New research finds highest-emitting companies off-track to meet Paris climate goals, and puts investors on “emergency footing”
Landmark ‘State of the Transition’ research assesses 274 high-emitting companies for $14 trillion-backed Transition Pathway Initiative
46% of companies are failing to adequately integrate climate change into their business decisions. Only 1 in 8 companies (12.5%) are reducing carbon emissions at the rate required to keep global warming below 2°. $14 trillion network urges investors to adopt “an emergency footing” to get companies moving faster on climate, and avoid “Catch 22 on disclosure”.Report notes that one in four (27%) companies assessed for a second year, however, are improving on climate management.
(10 July, London). A major new report assessing the climate performance of 274 of the world’s highest-emitting publicly-listed companies finds that almost half (46%) do not adequately consider climate risk in operational decision-making. A quarter (25%) do not report their own emissions at all, undermining a key recommendation of the Taskforce for Climate-related Financial Disclosure (TCFD).
The report assesses companies on ‘Management Quality’ related to climate, but also goes further and analyses ‘Carbon Performance’, in terms of current and planned GHG emissions. A total of 160 companies are analysed on Carbon Performance and the research finds that only20 companies, or one in eight, are aligned with a pathway that would keep global warming below 2°C.
Adam Matthews, Co-Chair of TPI and Director of Ethics & Engagement at Church of England Pensions Board said:
“TPI’s 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. 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 clock is ticking on irreversible climate change. The fact only 1 in 8 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 was carried out for the Transition Pathway Initiative (TPI) by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. It uses FTSE Russell data to analyse leading companies in 14 carbon-intensive sectors such as Oil and Gas, Electric Utilities, Automobiles, Airlines and Steel. These sectors account for 41% of global emissions from publicly listed companies worldwide. TPI is backed by investors with $14 trillion of assets including pension funds such as CalPERS and Environment Agency Pension Fund, and asset managers such as Legal & General Investment Management, BNP Paribas, Aberdeen Standard and Robeco. This report builds on TPI’s first ‘State of Transition’ report released a year ago.
Faith Ward, Co-chair TPI on behalf of the Environment Agency Pension Fund, part of the Brunel Pension Partnership. added:
“Today’s research shows clear leaders and laggards emerging within sectors from airlines to aluminium – and that gives investors an investment-relevant decision to make today. As the effects of climate change accelerate we can expect to see more capital flow away from those companies that bury their head in the sand, and towards those companies aligning with a 2°Cpathway.”
“The failure of 25% of high-emitting companies to report their own emissions is putting investors in a Catch