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Carbon budgets of listed companies would see 2.7°C global warming

The world’s listed companies are currently on course to exceed their carbon budgets, likely resulting in global warming of at least 2.7°C this century, a report has found.

In its latest ‘Net-Zero Tracker’, investment data provider MSCI said that 35 per cent of listed companies have disclosed at least some of their Scope 3 emissions - up 4 percentage points from seven months earlier.  

Scope 3 emissions are those not directly created by the company, but for which they are still indirectly responsible. An example of this is when consumers buy, use and dispose of products from suppliers.

The tracker also showed that 44 per cent of listed companies have set a decarbonisation target, up 8 percentage points from seven months earlier.

Only 17 per cent of listed companies have published a climate target that, if achieved, would align carbon emissions across the company’s total value chain with the ambitious 1.5°C goal of the Paris Agreement. However, this is still an improvement on earlier figures and is up 10 percentage points over the same period.

Companies in emissions-intensive utilities; real estate; capital goods, and automotive industries have the highest revenue exposure to sustainably produced power and clean technologies.

This suggests that investors who invest in emissions-intensive industries in the short term may help drive down global carbon emissions over the long term.

“Public and private companies and investors must act urgently, as this report clearly shows that time is running out and we are not on track to limit global warming to 1.5°C,” said Sylvain Vanston, executive director of climate change investment research at MSCI.

Despite new pledges, public companies were expected to emit 11.2 gigatonnes of direct greenhouse gas emissions into the atmosphere this year, the same as 2022, putting them on track to warm the planet by 2.7°C by the end of the century, the report said.

It acknowledged that the onus is also on policymakers to scale up renewable energy and green technologies to allow firms to be as carbon-efficient as possible. This includes electrifying “nearly everything that currently runs on fossil fuels”.

Achieving net-zero electricity in the US alone by 2035 would require annual deployment of solar and wind, for example, to “more than quadruple current levels”.

Last week, the UK was urged to levy a tax on millionaires and fossil fuel firms in order to increase contributions to a fund designed to alleviate the worst impacts of climate change in developing countries.

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