Report: Heavy industry making "slow progress" on Paris Agreement
A new study has shown there has been slow progress on climate action in high-emitting industries, with just one in five corporates operating in line with a 2C trajectory.
The research, produced by Transition Pathway Initiative (TPI), discovered only 19% of large industrial companies had aligned with a 2C or below pathway.
Its assessment of the paper, cement, steel, aluminium and chemical sectors also discovered though that 29% have set targets in line with the Paris Agreement by 2030 – an increase of 24% on 2018. This figure included a doubling of cement firms making pledges – but there was no improvement in the carbon performance of the aluminium or steel sectors. Paper saw 10 of the 18 companies represented in the research align with pledges.
The study also discovered the proportion of companies disclosing emissions had increased to 76% from 61% and 14 companies had set 2030 targets aligned with the Paris Agreement. Steel also saw a significant improvement in climate management quality with an average management quality score rising from 1.8 in mid-2017 to 2.4 this year. But it hasn’t improved its carbon performance with only six out of 24 companies aligned with Paris.
Two-thirds of industrial emissions
The research assessed the carbon of 72 listed companies and also looked at management quality on climate for 100 companies. Taken as a whole, the five sectors represented produced over two-thirds of direct industrial CO2 emissions.
The research was carried out for TPI by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.
Faith Ward, co-chair of the TPI and chief responsible investment officer at Brunel Pension Partnership, said: “Industrial sectors like steel and cement face tough challenges to decouple emissions from production, but make no mistake, these industries must transform themselves if they are to survive the low carbon transition and play their part in achieving the goals of the Paris Agreement.
“Today’s TPI data shows it can be done – with 14 companies now aligned with a path to keep global warming below 2 ° C. Yet most industrial companies are significantly off-track on climate and that is an abdication of corporate risk management that must be urgently corrected.”
Grasped the imperative
Edward Mason, head of responsible investment at Church Commissioners for England, said: “Many of the companies covered by this report face significant technical challenges decarbonising the industrial processes in which they are involved.
“But TPI’s analysis shows that leading companies, even in the toughest sectors like steel and cement, have grasped the imperative to decarbonise and are setting targets at the level of ambition society and investors alike require. Having committed to transition our portfolio to net zero emissions by 2050, the Church Commissioners expect to see ambitious targets consistent with the goals of the Paris Agreement across the industrial sectors in which we invest.”
Craig Martin, chief pensions officer at the Environment Agency Pension Fund, said: “Responding to the climate emergency is an urgent priority for us as long-term investors, and TPI data helps us to do that. The latest research shows that within the industrial sector there are clear winners and losers emerging on climate, which will guide our investment decisions and engagements in the years to come.”