Vast majority of CO2 emitting firms will not meet climate targets
Image credit: reuters
Just one in eight companies are managing to keep their carbon emissions below the level set forth in the Paris Agreement to keep global warming below 2°C, according to a report from the Transition Pathway Initiative (TPI).
The report also found that almost half (46 per cent) of the companies it assessed do not adequately consider climate risk in operational decision-making, while a quarter do not report their own emissions at all.
The TPI assesses large companies for their efforts towards carbon reduction to provide advice for environmentally conscious investors. The study was funded by investors with $14tr (£11tr) under management.
The report found that while the large majority of assessed companies now acknowledge climate change in their public disclosures, the minority that don’t are typically ‘large cap’ companies in sectors significantly exposed to transition risk.
It added that while the transition to a low-carbon economy in the private sector is happening, we remain “a long way from where we need to be”.
The findings underscore the gulf between commitments made by the private sector and the transformation that scientists say is needed to stop the climate crisis wrecking the planet.
“Engagement is starting to show results, but not at the pace needed,” said Adam Matthews, the co-chair of TPI.
“The clock is ticking on irreversible climate change. The fact only one in eight of the highest-emitting firms are responding at anywhere near the pace required is an urgent challenge to investors. Investors themselves need to adopt an emergency footing otherwise the window to secure the change we need will be gone.”
The study looked at 274 of the largest publicly traded, high-emitting companies, including German energy firm E.On, Spanish utility Iberdrola, Finnish paper firm Stora Enso and Californian utility Edison International, TPI said.
The Paris deal aims to limit the global average temperature increase to “well below” 2°C, while seeking to tighten the goal to 1.5°C. Current policies put the world on track for at least a 3°C rise by the end of the century.
The world has already warmed by about one degree, fuelling an increase in extreme weather, eating up Himalayan and Alpine glaciers and disrupting farming in many parts of the world.
Further warming could push the climate system closer to irreversible tipping points, scientists warn, raising the risk of harvest failures, forced migration, mass extinction of species, ecosystem collapse and societal breakdown.
TPI’s report underscored the complexities of pricing the risks in terms of record-breaking extreme weather, an upsurge in climate citizen activism and possible regulatory responses.
Although many investors also want to see chief executives taking the crisis more seriously, the TPI report noted that 35 of 130 companies assessed for a second year had improved how they integrate climate change into their business decisions.
Earlier this week, South Korean researchers said that Arctic ice could entirely disappear even if the global warming limits specified in the Paris Agreement are adhered to.
In the UK, the Carbon Trust recently commissioned a YouGov survey of more than 9,000 consumers across the USA, UK, Italy, Canada, Spain, the Netherlands and Sweden. A majority of two-thirds (66 per cent) of consumers confirmed they would feel more positive about companies that could demonstrate their efforts toward reducing the carbon footprint of their products.
Meanwhile, plans to ramp up the UK’s liquefied natural gas (LNG) imports could mean shifting the responsibility of gas-related methane emissions to other countries. By importing large amounts of gas - much of it fracked in the US - and then shipped in the form of LNG, the commodity reaches the UK with an already heavy emission footprint.
However, there was some more positive environmental news, after climate scientists noted the huge worldwide potential for carbon emission capture by replanting trees. A new analysis estimates that a worldwide planting programme could remove two-thirds of all the emissions that are blown into the atmosphere by human activities.
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