Report: Just one-eighth of corporates aligning with Paris Agreement
An analysis of 274 corporates across the world's most carbon-intense sectors has found that just one in eight are reducing their emissions in line with the Paris Agreement's less ambitious trajectory of 2C.
Undertaken by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics on behalf of the Transition Pathway Initiative (TPI), the study assessed each of the publicly listed corporates on the quality of their climate management, the impact of past greenhouse gas (GHG) reduction moves and planned GHG reduction projects and targets.
Companies assessed hail from the oil and gas, electric utilities, vehicle, aluminium, cement, coal mining, paper, consumer goods aviation and steel sectors. Other raw materials and other heavy industry firms are also represented in the sample.
The TPI found that climate management at almost half (46%) of the firms sampled was not adequate to embed decarbonisation into key operational decision-making processes.
Moreover, a quarter of the companies researched were found not to be externally reporting on their own GHG emissions at all – a disclosure which has been heavily recommended by the Taskforce for Climate-related Financial Disclosures (TCFD). Just 14% had published information to indicate that they had undertaken scenario analysis – another key facet of the TCFD framework.
The TPI, which is backed by investors with $14trn of assets under management collectively, is now warning companies in traditionally carbon-intensive sectors that they will lose investor support if they fail to decarbonise rapidly. The body’s co-chair Adam Matthews is additionally urging investors to increase their green ambitions.
“Our research shows that we need many more investors to engage with big-emitters across all sectors of the economy to ensure companies are setting emissions targets consistent with the goals of the Paris Climate Agreement,” Matthews, who also serves as director of ethics and engagement at the Church of England, said.
“Engagement is starting to show results but not at the pace needed. A failure to grasp the seriousness of the warning from this TPI report, and to recognise the slow pace of corporate progress, will directly undermine our ability as pension funds to manage the financial risks within our portfolio for our beneficiaries.”
The TPI has previously issued sector-specific reports warning businesses across the airline and oil and gas sectors that a failure to set Paris-aligned strategy would result in a loss of investment. Finance firms to back this line of argument include the likes of Legal & General Investment Management, BNP Paribas, Aberdeen Standard and Robeco.