector is overly reliant on offsets to contribute to emission reduction plans, rather than detailed action plans to reduce energy use and emissions.
Emma Howard Boyd, chair of the Environment Agency, and TPI Co-Founder said: “This year’s severe drop in travel has accelerated change in global transport. No one wanted this to happen the way it has and everyone wants to protect the jobs of the hard-working employees of the sector.
“For investors transition risks remain, with transport assets including vehicles, factories and infrastructure in danger of becoming stranded. At the same time, increased public understanding of climate change and targeted public policies, such as the phase-out of petrol cars, are driving greener opportunities for the sector. The UNFCC has launched a race to zero emissions ahead of COP26 next year, but the reality is that this race is already on and no one can afford to be left behind.”
The shipping firms were ranked as the best performing under carbon management. More than half of those analysed are aiming towards the “well below” 2C trajectory by 2030.
The automotive sector is also showing improvement, with an 11% increase in the number of companies aligning to the Paris Agreement compared to last year. In total, 23 companies were assessed including Tesla, Toyota and General Motors.
Earlier this year, analysis from the World Benchmarking Alliance (WBA) assessed 30 of the world’s biggest automotive corporations. It found that two-thirds of the world's largest carmakers had not set electric vehicle (EV) and emissions targets in line with the Paris Agreement's 2C trajectory.
Of the businesses analysed, 20 have not publicly published emissions reduction targets for emissions generated when vehicles are in use. For most brands, this is the largest source of Scope 3 (indirect) ambitions. And, of the ten businesses which have public targets, only five have targets which are aligned with the Paris Agreement’s ‘well-below 2C’ trajectory.
Almost half (12) of the companies assessed scored a ‘zero’ on emissions targets – either due to a lack of disclosure or due to weak targets. Tesla, Mitsubishi, Fiat Chrysler and BYD are in this cohort.
The WBA also released an updated Corporate Human Rights Benchmark (CHRB), earlier this year, ranking 229 of the world’s biggest businesses on their compliance with the UN’s Guiding Principles on Business and Human Rights.
Of the automakers, two-thirds scored zero across all human rights due diligence indications. The average overall score was 12% - lower than any other CHRB-benchmarked sector.